5G technology is undoubtedly a major catalyst for the telecommunications sector. However, picking a 5G horse in this race is the real dilemma many investors are faced with right now, so investors in 5G, read on!
In my view, telecom companies need to formulate and implement a coast-to-coast strategy to make the most of the 5G rollout. Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) has recently strengthened its position by expanding its footprint. Indeed, this is one of the key reasons I like this stock right now.
Let’s look at the company’s recent deal to acquire Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR.B) and why it’s such a big deal for investors.
$8.4 billion takeover bid for Cogeco group expires
Rogers collaborated with Altice USA to acquire Cogeco, a Montreal-based telecommunications company. However, the Audet family controlling the company rebuffed their hostile takeover bid. Although Rogers and Altice increased the offer, the family stood firm, and this deal did not materialize. As the bid worth $8.4 billion expired, Rogers revealed that it’ll still be considering the expansion of operations in Quebec.
According to a statement released on September 2, 2020, Rogers holds 41% of the subordinate voting shares in Cogeco. Furthermore, this company holds 33% of the subordinate voting shares in Cogeco Communications.
Although the Audet family rejected the bid to takeover Cogeco, there’s a lot of speculation pending that something could still be in the works by the Rogers’ management team.
Shaw acquisition is a big deal for 5G investors
However, the big news of late is that Rogers is set to take over its Calgary-based rival, Shaw.
Shaw CEO Bradley Shaw revealed that the company would require a substantial amount of funds to upgrade to 5G. He accepted the fact that it would not be possible for Shaw to fund multi-billion-dollar investments. Hence, Shaw has finally accepted a takeover bid worth $20.4 billion from Rogers.
Indeed, this will transform the Canadian telecommunications sector. Furthermore, this deal will make Rogers the best 5G player in Canada as it will have ample scope to expand its operations in Western Canada. This acquisition is a part of a strategy formulated by Joe Natale, CEO of Rogers. He intends on creating a coast-to-coast platform by taking over all telecom businesses of its customers (over wireless 5G, etc.).
Rogers aims to roll out 5G network in four provinces by spending $2.5 billion if the acquisition deal materializes. Moreover, the company is set to invest another $3 billion to upgrade its networks to 5G in the West.
As two of the leading telecommunication companies are set to merge, I believe there’s nothing but positive for growth investors.
Like the secular growth potential behind 5G? Then you need to read this:
5G is one of the greatest arrivals in technology since the birth of the internet. We could see plenty of new wealth-building opportunities in 2021 that would potentially dwarf any that came before them.
5G has the potential to radically change our lives and society as we know it, but if you’re an investor, the implications are even greater — and potentially much more lucrative.
To learn more about it and its revolutionary potential to change the industry — and potentially your bank account — click on the link below to get the full scoop.
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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.