What happens when an operator’s copper network reaches the end of its life? That’s the question Canadian player Telus is trying to answer, trialing different options for what to do with its legacy network assets upon their retirement.
Doug French, Telus’ EVP and CFO, said during an investor conference there aren’t really any good global models for copper decommissioning, at least not at its scale. So, it’s using the same trial and error approach it employed when it began its fiber program in 2013.
“What we did on that one is we took this pilot approach of a tier-two city, learn from it move to the next, learn from it move to the next. And so we’re going to do the exact same on the way out of copper: decommission, learn and then implement again,” French explained. Among other options, Telus is weighing whether it should pull out the copper altogether, resell it or monetize the real estate associated with it. It’s currently piloting these different models to determine “what’s the best way to do that final completion and what is the best monetization path,” he said.
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Detailing the real estate opportunity associated with the decommissioning, French said Telus has “identified more than 25 different properties” which over a 10-year period could offer $1 billion worth “of combined land and development opportunities.” From these, the operator could “generate either gains from selling outright, we could partner with others and create rental properties – condomuniums, etc. – and/or you could even have a real estate REIT for that matter and build your own call it ‘cash flow for the future’ that would allow us to continue to invest in our more core product.”
Telus executives said during the operator’s Q3 earnings call last week they expect to finish migrating customers from copper to fiber by the end of 2022 or early 2023.
French reiterated some of its learnings from the process thus far, noting the average margin per household is up over 20% on a fiber home versus copper while repair rates are down as much as 70%. Additionally, there is 37% less churn in a fiber home and fiber households are averaging three products, which he stated was a higher penetration rate than Telus achieved with copper.