No Welcome Mat for Verizon on Canada's Doorstep

"Get lost, eh!"

That's the message the Communications, Energy, and Paperworkers Union of Canada, the largest labor union north of the border, wants the Canadian government to give Verizon (NYSE: VZ  ) if it expects to get any advantages in buying Canadian wireless frequencies.

"Granting one of the biggest companies in the world special rights to public airwaves (spectrum), to buy small players and to existing companies' networks may be the most ill-conceived policy the Harper government has come up with," said CEP president David Coles in the union's press release.

And get this: Canadian telecom management is siding with the union, at least in this instance.

BCE's (NYSE: BCE  ) Bell Canada division, one of that country's three largest telecoms -- a group that also includes Rogers Communications (NYSE: RCI  ) and Telus (NYSE: TU  ) -- has written an open letter to "all Canadians" decrying new regulations that put Canadian telecoms at a disadvantage when bidding for wireless spectrum.

"Verizon Communications, a $120-billion U.S. Telecommunications giant with 100 million wireless customers, is considering entering the Canadian market," wrote Bell Canada CEO George Cope. "A company of this scale certainly doesn't need handouts from Canadians or special regulatory advantages over Canadian companies. But that is exactly what they get in the new federal wireless regulations."

Telus CEO Darren Entwistle told the Financial Post earlier this month that the telecom industry in Canada would face a "bloodbath" unless all companies were able to bid for spectrum under the same rules.

Verizon's interest in moving into Canada was confirmed by its CFO, Fran Shammo, when he told The Wall Street Journal that his company was indeed "looking at the opportunity."

And last month, Reuters reported that Verizon had made a tentative bid of $600 million to $800 million for Canadian start-up Wind Mobile and was also having takeover talks with another Canadian mobile start-up, Mobilicity.

The problem for the larger Canadian telecoms is that there is a moratorium on letting incumbent telecoms obtain spectrum owned by those start-ups. Not having to bid against the incumbents for spectrum is a huge advantage for Verizon, something Verizon picked up on after the Canadian government blocked Telus' $380 million bid for Mobilicity in early June.

BCE, Rogers, and Telus have all seen their stock prices slump from 12% to 20% since their 2013 highs in May and April on the threat of having Verizon come north.

The Canadian government imposed the new spectrum-buying regulations as a way to show consumers that it will try to give them lower cell phone bills by bringing in strong competition to the current industry leaders.

With little likelihood of significant subscriber gains in its U.S. market through mergers and acquisitions -- the Federal Communications Commission and the Department of Justice made that quite clear with their treatment of the AT&T (NYSE: T  ) /T-Mobile USA (NYSE: TMUS  ) merger proposal -- then the U.S. duopoly of telecom giants will have to look outside the good old US of A for a turbo boost.

But if Verizon and/or AT&T do travel north, they should expect a bitter cold welcome.

In the meantime, Verizon, along with AT&T are still exceptional income-producing stocks. While dividend-paying stocks don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. And there are other dividend stocks out there that smart investors should consider. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of the only nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (2) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 31, 2013, at 4:24 PM, markmhere wrote:

    Fran Shammo is Verizon CFO, not CEO.

    Lowell McAdam is Verizon CEO.

  • Report this Comment On July 31, 2013, at 5:00 PM, XMFDRadovsky wrote:

    Markmhere,

    You're right, of course. A typo on my part and I'll see about getting that changed.

    Thanks,

    Dan

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2568395, ~/Articles/ArticleHandler.aspx, 9/20/2014 4:30:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement