OTTAWA, May 27, 2011 /CNW/ - Increasing competition and higher costs
will cut into profitability for Canada's telecommunications companies
this year, according to The Conference Board of Canada's Canadian Industrial Outlook: Canada's Telecommunications Industry -
"Consumers are rapidly adopting new technologies, translating into
strong demand for wireless and Internet services," said Maxim
Armstrong, Economist. "However, the industry will struggle to keep cost
increases in line with revenue growth. Established providers are
investing large sums in faster, new networks, but new players in the
Canadian wireless market are limiting price increases."
Telecom providers managed to post profit growth of 10.3 per cent in
2010, thanks to lower costs. With costs on the rise again, pre-tax
profits will dip by 9.5 per cent to $6.7 billion in 2011. Costs will
continue to grow, led by above-average wage increases and higher
interest rates, averaging four per cent a year between 2011 and 2015.
At the same time, sales in the wired sector will remain weak and
competitive pressures will allow for minimal price increases. The end
result will be slightly lower margins and stagnating profits over the
next four years.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448