On Jan 16, we maintained our Neutral recommendation on
Rogers Communications Inc.
). In the recently concluded third quarter fiscal 2013, the
company missed both the top and bottom line of the Zacks
Rogers was the first company in Canada to launch LTE (Long Term
Evolution) network. Initially, the company deployed LTE network
in 90 cities of Canada, covering over 60% of Rogers' footprint.
The company also offered a variety of LTE-enabled smartphones.
Further, Rogers is the first Canadian carrier to offer LTE
roaming service to its subscribers traveling to Hong Kong,
Switzerland and South Korea.
Rogers is also the first Canadian carrier to strike a Connected
Car M2M deal with Sprint to deliver navigation, entertainment,
climate control, security and emergency services to its
subscribers using the Sprint Velocity solution in their vehicles.
Rogers also happens to be the first Canadian carrier to initiate
the suretap Wallet app in collaboration with MasterCard Canada.
The service is available on few NFC-based smartphones and
provides secure mobile payment service. Recently, the company
entered into a 12-year broadcast and multimedia agreement with
National Hockey League (NHL) for national rights to NHL games on
all platforms and languages.
Softness in the advertising market due to the lack of investment
in TV content may hurt profitability in the near future. The
increased competition in the cable TV business after BCE Inc.
entered the Canadian market could also add to the woes. Moreover,
the Canadian regulatory authority's decision to grant licenses to
four new operators in order to improve national wireless service,
subsequently increasing competition in the Canadian wireless
market, may further act as a headwind for Rogers.
Furthermore, the company has a highly leveraged balance sheet
with a debt-to-capitalization ratio of 0.70. Hence, we believe
that increased dividend payment coupled with an aggressive stock
buy-back plan and deployment of 4G LTE across its footprints may
further exert pressure on Rogers' cash flow, thereby widening its
current debt-to-capitalization ratio.
Rogers Communications currently carries a Zacks Rank #4 (Sell).
Other Stocks Outlook in Related Industries
Other stocks to consider in the cable and media industry include
Cablevision Systems Corporation
Liberty Global Inc.
). Currently, Cablevision has a Zacks Rank #1 (Strong Buy) while
Comcast and Liberty Global has a Zacks Rank #2 (Buy).
COMCAST CORP A (CMCSA): Free Stock Analysis
CABLEVISION SYS (CVC): Free Stock Analysis
LIBERTY GLBL-A (LBTYA): Free Stock Analysis
ROGERS COMM CLB (RCI): Free Stock Analysis
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