| Demand for wireless maintains industry profit levels |
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Canada’s telecom industry will remain healthy and profitable, even in the face of a worsening economic outlook, says the Conference Board’s latest forecast for the industry, which calls for annual profits of about $7 billion annually between 2008 and 2011. “The continued rapid rate of increase in demand for wireless services—8% increases on a year-over-year basis—is driving growth in the telecommunications industry. However, profit levels will remain flat over the next few years, due to fierce price competition and a slowdown in demand growth due to the economic slowdown,” said Michael Burt, associate director, Industrial Outlook. Although growth in the telecom industry is not highly correlated with the rest of the economy, the current uncertainty will slow demand for telecom services. In 2008 and 2009, industry output will grow by an average of 2.3%, its slowest pace in more than 10 years. The auction of the new wireless spectrum earlier this year means new players are expected to enter both regional and national markets in 2010. These new entrants will only intensify price competition, which benefits consumers but weakens industry profitability. (The forecast was completed before recent developments in the proposed sale of Bell Canada Enterprises.) |
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