OTTAWA – Wireless growth fed Canadian telecom companies through 2005, especially since mobile users are much better spenders than wired accounts, says a report put out today by Statistics Canada.
Two events stood out in the telecommunications services industry in 2005, says the release, the number of wireless subscribers passed the 16 million mark and the number of conventional residential telephone lines dipped below 12 million.
The wireless industry (with providers like Rogers Wireless, Bell Mobility, Telus, MTS, Sasktel, Aliant and Virgin Mobile) recruited more than 650,000 new customers in the last quarter of 2005, bringing the total number of subscribers to 16.6 million, up 11.7% from the fourth quarter of 2004.
"Not only are there more wireless subscribers, but they are making greater use of their equipment and spending more for their services. Average revenues per wireless subscriber rose by 5.6%, from $168.33 in the fourth quarter of 2004 to $177.74 in the fourth quarter of 2005. Usage time surged more than 23% between those two periods," says the release.
However, the most fundamental change witnessed in the mobile communications market in 2005 is undoubtedly the adoption of this technology as the principal means of communication by an increasing number of Canadians.
In a recent Residential Telephone Service Survey (as reported by cartt.ca), 4.8% of households indicated that as of late 2005 they used cellular services only, nearly double the corresponding figure at the beginning of the year (2.7%). In some markets, this percentage was as high as 10%.
The continually increasing popularity of wireless communications is reflected in the financial performance of service providers. They generated operating revenues of $11 billion in 2005, up 16.6% from 2004. In the fourth quarter alone, revenues were 18% higher than in the previous year.
Wireless telecommunications also represented the industry’s most profitable segment. Last year, the operating profit margin was 26.2%, just below the 2004 level of 26.6%. A more modest fourth-quarter result (21%) was behind this slight drop.
The erosion of the conventional residential telephone line market that began at the end of 2001 picked up speed in 2005. On a quarter-to-quarter basis, the decrease from the previous year became larger and larger, hitting 4.4% in the fourth quarter. By the end of the year there were 11.9 million lines among the incumbent telcos, down more than 500,000 from the beginning of the year.
The emergence of the top four cable operators in the local telephone market is the main reason for this, says the Statscan report. The business lines market nonetheless remained stable in 2005 after dropping continually for three years.
The loss of residential customers continues to bring down the operating revenues of operators of traditional wireline systems, which were $22.5 billion in 2005, a 1.5% drop from 2004. Their operating profits fell 12% to $4 billion in 2005.
