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Telus sat out ‘uneconomic’ pricing competition for mobile customers in Q3: CEO

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Telus Corp.’s wireless business faced bruising competition from aggressive pricing during the back-to-school period, but chief executive Darren Entwistle told analysts Thursday his company chose to “remain on the sidelines” during some of the most intense rivalry.

The Vancouver-based company, which operates the Telus, Koodo and Public Mobile wireless services, reported 111,000 net mobile phone additions during the three months ended Sept. 30 — 10,000 lower than last year’s third quarter, but better than some analyst estimates.

“The year-over-year decline was largely due to Telus purposely choosing to remain on the sidelines for some of the more aggressive and uneconomic competitive activity that occurred in the quarter,” Entwistle told a conference call.

Analyst Aravinda Galappatthige wrote in a report for Canaccord Genuity that the Telus wireless net additions topped his estimate of 105,000 net additions. Drew McReynolds of RBC Dominion Securities had expected 115,000 additions, but noted the consensus had been 109,000.

Entwistle said many customers opted for unlimited data plans with a higher monthly cost than they had previously, but without the potential for overage fees for going over usage limits.

He said the simplified pricing structure helped reduce the number of calls to customer support and quicker marketing and support calls, which are part of company’s cost of acquiring and cost of retaining customers.

However, Entwistle said reduction of those costs was “significantly moderated” by “competitive intensity around device promotions and the persistence of the subsidy model alongside unlimited data by some of our peers.”

The comments came after Telus reported $440 million or 72 cents per share in net income for the three months ended Sept. 30, down from $447 million or 74 cents per share a year ago.

On an adjusted basis, Telus earned 76 cents per share for the quarter, up from an adjusted profit of 74 cents per share a year ago.

Analysts on average had expected a profit of 75 cents per share, according to financial markets data firm Refinitiv.

Operating revenue totalled nearly $3.7 billion, down from $3.77 billion a year ago when the company saw $171 million in one-time equity income related to the sale of Telus Garden.

Wireless operating revenue was $2.1 billion, up $23 million from a year earlier after excluding the impact of Telus Garden. Wireline operating revenue, including home television and internet, was up 0.1 per cent at $1.68 billion.

Telus said it will increase its quarterly dividend to 58.25 cents per share, up from 56.25 cents per share, and expects to spend about $2.75 billion per year on capital projects in both 2020 and 2021. 

Telus was the last of Canada’s three national wireless companies to report quarterly results since they all introduced a new pricing strategy and new device financing options.

Both Bell Canada and Freedom Mobile, a regional carrier that competes with Telus in parts of Ontario, Alberta and British Columbia, said last week they used subsidies to reduce their customers’ cost of new devices.

Rogers said it also offered device subsidies during the back-to-school period but indicated that it’s strategy is to eliminate or reduce that expense as much as possible.  

Several analysts lowered their expectations for the sector after Rogers slashed its revenue expectations for this year, primarily because of the swift adoption of new unlimited data plans and intense price competition on mobile devices.

This report by The Canadian Press was first published Nov. 7, 2019.

Companies in this story: (TSX:T, TSX:RCI.B, TSX:BCE, TSX:SJR.B)

 

David Paddon, The Canadian Press


The post Telus sat out ‘uneconomic’ pricing competition for mobile customers in Q3: CEO appeared first on Canadian Business – Your Source For Business News.



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Why Russia Is Struggling to Build Putin’s Grand Dream

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(Bloomberg Opinion) — Russian President Vladimir Putin’s so-called national projects — spending plans meant to restart economic growth in Russia — appear to be stuck. Surprisingly, money isn’t the problem: There’s cash to fund them, but the Russian bureaucracy won’t spend it, apparently fearing responsibility for bad outcomes.The projects envisage a total outlay of 25.7 trillion rubles ($400 billion) until 2024. They aim to boost Russian quality of life in the broadest sense, from providing better health care and schooling to making Soviet-built cities  more livable. Putin has noted his sliding popularity, and he’s out to prove to Russians by the end of his current presidential term, which ends in 2024, that he’s good for more than a muscular foreign policy. But the program, first announced last year, has gotten off to a slow start. Earlier this month, the Accounting Chamber, Russia’s budget watchdog, published a report on the state of federal spending in the first nine months of 2019. According to the document, while total budget spending reached 62.9% of annual allocations (the lowest at this time of year since at least 2010), spending on the 12 national projects, plus a related plan to modernize Russia’s “backbone infrastructure” such as ports and railroads, only reached 52.1% of what’s been earmarked for the year. On some of the projects, in particular the effort to boost Russia’s digital economy, barely any of the available funds have been spent. And the total spending on the procurement part of the projects, as distinct from other forms of spending such as subsidies or transfers to regional authorities, has only reached 14% of the planned amount for the year.Russia regularly fails to spend its entire budget in a given year. At the end of 2018, 778 billion rubles ($12.1 billion) was left over. This year, Accounting Chamber head Alexei Kudrin expects 1 trillion rubles to be left, in large part because of the underspending on the national projects. Kudrin, a former finance minister, is the most prominent of Russia’s “system liberals,” Putin loyalists who favor more progressive government policies. He said this to the Russian parliament on Wednesday:Why aren’t we spending 1 trillion rubles, or 1% of GDP? Of course one can’t say we have too much money and that’s why we can’t spend it. I think it’s because of low-quality government. In 2017, Kudrin and fellow economist Alexander Knobel published a paper arguing that Russia was spending too much money on programs where expenditure is weakly or negatively correlated with economic growth, such as defense and security, and too little on those that drive expansion, such as education. The national projects are at least partly Putin’s response to Kudrin’s and Knobel’s thinking. Kudrin’s statement to parliament implies that bureaucrats simply don’t know how to run growth-friendly projects. It’s more likely, however, that they’re merely scared of spending the allocated money in ways that could land them in trouble. Because the national projects are Putin’s personal plan, they enjoy the attention of the president’s increasingly powerful and well-funded enforcement apparatus. Putin wants to make sure the allocated money won’t be stolen. That, however, is not easily done. As Sergey Aleksashenko, a former deputy central bank governor and now a Putin opponent, tweeted earlier this week, the requirements for spending budgetary funds are written so that they’re “impossible to execute without breaking rules. When an official asks himself if he wants to deal with the prosecutor’s office, the answer is obvious — to hell with these national projects!”A select group of Putin's friends can still profit from government spending. For example, earlier this week, the chief executive of a company owned by Putin’s judo sparring partner Arkady Rotenberg said the government-funded construction of a bridge between mainland Russia and Crimea would be merely a break-even project. But not long ago, Rotenberg sold one of the companies involved in the construction to the state-controlled natural gas producer Gazprom for a reported 75 billion rubles; he’d bought the five firms he merged into that company for 8.3 billion rubles in 2008 — from Gazprom.Of course, not everybody can pull of such schemes. Russian bureaucrats and subsidy recipients are regularly arrested and sentenced for misspending government funds even when they have achieved satisfactory results. Kirill Serebrennikov, a prominent theater director and darling of the Moscow intelligentsia, spent 19 months under house arrest on charges of embezzling government money, though he was able to show videos of the performances for which the funding was used in strict accordance with the contract. He still hasn’t been fully cleared.Earlier this month, the Prosecutor General’s office announced it had found 2,500 different irregularities in the administration of the national projects, mainly involving the distribution of subsidies and procurement. Some of these will end in criminal cases; no wonder the procurement budget was only 14% spent by the end of September.The creeping nationalization of Russia under Putin, and the accompanying empowerment of enforcement agencies, has created a dilemma. There’s not enough private initiative and private investment to boost growth beyond 1% to 2% a year, but not even Putin believes in the efficiency of government spending because of endemic corruption. As a result, government money still goes to players with good enough connections to avoid prosecution, but it’s being withheld elsewhere. Russia’s unique mixture of a grasping state, a graft culture and excessive centralized control continues to keep it from realizing its economic potential.To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.netTo contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.



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Amazon to File Lawsuit After Losing $10 Billion Pentagon Cloud Deal, Citing ‘Unmistakable Bias’

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Amazon has given notice that it will file a lawsuit challenging the Defense Department’s decision to award Microsoft a cloud computing contract valued at as much as $10 billion over a decade.

The e-commerce giant plans to lodge its complaint against the contract in the U.S. Court of Federal Claims, Seattle-based Amazon confirmed. The company’s challenge was earlier reported by the Federal Times. A representative for the Defense Department said the agency wouldn’t speculate on potential litigation.

Oracle is also mounting a legal challenge to the cloud contract, known as the Joint Enterprise Defense Infrastructure, or JEDI. The project is designed to consolidate the Defense Department’s cloud computing infrastructure and modernize its technology systems.

Amazon spokesman Drew Herdener said in a statement that the procurement was tainted by bias and evaluation deficiencies.

“It’s critical for our country that the government and its elected leaders administer procurements objectively and in a manner that is free from political influence,” he said. “Numerous aspects of the JEDI evaluation process contained clear deficiencies, errors, and unmistakable bias—and it’s important that these matters be examined and rectified.”

The Defense Department is grappling with dueling allegations that political interference may have helped or hurt Amazon’s chances of winning the contract. Some lawmakers questioned whether U.S. President Donald Trump unfairly intervened in the process against Amazon. Trump has long been at odds with Amazon Chief Executive Officer Jeff Bezos, who also owns the Washington Post.

Trump surprised the industry earlier this year when he openly questioned whether the contract was being competitively bid, citing complaints from Microsoft, Oracle and IBM.

A new book by Guy Snodgrass, a speechwriter to former Defense Secretary Jim Mattis, alleges that Trump, in the summer of 2018, told Mattis to “screw Amazon” and lock it out of the bid. Mattis didn’t do what Trump asked, Snodgrass wrote. Mattis has criticized the book.

Dana Deasy, the Pentagon’s chief information officer, said during his confirmation hearing in late October that to the best of his knowledge, no one from the White House reached out to any members of the JEDI cloud contract selection team.

Meanwhile, Oracle has alleged in court that former Pentagon employees with ties to Amazon may have structured the deal to favor Amazon. Oracle is appealing a July ruling from the U.S. Court of Federal Claims that dismissed its legal challenge to the cloud contract. Amazon offered at least two former Pentagon officials jobs while they were working on the procurement, according to the lawsuit.

The Defense Department in late October awarded the contract to Microsoft, an upset victory for a company initially viewed as a distant second to Amazon in the market for cloud computing services.

Amazon was also seen as the favorite for the Pentagon deal because it won a lucrative cloud contract from the Central Intelligence Agency and had obtained higher levels of federal security authorizations than its competitors.

Oracle and IBM waged a fierce lobbying and legal campaign over the decision to choose just one provider for JEDI, arguing it would imperil the Pentagon’s data and stifle innovation. Both companies were later eliminated from the competition.

More must-read stories from Fortune:

HP Inc.’s printing woes were years in the making. Then Xerox swooped in
—Review: Apple Watch Series 5 is insanely great
—A new Motorola Razr—and its folding screen—could bring phone design back to the future
—Most executives fear their companies will fail if they don’t adopt A.I.
—With new 16-inch MacBook Pro, Apple wants consumers to forget about its keyboard woes

Catch up with
Data Sheet, Fortune’s daily digest on the business of tech.



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Oct. automobile sales highest so far this year

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MOTOR VEHICLE sales in the country continued their recovery in October as the industry recorded its “highest monthly sales” so far this year, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) reported on Thursday.

Automotive sales have been growing since February, except for a seasonal dip in August.

Data jointly released by the groups showed that overall sales rose 3.8% to 34,397 units in October from 33,150 vehicles in the same month last year, and by 8.1% from 31,820 units sold in September.

CAMPI President Rommel R. Gutierrez described the latest growth clip as a “much-needed boost” for the industry to hit its target for the year. “The current market demand for vehicles along with creative and aggressive sales promotion efforts give us a positive outlook as we aim to sustain the growth trend for the remaining months of the year,” he said in a statement. “We remain positive that our industry target for the end of the year will be achieved as all brands remain committed to provide innovative mobility solutions to the Filipino people.”

Mr. Gutierrez last year projected a 10% sales growth for full-year 2019. Vehicle sales of CAMPI and TMA members dropped for the first time in seven years in 2018, with total sales falling 16% year-on-year to 357,410 units.

Year-to-date, both groups have so far sold 301,761 units, 2.53% more than the 294,311 vehicles sold in 2018.

Auto sales in October last year saw a 9.2% year-on-year drop after higher automobile excise taxes took effect earlier that year.

Broken down, this year’s October sales of commercial vehicles — which accounted for 70.69% of the total — went up by 2.6% to 24,314 units from 23,706 a year earlier. Asian Utility Vehicle sales rose 40.2% to 4,780 vehicles from 3,409 units, while light commercial vehicle sales dropped 3.3% to 18,271 vehicles from 18,896 units.

Passenger cars saw 6.8% sales growth to 10,083 vehicles from 9,444 a year earlier.

Year-to-date, commercial vehicle sales went up 3.8% to 211,361 units, while passenger car sales dropped 0.2% to 90,400 units.

Toyota Motors Philippines Corp. continued to have the biggest market share with 47.69%, selling 16,403 vehicles in October or 9.9% more than the 14,927 units sold a year ago.

It was followed by Mitsubishi Motors Philippines Corp. with 16.01% market share, even as sales dropped by 8.3% to 5,508 units from 6,004 a year ago.

Nissan Philippines retained the third spot with 10.75% market share as vehicle slipped 0.2% to 3,697 in October from 3,703.

Suzuki Philippines Inc. came next with 6.41% market share, growing sales by 11.8% to 2,206 units from 1,974.

Ford Motor Company Phils. Inc. followed with 4.78% market share, with sales up 1.1% to 1,643 from 1,625. — Jenina P. Ibañez

The post Oct. automobile sales highest so far this year appeared first on BusinessWorld.



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