The second-largest Canadian telecommunication company Telus Corporation (TU) plans to launch the fourth generation (4G) Long-Term Evolution (LTE) technology in early 2012 following the advancements in its 3G wireless network. It will provide higher Internet speeds relative to its 3G network.
Telus had upgraded its existing CDMA-based wireless network to the 3G high speed packet access plus (HSPA+) technology in late 2009 that offers downlink speeds of up to 21 (Mbps). HSPA+ wireless network covers more than 95% of the Canadian population.
Further, the company is expected to launch HSPA+ Dual Cell technology in the first half of this year. HSPA+ Dual Cell technology will double the download speeds to 42 Mbps on its 3G network by combining two wireless data carriers into a single carrier.
Telus rolled out these networks in partnership with BCE Inc. (BCE), which operates under the Bell Canada brand.
After the 3G network is fully updated in 2011, Telus will deploy its 4G network to urban Canadians providing download speeds of up to 150 Mbps and upload speeds of up to 70 Mbps. It will use the advanced wireless services (AWS) spectrum that Telus bought in Canada’s auction process in 2008.
However, deployment to the rural parts of Canada depends on lower frequency airwaves, the 700 MHz wireless spectrum, to be auctioned in 2012. The company did not disclose if it will build its own LTE technology or team up with Bell Canada again.
Telus is lagging its rival Rogers Communication (RCI) in the rollout of the LTE technology. Rogers will likely launch its LTE services this year. Telus continues to invest substantially to maintain its network infrastructure and upgrade to new technologies in order to keep pace with its competitors.
Telus is the leader in the deployment of the most advanced wireless technology in Canada. We remain impressed by the company’s prospects for future wireless data growth given new devices and technology upgrades, which are expected to fuel growth in wireless revenues. In addition, we are encouraged by the company’s improved confidence related to 2011 earnings and free cash flow outlook with cost reduction plans.
We are maintaining our long-term Outperform recommendation on Telus supported by the Zacks # 2 Rank (Buy).
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