Rogers Wireless and Telus Mobility outperform Bell Mobility in second quarter

Canada’s three national wireless carriers reported solid subscriber results with overall industry subscriber growth topping 11% for the second quarter of 2006 compared to results from last year’s second quarter, but Rogers Wireless and Telus Mobility continue to outpace rival Bell Mobility. There are now more than 17 million subscribers in Canada. When studying key business growth metrics, it is apparent that Bell Mobility continues to struggle when compared to its two biggest rivals (see table below for more information on key business measurement metrics). Michael Sabia, president and CEO of BCE Inc., noted during the company’s second quarter conference call that Bell Mobility is making progress, but more needs to be done. "I think the business is clearly making progress there and is on a better path, but the challenge we have now…is we need to accelerate that progress," he said. Things could be changing for Canada’s second largest wireless operator as a major new hire could very well provide Bell Mobility with a much-needed boost. Sabia added that the hiring of Wade Oosterman as president of Bell Mobility and Bell Distribution Inc., as well as chief brand officer at Bell Canada "will have a very, very positive impact on the acceleration of that business." (See article on page 4 for more information on Oosterman’s appointment.) George Cope, president and COO of Bell Canada added, "We know we have work to do. We now have a 20-year wireless executive operating and running Bell Mobility as of this morning, and I have confidence our peer performance will improve over time." While Bell Mobility is proceeding along a path of slow improvement, its other two main wireless rivals continue to make strong gains. Average revenue per user (ARPU) increases can be attributed to increased data usage and growing minutes of use for both Rogers Wireless and Telus Mobility. As well, the two companies are securing new customers at a lower cost than Bell Mobility. Johanne Lemay, co-president of Lemay-Yates Associates Inc., highlighted the different financial trajectories of Bell Mobility and Rogers in a recent note (Telus Corp. had yet to release its financial results when the note was issued). "Bell’s wireless results are improving, but still fall fairly short when compared to at least one of its key rivals in terms of overall growth, net subscriber additions and cost of customer acquisition," she wrote. "Bell was fairly timid in migrating new wireless services 18 to 24 months ago and while it has taken many positive steps since then to evolve its suite of handsets and services, it has generally fallen behind both Telus and Rogers and is still in catch up mode as reflected in its ARPU and overall revenue growth," Lemay added. Bell Mobility won’t release figures for wireless data services revenue, except to note that it is growing as a result of the EvDO network rollout and the increased penetration of devices such as the BlackBerry and walkie-talkie 10-4 handsets. For Rogers Wireless and Telus Mobility, data is growing by leaps and bounds. Data services revenue accounted for 10.5% of Rogers Wireless’ overall network revenue in the second quarter or about $209 million. Telus Mobility derived about 7% of its per-subscriber revenue from data services in the second quarter, or $4.45 of the $63 Q2 ARPU. There are a number of things affecting Bell Mobility’s progress when compared to its two main rivals. The cost of acquiring a customer, or COA, appears to be trending higher for Bell Mobility, while Rogers Wireless and Telus Mobility are decreasing their COA. The same can be said for minutes of use as Bell Mobility has been in the range of 250 to 270 minutes per month per subscriber, while Rogers Wireless and Telus Mobility are considerably higher than that at 561 and 412 in the second quarter, respectively. While the pre-paid wireless market remains a growth opportunity for the country’s wireless operators, only Bell Mobility and Telus Mobility appear to be capitalizing on it. Telus Mobility was the only operator of the big three to report positive pre-paid subscriber growth with the addition of nearly 21,000 net new customers. Rogers Wireless reported a loss of nearly 15,900 pre-paid subscribers. A net loss of 16,000 pre-paid wireless subscribers in the second quarter from Bell Mobility is a dip from the previous quarter’s net additions of 21,000. Over the past six quarters, Bell Mobility has added approximately 232,000 net new pre-paid subscribers. Telus Mobility had added slightly more than 200,000 new net pre-paid additions. Rogers Wireless had 16,900 fewer pre-paid subscribers at the end of the second quarter of 2006 than it did at the end of the first quarter in 2005.

Rogers Wireless and Telus Mobility outperform Bell Mobility in second quarter

News | August 25, 2006

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