Telus changed the way it reports wireless subscribers earlier this year, combining prepaid and contract customers and creating a new category for connected devices.Fred Lum
Telus Corp. saw a slight increase in turnover among its mobile phone customers during the third quarter as it opted not to match some of the more aggressive promotional tactics employed by its rivals amid a shakeup in Canada’s wireless market.
This summer, Rogers Communications Inc. introduced new wireless plans that don’t charge customers additional fees for going over monthly data limits.
BCE Inc. and Vancouver-based Telus both quickly followed suit, leaving analysts cautioning that Canada’s three national carriers will face a reduction in the revenue from charging data overage fees, which are estimated to be about 4 per cent or 5 per cent of their wireless revenues.
The move to unlimited data plans sparked increased competition in the sector, leading to what Telus chief executive Darren Entwistle described as “heightened industry-wide churn” during the third quarter. (Churn represents the rate of customer turnover on a monthly basis.)
On Thursday, Telus reported it added 193,000 net new wireless customers during the quarter, including 111,000 mobile phone customers and 82,000 connected devices. The number of new mobile phone customers was 10,000 lower compared with the third quarter of last year, as higher gross additions were offset by greater churn. Telus’s mobile phone churn rate increased by six basis points to 1.09 per cent. (A basis point is 1/100 of a percentage point.)
“The year-over-year decline was largely due to Telus purposely choosing to remain on the sidelines for some of the more aggressive and uneconomic competitive activity that occurred in the quarter," Mr. Entwistle said during a conference call to discuss the company’s third-quarter results.
Telus changed the way it reports wireless subscribers earlier this year, combining prepaid and contract customers and creating a new category for connected devices. The changes have made it challenging to compare Telus’s results to those of its peers.
Mr. Entwistle also noted that roughly half of the customers switching to the new unlimited data plans are migrating up from cheaper plans. Initially, the company had expected that 70 per cent of the migrations to the unlimited plans would be from customers moving over from more expensive deals.
On the residential side, the company added 32,000 internet customers and 19,000 television subscribers.
Competition is heating up in the residential market in Telus’s home turf of Western Canada. Shaw Communications Inc. announced Thursday that it will be offering home internet as part of a bundle to its Freedom Mobile customers in Alberta and British Columbia.
Telus also increased its quarterly dividend to 58.25 cents a share, up from 56.25 cents a share, even as its third-quarter profit slipped. Telus’s stock rose $1.98 or 4.2 per cent Thursday to close at $49.25 in Toronto.
Drew McReynolds, an analyst at RBC Dominion Securities, called Telus’s wireless results “much better than feared." Meanwhile, the performance of its wireline business was industry-leading, Mr. McReynolds said in a note to clients.
Telus reported a profit of $440-million for the three-month period ending Sept. 30, down 1.6 per cent from $447-million a year ago. After excluding income related to the sale of the Telus Garden towers in the third quarter of 2018, restructuring and other costs, adjusted profit was up 2.9 per cent to $458-million. The adjusted earnings amounted to 76 cents a share, beating analyst forecasts by 1 cent.
The company reported $3.7-billion in revenue, down 2 per cent from a year ago when it had $171-million in one-time equity income related to the Telus Garden sale.
EBITDA – which stands for earnings before interest, taxes, depreciation and amortization – was up 6.3 per cent from a year ago to $1.43-billion.
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