Rogers Communications (B)

RCI.B-T

Only 2% EPS growth, he forecasts, trading at 15x PE. Good dividend. They are more exposed to wireless than BCE is. He has a $72 target. An okay name, but look elsewhere for growth.

He owns BCE instead, which is more defensive. The threat to Rogers (and the telcos) is the unlimited data plans. ARPU could stagnate or decline just as 5G ramps up, so the telcos may need to spend more to roll it out. Rogers has to spend more anyway, because Rogers owns the entire network, whereas BCE shares some of that burden with Telus.

Telus vs Rogers? He prefers neither. The valuation is too rich. He sold his Rogers around $72. He would prefer Telus as it is more diversified and does not have the struggles of content issues. He would actually buy Shaw instead as they enter the wireless space. He would buy all three on weakness, but enter Shaw today.

We are beginning to see a little bit of a war in the telecommunication industry. We may be into a little bit of a price war. They have not competed to date as well with BCE's fiber to the home. When these guys fight for market share that is the time to look at cash flow. He'd be hesitant to invest in this one if going into the group.

A good income stream? He owns Telus instead of Rogers. He is studying the whole rollover of the wireless business in Canada. Prices are starting to drop on increased competitive pressures. It might be early to enter the space. He would prefer BCE-T or T-T.

Which telco to buy? Canadian telcos are a good place to invest (an oligopoly) though he owns none of them. Headwinds: slower growth compared to 5-10 years ago, especially in the wireline business and people move to cell phones. BCE, then Telus and Rogers in this order have the most exposure to wireline. Therefore, his first choice is Rogers, though he would carefully weigh all of them first.