Jul 20, 2017
BNN's Daily Chase: Natale puts his mark on Rogers; Hydro One enters U.S. market
By Noah Zivitz
Hydro One has joined the stampede of stateside takeovers by Canadian power companies. It’s paying $4.3 billion for Avista Corporation, thus spring boarding into the Pacific Northwest. Including debt, the deal value balloons to $6.7 billion. We’ll go in depth on the transaction when BNN's Paige Ellis speaks with Hydro One CEO Mayo Schmidt later today. In the interim, no shortage of angles to consider. Among them:
-The regulators: By my count, there are seven state and federal regulators that will need to sign off on this deal.
-The province: Is trying to take credit for this takeover. “One of the benefits of broadening the ownership of Hydro One was to unlock the potential for precisely this sort of transaction,” Ontario Energy Minister Glenn Thibeault said in a statement.
-The geography: The deal catapults Hydro One into the United States with Avista’s footprint spanning Washington, Oregon, Idaho, Montana and Alaska
-The consumers: Hydro One says it won’t pass along costs associated with the takeover to its customers. That won’t necessarily be enough to appease its user base on a day when the Fraser Institute has released a report saying the average Toronto electricity bill is $60 higher than the national average.
-The jobs: Hydro One and Avista go out of their way to say they won’t cut any jobs. Instead, there will be “non-headcount efficiencies” in IT, innovation and supply chain purchasing.
-The banker: I was a little surprised to see that Hydro One didn’t select one of the big banks as its financial advisor. Instead, New York-based Moelis & Company got the mandate.
THE MOST IMPORTANT WORD FOR JOE NATALE
Joe Natale is putting his mark on Rogers Communications. The telecom giant posted big gains in its wireless division in the first batch of results under its new CEO. Subscriber growth surged and a crucial metric that measures customer retention improved – both of which helped drive an overall profit beat in Q2. And now Natale is “intensifying” his campaign to drive down costs. We’ll have lots of insight today on the quarter and how Rogers is plotting its future after last year’s abrupt ouster of Guy Laurence.
INVESTORS AWAIT DRAGHI
The European Central Bank delivers an interest rate decision at 7:45 a.m. ET, to be followed by a news conference at 8:30 a.m. ET – where every word uttered by President Mario Draghi has the potential to move markets. “The risk today comes if Draghi puts his dovish hat on and suggests the [asset purchase] program could simply be extended in its current form,” OANDA’s Craig Erlam is telling clients.
OTHER NOTABLE STORIES:
-Today the Toronto Stock Exchange is celebrating its 500th exchange traded fund listing. We'll speak with TMX Group division President Ungad Chadda on BDAM about the incredible growth since the ETF's humble beginnings in 1990.
-While Hunter Harrison tries to whip CSX into shape, his protégé, Keith Creel, is making CP Rail even more efficient. CP’s operating ratio improved by more than three full percentage points in the second quarter, while revenue and profit both notched double-digit gains.
-Kinder Morgan Canada says it’s still on track to start building the Trans Mountain pipeline expansion in September.
-Recent short target Exchange Income Corporation late yesterday reported a 4 per cent rise in adjusted EPS on 20 per cent revenue growth. Free cash flow also rose (ex-maintenance costs) while the company noted its dividend payout ratio reached 75 per cent due to maintenance. CEO Mike Pyle is also hinting at more acquisitions.
NOTABLE RELEASES/EVENTS
-Notable earnings: Rogers Communications, West Fraser Timber, eBay, Microsoft, Visa
-Notable data: StatsCan EI report
-745 a.m. ET: European Central Bank releases rate decision, followed by President Mario Draghi news conference (8:30 a.m. ET)
-9:00 a.m. ET: Canadian Ambassador to U.S. David MacNaughton speaks on NAFTA panel in D.C.
-9:30 a.m. ET: Kelly Knight Craft testifies before U.S. Senate Foreign Relations Committee re. nomination as ambassador to Canada
-1000 a.m. ET: CMHC releases report on Fort McMurray housing market
-1030 a.m. ET: Finance Minister Bill Morneau holds media avail in Pickering, Ontario
-11:15 a.m. ET: Justin Trudeau holds media avail in Barrie, Ontario
-11:30 a.m. ET: Conservative Party Leader Andrew Scheer makes “important announcement” and speaks to the media in Ottawa
Every morning BNN's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.
