) reported first-quarter 2013 adjusted earnings per ADS of 55
cents (55 Canadian cents per share), which were ahead of the
Zacks Consensus Estimate of 53 cents. Adjusted earnings increased
17% from 47 Canadian cents (47 cents) per share registered in the
TELUS CORP (TU): Free Stock Analysis Report
To read this article on Zacks.com click here.
Adjusted earnings for the reported quarter excluded the impact of
special item related to favorable income tax-related adjustments
of a penny per share.
The total revenue grew 4.8% year over year to $2.74 billion
(C$2.76 billion) but missed the Zacks Consensus Estimate of $2.76
billion. The year-over-year increase was buoyed by higher
revenues from wireless and wireline data services.
Quarterly adjusted EBITDA upped 5.4% year over year to C$1,034
million ($1,026 million), resulting in an EBITDA margin of 37.5%,
up 20 basis points.
revenues rose 6.5% year over year to C$1.48 billion ($1.47
billion) in the reported quarter driven by higher data revenue
Within network revenues, data revenues jumped 17.1% year over
year on continued strong adoption of smartphones like
) iPhone and related data plans, increased mobile Internet
devices and tablets, and higher data roaming revenues. Voice
revenues slid 0.3% year over year, due to falling voice average
revenue per user (ARPU).
In the first quarter, ARPU grew 2% year over year to C$60.04
($59.58), primarily attributable to higher data ARPU (up 12.0%
year over year) negated by lower voice ARPU (down 4.5%) to some
extent. The monthly subscriber churn (customer switch) improved
to 1.48% from 1.55% in the year-ago quarter on the back of
high-value client retention and lower smartphone churn.
Quarterly, net wireless subscriber addition was 374,000,
reflecting growth of 3% from the year-ago quarter. Telus lost
26,000 net prepaid customers in the first quarter compared with a
net loss of 41,000 in the year-ago quarter. Additionally, net
post-paid subscriber addition was 59,000 in the quarter,
representing a year-over -year decline of 6.3%.
Telus had 7.7 million wireless subscribers (up 4.6% year over
year), including 6.60 million post-paid customers ( up 6.6% year
over year) and $1.10 million prepaid customers (down 5.9% year
over year) at the end of the reported quarter.
revenues nudged up 2.8% year over year to C$1.33 billion ($1.32
billion) in the reported quarter due to strong growth in data
services and equipment revenues, partially offset by lower voice
local, voice long distance and other services and equipment
Data and equipment revenues climbed 9.0% year over year to C$764
million ($758 million) owing to healthy TV subscriber growth,
higher rates, enhanced Internet and data services, and increased
data equipment sales.
Voice local revenues fell 5.3% year over year to C$340 million
($337.4 million) while voice long-distance revenues dropped 8.2%
to C$101 million ($100.23 million), hurt by lower revenues from
basic access, ongoing industry-wide price competition, shift to
wireless and Internet-based services, and declining residential
During the quarter, Telus added 34,000 TV subscribers to reach
712,000 total customers (up 28.8% year over year). Net high-speed
Internet subscriber additions were 16,000, bringing the total
number of customers at the end of the first quarter to 1.3
million (up 6.8% year over year).
Telus ended the quarter with cash and investments of C$22 million
($21.8 million) compared with C$107 ($107 million) million at the
end of fiscal 2012. Net debt reduced to C$6.595 billion ($6.545
billion) compared with C$6.898 billion ($6.882 billion) in the
year ago quarter. Net debt to EBITDA (excluding restructuring
costs) decreased to 1.7 times from 1.8 times in the year-ago
quarter and was within the company's long-term target of 1.5−2
Telus generated free cash flow of C$ $1.3 billion ($1.29
billion), exhibiting an annualized growth of 12%. Capital
expenditure was C$467 million ($463 million) in the first quarter
compared to C$441 million ($440 million) in the year-ago period.
Dividend & Share Buybacks
The company's board of directors increased the quarterly dividend
by 11.5% to 34 Canadian Cents from 30.5 Canadian cents paid in
the corresponding year ago period. In addition, the company
increased its dividend growth program by another three years up
till 2016 with projection of semi-annual dividend growth of
Further, Telus expects to repurchase 15 million-share worth $500
million in 2013, which is expected to move upto $2 billion by
We believe that the company's ongoing investments in the
expansion of LTE and Internet data centers will fuel strong
future growth leading to more opportunities in the wireless and
cloud computing businesses. Likewise, in the wireline front,
Telus continues to focus on the efficiency of the Optik TV and
Optik High-Speed Internet broadband services, which remains to be
its strength in operations.
Nevertheless, persistent erosion in access lines in the wireline
segment and weak voice services in wireless might weigh on the
company's future earnings. Further, a weak Canadian economy,
competitive threats from players such as
), and reduced roaming charges keep us on the sidelines.