New York-based asset manager Blackstone is the mystery investor bidding $7 billion for a minority stake in Rogers’ wireless infrastructure business.
The Globe and Mail, citing two anonymous sources familiar with the transaction, revealed the deal. Rogers announced the $7 billion deal alongside its third-quarter earnings on October 24th but didn’t say which company it had made the deal with. The agreement will see Rogers sell a portion of its wireless backhaul network, which connects cellphone towers to the company’s core network.
According to the Globe, Blackstone offered the best terms with Rogers and is now negotiating the final details. However, sources told the publication that Apollo Global Management is still trying to land the deal and will sweeten its offer to Rogers.
Rogers offered Blackstone, Apollo, and other asset managers the opportunity to invest in its backhaul business earlier this fall. The backhaul business generates fees from carrying data and the agreement would make a stand-alone business out of internal operates that reliably generate cash. Rogers will continue to control its backhaul operations after the Blackstone investment and will have the option to buy back the division in the future.
The deal is a major first for Canada, where major telecom companies have historically owned their infrastructure. In a separate Globe and Mail opinion piece, the publication predicted that Bell and Telus would likely follow suit and make similar deals to sell off towers, fibre networks and data centres to pay down debt.
However, while the deal might be new for Canadian telecoms, it’s a tried-and-true approach in other regions. The Globe notes that phone companies in the U.S., Asia, and Europe switched to strategies like selling stakes in hardware and leasing wireless backhaul.
Questions remain about the deal and Rogers will need to address concerns as it blazes the path. But if the deal goes through, it could have cascading impacts throughout the Canadian telecom industry.
Source: The Globe and Mail
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