VANCOUVER – Fourth quarter 2007 revenue at Telus came in at $2.33 billion, an increase of 3.4% from a year ago, the western telco announced this morning.
“The performance was driven by 9% growth in wireless revenue and 7% growth in wireline data revenue, partially offset by declines in local and long distance wireline revenues. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) increased 8% to $953 million due to a 14% increase in the wireless segment and 2% increase in the wireline segment,” reads the release
Net income in the quarter ended December 31, 2007, was $400 million and earnings per share (EPS) was $1.23, up 66% and 73% respectively compared to Q4 2006. Net income and EPS included favourable tax related adjustments of approximately $143 million or 44 cents per share, compared to $20 million or six cents a year ago, says the company. Also contributing to the increase in EPS were lower financing charges and a reduction in shares outstanding from continued share repurchases. Excluding tax related adjustments in both periods and the charge for the net-cash settlement feature for share options this period, net income was $258 million and EPS was $0.79, up 17% and 22%, respectively. Free cash flow was up 85% despite higher capital expenditures, due to the same positive factors that boosted EPS, says the release.
For the full year, Telus reported revenue growth of 4.5% to $9.1 billion and 4% growth in EBITDA (adjusted for comparability). Telus invested $1.77 billion in capital expenditures and generated healthy free cash flow of $1.57 billion, which funded shareholder dividends of $521 million and the repurchase of $750 million of Telus shares during the year. Telus met or exceeded three of four initial consolidated financial 2007 targets set more than a year ago, including both profitability targets, the company noted.
"Despite a turbulent year in the telecom industry and capital markets, Telus’ performance was solid as we focused on delivering against our long-standing national growth strategy," said Darren Entwistle, Telus president and CEO, in the release. "Disciplined performance in the fourth quarter allowed Telus to end the year on a positive note, which bodes well for 2008.
"Telus continues to generate strong cash flow that we are deploying three ways," he added. "We invested almost $1.8 billion in capital expenditures, much of it directed to new service initiatives and to generate long-term growth, and we returned to shareholders almost $1.3 billion in the form of value creating share buybacks and increased dividends."
Telus wireless highlights
* Revenues increased by $90 million or 8.8% to $1.1 billion in the fourth quarter of 2007, when compared with the same period in 2006
* Wireless data revenue increased $39 million or 43% due to adoption of full function personal data devices and increased text messaging
* Net subscriber additions were 161,400, an 11% decrease from the same quarter in 2006. Postpaid additions were 106,400, down 18%, while prepaid loading increased by 5.6% to 55,000, which included a one- time reduction of 5,100, for a clean-up of deactivated accounts.
* ARPU (average revenue per subscriber unit per month) decreased by 1.2% to $63.70 continuing the trend experienced in the third quarter due to the competitive impacts on the voice component. The fast growing data component at $7.95 represents 12.5% of ARPU
* EBITDA increased by $59 million over the fourth quarter of 2006, representing 14% growth, due to network revenue growth and lower COA expense
* Cost of acquisition per gross addition decreased 19% year-over-year to $352
* Blended monthly subscriber churn increased to 1.59% from 1.33% a year ago due to product mix shifting to prepaid combined with higher deactivations associated with introduction of WNP in 2007 Postpaid churn increased slightly to 1.14%
* Cash flow (EBITDA less capital expenditures) increased $29 million or 9% to $355 million in the quarter due to an increase in EBITDA. Capital expenditures also increased with continued investments in capacity and coverage.
Telus wireline highlights:
* Revenues decreased by $14 million or 1.1% to $1.2 billion in the fourth quarter of 2007, when compared with the same period in 2006. Data growth was offset by declines in local and long distance revenues
* Data revenues increased by $31 million or 7.2% due to increased high-speed Internet subscribers and enhanced data and hosting services
* Telus added 26,200 net high-speed Internet subscribers, pushing Telus’ high-speed base to more than one million, an 11% increase from a year ago. High-speed net adds were much lower than a year ago reflecting a mix of competitive and market factors
* EBITDA increased by $10 million or 2.2%, due to lower cost of sales associated with voice and data equipment and increased capitalization of labour
* Network access lines (NALs) declined by 39,000 in the quarter, down 3.2% from a year ago. This reflects continued residential line losses from ongoing competitive activity and wireless substitution partially mitigated by an increase in business access lines
* Cash flow (EBITDA less capital expenditures) declined 12% to $125 million, due to an increase in capex for new phases of the billing and client care system development in B.C. as well as upfront capital investments to support new contract wins.
