America’s Citi Research Gives ‘Buy’ Ratings for Telus and Bell, ‘Neutral’ for Rogers

Analyst Kevin Toomey from Citi Research sees more upside in Canada’s wireless sector versus his fellow American counterparts.

The analyst forecasts Canada’s Big 3 wireless players will see a compound annual revenue growth of roughly 2% versus less than 1% for American wireless carriers. Toomey gave buy ratings on Telus and BCE and a neutral rating for Rogers.

Image via Engadget

Reasons why Canada’s market is seen with an upside is based on the following factors: better industry structure, lower cellphone penetration, heavy wireless spectrum holdings, less pressures on wireline revenues, to go with a wealthier growing population, according to the analyst’s research note, reports the National Post:

“Valuations of the Canadian communication stocks have risen over the past month, but we believe there is still room for upside as these Canadian stocks deserve a premium valuation to the broader average of Telco & Cable stocks,”

Canadian wireless firms are trading at future value to operating income before depreciation and amortization (FV/OIBDA) multiples that are higher than U.S. firms, plus telecoms here also have better free cash flow yield.

The analyst singled out Telus as his top pick based on anticipated growth in wireless and wireline margins, and also chose Bell’s parent company BCE as a buy “out of consensus” based on prospects of growing wireless performance and “acquisition-related synergies.” He predicts both companies to have above-average earnings per share for 2015 and 2016.

Last quarter, Telus added 113,000 wireless customers, Bell added 91,000 and Rogers only added 17,000.

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • Jason Reid

    Agreed! The big 3 are all the same in general but IMO what sets Telus above is their customer service. BTW Happy Birthday Gary!!

  • Crosseyedmofo

    is it gary’s birthday? anyway we can give him the bumps through disqus?

  • Thanks! 🙂

  • **runs for the hills**

  • Crosseyedmofo

    happy birthday bud

  • Thanks! How did Jason remember?

  • Crosseyedmofo

    id be concerned D:

  • How did you know it was my birthday? 😉

  • That’s it, I’m changing my birthday!

  • Jason Reid

    Lol it said so on Facebook. I think we are friends.

  • Jason Reid

    i’m following you to the hills…*creepy voice*