Telus Corp (T.TO)

Governments are going to be targeting that sector for the next few years. Bought Rogers on the Verizon news and sold last week. Short term, he took money off the table. This one should pull back also. It is a bit overbought here. Take money off the table here for traders.

Exceptionally well managed company. Last quarter, revenues per subscriber didn’t meet expectations, but did a little bit better on their wireline service. This is a highly competitive market and getting more competitive as the major players roll out across Canada. On a valuation basis, it looks a little too expensive for him.

Concerned about regulatory risk with all telecoms. He sold some time ago because of competitive reasons. The government has given a clear signal that they want to give consumers a break.

Telecom Policy. Does not know what’s happening in terms of government policy. He is glad the US guys decided not to come to Canada. Thinks there is more room to recover.

In a sweet spot like BCE. Does not have content or media side but that could be a positive as well. Very shareholder friendly. Company is buying back shares and invested in infrastructure. A definite buy and has not recovered fully from the corrections from yield stock and Verizon stories.

Telcos are going to be subjected to quite a bit of additional competition. People are looking around more and more for TV service. There will be some regulatory pressure. There has been a suggestion that once smart phones hit 70% then things slow down in wireless. This will put a cap on dividend increases. He is watching it. Stay away from the industry but if you are going in, then buy Rogers.

There are no foreign bidders in the spectrum auction. They haven`t moved back as much because of interest rates. The fundamentals for telecom stocks are quite good. If you can buy them cheaper here it is a good opportunity.

Bell Canada (BCE-T) is his favourite, although he does own some of this as well. Well-run company and it will grow with the market. Have done a reasonable job of getting new business and are in areas that have relatively high growth.

All telcos really sold off through the spring and summer, both in the US and Canada. Believes we have seen the lion’s share of the initial move higher in the 10 and 20 year bond rates and that is likely to neutralize over the next little while. Interest sensitives in general will do better over the next little while. He still prefers to own something that gets a little bit of a lift from a better economy, like financials, but for those who are looking for yield, this is pretty attractive. Prefers this over Bell Canada (BCE-T) as this has a little bit better internal growth and will buy back shares and give you dividend increases of 10% a year for the next 3 years.

Manitoba Tel (MBT-T) or Telus (T-T)? The market has now changed a little bit in its outlook since interest rates have started to rise. On the equity side, you can’t just buy something for yield anymore because the stock price might go down because we need a higher yield to price the stock in a higher interest rate environment. Therefore, you need yield plus growth. Today, this has better growth than Manitoba Tel.

This has been hurt by 2 things. 1.) Rising interest rates and 2) the threat of foreign competition (Verizon (VZ-N)) coming in. Verizon has said they are not going to come into the Canadian market, but they still may bid on Spectrum or another competitor might come in.

Has been a good performer. Sector has been challenged by Verizon. Now we know they are not coming so share price has rebounded.

Likes this. Now that Verizon (VZ-N) is seemingly out of the picture, this gives the Canadian incumbent telcos room to move upwards. Telecoms are usually interest-rate sensitive so you have to be careful which ones you own. This one has one of the higher dividend growth profiles of all the incumbents.

Nobody came out looking good in the last couple of months on this blown up speculation that Verizon (VZ-N) might be coming to Canada. Canadian telcos got hammered unnecessarily so he expects them to come back. A decent industry to be in. Prefers Bell Canada (BCE-T) because it has a smaller footprint in wireless than the others and has a good broadcasting part, which is economically sensitive and is a good place to be.

The outlook is uncertain. He is not sure what is going to happen and doesn’t think anybody else does either. Of the 3 telcos, he likes this one the best. Would like to see the issues revolving around Verizon (VZ-N) resolved first.