Telus profits down nearly 40 per cent

Telus Corp. posted a 39.4 per cent drop in profit in the second quarter of the year, the first quarter to fully capture the impact of the COVID-19 pandemic. The company's net income fell to $315 million, down from the $520 million it recorded in the same quarter a year ago. The company's wireless revenue fell to $1.85 billion in the quarter, down 7.6 per cent from the $2 billion the division pulled in in the same quarter last year. Much of the loss, the company's executives told financial analysts on a Friday afternoon quarterly earnings call, came from the loss of some $65 million in roaming revenue. "Depending on the future timing of resumption of travel and cross border reopenings, the roaming recovery is expected to be slow, and will continue into 2021," chief financial officer Doug French told analysts. Responding to a question from Desjardins financial analyst Maher Yaghi about how Telus plans to deal with the long term decline of revenue from roaming fees during the pandemic, French said Telus was looking at reducing overhead costs. "There's going to be the direct impact of real estate costs and other, call it overhead costs, that if we change the dynamic of our flexibility with our team members, that we'll be balancing out all of that, call it more traditional overhead to the more fluid workforce," French said. The loss of roaming fees has also dampened Shaw Communications Inc. and Rogers Communications Inc.'s wireless revenues in the second quarter. Responding to a question for comment about Thursday's launch of Shaw Mobile, CEO Darren Entwistle said "we have a decided preference, any day of the week for vigorous competition over onerous regulation." Telus wireless president Jim Senko said "obviously we're not surprised. We've been expecting the Shaw mobile launch for four years now" and added that there was "no comparison" with Shaw on Telus's breadth of services. Meanwhile, overall revenue was up 3.6 per cent, growing to $3.73 billion compared to $3.6 billion in the same quarter last year. Wireline revenues grew by 17.1 per cent, up to $1.96 billion from $1.67 billion in the same quarter last year. Wireless average revenue per user (ARPU) was down to $56.82, a 5.8 per cent reduction from the $58.60 it was in the first quarter of 2020. Telus added 61,000 wireless subscribers in the quarter, a 25.6 per cent drop from the 82,000 they added in the second quarter of 2019, for a total of 8.75 million. In internet, the company also added 37,000 subscribers, 12,000 more than they added this time last year, for a total of 2.04 million subscribers. In TV, the company added 8,000 subscribers, half of what they added last year, for a total of 1.18 million subscribers. In a note published Friday morning, Canaccord Genuity analyst Aravinda Galappatthige said Telus's wireless subscriber additions were better than expectations. "We believe the stronger net adds number was the result of TELUS being noticeably more aggressive in the market over the past couple of months, including proactively dealing with free agents within its base," he wrote in the note. Indeed, Shaw and Telus both raised their wireline internet prices toward the end of the quarter in a move Galappatthige had written was indicative of a "more rational wireline pricing structure" in western Canada. - With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Adam Langenberg at alangenberg@thewirereport.ca This story has been updated to include net wireless subscriber additions, rather than gross additions.

Telus profits down nearly 40 per cent

News | July 31, 2020

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Telus profits down nearly 40 per cent

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