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Four analysts and top management from twenty sector firms examine the investing in Canada sector in this special 129-page Investing in Canada issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info490.htm.

TWST: What type of guidance are the Canadian telecom companies offering for 2002?

Mr. Rhamey: This is a year of transition, just as 2001 ended up being a year of transition. But the way I would characterize it, the year of transition in 2001 came as a surprise. It was about mid-year that companies began to realize that they weren’t necessarily recording the revenue growth that they had expected, and of course, growth slowed dramatically on the telecom side due to events in September. When I take a look at the companies going forward, very few companies are calling for robust growth in 2002, and their visibility on where they’re going to get growth is lower than in 2001. So a very common theme within the TMT sector is that visibility has been reduced dramatically. That being said, I think within the TMT sector (excluding media), relative to technology, certainly the companies in general may have ratcheted down expectations for 2002 but are able to give a 2002 guidance with some degree of confidence. I understand in the technology sector it’s more of a quarter-by-quarter phenomenon. One thing I should indicate as well is the type of guidance that they’re giving: most companies are trying to improve the return on investment and as a result are taking great pains to bring down capital spending. Over the last three years many companies had spent aggressively on capital spending in the wireline segment. Sometimes spending reachs well in excess of 30% of revenue, and they’re all trying to drive that down to a number consistent with historical norms of 15% to 20%. In the wireless segment, companies are struggling on the cap ex side with keeping capital spending under control. At the same time they have to implement new technologies such as 2.5G packet data network technologies that will, hopefully, drive revenue growth for these companies on a going-forward basis.

TWST: If we can look at some of your stock picks, what are your favorite names in the group today?

Mr. Rhamey: First and foremost, we have tended to favor the large cap over the small cap at this time because investor interest in the sector (I talked earlier on about where we fit within the cycle) is limited. Therefore, investor interest in smaller cap names is not there. Using that as a general criterion, right now we prefer BCE (NYSE:BCE), which we have rated outperform with a C41 target price. We also have an outperform rating on a smaller cap name, Aliant (TSE:AIT.TO), with a target price of 34, which operates in the eastern region of Canada. Those are two incumbent local exchange carriers. Among the wireless carriers, we are currently recommending Rogers Wireless (NYSE:RCN), which is owned and controlled by Rogers Communications (NYSE:RG). It’s rated outperform with a 26 target price.

TWST: Is there anyone else you would mention?

Mr. Rhamey: I think the most useful thing for readers is probably to switch over to Rogers Wireless, which is owned and controlled by Rogers Communications. It is a small float company, but nonetheless, an interesting play on the Canadian wireless industry. When you take a look at Rogers Wireless, it operates as one of four players that operate nationally; it has over 3 million subscribers. It’s a bit of a turnaround situation from the perspective that growth over 2001 is expected to be very modest. But a number of the operating issues that they were facing in 2001 have been resolved, and the company should show good momentum going into 2002. The wireless industry and its stocks are out of favor at the current time, primarily driven by issues facing US carriers. But Canada has a more favorable industry structure than the US. With only four providers, it seems poised to outperform the US carriers on a fundamental basis, but whether the stock market actually rewards these carriers for that outperformance remains to be seen. At the current time we’re placing our bets on Rogers Wireless.

This special issue includes:

1) Investing in Cananda - In an in-depth (4,700 words) Analyst Interview, Nick Majendie, Director and Senior Vice President of Canaccord Capital Corporation, examines the outlook for the sector and shares specific stock recommendations.

2) Canadian Telecommunications - In an in-depth (3,700 words) Analyst Interview, Peter Rhamey, Managing Director at BMO Nesbitt Burns, Inc., examines the outlook for the sector and shares specific stock recommendations.

3) Canadian Software & IT Services - In an in-depth (4,200 words) Analyst Interview, Paul Bradley, Technology-Software Analyst at Canaccord Capital Corporation, examines the outlook for the sector and shares specific stock recommendations.

4) Canadian Asset Management - In an in-depth (3,800 words) Analyst Interview, Bruce Brewington, Vice President at Putnam Lovell, examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of twenty sector firms examine the outlook for their firm and the sector.