Game of Phones: Telus Overtakes BCE as #2 Wireless Provider

Q4 results bring an extra surprise for Telus.

| More on:
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

After years of sitting in third place Telus (TSX:T) has overtaken BCE (TSX: BCE)(NYSE:BCE) in number of wireless subscribers two quarters in a row. At the close of Q4 Telus had 7.807 million wireless subscribers compared to BCE’s 7.778 million subscribers. This does not even include the 280,000 customers Telus added when it purchased Public Mobile during the last quarter.

Despite this growth, Telus is still a far way off from unseating the current king, Rogers (TSX: RCI.B)(NYSE:RCI), which currently has 9.5 million subscribers. In terms of growth the last quarter, Telus saw a 1.8% increase in subscribers while BCE recruited an additional 1.3% and Rogers 0.7%.

These gains in subscribers are coming even though Telus has the highest average monthly bill of the three at $61.86, compared to BCE at $56.92 and Rogers at $58.92. It appears that people are willing to pay a little more to avoid lackluster customer service some of Telus’s competitors are known for. Telus is even offering BCE customers in Alberta and BC $100 to switch to Telus.

Part of this growth has come from the increased use of smart phones by Canadians — two years ago only 53% of Telus customers used a smartphone; today 77% are using data-guzzling smart phones.

A numbers game

This surge in subscriptions contributed to wireless revenues, which grew during the quarter to $1.43 billion, an increase of  $56 million or 4.1%. BCE saw Q4 wireless revenues of $1.51 billion, up 3.2% from last year. Telus’ jump in revenues can be attributed partly to the wireless division, which saw 113,000 new subscribers, but it has seen gains in other areas also. During the same period Telus added 38,000 Optik TV and 21,000 internet subscribers.

Across all of its divisions, Telus earned $11.4 billion in revenues during 2013 and posted a net profit of $1.29 billion. This is up from 2012 revenues of $10.92 billion and net profits of $1.2 billion. Total “new connections” for 2013 including wireless, TV and internet grew by 584,000.

Foolish bottom line

With all these new subscribers in place, Telus is looking to continue its growth strategy. It has set aside $2.2 billion to continue upgrading to fiber-optic cable for its TV and internet services. There are also plans to fully utilize the 700mhz bandwidth it acquired from Novus Wireless Inc, Public Mobile, and the in-progress federal auction.

Telus also remains committed to purchase Mobilicity, despite the number of times the government has stepped in to hinder the sale. Things are looking bright for the now number two wireless company. Those looking for “More Choice” in who they contract with or invest in may have to rethink how they plan the game of phones.

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 Cameron Conway does not own any shares in the companies mentioned.

More on Investing

Hands holding trophy cup on sky background
Investing

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Here are three top TSX growth stocks that may be worth a look, given the significant valuation declines these stocks…

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Man data analyze
Stocks for Beginners

Beginners: 2 Market-Beating Stocks Just Getting Started

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) and Constellation Software (TSX:CSU) are proven market beaters that could continue their ways.

Read more »

oil and natural gas
Energy Stocks

Small OPEC+ Oil-Output Hike: Buy More Energy Stocks?

Energy stocks could soar higher, because oil markets will remain tight due to the small production increase by OPEC+.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

edit Person using calculator next to charts and graphs
Investing

Where to Invest $500 in the TSX Right Now

Long-term investors can look to buy stocks, including Suncor Energy and Shopify, as they are poised to outpace the broader…

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

falling red arrow and lifting
Investing

2 Oversold TSX Stocks That Should Bounce Back

Stocks that are oversold without an external catalyst like a market crash or a weak sector might be risky buys,…

Read more »