Telus (TU) Reports Q1 EPS of Cdn$0.27 on Revenues of Cdn$4.02B

Telus (NYSE: TU) reported Q1 EPS of Cdn$0.27, versus Cdn$0.32 reported last year. Revenue for the quarter came in at Cdn$4.02 billion, versus Cdn$3.69 billion reported last year.

“TELUS once again achieved strong operational and financial results in the first quarter, in both of our operating segments of TELUS Technology Solutions (TTech) and Digitally-Led Customer Experiences - TELUS International (DLCX),” said Darren Entwistle, President and CEO. “Our continued execution excellence, realized against the backdrop of an unprecedented operating environment, was characterized by the ongoing combination of robust, high-quality and profitable customer growth, alongside strong financial results across our business. This solid performance reflects the effectiveness of our world-leading performance culture, underpinned by our highly engaged team, and their dedication and passion for delivering outstanding connected experiences. This contributed to industry-leading customer net additions of 145,000 and leading customer loyalty across our key mobile and fixed product lines. Notably, mobile phone, internet, Optik TV and Smart Home Security churn were all once again below one per cent in the first quarter, whilst postpaid churn is now in its eighth consecutive year of industry-best churn below one per cent.”

“Furthermore, our results are buttressed by our highly differentiated and potent asset mix geared towards high-growth, technology-oriented verticals. Indeed, for the full year 2021, TELUS International today announced that it is targeting double-digit revenue and EBITDA growth, showcasing the significant global opportunities it has to drive digital transformation journeys for its existing and prospective clients, and enable them to more quickly embrace next-generation digital technologies to deliver better business outcomes.”

“Meanwhile, within our health portfolio, we are leveraging our technology leadership to deliver improved health outcomes for citizens through access to better health information. While the pandemic has disrupted the operations of our TELUS Health Care Centres since March 2020, our diversified virtual care offerings continue to grow to meet the healthcare needs of Canadians, including the accelerated adoption of virtual consultations as reflected in our growing virtual care user base. In the first quarter, Health services revenue was up a robust 10 per cent, driven by accelerated demand for virtual care, which has seen its number of members nearly triple over the past 12 months to 2 million, whilst clinic visits and preventative health services moderated substantially through pandemic-related lockdowns. We are confident that the increased healthcare related disclosure, which we are introducing today, will provide meaningful insight into the valuable asset we are creating as a world-leading provider of digital healthcare technology solutions.”

“Our first quarter performance was backed by strong digital capabilities and superior service offerings over our world-leading wireless and fibre broadband networks,” added Darren. “At a time when network connectivity is more important than ever, TELUS was again recognized as the best mobile network in Canada for the ninth time in UK-based Opensignal’s Mobile Network Experience Report February 2021. TELUS took first place for Video Experience, Voice App Experience, Download Speed Experience, Upload Speed Experience, and tied for first in 4G Availability, 4G Coverage Experience, and Games Experience. Opensignal further acknowledged our next-generation 5G network with six awards for superiority in respect of speed and coverage in their Canada 5G User Experience Report. Similarly, Canada-based Tutela named TELUS the best mobile experience provider in Canada in their Canada: State of Mobile Network March 2021 report. In addition, Seattle-based Ookla subsequently named TELUS the fastest mobile operator in Canada for the third quarter in a row in their Global Index Market Analysis for Q1 2021.”

“TELUS’ network leadership will be significantly bolstered by our accelerated broadband investment program, announced in March,” further commented Darren. “Our successful $1.3 billion equity offering will underpin the unique strategic opportunity we have to pull-forward the expansion of TELUS’ leading PureFibre network in Alberta, British Columbia and Eastern Quebec, as well as an accelerated roll-out of our national 5G network and digital experience. Investing from a position of strength and leadership, these transformational investments will significantly bolster TELUS’ leading customer experience and competitive position, including the enablement of up to 225,000 additional rural and urban premises with fibre technology, and enhancing the speed and coverage of our world-leading wireless network. These generational investments will fuel enhanced customer growth and operating efficiencies, supported by the accelerated de-commissioning of our copper infrastructure. This will drive positive cash flow benefits as TELUS completes the expedited build, alongside a faster than expected reduction in capital expenditures beginning in 2023. Importantly, this initiative will further support the 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, now in its eleventh year.”

“Our TELUS team continues to give, with their hearts and their hands, to support Canada’s COVID-19 relief efforts,” expressed Darren. “By way of example, nearly 1,800 TELUS team members are supporting the health and well-being of our fellow citizens through the Government of B.C.’s Immunize B.C. initiative. Due in part to our team’s efforts, we have been able to significantly accelerate the phased vaccination rollout, including more than one million vaccination appointment bookings for eligible British Columbians, providing hope of better days ahead. We are offering further support through eight of our 13 Health for Good mobile clinics across Canada, which provided over 500 vaccinations in the first quarter, as well as close to 18,000 COVID-19 assessments for marginalized populations since the start of the pandemic. Similarly, through our Mobility for Good program, we are providing wireless connectivity to youth leaving foster care and low-income seniors, two groups within our community that continue to be disproportionately impacted by the pandemic. Since its inception, the program has supported 24,000 Canadians, further demonstrating that Canadians can count on the TELUS team, day-in and day-out.”

Doug French, Executive Vice-president and CFO said, “Our first quarter results announced today demonstrate the resiliency of our business, our leading execution and the critical importance of providing world-leading broadband experiences along with superior bundled solutions. These results are further enhanced by the strength and diversity of our fast-growing asset mix centred around higher-valued technology oriented sectors. In that regard, our TELUS International, TELUS Health and TELUS Agriculture assets all delivered strong revenue growth driven in part by recent acquisitions, as well as organic growth, as those businesses successfully drive new customer growth.”

Doug added “With our strategic decision to pull forward capital expenditures to accelerate our broadband build program, focused on enhancing our fibre and 5G network coverage over the next 18 months, today we are increasing our capital expenditure guidance for 2021 by $750 million to approximately $3.5 billion. As a result of this pull forward of capital investments, we now expect free cash flow to be approximately $750 million in 2021, while our growth targets for consolidated revenue and Adjusted EBITDA for the full year remain unchanged. Additionally, upon completion of our accelerated broadband build in 2022, we anticipate capital expenditures to decline to $2.5 billion or less, beginning in 2023.”

“Based on our healthy balance sheet position, combined with confidence in our sustainable future free cash flow growth, today we announced a dividend increase to $0.3162 per share. We are excited for the long-term outlook of our business. Indeed, in Canada, we have exciting opportunities in front of us to support the economic recovery, leveraging our world-leading networks that will enable new growth opportunities and unlock new revenue streams. Furthermore, our international businesses are benefiting from a growing global economy and have significant opportunities to drive technology innovation as they look to deliver superior customer experiences and digitize workflows,” concluded Doug.

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