Telus Corp., Canada's second-largest telecommunications company, has reported a 45-per-cent drop in fourth-quarter profit, driven down partly by the economy and partly by huge investments in network infrastructure.
The Vancouver-based company yesterday reported profit of $156-million, down from $285-million last year, with earnings per share of 49 cents, both down slightly more than 45 per cent since the end of fiscal year 2008. Operating revenue was also down slightly to $2.44-billion, hit by a decline in voice services, which continues to drag on revenue from other wireless services and growth in data packages.
"You had people economizing, using less, containing the bills on their phones," Telus chief financial officer Robert McFarlane said in an interview. "You had people send a message, whereas previously they would have made a phone call."
One of the most significant costs of the last year would have been the expensive build-out of its new, national network with BCE Inc., which launched in November.
Wireless revenue increased by 3.1 per cent over all and the company added 122,000 net new subscribers, 18-per-cent lower than last year and below analysts' revised expectations of around 135,000.
Maher Yaghi, an analyst with Desjardins Securities, wrote in a note that the results "were not as impressive as last week's BCE results, but were mainly in line with expectations."
"We continue to believe Telus is attractively valued and will soon begin capitalizing on investments made in wireless (HSPA network, smart phones) and wire line," Mr. Yaghi said.
Telus was hit by a number of trends now plaguing the industry. People continue to drop their land line phone connections in favour of wireless, which is continuing to erode one of the most stable sources of revenues for firms like Telus and BCE. The company said there were "a large number of disconnections" in its land line business, which continues to be hit by weak spending by businesses.
Close: $33.62, down 18¢
Q3 / 2010 / 2009
Profit / $156 million / $285 million
EPS / 49¢ / 89¢
Revenue / $2.44 billion /$2.45 billion
Source : Company reports