Telus leads in wireless subscriber growth
Telecom’s revenue beats estimates, despite costs related to closure of Blacks
Telus Corp. says second quarter profit took a hit on restructuring costs related to the closure of its Blacks Photography stores, but quarterly revenue topped estimates thanks to gains in wireless customers.
The Vancouver-based telecom, cable and Internet service provider said Friday that sales for the three months ended June 30 rose 5.1 per cent to $3.1 billion, just ahead of the consensus analyst forecast.
Net income fell to $341 million, or 56 cents per share from a year earlier $381 million, or 62 cents on what Barclays analyst Phillip Huang called a bigger than expected impact from closure of the retail photography chain in June, along with higher corporate taxes in Alberta.
Profit after $59 million in restructuring and other one-time costs rose 4.9 per cent to $406 million and earnings per share matched the consensus estimate at 66 cents.
Telus grabbed the lion’s share of postpaid net wireless subscriber additions among the big three carriers in the quarter, adding 76,000 compared with 61,000 for BCE and 24,000 for Rogers and versus the analyst forecast for a gain of 54,000.
Wireless revenue rose 6.1 per cent to $1.57 billion, aided by sharp data usage growth and higher prices while the total wireless subscriber base increased 3.3 per cent from a year ago to 8.35 million.
Desjardins analyst Maher Yaghi said the company’s long-term focus on customer satisfaction underpins its industry-leading customer retention performance.
He said Telus is losing fewer of the most profitable postpaid wireless customers than rivals amid regulatory changes that left about 40 per cent of wireless users in Canada free to switch providers during the second quarter.
Telus said it added 22,000 Internet connections and 17,000 TV customers in the quarter and expects to spend more than initially forecast to build out its high-speed Internet network this year.
It said fixed line revenue rose 2.4 per cent to $1.38 billion, with growth in Internet and TV offsetting a decline in legacy voice services.
TV net adds were less than expected due to competition from on demand Web services, Huang said, but the broadband business was stronger thanks to expansion of fibre footprint. Business line loss was higher than analysts predicted largely due to economic sluggishness in Alberta.
On a conference call with analysts, CEO Joe Natale said the decline of Alberta enterprise business is “very manageable,” saying impacts are offset by strength across Telus operations.