On Apr 4, 2014 we maintained our Neutral recommendation on
Canadian telecom service provider
). We remain optimistic on the company's wireless segment,
technology upgrade, post-paid plans, increased rollout of
smartphones and expansion of the 4G LTE (Long Term Evolution)
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 increased capital expenditures
keep us cautious. Telus currently carries a Zacks Rank #3
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' growth. Launch of various rate plans, in particular the
high-end post-paid plans along with exceptional service will
improve the performance of the company.
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. The company also launched PTT service in Canada
under the brand Telus Link, which allows walkie-talkie voice
communications over the carrier's HSPA and LTE networks.
In an attempt to compensate for 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. Further, Telus remains committed to
enhance shareholders' wealth and has increased its quarterly
dividend to 36 cents. Telus also enhanced its share repurchase
program to $2.5 billion by 2016.
However, the Canadian government aim to reduce tariffs and
enhance customer choice by bringing in more competition within
the wireless segment. Another concern is Videotron's spectrum
wins in Ontario, British Colombia and Alberta that not only add
competitive pressure on Telus but also open up the prospect of
another large telecom carrier in Canada.
Additionally, Telus continues to lose local access line to
competition from cable TV operators that have started offering
phone service based on the less costly Voice-over-Internet
Protocol (VoIP). We thus prefer to remain sidelined on the
Better-ranked stocks in the industry include
SK Telecom Co Limited
Level 3 Communications Inc.
Shenandoah Telecommunications Co.
). All these carry a Zacks Rank #1 (Strong Buy).
LEVEL 3 COMM (LVLT): Free Stock Analysis
SHENANDOAH TELE (SHEN): Free Stock Analysis
SK TELECOM CO (SKM): Free Stock Analysis
TELUS CORP (TU): Free Stock Analysis Report
To read this article on Zacks.com click here.