TELUS reports strong operational and financial results for third quarter 2019

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, B.C. – 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.

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