Competition expected to put pressure on profit growth in telecom and computer
systems design industries

OTTAWA, June 14 /CNW Telbec/ - Canada's information technology services industries survived the recession in relatively good shape. However, weak price increases and rising costs will limit future profit growth, according to The Conference Board of Canada's Spring 2010 outlooks for the industries.

"New products, such as smartphones and digital TV, and the growing use of wireless services helped the telecom industry through the recession," said Maxim Armstrong, Economist. "As the economy rebounds, growth in demand for industry services will accelerate. However, competition will limit price increases for both telecoms and computer services firms. New entrants into the Canadian wireless market are also forcing telephone service providers to control escalating costs and make investments in new technologies."

Telecom profits surpassed $7 billion last year, slightly above 2008 levels. This year, costs are expected to grow by 5 per cent, due to rising interest rates and stronger wage increases, which will cause profits to dip to $6.7 billion. Profit growth will resume in 2011, but it will be 2013 before profits return to their 2009 peak.

The outlook for the computer systems design industry, which includes software and website development and management, and computer-related support services, is also being limited by strong cost increases. Even though revenues are expected to improve this year, further cost growth will cause industry profits to dip to $1.3 billion, a third consecutive yearly decline.

SOURCE Conference Board of Canada

For further information: For further information: Brent Dowdall, Media Relations, Tel.: 613-526-3090 ext. 448, E-mail: corpcomm@conferenceboard.ca


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