The cloud computing market is expected to grow 23.5% a year
over the next four years, five times faster than the entire rest
of the IT market -- all the way to $107 billion, according to
industry research firm International Data Corp. (IDC).
#-ad_banner-#IDC also expects that by 2017, 17% of all IT
expenditures will be invested in the public cloud and 59% will go
to cloud services in general.
And our Canadian friends to the north are in a position to
potentially steal billions of dollars in business away from cloud
providers in the good ol' U.S. of A.
In fact, snooping by the National Security Agency is already
costing the U.S. cloud industry a whole lot of business. Soon
after the initial leaks, 10% of foreign companies said they had
already canceled a project with a U.S. cloud provider, and 56%
said they'd be less likely to use one.
A study by the Information and Technology Innovation
Foundation (ITIF) showed that if American providers lose between
10% and 20% of foreign business over three years, the damage
could amount to as much as $35 billion.
You'll recall, last June, whistleblower Edward Snowden
revealed that the government agency collected and reviewed
sensitive data stored over the Internet. As a result, businesses
both foreign and domestic and entire countries want to wash their
hands of anything red, white and blue.
The Toronto Star recently reported that the Canadian Cloud
Council, an association representing data center firms in Canada,
is looking to profit from Snowden's latest snitch on the NSA.
Canada is rolling out the welcome wagon, wooing the likes of
American tech giants
to pack and set up shop across the border. And they're
encouraging foreign companies with operations in the U.S. to do
While the council tries to sell "Project Damage Control" to
U.S. cloud industry behemoths, one British Columbia-based company
has already added "less snooping" to its sales pitch to
foreigners looking for a non-U.S. data hosting provider.
The new marketing message has already begun to pay dividends
. The Canadian telecom has had more inquiries in the past 12
months from companies outside North America than in the entire
Last month's opening of its $75 million, 215,000-square-foot
Internet Data Centre in British Columbia couldn't have come at a
more opportune time. One of eight data centers in Quebec,
Ontario, Alberta and B.C, it will provide services for thousands
of Canadian businesses and has room for six more modules of
expansion to accommodate businesses that want out of the U.S.
The Kamloops facility is part of $3 billion in infrastructure
and facilities upgrades Telus is making across the province
through 2014, adding to the $29 billion it has already invested
in operations and technology since 2000.
In light of the NSA revelation, this segment of Telus'
business may be an unexpected but very welcome gold mine. Keep in
mind that much of the revenue funneled into its Internet data
centers will come from the IT world, which has a voracious
appetite for all things cloud.
While massive opportunities in data storage are sure to fuel
Telus' growth, its bread and butter actually comes from being the
"Comcast/Time Warner Cable" of Canada.
For 2013, Telus took in $11.4 billion in revenue serving 13.3
million customer connections through wireless, data, Internet,
TV, entertainment and video services. Next year is looking
promising as well, with revenue expected to increase by 4% to
Another great quality of Telus: It has paid a dividend every
quarter since 1999 and increased the payout consistently since
2004. The $22 billion company currently yields 3.7% and wants to
increase its dividend by at least 10% per year until 2016.
Supported by strong free cash flow, Telus also aims to repurchase
$500 million in shares each year through that date.
Considering the amount of distrust and continued angst toward
the U.S. government for snooping by the NSA, we may be on the
brink of a widespread migration north. Telus certainly has the
bandwidth to support companies seeking privacy outside the
Risks to Consider:
Quebecor's Videotron has elbowed its way into Telus territory
and may sway British Columbia customers away with lower wireless
service prices. I'd expect minimal fallout though, considering
Telus had less than a 1% rate of cancellation in the last
Action to Take -->
Shares of TU are up 5% in the past month, trending above its
200-day moving average and near a 52-week-high. I'd be a buyer at
the current price of $35, especially when it also kicks in a 3.7%
This article was originally published at
Shocking Prediction: Google Could Lead A Mass
Tech Exodus To Canada