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

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.

(A Top Pick May 24/12. Up 23.21%.) He is still long-term positive on telcos. If Verizon (VZ-N) comes into Canada, $7 billion of market cap will come off the 3 major incumbents and shareholders are already suffering. Also, dividend growth and share buybacks will be slower than expected.

There is more perception than reality of the threat of Verizon, and meanwhile telecoms are off 15%, which is an overreaction. There are a lot of pieces involved here. Would be surprised if they got outside of the major areas. Rogers is not his favourite. He likes BCE-T.

(3 Top Picks have a theme of needing some shareholder activism because there is so much value in some of the stocks they are going to be recognized and will be forced into some changes.) Loves this company because the market is not valuing it properly on the sum of the parts basis. It is ripe to be split into 3 parts. Wireless, Internet and cable. Cable companies in the US trade at 7.5X to 8X EBITDA. This one is 6 to 6.5 times. In the meantime you’ve got a media division that is small but is growing and this could be spun out as a separately traded company as well. If Verizon (VZN) does come in, they have a lot of options. They can sell or buy their Cogeco (CGO-T). They could also buy Shaw (SJR.B-T) or Corus (CJR.B-T). Yield of 4.22%.

Government of Canada is hell-bent on getting a 4^th provider and expect they will bend over backwards to make sure it happens this time. Verizon (VZ-N) has real advantages, buying power, connections with handset makers and they are going to have the governments help.

(Market Call Minute.) Has been paring back his position. He would be picking away at this at around $40. Verizon (VZ-N) coming into Canada is obviously a big threat and if that happens, he doesn’t think you’ll see much room for a valuation breakout.

3% bond due June 6/17. (All 3 Top Picks are based on a strategy that will earn you something without endangering your principal. Yield curve is very steep so when buying a 4 year bond, in 3 years you are one year closer to maturity and obviously less price risk and the yield has fallen and you have a capital gain. Corporate spreads from governments are fan shaped so the longer you go the wider the spread. As you come down a curve, this will trade at a tighter spread as well as a lower yield so you get a double effect of the yield curve and the credit spread.) This company is in a very decent shape as a bond credit.

With Verizon (VZ-N) talking about coming into Canada, which telco would be the safest bet, Bell Canada (BCE-T) Telus (T-T) or Rogers (RCI.B-T)? Interestingly enough, Sprint in the US just announced that they are offering “guaranteed for life” unlimited data so there is a bit of competition in the US. BCE is probably the safest with this one having the most exposure. It is difficult to say what is going to happen with Verizon.

Sees opportunity after the drop from the Verizon rumour. They have not sighed anything. The whole structure of telecom in Canada is now up for question. The game is now open. We have discounted the end of the wireless business and that is a long, long time from now. They are now buying back shares. 4.1% yield. He also holds BCE. Wireless is still a growth business.

Stock has fallen on fears that Verizon (VZ-N) will enter into Canada’s wireless business. Thinks the incumbents have a very strong market share and would be very difficult for Verizon to take away a lot of market share. He would look to buy at these levels. Numbers were very strong.

He doesn’t think Verizon will come up here. Regulatory changes have had an impact and caused the sell off recently.

There will be some management changes in this company over the next year. The way people watch television and use their phones is changing so rapidly with the Internet and Internet protocols. Hard to tell in the longer-term how well these companies are going to come out of it. The future seems to be in the mobile telephones. Gives you close to a 4% yield. Multiples are around 13-14 times earnings right now. Not a bad one to consider. He would have to see it much cheaper from here before he would step in and buy it.