VANCOUVER — Telus today reported strong growth for its fourth quarter of 2014, with a 6.1% increase in consolidated operating revenue from a year earlier, driven by revenue and earnings growth in both its wireless and wireline businesses.
Telus’s operating revenues for Q4 2014 totalled $3.1 billion, and the company’s Q4 EBITDA increased by 5.3% to $1.0 billion. Net income of $312 million was higher by 7.6% as compared to the same quarter last year, while basic earnings per share (EPS) rose by 8.5% to $0.51.
In total, Telus’s consolidated operating revenues for the full 2014 fiscal year were $12 billion and its EBITDA, including restructuring costs, was $4.2 billion, according to the financial result highlights included in a press release issued this morning.
In the fourth quarter of 2014, Telus’s wireless network revenues were $1.55 billion, an 8% increase compared to the same quarter a year ago. Telus attributed this growth to continued subscriber base expansion, higher data usage due to increased smartphone adoption, the expansion of Telus’s LTE network coverage, higher wholesale data roaming revenues and increased customer adoption of higher-rate two-year plans.
Telus wireless blended ARPU (excluding Public Mobile) increased by 3.8% to $64.20 in Q4 2014, reflecting Telus’s seventeenth consecutive quarter of year-over-year growth. Its monthly postpaid subscriber churn declined three basis points year-over-year to 0.94%, while its blended monthly churn (excluding Public Mobile) was down eight basis points to reach 1.33%.
Again excluding Public Mobile figures, Telus reported Q4 total wireless net additions of 110,000 increased by 21%, with postpaid net adds of 118,000 increasing by 4.4% and prepaid net losses of 8,000 improving by 14,000 year-over-year. Telus’s total wireless subscriber base (excluding Public Mobile) was up 3.8% or 293,000 from a year ago to 8.1 million. Smartphone subscribers now represent 81% of Telus’s postpaid base, up from 77% a year ago.
Telus wireless EBITDA increased 6.3% or $37 million to $629 million over last year, primarily due to network revenue growth, partially offset by higher retention costs and higher customer service and network operating expenses required to support the company’s larger customer base. Wireless EBITDA less capital expenditures increased to $441 million in Q4 due to higher EBITDA and lower capital expenditures.
On the wireline side of its business, Telus reported its external wireline revenues increased by 1.5% to $1.38 billion in the fourth quarter of 2014, when compared with the same period a year ago. However, its wireline data service and equipment revenues increased by 7.1%, due to higher Internet and enhanced data revenues from continued high-speed Internet subscriber growth and higher revenue per customer, a higher Telus TV subscriber base, growth in business process outsourcing services and increased Telus Health revenues.
Telus reported high-speed Internet net additions of 22,000 in Q4, bringing its total high-speed subscriber base to 1.48 million, which is up 80,000 or 5.7% from a year ago. Total Telus TV net additions of 28,000 in Q4 were lower by 10,000 from the same quarter last year, due primarily to slower market growth. Telus’s total TV subscriber base of 916,000 increased by 101,000, or 12%, from a year ago.
Telus total network access lines (NALs) declined by 25,000 in Q4, compared to a loss of 30,000 a year ago. Residential NAL losses of 20,000 actually reflect an improvement of 5,000 or 20% over the same period a year ago, while business NAL losses of 5,000 were unchanged year-over-year.
Telus wireline EBITDA increased 3.4% to $372 million in Q4 compared to the same period last year. Telus attributed this improvement to continued growth in high-speed Internet, enhanced data and Telus TV revenues as well as ongoing operating efficiency initiatives.
As part of its consolidated financial results, Telus reported the company’s overall free cash flow of $337 million was higher by 148% from a year ago, driven by higher EBITDA, lower income tax payments, and lower employer contributions to employee-defined benefit pension plans.
During the fourth quarter, Telus returned $345 million to shareholders, consisting of $233 million in dividends paid and $112 million in share purchases under its advanced 2015 normal course issuer bid (NCIB) program.
For the full fiscal year, Telus returned $1.5 billion to shareholders, consisting of $913 million in dividends and the purchase of approximately 15.8 million common shares for $612 million under its 2014 and advanced 2015 NCIB programs.
Telus also announced today its 2015 financial targets, saying it will continue to build on the positive results achieved in both the wireless and wireline data segments of its business.
For 2015, Telus is targeting consolidated year-over-year revenue growth of between 3% and 5%, while EBITDA including restructuring and other similar costs is targeted to be higher by 3% to 7%. Telus is targeting its basic EPS to be higher by 4% to 13%, due to EBITDA growth combined with lower shares outstanding reflecting its share purchase programs.
Telus’s consolidated capital expenditures in 2015, excluding spectrum licences, are targeted to be similar to 2014, which amounted to more than $2.3 billion. Telus said it plans to continue making investments in its wireline and wireless broadband infrastructure, including connecting more homes and businesses directly to fibre and the continued deployment of 700 MHz wireless spectrum.
Finally, Telus declared a quarterly dividend of $0.40 per share on the issued and outstanding common shares of the company, payable on April 1, 2015, which represents an 11.1% increase from the $0.36 quarterly dividend paid on April 1, 2014.
“During the year, we earned the privilege of providing service to an industry-leading 538,000 new customers across postpaid wireless, TV and high-speed Internet while maintaining our leadership in having the most loyal customers in the industry,” Darren Entwistle, Telus executive chair, said in the company’s news release. “Notably we realized an annualized postpaid wireless churn rate of 0.93% — the best full-year churn result we have ever achieved, while churn for high-speed Internet and TV also declined.”
Telus president and CEO Joe Natale added: “Customers vote with their feet every day, and it is gratifying to see them consistently voting to stay with Telus, or to join us from another provider. Putting customers first is the foundation of our business strategy, a source of great inspiration and motivation for our team, and ultimately the reason we continue to deliver strong financial results.”
