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TheStreet Open House

Will Verizon Hip Check Canada's Dominant Telecoms?

NEW YORK ( TheStreet) -- Over the past year, I've been bullish two huge Canadian media and telecommunications stocks -- Rogers Communications (RCI - Get Report) and BCE, Inc. (BCE - Get Report). Even with Wednesday's considerable losses, both, particularly RCI, have been strong performers before downtrending this spring.

Both names are off on reports Verizon (VZ - Get Report) wants to acquire one of Canada's smaller wireless players to take on Rogers and BCE. Canadian regulators opened the door to foreign ownership several months back; and Verizon appears to set to take advantage of the ruling.

Does it matter?

I don't think it does.

I was never bullish Rogers or Bell as wireless pure plays. I like them because of their ecosystems. Ecosystems that American telecoms such as Verizon could never dream of getting past U.S. bureaucrats.

But, looking specifically at mobile, if you want a new smartphone such as Apple's (AAPL - Get Report) iPhone 5 or BlackBerry's (BBRY - Get Report) Z10 -- at the subsidized price -- you're signing a three-year contract. That said, there's tons of room to add brand new smartphone subscribers in Canada, but even these late adopters are likely somehow tied up in the Rogers/Bell web. They're locked into bundle deals that include landline service, cable or satellite and/or Internet. And, who's to say, even if it doesn't go by its real name, that Canadians will leave one of their homegrown conglomerates for an American one?

Beyond that, for long-term investors, you're buying RCI and BCE because of the total package. And I don't mean the bundle. These two companies dual-handedly control the primary segments of media and entertainment in Canada. See this June 2012 article where I detail Rogers and Bell's interests throughout the Canadian sports, media and telecommunications landscape. You have judge if this is reason enough for you to get long; however, Verizon's move doesn't justify Wednesday's drop.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

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