2 Hot Media and Communication Stocks To Own in August 2020

Summary

• The media and communication industry has played a key role in the coronavirus pandemic crisis, enabling people to stay connected to each other.
• The industry’s overall revenue in 2019 was C$ 65 billion and it employed 118,814 people
• The future for media and communication sector will be defined by 5G, wireless, mobile data and fixed broadband segments.

Canada’s media industry is among the world’s most innovative industries producing blockbuster movies to best-selling video games. In 2019, the country’s television industry revenue was C$ 6.94 billion while radio industry revenue stood at C$ 1.86 billion, as per Statista.

The industry is closely connected to communication sector, with some of the largest companies offering diverse products and services in both telecom, internet, landline and satellite cable segments. Some of the top players include BCE, TELUS Corporation, Shaw Communications, Rogers Communications, Corus Entertainment and Cineplex.

As of 2019, the communication services industry had a total revenue of C$ 65 billion and employed 118,814 people, data from Canada’s Innovation, Science and Economic Development shows.

Following the coronavirus pandemic crisis, the industry emerged as Canada’s backbone, weaving together its social and economic threads. It enabled people to stay connected amid strict social distancing rules and stay-at-home mode. Canadian operators maintained fastest wireless speed across the world, despite a dramatic surge in traffic, a 2020 report by mobile analytics firm Opensignal said. While the pandemic has pushed the entire industry into a negative territory forcing a market contraction, analysts expect a rebound in 2021.

Over the coming years, the media and communication sector will be defined by advancements in 5th generation (5G), users’ experiences and internet of things (IoT). The market is already on the threshold of 5G revolution, which is expected to contribute C$ 40 billion to Canada’s annual GDP by 2026, as per an Accenture report. Nearly C$ 26 billion will be spent in deploying 5G infrastructure between 2020 and 2026, adds the report.

The media and communication sector’s future revenues will primarily be driven by wireless, mobile data and fixed broadband segments.

Let’s take a look at the stock and financial positions of two key players in from the media and communication sector:

Shaw Communications Inc. (TSX: SJR.B)

Network and content specialist Shaw Communications has been a market favorite since its acquisition of Wind Mobile in 2016. At the time of filing this story, the company stocks were up 8 percent in one month and 2.3 percent over three months.

Shaw Communications is one of biggest media and telecom players in Western Canada and has a diversified services portfolio including internet, landline, cable telecommunications and television. Its main market is in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario.

The company’s high-speed Fibre+ network traffic surged by 50 percent while daily peak usage period climbed is up to 12 hours, CEO Brad Shaw reported in a media write-up.

The company’s core business has been profitable amid the COVID-19 pandemic leading to strong 2020 third quarter financial results. Its free cash grew by 20.2 percent year-to-date (YTD) in the third quarter over the same period last year. Its scrips have regained 35.4 percent since the March lows.

Shaw Communications, previously known as Capital Cable Television, was incorporated in 1966. The firm has a strong 3.2 million-customer base, which includes 1.9 million internet subscribers and over one million Shaw Home Phone customers.

TELUS Corporation Common (TSX:T)

Counted among the top three wireless service providers in Canada, TELUS stocks gained from the Canadian market rebound and the homebody economy that pushed people to rely on data services. For now, TELUS stock is trading flat over three month-period and up by 1.7 percent in a month’s time.

The C$ 29 billion-dollar firm boasts of over 9 million mobile phone nationwide subscribers and a market share of 30 percent. It announced quarterly dividends of C$ 0.29125 per share and has current dividend yield of 5.048 percent.

TELUS announced solid first quarter results, posting consolidated revenue and EBITDA growth of 5.4 and 4.2 percent. Its free cash flow C$ 545 million shows 33 percent increase, up by $392 million from same period last year. Following a C$ 1.5 billion equity offering in February, right before the pandemic hit the market, the company has been able to navigate the crisis with a liquidity of over C$ 3 billion and no debt maturities until 2021.

Referring to Opensignal’s report that highlighted Canadian operators maintained fastest wireless speed globally, TELUS says its faced “Super Bowl-level traffic” daily during the pandemic.

In the first quarter of the year, TELUS added 119,000 new wireless, internet, TV and security customers, up by 14,000 YoY. It currently has 10 million wireless subscribers, up 5.6 percent over a year.

TELUS has a range of offerings including mobile, internet, television, landline and healthcare services. It recently launched fifth generation or 5G services in Canada.