OTTAWA – Canadian telecom company revenues climbed again in 2004, this time past the $34 billion mark, says Statistics Canada.
In a report released today, the 4.1% growth in revenue was spearheaded by the wireless side of the Canadian telecom industry.
As most know, the wireless segment has been sustaining the telecommunications industry’s revenue since the beginning of the decade and 2004 was no exception.
Thanks to Blackberries, cool ring tones, photo and data transmission and so on, revenues in the wireless segment jumped 17.5% to $9.5 billion in 2004, fuelled by a 12.7% gain in subscribers and a 3% increase in revenue per subscriber.
While double-digit annual growth in revenues and subscribers has been common in the wireless industry since its early days, the increase in revenue per subscriber is a relatively new phenomenon that began in the last quarter of 2002.
In contrast, operating revenues for the wireline segment edged down 0.6% from 2003 to $23.3 billion, the third consecutive year-over-year decline. The slow but gradual decline in the number of residential and business lines connected to the wireline network has dampened revenue growth in the wireline segment. The number of public-switched telephone network lines fell 1.2% between the last quarter of 2003 and the same period in 2004. This was the 12th consecutive year-over-year quarterly decline.
At the same time, the number of mobile subscribers surpassed 14.9 million at the end of the fourth quarter, a 12.7% jump from the same quarter of 2003. The mobile telephone penetration rate was 46.5 per 100 inhabitants at the end of 2004, almost 5 points above the level at the end of 2003.
Despite the steady hike, the penetration of mobile communications remained well below the level achieved in the United States where it stood at 62% of the people at the end of 2004.
The wireless segment was also the most profitable of the industry. The operating profit margin for the wireless segment last year was 26.4%, compared with 19.5% in 2003 and just 0.6% in 2001. In the case of the wireline segment, the profit margin in 2004 was 19.3%, compared with 18.8% in 2003 and 17% in 2001.
For the telecommunications services industry as a whole, operating profits were just over $7.2 billion in 2004, up 17.1% from $6.2 billion the previous year.
The wireless segment accounted for 27.9% of the sector’s operating revenues in 2004, up from 24.7% in 2003. Its share of operating profit jumped from 25.5% in 2003 to 34.7% in 2004. The significant contribution of the wireless segment to the sector’s operating profits in the past two years represents a significant turnaround. As recently as 2000 and 2001, the wireless segment sustained operating losses.
Capital expenditures by the telecommunications services industry rose 12.2% to $5.5 billion in 2004, the first annual gain since the $7.7 billion peak in 2001 (driven by the incumbent telcos’ drive to push fibre farther and farther out into the field in preparation for video delivery).
Both wireline and wireless segments contributed to the overall increase in 2004. Annual investment in both the wireline and wireless segments grew for the first time since 2001, reaching $4.1 billion and $1.5 billion, respectively.
