Telus Profit Beats Estimates on Wireless Customer Growth

Telus Corp. (T) reported third-quarter profit that beat analysts’ estimates as the wireless carrier gained more high-spending smartphone subscribers than predicted.

Excluding some costs and gains, earnings were 58 Canadian cents (55 cents) a share, the Vancouver-based company said today in a statement. The average of estimates compiled by Bloomberg was 54 cents. Sales climbed 3.6 percent to C$2.87 billion compared with the C$2.91 billion projected by analysts.

Chief Executive Officer Darren Entwistle has ignored the content-acquisition strategy of rivals at Rogers Communications Inc. (RCI/B) and BCE Inc. (BCE) and instead is plowing profits into increasing the speed of its wireless networks and returning more money to shareholders. Telus has been able to keep attracting smartphone customers and its stock has outpaced Rogers and BCE this year.

Telus added 106,000 wireless customers on contract during the quarter, compared with the 104,000 average estimate of analysts. Rogers, based in Toronto, added 64,000 subscribers in the quarter on that basis and Montreal-based BCE gained 102,714. Those two companies fell short of estimates, something they blamed in part on a government-mandated shift to two-year contracts from the traditional three-year plans.

Telus’s average revenue per contract user increased 1.7 percent to C$62.49 in the quarter.

The carrier’s shares rose 1.7 percent to C$36.90 at 4 p.m. in Toronto. The stock has climbed 14 percent this year, as BCE gained 8.7 percent and Rogers advanced 4.2 percent.

Public Mobile

Several small wireless carriers began operating in central Canada in recent years, aiming to woo customers away from the incumbents with no-frills calling plans. Telus last month agreed to buy Public Mobile for an undisclosed amount to boost subscriber growth.

Buying Public Mobile gives Telus sought-after wireless spectrum and more consumers, albeit prepaid customers who tend to spend less and change carriers more often, Chief Financial Officer John Gossling said in an interview today. It also provides tax credits, in the form of carry forwards from Public Mobile’s past operating losses, that Telus can use to reduce its tax bills in the future, he said.

The company’s bid to purchase Mobilicity has been blocked by the government, which says it won’t allow BCE, Telus or Rogers to amass more wireless spectrum by acquiring their struggling rivals until a moratorium on spectrum transfers ends next year. Gossling said Telus is still interested in Mobilicity’s AWS spectrum. He declined to comment on what measures Telus is taking to try and reach a deal.

Net income rose 10 percent to C$356 million, or 56 cents a share, from C$323 million, or 49 cents, a year earlier.

The company increased its quarterly dividend by 2 cents, or 5.9 percent, to 36 cents.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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