Terrion currently building a multi-carrier tower in Nanaimo
By Ahmad Hathout
Telus executives said Friday that they are confident the telco can compete on its suite of services in light of Bell’s entrance in the internet market out west.
“We are obviously supportive of competition,” Executive Vice President and CFO Doug French said on the company’s third-quarter earnings conference call on Friday. “We still want to obviously win in retail, and our bundling and our product superiority will continue to compete well there.”
The comments came after Bell announced last month that it was going to wholesale Telus fibre and bundle internet service with mobile wireless and content. In fact, on Thursday, Bell’s President and CEO Mirko Bibic said the company was already providing internet service using Telus’s network in Kelowna, British Columbia, with a full launch in western Canada planned for January.
Bell’s hook is its content, which it said it will use first and foremost to protect its mobile wireless base in the west.
On Friday, Telus CEO Darren Entwistle countered indirectly.
“Our goal is to ensure that when we’re leasing or when we’re renting fiber on a wholesale basis, the return – the total economic return – is equal to or better than the economic return that we derived historically from our own fiber build in western Canada,” he said about the economics of the game.
“And the reason why we’ve set that axiom and think that it’s doable is, clearly, we have much greater scale today on the fiber front,” he continued. “So we should be better positioned to seize those economies of scale. We have better technology deployed than what we had historically during the fiber build time in the west from 2014 to 2020 that improves both operational efficiency and operational execution.
“And we have far more products. When we started to build fiber in the West, the revenue returns were very much around internet and TV. Now our business still has the internet and TV components, but we have the security component, we have smart home automation, we have smart home energy services, so on and so forth. So again, leveraging the limitless bandwidth of fiber, we’re also looking to secure economies of scope by creating new services over that rented fiber and getting a better return than what we did originally on our own build activities.”
Telus is the only one of the three largest telecoms to support the CRTC’s policy to allow the incumbents to use the wholesale internet framework, which it said it needs to expand eastward. Despite active resistence to that policy — which is being challenged by other players in court — Bell said it must now play the cards it’s been dealt.
On wireless, Telus said its Terrion subsidiary, whose underlying assets are the 3,000 tower sites across the country, is currently constructing a multi-carrier tower in Nanaimo, British Columbia, part of an effort to expand the base and make revenue off of carrier rental. Company executives said there are more builds planned “in the months” to come.
“We are looking at acquiring towers where appropriate to do so,” French said. “And that could be either outright purchases and/or partnerships on bringing more partners into our overall partnership. We will continue to build and we have a diversification of our network and building our capacity.”
Telus sold a 49.9 per cent stake in the newly-created Terrion to the country’s second-largest pension fund, La Caisse, for $1.26 billion to pay down debt. It closed that deal last month.
The company saw total revenue of $5.1 billion for the quarter that ended on September 30, flat compared to the same period last year due to higher service revenue but offset by lower mobile equipment revenue and other income. Net income was $431 million, 68 per cent higher than the same period last year.
The company added 419,000 gross and 82,000 net new mobile wireless subscribers, down 37 per cent against the comparable period, for a total base at quarter-end that was two per cent higher at approximately 10.3 million.
The monthly average revenue per user (ARPU) was down 2.8 per cent to $57.21 in the quarter, with churn edging up by two basis points to 1.11 per cent – due largely to increased competition from promotional pricing.
The telco added 40,000 net new internet subscribers in the quarter, up 18 per cent against the comparable period, for a total base that was up two per cent to approximately 2.8 million.
It also added 5,000 net new television subscribers, down 76 per cent over the year, for a total base that was up five per cent to approximately 1.43 million.
Landline losses were 14,000 in the quarter, 56 per cent higher than the comparable period, for a base that shrunk five per cent to 986,000.
Connected devices continued its growth, with 169,000 net new customers, a six-per-cent increase over the year for a total base that increased 18 per cent to approximately 4.16 million.
The security and automation segment added 6,000 net new subscribers, down 50 per cent against the comparable period last year, for a total base that increased four per cent to about 1.15 million.
The telco’s health segment saw operating revenues of $517 million, up 18 per cent against the comparable period last year. That’s broken down into services revenue, which increased 18 per cent to $516 million and equipment revenue of $1 million, which was down 67 per cent.
