TELUS reports third quarter 2013 results
VANCOUVER, Nov. 8, 2013
Double-digit net income and EPS growth driven by wireless and wireline
Returning more than $1.6 billion to shareholders year-to-date
Increasing quarterly dividend 12.5 per cent year-over-year to 36 cents per
VANCOUVER, Nov. 8, 2013 /PRNewswire/ - TELUS Corporation's third quarter 2013
revenue increased by 3.6 per cent to $2.87 billion from a year earlier while
earnings before interest, taxes, depreciation and amortization (EBITDA)
increased by 4.6 per cent to $1.04 billion. EBITDA excluding restructuring and
other like costs increased by 5.7 per cent to $1.05 billion. Basic Earnings
per share (EPS) rose by 14 per cent to $0.56, or 18 per cent to $0.58 on an
The increase in consolidated revenue was generated by five per cent growth in
wireless network revenue and three per cent growth in wireline revenue.
Wireless revenue benefited from continued subscriber growth, higher average
revenue per unit (ARPU) due to increased smartphone adoption and related
increased use of data services. Wireline revenue growth was driven by a nine
per cent increase in data revenue, generated by ongoing TELUS TV and
high-speed Internet subscriber growth and increasing revenue per customer.
TELUS attracted 115,000 net new customer connections in the quarter, including
106,000 postpaid wireless customers, 34,000 TV subscribers and 19,000
high-speed Internet customers. The growth in TELUS' wireless customer base was
supported by an 11 basis point year-over-year decline in monthly postpaid
subscriber churn to just 0.99 per cent - the lowest level in over six years.
This growth was partially offset by the modest loss of prepaid wireless
customers and a continued decline in legacy wireline services. TELUS' total
wireless customer base of 7.8 million is up over three per cent
year-over-year, while the TELUS TV subscriber base of 776,000 is up 22 per
cent and high-speed Internet connections are up more than five per cent to
During the third quarter, TELUS returned $941 million to shareholders
including $222 million in dividends and $719 million in share purchases. For
the nine months ended September 2013, the company returned $1.639 billion to
shareholders, including $639 million in dividend payments and $1.0 billion in
Free cash flow of $365 million in the third quarter was down $61 million,
largely reflecting increased capital investments to expand the capacity,
speeds and coverage of TELUS' advanced broadband networks, as well as higher
cash income taxes, which mitigated growth in EBITDA.
C$ and inmillions, except per share amounts Three months ended
September 30 per cent
(unaudited) 2013 2012 change
Operating revenues 2,874 2,774 3.6
Operating expenses before depreciation and
amortization^(1) 1,839 1,784 3.1
EBITDA^(1)(2) 1,035 990 4.6
EBITDA excluding restructuring and other like
costs^(1)(2)(3) 1,050 993 5.7
Net income^(1) 356 323 10.2
Adjusted net income^(1)(4) 365 323 13.0
Basic earnings per share (EPS)^(1) 0.56 0.49 13.6
Adjusted EPS^(1)(4) 0.58 0.49 18.4
Capital expenditures 555 471 17.8
Free cash flow^(5) 365 426 (14.3)
Total customer connections^(6) 13.27 12.98 2.2
^(1) Figures for 2012 have been adjusted for retrospective
application of accounting standard IAS19 Employee benefits
^(2) EBITDA does not have any standardized meaning prescribed by
IFRS-IASB. For definition and explanation, see Section11.1 in
the accompanying 2013 third quarter Management's discussion and
^(3) For the third quarter of 2013 and 2012 restructuring and other
like costs were $15 million and $3 million, respectively.
^(4) Adjusted net income and Adjusted EPS do not have any
standardized meaning prescribed by IFRS-IASB. These terms are
defined in this news release as excluding (after income taxes):
1) Restructuring and other like costs; 2) income tax-related
adjustments. For further analysis of the aforementioned items
see Section 1.3 in the accompanying 2013 third quarter MD&A.
^(5) Free cash flow does not have any standardized meaning prescribed
by IFRS-IASB. For definition and explanation, see Section11.1
in the accompanying 2013 third quarter MD&A.
^(6) Sum of wireless subscribers, network access lines, total
Internet subscribers and TELUS TV subscribers (IPTV and
satellite TV). Effective with the second quarter of 2013 and on
a prospective basis, machine-to-machine (M2M) subscriptions have
been excluded from all subscriber-based measures. Cumulative
subscribers include an April 1, 2013 opening balance adjustment
to remove approximately 76,000 M2M subscriptions.
Darren Entwistle, President and CEO said, "TELUS once again delivered strong
results, underpinned by our strategic investments in advanced broadband
technology and services, coupled with our unwavering focus on putting
customers first and realising operational efficiencies. Our customers first
culture continues to attract new clients as evidenced by our third quarter
addition of 106,000 new postpaid wireless customers, 34,000 new TV clients,
and 19,000 new high-speed Internet connections. In addition to these strong
growth numbers we are also reporting an industry-leading monthly postpaid
wireless subscriber churn rate of only 0.99 per cent - our lowest since the
first quarter of 2007. Gaining customers and earning their loyalty is critical
to our ongoing success, so we were pleased with the results of the annual CCTS
report on customer complaints issued earlier this week, which saw complaints
by our customers decline significantly for the second year in a row. While we
have more work to do on this front, we are clearly delivering a differentiated
customer service experience and providing Canadians with a clear reason to
This excellence in customer service helped TELUS generate record earnings per
share this quarter, with 14 per cent growth. Furthermore, we continue to
produce robust free cash flow that will enable our organization to further
invest in our growth whilst providing superior investment returns to our
Mr. Entwistle added "In the first nine months of 2013, we returned $1.639
billion to our shareholders through our dividend growth and share purchase
programs and today we raised our quarterly dividend by two cents to 36 cents a
quarter, or $1.44 annually, a 12.5 per cent year-over-year increase. Our
consistently strong execution combined with our balance sheet strength has
placed TELUS in a unique position to successfully complete our unique
multi-year shareholder friendly initiatives. This includes, through 2016, our
dividend growth program targeting semi-annual increases of circa 10 per cent
annually and share purchases totaling up to $2.5 billion."
John Gossling, TELUS Executive Vice-President and CFO said "TELUS' sustainable
cash flow generation combined with our strong balance sheet enabled our
organization to successfully and expeditiously complete our 2013 share
purchase program announced in May and expanded in July. In total, we bought
back and cancelled more than 31 million TELUS common shares for $1 billion, at
an average cost of approximately $32 per share. This reduced shares
outstanding by 4.8 per cent and enhanced both our earnings per share, and the
affordability of future dividend increases."
Reflecting year-to-date results, TELUS updated its annual wireless external
revenue guidance to reflect slightly lower than expected wireless equipment
revenue. TELUS now expects external wireless revenue to be in the range of
$6.1 to $6.2 billion from $6.2 to $6.3 billion previously. External wireline
and consolidated revenue guidance remain unchanged. In addition, the capital
expenditure target is being raised to approximately $2 billion from
approximately $1.95 billion previously. Importantly, our guidance for 2013
EBITDA and EPS remain unchanged and are being reaffirmed today.
This news release contains statements about financial and operating
performance of TELUS and future events, including with respect to future
dividend increases and normal course issuer bids to 2016 and the annual 2013
guidance, 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 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 first, second and the accompanying third quarter
Management's discussion and analysis, in the 2012 annual report, and in other
TELUS public disclosure documents and filings with 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.
*Wireless network revenues increased by $71million or 5.2 per cent to
$1.44 billion in the third quarter of 2013, compared to the same period a
year ago, driven by continued subscriber growth and higher ARPU driven by
ongoing smartphone adoption and associated data services.
*Data revenue increased by $91million or 17 per cent to $637 million,
representing 44 per cent of wireless network revenue in the quarter. Data
ARPU increased by $3.21 or 13 per cent to $27.72. These increases were due
to continued strong adoption and usage of smartphones and data
applications as well as higher roaming volumes.
*Blended ARPU increased by $1.07 or 1.7 per cent to $62.49 as data ARPU
growth more than offset a 5.8 per cent voice ARPU decline. This is the
twelfth consecutive quarter of year-over-year growth in blended ARPU.
*Monthly postpaid subscriber churn declined 11 basis points to 0.99 per
cent, the lowest in over six years, while blended monthly churn was down
by eight basis points to 1.36 per cent. TELUS' industry-low churn reflects
the company's successful Customers First service approach, investments in
retention, and lower churn on smartphones.
*Postpaid net additions of 106,000 were partially offset by a modest loss
of 2,000 lower-ARPU prepaid subscribers for net additions of 104,000,
compared to 111,000 a year ago. Total wireless subscribers was up 3.3 per
cent from a year ago to 7.8 million, while the proportion of high-value
postpaid subscribers grew to 86 per cent of the base. Smartphone
subscribers now represent 75 per cent of TELUS' postpaid base, up from 63
per cent a year ago.
*Reported wireless EBITDA of $680 million increased by $42 million or 6.6
per cent over last year due to network revenue growth. The wireless EBITDA
margin, based on total network revenue, increased by 60 basis points to
46.8 per cent. EBITDA excluding restructuring and other like costs
increased by $45 million or seven per cent to $684 million or 47.0 per
cent on total network revenue.
*Wireless simple cash flow (EBITDA less capital expenditures) increased by
$23million to $486million in the quarter due to higher EBITDA.
*External wireline revenues increased by $38million or 3.0 per cent to
$1.31 billion in the third 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 8.7 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 ARPU growth, and TELUS Health services.
*Total TV additions of 34,000 were lower by 8,000 from the same quarter
last year, while the total TV subscriber base of 776,000 increased by
139,000 or 22 per cent from a year ago.
*High-speed Internet net additions of 19,000 were lower by 7,000 from the
same quarter a year ago, while TELUS' high-speed subscriber base of 1.37
million is up 71,000 or 5.4 per cent from a year ago.
*Total network access lines declined by 4.8 per cent from a year ago to
3.3million. Residential lines were down 7.4 per cent over last year,
reflecting ongoing wireless and Internet substitution and competition.
Business lines were down 1.8 per cent over last year, reflecting ongoing
price-based competition in the small and medium business market and
customer adoption of IP services.
*Reported wireline EBITDA of $355million increased by $3million or 0.8
per cent year over year, reflecting improving Optik TV and Internet
margins helped by subscriber and ARPU growth, as well as ongoing operating
efficiency initiatives. EBITDA excluding restructuring and other like
costs increased by $12 million or 3.4 per cent to $366 million.
*Wireline simple cash flow (EBITDA less capital expenditures) decreased
year-over-year by $62million due to higher capital expenditures to
support business service growth and investments in broadband
infrastructure including connecting more homes and businesses directly to
fibre optic cable.
CORPORATE AND BUSINESS DEVELOPMENTS
TELUS named as a 2013 component of the Dow Jones Sustainability North America
TELUS has been named to the Dow Jones Sustainability North America Index (DJSI
North America) for the 13th consecutive year. TELUS is the only Canadian
telecom company and one of three North American telecom companies to be named
to the index. TELUS received a score of 100 per cent in both Risk and Crisis
Management as well as in Corporate Citizenship and Philanthropy. TELUS also
had the best industry score for Codes of Conduct/Compliance/Corruption and
Bribery. The DJSI North America tracks the performance of the top 20 per cent
of the 600 largest Canadian and American companies in the S&P Global Broad
Market Index that lead the field in terms of sustainability.
Dividend Declaration - increased to 36 cents per quarter, up 12.5 percent from
a year ago
The TELUS Board of Directors has declared a quarterly dividend increase of two
cents to 36 cents ($0.36) Canadian per share on the issued and outstanding
common shares of the Company payable on January 2, 2014 to holders of record
at the close of business on December 11, 2013. The new dividend represents a
four cent or 12.5 per cent increase from the $0.32 quarterly dividend paid on
January 2, 2013.
This new quarterly dividend is the sixth increase under TELUS' dividend growth
program originally announced in May 2011 and recently extended through 2016,
wherein the company plans to continue with two dividend increases per year,
normally announced in May and November, 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 TELUS' 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 (TSX: T, NYSE: TU) is a leading national telecommunications company in
Canada, with $11.3 billion of annual revenue and 13.3million customer
connections, including 7.8million wireless subscribers, 3.3million wireline
network access lines, 1.4million Internet subscribers and 776,000 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.
For more information about TELUS, please visit telus.com.
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' third quarter 2013 conference call is scheduled for November 8, 2013 at
11 a.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 November 8
until December 7 at 1-855-201-2300. Please use reference number 1052450# and
access code 35175. An archive of the webcast will also be available at
telus.com/investors and a transcript will be posted on the website within a
few business days.
SOURCE TELUS Corporation
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