Q4 2011

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

 

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