TELUS (Toronto symbol T; www.telus.com) has 7.7 million wireless subscribers across Canada. It gets much more of its revenue from wireless than major competitor BCE—54% compared to BCE’s 32%. Telus gets the remaining 46% of its revenue from its traditional phone business, which has 3.4 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.3 million Internet subscribers and 712,000 Telus TV subscribers. Telus’s shares slipped recently in response to news that U.S.-based Verizon Communications (New York symbol VZ) is interested in buying two smaller Canadian wireless carriers: Wind Mobile and Mobilicity. Wind and Mobilicity are both small carriers, so regulators would probably approve a sale. [ofie_ad]
Dividend stocks: Verizon could bring cheaper smartphones to Canadian customers
The move of Verizon Communications into Canada will increase competition for Telus, which is Canada’s second-largest wireless service provider after Rogers Communications. Verizon could also use its large size to offer consumers cheaper smartphones and lower roaming fees in the U.S. In the three months ended March 31, 2013, Telus’s earnings per share rose 14.3%, to $0.56 from $0.49 a year earlier. Revenue rose 4.8%, to $2.76 billion from $2.63 billion. The company’s $0.34 quarterly dividend yields 4.3%. Earlier this year Telus finished converting its 151 million non-voting class A shares into regular common shares (which have one vote each) on a one-for-one basis. On April 16, 2013 it also split its common shares on a 2-for-1 basis. Together, the share conversion and the stock split have made the common shares more liquid. In the latest issue of Canadian Wealth Advisor, we look at whether Telus can meet the challenge from Verizon thanks to its heavy spending on network upgrades and its efforts to lock more customers into long-term bundles that include wireless, regular phone, Internet and TV services. We conclude with our clear buy-hold-sell advice. (Note: If you are a current subscriber to Canadian Wealth Advisor, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members Do you believe that competition from U.S. and other foreign companies is good for Canadian businesses? Or do you think that an open door policy for foreign corporations could be harmful for Canadian companies, and their shareholders, and that some government regulation is justified? Let us know what you think.
