Investors are bargain hunting in Canadian telecommunication stocks after rising government-bond yields and competition from Space X sparked steep declines in the group. The S&P/TSX Composite Communications Services Index, which tracks five major companies in the sector, has dropped 17% in 2026, while the broader Canadian stocks benchmark is up 14%.
The appeal of Canadian telecom stocks as bond proxies, because of their stable cash flows and dividend-paying capabilities, has been dented this year as government-debt yields in the US and Canada climbed rapidly. Now, some investors are taking advantage of the selloff to buy beaten-down shares. A few are particularly bullish on Rogers Communications Inc., down around 15% this year, after the firm said it would sell a minority stake in a consolidated sports, media and entertainment company.
"We've been adding on some of the weakness recently," John Zechner, president of Toronto-based asset manager J. Zechner Associates Inc., said in an interview. Zechner, who also holds positions in BCE Inc. and Telus Corp., said he's bullish on Rogers since it reduced its capital expenditures guidance earlier this year. He called the Space X risks "somewhat ludicrous," saying the threat is too far away to affect current telecom valuations. Julie Bouianovskaia of Letko Brosseau also added telecom names to her portfolio, citing attractive valuations and expected stronger free cash flow.
Analysts remain positive on the sector, with 72% of analysts holding a buy-equivalent rating for Rogers, nearly 67% for Quebecor Inc. and about 58% for BCE, according to Bloomberg data. TD Cowen analyst Vince Valentini said industry prospects are gradually improving, but that is not enough to attract investors while US bond yields hit new multiyear highs.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing