Should Investors Retain Rogers Communications Amid Risks?

On Jul 6, 2017, leading diversified Canadian communications and media company, Rogers Communications Inc. (NYSE:RCI) , was upgraded to Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The price performance of Rogers Communications has been encouraging for the last six months. The stock price inched up 21.3%, beating the Zacks categorized Cable TV industry’s gain of 7.7% over the same time span.

The company has maintained its position as the largest integrated-telecom operator in Canada. Rogers Communications continues to remain the first wireless operator in Canada to offer Internet of Things (IoT) as a service to business enterprises. End-to-End Incident Management, Farm and Food Monitoring, and Level Monitoring are the three IoT services that it currently offers. The wireless carrier expects the Canadian IoT market size to reach a value of $13.5 billion by 2019.

Rogers Communications continues to roll out 700 MHz LTE ‘lower block’ spectrum which provides better in-building penetration and rural LTE coverage. It has been able to attain favorable trends in churn and net additions supported by its high-quality network, value-added content offerings and sustained improvements in customer experience.

On Jun 6, 2017, the company’s subsidiary, Rogers Media, Inc., signed two major deals. One was with The Weather Company, which is a subsidiary of the Data and Analytics Platform business unit of International Business Machines Corporation (NYSE:IBM) . The other was with Iowa-based media conglomerate company, Meredith Corporation (NYSE:MDP) . Through these deals, Rogers Media will be able to expand and deliver brand-safe and premium-content environments to its advertising partners. These will focus on lifestyle, entertainment, news and information verticals.

Rogers Media, Inc. signed a deal to purchase broadcasting company, Tillsonburg Broadcasting Company Limited. The subsidiary views the transaction as an ideal one, which should help it strengthen its foothold in Southwest Ontario.

In Dec 2016, Rogers Communications announced plans of dumping its Internet Protocol TV (IPTV) platform and adopt Comcast Corporation’s (NASDAQ:CMCSA) cloud-based X1 video platform. Using the powerful X1 platform, the company aims to provide its customers with an advanced seamless and connected TV experience, at home or outside.

However, the wireless carrier faces fierce competition from large incumbents like TELUS Corporation (NYSE:TU) , BCE Inc. (BCE) and other small regional carriers. Moreover, Shaw Communications’ venture into the Canadian wireless market with the WIND Mobile acquisition raises competition for the company.

We believe that these are the reasons behind the stock currently carrying a Zacks Rank #3 (Hold).

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