Rogers Communications Inc. would get the means to accelerate the build-out of its 5G wireless network through its acquisition of Shaw Communications Inc. , but if the deal falls through it could leave its Western Canadian target in a precarious position.
The $20.4-billion deal, announced Monday, would give Rogers access to Shaw’s fibre-optic infrastructure – the lightning-fast wires that power broadband internet service – putting it on more equal footing with rivals Telus Corp. and BCE Inc. , who share portions of each other’s networks. But it could also see Shaw sitting out a crucial telecom auction this summer that will provide the building blocks companies need to offer the next generation of wireless technology.
Building out national 5G networks, which will power everything from smart cities to driverless cars, is a massive undertaking that will cost Canadian wireless carriers an estimated $26-billion, according to a 2018 Accenture analysis. A Rogers-Shaw merger would give both companies the scale they need to move quickly in the global technology arms race. However, the deal – which would eliminate Shaw’s Freedom Mobile, the country’s fourth-largest wireless carrier – faces significant regulatory scrutiny from a government that has been focused on increasing competition and reducing wireless prices
Early deployments of 5G have relied on adding equipment onto existing wireless networks. But in order to truly deliver on the promises of 5G – such as increased speeds and reduced lag times – telecoms will need new towers connected to fibre-opticcables, according to telecom consultant Mark Goldberg.
“Even in places that Shaw isn’t operating wireless, they’ve got extremely extensive fibreassets – that includes Manitoba and Saskatchewan, for example,” Mr. Goldberg said. If the deal goes ahead, he added, “It means that Rogerswould have deep infrastructure nationally.”
wireline (internet/TV) footprints
Rogers and Shaw have “virtually no overlap”
in their cable footprints, according to Rogers CEO
Joe Natale. The companies’ founders, Ted Rogers
and JR Shaw, struck a gentlemen’s agreement in
1994, when divvying up Maclean-Hunter’s cable
assets, that they wouldn’t compete in each
other’s territories.
Regional telecom operators
Homes passed*
In millions
National telecom operators
Homes passed*
In millions
*When there is more than one unit in a single dwelling, such as an
apartment building, each unit that is a cable subscriber, or has the
ability to access cable services, is counted as an individual home passed.
alexandra posadZki and JOHN SOPINSKI
THE GLOBE AND MAIl, SOURCE: rbc capital markets
wireline (internet/TV) footprints
Rogers and Shaw have “virtually no overlap” in their cable
footprints, according to Rogers CEO Joe Natale. The
companies’ founders, Ted Rogers and JR Shaw, struck
a gentlemen’s agreement in 1994, when divvying up
Maclean-Hunter’s cable assets, that they wouldn’t
compete in each other’s territories.
Regional telecom operators
Homes passed*
In millions
National telecom operators
Homes passed*
In millions
*When there is more than one unit in a single dwelling, such as an
apartment building, each unit that is a cable subscriber, or has the
ability to access cable services, is counted as an individual home passed.
alexandra posadZki and JOHN SOPINSKI
THE GLOBE AND MAIl, SOURCE: rbc capital markets
wireline (internet/TV) footprints
Rogers and Shaw have “virtually no overlap” in their cable footprints, according to Rogers
CEO Joe Natale. The companies’ founders, Ted Rogers and JR Shaw, struck a gentlemen’s
agreement in 1994, when divvying up Maclean-Hunter’s cable assets, that they wouldn’t
compete in each other’s territories.
Regional telecom operators
Homes passed*
In millions
National telecom operators
Homes passed*
In millions
*When there is more than one unit in a single dwelling, such as an apartment building,
each unit that is a cable subscriber, or has the ability to access cable services,
is counted as an individual home passed.
alexandra posadZki and JOHN SOPINSKI/THE GLOBE AND MAIl
SOURCE: rbc capital markets
The takeover, which requires shareholder and regulatory approvals, would see Rogers pay $40.50 a share for Shaw, a 70-per-cent premium to where the Calgary-based telecom’s stock recently traded.
The announcement comes three weeks ahead of the April 6 deadline for telecoms to pay their deposits if they wish to participate in the June auction for airwaves critical for 5G. Experts say the deal raises questions about Shaw’s ability to bid on licenses for the 3,500-megahertz spectrum – airwaves used to transmit wireless signals.
“Based on a reading of the auction rules, there is a non-negligible possibility that the announced merger may jeopardize Shaw’s participation as a stand-alone entity in the upcoming spectrum auction,” Johanne Lemay, co-president of telecom consultancy Lemay-Yates Associates Inc., said in an e-mail.
The 3,500-MHz band is a key one for the delivery of fifth-generation wireless services because it can carry large volumes of data over long distances.
“Sitting out this auction could make or break a company,” said Gregory Taylor, a spectrum expert and associate professor at the University of Calgary. “If Shaw were out of this auction and then somehow the deal does not go through, Shaw is in big trouble.”
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According to the rules set out by Innovation, Science and Economic Development Canada – the federal ministry responsible for regulating spectrum – companies that are in an agreement to merge are considered associated entities. They can participate separately in the auction only “if they can demonstrate that they intend to separately and actively provide services,” John Power, a spokespersonfor the department, said in an e-mail.
“Innovation, Science and Economic Development will apply these rules when it reviews all applications to participate in the auction following the April 6, 2021, application deadline, and make its assessment of eligibility on the facts of each specific application,” Mr. Power said.
Shaw and Rogers declined to comment on the upcoming auction.
The decision is going to be a tricky one for the government to make, Prof. Taylor said.
“I suspect they’re going to have to come up with creative solutions here,” he said. “It could be that Shaw gets to bid on set-aside spectrum and then if the deal [with Rogers] goes through they have to return it. … We’re into uncharted waters.” (Set-aside spectrum refers to a block of airwaves that is earmarked specifically for newer wireless carriers, such as Freedom Mobile, to encourage competition.)
Analysts are expecting strong demand for the 3,500 MHz spectrum. A report published by TD Securities analyst Vince Valentini earlier this year predicts that BCE, Rogers and Telus will spend roughly $2.8-billion combined on the airwaves. South of the border, an auction for similar airwaves netted US$80.9-billion.
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Carriers will need a mix of different frequencies to deliver 5G services. Higher frequencies provide faster speeds, while lower frequencies are better at travelling long distances. The airwaves in the 3,500 MHz range, known as mid-band spectrum, are considered ideal because they provide a mix of both.
If Shaw isn’t able to participate in the auction, that could create opportunities for smaller players to bid on those blocks of spectrum, Prof. Taylor said.
“It would mean that those looking for the set-aside [spectrum] will probably get a much better deal,” he said. “Of all the groups that qualify for set-aside spectrum, Shaw has some of the deeper pockets.”
The Canadian Radio-television and Telecommunications Commission (CRTC) is currently mulling whether to force the national carriers to open up their wireless networks to resellers. The decision, which is expected in the coming weeks or months, could determine whether companies such as Cogeco Communications Inc. enter the wireless business.
If the deal between Rogers and Shaw goes through, Shaw will likely have to return airwaves in the 600 MHz range that it bought in a 2019 auction. Those airwaves were also set aside for smaller competitors and are not allowed to be transferred to one of the three big telecoms for five years.
The Rogers-Shaw merger is subject to approval by the Competition Bureau; Innovation, Science and Economic Development; and the CRTC.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
