OTTAWA – Thanks to ongoing, dramatic reductions in customers, the traditional wireline telco industry saw fourth quarter 2006 profits drop by 23.7% according to a release today from Statistics Canada.
This was due to the 1.5% reduction in operating revenues which fell to $5.6 billion, while operating expenses grew by 2.6% over the same period. "With wireline operating revenues declining by 2.2% between 2005 and 2006 (preliminary) to $22 billion, and operating expenses increasing by 0.4% over the same period, operating profit declined 14.0% to settle at $3.5 billion in 2006," said the press release from Statscan.
On the other hand, however, operating profit in the wireless industry increased by 67.1% compared with the same period a year earlier to just over $1 billion in Q4 ’06, substantially more than the $675 million posted by the traditional wireline segment. This increase in operating profit was attributable to the wireless industry’s increase in revenues (16.2% over the fourth quarter of 2005 to $3.4 billion in 2006), while holding down the increase in costs during the same period to 2.8%, says Statscan.
Wireless users, in relation to wireline, are also way up. "There were 55.1 mobile subscribers per 100 inhabitants at the end of 2006, almost identical to the 55.3 traditional wireline access lines per 100 inhabitants. This convergence in usage rates has been ongoing since the introduction of cellular service in Canada. For example, at the end of the first quarter of 1999, there were 18.7 wireless subscribers per 100 inhabitants, whereas there were 64.4 traditional wireline access lines per 100 inhabitants," explains the release.
The number of wireless subscribers increased 8.4% to just over 18 million in the fourth quarter of 2006 and operating revenue per subscriber also increased at the end of the year, climbing 7.2% to approximately $190 per subscriber compared with $177 in the fourth quarter of 2005.
"These data suggest that not only has the wireless industry continued to attract more users, but the industry has also managed to increase the usage per subscriber," says the release.
The traditional wireline industry increased its capital expenditures per dollar of revenue faster than the wireless industry, too. "In 2006, capital expenditure per dollar of revenue increased by 3.6% for the wireline industry over 2005. Conversely, the wireless industry maintained a relatively flat growth of 0.5% over 2005," says the release,
