TELUS Reports Operational and Financial Results for Second Quarter 2021, Q2 Revenue up 10% to $4.1 BillionWednesday, August 4, 2021
Burnaby, BC, August 4, 2021--(T-Net)--TELUS Corporation today released its unaudited results for the second quarter of 2021. Consolidated operating revenues and other income increased by 10 per cent over the same period a year ago to $4.1 billion.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 6.8 per cent to $1.45 billion while Adjusted EBITDA increased by 9.5 per cent to $1.5 billion.
This growth reflects:
(i) higher internet and third wave data service margins, as well as other fixed data service margins resulting from subscriber base growth and expanded services;
(ii) growth in the company mobile subscriber base and mobile equipment margins;
(iii) growth from business acquisitions (net of associated support costs);
(iv) an increased contribution from our Digitally-led customer experiences - TELUS International (DLCX) segment from customer growth and increased depth and breadth of services offered to our existing customers; and
(v) the non-recurrence of the comparative period's COVID-19-related provisions and non-labour restructuring and other costs related to the pandemic. This growth was partly offset by lower legacy fixed voice and legacy fixed data services and higher employee benefits expense.
Darren Entwistle, President and CEO, TELUS
"Our team once again achieved strong operational and financial results in the second quarter at both TELUS and TELUS International (TI)," said Darren Entwistle, President and CEO. "TELUS' continued execution excellence, realized against the backdrop of the ongoing global pandemic, was characterized by the consistent combination of industry-leading and profitable customer growth, yielding strong financial results across our business as evidenced by 10 per cent consolidated revenue and EBITDA growth. This robust performance reflects the effectiveness of our globally leading customer-centric culture and broadband networks, underpinned by our highly engaged team and their dedication and passion for delivering outstanding connected experiences. This contributed to leading customer net additions of 223,000 and industry-best client loyalty across our key mobile and fixed product lines. Notably, blended mobile phone, voice, PureFibre internet and Optik TV churn were below one per cent in the second quarter, while our postpaid mobile phone churn result of 0.64 per cent in the quarter continues to lead the industry."
"Our results are buttressed by our highly differentiated and potent asset mix geared towards high-growth, technology-oriented verticals," continued Darren. "Earlier today, TI announced strong double-digit operating revenue and EBITDA growth for the second quarter, demonstrating its position as the partner of choice for premier digital customer experiences as it continues to win more business from existing and new clients alike. Indeed, our passionate and talented team at TI are powering differentiated customer experiences for leading global brands through end-to-end next-gen digital solutions and services, including its unique mix of content moderation and growing artificial intelligence capabilities. At TELUS Health, our team drove 26 per cent year-over-year health services revenue growth in the quarter, with robust key operating results, including earning one million new virtual healthcare members over the last twelve months, representing an 83 per cent increase over last year. We are leveraging our leading position in healthcare technology solutions to deliver improved health outcomes for citizens through access to better health information, which has never been more critical. We continue to grow and integrate our TELUS Agriculture business, and expect it to also generate double-digit revenue growth and annual revenues in agriculture of approximately $400 million in 2021. As we continue to increase our agriculture related disclosure, we are confident this will provide meaningful insight into the valuable asset we are creating as a globally-leading provider of agriculture technology solutions."
"Our second quarter performance was backed by strong digital capabilities and superior service offerings over our world-leading wireless and fibre broadband networks," added Darren.
Doug French, Executive Vice-president and CFO commented, "Our second quarter results announced today continue to showcase our execution excellence, superior asset mix focused on technology-oriented verticals, and focus on disciplined cost containment and enhanced effectiveness. As our results have consistently demonstrated, our success is powered by our team's collective focus around the world on delivering outstanding customer experiences over our globally-leading networks and superior bundled solutions. Indeed, our team is focused on driving product intensity higher as we leverage our accelerated broadband build and expanding fibre footprint along with our copper-to-fibre migrations."
"Investing from a position of strength, our accelerated broadband build is actively underway and importantly pre-funded by our equity offering in March earlier this year," Doug added. "The strategic and transformational investments we are making in our leading broadband technologies, including our valuable investment in 3500 MHz wireless spectrum, will significantly advance our leading customer experience and network leadership position and enhance our competitive positioning to drive strong profitable customer growth. Our margin and cash flow profile will also benefit from the efficiencies we will extract from our advanced program to migrate our remaining copper customers within our fibre footprint to our superior PureFibre network. Our consistent execution, healthy balance sheet and strong cash flow outlook, including our expectations for significantly lower capital expenditures beginning in 2023, provides our team with the confidence to make these critical investments to enhance our network and customer service leadership position. These growth-oriented investments, including those in healthcare and agriculture, support our leading annual financial targets that we are reaffirming today, including consolidated revenue and adjusted EBITDA growth of up to 10 and 8 per cent respectively, and underpin our long-standing dividend growth program, now in its eleventh year, with our October quarterly payment up 8.6 per cent on a year-over-year basis."
"In June, we successfully issued our inaugural Sustainability-Linked Bond, representing the first of its kind in Canada, putting our team at the forefront of sustainability practices and setting a clear leadership example in respect of leveraging behaviour-based financing to advance our sustainability goals. The $750 million 10-year note, with a 2.85 per cent interest rate, reinforces our commitment to reducing Scope 1 and 2 greenhouse gas emissions, as approved by the Science Based Targets initiative, further demonstrating TELUS' global sustainability leadership. Our team is proud to take a leadership role and demonstrate what a committed organization can do to support the world's fight against climate change. Notably, with this successful offering, our average cost of long-term debt declined by 10 basis points to an all-time low of 3.70 per cent, further enhancing the quality and strength of our balance sheet, and underpinning our ability to make the necessary investments to continue to advance our growth strategy while remaining committed to our investment-grade credit ratings," concluded Doug.
In the quarter, the company added 223,000 new customer additions, up 82,000 over last year, and inclusive of 89,000 mobile phones, 84,000 connected devices, in addition to 30,000 internet, 19,000 security and 11,000 TV customer connections. This was partly offset by low residential voice losses of 10,000. Our total TELUS technology solutions (TTech) subscriber base of 16.3 million is up 5.9 per cent over the last twelve months, reflecting a 3.6 per cent increase in our mobile phones subscriber base to more than 9.0 million, and a 20 per cent increase to our connected devices subscriber base to more than 1.9 million. Additionally, our internet connections grew by 6.9 per cent over the last twelve months to approximately 2.2 million customers, our TV subscriber base increased by 5.2 per cent to over 1.2 million customers, and our security customer base expanded by 17 per cent to 743,000 customers. In health services, as of the end of the second quarter of 2021, virtual care members were 2.2 million and healthcare lives covered were 18.1 million, up 1.0 million and 2.6 million over the past 12 months, respectively, while digital health transactions were 137.1 million, up 13.0 million over the second quarter of 2020.
Free cash flow of $210 million decreased by $301 million or 59 per cent over the same period a year ago, resulting primarily from: (i) the timing of income tax payments, as a portion of the tax instalments in the first six months of 2020 were deferred into the third quarter of 2020 as permitted by several government jurisdictions as part of their pandemic responses, as well as increased income tax payments for newly acquired companies; (ii) higher capital expenditures in connection with our planned accelerated capital investments; (iii) the timing related to device subsidy repayments and associated revenue recognition and our TELUS Easy Payment device financing program; (iv) higher lease principal payments; and (v) higher restructuring and other costs disbursements. These factors were partly offset by strong EBITDA growth.
Consolidated capital expenditures increased by $157 million in the second quarter of 2021, due to increased investments in our 5G network, the accelerated purchase of equipment to support subscriber growth, and accelerated investments in our broadband build to increase system capacity and reliability. This was partly offset by a reduction in spend from efficiencies in our 4G network spend. Our accelerated broadband build is actively underway. With our ongoing investments, we are advancing wireless speeds and coverage of our expanding 5G network, continuing to connect additional homes and businesses directly to our fibre-optic technology, evolving our TV ecosystem and supporting system reliability and operational efficiency and effectiveness efforts. These investments also support our internet, TV and security subscriber growth, address our customers' demand for faster internet speeds, and extend the reach and functionality of our business, healthcare solutions and agriculture solutions.
At the end of the quarter, our TELUS PureFibre network covered approximately 2.6 million premises, up from approximately 2.3 million premises in the second quarter of 2020. By June 30, 2021, our 5G network covered approximately 13.4 million Canadians, representing approximately 36 per cent of the population.
For the quarter, net income of $344 million increased by 9.2 per cent over the same period last year and Basic earnings per share (EPS) of $0.25 increased by 8.7 per cent. These increases are driven by increased EBITDA, as detailed above, and lower income tax expense, largely due to tax adjustments recognized in the current period for income taxes of prior periods, partly offset by higher depreciation and amortization; and, as it relates to EPS, higher shares outstanding.
When excluding the effects of restructuring and other costs, income tax-related adjustments, other equity losses related to real estate joint ventures and a gain on a retirement of a provision arising from business acquisition-related written put options within DLCX recorded in the second quarter of 2020, adjusted net income of $348 million increased by $32 million or 10 per cent in the second quarter of 2021, while adjusted basic EPS of $0.26 was up 4.0 per cent.
Consolidated Financial Highlights
|C$ millions, except footnotes and unless noted otherwise||Three months ended
|Operating revenues and other income||4,111||3,728||10.3|
|Operating expenses before depreciation and amortization||2,660||2,369||12.3|
|Adjusted net income(1)||348||316||10.1|
|Net income attributable to common shares||335||290||15.5|
|Basic EPS ($)||0.25||0.23||8.7|
|Adjusted basic EPS(1) ($)||0.26||0.25||4.0|
|Free cash flow(1)||210||511||(58.9||)|
|Total subscriber connections(3) (thousands)||16,295||15,382||5.9|
|(1)||EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted basic EPS and Free cash flow are non-GAAP measures and do not have any standardized meaning prescribed by IFRS-IASB. For further definitions and explanations of these measures, see 'Non-GAAP and other financial measures' in this news release.
|(2)||Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and consequently differ from Cash payments for capital assets, excluding spectrum licences, as reported in the interim consolidated financial statements. Refer to Note 31 in our interim consolidated financial statements for further information.|
|(3)||The sum of active mobile phone subscribers, connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers and security subscribers, measured at the end of the respective periods based on information in billing and other source systems. During the third quarter of 2020, we adjusted cumulative subscriber connections to add approximately 31,000 security subscribers as a result of a business acquisition. Effective January 1, 2021 with retrospective application to January 1, 2020, in alignment with our segment reporting changes, we made a retroactive adjustment to remove internal network service revenue and approximately 29,000 subscribers from our mobile phone subscriber base and associated operating statistics (average billing per subscriber per month (ABPU) / average revenue per subscriber per month (ARPU) and churn). Effective January 1, 2021 on a prospective basis, following an in-depth review of customer accounts within a legacy subscriber provisioning system to be decommissioned, we adjusted our internet subscriber base to remove 16,000 subscribers.|
Second Quarter 2021 Operating Highlights
Commencing with the three-month period ended March 31, 2021, we transitioned to our new segment reporting structure and have recast comparative amounts on a comparable basis.
The TELUS technology solutions (TTech) segment includes: network revenues and equipment sales arising from mobile technologies; data revenues (which include internet protocol; television; hosting, managed information technology and cloud-based services; software, data management and data analytics-driven smart food-chain technologies; and home and business security); certain healthcare software and technology solutions; voice and other telecommunications services revenues; and equipment sales.
The digitally-led customer experiences - TELUS International (DLCX) segment, whose primary functional currency is the U.S. dollar, is comprised of digital customer experience and digital-enablement transformation, including artificial intelligence and content management solutions, provided by TELUS International.
As noted in Section 1.2 of our 2020 annual MD&A, the COVID-19 pandemic, which emerged in the first quarter of 2020, continued to have a pervasive global impact throughout the balance of 2020 and into 2021. The nature of the pandemic and the uncertainty of its magnitude, length and the time to recovery are not currently able to be estimated. Therefore, results described below may not be indicative of future trends, as the COVID-19 pandemic prevents us and our customers from operating in the normal course of business in certain areas while we continue to adjust our mode of operations to continue delivering on our customers first priorities and social purpose. Our results discussed below are compared to the equivalent period in 2020 unless otherwise indicated.
TELUS technology solutions (TTech)
Mobile products and services
Fixed products and services
Digitally-led customer experiences - TELUS International (DLCX)
3500 MHz spectrum auction developments
Innovation, Science and Economic Development Canada's (ISED's) 3500 MHz band spectrum auction occurred during the period from June 15, 2021, through July 23, 2021. We acquired 142 licences equating to 16.4 MHz of spectrum for a total purchase price of approximately $1.95 billion. When combining the 3500 MHz spectrum licences purchased privately ahead of the auction, we now hold 25 MHz of spectrum in the 3500 MHz spectrum band nationally, or 40 MHz within key markets. In accordance with the terms of the auction, 20 per cent ($390 million) will be remitted to ISED on August 13, 2021, while the remaining balance will be paid on, or before, October 4, 2021. Until such time as ISED determines that we qualify as a radio communications carrier and comply with Canadian Ownership and Control rules, we may not commercially use the licences.
TELUS International announces updated guidance
TELUS International (TI) today updated its annual financial targets for 2021. Please refer to TI's second quarter of 2021 earnings release dated July 30, 2021 for additional details.
Inaugural Sustainability Linked-Bond offering; Early redemption of Series CT Notes
On June 28, 2021, we announced the successful closing of our inaugural Sustainability-Linked Bond, the first of its kind in Canada. The $750 million of senior unsecured 2.85 per cent Sustainability-Linked Notes, Series CAF, will mature on November 13, 2031, and was issued pursuant to our Sustainability-Linked Bond Framework (Framework) announced on June 14, 2021. As part of the Framework, we have committed to reducing our absolute Scope 1 and 2 greenhouse gas emissions by 46 per cent from 2019 levels by 2030 (Sustainability Performance Target). If we fail to achieve the Sustainability Performance Target by December 31, 2030, the interest payable on these notes will increase by 1.00 per cent in the final year of maturity. We will report annually on our performance against the Sustainability Performance Target and will also obtain an annual independent and external verification of our performance against the Sustainability Performance Target.
On July 16, 2021, we exercised our right to early redeem, on August 17, 2021, all of our 2.35 per cent Notes, Series CT. The long-term debt prepayment will be recorded in the three-month period ended September 30, 2021, and is estimated to be approximately $10 million before income taxes. Subsequent to this early redemption, we will no longer have any TELUS Corporation notes maturing in 2022.
Our Board of Directors
At our 2021 annual general meeting (AGM) held on May 7, 2021, the nominees listed in the TELUS 2021 Information Circular were elected as directors of TELUS, including two new nominees, Hazel Claxton and Sean Willy.
Hazel Claxton is a corporate director. She served as Executive Vice-President and Chief Human Resources Officer with LifeWorks Inc. (formerly Morneau Shepell Inc.) from 2013 to 2018. Prior to that, Hazel spent 29 years at PwC Canada, where she held several leadership roles including Canadian Leadership Group member, Human Capital leader, and Partner within the Corporate Advisory and Restructuring Group, an area she practiced in for 20 years. Hazel holds a Bachelor of Commerce (Honours) from Queen's University and the ICD.D designation from the Institute of Corporate Directors. She is a Chartered Professional Accountant.
Sean Willy is President and Chief Executive Officer of Des Nedhe Development, the economic development entity for English River First Nation, which includes a broad portfolio of businesses and investments that range from construction and mining to retail and communications, a role he has held since August 2017, and prior thereto he was a Vice-President of Des Nedhe Development since June 2016. Sean holds a Bachelor of Commerce from the Edwards School of Business of the University of Saskatchewan.
Our Board diversity policy includes separate diversity targets of having (i) at least two directors who represent a visible minority or are Indigenous by our annual meeting in 2023 and (ii) women and men each represent at least one-third of the independent directors. With the appointment of directors at our May 2021 annual meeting, we surpassed both targets.
The TELUS Board of Directors declared a quarterly dividend of $0.3162 per share on the issued and outstanding Common Shares of the Company payable on October 1, 2021 to holders of record at the close of business on September 10, 2021. This quarterly dividend reflects an increase of 8.6 per cent from the $0.29125 per share dividend declared one year earlier and consistent with our multi-year dividend growth program.
TELUS makes significant contributions and investments in the communities where team members live, work and serve and to the Canadian economy on behalf of customers, shareholders and team members. These include:
Giving back to our communities
Ensuring access to vital connectivity
Prioritizing health and wellbeing
Global Social Capitalism Awards and Recognition
TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications technology company with $16 billion in annual revenue and 16 million customer connections spanning wireless, data, IP, voice, television, entertainment, video, and security. We leverage our global-leading technology and compassion to enable remarkable human outcomes. Our longstanding commitment to putting our customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. In 2020, TELUS was recognized as having the fastest wireless network in the world, reinforcing our commitment to provide Canadians with access to superior technology that connects us to the people, resources and information that make our lives better. TELUS Health is Canada's leader in digital health technology, improving access to health and wellness services and revolutionizing the flow of health information across the continuum of care. TELUS Agriculture provides innovative digital solutions throughout the agriculture value chain, supporting better food outcomes from improved agri-business data insights and processes. TELUS International (TSX and NYSE: TIXT) is a leading digital customer experience innovator that delivers next-generation AI and content management solutions for global brands across the technology and games, ecommerce and FinTech, communications and media, healthcare, travel and hospitality sectors. TELUS and TELUS International operate in 25+ countries around the world. Together, let's make the future friendly.
Driven by our passionate social purpose to connect all citizens for good, our deeply meaningful and enduring philosophy to give where we live has inspired TELUS, our team members and retirees to contribute more than $820 million and 1.6 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world.
For more information about TELUS, please visit telus.com
Caution regarding forward-looking statements
This news release contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, we, us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.
Forward-looking statements include any statements that do not refer to historical facts. They include, but are not limited to, statements relating to our objectives and our strategies to achieve those objectives, including the anticipated benefits and efficiencies of the accelerated investments in fibre and 5G that we plan to make, the timing of our accelerated investment program, statements regarding our sustainability strategy, targets to reduce emissions including our sustainability performance target (as defined in Section 1.3 of the second quarter 2021 MD&A), our commitment to report annually on our performance in reducing scope 1 and 2 GHG emissions, our commitment to obtain an annual independent and external verification of our performance against the sustainability performance target and to report such performance and such independent and external verification, our plans and expectations regarding the impact of the COVID-19 pandemic and responses to it, and our multi-year dividend growth program. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, predict, seek, should, strive and will. These statements are made pursuant to the "safe harbour" provisions of applicable securities laws in Canada and the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements are subject to inherent risks and uncertainties and are based on assumptions, including assumptions about future economic conditions and courses of action. These assumptions may ultimately prove to have been inaccurate and, as a result, our actual results or events may differ materially from our expectations expressed in or implied by the forward-looking statements.
The assumptions for our 2021 outlook, as described in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings of our 2020 annual MD&A, remain the same, except for the following:
The extent to which these economic growth estimates affect us and the timing of their impact will depend upon the actual experience of specific sectors of the Canadian economy.
Risks and uncertainties that could cause actual performance or events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following:
These risks are described in additional detail in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings and Section 10 Risks and risk management in our 2020 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement but are not intended to be a complete list of the risks that could affect TELUS.
Many of these factors are beyond our control or our current expectations or knowledge. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation. Except as otherwise indicated in this document, the forward-looking statements made herein do not reflect the potential impact of any non-recurring or special items or any mergers, acquisitions, dispositions or other business combinations or transactions that may be announced or that may occur after the date of this document.
Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements in this document describe our expectations and are based on our assumptions as at the date of this document and are subject to change after this date. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements. The forward-looking statements in this news release are presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2021 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes.
This cautionary statement qualifies all of the forward-looking statements in this document.
Non-GAAP and other financial measures
We have issued guidance on and report certain non-GAAP measures that are used to evaluate the performance of TELUS, as well as to determine compliance with debt covenants and to manage our capital structure. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined, qualified and reconciled with their nearest GAAP measure. Certain of the metrics do not have generally accepted industry definitions.
Adjusted net income and adjusted basic earnings per share: These measures are used to evaluate performance at a consolidated level and exclude items that, in management's view, may obscure the underlying trends in business performance. These measures should not be considered alternatives to Net income and basic earnings per share in measuring TELUS' performance.
Reconciliation of adjusted net income
|Three months ended
|C$ and in millions||2021||2020||Change|
|Net income attributable to Common Shares||335||290||45|
|Restructuring and other costs, after income taxes||26||42||(16||)|
|Income tax-related adjustments||(14||)||2||(16||)|
|Other equity losses related to real estate joint ventures||1||3||(2||)|
|Long-term debt prepayment premium, after income taxes||—||14||(14||)|
|Retirement of a provision arising from business acquisition-related written put options within DLCX, after income taxes||—||(35||)||35|
|Adjusted Net income||348||316||32|
Reconciliation of adjusted basic EPS
|Three months ended
|Restructuring and other costs, after income taxes, per share||0.02||0.04||(0.02||)|
|Income tax-related adjustments, per share||(0.01||)||—||(0.01||)|
|Long-term debt prepayment premium, after income taxes, per share||—||0.01||(0.01||)|
|Retirement of a provision arising from business acquisition-related written put options within DLCX, after income taxes, per share||—||(0.03||)||0.03|
|Adjusted basic EPS||0.26||0.25||0.01|
EBITDA (earnings before interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used to evaluate performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should not be considered an alternative to Net income in measuring TELUS' performance, nor should it be used as a measure of cash flow. EBITDA as calculated by TELUS is equivalent to Operating revenues and other income less the total of Goods and services purchased expense and Employee benefits expense.
We also calculate Adjusted EBITDA to exclude items of an unusual nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should not be included in an assessment of our ability to service or incur debt.
|Three months ended
|C$ and in millions||2021||2020|
|Amortization of intangible assets||266||220|
|Add restructuring and other costs included in EBITDA||38||70|
|EBITDA - excluding restructuring and other costs||1,489||1,429|
|Add other equity losses related to real estate joint ventures||1||3|
|Deduct retirement of a provision arising from business acquisition-related written put options within DLCX||—||(71||)|
Free cash flow: We report this measure as a supplementary indicator of our operating performance, and there is no generally accepted industry definition of free cash flow. It should not be considered an alternative to the measures in the condensed interim consolidated statements of cash flows. Free cash flow excludes certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the condensed interim consolidated statements of cash flows. It provides an indication of how much cash generated by operations is available after capital expenditures (excluding purchases of spectrum licences) that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting changes that do not impact cash, such as IFRS 15 and IFRS 16. Free cash flow may be supplemented from time to time by proceeds from divested assets or financing activities.
|Free cash flow calculation|
|Three months ended
|C$ and in millions||2021||2020|
|Deduct non-cash gains from the sale of property, plant and equipment||—||1|
|Restructuring and other costs, net of disbursements||(2||)||14|
|Effects of contract asset, acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment device financing||33||102|
|Effects of lease principal (IFRS 16 impact)||(124||)||(81||)|
|Leases formerly accounted for as finance leases (IFRS 16 impact)||—||27|
|Items from the condensed interim consolidated statements of cash flows:|
|Share-based compensation, net||52||41|
|Net employee defined benefit plans expense||30||25|
|Employer contributions to employee defined benefit plans||(12||)||(12||)|
|Capital expenditures (excluding spectrum licences)1||(913||)||(756||)|
|Free cash flow before income taxes||343||524|
|Income taxes paid, net of refunds||(133||)||(13||)|
|Free cash flow||210||511|
(1) Refer to Note 31 of the consolidated financial statements for further information.
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