Shaw Communications (TSX:SJR.B) is making its long-anticipated foray into the wireless business by picking up Wind Mobile for $1.6 billion.
The Calgary-based telecommunications company says it will acquire the country’s fourth-largest mobile operator by subscribers pending a number of regulatory approvals, including the Competition Bureau and the Ministry of Innovation, Science & Economic Development.
Shaw expects the transaction to close in the third quarter of 2016.
The purchase puts Shaw in line with competitors BCE (TSX:BCE), Rogers and Telus in offering the entire slate of popular bundled services — wireless, television, home phone, and Internet.
“We believe that our customers want us to be their network and experience company, and in order to do that we needed to make a wireless play,” said Shaw chief operating officer Jay Mehr.
Shaw scrapped its previous plans to introduce a mobile network in 2011, and two years later signed a deal to sell the spectrum — which would’ve been the foundation of that network — to Rogers (TSX:RCI.B).
“The aspirations were always there in 2011 — the economics certainly weren’t,” Mehr said.
Wind Mobile, which is based in Toronto, has 940,000 subscribers across Ontario, British Columbia and Alberta.
Since 2011, the federal government and the CRTC have made several changes to the rules for wireless competition which lowered roaming fees for carriers and customers.
Mehr said Shaw re-examined its wireless strategy at the beginning of this year and found that it made sense to buy an established player. He said Shaw has no plans to shift from Wind Mobile’s low-cost packages or hike prices.
“This is a winning strategy that’s been created, and our plan is to continue on that winning strategy,” he said.
The company plans to compete hard against the larger carriers, Mehr said, and Shaw’s resources will give Wind Mobile the ability to build out its network.
Wind Mobile CEO Alek Krstajic and his executive team plan to stay with the company.
Wind Mobile was formed exactly six years ago on Wednesday as part of group of new entrants in Canada’s wireless industry, a move encouraged by the federal Conservative government to stoke competition.
The company ran into financial problems and has had difficulty raising money for its capital investments, but a change in its ownership structure last year cleared the way for it to raise funds.
Last week, Wind Mobile said it had secured financing of $425 million from a syndicate of major Canadian banks to upgrade from 3G to a higher-speed LTE network, which would give it more capacity for the growing popularity of streaming video and music on mobile phones.
Mehr said Shaw still plans to roll out LTE across Wind Mobile’s network by the end of 2017.