Q4 2011 Wireline Results – Canada

Phone

In Q4 we had some interesting activities in Canada.  TELUS had some exceptional results, but otherwise all trends stayed the same.  Firstly wireline phone:  Overall nets for cablecos were lower than Q3 2011 but higher than Q4 2010.  The real cableco winner was Cogeco, which has 24k nets vs. last year where they added less than 18K.  This represented a 37% improvement y/y and 83% improvement sequentially!

On the telco side wireline phone subscriber losses slowed mainly due to TELUS, which had NAL losses of 48k vs. last year’s 55K and Q3 2011 which was 43K losses.  Bell’s NAS losses were worse by 62% y/y whereas TELUS had a good quarter with NAL losses slowing by 12% y/y for the same quarter.  Bell Aliant almost lost as many customers has TELUS, despite having a base that is nearly a million subscribers smaller.  MTS

Q4 2011 wireline phone net adds in Canada

Q4 2011 wireline phone net adds in Canada

In this chart it is clear that the total line lost by the telcos was significantly larger than the total new nets won by the cablecos.  In 2011 this was increasingly the case every quarter and in Q4 more than half the teclo losses did NOT go to cable.  We assume that these customers are going to a combination of wireless (fixed-wireless substitution) which we believe was exaggerated in the GTA and Montreal due to Public mobile.  Some of these customer also went to resellers and VoIP providers.

Telco losses have outstripped cableco gains every quarter since Q4 2008 and this trend is accelerating, as you can see in the next chart.  Bell alone lost more customers than Rogers, Shaw, Videotron and Cogeco together gained.

Substitution = cable gains less teclo losses

Substitution = cable gains less teclo losses

The chart below still shows how Bell and TELUS dominate the landline space, mainly due to their enterprise dominance.  We expect that this will accelerate down with cheaper and better VoIP solutions.  Bell is already on a downward trend, although much of this is in consumer.

Q4 2011 landline subscribers

EOP landline

In wireline phone, the telcos are losing customers at a faster rate than cablecos are gaining them.  While the overall residential market is in decline, cablecos are still gaining share.   Shaw has passed the 40% of share between them and TELUS, Rogers+Videotron+Cogeco now have 45% of the markets that Bell operates in and we believe that Eastlink (which is a private company, so does not report these numbers) is over 50% in urban areas.

Q4 2011 Residential wireline phone subscribers

Q4 2011 Residential wireline phone subscribers

In summary, after many quarters of cable companies easily picking up phone subscribers, their growth has slowed but in aggregate, the telcos continue to lose customers.  Since 2007 cable companies have gained 144,000 customer per quarter and on average the telcos have lost 164,000 customers per quarter.  (c) Alphasynb

 

No comments

European telecoms woes grow – FT.com

Outlook for T-Mobile down, port results at Telecom Italia, reduced dividends at Telekom Austria, Telefonica and warning of lower dividends at France Telecom.  So why are Rogers, Bell and Telus all raising their dividends?  European telecoms woes grow – FT.com.

No comments

Protected: Rogers Reports

This post is password protected. To view it please enter your password below:

Enter your password to view comments.

Protected: Wireless Results Q4 2011

This post is password protected. To view it please enter your password below:

Enter your password to view comments.

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?

 

No comments

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

 

No comments

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.

No comments

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.

No comments