Analysts Criticize Rogers’ Decision to Buy Prime Block in Spectrum Auction

This article was last updated on April 16, 2022

Majority of analysts have matching opinion that Rogers Communications Inc. has paid an unnecessarily big price in order to win a prime block in the wireless spectrum auction, while they also commented that Quebecor Inc. did not overpay its position and has several options for what to do with its prize.

According to a research note published by Barclays Capital analyst, Phillip Huang, he mentioned that even though Toronto-based Rogers might have won the most fashionable spectrum position in the auction, it has paid much more than its rivals and its debt leverage will increase. He alleged that the $3.3 billion payment is almost three times more than the consensus estimate of $700 million-to-$1 billion.  Whereas an analyst from Canaccord Genuity, Dvai Ghose, mentioned in another a note published on the same day that Rogers shares may even suffer due to the amount paid by the company to secure two blocks of contiguous spectrum in major markets across the country. He stated that “we did not expect [Rogers] to buy the A block in every major market and wonder when it can be deployed.”

In addition to that, RBC Dominion Securities analyst, Andrew Calder, mentioned in his remarks that he expects Rogers’ credit spreads to have constraints on concerns that the 0.7 times increase in its leverage places it beyond its leverage policy range and that reducing debt will be a slow process, among other issues.

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