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Telus Corp. reported a slight uptick in its second-quarter revenue, even as its profit declined by 39 per cent from a year ago owing to higher costs stemming from recent acquisitions and the COVID-19 pandemic.

Canada’s telecom sector faces a slew of headwinds because of the global health crisis, ranging from sharp drops in roaming revenues to slower subscriber growth as a result of temporary store closings. Carriers have also seen their costs elevated by temporary measures aimed at helping consumers who are experiencing financial hardships, such as removing data caps on some internet plans.

“It was obviously a very challenging quarter,” Telus’s chief financial officer Doug French said in an interview.

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The company reported $315-million in net income for the three-month period ended June 30, down from $520-million a year ago. The earnings – which amounted to 23 cents a share, down from 43 cents a year ago – were affected by higher income tax and financing costs, and increased depreciation and amortization.

In spite of the challenging environment, Telus was able to grow its business by adding new customers while keeping churn – the rate of customer turnover on a monthly basis – low, Mr. French said. The company added 61,000 net new mobile phone subscribers during the quarter, beating out analyst predictions of roughly 25,000 subscribers.

“We think Telus’s wireless results were a relief and point to strong execution during the early stages of the pandemic,” Bank of Nova Scotia analyst Jeffrey Fan said in a note to clients.

Telus’s lower profit came in spite of a nearly 4-per-cent increase in its quarterly revenue, which totalled $3.73-billion – above the consensus analyst estimate of $3.53-billion from S&P Capital IQ. Revenue was bolstered by its recent acquisitions of ADT Security Services Canada Inc. and German business-services company Competence Call Center.

Revenues from its wireless business declined by 7.7 per cent during the quarter, as stores closed and shopping halted. Meanwhile, travel restrictions and border closings caused roaming revenues to plummet – and it could take some time before they recover, Mr. French said.

“Depending on the future timing of resumption of travel and border reopenings, the roaming recovery is expected to be slow and will continue into 2021,” Mr. French said during a conference call to discuss the company’s results.

The company also set aside an additional $30-million during the quarter for customers who are unable to pay their bills, but has seen improvement on that front in the past month, he said.

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While the pandemic poses financial challenges for the sector at large, Desjardins analyst Maher Yaghi said Telus is likely to be less affected than its peers such as Rogers Communications Inc. and BCE Inc.

“The company has no exposure to media, which continues to be severely impacted by the pandemic,” Mr. Yaghi said in a note to clients. (Earlier this month, Rogers reported that its second-quarter profit fell by 53 per cent from a year ago while revenue at its sports and media unit declined by 50 per cent.)

“Moreover, we view [Telus’s] operations in IT services and health technology as well-positioned for recovery,” Mr. Yaghi added.

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