Investors would be wise to avoid Canada’s “big three” telcos right now, says one fund manager
Diana Avigdor, VP, Portfolio Manager and Head of Trading, Barometer Capital Management was on BNN’s “The Street” Friday to talk about the Canadian telecom sector.
Avigdor says that with the overall markets performing particularly well right now, investors should think twice about parking money in the volatile sector.
“At some point the telcos are going to be okay to buy,” she says. “For now there is no reason to gain exposure to that kind of volatility when you have so many other things working.”
The potential entry of U.S. giant Verizon has weighed heavily on Canada’s telco incumbents. Rogers, Bell and Telus are all trading near 52-week lows. Shares of all three did perk up late last week on reports that Verizon may be putting off the purchase of Wind Mobile or Mobilicity.
Bell, Rogers, and Telus have been intensely lobbying the government and Canadian public, arguing that they are at a disadvantage because current rules allow a new entrant to buy smaller Canadian carriers, buy more wireless spectrum than they can, and to piggyback on their wireless spectrum, rather than building their own.
The report last week from the Globe and Mail’s Rita Trichur and Boyd Erman says Verizon will likely focus on the upcoming auction of the 700 megahertz frequency, which is “…considered the most valuable airwaves that have ever come up for bidding in Canada.”
Avigdor says the political risk of the sector right now worries her, and believes the entry of another competitor into the Canadian market is “inevitable at some point”.