Rogers Communications (B) (RCI.B.TO)

Earnings were weaker and perhaps the guidance was what got some of the analysts upset creating the reaction in the market. In terms of EBITDA growth, they are only guiding 0 to 1%. Not very strong revenue growth. A new CEO is coming in and not setting the bar very high. Competition is very tough. Expects they will still generate about $5 billion of EBITDA. 4% dividend yield which they are committed to growing. Trading at about 6.5X enterprise value to EBITDA so he likes this. Has been adding to his holdings on weakness.

Prefers BCE, which is slightly more stable. The new management in Rogers will be a good thing long term.

Telecoms are still a good place to be. They are all benefiting from cheaper spectrum auction. Still sees margin growth on this, even though there is concern about subscriber declines because of Netflix. Wireless has impacted them a little bit last quarter due to lower roaming prices but feels that lower prices will ultimately spur demand. You can buy this on a little bit of a pull back.

News about buying new movies and other content. Content is key. It is a great thing that they are acquiring it. Right now you are buying below the 21 day average. If you use 3 moving averages on a chart, (252, 63, 21 days), if the shorter two are trending up, and if that is above the long term trend (the 252), it is a buying opportunity.

Conservative government’s war on the telecom sector continues apace. Telus (T-T), followed by this company has the most to lose by the Fed imposing change on the wireless industry. This has created a bit of a cloud over the stock since last summer. This is a great company with great properties. Has content to feed across its wires and content is the thing to have right now. (See Top Picks.)

Telcos are good businesses that are very stable with good cash flow. There has been the build out of the voice but there is still the build out of the data. There are some definite headwinds. Penetration rates in terms of wireless are high and can still go higher. Also, a lot of headline risks. They are in a bit of a bun fight with the government around new entrants and competition. Still feels there is slow growth there.

New NHL contract is not a big deal in itself, but it is positive. More importantly, they are the biggest wireless service provider in the country. As long as the wireless business is doing well, they should continue to perform. Given the balance sheet and given where they are, it should still do reasonably well but don’t expect a lot of capital appreciation from here.

What is your opinion on the big NHL deal? They paid over $5 billion for all the rights to all the games. There is going to be a new CEO and there will be some issues there. Doesn’t feel that the announcement means that you should buy it or not. He would prefer Telus (T-T).

Signed a massive deal with the NHL for $5.2 billion over 12 years. Feels this was a good decision. Sports are where you want to be on the cable side of things. The control over the programming is very, very important.

Owns this for the dividend increasing. Believes they are up 10% this year and he expects a 5%-10% increase next year.

Bell Canada (BCE-T) and Rogers (RCI.B-T). What are the benefits of getting into each of these? Prices have not yet been fully reflected yet from their highs on the false alarm of a new entrant from the US. This may be an opportunity. In terms of valuation, these are both pretty much neck and neck at 7X EBITDA. Both have opportunities in being able to shift their business from the wireline space to wireless. As a source of income Bell would probably be best, but growth opportunities would probably lie with this one.

Bell Canada (BCE-T) versus Rogers (RCI.B-T)? These are both benefiting from the recent news that international players are bidding on Spectrum. Spectrum licenses will cost both of them lower now. It looks like a 4^th carrier is not viable. Between the 2, he would be putting his money on Rogers, which has been showing good cost control. New CEO is adept at operating immature wireless network, which will improve the customer experience.

If you own, he would not be in a rush to Sell. We have seen the telecoms pop, particularly since the announcement by Verizon (VZ-N). For people who are looking for dividends and dividend growth, this is not a bad place to look. This company has done a lot to improve their balance sheet over the last number of years. Doesn’t expect there will be a lot of capital gain and, if anything, there may be some resistance by consumers as the new rate plans come out.

(Market Call Minute.) Thinks this has suffered a great deal because of Verizon (VZ-N), so trades at a discount to the rest of them.

Bell Canada (BCE-T), Telus (T-T) or Rogers (RCI.B-T)? Verizon (VZ-N) possible incursion into Canada is causing a negative effect on all the telcos. The ones most exposed to this would be Telus and Rogers because of the wireless exposure. These will probably be dead money for a while. If you own, you could even think of selling half of your position. Dividend yields are going to be safe.