Canadian fixed line operator and DTH provider Shaw Communications has signed a series of asset sale agreements with incumbent operator Rogers Communications that could be worth up to C$700m (US$711m).
Under the terms of the transaction, Shaw will sell…
Canadian fixed line operator and DTH provider Shaw Communications has signed a series of asset sale agreements with incumbent operator Rogers Communications that could be worth up to C$700m (US$711m).
Under the terms of the transaction, Shaw will sell to Rogers its Hamilton, Ontario-based cable operations, Mountain Cablevision, and the option to acquire its AWS spectrum holdings in 2014. In return, Rogers is to sell to Shaw its 33% stake in speciality TV network TVtropolis.
Rogers has agreed to pay an initial C$250m upfront deposit for Mountain Cablevision. Upon closing, the total consideration will be C$400m, which includes not only the value of the cable operator but also reflects the bundle of transactions taken together, as well as consideration for timing of the cash payments between the parties.
As for the spectrum licences, which include 10MHz and 20MHz AWS spectrum covering British Columbia, Alberta, Saskatchewan, Manitoba and Northern Ontario, Rogers has paid C$50m for the option. If the company subsequently takes up this option, then a further payment of around C$200m will be made. Rogers plans to use the spectrum to bolster its LTE network.
For its part, Shaw will pay Rogers C$59m for its one-third holding in TVtropolis, giving Shaw 100% ownership of the company. TVtropolis mainly broadcasts popular sitcoms and entertainment shows from the 1980s and 1990s.
The transactions are not conditional on the closing of any of the other transactions and remain subject to customary conditions, including applicable regulatory approvals. The Mountain Cable transaction remains subject to the Canadian Radio-television and Telecommunications Commission and Competition Bureau approvals, while the spectrum option will be exercisable from the date on which Industry Canada and Competition Bureau approvals permit such exercise. This is likely to be late 2014 as the conditions on the spectrum being set-aside for new wireless entrants only comes to an end in September 2014.
TD Securities acted as the financial adviser to Shaw in connection with the transactions with Davies Ward Phillips & Vineberg providing legal advice.
Shaw calls time on wireless plans
For Shaw, the deal signifies the end of its once grand plans to launch a nationwide wireless network and compete directly with the likes of Rogers, Bell and Telus.
The company had already announced back in September 2011 that it was to abandon its C$1bn plus plan to roll out a new wireless network, citing the prohibitive costs involved and the strength of the established competition.
Since then, the spectrum assets it had slowly amassed over the years have become increasingly non-core and Shaw has sought to focus instead on bolstering its triple play offering, particularly in its core Western Canadian market where Telus has become increasingly present.
Commenting on the asset sale agreements, Brad Shaw, CEO of 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.
“Key strategic investments that will be accelerated include the completion of our Calgary data centre, further digitization of our network, additional bandwidth upgrades, expansion of our Wi-Fi network in Western Canada and additional product development relating to Shaw Go and other applications that are focused on an enhanced customer experience. Proceeds from the transactions enable us to realize the benefits of these strategic capital investments sooner than originally contemplated.”
