Cogeco Communications (CCA.TO)

They have business in Ontario and Quebec, and a large cable business in some US states, but that is facing strong competition from fixed-wireless, fibre providers and satellite companies like Starlink. He's bearish all Canadian telcos, which are impacted by weak immigration and wireless competition is aggressive as the CRTC clamps down on fees and contracts. For Rogers, the business is mature and demands a lot of capex and carries $40B of debt.

Their US cable business is struggling from more competition. CCA wants to sell this business. Also, what will happen to the family's ownership position in the medium and long term? What is their business and growth if they sell their US business?

Canadian telcos are a tough space due to lower population growth, less immigration and rising inflation. All telcos are stuck. CCA is cheap and pays a dividend, so it won't hurt a portfolio much. He prefers Rogers or Quebecor, though. 

Issues centre on cable and fibre divisions -- major footprint in the US, a very competitive space. Potential competition from providers like Starlink down the road.

Telco space under pressure sentiment-wise. This name doesn't have the same spending issues that BCE and Telus do. Challenge for the space is it just doesn't have a lot of pricing power.

In general, telcos are not something he wants to be involved in. He does, however, own this one in client TFSAs. Yield is good, with dividends growing at a hefty clip. Other telcos' dividend growth has only been in 1-2% range, if at all.

Likes the chart here. The sector is underperforming. This and Quebecor are small caps compared to peers, which is tough for institutional investors to buy them. But the RSI shows momentum. He sees good upside. A leader in this space.

Dividends are not in doubt, but there has to be some way to pay down debt while growing the business. Right now, all you're getting is the dividend but very little growth.

Allowed to hop on Wi-Fi networks of the other telcos, so it's becoming a more asset-light business. Passes through higher margins, and can continue to grow dividend more than 10% a year.

Still adding new money. He uses a name like this to offset higher beta/risk names like CSU and BN in client TFSAs. Due to price competition, telcos haven't grown. Being further tested due to less immigration. Flipside is that a 6-7% yield and a 2-3% price gain would give you a 10% total return.

Problem is all the leverage taken on to build out 5G, but not getting an economic return from it. Because CCA could hop on the fibre network paid for by others, its stock price has gone up, while the others have gone down.

FCF generation has allowed them to raise dividends faster than the other telecoms.

He bought it for the dividend, which grows 10% annually. All the telcos are down because they've had to borrow to upgrade to 5G, and rates have been high. Especially if rates decline, a lot of their debt will fall in the next 2 years and this oligopoly will enjoy profitablility.