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Recent newspaper reports again suggested Telus Corp. (NYSE:TU) may be in the sights of private equity groups. While the speculation has helped boost shares in the telecommunications company, Merrill Lynch analyst Glen Campbell thinks while such a bid is indeed possible, it is unlikely due to factors such as foreign ownership restrictions.

He does however, think Telus shares are worth C$61, representing upside of 5% from their current trading value, pointing to the potential for further gains if the company sustains strong wireless revenue and average revenue per unit (monthly revenue generated by each customer).

On Friday, Mr. Campbell expects Telus will report fourth quarter revenue of C$2.23 billion (close to consensus estimates) and earnings per share of C83¢ (above consensus), he said in a research note.

He thinks Telus has a good chance of meeting or exceeding his postpaid wireless subscriber growth estimate of 125,000, given weak numbers recently from BCE Inc. (NYSE:BCE).

Mr. Campbell also emphasized the potential value that can be derived from network sharing among wireless carriers, saying “no single management action could create as much value for Telus (or BCE) as network sharing.”

TU 1-yr chart:

TU 1-yr chart

Source: Private Equity Bid or Not, Merrill Likes Telus