Rogers Leads Telecoms Surge on Vodafone, Verizon

Rogers Communications Inc., Canada’s largest wireless carrier, led a rally in the country’s telecommunications stocks on speculation that a Verizon Communications Inc. bid for its U.S. partner will reduce Verizon’s appetite for Canadian expansion.

Vodafone Group Plc confirmed it’s in talks to sell its 45 percent stake in Verizon Wireless to partner Verizon Communications, in a deal that may be worth $130 billion, according to people familiar with the matter.

Rogers rose 3.3 percent to C$42.11 in Toronto at 10:18 a.m. after jumping as much as 5.1 percent, the biggest intraday increase since Aug. 15. Montreal-based BCE Inc. gained 1.8 percent to C$43.25 and Telus Corp., based in Vancouver, added 3.3 percent to C$33.33.

“If negotiations between Verizon and Vodafone are really heating up, we believe that the prospects of a Verizon entry into Canadian wireless could decline significantly,” Dvai Ghose, head of research at Canaccord Genuity said in a note to clients dated yesterday.

Verizon’s balance sheet priority would be on a U.S. deal, and management may not want to detract their focus by investing in Canada, he said. The opportunity north of the border is small for a “behemoth” like Verizon, Ghose said.

New York-based Verizon said in June it was weighing a bid to buy Wind Mobile, the largest of three new Ontario-based carriers. The Globe and Mail reported Aug. 14 the company may be backing away from a Canadian entry.

Still, Verizon would have the financial scale to pursue both opportunities, said Tim Casey, an analyst at BMO Capital Markets. Verizon is likely to submit an initial deposit next month, which is refundable, to participate in a January spectrum auction to expand in Canada, Casey said in a note today.

The Canadian carriers have taken out newspaper advertisements to lobby against the government’s spectrum rules, which limit incumbents to bid on just one of four blocks of 700-megahertz spectrum, which is prized for its ability to penetrate dense urban areas. New entrants such as Verizon can bid on two prime blocks.

Before it's here, it's on the Bloomberg Terminal.