Adds 141,000 new customers
VANCOUVER – Telus today reported consolidated operating revenue of $3.7 billion in the second quarter of 2020, a 3.6% increase over the same period a year ago.
However, earnings before interest, income taxes, depreciation and amortization decreased by 1% to $1.4 billion while adjusted EBITDA was down 2.9%. This decline reflects the financial impacts arising from the Covid-19 pandemic, said the company’s press release, mainly thanks to lower wireless roaming revenue (partly offset by growth in wireline data service margins), expanded services and subscriber growth, an increased EBITDA contribution from our organic Telus International (TI) business, and cost efficiency programs.
The company also posted healthy free cash flow growth of more than 57% to $511 million while seeing quarterly profit drop 39% year-over-year.
“Telus achieved resilient financial and operational results in the second quarter, characterized by strong customer growth of over 141,000 net new additions, despite the challenges we faced in the quarter with respect to the Covid-19 pandemic,” said Darren Entwistle, president and CEO in the press release.
“Importantly, our strong first quarter results were attained as 95% of our domestic team members embraced a work-from-home environment,” he added.
Telus added 61,000 wireless customers, “comprised entirely of higher-value postpaid customers, and 47,000 wireline customer additions, driven by 37,000 internet and 12,000 security net additions, both up year-over-year,” continued Entwistle in the release.
“We believe the stronger net adds number was the result of Telus being noticeably more aggressive in the market over the past couple of months, including proactively dealing with free agents within its base,” said Canaccord Genuity telecom analyst Aravinda Galappatthige in an early note to investors this morning after results were released. Telus had some wireless promotional offers in the market during Q2 priced at $70/month for 20GB of data (at regular speed).
The company also posted record low postpaid churn of 0.59%. All companies are seeing this right now as far fewer customers were interested in shopping around for new communications providers during the pandemic lockdowns.
“For 2020, we are driving to flat to modestly positive EBITDA growth, and free cash flow within the lower-half of our original target range,” said the CEO. “Moreover, we remain hopeful that conditions will permit us to meet or exceed our targeted dividend increase when we report our third quarter results in November.”
The company’s release also outlined its $150 million worth of contributions to Covid-19 relief efforts across the country, such as the Telus Friendly Future Foundation contribution of $5.5 million to 326 charitable health projects and the launch of its virtual Telus Days of Giving where employees have participated in 200,000 Acts of Giving, including 450,000 volunteer hours served and 131,000 masks sewn.
Another highlight was the expansion of Telus Health, including its Health for Good mobile clinics to support with Covid-19 testing efforts (to which there have been 36,000 visits so far during the pandemic), the expansion of the Telus Internet for Good program, which has connected over 65,000 Canadians from low income families to low-cost $9.99/month) Telus internet.
