Data consumption, competitive pressures headline investor conference

Canada’s biggest telcos told investors Wednesday that they are seeing growth in wireless data usage on the first of a two-day conference hosted by CIBC World Markets. BCE Inc. and Telus Corp., alongside Cogeco Inc. and Corus Entertainment Inc., participated in a discussion with CIBC analyst Robert Bek at the annual Eastern Institutional Investor Conference in Montreal about wireline and wireless trends and how the companies have been able to meet the challenge of industry and competitive pressures. Some highlighted the increase in data as a boost to their balance sheets. “More and more data is being consumed on our networks every day and there’s a great opportunity for us to monetize because you’re not seeing unlimited data plans here in Canada,” Glen LeBlanc, Bell’s executive vice president and chief financial officer, said in his one-on-one with Bek.“The three of us, the large incumbents, continue to find a way to monetize that consumption and increase bandwidth and usage.” When asked about whether the market will continue to stay away from an unlimited offering and stick to price-per-usage, LeBlanc said he hopes so. “I think nobody is rushing to go in that direction,” LeBlanc added. Doug French, Telus Corp.’s executive vice-president and chief financial officer, echoed those statements, saying that the company’s average revenue per unit (ARPU) growth has come off the back of that data consumption. “The demand for data continues to grow,” French told Bek. “We saw a lot of our customers are doing what we call ‘top-ups,’” where a customer can pay a certain amount to add more data as they reach their threshold for the month. He added that since implementing a data notification warning for customers on the verge of going over, they have placed more trust in the company, whereas when it was introduced, less data was consumed implying some were afraid of going over. Additionally, French said the company’s step-up feature, where customers move up to higher data buckets, also contributed to that ARPU growth. In a note on Monday, Canaccord analyst Aravinda Galappatthige said some telecom companies could expect heightened competitive pressure as the broadband market heats up, Shaw Communications Inc. rolls out LTE for Wind Mobile and as the second phase of the CRTC's pick-and-pay mandate comes into play on Dec. 1. LeBlanc also raised the issue of long-term competitive offers. “The competitive dynamic is always intense,” LeBlanc said about wireline challenges. “You’re seeing long-term offers in the market that we’re trying to avoid matching, like $99 for two-year guaranteed price points.” “That’s not a promotion; that’s a permanent price in my eyes,” LeBlanc said. He added that Bell has had to do some price matching in Quebec, where he said Quebecor Inc.’s Videotron tends to compete on price. He warned, however, that Videotron is not a disrupter anymore and that “they have to be careful with the aggressive pricing or you’re going to re-price your own base.” While fears of industry challenges, such as retention of advertising dollars and the CRTC’s skinny-basic television mandate, are palpable, broadcaster Corus Entertainment Inc. said it hasn't suffered under the regulator's new rules. “Everyone thought that we were going to hell in a handbag with all these subscriber revenue diminution, and that hasn’t happened,” Doug Murphy, Corus’ president and CEO told Bek of the announcement of the CRTC’s implementation of skinny basic. “And it hasn’t happened because the bundle is still the most cost-effective way to get content…people are still watching a lot of TV.” For premium content, Murphy said people are still plopping down in front of their 55-inch screens. “That behaviour remains pretty sticky.” In light of the release of Apple Inc.’s iPhone 7 last week, questions on the trend of U.S. companies moving away from handset subsidies were raised. Regarding keeping with handset subsidies, LeBlanc said that “it’s a healthier landscape this way.” He said that with installment plans “you get constant and frequent renewal” with customers moving to the newest handset on a 24-month cycle, which “can be quite costly for the industry.” He said the U.S. is a “totally different landscape with disrupters” like T-Mobile US Inc. “For us, we won’t lead it, but we’ll be a fast-follower if the industry goes there,” LeBlanc said. “Never say never.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Data consumption, competitive pressures headline investor conference

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