Telecoms’ TV customer losses up five-fold in 2015

The number of subscribers leaving the Canadian TV system appears to be accelerating, as Canada’s publicly traded telecom companies lost five times more TV subscribers in 2015 than a year earlier. They reported having 178,910 fewer television customers at the end of 2015 than at the end of 2014, according to data compiled by The Wire Report based on the companies’ fourth-quarter statements. That’s compared to the previous year’s 31,663 drop, the first on record. Overall, the number of TV subscribers reported by BCE Inc., Rogers Communications Inc., Shaw Communications Inc., Quebecor Inc., Cogeco Inc., Telus Corp. and MTS Inc. fell 1.6 per cent from the 11,112,353 customers the companies had a year earlier. While the biggest telcos continued growing IPTV subscribers, they attracted fewer subscribers than the cable companies lost. Shaw, Rogers, Quebecor and Cogeco lost a combined 357,804 TV customers. Shaw experienced the biggest drop, at 152,597, and Rogers’ subscriber base fell 128,000. Meanwhile, Bell reported 95,888 more total TV subscribers in 2015 than in 2014, with an increase from 2,642,608 to 2,738,496, though it also reported a 107,380 increase in net subscriber activations. For its calculations, The Wire Report compared all the companies’ reported totals at the end of the fourth quarter of 2014 with the totals at the end of the same quarter 2015. Bell spokeswoman Jacqueline Michelis said in an email the total subscriber number was adjusted in early 2015 and reduced by 11,492 "due to the elimination of the 30-day notice required to cancel services.” Telus attracted 89,000 additional customers. Both its increase and Bell's were smaller than either company experienced in the previous two years, while MTS lost 2,062 IPTV customers. But all seven companies saw increases in the wireless and wireline Internet sectors, which attracted more new subscribers than the TV sector lost. The companies added 328,898 Internet subscribers, which made for an almost three-per-cent increase, and 850,434 wireless subscribers, a 3.2 per cent increase. Mario Mota, a TV analyst with Boon Dog Professional Services Inc., said in a phone interview the trend in TV subscribers is “consistent with what’s going on in the U.S. There’s an acceleration going on.” “I would be worried by seeing these trends if I was in the business, but at the end of the day, they’re still relatively small in the grand scheme of things given the size of the market,“ Mota added. At the same time, he cautioned, “that doesn’t mean that TV providers can sit on their hands and say ‘oh, we’re fine.’ I do think that they still need to adjust their business to make sure that they make it as attractive as possible to keep people within their TV services.” He added that he wouldn’t describe the five-fold increase in TV customer losses as a tipping point, because there are too many variables involved. For example, the numbers are based on statements by the publicly traded companies, and don’t reflect the customers who may have left for smaller competitors that don’t publicize their financial results. “It’s hard to know whether there’s a five-time acceleration or whether it’s a little bit less than that because maybe the new IPTV providers that are on the scene are gaining customers back from the big players,” he said, citing companies like VMedia Inc. and Zazeen Inc. “But there’s also cord-cutting going on, people leaving the system altogether and going to over-the-top and whatever other options they want to choose. So there’s a combination of that going on,” he said. He added that the same companies that are losing or seeing slower growth in TV subscribers are also gaining subscribers through their OTT offerings. Though Shaw and Rogers’ Shomi and Bell’s CraveTV don’t release their subscriber numbers, Videotron does for its Illico TV. Videotron’s fourth-quarter numbers show it added more over-the-top subscribers than it lost TV customers, he noted, going up from 177,700 to 257,500 over the space of a year. “So they’re kind of winning that battle. Yes, it’s not the same kind of customers. It’s most definitely not the same kind of margin customers, because you may be going from a $50 cable package to a $9.99 over-the-top service fee,” he said. “But at the same time, they’re not coming out on the losing end in terms of customers.” Greg MacDonald, telecom analyst at Macquarie Capital Markets, said in a phone interview that the overall 1.6 per cent decline in TV subscribers “is absolutely a reflection of a trend — a trend that will probably get worse.” However, it’s also “well within the expectation” due to both the impact of the weaker economy Canada saw over the last year, and the ongoing trend toward OTT, which MacDonald said was irreversible. “More and more people will drop services to take over-the-top services, and that will probably be a bigger impact on overall trends as skinny basic gains traction,” he said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Telecoms’ TV customer losses up five-fold in 2015

News | March 10, 2016

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Telecoms’ TV customer losses up five-fold in 2015

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