One of the leading Canadian telecom companies,
) recently unveiled the
Research In Motion
) BlackBerry Q10 smartphone. The new smartphone is available at
$199 along with a three-year contract for a minimum $50 per month
service plan. Customers can also opt for a $700 plan that comes
with monthly contract plans. Telus' latest addition to its
line-up of devices bodes well for customer accretion. In
addition, we expect the new range of smartphones to support data
revenues as these operate on Telus 4G LTE platform.
Telus is leading the Canadian industry in the deployment of
the three fastest wireless networks - high-speed packet access
plus (HSPA+), HSPA+ Dual and LTE. The company is providing 4G LTE
networks with the popular Samsung Galaxy S III, HTC One X,
Samsung Galaxy Note, Huawei E397 4G LTE Mobile Internet Key and
Samsung Galaxy Tablet. It is experiencing solid growth in its
post-paid division with smartphones comprising almost 66% of the
post-paid base, much higher than 53% recorded a year ago.
Further, the company is expanding its Internet data centers to
support its cloud computing services. These initiatives
pose threats to our recommendation.
Moreover, the company is making huge investments in the
expansion of its fiber-optic network that supports compelling
home entertainment services in the West Canadian market. Telus
continues to add new features and upgrade the existing features
of its Optik TV and Optik High Speed Internet broadband services
that are gaining traction across British Columbia, Alberta and
However, despite these tailwinds, intense competitive
pressures resulted in lesser subscriber addition. The company's
strict credit policies as well as loss of a federal wireless
contract to a lower bid by a prominent national carrier made the
picture even worse. Further, the company also felt the burden of
higher operating expenses in 2012 due to higher per-unit subsidy
costs for smartphones, changes in pricing plans, increased
advertising and promotional costs and higher commission
Telus Corporation - which operates within the Canadian telecom
industry along with
Rogers Communications Inc.
) - currently carries a Zacks Rank #3 (Hold).
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