The recent news about the merger between Canadian telecom giant Rogers Communications and its Calgary-based rival Shaw Communications created ripples and raised eyebrows. Consumers advocacy groups wasted no time in bringing up the issue of prevention of competition. However, a Morningstar report says the regulators don’t have a strong case to block the $26 billion deal.
Over the years, the Canadian wireless landscape has shrunk, as larger players gobbled up smaller rivals -- Rogers bought Fido, Shaw swallowed Wind, and Bell purchased Manitoba Telecom Services. This resulted in an oligopoly comprising Rogers, BCE and Telus, known as the Big Three.
Against that backdrop, consumer watchdogs have expressed concern over constrained competition leading to some of the most expensive plans in the world and reduced choice for Canadian consumers. The proposed merger, which is subject to multiple regulatory approvals, will create Canada’s second biggest cellular and cable operator, leapfrogging Telus, the current number 2 operator.
For investors, though, greater profitability makes wireless players more attractive investment prospects. These leading Canadian operators control 90% of the domestic wireless market and boast strong fundamentals that positions them well to benefit from secular trends including 5G rollout, subscriber growth, remote working, and industry consolidation.
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About Author
Vikram Barhat Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star. 
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