By Divya Rajagopal
TORONTO (Reuters) - Canada's competition bureau is expected to ask Rogers Communications Inc to sell Shaw Communications Inc's cellular business to overcome antitrust concerns presented by Rogers' C$20 billion ($15.4 billion) acquisition of Shaw, two sources familiar with the matter told Reuters on Thursday.
Canada's competition bureau has blocked Rogers' proposed purchase of Shaw on the grounds that the deal will lessen competition in the telecom sector, leading to increased mobile bills for consumers.
As part of the merger remedy, Rogers-Shaw last week agreed to sell Freedom Mobile, the cellular business owned by Shaw, to Montreal-based Quebecor Inc for C$2.85 billion. The bureau has previously said that the sale of Freedom Mobile is insufficient to bolster competition in the Canadian market.
"The bureau really wants to extract a pound of flesh from this merger," said one of the sources, who declined to be identified due to the sensitivity of the issue. The source added that Quebecor is expected to buy Shaw's wireless business.
It was unclear if the sale of Shaw Mobile would satisfy the competition bureau, or if it would demand more concessions.
A Rogers spokesperson pointed to documents filed with the Competition Tribunal, where antitrust cases are decided, this month where it has argued that Shaw's own cellular operation Shaw Mobile has no "sustainable path to grow."
"The Commissioner has overstated the competitive significance and impact of the Shaw Mobile brand (as distinct from Freedom)," Rogers said in the filing.
Launched in 2020 to offer low-cost cellular services to Shaw internet's customers, Shaw Mobile has some 450,000 subscribers in western Canada and the business was responsible for growing its overall wireless subscriber base, according to the company's latest financial statements.
Representatives of Shaw were unavailable for comment, while the competition bureau and Quebecor declined to comment.
($1 = 1.3003 Canadian dollars)
(Reporting by Divya Rajagopal; Editing by Denny Thomas, Jonathan Oatis and Richard Chang)