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TELUS to Invest $53M in Greater Montreal Networks This Year

Zacks Equity Research

Recently, TELUS Corporation TU announced that it is going to invest $53 million in its wireless and wireline networks in Greater Montreal this year. The move is in accordance with the Canadian telecommunications company’s five-year billion-dollar pledge in Quebec. It is aimed at helping Montreal to become one of the smartest cities in Canada, while paving the way for the impending 5G technology across the region.

Markedly, these investments are part of a 20-year partnership between TELUS and the Old Port of Montréal Corporation, announced in 2017, to provide the location with a number of cutting-edge technologies and a free high-speed Wi-Fi zone. The company also stated that it would deploy Centralized Radio Access Network technology to enhance the performance of its Long Term Evolution-Advanced wireless network.

Reportedly, TELUS has invested more than $175 billion in its network and operations since 2000 and intends to add nearly $40 billion in the next three years across the nation. It is poised to benefit from the increased penetration of smart devices, wireless data services and wireline fiber optic networks. It expects balanced growth in the wireless and wireline businesses, supported by healthy investment in high-speed broadband technology.

The company also secured new 600 MHz spectrum licenses in British Columbia, Alberta, Saskatchewan, Ontario and Quebec for $931 million. Equating to a national average of 11.3 MHz, these licenses would allow it to provide better mobile broadband connectivity at a time when the industry participants are shifting gears from 4G LTE to 5G. The deployment of this spectrum is significant to TELUS’ 5G growth strategy along with improved network quality, speed and coverage.

Between 2013 and 2021, the company plans to invest more than $300 million to expand its PureFibre network in the eastern part of Quebec, with $72 million in support from the federal and provincial governments. In the next two years, it aims to offer direct fiber access to 93% of Greater Quebec City and Eastern Quebec residents.

Courtesy of diligent capital allocation initiatives, investment in networks and increase in subscriber base, TELUS’ top line is expected to increase in the coming quarters. The company’s revenues witnessed a CAGR of 4.1% from 2004 to 2018.

TELUS has long-term EPS growth expectation of 8%. Driven by proper execution of operational strategies, the stock has rallied 12.2% on average against the industry’s decline of 1.4% in the year-to-date period.

TELUS currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are Deutsche Telekom AG DTEGY, VEON Ltd. VEON and Consolidated Communications Holdings, Inc. CNSL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Deutsche Telekom has long-term earnings growth expectation of 9%.

VEON is currently trading with a forward P/E of 5x.

Consolidated Communications has long-term earnings growth expectation of 2%.

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