Rogers says to buy PE-backed Mobilicity, Shaw airwaves: Reuters

Rogers Communications Inc (RCIb.TO) has made a series of deals to try to solidify its position as Canada’s largest wireless operator.

Rogers said on Wednesday it will pay $440 million to buy struggling wireless operator Mobilicity and $100 million to complete a long standing agreement to buy airwaves from cable and media company Shaw Communications Inc (SJRb.TO). It had already paid $250 million to secure the Shaw purchase option.

It will also sell some spectrum across the country to smaller company Wind Mobile, a deal seen as necessary to win Canadian government approval for the Mobilicity takeover.

The government has encouraged competition in the wireless industry and Wind is seen as the most viable new competitor to Canada’s three big players: Rogers, BCE Inc‘s BCE.TO Bell, and Telus Corp (T.TO).

Rogers’ deals will give it new airwaves in British Columbia, Alberta and southern Ontario, among Canada’s most populated regions.

“We’re basically adding multiple lanes on our wireless highway in three key markets overnight,” Guy Laurence, chief executive officer of Rogers, said in a statement.

Mobilicity, which has been under creditor protection since September 2013, said the deal is the best possible outcome for its customers, dealers and employees.

The court overseeing Mobilicity’s creditor-protection process approved the purchase on Wednesday. It has already been blessed by the government, Rogers said, but will need to pass muster with the Competition Bureau.

The purchase price for Mobilicity will be offset by tax losses valued at around $175 million, Rogers said.

The secondary deal with Wind Mobile will include airwaves in British Columbia, Alberta, Saskatchewan, Manitoba, and northern and eastern Ontario.

Wind Mobile entered the country’s wireless industry via the same 2008 spectrum auction of airwaves that gave Mobilicity and Shaw their starts.

Rogers and the other incumbents were restricted in bidding in that auction and subsequent ones as Ottawa sought to help new players compete.

Shaw later decided not to build out a wireless network.

The government had previously blocked takeover offers for Mobilicity by Telus, which had again been actively bidding for Mobilicity in the past week.

Update: Mobilicity, a.k.a. DAVE Holdings Inc, is currently held in the portfolios of U.S. private equity firm Quadrangle Capital Partners and Canadian firm Catalyst Capital Group. Rogers said Catalyst supports the acquisition and helped in structuring the transaction.

By Alastair Sharp and Allison Martell

(Reporting by Alastair Sharp; Editing by Chizu Nomiyama; and Peter Galloway)

(This story has been edited by Kirk Falconer, editor of peHUB Canada)

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