NOVEMBER 6, 2020

TELUS reports operational and financial results for third quarter 2020

Industry-leading customer growth of 277,000 net additions, representing TELUS’ highest quarter on record for combined wireless and wireline loading, driven by best-in-class customer experience over a world-leading network, powered by a leading team
Total wireless net additions of 198,000, including 111,000 high-quality mobile phone net additions, flat to the prior year, and 87,000 mobile connected devices, up 5,000; low blended mobile phone churn below 1 per cent for the third consecutive quarter
Industry best wireline net additions of 79,000, inclusive of 50,000 internet net additions representing the highest internet loading quarter since 2002
Consolidated revenue growth of 7.7 per cent and EBITDA decline of 0.6 per cent, reflective of consistent execution and resiliency in a challenging operating environment; year-to-date revenue and EBITDA growth of 5.6 per cent and 0.3 per cent respectively
Quarterly dividend increased to $0.3112 per share, representing an approximate 7 per cent increase as TELUS resumes its leading multi-year dividend growth program, supported by a robust capital structure, strong liquidity position, and healthy cash flow generation
Building on our strong and consistent operating and financial momentum, TELUS expects to achieve 2020 free cash flow at the lower end of our original target range of $1.4 to $1.7 billion
TELUS today released its unaudited results for the third quarter of 2020. For the quarter, consolidated operating revenue of $4.0 billion increased by 7.7 per cent over the same period a year ago. Earnings before interest, income taxes, depreciation and amortization (EBITDA) decreased by 3.1 per cent to $1.4 billion while Adjusted EBITDA was down 0.6 per cent. This decline reflects multiple impacts from the COVID-19 pandemic, declines in wireline legacy voice and legacy data services and higher employee benefits and other costs including support for business acquisitions. This was partly offset by: growth in wireline data service margins resulting from business acquisitions; expanded services and subscriber base growth; increased organic and inorganic EBITDA contribution from TELUS International (TI) business growth; and enhanced cost efficiency programs.
“TELUS once again achieved strong operational and financial results in the third quarter, characterized by excellent execution, resulting in industry-leading and record high customer growth of over 277,000 net new additions,” said Darren Entwistle, President and CEO. “This accomplishment, realized against the backdrop of an unprecedented operating environment as a result of the global pandemic, reflects the effectiveness of our world-leading performance culture, underpinned by our highly engaged team. TELUS’ recent recognition as the highest ranking Canadian organization on Forbes’ World’s Best Employers ranking is a testament to the skill, passion and grit of our high-performing team around the world.”
“Leveraging our best-in-class customer service and strong digital capabilities, we continued to achieve robust customer growth in the quarter, including 111,000 high-quality mobile phone net additions and 79,000 wireline customer additions, driven by 50,000 internet, 19,000 TV and 18,000 security net additions, in addition to the lowest residential voice net losses since 2004. This was supported by strong and enhanced customer loyalty across our key product lines, including blended mobile phone and internet churn both below one per cent, and TV churn of one per cent, backed by our world-leading wireless and fibre broadband networks.
”Darren added, “TELUS’ broadband networks continue to perform exceedingly well through the COVID-19 health crisis, and the efficacy of our ongoing technology investments is reflected in numerous awards from leading independent network authorities. Notably, UK-based Opensignal ranked TELUS as having the fastest network in the world in their Global Mobile Network Experience Awards, stating that TELUS’ 4G LTE network speeds surpass not only our Canadian competitors, but they also exceed the 5G network speeds of the top wireless carriers in the United States. This award builds on our multiple third-party acknowledgements for wireless network excellence from U.S.-based PCMag and Ookla, as well as Canada-based Tutela, all received every year for three or more years. Our PureFibre network is receiving similar recognition, with PCMag ranking TELUS as the fastest internet service provider (ISP) in Canada, further reinforcing TELUS’ leadership as Canada’s Best Gaming ISP for 2020, amongst major providers, as announced by PCMag earlier this year. As we continue to rollout our globally leading 5G and fibre networks in the months and years to come, Canadians will have access to exceptional speed, quality and coverage that will catalyse dramatic innovations in health, educational, environmental and socio-economic outcomes for the benefit of Canadians. Importantly, the growing ubiquity of our broadband technology will amplify our entrepreneurial spirit; unleash human productivity; and drive the economic growth and diversity that is key to Canada’s fiscal recovery.”
“Today, we are announcing the reinstatement of our multi-year dividend growth program, now in its tenth year and targeting annual growth between seven and 10 per cent through 2022. The 7 per cent increase reflects our confidence in the outlook for our business, the sustainability of strong results, as well as our robust free cash flow generation and expected future free cash flow expansion. Today’s increase is the 19th since 2011, and reinforces the strength of our financial and operational performance, which enable us to successfully execute on our industry-leading shareholder-friendly program in combination with a strong balance sheet. TELUS has now returned nearly $19 billion to shareholders, including $13.6 billion in dividends, representing approximately $15 per share since 2004.”
“Our TELUS team continues to manage the impacts of the pandemic, while taking care of our team members, customers and communities,” Darren expressed. “In this regard, we expanded our Internet for Good low cost, high-speed internet program, which is already accessible to economically challenged families and K-12 students, to also support Canadians living with disabilities. We have now enabled over 68,000 low-income family members and people with disabilities in B.C., Alberta and Quebec. Similarly, we extended our Mobility for Good program to all provinces across Canada, and now provide free smartphones and data plans to more than 20,000 youth who are making the difficult transition out of foster care. Moreover, we have distributed over 350,000 TELUS masks to help Canadians stay safe during the pandemic, and fundraised almost $400,000 this year for the TELUS Friendly Future Foundation to support COVID-19 health-related initiatives. Indeed, our TELUS teams’ passionate efforts to protect and support our communities and our customers was recognized by the Wall Street Journal, which ranked TELUS 29th in their 100 Most Sustainably Managed Companies in the World report, and 15th, globally, in the subcategory of social capital. TELUS is the only telecommunications company and one of only three Canadian companies named to this global list, further exemplifying our leadership in social capitalism and demonstrating that Canadians can count on the TELUS team, even during the most trying of times.”
Doug French, Executive Vice-president and Chief Financial Officer said, “In the third quarter, TELUS once again delivered a strong set of operational and financial results, during what has been an unprecedented time for all of us. Our third quarter results showcase the efficacy of our strategic focus on profitable customer growth, our strong and differentiated asset mix targeting high-growth verticals, and our proactive focus on operational effectiveness and margin accretive initiatives.”
"We have remained focused on maintaining a strong balance sheet to ensure financial flexibility amid an uncertain global economic environment,” Doug added. “In October, we leveraged attractive credit market conditions to successfully complete a $500 million debt offering at an attractive rate of 2.05 per cent, the lowest coupon on record for a Canadian BBB 10-year issuance. Our weighted average interest rate on long-term debt now sits at 3.85 per cent, down from 3.98 per cent one year ago, along with an average term to maturity of nearly 13 years. This strong financial position allows us to continue to pursue thoughtful and strategic growth initiatives, including our acquisition of Lionbridge AI announced today, as well as AFS Technologies, which further support TELUS’ long-term growth trajectory.”
“As we head into the final quarter of the year, and into 2021, we are well-positioned to build on the operating momentum established this year, taking the valuable learnings from the pandemic to enhance our go-to-market strategy and support our efforts to maintain TELUS’ track record of consistently delivering strong results quarter-in and quarter-out. Leveraging our highly differentiated and superior asset mix, we continue to focus on generating sustainable free cash flow growth, which will in turn support the consistent return of capital through our long-standing and transparent dividend growth program. Despite the challenging environment ahead, we are striving to deliver flat EBITDA growth for the full year 2020, along with strong free cash flow at the lower-end of our original target range,” Doug concluded.
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