Bell, Cogeco execs say enterprise market weak

Executives from two of Canada’s largest telecommunications companies told the crowd at the Scotiabank Telecom & Cable 2015 Conference on Wednesday that the business of selling services to businesses is challenging their bottom line. Yet both BCE Inc. chief financial officer Siim Vanaselja and Cogeco Cable Inc. CEO Louis Audet said weak growth in enterprise services is an industry-wide phenomenon that reflects continuing tepid growth in the overall economy. “I don't believe that this is a market-share issue that we are seeing,” Vanaselja told the Toronto crowd. “I think in the enterprise space we just aren't seeing a lot of growth in the economy, a lot of telecom infrastructure services that are being invested in.” His company’s enterprise business for wireline services is “performing in line with the market,” Vanaselja said, adding that that positive or even break-even growth in earnings for the enterprise market wasn’t necessary for the company to make a profit from its wireline business as a whole. Both Vanaselja and Audet said their companies were turning to other services beyond selling access, such as cloud services, data centres and consulting to attract business customers to their offerings. “We're seeing all of those measures really beginning to show improvements,” Vanaselja said. “I think we're actually quite optimistic on the ability to, rather than seeing a sustained flatlined year over year performance in enterprise to actually see a year-over-year improvement as we move into 2015.” Cogeco, which Audet said was now in its ninth year of providing enterprise services, has invested in its own data centres and purchased infrastructure provider Peer 1 Network Enterprises Inc. in April 2013. Yet Audet said that division had never made more money than what the company was spending on building and maintaining the data centres, in part because there were “constantly new opportunities to be tackled” in the enterprise market. The company aims to be “cashflow neutral” in 2016, Audet said, although he added that he has said something similar in the past for 2014 and 2015. One thing Cogeco isn’t looking to do is buy any more data-centre related companies, Audet said. “I don't think we're in a position to act on acquisitions in that sector until we're satisfied that we have our house in order, but that won't take very long,” he said. Unlike its enterprise services, Audet said he was “extremely pleased” with the performance of the company’s consumer products. Cogeco recently introduced its TiVo Inc. television service in Ontario, which allows customers to search multiple streams of content at once. Audet said the company had identified a “weakness” in their video offerings and the newly launched service, which was previously available for subscribers of their American subsidiary Atlantic Broadband, addresses that problem. “That was a key moment for us because now we have something better than our competitors to compete on the video side,” he said. Competitors, including Bell, have invested in fibre-optic connections to bring IPTV and other services to consumers, yet Audet said Cogeco’s research showed customers didn’t care about how their content was delivered. “It wasn't about fibre, it was about a customer-friendly user interface, easy to use and powerful, which we did not have,” he said. “And with TiVo at last we have a very user-friendly interface that gives customers access seamlessly to linear, recorded, on-demand cable content, and over-the-top content in one seamless experience with a search engine that will search all sources of programming and offer up recommendations.” Audet said he hopes the the TiVo product will address existing consumer dissatisfaction, at least in part, and noted the CRTC’s Let’s Talk TV process is doing the same thing. “It is our experience that when consumers want something they find it,” he said. “And if they have to go to the black market to find it, they do. So our industry has to react in a consumer-friendly way. What you're seeing from the CRTC is really the regulator taking charge of a customer desire that was not being fulfilled.” BCE’s Vanaselja said his company was looking to the wireless business, and specifically opportunities beyond traditional consumer wireless services, to offset flat growth in the enterprise market. “I still believe there is a lot of opportunity for growth across the wireless industry, and I think disproportionate opportunities for Bell Mobility,” he said. “We look at machine to machine (M2M) services, the dramatic increase that we're seeing in mobile TV, and mobile commerce is something that we're invested in.” The company is looking to use its existing relationships with businesses to expand its service offerings, he said. “When we look at the mix of consumer versus business wireless customers there's certainly opportunities for us to improve on market share in the business segment as well,” he said. “Recognizing Bell Canada's touch with large enterprise customers, we can do a much better job in attaching wireless with those customers. We certainly see a lot of continued, sustained opportunity for growth.” — Reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Bell, Cogeco execs say enterprise market weak

News | November 12, 2014

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Bell, Cogeco execs say enterprise market weak

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