Canadian Telecom Stocks - Price War Temporary or a Structural Change?

[Viking]

Telecom in Canada is in a price war. Shaw’s sale to Rogers, forcing Freedom Mobile’s sale to Quebecor, appears to have unleashed a sprint for market share. Canada is the land of oligopolies. The kind that tend to play nicely in the sand box. So investing in Canada’s oligopolies has generally been pretty good for investors. How times have changed.
 

• BCE is trading today at C$44.00, where it was trading back in 2013. Its dividend yield is 8.5%. 
• Telus is trading at C$21.20, where it was trading back in late 2014. Its dividend yield is 7%.

 

Bottom line, telecom stocks are getting killed. Again. They all got taken out behind the woodshed late last year.
 

I don’t follow the Canadian telecom industry all that closely. Although i will say my telecom bill (cell, internet and TV) has come down materially over the past year. The current environment is great for consumers - not so great for shareholders.

 

Is the current competitive dynamic the new normal for Canadian telecom companies? Or will they become rational actors again? 

Has something structurally changed in this industry that means profitability moving forward will be permanently lower? Or is the current price war just a temporary bout of insanity among the major players?

 

I bought more BCE today and i added to my Telus position last week. Do board members have favourites in the sector? Rogers? Quebecor?

Edited April 2 by Viking

[beerbaron]

I think the CRTC has done a good job for the consumer. It will likely not stop until a mid sized bankruptcy. Why not wait till such thing happen and people panick? Ideally a few divvy cuts with it to make the panic being felt by divvy investors?

[juniorr]

1 hour ago, Viking said:

Telecom in Canada is in a price war. Shaw’s sale to Rogers, forcing Freedom Mobile’s sale to Quebecor, appears to have unleashed a sprint for market share. Canada is the land of oligopolies. The kind that tend to play nicely in the sand box. So investing in Canada’s oligopolies has generally been pretty good for investors. How times have changed.
 

• BCE is trading today at C$44.00, where it was trading back in 2013. Its dividend yield is 8.5%. 
• Telus is trading at C$21.20, where it was trading back in late 2014. Its dividend yield is 7%.

 

Bottom line, telecom stocks are getting killed. Again. They all got taken out behind the woodshed late last year.
 

I don’t follow the Canadian telecom industry all that closely. Although i will say my telecom bill (cell, internet and TV) has come down materially over the past year. The current environment is great for consumers - not so great for shareholders.

 

Is the current competitive dynamic the new normal for Canadian telecom companies? Or will they become rational actors again? 

Has something structurally changed in this industry that means profitability moving forward will be permanently lower? Or is the current price war just a temporary bout of insanity among the major players?

 

I bought more BCE today and i added to my Telus position last week. Do board members have favourites in the sector? Rogers? Quebecor?

Rogers and Telus dividend seems more stable...Question is does Bell cut its dividend

[ICUMD]

Bought a little BCE. 

BCE owns the telecom infrastructure.  

 

Forced competition and cost reduction will slow build out of fibre to small communities. Ultimately, this company needs to survive and expand and all Canadians need to be connected.

 

Political interference can only go so far.

Starlink and satellite Internet are bandwidth constrained relative to fibre. (I know, since I have Starlink and wish I had fibre).

 

Hard not to add at these levels and dividend is highly attractive. 

[scorpioncapital]

Oligopolies may seem like minting gold but live by the sword, die by the sword. Imagine a scenario where the government allows just 1 provider of some social service - like Communism. It then has the power to set any subsidized fake price it wants, usually due to populism or to appease the people to maintain power. So you get a fake or Potemkin like stock market that is really no market and you get low prices that make the investment not work out. Is a duopoly any safer? Maybe a little. Look what happened to the big banks. As soon as the government got desperate enough and wanted to get some money, it did a 'special tax' for the banks. Remember when government owns everything or near everything it becomes their go to piggy bank. To stay in power or have 'stability' they will prioritize businesses over personal income tax imho.  In the end game, everyone is taxed more and more, but I think the lack of a free market is the biggest risk.

Edited April 11 by scorpioncapital