SaskTel sees slight revenue dip due to increased competition and changing habits
SaskTel says its revenues fell slightly in the 2017/18 fiscal year over the previous year. Revenue was down $29.3 million, or 2.3 per cent. The company saw a net income of $121 million, based on $1.25 billion in revenue.
The Crown corporation attributes this to an economic environment with fewer small- to medium-sized businesses upgrading technology, regional pricing challenges, increased competition and changing consumer behaviour.
“The corporation has private sector competition in every aspect of what it does; security, data, cellular service, maxTV service,” the minister responsible for SaskTel, Don Morgan, said.
“Over the last number of years they have developed a keen competitive edge and continue to thrive in an increasingly competitive market.”
SaskTel’s acting president and CEO, Doug Burnett, said they maintain a 67 per cent market share in the province’s wireless market. That share has shrunk by around 1.5 per cent in recent years due to the growing presence of other telecommunications companies like Bell and Telus in Saskatchewan.
Burnett added that big telecoms use regional pricing in the province, where a cellular plan may be up to 40 per cent cheaper here than in Toronto. This means SaskTel has to remain competitive with these rates, otherwise they could lose a larger portion of the market share.
Revenue losses that are attributed to changing consumer habits, like fewer landline phones and people abandoning cable TV, are seen by all companies.
Burnett sees growing demand for cybersecurity and commercial data protection as an area SaskTel can make up for these legacy losses.
“Professional services and cybersecurity consulting in particular is a growing aspect of SaskTel’s business. It is becoming possibly the number one threat to many businesses,” Burnett said.
Over the next five years, Burnett said he wouldn’t be surprised if demand for cybersecurity services doubled. However, he does not have a concrete projection.
In addition to a growing focus on cybersecurity, expanding rural connectivity continues to be a priority. For instance, the plan to add 34 fusion internet towers was implemented to expand high speed coverage in rural areas, and upgraded service was brought to 24 First Nations communities.
Recently, SaskTel also announced the first 43 communities in a plan to build new wireless transmission towers over the next two years in 100 rural communities.
Burnett anticipates a profit on the fusion towers, and the 100 wireless towers are expected to break even or sustain a small loss.
In this competitive market, Morgan said they have to balance the business case with the obligation of a publicly owned entity to provide good service.
“It’s a weighing process, and the more you move toward a social policy that certainly has the potential to have an impact on the bottom line, but our goal as a province has to be to maintain the viability and provide the best service as possible,” Morgan said.
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