VANCOUVER – Telus lowered its 2009 guidance to investors after reporting a drop in revenue and profit for its third quarter ended September 30, 2009.
Net income dipped 2% to $280 million which included favourable income tax-related adjustments related to prior years’ tax matters. Excluding income tax-related adjustments, net income dropped by 7%.
Operating revenue was $2.4 billion, a decrease of $39 million from last year. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 5% primarily due to lower revenues, higher defined benefit pension plan expenses, and higher restructuring costs from ongoing operating efficiency initiatives.
The company said that its revenue decrease reflects continued declines in voice revenues. Data and wireless revenues grew modestly, affected by a weak economic environment and intense competition. Total customer connections of 11.9 million were 326,000 higher than a year ago due to growth in wireless, Telus TV and high speed Internet.
“While we continue to appropriately focus on investing in cost reduction initiatives given the economic and competitive environment, we are at an exciting inflection point in respect of our major growth investments as we transition into the commercialization phase of our wireless and wireline broadband expansion initiatives”, said EVP and CFO Robert McFarlane, in a statement. “As a result, we expect capital expenditures to peak in the second half of 2009, while subscriber growth in wireless, Internet and TV should accelerate."
In its wireless division, net subscriber additions of 125,000 decreased 29% from the same period a year ago, when excluding the deactivation of subscribers from the turndown of the analogue network one year ago, but improved 13% sequentially.
Average revenue per subscriber unit per month declined by 7.3% to $59.45 compared to the same quarter a year ago, while wireless data evenue increased $48 million (27%) due to the continued adoption of full function smart phones and mobile Internet keys, and increased use of data services such as text messaging and social networking.
Over in the wireline division, high-speed Internet net additions of 9,000 were down from 13,000 in the same period a year ago, due to a maturing market and promotional activity from cable-TV competitors.
Telus TV net additions were 22,000, an increase of 83% over the same period last year, due to enhanced broadband coverage, expanded marketing efforts and the introduction of Telus satellite TV service that supplements the coverage of IP-based services.
Network access lines (NALs) declined by 44,000 in the quarter to 4.1 million, which is down 4.3% from a year ago. Residential NAL losses of 41,000 improved year-over-year due to more effective winbacks and from the benefit of bundling services, including Telus TV. A decrease in business NALs in Western Canada due to economic and competitive factors more than offset increased business lines in Ontario and Quebec.
