Telcos face increasing cost reductions: Standard & Poor’s
Wireline telecommunications carriers will continue to face cost-reductions, and labour-related issues throughout 2004, according to Standard & Poor’s Equity Research semi-annual study of the industry. Industry Survey on Telecommunications: Wireline states the industry will face increased competition and sluggish revenue growth. "We expect wireline telecom companies’ difficulties to continue through the remainder of 2004," says Todd Rosenbluth, integrated telecommunications services equity analyst with Standard and Poor’s equity research services and author of the report. "The regional Bells should see access line declines of at least 4%, as wireless, cable, and Internet telephony make greater inroads into U.S. households. Also with the Bells having entered long-distance markets, pricing pressures are not likely to ease." However, the report is positive about the integrated telecommunications services (wireline) sub-industry. Year to date through August 20, the wireline carriers were up 0.3%, versus a 1.0% decline in the S&P 1500 Index. The telecom services sector has tended to be a strong performer as economic expansions mature with the recovery of business spending, notes the report. The report states that the issues affecting the main segments of the industry are competition from cable and wireless providers, the eroding difference between local and long-distance carriers, continued merger and acquisition activity, and labour issues.

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Karl Hantho has been appointed COO at Blue Tree Wireless Data Inc., formerly Stanstead Capital Inc. He was previously president of Tandberg Inc. and Tandberg Canada Inc. The company has also announced Jeffrey Speak as chairman and CEO of the company, Michael Ramsay as president, Alain Dubé as CFO and Richard Belitzky as corporate secretary on the eve of the company’s impending IPO.

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Telecom to be growth leader through 2006: BMO
The BMO Financial Group is projecting the real output of telecommunications services to expand at an annual rate of 5.8% during the next three years, which would position the sector as one of the fastest-growing in the Canadian economy. In a recently released report, Prospects for Canada’s Industries: 2004-2006, BMO economists predict that the overall economy will grow by 2.8% this year, then 3.5% in 2005 and then a "sustainable pace" of 3.3% in 2006. Communications and information services are expected to outstrip the broader trend, with growth predicted at 3.5% this year, 7.4% in 2005, and 6.6% in 2006. The report notes that wireless telecom will be one of the fastest growing businesses in the sector as there is continued room to grow subscriber bases and as data services bring in new revenue streams. The report also sees improved profitability for high-speed Internet providers as capital expenditure requirements fall. The shift to high-speed Internet access is also seen as good news for cable television companies as revenues from those services offset subscriber losses to DTH satellite televison providers. Those losses, says the BMO, are expected to slow.

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Modem hijacking scams led victims to file a class action lawsuit against Bell Canada on July 22 in the Ontario Superior Court of Justice asking for damages and reimbursement of all faudulent long distance telephone charges paid by customers. Edith Carriere, a resident of Monetville ON, is the first person named in the lawsuit, having incurred $1,000 of long distance charges on her phone bills earlier this year for calls that she did not make and that were initiated only as a result of modem hijacking. The lawsuit, conducted by class action specialist David Thompson, is now open to anyone who paid Bell Canada for fraudulent long distance telephone charges for calls to foreign locations such as Sao Tome, the Cook Islands, Nauru, Guyana, Guinea-Bissau, Tuvalu and Tokelau.

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