Communications Technology

Telecom companies look to profit in 2011
By Staff, The Canadian Press

Source: The Canadian Press - Decemer 2, 2010

[OTTAWA, ONT] - The introduction of new consumer technology and cost cutting will lead Canada’s telecom industry to a profitable 2010 but earnings are expected to stagnate in 2011 as competition heats up, according to a report by the Conference Board of Canada.Industry profit is expected to increase 11.6 per cent this year to $7.5 billion, but more competition will limit the ability of wireless providers to raise their prices, the report released Thursday said.

“All in all, telecom providers are benefiting from strong demand from both consumers and businesses but their pricing power is growing steadily weaker as competition increases,” conference board economist Maxim Armstrong said in his report.

The sluggish economic recovery made it harder for telecom providers to attract new clients or convince existing customers to expand their service, he said.

But lower costs and continued demand for products like digital TV and smartphones helped to keep the telecom industry growing when most other industries were in recession, Armstrong said.

The report noted that four new wireless players - Wind Mobile, Mobilicity, Public Mobile and Quebecor’s Videotron - entered the wireless market.

“The result for the industry as a whole is that increased competition will bring prices and profit margins down,” the report said. “In reaction to the new entrants’ arrival, most companies have eliminated network fees and made new types of packages available.”

The report also noted the influence of the Internet and improved networks with traditional telecom providers trying to adapt by adding content and more flexibility to their on-demand services.

“In the coming years, demand for telecom services is expected to continue to increase at a solid pace.”