November 4, 2022

TELUS reports strong operational and financial results for third quarter 2022

Industry-leading total Mobile and Fixed customer growth of 347,000, up 27,000 over last year, and our strongest quarter on record, driven by higher year-over-year customer growth across our portfolio of leading Mobility and Fixed services

Strong, high-quality mobile phone net additions of 150,000, a 15,000 increase over the prior year, the best quarterly result since 2010; record high connected device net additions of 124,000, up 14,000 year-over-year

Robust wireline customer net additions of 73,000, powered by world-leading customer loyalty in combination with TELUS’ PureFibre network, including sustained momentum on accretive copper-to-fibre migrations as TELUS continues to successfully execute on its accelerated broadband expansion plan

Consolidated Revenue, Adjusted EBITDA, Net Income and Earnings Per Share growth of 10 per cent, 11 per cent, 54 per cent and 48 per cent, respectively, reflecting consistent execution excellence; strong Free Cash Flow growth of 63 per cent

TELUS International’s strong growth profile to be amplified by the acquisition of WillowTree, significantly enhancing our end-to-end transformation capabilities for customers around the world  

Quarterly dividend increased to $0.3511, an increase of 7.2 per cent over the same period last year, representing a yield of approximately 5 per cent at current share price, supported by leading Adjusted EBITDA growth and significant expected cash flow expansion beginning in 2023

Vancouver, B.C. –TELUS Corporation today released its unaudited results for the third quarter of 2022. Consolidated operating revenues and other income increased by 10per cent over the same period a year ago to $4.7 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 higher mobile network revenues, growth in health services revenues, increased data service revenues and growth in agriculture and consumer goods service revenues. Increased DLCX revenues resulted from growth from both expanded services for existing clients and growth from new clients. See Third Quarter 2022 Operating Highlights within this news release for a discussion on TTech and DLCX results.

"In the third quarter, the TELUS team once again demonstrated continued execution excellence, characterized by the potent combination of industry-leading customer growth, resulting in strong operational and financial results across our business," said Darren Entwistle, President and CEO. “Our robust performance reflects the chemistry of our globally leading broadband networks and customer-centric culture, which enabled our strongest quarter on record, with total customer net additions of 347,000, up more than 8 per cent, year-over-year. This included strong mobile phone net additions of 150,000, up 11 per cent over last year and the best quarterly result since the third quarter of 2010; record high connected device net additions of 124,000; and industry-leading total fixed net additions of 73,000. Our leading customer growth is underpinned by our consistent, industry-best client loyalty across our mobile and fixed product lines. Notably, again this quarter, blended mobile phone, PureFibre internet, security and voice churn were all at or below one per cent. Moreover, our industry-leading postpaid mobile phone churn of 0.76 per cent represents the eighth quarter out of the last 11 below 0.80 per cent.”

"Our results are backed by our highly differentiated and powerful asset mix geared towards high-growth, technology-oriented verticals,” continued Darren. “Despite a challenging macroeconomic environment, earlier today TELUS International (TI) once again announced solid double-digit revenue growth, coupled with leading profitability and robust cash flow in the third quarter. TI’s continued focus on profitable growth, powered by attractive end-to-end digital capabilities, position TI as a trusted advisor for premier digital customer experiences and IT services for its over 600 global clients. In October, TI announced an agreement to acquire WillowTree, a full service digital product provider, that will bolster TI's front end and design competencies, and unlock attractive cross-selling opportunities, while adding new marquee customers and further diversifying TI's enviable list of client partners. Importantly, WillowTree will augment our go-to-market transformation capabilities in respect of digital, cloud and software-based services that will be highly sought-after as we progress toward a period of economic recovery in the months to come. Furthermore, WillowTree’s software development capabilities will enhance TI’s ability to support and accelerate TELUS’ ongoing digital transformation and support key product development across our business, particularly within health and agriculture and consumer goods.”

“At TELUS Health, our team drove ongoing year-over-year health services revenue growth, while continuing to meaningfully scale our health operations as we improve health outcomes for citizens through access to better health information. This includes our healthcare programs covering over 60 million lives, inclusive of LifeWorks, an increase of more than 41 million over the third quarter last year; along with executing 143 million digital health transactions during the quarter, up 4 per cent over last year; and earning 1.7 million new virtual healthcare members in the last 12 months, increasing our virtual healthcare members to 4 million, up 74 per cent over the prior year. On September 1, 2022, we completed our acquisition of LifeWorks, welcoming their employees and customers into our TELUS Health family, and have already commenced integration to combine our respective skills and capabilities. This powerful combination creates a globally leading, end-to-end, digital-first employee primary and preventative healthcare, mental health and wellness platform covering more than 60 million lives in Canada and beyond. Customers will benefit from our team’s steadfast focus on providing exceptional customer experiences over our world-leading broadband networks, and as well, our consolidated engineering talent that will incorporate best-in-class data platform technologies to positively impact health outcomes for employees and their families, and our significantly expanded economies of scope and scale. This includes complementing LifeWorks’ international relationships with TI’s proven expertise in digital transformation and client service excellence, as well as their expansive client base and delivery teams spanning 30 countries, to extend our offerings to customers well beyond Canada. Our combined organizations, guided by a shared set of values, will provide employers with convenient, innovative and effective, data-driven primary and preventive care solutions for employees and their families to proactively manage their health and wellness, including their mental health, so that they can lead their healthiest and most productive professional and personal lives. LifeWorks brings significant benefits to TELUS Health, and we are focused intensely on integration efforts aimed at crystallizing these benefits, including meaningful synergies of $200 million or more over the next three to five years, inclusive of revenue synergies, and approximately $50 million in nearer-term cost synergies.”

“At TELUS Agriculture & Consumer Goods, our team drove revenue growth of 29 per cent over the same period last year, as a result of our team’s ongoing efforts to integrate and grow this compelling global business. We are creating significant value as the leading provider of agriculture and consumer goods technology solutions around the world, as we advance the sector’s efficiency and effectiveness, including food quality production and waste reduction, through data analytics.”

“Our consistently strong operating and financial performance is buttressed by our highly engaged team who are passionate about delivering superior service offerings and digital capabilities over our world-leading wireless and PureFibre broadband networks,” Darren further commented. “More than ever before, Canadians value fast, reliable connections, and the consistent recognition from a range of independent organizations reinforces the superiority of TELUS’ world-leading networks. Notably, in August, independent global analytics company Opensignal named TELUS as Canada’s best provider for consistent mobile network quality. This recognition makes TELUS the most awarded network in Canada, and one of the most awarded globally, by Opensignal for the 11th consecutive time. Furthermore, in October, US-based Ookla recognized TELUS as the fastest mobile provider in Canada, in their Q3 network performance report, also representing the 11th consecutive time TELUS has received this award. Alongside the numerous other third-party network awards our skilled and dedicated team has earned, these acknowledgements reinforce TELUS’ leadership in terms of offering customers the fastest, most expansive and reliable service in Canada across both our wireless and PureFibre networks. Moreover, this recognition of the leadership of TELUS’ national broadband networks underscores the tremendous value of our generational investments in world-leading network technologies, including our ongoing accelerated broadband expansion program nearing completion at the end of 2022, which will continue to drive extensive socio-economic benefits to Canadians from coast-to-coast, for decades to come.”

“Importantly, our significant, ongoing broadband network investments further enable the continued advancement of our financial and operational performance, strengthening our confidence in the robust outlook for our business, and the long-term sustainability of our industry-leading dividend growth program. The 7.2 per cent year-over-year dividend increase announced today represents the twenty-third increase since we initiated our multi-year dividend growth program in 2011, with our program now in its twelfth year and recently extended through 2025. Since 2004, TELUS has returned more than $22 billion to shareholders, including over $17 billion in dividends and more than $5 billion in share purchases, representing approximately $16 per share. Future dividend growth and affordability will be supported by strong EBITDA growth and free cash flow, value creation across our TI, Health and Agriculture and consumer goods businesses, as well as a significant reduction in annual capital expenditures beginning in 2023, leading to a meaningful and sustainable expansion in free cash flow.”

“Our TELUS team continues to demonstrate that when things are at their worst, the TELUS team is at its best. This is highlighted by our team’s support for humanitarian and disaster relief efforts this past quarter, including Hurricane Fiona, Hurricane Ian, flooding in Pakistan and the unrest in Iran. Thus far, TELUS, our team members, the TELUS Friendly Future Foundation and our customers have contributed more than $760,000 in cash and in-kind assistance. By way of example, in the aftermath of Hurricane Fiona, local team members and TELUS Community Ambassadors volunteered on the ground in impacted communities to distribute disaster relief kits, donate supplies and provide support for local charities. In addition, as a leading provider of mental health and well-being services, we launched a free 24/7 crisis support hotline through LifeWorks to support the Iranian community and their loved ones. Indeed, our TELUS teams’ passionate efforts to support our communities across the globe further exemplifies our leadership in social capitalism, Darren concluded.”

Doug French, Executive Vice-president and CFO said, “Our third quarter results build on our strong operating momentum, reflecting a continuation of our execution excellence and supported by our high growth and diversified asset mix. As we progress through the final quarter of the year and into 2023, our team remains highly confident of our growth trajectory and long-term strategic plan to further advance our leading growth profile. Our domestic core telecom business continues to perform well, benefitting from our world-leading wireless and PureFibre networks. At TI, the current macroeconomic environment is influencing customer spending in the near-term, leading TI to update its 2022 outlook for revenue growth as announced today. Importantly, TI continues to target robust double digit revenue growth with continued strong margin profile. TI remains focused on leveraging its key strategic partnerships and expanding its service offerings across its deep client roster, benefitting from the industry tailwinds as the pace of digitization continues at a robust pace. Considering TI’s updated revenue outlook, and lower than expected mobile equipment revenues, offset by the inclusion of LifeWorks, we are updating our 2022 guidance. We are now targeting consolidated revenue growth of approximately 8 per cent, tightening upwards adjusted EBITDA growth of 9 to 10 per cent, and capital expenditures of approximately $3.475 billion, inclusive of LifeWorks. For free cash flow, we are increasing our target to approximately $1.3 billion.”

“During the quarter, our team successfully closed our acquisition of LifeWorks earlier than anticipated, accelerating the recognition of the financial and operational benefits of the transaction, as well as accelerating the integration process months earlier, advancing our ability to begin unlocking the significant synergy opportunities.” added Doug. “Importantly this acquisition enhances the growth profile of TELUS Health by opening new business and revenue opportunities. In October, we announced the planned acquisition of WillowTree, significantly scaling TI’s digital services portfolio, augmenting its design and build capabilities, and increasing its higher-value digital services mix and revenue per team member. These two transactions represent important steps we are taking to scale these high growth, technology-oriented businesses. They augment their capacity for value creation, further diversifying our business and benefit from a larger addressable global market, building on our track record of execution excellence, industry-leading growth and profitability, and will further enhance our growth profile as we head into 2023.”

“Our team also successfully accessed the capital markets during the third quarter, issuing $2 billion in new debt securities across three different maturities, notably including our third sustainability-linked bond. This offering was met with high investor demand, within a dynamic market environment, and further demonstrates our strong access to the capital markets as we further advance our growth strategy. Importantly, our balance sheet remains strong. At the end of the third quarter, the average cost of our long-term debt remained low at 3.95 per cent, reflecting how our team has successfully leveraged the ultra-low interest rate environment over the last decade to accelerate our growth strategy, including our generational PureFibre build which is now nearing completion. We have a strong debt maturity schedule with the average maturity of our long-term debt at over 12 years along with no significant debt maturities until 2024. Our balance sheet strength will be further enhanced in 2023 with a meaningful increase in cash flow generation. At the end of 2022, our accelerated broadband build will wind down, setting ourselves up to see a meaningful positive impact to cash flow with capital expenditures declining by approximately $1 billion beginning in 2023,” concluded Doug. 

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