Rogers Buys Shaw System, Spectrum for $710M

Canadian telecom giant Rogers Communications said it will acquire wireless spectrum and a cable system from Shaw Communications in a deal valued at about $710 million.

Rogers has secured an option to purchase Shaw’s AWS spectrum holdings in 2014, and will acquire Shaw’s Mountain Cablevision system in Hamilton, Ontario. In addition, Shaw will acquire Rogers’ one-third interest in cable channel TVtropolis and will enter into negotiations with Rogers for the provision of certain services in Western Canada. Rogers said its net cash investment once the deals are completed is expected to be about $710 million.

"The agreements will benefit businesses and consumers across the country and fit squarely within our focused, strategic game plan," said Rogers CEO Nadir Mohamed in a statement. "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."

The acquisition of Shaw's unused spectrum will augment Rogers’s existing network in Western Canada. 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.  Under the agreement Rogers has acquired an option to purchase this spectrum which may be exercised after receiving regulatory approval.  If approved by Industry Canada and the Competition Bureau, the purchase of the spectrum following an exercise of the option would likely take place in late 2014.

Rogers, which already has a significant presence in Ontario, will pay about $400 million for the Mountain Cablevision system. The transaction is expected to close in the first half of 2013, pending regulatory approvals.

Shaw will pay about $60 million for the one-third interest in TVtropolis, bringing its total interest in the specialty TV network to 100%. Under the terms of the agreement, Rogers will continue to have access to TVtropolis content for broadcast to all of its cable subscribers. That deal is expected to close in the first half of 2013, pending regulatory approval.