The 5G revolution is one that is perhaps less exciting than other paradigm shifts in the market. Indeed, the growth catalyst 5G provides for the telecom sector is one that’s a long burn. It will take many years for investors to reap the benefits of the infrastructure improvements telecom players are making today.
However, it’s undeniable the improvements that are coming via 5G. Improved data speeds and minimized latency provide a data-hungry user base with better, faster connectivity. And companies like Rogers Communications (TSX: RCI.B)(NYSE: RCI) are leading the way in bringing this technology to the masses.
Here is the key reason why investors are honing in on Rogers as an excellent long-term 5G pick.
Shaw Communications deal provides a tonne of potential upside
Without a doubt, the $20 billion takeover bid for Shaw Communications (TSX: SJR.B)(NYSE: SJR) is huge for investors. Indeed, it appears that there is a lot of optimism in relation to this acquisition. However, I expect this merger to be more beneficial for Rogers than Shaw.
Rogers will be able to roll out the 5G technology much faster than the other players in the market. Furthermore, this deal allows the company to expand its operations in Western Canada, which requires a significant amount of investment when it comes to 5G infrastructure.
Once this acquisition is complete, Rogers will become the second-largest telecommunications company in the country. It will overtake Telus to compete with BCE, which is currently leading the market. There’s huge upside for shareholders considering the potential size of this company following the completion of this takeover. Indeed, there’s plenty of optimism among analysts in relation to the potential value that could be generated once this acquisition is complete.
The acquisition is not a done deal yet
Investors must note that there’s still a lot of speculation going on as to whether this deal will eventually materialize or not. Since this takeover will be a game changer for the telecommunications space, a regulatory review will take place. Nevertheless, it appears that there’s a tonne of optimism around the deal going through right now.
Canada has a reputation for having a relatively lenient regulatory process when compared to that of other countries. Indeed, regulators of this country have given the green light to big deals similar in size and scale to this one recently. Accordingly, the market appears to be correctly pricing in lower regulatory risk with this deal today.
Indeed, I think if Rogers were to tie up with an international counterpart, this risk level would be much higher and would be priced accordingly.
Bottom line
With the race to 5G supremacy on, now’s the perfect time to start considering the best way to play this space. For those who believe this major acquisition will take place, Rogers is a great bet today.
