- Quebecor (TSX: QBR.B) has agreed to purchase Freedom Mobile from Rogers (TSX: RCI.B).
- Rogers deployed its 3500 MHz spectrum in Nanaimo, British Columbia on June 15.
- Shaw added about 16,900 new wireless customers in Q2 2022.
Rogers (TSX: RCI.B) has agreed to sell Freedom Mobile to Quebecor (TSX: QBR.B) for an enterprise value of C$ 2.85 billion. This deal was reportedly set to address the concerns of the Canada Competition Bureau, which has been trying to block the Rogers-Shaw merger deal permanently.
All the three parties announced a divestiture agreement for the sale of Shaw's wireless business to Quebecor on June 17, which is said to foster wireless competition by ensuring the presence of a 'fourth' wireless carrier across the nation.
This agreement could be marking Rogers's attempt to secure outstanding regulatory approval to complete Shaw's acquisition. On that note, let us look at the three TSX communication companies involved in this proposed divestiture.
1. Quebecor Inc (TSX: QBR.B)
Quebecor is a mid-cap telecommunication firm providing fixed-line and mobile internet services. Freedom Mobile transaction involves selling its wireless and internet customers, infrastructure, spectrum and retail operations to Quebecor, thereby expanding the company's wireless footprints countrywide.
Quebecor would also receive transport and roaming services from Shaw and Rogers under a long-term undertaking.
The Montreal-headquartered communication service firm recorded net profit growth of 0.1 million to C$ 121.4 million in Q1 FY2022 than Q1 2021. QBR.B scrip rose by nearly two per cent in the last week as on Friday.
As per Refinitiv data, Quebecor's Relative Strength Index (RSI) appears to head upward and was at 44.1 on June 17, supported by volume in green with 1.3 million shares exchanging hands.
2. Rogers Communications Inc (TSX: RCI.B)
Rogers began deploying its 3500 MHz spectrum from Nanaimo, British Columbia, on June 15 and will 'continue' to spread its 5G network coverage nationwide, including urban centres and rural areas. Rogers believes this launch expands its network capacity and will increase speed and deliver 'ultra-low latency.
RCI.B stock dipped by nearly eight per cent in the past one year. This telecom stock has fallen by about 27 per cent from its 52-week high of C$ 80.85 (April 20). As per Refinitiv findings, Rogers. RSI value was 27.71 on June 17, below the oversold mark of 30.
3. Shaw Communications Inc (TSX: SJR.B)
Shaw added about 16,900 new wireless customers in Q2 2022. The telecom company’s postpaid net additions stood at about 8,600 in Q2 FY2022, reflecting a year-over-year (YoY) plunge due to heightened competition in the wireless market.
Stocks of Shaw decreased by almost 10 per cent year-to-date (YTD). According to data from Refinitiv, Shaw's RSI value also improved to 39.28 on June 17, with a trading volume of 3.15 million shares.
Some experts believe that Rogers and Shaw may be able to complete their merger deal without regulatory disapproval after selling Freedom Mobile to Quebecor, which is believed to increase wireless footprint. Hence, investors can explore these three TSX stocks as they are likely to benefit if regulatory bodies approve the Freedom Mobile deal.
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.