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morning business briefing

At the end of 2010, new wireless companies – such as Wind, Mobilicity, Public Mobile and Vidéotron Ltée – were responsible for 30 per cent of all new wireless subscribers.

Stories Report on Business is following today :

TD profit surges

Like many of its peers, Toronto-Dominion Bank beat analysts' estimates with first-quarter results that doubled to $1.3-billion, lead by its personal and commercial banking operations in Canada. Revenue jumped to $5-billion. Of the banks that have reported so far in Canada, only Royal Bank of Canada has missed projections, and then just by a penny, while still reporting a 35-per-cent gain. The results of the major banks illustrate again the strength of Canada's financial sector, particularly compared to its global competitors. "Overall, we feel great about our results and the momentum we have going into this year," said TD chief executive Ed Clark. "Economic weakness remains a challenge going forward, as does the regulatory uncertainty in the U.S. However, our capital levels remain robust and position us to emerge even stronger when the economic recovery is complete."

Said analyst John Aiken of Barclays Capital: "We believe that TD's ability to vastly exceed expectations with provisions for credit losses remaining essentially flat points to the strength of its retail banking operations and why shareholders should want to invest in the bank." Read the story



Asper leaves CanWest

The last Asper is leaving CanWest Global Communications Corp. CanWest said this morning Leonard Asper has resigned as chief executive officer, and from the board, "to pursue other business opportunities and to avoid any concerns regarding potential conflicts of interest." CanWest is operating under court protection, and has struck a deal to sell its broadcasting assets to Shaw Communications Inc., while its newspapers are auctioned separately. There are now no members of the Asper family at the media giant built by the late Izzy Asper. Read the story



Related: Black Press founder joins CanWest paper chase



Greece launches 10-year bond issue

Greece may be calming down after yesterday's fiscal reform package, but Europe has many fires to extinguish still. Greece has been the focus of a debt storm that has rippled through financial markets, and with its austerity measures now on the table, investors are looking elsewhere. Greece is the 'G' in what have become known as the PIIGS, the debt-burdened countries that also include Portugal, Ireland, Italy and Spain, and its reforms have sparked widespread unrest among the public service.

Greece today launched an expected 10-year bond issue that is seen as a test of how the market views its initiatives. Greece is struggling under a mountain of debt and had been seeking to raise about €5-billion from the issue. But, Dow Jones Newswire reported, the issue brought in bids of about €14.5-billion, a good sign. "We are very happy with the bid because the re-entry into the market is always challenging," Petros Christodoulou, who heads Greece's debt management agency, told the news service.

In Portugal today, public employees staged a nationwide strike over the government's proposed wage freeze, while the government stood firm. According to The Associated Press, Goncalo Castilho dos Santos, the country's secretary of state responsible for the civil service, said Portugal "cannot sacrifice the common good for the sake of individual well-being."

As Greece calms somewhat, traders are now shifting their focus to the next basket case, the New York Times reported today. Some banks and hedge funds, the newspaper said, are looking now at the remaining PIIGS, which promises to continue to roil markets. "What people are doing in the markets is no different from what they did with the banks," Jim Caron, Morgan Stanley's chief of interest rate strategy, told the newspaper. "First it was Bear Stearns, then it was Lehman Brothers and so on. That's what people are worried about."

Read

Greece seeks EU solidarity



The search for villains is on in Greece



Eric Reguly in Europe: Beware Greeks bearing Goldman's gifts



New York Times: Traders, hedge funds turn attention to the next Greece



Portugal stands firm on austerity measures



Britain grapples with debt of Greek proportions



What changes to telecom ownership rules could mean

Analysts are weighing in on the outlook for Canada's telecom industry after the government announced yesterday it planned to allow greater ownership in the sheltered sector, though many questions remain. Here's what some analysts say:

"Even if foreign ownership restrictions were lifted today, we do not see much foreign strategic interest in Canadian incumbents. This is because large U.S. carriers like AT&T, Verizon and Comcast still seem focused on domestic operations. In addition, Canadian telcos and cablecos currently trade at significant premiums to U.S. and European peers. Consequently we reiterate that an easing of restrictions would probably benefit new entrants like Globalive, DAVE and Public Mobile to the detriment of incumbents. Finally, we see no reason why [the]throne speech should drive consolidation amongst incumbents." Dvai Ghose, Genuity Capital Markets

"Here are the potential implications: 1. Wireless new entrants will benefit from greater access to foreign capital. Good for Wind, Public Mobile and Dave (Mobilicity). 2. With foreigners in, there could be a stronger case for BELUS (a merger of Bell Canada and Telus) or it could happen earlier. 3. If BELUS were to take place, cables will likely be next to consolidate. Rogers + Shaw + Cogeco. 4. Cables are regulated by the Broadcasting Act, not the Telecommunications Act. Therefore, some legislation changes will be needed to allow cables to get the same treatment as their telecom peers. 5. Under this scenario, consolidatees are likely to benefit most from an investment perspective: TELUS (voting and non-voting shares will also collapse), MTS, Cogeco Cable, Shaw. Note the cables are family controlled and the ultimate decisions rest with the families." Jeff Fan, Scotia Capital

"It's going to force them to be more competitive. If at the end of the day it's going to force them to strike a deal with an outside player or amalgamate, so be it." Ronald Gruia, Frost and Sullivan, referring to the incumbent players

"There's a difference between opening the door part of the way and letting cats and dogs through and opening it all the way and letting the elephants in … It is my hunch they are not going to let AT&T buy Bell tomorrow." Duncan Stewart, Deloitte Canada, to The Canadian Press

"I think this is long overdue. There is a possibility a Verizon or Deutsche Telekom, or NTT Docomo, some of the large global players that have been investing in other markets, might see Canada as more open to business." University of Ottawa professor Michael Geist, to The Canadian Press

"We believe opening the doors to foreign investment in Canada will benefit the new wireless entrants in the near term by providing them with greater access to capital and allowing them to simplify their business structures ...For widely-held companies such as BCE and Telus, they may benefit in the longer term from potential takeout by foreign strategic players (although they may need to divest their media businesses in doing so - foreign ownership rules for broadcasting does not appear to be addressed). For family-controlled businesses (e.g. Rogers, Shaw, Cogeco, Quebecor), the benefit is less certain until there's greater visibility to the families' intentions. We also note that the Canadian telecom sector may be less attractive to foreign strategic players today versus several years ago as the industry is maturing and growth is slowing, and their shares are generally trading at a discount to their Canadian peers." Phillip Huang, UBS Securities Canada

Read the story



Central banks hold firm

Both the European Central Bank and the Bank of England held their benchmark interest rates at historic lows today, as expected, while new ECB forecasts showed the economies of the 16-nation euro zone will continue to rebound only modestly from the recession. The ECB projected the economy will expand by just 0.8 per cent this year and 1.5 per cent in 2011. The ECB held its key rate at 1 per cent, while the Bank of England stayed at its record low of 0.5 per cent. Read the story



Stronger signs in U.S. jobs market

While it's just one week's reading, there are optimistic signs this morning from the U.S. jobs market. With more than 8 million workers tossed out of their jobs during the recession, new claims for unemployment benefits in the United States fell last week, by 29,000, while continuing claims fell more than expected to the lowest in over a year, 4.5 million. "Overall, this was a somewhat encouraging report, as it suggests that the recent spike in claims over the past few weeks was mostly due to temporary factors, and not a sign that the improvement in the U.S. labour market has lost traction," said TD Securities economics strategist Millan Mulraine.



U.S. retail sales strong

U.S. retailers this morning are reporting solid February sales, indicating Americans shook off their recession blues, and the heavy snows that battered the East Coast. Several retailers reported better than expected sales, though analysts still caution the low consumer confidence and high unemployment will hold spending in check. Separately today, Wal- Mart Stores Inc. WMT-N boosted its annual dividend by 11 per cent, to $1.21 (U.S.) a share. Read the story



Canadian Natural Resources hikes dividend

Canadian Natural Resources Ltd. CNQ-T is hiking its dividend and splitting its stock. The Calgary-based energy producer also this morning posted a hefty drop in fourth-quarter profit to $455-million or 85 cents a share from $1.77-billion or $3.27 a share a year earlier. Still, at $3.32-billion, revenue topped analysts' estimates. The company did not change its outlook. It boosted its quarterly dividend to 15 cents from 10.5 cents and, subject to approval by shareholders, announced a two-for-one stock split. UBS Securities Canada called it a "solid" quarter. Canadian Natural vice-chairman John Langille noted that "the commodity price environment in 2009 was challenging, particularly in the first half of the year, as a result of economic concerns that continued from 2008." Read the story



Real estate remains strong

Canada's housing market "kept humming along in February," BMO Nesbitt Burns says, citing sales results from Toronto and Vancouver. While national numbers won't reported until later this month, BMO noted this morning that resales in Toronto rose 77 per cent in February from a month earlier, while prices jumped 19 per cent. In Vancouver, sales rose 67 per cent and prices 20 per cent. BMO projected the real estate market will remain strong in advance of Ottawa's tightening of mortgage standards, the harmonized sales tax in Ontario and British Columbia, and the inevitable rise in interest rates. "However, the year-over-year numbers will start to plunge as the comparisons (right now being made to the depths of recession) become much tougher," BMO said. "The key to watch this spring is supply - it is slowly starting to come back as we speak, but will it be able to meet seemingly insatiable demand?"

Building permits, meanwhile, took a surprising fall in January, marking their third monthly drop in a row, Statistics Canada said this morning. But this was driven by declines in the non-residential sector, which marked a 21-per-cent decline. Residential permits increased 4.1 per cent, another sign of strength in the housing market.



Citigroup chief to thank taxpayers

Be he ever so humble. Amid the controversy over bailouts and bankers' pay, Citigroup Inc.'s Vikram Pandit is thanking U.S. taxpayers today for the massive government aid it received at the height of the financial crisis. "This investment built a bridge over the crisis to a sound footing on the other side, and it came from the American people," the chief executive officer planned to tell a congressional hearing, according to a prepared text report by Bloomberg News. "I want to thank our government."

Mr. Pandit, whose bank is 27-per-cent owned by the U.S. government, is appearing today before the Congressional Oversight Panel, which is studying how officials spent the $700-billion (U.S.) from its Troubled Asset Relief Program. Elizabeth Warren, the Harvard professor who heads the panel, said in a prepared text, according to the news agency, that "were it not for the market's view that Citigroup enjoyed an implicit government guarantee, it would cost Citigroup more to do business and it would be viewed as a riskier investment."

Related: Governments miss mark on crisis, RBC's Nixon says



From today's Report on Business

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