TORONTO – Despite their continued discounted pricing, Canada’s new wireless entrants are expected to own only 5.8% of the wireless market (or 1.64 million Canadian wireless subscribers) by the end of 2014, the same percentage as they did at year end 2013, according to a new report from Convergence Consulting.
Canadian Wireless: Assessing the Impact of New Entrants, September 2014 says that Wind Mobile and Mobilicity can in some cases undercut incumbents Rogers, Bell and Telus and their discount brands on voice and on combined voice/data packages by more than 60%. Though in some cases, especially against Videotron, the incumbents/discount brands can price undercut, continues the report. (Public Mobile, now owned by Telus, was not included as a new entrant starting in 2014).
Low prices are spurring wireless substitution, which the report forecasts will grow to 26.3% by year-end 2014 and 29.8% by year-end 2015, up from 22.5% at the end of 2013.
Despite moving towards EBITDA positive, operating free cash flow continues to be a challenge for the new entrants, the report continues, but notes that the upcoming AWS auction, potential acquisitions and investments, and wholesale roaming rates could alter its analysis and forecasts.
Other highlights from the report include:
– Canadian annual wireless subscriber additions are expected to remain moderate (the report forecasts 2013-2015 additions will be well under half of 2010-2012 additions);
– Canadian wireless service ARPU (weighted) will grow by 1.2% in 2014 (2013 saw 1.3%) driven by data;
– The big three incumbent wireless providers will see 13% data revenue growth in 2014 and data will represent 49% of their 2014 service revenue; and
– Canadian wireless subscriber smartphone penetration will reach 71% by the end of 2014, and 75% year-end 2015, up from 65% year-end 2013.
