Telus has strong prospects in the Wireless segment backed by technology upgrades, extensive rollout of smartphones, attractive postpaid plans and 4G LTE network expansion. The company's investments in Optik TV and Internet business are expected to reap favorable results for its Wireline segment. Further, the introduction of shared data plans, the Customer First strategy and solid shareholder returns will likely work in favor of the stock. However, these positives might be somewhat mitigated by persistent access lines erosion. In addition, heightened competition from national as well as regional players and prepaid subscriber churn are compounding problems that need to be addressed going ahead. The stock is already trading near its 52-week high end, and thus has limited upward potential. We, thus, maintain a Neutral recommendation on Telus.
Telus Corporation is a leading Canadian telecom service provider based in Burnaby, British Columbia (with executive offices in Vancouver). The company is one of the largest telecom carriers in Canada (the largest in western Canada), covering 95% of the country's population. Telus provides wireless, wireline, and Internet communications services for voice and data to businesses and consumers. The company operates as the incumbent local exchange carrier (ILEC) in British Columbia, Alberta and parts of Quebec.
Telus currently serves approximately 13.4 million customers, including 3.2 million wireline network access lines, 7.9 million wireless subscribers, 1.43 million Internet customers and 865,000 Telus TV users. The company's national wireless network runs on the CDMA 2000 technology. Telus was the first wireless carrier in Canada to offer the Push-To-Talk' (PTT) service similar to Nextel's walkie-talkie service in the U.S. The company also offers Telus TV, which provides video and broadcast services to customers in select markets.
The company achieved a strong foothold in the Canadian healthcare telecom market through its acquisition of Emergis, a business process outsourcer specializing in healthcare and financial services. This acquisition strengthened Telus' industry solutions for healthcare and financial services. Furthermore, the acquisition of Toronto-based Fastvibe Corporation, a leading provider of innovative and superior quality web streaming solutions for businesses, has added a unique technical, event and production web management capability to the company's expertise.
Telus has expanded its retail network footprint with the acquisition of Black's Photo Corporation (Black's), a leading imaging and digital retailer in Canada. The acquisition has broadened the nationwide distribution apparatus of Telus' wireless products and services through its 113 retail stores spread across Canada. The addition of Black's retail outlets has increased the company's total store count to more than 1,000.
Telus reports operating results in two segments, namely, Telus Wireline and Telus Wireless. Wireline accounted for approximately 46.5% of the company's 2013 revenues with Wireless representing the remaining 53.5%. Following is a snapshot of the company's operating segments:
Telus Wireline: Offers voice services (local, long distance and call management), data, Internet (high-speed, dial-up and entertainment), video (Telus TV) and other services to consumers and businesses. The company provides hosting and infrastructure solutions and managed solutions (business security) as well as converged data and voice services. Telus' data solutions include IP networks, private line, network management and hosting services.
Telus Wireless: Offers digital wireless voice, data and Internet services on its high-speed network. Digital voice services include PCS postpaid, PCS prepaid and push-to-talk services while Internet and data services cover Telus Mobile TV, Telus Mobile Radio, Telus Mobile Music, web browsing, Windows Live Messenger, social networking and messaging services. The company also offers data devices such as smartphones and wireless connect cards.
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