The $8-billion number “is shockingly high in our view,” TD Securities analyst Vince Valentini said in a note to investors. The costs will inflate debt and hurt equity values, he wrote, “but they could also negatively impact investor sentiment as we face two more auctions in the next two years.”
RBC Capital Markets analyst Drew McReynolds had forecast the three companies would spend a combined $3.25 billion in the auction, with two smaller players, Cogeco Communications Inc. and Quebecor Inc., spending a total of $650 million, McReynolds said in a note to investors late Wednesday. The auction also included other regional telecommunications providers.Article content
“It is somewhat higher than what the market was expecting, which was in the $5 billion to $6 billion range,” said Max D’Alessandro, a fixed-income portfolio manager at FDP in Montreal. “Telcos can tap their credit lines and stagger the issuance over time so as to diminish the impact of coming all at once with big deals.”
McReynolds said a spectrum cost of that magnitude is “negative,” but that the impact for shareholders will probably be modest. Each additional $500 million in spending erodes BCE’s net asset value by 55 cents a share and Telus’s by 40 cents a share, the analyst wrote.
Nice haul for the feds. No wonder we don't have cheap cell service in Canada. This country is a racket.