Telus profit rises 23 percent on wireless, TV strength

TORONTO Fri Feb 15, 2013 3:48pm EST

A pedestrian is reflected in the window of a Telus store while using a mobile phone in Ottawa February 11, 2011. REUTERS/Chris Wattie

A pedestrian is reflected in the window of a Telus store while using a mobile phone in Ottawa February 11, 2011.

Credit: Reuters/Chris Wattie

TORONTO (Reuters) - Telus Corp (T.TO), one of Canada's three biggest telecom companies, reported a 23 percent rise in quarterly profit on Friday, helped by strength in its wireless business and a surprising burst of growth from its fixed-line unit.

Telus shares rose to their highest-ever level on Friday as the Vancouver company also gave a robust outlook for the current year.

The company said fixed-line earnings rose for the first time in two years, thanks to a strong performance at its Optik TV product, which sends content to customers' television screens and other devices via the Internet.

"It's good to see Telus finally get some financial traction from all their investment in broadband and TV," said Canaccord Genuity analyst Dvai Ghose.

Telus competes against cable company Shaw Communications Inc (SJRb.TO) for television and Internet customers in Western Canada and against Rogers Communications Inc (RCIb.TO) and BCE Inc's (BCE.TO) Bell for wireless subscribers across the country.

The growth in the fixed-line business bucks a broad industry trend of customers relying increasingly on mobile devices for communication and entertainment.

"There are not many telcos on the planet that are growing wireline revenue," Telus' chief executive, Darren Entwistle, said in an telephone interview.

Telus said net income rose to C$291 million, or 89 Canadian cents a share, in the three months to the end of December, compared with C$237 million, or 76 cents, a year earlier.

Operating revenue rose 6 percent to C$2.85 billion.

Analysts had on average expected Telus to earn 87 Canadian cents a share on revenue of C$2.8 billion, according to Thomson Reuters I/B/E/S.

Telus signed up 123,000 net new postpaid wireless subscribers, who typically pay more to use high-end smartphones.

By comparison, Bell added 144,000 postpaid customers in the same period, while Rogers added 58,000.

THE LEADERS ARE ALL RIGHT

Telus said its wireless customers paid an average of C$60.95 a month for service, as booming data usage more than offset falling voice calls.

Telus, unlike its rivals, has not acquired companies producing the content distributed over its network. But it has moved forcefully to increase fixed-line revenue through Optik TV, which is challenging Shaw's dominant cable television position.

Telus said it added 41,000 TV customers in the quarter.

Both Shaw and Telus have backed away from aggressive pricing promotions that had threatened margins, although Telus is still offering a free high-definition television set for people who sign up for three years of Optik and home Internet service.

Shaw last month said higher rates had offset slipping TV subscriber numbers.

Telus expects revenue growth of between 4 and 6 percent in 2013, and earnings per share of between C$3.80 and C$4.20.

Telus shares have risen some 18 percent in the last 12 months as investors focus on strong cash generation and healthy dividend growth; the company raised its dividend by 10 percent in 2011 and in 2012.

Telus said it would announce at its annual meeting in May its future plans for the dividend.

Telus shares were up 1.8 percent at $67.95 on Friday afternoon on the Toronto Stock Exchange.

(Additional reporting by John Tilak in Toronto; editing by Chizu Nomiyama and Matthew Lewis)