Canada’s Rogers extends Shaw deal deadline, flags hit by outage

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July 27 (Reuters) – Rogers Communications Inc (RCIb.TO), has extended the deadline to close its C$20 billion ($15.6 billion) takeover of rival Shaw Communications (SJRb.TO) to December and said it would take a hit due to an outage that affected millions of customers earlier this month.

The company will consider bank financing or raise funds in the capital markets to fund the deal if the closing extends beyond December 31, as it has a mandatory redemption clause on its senior notes. worth C$12.01 billion plus accrued interest if the transaction does not close by the end of December.

William Densmore, senior director, corporates at Fitch Ratings, said each 1% increase in the average cost of newly issued new debt due to refinancing would add about C$130 million in interest costs.

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The Shaw purchase has been in the crosshairs of Canada’s antitrust agency, which said last week it needed more time to review the concession offered to clear up competition concerns over the deal. Read more

Rogers said Wednesday it had the option of further delaying the deal until late January past the Dec. 31 deadline.

The Canadian telecoms giant has been under increased pressure since the July 8 blackout that paralyzed the country’s banking and emergency services for nearly 19 hours.

The company expects to incur costs of C$150 million in the third quarter as it credits customers with the equivalent of five days of service, which is below estimates of C$175 million from JP Morgan and TD Securities.

For the three months ended June 30, the company posted earnings and revenue that beat market expectations, driven by an increase in wireless subscribers and strong demand for its Internet services.

Rogers added 122,000 paid monthly wireless subscribers in the second quarter, up from 66,000 net additions in the previous three months, as its efforts to expand 5G coverage helped attract more customers.

Its cable unit – which includes internet, telephony and cloud-based services – saw a 3% increase in revenue.

Total revenue reached C$3.87 billion, versus C$3.8 billion expected by analysts, according to Refinitiv IBES data. Adjusted net earnings were 86 cents Canadian per share, better than estimates of 85 cents Canadian.

Shares of Rogers rose 1% in the afternoon, in line with gains in the benchmark Toronto equity index.

($1 = 1.2852 Canadian dollars)

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Reporting by Akash Sriram in Bangalore; Editing by Aditya Soni and Marguerita Choy

Our standards: The Thomson Reuters Trust Principles.

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