Canada's telcos burst into banking, healthcare in hunt for growth

Fri Aug 1, 2014 1:06am EDT
 
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By Alastair Sharp and Euan Rocha

TORONTO August 1 (Reuters) - Canada's three biggest telecom firms, keen to keep shareholders happy with fat dividends, are breaking into businesses ranging from banking to healthcare to drive growth as they run out of expansion options and shy away from overseas purchases.

BCE Inc (BCE.TO: Quote), Rogers Communications Inc (RCIb.TO: Quote) and Telus Corp (T.TO: Quote) dominate their industry in Canada but with landline connections on the wane, cable TV losing out to online portals and wireless growth slowing, Canada's telecom giants are pushing into uncharted businesses.

Some of the moves - such as Rogers' C$5.2 billion-deal ($4.8 billion) for exclusive National Hockey League broadcast rights - may bring a rapid pay-off. Others, like Telus' bid to dominate healthcare services, are gambles that may not pay off for many years.

"They're all quite different bets," said Iain Grant, head of Seaboard Group, a telecom consultancy. "I was quite impressed by the audacity of Rogers making the bid for NHL in Canada," he said, pointing to a likely immediate boost to earnings as more live sports content is consumed on mobile devices.

Along with NHL rights, Rogers has also obtained a banking license as part of a foray into mobile banking and has launched its own standalone credit card, without backing from another financial institution.

"The bank stuff is unique," said Canaccord Genuity analyst Dvai Ghose, noting the baby steps into financial services offers only marginal upside even if enough customers ultimately use their phone as a credit card.

Rogers hasn't disclosed the financial performance of its new banking arm, which doesn't have retail branches or take deposits.

Rogers and BCE also jointly control a sports empire that owns the NHL's Maple Leafs as well as professional basketball, baseball and soccer teams in Toronto.   Continued...

 
A woman speaks on her cell phone in front of a Rogers Communications Inc sign before the company's annual general meeting for shareholders in Toronto April 22, 2014.   REUTERS/Mark Blinch