Telus probably has more upside than BCE, says Bruce Campbell

Canadian telecom rivals Telus (Telus Stock Quote, Chart TSX:T) and BCE (BCE Stock Quote, Chart TSX:BCE) have both had excellent first halves to 2019 but the growth prospects for Telus could be a little better, says Bruce Campbell of Campbell, Lee & Ross Investment Management, who argues that by rights Telus should be thinking about picking up a media interest in a company like Corus Entertainment.

Telus’ share price got a boost earlier in May with the release of its first quarter financials, which met estimates for top and bottom lines. The company generated $437 million in profit, an increase from $412 million a year prior, which translated to adjusted earnings of $0.75 per share, equal to analysts’ $0.75 per share forecast. Telus’ operating revenue came in at $3.51 billion, up from $3.38 billion a year ago and also right on target with the consensus.

Those numbers helped the stock gain three per cent since the May 9 release date and altogether put Telus up 10.3 per cent for the year, even as the company continues to raise its dividend, which currently yields 4.5 per cent.

But BCE has had a good run as well, climbing 13 per cent year-to-date and sporting its own attractive yield of 5.2 per cent.

Campbell says the difference between the two is slim but that Telus might benefit from, like BCE, which has Bell Media, taking on media assets. Fellow telco Shaw Communications recently announced it is selling its 38-per-cent stake in Corus Entertainment, which includes the Global Television Network and a number of specialty channels, and Campbell says the fit might work for Telus.

“We like Telus but don’t own it. It’s one that we have owned but at the moment we’re on BCE,” said Campbell, chairman and portfolio manager at Campbell, Lee & Ross, to BNN Bloomberg on Tuesday. “Telus could have bought Corus because they don’t have any assets on the media side, so the advantage to them would be that they can look at it and say, ‘Yeah, it’s slower growth,’ and they’re doing a good job on wireless so they’re just going to stick there.”

Campbell says there’s potential upside to owning Telus.

“For Telus, like BCE, there’s relatively low growth in the industry but with a good dividend and it might be one or two per cent better than BCE in the next 12 months,” he says.