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What the Rogers-Shaw deal means for consumers, jobs and 5G networks – CBC.ca

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It’s the biggest deal in Canada’s telecommunications sector in two decades.

Rogers Communications said on Monday it wants to buy Shaw Communications for $26 billion, creating Canada’s second-largest cellular and cable operator.

Consumer watchdogs say the deal will further constrain competition in a country with some of the world’s highest cellphone and internet costs. 

The companies say the deal will help them invest in 5G networks and create “synergies.”

Here is what we know so far and what the proposed tie-up might mean for you.

How will this deal impact consumers? 

Put simply, it’s not immediately clear.

Consumer advocates say Canada is “dramatically” different from other countries based on the number of cellphone providers here. 

“We know that the less providers you have, the higher the prices get,” Laura Tribe, executive director of OpenMedia, an advocacy group, told CBC News.

WATCH | Industry expert reacts to Rogers-Shaw deal:

Patrick Horan, a portfolio manager with Toronto-based investment service Agilith Capital, says he’s been hearing about a potential deal between Rogers Communications and Shaw Communications for decades, but he was shocked when the news actually broke today. 0:27

“Over the years, we’ve seen competitor after competitor swallowed up by the Big 3,” Tribe said of Rogers, Bell and Telus. 

“The result is always the same: more profits for the Big 3, worse plans and less choice for Canadians.”

Bell’s cellular brands include Virgin Mobile and Lucky Mobile, while Telus’s brands include Koodo and Public Mobile.

Rogers owns a national wireless network that operates under the Rogers, Fido and Chatr brands. Shaw owns Freedom Mobile and Shaw Mobile in Alberta, British Columbia and Ontario.

Tribe couldn’t give a specific estimate on how the deal will impact internet prices for Canadians.

As part of the deal, Rogers said it will will not increase wireless prices for Freedom Mobile customers for at least three years following the close of the transaction. 

“The combined company is committed to continue offering affordable wireless plans, with no overage fees, that meet the budgets and needs of Canadians,” Shaw said in a statement. 

How does deal impact Canadians in rural areas?

About 10 per cent of homes in Canada have no internet access, and roughly 600,000 households in Western Canada still cannot access the minimum internet speeds recommended by the federal government, Shaw said.

Rogers said it will commit to establishing a new $1 billion fund dedicated to connecting rural, remote and Indigenous communities across Western Canada to high-speed internet and closing critical connectivity gaps faster for underserved areas.

The company didn’t say when those initiatives will be launched, when more rural Canadians will be connected to high-speed internet or how much those connections will cost. 

Outside the Toronto head office of Rogers Communications on Monday. Rogers has signed a deal to buy Shaw Communications in a transaction valued at $26 billion, including debt, which would create Canada’s second-largest cellular and cable operator. (Evan Mitsui/CBC News)

Is this deal actually bad for competition? 

Shaw and Rogers aren’t direct competitors in cable and internet because their networks are in different parts of the country. They have, however, been fierce combatants in the wireless sector since Shaw bought the former Wind Mobile in 2016.

Fewer cellphone companies, Tribe said, invariably means less competition. 

Rogers president and CEO Joe Natale told analysts in a morning conference call that it’s too early to speculate on whether the competitors will be required to divest any of their operations before approval for the deal is granted by federal regulators.

Is approval from regulator a foregone conclusion?

The Competition Bureau is looking into the proposed deal, Pierre Poilievre, the Conservative Party’s critic for jobs and industry, said in a statement. He said his party is pleased the Competition Bureau is looking into the proposed deal.

Poilievre said his party will also be reviewing the deal with an eye to ensuring it helps to create competition, jobs and affordability. 

Innovation, Science and Industry Minister François-Philippe Champagne said in a brief statement that he wouldn’t predict the outcome of the regulatory reviews and repeated the Liberal government’s promises of greater affordability, competition and innovation in the Canadian telecom sector.

Natale said that Rogers feels “confident” the deal will be approved. 

WATCH | Rogers plan to buy Shaw for $26B sparks concern:

Rogers Communications has signed a deal to buy Shaw Communications for $26 billion pending approval from the Competition Bureau of Canada, the CRTC and the Canadian government. The deal has raised fears that reduced competition will push Canadians’ cellphone bills even higher. 1:49

Why is this merger happening now? 

The companies say it’s about building 5G networks. As part of the tie-up, Rogers will invest $6.5 billion in Western Canada to build critically needed 5G networks, Shaw said in a statement. 

“We’re at a critical inflection point where generational investments are needed to make Canada-wide 5G a reality,” Natale said in a press release. 

“5G is about nation-building; it’s vital to boosting productivity and will help close the connectivity gap faster in rural, remote and Indigenous communities.”

Rogers said it will commit to setting up a new $1 billion fund dedicated to connecting rural, remote and Indigenous communities across Western Canada to high-speed internet and closing critical connectivity gaps faster for underserved areas. (Evan Mitusi/CBC News)

How does the deal affect jobs? 

New technology and network investments will create up to 3,000 net new jobs across Alberta, British Columbia, Manitoba and Saskatchewan, Shaw said

How are the markets reacting? 

Shaw shares jumped 42 per cent to $34 but traded well below the offer price of $40.50, suggesting doubts about the deal, which is valued at $26 billion, including debt. Shares of Rogers were up seven per cent to $64.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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