VANCOUVER – Competition and the struggling Alberta economy helped to weigh down fourth quarter profits at Telus, the company said Thursday.
For the period ended December 31, 2015, consolidated operating revenue grew 2.8% to $3.2 billion from $3.1 billion a year earlier, buoyed by higher data revenue in both wireless and wireline operations. Net income dropped 16.3% to $261 million from $312 million year-over-year due to “significant restructuring” and other costs. Adjusted net income dipped 1.2% to $324 million
Earnings before interest, income taxes, depreciation and amortization (EBITDA) fell 2.2% to $978 million, though EBITDA excluding restructuring and other like costs increased by 6.2% to $1.2 billion. EBITDA excluding restructuring and other costs was higher by 4.9%, increasing to $1.1 billion.
Free cash flow of $197 million in the fourth quarter was lower by $140 million from a year ago, primarily due to higher share-based compensation, higher capital expenditures and lower EBITDA.
Wireless network revenues grew 3% to $1.6 billion in the fourth quarter of 2015, when compared to the same period a year ago. This growth was driven by a 9.9% increase in data revenue, reflecting subscriber growth, an increased but moderating proportion of higher-rate two-year plans in the revenue mix, a more favourable postpaid subscriber mix, and increased data roaming, partially offset by the effects of an economic slowdown, particularly in Alberta, and ongoing decline in voice revenue.
External wireline revenues grew 4.4% to $1.4 billion year-over-year. This growth was generated by increased data service revenue, partially offset by continued declines in legacy voice and equipment revenues and lower business activity.
In the quarter, the company attracted 109,000 net wireless postpaid, high-speed Internet and TV customers. This included 62,000 wireless postpaid customers, 25,000 Telus TV customers and 22,000 high-speed Internet subscribers. These gains were partially offset by the ongoing loss of traditional telephone network access lines. Telus' total wireless subscriber base is up 2.1% from a year ago to 8.5 million, high-speed Internet connections have increased 6.2% to 1.6 million, and Telus TV subscribers are higher by 9.7% to 1 million.
"Telus delivered solid fourth quarter revenue, EBITDA, and subscriber growth in both its wireless and wireline businesses despite economic challenges impacting some of our customers in Alberta," said president and CEO Darren Entwistle, in a statement. “Our continued strong performance was the result of our unwavering focus on putting customers first and the ongoing execution and success of a winning strategy that focuses on long-term capital investment to drive sustainable growth.
Looking ahead to 2016, Telus predicted consolidated year-over-year revenue growth of between 2 – 3%, while EBITDA excluding restructuring and other costs is targeted to be higher by 3 – 6%.
