TELUS Reports Profit of $400 Million in Fourth Quarter 2007
Friday, February 15, 2008
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Vancouver, BC, February 15, 2008--(T-Net)--TELUS Corporation today reported fourth quarter 2007 revenue of $2.33 billion, an increase of 3.4 per cent from a year ago. The performance was driven by nine per cent growth in wireless revenue and seven per cent growth in wireline data revenue, partially offset by declines in local and long distance wireline revenues. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) increased eight per cent to $953 million due to a 14 per cent increase in the wireless segment and two per cent increase in the wireline segment.
Net income in the quarter was $400 million and earnings per share (EPS) was $1.23, up 66 per cent and 73 per cent respectively. Net income and EPS included favourable tax related adjustments of approximately $143 million or 44 cents per share, compared to $20 million or six cents a year ago. Also contributing to the increase in EPS were lower financing charges and a reduction in shares outstanding from continued share repurchases. Excluding tax related adjustments in both periods and the charge for the net-cash settlement feature for share options this period, net income was $258 million and EPS was $0.79, up 17 per cent and 22 per cent, respectively. Free cash flow was up 85% despite higher capital expenditures, due to the same positive factors that boosted EPS.
For the full year, TELUS reported revenue growth of 4.5 per cent to $9.1 billion and four per cent growth in EBITDA (adjusted for comparability). TELUS invested $1.77 billion in capital expenditures and generated healthy free cash flow of $1.57 billion, which funded shareholder dividends of $521 million and the repurchase of $750 million of TELUS shares during the year. TELUS met or exceeded three of four initial consolidated financial 2007 targets set more than a year ago, including both profitability targets.
OPERATING HIGHLIGHTS
TELUS wireless
- Revenues increased by $90 million or 8.8% to $1.1 billion in the fourth quarter of 2007, when compared with the same period in 2006
- Wireless data revenue increased $39 million or 43% due to adoption of full function personal data devices and increased text messaging
- Net subscriber additions were 161,400, an 11% decrease from the same quarter in 2006. Postpaid additions were 106,400, down 18%, while prepaid loading increased by 5.6% to 55,000, which included a one- time reduction of 5,100, for a clean-up of deactivated accounts.
- ARPU (average revenue per subscriber unit per month) decreased by 1.2% to $63.70 continuing the trend experienced in the third quarter due to the competitive impacts on the voice component. The fast growing data component at $7.95 represents 12.5% of ARPU
- EBITDA increased by $59 million over the fourth quarter of 2006, representing 14% growth, due to network revenue growth and lower COA expense
- Cost of acquisition per gross addition decreased 19% year-over-year to $352
- Blended monthly subscriber churn increased to 1.59% from 1.33% a year ago due to product mix shifting to prepaid combined with higher deactivations associated with introduction of WNP in 2007 Postpaid churn increased slightly to 1.14%
- Cash flow (EBITDA less capital expenditures) increased $29 million or 9% to $355 million in the quarter due to an increase in EBITDA. Capital expenditures also increased with continued investments in capacity and coverage.
TELUS wireline
- Revenues decreased by $14 million or 1.1% to $1.2 billion in the fourth quarter of 2007, when compared with the same period in 2006. Data growth was offset by declines in local and long distance revenues
- Data revenues increased by $31 million or 7.2% due to increased high-speed Internet subscribers and enhanced data and hosting services
- TELUS added 26,200 net high-speed Internet subscribers, pushing TELUS' high-speed base to more than one million, an 11% increase from a year ago. High-speed net adds were much lower than a year ago reflecting a mix of competitive and market factors
- EBITDA increased by $10 million or 2.2%, due to lower cost of sales associated with voice and data equipment and increased capitalization of labour
- Network access lines (NALs) declined by 39,000 in the quarter, down 3.2% from a year ago. This reflects continued residential line losses from ongoing competitive activity and wireless substitution partially mitigated by an increase in business access lines
- Cash flow (EBITDA less capital expenditures) declined 12% to $125 million, due to an increase in capex for new phases of the billing and client care system development in B.C. as well as upfront capital investments to support new contract wins.
Corporate Developments
TELUS successfully acquires Emergis
On January 17, TELUS successfully completed its $743 million bid to acquire Emergis under its offer to acquire all of their common shares. This acquisition advances TELUS' business strategy based on its fit with two of our four key industry verticals.
Emergis is a business process outsourcer that specializes in the healthcare and financial services sectors and is a leader in the automation of electronic health records and claims processing and pharmacy solutions. In addition, Emergis' suite of financial service solutions complements TELUS' focus in this sector.
TELUS is taking a leadership role in the transformation of healthcare in Canada. It has invested in strengthening its healthcare service capabilities in the last several years, building teams with deep expertise and delivering innovative solutions. Emergis' complementary expertise, applications and customer base are expected to strengthen TELUS' existing industry solutions and allow it to better compete in the growing and transforming healthcare industry.
Government issues wireless spectrum decision
On November 28, Industry Canada announced the framework for the upcoming Advanced Wireless Spectrum auction planned for May 2008. The Government decided to set aside 40 MHz of 105 MHz of available spectrum for potential new entrants and to require existing providers including TELUS to share their infrastructure. This includes mandated roaming and tower sharing. TELUS is participating in a round of public comments and the Government is expected to announce final rules at the end of March 2008.
TELUS was disappointed the Government failed to abide by its policy mandate to rely on market forces to the greatest extent possible to deliver benefits for Canadian consumers and instead made a decision that will favour a select group of industry players at the expense of companies that have invested more than $20 billion building wireless infrastructure.
While TELUS remains in a good position to compete and generate ongoing growth, this announcement creates uncertainty regarding the future competitive structure, which has negatively impacted share values of TELUS and other wireless carriers.
TELUS continues share repurchases
During the fourth quarter, TELUS continued to purchase shares under its Normal Course Issuer Bids (NCIBs). Repurchases were 3.1 million shares for a total outlay of $147.5 million. For the full year, TELUS repurchased 13.6 million shares for $750 million thereby reducing shares outstanding by four per cent.
TELUS renewed its NCIB program on December 20, 2007 with the intention, if considered advisable, to purchase and cancel, over a 12-month period, up to 8 million of its outstanding common shares and 12 million of its outstanding non-voting shares on the Toronto Stock Exchange. This represents approximately 4.6% of the common and 8.1% of the non-voting outstanding public float of each class of shares.
Since December 2004, TELUS has repurchased a total of 53 million shares for an outlay of $2.5 billion under four share repurchase programs. TELUS believes that such purchases are in the best interest of the Company and constitute an attractive investment opportunity and desirable use of company funds that should enhance the value of the remaining shares.
TELUS is Canada's best in corporate reporting, including governance and sustainability
The Canadian Institute of Chartered Accountants (CICA) handed TELUS five awards, including the Overall Award of Excellence for Corporate Reporting, at the 2007 award ceremony in December. The CICA awards reflect TELUS' commitment to continuous improvement and to clear and thorough reporting to all its stakeholders. TELUS was also awarded best Corporate Governance disclosure for the third year running and was handed first-time awards for best Corporate Social Responsibility reporting and an honourable mention for Financial Reporting. Finally, TELUS received the award of excellence in corporate reporting in the Communications and Media category for the thirteenth consecutive year.
Ville de Montréal selects TELUS as primary telecom partner in $87 million deal
In early February, a new partnership with Ville de Montréal was announced in which TELUS will provide and manage Internet Protocol (IP) based voice and data services for the city's more than 300 administrative offices. The contract is valued at $87 million over ten years.
The advanced telecommunications framework is to support the city's goals of accessing a cost-effective infrastructure while providing a secure IP backbone for new services and solutions. Migration from the city's previous technology to TELUS' centralized IP-based communications platform is expected to begin in the fall of 2008.
Yellow Pages Group selects TELUS in $90 million deal
In October, TELUS announced that Yellow Pages Group (YPG) has selected TELUS to provide support services and management of the information technology infrastructure for their Western Canada-based operations. This long-term contract with Canada's largest directory publisher is valued at approximately $90 million.
Under the agreement, TELUS will provide a wide range of services including IT infrastructure operations, IP applications development, wireless services, document services and managed network services ranging from help desk to desktop to computing operations. TELUS will also provide facilities and managed services for YPG's online directory system in TELUS Internet Data Centres.
TELUS acquires Toronto-based Fastvibe
TELUS has acquired privately held Fastvibe Corporation, a small but leading provider of innovative and superior quality Web streaming solutions for business. Launched in 2000, Fastvibe, based in Toronto, serves approximately 130 corporate customers including the Bank of Montreal, Bank of Nova Scotia, Barrick Gold, Trans Canada Pipelines, Ministry of Education of Ontario, Torstar and Investors Group. Web streaming is a rapidly growing market.
The Fastvibe team brings unique technical, event and production Web streaming management expertise to TELUS. The acquisition strengthens TELUS' technology solutions portfolio by offering Canadian businesses an environmentally responsible and cost effective way to deliver information like training, employee communications and investor information to staff and stakeholders who are geographically dispersed.
TELUS House opens its doors in the Nation's Capital
In October, TELUS House in Ottawa was opened. The building is a Leadership in Energy and Environmental Design (LEED) "silver" designed facility, making it one of the most environmentally friendly buildings in the city. The 160,000 square-foot, nine floor facility is a sustainable building, designed and built to embrace healthy living, conserve energy and support the environment. For example, TELUS House is designed to reduce energy consumption by almost 40 per cent compared to model national energy code buildings, and its high-efficiency plumbing system is designed to reduce water usage by more than 40 per cent.
Upopolis keeps kids in hospitals connected
As part of TELUS' commitment to making the future friendly for Canadian youth, it partnered with Kids' Health Links Foundation (KHLF) and McMaster Children's Hospital (MCH) to launch of Upopolis.com, Canada's first secure online social network for kids in hospital care. This site, powered by TELUS, allows young patients to connect with their peers and teachers, much like they do on Facebook. Upopolis provides a personal profile, secure mail, instant chat, discussion boards, personal blogs and links to games. The site also provides unique features to kids in hospital like a homework site to stay up-to-date with school, links to kid-friendly health and wellness information, and connections to other children with the same condition.
Through a partnership with Kids' Health Links Foundation, TELUS is providing a gift of technology services to develop Upopolis. TELUS helped build the site and will continue to provide site expansion, ongoing access to Upopolis.com, managed Web hosting, and application support and maintenance services.
TELUS becomes first Canadian telco to deploy and support Cisco TelePresence
TELUS is the first Canadian telecommunications provider to achieve both the Cisco TelePresence Connection Certification and the Cisco TelePresence Authorized Technology Provider Certification. These designations recognize TELUS' capability to sell, deploy and support Cisco TelePresence and for having the network sophistication to deliver an optimal customer experience.
The Cisco TelePresence system allows TELUS to bring customers unique, 'in-person' experiences between people, places and events in a secure environment. This system delivers life-size images via ultra-high-definition video and spatial audio within a specially designed environment to create the experience of being in the same room with remote participants, whether they are down the street or around the world.
TELUS has also implemented Cisco TelePresence internally in its Vancouver and Toronto offices, and is using the solution to help improve team member efficiency and customer communication, reduce travel, and assist in meeting environmental goals.
TELUS first to bring Canadians the next generation RAZR
TELUS became the first Canadian wireless carrier to offer the CDMA RAZR2 V9m in the quarter. The next generation of the revolutionary MOTORAZR brings together brains and beauty with a full SPARK entertainment service line-up along with the elegant styling synonymous with the RAZR. For ultimate enjoyment of TELUS multimedia SPARK, the phones come packaged with a stereo headset, data cable, mini-to-micro USB adapter, Motorola Mobile Phone Tools software, and 1GB microSD memory card.
TELUS also introduced the Samsung R500 wireless phone, which lets consumers reflect their own style with a choice of red and blue exchangeable faceplates and access to the company's SPARK suite of services.
TELUS introduces four new Mike handsets
In December, TELUS launched four new handsets to its Mike Push To Talk (PTT) line-up. With more than 12 Mike handsets, TELUS has the largest selection of Push To Talk devices in Canada.
The new Motorola i876 and Motorola i876w Push To Talk phones offer unmatched levels of processing speed, multimedia, and convenience. Such innovative new features as 3D Audio, 3D Animation and stereo Bluetooth allow users to get more effective at work and better enjoy their downtime with music, games, and Web access.
TELUS also launched the i876 and i876w, both boasting a combined alarm clock/stopwatch/timer and a camera with a built-in photo editor. The difference between the two models is simply styling - while the i876 comes in sleek dark brown, the i876w's casing is a lustrous pearl with a titanium ivy design. The emergence of this option represents the increasing popularity of Mike outside its industrial roots, as well as the growing diversity of industries that have relied on Mike over its 11 years in the market.
TELUS training program tops in the world
TELUS was recognized by the American Society for Training and Development for having the world's third best enterprise learning program in the world. TELUS was one of only two Canadian corporations honoured with a BEST award by the society. In 2007, TELUS' 34,000 employees took 361,000 online courses and 64,000 classroom courses. TELUS previously won BEST awards in 2003, 2004, and 2005.
Karen Radford named Best Canadian Woman Executive
Karen Radford, TELUS executive vice-president and president of TELUS Québec and Partner Solutions, was named Best Canadian Executive at the 4th annual Stevie Awards for Women in Business. This international award recognizes the outstanding performance in the workplace and honours the efforts, accomplishments, and positive contributions of companies and businesspeople worldwide. Ms. Radford was selected as Best Canadian Executive by a panel of judges and advisors featuring many leading figures in the business world. More than 800 entries from companies of all sizes across virtually every industry were submitted for consideration in categories such as Best Entrepreneur, Best Executive, Lifetime Achievement, and Women Helping Women.
Four TELUS executives named Top 100 women by the Women's Executive Network
The Women's Executive Network (WXN) recognized four of TELUS' senior leaders for their career successes and dedication to the communities where they live and work. The society's 2007 list of Canada's 100 most powerful women included Audrey Ho, TELUS senior vice-president, General Counsel and Corporate Secretary; and Judy Shuttleworth, TELUS vice-chair of Human Resources. Ms. Ho received the award in the Professionals category and Ms. Shuttleworth was recognized in the Corporate Executives category. This was the first Top 100 award for Ho and the third time Shuttleworth had been honoured with the award. Karen Radford, TELUS executive vice-president and president of TELUS Québec and Partner Solutions; and Janet Yale, TELUS executive vice-president of Corporate Affairs, were also honoured at the luncheon and included in the prestigious list. Both members of the top 100 list for the previous three years, Ms. Radford and Ms. Yale were inducted into the new WXN Hall of Fame.
TELUS and its team members donate $5.5 million to Canadian charities
TELUS, its team members and alumni give where they live. They have donated and pledged $5.5 million for 2008 to more than 2,800 charities across Canada as part of the Team TELUS Cares charitable giving program. TELUS team members and alumni have chosen to make donations through payroll and pension deduction to more than 45,000 eligible registered Canadian charities such as the Canadian Cancer Society, B.C. Children's Hospital Foundation and the Canadian Breast Cancer Foundation. TELUS then matches these donations dollar for dollar to provide financial support for those charities. TELUS and its team members have contributed $113 million to charitable and not-for-profit organizations and volunteered more than 2.1 million hours of service to local communities since 2000.
TELUS International team members build homes in Manila
The TELUS International office in Manila, Philippines took part in a TELUS Day of Service in November. More than 300 TELUS team members, family and friends partnered with Gawad Kalinga, an organization similar to Habitat for Humanity, to build homes in a newly-created village. The village, known as the TELUS GK Village, will help provide a brighter future to families in the Philippines. TELUS' dedication to the community doesn't stop with this one day - TELUS has committed to building 71 homes over the next year to house 107 families in TELUS GK Village.
TELUS partners with SOVERDI and City of Montréal to plant 22,000 trees and shrubs
In January 2008, the Société de verdissement du Montréal métropolitain (SOVERDI), the City of Montreal, and TELUS announced the results of their 2007 greening campaign. In total, 12,000 trees and 10,000 shrubs were planted in alleyways, schoolyards and riverbanks in over 20 public spaces in the greater Montreal area, thanks to this innovative partnership.
Dividend declaration
The Board of Directors has declared a quarterly dividend of forty-five cents ($0.45) Canadian per share on the issued and outstanding Common shares and forty-five cents ($0.45) Canadian per share on the issued and outstanding Non-Voting shares of the Company payable on April 1, 2008 to holders of record at the close of business on March 11, 2008.
This quarterly dividend represents a 20 per cent increase from the $0.375 quarterly dividend paid in 2007.
About TELUS
TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications company in Canada, with $9.1 billion of annual revenue and 11.1 million customer connections including 5.6 million wireless subscribers, 4.4 million wireline network access lines and 1.2 million Internet subscribers. TELUS provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. Committed to being Canada's premier corporate citizen, we give where we live. Since 2000, TELUS and our team members have contributed $113 million to charitable and not-for-profit organizations and volunteered more than 2.1 million hours of service to local communities. Eight TELUS Community Boards across Canada lead our local philanthropic initiatives. For more information about TELUS, please visit telus.com.
Company Snapshot |
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TELUS Communications Inc.
Burnaby, BC (InfoTech)
8200 Employees In BC (34800 Total)
Founded: 1993 | Revenues: $10 Billion
TELUS is a leading national telecommunications company in Canada, with $10.3 billion of annual revenue and 12.6 million customer connections including 7.2 million wireless subscribers, 3.6 million wireline network access lines
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