TELUS reports operational and financial results for fourth quarter 2023; announces 2024 financial targets

Vancouver, B.C. – TELUS Corporation today released its unaudited results for the fourth quarter of 2023. Consolidated operating revenues and other income increased by 2.8 per cent over the same period a year ago to $5.2 billion. This growth was driven by higher service revenues in our two reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences – TELUS International (DLCX). TTech service revenue growth was driven by: (i) higher mobile network revenues attributable to subscriber and moderating roaming revenue growth; (ii) an increase in fixed data service revenues, resulting from subscriber growth and higher, albeit moderating, revenue per internet customer; and (iii) growth in health services revenues. These factors were partly offset by lower TV and fixed legacy voice services revenues, primarily due to technological substitution, as well as macroeconomic and competitive pressures impacting consumer purchasing decisions across various products. Higher DLCX operating revenues resulted from expanded services for certain existing clients and growth from new clients, including new clients from our acquisition of WillowTree on January 3, 2023, and favourable foreign exchange impacts, which collectively more than offset the impact of some DLCX clients managing their own costs thus reducing our revenue. See Fourth Quarter 2023 Operating Highlights within this news release for a discussion on TTech and DLCX results.

“Throughout 2023, our team successfully navigated a highly competitive industry, overcame a challenging macroeconomic landscape and a dynamic regulatory environment, to achieve strong financial and operational results across our business. Indeed, our results for the year demonstrate execution strength in our TTech business segment, characterized by the potent combination of leading customer growth, complemented by strong operational and financial results, and enhanced by our significant and ongoing focus on cost efficiency. These results were buttressed by improving and resilient fourth quarter profitability from our DLCX segment, despite the continued challenging macroeconomic operating environment faced by TELUS International,” said Darren Entwistle, President and CEO. “Robust performance in our core telecom business is underpinned by our globally leading broadband networks and superior customers-first culture. This enabled our strongest fourth quarter customer growth on record, with total net additions of 404,000, up 34 per cent, year-over-year, driven by strong demand for our leading portfolio of bundled services across Mobility and Fixed services. The fourth quarter capped off a record setting year for customer net additions of 1,266,000, surpassing our previous record high in 2022 by more than 21 per cent, and marked the second consecutive year our team delivered more than one million new customer additions. These strong results included robust Fixed subscriber growth of 259,000; our highest Mobile Phone net additions since 2010 with 443,000 net new customers; and all-time record connected device net additions of 564,000. TELUS’ industry-leading growth reflects the consistent potency of our operational execution, and our unmatched bundled product offerings across Mobile and Home. Our team’s passion for delivering customer service excellence contributed to continued strong loyalty across our key product lines, once again this quarter. Notably, postpaid mobile phone churn of 0.87 per cent for the full year marks the tenth consecutive year at less than one per cent.”

“Today, TI reported its fourth quarter and full-year 2023 results that featured solid revenue growth, notwithstanding a continued challenging operating environment. Importantly, TI delivered on its commitment to improve profitability in the second half of the year, exiting the year with a strong margin profile more aligned with its historical trends,” continued Darren. “Our synergistic relationship offered meaningful support for TI’s business, alongside momentum fuelled by the AI solutions that TI provides to companies like Google, its second largest client, offsetting an otherwise softer demand environment. The improvement in TI’s profitability also reflected meaningful cost efficiency efforts implemented during the year, realigning its cost base to better meet the near-term demand environment. Over the long-term, TI remains an exciting growth story, with meaningful opportunities driven by digital transformation, underpinned by robust AI capabilities.”

“At our TELUS Health business unit, we achieved fourth quarter revenues of $432 million, alongside 24 per cent EBITDA contribution growth, delivering total annual revenues of $1.7 billion along with 11 per cent EBITDA contribution growth. We continue to execute on our global growth strategy and demonstrate our progress towards our goal to be the most trusted wellbeing company in the world. This includes our healthcare services and programs now covering nearly 70 million lives around the world, an increase of 1.8 million year-over-year; supporting health outcomes on 610 million digital health transactions during 2023, up five per cent over last year; and increasing our virtual care membership to 5.6 million, up more than 24 per cent over the prior year. Since acquiring LifeWorks in 2022, our team has committed to driving $427 million in annualized synergies by the end of 2025. This includes $327 million expected to be realized through operating cost synergies from continued integration, and optimizing our organizational structure, systems and real estate. Furthermore, we anticipate $100 million from longer-term revenue synergies driven by cross-selling health services products within our TELUS Health customer base, and throughout our TELUS portfolio of assets, including TELUS International. To date, we have achieved $233 million in combined annualized synergies, towards our overall objective. These synergies will allow us to re-invest in the growth of our business and improve our profitability, while we focus on delivering efficient, secure and best-in-class health and wellness solutions to our customers.”

“Our all-time record customer growth is underpinned by our dedicated team who are passionate about delivering superior service offerings and digital capabilities, over our world-leading wireless and PureFibre broadband networks,” added Darren. “Importantly, TELUS’ networks continued to earn global accolades in 2023 for reliability, expansiveness, speed and superiority, including multi-year recognition from independent, third-party organizations, such as Opensignal and PCMag. TELUS has been recognized as Canada’s most awarded network by Opensignal over six consecutive years, while PCMag named TELUS Canada’s best mobile carrier, and Best mobile carrier for business, in their annual Readers’ Choice Awards. With respect to fixed, PCMag recognized TELUS as the Fastest Internet Service Provider (ISP) in Canada for the fourth consecutive year in 2023. These accolades illustrate the TELUS team’s steadfast commitment to connecting Canadians to the people and information that matter most.”

Darren further commented, “The generational broadband network investments that TELUS has made over the last decade will continue to drive extensive socio-economic benefits for Canadians in communities from coast-to-coast, while underpinning the continued advancement of our financial and operational performance. These investments power our team’s ability to consistently drive profitable growth over the long-term, on the back of our differentiated asset base, best-in-class customer experience, and world-leading networks, alongside our unique growth businesses. This provides us with confidence in the robust outlook for our business and delivering on the annual targets for 2024 that we have announced today. These include TTech Operating Revenues and Adjusted EBITDA increases of 2 to 4 per cent and 5.5 to 7.5 per cent, respectively; Consolidated Capital Expenditures of approximately $2.6 billion; alongside Consolidated Free Cash Flow of approximately $2.3 billion, up circa 30 per cent over 2023, bolstered by strong EBITDA growth and stable capital investments. Our outlook for 2024 will be supported by the 2024 targets announced this morning by TI, with revenue and EBITDA growth of 3 to 5 per cent and 7 to 10 per cent, respectively, and industry leading free cash flow yield in line with TI’s historical average. Combining our outlook for TTech and TI, Consolidated Operating Revenues and Adjusted EBITDA are expected to grow at similar rates approximate to our TTech outlook. Furthermore, the unparalleled skill, innovation, grit and execution excellence of our team, on our consistent and winning strategy, underpins our leading multi-year dividend growth program, now in its fourteenth year, through to the end of 2025.”

“To further buttress the sustainability of our consistently strong performance, against the backdrop of the rapid transformation in our industry due to the evolving regulatory, competitive and macroeconomic environment that we currently face, we continue to focus on executing the extensive efficiency and effectiveness initiative across TELUS, initially announced in August. Importantly, the transformational investments we have prudently made over the course of more than a decade in building the best culture, and enabling industry-leading customer experiences over our globally leading wireless and PureFibre broadband networks, allowed us to accelerate our well-progressed plans to digitally revolutionize our business and further streamline our operating costs. Our team’s grit, resilience and ability to embrace change and continuously evolve the way we operate have enabled us to achieve our targeted team member reductions in 2023, with the full run-rate of annualized cost savings expected to be realized in the second quarter of 2024. Furthermore, our focus on cost efficiency is continuing into 2024, targeting incremental restructuring investments of approximately $300 million. While these come with many difficult decisions, we continue to leverage our decades-long track record of successfully navigating exogenous factors, in order to rise to the current challenges and future proof our business.”

“Against the backdrop of these ongoing challenges, our TELUS family continues to bring our caring culture to life,” said Darren. “Last year alone, our team members and retirees logged an unprecedented 1.5 million hours of volunteerism in communities across the globe — an unparalleled accomplishment that is more than any other company in the world. Importantly, this represents the fifth consecutive year that we have collectively contributed over one million hours. This brings us to a total of $1.7 billion gifted in cash, in-kind contributions, time and support programs, and 16 million hours, which equates to 2.2 million days of volunteering since 2000. Due, in part, to our team’s unsurpassed dedication to putting our communities and customers first, the TELUS brand has increased in value from $10.3 billion in 2023 to circa $11.5 billion today as ranked in the Brand Finance 2024 global report. Notably, TELUS moved up two places to become the most valuable telco brand in Canada and the eighth most valuable brand, nationally.” 

Doug French, Executive Vice-president and CFO said, “In the fourth quarter of 2023, our team achieved strong operational and financial results, supported by our consistent focus on profitable customer growth and our ongoing focus on cost efficiency. For the year, operating revenue growth of 9.4 per cent was effectively aligned with the lower end of our updated guidance, while Adjusted EBITDA landed within the targeted range. Cash flow from operations decreased by 6.5 per cent and free cash flow increased by 38 per cent to approximately $1.8 billion, surpassing our updated target of approximately $1.5 billion. The higher free cash flow result for the year reflects the timing of restructuring payments of approximately $200 million related to our efficiency program in 2023 that will flow into 2024 along with a lower-than-expected cash impact from device financing.” 

Doug added, “In the fourth quarter, we purposefully accelerated capital expenditures, focusing additional investments in digitization and platform development, particularly within key growth areas of our business, along with additional investments to expand the reach of our PureFibre network within targeted communities. These additional investments will further enhance our go-to-market opportunities as we begin the new year. Our team also continued to execute against our significant cost efficiency program focused on driving sustainable EBITDA expansion, margin enhancements and cash flow generation. As we head into 2024, cost efficiency will remain a key priority as we identify further opportunities across our organization.”

“Our continued strong operational and financial performance supports our robust balance sheet and liquidity position” added Doug. “Our debt maturity schedule is a testament to our prudent financial planning. With the average maturity of our long-term debt of over 11 years, and 87 per cent of our debt being fixed, we are well-positioned to successfully navigate a dynamic operating environment with resilience and foresight. Furthermore, the average cost of our long-term debt of 4.33 per cent at the end of 2023 remains low relative to current rates. Our balance sheet in 2024 will be further enhanced by the meaningful increase in free cash flow alongside strong EBITDA growth, and supported by our stable core capital expenditure outlook of approximately $2.6 billion, excluding investments related to real estate development initiatives. As a percentage of revenue, our consolidated capital intensity in 2024 will remain low and in the 13 per cent range. This strong position further supports our industry-leading dividend growth program now in place through 2025, along with deleveraging our balance sheet while continuing to make strategic investments to continue advancing our winning and sustainable growth strategy.”

“For 2024, we have established ambitious financial targets, building off our leading growth profile and operating execution excellence. Our financial outlook reflects continued healthy growth within our core TTech business as we maintain our consistent focus on profitable customer growth driven by continued demand for our superior bundled offerings over our leading broadband networks. Furthermore, in 2024, we anticipate improving financial contributions from TELUS International, as well as from TELUS Health and TELUS Agriculture & Consumer Goods,” Doug concluded.

To view the full release in PDF format, please download here.