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Rogers, Telus upgraded on CRTC decision

Rogers and Telus were both upgraded by Scotiabank Thursday following a CRTC decision that suggests new permanent rates are a year or more away.

Telus Corp. and Rogers Communications Inc. were upgraded to the equivalent of a buy rating by Scotiabank on Thursday, following a decision through the Canadian Radio-television and Telecommunications Commission that found the present wireless roaming environment “insufficient,” but opted to delay any changes to the present pricing scheme.

“We feel the timing for the permanent rate might be one year away,” said Jeff Fan, analyst at Scotiabank. “Therefore, in the end believe the broad policy was in-line, the details were largely favorable for that wireless incumbents.”

The CRTC’s favourable decision should be a relief for the so-called Big Three: Telus, Rogers and BCE Inc. Their shares have underperformed this year relative to the broader TSX, impacted by souring sentiment on dividend stocks, growing competition in wireless, and a series of regulatory reviews, including the wireless roaming decision this week.

Mr. Fan believes that underperformance will now ease because the decision helps to remove uncertainty. He raised his price target on Rogers to $47, on Telus to $46 as well as on BCE to $61.

“Using the current interim roaming rate unchanged, we feel this is a positive relief for the Big 3,” Mr. Fan said. “With the status quo, we believe the Big 3 continues to enjoy the present relatively benign pricing environment.”