Forget Telus (TSX:T): This Telco Stock Is FAR Better Positioned for 5G!

Telus Inc (TSX:T)(NYSE:TU) is a popular telco stock, but one of its competitors is better positioned for 5g.

| More on:
Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization

Image source: Getty Images

Telus Inc (TSX:T)(NYSE:TU) is one of Canada’s most popular telecom stocks. With a $30 billion market cap, it’s a mainstay of many dividend investors’ portfolios. Investors generally buy telcos for safe, modest returns and high dividend income. The latter, at least, Telus delivers in spades: the stock has a 4.9% yield at today’s prices.

However, the company is going into the 5G era with a major handicap:


The politically unpopular Chinese firm had been Telus’ 5G partner until recently, leading to delays when Telus switched over to Ericsson. As a result, Telus is behind other Canadian telcos on 5G rollout. While Telus’ most recent quarter was fairly strong, it may face problems going forward. On the other hand, its largest competitor looks far better positioned for 5G.

Rogers Communications

Rogers Communications Inc (TSX:RCI.B) is Canada’s largest telecom. It operates cell, internet and TV service nationwide. It also has some media holdings.

Before going any further, I should mention that Rogers’ most recent quarter was a loser. Revenue was down 17%, net income was down 53%, and adjusted earnings were down 48%. On the bright side, cash flow from operations was up 35%, but free cash flow was down 24%.

Overall, these are fairly poor results. But remember that Rogers has significant media holdings, such as TV stations. These got hit harder than the company’s other business segments.

Media revenue was down 50% thanks to less demand for advertising and cancelled sports. Core telecom operations fared better on average. For example, cable revenue decreased by just 3%. What this means is that Rogers’ core operations fared comparatively well in Q2 compared to other telecoms.

Why it’s better positioned than Telus

The reason that Rogers is better positioned than Telus for 5G is that it doesn’t have Huawei issues to deal with.

Rogers has always partnered with Ericsson on infrastructure, and will continue doing so for 5G. This has allowed it to roll out its 5G quickly. With no political headaches to deal with, Rogers’ 5G rollout has happened on schedule.

Telus is a different story, however. Until recently, Telus had been partnered with Huawei for some network components. Unfortunately, political pressure has been mounting against Huawei. The U.S. recently banned the Chinese firm from government networks, and Canadian military have voiced similar concerns.

Telus held the line on Huawei for a long time, until announcing in June that they would switch to Ericsson and Nokia. As a result, their rollout has been delayed.

Foolish takeaway

Rogers and Telus are two of Canada’s most popular 5G stocks. With high dividend yields and steady dividend growth, they’re both solid income plays. However, Rogers seems to have the better future.

With its rollout steaming ahead, it’s positioned to win over subscribers who want the fastest wireless available. This should play out well for the company going forward, despite its Q2 headwinds.

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.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

4 Ways to Grow $100,000 Into $1 Million in Retirement Savings

Anyone can build a million-dollar retirement portfolio. Here are four ways you could practically grow $100,000 to $1 million.

Read more »

A shopper makes purchases from an online store.
Dividend Stocks

3 Reasons to Buy TFI Stock Like There’s No Tomorrow

TFI stock (TSX:TFII) had a hard 2023, but now it's set up for a solid 2024, with an acquisition that…

Read more »

Dividend Stocks

5 Secrets of TFSA Millionaires

These lesser-known secrets can help you set up the perfect long-term portfolio and achieve a million-dollar TFSA!

Read more »

analyze data
Dividend Stocks

How to Build a Powerful Passive-Income Portfolio With Just $20,000

These fundamentally strong TSX stocks have paid and increased their dividend in all market conditions. Add these stocks to build…

Read more »

Canadian stocks are rising
Dividend Stocks

iShares S&P/TSX Capped REIT Index ETF (TSX:XRE): Why I Like this ETF Better Than a Rental Property

XRE is a great ETF for gaining exposure to the Canadian real estate sector.

Read more »

Payday ringed on a calendar
Dividend Stocks

3 High-Yield Dividend Stocks That Pay Cash Every Month

These three dividend stocks all offer high yields and have sustainable dividends, making them some of the best investments to…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

3 Stocks That Could Create Lasting Generational Wealth

If you want to start transferring over your wealth, you'll need to actually have some! And these are three stocks…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Down by 25%: Is Canadian Tire Stock a Buy in February 2024?

Take a closer look at this Canadian retail stock if you are looking for low-cost additions to your self-directed portfolio…

Read more »