Canadian telecommunications companies have an interesting reputation among consumers and investors for a number of reasons. As with many national markets when it comes to telecommunications services, Canada has an oligopoly of companies which control national coverage for Canadians from coast to coast.
The three major players, Rogers Communications Inc., BCE Inc., and Telus Corporation, operate with an interestingly competitive, yet symbiotic relationship in which service is shared and often aggregated to give Canadian mobile users the fastest and best possible services throughout the country.
The consumer wants increased access to the best and fastest technology available, and this requires billions of dollars of investment from Canada’s largest telecom firms. Canada’s largest telecoms want somewhat of a guarantee that if the massive investments are made for consumers, a reasonable return in a reasonable amount of time will be assured for investors.
This prescient reality, that massive capital expenditures in the billion-dollar range are necessary to gain entrance to an elite group of telecom providers, has led to little expansion among the smaller companies vying to compete on a national scale.
One company looking to change all this is Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR).
As early as Q2 2016, Shaw’s subsidiary Freedom Mobile (formerly Wind Mobile) announced plans to launch a massive LTE network by late 2017 (it’s now looking like it will launch closer to Q4 2017) that would support new devices using the revolutionary AWS-3 specification. This announcement was made in the absence of such phones, but the plans indicated at the time that Shaw was a forward-thinking company with a real long-term plan of how to take on the big players.
As it happens, the consumer is always right, and whatever the consumer wants, they usually get. Apple Inc.’s new iPhone 8 and Samsung’s Galaxy S8 are going to require the newer, better, faster LTE networks — and Shaw appears ready, or nearly ready, to meet the challenge.
I expect consumers will begin to see a lot of marketing and advertising in the coming quarters with respect to the new LTE infrastructure being put in place. The amount of time and money spent on this initiative is significant, and while the numbers are not out yet, one thing is for certain: for an investment of this size, Shaw must be expecting a significant boost in earnings for 2018.
Right now may be the best time to buy on the expected bump.
Stay Foolish, my friends.
