Winnipeg Free Press - PRINT EDITION

The Verizon effect could hit wireless stocks: analyst

  • Print

TORONTO -- If Verizon enters the Canadian market, it could hit the stock prices of domestic carriers for several years until the actual market impact of the U.S. telecom giant becomes known, says RBC Capital Markets analyst Drew McReynolds.

Bell, Rogers and Telus have already seen their share prices affected by the possibility Verizon will enter Canada as the country's fourth major wireless player, McReynolds said in a note.

"Although we believe the pullback in BCE, Rogers and Telus offers a potential buying opportunity for more risk-tolerant investors should Verizon not enter Canada, we see another leg down for the wireless stocks should Verizon enter," he said.

"Furthermore, we see the persistence of a major overhang on the group in this scenario for potentially several years until visibility on Verizon's actual market impact emerges."

BCE's chief executive George Cope recently said Bell, Rogers and Telus have taken a cumulative hit of $15 billion on the capital markets since the news about Verizon's possible entry broke.

McReynolds is recommending investors move to invest in regional wireless companies Cogeco Cable, Quebecor Inc. and Manitoba Telecom Services to lessen risk.

"Our bias is toward the regional operators until wireless visibility improves."

Verizon hasn't confirmed whether it's entering Canada's domestic cellphone market, but there have been reports the U.S. giant is interested in buying new wireless companies Wind Mobile and Mobilicity, which have about 900,000 subscribers between them.

Verizon has about 100 million subscribers compared with a total of about 25 million for Rogers, Bell and Telus combined.

The federal government has loosened foreign investment rules, allowing for telecom companies that have less than a 10 per cent share of the market to be bought by foreign companies such as Verizon.

Meanwhile, domestic carriers Bell, Telus and Rogers aren't able to buy new wireless startups.

The big three wireless players are lobbying against the entry of Verizon under the current rules.

The Canadian carriers are also disputing rules that would allow Verizon to use their wireless networks and to bid on more wireless spectrum -- the radio waves used by mobile communications devices -- than the incumbent carriers at a January auction.

So far, the federal government has said it is standing by the rules, which it says were intended to encourage competition.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition August 13, 2013 B5

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

The Whiteboard - Jets' 5-on-3 penalty kill

View more like this

Photo Store Gallery

  • Geese take cover in long grass in the Tuxedo Business Park near Route 90 Wednesday- Day 28– June 27, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Marc Gallant / Winnipeg Free Press. Local- Weather standup. Sundog. Refraction of light through ice crystals which caused both the sun dog and and fog along McPhillips Road early Wednesday morning. 071205.

View More Gallery Photos

Poll

How will you be spending the holiday season? (select all that apply)

View Results

Ads by Google