TELUS reports strong operational and financial results for second quarter 2019
Consolidated revenue, EBITDA and net income growth of 4.2, 9.8 and 31 per cent, respectively (including impact of IFRS 16 in 2019)
Robust subscriber growth of 186,000 new customer additions, up 33 per cent and driven by customer service excellence and broadband network leadership
Strong wireless customer additions of 154,000, up 45 per cent, including 82,000 mobile phone additions, up 19 per cent, and 72,000 mobile connected devices additions
Consistent and industry-leading wireline customer additions of 32,000, reflecting 25,000 Internet and 16,000 TELUS TV net additions, and low residential voice losses of 9,000
Industry-leading customer loyalty with mobile phone churn of 1.01 per cent, along with low combined churn across mobile phone, Internet and TV
More than two million premises PureFibre enabled, representing approximately 64 per cent of our high speed broadband footprint and approaching 70 per cent by year-end
*Awards from Ookla and Tutela confirm our global network excellence, and build on the numerous major global network awards received consistently over recent years *
Vancouver, B.C. – TELUS Corporation today released its unaudited results for the second quarter of 2019. For the quarter, consolidated operating revenue of $3.6 billion increased by 4.2 per cent over the same period a year ago, driven by both wireless and wireline data services revenue growth. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 9.8 per cent to $1.4 billion due to higher wireless network revenue growth and wireless equipment margins, growth in wireline data service margins, higher EBITDA contribution from our customer care and business services (CCBS) and TELUS Health businesses, and the effects of implementing IFRS 16. This growth was partly offset by declines in wireline legacy voice and legacy data services. When excluding restructuring and other costs, Adjusted EBITDA was up 9.0 per cent. Applying a retrospective IFRS 16 simulation to fiscal 2018 results, pro forma Adjusted EBITDA growth was approximately 4.5 per cent, representing a margin of 39.0 per cent, up 20 basis points over last year.
For the quarter, net income of $520 million increased by 31 per cent over the same period a year ago due to EBITDA growth and lower income taxes, including a $121 million benefit from the revaluation of the deferred income tax liability for the multi-year reduction in the Alberta provincial corporate tax rate. This growth was partly offset by higher depreciation and amortization due to growth in our asset base, including from investments in our broadband technologies and business acquisitions, as well as increased financing costs, in part driven by higher foreign exchange losses due to the fluctuation in the Canadian dollar relative to the U.S. dollar. Additionally, $46 million of the increase in depreciation and $16 million of the increase in financing costs resulted from the application of IFRS 16 as we did not retrospectively adjust amounts reported for periods prior to fiscal 2019. Basic earnings per share (EPS) of $0.86 rose by 30 per cent over the same period last year. When excluding restructuring and other costs, as well as favourable income tax-related adjustments, Adjusted net income of $416 million was essentially unchanged over the same period a year ago, while adjusted basic EPS was $0.69.
“TELUS reported strong second quarter results, including robust subscriber net additions across our portfolio of growth services. This was anchored by the TELUS teams’ efforts to deliver a superior performance in respect of wireless and wireline customer loyalty,” said Darren Entwistle, President and CEO. “Industry-leading second quarter mobile phone churn of 1.01 per cent, and continued improvements in wireline loyalty, drove a low combined churn rate across mobile phone, Internet and TV of 1.05 per cent. Moreover, we realised the fewest residential voice losses in 15 years. These achievements contributed to strong customer growth in concert with continued value-creating financial results, supported by our team’s relentless focus on providing the best customer experience on our world-leading broadband networks. Indeed, earlier this week, TELUS was recognised as having the best mobile network in Canada, inclusive of the fastest speed and most expansive coverage, by Ookla. Furthermore, for the second quarter in a row, Tutela ranked TELUS number one for mobile experience in Canada. These accolades complement the additional major network awards TELUS has earned from J.D. Power, PCMag and OpenSignal – each received consecutively for two or more years – and reinforce the consistent superiority of our networks and the value of the ongoing generational investments we are making in broadband technologies.”
Mr. Entwistle added, “In early July, TELUS took a significant step forward in its unwavering commitment to put customers first by becoming the first national carrier to launch three innovative programs in combination, providing more value, simplicity and transparency to Canadians than ever before. Thanks to the passion and skill of our TELUS team, we launched Peace of Mind endless data rate plans, alongside our TELUS Family Discount offering and Easy Payment device financing. In addition to facilitating an enhanced customer experience on the path to 5G, these new mobility service offerings will support sustainable and profitable customer growth, enhanced bundling options and long-term financial performance. Moreover, the simplification attributes and device payment transparency will enable significant opportunities to further improve our cost structure and support operating margins.”
Mr. Entwistle further commented, “Through the consistent execution of our longstanding strategy, we are continuing to build on our track record of providing investors with the industry’s best multi-year dividend growth program, targeting annual dividend growth between seven and 10 per cent through to 2022 that is underpinned by our expectation of strong cash flow generation and growth from TELUS over this period. Indeed, our proven history of delivering on our industry-leading shareholder-friendly initiatives from the strong cash flow generated by our strategic investments, is underscored by TELUS having now returned $17 billion to shareholders, representing approximately $28 per share since 2004.”
“Importantly, we believe there is a truly synergistic relationship between what we do in business, in terms of driving positive outcomes for our customers and shareholders, and what we do to create healthier and more caring communities for our fellow citizens. This year, we are celebrating our 14th annual TELUS Days of Giving, and in the second quarter, more than 33,000 team members, retirees, family and friends volunteered at events in Canada and around the globe. Our team’s incredible compassion, giving with their hearts and their hands, is helping to make TELUS the most giving company in the world,” Mr. Entwistle concluded.
Doug French, Executive Vice-president and Chief Financial Officer said, “Our strong second quarter results for 2019 build on our solid execution in the first quarter and position our year-to-date financial performance in line with our 2019 consolidated financial targets. Free cash flow before income taxes is higher by 8 per cent for the first six months, driven by EBITDA growth and stable capital expenditures as we continue to make the right strategic investments to drive sustainable and profitable subscriber growth across our diverse and expanding product portfolios.”
“During the quarter, we took advantage of strong credit market conditions, successfully executing two financings used to early redeem our $1 billion Series CH notes due in July 2020. Subsequent to the early redemption and recent bond issues, the average term to maturity of our long-term debt stands at 12.8 years, our average weighted interest rate is down to a record low of 3.98 per cent, and we have no maturities in 2020, all of which further strengthens our balance sheet. As we look to the back half of 2019 and beyond, we will strive to continue balancing the interests of all our stakeholders as we execute on our strategy to further position TELUS for long-term success,” concluded Mr. French.
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