A Rogers CEO said that if the government allows them to buy Shaw, then they will fix the outage issue.
In March, Rogers revealed plans to buy rival Shaw for an estimated $26 billion. The announcement brought a storm of controversy as Canadians already pay some of the highest cell phone rates in the developed world.
Already, Innovation Minister, François-Philippe Champagne has gone back and forth on this deal. In the early days, he seemed intend on rubberstamping the deal, though was interested in a minor caveat of spinning off Freedom Mobile – something that would wind up being a footnote in the grand scheme of things. As opposition mounted, however, the Minister seemingly changed his tune a little and expressed concern about competition should the deal move forward.
It seemed like the deal might have been going ahead despite the widespread rejection of Canadians and a recommendation by the Competition Bureau to block the deal. However, things changed when a massive Rogers outage paralyzed a large portion of the country. Millions were left without Internet and cell phone service. Businesses were unable to conduct transactions. 911 was also inaccessible as well. This left many concerned for the fragility of the Canadian economy as well as the precariousness of public safety.
As a result of the widespread controversy, Rogers pushed the deadline of the deal to the end of the year, seemingly hoping that things will blow over by then.
Apparently, in the midst of all of this, Rogers made a rather gutsy pitch to lawmakers. That pitch amounted to, “Gee, it would be nice to, you know, fix the network and add redundancy to prevent this from happening again, but we are only a multi-billion dollar company. We can’t afford something like that. You know, if you just let us go ahead and buy Shaw, then we might get around to doing that whole network upgrade thing.” From Reuters:
But Rogers Chief Executive Tony Staffieri told lawmakers [that a] combined entity would be able to invest in the resiliency of telecom networks at a level that neither company can do alone.
One of the lawmakers questioned whether it was an end of the road for the merger, to which Staffieri said the merger was about scale and making “necessary investment.”
Yeah, that executive deserves a slap up the back of the head for such an asinine comment.
Still, it seems that the Canadian government is leaning towards allowing Rogers to complete the buyout as long as the company fixes the redundancy issues:
Canada will examine the resiliency of telecom networks across the country before approving Rogers Communications Inc’s(RCIb.TO) proposed C$20 billion ($15.6 billion) acquisition of Shaw Communications Inc (SJRb.TO), Industry Minister Francois Philippe Champagne said on Monday.
The thinking should represent a huge disappointment to Canadians who think that the deal should be blocked altogether. If anything, Rogers getting its act together on this front should be a prerequisite to ask if they are allowed to go ahead with the merger, not a sole condition for the government to approve. If this is truly the state of where Canada is with the Rogers Shaw deal, then the Canadian government is a terrible negotiator. Here’s hoping that the Canadian government will come to their senses and block the deal altogether.
Drew Wilson on Twitter: @icecube85 and Facebook.
