Telus' Nontelecom Business Weighs Down Wireless and Wireline Results, Which Also Remain Challenged

We believe Telus has a strong and relatively stable position in the Canadian telecom industry despite ongoing regulatory challenges and intensifying competition. We see little practical difference between Telus’ wireless network and those of Rogers and BCE, with each offering high-quality service and nationwide reach. With little separating the wireless networks and Quebecor developing into a stronger national competitor, we expect pricing pressure to constrain wireless revenue growth. We don’t expect this to materially weaken Telus’ wireless position, given Quebecor’s inability to bundle wireless with wireline and BCE and Rogers' unwillingness to compete further on price.