VANCOUVER – Higher operating expenses cut in to first quarter profits at Telus, the company said Thursday.
For the period ended March 31, operating expenses before depreciation and amortization jumped 8.2% to $2.11 billion compared to $1.95 billion year-over-year.
Telus said that net income of $412 million was 2.4% lower than the $422 million posted in the same period a year ago due to a $30 million increase to restructuring and other costs driven by efficiency initiatives, increased financing costs, as well as higher income taxes reflecting an increase to the B.C. corporate income tax rate.
Consolidated operating revenue increased by 6% to $3.4 billion year-over-year, primarily due to higher consolidated service revenues due to continued growth in wireless network revenue and wireline data services revenue.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 2.7% to $1.3 billion as a result of higher service revenue growth, partially offset by increased costs to support higher wireless gross loading and retention volumes as well as from increased employee benefits expense due to recent acquisitions. Adjusted EBITDA was up 5.2% when excluding restructuring and other costs. Excluding the effects of accounting standard IFRS 15, consolidated revenue and adjusted EBITDA were higher by 6.2% and 4.7% respectively.
In wireless, network revenue increased by 4% to $1.5 billion, reflecting continued postpaid subscriber growth, including subscribers acquired from Manitoba Telecom Services (MTS), and a higher proportion of customers selecting plans with larger data buckets or periodically topping up their data buckets.
Average billing per user per month (ABPU) was higher by 1.5% to $66.51, reflecting a higher proportion of higher-value postpaid and smartphone customers in the subscriber mix, and monthly postpaid subscriber churn edged up to 0.95% as compared to 0.93% a year ago.
In wireline, data services revenue increased by 9.8% to $1.1 billion, due to growth in customer care and business service (CCBS) outsourcing revenues primarily due to growth in business volumes from recent acquisitions, increased Internet and enhanced data service revenues from continued high-speed Internet subscriber growth and higher revenue per customer, higher Telus TV revenues from subscriber growth, increased equipment revenues in the business market and revenues from the company’s recently acquired home security business.
In the quarter, Telus added 76,000 new postpaid wireless, high-speed Internet and Telus TV customers, essentially flat when compared to the same period year-over-year. The higher net additions included 48,000 wireless postpaid net additions, 22,000 high-speed Internet subscribers, and 6,000 Telus TV customers. The company’s total wireless subscriber base of 8.9 million is up 4% from a year ago, reflecting a 5.7% lift in its postpaid subscriber base to 8.0 million. High-speed Internet connections are up 4.7% over the last twelve months and approaching 1.8 million, while the Telus TV subscriber base of 1.1 million is higher by 3.2%.
“Telus’ first quarter results reflect strong operational and financial performance, including healthy revenue and EBITDA expansion across both our wireless and wireline product portfolios in concert with robust customer growth”, said president and CEO Darren Entwistle, in a statement. “Our team achieved an important milestone in the first quarter as we surpassed 50 per cent coverage of our Optik footprint with our broadband network build program. This ongoing expansion will enable more customers to access our leading fibre technology while supporting the continued sustainable growth of our wireline and wireless services, including the advent of 5G.”
Click here for the full details of Telus’ Q1 2018 financial results.
