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TELUS reports strong operational and financial results for first quarter 2023

Press Release

MAY 4, 2023

  • Total Mobile and Fixed customer growth of 163,000, up 15,000 over last year, and our strongest first quarter on record, driven by strong demand for our leading portfolio across Mobility and Fixed services
  • Strong Mobile Phone net additions of 47,000, our best first quarter since 2010, and robust Connected Device net additions of 58,000; industry-leading postpaid churn of 0.70 per cent and Mobile Phone ARPU growth of 3.8 per cent
  • Record first quarter Fixed customer net additions of 58,000, including 35,000 internet customer additions, powered by industry-leading customer loyalty, with blended PureFibre churn below 1 per cent, in combination with TELUS’ PureFibre network; achieved one million security customer milestone
  • Strong quarterly financial results including Consolidated Operating Revenue and Adjusted EBITDA growth of 16 per cent and 11 per cent, respectively, and double digit Free Cash Flow growth of 29 per cent; Net Income lower by 45 per cent on higher interest, depreciation and amortization, and restructuring and other costs
  • Quarterly dividend raised to $0.3636, an increase of 7.4 per cent over the same period last year and our twenty-fourth increase since May 2011, representing a yield of approximately 5 per cent, supported by leading Adjusted EBITDA growth and strong cash flow expansion
  • Reiterating our 2023 Consolidated Financial Targets including Operating Revenue and Adjusted EBITDA growth of 11 to 14 per cent and 9.5 to 11 per cent, respectively, Capital Expenditures of approximately $2.6 billion and Free Cash Flow of approximately $2.0 billio

Vancouver, B.C. –TELUS Corporation today released its unaudited results for the first quarter of 2023. Consolidated operating revenues and other income increased by 16 per cent over the same period a year ago to $5.0 billion. This growth was driven by higher service revenues in our two reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences – TELUS International (DLCX). TTech service revenue increased due to: (i) growth in health services revenues mainly driven by our acquisition of LifeWorks on September 1, 2022; (ii) higher mobile network revenues attributable to roaming revenue improvements and subscriber growth; and (iii) an increase in fixed data service revenues, resulting from subscriber growth, business acquisitions and higher revenue per internet customer. These factors were partly offset by lower TV and fixed legacy voice services revenues, primarily due to technological substitution. Growth in DLCX operating revenues resulted from expanded services for existing clients and growth from new clients, including new clients from our acquisition of WillowTree on January 3, 2023, and favourable foreign exchange impacts. See First Quarter 2023 Operating Highlights within this news release for a discussion on TTech and DLCX results.

“In the first quarter, our TELUS team once again demonstrated our hallmark execution excellence, characterized by the potent combination of leading customer growth and strong financial results,” said Darren Entwistle, President and CEO. “Our robust performance is underpinned by our globally leading broadband networks and customer-centric culture, which enabled our strongest first quarter on record, with total customer net additions of 163,000, up 10 per cent, year-over-year. This included strong mobile phone net additions of 47,000, our best first quarter result since 2010; healthy connected device net additions of 58,000; and record first quarter total fixed net additions of 58,000, inclusive of reaching our one millionth security subscriber. Our leading customer growth is reflective of our consistent, industry-best client loyalty across our mobile and fixed product lines. In this regard, our team’s passion for delivering customer experience excellence contributed to strong client loyalty across our key product lines, once again this quarter, including blended mobile phone, PureFibre internet, Optik TV, security and voice churn at or below one per cent. Moreover, our industry-leading postpaid mobile phone churn of 0.70 per cent represents the ninth quarter out of the last 13 below 0.80 per cent.”

“Our results are backed by our highly differentiated and powerful asset mix geared towards high-growth, technology-oriented verticals,” continued Darren. “Despite a challenging global macroeconomic environment, earlier today TELUS International (TI) once again announced strong double-digit revenue growth and solid profitability for the first quarter. TI’s resilient results and outlook reflect the important relationship with TELUS as an anchor customer, enabling TELUS’ customer service excellence and powering our digitization strategy – a unique relationship that significantly benefits both organizations. TI’s continued focus on profitable growth, powered by attractive end-to-end digital capabilities, position it as a trusted advisor for premier digital customer experiences and IT services for its over 650 global clients.”

“At TELUS Health, significant growth in first quarter revenues of $423 million reflects the enhanced scale of our health operations driven by our acquisition of LifeWorks, which is enabling us to make meaningful progress in respect of our goal to be the most trusted wellbeing company in the world. This includes: our healthcare programs, now covering 67 million lives; executing 149 million digital health transactions in the first quarter, up seven per cent, year-over-year; and welcoming close to two million new virtual healthcare members in the last 12 months, increasing our membership to 5.2 million, up nearly 60 per cent over the prior year. We anticipate continued strong growth in TELUS Health, buttressed by the integration of our synergistic product suite that enables us to not only meet, but exceed the diverse and evolving needs of our customers, with a differentiated and comprehensive range of innovative healthcare solutions. Looking at the over $200 million in synergies we initially identified with respect to the integration of LifeWorks, inclusive of revenues and costs, we have now achieved more than the $50 million in expected nearer-term annual cost savings. Furthermore, we have identified additional annual cost efficiencies approaching $70 million, for a total of approximately $120 million in cost synergies by 2025. Moreover, our combined organizations are fully ramped up and delivering on revenue synergies, with in-market efforts pursuing value creation through organic growth throughout 2023 and beyond.”

“At TELUS Agriculture & Consumer Goods, first quarter revenues of $84 million were relatively flat year-over-year, reflecting transient headwinds, including one-time sales last year and some softness related to macroeconomic challenges. This was mostly offset by growth within our consumer goods and animal health verticals, as our team continues to integrate and grow this compelling global business. We continue to expect strong progress and double-digit revenue growth in this business in 2023, reflective of the significant long-term value we are creating as a globally leading provider of agriculture and consumer goods technology solutions around the world. Thanks to the efforts of our team, we will continue to advance the sector’s efficiency and effectiveness – including quality food production, waste reduction, food and retail execution, and trade promotion optimization – through data analytics.”

“Our consistently strong operational and financial performance is buttressed by our highly engaged team, who passionately deliver superior service offerings and digital capabilities over our world-leading wireless and PureFibre broadband networks,” Darren further commented. “In April, our TELUS PureFibre network was recognised by global analytics company, Opensignal, as the best fixed broadband network in Western Canada, in their inaugural April 2023 Canada Fixed Broadband Experience Report. Furthermore, in March, TELUS was named Canada’s inaugural 2023 Reader’s Choice Award winner, according to a survey conducted by U.S.-based PCMag. In particular, TELUS was recognized as Canada’s best major mobile carrier, and Public Mobile was named Canada’s best digital mobile carrier. In addition, TELUS was awarded Canada’s best mobile carrier for business in PCMag’s Business Choice Awards for 2023. Complementing these wins, in February, TELUS was once again named Canada’s most-awarded network by Opensignal for the twelfth consecutive time. The consistent recognition from a range of independent organizations reinforces the superiority of TELUS’ world-leading networks in terms of offering customers the fastest, most expansive and reliable service in Canada across both our wireless and PureFibre networks. Indeed, these accolades underscore the tremendous value of our generational investments in global-best network technologies, including our now-completed accelerated broadband expansion program, which will continue to drive extensive socio-economic benefits for Canadians from coast-to-coast-to-coast, for decades to come.”

“TELUS’ global leadership in broadband fibre is owing to our unique, innovation-centric culture, as well as the determination and skill of our team as we built and rapidly expanded our PureFibre network over the past 10 years. This generational investment is the cornerstone of our leading customer growth and the significant market share gains we have driven over many years. Moreover, TELUS PureFibre has fundamentally transformed the way we do business; it supports our social purpose and sustainability promises; and it positions us for decades of robust free cash flow generation, in the way we reaped a century of return from copper. Our ongoing broadband network investments further enable the continued advancement of our financial and operational performance, strengthening our confidence in the robust outlook for our business, and the long-term affordability and sustainability of our industry-leading dividend growth program. The 7.4 per cent year-over-year dividend increase announced today represents the twenty-fourth increase since we initiated our multi-year dividend growth program in 2011, with our program now in its 13th year and extended through 2025. Since 2004, TELUS has returned more than $23 billion to shareholders, including over $18 billion in dividends, representing over $16 per share. Future dividend growth and affordability will be supported by strong EBITDA and free cash flow growth; value creation across our TI, Health and Agriculture & Consumer Goods businesses; as well as the significant reduction in annual capital expenditures beginning this year, leading to meaningful and sustainable free cash flow expansion.”

“At TELUS, our award-winning culture of caring is epitomized by our heartfelt philosophy to give where we live,” said Darren. “In this regard, since its inception in 2018, TELUS Friendly Future Foundation (TFFF) has granted $38 million in cash donations to charities in our communities, making a positive impact on the lives of 14 million youth. This includes $2.1 million in grants so far in 2023 alone. Moreover, in February, TFFF launched its $1 million Livable Communities for our Youth challenge to improve the lives of young Canadians by connecting innovative entrepreneurs to local charities overwhelmed by increasing demand. Thanks to the combined efforts of our TELUS and TELUS Friendly Future Foundation teams, we are ensuring even more youth have the opportunity to realize their full potential.”

Doug French, Executive Vice-president and CFO said, “In the first quarter of 2023, our team achieved strong operational and financial results, building upon our long-standing track record of execution excellence. As we progress towards our consolidated financial targets for 2023, which we reiterated today, we delivered double-digit consolidated operating revenue, Adjusted EBITDA and free cash flow growth. These strong results reinforce our positive outlook for the year and are driven by our consistent focus on profitable customer growth over our leading mobile and fixed broadband networks, and supported by our highly differentiated and global asset mix. Net income in the quarter was down 45 per cent, driven by an increase in depreciation and amortization reflecting a higher asset base from organic and inorganic investments, an increase to financing costs and higher restructuring costs inclusive of lump sum payments of $67 million from the ratification of the new collective agreement with the TWU and costs related to the ongoing integration of LifeWorks. Within our TTech segment, we delivered strong Operating revenue growth of over 15 per cent, or approximately eight per cent excluding LifeWorks, powered by healthy mobile network revenue growth of almost eight per cent, and fixed data revenue growth of nearly seven per cent, while Adjusted EBITDA was up 11 per cent. This performance reflects the powerful attributes of our superior bundled offerings over our world-leading networks, underpinned by our unrelenting focus to deliver leading customer experiences. As we progress through 2023 and beyond, our team will remain focused on empowering our customers with technology innovations to enable meaningful outcomes. This will be supported by our ongoing focus on reducing our cost structure, on a permanent basis, from our investments in digitization as we make steady progress decommissioning our legacy copper infrastructure and move toward a singular PureFibre network.”

“During the first quarter, our team advanced our leadership position in sustainability, issuing our fourth sustainability-linked bond (SLB), linking our financing to the achievement of ambitious environmental targets,” added Doug. “Furthermore, our latest SLB offering affirms TELUS as having the largest SLB program in the Canadian fixed income market and reinforces our sustainability commitments as a global leader in ESG. At the end of the quarter, our average cost of long-term debt remains favourable at 4.18 per cent, while our average term to maturity of long-term debt is 11.8 years. Continuing to secure cost-efficient financing remains critical in driving the success of our strategic initiatives and generational investments. As we progress through 2023, we anticipate the profile of our capital expenditures to be greater in the first half of the year, as we drive incremental operational and financial benefits in-year, while decelerating our investment profile in line with our annual target of approximately $2.6 billion.”

“Our leading growth profile and robust balance sheet position support our well-established dividend growth program. Our ability to deliver on our dividend growth program reflects our confidence in executing our growth strategy, on a global basis, and our ability to drive meaningful free cash flow growth on a sustained basis from our leading EBITDA growth profile and lower capital intensity. Returning capital to shareholders is balanced against our continued focus to invest strategically to unlock transformational benefits for all of our stakeholders, while maintaining a strong balance sheet to support critical investments that will further advance our growth strategy and support our long-term success today and well into the future,” concluded Doug.

To view the full release in PDF format, please download here.


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