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Telus likely picked up market share in the quarter as strong results offset pricing pressure

Telus
Telus - Contributed

New subscribers beat estimates, rising by a third to 186,000 during the three months

Telus Corp. said wireless expansion helped it achieve almost double-digit earnings growth during this year’s second quarter compared with the same period in 2018.

Earnings before interest, depreciation and amortization, or EBITDA, increased by 9.8 per cent to $1.4 billion, the Vancouver-based company reported. Revenue rose by 4.2 per cent to $3.6 billion compared with a year ago, it said.

The company also credited growth on lower income taxes, “including a $121 million benefit from the revaluation of the deferred income tax liability for the multi-year reduction in the Alberta provincial corporate tax rate.”

New subscribers beat estimates, rising by a third to 186,000 during the three months. Wireless customer additions jumped 45 per cent to 154,000 including 82,000 mobile phones and 72,000 other mobile devices.

Darren Entwistle, president and chief executive officer, called the results “strong” because of “robust subscriber net additions,” and “customer loyalty.” Customer losses, or churn, was just 1.01 per cent in the wireless unit, helping the figure for mobile phone, internet and TV units hit 1.05 per cent, the company said.

Ciitbank analyst Adam Ilkowitz said while comparability remains an issue due to a different subscriber reporting methodology, “it would appear that promotional activity during the quarter helped Telus take market share.”

Desjardin analyst Maher Yaghi noted that pricing metrics were in line with expectations, they are still under pressure.

Mobile phone average revenue per user, a key metric, was down 1.2 per cent due to competitive pressure as the company countered unlimited plans offered by rivals.

“We believe ARPU could be affected in the next few quarters as overage fees fade away with the introduction of unlimited plans,” Yaghi said.

“We are continuing to build on our track record of providing investors with the industry’s best multi-year dividend growth program,” the CEO said in a statement, noting that the company has returned $17 billion to shareholders or about $28 a share since 2004 and is targeting annual dividend growth of 7 per cent to 10 per cent to 2022.

It’s “underpinned by our expectation of strong cash flow generation and growth from Telus over this period.”

Telus, which began in Alberta and British Columbia before expanding nationally, shows strength in Canada’s west. Like all of the country’s telcos, it faces daunting distance and infrastructure hurdles while competing for customer dollars amid some of the world’s highest prices for wireless phone and internet services.

“We continue to make the right strategic investments to drive sustainable and profitable subscriber growth across our diverse and expanding product portfolios,” Doug French, executive vice-president and chief financial officer said.

Copyright Postmedia Network Inc., 2019

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