VANCOUVER – A six per cent increase in revenues, compared to a year ago, to $2.21 billion highlighted first quarter results from Telus.
The company cited continued strong wireless and data growth as primary drivers.
However, reported earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings per share (EPS) were negatively impacted in the quarter by a previously announced non-recurring and non cash charge of $173.5 million associated with the introduction of a new cash settlement feature for employee share options granted prior to 2005, says the press release. The benefits of the new feature include reducing share dilution and generating cash tax savings of up to $70 million over three years.
Adjusted for this charge, underlying EBITDA and EPS increased 8.7% and 50%, to $938 million and 90 cents, respectively, when compared to the same period a year ago. EBITDA as adjusted increased due to wireless growth and lower restructuring costs. Free cash flow this quarter was lower due to higher capital expenditures and the receipt, in the first quarter of 2006, of a large income tax recovery, says the Telus release.
"The momentum from our winning strategy since its inception in 2000 has continued in 2007 and we have started the year strongly with good first quarter financial results underpinned by wireless revenue growth of 13% and underlying wireline data revenue growth of almost 11%," said Darren Entwistle, president and CEO, in the release. "The focused execution of our national growth strategy is producing a superior asset mix for Telus such that 46% of our consolidated revenue is generated by wireless and 19% from wireline data."
"The continued resilience of Telus’ traditional wireline business is also encouraging," Entwistle added. And, along with his telecom peers, he also lauded the federal government’s move towards local phone deregulation. "Accordingly we have made applications for deregulation in six cities that cover almost one million consumers in our incumbent territories," he said.
Some highlights, as set out in the Telus release:
Telus wireless
* Revenues increased by $118 million or 13% to $1 billion in the first quarter of 2007, when compared with the same period in 2006
* ARPU (average revenue per user per month) improved by 2.9% to $62.03. The data component increased by 69% to $6.27, which more than offset the decline in voice ARPU
* EBITDA (as adjusted) increased by $68 million over the first quarter of 2006 representing 17% growth
* Cost of acquisition per gross addition of $438 increased slightly at 2% year over year.
* Net subscriber additions were 90,500, down slightly by 2%. Postpaid additions totaled 60,800 while prepaid loading was 29,700
* Blended monthly churn was stable at 1.35% compared to 1.33% a year ago, while postpaid churn remained low at 0.97%
* Cash flow (EBITDA less capital expenditures) based on EBITDA as adjusted increased $18 million or 5.4% to $353 million in the quarter due to higher EBITDA partially offset by increased capital expenditures, which included implementation of wireless number portability.
Telus wireline
* Revenues increased slightly by $7 million or 0.6% to $1.21 billion in the first quarter of 2007, when compared with the same period in 2006 due to data growth, offsetting declines in local and long distance revenues
* Data revenues increased by $31 million or 8% due to strong high-speed Internet and enhanced data service growth. Excluding the impact of two retroactive mandated competitor price reductions the actual underlying growth rate was 10.8%
* Long-distance revenue declined $20 million or 10% due primarily to lower average per-minute rates partly offset by increased retail and wholesale minute volumes
* EBITDA (as adjusted) increased by $7 million or 1.5%, due to a modest increase in revenues and lower restructuring charges
* High-speed Internet net additions were 32,100, taking Telus’ high- speed base to 949,000, an 18% increase from a year ago. The total Internet subscriber base topped 1.13 million
* Network access lines declined by 22,000 in the quarter, with total NALs down 2.9% from a year ago reflecting 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) based on EBITDA as adjusted declined 2% to $203 million, due to increased capital expenditures reflecting increased spending to support new enterprise customers in Central Canada as well as on broadband infrastructure.
The release does not address the company’s nascent video product, Telus TV.
