Telus Corp ((TSE:T)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Telus Corp was marked by a generally positive sentiment, with the company showcasing strong customer growth, low churn rates, and significant revenue growth in TELUS Health. The call also highlighted strategic asset monetization and improvements in free cash flow. Despite these positive aspects, challenges such as a decline in mobile network revenue and ARPU, as well as a noncash impairment adjustment, were acknowledged. Overall, the positive aspects of TELUS’ growth and strategic initiatives appear to outweigh the lowlights.
Strong Customer Growth
TELUS reported impressive customer growth in the second quarter, achieving a total mobile and fixed customer increase of 198,000. This growth was driven by 167,000 additions in mobile phones and connected devices, alongside 31,000 fixed customer additions. This robust performance underscores TELUS’ ability to attract and retain customers in a competitive market.
Low Postpaid Mobile Phone Churn
The company maintained a low postpaid mobile phone churn rate of 0.9%, marking the 12th consecutive year it has remained below the 1% threshold. This consistency highlights TELUS’ success in customer satisfaction and retention strategies.
TELUS Health Revenue Growth
TELUS Health emerged as a significant growth driver, achieving a 16% increase in operating revenue and a 29% growth in adjusted EBITDA. This performance underscores the strength and potential of TELUS Health as a key component of the company’s diversified portfolio.
Wireline Business Success
In the wireline segment, TELUS delivered industry-leading results with 27,000 Internet net additions and an impressive 73% growth in fixed data services revenue. This success positions TELUS as a leader in the wireline business, showcasing its ability to innovate and grow in this sector.
Successful Asset Monetization
TELUS announced a strategic agreement with La Caisse to acquire a 49.9% interest in their newly formed Canadian wireless tower infrastructure operator, Terrion. This move is expected to aid in balance sheet deleveraging, reflecting TELUS’ strategic approach to asset monetization.
Free Cash Flow Improvement
The company reported an 11% increase in free cash flow, reaching $535 million compared to the same period last year. This improvement was driven by higher EBITDA and lower capital expenditures, indicating strong financial management and operational efficiency.
Decline in Mobile Network Revenue
Despite the positive trends, TELUS faced a slight decline in mobile network revenue, attributed to lower mobile phone ARPU. However, the company experienced a 9% increase in IoT revenue, partially offsetting this decline.
ARPU Decline
TELUS reported a 3.3% decline in ARPU, driven by ongoing competitive pressures, lower overage, and reduced roaming revenues. This highlights the challenges TELUS faces in maintaining revenue per user amidst a competitive landscape.
Impairment Adjustment
The company recorded a noncash impairment adjustment to goodwill due to updated assumptions, including a higher weighted average cost of capital and a lower perpetual growth rate. This adjustment reflects TELUS’ cautious approach to financial forecasting.
Forward-Looking Guidance
Looking ahead, TELUS provided robust guidance, emphasizing continued strong customer growth and financial performance. The company aims to maintain its low churn rate and achieve a 4% growth in TTech EBITDA. TELUS also plans to continue its strategic asset monetization efforts, targeting a net debt to EBITDA ratio of 3x by 2027. These forward-looking statements reflect TELUS’ confidence in its strategic direction and growth potential.
In summary, TELUS Corp’s earnings call presented a positive outlook, with strong customer growth and strategic initiatives leading the way. While challenges such as declining ARPU and mobile network revenue were noted, the company’s robust performance in TELUS Health and wireline business, along with successful asset monetization, paint a promising picture for the future.