On Jun 28, we maintained our Neutral recommendation on Rogers Communications Inc. (RCI). In the recently concluded first quarter, the company missed both the top and the bottom line of the Zacks Consensus Estimate.
Why Maintained?
Rogers was the first company in Canada to launch LTE (Long Term Evolution) network. Initially, the company deployed LTE network in 90 cities of Canada, covering over 60% of Rogers’ footprint. The company also offered a variety of LTE-enabled smartphones. Further, the company teamed up with a Hong Kong-based carrier to offer the first LTE roaming service to its subscribers in Hong Kong and expects to extend the service to other countries by 2013.
Rogers received CRTC’s approval to gain complete control over sports television network – Score Media Inc. – Canada's third-largest specialty sports channel. The acquisition of Score Media Inc. will provide Rogers the right to access television assets of the Score Television Network along with an additional 6.6 million television subscribers, thereby driving revenues.
Softness in the advertising market due to lack of investment in TV content coupled with increased competition in the cable TV business after BCE Inc. entered into the Canadian cable market, may hurt profitability in the near future. Moreover, the Canadian regulatory authority’s decision to grant licenses to four new operators in order to improve national wireless service, subsequently increasing competition in the Canadian wireless market, may further act as a headwind for Rogers.
Rogers Communications carries a Zacks Rank #3 (Hold).
Other Stocks Outlook in Related Industries
Other stocks in this sector like TELUS Corporation (TU), Sprint Nextel Corp. (S) and BCE Inc. (BCE) are set to gain from the extensive/increasing LTE deployment in the upcoming days. These companies will declare their fourth-quarter results next month.
Currently, TELUS Corporation has a Zacks Rank #2 (Buy) while both Sprint and BCE Inc. have a Zacks Rank #3 (Hold).
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