December 2011

Q32011 COA

COA

Chart1:  COA does not seem to have gone up much over the years despite a massive increase in smartphones.  Strange!

Cost of acquisition

Wireless cost of acquisition

COA in Q3 2011 could have stayed down ahead of the iPhone 4S launch?

 

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Q3 2011 Churn

Q3 2011 Churn

Chart1:  Churn is becoming more of an issue for all of the incumbents.  Bell’s churn is significantly higher.  One can only assume that this is by design to clean up their base and improve profitability?  Note that Rogers only recently started reporting blended churn.

wireless churn blended Q3 2011

Q3 2011 Blended Churn - Wireless

Chart2: Postpaid Churn show worrying trends for Rogers and Bell.  In their call, TELUS reported Q3 2011 postpaid churn at 1.20% (adjusted for federal government account losses of 20K subs).  These all wen to Rogers, so their churn was actually worse and their nets were really just over 50K considering they will probably not make any profit from the federal government account.

Incumbent wireless postpaid churn Q3 2011

Incumbent wireless postpaid churn Q3 2011

Chart 3:  One can only think that Bell was trying to get rid of low margin prepaid customers?  We are really not sure what is happening at Rogers, but the chart surely looks like teeth.

Q32011 Wireless Prepaid Churn - incumbents

Q32011 Wireless Prepaid Churn - incumbents

Churn in Q3 2011 really started to change the wireless landscape in Canada

 

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Q3 2011 Net Adds

Q3 2011 Net Adds

Wireless incumbent nets share Q3 2011

Wireless incumbent nets share Q3 2011

Chart1:  At first glance, it might appear that Bell lost out to Rogers, which nearly doubled the total net adds of Bell.  TELUS got just below fair share, BUT…

Wireless incumbent postpaid nets share Q3 2011

Wireless incumbent postpaid nets share Q3 2011

Chart2: The Postpaid Nets Share shows a different story.  Due to much lower churn, TELUS and Bell did a bit better than fair share and Rogers was left with their hands in their pockets and their powder dry.

The marked difference between gross and net share in Postpaid is a real worry for Rogers.  They obviously know that keeping customers is cheaper than getting new ones, so why let so many slip out the back door?  To maintain the highest margin in the industry?

Wireless incumbent postpaid nets share Q3 2011 pie chart

Wireless incumbent postpaid nets share Q3 2011 pie chart

Chart 3: The new entrants are starting to get nets share, but our concern is that much of this is slipping out the back door through high churn rates.

Nets adds in Q3 2011 marked a change, where Rogers did not get their fair share and the new entrants started to impact the churn of the incumbents.

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Q3 2011 Gross Adds

Q3 2011 Gross Adds

Incumbent gross adds Q3 2011

Q3 2011 Gross Adds

Chart1: In terms of Gross Adds, the incumbents pretty much got fair share, but a closer look shows significant shifts in mix.

Despite so called “competition” from the new entrants, gross continued to grow. This was the highest quarterly gross adds in over 5 years.

Gross adds share Q3 2011

Incumbent Gross Adds Share Q3 2011

Chart 2: But Gross Add share did change between the incumbents. Overall Rogers and TELUS grew gross while Bell had a slight decline over Q3 2010.

Q3 2011 Gross Adds Postpaid

Incumbent gross adds Q3 2011

Chart 3: Postpaid Gross shows a different story. It is clear that this is where Bell focused their resources and they did get their fair share.

For gross adds Q3 2011 was an interesting quarter.

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