2 TSX Telecom stocks that are the best value picks

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A mega-merger in the Canadian telecommunications sector is imminent. Rogers Communications (TSX:RCI.B)(NYSE:RCI) must overcome two other major hurdles to proceed with the acquisition of Shaw Communications. The business combination will reverse TELUS as the second telecommunications operator in the country.

In all likelihood, Rogers will become a value choice for investors in the space alongside ECB (TSX: BCE)(NYSE: BCE). As of this writing, Rogers is the best performing 5G stock among the Big Three telecoms with its year-to-date return of 20.77%.

Conditional approval

The Canadian Radio-television and Telecommunications Commission (CRTC) granted Rogers conditional approval to acquire Shaw last month. The CRTC assessed the broadcasting elements of the $26 billion deal and said the merger would be in the public interest. He adds that it would not impact the competitive landscape.

Rogers said earlier that Canada is no longer an island in an ocean. He argued that in addition to industry peers BCE and TELUS, competition on a global scale is also increasingly important. Among the main conditions, Rogers must contribute $27.2 million to various media and local news initiatives and funds. The amount is five times greater than the initial commitment of the procuring entity.

Rogers must also distribute at least 45 English- and French-language independent services on each of its cable and satellite services. It should ensure that independent programming services are not disadvantaged in negotiations with Rogers.

Regarding rate increases, Rogers said any price increases would be consistent with Shaw’s decades-old pricing system. Plus, fierce competition from Telus is the best way to combat rising prices, Rogers said. The Competition Bureau and Innovation, Science and Economic Development Canada (ISED) will then examine acquisitions of wireless, telephone and Internet services.

As Rogers waits for the next round of hearings, the $36.53 billion telecommunications company has launched Canada’s first commercial standalone 5G (SA) network. According to Rogers CTO Jorge Fernandes, the milestone underscores the telecom operator’s continued leadership in 5G.

Additionally, Rogers has a $300 million partnership with the Government of Canada, the Province of Ontario and the Eastern Ontario Regional Network (EORN). The partners aim to bridge the digital divide and provide reliable wireless connectivity across Eastern Ontario. For potential investors, Rogers is trading at $72.21 per share and paying a dividend of 2.8%.

buy and keep

Canada’s largest telecommunications company is a buy-and-hold stock. Besides the dividend growth streak of 13 consecutive years, BCE’s dividend history dates back to 1881, or 140 years. If you invest today, the stock price is $72.12, while the dividend yield is 5.16%. On April 6, 2022, the telecommunications stock hit a 52-week high of $72.24.

The compelling reason to invest in BCE is the recurring revenue streams. Income investors or retirees can receive pension-like income if they buy the stock today and hold it indefinitely. Over the past 46.29 years, the total return is 84,444.30% (CAGR of 15.67%). The $65.63 billion industry giant generates billions of dollars in revenue each year, so dividend payouts should be safe and sustainable.

Blaik Kirby, Group President, Consumer and Small and Medium Business, BCE, said, “I’m so proud that Bell is once again leading the way in delivering faster Internet speeds to our customers.

High chance of approval

Industry analysts predict that the Competition Bureau and ISED will also approve the telecom merger, although there may be more conditions compared to the CRTC. The schedule is late this year.

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