Are there any company-specific issues to account for yesterday's 4.28% decline in the share price of QBR.B, and the larger 6.87% decline for Telus?
A 5i member recently expressed his frustration with Telus, a view that I share.
I own both of these stocks, and have been pleased with the performance of QBR.B. With Telus, not so much!
To maintain the same weighting in the sector, I plan to sell Telus, and use the proceeds to buy more QBR.B. Your thoughts?
Thanks as always for the guidance.
Telus was downgraded by Canaccord and Scotia yesterday and price targets were lowered, citing concerns on the dividend and continued high competition within the sector. This comes amid a TD analyst also cutting price targets on the Big 3 telecom names, and the thesis is that the flanker brands are all offering promotions that were intended to spur phone plan growth, but instead it created more churn.
T now pays a yield of about 10%, and this is typically the range where we start to see the market pricing in the potential for a dividend cut risk. There are a few positives that we like with T, such as its Telus Health division and AI factory, but these will take some time to fully offset the structural decline of its telco business.
For QBR.B, a regulatory change was enacted that forces the Big 3 telcos to allow regional competitors to piggyback on their wireless networks. This directly benefits Freedom Mobile (QBR.B). The mandated access is set to run out to 2030, and this is where QBR.B will likely be spending to build its own towers before then.
While acknowledging that QBR.B is much smaller, we would be comfortable with this switch.