Bell Canada Inc.
), the largest telecom company in Canada, and its subsidiary Bell
Aliant Inc. have threatened to trim down their unprofitable
payphone business if industry regulators refuse to accept their
request for rate hike.
The telecom company, which faces stiff competition from
Rogers Communication Inc.
) had asked for a 100 percent rate hike, which could raise the
local call charges from 50 cents to $1 and non-cash local call from
$1 to $2. They have given an ultimatum to Radio-Television and
Telecommunication Commission (CRTC) to accept their rate hike
request failing which will force them to remove almost 25 per cent
of their pay telephones.
Consumer advocates suggest that payphones still remain an
essential communication means for the poor, who cannot afford cell
phones or home phones. They believe that these public phones will
also help in unwanted situations like disruptions in wireless
services or low battery scenarios. However, Canadian telecom
companies argue that if they can get the desired price flexibility
it will help them to sustain their ailing payphone business and
will provide them with the money needed to upgrade their much older
The rate dispute comes at a time when most of the telecom
companies are trying to increase their more lucrative wireless
subscriber base. Increased adaptation of smartphones and other
wireless devices have resulted in reduction in payphone revenue for
We believe if CRTC increases the rate it may handicap low income
Canadians. On the contrary, if they don't provide the price rise it
may put payphones on the verge of extinction.
The current Zacks Consensus Estimate for Bell Canada Inc. is
pegged at 76 cents for the third quarter of 2012 with a growth rate
estimate of (16.12%.) For 2012, the Zacks Consensus Estimate stands
at $3.22 with a growth rate of 2.12% while for 2013, the Zacks
Consensus Estimate stands at $3.29 with a growth rate of 2.34%.
We retain our long-term Neutral recommendation on Bell Canada
Inc. Currently, it has a Zacks #3 Rank, implying a short-term Hold
BCE INC (BCE): Free Stock Analysis Report
ROGERS COMM CLB (RCI): Free Stock Analysis
To read this article on Zacks.com click here.