Cable stocks worth a second look by David Berman
Source : Globe & Mail
August 22, 2008
Canadian cable company stocks suffered setbacks during the recent wireless auction, which fed concerns that new competition would erode their profits. Rogers Communications Inc., in particular, has seen its shares wilt 24 per cent from their high point last year.
But according to Vince Valentini, an analyst at TD Securities, cable companies are winning the subscriber battle against rival telecom companies, which makes them compelling buys.
"What we see is a picture of total domination by the cablecos," he said in a note to clients. "We have to go back to the third quarter of 2003 to find a period where the telcos added more revenue-generating units than the cablecos in Canada."
Take Internet subscribers. In the second quarter, Canadian cable companies added 67-per-cent more high-speed data subscribers than telcos did.
At the same time, telco executives have boasted that they can win market share in digital video subscribers because their satellite-video platform does not have a cumbersome legacy analog network to support, unlike the cablecos.
However, Mr. Valentini believes that the telcos are not delivering. He noted that the cable industry added 95,000 digital video subscribers over the past quarter, or more than seven times the number added by the telcos.
He has "buy" recommendations on Rogers, Shaw Communications Inc., Cogeco Cable Inc. and Quebecor Inc.
© Globe and Mail
But according to Vince Valentini, an analyst at TD Securities, cable companies are winning the subscriber battle against rival telecom companies, which makes them compelling buys.
"What we see is a picture of total domination by the cablecos," he said in a note to clients. "We have to go back to the third quarter of 2003 to find a period where the telcos added more revenue-generating units than the cablecos in Canada."
Take Internet subscribers. In the second quarter, Canadian cable companies added 67-per-cent more high-speed data subscribers than telcos did.
At the same time, telco executives have boasted that they can win market share in digital video subscribers because their satellite-video platform does not have a cumbersome legacy analog network to support, unlike the cablecos.
However, Mr. Valentini believes that the telcos are not delivering. He noted that the cable industry added 95,000 digital video subscribers over the past quarter, or more than seven times the number added by the telcos.
He has "buy" recommendations on Rogers, Shaw Communications Inc., Cogeco Cable Inc. and Quebecor Inc.
© Globe and Mail
