Telus misses profit estimates as it spends heavily to add subscribers

(Reuters) - Canadian telecom company Telus Corp T.TO on Thursday reported a lower-than-expected quarterly profit as it spent heavily to expand its wireless and fiber-optic networks in a bid to add more subscribers in a fiercely competitive industry.

A Telus Corporation sign is pictured in Ottawa, Ontario, Canada, November 8, 2017. REUTERS/Chris Wattie

Vancouver-based Telus faces increasing competition from Shaw Communications SJRb.TO, which has rolled out new internet and television services and is also building a low-cost wireless business.

Telus said on Thursday its capital expenditure for wireline unit rose 19 percent in the quarter, mainly as it boosted its fiber-optic network. Total operating expenses rose 3.6 percent.

Shaw also reported last month an increase in costs that squeezed its margins.

Telus said it added about 115,000 new wireless postpaid customers in the quarter. That compares with 99,000 additions estimated by RBC Capital Markets and 93,000 by Barclays.

The company’s postpaid churn rate, or percentage of subscribers who discontinued services, also fell to 0.86 percent and was below the consensus estimate of a 0.9 percent drop, according to Barclays analyst Phillip Huang.

Average revenue per user (ARPU) for wireless services rose 3 percent in the quarter.

“Our capital investments have been instrumental in the success of our wireless and wireline growth strategy, which has now delivered 28 consecutive quarters of wireless ARPU growth and 20 successive quarters of wireline EBITDA growth,” Chief Executive Darren Entwistle said.

Telus said it expected capital expenditure of about C$2.85 billion ($2.25 billion) for 2018, slightly below its estimated capital expenditure of about C$3 billion in the current year.

Excluding items, the company reported a profit of 66 Canadian cents per share, missing the average analyst estimate of 69 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Net income attributable to shareholders rose to C$367 million, or 62 Canadian cents per share, in the three months ended Sept. 30 from C$348 million, or 59 Canadian cents per share, a year earlier.

Operating revenue rose 4 percent to C$3.37 billion.

Shares of the company were marginally up at C$47.32.

Reporting by Taenaz Shakir; Editing by Anil D’Silva