Canada Telecommunications Report Q3 2013 - New Report Available

Canada's mobile market continues to show slow but steady growth. With penetration as low as 77%, consumers preferring postpaid plans and operators committing to selected deployments of LTE technology, this trend is likely to continue. Although mobile ARPU growth was recorded for much of 2012, a downturn was seen in Q113. It is far from clear whether this is a result of increased pricing competition or an uptick in customer migration to the smaller new players (which do not report operating data). However, with the major new entrants all putting themselves up for sale in Q113, it seems likely that they are close to exhausting their financial reserves and that their strategy of targeting the low-cost prepaid market has not paid off. This does not bode well for private investors and the news could dissuade investors in ancillary industries - such as mobile content and mobile financial services - from developing muchneeded new products and services. 2013 will, therefore, represent an important step-change in the development of Canada's telecoms sector.

Full Report Details at
- http://www.fastmr.com/prod/640218_canada_telecommunications_report_q3_2013.aspx?afid=301

Key Data

* Bell Wireless, Rogers Wireless and MTS Mobility all reported net mobile subscriber losses in Q113, while growth at Telus and Wind Mobile was hard-won. Although the smaller new entrants are likely to have added customers in Q113, their decisions to sell up or abort their mobile strategies suggest growth was not significant. BMI has therefore scaled down mobile sector growth forecasts for the 2013-2017 period.
* The principal operators - including regional players MTS and SaskTel - continue to roll out 4G services based on LTE technology. Although they remain reluctant to disclose adoption rates, continued growth in the number of smartphone and tablet users suggests they would be unwise to curtail 3G/4G investment any time soon.
* There are no new data available regarding the development of the fixed-line, broadband and pay-TV markets, other than FY12 and Q113 data from selected operators. Therefore, we have made no changes to our forecasts in these sectors.

Key Trends & Developments

The main talking point in this Q313 update is the seeming collapse of the new entrants in the mobile market. Mobilicity agreed to be acquired by Telus and Rogers agreed to acquire unused mobile spectrum from Shaw before Public Mobile sold itself to private equity investors and expressed interest in participating in - but not leading - consolidation among the new entrants. Wind - the most successful of the newcomers - has indicated that it may become the focal point for consolidation, but it is unclear whether this can happen given Canada's rigid foreign ownership and spectrum cap regulations. If the regulations are immovable, there may be little incentive for consolidation to happen and the result would be that the highly desirable fourth operator would fail to emerge.

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