Telus Corp. painted a significantly clearer picture Thursday about how exactly its businesses in Canada’s oilpatch have weathered the uncertainty and job losses resulting from the continuing rout in oil prices.
In Alberta, the carrier asserted it gained a mere 4,400 new postpaid subscribers on the net basis throughout the other half of 2015, down from the net 50,000 throughout the same period this past year. It disclosed that average revenue per customer plunged in excess of 4.5 percent.
In the fourth quarter alone, business users within the province trimmed their regular bills by an average of 7.6 per cent. The rate of monthly disconnections also ticked higher, but it is still “remarkably lower” compared to national rate, which ranks the best among the Big Three.
It’s the best thing “Western Canada isn’t one province. It’s two. The B.C. economy continues to be very strong for us,” leader Darren Entwistle said Thursday on the Vancouver telco’s fourth-period earnings call.
“If we are able to generate outcomes of this ilk within the context that people face now economically in Alberta, then I’d say there exists a very bright future ahead … whilst we work our way through the eventual Alberta recovery.”
According to estimates complied by analysts at RBC Capital Markets, Telus commands 48 per cent from the province’s wireless market, which accounts for 23 percent of their wireless revenues and 11 per cent of total sales. Rivals BCE Inc. and Rogers Communications Inc. possess 24 and 25 per cent, respectively, of sales.
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In the fourth quarter, Telus posted profits excluding some items of 54 cents a share, which fell anything lacking average estimates on Bay Street. Revenues for that three months ended Dec. 31 were $3.22 billion, just shy of the $3.25 billion analysts were expecting. Net gain decreased 16.3 per cent to $261 million.
Shares of Telus fell four per cent at the begining of trading before paring back losses. By midday its stock had fallen 1.3 per cent to $39.32, because the country’s benchmark index lost 1.4 percent. Its stock has added 2.4 percent to begin 2016. In the past year, it’s fallen 10 per cent, amid heightened volatility and competitive pressure.
As it attempts to protect its wireless profit margins amid slowing growth, Telus is managing its cost structure.
In November, the organization announced plans to eliminate 1,500 jobs over the next several quarters, which can slash around $125 million in annual costs. Telus said “a notable number” from the cuts are voluntary exits or early retirements. As the telco reduces its headcount, it continues to allocate extra capital to bolstering its dividend, buying back its shares near all-time highs, and improving its cellular and broadband networks.
“Telus, a minimum of, provide them with credit to be proactive about costs,” said David Heger, an analyst at Edward Jones. However, “investors are likely to applaud more if you can get profit growth from revenue growth.”
In your fourth quarter, it posted $99 million in restructuring along with other costs, up from $26 million within the prior year. Three-fourths of this arrived the wireline segment, where Telus is spending billions to upgrade its fibre-optic cables in Edmonton and Vancouver. In 2016, it expects restructuring to take into account $175 million in costs, when compared with $226 million in 2015. A few of the initiatives it is pursuing include: the outsourcing of economic processes; offshoring, reorganizing and integrating; procurement; and rationalizing property.
The wireless carrier added an internet 62,000 cellphone users to monthly contracts, or 56,000 fewer than what Telus gained during the same period last year. It says it was due to rising smartphone prices, increased churn among its client base and the side effects of the worsening Alberta economy. In comparison, BCE Inc. posted a net 91,308 new contract users, and Rogers Communications Inc. had 31,000 new accounts.
Last quarter, Telus added an internet 69,000 new contract customers, Rogers had 77,000 and BCE had 77,655.
“By no means were the numbers a tragedy, or anything,” Heger said. “But, recently, Telus has been considered a strong player and share gainer in wireless as well as in the last two quarters it seems as though that it is strength has slowed to some degree and, perhaps, BCE has taken the lead in investors’ minds.”