We reiterate our Neutral recommendation on
Rogers Communications Inc.
). The Canadian wireless market has become increasingly competitive
exerting huge pressure on the company's ARPU and churn rate. Rogers
Communications reported weak financial results for second-quarter
2012, which fell below the Zacks Consensus Estimates. The cable
segment has also started facing the brunt of the aggressive rollout
of IPTV by its competitor. Moreover, the media segment is facing
continued softness of the advertisement market.
Nevertheless, we believe that the significant expansion of LTE
networks and an attractive dividend yield will support the stock
price in the near future. Massive demand for mobile data and
growing activation of latest smartphones will pave the way for
Rogers Communications' future growth.
Last month, Rogers Communications together with Bell Canada, a
) completed the joint acquisition of 75% stake in Maple Leaf Sports
& Entertainment (MLSE). With this acquisition, Rogers will be
able to deliver highly quality sports content to its subscribers
anywhere, anytime, on any platform through its wireless/cable
networks and robust portfolio of media assets. The sports contents
of MLSE are in high demand in Canada.
Rogers Communications has decided to gain complete control over
sports television network Score Media Inc. - Canada's third largest
specialty sports channel - by purchasing its full stake for $167
million. The transaction awaits shareholder and other customary
approvals. The proposed acquisition of Score Media Inc. will
provide Rogers the right to access television assets of the Score
Television Network, that includes Voice to Visual Inc., mixed
martial arts promotion The Score Fighting Series, and The Score
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