Evidence of meeting #26 for Industry, Science and Technology in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was prices.
A video is available from Parliament.
12:05 p.m.
Liberal
The Chair Liberal Sherry Romanado
Unfortunately, you do. Hopefully, you can pick it up on the next round.
Our next round of questions goes to MP Masse.
You have the floor for two and a half minutes.
12:05 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you, Madam Chair.
I'll go back to Rogers. With regard to your hostile attempt to take over Cogeco, has the departure from that led to this? It seems that you're in an acquisition stage as a company versus that of one growing through your own operations.
Is that an accurate portrayal? Is Cogeco still on the table, with Shaw now and then perhaps a revisit to Cogeco?
12:05 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
Thank you for the question, Mr. Masse.
I want to go back to the strategy discussions at the Rogers' board table over the last few decades, including when Ted Rogers was at that table, up until 12 years ago when he passed. There's been a conversation around deepening our presence in [Technical difficulty—Editor]. That's been a question on the table from the very beginning and the reason for the stake in Cogeco, the reason for always looking at opportunities to go further and go farther. That's why we bought Fundy Cable in New Brunswick and we bought Cable Atlantic in Newfoundland. Having [Technical difficulty—Editor] helps us get the scale to make the investments. This is a scale business with massive fixed costs, so adding Cogeco or adding Shaw brings those efficiencies with fibre or spectrum and allows us to do things when otherwise that wouldn't have been the case.
We needed to answer the Cogeco question. We held the shares for 20 years. Quebec remains a very important market. The timing of this is not something that was anticipated. The timing happens when the timing happens. The Shaw opportunity came to light in the last little while, and we at Rogers said to ourselves that this is a great opportunity to drive forward on the strategy and deliver the benefits for Canadians and the abilities that such a scale will allow for the future.
12:10 p.m.
NDP
Brian Masse NDP Windsor West, ON
I'll wrap up there, Madam Chair, because I was over on the last segment.
Thank you to the witnesses.
12:10 p.m.
Liberal
The Chair Liberal Sherry Romanado
Thank you very much.
We'll now go to MP Généreux.
You have five minutes.
12:10 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you, Madam Chair.
I thank the witnesses for being here.
Mr. Natale and Mr. Shaw, earlier you said that communications in Canada was reaching a turning point not only in Canada, but around the world. You are merging your two companies to make them even more productive and more attractive, and to allow them to grow more quickly.
Based on your analysis, what are the key aspects of this turning point that communications is reaching around the around? In other words, we have launched a study into the affordability and availability of Internet services and some witnesses tell us that there will be roughly 100,000 satellites in the sky within 10 to 15 years. Did this factor speed up your decision to merge?
12:10 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
Why don't I start? Thank you for the question.
I would say there is an inflection point right now in Canada and, frankly, across the globe, as 5G will be the biggest generational investment in wireless since the beginning of wireless, and 5G in Canada will [Technical difficulty—Editor]. It will be a 70% greater investment than there was for 4G, and it will lead to greater opportunity. A recent Accenture study said that it will create $40 billion of additional GDP, 250,000 sustained jobs and 154,000 network-building construction jobs. That's a big move for any country, and that's a big opportunity for us as a nation.
We led the world in 4G. We were only ever second to South Korea. We fought tooth and nail between first and second. Bear in mind that South Korea is the size of New Brunswick, with a population of 51 million people. So we did well in 4G, and our goal is to do very well in 5G, because it means everything to the future of what we can do with that technology—what it means for agrotech, what it means for transportation, what it means for resources, oil and gas, and what it means for health care. The list goes on. We need a modern policy framework and viewpoint that really focus on that opportunity, because in 5G we're not competing with one another; we're competing with other nations and what it means for the future of Canada. Imagine where we would be without 4G in Canada; 5G is a massive opportunity.
As it relates to satellite technology, I would say to you that we'll continue to develop and nurture many technologies: fixed wireless, fibre and satellite. It's going to take an assortment of technologies to solve the problem [Technical difficulty—Editor].
12:10 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
You want to add something, Mr. Shaw?
12:10 p.m.
President, Shaw Communications Inc.
I'll take that on Brad's behalf.
Joe's response was robust. We'll leave it at that. We have nothing to add.
12:10 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Okay, thank you.
Mr. Natale, did the pandemic influence or at least speed up your decision to merge the two companies?
12:10 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
Well, I'll tell you.... The pandemic has taught us a lot. It has taught us a lot about our business and a lot about the importance of our business. It has taught us three things, I think, overall. Number one is that network quality really matters. We saw consumption go up overnight. We saw three years of data consumption in about three weeks in a moment. Canada performed very well.
Number two is that it taught us that our networks are truly some of the best in the world. In the middle of the pandemic, we maintained our rankings: number one and number two in the world for our wireless download speeds; number one and number two in the world for our home Internet speeds. That came directly from PwC.
The third thing it underscored for me personally is.... I got a lot of letters, emails and notes from rural Canadians, from rural mayors, from rural members of government. They were heartbreaking to read because of the fact that they were left behind in this incredible moment, and we have no real tools at our disposal to close that gap. I said to myself that there's one thing I really want to focus on in my career, in the years I have left in my career—I've devoted my whole career to this industry—and that is that we have to do whatever it takes. We have an obligation to do whatever it takes, in partnership with government, to close the digital divide, the connectivity divide in rural Canada and the affordability divide for those Canadians who live in low-income areas and live low-income lives and don't have what it takes to access the Internet and the capability of the Internet.
Did COVID directly lead to this? I wouldn't say that it directly led to this, but COVID created a context around the importance of scale, the importance of rural and the importance of affordability like no other.
12:15 p.m.
Conservative
12:15 p.m.
Liberal
The Chair Liberal Sherry Romanado
Thank you very much.
Our next round of questions goes to MP Ehsassi.
You have the floor for five minutes.
12:15 p.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Thank you, Madam Chair.
I'll ask Mr. Natale a few questions, if I could.
You were just reviewing for us your activities over the course of the last year. Obviously, it's been quite challenging for all Canadian businesses. What would you say about the profit margins that were announced for Rogers at the end of 2020?
12:15 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
If you look at the profit of Rogers, the way that we measure profit, the way that our shareholders measure profit, is based on the return on capital. In a capital-intensive business, it really comes down to—
12:15 p.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Could you just give us some figures? By the end of 2020, I understand that profit margins for Rogers were 12.2%. Is that correct?
12:15 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
Our return on capital last year was 6%. On average over the last five years, it was 8%.
12:15 p.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Mr. Natale, obviously a lot of Canadians are concerned about the possible acquisition of Shaw. Would you agree with me that less competition should very much concern Canadians?
12:15 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
I think the most important factor around competition is having strong players that have the ability to invest in the future with new technologies and new ideas that will become the competitive landscape of the future, and therefore have the ability to invest—
12:15 p.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
But in your opening remarks, you said the Canadian sector is intensely competitive. Did you not say that?
12:15 p.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
So, undermining competition and having fewer players, you would agree with me, can very much be a cause for concern.
12:15 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
If you look at the competition in Canada right now.... I'll give you an example. Last year, 4.2 million Canadians changed their wireless provider in the middle of—
12:15 p.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
But you would agree that your company is pretty profitable. Is that correct?
12:15 p.m.
President and Chief Executive Officer, Rogers Communications Inc.
I would agree that our company is very competitive, and I would agree that our company—