Canadian Telecom Carriers Witness Record Customer Complaints

According to the annual report of the Commission for Complaints for Telecom-television Services, Canadian telecom operators have witnessed record-high customer complaints in the year ending July 2019. Although the carriers are reportedly working to improve their service, the increase in customer grievance indicates a significant gap between actual and perceived performance.

About 19,300 complaints were received by the bureau, up 35% year over year and 145% over the past five years, with billing issues topping the list. While Bell Canada, an operating unit of BCE Inc. (TSX:BCE) accounted for majority of the complaints (30.5%), Rogers Corporation (NYSE:ROG) and TELUS Corporation (NYSE:TU) were other notable offenders with 9.5% and 8.3% complaints, respectively.

BCE’s wholly-owned subsidiary Bell Canada operates the company’s wireline (Bell Wireline) and wireless (Bell Wireless) businesses. The company has acknowledged that although it has invested significantly for improving the infrastructure facilities for better service, a lot of work is yet to be done to reach optimum customer satisfaction levels.

The company continues to face near-term headwinds that further limit its growth potential. The price cap rules introduced by the Canadian regulators are limiting rate increase and reducing the amount that incumbent carriers can charge competitors for accessing their network. As BCE attempts to offset inter-carrier price caps by raising the fees of its own end-users, the market dynamics and dictating elasticity have reduced overall demand as customers switch to lower-priced carriers. Moreover, the company’s local line access for traditional telephony service continues to face a decline among large customers due to higher wireless substitution and migration to IP-based services. This is reflected by persistent erosion in overall network access services on a year-over-year basis, hurting revenues of the local and long-distance operations.

Nevertheless, BCE is likely to benefit from robust activities in the wireless business, strong subscriber additions, fall in churn rates and its focus on technology upgrades. The company continues to focus on six strategic areas — investment in broadband network and services, accelerating wireless services, leveraging wireline momentum, expanding media coverage, improving customer service and achieving a competitive cost structure. These initiatives are expected to generate higher revenue per user and attract new customers.

The stock has gained 11.9% in the past year against the industry’s fall of 29.1%.

BCE currently has a Zacks Rank #3 (Hold). A better-ranked stock in the broader industry is Qualcomm Incorporated (NASDAQ:QCOM) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Qualcomm has long-term earnings growth expectation of 14%. It delivered an average positive earnings surprise of 8.7% in the trailing four quarters, beating estimates on each occasion.

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