TELUS reports first quarter 2013 results
VANCOUVER, May 9, 2013
Strong earnings growth driven by data revenue in wireless and wireline
Quarterly dividend increased to 34 cents per share up 11.5 per cent from year
Extending target of semi-annual dividend increases of circa 10 per cent
annually to 2016
Announcing up to $500 million share purchase program in 2013 and same target
each year to 2016 for a total of up to $2.0 billion
VANCOUVER, May 9, 2013 /PRNewswire/ - TELUS Corporation's first quarter 2013
revenue increased by nearly five per cent to $2.76 billion from a year earlier
while earnings before interest, taxes, depreciation and amortization (EBITDA)
increased by more than five per cent to $1.03 billion. Earnings per share
(EPS) rose 14 per cent to $0.56, which reflects the mid-April two-for-one
The increase in consolidated revenue was generated by greater than six per
cent growth in wireless revenue and almost three per cent growth in wireline
revenue. TELUS continued to attract new wireless customers and increase
average revenue per unit (ARPU) from use of more wireless data services and
continued focus on higher value postpaid subscribers. Wireline benefited from
a nine per cent increase in data revenue generated from the company's Optik TV
and high-speed Internet services. Consolidated EBITDA growth reflects seven
per cent higher wireless EBITDA and two per cent higher wireline EBITDA.
TELUS started the year with strong subscriber growth, adding 59,000 postpaid
wireless customers, 34,000 TV subscribers and 16,000 high-speed Internet
customers, partially offset by losses of prepaid wireless customers, and wired
phone lines. TELUS' total wireless base of 7.7 million is up nearly five per
cent year-over-year, the TELUS TV subscriber base of 712,000 is up 29 per
cent, and the high-speed Internet connections are up nearly seven per cent to
more than 1.3 million.
Free cash flow of $358 million in the first quarter was unchanged from a year
ago. Underlying free cash flow, before income taxes, was up strongly by 25 per
cent to $506 million, giving the company the ability to invest in the growth
of its core operations while returning capital to investors and funding higher
income tax payments.
C$ and inmillions, except per share amounts three months ended
(unaudited) 2013 2012 change
Operating revenues 2,756 2,631 4.8
Operating expenses before depreciation and
amortization^(1) 1,722 1,650 4.4
EBITDA^(1)(2) 1,034 981 5.4
Net income^(1)(3) 362 319 13.5
Earnings per share (EPS), basic^(1)(3)(4) 0.56 0.49 14.3
Capital expenditures 467 441 5.9
Free cash flow^(5) 358 358 -
Free cash flow before income taxes 506 406 24.6
Total customer connections^(6) 13.15 12.75 3.1
^(1) Figures for 2012 have been adjusted for retrospective application of
accounting standard IAS19 Employee benefits (2011).
^(2) EBITDA does not have any standardized meaning prescribed by IFRS-IASB.
For definition and explanation, see Section11.1 in the accompanying 2013
first quarter Management's discussion and analysis (MD&A).
^(3) Net income and EPS for the first quarter of 2013 included favourable
income tax-related adjustments of $5 million or 1 cent per share compared
to $10 million or 2 cents per share a year ago.
^(4) Adjusted for two-for-one stock split effective April 16, 2013.
^(5) Free cash flow does not have any standardized meaning prescribed by
IFRS-IASB. For definition and explanation, see Section11.2 in the
accompanying 2013 first quarter MD&A.
^(6) Sum of wireless subscribers, network access lines, total Internet
subscribers and TELUS TV subscribers (IPTV and satellite TV).
Darren Entwistle, TELUS President and CEO said "TELUS realised strong first
quarter results driven by our company's revenue and EBITDA growth in both the
wireline and wireless segments of our business. Our unwavering focus on
investing in broadband data technology and services combined with
ourunremitting commitment to put our customers first enhances the loyalty of
our existing client base, attracts new customers and generates strong bottom
line growth. This is evidenced by our 59,000 new postpaid wireless customers,
34,000 new TV clients, 16,000 additional high-speed Internet connections and
industry leading postpaid subscriber churn rate of only 1.11 per cent per
month. Furthermore, the strength of our earnings per share, up 14 per cent,
and free cash flow position are enabling us to proceed with numerous
initiatives aimed at continuing to create value for our investors."
Mr. Entwistle stated, "Building on the momentum generated by our successful
two-for-one stock split completed in April, I am pleased to announce four
additional shareholder-friendly initiatives. Firstly, we are increasing our
quarterly dividend to 34 cents per share, 11.5 per cent higher than the
dividend level one year ago. Secondly, we are extending our dividend growth
program for an additional three years to 2016, targeting semi-annual increases
of circa 10 per cent annually. Thirdly, we are requesting regulatory approval
to make a normal course issuer bid to purchase and cancel up to 15 million
TELUS shares valued at up to $500 million in 2013. Finally, it is our
intention to extend this share purchase program for up to $500 million in each
of the next three calendar years for a total of up $2 billion. We see all
these initiatives as consistent to our goal of providing superior investment
returns to TELUS shareholders."
John Gossling, TELUS Executive Vice-President and CFO said, "The successful
completion of our $1.7 billion debt financing on April 1 of 11 year and 30
year notes, at an attractive average blended coupon rate of 3.7 per cent,
demonstrates our excellent access to Canadian and U.S. capital markets. This
outcome is something TELUS has earned by maintaining a strong balance sheet
and adhering to our financial policies year-after-year. In addition, this
financing significantly reduces our refinancing risk with our average term to
maturity almost doubling to nine years. With this issue and almost $2 billion
of available liquidity, we are well positioned to early redeem this month $700
million of higher cost 2014 debt, participate in the upcoming spectrum auction
and to action our $500 million share purchase program in 2013."
TELUS has reaffirmed its full year 2013 targets on all eight financial metrics
announced in mid-February.
This news release contains statements about future events and financial and
operating performance of TELUS that are forward-looking. By their nature,
forward-looking statements require the Company to make assumptions and
predictions and are subject to inherent risks and uncertainties. There is
significant risk that the forward-looking statements will not prove to be
accurate. Readers are cautioned not to place undue reliance on forward-looking
statements as a number of factors could cause actual future performance and
events to differ materially from that expressed in the forward-looking
statements. Accordingly, this news release is subject to the disclaimer and
qualified by the assumptions (including assumptions for 2013 annual guidance,
CEO three-year goals to 2013 for EPS and free cash flow growth to 2013
excluding spectrum costs, semi-annual dividend increases to 2016, ability to
sustain and complete multi-year share purchase programs to 2016),
qualifications and risk factors referred to in the attached first quarter
Management's discussion and analysis, in the 2012 annual report, and in other
TELUS public disclosure documents and filingswith securities commissions in
Canada (on SEDAR at sedar.com) and in the United States (on EDGAR at sec.gov).
Except as required by law, TELUS disclaims any intention or obligation to
update or reviseforward-looking statements, and reserves the right to change,
at any time at its sole discretion, its current practiceof updating annual
targets and guidance.
*External wireless revenues increased by $89million or 6.4 per cent to
$1.5 billion in the first quarter of 2013, compared to the same period a
year ago. This growth was driven by continued growth in data services and
*Data revenue increased by $85million or 17 per cent to $583 million,
representing 43 per cent of wireless network revenue in the quarter. Data
ARPU increased by $2.79 or 12 per cent to $25.62. These increases were due
to continued strong adoption and usage of smartphones and data
applications and higher roaming volumes.
*Blended ARPU increased by $1.17 or 2.0 per cent to $60.04 as data ARPU
growth more than offset a moderating 4.5 per cent voice ARPU decline. This
is the tenth consecutive quarter of year-over-year growth in blended ARPU.
*Monthly postpaid subscriber churn was 1.11 per cent, down three basis
points (bps) from a year ago, while blended churn decreased seven bps to
1.48 per cent. This is the best first quarter blended churn result in six
years, reflecting our successful Customers First service approach,
investments in retention and lower churn on smartphones.
*Postpaid net additions of 59,000 were partially offset by a loss of 26,000
lower ARPU prepaid subscribers for net additions of 33,000 - an increase
of 50 per cent from 22,000 a year ago. Total wireless subscribers were up
4.6 per cent from a year ago to 7.7 million, while the proportion of
high-value postpaid subscribers grew to 86 per cent of the base.
Smartphone subscribers now represent 68 per cent of our postpaid base, up
from 56 per cent a year ago.
*Wireless EBITDA of $666 million increased by $46million or 7.4 per cent
over last year due to strong network revenue growth and expense
management. The EBITDA margin based on network service revenue increased
by 0.5 points to 48.6 per cent. Wireless simple cash flow (EBITDA less
capital expenditures) increased by $63million to $532million in the
quarter due to higher EBITDA and $17 million lower capital expenditures.
*External wireline revenues increased by $36million or 2.9 per cent to
$1.3 billion in the first quarter of 2013, when compared with the same
period a year ago. This growth was generated by increased data service
revenue, partially offset by declines in legacy voice revenues.
*Data service and equipment revenues increased by $64million or 9.1 per
cent, due primarily to strong growth in TELUS TV subscribers, high-speed
Internet and enhanced data services, combined with TV and high-speed
Internet rate increases.
*Total TV additions of 34,000 were lower by 10,000 over the same quarter
last year, as lower gross additions were partly offset by a lower churn
rate. The total TV subscriber base of 712,000 increased by 159,000 or 29
per cent from a year ago.
*High-speed Internet net additions of 16,000 were stable year-over-year,
and reflect successful promotions and the pull-through effect of Optik TV
sales. TELUS' high-speed subscriber base of 1.3 million is up 85,000 or
6.8 per cent from a year ago.
*Total network access lines declined by 4.9 per cent from a year ago to
3.4million. Residential lines were down 7.2 per cent over last year,
reflecting ongoing wireless and Internet substitution and competition.
Business lines were down 2.3 per cent over last year, reflecting ongoing
price-based competition in the small and medium business market and
customer adoption of IP services.
*Wireline EBITDA of $368million increased by $7million or 1.9 per cent
year over year due to improving Optik TV and Internet margins helped by a
lower cost of subscriber acquisition and subscriber growth. This is the
second consecutive quarter of positive year over year EBITDA growth.
*Wireline simple cash flow (EBITDA less capital expenditures) declined by
$36 million to $35 million in the quarter due to a $43 million increase in
CORPORATE AND BUSINESS DEVELOPMENTS
Dividend Declaration - increased to 34 cents per quarter, up 11.5 percent from
a year ago
The Board of Directors has declared a quarterly dividend increase of two cents
to thirty-four cents ($0.34) Canadian per share on the issued and outstanding
common shares of the Company payable on July 2, 2013 to holders of record at
the close of business on June 10, 2013.
This new quarterly dividend represents the fifth of six under TELUS' 2011
dividend growth program announced in May 2011 that targeted semi-annual
increases of circa 10 per cent annually. The new dividend represents a 3.5
cent or 11.5 per cent increase from the $0.305 quarterly dividend paid on July
TELUS extends semi-annual dividend growth program to 2016
TELUS is providing shareholders with additional clarity on our intentions
regarding our dividend growth program through to 2016. The Company plans to
continue with two dividend increases per year to 2016, normally announced in
May and November, and is targeting the increase to also be in the range of
circa 10 per cent annually. Notwithstanding this, dividend decisions will
continue to be dependent on earnings and free cash flow and subject to the
Board's assessment and determination of our financial situation and outlook on
a quarterly basis. There can be no assurance that the Company will maintain
its dividend growth program through to 2016.
TELUS to file for $500 million TELUS common share purchase program in 2013 and
intends to have multi-year share purchases
The Board of Directors has authorized TELUS to file shortly with the Toronto
Stock Exchange (TSX) a request for approval to make a Normal Course Issuer Bid
(NCIB). Subject to TSX approval, the NCIB program will enable TELUS to
purchase until December 31, 2013 up to a maximum of 15.0 million TELUS common
shares or approximately 2.3 per cent of the public float of our common shares,
for an aggregate purchase price of up to $500 million. All shares purchased
will be cancelled. The Company believes that the proposed purchase of its
shares is an attractive investment opportunity and a desirable use of TELUS'
funds to enhance the value of the remaining shares.
In addition, TELUS currently intends to renew its NCIB program in each of the
next three years in order to permit purchases for up to $500 million in each
calendar year. Future NCIBs will be dependent on earnings and free cash flow,
subject to Board assessment and determination, and obtaining regulatory
(including TSX) approvals. There cannot be any assurance as to how many
shares, if any, will ultimately be acquired by TELUS under any NCIB.
TELUS (TSX: T, NYSE: TU) is a leading national telecommunications company in
Canada, with $11 billion of annual revenue and 13.2million customer
connections, including 7.7million wireless subscribers, 3.4million wireline
network access lines, 1.4million Internet subscribers and 712,000 TELUS TV
customers. Led since 2000 by President and CEO, Darren Entwistle, TELUS
provides a wide range of communications products and services, including
wireless, data, Internet protocol (IP), voice, television, entertainment and
In support of our philosophy to give where we live, TELUS, our team members
and retirees have contributed more than $300million to charitable and
not-for-profit organizations and volunteered 4.8million hours of service to
local communities since 2000. Fourteen TELUS Community Boards lead TELUS'
local philanthropic initiatives. TELUS was honoured to be named the most
outstanding philanthropic corporation globally for 2010 by the Association of
Fundraising Professionals, becoming the first Canadian company to receive this
prestigious international recognition.
Access to Quarterly results information
Interested investors, the media and others may review this quarterly earnings
news release, management's discussion and analysis, quarterly results slides,
audio and transcript of investor webcast call, supplementary financial
information and our full 2012 annual report at telus.com/investors.
Full quarterly earnings release available at:
TELUS' first quarter 2013 conference call is scheduled for May 9, 2013 at 2
p.m. ET and will feature a presentation followed by a question and answer
period with investment analysts. Interested parties can access the webcast at
telus.com/investors. A telephone playback will be available on May 9 until
June 8 at 1-855-201-2300. Please use reference number 956698# and access code
30599. An archive of the webcast will also be available at telus.com/investors
and a transcript will be posted on the website within several business days.
SOURCE TELUS Corporation
about TELUS, please visittelus.com.
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