TELUS Corporation today released its unaudited results for the
third quarter of 2020. For the quarter, consolidated operating
revenue of $4.0 billion increased by 7.7 per cent over the same
period a year ago. Earnings before interest, income taxes,
depreciation and amortization (EBITDA) decreased by 3.1 per cent to
$1.4 billion while Adjusted EBITDA was down 0.6 per cent. This
decline reflects multiple impacts from the COVID-19 pandemic,
declines in wireline legacy voice and legacy data services and
higher employee benefits and other costs including support for
business acquisitions. This was partly offset by: growth in
wireline data service margins resulting from business acquisitions;
expanded services and subscriber base growth; increased organic and
inorganic EBITDA contribution from TELUS International (TI)
business growth; and enhanced cost efficiency programs.
“TELUS once again achieved strong operational and financial
results in the third quarter, characterized by excellent execution,
resulting in industry-leading and record high customer growth of
over 277,000 net new additions,” said Darren Entwistle, President
and CEO. “This accomplishment, realized against the backdrop of an
unprecedented operating environment as a result of the global
pandemic, reflects the effectiveness of our world-leading
performance culture, underpinned by our highly engaged team. TELUS’
recent recognition as the highest ranking Canadian organization on
Forbes’ World’s Best Employers ranking is a testament to the skill,
passion and grit of our high-performing team around the world.”
“Leveraging our best-in-class customer service and strong
digital capabilities, we continued to achieve robust customer
growth in the quarter, including 111,000 high-quality mobile phone
net additions and 79,000 wireline customer additions, driven by
50,000 internet, 19,000 TV and 18,000 security net additions, in
addition to the lowest residential voice net losses since 2004.
This was supported by strong and enhanced customer loyalty across
our key product lines, including blended mobile phone and internet
churn both below one per cent, and TV churn of one per cent, backed
by our world-leading wireless and fibre broadband networks.”
Darren added, “TELUS’ broadband networks continue to perform
exceedingly well through the COVID-19 health crisis, and the
efficacy of our ongoing technology investments is reflected in
numerous awards from leading independent network authorities.
Notably, UK-based Opensignal ranked TELUS as having the fastest
network in the world in their Global Mobile Network Experience
Awards, stating that TELUS’ 4G LTE network speeds surpass not only
our Canadian competitors, but they also exceed the 5G network
speeds of the top wireless carriers in the United States. This
award builds on our multiple third-party acknowledgements for
wireless network excellence from U.S.-based PCMag and Ookla, as
well as Canada-based Tutela, all received every year for three or
more years. Our PureFibre network is receiving similar recognition,
with PCMag ranking TELUS as the fastest internet service provider
(ISP) in Canada, further reinforcing TELUS’ leadership as Canada’s
Best Gaming ISP for 2020, amongst major providers, as announced by
PCMag earlier this year. As we continue to rollout our globally
leading 5G and fibre networks in the months and years to come,
Canadians will have access to exceptional speed, quality and
coverage that will catalyse dramatic innovations in health,
educational, environmental and socio-economic outcomes for the
benefit of Canadians. Importantly, the growing ubiquity of our
broadband technology will amplify our entrepreneurial spirit;
unleash human productivity; and drive the economic growth and
diversity that is key to Canada’s fiscal recovery.”
“Today, we are announcing the reinstatement of our multi-year
dividend growth program, now in its tenth year and targeting annual
growth between seven and 10 per cent through 2022. The 7 per cent
increase reflects our confidence in the outlook for our business,
the sustainability of strong results, as well as our robust free
cash flow generation and expected future free cash flow expansion.
Today’s increase is the 19th since 2011, and reinforces the
strength of our financial and operational performance, which enable
us to successfully execute on our industry-leading
shareholder-friendly program in combination with a strong balance
sheet. TELUS has now returned nearly $19 billion to shareholders,
including $13.6 billion in dividends, representing approximately
$15 per share since 2004.”
“Our TELUS team continues to manage the impacts of the pandemic,
while taking care of our team members, customers and communities,”
Darren expressed. “In this regard, we expanded our Internet for
Good low cost, high-speed internet program, which is already
accessible to economically challenged families and K-12 students,
to also support Canadians living with disabilities. We have now
enabled over 68,000 low-income family members and people with
disabilities in B.C., Alberta and Quebec. Similarly, we extended
our Mobility for Good program to all provinces across Canada, and
now provide free smartphones and data plans to more than 20,000
youth who are making the difficult transition out of foster care.
Moreover, we have distributed over 350,000 TELUS masks to help
Canadians stay safe during the pandemic, and fundraised almost
$400,000 this year for the TELUS Friendly Future Foundation to
support COVID-19 health-related initiatives. Indeed, our TELUS
teams’ passionate efforts to protect and support our communities
and our customers was recognized by the Wall Street Journal, which
ranked TELUS 29th in their 100 Most Sustainably Managed Companies
in the World report, and 15th, globally, in the subcategory of
social capital. TELUS is the only telecommunications company and
one of only three Canadian companies named to this global list,
further exemplifying our leadership in social capitalism and
demonstrating that Canadians can count on the TELUS team, even
during the most trying of times.”
Doug French, Executive Vice-president and Chief Financial
Officer said, “In the third quarter, TELUS once again delivered a
strong set of operational and financial results, during what has
been an unprecedented time for all of us. Our third quarter results
showcase the efficacy of our strategic focus on profitable customer
growth, our strong and differentiated asset mix targeting
high-growth verticals, and our proactive focus on operational
effectiveness and margin accretive initiatives.”
“We have remained focused on maintaining a strong balance sheet
to ensure financial flexibility amid an uncertain global economic
environment,” Doug added. “In October, we leveraged attractive
credit market conditions to successfully complete a $500 million
debt offering at an attractive rate of 2.05 per cent, the lowest
coupon on record for a Canadian BBB 10-year issuance. Our weighted
average interest rate on long-term debt now sits at 3.85 per cent,
down from 3.98 per cent one year ago, along with an average term to
maturity of nearly 13 years. This strong financial position allows
us to continue to pursue thoughtful and strategic growth
initiatives, including our acquisition of Lionbridge AI announced
today, as well as AFS Technologies, which further support TELUS’
long-term growth trajectory.”
“As we head into the final quarter of the year, and into 2021,
we are well-positioned to build on the operating momentum
established this year, taking the valuable learnings from the
pandemic to enhance our go-to-market strategy and support our
efforts to maintain TELUS’ track record of consistently delivering
strong results quarter-in and quarter-out. Leveraging our highly
differentiated and superior asset mix, we continue to focus on
generating sustainable free cash flow growth, which will in turn
support the consistent return of capital through our long-standing
and transparent dividend growth program. Despite the challenging
environment ahead, we are striving to deliver flat EBITDA growth
for the full year 2020, along with strong free cash flow at the
lower-end of our original target range,” Doug concluded.
In the quarter, we added 285,000 new wireless, internet, TV and
security customers, up 27,000 over the same quarter a year ago.
Residential voice losses of 8,000 improved by 4,000 over the same
period a year ago, resulting in total net additions of 277,000. The
net additions included 111,000 mobile phones, 87,000 mobile
connected devices, as well as 50,000 internet, 19,000 TV and 18,000
security customers. Our total wireless subscriber base of 10.6
million is up 4.9 per cent over the last twelve months, reflecting
a 2.3 per cent increase in our mobile phones subscriber base to 8.9
million and a 20.3 per cent increase to our mobile connected
devices subscriber base to over 1.7 million. Additionally, our
internet connections are up 7.2 per cent over the last twelve
months, nearing 2.1 million customers, our TV subscriber base of
1.2 million is higher by 4.4 per cent and our security customer
base expanded to 684,000.
Free cash flow of $161 million decreased by $159 million over
the same period a year ago, largely from increased income tax
payments as several government jurisdictions permitted the deferral
of income tax instalments from the first and second quarter of 2020
into the third quarter of 2020 due to the pandemic, in addition to
lower EBITDA attributed to pandemic impacts. Excluding cash taxes,
free cash flow of $359 million decreased by $58 million or 14 per
cent.
Consolidated capital expenditures of $741 million decreased by
0.9 per cent over the same period a year ago due to the timing of
our fibre build activities and efficiencies in our 4G network
expenditures. These decreases were partially offset by increased
investments in our 5G network, in addition to investments to
increase system capacity and reliability during the pandemic. With
our ongoing investments, we are advancing wireless speeds and
coverage that enabled our 5G network launch, continuing to connect
additional homes and businesses directly to our fibre-optic
technology, and supporting systems reliability and operational
efficiency and effectiveness efforts. These investments also
support our internet, TV and security subscriber growth, address
our customers’ demand for faster internet speeds, and extend the
reach and functionality of our business and healthcare
solutions.
At the end of the quarter, our TELUS PureFibre network covered
approximately 2.41 million premises, or approximately 78 per cent
of our high-speed broadband footprint, reflecting an increase of
approximately 270,000 fibre premises over the last twelve months.
Furthermore, at September 30, 2020, our 5G network covered over 7.3
million Canadians representing almost 20 per cent of the Canadian
population. At the end of the third quarter, our 5G network was
available in 24 cities and we expect to increase our coverage to a
total of 50 communities by the end of 2020.
For the quarter, net income of $321 million
decreased by 27 per cent over the same period last year and Basic
earnings per share (EPS) of $0.24 decreased by 33 per cent. These
declines reflect multiple impacts from the COVID-19 pandemic,
increased depreciation and amortization from capital assets growth,
including acquisitions, declines in wireline legacy voice and
legacy data services, and higher non-labour-related restructuring
and other costs.
When excluding the effects of restructuring and other costs,
income tax-related adjustments, lease-up period and other equity
losses related to real estate joint ventures, and a long-term debt
prepayment premium in the third quarter of 2019, adjusted net
income of $356 million decreased by 22 per cent compared to the
prior year, while adjusted basic EPS of $0.28 was down 28 per
cent.
COVID-19 updateOn September 23, 2020,
approximately 8 months after the first case of COVID-19 was
reported in Canada, the Prime Minister declared that a second wave
of COVID-19 was already underway in most of Canada. Since the
beginning of the pandemic, we have focused relentlessly on keeping
Canadians connected and on the health, safety and well-being of our
team members, our customers and our communities. Our Executive Team
continues to be guided by advice from our Emergency Management
Operating Committee (EMOC) and the TELUS Medical Advisory Council
(MAC).
The pandemic has impacted our operations and financial condition
and we expect many of these trends to continue into the fourth
quarter of 2020 and into 2021. As we navigate through the pandemic,
we continue to take various steps to mitigate the negative effects,
including pursuing cost savings initiatives and margin accretion
opportunities.
Late in the second quarter of 2020, we commenced re-opening our
conventional retail stores that were previously closed as a result
of the pandemic and by July 31, 2020, a majority had been
re-opened. While the health emergency has had a negative impact on
customer loading and overall store traffic, our wireless gross
additions have been resilient and only marginally lower over prior
year periods as we successfully leveraged our digital assets to
support customer growth and retention activities. Coinciding with
wireless industry retail stores having re-opened by the third
quarter of 2020, the typical third quarter seasonal promotional
intensity was exacerbated by pent-up demand coming out of retail
closures and lockdowns from the second quarter of 2020. This has
led to industry churn starting to return to pre-pandemic levels. We
have experienced decreases in wireless roaming revenues with the
closure of borders and corresponding decline in customer travel. We
expect declines in roaming revenue to persist throughout the health
crisis as the closure of borders, including those of Canada and the
U.S., and decreases in customer travel continue.
With respect to small and medium-sized business (SMB), we expect
lower contribution from our business customers as we anticipate
that many SMB enterprises will be forced to close and/or reduce the
scope of their operations.
In our health business, we have seen an improvement as our
health clinics have re-opened, but due to restrictions in place to
protect patients during the pandemic, the clinics are still unable
to offer their full suite of core services. Additionally, in our
health business, increased demand for virtual care solutions
carried into the third quarter of 2020 and we are seeing increased
demand for our Home Health Monitoring (HHM) solutions within
certain provinces, as well as increased demand for our LivingWell
Companion™ by TELUS Health, enabling Canadians to access 24/7
emergency support.
TI was impacted by temporary operating restrictions of certain
centres, however TI’s ability to quickly enable team members to
work and support customers from home and in other modified work
locations has helped to mitigate these impacts. Certain TI clients
also continue to experience challenges, in particular those clients
in travel and hospitality-related businesses, however, the decline
in business from these clients was offset by increases in business
from clients in the games, media and ecommerce food delivery
industries. While some delivery centres have begun to welcome back
more team members, TI is planning for the majority of its team to
make a gradual return to its centres provided it has been deemed
safe to do so by local government and health authorities, in
addition to guidance from the TELUS MAC and its own best
practices.
In the third quarter of 2020, cash receipts from customers have
been steadily recovering from earlier declines experienced in the
second quarter of 2020. We believe government assistance programs
designed to support individuals and businesses, as well as the
resumption of collections activities, were key contributing factors
to the improvement in cash receipts in the third quarter.
In addition to the financial impacts described above, we
continued to take various steps to support our community during
these challenging times. As the global leader in social capitalism,
TELUS made a $20 million commitment to help build public healthcare
capacity and support vulnerable communities through the COVID-19
pandemic and beyond. Below are select highlights of the steps we
are taking through this committment:
- Donating over 14,000 devices and free rate plans - valued at
over $9 million - to over 325 organizations, helping hospitalized
COVID-19 patients connect virtually with loved ones, while also
enabling isolated seniors and other vulnerable Canadians to sustain
contact with health practitioners and social support services.
- Expanding Mobility for Good nationally to 20,000 youth aging
out of foster care.
- With the help of an additional $250,000 donation from the TELUS
Friendly Future Foundation, repurposing TELUS Health for Good
clinics to support COVID-19 response and administering almost
10,000 COVID assessments and tests.
- Providing K-12 students in need in B.C and Alberta with
expedited access to Internet for Good, allowing them to learn from
the safety of their home.
- Expanding Internet for Good to include 200,000 people living
with disabilities who receive financial disability assistance in
B.C., Alberta and Quebec.
- Disbursing over $2 million in TELUS Friendly Future Foundation
grants to 24 charitable partners nationwide in support of
healthcare relief efforts including London Health Sciences Centre,
CHUM University of Montreal's Hospital Centre Foundation, Manitoba
Health Sciences Centre and Centre for Addiction and Mental Health
Foundation.
- Giving over $5 million to close to 500 grassroots charities
working on the front lines of the pandemic, including Pacific
Immigrant Resources Society, Urban Society for Aboriginal Youth,
Covenant House Toronto and the Fondation Institut de gériatrie de
Montréal, enabling them to continue their critically important work
supporting diverse populations.
- Extending $1 million to support world class research at
institutions including Sunnybrook Hospital Foundation and the
McGill Hospital Foundation focused on addressing the public health
crisis.
- Enabling Canadians to stay safe through the sale of 50,000
TELUS critter masks with proceeds supporting the work of the TELUS
Friendly Future Foundation.
- Donating 13,000 backpacks filled with essential school supplies
and reusable youth-sized face masks to support a successful return
to learning.
- Supporting the public health crisis through a unique leadership
gift, TELUS CEO Darren Entwistle donated $400,000 of his salary to
essential hospitals, community health centers and critical COVID-19
research across Canada. Additionally, the Entwistle Family
Foundation matched a portion of the salary donations, with a
$150,000 gift, in order to maximise the TELUS team’s commitment to
supporting healthcare in Canada and helping those most impacted by
COVID-19. The philanthropic gift from Mr. Entwistle and the Family
Foundation includes: º A $100,000
donation made to BC Women’s Hospital Foundation in May to support
virtual care technology; º A $100,000
contribution given to McGill University Health Centre Foundation in
June to enable ICU patients to virtually connect with loved
ones; º A $100,000 gift to support
vulnerable and isolated seniors contributed to Covenant Health
Foundation in Alberta in July; and º A
final $100,000 donation given to Sunnybrook Hospital Foundation in
Ontario in August to urgently address the alarming increase in
suicides during the pandemic.
For further discussion on the effect of the COVID-19 pandemic on
the environment in which we operate, refer to section 1.2 in our
third quarter 2020 Management’s discussion and analysis.
Consolidated Financial Highlights
C$ millions, except footnotes and unless noted otherwise |
Three months ended September 30 |
Per cent |
(unaudited) |
2020 |
2019 |
change |
Operating revenues |
3,981 |
3,697 |
7.7 |
Operating expenses before
depreciation and amortization |
2,591 |
2,263 |
14.5 |
EBITDA(1) |
1,390 |
1,434 |
(3.1) |
Adjusted EBITDA(1)(2) |
1,456 |
1,463 |
(0.6) |
Net income |
321 |
440 |
(27.0) |
Adjusted net income(1) |
356 |
458 |
(22.3) |
Net income attributable to
common shares |
307 |
433 |
(29.1) |
Basic EPS(3) ($) |
0.24 |
0.36 |
(33.3) |
Adjusted basic EPS(1)(3)
($) |
0.28 |
0.39 |
(28.2) |
Capital expenditures(4) |
741 |
748 |
(0.9) |
Free cash flow(1) |
161 |
320 |
(49.7) |
Total subscriber
connections(5) (thousands) |
15,719 |
14,500 |
8.4 |
(1) |
|
EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted basic
EPS and Free cash flow are non-GAAP measures and do not have any
standardized meaning prescribed by IFRS-IASB. For further
definitions and explanations of these measures, see ‘Non-GAAP and
other financial measures’ in this news release. |
(2) |
|
Adjusted EBITDA for the third quarters of 2020 and 2019
excludes restructuring and other costs of $58 million and $29
million respectively, and lease-up period and other equity losses
related to real estate joint ventures of $8 million in the third
quarter of 2020. |
(3) |
|
On March 17, 2020, TELUS shareholders received one additional
share for each share owned on the record date of March 13, 2020.
All information pertaining to shares outstanding and per-share
amounts in this news release for periods before March 17, 2020,
reflects retrospective treatment of the two-for-one share
split. |
(4) |
|
Capital expenditures include assets purchased, excluding
right-of-use lease assets, but not yet paid for, and consequently
differ from Cash payments for capital assets, excluding spectrum
licences, as reported in the interim consolidated financial
statements. Refer to Note 31 of the interim consolidated financial
statements for further information. |
(5) |
|
The sum of active mobile phone subscribers, mobile connected
device subscribers, internet subscribers, residential voice
subscribers, TV subscribers and security subscribers, measured at
the end of the respective periods based on information in billing
and other source systems. December 31, 2019 security subscriber
connections have been increased to include approximately 490,000
subscribers related to our acquisition of ADT Security Services
Canada, Inc. (ADT Canada) (acquired on November 5, 2019). During
the third quarter of 2020, we adjusted cumulative subscriber
connections to add approximately 31,000 security subscribers as a
result of a business acquisition. |
Third Quarter 2020 Operating Highlights
As noted in Section 1.2 of our third quarter 2020 Management’s
discussion and analysis, the COVID-19 pandemic, which emerged in
the first quarter of 2020, continued to have a pervasive global
impact throughout the third quarter of 2020. The nature of the
pandemic and the uncertainty of its magnitude, length and the time
to recovery are not currently able to be estimated. Therefore,
results described below may not be indicative of future trends, as
the COVID-19 pandemic prevents us and our customers from operating
in the normal course of business in certain areas while we continue
to adjust our mode of operations to continue delivering on our
customers first priorities and social purpose.
TELUS wireless
- External wireless operating revenue was essentially flat to the
prior year, as equipment and other service revenues increased by
7.5 per cent, offset by a decline to network revenue discussed
below.
- Network revenue decreased by $46 million or 2.9 per cent,
reflecting a 5.0 per cent decline in mobile phone ARPU as outlined
below, partly offset by a 4.9 per cent increase in the subscriber
base over the last 12 months.
- Equipment and other service revenues increased by $38 million
or 7.5 per cent, reflecting higher-value smartphones in the sales
mix for gross additions and retention units.
- Mobile phone ABPU was $71.39, reflecting a decrease of 4.9 per
cent. This decrease reflects the impacts caused by the COVID-19
pandemic including: (i) significantly reduced roaming revenue from
changing customer behaviour related to travel restrictions; (ii)
the temporary closure of approximately 90 per cent of our
conventional retail stores beginning in March 2020 through a
majority of the second quarter which hindered customer
opportunities for device upgrades and the upgrade or selection of
higher-tier plans; and (iii) decreases in chargeable data usage as
more people work from home and offload their mobile devices onto
Wi-Fi networks. Mobile phone ABPU was also impacted by continued
declines in chargeable data usage, and the impact of the
competitive environment putting pressure on base rate plan prices
in the current and prior periods. Mobile phone ABPU declination was
partly offset by growth resulting from our combined TELUS Easy
Payment device financing, Peace of Mind endless data plans and
TELUS Family Discount offerings, which we introduced at the
beginning of the third quarter of 2019, with customers selecting
plans with endless data or larger data buckets and higher-value
smartphones in the sales mix.
- Mobile phone ARPU was $58.54 in the third quarter of 2020, a
decrease of 5.0 per cent. Mobile phone ARPU was impacted by the
same items noted above for Mobile Phone ABPU, with the exception
of: (i) our TELUS Easy Payment device financing program; (ii) prior
to our TELUS Easy Payment device financing program, devices with
subsidies; and (iii) contracted device upgrades.
- Mobile phone churn rate was 0.99 per cent as compared to 1.09
per cent in the same period a year prior, reflecting the impacts of
reduced switching activity between carriers due to the COVID-19
pandemic. This decline also reflects the successful utilization of
our TELUS Easy Payment device financing program, Peace of Mind
endless data plans, Bring-It-Back™ and TELUS Family Discount
offerings, our focus on executing customers first initiatives and
retention programs, and our leading network quality.
- Mobile phone gross additions were 370,000, reflecting a
decrease of 18,000 compared to the same period a year ago. This
decline is reflective of fewer activations from travelers due to
border restrictions. The decline more than offset higher loading
from growth in the Canadian population, successful promotions and
expanded channels, including enhancing the capabilities of our
digital footprint.
- Total subscriber net additions were 198,000, compared to
193,000 in the prior year. Mobile phone net additions were 111,000
in the third quarter of 2020, flat to the prior year. Mobile
connected device net additions were 87,000 as compared to 82,000 in
the third quarter of 2019, due to increased demand for Internet of
Things solutions, partly offset by lower tablet net additions.
- EBITDA of $945 million decreased by $25 million or 2.6 per
cent, while Adjusted EBITDA of $961 million was lower by $15
million or 1.6 per cent over last year, reflecting the impacts of
the COVID-19 pandemic, including lower roaming revenue resulting
from restricted travel, the temporary closure of approximately 90
per cent of our conventional retail stores, and decreases in
chargeable usage as more people work from home and offload their
mobile devices onto Wi-Fi networks. This was partially offset by
enhanced cost efficiency programs, increased gains on sales of
assets, and increases in our subscriber base.
TELUS wireline
- External operating revenues increased by $285 million or 18 per
cent, primarily driven by data services revenue growth as discussed
below.
- Data services revenues growth of 23 per cent was driven by a
combination of higher revenues from our diverse portfolio of
solutions, including our TI customer care and business services
which included contribution from our acquisition of Competence Call
Center (CCC) in the first quarter of this year. The increased
revenues was also from growth in our home and business smart
technology (including security) which included contribution from
our fourth quarter 2019 acquisition of ADT Canada, internet and
third wave data services. Additionally, this growth was driven by
increased revenues from our virtual care solutions. This growth was
partly offset by impacts resulting from the COVID-19 pandemic,
including a decline in health revenue mainly from the temporary
closures of our conventional Medisys and Copeman clinics for all
non-essential services and reduced health benefit claims, in
addition to lower revenue from business customers as they redeploy
their resources. Data services revenues growth was also impacted
the ongoing decline in legacy data service revenues.
- Internet net additions of 50,000 increased by 18,000, as a
result of continued net new demand from consumers and businesses
for our PureFibre services as we continued to keep our customers
connected through offering a range of installation options, as well
as lower customer churn resulting from our customers first
initiatives and retention programs, the success of our bundled
product offerings, and reduced switching activity between providers
due to the COVID-19 pandemic. Additionally, we continued our focus
on connecting more homes and businesses directly to fibre.
- TV net additions were 19,000, flat to the prior year, due to
strong retention efforts, the success of our bundled product
offerings, and reduced switching activity due to the pandemic.
These factors offset lower gross additions from the changing
landscape of increased streaming services.
- Security net additions of 18,000 reflected an increase of
4,000, which was driven by strong organic growth as we keep our
customers connected and protected through offering a range of
installation options and demand from our bundled product
offerings.
- Residential voice net losses were limited to only 8,000,
representing our fewest quarterly net losses since 2004, and were
down 4,000 compared to the same period a year ago. The residential
voice subscriber losses continue to reflect the trend of
substitution by wireless and internet-based services, partially
mitigated by our expanding fibre footprint and bundled product
offerings and our strong retention efforts, including lower-priced
offerings.
- EBITDA of $445 million decreased by $19 million or 4.1 per
cent. Adjusted EBITDA of $495 million increased by $8 million or
1.6 per cent. This increase reflects: increased contribution from
TI as a result of the acquisition of CCC and expanded services for
existing customers and customer growth; growth from our home and
business smart technology (including security), driven by business
acquisitions and expanded services; and higher internet margins.
This growth was partially offset by higher employee benefits
expense, as well as higher operating and administrative costs
associated with business acquisitions and TI growth, a decline in
TV margins as a result of lower revenue per customer and higher
content costs, and a decline in the EBITDA contribution from our
legacy voice and data services. Our health business saw growth from
our virtual care solutions, which was mostly offset by higher
product costs in support of growth, lower contribution from our
conventional health business in Medisys and Copeman clinics, and
reduced health benefit claims due to the lingering COVID-19
pandemic impacts on business recovery.
Dividend Declaration The TELUS Board of
Directors has declared a quarterly dividend of $0.3112 per share on
the issued and outstanding Common Shares of the Company payable on
January 4, 2021 to holders of record at the close of business on
December 11, 2020. This fourth quarter dividend represents an
increase of 6.8 per cent from the $0.29125 quarterly dividend paid
on January 2, 2020 and is the nineteenth dividend increase since
TELUS announced its original multi-year dividend growth program in
May 2011.
TELUS announces agreement to acquire Lionbridge AI
through TELUS International (TI)On November 6, 2020, TELUS
announced that it has agreed to acquire Lionbridge AI, a market
leading global provider of crowd-based training data and annotation
platform solutions used in the development of AI algorithms to
power machine learning, for approximately $1.2 billion
(approximately US$935 million), through TI. As a division of
Lionbridge Technologies, Inc. - a privately-held company that is
part of the portfolio of H.I.G. Capital companies with more than 20
years of industry experience - Lionbridge AI is one of only two
globally-scaled, managed training data and data annotation services
providers in the world. Data annotation is the essential process of
labeling data to make it usable for AI systems, and Lionbridge AI
annotates data in text, images, videos, and audio in more than 300
languages and dialects for some of the world’s largest technology
companies in social media, search, retail and mobile.
TELUS acquires AFS TechnologiesOn August 19,
2020, we acquired 100 per cent of AFS Technologies Inc., a business
complimentary to our existing technology-related lines of business
providing trade promotion and supply chain software solutions to
consumer packaged goods companies, food distributors and food
manufacturers for approximately $315 million. The investment was
made with a view to growing our existing smart data solutions
business.
Corporate Highlights TELUS makes significant
contributions and investments in the communities where team members
live, work and serve and to the Canadian economy on behalf of
customers, shareholders and team members. These include:
- Paying, collecting and remitting in excess of $1.6 billion in
taxes in the first three quarters of 2020 to federal, provincial
and municipal governments in Canada consisting of corporate income
taxes, sales taxes, property taxes, employer portion of payroll
taxes and various regulatory fees. When including spectrum
remittances, we have remitted in excess of $33 billion in taxes and
spectrum since 2000.
- Investing over $2.2 billion in capital expenditures primarily
in communities across Canada in the first three quarters of 2020
and approximately $44 billion since 2000.
- Spending $5.9 billion in total operating expenses in the first
three quarters of 2020, including goods and service purchased of
approximately $4.2 billion. Since 2000, we have spent $129 billion
and $87 billion respectively in these areas.
- Generating a total team member payroll of $2.3 billion in the
first three quarters of 2020, including payroll taxes of $120
million. Since 2000, total team member payroll totals $50
billion.
- Returning approximately $1.5 billion in dividends year-to-date
through four quarterly dividend payments through November 6, 2020
to individual shareholders, mutual fund owners, pensioners and
institutional investors. Since 2004, we have returned $18.8 billion
to shareholders through our dividend and share purchase programs,
including $13.6 billion in dividends, representing approximately
$15 per share.
Access to Quarterly results
informationInterested investors, the media and others may
review this quarterly earnings news release, management’s
discussion and analysis, quarterly results slides, audio and
transcript of the investor webcast call, supplementary financial
information at telus.com/investors.
TELUS’ third quarter 2020 conference call is scheduled for
Friday, November 6, 2020 at 12:00pm ET (9:00am PT)
and will feature a presentation followed by a question and answer
period with investment analysts. Interested parties can access the
webcast at telus.com/investors. An audio recording will be
available approximately 60 minutes after the call until December 6,
2020 at 1-855-201-2300. Please use reference number 1252440# and
access code 77377#. An archive of the webcast will also be
available at telus.com/investors and a transcript will be posted on
the website within a few business days.
Caution regarding forward-looking
statements
This news release contains forward-looking statements about
expected events and the financial and operating performance of
TELUS Corporation. The terms TELUS, we, us and our refer to TELUS
Corporation and, where the context of the narrative permits or
requires, its subsidiaries.
Forward-looking statements include any statements that do not
refer to historical facts. They include, but are not limited to,
statements relating to our objectives and our strategies to achieve
those objectives, our targets, outlook, updates, our plans and
expectations regarding the impact of the COVID-19 pandemic and
responses to it, our current expectations regarding out ability to
achieve flat EBITDA growth for 2020 as well as annual free cash
flow at the lower end of our original target range and and our
multi-year dividend growth program. Forward-looking statements are
typically identified by the words: assumption, goal, guidance,
objective, outlook, strategy, target and other similar expressions,
or future or conditional verbs such as aim, anticipate, believe,
could, expect, intend, may, plan, predict, seek, should, strive and
will. These statements are made pursuant to the “safe harbour”
provisions of applicable securities laws in Canada and the United
States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements are subject to
inherent risks and uncertainties and are based on assumptions,
including assumptions about future economic conditions and courses
of action. These assumptions may ultimately prove to have been
inaccurate and, as a result, our actual results or events may
differ materially from expectations expressed in or implied by the
forward-looking statements.
Due to the wide range of possible outcomes of the COVID-19
pandemic and the uncertainty with regard to the length of the
pandemic and measures in place to limit its spread and
transmission, the impact on our business cannot be accurately
forecasted as of the date of this news release.
During the third quarter of 2020, the Canadian Prime Minister
announced that a second wave of COVID-19 was already underway in
most of Canada as described in Section 1.2 of the third quarter
2020 MD&A. Given the uncertain magnitude, duration and
potential outcomes of this second wave, we cannot accurately
provide an update on our outlook and 2020 guidance, which we
withdrew in May 2020. Forward-looking statements in this press
release regarding our ability to achieve flat EBITDA growth for
2020 as well as annual free cash flow at the lower end of our
original target range are based on the assumption that our
business, as well as overall economic conditions, will not change
materially in the final quarter of 2020. In addition to the risks
and uncertainties confronting our business as described below,
these statements are subject to the risk that government assistance
in response to the pandemic will not continue or will not be
effective, that the economic recovery currently underway will stall
and that the economic conditions in Canada and other jurisdictions
will worsen, and that the second wave of COVID-19 will intensify
beyond current expectations.
Other risks and uncertainties that could cause actual
performance or events to differ materially from the forward-looking
statements made herein and in other TELUS filings include, but are
not limited to, the following:
- The COVID-19 pandemic including its impacts on our customers,
our team members and our communities, as well as changes resulting
from the pandemic to our business and operations including to the
demand for and supply of the products and services that we offer
and the channels through which we offer them.
- Regulatory decisions and developments including changes to our
regulatory regime (the timing of announcement or implementation of
which are uncertain) or the outcomes of proceedings, cases or
inquiries relating to its application, including but not limited to
those set out in Section 9.1 Communications industry regulatory
developments and proceedings in our third quarter 2020
Management’s discussion and analysis (MD&A), such as the
potential for government intervention to further increase
competition, for example, through mandated wholesale access; the
potential for additional government intervention on pricing,
including the March 2020 announcement by the federal government
(reiterated in June 2020) targeting a 25% price reduction in
wireless plans using between two to six GB of data over a two year
period by the national wireless carriers; federal and provincial
consumer protection legislation and regulation; amendments to
existing federal legislation; potential threats to unitary federal
regulatory authority over communications; potential threats to the
CRTC’s ability to enforce the Wholesale Code, which aims to ensure
the fair treatment by vertically integrated firms of rival
broadcasting distributors and programming services; regulatory
action by the Competition Bureau or other regulatory agencies;
spectrum and compliance with licences, including our compliance
with licence conditions, changes to spectrum licence fees, spectrum
policy determinations such as restrictions on the purchase, sale,
subordination and transfer of spectrum licences, the cost,
availability and timing of spectrum, and ongoing and future
consultations and decisions on spectrum allocation; the impact on
us and other Canadian telecommunications carriers of government or
regulatory actions with respect to certain countries or suppliers,
including the executive order signed by U.S. President Donald Trump
permitting the Secretary of Commerce to block certain technology
transactions deemed to constitute national security risks and the
imposition of additional licence requirements on the export,
re-export and transfer of goods, services and technology to Huawei
Technologies Co. Ltd. and its non-U.S. affiliates, and decisions of
other foreign governments; restrictions on non-Canadian ownership
and control of TELUS Common Shares and the ongoing monitoring of
and compliance with such restrictions; unanticipated changes to the
current copyright regime; and our ability to comply with complex
and changing regulation of the healthcare and medical devices
industry in the jurisdictions in which we operate, including as an
operator of health clinics.
- Competitive environment including: our ability to continue to
retain customers through an enhanced customer service experience,
including through the deployment and operation of evolving wireless
and wireline infrastructure; intense wireless competition,
including the ability of industry competitors to successfully
combine a mix of internet services and, in some cases, wireless
services under one bundled and/or discounted monthly rate, along
with their existing broadcast or satellite-based TV services; the
success of new products, services and supporting systems, such as
home automation security and Internet of Things (IoT) services for
internet-connected devices; wireline voice and data competition,
including continued intense rivalry across all services among
wireless and wireline telecommunications companies, cable
companies, other communications companies and over-the-top (OTT)
services, which, among other things, places pressures on current
and future mobile phone average billing per subscriber per month
(ABPU), mobile phone average revenue per subscriber per month
(ARPU), cost of acquisition, cost of retention and churn rate for
all services, as do customer usage patterns, increased data bucket
sizes or flat-rate pricing trends for voice and data, such as our
Peace of Mind™ plans and comparable plans, inclusive rate plans for
voice and data and availability of Wi-Fi networks for data; mergers
and acquisitions of industry competitors; pressures on internet and
TV ARPU and churn rate resulting from market conditions, government
actions and customer usage patterns; residential voice and business
network access line losses; subscriber additions and retention
volumes, and associated costs for wireless, TV and internet
services; our ability to obtain and offer content on a timely basis
across multiple devices on wireless and TV platforms at a
reasonable cost as content costs per unit continue to grow;
vertical integration in the broadcasting industry resulting in
competitors owning broadcast content services, and timely and
effective enforcement of related regulatory safeguards; our ability
to compete successfully in our TELUS International customer care
and business services given our competitors’ brand recognition,
consolidation and strategic alliances, as well as technology
development; in our TELUS Health business, our ability to compete
with other providers of electronic medical records and pharmacy
management products, systems integrators and health service
providers including those that own a vertically integrated mix of
health services delivery, IT solutions, and related services, and
global providers that could achieve expanded Canadian footprints;
and our ability to successfully develop our smart data solutions
business.
- Technological substitution including: reduced utilization and
increased commoditization of traditional wireline voice services
(local and long distance) resulting from impacts of OTT
applications and wireless substitution; a declining overall market
for paid TV services, including as a result of content piracy and
signal theft, a rise in OTT direct-to-consumer video offerings and
virtual multichannel video programming distribution platforms; the
increasing number of households that have only wireless and/or
internet-based telephone services; potential declines in mobile
phone ABPU and ARPU as a result of, among other factors,
substitution by messaging and OTT applications; substitution by
increasingly available Wi-Fi services; and disruptive technologies,
such as OTT IP services, including software-defined networks in the
business market, that may displace or cause us to reprice our
existing data services.
- Challenges to our ability to deploy technology including: high
subscriber demand for data that challenges wireless networks and
spectrum capacity levels and may be accompanied by increases in
delivery cost; our reliance on information technology and our
ability to streamline our legacy systems; the roll-out and
evolution of wireless broadband technologies and systems, including
video distribution platforms and telecommunications network
technologies (broadband initiatives, such as fibre to the premises
(FTTP), wireless small-cell deployment, 5G wireless and
availability of resources and our ability to build out adequate
broadband capacity); our reliance on wireless network access
agreements, which have facilitated our deployment of wireless
technologies; our choice of suppliers and those suppliers’ ability
to maintain and service their product lines, which could affect the
success of upgrades to, and evolution of, technology that we offer;
supplier limitations and concentration and market power for
products such as network equipment, TELUS TV® and wireless
handsets; our expected long-term need to acquire additional
spectrum capacity through future spectrum auctions and from third
parties to address increasing demand for data and our ability to
utilize spectrum we acquire; deployment and operation of new
wireline broadband network technologies at a reasonable cost and
the availability and success of new products and services to be
rolled out using such network technologies; network reliability and
change management; and our deployment of self-learning tools and
automation that may change the way we interact with customers.
- Capital expenditure levels and potential outlays for spectrum
licences in auctions or purchases from third parties, affect and
are affected by: our broadband initiatives, including connecting
more homes and businesses directly to fibre; our ongoing deployment
of newer wireless technologies, including wireless small cells to
improve coverage and capacity; investments in network resiliency
and reliability; including to address changes in usage resulting
from restrictions imposed in response to COVID-19; the allocation
of resources to acquisitions and future wireless spectrum auctions
held by Innovation, Science and Economic Development Canada (ISED),
including the 3500 MHz spectrum auction expected to take place
in 2021 and the millimetre wave spectrum auction targeted to take
place in 2021, and the announcement of a formal consultation on the
auctioning of 3800 MHz spectrum, expected to take place in 2023.
Our capital expenditure levels could be impacted if we do not
achieve our targeted operational and financial results or by
changes to our regulatory environment.
- Operational performance and business combination risks
including: our reliance on legacy systems and ability to implement
and support new products and services and business operations in a
timely manner; our ability to manage the requirements of large
enterprise deals; our ability to implement effective change
management for system replacements and upgrades, process redesigns
and business integrations (such as our ability to successfully
integrate acquisitions, complete divestitures or establish
partnerships in a timely manner and realize expected strategic
benefits, including those following compliance with any regulatory
orders); our ability to identify and manage new risks inherent in
new service offerings that we may provide, including as a result of
acquisitions, which could result in damage to our brand, our
business in the relevant area or as a whole, and additional
exposure to litigation or regulatory proceedings.
- Data protection including risks that malfunctions or unlawful
acts could result in unauthorized access to, change, loss, or
distribution of data, which may compromise the privacy of
individuals and could result in financial loss and harm to our
reputation and brand.
- Security threats including intentional damage or unauthorized
access to our physical assets or our IT systems and networks, which
could prevent us from providing reliable service or result in
unauthorized access to our information or that of our
customers.
- Ability to successfully implement cost reduction initiatives
and realize planned savings, net of restructuring and other costs,
without losing customer service focus or negatively affecting
business operations. Examples of these initiatives are: our
operating efficiency and effectiveness program to drive
improvements in financial results; business integrations; business
product simplification; business process automation and
outsourcing; offshoring and reorganizations; procurement
initiatives; and real estate rationalization.
- Foreign operations and our ability to successfully manage
operations in foreign jurisdictions, including managing risks such
as currency fluctuations.
- Business continuity events including: our ability to maintain
customer service and operate our network in the event of human
error or human-caused threats, such as cyberattacks and equipment
failures that could cause various degrees of network outages;
supply chain disruptions, delays and economics, including as a
result of government restrictions or trade actions; natural
disaster threats; epidemics; pandemics (including the ongoing
COVID-19 pandemic); political instability in certain international
locations; information security and privacy breaches, including
data loss or theft of data; and the completeness and effectiveness
of business continuity and disaster recovery plans and
responses.
- Human resource matters including: recruitment, retention and
appropriate training in a highly competitive industry, the level of
our employee engagement, and the health of our team.
- Financing and debt requirements including: our ability to carry
out financing activities, refinance our maturing debt and/or
maintain investment grade credit ratings in the range of BBB+ or
the equivalent. Our business plans and growth could be negatively
affected if existing financing is not sufficient to cover our
funding requirements.
- Lower than planned free cash flow could constrain our ability
to invest in operations, reduce leverage or return capital to
shareholders, and could affect our ability to sustain our dividend
growth program through 2022. This program may be affected by
factors such as the competitive environment, economic performance
in Canada, our earnings and free cash flow, our levels of capital
expenditures and spectrum licence purchases, acquisitions, the
management of our capital structure, regulatory decisions and
developments, and business continuity events. Quarterly dividend
decisions are subject to assessment and determination by our Board
of Directors based on our financial position and outlook. Shares
may be purchased under our normal course issuer bid (NCIB) when and
if we consider it opportunistic, based on our financial position
and outlook, and the market price of TELUS Common Shares. There can
be no assurance that our dividend growth program or any NCIB will
be maintained, not changed and/or completed.
- Taxation matters including: interpretation of complex domestic
and foreign tax laws by the relevant tax authorities that may
differ from our interpretations; the timing and character of income
and deductions, such as tax depreciation and operating expenses;
tax credits or other attributes; changes in tax laws, including tax
rates; tax expenses being materially different than anticipated,
including the taxability of income and deductibility of tax
attributes; elimination of income tax deferrals through the use of
different tax year-ends for operating partnerships and corporate
partners; and changes to the interpretation of tax laws, including
those resulting from changes to applicable accounting standards or
the adoption of more aggressive auditing practices by tax
authorities, tax reassessments or adverse court decisions impacting
the tax payable by us.
- Litigation and legal matters including: our ability to
successfully respond to investigations and regulatory proceedings;
our ability to defend against existing and potential claims and
lawsuits (including intellectual property infringement claims and
class actions based on consumer claims, data, privacy or security
breaches and secondary market liability), or to negotiate and
execute upon indemnity rights or other protections in respect of
such claims and lawsuits; and the complexity of legal compliance in
domestic and foreign jurisdictions, including compliance with
competition, anti-bribery and foreign corrupt practices laws.
- Health, safety and the environment including: lost employee
work time resulting from illness or injury, public concerns related
to radio frequency emissions, environmental issues affecting our
business, including climate change, waste and waste recycling,
risks relating to fuel systems on our properties, changing
government and public expectations regarding environmental matters
and our responses; and challenges associated with the COVID-19
pandemic and our response to it, which may add to or accentuate
these factors.
- Economic growth and fluctuations including: the state of the
economy in Canada, which may be influenced by economic and other
developments outside of Canada, including potential outcomes of yet
unknown policies and actions of foreign governments and the ongoing
COVID-19 pandemic as well as public and private sector responses to
the pandemic; expectations of future interest rates; inflation;
unemployment levels; effects of fluctuating oil prices; effects of
low business spending (such as reducing investments and cost
structure); pension investment returns, funding and solvency
discount rates; fluctuations in foreign exchange rates of the
currencies in the regions in which we operate; the impact of
tariffs on trade between Canada and the U.S., and global
implications of the trade dynamic between major world
economies.
These risks are described in additional detail in Section 9
General trends, outlook and assumptions, and regulatory
developments and proceedings and Section 10 Risks and risk
management in our 2019 annual and third quarter 2020 MD&A.
Those descriptions are incorporated by reference in this cautionary
statement but are not intended to be a complete list of the risks
that could affect TELUS.
Many of these factors are beyond our control or our current
expectations or knowledge. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial
may also have a material adverse effect on our financial position,
financial performance, cash flows, business or reputation. Except
as otherwise indicated in this document, the forward-looking
statements made herein do not reflect the potential impact of any
non-recurring or special items or any mergers, acquisitions,
dispositions or other business combinations or transactions that
may be announced or that may occur after the date of this
document.
Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements in this
document describe our expectations and are based on our assumptions
as at the date of this document and are subject to change after
this date. Except as required by law, we disclaim any intention or
obligation to update or revise any forward-looking statements. The
forward-looking statements in this news release are presented for
the purpose of assisting our investors and others in understanding
certain key elements of our expected 2020 financial results as well
as our objectives, strategic priorities and business outlook. Such
information may not be appropriate for other purposes.
This cautionary statement qualifies all of the forward-looking
statements in this document.
Non-GAAP and other financial measuresWe have
issued guidance on and report certain non-GAAP measures that are
used to evaluate the performance of TELUS, as well as to determine
compliance with debt covenants and to manage our capital structure.
As non-GAAP measures generally do not have a standardized meaning,
they may not be comparable to similar measures presented by other
issuers. Securities regulations require such measures to be clearly
defined, qualified and reconciled with their nearest GAAP measure.
Certain of the metrics do not have generally accepted industry
definitions.
Adjusted net income and adjusted basic earnings per
share: These measures are used to evaluate performance at
a consolidated level and exclude items that may obscure the
underlying trends in business performance. These measures should
not be considered alternatives to Net income and basic earnings per
share in measuring TELUS’ performance. Items that may, in
management’s view, obscure the underlying trends in business
performance include, but are not limited to significant gains or
losses associated with real estate development partnerships, gains
on exchange of wireless spectrum licences, restructuring and other
costs, long-term debt prepayment premiums (when applicable), income
tax-related adjustments, asset retirements related to restructuring
activities and gains arising from business combinations.
Reconciliation of adjusted net income
|
Three months ended September 30 |
|
C$ and in millions |
2020 |
2019 |
Change |
Net income
attributable to Common Shares |
307 |
433 |
(126) |
Add (deduct): |
|
|
|
Restructuring and other costs, after income taxes |
43 |
22 |
21 |
Income tax-related adjustments |
(2) |
(17) |
15 |
Lease-up period and other equity losses related to real estate
joint ventures |
8 |
— |
8 |
Long-term debt prepayment premium, after income taxes |
— |
20 |
(20) |
Adjusted Net income |
356 |
458 |
(102) |
Reconciliation of adjusted basic EPS
|
Three months ended September 30 |
|
C$ |
2020 |
2019 |
Change |
Basic
EPS |
0.24 |
0.36 |
(0.12) |
Add (deduct): |
|
|
|
Restructuring and other costs, after income taxes, per share |
0.03 |
0.02 |
0.01 |
Income tax-related adjustments, per share |
— |
(0.01) |
0.01 |
Lease-up period and other equity losses related to real estate
joint ventures, per share |
0.01 |
— |
0.01 |
Long-term debt prepayment premium, after income taxes, per
share |
— |
0.02 |
(0.02) |
Adjusted basic EPS |
0.28 |
0.39 |
(0.11) |
EBITDA (earnings before interest, income taxes,
depreciation and amortization): We have issued guidance on and
report EBITDA because it is a key measure used to evaluate
performance at a consolidated level. EBITDA is commonly reported
and widely used by investors and lending institutions as an
indicator of a company’s operating performance and ability to incur
and service debt, and as a valuation metric. EBITDA should not be
considered an alternative to Net income in measuring TELUS’
performance, nor should it be used as a measure of cash flow.
EBITDA as calculated by TELUS is equivalent to Operating revenues
less the total of Goods and services purchased expense and Employee
benefits expense.
We also calculate Adjusted
EBITDA to exclude items of an unusual nature that
do not reflect our ongoing operations and should not, in our
opinion, be considered in a long-term valuation metric or should
not be included in an assessment of our ability to service or incur
debt.
EBITDA reconciliation |
|
|
|
Three months ended September 30 |
C$ and in millions |
2020 |
2019 |
Net income |
321 |
440 |
Financing costs |
187 |
201 |
Income taxes |
109 |
144 |
Depreciation |
540 |
489 |
Amortization of intangible assets |
233 |
160 |
EBITDA |
1,390 |
1,434 |
Add restructuring and other costs included in EBITDA |
58 |
29 |
EBITDA – excluding restructuring and other
costs |
1,448 |
1,463 |
Add lease-up period and other equity losses related to real estate
joint ventures |
8 |
— |
Adjusted EBITDA |
1,456 |
1,463 |
Free cash flow: We report this measure as a
supplementary indicator of our operating performance, and there is
no generally accepted industry definition of free cash flow. It
should not be considered an alternative to the measures in the
Consolidated statements of cash flows. Free cash flow excludes
certain working capital changes (such as trade receivables and
trade payables), proceeds from divested assets and other sources
and uses of cash, as found in the Consolidated statements of cash
flows. It provides an indication of how much cash generated by
operations is available after capital expenditures (excluding
purchases of spectrum licences) that may be used to, among other
things, pay dividends, repay debt, purchase shares or make other
investments. We exclude impacts of accounting changes that do not
impact cash, such as IFRS 15 and IFRS 16. Free cash flow may be
supplemented from time to time by proceeds from divested assets or
financing activities.
Free cash flow calculation |
|
|
|
Three months ended September 30 |
C$ and in millions |
2020 |
2019 |
EBITDA |
1,390 |
1,434 |
Deduct non-cash gains from the
sale of property, plant and equipment |
(1) |
(3) |
Restructuring and other costs,
net of disbursements |
(5) |
(3) |
Effects of contract asset,
acquisition and fulfilment (IFRS 15 impact) and TELUS Easy
Payment device financing |
(59) |
(31) |
Effects of lease principal (IFRS 16 impact) |
(90) |
(62) |
Leases formerly accounted for as finance leases (IFRS 16
impact) |
16 |
13 |
Items from the condensed interim consolidated statements of cash
flows: |
|
|
Share-based compensation, net |
25 |
14 |
Net employee defined benefit plans expense |
25 |
20 |
Employer contributions to employee defined benefit plans |
(10) |
(11) |
Interest paid |
(195) |
(208) |
Interest received |
4 |
2 |
Capital expenditures (excluding spectrum licences)1 |
(741) |
(748) |
Free cash flow before income taxes |
359 |
417 |
Income taxes paid, net of refunds |
(198) |
(97) |
Free cash flow |
161 |
320 |
(1) Refer to Note 31 of the interim consolidated
financial statements for further information.
About TELUS TELUS (TSX: T, NYSE: TU) is a
dynamic, world-leading communications and information technology
company with $15.3 billion in annual revenue and 15.7 million
customer connections spanning wireless, data, IP, voice,
television, entertainment, video and security. We leverage our
global-leading technology to enable remarkable human outcomes. Our
longstanding commitment to putting our customers first fuels every
aspect of our business, making us a distinct leader in customer
service excellence and loyalty. TELUS Health is Canada's largest
healthcare IT provider, and TELUS International delivers the most
innovative business process solutions to some of the world’s most
established brands.
Driven by our passionate social purpose to connect all Canadians
for good, our deeply meaningful and enduring philosophy to give
where we live has inspired our team members and retirees to
contribute more than $700 million and 1.3 million days of service
since 2000. This unprecedented generosity and unparalleled
volunteerism have made TELUS the most giving company in the
world.
For more information about TELUS, please visit telus.com, follow
us @TELUSNews on Twitter and @Darren_Entwistle on Instagram.
Investor RelationsRobert Mitchell (647)
837-1606ir@telus.com
Media RelationsSteve Beisswanger(514) 865-2787
Steve.Beisswanger@telus.com
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