Telus CEO Darren Entwistle during a press conference in Edmonton on Sept. 24, 2019.AMBER BRACKEN/The Canadian Press
With the initial public offering of Telus International behind him, Telus Corp.’s chief executive is setting his sights on the company’s other high-growth business divisions.
Darren Entwistle plans to expand Telus Health, Telus Agriculture and Telus’s security business by following a similar blueprint to the one he used to turn the telecom’s IT services division into a standalone company with a $10-billion market cap on the Toronto Stock Exchange.
“I think you can draw inferences from what’s transpired at [Telus International] in terms of what it portends for our emerging growth businesses,” Mr. Entwistle said Thursday during a conference call to discuss the Vancouver-based telecom’s fourth-quarter results.
Telus International, which soared in its debut on the TSX and the New York Stock Exchange last week, started out 15 years ago as a call-centre operator for Telus and a handful of other companies. It quickly branched out into other areas and today provides outsourced digital customer service to global brands such as Fitbit Inc. , Uber Technologies Inc. and online gamer Zynga Inc. Along the way it attracted an investment from Baring Private Equity Asia, a Hong Kong-based private equity firm that contributed its expertise in the technology services sector.
The company’s IPO fulfilled a personal goal for Mr. Entwistle, the CEO told analysts. “To achieve an enterprise value for [Telus International] exceeding the $8-billion market cap of Telus two decades ago, when we first embarked on our national growth strategy, really is a fulfilment of an ambition,” Mr. Entwistle said. “When the progeny can outgrow the origins of the parent, there’s something meaningful and poetic about it.”
Asked about his retirement plans, Mr. Entwistle said he intends to remain at the company’s helm until he can achieve similar success with Telus’s health, agriculture and security offshoots. “I won’t be satisfied until we realize that particular outcome,” he said.
He would also like to oversee the rollout of 5G wireless services, the completion of Telus’s fiber-optic network expansion and to support Telus International’s continuing growth. The IPO is a “milestone, not an endgame,” Mr. Entwistle said, adding “I think there’s huge potential still to be realized.”
Earlier this week, Telus announced it has inked a 10-year deal with Google Cloud that will see the two companies collaborate on improving health care, agriculture and security through the use of technology. Google will also help Telus modernize its IT and network infrastructure and deliver fifth-generation wireless services.
Telus reported $4.06-billion in revenue during the fourth quarter, up 5.2 per cent from a year ago when it had $3.86-billion in revenue.
Its fourth-quarter profit fell 28.5 per cent from a year ago to $271-million because of higher depreciation and amortization related to acquisitions, declines in legacy voice services, higher restructuring costs and the impact of the COVID-19 pandemic.
The earnings amounted to 20 cents a share, down from 30 cents per share during the same quarter last year. After adjustments relating to income tax, restructuring and other items, Telus had 22 cents a share in fourth-quarter earnings, down from 32 cents per share a year ago.
Analysts had been expecting $4.03-billion in revenue and 25 cents of adjusted earnings a share, according to the consensus estimates from S&P Capital IQ.
Telus added 87,000 net new mobile-phone customers, 44,000 internet subscribers and 20,000 new television customers during the quarter, while losing 9,000 landline-phone customers.
Canaccord Genuity analyst Aravinda Galappatthige called the subscriber figures strong and credited the company’s “solid retention efforts” for its ability to surpass expectations with regards to the number of new wireless customers.
Telus also provided a financial outlook for 2021, targeting revenue growth of 8 per cent to 10 per cent and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth of 6 per cent to 8 per cent. It also expects to generate $1.5-billion in free cash flow in 2021.
Scotiabank analyst Jeff Fan called it the best 2021 outlook in the sector. BCE Inc. is targeting revenue and adjusted EBITDA growth of between 2 per cent and 5 per cent for the year, while Rogers Communications Inc. held off on providing annual guidance, citing uncertainty around the impact of the COVID-19 pandemic.
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