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Telus contends with tough competition, Telus International challenges in Q2

Telus Corp. posted an increase in net new customers in its second quarter, but fierce competition among cell service providers took a toll on its average revenue per user.
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The Telus offices are seen in Ottawa on Friday, Aug. 4, 2023. THE CANADIAN PRESS/Justin Tang

Telus Corp. posted an increase in net new customers in its second quarter, but fierce competition among cell service providers took a toll on its average revenue per user.

The telecommunications company reported average revenue per mobile phone user of $58.49 in the second quarter, down 3.4 per cent or $2.07 compared with the same time in 2023.

"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," chief financial officer Doug French told analysts on a conference call Friday to discuss the company's latest financial results.

"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."

Overall, Telus added 332,000 net new customers, up 13 per cent compared with last year, which included 101,000 mobile phone subscribers and 33,000 internet customers.

CEO Darren Entwistle said the company will be focusing on premium bundle offers for its mobile and fixed customers, while focusing on profitable growth.

The telecom company's net income attributable to common shares came in at $228 million in its second quarter, 14 per cent higher compared with the same time last year. Its earnings per diluted share was 15 cents compared with 14 cents a year earlier.

It reported adjusted net income of $366 million, up 34.1 per cent year-over-year from $273 million in the same quarter last year.

Operating revenue and other income for the quarter was $4.97 billion, up 0.6 per cent from the previous year.

The company reported its mobile phone churn rate — a key metric measuring subscribers who cancelled their services — was 1.07 per cent in the second quarter, up from 0.94 per cent in the second quarter of 2023.

Meanwhile, the company cut its forecasts for its digital IT services segment, Telus International, saying it doesn't expect demand to recover as well as initially expected in the second half of the year.

Jerome Dubreuil, research analyst at Desjardins, said while the overall results were in line with expectations, he expected a negative market reaction as Telus lowered its free cash flow estimate for the year to $2.1 billion from an original target of $2.3 billion.

Dubreuil called the forecast an "ugly update."

Telus International, which is being rebranded as Telus Digital Experience, saw its shares plunge 36 per cent on Friday to close at $5.75 on the Toronto Stock Exchange.

"Telus Digital second-quarter results reflect a macroeconomic and operating environment that remains distinctly challenged," Entwistle said.

"Whilst we are obviously not pleased with this performance, our confidence in the business and assets remain steadfast."

Telus also announced an executive shakeup at the subsidiary.

Telus International president and CEO Jeff Puritt will retire from his role and take on the responsibilities as executive vice-chair of the board of directors of the subsidiary starting Sept. 3.

Jason Macdonnell will become acting CEO in Puritt's place.

This report by The Canadian Press was first published Aug. 2, 2024.

Companies in this story: (TSX:T)

Ritika Dubey, The Canadian Press

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