Rogers, Videotron reach network-sharing, spectrum deal

Thu May 30, 2013 8:51am EDT
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TORONTO May 30 (Reuters) - Rogers Communications Inc and Quebecor Inc's Videotron wireless arm said they would team up to build and operate a shared high-speed wireless network in and around the province of Quebec.

The 20-year agreement, announced late Wednesday, will bring a high-speed wireless technology known as long-term evolution, or LTE, to more customers in Québec and the Ottawa region.

Under this agreement, Videotron and Rogers will share the cost of deploying and operating the LTE network, allowing the companies to reduce capital costs.

Besides the network-sharing deal, the companies also came to an agreement on Videotron's unused Advanced Wireless Service spectrum for mobile and data services in the Greater Toronto Area.

As of Jan. 1, Videotron will have the option to sell its Toronto spectrum license to Rogers, subject to regulatory approvals, for about $180 million. Rogers said it intended to use the spectrum to keep pace with customer needs in the densely populated Toronto area.

RBC Dominion Securities analyst Drew McReynolds said the deals were a "material win" for Quebecor and "directionally positive" for Rogers.

This side deal, however, may face regulatory obstacles. Last month, Canada's industry minister signaled his unhappiness with Shaw Communications Inc's plans to sell wireless spectrum to Rogers.

Rogers is already one of three dominant players in the market, along with Telus Corp and BCE Inc's Bell Canada .

Some consumer and advocacy groups have already appealed to the government to block that deal. All such spectrum license transfers must be approved by the federal industry ministry, giving Ottawa an effective veto.