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Telus Mobile Head Sees Roger-Shaw Merger Lessening Competition

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(Bloomberg) — The head of Telus Corp.’s mobile phone unit said the sale of Shaw Communications Inc. to Rogers Communications Inc. may curb competition in key markets, including Western Canada.

Speaking in an interview Friday after Canada’s No. 3 telecom company reported its largest ever second-quarter increase in customers, Telus’s Jim Senko said the proposed sale of Shaw’s mobile assets to Quebecor Inc., a smaller regional player based out of Montreal, will probably mean a weaker competitive landscape.

Quebecor’s Videotron mobile unit “doesn’t truly understand the Western markets and would have to wholesale there any kind of wireline services at very thin margins, and will not be able to compete as well as Shaw who owns those assets,” Senko said by telephone .

Rogers has agreed to buy Shaw in a C$20 billion ($15.4 billion) deal that still requires regulatory approval. Including debt, the transaction is worth about C$26 billion.

The merger is also facing a legal challenge from the country’s competition watchdog, which has cited concerns about higher prices, poorer service quality and fewer choices.

Read more: Rogers Takeover of Shaw Meets Skepticism; Deal Spread Widens

Quebecor agreed to buy Shaw’s Freedom Mobile wireless service for C$2.85 billion — giving it an opening to expand outside of its core Quebec market. With the sale, Shaw and Rogers are hoping to temper worries related to competition issues.

“I think Shaw was a very strong competitor,” Senko said. “They had the bundling in the West and they executed well in the Greater Toronto Area with Freedom Mobile.”

Quebecor Chief Executive Pierre Karl Peladeau said on an analyst call Thursday that he finds the antitrust agency’s concerns “incomprehensible” given the need for more competition in the sector. Citing federal data, Peladeau claims Quebec is one of the most competitive regions in Canada, with wireless service costs less than in other provinces.

“We must act and we must act now,” he said.

‘Unique Bundles’

Vancouver-based Telus reported operating revenues of C$4.4 billion for the three-month period ended June 30, up 7.1% on a year-over-year basis. The C$0.32 adjusted earnings per share, a 23% boost from 2021, beat Bloomberg’s consensus estimate by C$0.03.

Telus reported that it added 247,000 customers in the second quarter, including 93,000 in net mobile phone additions.

“We have a very diversified product portfolio that we can put together in very unique bundles,” Senko said. The mobile phone, internet and television provider also offers home security solutions. All services can be bundled in a single purchase.

Since the onset of the pandemic, the company has added 800,000 mobile phone net additions, and over 600,000 in wireline.

Telus’ shares were little changed in Toronto trading Friday, closing at C$28.92. The shares have declined 2.9% this year, outperforming rivals Rogers and BCE Inc.

(Updates with relative share price performance in last paragraph. An earlier version corrected the spelling of a company name in the headline.)

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