VANCOUVER – Strong wireless and wireline data growth drove Telus to a very good second quarter, the big telco announced this morning.
Second quarter (ended June 30, 2012) revenue increased 4% to $2.7 billion while earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 5% to $1 billion, the company reported. Earnings per share rose 2% to $1.01, or 6% when excluding income tax adjustments and a gain on the Telus Garden real estate development.
Quarterly growth was primarily generated by a 7% increase in wireless revenue and 13% increase in wireless EBITDA, plus strong revenue growth of 8.5% in wireline data.
In the wireless segment, revenue growth was generated by 112,000 postpaid wireless customer additions - up 22% from a year ago - wireless data revenue growth of 27% and continued growth in industry leading wireless average revenue per unit (ARPU) - up 2.4%, reads the release. Other wireless highlights include strong ongoing smartphone adoption and achieving the best churn rate in over five years.
Highlights in the wireline segment include the addition of 43,000 new TV customers and 20,000 high-speed Internet subscribers in the quarter. The company’s total TV subscriber base of 595,000 is up 48% from a year ago. These increases helped generate wireline data revenue growth of 8.5%, which more than offset continued local and long-distance legacy revenue declines to generate a 1% increase in total wireline revenue. EBITDA declined 6%, primarily reflecting the loss of higher margin legacy services.
Free cash flow of $284 million remained stable over the same period a year ago as higher adjusted EBITDA and lower interest expense and income taxes were offset by higher capital expenditures as Telus invests in expanding its new LTE wireless network and building two Internet Data Centres (the one in Kamloops broke ground in June and Rimouski’s will open in September). Free cash flow for the first half of 2012 was $642 million, up 43% from a year ago, reports the company.
"Our second quarter results continue to demonstrate that our focus on investing in our broadband data networks and services, whilst providing a differentiated customer experience, continues to pay off in the competitive Canadian marketplace,” said Telus president and CEO Darren Entwistle, in the release. “In addition, our low rate of wireless disconnections, called churn and a key measure of customer loyalty, is an industry leading 1.39% for our postpaid and prepaid customers combined and is our best result in over five years. These results demonstrate the significant success of our highly engaged team driving our top priority of putting customers first.”
Given the positive news, Telus has increased its 2012 guidance. The consolidated revenue guidance range has been increased by $50 million, consolidated EBITDA range has increased and narrowed - up by $50 million on the top end due to a $100 million increase in the wireless EBITDA range partly offset by a $50 million decrease at the top of the wireline range. The bottom end of the consolidated EBITDA range is up $100 million due to the increase in the wireless range and no change to the bottom end of the wireline range. The approximate guidance for capital expenditures has been increased by five per cent or $100 million.