Telus sees net customer increase but faces revenue challenges due to intense market competition
Telus Corp. saw an increase in net new customers in its second quarter, but intense competition among cell service providers impacted its average revenue per user, reports BNN Bloomberg.
The company added 332,000 net new customers, marking a 13 percent increase from last year. This growth included 101,000 mobile phone subscribers and 33,000 internet customers.
Despite this, Chief Financial Officer Doug French noted, “The ARPU (average revenue per user) reflects the ongoing impact from the competitive pricing environment, with customers optimizing the rate plans, as well as declining contribution from overage and roaming.”
French emphasized the company's focus on bundling to drive economic outcomes, stating, “As we progress through the back half of the year, we expect the highly competitive environment to continue. Importantly, we continue our intense focus on bundling to drive the right economic outcomes.”
Telus reported net income attributable to common shares at $228m for the second quarter, a 14 percent increase from the same period last year. Earnings per diluted share were 15 cents, up from 14 cents a year earlier.
Adjusted net income rose 34.1 percent year-over-year to $366m from $273m in the same quarter last year. Operating revenue and other income for the quarter reached $4.97bn, up 0.6 percent from the previous year.
CEO Darren Entwistle highlighted the company's strategy, saying Telus will focus on premium bundle offers for its mobile and fixed customers to achieve profitable growth.
The company's mobile phone churn rate, which measures subscribers who cancelled their services, increased to 1.07 percent in the second quarter from 0.94 percent in the same period in 2023.
Telus lowered its forecasts for its digital IT services segment, Telus International, predicting that demand will not recover as expected in the second half of the year.
This led Jerome Dubreuil, a research analyst at Desjardins, to anticipate a negative market reaction. He pointed out that Telus reduced its free cash flow estimate for the year to $2.1bn from the original target of $2.3bn, calling it an “ugly update.”
Telus International, rebranded as Telus Digital Experience, saw its shares drop 36 percent on Friday, closing at $5.75 on the Toronto Stock Exchange.
Entwistle acknowledged the challenges, stating, “Telus Digital second-quarter results reflect a macroeconomic and operating environment that remains distinctly challenged. Whilst we are obviously not pleased with this performance, our confidence in the business and assets remain steadfast.”
The company also announced executive changes at the subsidiary. Jeff Puritt, president and CEO of Telus International, will retire and assume the role of executive vice-chair of the board of directors of the subsidiary starting September 3. Jason Macdonnell will become acting CEO in Puritt’s place.
