Telus to Use Fujitsu Technology - Analyst Blog

One of the leading Canadian telecommunication companies, TELUS Corporation (TU) has collaborated with Fujitsu Limited (FJTSY) to add the 100G technology solution of the latter to its network. Through this technology, Telus aims to provide a cost effective networking solution that supports speed and higher network bandwidth. The financial details of this transaction were not disclosed.

The leading Japanese technology company, Fujitsu will enable the deployment of 100 Gbps optical components over its FLASHWAVE 9500 networks for Telus, providing several benefits. These include cost benefits through lesser cost per GB of traffic, increased network utilization and higher spectrum efficiency. These would further drive revenues for Telus  as better network would support new product offerings and customer accretion.

Apart from seeking 100G technology deployments, Telus is taking a number of initiatives to improve its wireless services. It is leading the Canadian industry in the deployment of the three fastest wireless networks — high-speed packet access plus (HSPA+), HSPA+ Dual and LTE. The company is providing 4G LTE networks with the popular Samsung Galaxy S III, HTC One X, Samsung Galaxy Note, Huawei E397 4G LTE Mobile Internet Key and Samsung Galaxy Tablet. These initiatives have resulted in solid growth in its post-paid divisions with smartphones comprising almost 66% of the post-paid base in 2012, much higher than 53% recorded a year ago. Further, the company is expanding Internet data centers to support its cloud computing services.

Apart from wireless, Telus is also focused on improving its wireline business with the ongoing investments in the expansion of its fiber optic network that supports compelling home entertainment services in the Western Canadian market. The company continues to add new features as well as upgrade the existing features of its Optik TV and Optik High Speed Internet broadband services that are gaining traction across British Columbia, Alberta, and Eastern Quebec.

In 2012, the company also registered increases in TELUS TV subscription (up 33.2% year over year) and high-speed Internet services (up 28.1% year over year). The TELUS TV subscriber base touched 1.4 million last year.

However, despite these tailwinds, intense competitive pressures resulted in lesser subscriber addition. During 2012, Telus' gross customer addition decreased 8.5% year over year. The post-paid division added nearly 112,000 or 8.7% less users, while the addition of prepaid customers fell 40,000 or 7.8%.

The company's strict credit policies as well as loss of a federal wireless contract to a lower bid by a prominent national carrier made the picture even worse. Further, the company also felt the burden of higher operating expenses in 2012 due to higher per-unit subsidy costs for smartphones, changes in pricing plans, increased advertising and promotional costs and  higher commission rates. 

Telus Corporation – which operates within the Canadian telecom industry along with Rogers Communications Inc. (RCI) and BCE Inc. (BCE) – currently carries a Zacks Rank #4 (Sell).