Why Canada’s Telecom Investment Strategy Faces a Crossroads
Canadian telecom carriers face mounting pressure to justify heavy infrastructure investments amidst a regulatory environment that some argue actively disincentivizes spending. According to a recent analysis by Scotiabank’s Maher Yaghi, the current cost-sharing mandates imposed by Canada’s regulator—and the resulting financial burdens on major carriers like Rogers, BCE, and TELUS—are creating significant headwinds for telecom infrastructure development. Yaghi’s provocative question—’Why continue to heavily invest in infrastructure?’—resonates across an industry grappling with constrained ROI on capital expenditures.
Are Canada’s Policies Undermining Infrastructure Development?
The core argument, outlined in Yaghi’s analysis of BCE’s 2025 financial results, critiques the Canadian telecom policy landscape. Key factors include regulatory mandates requiring entities to share infrastructure with competitors at non-commercial rates—terms that starkly contrast with the more competitive U.S. market. This raises a critical concern: investments made by market leaders effectively subsidize competitors, such as Quebecor, without yielding proportionate benefits for the investors themselves.
For context, BCE and Rogers have opted to maintain robust capital expenditure (capex) plans for 2026. In contrast, challengers with lower market share operate with significantly reduced investment levels. Yaghi notes that the capital-intensive commitments from Canada’s telecom giants stand in stark contrast to regulatory conditions, further exacerbating their high leverage ratios.
The Broader Implications for Canada’s Digital Economy
This friction between regulatory policies and market dynamics extends beyond corporate boardrooms into broader economic concerns. Prime Minister Carney recently emphasized the importance of private sector investment to “supercharge growth” in Canada’s digital economy, launching initiatives such as the Major Projects Office to accelerate infrastructure deployment. Similarly, policymakers like Energy Minister Hodgson have called for “predictable regulation” to bolster investor confidence.
Yet, these aspirations for nation-building clash with Canada’s telecom policy framework. Historically, Canadian regulators have aimed to strike a balance between affordability and infrastructure development. However, critics argue that this balancing act has skewed too far toward short-term price controls, jeopardizing long-term network advancements in 5G, fiber, and rural connectivity.
What Lies Ahead for Telecom Investment?
Industry observers predict that unless Canada’s regulatory framework evolves to offer greater investment certainty, carriers may pull back on capex, slowing progress in critical areas like 5G upgrades and rural broadband expansion. Without necessary policy adjustments, the status quo risks creating a two-tiered system: well-funded urban networks and lagging rural areas.
For shareholders, this represents an inflection point. Will Canadian telecom operators lean into aggressive investments in spite of suboptimal returns? Or will regulatory stagnation force carriers to pivot toward lower infrastructure spending, jeopardizing Canada’s digital economy goals?
The answer will largely depend on whether policymakers address the structural inefficiencies Yaghi—and others—have highlighted. As Canada’s telecom market confronts a rapidly shifting global competitive landscape, securing smart, predictable regulation could be the first step toward avoiding stagnation in its digital transformation.
