You can look at the evolution as a segmentation too. Each of them with consumers and profits. Telecoms tend to report their revenues around those segmentation in one way or another.

The reason this list is important is that it highlights the profit segments the telcos will be competing against with each other. For some of the companies, entering a segment simply augments their revenue while driving customers to their other services. An example would be Shaw when it introduced it’s Home Phone. It adds to their bottom line but it allows them to provide multiple services to a household and retain more revenue by discounting other services. Ever since it’s introduction, subscription has increased every year.

Telus Caught My Attention!

What caught my attention is the market segment graph Telus showed where 50% of their revenues is from wireless!!! I expected it to be high, but at 50% I was surprised. So I looked at the other companies… and Rogers derives 56% of its revenues from wireless which generates 70% of its profit from while 29% is from cable!!!

Here is a look at their approximate market segmentations. I captured the data the best I could from their fact sheet. Shaw turned out to be difficult so I used their customer subscription per segment. I have included Q1 revenue as a comparative example.

Revenue Stream Rogers BCE Telus Shaw Wireless Data 14.00% 31.00% 10.00% - Wireless Phone 42.00% - 40.00% - Land Phone 8.84% 26.00% 28.00% 13.61% Internet 6.80% 25.00% 22.00% 23.42% Cable 15.30% 12.00% 0.00% 62.97% Others 13.06% 6.00% 0.00% - Q1 Revenue $2,887 $4,432 $2,375 $943

For further details, please visit the investor relation website for each company to access their fact sheet.

I was a little surprised at BCE’s low percentage in the wireless segment but when I looked at the revenue from their wireless sector, it is still 1.373B$ where as Rogers is at 1.616B$ and Telus is at 1.187B$. BCE just happens to have a large traditional phone and internet customer base. Their business segment is actually strong in those sectors.

From an investment perspective, the business sector is a solid sector to own. I can’t imagine businesses going wireless anytime soon. The amount of data throughput a company needs to operate is significantly higher than what end user require.

Shaw is interesting and I am watching them as they have invested over 250 million dollars in their wireless venture (190$ million for the wireless spectrum in 2008). Last year in April, Shaw announced they will launch their new wireless venture late in 2011. It will be an interesting competitive landscape! What kind of discount existing Shaw customer could get I wonder?

Rogers has been a darling with the analysts but if 75% of their profits come from wireless, that’s a lot of eggs in the same basket. No wonder the stock dropped when they decided not to provide any guidance for the upcoming quarter. Any disruption from competition in the wireless sector has a big impact for them.

Telco Dividends

A quick look at their dividends so far … with the inclusion of other telecommunication players.

Comnpany Quote Dividend Yield BCE 31.94 $0.44 5.51% Rogers 36.83 $0.32 3.48% Shaw 20.18 $0.07 4.16% Telus 41.64 $0.50 4.80% Manitoba Telecom 27.94 $0.65 9.31% AT&T 26.15 $0.42 6.42%

Telecoms make for an interesting investments as their dividends are relatively strong and their stock have potential for growth. It’s just a little more competitive than the financial sector I would say

Readers: Any surprises in the segment numbers above? Are the Telcos an attractive investment to you?

Disclaimer: I own BCE and Telus under DRIP.