5G's Promise? $80 Billion in Competition-Killing Megadeals
The rationale for a merger of the top two Canadian cable providers sounds a lot like T-Mobile-Sprint’s argument. Will it fly?
The 5G argument worked wonders in the U.S. for T-Mobile and Sprint. Will it work for Rogers and Shaw in Canada?
Photographer: Brent Lewin/BloombergA formidable low-cost wireless carrier was threatening a competitor’s subscriber growth, so they merged. If this sounds like last year’s controversial $58 billion deal between T-Mobile US Inc. and Sprint Corp. in the U.S., look further north. On Monday, Rogers Communications Inc. agreed to acquire its Western Canadian rival Shaw Communications Inc. for C$26 billion ($20.9 billion) including debt, the latest megadeal in North America to punctuate the global race to 5G and raise eyebrows from both consumers and regulators. Investors won’t be complaining, though.
“As virus pressure subsides, Shaw may remain a threat to postpaid growth,” Bloomberg Intelligence analyst John Butler wrote in a Dec. 10 report. Likewise, a takeover by Rogers would provide the biggest upside to Shaw’s stock price, Vince Valentini, an analyst for TD Securities, wrote in November. Those predictions proved accurate: Rogers is offering Shaw shareholders C$40.50 a share in cash, 77% higher than the stock’s average closing price over the past 20 days. The average share-price estimate for Shaw was only C$27.58 before the deal was announced, according to data compiled by Bloomberg.