It was announced on Monday that Shaw(SJR.B) and Rogers(RCI.B) have planned to merge to the tune of $40.50(for Shaw) in an all stock deal worth $26 Billion. This is a pretty big deal considering the fact that this will only leave 2 other real players in the Canadian Telecom market who is Bell(BCE) and Telus(T).This is actually great news for investors of both companies because other then freedom mobile they don’t directly compete with each other. This will give investors in each company an “in” for all markets that Shaw and Rogers are into. How could you go wrong?
Now we have had a week to sit on this big news and from a consumer stand point I would not be happy with this. Even as a customer from either company. Why not? Less competition in Canada as far as these businesses are concerned is a bad thing. As if the price gouging isn’t bad enough in this country but only having 3 major players in the Telecom/TV/Internet sector doesn’t give you much for options. We already have the highest cellphone plans LITERALLY in the world. Does this mean that TV and Internet is going to go up as well? Its my speculation but it very well could if this merger goes through.
I am now thinking of it from an investor point of view. Its great really. Less competition means that people only have 3 options and with Shaw possibly getting rid of freedom mobile who is a discount cell provider that just means more money for the big guy. This doesn’t just go for Shaw/Rogers it also goes for Telus and Bell who would really only be competing with 1 company now instead of 2 along with each other. The only down side now is whether or not this merger will be allowed to happen. Both Shaw and Rogers have had a nice boost in share price since last week which give investors a fair amount in optimism but that could be short lived if the deal doesn’t go through.
Right now its pretty much just a waiting game to see what will actually happen. Investors want it to happen for the obvious reasons I mentioned. Consumers have already started petitions and protesting the merger for their obvious reasons. What I really want to know is, who’s side are you on? I feel either way we will all be affected if it goes through. If it doesn’t? Then I guess its just business as usual and maybe even a small boost for Telus and Bell. Again, we just have to wait and see what the decision from the Competition Bureau and the CRTC is.
That is all for today and remember everyone, invest in yourself first.
*Disclaimer-I currently hold positions in Bell and Telus but not with Rogers or Shaw.
Outsider Trading 