Canaccord Adams on Globalive decisionDon't seem to like BCE very much. -TR
Canaccord Adams - Daily Letter - Friday, October 30, 2009
SECTOR UPDATES
Telecommunications
David Lambert
CRTC disappropriates Globalive
We are upgrading our rating on Rogers and increasing our target prices for
TELUS and Rogers as we expect the CRTC decision could delay or potentially
eliminate an impactful new entrant: Globalive Wireless. In our view, it is
unlikely that Globalive will be able to make all of the adjustments
necessary to get around this decision as the decision suggests Globalive is
not compliant on the composition of its board of directors, the shareholder
agreement, its debt financing and its commercial arrangements with Orascom.
We expect Globalive could appeal this decision to Cabinet based on the
process used by the CRTC and on the decision itself. We believe the CRTC
created not only a new process to review the Globalive ownership structure
but also new rules out of thin air. The decision could give Industry Canada
the political momentum to try to eliminate foreign ownership restrictions,
but that could also be a long process. We are increasing our target
multiples and estimates for TELUS and Rogers. TELUS remains our top pick
and should be the most positively impacted since Globalive had purchased
wireless licences in Ontario and western Canada where the majority of the
TELUS's wireless subs are located. However since Quebecor, Dave Wireless
and Public Mobile are launching services in Ontario and Quebec, Rogers and
BCE could still face competition where they have the majority of their
subscribers.
TELUS Corp. (T : TSX : C$32.85): We maintain our BUY rating but are
increasing our target price to $43 from $40.
Rogers Communications Inc. (RCI.B : TSX : C$30.96): We are raising our
rating to BUY from Sell and increasing target to $36 from $28.
BCE Inc. (BCE : TSX : C$25.60): We maintain our HOLD rating and our $27
target price.