BCE, Telus and Rogers: Who's Winning the Wireless Numbers Game?

RBC Capital Markets analyst Jonathan Allen says Wednesday's earnings results from BCE Inc. (BCE) may have implications for Telus Corp. (TU).

Bell Mobility reported a solid 510,000 new customers to its wireless segment in the fourth quarter, and Mr. Allen says analysis shows that a portion of those likely came from Rogers Communications Inc. (RCI). He believes Telus Corp. may have turned the same trick, and will report an increase in gross additions as part of its quarterly results on Feb. 15.

However, churn (the percentage of existing customers switching to other carriers) also rose at Bell, so on a net basis the additions were more modest. If the same holds true at Telus, investors may be disappointed with the subscriber growth, especially in light of the heavy promotions from the Vancouver-based telco last quarter.

It costs telecos a lot in the short term to add new wireless subscribers because of things like handset subsidies that lure new customers, who then contribute to the bottom line over time, said Mr. Allen. So Telus may also see some temporary pressure on its wireless margins due to the higher number of new customers.

TU vs. BCE vs. RCI 1-yr chart: