Loblaw goes driverless, credit card surcharges and why adulting is unaffordable: Must-read business and investing stories | Canada News Media
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Loblaw goes driverless, credit card surcharges and why adulting is unaffordable: Must-read business and investing stories

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An autonomous driving vehicle drives around a parking lot without a human driver behind the steering wheel from the Loblaw office to a Superstore in Brampton, Ont., on Tuesday, October 4, 2022. (Christopher Katsarov/The Globe and Mail)Christopher Katsarov/The Globe and Mail

Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.

Loblaw trucks along with no drivers

Canada’s largest grocer announced this week the launch of driverless delivery trucks on the roads across Toronto and surrounding suburbs, delivering products to its stores. In partnership with Palo Alto, Calif.-based startup Gatik, Loblaw has been testing the autonomous driving technology in Ontario since 2020 with a human on board, and has now moved to the next phase – sans human. As Susan Krashinsky Robertson reports, Gatik received approval from Ontario’s Ministry of Transportation to operate fully driverless vehicles; however, the province is not keen to comment on any details about the approval that’s been granted, or whether others are testing similar tech on Ontario roads. Loblaw’s driverless trucks are a first, but certainly won’t be the last.

Paying with a credit card might cost you more

Canadians may see added surcharges to their bills when paying by credit card starting this week. New rules that have come into effect are the result of a settlement in a class-action legal battle between small merchants, Visa, MasterCard and financial institutions, Chris Hannay writes. Credit-card companies had long resisted allowing businesses to pass on these costs as it could lead consumers to switch payment methods to avoid paying the fees. Instead, merchants pay the costs, and many of them feel they have to pay to accommodate customers who want to pay by credit card. That’s no longer the case. Business owners now have the choice of making these fees transparent to their customers. And according to a new survey from the Canadian Federation of Independent Business, an estimated one in five small businesses is planning to pass on credit-card transaction fees to their customers. The fees aren’t set, but would be around 1.4 per cent or more of the bill.

Auto sales continue to slump

The auto industry was one of the hardest hit during the pandemic because of supply chain issues, and it appears that car sales are still languishing. In September, around 130,000 cars and light trucks were sold in Canada, and while that was a slight improvement from August, sales were down 22 per cent from three years ago. Auto dealers still struggling to fill their lots have been hit with yet another issue: rising borrowing rates. The average interest rate for auto loans advanced in July was 6.62 per cent, up from a pandemic low of 4.04 per cent. Matt Lundy takes a look at slumping vehicle sales in this week’s Decoder.

More interest rate hikes are coming

The Bank of Canada has raised interest rates five times since March, and they’re not done yet, Mark Rendell writes. In a speech this week, BoC governor Tiff Macklem said that more interest rate increases are necessary to tame inflation, despite the economy showing signs of slowing and inflation beginning to recede. “Simply put, there is more to be done,” Mr. Macklem said, pointing to domestic inflation and a tight labour market as areas of concern. The policy rate is currently 3.25 per cent, and economists widely expect the central bank to announce another half-point increase at its next meeting on Oct. 26.

Asked to be an executor? Ask this first

It’s hard to say no when a family member or friend asks you to be the executor of their will. After all, it’s the final favour you’ll ever do for them. But as Rob Carrick warns, being an executor can bring a bunch of trouble, and one should know what they’re up against before agreeing to do the deed. So what questions should you be asking? For one: How complex is your estate? Executors should expect to spend around 100 hours over 18 to 24 months to settle an estate, and complexities such as family businesses, trusts and investment properties can add significantly to your commitment, and require that you spend time consulting outside experts.

The unaffordability of adulting these days

Enough about expensive lattes and avocado toast. The magnitude of obstacles facing young Canadians launching into adulthood today is incomparable to generations before. In Erica Alini’s ROB cover story, she crunched the numbers on how much it costs people in their 20s and 30s to live on their own, pay down student debt and save for a home in Canada. The math is grim, and earning a paycheque is hardly the issue. By 2030, buying an average-priced home with a minimum down payment will likely require a household income of around $230,000 in today’s dollars in places such as Vancouver, Toronto and – wait for it – Hamilton. Meanwhile, Gen Z and younger millennials can’t even make the rent. In Vancouver and Toronto, the average one-bedroom now rents for well over $2,000.

Now that you’re all caught up, prepare for the week ahead with the Globe’s investing calendar.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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