Shaw enters into $700M deal with Rogers that includes AWS, Mountain Cable
Shaw Communications and Rogers Communications have signed a series of agreements that include the sale of Hamilton-based Mountain Cablevision and Shaw’s AWS wireless spectrum to Rogers.
The agreements total $700 million and also include Shaw gaining Rogers’ one-third stake in TVtropolis, as well as negotiations with Rogers to provide services in Shaw’s Western Canada footprint.
On the wireless side, the agreements marked Shaw’s final exit from its ambitious plan of building its own wireless network. When the Canadian government opened up spectrum auctions in 2008 to encourage competition – Rogers is still the largest wireless provider in the country – Shaw spent $189.5 million on its wireless licenses. In September of 2011, Shaw announced it was dropping its LTE ambitions in favor of Wi-Fi build-outs across its Western Canada footprint.
The option for Rogers to buy Shaw’s wireless spectrum represents about $50 million and, if it passes regulatory approval, it could close late next year. In turn, Shaw agreed to pay Rogers $59 million for its 33.3 stake in TVtropolis.
TVtropolis is a specialty TV network seen across Canada. This sale will provide Shaw with 100 percent ownership of TVtropolis and, under the terms of the agreement, Rogers will continue to have access to TVtropolis content for broadcast to all of its cable subscribers. The sale of TVtropolis is expected to close in the first half of this year, pending regulatory approval.
Rogers is paying Shaw $400 million for Mountain Cablevision, also known as Mountain Cable, with $250 million upfront that was paid yesterday.
What Shaw gets
Shaw CEO Brad Shaw said the proceeds from the agreements would be used to complete its Calgary data center, more digital conversions for its network, additional bandwidth upgrades, the expansion of its Wi-Fi network in Western Canada, and additional product development relating to Shaw Go and other apps related to enhanced customer experiences.
“We are pleased to announce this transaction with Rogers,” Shaw said. “The sale is strategic for both parties, and Shaw will be able to use the net proceeds from the transactions to accelerate various strategic capital investments in its core business, as well as for general corporate purposes. The majority of the proceeds will be reinvested back into our business and will be focused on improving and strengthening our network advantage.
“Proceeds from the transactions enable us to realize the benefits of these strategic capital investments sooner than originally contemplated."
The currency infusion deepens Shaw’s war chest in its battle against Telus for subscribers in Western Canada.
What Rogers gets
Shaw’s wireless spectrum covers parts of British Columbia, Alberta, Saskatchewan, Manitoba and northern Ontario. Rogers will use that spectrum to help meet the data needs of its mobile, computer and tablet subscribers.
Shaw's AWS spectrum holdings cover 188 million MHz POPs, including 20 MHz across B.C., Alberta and Manitoba and 10 MHz in select B.C., Alberta, Saskatchewan and northern Ontario markets.
Rogers will also be able to sell its own wireless service to the 40,000 Mountain Cable customers. Rogers said Mountain Cable, which recently upgraded its HFC network, is adjacent to its clustered cable network.
“The agreements will benefit businesses and consumers across the country and fit squarely within our focused, strategic game plan," said Rogers President and CEO Nadir Mohamed. "We're investing in spectrum to ensure our customers continue to enjoy the incredibly fast speeds and throughput they crave, while ensuring our continued network leadership. We're also strengthening our cable portfolio by acquiring a valuable cable business, which complements our existing Ontario cable system, allowing us to deliver even more value for our customers and shareholders."