'It's My Favorite Name on the Telecom Space': McFadgen on Québecor

Why It Matters

Quebecor’s roaming‑inclusive model pressures incumbent margins and could reshape Canadian wireless pricing, while Rogers’ undervalued sports assets and BCE’s AI push present distinct upside opportunities for investors.

Key Takeaways

• Quebecor disrupted Canadian telecom with low‑priced bundled landline offering
• New Freedom acquisition adds roaming to all plans, eroding incumbents' margins
• Rogers' sports assets valued at $11 billion could trigger stock rally
• BCE focuses on AI, targeting $2 billion revenue by 2028
• Telus' dividend payout exceeds 100%, raising concerns about sustainability

Summary

The interview spotlights Quebecor as the analyst’s top telecom pick, while also weighing Rogers, BCE and Telus in Canada’s competitive wireless market.

Quebecor’s rise mirrors its 2005 strategy of undercutting Bell with a $30 landline‑plus‑cable bundle, growing to 1.35 million subscribers and over $200 million IBA. Its recent Freedom acquisition embeds unlimited roaming in every plan, threatening incumbents’ $400‑$500 million high‑margin roaming revenues. Rogers, after its Shaw deal, is valued at roughly 7× EBITDA excluding sports assets, yet its 75 % stake in MLSSE is appraised at $9.5 billion, suggesting a potential re‑rating once the remaining 25 % is bought out and a minority stake sold.

The analyst notes BCE’s focus on artificial intelligence, aiming for $2 billion annual AI revenue by 2028 and a $500 million Saskatchewan contract, while highlighting Telus’s dividend payout ratio above 100 % and the risk of a cut if its health‑care spin‑off proceeds.

For investors, Quebecor’s aggressive pricing and roaming strategy could drive sustained share‑gain, Rogers may unlock hidden value through its sports assets, BCE offers dividend stability with AI growth upside, and Telus presents dividend sustainability concerns, shaping allocation decisions across Canada’s telecom sector.

Original Description

David McFadgen, managing director of institutional equity research at ATB Cormark Capital Markets, joins BNN Bloomberg to share his Hot Picks in telecoms.

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