Rogers-Shaw antitrust suit over mobile unit baffles analysts

The antitrust case against Rogers takeover of a rival is thousands of pages long but comes down to one core idea: the company it’s buying is too good. Analysts don’t see it that way.

Freedom has been “a strong, independent competitor in Canada’s wireless market -- one that has driven down prices, made data more accessible, and offered innovative services,” Competition Commissioner Matthew Boswell said.  Rogers has agreed to sell the unit and has already lined up a buyer, but Boswell said in court documents that wasn’t an adequate solution. Separated from Shaw, Freedom’s business wouldn’t be as strong, and consumers “are likely to pay higher prices, have less choice and receive lower-quality service,” he wrote.

But while Freedom may be a tough competitor, analysts question how healthy it really is. Shaw is struggling to generate much cash flow from it. 

Shaw earned $393 million from wireless on an adjusted basis before interest, taxes, depreciation and amortization in the fiscal year ended Aug. 28. It spent $280 million in capital and would face larger costs in the years ahead to make network improvements for 5G services.