One of the leading Canadian telecom companies, TELUS Corporation (TU - Free Report) recently unveiled the Research In Motion Limited (BBRY - Free Report) 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 Eastern Quebec.
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 rates.
Telus Corporation – which operates within the Canadian telecom industry along with Rogers Communications Inc. (RCI - Free Report) and BCE Inc. (BCE - Free Report) – currently carries a Zacks Rank #3 (Hold).