Rogers Will Buy Shaw Spectrum, Cable Unit for C$700 Million

Rogers Communications Inc., Canada’s largest mobile-phone company, agreed to buy wireless spectrum and a local cable business from Shaw Communications Inc. for C$700 million ($712 million).

Rogers will buy Shaw’s Mountain Cablevision Ltd. unit based in Hamilton, Ontario, the companies said yesterday in a joint statement. In return, Calgary-based Shaw will acquire Rogers’s one-third interest in the TVtropolis network, the companies said.

Rogers is acquiring Shaw’s unused wireless spectrum to meet growing demand for bandwidth from data-hungry smartphone users. At the same time, the Toronto-based company wants to use Mountain Cablevision to bolster its cable business in southwestern Ontario, Canada’s most populous region.

The deal “gives Rogers more tools to continue to grow its wireless business unencumbered” and “secures precious wireless spectrum,” Maher Yaghi, a Desjardins Securities analyst, wrote in a research note today. Yaghi, based in Montreal, rates both Rogers and Shaw a hold.

The price for the cable business is about C$400 million, putting the price for the rest of the assets at about C$300 million, Rogers Chief Executive Officer Nadir Mohamed said in a phone interview.

“The wireless business is defined by what I would describe as an explosion in terms of usage,” he said. The new spectrum “will help us meet that demand in terms of capacity and speed,” Mohamed said.

Airwave Auction

Shaw, a cable-television provider, spent about C$190 million on wireless spectrum in the last Canadian government auction in 2008 before canceling plans in 2011 to build a mobile-phone business. The Canadian government will hold an auction in the first half of this year to sell new wireless airwaves.

Rogers may issue as much as C$800 million in debt this year to buy new spectrum, according to Andrew Calder, an analyst at RBC Capital Markets in Toronto.

Mohamed declined to say how much more Rogers is willing to spend on new airwaves in that auction. “What I can tell you is I think this transaction really fits well into our strategy and is a great opportunity,” he said.

Rogers gained 1.2 percent to C$44.92 at the close in Toronto, while Shaw rose less than 1 percent to C$22.99.

Before it's here, it's on the Bloomberg Terminal.