UBS Upgrades Rogers as Defensive Growth Play

| About: Rogers Communications (RCI)

Reluctance on the part of consumers to part with their cell phones and Internet connections makes Rogers Communications Inc. (NYSE:RCI) a defensive play in the cable and telecommunications sector, says UBS analyst Jeffrey Fan.

“Rogers provides investors with defensive growth as we believe wireless and cable TV to be the most resilient services across the communications universe,” Mr. Fan wrote in a note to clients.

Mr. Fan rates the stock ‘buy,’ and lowers his 12-month target price to C$43 from C$47 previously.

The money that iPhone customers spend on surfing the Internet and downloading songs and video should help Rogers offset competitive pressure on margins as other wireless carriers step up the battle in the PDA market, Mr. Fan said.  

He estimates Rogers pulls in over $100 of revenue for each iPhone subscriber, twice the amount of its average wireless customer.

As initial hype surrounding the iPhone fades and the number of new subscribers levels out, Mr. Fan said he expects the company to start focusing on other segments of the wireless market.

“Non-iPhone sales likely underperformed as a result of the iPhone focus. With iPhone launch now well behind and with supporting infrastructures in place, we believe Rogers is ready to address the lower segment,” he wrote.