TORONTO – The industry outlook for Canadian wireless carriers remains stable, according to Moody’s Investors Service, though the company upgraded its outlook on U.S.-based carriers to ‘positive’ from ‘stable’.
Moody’s said Wednesday that the pending arrival of new wireless entrants in the Canadian market “is likely to pressure industry operating income growth, limiting it to the low single digits". At the same time, Moody’s said that it expects Canadian operators to benefit from many of the trends that support a ‘positive’ industry outlook in the U.S., particularly the proliferation of powerful new handsets that could increase data revenues, which in turn may offset a weakness in voice-services pricing.
“Moody’s expects wireless carriers in the U.S. and Canada to realize low-single-digit percentage subscriber growth in 2010 and 2011”, reads the company’s outlook. “Revenues are projected to increase a little faster as the incremental revenue associated with consumers’ increasing data usage is expected to slightly offset expected lower average revenue per unit (ARPU) associated with new connections. Additionally, carriers are expected to continue growing cash flow by exploiting the industry’s inherent economies of scale.”
One noteworthy challenge for the industry will be the continuing need for investment spending to manage customer churn, Moody’s said, noting that the Canadian government has yet to follow the U.S. government’s lead in auctioning 700 Mhz spectrum. Another area of focus for carrier infrastructure is the backhaul network that connects cell towers to the wire-line infrastructure. Growth in wireless data usage may stress this link and necessitate higher-speed connectivity and commensurate capital spending.
