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Demand for wireless maintains telecommunications industry profit levels

Canada's telecommunications industry will remain healthy and profitable even in the face of a worsening economic ou...


December 9, 2008  


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Canada’s telecommunications industry will remain healthy and profitable even in the face of a worsening economic outlook, according to 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 industry,” said Michael Burt, associate director, industrial outlook, with the board. “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.”

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 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 board said in a release.