) reported third-quarter 2013 adjusted earnings per ADS of 56
cents (58 Canadian cents per share), which were ahead of the
Zacks Consensus Estimate of 52 cents. Adjusted earnings increased
18.4% from 49 Canadian cents (ADS of 49 cents) in the year-ago
Adjusted earnings excluded the impact of losses related to
restructuring and other expenses as well as income tax-related
Total revenue grew 3.6% year over year to $2.76 billion
(C$2.87 billion) but marginally missed the Zacks Consensus
Estimate of $2.78 billion. The year-over-year increase was backed
by higher revenues from wireless and wireline segments. The
strength also came on the back of continuous subscriber addition
and higher ARPU across wireless, Optik TV and high-speed Internet
Quarterly adjusted EBITDA grew 5.7% year over year to C$1,050
million ($1,010 million), resulting in an EBITDA margin of 36.5%,
down 20 basis points.
revenues rose 5.2% year over year to C$1.44 billion ($1.39
billion) in the reported quarter driven by growth in subscribers
and higher ARPU.
Within network revenues, data revenues jumped 17.0% year over
year to C$637.0 million ($613.0 million) on continuous adoption
of smartphones and related data services and higher data roaming
revenues. Voice revenues slid 5.8% year over year due to
declining voice average revenue per user (ARPU).
In the third quarter, ARPU grew 1.7% year over year to C$62.49
($60.13), primarily attributable to higher data ARPU (up 13.0%
year over year), which more than offset lower voice ARPU (down
5.8%). The monthly subscriber churn (customer switch) declined to
0.99% from 1.10% in the year-ago quarter on the back of
successful Customer First service approach, investments in client
retention and lower smartphone churn.
Quarterly net wireless subscriber addition was 106,000,
reflecting a decline of 4.5% from the year-ago quarter. Telus
lost 2,000 net prepaid customers in the third quarter while net
post-paid subscriber addition totaled 104,000.
Telus had 7.8 million wireless subscribers (up 3.3% year over
year) including 6.71 million post-paid customers and $1.09
million prepaid customers at the end of the reported quarter.
revenues increased 3.0% year over year to C$1.31 billion ($1.26
billion) in the reported quarter on strong growth in data
services revenues, partially offset by deteriorating legacy voice
Data and equipment revenues climbed 8.7% year over year owing
to healthy growth of Telus TV subscribers, high speed Internet
and enhanced data services along with increased TV and Internet
Network access lines declined 4.8% year over year to 3.3
million while residential lines reported an annualized drop of
7.4%hurt by on-going industry-wide price competition and shift to
wireless and Internet-based services. Business lines were down
1.8% year over year due to the ongoing price based competition in
the small and medium business market and customer adaptation of
IP based services.
During the quarter, Telus added 34,000 TV subscribers to reach
776,000 customers (up 22.0% year over year). Net high-speed
Internet subscriber addition was 19,000, bringing the total
number of customers at the end of the third quarter to 1.37
million (up 5.4% year over year).
Telus ended the quarter with cash and investments of C$32
million ($30.8 million) compared with C$107 ($106 million)
million at the end of 2012. Net debt increased to C$7.31 billion
($7.04 billion) from C$6.56 billion ($6.59 billion) in the
year-ago quarter. Net debt to EBITDA (excluding restructuring
costs) increased to 1.8 times from 1.7 times in the year-ago
quarter and was within the company's long-term target of 1.5−2
During the third quarter, Telus generated free cash flow of
C$365.0 million ($351.2 million), exhibiting an annualized
decline of 14.3%. Capital expenditure was C$555 million ($534.1
million) in the third quarter compared with C$471 million ($473
million) in the year-ago quarter.
Dividend & Share Buyback
The company's board of directors declared a quarterly dividend
increase of 2 Canadian cents to 36 Canadian cents payable on Jan
2, 2014 to shareholders of record as on Dec 11, 2013.
During the quarter, the company returned $941 million to
shareholders including $222 million in dividends and $719 million
in share repurchases.
We believe that the company's ongoing investments in the
expansion of LTE and increased rollout of smartphones and
Internet data centers will fuel strong 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 remain 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. Competitive threats and reduced
roaming charges are other impediments which make us remain
sidelined on the stock.
Telus, currently carries a Zacks Rank #3 (Hold).
Other stocks worth considering are
Vodafone Group Plc.
Shenandoah Telecommunications Co.
). ORAN and SHEN carry a Zacks Rank #1 (Strong Buy) while VOD
carries a Zacks Rank #2 (Buy).
ORANGE-ADR (ORAN): Free Stock Analysis Report
SHENANDOAH TELE (SHEN): Free Stock Analysis
TELUS CORP (TU): Free Stock Analysis Report
VODAFONE GP PLC (VOD): Free Stock Analysis
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