Friday proved to be a less than solid day for the Canadian telecom market. Shares were lightly traded among several different companies as RBC Capital Markets analysts cut price targets on several different firms. Prices wavered little, though, with Telus ($TSE.T) up modestly, BCE (TSE:BCE) up fractionally, Rogers ($TSE:RCI.A) flat and Quebecor ($TSE:QBR.B) down modestly in Friday morning’s trading.
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Essentially, as far as Canadian telecom went, RBC was looking for 2025 to look a lot like 2024, and 2024 did very few favors for the communications giants. Telus was cut from $26 to $24 per share, BCE took a bigger slide from $45 to $41, and Rogers was hit hardest of all, with price targets dropping from $66 per share to just $61.
The word from RBC analyst Drew McReynolds left little doubt of a bad year in 2025. McReynolds noted that, without “…new value propositions (that) emerge and scale to create meaningful new revenue streams, 2024 revenue headwinds are likely to persist through 2025.” This includes everything from ongoing competition in the field, macroeconomic issues as households and businesses alike cut back, and overall maturity in the market. McReynolds then nailed the coffin shut, saying “…any meaningful Canadian telecom comeback (is) more of a 2026 story.”
The New Battle With Big Tech
Worse yet for Canadian telecom, it will be going into battle flat-footed against a whole new rival: major technology giants. The rise of “media convergence” is hitting, noted a report from Canadian Dimension, as some of the biggest names in tech like Alphabet (GOOGL) and Meta Platforms (META) leave Canadian telecoms forced to serve as “dumb pipes,” routing customers to other people’s platforms.
The report also noted that the Canadian landscape itself is playing its cards increasingly, and disturbingly, close to the vest in the meantime. News Media Canada, it noted, has “…discontinued several annual reports on newspaper ownership, revenue and circulation.” But the report also suggests that this may be less about survival and more about a play for Canadian taxpayer dollars in the form of government support.
Which Canadian Telecom Stock Is a Good Buy?
Turning to Wall Street, the leader among the stocks is TSE:RCI.A. With an average price target of C$63.40 and a Strong Buy recommendation, it offers investors a 34.15% upside potential. Meanwhile, the laggard in the group is TSE:T, as this Moderate Buy-rated stock offers an 18.58% upside potential against an average price target of C$23.74.
