As revenue from landlines is dropping and wireless growth is slowing down (see Rogers Q2 earnings), Canadian incumbent players are looking into other revenue streams such as banking and healthcare. But how much can these companies grow? Shareholders question viable growth options, as the telcos aren’t willing to make investments overseas, reports Reuters.
Rogers has recently invested $5.2 billion for NHL rights, but it has also obtained a banking license. Since then, it has launched its own credit card as part of its foray into mobile banking. However, there is no public information about the performance of its banking arm of business.
Telus, on the other hand, has focused on the health sector — remote diagnosis and patient monitoring, pharmacy benefits, and medication management. Canada’s second-largest wireless carrier has become the country’s biggest provider of electronic medical records.
According to the latest available data, the $550 million revenue recorded in 2013 accounted for less than 5% of the telco’s overall revenue after it has invested $1 billion into health solutions over the past six years. This compares to the $2.1 billion spent on telecom infrastructure last year alone.
Bell has recently made a $3.95 billion offer to its regional affiliate, Bell Alliant. The offer follows other big purchases such as $1.3 billion for CTV and $3 billion for Astral Media.
Questions regarding dividend growth have gathered dark clouds over the incumbent players’ future, which has affected their stock price lately. Since posting all-time highs, the stock prices of the Big Three have slipped.
And there is another reason for investors to start worrying about their investments: The government is determined to increase competition in the wireless sector, and there are signs of some major changes coming in the Canadian wireless landscape.