After two years of negotiations, the Canadian government approved Rogers Communications' $15 billion buyout of Shaw Communications Friday in a transaction that will create the country's second-largest telecom company behind BCE.

Importantly, the transaction also involves the sale of Shaw's wireless business, Freedom Mobile, to Quebecor's Videotron. Freedom Mobile counts around 1.7 million customers in Ontario, Alberta and British Columbia. The addition of Freedom Mobile will roughly double the size of Videotron's mobile customer base, allowing it to expand beyond its home market of Quebec and becoming Canada's fourth-largest mobile provider.

However, under government conditions, Videotron now must invest into Freedom Mobile's network over the next two years and offer wireless plans that are at least 20% cheaper than competitors' offerings.

Conditions on Rogers, meantime, require the company to create 3,000 jobs in Western Canada, invest into its broadband and wireless networks, and offer new, lower-cost service plans.

Figure 1: (Source: Paul McKinnon/Alamy Stock Photo)

"Should the parties fail to live up to any of their commitments, our government will use every means in our power to enforce the terms on behalf of Canadians," said François-Philippe Champagne, Canada's minister of innovation, science and industry, at a news conference announcing the deal, according to CBC.

The initial 2021 deal between Shaw and Rogers was delayed several times amid opposition by Canadian officials. The companies' agreement last year to divest Freedom Mobile to Videotron helped address regulatory concerns over consolidation in the country's mobile market.

"We are very pleased to move forward with this transformative merger and proudly deliver on our commitments to enhance and expand network coverage, connect underserved communities, and improve access for low-income Canadians," said Tony Staffieri, CEO of Rogers, in a release. "Building on a shared legacy with Shaw, we will invest substantially to bring more choice, more value, and more connectivity to Canadians across the country."

The transaction is the latest mega-merger in the telecom industry in North America. It comes roughly three years after T-Mobile completed its purchase of Sprint in the US, setting up Dish Network to be the fourth wireless provider in that country.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano