Telus Q2 Profits Down 9% As Subscriber Spending Falls

Canada's Telus Corp has reported a 9% drop in second-quarter profits to C$244 million ($236 million). Revenues fell by 1% to C$2.38 billion over the same period. The one percent decrease in revenues reflects continued declines in voice revenues that more than offset growth in data revenues.

Consolidated EBITDA decreased by five per cent due primarily to a C$49 million increase in restructuring costs from ongoing operating efficiency initiatives. Underlying EBITDA increased C$34 million, or nearly four per cent, excluding higher restructuring costs and defined benefit pension plan expenses. The increase in underlying EBITDA reflects strong cost containment as operations expense decreased two per cent.

Telus increased capital expenditures by C$122 million to fund its ongoing wireless and wireline broadband build-out initiatives. As a result, free cash flow was down 43 per cent to C$144 million this quarter, which was also lower due to increased restructuring costs and pension contributions.

"The second quarter results continue to reflect the impacts of the recession on our western and nationally based businesses," said Darren Entwistle, TELUS president and CEO. "In light of moderating revenues, our solid progress on operational efficiency initiatives has helped mitigate the effect of current economic conditions and better position the organization for accelerated performance when the economy recovers."

Wireless ARPU declined by 6.6% to C$58.61 compared to the same quarter a year ago, but up slightly from the first quarter.

Net wireless subscriber additions were 111,000, a decrease of 37% from the same period a year ago but more than double the 48,000 added in the first quarter. Contributing to the decrease was current churn of Koodo subscribers at normal levels, whereas a year ago there was minimal Koodo churn given its then recent service launch. Postpaid net additions of 95,000 represented 86% of the total net additions.

Posted to the site on 9th August 2009