TELECOM PROFITS TO INCREASE IN 2010 THANKS TO LOWER COSTS AND THE
INTRODUCTION OF NEW PRODUCTS

OTTAWA, Dec. 2 /CNW/ - Even in a weak economic recovery, Canada's telecommunications industry has continued to experience increases in profitability thanks to cost control and demand for new technologies, according to The Conference Board of Canada's Canadian Industrial Outlook: Canada's Telecommunications Industry - Autumn 2010.

"The sluggish economic recovery made it harder for telecom providers to attract new clients or convince existing customers to expand their service," said Maxim Armstrong, Economist. "However, lower costs and continued demand for new products, such as digital TV and smartphones, helped to keep the telecom industry growing when most other industries were in recession."

Slower sales and minimal price increases resulted in sluggish revenue growth over the last two years. Costs, however, increased by just 1 per cent last year. Low interest rates and a favourable exchange rate—which lowers the price of imported components— will limit cost growth to 0.9 per cent this year.

This past year was a milestone for the telecom industry, as four new wireless service providers entered the market. The result for the industry as a whole is increased competition, which will limit price growth and reduce profit margins.

Industry profits are expected to expand by 11.6 per cent to $7.5 billion in 2010, building on a 5.6 per cent increase in 2009. Profit levels are expected to stagnate starting next year as increased competition limits the ability of providers—notably in wireless services— to raise prices.

For further information:

Yvonne Squires, Media Relations, Tel.: [phone] ext.  221
E-mail: [email protected]