Market Overview

TELUS reports strong operational and financial results for third quarter 2019

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Consolidated revenue higher by 2.6 per cent (excluding TELUS Garden gain in 2018); Consolidated EBITDA growth of 8.3 per cent

Industry-leading growth of 246,000 net additions, up 14 per cent and driven by our award winning network and leading customer service excellence

Strong wireless net additions of 193,000, up 13 per cent, including 111,000 mobile phone additions and 82,000 mobile connected device additions

Industry-leading wireline customer additions of 53,000 including 32,000 Internet, 19,000 TV and 14,000 Security net new clients, and stable residential voice losses of 12,000

Quarterly dividend increased to $0.5825 per share, our 18th dividend increase since our multi-year program commenced in 2011; $1.3 billion in dividends returned to shareholders in 2019

Capital expenditure guidance announced for 2020 and 2021, further advancing our broadband network leadership and supporting free cash flow expansion

VANCOUVER, British Columbia, Nov. 07, 2019 (GLOBE NEWSWIRE) -- TELUS Corporation today released its unaudited results for the third quarter of 2019. Consolidated operating revenue of $3.7 billion increased by 2.6 per cent when excluding the non-recurrence of equity income related to real estate joint ventures arising from the sale of TELUS Garden of $171 million in the third quarter of 2018. Including this equity income, consolidated operating revenue decreased by 2.0 per cent. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 6.3 per cent to $1.4 billion due to higher wireless network revenue growth, growth in wireline data service margins, higher EBITDA contribution from our customer care and business services (CCBS) and health businesses, and the effects of implementing IFRS 16. This growth was partly offset by declines in wireline legacy voice and legacy data services and decline in EBITDA contribution from our legacy business services. When excluding the equity income from the sale of TELUS Garden in the third quarter of 2018, as well as restructuring and other costs, including the $118 million donation to the TELUS Friendly Future Foundation in the third quarter of 2018, Adjusted EBITDA was up 8.3 per cent. Applying a retrospective IFRS 16 simulation to fiscal 2018 results, pro forma Adjusted EBITDA growth was approximately 4.1 per cent, representing a margin of 39.6 per cent, up 50 basis points over last year.

For the quarter, net income of $440 million decreased by 1.6 per cent over the same period last year and Basic earnings per share (EPS) of $0.72 decreased by 2.7 per cent as EBITDA growth was primarily offset by higher depreciation and amortization due to growth in our asset base, including from investments in our broadband technologies and business acquisitions. When excluding equity income related to the sale of TELUS Garden in the third quarter of 2018, restructuring and other costs, including the donation to the Friendly Future Foundation in the prior year period, favourable income tax-related adjustments and long-term debt prepayment premiums, adjusted net income of $458 million increased by 2.9 per cent over the same period a year ago, while adjusted basic EPS was $0.76, up 2.7 per cent.

"TELUS reported strong operational and financial results for the third quarter, including robust customer growth across both our wireless and wireline business segments. The expansion of our subscriber base by 246,000 customers was driven by high-quality mobile phone net additions, strong growth in connected device subscribers and industry-leading wireline net additions. TELUS' robust performance was backed by our team's unwavering focus on providing exceptional customer experiences, in combination with the ongoing generational investments we are making in our leading wireline and wireless broadband network, both of which are integral to the continued success of our long-term growth strategy."

Mr. Entwistle added, "The efficacy of our broadband technology investments is reflected in TELUS being recognized once again as having the fastest mobile network in Canada by Ookla as well as by PCMag for the third year in a row. Additionally, our team once again earned top marks from Opensignal for mobile network experiences in Canada, winning four of five categories, including 4G availability, video experience, speed and latency. These acknowledgements build on our outstanding record of achievement with respect to network excellence, having earned the top spot in all major mobile network reporting again this year, including J.D. Power and Tutela. These leading network rankings reinforce the consistent superiority of TELUS' broadband network available to Canadians across the country. Notably, in September, Opensignal assessed the mobile network experience of rural Canadian wireless consumers as compared to their urban counterparts across the country and globally, concluding that rural Canadians have access to speeds and availability that exceed or rival the overall figures of developed countries, and indeed get what they pay for. Opensignal went on to note that if rural Canada was a country, it would rank 12th in download speeds with rural Canadian users, on average, seeing faster 4G download speeds than mobile users in Sweden, New Zealand, France and 73 of the other countries they report on, including any region of the United States. We also outperform our neighbours to the south in terms of rate plan affordability, as our endless data plans are less expensive than comparable U.S. data plans, despite the fact that Canada has a larger, more challenging geography, and a smaller population density."

"Our dividend increase announced today reflects the eighteenth increase since 2011, and is the sixth in our most recent three-year dividend growth program, targeting annual growth between seven and 10 per cent through 2019. We have established an enviable track record in respect of an attractive balance sheet and strong operational performance, which enable us to successfully execute on our consistent, transparent and industry-leading shareholder-friendly program thus generating significant value for our shareholders," added Mr. Entwistle. "Notably, TELUS has now returned more than $17 billion to shareholders, including over $12 billion in dividends, representing approximately $29 per share since 2004. In May, we announced the extension of our multi-year dividend growth program from 2020 through 2022, again targeting annual growth of seven to 10 per cent, reflecting TELUS' confidence in future market opportunities stemming from our longstanding and successful growth strategy. Future dividend growth and affordability will also be supported by lower expected capital expenditures, in line with the preliminary guidance we are providing today for 2020 and 2021, and the resulting free cash flow expansion."

"Importantly, reflecting our team's belief that in order to do well in business, we must do good in our communities, nearly 43,000 team members, family and friends celebrated diversity in nearly 20 Pride events in communities from coast to coast. In addition, we continue to leverage our technology to create positive social outcomes, as evidenced by our team's efforts in the third quarter, providing nearly 5,500 low income families with low-cost, high-speed Internet; 1,000 youth aging out of foster care with a free smartphone and data plan; and more than 2,500 patient visits through our TELUS mobile health care clinics. In the third quarter alone, we donated nearly $1 million through TELUS Friendly Future Foundation grants, helping youth realize their potential. Thus far in 2019, our team has contributed nearly 55,000 days of volunteerism, bringing our total to 1.3 million days of giving since 2000. Moreover, thanks to our team's commitment to social and environmental responsibility, TELUS was named to the Dow Jones Sustainability World Index for the 4th consecutive year and to the North America Index for the 19th year in a row – a feat unequalled by any North American telecommunications or cable company," Mr. Entwistle concluded.

Doug French, Executive Vice-president and CFO said, "The superior execution of our customer experience-focus and data growth strategy, delivered another set of strong financial and operational results that are in line with 2019 annual financial targets. Our consistent strong performance is a testament to our ability to operationally launch new customer friendly offerings and the importance our customers place on the value of our superior broadband network and the growing number of advanced, data-focused services it enables – everything from TELUS PureFibre broadband connectivity to next generation services, including home and business security and automation."

Mr. French added, "Earlier this week, TELUS completed the acquisition of ADT Canada, the leading national provider of home and business security and automation solutions. This builds on TELUS' strategy to leverage its world-leading wireless and PureFibre network, supported by our industry-leading customer service, to enhance connected home, business, security, IoT, cybersecurity, smart buildings, smart cities and health services for all Canadians. Importantly, the ADT Canada acquisition not only expands and provides scale to TELUS' growing security business, but also supports the continued advancement of TELUS' health strategy. This includes enabling remote patient care with home health monitoring; and helping Canadians, notably elderly citizens, enjoy their independence with secure, connected technology in the comfort of their own home."

"As we look beyond the final quarter of 2019, we are announcing preliminary capital expenditure guidance for 2020 and 2021 of approximately $2.75 billion in each year. These investments reflect the continued expansion of our leading fibre footprint, and positions our converged network for the future capabilities that 5G networks will enable, while supporting free cash flow expansion. Looking further out we remain excited about the future cash flow opportunities as we increasingly near the completion of our generational fibre build, additionally supporting our dividend growth program and commitment to balancing the interests of all TELUS stakeholders," concluded Mr. French.

In wireless, revenues arising from contracts with customers increased by 1.1 per cent due to network revenue growth of 2.0 per cent driven by a 5.5 per cent increase in our subscriber base, partly offset by lower mobile phone ARPU from declining chargeable data usage and the competitive environment putting pressure on rate plans. External wireless operating revenue decreased by 2.9 per cent due to the non-recurrence of equity income related to the sale of TELUS Garden in the third quarter of 2018, of which 50 per cent of the total $171 million was allocated to each of the wireless and wireline segments. Excluding this non-recurring equity income of $85 million, external wireless operating revenues increased by 1.1 per cent.

In wireline, revenues arising from contracts with customers increased by 4.8 per cent due to data services revenue growth of 8.4 per cent. Data revenue growth was driven by higher customer care and business services (CCBS) revenues due to increased business volumes from expanded services for existing customers as well as customer growth, increased Internet and third wave data service revenues, reflecting higher revenue per customer and continued Internet subscriber growth. Additionally, increased health revenues driven by business acquisitions and expanded services for existing customers, revenues from our home and business smart technology (including security) service offerings and increased TV revenues from subscriber growth also contributed to data services revenue growth. External wireline operating revenue decreased by 0.9 per cent due to the non-recurrence of equity income related to the sale of TELUS Garden in the third quarter of 2018, of which $86 million was allocated to the wireline segment. Excluding this non-recurring equity income, wireline external operating revenues increased by 4.7 per cent.

In the quarter, we added 258,000 new wireless, Internet, TV and security customers, up 31,000 or 14 per cent over the same quarter a year ago. The higher net additions included 111,000 mobile phones, 82,000 mobile connected devices, as well as 32,000 Internet, 19,000 TV and 14,000 Security customers. Our total wireless subscriber base of more than 10 million is up 5.5 per cent over the last twelve months, reflecting a 3.1 per cent increase in our mobile phones subscriber base to nearly 8.7 million and a 23 per cent increase to our mobile connected devices subscriber base to more than 1.4 million. Additionally, our Internet connections are up 6.7 per cent over the last twelve months, approaching 2 million customers, our TV subscriber base of 1.1 million is higher by 7.1 per cent and our security customer base is up 52 per cent to over 100,000.                                                                                        

Consolidated capital expenditures of $748 million declined by 1.8 per cent primarily due to the timing of our fibre build activities. At the end of the quarter, approximately 2.14 million premises, or 67 per cent of our high-speed broadband footprint of approximately 3.2 million premises, were covered by TELUS PureFibre. This is an increase of approximately 400,000 PureFibre premises over the last twelve months.

Free cash flow of $320 million increased by 5.6 per cent over the same period a year ago, largely from EBITDA growth and the timing of device subsidy repayments and associated revenue recognition, including the introduction of TELUS Easy Payment device financing, partially offset by higher cash income taxes paid and increased interest paid. The higher interest paid was due to an increase in our long-term debt balances outstanding, partly offset by a decrease in the effective interest rate. Free cash flow before income taxes increased by 18 per cent to $417 million.

Consolidated Financial Highlights

C$ millions,
except per share amounts
Three months ended
September 30(1)
Per cent  
(unaudited) 2019 2018 change   
Operating revenues(2) 3,697 3,774 (2.0 )
Operating expenses before depreciation and amortization(3) 2,263 2,425 (6.7 )
EBITDA(4) 1,434 1,349 6.3  
Adjusted EBITDA(4)(5) 1,463 1,351 8.3  
Net income 440 447 (1.6 )
Adjusted net income(4) 458 445 2.9  
Net income attributable to common shares 433 443 (2.3 )
Basic EPS 0.72 0.74 (2.7 )
Adjusted basic EPS(4) 0.76 0.74 2.7  
Capital expenditures(6) 748 762 (1.8 )
Free cash flow before income taxes(4) 417 352 18.5  
Free cash flow(4)   320 303 5.6  
Total subscriber connections(7)(8) (thousands) 14,500 13,784 5.2  


(1) Our results for 2019 reflect the application of IFRS 16, Leases. Our results for periods prior to fiscal 2019 have not been retrospectively adjusted.
(2) Consolidated operating revenue for the third quarter of 2018 included non-recurring equity income related to real estate joint ventures of $171 million arising from the sale of TELUS Garden. Excluding this equity income, operating revenues for the third quarter of 2019 increased by 2.6 per cent.
(3) Operating expenses before depreciation and amortization for the third quarter of 2018 includes a $118 million donation to the TELUS Friendly Future Foundation. Excluding the donation, Operating expenses before depreciation and amortization decreased by 1.9 per cent.
(4) EBITDA, Adjusted net income, adjusted basic EPS and Free cash flow are non-GAAP measures and do not have any standardized meaning prescribed by IFRS-IASB. For further definitions and explanations of these measures, see ‘Non-GAAP and other financial measures' in this news release.
(5) Adjusted EBITDA for the third quarters of 2019 and 2018 excludes restructuring and other costs of $29 million and $173 million respectively. In the third quarter of 2018, the $118 million donation to the TELUS Friendly Future Foundation was recorded as part of other costs.
(6) Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and consequently differ from Cash payments for capital assets, excluding spectrum licences, as reported in the interim consolidated financial statements. Refer to Note 31 of the interim consolidated financial statements for further information.
(7) The sum of active mobile phone subscribers, mobile connected device subscribers, Internet access subscribers, residential voice subscribers, TV subscribers and security subscribers, measured at the end of the respective periods based on information in billing and other systems. Fourth quarter 2018 opening mobile phone subscriber connections have been adjusted to exclude an estimated 23,000 subscribers impacted by the CRTC's final pro-rating ruling in June 2018, which was effective October 1, 2018. During the first quarter of 2019, we adjusted cumulative Internet subscriber connections to add approximately 16,000 subscribers from acquisitions undertaken during the quarter. Effective for the third quarter of 2019, with retrospective application to the launch of TELUS-branded security services at the beginning of the third quarter of 2018, we have added security subscriber connections to our total subscriber connections.
(8) Effective for the first quarter of 2019, with retrospective application, we have revised our definition of a wireless subscriber and now report mobile phones and mobile connected devices as separate subscriber bases. As a result of the change, total subscribers and associated operating statistics (gross additions, net additions, churn, ABPU and ARPU) were adjusted to reflect (i) the movement of certain subscribers from the mobile phones subscriber base to the newly created mobile connected devices subscriber base, and (ii) the inclusion of previously undisclosed IoT and mobile health subscribers in our mobile connected devices subscriber base. For additional information on our subscriber definitions, see Section 11.2 Operating indicators in our third quarter 2019 Management's discussion and analysis (MD&A).

Third Quarter 2019 Operating Highlights

TELUS wireless

  • Revenues arising from contracts with customer increased by $23 million or 1.1 per cent due to growth in network revenue from a growing subscriber base. External operating revenue decreased by $62 million or 2.9 per cent in the third quarter of 2019 driven by lower Other operating income resulting from non-recurring equity income arising from the sale of TELUS Garden in third quarter of 2018. Excluding this non-recurring equity income, external wireless revenue was higher by 1.1 per cent due to aforementioned network revenue growth.
  • Network revenue increased by $31 million or 2.0 per cent year-over-year to $1.6 billion. This growth was driven by a 5.5 per cent increase in our subscriber base, partly offset by declining mobile phone ARPU as discussed below. Equipment and other service revenues decreased by $8 million or 1.6 per cent mainly due to lower volumes.
  • Mobile phone ABPU of $75.06 increased by 0.5 per cent due to our combined TELUS Easy Payment device financing, Peace of Mind endless data plans and TELUS Family Discounts offerings, with customers selecting plans with endless data or larger data buckets and higher value smartphones in the sales mix. These drivers were partly offset by declines in chargeable data usage, the impact of the competitive environment putting pressure on base rate plan prices in the current and prior periods and changes in our customer mix.
  • Mobile phone ARPU of $61.64 declined by 1.1 per cent as the declines in chargeable data usage, competitive pressures on base rate plan prices and changes in our customer mix mentioned above more than offset the increased number of customers selecting plans with endless or larger data buckets.
  • Mobile phone churn rate of 1.09 per cent increased by 6 basis points over the same period a year ago due to heightened competitive intensity during the seasonal promotional period and not matching uneconomic market offers by instead utilizing our innovative Easy Payment device financing program, Peace of Mind endless data plans, Bring-it-Back and TELUS Family Discounts offerings. The increase in the mobile phone churn rate was partially mitigated by our focus on executing customers first initiatives and retention programs, as well as our leading network quality.
  • Total subscriber net additions of 193,000 increased by 22,000 over the same period a year ago. Mobile phone net additions of 111,000 were lower by 10,000 over last year, as higher mobile phone gross additions were offset by higher mobile phone churn, reflecting our continued focus on margin accretive growth with the focus away from lower economic loading. Mobile connected device net additions of 82,000 increased by 32,000 year-over-year, driven by growth in our Internet of Things (IoT) offerings including the connected device growth arising from our subscribers expanding their IoT services to their growing customer bases, partly offset by less low or negative-margin tablet loading.
  • EBITDA of $970 million increased by $49 million or 5.3 per cent, while Adjusted EBITDA of $976 million increased by $64 million or 7.0 per cent over last year, reflecting higher network revenue growth driven by a larger subscriber base, savings from cost efficiency programs and the implementation of IFRS 16. Applying a retrospective IFRS 16 simulation to fiscal 2018 results, pro forma wireless Adjusted EBITDA growth was approximately 4.0 per cent.           

TELUS wireline

  • Revenues arising from contracts with customers increased by $73 million or 4.8 per cent driven by higher data services revenue. External operating revenue decreased by $14 million or 0.9 per cent in the third quarter of 2019 mainly driven by lower Other operating income resulting from the non-recurring equity income arising from the sale of TELUS Garden in third quarter of 2018. Excluding this non-recurring equity income, external wireline revenue was higher by 4.7 per cent due to the aforementioned growth in data services revenue.
  • Data services revenues increased by $98 million or 8.4 per cent, reflecting growth in CCBS revenues, primarily due to growth in business volumes resulting from expanded services for existing customers as well as customer growth, and increased Internet and third wave data service revenues, reflecting higher revenue per customer, as well as an increase in our Internet subscriber base. Additionally, increased health revenues, driven by both business acquisitions and expanded services for existing customers, revenues from our home and business smart technology (including security) lines of business and increased TV revenues also contributed to data services revenue growth. This growth was partly offset by the ongoing decline in legacy data service revenues.
  • Internet net additions of 32,000 were lower by 4,000 as consistent demand from consumers and businesses for our high-speed broadband services, partly due to the launch of our unlimited home Internet data offerings, as well as our continued focus on connecting more homes and businesses directly to fibre, was offset by heightened competitive intensity.
  • TV net additions of 19,000 increased slightly by 1,000 over the same quarter a year ago due to higher gross additi
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