07:22 AM EDT, 10/28/2022 (MT Newswires) -- National Bank noted overnight Thursday that nothing ultimately came from a second "seemingly one-sided" attempt at mediation, with Rogers, Shaw and Quebecor noting that they "are disappointed with this outcome and believe that litigation is both unnecessary and harmful to competition". The companies also emphasized that "the [Competition] Bureau's unwillingness to meaningfully engage unduly delays lower wireless prices for Canadian consumers".
It remains intriguing, National said, that a sale of Freedom to Quebecor appears to be a "reasonable" remedial solution for ISED and effectively the Canadian government, with recently stipulated conditions accepted by Quebecor. But, National noted, the Competition Bureau, despite apparently added concessions by Rogers, remains steadfast in its opposition and desire to extend the process with litigation.
National said: "We've seen articles in the press this week talking about harmful mergers. Consumers in Ontario and Western Canada, however, will retain the same number of competitive options in wireline and wireless after the transactions. Rogers will replace Shaw out West with respect to cable operations which nobody has brought up as an issue, while Quebecor will replace Freedom as a fourth wireless provider with a commitment to compete aggressively at prices equal to or better than Freedom along with disruptive bundle offers.
"Shaw wants out and Quebecor wants in. The Competition Bureau has indicated that it doesn't care about Shaw's motivation to sell, but presumably governments as well as consumers and businesses out West want to see full engagement and investment by telecom operators in their provinces."
National noted the Tribunal hearing will begin Nov. 7 and the process could run through much of December unless somehow truncated due to a sudden settlement which shouldn't necessarily be anticipated. National expects the Tribunal to render its decision 30 days later within the latter part of January, with any approval likely followed soon after by ISED approval which could allow for a closing before the end of February.
In the meantime, National added, investors should expect ongoing volatility in the shares of Rogers and Shaw as well as Quebecor. National's Rogers target is based on the averages of its PF2022E/PF2023E DCF & PF2023E/2024E NAV, with implied EV/ EBITDA of 8.6x PF2022E, 8.3x PF2023E & 7.8x 2024E. Its Shaw target is based on the offer price by Rogers. Its Quebecor target is based on 2023E NAV, with implied EV/EBITDA of 7.1x 2022E and 6.8x 2023E.