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Rogers Communications Inc. Class A Shares (RCI.A)
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T-Mobile US Inc. (TMUS)
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BCE Inc. (BCE)
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Quebecor Inc. Class A Multiple Voting Shares (QBR.A)
Q: Seeing as BCE is down, would it make sense to reduce BCE and enter into RCI.A and QBR.A. ? They seem more cyclical and are down as well. Or ride out BCE?
5i Research Answer:
It is a challenging operating environment for the telcos in general. Higher interest expense due to high rates, challenging average revenue per user (ARPU) growth and increasing capital investment to invest in 5G and fibre. Other than TMUS in the US which has executed so well, we don’t think any telcos would do much better than the industry in general. BCE is a well-managed operator that has managed this downturn OK and is taking steps to cut costs, but again, this is msotly an industry-wide issue not due to any specific company. If investors want to maintain exposure in the space, we would keep BCE at its current valuation rather than switch and hope for improvement elsewhere in the Canadian sector.