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Canada to assess network resiliency before clearing Rogers-Shaw deal

Canada to assess network resiliency before clearing Rogers-Shaw deal

[html]OTTAWA (Reuters) -Canada will examine the resiliency of teleco* networks across the country before approving Rogers co*munications Inc’s proposed C$20 billion ($15.6 billion) acquisition of...
                              

OTTAWA (Reuters) -Canada will examine the resiliency of teleco* networks across the country before approving Rogers co*munications Inc’s proposed C$20 billion ($15.6 billion) acquisition of Shaw co*munications Inc, Industry Minister Francois Philippe Champagne said on Monday.


The deal is being blocked by Canada’s co*petition bureau but Champagne has the last word on approving the merger. The deal is now being questioned by policy makers after Rogers faced an unprecedented network outage this month that halted industries from banking to airlines to emergency services.


Champagne told a Canadian parliamentary co*mittee probing the network collapse that Canada needs to strengthen resiliency.


Rogers has blamed the outage on a routing configuration change in its core network.


The network shutdown has raised questions among policymakers on how a lack of co*petition in Canada’s teleco* sector exposes consumers to vulnerabilities. In Canada, three teleco* operators control about 95% of the market and consumers pay among the highest bills in the world.


But Rogers Chief Executive Tony Staffieri told lawmakers that a co*bined entity would be able to invest in the resiliency of teleco* networks at a level that neither co*pany can do alone.


One of the lawmakers questioned whether it was an end of the road for the merger, to which Staffieri said the merger was about scale and making “necessary investment.”


Staffieri said that a large portion of a planned C$3 billion investment this year would go toward improving its networks.


Rogers announced a C$10 billion investment into its network over the next three years on Sunday, which includes the cost of separating wireless and internet services to create an “always on” network. This would ensure that customers do not experience an outage with both cellular and internet services again.


Shares of Shaw co*munications were down 0.3% at C$34.6 at closing on Monday at the Toronto Stock Exchange, while Rogers fell 0.2% to C$60.27.


($1 = 1.2845 Canadian dollars)


(Reporting by Ismail Shakil in Ottawa and Divya Rajagopal in TorontoEditing by Mark Potter and Josie Kao)


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