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CALGARY – In a blockbuster shake-up of Canada’s mobile phone industry, cable and Internet giant Shaw Communications is buying upstart WIND Mobile in a deal valued at about $1.6 billion.

If approved by regulators, the deal could go a long way toward helping the federal government meet its stated desire for a fourth national wireless carrier to challenge the market dominance of Rogers, Bell and Telus.

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“This transaction represents a transformational step in the history of Shaw and we are excited about our future growth prospects in mobile,” Chief Executive Officer Brad Shaw said in a statement released late Wednesday.

“This growth will be accelerated by combining Shaw’s existing customer relationships, trusted brand and wireline and WiFi infrastructure with WIND’s impressive asset base.” Tweet This

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WIND is Canada’s fourth-largest wireless services provider, serving approximately 940,000 subscribers across Ontario, BC and Alberta.

WATCH: Shaw Communications CEO Brad Shaw spoke with Global’s Gord Gillies regarding Shaw’s blockbuster acquisition of WIND Mobile.

The move by Shaw comes as a surprise, since the Calgary-based company had announced in 2013 that it was abandoning plans for a cellular division and would focus instead on cheaper Wi-Fi options for mobile customers.

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Earlier this year, it sold its unused wireless spectrum to rival Rogers for $100 million. To receive regulatory approval for the transaction, Rogers agreed to transfer some of its spectrum to WIND, strengthening the competitive ability of the company which is now being acquired by Shaw.

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WATCH: Wind Mobile CEO Alek Krstajic speaks to Global’s Gord Gillies after reaching a deal with Shaw Communications to purchase the company.

WIND’s current management team, led by CEO Alek Krstajic, will remain with the Company and lead the wireless division.

“We believe the combination of Shaw and WIND creates a wireless leader with immediate benefits for our customers and employees, giving them more choice, capabilities and opportunities to stay connected,” said Krstajic. Tweet This

Shaw Communications is the parent company of Global News.