“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.”
Data usage is exploding and additional wireless spectrum is needed to meet this growing demand by consumers and businesses for mobile Internet services. The acquisition of Shaw’s unused spectrum will ensure Rogers maintains its network leadership position, particularly in Western Canada where Rogers has a significant share of the wireless market. 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 this agreement Rogers has acquired an option to purchase this spectrum and the option may be exercised only following receipt of Industry Canada and Competition Bureau 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.
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. Final consideration for the spectrum will be payable if Rogers exercises its Option and the spectrum licenses are acquired, and will take into account the terms of the services agreement between Rogers and Shaw. The Option will be exercisable from the date on which regulatory approvals permit such exercise and the transfer of the spectrum licenses until expiry in March 2015, subject to extension in certain circumstances. The transactions are not conditional on the closing of any other transactions and remain subject to customary conditions, including applicable regulatory approvals as referred to above.