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Canada Telecommunications Report Q1 2012
Business Monitor International, Jan 2012, Pages: 101
Business Monitor International's Canada Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada's telecommunications industry.
For another quarter, the Canadian telecommunications market continues along its steady growth trajectory, and no major adjustments have been made to BMI's forecasts as a result. Mobile broadband adoption continues to drive growth in the mobile sector, and 443,000 subscriber additions were recorded in Q311. Bell launched LTE services in September, following the launch of Rogers' network in July. In October 2011, Rogers launched the first LTE smartphones - prior to this, the operator only offered USB modems. BMI believes that in Q411 we will see increases in ARPUs relating to the uptake of LTE services, and also the launch of the iPhone 4S among 3G users.
In Q311 the number of subscribers connected to Canada's principal mobile networks grew by 1.4% to pass 25.55mn. The three main carriers Rogers, Bell, Telus are fiercely trying to defend their market shares in the face of growing competition from newer players, namely Wind Mobile, Public Mobile and Mobilicity. Further, demand has been bolstered by the launch of new 3.5G HSPA and 4G LTE networks in key cities, and continued efforts to lure subscribers onto new contracts through multiple service and product bundling, which is increasingly focused on new smartphones and tablet computers.
BCE has been performing very strongly over the past quarter, and BMI believes this looks set to continue. It announced on December 8 2011 that it is to bolster its annual dividend by 5% in 2012. The company will also use its 2011 surplus cash balance to repurchase CAD250mn worth of shares, and make a voluntary CAD740mn pension contribution. The moves follow a strong performance through 2011, with Bell gaining subscribers at a faster rate than competitor Rogers.
This strategy highlights the company's confidence that it will continue to perform strongly in 2012, and, given the strong fundamentals, BMI believes this confidence is well placed. Bell's stock is up more than 13% in the year to date, and BMI believes it is set to climb higher following these announcements.
BMI forecasts the Canadian 3G and 4G subscriber base to rise from 4.7mn in 2011 to 14.4mn by 2016. 3G subscribers will represent 45.8% of the Canadian mobile market by 2016, and with growth continuing strongly throughout the forecast period. As mentioned above, Rogers and Bell have already launched 4G LTE-based networks and have rolled these out to cover further urban centres during Q411.
SaskTel announced in September 2011 that it would begin migrating to LTE by Q311. MTS and Telus also have plans to move to LTE as soon as possible, so it seems likely that the number of 'pure' 3G subscribers will remain relatively small as the emphasis switches to the higher-capacity platforms.
The huge jump in broadband subscribers recorded in BMI's data comes from its addition of mobile broadband to fixed line in 2010. This yielded a revised end-2010 broadband subscriber figure of 20.1mn. BMI believes that mobile broadband will increasingly cannibalise - though not completely replace - demand for fixed broadband services and BMI expects there to be 24.3mn broadband subscribers by end-2011, a figure that will rise to 34.7mn by 2016.
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