Canada Telecommunications Report Q3 2011

SWOT Analysis
Canada Mobile SWOT

Strengths

Five locally owned mobile operators have invested heavily in the market. Low penetration rate means ample scope for continued growth. New operator launches to bring some dynamism to the market. Market is predominantly postpaid leading to slower growth but high revenues. All mobile operators have launched 3G services.

Weaknesses

Market only tends to see slow steady growth. Size of Canada and spread of population makes truly nationwide coverage a difficult task for operators. Take-up of 3G has been slower than expected

Opportunities

New operators, which launched in 2010, could provide the boost to the market that will drive growth. Subscribers are increasingly using VAS, providing opportunities for operators to expand their services and generate higher revenues from new sources. Network and infrastructure sharing agreements could see coverage expanded to new regions of Canada, enabling more subscribers to acquire mobile services. The auction of 700MHz and 2.5GHz of spectrum will give scope for smaller operators to step up their role in the mobile market.

Threats

Financial crisis has already made its impact on the buyout of BCE, as well as playing a part in the Nortel bankruptcy filing, showing how squeezed credit markets have put pressure on the telecoms industry. Some of the new mobile operators are focusing on low-cost prepaid services in order to gain traction; this may lead to a price war, with ARPUs likely to be the obvious casualties.

Canada Wireline Market SWOT

Strengths

Competition in the fixed-line market is fierce, with presence of traditional operators and cable operators. Broadband growth remains robust and is fastest-growing area of the market. Cable operators capturing many of the lost subscriptions reported by fixed-line operators. High interest in triple-play services has expanded competition in this arena.

Weaknesses

Fixed-line market continues to decline with young subscribers more likely to choose wireless options over wireline. Large number of operators means market is somewhat fragmented.

Opportunities

Limits of mobile coverage in many areas means that fixed-line services remain important. Faster services will encourage greater spending from subscribers, although this will not drive up net additions. Bundled services have successfully encouraged retention of fixed-line services.

Threats

The financial crisis has already made an impact on the buyout of BCE, as well as playing a part in the Nortel bankruptcy filing, showing how squeezed credit markets have put pressure on the telecoms industry.

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Canada Telecommunications Report Q3 2011

Canada Political SWOT

Strengths

Stable long-term parliamentary democracy with vigorous political culture. High economic growth and moderate unemployment increase the potential for consensual political dialogue and reduce chances of polarisation. No single party has had a majority within the House of Commons since 2004, meaning that ruling parties have been relatively weak and must seek alliances to govern. A tradition of Qubcois separatism has in the past divided the political culture and led to long periods of introspective constitutional negotiations between the federal centre and the provinces. Although the deadlock remains unbroken, Canada still has a chance to launch a fresh initiative to resolve bilateral disputes with the US a key strategic partner. With the US a renewed target for international terrorist attack, Canada is simultaneously a target by geographic and political association, as well as vulnerable to the shockwaves (as it was to the fallout from the 9/11 attacks in 2001). The country has recently fallen into a pattern of short-lived minority governments followed by early elections, creating a period of political drift.

Weaknesses

Opportunities

Threats

Canada Economic SWOT

Strengths

Advanced high-tech industrial economy with high living standards and abundant natural resources. Close integration with the US economy through North American Free Trade Agreement (NAFTA), which in the decade since 1994 triggered a dramatic increase in trade and investment.

Weaknesses

Vulnerability to US downturns and a dependence on commodity-related industries as a major driver of growth. Assuming the global economy and emerging markets in particular resumes growing apace, over the long term, Canada is well placed to benefit from high international oil prices, as a net oil exporting country. With a recent history of budget surpluses and low debt-to-GDP ratio, the country is uniquely well positioned to prepare for the longer term fiscal challenges facing most advanced economies, such as the looming pensions crisis.

Opportunities

Threats

With oil prices having dropped rapidly, Canadas oil-enhanced current account surplus has flipped into deficit. The federal structure, with individual provinces sometimes pulling in different directions, could create new and unexpected calls on the federal budget and risk further eroding the fiscal deficit.

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