Canada’s 5G Delay and Telco Trouble

2020 is already looking rough enough for Canadian phone companies

Andrew Willis 15 June, 2020 | 1:20AM

 

 

This month, the Canadian government announced that plans for blazing-fast 5G wireless cellphone service would be put on hold until 2021. This, of course, is not because the 5G antennas were spreading the coronavirus (according to some conspiracies) – but rather so that telcos can focus on providing basic services in the pandemic, says equity analyst Matthew Dolgin. And he says the decision comes with a silver living.

The 5G auction that was delayed was going to be expensive for the whole industry. All players had significant capital put aside, in a time when money is tight. Canadian telcos now have some extra capital to help soften what could be a rough remainder of the year. The main threat to the telco industry in Canada is a persistent, fundamental demand issue. Malls are still closed! Ironic as it is, wireless service providers are still mostly tied down to retail outlets when it comes to sales.

Even other significant threats from the government such as a pledge to reduce the price of cellphone plans nationwide by 25% over the next two years do not affect the forecast for phone companies as much as the pandemic does. With fewer new customers, and current customers less likely to upgrade, we can worry about 5G problems after we find a vaccine.

For Morningstar, I’m Andrew Willis

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BCE Inc54.84 CAD-0.74
Rogers Communications Inc56.67 CAD0.43
Rogers Communications Inc Class B52.99 CAD-0.67
Shaw Communications Inc Class A22.27 CAD-0.09
Shaw Communications Inc Class B21.99 CAD0.09
TELUS Corp22.33 CAD-0.40

About Author

Andrew Willis

Andrew Willis  Andrew Willis is Content Editor for Morningstar.ca

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