VANCOUVER – Despite subscriber growth in both wireless and wireline operations, Telus saw fourth quarter profits plunge 69%, the company reported Thursday.
For the period ended December 31, net income fell to $87 million from $261 million year-over-year, impacted by higher restructuring and others costs, primarily reflecting a $305 million one-time “transformative compensation expense” made to employees. When excluding restructuring and other costs, net gains and equity income from real estate joint venture developments, and favourable income tax-related adjustments, adjusted net income dipped 2.5%.
Consolidated operating revenue increased 2.7% to $3.3 billion over the same period a year ago, reflecting higher data revenue and subscriber growth in both wireless and wireline operations, while earnings before interest, income taxes, depreciation and amortization (EBITDA) dropped 21% to $769 million due to the higher restructuring and other costs including the transformative compensation mentioned above.
When excluding restructuring and other costs as well as net gains and equity income related to real estate joint venture developments in the quarter, adjusted EBITDA was up 3.1% to $1.1 billion, and up 5.1% when excluding a non-recurring gain on certain real estate assets in the fourth quarter of 2015. Telus said that this growth reflects higher wireless and wireline revenue, as well as ongoing operational efficiency and effectiveness initiatives.
In wireless, network revenue growth was driven by an 11% increase in data revenue, reflecting a larger proportion of higher-rate two-year plans in the revenue mix, increased adoption of larger data buckets or topping up of data buckets, continued subscriber growth, a more favourable postpaid subscriber mix, and increased data usage from data-intensive devices. In wireline, data revenue growth of 6.1% was generated by increased Internet and enhanced data service revenues from continued high-speed Internet subscriber growth and higher revenue per customer, growth in business process outsourcing revenues, and an increase in Telus TV revenues from subscriber growth and higher revenue per customer.
In the quarter, Telus added 127,000 new wireless postpaid, high-speed Internet and TV customers, up 18,000 over the same quarter a year ago and up 12,000 sequentially over the prior quarter. Net additions in the quarter included 87,000 wireless postpaid customers, 24,000 high-speed Internet subscribers, and 16,000 Telus TV customers. These gains were partially offset by the ongoing loss of traditional telephone network access lines and a moderating decline in wireless prepaid customers. The company's total wireless subscriber base of 8.6 million is up 1.5% from a year ago, reflecting a 2.7% increase in the postpaid subscriber base to more than 7.5 million. High-speed Internet connections have increased 5.7% to 1.7 million, while Telus TV subscribers are higher by 5.4% to more than 1 million.
"As we look to 2017, Telus is once again providing industry-leading revenue, EBITDA and dividend growth targets, highlighting the confidence we have in the entire global Telus organization”, said president and CEO Darren Entwistle, in a statement. These targets are representative of the ongoing excellence of our long-term strategy, reflecting the consistency, diversity and combined strength of both our wireless and wireline operating segments that underpin our shareholder-friendly initiatives."
For 2017, Telus is projecting revenue growth in the range of 2.5% – 3.5%, and EBITDA growth of 3.0% – 6.0%.
The full details of Telus’ Q4 2016 financial results are available here.
