Telus Corp. T-T saw its third-quarter profit fall sharply, even as it increased its revenue year over year and added new wireless customers in an increasingly competitive market.
Vancouver-based Telus reported $137-million of profit for the three-month period ended Sept. 30, down 75 per cent from a year ago. Its revenue for the quarter came to $5-billion, up 7.2 per cent from the same period last year when it had $4.67-billion in revenue.
The telecom attributed the lower profit to increased depreciation and amortization relating to its accelerated network buildout and recent acquisitions. In addition, it blamed higher interest rates and higher restructuring costs relating to its continuing cost-efficiency program and its recent work force reduction. (The company announced in August when it reported its second-quarter results that it was trimming its global head count by 6,000 people.)
However, chief financial officer Doug French said the company saw strong growth in its wireless subscriber base.
Mr. French said in an interview that while the market has “always” been competitive, particularly during the back-to-school period, “the competitive environment is more intense than I would say it’s been in other years for a long consistent basis.”
“That being said, our organization continues to focus on value and driving margin,” Mr. French added, noting that Telus will not chase new customers at the expense of its profitability.
Telus added 160,000 net new wireless subscribers during the quarter, an increase of 10,000 over the previous year. The company does not break out postpaid subscribers, who are billed at the end of the month for the services they used, versus prepaid customers, who pay upfront for wireless services. However, Mr. French said the majority of its subscriber gains were postpaid customers.
RBC analyst Drew McReynolds called the subscriber growth “strong.”
“Considering the adjustment Telus is making to a more competitively intense operating environment (particularly in Western Canada following the Rogers-Shaw merger), Q3/23 results (while not perfect) demonstrate notable resilience with strong subscriber growth across the board,” Mr. McReynolds wrote in a note to clients.
Mobile-phone ARPU, which stands for average revenue per user, declined by 29 cents, or 0.5 per cent, to $59.19. The telecom attributed this to “lower base rate plan prices from increased promotional activity and market aggression affecting both new and existing customers, which first escalated in the second quarter of 2023 and continued through the third quarter.”
On Thursday, BCE Inc.’s chief executive Mirko Bibic described the telecom market as “highly competitive,” highlighting his company’s efforts to balance growth with profitability.
Rogers Communications Inc., which completed its $20-billion takeover of Shaw Communications Inc. earlier this year, will report its third-quarter results on Nov. 9.
After adjusting for restructuring costs and other items, Telus had $373-million of profit, down 20.8 per cent from a year ago when it had $471-million in adjusted earnings.
The adjusted earnings amounted to 25 cents per share, down from 34 cents per share during the same quarter last year.
Analysts had been expecting 24 cents per share of adjusted earnings and $5.08-billion of revenue, according to the consensus estimate from S&P Capital IQ.
Scotiabank analyst Maher Yaghi said that Telus’s subscriber results in both its wireless and wireline (internet and TV) businesses suggest that so far, the telecom has been able to protect its market share against encroachment from Rogers.
“Rogers is likely after the low-hanging fruits in the West, essentially in non-bundled wireless customers and protecting its own cable customers. Taking bundled customers away from Telus is an expensive proposition,” Mr. Yaghi said in a note to clients.
Shares of Telus rose 56 cents, or 2.37 per cent, to $24.22 on the Toronto Stock Exchange in afternoon trading.