Telus income slips 10%, beats estimates

Telus Corp., which in June lost out in its efforts to land upstart Mobilicity, posted strong financial results Friday amid turbulent economic times in Canada’s oilpatch.

Telus recorded adjusted net income of $ 406 million and revenue of $ 3.1 billion in its second quarter, narrowly beating analysts’ estimates of $ 396.8 million and $ 3.08 billion, respectively.

Net income fell 10 per cent compared with last year, hampered by higher restructuring and other like costs mostly related to the closure of 59 Blacks photography stores and a non- cash adjustment of $ 48 million to revalue deferred income tax liabilities in response to a hike in Alberta’s corporate income tax rate to 12 per cent from 10 per cent, and an asset retirement charge.

Once again, the company credited its net additions of 76,000 postpaid wireless clients to its monthly churn rate of 0.86 per cent, the eighth consecutive quar- ter this metric has been below one per cent. Analysts at RBC Capital Markets called this feat “impressive,” adding the growth in its base of subscribers was “strong.”

“We’re going to continue putting pressure on that ( churn) number because it’s the magic formula of our wireless business,” chief executive Joe Natale told analysts during the earnings call. “Churn allows us to be more disciplined when it comes to promotional periods,” such as the coming back- to- school rush, “because we’re not gasping for air around loading,” or when a carrier adds subscribers.

The company also posted a three per cent boost to its blended average monthly revenue per user of $ 63.48. It expects to see between a $ 7 and $ 10 lift in the APRU figure every time a subscriber upgrades from an older device to a newer one that consumes faster, pricier longterm evolution ( LTE) services, Natale added.

In this area, the country ’s Big Three carriers surprised t he Street. Telus’s addition of new postpaid subscribers beat analysts expectations of 55,200. BCE Inc. added 61,033, versus the estimated 56,000. Rogers Communications Inc. snapped a losing streak and gained 24,000, more than the estimated 6,000.

In its wireline unit, Telus attracted 22,000 new high- speed Internet and 17,000 new TV subscribers. It has 1.5 million and 954,000 clients in those two categories, respectively. Notably, Natale said 80 per cent of Telus’ new TV customers weren’t already signed up for residential services.

As of June 30, its high- speed broadband coverag e r eached more than 2.8 million households in British Columbia, Alberta and eastern Quebec.

Telus shares in Toronto closed Friday at $ 44.57, down 24 cents or 0.54 per cent.

We’re going to continue putting pressure on that ( churn) number because it’s the magic formula of our wireless business.