Canaccord Adams Downgrades Rogers Communications (RCI) to Hold

January 7, 2009 1:32 PM EST

Canaccord Adams downgrades Rogers Communications (NYSE: RCI) from Buy to Hold. Price target lowered to C$35 from C$38.

Canaccord analyst says, "...However, in our view, the real story was not wireless, but weak cable subscribers. The cable operation added only 17k net new high-speed customers and only 1k net new telephone subscribers as compared with our 50k and 45k estimates. We believe the telephone additions are correlated with high-speed additions and therefore explain this substantial drop in net RGU additions from the cable operation. However, in addition we believe this could be the start of a pendulum swing from the cable companies to the telcos during 2009 as: 1. customers move to cheaper alternatives such as DSL, 2. cable company market share of Internet customers is peaking at approximately 60%,and 3. the increasingly competitive telephone pricing offered by the telcos works itself into the bundles."

Rogers Communications Inc. (Rogers) is a diversified public Canadian holding company. The Company operates in three segments: Wireless, Cable and Media. Wireless consists of its wireless communications operations, including Rogers Wireless Partnership (RWP) and Fido Solutions Inc. (Fido).

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