The merger of Rogers Communications (TSX: RCI.B) (NYSE: RCI) and Shaw Communications is not yet a done deal, but the chances of it happening are high. In May 2021, Shaw shareholders overwhelmingly approved the proposed $ 26 billion deal.
Meanwhile, Telus (TSX: T) (NYSE: TU) is watching as Rogers could overthrow the company as the second-largest telecom in a near-monopoly industry. Shaw Executive Chairman and CEO Brad Shaw said the combination will create a true national network provider. The result would be far-reaching, multigenerational benefits for all Canadians.
The Rogers-Shaw merger is not without its obstacles. First, the agreement has additional conditions before consumption. As a buyer, Rogers must obtain approvals from Canadian regulators such as the Competition Bureau. The CRTC and Innovation, Science and Economic Development Canada are also reviewing the agreement.
Consumer groups, including telecommunications advocacy group OpenMedia, want the federal government to stop Rogers from pursuing the Shaw buyout. Rogers promises to invest $ 2.5 million in 5G networks over the next five years. In addition, the new company plans to create a $ 1 billion rural and indigenous connectivity fund.
The goal is to connect rural, remote and Indigenous communities in Western Canada to high speed Internet. In the first quarter of 2021 (quarter ended March 31, 2021), revenue and net income increased slightly by 2% and 3% compared to the first quarter of 2020. Joe Natale, president and CEO, said that the Quarterly results reflect Rogers’ disciplined performance in each of its business units.
Telus (+ 12.64%) has underperformed the stock market relative to Rogers (+ 14.4%) so far in 2021. Industry leader AEC at the top of the two with + 16.44%. Telus also has big plans that should consolidate its presence in Canada. The $ 37.6 billion company will invest $ 2 billion to connect more than 90% of Calgary homes and businesses to its PureFibre network.
The network is the largest 100% fiber-to-the-home network in Western Canada. Darren Entwistle, President and CEO of Telus, said, “With this generational investment in Calgary, TELUS is proud to provide the technology to bridge geographic and socio-economic divides. He added that he will connect citizens with people, resources and information to improve their lives.
In the first quarter of 2021, operating income increased by 8.9% compared to the first quarter of 2020, although net income decreased by 5.7%. Doug French, executive vice president and chief financial officer of Telus, said quarterly results demonstrate the resilience of the company. The company continues to provide leading broadband experiences as well as premium bundled solutions.
Last month, based in New York PCMag named Telus as Canada’s fastest Internet service provider for the second year in a row. Telus has invested $ 1 million to support small businesses through the #StandWithOwners initiative.
The telecommunications industry is capital intensive with high barriers to entry. Telus has invested approximately $ 51 billion in Alberta since 2000. It will invest an additional $ 14.5 billion in the province through 2024. The goal is to create significant and tangible social results for all Albertans.
Excellent dividend-paying stocks
There is no specific date on which Rogers will complete the transaction with Shaw. It leads the 5G network coverage, although Telus, along with BCE, has the best network coverage. Both are excellent dividend-paying stocks with a dividend of 4.56% for Telus and 3.01% for Rogers. If you’re price conscious, Rogers ($ 66.55) is more expensive than Telus ($ 27.75). Telus seems to have the advantage if the considerations are dividend yield and share price.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content.
Foolish contributor Christopher Liew has no position on any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV and TELUS CORPORATION.