SaskTel sees increase in income despite drop in revenue

SaskTel's logo. (Courtesy SaskTel)

SaskTel struggled in a highly-competitive telecommunication market in the 2018-19 fiscal year but still saw income growth thanks to cost-cutting measures.

The Crown corporation unveiled its annual report Monday. The provincially-owned telecommunications company saw $136.8 million in income, an increase of 13.1 per cent, despite seeing nearly stagnant revenue of $1.256 billion — an increase of just 0.2 per cent compared to 2017-18’s total revenue.

The results come as SaskTel faces an evolving technology sector where constant innovation, speed and new players are the norm. The revenue earned in this past fiscal year was below target due to competitors offering lower rates in Saskatchewan than elsewhere in the country, aggressive competition and changing consumer behaviour. SaskTel missed its total revenue target by about $61 million.

“It is increasingly challenging to increase revenue and profit margins due to commoditized legacy products, a highly competitive wireless market, emerging disruptive technologies and large, non-traditional global companies offering low-cost solutions,” Sasktel wrote in its annual report.

It says it plans to improve its position by focusing on customer experience, new services and expanding fixed and mobile networks to meet market demands.

Despite those challenges, the net income was $3.8 million higher than targeted, thanks to savings found in goods and services, salaries wages and benefits, as well as a reduction in capital expenditures.

SaskTel also continues to see the usage of its services change. Wireless data use increased by 19.2 per cent over the last fiscal year, while the use of traditional wireline phone services continued to drop.

Wireless services made up over 40 per cent of SaskTel’s revenue, followed by MaxTV, internet and data. Both those services saw their use and associated revenue streams rise in 2018-19. More traditional wired phone services made up the third largest stream, however, for the second consecutive year, usage and income from that stream fell.

Other streams of business, including security and professional equipment, rose in 2018-19.

SaskTel did see success on the infrastructure side. New fibre optic connections were installed passed 32,988 homes, much higher than the targeted 18,763. An additional 14,839 are planned for this fiscal year.

In terms of fibre connections, 98 per cent of the targeted 20,135 homes and businesses were connected, with the remainder scheduled for the first two weeks of the 2019-20 fiscal year. The plan is to connect another 10,000 in 2019-20.

Additionally, 50 communities got enhanced LTE, with 41 more planned for this year.

Return on investment fell one percentage point lower than targeted, while debt ratio improved to three percentage points better than the targeted level

SaskTel planning continued expansion

SaskTel is continuing to plan and fund installation of the newest wired and wireless technology to sites throughout Saskatchewan.

The plan, the Crown corporation wrote, is to ensure 98 per cent of the province’s businesses and homes have access to at least 10 Mbps (megabits per second) download speeds on fixed broadband by the end of this coming fiscal year. In addition, the plan is for 50 per cent of homes and businesses to have access to speeds of up to 50 Mbps in the same period.

That will help SaskTel keep up with other emerging technologies, such as machine to machine applications, connected home devices, home security and monitoring service. It’ expected that by 2022, the average household will require a minimum of 25 Mbps in download speeds.

SaskTel is also prepping for the increased rollout of 5G (fifth generation) mobile wireless networks. According to the annual report, Canada lags behind the world in 5G rollout, however, with spectrum auctions in 2019 and 2020, a widespread rollout isn’t expected in this country until 2020 at the earliest.

SaskTel said its biggest driver of long-term growth centres around broadband access across the province, both fixed and mobile.

In centres with fibre optic cable installed, that could mean download speeds of up to 300 Mbps.