Verizon’s Coming to Canada

Real competition may finally be coming to this country’s wireless space.

| More on:
The Motley Fool

Well, after this Fool initially figured a move north by Verizon (NYSE:VZ) wasn’t worth its while, it turns out the company thinks it is.  Guess which opinion matters more?

Ottawa wants a 4th player in the Canadian wireless market, and Ottawa is going to get a 4th player in the Canadian wireless market.  Verizon has made an initial bid of $700 million for Wind Mobile and is apparently in talks with Mobilicity to perhaps bring it into the fold as well.

Verizon’s advantage over the 3 Canadian incumbents, Rogers (TSX:RCI.B), Telus (TSX:T), and BCE (TSX:BCE) is its size.  With 100 million customers, Verizon has buying power with handset manufacturers that cannot be matched by this country’s carriers.  This has implications for the industry’s market share, and margins.

In addition, Verizon offers the possibility of unlimited roaming throughout North America.  No more touching down on a U.S. runway only to be greeted by a message from Rogers indicating that if you want to use your mobile device outside of Canada it’s going to cost you your first born.

Should this deal get done, the most important near term development is how this changes the dynamic of the upcoming 700-Mhz spectrum auction.  This auction has been highlighted on the calendar of Canada’s Big 3 wireless players for some time as they expected it to be a great way to squeeze out the pesky upstarts.  Now that another deep-pocketed player may potentially be sitting at the table, it could significantly alter what the incumbents had envisioned.

Foolish Takeaway

While this is big news in the Canadian wireless landscape, it’s unlikely to have an impact on Verizon’s stock.  Even though they’ve elected to proceed with a Canadian market strategy, it’s still a small piece of the overall pie.  Rogers and Telus are the two incumbents with the most wireless exposure, and therefore, their stocks are likely to face the brunt of this development.

Canada’s telecom space is a haven for investors that are looking for yield.  To add some diversity to your income-producing portfolio, simply click here to download our FREE report “13 High Yielding Stocks to Buy Today”.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler does not own any of the companies mentioned in this report.  The Motley Fool has no position in any stocks mentioned at this time

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Thursday, December 8

TSX stocks may remain volatile ahead of the U.S. inflation data and the Fed’s interest rate decision, which are due…

Read more »

Dividend Stocks

Enbridge Is a High-Yielding Canadian Dividend Stock to Buy Now and Own Forever

Are you looking for a high-yielding Canadian dividend stock to buy? Enbridge (TSX:ENB) has plenty to offer investors.

Read more »

sale discount best price
Stocks for Beginners

3 TSX Growth Stocks You Can Buy at a Screaming Discount

These three growth stocks remain screaming buys, given their track records of growth and future opportunities for investors.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Why I’d Buy These 2 Healthcare Stocks Today (Besides the Cheap $10 Price)

Two small-cap stocks trading under $10 worth buying right now as promising healthcare plays in 2023.

Read more »

woman data analyze

Better Buy: Telus Stock or BCE?

Telus (TSX:T) and BCE (TSX:BCE) are dividend-growth stocks that seem like worthy pick-ups ahead of a recession year.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

3 Dividend Stocks to Build Wealth in the New Year

These dividend stocks have proven they're set up for a strong future and have dividends you'll want to lock up…

Read more »

Dad and son having fun outdoor. Healthy living concept
Tech Stocks

Prediction: These Will Be 2 of the Strongest TSX Stocks in 2023

Tech stocks may have dropped during the last few years, but these two TSX stocks are bound for major growth…

Read more »

edit Person using calculator next to charts and graphs
Tech Stocks

This 1 Tech Stock Is My Hands-Down Choice Over Shopify

A small-cap tech stock with consistent revenue growth and nearly 300% profit growth is a better option over the TSX's…

Read more »