Fourth major wireless carrier breaks into Canadian market

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A fourth major wireless carrier has been launched in Canada, with Videotron completing its acquisition of Freedom Mobile.

Shaw Communications and Quebecor Inc. — the company that operated Freedom Mobile as its subsidiary — announced the deal on Monday, a weekend after the federal government approved the acquisition.

For an enterprise value of $2.85 billion, Videotron paid $2.17 billion in cash and assumed certain debts and primarily lease obligations to complete the “Freedom Transaction,” the company said.

The new network will boost competition — something Canadian consumers and regulatory authorities have been waiting for to ensure prices stay in check.

“With a combined total of more than 3.5 million customers for mobile services alone and the expertise of nearly 7,500 employees, Freedom and Videotron have the leverage to further disrupt Canada’s wireless market,” reads a press release issued Monday.

Pierre Karl Péladeau, president and CEO of Quebecor, believes the alliance of Freedom and Videotron will “permanently transform Canada’s wireless market.”

“Today marks the beginning of a new era for Canadians,” Péladeau said. “Joining Videotron’s track record of success in Quebec with Freedom’s highly skilled teams will bring our customers the benefit of our combined expertise and our unwavering customer-centric focus.” He thanked Rogers and Shaw for their cooperation throughout the process.

Last week, Federal Industry Minister François-Philippe Champagne spoke to the Canadian public about these developments.

“The evidence is clear: Having a strong fourth competitor does lead to lower prices, as we’ve Atlantic provinces, Quebec, Ontario, Alberta and British Columbia,” he remarked.

Good times are coming for Canadian consumers

There are many benefits Canadians can begin enjoying immediately as a result of this acquisition:

Videotron promises to:

Ensure that over 10 years, Freedom’s plans will be at least 20% more affordable than the equivalent plans currently offered by the incumbents in the British Columbia, Alberta and Ontario markets;
Maintain prices for Freedom’s existing customers for five years. Existing Freedom customers will also automatically receive a 10% increase in their local data limit at no additional cost. In addition, Freedom will participate, within its wireline footprint, in the Connecting Families initiative available to low-income Canadian families and seniors, as Videotron already does;
Invest more than $150 million to upgrade Freedom’s infrastructure, which will, among other things, enable 90% of its customers to access the 5G network using a compatible device within two years. Quebecor has also committed to keeping Freedom’s spectrum licences for at least 10 years after they are transferred.

Videotron will also be able to offer Canadians in BC, Alberta, Manitoba, and Ontario attractive multi-service bundles — wireless, internet, and TV — over the coming months.

Background

All the plans listed above align with the government’s final requirements for this deal. According to the government’s outline, published Friday, Videotron:

Will offer plans that are comparable to those currently available in Quebec and offer options at least 20% cheaper than those made available by the major players;
Cannot transfer the Freedom Mobile licences for 10 years;
Will have to expand its 5G wireless network in Freedom Mobile’s pre-existing operating territory within two years;
Will expand mobile service into Manitoba via the use of a signed Mobile Virtual Network Operator (MVNO) agreement or other means and offer plans comparable to what it offers in Quebec; and,
Will increase data allotments of existing Freedom Mobile customers by 10% as a near-term bonus while it invests in bringing down prices overall.

Rogers will also be legally bound to make significant investments in the next five years to boost connectivity. Its goals include:

Creating 3,000 new jobs in Western Canada and maintaining them for a minimum of 10 years after the closing date;
Establishing a Western headquarters in Calgary and maintaining it for a minimum of 10 years after the closing date;
Investing $1 billion to expand broadband Internet access, at speeds of at least 50/10 megabits per second, and 5G mobile service in areas where it is not currently available;
Investing at least $2.5 billion to enhance its 5G network in Western Canada and $3 billion in additional network service expansion projects; and,
Expanding access to low-cost broadband Internet plans and launching a new low-cost mobile offering for low-income Canadians.

Any noncompliance could lead to financial damages of up to $200 million for Videotron and $1 billion for Rogers.

“Should parties fail to live up to any of their commitments, our government will use every means in our power to enforce the terms on behalf of Canadians,” ensured Minister Champagne.

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