The Canadian telecommunication industry anticipates the total telecom earnings to report a small increase on account of the increased costs, weak pricing and sales growth.

The telecommunication industry in Canada is likely to remain cool by the increasing costs in 2007, with earnings rising by a mere 3.2%, as per the Conference Board of Canada, as reported by Canadianpress.

According to the members of Board, the total telecom earnings are expected to reach merely $6 Billion in 2007. Industry costs in 2007 are anticipated to shoot up by 5.4% and are likely to increase at an average of 3.6% during the period 2007-2011. However, the Board also highlighted that despite been afflicted by weak sales, growth and pricing, the telecom industry reported steady progress in the profits due to weak acceleration in the material costs.

According to Michael Burt, Principal Economist of Conference Board, the major growth driving factor of the Canada telecom market is the ever-increasing labor. Amid an unemployment rate in the range of 6%, the well-built labor market is reflecting a considerable bearing on all the industries, reported ITworldcanada.

Moreover, the telecom industry is highly capital-intensive, thus the companies have to pay a bigger amount on servicing debt in comparison to other industries. This causes the telecom companies to get more exposed particularly to the interest rates fluctuations, which results in stable and constant growth of the telecom industry.

As per the industry experts, the competition is likely to be further intensified by the liberalization of regional voice services in several big urban areas of Canada. Besides, the government auction relating to new wireless spectrum licenses scheduled in early 2008 also has the prospective to amplify the figure of Canada’s wireless service providers.

The industry experts predict the business affairs to remain as normal with the end of spectrum auction, leading to moderate price gains. However, with the probable launch of new players by spectrum auction into the wireless market of Canada, prices will decline further with the sharp competition.

A Senior Research Analyst at RNCOS opines, “The telecom industry in Canada was suppressed by weak sales growth and pricing, however the industry profits have reflected consistent growth driven by a moderate increase in the material costs. Though the rise in cost is anticipated to speed up, the growth in earnings is likely to remain cold for the remaining forecasted time period”.

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