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Telus is expected to post the lowest churn rate of the big three wireless providers.Peter Power/The Globe and Mail

Telus Corp. is poised to overtake BCE Inc. as Canada's second-largest wireless carrier by the end of this year, based on number of subscribers, predicts a new report.

Convergence Consulting Group Ltd.'s annual study of telecom and media trends, "The Battle for the North American (U.S./Canada) Couch Potato," forecasts that Telus will claim the No. 2 spot behind Rogers Communications Inc. in 2013, owing to aggressive pricing and a bigger emphasis on attracting "prepaid" subscribers. Those mobile users, often budget-conscious consumers such as youth, pay in advance for wireless service.

BCE and Telus share a wireless network, but remain fierce competitors. The two carriers ended 2012 nearly tied in terms of total subscribers, with BCE's Bell Mobility unit maintaining a slight lead of about 11,000. Although wireless remains a key priority for both, this could be the year that Telus eclipses its rival.

"Telus's focus is both on the postpaid and the prepaid [customer]. It's been highly price-competitive," Convergence president Brahm Eiley said. "Bell has also been very innovative on its pricing, but it has had an eye to maximizing ARPU [average revenue per user]."

In its study, to be released Tuesday, Convergence estimates that Telus will add 350,000 subscribers this year to grow to 8.02 million wireless subscribers, up from 7.67 million in 2012. That compares with Bell, which is forecast to add 279,000, for a total subscriber base of 7.96 million by year's end.

The firm predicts Rogers will finish 2013 with 9.56 million subscribers and a market share of 33 per cent. Collectively, the three big carriers will command about 88 per cent of the market.

Bell stopped enrolling new subscribers to its Solo discount brand last May, while Telus began offering a prepaid service on its Koodo brand for the first time in August – more than four years after it launched that brand. As other companies, including newcomer Wind Mobile, shift their focus away from prepaid, Telus has suggested that prepaid could play a key role in the industry's next wave of growth as carriers compete for first-time users such as teens and tweens.

But Telus's gains in the prepaid market are not expected to come at the expense of ARPU, a key industry statistic that reflects the amount of the average monthly bill for consumers. Convergence expects it to be $61.10, compared with $57.70 and $60 for Bell and Rogers, respectively.

For its part, Bell has mounted a major turnaround of its wireless business since 2008. "We believe we will lead the industry this year in postpaid net adds, wireless ARPU growth, and EBITDA, when all the numbers are in for the year," CEO George Cope said during a recent conference call. EBITDA represents earnings before interest, taxes, depreciation and amortization.

Telus, meanwhile, is also expected to post the lowest churn rate of the big three at 1.4 per cent for 2013 – a key measure that reflects customer loyalty. Telus CEO Darren Entwistle said reducing churn remains a key priority. "Telus is an organization that is permanently dissatisfied with the status quo," Mr. Entwistle said in a recent interview.

Over all, the wireless industry's ARPU will continue to increase in 2013 and 2014, thanks to higher data usage as more Canadians upgrade to smartphones. New entrants, meanwhile, will capture 8.1 per cent of the market by the end of this year, up from 6.1 per cent in 2012, Convergence said.

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