Having previously posted a write up of BCE Inc. (USA) (NYSE:BCE), Canada’s largest telecom firm, illustrating its qualities as both an income and growth holding, it became of interest to consider its fellow providers within the nation. Plus, more recently I blogged about several European telecoms, including several that have sold off substantially. The difference with the U.S.’ closest neighbor is that the economy is expanding, albeit slowly. This is an important factor that impacts to what extent access lines are being lost or gained, as the industry continues its transition from landline to mobile and Internet. Share prices will fluctuate on how well they can offset the higher-margined legacy businesses with revenues from new offerings, and the dividend yields.
Another look at BCE Inc. (USA) (NYSE:BCE) with the benefit of its 2013 guidance confirms the belief that share profits will continue to rise. Increased revenues and margin improvements ought to support this momentum. And this outlook disregards the likely positive effect on results of the pending acquisition of Astral, expected to occur during the second quarter.
Astral’s $3.38 billion purchase price includes eight TV services, as well as radio, out-of-home advertising and digital properties. BCE Inc. (USA) (NYSE:BCE) has purchased TV assets in the past, particularly through its buyout of CTV Inc.
The company already reports solidly climbing wireless operating income behind an increasing postpaid subscriber base and pricing power. It thanks its 4G LTE network rollout and introduction into new markets for the strength in that segment.
BCE Inc. (USA) (NYSE:BCE)’s aforementioned 2013 forecast is founded on 2% growth in GDP. It also pays out 65% to 75% of income as dividends. The shares have gained ground along with the S&P 500 this year and hold appeal primarily for their yield.
And sports fans might know that BCE Inc. (USA) (NYSE:BCE) owns a minority stake in the Montreal Canadiens and the club’s Bell Centre arena. This brings me to the second company, Rogers Communications Inc. (USA) (NYSE:RCI), primarily a provider of wireless services, that also operates Cable, Business Solutions, and Media units. The Media unit is partly comprised of The Toronto Blue Jays and that team’s Rogers Centre.
Rogers Communications Inc. (USA) (NYSE:RCI)’ domestic wireless market share equaled about 34%, with its closest competitor at about 28%. Smartphone activations are assisting profit growth in the segment through subscription increases and pricing gains. Wireless data services revenue was up sharply, 17% overall, in 2012.
Its Cable and Internet businesses are gaining headway, as well, as subscriber counts rise and margins improve. Rogers Communications Inc. (USA) (NYSE:RCI) is leveraging its TV subscriber base, with 84% of those also purchasing Internet services. Although the slow Canadian ad climate has limited Media segment results, Rogers Communications Inc. (USA) (NYSE:RCI) is offsetting the weakness with its sports properties and, in fact, purchased a new network, Score, in August 2012.