Rogers Communications Inc. has struck a deal to sell wireless carrier Freedom Mobile to Quebecor Inc. for $2.85-billion in order to win regulatory approval of Rogers’ takeover of Shaw Communications Inc.
The two parties have been in talks for weeks, after Rogers entertained several other bidders. Shaw’s Freedom Mobile is Canada’s fourth-largest wireless carrier, with 1.7 million customers in Ontario, Alberta and B.C., and has been credited with driving down wireless prices in recent years.
The takeover still requires approval from the Competition Bureau and the Ministry of Innovation, Science and Economic Development, which oversees the transfer of wireless licences.
Rogers, Shaw and Quebecor said in a joint news release Friday evening that they believe the agreement with Quebecor – which includes the sale of all Freedom customer contracts, infrastructure, wireless licenses and stores – addresses the concerns raised by the Commissioner of Competition and the ministry regarding the viability of the fourth wireless competitor. Rogers has also agreed to provide Quebecor with transport and roaming services.
The Competition Bureau is attempting to block the merger of Canada’s two largest cable companies, arguing that the deal would result in higher prices, poorer service and fewer choices for consumers, particularly for mobile phone services.
Rogers president and CEO Tony Staffieri called the agreement a “critical step” toward completing the takeover of Shaw. “We strongly believe the divestiture will meet the Government of Canada’s objective of a strong and sustainable fourth wireless provider,” Mr. Staffieri said in a statement.
Pierre Karl Péladeau, president and CEO of Quebecor, called the agreement “a turning point for the Canadian wireless market.” For Quebecor, which owns Montreal-based cable company Videotron Ltd., the deal presents the opportunity to expand nationally.
“Quebecor’s Videotron subsidiary is the strong fourth player who, coupled with Freedom’s solid footprint in Ontario and Western Canada, can deliver concrete benefits for all Canadians,” Mr. Péladeau said in a statement.
Brad Shaw, the executive chairman and CEO of Shaw, said the announcement “ensures that Freedom Mobile will remain a strong competitor,” while Rogers chairman Edward Rogers called it a “truly Canadian-made solution that will benefit all Canadians by delivering increased competition and choice, the next generation of telecommunications services and enabling the transformative benefits of a combined Rogers and Shaw.”
Rogers, Shaw and Quebecor said they will work quickly “and in good faith” to finalize the documentation for the sale, which is “on a cash-free, debt-free basis at an enterprise value of $2.85 billion.”
Friday’s announcement follows a filing from the Competition Bureau in which the watchdog said the economic efficiencies that Rogers claims would result from its takeover of Shaw are speculative, “grossly exaggerated” and based on unrealistic assumptions and flawed methodologies.
Under Canadian competition law, companies can argue that the cost savings a contested merger would create, by allowing them to combine resources and reduce headcount, would be greater than the harm to consumers from lessened competition.
Rogers has argued that the Competition Bureau failed to weigh the effects of the deal on competition – which the telecom says would be “minimal to none” – against the economic efficiencies that the deal would create.
In a rebuttal filed with the Competition Tribunal, the watchdog argues that the benefits that Rogers is promising are insufficient to outweigh the hit to competition. The bureau says the deal “will result in a transfer of wealth from low- and moderate-income groups in society to the respondents, whose shareholders include ultra-rich members of the family ownership groups of these companies.”
“Increased profits will also be paid to non-Canadian investors. These effects are socially adverse and otherwise must be given weight against any efficiencies that may arise,” reads the filing, made public on Friday.
The bureau’s case focuses on potential harm to Canada’s wireless industry if Rogers were permitted to acquire Freedom Mobile.
Although Rogers had vowed to sell Freedom, the competition watchdog has argued that separating the wireless carrier from Shaw’s cable network would reduce the carrier’s ability to compete because it would not be able to cross-sell or offer bundled services. Shaw has called those concerns “wholly misplaced,” arguing that Freedom Mobile’s success has not depended on leveraging Shaw’s cable network.
In its rebuttal, the Competition Bureau says that the position that the telecoms have taken on the importance of the cable network is “contradictory and self-serving,” as Rogers has argued that acquiring Shaw’s cable network will enable it to compete more effectively in wireless with BCE Inc. and Telus Corp.
That “contradicts Rogers’ claim that Freedom Mobile can be severed from Shaw’s wireline business without suffering a substantial competitive disadvantage,” the filing reads.
Rogers and Shaw have both said that they hope to reach a settlement and avoid a hearing in front of the Competition Tribunal, but are prepared to oppose the application by Commissioner of Competition Matthew Boswell if one does occur.
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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
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