VANCOUVER – Despite growth in operating revenue, Telus posted flat profits in the third quarter ended September 30, 2104.
Consolidated operating revenue increased 5.4% to $3.02 billion, while net income of $355 million was flat year-over-year. Adjusted net income increased by 6.0% to $387 million. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 2.9% to $1.07 billion, though EBITDA excluding restructuring and other like costs increased by 4.3% to $1.1 billion.
Telus said that consolidated revenue growth was generated by strength in both its wireless and wireline operations, with network wireless revenue up 6.6% to $1.54 billion and wireline revenue up 2.5% to $1.34 billion from a year ago.
In wireless, revenue was primarily driven by continued subscriber growth and higher data usage as a result of continued smartphone adoption and the expansion of Telus' LTE network coverage. Smartphone subscribers now represent 80% of Telus' postpaid base, up from 75% a year ago.
Wireline strength was driven by data revenue growth of 7.1%, generated primarily by high-speed Internet subscriber growth and higher revenue per customer, and Telus TV subscriber growth, partially offset by continued declines in legacy voice local and long-distance revenues. Data revenue from both wireless and wireline operations increased by 14% over the same period a year ago to $1.65 billion.
Telus attracted a total of 136,000 net new customer connections (excluding Public Mobile) in the quarter, driven by the gain of 113,000 wireless postpaid customers, 23,000 Telus TV subscribers and 22,000 high-speed Internet customers, partially mitigated by the moderating loss of residential access lines. Telus' total wireless subscriber base is up 2.3% from a year ago to 8.0 million, high-speed Internet connections are up 5.7% to 1.45 million, and Telus TV subscribers are up 14% to 888,000.
“Telus’ performance in the third quarter demonstrates that putting customers first delivers consistent results”, said president and CEO Joe Natale, in the press release. “We are committed to delivering upon what Canadians deserve from their telecom, Internet and TV provider, while simultaneously growing our businesses and producing meaningful returns for our shareholders.”
Telus credited its ongoing customers first focus for a nine basis point year-over-year improvement in monthly postpaid wireless subscriber churn to a record low 0.90 per cent, the fifth consecutive quarter this important metric was below one per cent.
Free cash flow of $219 million was lower by 40% from a year ago as higher EBITDA was more than offset primarily by higher capital expenditures (excluding spectrum licences), interest and income tax payments.
