On Oct 10, 2013 we maintained our Neutral recommendation on
Canadian telecom service provider
). We remain optimistic on the company's wireless segment,
technology upgrade, high rollout of smartphones and expansion of
the 4G LTE network.
Furthermore, investments in Optik TV business and high-speed
broadband technology and services will likely work in favor of
Telus. Nevertheless, continuous access lines erosion along with
competitive threats and reduced roaming charges keep us cautious.
Telus currently carries a Zacks Rank #3 (Hold).
Deeper penetration of smartphones, improving churn, increasing
average revenue per unit, accelerating wireless data services and
growing wireline fiber optic networks are the catalysts for
Telus' future growth. Investments in high-speed broadband
technology and services will provide balanced growth for its
wireless and wireline businesses.
Expansion of 4G LTE network, offering of the latest LTE based
handsets and launch of SharePlus rate plans that come with an
unlimited talk and text option will expedite growth within Telus'
wireless segment. In an effort to compensate for the access line
loss, Telus continues to add features as well as upgrade the
existing features of its Optik TV and Optik High-Speed Internet
broadband services that are gaining traction across British
Columbia, Alberta and Eastern Quebec.
The company also remains committed to enhance shareholders'
wealth and has extended its dividend growth program by three
years to 2016, with the projection of semi-annual dividend growth
of approximately 10%. Telus also enhanced its share repurchase
program and now expects to buy back up to $2.5 billion by
Moreover, the potential rollout of the 4G LTE wireless service
in rural Canada might pose a serious threat if it fails to
acquire the 700 MHz band from the expected auction in early 2014.
Uncertainties in the regulation of spectrum bands arising from
capital outlay, bid price, high competition and availability,
might limit the company's capacity in expanding wireless coverage
with the updated technology.
Additionally, Telus continues to lose local access line to
competition from cable TV operators, who have started offering
phone service based on the less costly Voice-over-Internet
Protocol (VoIP). We thus prefer to remain sidelined on the
Among other stocks
Shaw Communications Inc.
BT Group plc.
), all with a Zacks Rank #2 (Buy), look attractive for the short
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TELUS CORP (TU): Free Stock Analysis Report
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