North America's seventh largest cable TV operator was forged on Monday when Canada's biggest cable company, Rogers Communications, announced a merger with Groupe Videotron, the country's third largest.

The C$6bn ($4.1bn) friendly takeover creates a company that boasts not only 3.7m subscribers, representing nearly half of Canadian households, but also the most sophisticated broadband network in the world.

The union, which is expected to be consummated in April subject to approval by the Canadian Radio-television and Telecommunications Commission, comes in anticipation of changes in the regulations that govern foreign control in the Canadian telecommunication industry.

The low share prices of Canadian cable companies have made them likely takeover targets of late. By consolidating their interests, Rogers and Videotron are protecting themselves against easy predators while simultaneously increasing their value should a deep-pocketed media behemoth come courting.

Rogers' minority investors include Microsoft, AT&T and British Telecom. For its part, Videotron is widely admired for its success in developing an interactive relationship with cable subscribers; more than 60% of its 1.45m subscribers currently have a two-way connection.

The consolidation trend should continue: Calgary-based Shaw Communications, Canada's second largest operator, holds a 9% stake in Cogeco Cable, the fourth largest, and has made no secret of its interest in expanding its stake.

The Rogers-Videotron union has ramifications beyond cable. In a telephone conference call Rogers CEO Ted Rogers said the combined company, with a market capitalisation of $17bn, will now be able to compete with Canada's largest phone company Bell Canada both in terms of residential and wireless telephony.

Videotron's broadcasting asset, TVA, will remain in the control of Videotron shareholders.