Q: Given that these two companies control apx. 65% of phone and internet use, what change would reverse the course of their stock price? Does the concentration of ownership and reliance on their services not bode well into the future? Thanks
5i Research Answer:
Typically, a duopoly or oligopoly is good for companies' ability to raise prices and prosper. Currently, however, in Canada competition has increased, consumers are backing off, interest rates are high and capex spending is hurting the current growth rates of these companies. Each is taking steps to reduce costs, and that plus a decline in rates might help sentinment. Each is somewhat 'bloated' and some asset sales would likely help as well, and this would also alleviate concerns on their dividend sustainabiity.