TORONTO – Verizon Wireless' strong wireless growth in fiscal year 2013 may bode well for Canadian incumbent wireless carriers, says an industry analyst.
In a note to clients on Tuesday, Dvai Ghose, Managing Director/Head of Research for Canaccord Genuity, said that incumbent wireless subscriber growth in North America still looks to be “robust despite maturation”, and predicted postpaid subscriber base increases at all three Canadian incumbents when they post their financial results for 2013 within the next few weeks. He estimates a 5.7% year-over-year increase at Bell Mobility, a 4.7% uptick at Telus Mobility and a 3.2% rise at Rogers Wireless.
Despite maturation, slowing smart phone growth and competition, Ghose is also predicting “healthy ARPU growth” of 2% and 1% from Bell Mobility and Telus Mobility, however, anticipates a 1.5% decline at Rogers driven by re-price and loss of roaming revenue.
Canadian incumbent ARPU should benefit in general from $5-10 rate hikes from the end of last summer/beginning of the fall, he continued, noting that Canadian carriers increased airtime prices when the CRTC’s new wireless code of conduct forced carriers to reduce contract lengths from three years to two, which in turn reduces the amortization period for device subsidies.
Ghose added that incumbent churn should decrease year-over-year due to developments that include Telus’ acquisition of Public Mobile, Mobilicity’s bankruptcy, and Wind’s focus on “preserving cash and potential funding issues”, all coupled with the increasing popularity of the incumbents’ family/shared plans. He also forecast that the incumbents’ wireless capex should be “modest” in 2014 given that LTE overlays are largely complete.
“In summary, we remain very bullish about the Canadian wireless incumbents despite regulatory risk”, Ghose wrote, noting that unlike cable, Canadian wireless carriers still have the potential for solid subscriber and data gains and are not reliant on price increases for growth. “However, while we remain bullish towards the wireless incumbents in general, in our view, Bell Mobility and Telus Mobility clearly remain much better positioned than Rogers Wireless entering into 2014.”
www.canaccordgenuity.com
