Capex spending and revenue on the rise in wireless telecom industry

Wireless carriers spent more on capital expenditures last year, but they also generated more revenue and signed up a greater number of digital than analog customers, according to new figures compiled by Statistics Canada. Released earlier this month, the Quarterly Telecommunications Statistics also found that wireless telecom is outpacing wireline when it comes to expanding access to the public switched telephone network. At the end of last year, Canada had more than 8.75 million wireless customers, with 4.64 million of them subscribing to digital PCS service. Canada has probably hit the nine-million subscriber mark since then, with most of the growth attributed to expanded digital coverage outside urban areas, and a plethora of new applications that are only available on PCS networks. The StatsCan report found that while wireless is primarily used for local telephone calls, long distance minutes originating from or arriving to cell phones has risen dramatically in the past year. The quarter-to-quarter increase in long distance minutes was up 34.5 per cent, raking in a total of 5.2 billion minutes. Even more striking was the increase in total LD minutes from 1999 to 2000 which rose nearly 40 per cent to reach 18.9 billion minutes at the end of last year. The Canadian telecom industry as a whole spent $6 billion last year on capital expenditures, a drop of 3.8 per cent compared to 1999. Wired telcos still account for the lion’s share of this spending, but the rate dropped by more than 10 per cent compared to 1999. In comparison, capex spending for the wireless sector rose 21.6 per cent for the year, topping out at $1.675 billion. For the last year’s fourth quarter, wireless capex spending hit more than $550 million. The chart below demonstrates the capex levels for both the wireless and wireline industries during the past two years. Operating revenues for the wireless sector experienced healthy increases in 2000 compared to 1999. Total wireless operating revenue for 2000 jumped nearly 20 per cent over the previous year’s levels, topping the $5.5-billion mark. In Q4, revenue was up 19.7 per cent from the previous year’s fourth quarter and 4.8 per cent from 2000Q3. Operating profits tell a different story. Fourth quarter profit slid back into a loss situation of –9 cents on each dollar of revenue after two quarters of operating in the black. Overall operating profit for the wireless industry in 2000 was –1 cent on each revenue dollar. The loss in this category can be attributed to the increased costs of rolling out networks and services to provide new applications in a highly competitive market, StatsCan writes in its report.

Capex spending and revenue on the rise in wireless telecom industry

News | May 28, 2001

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