Heightened Competition That Hurt Big Canadian Telcos Like Telus Will Eventually Ease but Not Soon

Telus is one of the three major Canadian wireless carriers, but we think its wireline unit is its standout business. Telus has replaced most of its legacy copper network with fiber, significantly upgrading the quality of the services it can deliver. This move has set Telus up for a prolonged period of success. Telus took significant broadband share from Shaw in the years before Shaw was acquired by Rogers. While geographic disclosures are not as clean now that Shaw is part of a nationwide network, we suspect the trend has continued but slowed in western Canada where Telus competes, now that Telus’ fiber network has been established for several years. Still, with its fiber ownership, Telus has outperformed its peers, achieving years of mid-single-digit fixed-line sales growth and margin expansion.