Telus Expands Fibre Network, Embraces Wholesaler Role Amidst Regulatory Changes
Telus Corp. plans to continue expanding its fibre internet network within its core regions while acting as a wholesaler elsewhere in Canada. This strategy aligns with a recent regulatory ruling, supporting the company’s belief that a mix of wholesale and retail customers at the right access price maximizes value for the fibre infrastructure.
A Regulatory Alignment
Doug French, Telus’s chief financial officer, commented on the regulatory ruling during an interview following the company’s fourth-quarter earnings. “We build our networks for our customers, and our customers include both wholesale and retail clients. We believe having customers on our network, whether through a retail channel or a wholesale channel, maximizes the fibre’s value,” explained French.
CRTC Decision and Rival Reactions
Last week, Telus expressed approval for a CRTC ruling that permitted Canada’s largest telecommunications companies to sell internet services in regions they do not own fibre networks by paying local incumbents to use their infrastructure. However, the CRTC deferred a final decision on this matter until the summer, intending to further examine the decision’s impact on investment and competition.
In contrast, Bell Canada’s CEO, Mirko Bibic, criticized the CRTC’s decision, arguing that allowing incumbents to resell internet services from each other might discourage investment in their own infrastructure. Bell announced it would scale back its fibre buildout due to the ruling, reducing capital spending plans by $2.2 billion from this year to 2027, on top of $684 million saved in 2024. This reduction affects over one million homes and businesses across 150 communities.
Bell’s Criticism
Bell’s chief legal and regulatory officer, Robert Malcolmson, expressed concern that the CRTC’s direction undermines the business case for building fibre in all locations Bell originally planned. Malcolmson believes the spending cut will particularly impact rural and remote areas. “The CRTC has the wrong policy at the worst time. As the economy faces an existential threat from tariffs, Canada needs policies that encourage investment and get more Canadians working,” he stated in a press release.
Telus’s Future Outlook
Telus, however, intends to continue fibre buildouts in Canada under the current CRTC model for wholesale fibre services. French highlighted ongoing projects in Alberta, British Columbia, and parts of Quebec. The company began offering fibre services throughout Ontario and Quebec in November and plans to extend its offerings to the Atlantic provinces.
“We are not kidding ourselves that we’re not perfect and there are certain customers that would select another vendor sometimes,” French admitted. “If they select another vendor, but ride across our fibre, we never would have gotten that customer in the first place.”
Financial Performance
Telus reported a strong quarter, with net income attributable to common shares totalling $358 million or 24 cents per share for the quarter, up from $288 million or 20 cents per share a year ago. Operating revenue and other income rose to $5.38 billion from $5.20 billion. On an adjusted basis, Telus earned 25 cents per share, exceeding analysts’ expectations of 22 cents per share.
The company added 328,000 net new customers, down around 76,000 year-over-year. This decline includes a decrease in mobile phone subscribers by 56,000 and an increase in internet customers by 1,000. Telus attributed the changes to more intense marketing and promotional price competition and slower immigration targets.
Telus’s mobile phone average revenue per user was $58.05, down $2.15 or 3.6% year-over-year. The company cited customers opting for lower-priced base rate plans and reduced overage and roaming revenues as contributing factors.
Industry Trends
Scotiabank analyst Maher Yaghi observed that Telus’s results reflect the industry pressure caused by pricing. He emphasized that Telus and its rivals are focusing on cost reduction strategies to sustain profit growth despite top-line revenue challenges.
“What we should continue to see into 2025 is management’s strong push to reduce costs in order to continue to grow profitability at a higher pace than top line growth, not easy in a high operating leverage industry,” Yaghi added.
Conclusion
Telus’s continued commitment to fibre network expansion and its role as a wholesaler in certain regions demonstrate a proactive response to regulatory changes and market demands. By balancing wholesale and retail services, Telus aims to maximize the value of its infrastructure and position itself as a leading player in the Canadian telecom industry.
The contrasting reactions from Telus and Bell highlight the complex landscape of the Canadian telecommunications market, where regulatory decisions can significantly impact business strategies and investment priorities.
Stay tuned for further updates on this evolving industry动态 and Telus’s strategic moves. Your insights and questions are valuable to us. Feel free to share your thoughts below!
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