Telus Corp. painted a much clearer picture Thursday about how its businesses in Canada’s oilpatch have weathered the uncertainty and job losses resulting from the continuing rout in oil prices.
In Alberta, the carrier said that it gained only 4,400 new postpaid subscribers on the net basis during the second half of 2015, down from a net 50,000 during the same period last year. It disclosed that average revenue per customer plunged in excess of 4.5 per cent.
In your fourth quarter alone, business users within the province trimmed their regular bills by an average of 7.6 per cent. The speed of monthly disconnections also ticked higher, but it’s still “remarkably lower” compared to national rate, which ranks the very best among the Big Three.
It’s the best thing “Western Canada isn’t one province. It’s two. The B.C. economy has been quite strong for all of us,” leader Darren Entwistle said Thursday around the Vancouver telco’s fourth-period earnings call.
“If we can generate results of this ilk inside the context that people face now economically in Alberta, then I’d say there exists a very bright future ahead … whilst we work our way through the eventual Alberta recovery.”
According to estimates complied by analysts at RBC Capital Markets, Telus commands 48 percent from the province’s wireless market, which makes up about 23 per cent of their wireless revenues and 11 per cent of total sales. Rivals BCE Inc. and Rogers Communications Inc. possess 24 and 25 %, respectively, of sales.
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In the fourth quarter, Telus posted profits excluding some items of 54 cents a share, which fell anything short of average estimates on Bay Street. Revenues for that three months ended Dec. 31 were $3.22 billion, just shy from the $3.25 billion analysts were expecting. Net income decreased 16.3 percent to $261 million.
Shares of Telus fell four percent at the begining of trading before paring back losses. By midday its stock had fallen 1.3 percent to $39.32, because the country’s benchmark index lost 1.4 percent. Its stock has added 2.4 per cent to begin 2016. Previously year, it’s fallen 10 per cent, amid heightened volatility and competitive pressure.
As it tries to protect its wireless profit margins amid slowing growth, Telus is managing your buck structure.
In November, the organization announced plans to eliminate 1,500 jobs within the next several quarters, which could slash around $125 million in annual costs. Telus said “a notable number” from the cuts are voluntary exits or early retirements. Because the telco reduces its headcount, it continues to allocate extra capital to bolstering its dividend, buying back its shares near all-time highs, and improving its cellular and broadband networks.
“Telus, a minimum of, give them credit for being proactive about costs,” said David Heger, an analyst at Edward Jones. However, “investors are likely to applaud more if you can get profit growth from revenue growth.”
In the fourth quarter, it posted $99 million in restructuring along with other costs, up from $26 million in the prior year. Three-fourths of that came in the wireline segment, where Telus is spending billions to upgrade its fibre-optic cables in Edmonton and Vancouver. In 2016, it expects restructuring to take into account $175 million in costs, compared to $226 million in 2015. A few of the initiatives it’s pursuing include: the outsourcing of business processes; offshoring, reorganizing and integrating; procurement; and rationalizing property.
The wireless carrier added an internet 62,000 cellphone users to monthly contracts, or 56,000 fewer than what Telus gained throughout the same period last year. It says this was because of rising smartphone prices, increased churn among its subscriber base and also the negative effects of the worsening Alberta economy. In comparison, BCE Inc. posted an internet 91,308 new contract users, and Rogers Communications Inc. had 31,000 new accounts.
Last quarter, Telus added a net 69,000 new contract customers, Rogers had 77,000 and BCE had 77,655.
“By no means were the numbers a tragedy, or anything,” Heger said. “But, recently, Telus has been viewed as a strong player and share gainer in wireless and in the last two quarters it seems as though that it is strength has slowed to some extent and, perhaps, BCE has taken the lead in investors’ minds.”