Competition will trump telecom price increases

CANADA’S TELECOM INDUSTRY AS A WHOLE WILL GROW AT A MODEST PACE OVER THE NEXT FOUR YEARS, but according to the Conference Board, significant shifts in market share will occur within segments of the industry.

“Fierce competitive pressures in growing segments of the telecommunications industry will limit price increases. This increasing competition benefits consumers but will constrain profit growth for telecommunications companies,” said Michael Burt, Associate Director, Industrial Outlook. The number of wired phone lines is steadily declining, but increasing demand for wireless services will sustain overall growth in the industry.

The May 2008 spectrum auction for wireless services will bring new competitors into the market, which will limit the industry’s ability to raise prices. Prices are forecast to grow at less than one per cent annually through 2011.

In addition to weak pricing power for the industry, rising costs will be another factor limiting profitability. For example, labour shortages in the IT sector are driving wage increases. As a result, after posting double-digit profit growth in each of the past two years, industry profits are expected to grow by just 1.1 per cent in 2008, to $6.8 billion. Profits will remain flat in 2009 and will grow modestly each year between 2010 and 2012.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now