Videotron claims it is also owed $2.8M in BAI deal; Rogers claims Videotron owes it $4M
By Ahmad Hathout
Quebecor’s Videotron is suing Rogers for $151 million over aspects of its acquisition of Freedom Mobile.
Videotron filed a detail-less six-page notice of action in Ontario Superior Court last year that alleged Rogers owed it $91 million in breaches of the Freedom sale agreement, which required Rogers and Shaw to offload the mobile wireless subsidiary to merge. The transactions – Rogers buying Shaw and Quebecor buying Freedom (formerly Wind Mobile) – closed in April 2023.
Since then, Rogers and Quebecor have been feuding over amounts owed under certain terms of the agreements, namely: the Share Purchase Agreement (SPA), the Indefeasible Right of Use Agreement (IRU), the Transition Services Agreement (TSA), and the Asset Purchase Agreement (APA), according to the lawsuits.
And now, we have more precise details about the grievances.
The largest claim is related to fibre delivery to cell sites. Videotron claims that there was an agreement whereby Rogers would deliver thousands of metres of fibre to at least 200 cell sites. Rogers, the claim goes, told Videotron in November 2023 and February 2024 that it would receive 12,270m in fibre strands for three sites and 30,980m in fibre strands for a total of 171 cell sites, respectively.
Instead of receiving what Videotron “reasonably understood” to be 575,946m in fibre strands for 171 cell sites, “Rogers slashed the promised Fibre distance by approximately 95%, now providing a mere 660m for the very same 3 cell sites it had previously committed to supply with 12,270m,” the suit claims.
Videotron says it estimates the damages arising from these alleged breaches under the IRU agreement to be worth $103 million.
Videotron is also alleging it was not informed, as required by disclosure rules, that Freedom would be required, from deal closing, to contribute at any time in the future $7.1 million to the CRTC’s National Contribution Fund, which funds telecom builds, and therefore suffered $22.1 million in loss of business value.
The telecom also claims it was not informed that Freedom would owe some $2 million for services provided to Wind by Nokia starting in 2022; roughly $1.2 million in payments to landlords of cell sites that Videotron claims has amounted to a loss of $10 million in business value; and was not informed that in late March 2023, right before deal closing, Shaw and Freedom agreed to pay a cloud data management company called Informatica LLC some $637,000 to settle disputed amounts.
Videotron also claims Rogers has not paid $570,597 in amounts related to a Wi-Fi project connected to TransLink trains and buses that used LTE as backhaul, and $107,845 to the Canada Revenue Agency in pre-closing taxes payable by Freedom.
Videotron is also accusing Rogers of failing to uphold its end of the deal on transport capacity. According to the TSA, if, before the fourth anniversary of closing, Freedom requires additional transport capacity for its mobile wireless network, “Rogers shall use commercially reasonable efforts” to do so “at no cost to Freedom…”
Videotron claims that it has made “several requests to Rogers for additional transport capacity” since November 23, 2023, but “Rogers responded by imposing charges for such additional transport capacity.” Videotron claims $1 million in damages from this.
In May 2023, Rogers acquired BAI Canada Inc., which entered into an agreement with Wind in 2015 to deliver underground wireless services for the Toronto Transit Commission. Rogers delivers capacity to other carriers and services its own customers riding the subway.
Videotron now claims it is owed $2.85 million from that deal. The telecom relies on a section called “reimbursement for additional carriers” from the 2015 Site License Agreement (SLA), which states: the “licensor shall reimburse to the licensee an amount of $15,000 per segment … for each additional third party carrier granted a license at a segment,” up to a maximum of two reimbursements.
While Videotron acknowledges there are no explicit provisions to the same effect in the 2017 and 2018 SLAs, “both SLAs expressly incorporate all terms and conditions of the TTC Network MLA,” it claims.
Rogers filed its own lawsuit in Ontario Superior Court earlier this year alleging Quebecor owes it at least $4 million for services it allegedly provided to the telecom during the Freedom Mobile handoff.
The claim is related to third-party costs. Rogers claims it provided nearly $1.5 million in technology, operations, procurement and supply chain services; nearly $1.2 million in transport services; nearly $1 million in Microsoft software licences; and nearly $400,000 in human resources and related services obtained from DLGL Technologies Corporation.
“The Defendants have failed or refused to pay any of the amounts owing to the Plaintiffs,” Rogers claims in an amended statement of claim. (Rogers’s initial statement of claim only included the Microsoft services.)
Videotron paid $2.17 billion in cash and assumed debt for Freedom, making it the fourth national player in the market.
When asked for a comment, Rogers deferred to its lawsuit, while Quebecor did not respond.
