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Roger Communication's (RCI) Roger-Shaw Deal Faces Opposition
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Roger Communication’s (RCI - Free Report) deal to acquire its competitor Shaw Communications , which was proposed in March 2021, continues to face opposition from the Canadian tribunal.
Even after the four-week hearing on the acquisition deal that commenced on Nov 7, the Canadian tribunal said that it couldn’t arrive at a decision and is expected to release its verdict either by the end of this year or early January 2023.
The tribunal has been showing concern over the potential merger of Roger and Shaw that would result in less competition in Canada’s wireless business. Though Rogers has tried to address this by agreeing to sell Shaw's Freedom Mobile business to Quebecor, which would overcome competition concerns, it hasn’t helped in coming down to a settlement.
Canada’s competition tribunal believes that Rogers is one of the biggest telecom providers in the country and this small divestment will not create a competitive edge for Quebecor and will continue to strengthen Rogers’ power in the industry. This could lead to dominance and high service prices.
Rogers’ Growing Top-Line Causes Headwind for the Deal
In the third quarter of fiscal 2022, Rogers released that it delivered a total of 448000 net wireless additions year to date, up 137% year over year while Telus Corp (TU - Free Report) had total customer net additions of 347,000, up 8% year over year, in the same quarter. Rogers had also become the largest provider of unlimited data plans to Canadian customers with more than 3.2 million customers on these robust 5G plans.
Per WhistleOut, though Bell and Telus are at neck-and-neck for the fastest 5G service, Rogers offers the most 5G coverage in Canada.
Adding to this, Roger’s postpaid phone net subscribers saw an addition of 164,000 in the discussed quarter, and total mobile phones had a net addition of 221,000, up 30,000 year over year.
This signifies strength in Rogers and also supports the tribunal’s concern over the Roger-Shaw deal giving undue advantage to Rogers over other telecom companies. This could block the deal or close it under conditional settlements, thus hindering Rogers’ plans of scaling its business with combined assets from Shaw and reduced competition.
The fear has tumbled shares of Rogers by 5.7% year to date against the Zacks Consumer Discretionary sector, which fell by 36%.
However, despite this ongoing uncertainty for months, Rogers continues to make investments to enhance its services and grow its customer base even further.
Earlier this year, it made a remarkable announcement to invest $10 billion over the next three years into Artificial Intelligence (AI). The AI technology could be used to help Rogers design a more effective network infrastructure, improve connectivity and thus transform its business for the better.
A better-ranked stock in the same sector is Liberty Media (FWONK - Free Report) , sporting a Zacks Rank #1.
Liberty Media’s share price decreased 5.6% year to date. The Zacks Consensus Estimate for earnings is pegged at 10 cents, which has moved up by 42% over the past 30 days.
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Roger Communication's (RCI) Roger-Shaw Deal Faces Opposition
Roger Communication’s (RCI - Free Report) deal to acquire its competitor Shaw Communications , which was proposed in March 2021, continues to face opposition from the Canadian tribunal.
Even after the four-week hearing on the acquisition deal that commenced on Nov 7, the Canadian tribunal said that it couldn’t arrive at a decision and is expected to release its verdict either by the end of this year or early January 2023.
The tribunal has been showing concern over the potential merger of Roger and Shaw that would result in less competition in Canada’s wireless business. Though Rogers has tried to address this by agreeing to sell Shaw's Freedom Mobile business to Quebecor, which would overcome competition concerns, it hasn’t helped in coming down to a settlement.
Canada’s competition tribunal believes that Rogers is one of the biggest telecom providers in the country and this small divestment will not create a competitive edge for Quebecor and will continue to strengthen Rogers’ power in the industry. This could lead to dominance and high service prices.
Rogers’ Growing Top-Line Causes Headwind for the Deal
In the third quarter of fiscal 2022, Rogers released that it delivered a total of 448000 net wireless additions year to date, up 137% year over year while Telus Corp (TU - Free Report) had total customer net additions of 347,000, up 8% year over year, in the same quarter. Rogers had also become the largest provider of unlimited data plans to Canadian customers with more than 3.2 million customers on these robust 5G plans.
Per WhistleOut, though Bell and Telus are at neck-and-neck for the fastest 5G service, Rogers offers the most 5G coverage in Canada.
Adding to this, Roger’s postpaid phone net subscribers saw an addition of 164,000 in the discussed quarter, and total mobile phones had a net addition of 221,000, up 30,000 year over year.
Rogers Communication, Inc. Price and Consensus
Rogers Communication, Inc. price-consensus-chart | Rogers Communication, Inc. Quote
This signifies strength in Rogers and also supports the tribunal’s concern over the Roger-Shaw deal giving undue advantage to Rogers over other telecom companies. This could block the deal or close it under conditional settlements, thus hindering Rogers’ plans of scaling its business with combined assets from Shaw and reduced competition.
The fear has tumbled shares of Rogers by 5.7% year to date against the Zacks Consumer Discretionary sector, which fell by 36%.
However, despite this ongoing uncertainty for months, Rogers continues to make investments to enhance its services and grow its customer base even further.
Earlier this year, it made a remarkable announcement to invest $10 billion over the next three years into Artificial Intelligence (AI). The AI technology could be used to help Rogers design a more effective network infrastructure, improve connectivity and thus transform its business for the better.
Zacks Rank & Stock to Consider
Rogers currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock in the same sector is Liberty Media (FWONK - Free Report) , sporting a Zacks Rank #1.
Liberty Media’s share price decreased 5.6% year to date. The Zacks Consensus Estimate for earnings is pegged at 10 cents, which has moved up by 42% over the past 30 days.