Yesterday, Rogers Communications and Quebecor’s Videotron announced they had signed a 20-year agreement to build out and operate a shared LTE wireless network, which they say will offer the most advanced wireless technology in the world.
Rogers CEO Nadir Mohamed said a partnership makes sense for customers.
“This agreement will benefit businesses and consumers and is part of Rogers’s focused, strategic game plan,” he said. “This network and spectrum-sharing agreement, combined with the expansion of our LTE footprint, will allow even more consumers to experience the superior connectivity and incredibly fast speeds that LTE delivers.”
Goff says Canada’s wireless players are benefiting from an improving macro environment, and revenue outlooks are also improving because of accelerated data usage. He says that because mobile data usage is rising, spectrum has become increasingly valuable and yesterday’s deal builds on Rogers’ previously announced option to acquire Shaw’s AWS spectrum in Western Canada and boost its spectrum holdings ahead of the 700 Mhz auction that will take place later this year.
In a research update to clients this morning, Goff maintained his BUY rating and $58 one-year price target on Rogers Communications, a target that implies a 25% return, as shares of Rogers on the TSX closed today down .4% to $47.73.
Goff says Rogers will derive almost two-thirds of this year’s forecast EBITDA from wireless. This is on par with Telus, but much higher than competitor BCE, who will draw just 25% of this year’s EBITDA from the increasingly lucrative space.