Canadian Telecom Sector: A New Era of Competition

By Andre-Philippe Hardy and Drew McReynolds
Published May 3, 2023 | 12 min listen

In this episode of the Industries in Motion podcast, Drew McReynolds, Managing Director and Telecommunications & Media Analyst, and Andre-Philippe Hardy, Head of Canadian & APAC Research at RBC Capital Markets, examine what will be a new competitive and regulatory landscape for Canadian telecom companies following the recent merger of Rogers and Shaw and the sale of Freedom Mobile to Quebecor.

Disclosures and Disclaimers

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We believe the Canadian telecom sector is at another major structural crossroad in 2023 with the Rogers-Shaw-Quebecor transactions, 5G and higher interest rates putting competitive structure, growth and valuations to the test. In our view, the Rogers-Shaw and Quebecor-Freedom Mobile transactions carry a very high degree of industrial logic and tick almost all of the boxes for Canadian telecom policy makers. In the wake of these transactions, we expect the telecom industry to become increasingly competitive in the months and years ahead while garnering greater regulatory scrutiny.

What does this mean for consumers and wireless prices? As part of gaining government approval for its acquisition of Freedom Mobile, Quebecor has committed to ensuring that its wireless plans in BC, Alberta, Ontario are at least 20% lower than the equivalent plans offered by the big three wireless providers (Rogers, BCE and TELUS). We also expect Quebecor to accelerate 5G deployment, be much more promotionally active and fully leverage the benefits of additional network support that Rogers will be providing to Freedom Mobile as part of the transaction. In addition, the CRTC is implementing a new wireless regime across the country to the benefit of regional wireless players like Freedom Mobile.  In aggregate, all of these developments in our view should translate to a more competitive wireless market with declining wireless prices for consumers. 

Contributing to a more competitive telecom sector over the next few years will be ongoing 5G deployment and an expansion of new internet options. On the 5G front, the 3800 MHz spectrum auction takes place later this year enabling the Canadian operators to begin fully deploying the most important spectrum for 5G thereby delivering on the long-standing promise of greater speed/capacity and lower latency. On the internet front, we expect major fiber deployment by the incumbent telcos, emerging satellite broadband and fixed wireless alternatives and forthcoming regulation that is likely to attract more resellers to translate to a much more competitive internet market across Canada. Against this backdrop, we believe the Canadian telecom industry is truly embarking on a new era of competition.

5GAndré-Philippe HardyDrew McReynoldsIndustries in MotionInterest RatesTelecommunications

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