Telus Q2 profit drops 39 per cent to $315 million despite uptick in revenues

Telus Corp.'s net income fell 39 per cent in its latest quarter to $315 million despite an uptick in revenues, as operating expenses at its wired services increased from the same time last year.

The Vancouver-based telecommunications company — which owns the Telus, Koodo and Public Mobile wireless brands and internet and video services — said Friday that it earned $315 million or 23 cents per share for the three months ended June 30, down from $520 million or 43 cents per share a year earlier.

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Adjusted profits were $316 million or 25 cents per share, versus $416 million or 35 cents per share in the second quarter of 2019.

Revenue was up 3.6 per cent from a year earlier at $3.73 billion while total operating expense before depreciation and amortization was up 6.5 per cent overall, fuelled by a $252 million increase at Telus wireline services.

Analysts had estimated 26 cents per share of adjusted earnings on $3.56 billion of revenues, according to financial markets data firm Refinitiv.

The company says its earnings decline reflects the COVID-19 pandemic lowering wireless roaming revenue, which is usually generated when customers travel outside their home area, and was partly offset by higher wireline data service margins from business acquisitions and cost-cutting programs.

Telus recorded 61,000 mobile phone net additions and 47,000 wireline customer additions with a historically low postpaid customer loss of 0.59 per cent.

Analyst Drew McReynolds of RBC Dominion Securities wrote in a note to clients that mobile additions were much higher than his estimate of 18,000 and a consensus estimate of 25,000.

Telus chief financial officer Doug French said in an interview that a low churn rate — which goes up if large numbers of customers leave — made it easier to grow the base. Customer churn is a key metric for telecom companies.

He added that most of the wireless subscriber growth came with unlimited plans offered by its Telus premium mobile brand, which began offering that type of plan for the first time about a year ago.

Telus also had to adapt to the widespread closure of retail stores and malls due to COVID-19 by redeploying employees to customer care functions, he said.

"They would be able to help our customers on the phone, whether they needed to upgrade or whether they were new customers coming over to us," French said.

Telus internet services added 37,000 net subscribers, 48 per cent more than in the 2019 second quarter. The company attributed the increase to investments in its fibre optics network, bundled product offerings, and a low churn rate.

This report by The Canadian Press was first published July 31, 2020.

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