Telecom stocks climb after debt cuts and subscriber growth raise hopes for sector recovery in Canada
After a prolonged slump, Canada’s telecom sector may be staging a turnaround—Rogers is up 21 percent, BCE 5 percent, Telus 3 percent, and Quebecor 1.5 percent since mid-June, as reported by The Globe and Mail.
Rogers’ stock spike followed the July 2 closing of its $4.7bn deal to acquire BCE’s stake in Maple Leaf Sports and Entertainment.
Analysts expect this momentum to continue as all four major carriers prepare to report quarterly earnings in the coming weeks.
Royal Bank of Canada analyst Drew McReynolds said Rogers and Telus are likely the only firms to post year-over-year consolidated revenue growth, with both benefiting from efforts to strengthen their balance sheets, as reported by The Globe and Mail.
Rogers recently completed a $7bn backhaul deal and launched cash offers to repurchase US$1.25bn and $400m in outstanding senior notes.
Telus raised US$1.5bn through long-term junior subordinated notes to fund tender offers, reduce debt, and support corporate activities.
McReynolds expects Quebecor to lead in wireless net additions, projecting 70,000 new customers after gaining 54,400 last quarter—about 45 percent of Canada’s total new subscribers.
Bank of Nova Scotia analyst Maher Yaghi said major carriers have recently raised wireless prices, including Rogers’ Fido, BCE’s Virgin Plus, Telus’ Koodo, and Quebecor’s Freedom Mobile.
Although average wireless prices remain below 2023 levels, analysts say the shift could strengthen earnings over time.
Canadian Imperial Bank of Commerce analyst Stephanie Price noted that more than half of wireless users have switched to lower-cost plans in recent years, pressuring a key profitability metric—average revenue per user (ARPU).
In a note cited by The Globe and Mail, Price said investors are closely watching how much of the customer base has repriced at lower levels.
“We see valuation upside at current levels,” she added, “although we expect that it will take several years for the Canadian telecom customer base to completely reprice.”
Desjardins analyst Jérome Dubreuil cautioned that ARPU recovery may take time, but said he believes industry valuation multiples are “bottoming,” making the space more attractive to investors.
McReynolds echoed this view, saying the sector “has now moved beyond the trough” and looks more likely to hit full-year guidance midpoints, despite a “still subdued growth outlook.”
Telecom providers had intensified competition in a mature market over recent years, with Freedom Mobile playing a central role by offering lower-priced plans.
However, the trend of end-of-quarter discounting to boost subscriber numbers appears to have slowed, as reported by The Globe and Mail.
The sector’s potential importance to broader economic productivity was highlighted in a PwC report cited by Consulting.ca.
The report found that telecommunications contributed $87.3bn in direct GDP in 2024 and supported 661,000 jobs.
Of that, $30.1bn came from sector-specific jobs and outputs, while $57.2bn came from productivity and enablement gains in other industries.
According to PwC, cellular service and wireline CPI declined by 50.4 percent and 6.4 percent, respectively, from January 2020 to December 2024.
At the same time, telecom remains more capital intensive in Canada than in many peer countries, with a 2020–2024 capital intensity ratio of 18 percent, compared to 17 percent in the UK, 14 percent in the US, and 10 percent in Australia.
The report said telecom could help address Canada’s productivity challenge, noting labour productivity has grown only 1.4 percent over the last eight years.
Infrastructure investments could generate economy-wide productivity gains by supporting advanced technologies such as AI, enabling inclusive labour participation, and improving trade corridor efficiency through real-time integration of logistics and transportation networks.
PwC concluded that “ensuring the health and investment capacity of the telecommunications sector becomes a strategic imperative for maintaining Canada’s economic independence.”
Upcoming earnings reports may also bring updates on strategic deals.
Analysts expect details on BCE’s $1bn Northwestel divestiture, Telus’ potential tower sale, and a possible minority stake sale in MLSE by Rogers.
Canaccord Genuity analyst Aravinda Galappatthige said BCE could return to low single-digit growth, pointing to the recent dividend cut and its May decision to bring in PSP Investments to support the expansion of its US acquisition Ziply Fiber.
