Rogers announced that it has signed agreements with Shaw Communications to secure an option to purchase Shaw’s AWS spectrum holdings in 2014, and to acquire Shaw’s cable system in Hamilton, Ontario – Mountain Cablevision .
Shaw will also acquire Rogers’ one-third interest in TVtropolis and will enter into negotiations with Rogers for the provision of certain services in Western Canada. Rogers net cash investment is expected to total approximately $700 million once all aspects of the transactions are completed.
“The agreements will benefit businesses and consumers across the country and fit squarely within our focused, strategic game plan,” said Nadir Mohamed, President and Chief Executive Officer. “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.”
It is a smart move on Rogers part as more and more Canadians are turning to wireless devices, and in many cases now have a smartphone and tablet device within the same household, and this will only increase throughout 2013. This will give Rogers the opportunity to increase its coverage in Western Canada specifically in British Columbia, Alberta and Manitoba, Saskatchewan and Northern Ontario markets.
The acquisition of Mountain expands Rogers cable business in the southern Ontario area and is immediately adjacent to its already highly clustered cable network. This acquisition will allow Rogers to drive synergies through increased product penetration of its wireless services, as well as through cost efficiencies. Mountain delivers a full bundle of advanced cable television, Internet and telephony services over its recently upgraded hybrid fiber coax network. The Cable transaction is expected to close in the first half of 2013, pending regulatory approvals.
TVtropolis is a specialty TV network seen across Canada, specializing in bringing viewers some of the most widely watched shows ever broadcast. 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 2013, pending regulatory approval.
The cash consideration for the transactions includes a $250 million deposit for Mountain, as well as a $50 million payment for the Option to purchase the spectrum holdings. Upon the closing of the Mountain component, total cash consideration of $400 million will have been paid in respect of this cable business – an amount that includes not only the value of Mountain, but also takes into consideration the value of the bundle of transactions taken together, as well as consideration for the timing of cash payments between the parties. Rogers will receive $59 million for the sale of TVtropolis, to be received as a deposit on today’s signing of agreements.