Numbers released by a Statistics Canada report on Thursday confirm that while most of IT continues to experience losses or no growth, the wireless providers are generating stellar numbers. However, at least one analyst warned not to take the numbers too seriously.
For the first nine months of 2002, wireless operators’ revenues were $5.6 billion and operating profits surged to $829.9 million during the same period, more than five times the amount for the same period in 2001.
For the third quarter, operating revenues increased 12.5 per cent from the 2001 period. If the numbers continue, it will help the wireless providers to achieve record numbers, Statistics Canada said.
The success of the wireless industry is largely being attributed to the growing penetration of wireless technologies. The number of subscribers rose to 11.4 million by the third quarter, Statistics Canada said.
However, the numbers really don’t tell the whole story.
“Operating revenues, is (overall) sales, not profit and that’s a different beast,” said Lawrence Surtees, director telecom research at IDC Canada in Toronto. Last year, he noted that Rogers AT&T Wireless and Bell Mobility were able to turn a profit – but barely.
So long as subscriber growth remains healthy, “it stands to reason that revenues will be up in the wireless space,” he said.
Aside from wireless subscriber numbers on the rise which helped over-all growth, he noted that short message service (SMS) also aided to increase sales in Canada last year. On the whole, Surtees cautioned against taking the numbers too seriously, saying all that Statistics Canada did was compile the latest quarterly numbers.
Yet, Jeremy Depow, senior analyst at Ottawa-based The Yankee Group in Canada, said the figures released “made sense.” He explained that new subscribers and the average revenue per user were both factors in increasing profits. Once the wireless providers switched from per second billing back to per minute billing, revenues began to grow again in the second quarter, as the per second billing scheme resulted in lost revenues.
However, the wireline side experienced a year-over-year decline in operating revenues of 3.3 per cent for the third consecutive quarter. Operating profits declined were down by 5.2 per cent in the third quarter for the same time frame for 2001, according to the report.
Statistics Canada is online at www.statcan.ca.