Telus posts wireline gains at expense of Shaw

Telus Corp. ended its third quarter with 187,000 new customers, reporting growth that beat expectations in wireline and was likely gained at the expense of its Western rival Shaw Communications Inc. For the quarter ending Sept. 30, the company saw net gains of 145,000 new wireless subscribers in the quarter and 42,000 in wireline, according to its third quarter earnings report released Thursday. Canaccord Genuity Corp. analyst Aravinda Galappatthige said in a note to clients that the company’s “impressive subscriber loading” in wireline likely reflects the “ongoing notable share gain” from rival Shaw Communications Inc., which has been pulling back on promotional activity and restructuring internally. Shaw had reported a rough third quarter on wireline, where it lost 71,030 residential customers, and chalked that up to rough competition from Telus. The 42,000 net wireline adds for the quarter compared to 8,000 in the same quarter of 2017, for a quarter-end total of 4.15 million wireline customers. Within those gains, high-speed internet subscribers net adds reached 36,000, up from 19,000 same quarter last year – an increase of nearly 90 per cent. Telus ended the quarter with 1.8 million internet customers. The company attributed the increase to higher demand for high-speed broadband and fibre-to-the-premises, along with improved churn. Telus’ TV net adds increased to 18,000 from 9,000 the previous year, but aggregate TV subscribers dropped 1.4 per cent year-over-year to 1.06 million. Telus’ total wireline revenue jumped 13.7 per cent to $1.6 billion, up $202 million year-over-year. The increases in internet and TV revenue came from from subscriber growth and higher internet revenue per customer because of upgrades to faster speeds and larger data plans, its investor report said. Company brass also provided an update on Telus’ multi-year fibre-build rollout, reporting Thursday fibre should be available to roughly 60 per cent of its broadband footprint by end of year. Telus president and CEO Darren Entwistle said on an investor call that by the end of 2019, its fibre coverage -- which currently makes up about 56 per cent of the company’s broadband footprint at nearly 1.8 million households and businesses -- should jump to between 66 to 70 per cent. This time last year, fibre covered 1.33 million, or about 44 per cent of the footprint. Entwistle said boosting its fibre reach will be important for its plans with its smart home product suite, and “key for new services that we’re looking to layer on top of that, including security services, home-health services and home-automation.” “That’s a big competitive differentiator for us,” he said. He also said the boost to its fibre footprint should “buttress” subscriber loading and customer retention, citing its Pure Fibre churn is 25 per cent better than copper lines, while its average revenue per home is 35 per cent higher than copper. Looking at its wireless portfolio, it added 145,000 net wireless subscribers, up from 124,000 year-over-year – an increase of nearly 17 per cent. That said, growth in postpaid slowed, dipping by 5.2 per cent to 109,000 adds from 115,000 the quarter the year before, while prepaid jumped to 36,000 from 9,000. Overall wireless subscribers were up 3.7 per cent, reaching a total of 9.1 million. Wireless revenues were pushed upward, growing at 2.2 per cent to $1.5 billion, from a growing subscriber base and from more customers picking higher-rate plans with larger data allotments, the earnings report said, but it was partly offset from declining data overages and the “competitive environment putting pressure on rate plan prices.” Desjardins analyst Maher Yaghi said in a note that while its wireless postpaid adds met expectations, Telus fell short of its peers. It also fell short of expectations for wireless average billing per user (ABPU) growth. He noted an industry-wide decline in ABPU growth was “once again faster than the Street’s expectations” for the quarter. “ABPU growth has been an important driver for wireless revenue growth over the last few years,” he said. Telus was the last of the big incumbents to report for the quarter. Its monthly blended average billing per subscriber unit went relatively unchanged, ticking down slightly to $68.64 from $68.67 year-over-year. Blended ARPU was $57.28, down 1.2 per cent. The company investor report noted the “moderating” wireless ABPU growth had slowed because of a few things, including competitive pressure on promotions, larger data allotments and “consumer behavioural response to increased frequency of customer data usage notifications and offloading of data traffic to increasingly available Wi-Fi hotspots.” Operating revenue jumped 10 per cent to $3.77 billion, from $3.4 billion in 2017. That included income from the sale of the Telus Garden – a joint-venture Vancouver real estate development with Westbank Corp. – which resulted in $171 million. Net income was up for the company by 10 per cent to $447 million. — With reporting by Kyle Duggan at kduggan@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Telus posts wireline gains at expense of Shaw

News | November 8, 2018

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Telus posts wireline gains at expense of Shaw

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