Globalive buying Freedom could spare Quebecor from rich bid: Analyst
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The possibility of an encore for Anthony Lacavera in Canada’s wireless industry could be beneficial not only for Rogers, but also another wireless service provider with national ambitions.
The possibility of an encore for Anthony Lacavera in Canada’s wireless industry could be beneficial not only for Rogers Communications Inc. as it attempts to close its takeover of Shaw Communications Inc., but also another wireless service provider with national ambitions.
After The Globe and Mail reported late Tuesday that Globalive, which Lacavera founded and chairs, has lined up financial backers on a $3.75-billion bid for Freedom Mobile, RBC Capital Markets Analyst Drew McReynolds said that deal could spare Quebecor Inc. from paying too much for the assets.
If Globalive ends up buying Freedom as reported, it would be “a near-term positive (for Quebecor) given the current discounted valuation, lingering concerns around Quebecor ‘over-paying’ as a Rogers remedy partner, and what would be optionality around its 3500 MHz set-aside spectrum outside Quebec and/or future wireless partnership/acquisition potential outside Quebec,” McReynolds wrote in a report to clients.
Quebecor has repeatedly stated its desire to expand wireless service beyond its home province, and it was among the top bidders in last year’s auction of 3,500 megahertz spectrum, which is crucial for 5G technology.
The speculation that Quebecor could end up bidding for Freedom has likely contributed to its underperformance in the market. Through the close of trading Tuesday, Quebecor’s shares were up 2.5 per cent, compared to Telus Corp.’s nine-per-cent gain, and BCE Inc.’s gain of almost three per cent.
McReynolds said if Globalive’s reported offer ends up being confirmed and completed, it would be “an incremental positive” for Rogers shares since it would address some of the regulatory uncertainty hanging over the acquisition of Shaw, and the offer would surpass the range of $1.5 billion to $2.5 billion that RBC estimated Freedom would fetch.
