Why Canada’s telecom sector is booming

BMO Capital Markets expects Canada’s telecommunications sector to grow by 7 per cent this year, a rate the bank expects to be competitive with the U.S. and Mexico.

The growth is driven by a strong start to the year, with revenue rising 14 per cent to $1.35-billion in the year to July 31, while subscriber additions are growing by 3 per cent.

“We see some momentum in Canada’s cable industry, and the wireless industry is also growing,” said Mark Zandi, the bank’s chief economist.

In contrast, in the U, wireless is growing at a rate of just 2 per cent while cable is booming, rising by 9 per cent, Zandi said.

Zandi added that Canada’s wireless sector has a long way to go to compete with the likes of the U: the Canadian Wireless Telecommunications Association expects a 3.9 per cent growth this year compared with 4.4 per cent for the U as of July.

But the bank thinks the industry will pick up in the next few years.

“There is some growth to come, and I think we’re going to see some good things happen,” Zandi told reporters in a conference call.

He also noted that Canada is seeing strong growth in broadband.

BMO sees broadband penetration to reach 100 per cent by 2021, a goal that would require a lot of investment and capital, and a large amount of infrastructure upgrades.

While the country’s broadband penetration is improving, the pace of improvement is slower than in other advanced economies.

For example, while Germany’s broadband deployment has surpassed that of Canada’s, the U has yet to catch up, Zanda said.

Canada’s broadband growth is “very much dependent on the deployment of new technologies and the infrastructure to connect those technologies.”

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