I have had an interest in looking at demographics ever since my graduate research paper examined the impact of Quebec politics on the growth of a subset of Ontario’s population.
That may explain why I was particularly taken by a research report released by Scotiabank Global Equity Research that looked at Canada’s increased rate of immigration and the impact on the mobile services market.
I was particularly interested in these key points raised in the Scotiabank report:
Strong wireless loading in Q2 likely not a one-time event. Net wireless loading for publicly listed Canadian service providers totaled 450K in Q2, the highest level for a second quarter in the last 15 years. This level of wireless loading is usually reserved for a normal Q3 or Q4 (i.e., the back-to-school and winter holiday seasons). In “normal” times, Q2 usually saw 200K-350K net new activations.
Canadian immigration surge fueling recent population growth. Interestingly, the Canadian population grew by 128K in Q1 2022 (the last data set published by Statcan), the highest level for a first quarter in at least the last 15 years. Of that increase, 127K came from new international migration, of which, 114K were due to new permanent residents. The increase in new permanent residents is a proactive government directive that is expected to boost new immigrants to around 443K per year over the next 3 years from around 300K on average in the last 7 years. Just to frame the impact of immigration on population growth, the Canadian population grew by 1.3% yoy in 1Q22, excluding immigration the growth would have been 0.1%.
Some companies will feel the benefit more than others. Population growth was not even across Canada. Ontario and British Columbia saw an outsized increase compared to Quebec which was closer to recent levels. The reason we highlight these divergences is due to the higher market share that Rogers has in Ontario and TELUS in BC in normal times. This also could explain why Quebecor did not see a material increase in yoy net loading in Q2 vs previous years as population growth in Quebec has not increased to the same extent as Ontario or BC.
To what extent are these trends contributing to business strategies, including M&A activity, among national telecommunications companies?