TELUS reports strong results for first quarter 2019
Consolidated revenue, EBITDA and net income growth of 3.8, 8.6 and 6.1 per cent, respectively (including impact of IFRS 16 in 2019). Strong customer growth, including 99,000 new customer additions, reflecting 11,000 mobile phone, 49,000 connected wireless devices, 22,000 Internet and 17,000 TV net additions, up 50 per cent over last year, and supported by expanding PureFibre network now covering 63 per cent of our high-speed broadband footprint and world leading wireless network. Mobile phone churn of 1.02 per cent; 8 basis-point improvement and first quarter record low for TELUS. Quarterly dividend increased to $0.5625 per share, our 17th dividend increase since 2011. Extending industry-best dividend growth program for additional three years targeting 7 to 10 per cent annual growth for 2020 through 2022
VANCOUVER- TELUS Corporation today released its unaudited results for the first quarter of 2019. For the quarter, consolidated operating revenue of $3.5 billion increased by 3.8 per cent over the same period a year ago. This growth was driven by higher wireless and wireline data services revenue growth. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 8.7 per cent to $1.4 billion due to higher revenue growth and wireless equipment margins, growth in wireline data service margins, the implementation of IFRS 16 on certain expenses, as well as EBITDA contribution from our customer care and business services (CCBS) and TELUS Health businesses. This growth was partly offset by declines in wireline legacy voice and legacy data services and a decline in the EBITDA contribution from our business services. When excluding restructuring and other costs, Adjusted EBITDA was up 8.6 per cent. Applying a retrospective IFRS 16 simulation to fiscal 2018 results, pro forma Adjusted EBITDA growth was approximately 4.4 per cent.
For the quarter, net income of $437 million increased by 6.1 per cent over the same period a year ago as EBITDA growth was partly offset by higher depreciation and amortization due to growth in our asset base, resulting from investments in our broadband technologies and from business acquisitions, as well as increased financing costs. Additionally, $48 million of the increase in depreciation and $15 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 $0.71 rose by 2.9 per cent over the same period last year. When excluding restructuring and other costs, Adjusted net income of $453 million increased by 4.1 per cent over the same period a year ago, while adjusted basic EPS of $0.75 rose by 2.7 per cent.
“TELUS achieved strong financial and operational results in the first quarter, including high quality smartphone-centric mobile phone net additions and vigorous connected device growth in wireless, alongside ongoing robust wireline customer growth”, said Darren Entwistle, President and CEO. “Without question, our continued strong performance is owing in no small part to our team’s unparalleled dedication to providing exceptional customer experiences. TELUS, once again, achieved industry-leading wireless loyalty, with a record first quarter low mobile phone churn of 1.02 per cent. This unrelenting commitment to our Customers First promise is buttressed by our meaningfully differentiated product offerings, as well as the ongoing significant investments we are making synergistically in our world-leading broadband network and technologies across both our wireless and wireline operations.”
Mr. Entwistle added, “Our acquisition of important 600 MHz spectrum licences in the recent spectrum auction will further support TELUS in delivering enhanced mobile broadband connectivity to our customers in both urban and rural communities, which is critical as the demand for wireless data continues to grow. Indeed, today Canadians enjoy the second fastest networks in the world, and TELUS has been recognized in Ookla’s analysis of Speedtest Intelligence data as having the fastest network in Canada. Importantly, the acquisition and deployment of this spectrum will ensure we continue to provide citizens from coast to coast with globally leading network quality, speed and coverage, while bolstering the advancement of our national 5G growth strategy.”
“Today, we are pleased to announce the extension of our multi-year dividend growth program from 2020 through 2022, targeting annual growth of 7 to 10 per cent. This extension reflects TELUS’ confidence in future market opportunities stemming from our longstanding and successful growth strategy. This range will enable TELUS to continue to simultaneously make the critical strategic investments in our advanced broadband network and quality customer growth that underpin our ongoing profitability and free cash flow expansion which, in turn, support the return of cash to shareholders. We have established an enviable track record in respect of an attractive balance sheet and strong operational performance, which enable us to successfully undertake and extend our consistent, transparent and industry-leading shareholder-friendly program. Furthermore, today’s dividend increase represents the 17th semi-annual increase over the course of our multi-year dividend growth program, originally introduced in May 2011. Indeed, between 2004 and April 2019, TELUS has returned $16.7 billion to shareholders, including $11.5 billion in dividends, representing $28 per share,” Mr. Entwistle added.
“As a company that believes in the profound connection between the success of our business and the welfare of our communities, our TELUS team has volunteered 1.3 million days of caring and gifted $690 million in philanthropy since 2000 to create stronger, healthier communities where we live, work and serve. Moreover, TELUS has contributed more than $39 billion in total tax and spectrum remittances to our federal, provincial and municipal governments since 2000, supporting economic, educational, cultural, environmental and health opportunities for Canadians,” Mr. Entwistle concluded.
Doug French, Executive Vice-president and Chief Financial Officer, said, “For the first quarter of 2019, TELUS delivered healthy results across wireless and wireline, in-line with our 2019 targets. The strategic investments we are making in our leading broadband technologies, including our valuable investment in 600 MHz wireless spectrum, continue to advance our network leadership position and support profitable, economically accretive customer growth.”
Mr. French added, “Our consistent execution, healthy balance sheet and strong cash flow outlook, including our expectations for moderating capital expenditures, provides our team with the confidence to extend our multi-year dividend growth program through 2022. Our capital return program continues to be balanced with making the right strategic investments to further advance our growth strategy, and our commitment to maintain investment-grade credit ratings.”
“Beginning with our first quarter of 2019, TELUS has modernized our corporate reporting as it relates to our wireless subscriber results, aligning with notable, large global peers. Specifically, we have made the strategic decision to begin disclosing mobile phones and mobile connected devices as separate subscriber bases and net additions. We will continue to report on a blended basis, mobile phone average revenue per subscriber unit per month (ARPU) and mobile phone average billing per subscriber unit per month (ABPU), as well as mobile phone churn, which will be reflective of the mix of postpaid and prepaid within our mobile phones subscriber base. Importantly, we have adjusted certain 2018 quarterly metrics where applicable to ensure comparability. Our updated disclosure is consistent with how we look at value creation of overall customer loading, and the associated margin and economics in terms of lifetime value and EBITDA growth, and further enhances the transparency of our disclosure on customer loading. Notably, first quarter mobile phone customer growth was substantially all driven by higher-value, smartphone-centric loading,” concluded Mr. French.
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