Was TELUS or Rogers Best in Wireless in Q1/23?
With BCE and TELUS reporting Q1/23 results yesterday, this will be the last quarter where we have three national wireless carriers, as the merged Quebecor/Freedom will report its combined results starting Q2. We highlight key takeaways with respect to the incumbents in the wireless market below, as well as corresponding Exhibits on page two.
Before we delve into details of results from Q1/23, we want to take a step back to outline historical subscriber growth. If we look at rolling LTM wireless subscriber net adds, which include both postpaid and prepaid, as outlined in Exhibit 1, the incumbents have added a total of ~1.6mm mobile phone subscribers in the LTM ending Q1/23. That compares to an average across each LTM ending Q1 between 2018-2022 of ~956k (Exhibit 2), which we note would have included some net adds from quarters under the old subscriber definitions which included non-mobile phone subscribers such as tablets. One could argue that the 2017-2018 period was when Shaw/Quebecor had been gaining share of net adds, but even if we were to include the roughly 385k net adds Shaw/Quebecor achieved in fiscal 2018, that would still mean that net adds across the country increased by at least 200k even if we assume Shaw/Quebecor added no subscribers in the LTM, which we know is not true. We simply highlight this point as we believe that it illustrates that there is potential for healthy subscriber growth (via population growth, immigration, and wireless penetration) even if there are four national carriers going forward.
Shifting the focus to Q1/23A results, we show our wireless recap table in Exhibit 3. Each of the incumbents grew wireless network revenues by at least 5% y/y through a mix of volume and pricing growth. Rogers led the pack on subscriber additions with 87k total mobile phone subscribers and 95k postpaid net adds, but offset with flat y/y ARPU growth. On the other side of the spectrum, TELUS grew its ARPU at an industry-leading +3.8% y/y while still adding 47k mobile phone subscribers, which also drove best in class wireless service revenue growth of +7.6% y/y. We believe that these results show that there is not just one pathway to successfully growing service revenues, a metric which we believe will become more of a focal point in discussions for the wireless industry going forward given that EBITDA is not being disclosed anymore by two of the three incumbents.