TELUS (TU) Tops Q1 Earnings & Revenues, Hikes Dividend - Analyst Blog

TELUS Corp.TU reported strong first-quarter 2015 financial results with both the top line and the bottom line surpassing the respective Zacks Consensus Estimate.

GAAP net income in the first quarter of 2015 was approximately $343.7 million or 56 cents per share compared with $312.3 million or 51 cents per share in the year-ago quarter. The company reported first-quarter earnings per ADS (American Depositary Share) of 58 cents outpacing the Zacks Consensus Estimate of 54 cents.

Total revenue came in at approximately $2,508 million, up 4.6% year over year and also above the Zacks Consensus Estimate of $2,479 million. Service revenues stood at $2,343.3 million, up 4.7%. Equipment revenues were $150.8 million, up 5.8% and Other revenues totaled $14.1 million, down 19%.

Quarterly operating income was $562.4 million, up 10.6% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $954.2 million, up 6.2% year over year. Quarterly adjusted EBITDA margin stood at 38% as against 37.5% in the prior-year quarter.

Dividend Raised

In the first quarter of 2015, TELUS returned $400 million to shareholders including $244 million in dividends paid and $156 million in share purchases. The company's board of directors has declared a quarterly dividend of 42 Canadian cents per share on the issued and outstanding common shares of the company payable on Jul 2, 2015 to shareholders of record at the close of business on Jun 10, 2015. This highlights an improvement of 10.5% over the existing dividend rate of 38 Canadian cents per share.

Cash Flow & Liquidity

During the first quarter of 2015, TELUS generated approximately $594.7 million of cash from operations, up 20.1% year over year. Free cash flow, in the reported quarter, was around $224.5 million, down 6.9% year over year. TELUS exited the reported quarter with $1,370.9 million of cash & marketable securities and $9,042.3 million of outstanding debt compared with $49.7 million of cash & marketable securities and $7,583.1 million of outstanding debt at the end of 2014. At the end of first-quarter 2015, the debt-to-capitalization ratio was 0.58 against 0.55 at the end of 2014.

Segmental Results

Wireless revenues rose 7.5% year over year to approximately $1,396.5 million in the reported quarter. Wireless network revenues grew 6.4% year over year to $1,271.4 million. Equipment and Other revenues surged 22.3% to around $113.5 million. Intersegment network revenues climbed 7.7% to $11.6 million. Within Network revenues, data revenues grew 19% while Voice revenues slid 5.3%.

Blended ARPU (average revenue per month) grew 3.2% year over year to around $51.64. The monthly blended subscriber churn rate improved to 1.28% from 1.50% in the year-ago quarter. Postpaid customer churn rate was 0.91% compared with 0.99% in the year-ago quarter.

Net wireless subscriber addition in the reported quarter was 8,000, down 20% year over year. Postpaid customer net addition was 37,000, down 22.9% year over year. TELUS lost 29,000 prepaid customers in the first quarter against a loss of 38,000 in the year-ago quarter. As of Mar 31, 2015, TELUS had 8.289 million wireless subscribers, up 3.1% year over year. Postpaid users were 7.145 million, up 5.1% and prepaid users were 1.144 million, down 7.7%.

Wireline revenues increased 1.3% year over year to approximately $1,158.8 million. Data service & equipment revenues came in at $748 million, up 7.2%. Voice revenues stood at $316.4 million, down 7.5%. Other revenues were $46.4 million, down 16.7% and Intersegment revenues grossed $35.6 million, up 4.9%.

During the reported quarter, TELUS added 21,000 TV subscribers, reaching the total count to 937,000 customers (up 11.3% year over year). High-speed Internet subscriber addition was 23,000, reaching the total tally at the first quarter end to 1.498 million (up 5.8% year over year).

Other Stock to Consider

TELUS currently carries a Zacks Rank #2 (Buy). Other well-performing stocks in the same industry include Verizon Communications Inc. VZ , Level 3 Communications Inc. LVLT and Comcast Corp. CMCSA . All three stocks currently carry a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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