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UPDATE 3-Telus profit rises as wireless racks up gains
May 8, 2008 / 4:49 PM / 9 years ago

UPDATE 3-Telus profit rises as wireless racks up gains

(Adds CFO comments, details, stock price)

By Wojtek Dabrowski

TORONTO, May 8 (Reuters) - Profit at Telus Corp (T.TO), Canada’s second-biggest phone company, jumped almost 50 percent in the first quarter, helped by higher wireless revenues as the company added long-term subscribers at a faster pace.

Telus said on Thursday it earned C$291 million ($286 million), or 90 Canadian cents a share, in the three months ended March 31. That was up from a profit of C$194.8 million, or 57 Canadian cents a share, in the same period a year earlier.

The company also declared a quarterly dividend of 45 Canadian cents per share, an increase of 20 percent from the quarterly dividend of 37.5 Canadian cents paid in 2007.

Operating revenue rose 6.6 percent to C$2.35 billion from C$2.2 billion a year earlier as the company made more money from wireless services and data, which includes text messaging and mobile e-mail.

A year ago, the company took a stock-option related expense of C$173.5 million that did not recur this quarter, it said. Excluding this and other tax adjustments, profit a year ago would have been 90 Canadian cents per share, Telus said.

Telus shares rose C$1.80, or about 4 percent, to C$47.40 on the Toronto Stock Exchange.

Telus said that while net wireless subscriber additions dipped 2.3 percent to a total 88,400 during the quarter, the amount of postpaid net additions was up 19 percent to 72,400.

Postpaid users are those who pay monthly bills and usually sign multi-year contracts, as opposed to prepaid subscribers who pay in advance for a set amount of service. They are viewed as key to the long-term growth of wireless firms such as Telus.

Prepaid wireless additions fell 46 percent to 16,000, Telus said.

National Bank Financial analyst Greg MacDonald said the results were in line with his estimates and spoke to the stability of Telus’s wireless business.

In the past, some had viewed that division of the company as “broken,” he said.

“That’s clearly not the case. The wireless results are quite reasonable.”

However, MacDonald added the performance also reflects the challenges the Vancouver-based company faces, such as selling higher-end data products to customers.

Monthly subscriber turnover, or churn, rose to 1.53 percent from 1.35 percent a year earlier, in part due to wireless number portability, which was introduced in March 2007 and lets users switch service providers while keeping the same telephone number.

Average monthly revenue per user was “relatively stable” at C$61.88, Telus said.

NO SIGNS OF ECONOMIC IMPACT

Rogers Communications Inc (RCIb.TO), which owns Canada’s largest wireless company and is a major Telus rival, has warned it is concerned about the economy -- particularly in the province of Ontario, Canada’s manufacturing heartland.

Telus, however, has relatively limited exposure to consumers in that market and Chief Financial Officer Robert McFarlane said it has yet to see a large impact.

“While we have to be wary that maybe the economy isn’t going to be as good as it had been, it really hasn’t shown up too much and I think we’ve been pretty resilient,” he told reporters after the company’s annual meeting in Calgary.

Telus’s high-speed Internet business added 20,300 net new subscribers -- a 37 percent drop from a year earlier. The company blamed the decline on strong competition and a mature market.

Telus and competitors BCE Inc (BCE.TO) and Rogers are preparing for a potential increase in wireless competition following an auction of spectrum to be held by the government late this month.

Telus, which rolled out a discount brand called Koodo Mobile in March, said on Thursday that it has deposited C$230 million with the government ahead of the auction. ($1=$1.02 Canadian) (Reporting by Wojtek Dabrowski; editing by Rob Wilson)

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