Canadian Wireless Market

The Big-3 Canadian wireless market players have been cash cows for a lot of investors over the years. The national market is carved up between three large players – BCE Inc (TSE: BCE), Rogers Communications Inc (TSE: RCI.B) and Telus (TSE: T) controlling approximately 91% of the wireless market, with various other regional players filling in the rest.


As a consumer, Canada is ranked among the ten most expensive countries for wireless services (Source: OECD Communications Outlook, 2013). The Canadian conservative government has been bipolar in trying to balance encouragement of competition and having a protectionist viewpoint roadblocking foreign ownership of local companies or downright blocking some from entering the market. Wind Mobile, a relatively new small player, has had a troubled past with foreign ownership (source) and national security concerns regarding deals with Huawei (source). Earlier this year, Verizon Communications Inc (NYSE: VZ) and AT&T (NYSE: T) decided not to enter the Canadian market after mulling on it for months (Verizon source, AT&T source).

In the upcoming 2014 wireless spectrum auction, all the roadblocks created have resulted in no new foreign telecom carriers planning on entering the market (source), which is bad news for the consumers – as the status quo results in continuation of the eye-gouging rates. However, the Big-3 are the big winners from the news.

The stats for the Big-3 are:

Company Name Ticker Quote P/E Yield Payout Ratio 5-yr DGR Debt/Equity
BCE Inc BCE  $44.51  14.22  5.23% 74.40% 16.74% 1.21
Rogers Comm Inc  RCI.B $45.36 12.49  3.84% 45.50% 14.40% 2.90
Telus Corp T $35.44 18.02  3.84% 66.30% 7.96% 0.95

Of the Big-3, BCE Inc is the most diversified. Click here to read about BCE’s profile when I initiated my position in July.

Disclosure: I am long BCE.

Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.

 

Dividend Comparison – Telecom

Telecom companies have become an essential utility over the past few years. Just like essential services such as water and electricity, communication has become the next most important utility for every person. A lot of investors get bogged down with the gadget markers since there is a new shiny toy to talk about every few weeks or months. The arguments between which device is the coolest goes back and forth between Google, Apple and Samsung. The actual winners that provide us with the link to the Internet, the telecom giants, are the real winners no matter which gadget an end-user loves and adores. These telecom providers can be great investments for everyone and in this article, we will compare the dividends of the companies. These companies are cash cows and most of them are mature companies paying out hefty dividends.

US Market

I have filtered telecom service providers in the US which payout dividends on a regular basis (this leaves out some players such as T-Mobil, Sprint etc) and larger than $2B market cap.

Company Name Ticker Quote P/E Yield Payout Ratio 5-yr DGR
CenturyLink Inc CTL $36.27 25.78 5.96% 156.9% 23.03%
Frontier Comm Corp FTR $4.10 26.19 9.76% 250% -16.74%
AT&T Inc T $35.88 28.01 5.02% 138% 2.85%
Verizon Comm Inc VZ $50.28 126.51 4.1% 511.3% 3.67%
Windstream Corp WIN $8.07 30.10 12.39% 270.3% 0%

Canadian Market

With the news of Verizon (VZ) potentially entering the Canadian market, most of the wireless providers had their stock values drop last month. Some of these may have been oversold and potentially at an attractive price to pick up.

Company Name Ticker Quote P/E Yield Payout Ratio 5-yr DGR
BCE Inc BCE $43.82 13.63 5.32% 72% 16%
Rogers Comm Inc RCI.B $42.06 12.49 4.14% 51% 17.22%
Telus Corp T $31.82 15.67 4.27% 67% 8.3%
Shaw Comm Inc SRJ.B $25.50 15.21 4.00% 64% 7.45%

My Thoughts

The US telecom giants have a comical payout ratios and very high P/E ratios. The dividend payouts are simply not sustainable and almost beg for the stock to be shorted. I have decided to stay away from these stocks.

The Canadian providers seem more stable and have a decent payout. The selloff has definitely made them attractive, but if Verizon does enter the market, it means a drop in the market share for each of these. Shaw Communications has been the most resilient of the lot since it is not just a wireless provider and has its business diversified into cable, satellite and programming content. I will be keeping a close eye on the Canadian providers over the next few days and potentially make a move to pick some up.

Disclosure: None

Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.