Rogers Communications Inc. RCI-B-T has struck a definitive agreement to sell a minority stake in its wireless infrastructure for $7-billion to a consortium led by New York-based Blackstone Inc. that includes four of Canada’s largest pension plans.
Last October, Rogers announced it planned to raise money and repay debt by selling a portion of its wireless backhaul business to an institutional investor but did not disclose the investor’s identity.
On Friday, the Toronto-based company spelled out the details of the transaction, an innovative financing for a Canadian company that is expected to pave the way for further infrastructure sales at debt-heavy domestic telecom platforms.
Rogers is selling a 49.9-per-cent equity interest in its wireless unit to the Blackstone consortium, which also includes the Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec, the Public Sector Pension Investment Board and British Columbia Investment Management Corp.
“This strategic partnership demonstrates the confidence investors have in Rogers and in our world-class assets,” said Tony Staffieri, Rogers’ chief executive officer, in a news release.
The Blackstone consortium will only hold a 20-per-cent voting interest in the new business, while Rogers will own 50.1-per-cent of the equity and an 80-per-cent voting interest.
“This transaction will strengthen the company’s investment grade balance sheet by reducing our borrowings and unlocking the unrecognized value of critical assets,” said Glenn Brandt, Rogers’ chief financial officer, in a news release. The transaction is expected to close in the second quarter of 2025.
Analysts gave the infrastructure sale positive reviews. On Friday morning, RBC Capital Markets analyst Drew McReynolds said in a report: “We are encouraged to see a deal structure that on the surface seems to tick all of the boxes with respect to size, cost and impact.”
Analysts estimate the consortium’s investment will reduce Rogers’ debt-to-earnings before interest, taxes, depreciation and amortization (EBITDA) ratio by approximately 0.7 times. At the end of last year, Rogers’ debt was 4.5 times its EBITDA.
In 2023, Rogers borrowed to acquire rival Shaw Communications Inc. for $20-billion. The company plans to spend $4.7-billion this year to acquire BCE Inc.’s stake in Maple Leaf Sports & Entertainment.
Blackstone, one of the world’s largest private equity funds, is a significant investor in Canadian infrastructure and real estate and plans to continue committing capital to the country as a trade war plays out.
“Canada is a hugely important market for investment at Blackstone, and that has not changed,” said president Jon Gray in a recent interview with The Globe and Mail. “Obviously you have to be mindful of export-oriented businesses, but we are actively looking at a range of opportunities in the country today.”
Blackstone co-founder and chief executive officer Stephen Schwarzman openly backed U.S. President Donald Trump’s 2020 election campaign and is a significant donor to the Republican Party and its leader.
Ottawa hiked scrutiny of cross-border transactions last month in the wake of Mr. Trump’s decision to launch a trade war and campaign for an economic union that would make Canada the 51st state.
The structure of the Rogers transaction, with significant Canadian content, is meant in part to deal with regulatory concerns regarding control of telecom infrastructure.
Telus Corp. is using a similar structure to attempt to sell a 49-per-cent stake in its cellphone tower business, according to a pitch book on the potential transaction distributed by TD Securities, Telus’s financial adviser.
“This transaction demonstrates CPP Investments’ ability to invest at scale in large and long-term real assets,” said Geoffrey Souter, the managing director and head of real assets credit at Toronto-based CPP Investments, in an e-mail. “We look forward to supporting Rogers’ critical backhaul network in Canada, which is well positioned amid growth in mobile data usage.”
The transaction announced Friday gives Rogers the right to repurchase the consortium’s interest at any time between the eighth and 12th anniversaries of the deal’s closing.
Once launched, the wireless business is expected to pay the Blackstone consortium approximately $400-million annually for the next five years.
Rogers said the consortium’s investment is expected to be treated as equity by credit-rating agencies Moody’s Investors Services Inc., S&P Global Inc. and DBRS Ltd.
The telecom previously pledged its wireless infrastructure as security to lenders. On Friday, the company said that as part of the sale to the consortium, it would ask holders of its senior notes for amendments to the terms of the debt.
With files from Irene Galea