Research -Telecommunication Industry in Canada

It was my another assignment in 2008 as the below. My predict was not bad according to the stock charts of the Telecommunication Industry in Canada during the current years.

Market Overview

The Canadian wireless telecommunication services market grew by 14.58 % per year on average from 2003 to 2007 to reach a value of about $15 billion. In 2011, the Canadian wireless telecommunication services market is forecast to have a value of about $21 billion. The Canadian wireless telecommunication services market grew by 11.45 % per year since 2003 and to reach a volume of 20 million subscribers. In 2011, the Canadian wireless telecommunication services market is forecast to have a volume of 26.9 million subscribers. In the foreign market, Canada accounts for 7% of the Americas regional market value during 2006.

In the Canada wireless telecommunication service market, Rogers Communications was generating 36.6% of the market’s total volume in 2006. Bell Canada and TELUS Mobility were generating 31.70% and 27.30% of the market’s total volume.

The Canadian wireless telecommunication industry was at a growth stage of a business cycle, and its net profit has been increasing in recent years.In the next a few years, it is going to a mature stage of the wireless telecommunication service in a business cycle . The wireless telecommunication services usually focus on a local market; hence, there are not a lot of influences by some foreign markets. There are not a lot of foreign competitors in the Canadian telecommunication services’market now.

Every year, a lot of immigrants bring their capital, technology or knowledge to Canada. They work hard and want to build new homes. As a result, they increase societal consumptions, and reduce the business cycle period. They stimulate economic development in Canada. Every year, the population is increasing by 1% providing a large potential customer base to Canadian business such as communication business, food business and transportation business etc. Canadian economy has enjoyed steady development in recent years, and Canadian GDP has been increasing by around 3% annually. In order to support economies continue development; as a result, the communication technology will play an important role in the modern society.

Leading Companies

Rogers Communications Inc.

Rogers Communications Inc was founded in 1920 and is based in Toronto, Canada. It includes three businesses: wireless, cable and telecom; and media. This segment markets its products and services under the Rogers Communications and Fido brands through a distribution network of about 11,500 dealer and retail locations across Canada. It operates in the communications and media business in Canada, and provides services including cable television, local phone and long distance and wireless voice and data communications, radio and television broadcasting and high-speed Internet access. It also operates in video retailing, televised shopping, consumer magazines, trade and professional publication business as well as sports entertainment.

TELUS Corporation.

The company is the largest telecommunications service provider in western Canada. It provides a range of telecommunication products and services including IP, voice, entertainment and video. The company has 5.1 million wireless subscribers, 4.5 million network access lines and 1.1 million Internet subscribers.

BCE Inc.

Bell Canada Inc was founded in 1880 and is based in Montreal, Canada. It is Canada’s largest communications company offering local and long distance telephone, wireless communications, Internet access, data transmission and other service. Bell Canada Inc. Provides wireline and wireless telecommunications products and applications, satellite communications and direct-to home television services, systems integration expertise, electronic commerce solutions, Internet access, content and high-speed data services, primarily in Canada.

Bell Canada’s strategy of focusing on recurring revenues from its growth services combined with cost containment across all business units led to strong Bell EBITDA as BCE Inc. In wireline business, EBITDA grew by 5.4% as cost containment across all units, the strategy to move away from low margin equipment sales and lower pension costs, offset the erosion of higher margin legacy services. The main revenues come from wireline service and wireless service. The BCE has a higher net profit margin; as a result, BCE will have a higher return on stock than others. It is a more profitable stock.

The BCE has a higher current ratio 1.16 compare with Rogers 0.78; as a result, BCE has strength on a short-term solvency.

Although the three companies are telecommunication companies, they have their different main products. The majority of BCE’s revenue comes from wireline services, whereas Rogers focuses more on a wireless services and cable services. TELUS focuses on the main products of the two companies BCE and RCI, which are wireless services and wireline services. The wireline and wireless can make more profit than other communication products because they have higher net profit margins. Bell Canada and Rogers have diversified their products in the market. As a result, they can survive and earn profit in the telecommunication industry for a long time. Bell Canada and Rogers have some common products and services in Canadian market.

Bell Canada delivers CBC/Radio-Canada’s exclusive coverage of the Beijing Games on a number of digital platforms on Feb 1, 2008. Moreover, Bell Canada will be a premier national partner and exclusive communications partner to the Vancouver 2010 Olympic and Paralympic Winter Games. Those are good business opportunity to Bell Canada increase its market shares and net profit.

“Takeover of BCE passes key hurdle” in the Canadian Press, Craig Wong reported that BCE buyout by Ontario Teachers’ Pension Plan. It is favorable for BCE as it will get out from bondholders. BCE will reduce its company’s risk from reducing their debts. The BCE stock price would likely go up in the near future.

Conclusion
Overall, the telecommunication industry has a good prospect and is the favourable sector to investors. The telecommunication industry is at a growth stage of a business cycle; therefore, there are still some potential markets for expansion leading to increasing profits. Telecommunication industry has large potential customers in Canada market because the population continues to increase every year due to new immigrants, and we are in a high technology world. There is more and more demand for the wireless service and wireline service in recent years; as a result, the increasing demand will bring up the amount of supply. In the Canadian telecommunication industries, although companies have some common products, they also have some unique products and services in different locations. Consequently, the large companies can co-survive in the telecommunication market for a long time. Telecommunication industry is a high technology industry. It is a high-risk business but there is a high profit margin on their products and services. It is an attractive industry as investment purposes.

 

Equity Research Report

I went to my “bravehost.com” website. I  felt that my predict was not bad after I saw my previous assignment in 2008 as the below .hahaa…

 

Air Canada Corp. (AAR Corp—NYSE)                                                          Target price (1 year): $16.70 USD

Quebec, Canada Current (10-Oct-2008): $12.22 USD

Industry: Airlines Return ( 1 year): 36.67% Risk: Mid

Crude oil demand declined in the middle of a worsening economic outlook caused by a global credit crisis. Investors concerned a weakening global economy is causing businesses and consumers to cut back on fuel consumption. The crude oil prices are going to decreasing and their prices would be between $65 and $75 during 2009. It is a good news for Airline industries. The stocks’ return of the airline industry will take a slight positive as oil prices are moving down. The airline industries’ profits have affected by the high fuel prices in recent years.

                       

The Canadian Airlines industry’s volume is expected to rise to 67.2 million people by the end of 2011, this representing a total average growth rate is 7% for the 2006-2011. In 2011, the Canadian airlines industry is forecast to have a value of $19.3 billion, and have a volume of 67.2 million passengers. The Canadian airlines industry’s volume includes 63.5% domestic passengers’’ accounts and 36.5% international passengers’ accounts. The Canadian currency has depreciated recently that would lead to Canadian airline tickets’ sales increase. Airline Industry is highly price sensitive. The majority of customers try to find the lowest prices of airline tickets for their trips.

Air Canada together with its regional airline subsidiary, Air Canada Jazz, provides scheduled and charter air transportation for passengers and cargo to more than 150 destinations, vacation packages to over 90 destinations. Air Canada mainline provides services directly to over 20 Canadian cities, 30 destinations in the US and over 50 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air Canada’s extensive global net work, schedules and customer services are enhanced through its membership in the Star Alliance network with Lufthansa, SAS, Thai Airways International, United Airlines etc and Star Alliance carriers serve airports in over 130 countries.

Air Canada provides a full service online travel site offering low prices and one-stop access to 450 airlines, 53,000 hotels and 52 car rental agencies.

There are numbers of factors that could cause the stock price to come short of our expectations. The leading one is the market prices of crude oil. If the crude oil price is creasing above $100, it will reduce the Air Canada Corp’s net earnings.

The second one is that the world economy is in a deep recession period now. If the deep economic recession continues in the next year, the demand of airline tickets would be decreased during the next year. It would affect the Air Canada Corp’s revenues and net earnings.

 

Yearning for a More Spiritual Workplace

Spirituality in the workplace is a term, which, for some, has merely meant yet a new buzzword in the business environment, but which is fortunately for an increasing number of business executives and workers at various levels, emerging into a serious trend that can no longer be pushed aside with an annoyed shrug, or rejected with the cry that it is just another disguise for bringing religious practices into work environments. This paper reviews 3 main insights that have arisen since the topic of spirituality in the workplace has become such an extensively discussed one, and subsequently elaborates on some major advantages of applying this mindset versus some major disadvantages of refraining from doing so. The paper finally examines one of the main reasons for today’s corporate workplaces to remain unspiritual.

Resource: Journal of American Academy of Business, Cambridge . Hollywood: Sep 20 05 .

 

The Art of Watching Films

The cinema is a work of art when motion conforms to a perceptible rhythm with pause and pace and where all aspects of the continuous image relate to the whole.

—Josef Von Sternberg, Director

Five Major Categories of Filmmaker’s Focus (Thematic Elements)

1. Focus on Plot: the focus of such a film can best be stated by a concise summary of the plot .

2. Focus on Emotional Effect or Mood: the focus is on a specific emotional effect or mood that filmmaker maintains throughout the film( often most evident in genuine horror films, or conversely, in true comedies)

3. Focus on Character: the focus of such films can best be expressed in a brief description of the central character; with emphasis on the unusual aspects of the individual’s personality.

4. Focus on Style or Texture: the focus can best be started by describing the film’s unique look, feel, rhythm, atmosphere, or tone that echoes in our minds and senses long after we leave the theatre.

5. Focus on Ideas: The first step in identifying the central idea is accurately identifying the subject of the film in a single word or phrase.

The film’s central idea might fall into one of the following sub-categories:

a) Moral Statements

b) The Truth of Human Nature

c) Social Problems

d) The struggle for Human Dignity

e) The Complexity of Human Relationships

f) Coming of Age/Loss of Innocence/ Growing Awareness

g) A Moral or Philosophical Riddle

 

Distinguishing between uncertainty and probabilistic risk:

Keynes explicitly developed a ‘general theory’ as an alternative to classical theory. Keynes argued that the difference between probabilistic risk and uncertainty had important implications for understanding (a) the operations of a market-oriented entrepreneurial economy and (b) the positive, active role of government in influencing market outcomes through deliberate legislative policies.
Keynes’s concept of uncertainty, therefore, reflects the fact that the future is transmutable or creative in the sense that future economic outcomes may be permanently changed in nature and substance by the actions today of individuals, groups or governments, often in ways not even perceived by the creators of change.
To summarize, following Samuelson, mainstream economic theory imposes the ergodic axiom for its ‘scientific’approach. Requiring this ergodic axiom as a basis for scientific analysis dictates a laissez-faire policy philosophy by assumption. On the other hand, if one invokes Keynes’s concept of uncertainty as involving a non-ergodic environment, then, logically, there can be a positive role for government in deliberately using monetary policy, and if that fails, fiscal policy, to encourage the full employment of resources and promote economic growth. Proposition evidence treatise

Source: The Philosophy of Keynes’s Economics—Probability, uncertainty and convention

 

The absence of uncertainty in nineteenth-century classical economics

Ricardo (1817), the father of nineteenth-century classical economics, assumed a world of perfect certainty. On this view, all households and businesses were assumed to possess a full and correct knowledge of a presumed pre-programmed external economic reality that governed all past, present and future economic outcomes. The external economic environment was assumed to be immutable in the sense that it was not susceptible to change induced by human action. The path of the economy, like the path of the planets under Newton’s celestial mechanics, was regarded as determined by timeless natural laws.

Economic decision-makers were assumed to have complete knowledge of these laws. Accordingly, while pursuing their respective goals of utility maximization and profit maximization, households and enterprises never make errors in their spending choices among all the goods available in the competitive market place. Theses’ economic agents’ always spend everything they have earned on things with the highest ‘known’ future pay-off in terms of utility for households and profits for businesses. Accordingly, within the capacity of the economy to produce, there could never be a lack of demand for the products of industry or for workers who wanted to work. In this manner, classical economics justified a laissez-faire philosophy for the economic system. No government action could ensure a higher pay-off than the decisions of individuals with complete knowledge of the pay-off of each of their decisions made in free markets.

 

The Economist commodity-price index

 

Trade, exchange rates, budget balances and interest rates

 

That’s yuan way to adjust

AHEAD of a looming Sino-American summit, it’s once again time for newspapers to allocate ink to coverage of the spat over the value of China’s currency. Happily, we seem to be seeing an improved understanding that movement in the nominal dollar-yuan exchange rate is not the most important factor shaping imbalances. Tim Geithner (who, bless him, once got in trouble for saying that the dollar needed to decline) declared today that the yuan is “substantially undervalued” and needs to strengthen. But he later elaborated:

“This is a pace of about 6 percent a year in nominal terms, but significantly faster in real terms because inflation in China is much higher than in the United States,” Geithner said. Taking inflation into account, the yuan is rising at a rate of about 10 percent a year, “so if that appreciation was sustained over time, it would make a very substantial difference,” he said in response to a question after the speech.

Yes, China continues to manipulate its currency. This much is clear from the latest data on Chinese reserve accumulation. Here’s the Washington Post:

At issue is the imbalance in their financial relationship. China’s central bank said Tuesday that Beijing’s holdings of foreign cash and securities amount to $2.85 trillion – a jump of 20 percent over the year before – despite Chinese promises to try to balance its trade and investment relations with the United States and other countries.

China added $200 billion to that stockpile in the last three months of the year alone, as the country socked away capital from the rest of the world at a torrid pace.

That reserve accumulation is directly connected to China’s interventions in currency markets to keep the yuan cheap against the dollar. But the Post makes a mistake in saying that:

The reserves are so large and the recent run-up so rapid that it’s casting new doubts over whether Beijing is reforming the handling of its currency and curbing its heavy reliance on exports as a source of jobs and growth.

And the reason has everything to do with China’s limited ability to control its real exchange rate. A cheap yuan makes for dear Chinese imports and excess demand for Chinese goods, leading to rising Chinese inflation. That’s makes Chinese goods more expensive to foreign buyers—just what a nominal appreciation would accomplish.

When garment buyers from New York show up next month at China’s annual trade shows to bargain over next autumn’s fashions, many will face sticker shock.

“They’re going to go home with 35 percent less product than for the same dollars as last year,” particularly for fur coats and cotton sportswear, said Bennett Model, chief executive of Cassin, a Manhattan-based line of designer clothing. “The consumer will definitely see the price rise.”

Chinese inflation is running consistently higher than American inflation, which is scarcely above 1%. That translates into rapid real appreciation despite the slow movement in the nominal exchange rate. And that should produce a decline in Sino-American imbalances, which seems to be emerging. In December, China’s trade surplus fell sharply its November level, from $22.9 billion to $13.1 billion.

It appears that markets are pushing the real exchange rate in the appropriate direction, despite Chinese intervention. That will help bring trade between the countries closer to balance. But it’s up to the governments in China and America to facilitate this process and reduce its cost to citizens by removing structural obstacles to adjustment.

 

Currency comparisons, to go

A beefed-up version of the Big Mac index suggests that the Chinese yuan
is now close to its fair value against the dollar

THE Economist’s Big Mac index is a fun guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of a basket of goods and services around the world. At market exchange rates, a burger is 44% cheaper in China than in America. In other words, the raw Big Mac index suggests that the yuan is 44% undervalued against the dollar. But we have long warned that cheap burgers in China do not prove that the yuan is massively undervalued. Average prices should be lower in poor countries than in rich ones because labour costs are lower. The chart above shows a strong positive relationship between the dollar price of a Big Mac and GDP per person.

PPP signals where exchange rates should move in the long run. To estimate the current fair value of a currency we use the “line of best fit” between Big Mac prices and GDP per person. The difference between the price predicted for each country, given its average income, and its actual price offers a better guide to currency under- and overvaluation than the “raw” index. The beefed-up index suggests that the Brazilian real is the most overvalued currency in the world; the euro is also significantly overvalued. But the yuan now appears to be close to its fair value against the dollar—something for American politicians to chew over.