How Canada’s Largest Telecoms Monetized a 44% Increase in Mobile Data Usage

CRTC’s Communications Monitoring Report for 2016 is out and could provide some insight into Telus Corporation’s (TSX:T)(NYSE:TU) upcoming earnings.

The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Canadian Radio-Television and Telecommunications Commission (CRTC) released its Communications Monitoring Report for 2016, which outlines the key trends in the sector. The results were pretty anticlimactic when determining the market share of the five largest telecom companies in Canada. Their percentage share of wireless subscribers was unchanged at 90%, including their share of revenues, which also remained at 92%.

What was noticeable was the 44% increase in mobile data usage by Canadians in 2015. The average monthly data usage per subscriber increased by 33% from the previous year. The average Canadian consumer is now using in excess of 1.3 gigabytes (GB), or more than the basic $25 per month for one GB of data.

Why is this important to consumers and investors?

For Canada’s telecommunications companies, this is significant trend; their wireless revenues continue to grow and outpace the majority of their other services.  The wireless service market sector is now the largest retail telecommunications service sector; it has grown more than any other sector since 2008. The following chart highlights a few metrics from the CRTC’s report.

cdn-telecom

Wireless services grew by almost 8% in 2015 and now represents 51% of all telecommunications revenues. It’s important to note that wireless revenues have the highest EBITDA margin of all other services at 40%.

An improvement in mobile applications and technologies continues to shift computing habits toward mobile devices.  Users have also become less elastic to the increasing prices as the average monthly fee grew by over 5% in 2015 to $64 per month.

What did remain unchanged in the report was the dominance of Telus Corporation (TSX:T)(NYSE:TU), Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI), and BCE Inc. (TSX:BCE)(NYSE:BCE) in the industry. The market share of the five largest firms remained at 90% and accounted for 92% of total revenues.

There still is some uncertainty, as the CRTC has started to crack down on the noncompetitive nature of the market. Lately, the cable and internet service providers (ISP) have seen the brunt of this legislation. Earlier this month, the CRTC ordered the major ISPs to reduce the prices they charge to retail competitors who buy space on their networks. As of now, the wireline service industry seems to be the target, but the wireless sector could be next.

Why Telus?

Of the three telecommunications companies, Telus has the largest portion of its revenues coming from one province. In 2015 it generated 53% of its revenues in the province of Alberta. Considering the economic conditions over the last two years in Alberta, it has increased in dividend by almost 30%, and the stock has gained about 20%.

One factor to consider is that Alberta has the highest wireless service revenues per subscriber at $76.48, or 10% higher than the next highest province, which is Newfoundland and Labrador. These numbers do exclude the northern provinces.

If your concerned about consumer retention, Telus has the lowest churn rate of Bell Mobility and Rogers Communications. The churn rate is the amount of customers or subscribers that cut ties with your service or company during a given time period. Telus had an annual churn rate of 1.3 times versus 1.5 and 1.6, respectively, for Bell and Rogers.

Rogers released positive earnings this week in large part due to strong wireless service revenue growth of 6% year over year. It’s expected that Telus will report similar results bolstered by its wireless growth and improvement in the economic landscape of some of its key markets.

 

Should you invest $1,000 in Barrick Gold right now?

Before you buy stock in Barrick Gold, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Barrick Gold wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Scott Brandt has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

dividend growth for passive income
Dividend Stocks

Why I’d Invest in Canadian Value Stocks for Both Stability and Growth

Three Canadian value stocks are buying opportunities for investors looking for stability and growth.

Read more »

investment research
Dividend Stocks

Got $15,000? 3 Blue-Chip Stocks Every Canadian Should Consider

Here's why investing in blue-chip TSX stocks such as CNQ and CNR should derive outsized gains in 2025 and beyond.

Read more »

A plant grows from coins.
Energy Stocks

2 Discounted Dividend Stocks With Significant Growth Potential

If you’re in search of income and capital appreciation in the long run, here are two discounted Canadian dividend stocks…

Read more »

protect, safe, trust
Dividend Stocks

Where I’d Allocate $20,000 in 2 Safer High-Yield Dividend Stocks for Retirement Needs

Here are two safer, high-yield dividend stocks I'm looking at for my retirement needs.

Read more »

Senior uses a laptop computer
Energy Stocks

Here’s How Investors Can Turn $15,000 in a TFSA Into $235,000

Energy stocks aren't created equal, and this one might be one of the best of the batch.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

monthly desk calendar
Dividend Stocks

A 9.2% Dividend Stock Paying Cash Every Single Month

With one of the highest dividends out there, this dividend stock deserves attention in your portfolio.

Read more »

Happy golf player walks the course
Dividend Stocks

Build a Powerful Passive Income Portfolio With Just $20,000

If you are worried that the bear market could reduce your savings, these stocks can build a powerful passive income…

Read more »