Rci Fuel Cells

Telus Misses, Guides Higher

Has reported second quarter adjusted earnings per ADS of $0.99 (C$0.96 per share), missing the Zacks Consensus Estimate by a penny. Adjusted earnings increased 5.5% from C$0.91 in the year-ago quarter.

Adjusted earnings exclude an income tax benefit of 3 Canadian cents.

Total revenue increased 6.4% year over year to C$2.554 billion ($2.639 billion), striding ahead of the Zacks Consensus Estimate of $2.616 billion. The year-over-year increase was attributable to higher revenues from wireless and wireline data services. Adjusted EBITDA upped 2.7% year over year to C$950 million ($983 million). The improved revenue was partially offset by high costs associated with the growth in wireline Optik TV services and retain wireless subscribers.

Segment Results

Wireless revenues spiked 9.6% year over year to C$1.34 billion ($1.38 billion) in the reported quarter driven by increases of 8.8% in network revenue and 21% in equipment and other revenue.

Within network revenue, data revenue jumped 48.9% year over year on strong adoption of smartphones and related data plans, increased mobile Internet devices and tablets, and higher roaming revenues. Voice revenue slid 3.7% year over year, due to falling voice average revenue per user (ARPU).

In the reported quarter, ARPU grew 2.5% year over year to C$58.88 ($60.83), primarily attributable to higher data ARPU (up 39% year over year) partly offset by lower voice ARPU (down 9.3%). The monthly subscriber churn (customer switch) deteriorated to 1.67% from 1.45% in the year-ago quarter, reflecting the loss of the federal contract and increased price competition from new entrants and existing national competitors.

Net wireless subscriber addition was 94,000, reflecting a 24.2% year-over-year decrease following the loss of a federal service contract. Telus added 2,000 net pre-paid customers in the second quarter, representing a 15.6% year-over-year decline. Net post-paid subscriber addition was 92,000, down 15.6% year over year.

Telus had 7.1 million wireless subscribers, including 5.9 million post-paid customers and $1.2 million prepaid customers at the end of the second quarter.

Wireline revenues rose 3% year over year to C$1.261 billion ($1.30 billion) due to declines in voice local and long distance revenues, partially compensated by data and other services and equipment revenue growth. Data revenues increased 14% year over year to C$635 million ($646 million) owing to healthy TV subscriber growth, higher Internet services and enhanced data services, increased data equipment sales as well as newly consolidated managed workplace revenues.