VANCOUVER — Higher data revenue and overall net increases in both wireless and wireline subscribers helped Telus continue to grow its revenues in the second quarter of 2016, the company said Friday.
Announcing its Q2 2016 financial results in a news release, Telus said it added 92,000 net new postpaid wireless, Internet and Telus TV customers during the quarter, and grew its consolidated operating revenue for the quarter to $3.1 billion, which is a 1.5% increase over its Q2 2015 operating revenues.
The company’s adjusted EBITDA in Q2 2016 was up 4.3% to $1.2 billion, when compared to the second quarter of 2015. Telus said this growth reflected higher revenue in wireless and wireline, as well as its execution of operational efficiency and effectiveness initiatives.
“Telus’s strong second quarter results and improved outlook reflect the effectiveness of our company’s industry leading customer service and the robustness of our multi-tenet growth strategy,” Darren Entwistle, Telus president and CEO, said in the news release. “Impressively, our team continues to deliver strong subscriber, revenue and EBITDA growth in both our wireless and wireline business despite the economic challenges in Alberta.”
The company said its wireless data revenue increase was driven by continued subscriber growth, a larger proportion of higher-rate two-year plans in the revenue mix, a more favourable postpaid subscriber mix, and increased data usage from the continued adoption of smartphones and other data-centric devices, plus greater use of applications and the expansion of Telus’s LTE network.
On the wireline side, data revenue was generated by growth in business process outsourcing revenues, an increase in Internet and enhanced data service revenues from continued high-speed Internet subscriber growth and higher revenue per customer, plus continued Telus TV subscriber growth, Telus said in its news release.
However, looking at the company’s actual net addition subscriber numbers for Q2 2016 (similar to but not quite the same as what Bell experienced in its second quarter), Telus added subscribers to its various services at a slower rate than it did a year ago in Q2 2015.
Telus had 61,000 postpaid wireless net additions in Q2 2016, which is a 19.7% decrease or 15,000 less net additions than it had in the same quarter last year. Telus attributed the slowdown in postpaid customer signup to lower gross additions resulting from the economic slowdown, particularly in Alberta, competitive intensity in the market, and the effect of higher handset prices on customer demand, as well as higher monthly churn. Telus’s total wireless net additions in Q2 2016 were 40,000, compared to net additions of 63,000 a year ago, resulting from lower postpaid net additions and higher prepaid net losses of 21,000, the company said.
High-speed Internet net additions were also down in Q2 2016. Telus added 18,000 net new Internet subscribers in the second quarter, which are 4,000 less than it added in the same quarter a year ago. Telus also attributed this to increased competitive intensity and the impact of the economic slowdown leading to a higher customer churn rate, which was partly offset by the ongoing expansion of Telus’s high-speed broadband footprint in urban and rural communities, including fibre to the premises, and the pull-through effect of bundling with Optik TV.
Telus added 13,000 total TV net additions in Q2 2016, which are 4,000 less net additions than what it had in the same quarter a year ago. Telus said this reflected a higher customer churn rate and a decline in satellite subscribers, as the effects of slower subscriber growth for paid TV services and increased competitive intensity, including OTT services, were partly offset by ongoing expansion of Telus’s addressable high-speed broadband footprint and increasing broadband speeds.
In total, Telus’s wireless subscriber base is up 0.9% from a year ago to 8.4 million total subscribers. Its high-speed Internet connections have increased 6.4% to reach 1.6 million customers, while Telus TV subscribers are higher by 7.9% to more than 1 million, the company reported.
In terms of revenue, Telus reported its wireless network revenues increased by $40 million or 2.6% to reach $1.6 billion in the second quarter of 2016, when compared to the same period a year ago. Telus said its adjusted wireless EBITDA increased by $28 million or 3.6% over last year to $783 million in Q2 2016, and its wireless blended ARPU increased by 1.4% to $64.38, making this Telus’s twenty-third consecutive quarter of year-over-year growth in blended ARPU. However, its monthly postpaid subscriber churn of 0.90% increased four basis points year-over-year.
Telus’s external wireline revenues increased by $14 million or 1% to reach $1.4 billion in the second quarter of 2016, compared to Q2 2015. This growth was generated primarily by higher data service and equipment revenues, which increased by $62 million or 6.7% in Q2 2016, compared to the same quarter last year, the company said. Telus’s adjusted wireline EBITDA increased by $20 million or 5.5% over last year to $405 million in Q2 2016. Telus said this improvement reflected execution on operating efficiency and effectiveness initiatives, as well as improving margins in data services, including Internet, business process outsourcing services, Telus TV and Telus Health.
Telus’s Q2 2016 net income of $416 million and basic earnings per share (EPS) of $0.70 were higher year-over-year by 22% and 25%, respectively. However, the company’s adjusted net income of $415 million and adjusted EPS of $0.70 for the second quarter of 2016 were higher year-over-year by only 2.2% and 6.1%, respectively.
In addition, Telus’s free cash flow of $126 million in the second quarter of 2016 was lower by $174 million from a year ago, primarily due to higher capital expenditures, an increase in income tax payments, and higher restructuring disbursements partially offset by adjusted EBITDA growth, Telus said.
Telus’s financial results for Q2 2016 can be accessed by clicking here.
