VANCOUVER – Targeted promotions attracted more wireless customers for Telus, resulting in a 16.7% lift in first quarter profits, the company said Thursday.
For the period ended March 31, 2017, consolidated operating revenue increased 2.9% to $3.2 billion over the same period a year ago, reflecting higher revenue from data services and subscriber growth in both wireless and wireline operations, while earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 11% to $1.3 billion.
When excluding restructuring and other costs, adjusted EBITDA was up 6.4% to $1.3 billion, reflecting higher revenue growth, as well as ongoing execution of operational efficiency and effectiveness initiatives.
Net income grew 16.7% to $441 million reflecting EBITDA growth, partially offset by higher depreciation and amortization expenses. When excluding restructuring and other costs and unfavourable income tax-related adjustments adjusted net income increased by 5.6%.
Free cash flow of $217 million in the first quarter doubled from $108 million a year ago due to lower cash taxes paid and higher EBITDA, partially offset by an increase in capital expenditures.
In wireless, network revenue growth was driven by a 12% increase in data revenue, reflecting a larger proportion of higher-rate two-year plans in the revenue mix, including Premium Plus plans, increased adoption of larger data buckets or topping up of data buckets, continued subscriber growth, a more favourable postpaid subscriber mix, and higher data-related roaming revenues.
In wireline, data services and equipment revenue growth of 4.2% was generated by increased Internet and enhanced data service revenues from continued high-speed Internet subscriber growth and higher revenue per customer, growth in business process outsourcing revenues, an increase in Telus TV revenues from subscriber growth and higher Telus Health revenues.
In the quarter, Telus attracted 75,000 new wireless postpaid, high-speed Internet and TV customers, up 44,000 over the same quarter a year ago. The higher net additions included 44,000 wireless postpaid customers, 24,000 high-speed Internet subscribers, and 7,000 Telus TV customers. Telus ' total wireless subscriber base of 8.6 million is up 2.3% year-over-year, reflecting a 3.8% increase in the postpaid subscriber base to 7.6 million. The company's high-speed Internet connections have increased 5.4% to 1.7 million, while Telus TV subscribers are higher by 5.3% to 1.1 million.
Telus added that its wireless monthly postpaid churn rate of 0.93% has now been below 1% for 14 of the past 15 quarters.
"Telus continued to demonstrate the quality and effectiveness of the company's long-term strategy in the first quarter by delivering industry-leading revenue and EBITDA growth in conjunction with the best customer loyalty in our industry," said president and CEO Darren Entwistle, in a statement. "Through the consistency of our strong results owing to our skilled team's dedicated execution of our strategy, we are increasing our industry-leading 2017 financial targets to reflect additional revenue and EBITDA growth opportunities, including those associated with the acquisition of MTS customers. Moreover, we are once again raising our quarterly dividend by 7.1 per cent, commensurate with our dividend growth model that is underpinned by our strong financial and operational results."
The company revised its 2017 revenue targets to between $13.18 billion – $13.31 billion (up between 3 – 4% from an earlier forecast), and predicted EBITDA growth of $4.88 billion – $5.04 billion (up 3.5 – 7.0%.)
The full details of Telus’ Q4 2016 financial results are available here.
