Rogers, Shaw Swap Cable Assets, Strategic Net Alliances

Rogers Communications and Shaw Communications this week agreed to a major swap of cable assets and the creation of strategic Internet alliances.

Shaw (SJR) and Rogers (RG) will merge the operations of its @Home Canada and Excite Canada — a 50/50 partnership between Excite@Home and Rogers Media — into a single national broadband and narrowband portal.

The ownership of the combined entity will be Rogers 51 percent, Shaw 22.5 percent, and Excite@Home 22.5 percent. Cogeco and Moffat Communications will also be invited
to become partners in the combined entity.

The new venture — Excite@Canada — will have an initial funding of $50 million and will be available to over 500,000 current high-speed customers.

As part of a strategy of building a national Internet backbone company, Shaw concluded a transaction earlier this week with 360networks to invest US$100 million in it, acquire a national dark fiber network for $225 million, and commit to purchase approximately $25 million of OC-48 capacity over a 3-4 year period.

Rogers will also have the right to purchase, at cost, US$25 million of Shaw’s US$100 million investment in 360networks.

Rogers will invest $125 million in the new Internet backbone company representing a 49 percent interest in it. Shaw and Rogers will commit all of its Internet backbone traffic to the new company.

Rogers will trade its existing cable operations in British Columbia in
exchange for Shaw’s operations in Southern Ontario and New Brunswick, Shaw
has agreed to sell its current position in Cogeco Cable and Cogeco Inc. to
Rogers, and Rogers will sell its current position in Canadian Satellite
Communications to Shaw.