Telus Net Profits Up on Tax Gains - Warns on Outlook

Canada's Telus has reported a slight increase of CA$25 million in first-quarter revenues to reach CA$2.38 billion (US$2 billion) - while net profits rose by 10% to CA$322 million (US$274 million). The increase in revenues was driven primarily by three per cent growth in wireless revenue and six per cent growth in wireline data revenue, more than offsetting the ongoing declines in local and long distance wireline revenues.

Excluding income tax-related adjustments worth CA$62 million in 2008 and 2009, net income was both down five percent due to lower operating earnings.

Cash provided by operating activities was down three per cent to CA $614 million this quarter. Free cash flow was down 76 per cent to CA $125 million this quarter, primarily because of higher cash taxes and capital expenditures. Telus paid cash income taxes of CA $214 million this quarter in respect of 2008 earnings and current year tax installments. Telus increased capital expenditures by CA $154 million to fund wireless and wireline broadband build-out initiatives.

Net subscriber additions were 48,000, a decrease of 46% from the same period a year ago. Postpaid net additions of 44,000 represented 92% of the total net additions.

"Clearly, Telus' wireless results do not meet the expectations we set late last year and are reflective of the weakening Canadian economy and competitive activity," said Darren Entwistle, Telus president and CEO. "Given the current environment, Telus has accelerated our efficiency initiatives. Accordingly, we have significantly increased our restructuring cost estimate for this year to approximately $125 million to drive efficiency and enhance our competitiveness."

The Company has provided revised 2009 guidance, which reflects the worsening Canadian economy, weaker than expected wireless results at Telus and the industry in the first quarter, and the company's most recent outlook. Wireless and wireline revenue have been adjusted down by a total of approximately CA $350 million. Wireless and consolidated EBITDA have been reduced by $125 million.

Posted to the site on 7th May 2009