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Rogers deal complicates Shaw’s place at 5G airwaves auction

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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.

Rogers, accustomed to high debt, secures record bridge loan for Shaw deal

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-optic cables, according to telecom consultant Mark Goldberg.

“Even in places that Shaw isn’t operating wireless, they’ve got extremely extensive fibre assets – that includes Manitoba and Saskatchewan, for example,” Mr. Goldberg said. If the deal goes ahead, he added, “It means that Rogers would 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 spokesperson for 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.

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Source:- The Globe and Mail

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Barrick Gold profit beats expectations as copper, gold prices surge

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JOHANNESBURG (Reuters) -Barrick Gold Corp reported a 78% jump in first-quarter profit on Wednesday, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.

Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia.

Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.

Adjusted profit surged 78% to $507 million in the quarter ended March 31, from $285 million a year earlier, and Barrick announced a 9 cent per share quarterly dividend.

Stronger prices helped boost Barrick’s revenue from its copper mines in Chile, Saudi Arabia and Zambia by 31% from the fourth quarter. Overall earnings per share were $0.29, ahead of analysts’ estimate of $0.27.

“We expect a positive stock reaction to the earnings beat and strong cash flow,” said Credit Suisse analysts.

POTENTIAL FOR SOUTH AFRICA MERGER

Barrick CEO Mark Bristow, who has championed mergers across the gold industry, said he backed the idea of South Africa-listed miners Goldfields and AngloGold Ashanti combining.

Speculation has been swirling around the two companies and Sibanye-Stillwater, whose CEO Neal Froneman floated the idea of a three-way merger in March.

“I’m a South African, and this country has such a great mining history and it would be great to see a real gold business come out of the many failed discussions that we’ve seen,” said Bristow.

Goldfields declined to comment. In a statement, AngloGold Ashanti said it was focused on delivering on its growth plan to unlock value from its portfolio of gold assets.

Bristow also said he had met with the Democratic Republic of Congo’s new mines minister and other officials and was continuing to work on getting $900 million belonging to its Kibali mine joint venture out of the country.

“We have a solution, it just needs to be sanctioned by the appropriate authorities which haven’t been around for a while,” he said, referring to a recent government overhaul by President Felix Tshisekedi.

(Reporting by Helen Reid in Johannesburg and Arundhati Sarkar in Bengaluru; editing by Shounak Dasgupta and Bernadette Baum)

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Loblaw gets quarterly sales, profit boost from online demand surge

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Retailer Loblaw Cos Ltd beat market estimates for quarterly revenue and profit on Wednesday, as its online sales more than doubled on soaring demand from homebound buyers for groceries and other essentials during the COVID-19 pandemic.

Lockdowns and other virus-related restrictions in Canada, including reduced store capacity, during the first three months of the year pushed consumers to stockpile groceries and other essential items.

Loblaw, one of the biggest retailers in Canada, said that the momentum from the first quarter has continued into the current quarter, adding that it expects to exceed its own full-year profit expectations.

However, the company has warned that its food retail unit, which saw a surge last year at the peak of stockpiling, would not be as robust in the current quarter. In the first month of the ongoing quarter, food same-store sales have declined slightly, Loblaw said.

For the second quarter, the company expects to incur pandemic-related costs of about $65 million to $75 million, compared with $282 million a year earlier.

Net earnings available to its common shareholders rose to C$313 million, or 90 Canadian cents per share, in the quarter ended March 27 from C$240 million, or 66 Canadian cents per share, a year earlier.

Excluding one-time items, the retailer earned C$1.13 per share, beating the average analysts’ estimate of 87 Canadian cents per share.

Its revenue rose to C$11.87 billion ($9.67 billion) in the first quarter from C$11.80 billion a year earlier, surpassing analysts’ estimate of C$11.72 billion, according to IBES data from Refinitiv.

($1 = 1.2277 Canadian dollars)

(Reporting by Mehr Bedi in Bengaluru; editing by Uttaresh.V)

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Bombardier in talks to amend bondholders’ agreement after breach claim on asset sales

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(Reuters) – Bombardier on Monday contested a bondholder’s claims that its recent sales of non-core assets breach the terms of certain notes, and said it would seek bondholders’ consent to amend terms on eight bond issues.

Bombardier has emerged as a pure play business jet maker after divesting assets including the sale of its transportation business to Alstom, which it completed in January, to pay down debt and boost earnings.

The company said it launched consent solicitations with respect to outstanding senior notes or debentures, following the claims by the unnamed bondholder that the asset sales constitute a breach of certain covenants under the indenture governing the 2034 notes.

Bombardier said in a statement these claims are without merit and it has not breached any covenant, adding that after evaluating various options it had determined requesting bondholders to amend the terms of the bonds was the most “expedient and efficient path” to maintain value and protect itself and its stakeholders.

If the amendments are approved, Bombardier will make a consent payment of $1.25 per $1,000 principal amount for applicable series of notes, and C$1.25 per C$1,000 principal of Canadian dollar-denominated 7.35% debentures due 2026, the statement said.

Bombardier also flagged early first-quarter revenue that would beat analysts’ estimates, as rising vaccinations encourage wealthy travelers to return to flying.

Bombardier reports earnings on Thursday.

The jet maker said it expects first-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations of $123 million, above analysts’ average estimate of $89 million, according to IBES data from Refinitiv.

The company expects business jet revenue to rise by 18% to $1.3 billion in the first quarter, from a year ago, beating Wall Street’s estimate of $1.18 billion.

Bombardier stock closed up 3.3%.

While deliveries are roughly the same, Bombardier’s product composition is shifting toward its flagship Global 7500 jets, a revenue driver.

Bombardier said it remains on track to deliver between 110-120 business aircraft in 2021. The company’s full-year deliveries fell 20% to 114 jets in 2020.

 

(Reporting by Ankit Ajmera in Bengaluru and Allison Lampert in Montreal; Editing by Shailesh Kuber and Karishma Singh)

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