Noah Zivitz

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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.

He added that a Globalive-Freedom deal would be “largely neutral” for BCE and Telus.

McReynolds has an outperform recommendation (the equivalent of a buy) on Quebecor, with a price target of $36 per share. His rating on Rogers is sector perform (the equivalent of hold), and a price target of $72. He has an outperform rating on Telus, with a price target of $36; and a $66 price target on BCE, with a sector perform rating.

When reached by email, Globalive’s Lacavera said he would not comment on the report; however, he reiterated Globalive’s interest in acquiring Freedom’s assets and underscored that he wouldn’t have overseen the sale of Wind Mobile to Shaw if not for “regulatory challenges” that the upstart carrier faced. Wind was later rebranded as Freedom by Shaw after the purchase closed in 2016.

Rogers announced its $20-billion acquisition of Shaw on March 15, 2021. The companies said they expect the deal to close by the end of June, pending approval by the Competition Bureau; the Canadian Radio-Television and Telecommunications Commission; and the Minister of Innovation, Science, and Economic Development.

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