Canada Telecommunications Report Q1 2008

During the first nine months of 2007, the number of Canadian mobile subscribers grew by 5% to reach 19.370mn subscribers. Generally speaking, the number of Canadian mobile subscribers has increased at a steady but none too dramatic pace. However, there are also signs that mobile subscriber growth is slowing: the 9.8% rate of growth was lower than the 11.9% and 12% growth seen in 2004 and 2005 respectively. Furthermore, BMI estimates that overall growth for 2007 was lower still, at just 7.8%. We predict that Canada's mobile sector will grow by around 7.2% in 2008 and by marginally lower rates of growth in the years thereafter. The increasing attractiveness of mobile services, along with the possible introduction of more market competition, should help to boost growth levels in the later years of our forecast; by the end of 2012, we anticipate a market of over 27mn customers and a mobile penetration rate of 84.7%.

In contrast to the steady growth seen in Canada's mobile market, the market for traditional circuitswitched (i.e. PSTN) lines continued to decline in 2007, although a decrease in the number of subscribers belonging to the traditional fixed-line operators was partially offset by the fixed-line subscriber growth experienced by cable companies. The largest operators offering circuit-switched voice telephony all reported a decrease in PSTN subscriber numbers in the first three months of 2007, as did Rogers, which offers both PSTN and cable-based telephony. Meanwhile, Rogers continued to report growth from its cable telephony customer base, as did cable operators Vidotron, Shaw and Cogeco. Overall, the number of fixed-line subscribers shrank by 0.1% in the first nine months of 2007. However, the number of customers of traditional fixed-line services fell by 3.2% during the same period. Meanwhile, Canada's broadband market grew by 9.2% in the first nine months of 2007, with broadband subscriber numbers increasing to an estimated 19.720mn by the end of the year (this is equivalent to 60% of the population and means that Canada continues to have one of the world's highest broadband penetration rates).

Other major developments in the Canadian telecoms market include the announcement by telecoms regulator the CRTC in December 2007 that it had scheduled a public hearing on the pending takeover of BCE for 25 February 2008. BCE now expects the transaction to close in the first part of the second quarter of 2008.

In other news, Western Canada-based cable operator Shaw Communications reported in October 2007 that it did not intend to enter the country's mobile sector unless the federal government's rules for a planned wireless spectrum auction are attractive to new entrants. The CRTC has not yet finalised rules for the spectrum auction. Quebec-based cableco Videotron intends to bid for frequencies in order to expand its wireless operations, which are currently limited to MVNO services.