Q: Hello,
Could you comment on now that Ontario has partnered with Elon, how does the provincial subsidization of fixed costs for installation of internet, etc. bode for BCE, Telus and other "hardwire" "maybe "fiber optic" providers?
I frequently drive along Hwy 7 and see trees fallen down on the Bell lines - so maintaining this lower margin asset is not a top priority.
How much of a moat is fibre optic vs Starlink?
Elon's satellites have a lot of operating leverage vs copper or fibre optic installation.
Thank you
Could you comment on now that Ontario has partnered with Elon, how does the provincial subsidization of fixed costs for installation of internet, etc. bode for BCE, Telus and other "hardwire" "maybe "fiber optic" providers?
I frequently drive along Hwy 7 and see trees fallen down on the Bell lines - so maintaining this lower margin asset is not a top priority.
How much of a moat is fibre optic vs Starlink?
Elon's satellites have a lot of operating leverage vs copper or fibre optic installation.
Thank you
5i Research Answer:
The recently announced partnership between Elon Musk and the Ontario government in an effort to boost rural internet through his satellite internet service company, Starlink, is certainly concerning for telco investors. Starlink could be a real risk and a potential disruptor to the fiber business if successful. That being said, it is still very early, internet connection is a challenging business to be in. Even GOOGL, with all the resources, tried in the past and failed to make the economics of the industry attractive. We think investors can wait to see how it turns out over time, keep an open mind, and be willing to get out if the risk becomes meaningful.