Rogers only wireless carrier willing to spend heavily on capex, says new survey

Capital expenditures by Canadian wireless companies will be consistent, but not spectacular, a new study by IDC Canada finds. Only Rogers Wireless Communications Inc. is projected to invest heavily, the market research firm predicts in its annual Canadian Telecom Market Drivers and Strategies.Unlike last year's report (RoW, Jan. 22/01), the current edition includes figures from wireless operators that also have wireline operations. The earlier study consolidated both wireless and wireline figures.IDC notes that spending in wireless is down slightly in 2002, but ahead of 2000. Authors Lawrence Surtees and Warren Chaisatien point out that wireless carriers will need expanded infrastructure with greater bandwidth. The launch of 2.5G networks is unlikely to bring in a jump in capex spending, save for Rogers."Rogers is an exception because it must now build an all-digital GPRS overlay onto its first-generation cellular network in order to offer 2.5G wireless Internet services," the analysts write. "Rogers plans to spend $600 million in each year between 2000 to 2002 with the bulk of expenditures going to Ericsson Canada Inc. Rival wireless carriers, however, are not faced with making similar expenditures because they converted their cellular networks to digital when second-generation PCS networks were launched in 1996."This is consistent with predictions IDC made last year. "Because Rogers AT&T uses an older TDMA architecture, it must construct a special digital overlay network," Surtees wrote in the previous report. Rogers has already completed much of its GPRS network and will mirror its analog coverage by the end of this year.The rest of the wireless companies will concentrate on increasing their geographic coverage in anticipation of 2.5G rollout later this year. Bell Mobility unveiled its 2.5G network in the Toronto area last November and only last week announced commercial availability of services and handsets. Bell assigned $120 million of its 2001 capex budget to expand its digital coverage in Quebec and Ontario to more than 90 per cent of the population. The company also spent $180 million to expand its services in western Canada. This year's capex budget is expected to be $525 million.Bell's resale and roaming agreement with Telus Mobility will help the western-based telco boost its coverage from 64 per cent of the nation's population to over 90 per cent (RoW, Oct. 30/01). The report predicts that both Bell and Telus will be able to reduce their capex over the next decade by $500 million each.Microcell Telecommunications Inc. has scaled back its capex projections significantly. It had originally expected to spend $500 million last year, but cut that back to $325 million. This year's total was also slashed and is now predicted to be $175 million.Canadian Wireless Capex Growth ($Millions)Bell MobilityNPNPNPNP450525Aliant Mobility5075Clearnet*561.8282372.5400NANATelus MobilityNPNPNP534650560Rogers AT&T605301401600650600Microcell200.4202.5133.6280300175Total1,367.2785.5907.11,8142,1001,935NPnot provided; NAnot applicable*Clearnet bought by Telus in 2000 and results included in Telus data starting in 2001.Source: IDC Canada, 2002

Rogers only wireless carrier willing to spend heavily on capex, says new survey

News | February 19, 2002

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