Canadian Telecom Rogers Goes Into Tailspin as Price War Heats Up
Summarize this article with:
2(daltr2pu6w5khaoxt2p(re_media_dl_1.png BloombergArticle content(Bloomberg) — Rogers Communications Inc. has gone from the top performer among Canada’s three big telecommunications companies to the sector’s biggest drag, as a wireless price war threatens its premium valuation.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentCanada’s telecom companies are in the midst of an aggressive race to lure customers by lowering prices, a move that threatens to squeeze profits and has unnerved investors.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentRogers, the country’s biggest wireless carrier, discloses first quarter results early Wednesday at a moment of extreme negative sentiment about the industry’s growth. The S&P/TSX Composite Communication Services index is down 10% since the beginning of March. Analysts, after watching companies ramp up consumer discounts and promotions, expect Rogers to report earnings of C$1.01 per share on an adjusted basis, up just 2% from the same period last year, according to a Bloomberg survey.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentRogers shares were set up to fall as the company’s outlook softened, partly because it had outperformed its competitors by so much. The shares had surged 35% in the 12-month period ended Feb. 28, right before the stock price hit a two-year peak.Article contentToronto-based JCIC Asset Management Inc. sold its entire Rogers position in March, souring on the stock because earning estimates for the company were falling, said Kai Lam, its chief investment officer.Article content“I didn’t think the outlook at this point would improve either. Slower population growth in Canada is also a headwind now,” Lam said. The Canadian government has dramatically pulled back on certain categories of immigration, including foreign students.Article contentArticle contentJCIC sold its Rogers stake at C$55.06 on March 9, said Lam, some 17% higher than Monday’s closing price. “Pretty lucky given how poorly Rogers has done since then,” he said.Article contentAs investors cut exposure to the sector, Rogers is taking the brunt, said TD Cowen analyst Vince Valentini. Institutional investors “would simply look at their portfolio and say, ‘Well, we actually don’t own any Telus anymore and we don’t own much BCE, so I guess the one we have to sell is Rogers,’” he said in a phone interview.Article contentRogers has some unique assets compared with its two major rivals — particularly in media and sports. It now controls Toronto’s major league baseball, hockey and basketball teams, as well as the city’s two major downtown stadiums and one of Canada’s two major sports cable television networks (BCE has the other).Article contentRogers enjoyed a revenue bump last year as the Toronto Blue Jays almost won the World Series, but such gains from on-field success are difficult to control, Valentini said.Article contentRogers’ rivals are also struggling. Telus shares have tumbled roughly 10% since the end of February. Investors and analysts are worried about its debt and the sustainability of its dividend. BCE’s stock is down more than 8%. Last year, the company took the hard decision to cut its quarterly payout by more than half. Article content“I’m a little surprised how quickly and how aggressively the stocks sold off,” John Zechner, president of Toronto-based asset manager J.
Zechner Associates Inc., said in a phone interview. Rogers’ exposure to the sports business is a point of differentiation, but “that probably, compared to Telus and BCE, is going to give you a little bit more volatility because that’s a wider factor.”Article contentRogers makes up roughly 1.6% of his firm’s portfolio, down from just over 2% in October. Article contentTrending Solomon says U.S. recession risk could be 'one tweet away' PMN Business Toronto's condo market 'hits bottom' with some developers looking at selling units below cost Real Estate From where the deals are to where prices dropped most, 5 key things to know about the spring real estate market Real Estate Posthaste: This fiscal edge has helped Canada become the 'cleanest dirty shirt' in the G7 News Latest inflation data reinforce rate cuts would be on the table if not for Iran, says economist Economy Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Solomon says U.S. recession risk could be 'one tweet away' PMN Business Toronto's condo market 'hits bottom' with some developers looking at selling units below cost Real Estate From where the deals are to where prices dropped most, 5 key things to know about the spring real estate market Real Estate Posthaste: This fiscal edge has helped Canada become the 'cleanest dirty shirt' in the G7 News Latest inflation data reinforce rate cuts would be on the table if not for Iran, says economist Economy