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File photo of a Telus store in downtown Toronto. (Gloria Nieto for The Globe and Mail)
File photo of a Telus store in downtown Toronto. (Gloria Nieto for The Globe and Mail)

Customer focus pays off for Telus Add to ...

An emphasis on customer service helped Telus Corp. beat analyst expectations with stronger fourth-quarter earnings than most of its competitors.

The company said it added 113,000 new wireless customers in the quarter, and postpaid churn, or the number of non-prepaid customers who leave each month, dropped to 0.97 per cent, the lowest such number at Telus in seven years.

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Telus executives were quick to frame the low churn percentage as a consequence of the company’s focus on differentiating itself from its rivals with its focus on customers.

“At the end of the day, we don’t make any technology, we don’t build hardware – we’re a service provider,” said Telus chief commercial officer Joe Natale in an interview. “Tech will come and go and tech advantages are fleeting at best, but your ability to drive customer loyalty through customer experience is something you get to enjoy for a long time.”

The low churn number has at least one major bottom-line benefit for Telus. Because it can rely on a higher level of customer loyalty, Telus is better positioned to resist the temptation to match competitors whenever they offer very low-price, limited-time offers, Mr. Natale said.

For the three months ending Dec. 31, 2013, the B.C.-based telecom giant posted adjusted earnings of $301-million, or 49 cents a share. A year earlier, the company earned 40 cents a share. Revenue also climbed 3.4 per cent to $2.95-billion.

On average, analysts expected Telus earnings of 48 cents a share and revenue of $2.98-billion, according to Thomson Reuters I/B/E/S.

The company also estimated it will post revenue growth of between 4 and 6 per cent this year.

Telus shares were almost unchanged on the news, rising less than 1 per cent.

The earnings undoubtedly came as a relief to many Telus investors, after a number of sluggish quarterly reports from other Canadian telecom and cable firms, such as Shaw Communications Inc. and Rogers Communications Inc., in recent weeks.

“Those who feared a very weak wireless quarter after Rogers results yesterday should be relieved,” said Dvai Ghose, managing director at Canaccord Genuity, in a note following Telus’s results.

“In our view Telus remains best positioned in the sector due to solid wireless fundamentals, strong wireline growth and cash flow recovery, industry leading [dividend per share] growth and the strongest balance sheet in the sector.”

The company’s results were not without weak points, however. Telus continues to shed residential and business land-line customers, as more and more consumers opt for Internet-based voice options or simply rely exclusively on smartphones and other wireless devices. But the company continued to make up for those losses by adding new subscribers to its broadband and Internet-based TV services.

Indeed, the company is largely focusing on tailoring its services to customers who use them on multiple devices, from smartphones to tablets and televisions. In recent months, Telus has aggressively pushed its new data-sharing plans, designed to allow multiple users to share services across many devices.

In the quarter, increased data usage contributed heavily to both wireless and wireline revenue growth at Telus. In wireless, data revenue jumped 14 per cent, as more customers switched to smartphones, which generally consume far more data than older cellphones. In the wireline segment, data revenue grew 10.5 per cent, mostly due to increased adoption of Telus’s Internet-based TV offerings and its high-speed Internet service.

“That world is materializing right before our very eyes,” said Mr. Natale. “It’s happening now that more and more consumers are using a multiplicity of devices.”

 
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