By Ken Kelley
MONTREAL – Not that we expected otherwise, but there was no dodging the Rogers-Shaw elephant in the room when Cogeco president and CEO Philippe Jetté spoke during the Desjardins’ Group annual Industrials, TMT & Consumer virtual conference Tuesday.
In fact the session’s moderator, analyst Jerome Debreuil, ripped off the band-aid straight away, asking Jetté if he expected Cogeco would be interested in bidding on any wireless assets Rogers may be forced to divest as part of the tie-up.
“There’s a great deal of uncertainty as far as we’re concerned, as to whether the deal will be approved and if wireless assets will be for sale and the implied economics of all this,” Jetté (above) said. “If we want the future of mobile in Canada to work, the regulators have to deliver a balance-, competitive-, innovative-, and investment-based framework. Regulation does not need to be heavy; it needs to be fair and it needs to be predictable. We’re expecting to see the regulators will be looking at this transaction.”
Indeed, the potential Rogers-Shaw tie-up has drawn intense scrutiny from all sides. NDP Leader Jagmeet Singh decried the potential merger, noting it would most likely drive already high prices even higher for consumers. Not surprisingly, Rogers CEO Joe Natale praised the virtues of the deal in an exclusive interview with Cartt not long after news of the merger broke.
Rather than focus exclusively on the Rogers-Shaw merger and the potential implications should regulators green light the deal, Jetté also discussed the history of various mergers and acquisitions the Big Three made along the way – such as Bell’s purchase of Aliant in Atlantic Canada; Public Mobile and Clearnet being scooped up by Telus; and Rogers’ acquisition of Fido, among others – all of which have helped establish their market dominance.
“The market power that the Big Three actually have has been recognized over and over by the CRTC and the Competition Bureau. First and foremost, we need a regulatory framework that will support everyone and that will help the smaller companies to [not only] grow, invest and innovate, but also to introduce and preserve competition in a healthy marketplace,” the CEO said.
“Canadians today, I think, are concerned about this proposed merger, and for the right reasons. I think it’s concerning the way it’s being presented, and [stands to] consolidate even further the power the Big Three have in their possession. The regulatory framework is necessary to help the smaller players grow, to protect competition, and to make sure that the big players can actually play by the rules.”
Given the high cost of entry into the wireless market, Jetté believes granting new players access to a portion of the national incumbents’ network is fundamental to helping smaller players grow.
“The government has to introduce a mandated regulatory framework and not just let the Big Three decide what they want to do with the market.” – Philippe Jetté, Cogeco
“The government has to introduce a mandated regulatory framework and not just let the Big Three decide what they want to do with the market. [The creation of wholesale wireless access] needs to be mandated to help smaller players grow. And that’s exactly what we’ve put in front of the CRTC, what we call a hybrid mobile network operator model. We’re very eager to see when the CRTC will render its decision to open mandated wholesale wireless access in the market,” Jetté said.
With politicians expected to consider the fate of the Rogers-Shaw tie-up over the Easter break, (which will be followed by the CRTC, the Bureau and ISED itself, over spectrum) Jetté said he hopes the prospect of reduced competition that would come from the merger will in fact help boost the chances of mandated wholesale access to wireless infrastructure.
Asked if Cogeco will participate in the June 3.5 GHz spectrum auction, he said until the time the CRTC announces a decision on its new wireless policies, the company is keeping its options open, but he declined to otherwise offer any kind of comment or decision on the auction. Companies wishing to participate are subject to strict confidentiality rules imposed by ISED.
