Telus Corp (TU), Canada’s second largest telecom carrier, has reportedly acquired Black’s Photo Corporation (Black’s), a leading imaging and digital retailer in Canada , for C$28 million (US$26 million). For nearly 80 years, Black’s has been a premier distributor of cameras, accessories, albums and printing services that are complementary to Telus’ wireless offerings.
Telus’ wireless devices will feature in Black’s nationwide retail outlets, addressing the growing demand for mobile handsets embedded with high quality photo and video capability. Telus remains the industry leader in offering the broadest assortment of smartphones in Canada. Strong smartphone adoption and the associated increase in data service usage continue to catalyze wireless data revenue growth.
Telus contends with a weakening Canadian economy and domestic competition, which would intensify with the entry of new wireless players (including Globalive Communications and Quebecor Inc) in late 2009 and early 2010. The company continues to lose local access lines (both business and residential) to competitors.
Telus’ move to buy Black’s was in response to its rival BCE Inc’s (BCE) recent acquisition of the leading Canadian consumer electronics retail chain “The Source”. The Source has expanded BCE’s retail outlet count to 1,450 and provided the company the opportunity to distribute its wireless and broadband Internet products and services over 750 retail locations staring early 2010. Moreover, BCE has further strengthened its national retail distribution network with full ownership of Virgin Mobile Canada.
The acquisition of Black’s has expanded Telus’ retail network footprint by adding 113 retail stores across Canada, thereby broadening the nationwide distribution of the company’s wireless products and services. The addition of Black’s retail outlets brings Telus’ total store count to more than 1,000, enabling the company to more effectively compete with its Canadian peers BCE and Rogers Communications (RCI). Moreover, the acquisition will significantly improve Telus’ retail presence in Ontario (Black’s stronghold) where the company ranks third in market share.
We feel that Telus’ wireless business prospects remain firm, driven by an increasing customer base, solid spectrum acquisitions, attractive product/service offerings, ongoing technology advancements and expanding distribution capabilities.
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