TELUS Corporation today released its unaudited results for the
first quarter of 2022. Consolidated operating revenues and other
income increased by 6.4 per cent over the same period a year ago to
approximately $4.3 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 segment (DLCX). TTech service revenue growth was
driven by higher mobile network revenue; increased internet and
data service revenues; growth in agriculture service revenues; and
growth in health services revenues. Increased DLCX revenues
resulted from organic growth from both expanded services for
existing clients and growth from new clients. See First Quarter
2022 Operating Highlights within this news release for a discussion
on TTech and DLCX results.
“Our team once again achieved strong operational and financial
results in the first quarter of 2022,” said Darren Entwistle,
President and CEO. “TELUS’ ongoing execution excellence continues
to be characterized by the consistent combination of
industry-leading and profitable customer growth, yielding strong
financial results across our business. Impressively, since the
beginning of 2020 and the pandemic period, TELUS has driven leading
cumulative revenue and EBITDA growth over the pre-pandemic baseline
of over $4 billion and close to $600 million, respectively. Our
robust performance reflects the effectiveness of our globally
leading customer-centric culture and broadband networks, which
enabled record first quarter total customer net additions of
148,000. This included strong mobile phone net additions of 46,000,
the best first quarter result since 2010; industry-leading internet
net additions of 30,000; and record first quarter security net
additions of 26,000. Notably, since the beginning of 2020, we have
welcomed an industry-leading 1.9 million net new customers,
including 1.3 million mobile and more than 550,000 fixed net
additions. Our leading customer growth is buttressed by
industry-best client loyalty across our key mobile and fixed
product lines. Notably, again this quarter, blended mobile phone,
PureFibre internet, Optik TV, Security and voice churn were all
below one per cent. Moreover, postpaid mobile phone churn of 0.63
per cent represented a 9 basis point improvement over 2021, and
puts us in our ninth year of postpaid churn below one per
cent.”
“Our results are backed by our highly differentiated and potent
asset mix geared towards high-growth, technology-oriented
verticals,” continued Darren. “Earlier today, TELUS International
(TI) announced strong double-digit revenue, Adjusted EBITDA, and
free cash flow growth for the first quarter. TI’s continued robust
results demonstrate its consistent execution, attractive end-to-end
digital capabilities, and position as a leading partner of choice
for premier digital customer experiences and IT services for its
enviable list of clients around the world. Notably, our TI team
provides highly differentiated service offerings such as content
moderation and artificial intelligence solutions. At TELUS Health,
our team once again drove double-digit year-over-year health
services revenue growth, while continuing to meaningfully scale our
health operations as we improve health outcomes for citizens
through access to better health information. This includes our
healthcare programs covering 22 million lives, an increase of over
25 per cent on a year-over-year basis, along with executing 140
million digital health transactions during the quarter, up 5 per
cent over last year, and earning 1.3 million new virtual healthcare
members in the last 12 months, increasing our virtual healthcare
members to 3.3 million, up 65 per cent over the prior year. Today,
we are introducing expanded disclosure for TELUS Agriculture, with
agriculture services revenue, which was up 37 per cent over the
same period last year, as a result of our team’s ongoing efforts to
integrate and grow this unique global business. This result is
illustrative of the significant value we are creating as the
leading provider of agriculture and consumer goods technology
solutions around the world, where we are advancing the sector’s
efficiency and effectiveness, and food quality production, through
data analytics. We are confident that our expanding disclosure
further illustrates the value and asset of consequence we are
creating in this important area.”
“Our consistently strong financial and operating performance is
underpinned by our highly engaged team who are passionate about
delivering superior service offerings and digital capabilities over
our world-leading wireless and PureFibre broadband networks. More
than ever, Canadians value a fast, reliable connection, and the
consistent recognition from independent, third-party organizations
reinforces the superiority of TELUS’ world-leading networks. During
the quarter, independent UK-based Opensignal named TELUS #1 in
respect of the fastest 5G download speed in Canada for the third
consecutive time. Impressively, Opensignal confirmed that TELUS
consistently has, “the fastest 5G download speeds of any Operator
since Opensignal started reporting on the 5G mobile experience in
Canada.” In addition, U.S.-based Ookla once again named TELUS the
fastest mobile operator in the first quarter, confirming that TELUS
has ranked first in every quarter of Ookla’s Speedtest since the
third quarter of 2020. Moreover, TELUS placed first in respect of
5G performance for the first time, according to Ookla's Speedtest.
TELUS intends to continue extending this global leadership position
as we advance the development, coverage and commercialization of
our 5G network and its inherent functionalities. The numerous
network awards our dedicated team has earned from independent,
third-party organizations reinforce TELUS’ leadership in terms of
offering customers the fastest, most expansive service in Canada
across both our wireless and PureFibre networks. Moreover, this
recognition of the superiority of TELUS’ national broadband
networks underscores the value of our significant generational
investments in world-leading network technologies, including our
ongoing accelerated broadband expansion program through 2022, which
together will drive extensive socio-economic benefits to Canadians
from coast-to-coast.”
“Importantly, our significant, ongoing broadband network
investments further enable the continued advancement of our strong
financial and operational performance, strengthening our confidence
in the robust outlook for our business, and the long-term
sustainability of our industry-leading dividend growth. Today, we
announced, for the fourth time, the extension of our industry-best
dividend growth program targeting 7 to 10 per cent annual growth
for 2023 through 2025, supported by our positive business outlook
and accelerating cash flow growth. Since 2004, TELUS has returned
more than $21 billion to shareholders, including over $16 billion
in dividends and $5.2 billion in share buybacks, representing more
than $15 per share. Future dividend growth and affordability will
be supported by a strong EBITDA growth outlook, as well as
significant value creation in our TI, Health and Agriculture
businesses, in addition to lower future capital expenditures,
consistent with the preliminary guidance we have provided for
significantly reduced capital investments of $2.5 billion,
beginning in 2023, and the meaningful resulting free cash flow
expansion.”
“The TELUS team continues to give, with their hearts and their
hands, to support communities across the globe,” stated Darren. “By
way of example, our team has contributed nearly $4 million in
donations and in-kind support, thus far, to assist those impacted
by the tragic events in Ukraine and Eastern Europe. Moreover, our
team continues to demonstrate our social purpose in action through
our TELUS Days of Giving. Notably, last year, more than 55,000
members of our TELUS family contributed 1.3 million volunteer hours
worldwide. I invite everyone to join us for our 2022 TELUS Days of
Giving as we work together to create extraordinary outcomes in the
global communities where we live, work, and serve.”
Doug French, Executive Vice-president and CFO said, “Our first
quarter results reflect a strong start to 2022, as we enter the
final year of our accelerated capital expenditure program. Building
on the momentum established over the past several years, our
results demonstrate our team’s ability to successfully deliver
strong operating and financial growth, including delivering
industry-leading consolidated revenue growth on a consistent basis
over the last 12, 24 and 36 months. This growth is being realized
from our smart, generational investments, which are further
advancing our network leadership and consistently supporting
profitable customer growth. Importantly, our performance is made
possible by our team’s deep commitment to customer service
excellence, along with an organization-wide focus on cost
efficiency and operational effectiveness. By leveraging our digital
capabilities and simplification efforts, we are effectively
navigating through the current macroeconomic environment, enabling
the realization of sustainable improvements in our cost structure,
while at the same time enhancing the effectiveness in the way we
serve customers.”
“Reflecting our confidence to deliver on our strategy, we are
reiterating our 2022 financial guidance today, targeting Operating
Revenue and Adjusted EBITDA growth of 8 to 10 per cent along with
free cash flow of $1 billion to $1.2 billion,” added Doug. “Looking
further out, we remain excited about the future cash flow
generation opportunities as we increasingly near the completion of
our generational fibre build, supporting our leading and
long-standing dividend growth program. Indeed, today we raised our
quarterly dividend by 7.1 per cent year-over-year to $0.3386,
representing the twenty-second increase since we initiated our
multi-year dividend program, now in its twelfth year and today
extended through 2025.”
“Backed by our diversified asset mix, our consistently strong
performance underscores TELUS’ unique ability to return capital to
investors through our dividend growth program, while simultaneously
funding significant strategic growth investments. As we deliver on
these key priorities, we also remain firmly committed to
maintaining our investment grade credit ratings and strong balance
sheet in order to make critical investments that further enhance
the customer experience, deliver balanced long-term growth, and
support our shareholder friendly initiatives,” concluded Doug.
For the first quarter, net income of $404 million increased by
21 per cent over the same period last year and Basic earnings per
share (EPS) of $0.28 increased by 12 per cent. These increases were
driven by the impacts of increased Operating income, including
increased earnings before interest, income taxes, depreciation and
amortization (EBITDA), as detailed below, partly offset by higher
depreciation and amortization; higher income taxes; and, as it
relates to EPS, higher shares outstanding. When excluding the
effects of restructuring and other costs from both first quarter
periods and other equity losses related to real estate joint
ventures in the first quarter of 2021, adjusted net income of $414
million increased by 15 per cent, while adjusted basic EPS of $0.30
was up 11 per cent. Adjusted net income is a non-GAAP financial
measure and adjusted basic EPS is a non-GAAP ratio. For further
explanation of these measures, see ‘Non-GAAP and other specified
financial measures’ in this news release.
Consolidated EBITDA increased by 7.4 per cent to approximately
$1.6 billion and Adjusted EBITDA increased by 7.0 per cent to more
than $1.6 billion. This growth reflects: (i) higher mobile network
revenues driven by growth in our subscriber base over the past 12
months, in addition to higher mobile phone ARPU; (ii) increased
internet and data service revenues driven by a combination of
higher revenue per customer, subscriber growth across internet,
security, and TV, business acquisitions and expanded services; and
(iii) increased contribution from our DLCX business. This was
partly offset by: (i) higher employee benefits expense; (ii) higher
costs related to the scaling of our digital capabilities, inclusive
of increased subscription-based licences; and (iii) lower legacy
fixed voice and legacy fixed data services revenues.
In the first quarter, we added 148,000 net customer additions,
up 3,000 over last year, and inclusive of 46,000 mobile phones and
46,000 connected devices, in addition to 30,000 internet, 26,000
security and 10,000 TV customer connections. This was partly offset
by residential voice losses of 10,000. Our total TTech subscriber
base of 17 million is up 5.8 per cent over the last twelve months,
reflecting a 4.3 per cent increase in our mobile phones subscriber
base to over 9.3 million, and a 15 per cent increase in our
connected devices subscriber base to more than 2.1 million.
Additionally, our internet connections grew by 6.8 per cent over
the last twelve months to 2.3 million customers, our security
customer base expanded by 15 per cent to 830,000 customers, and our
TV subscriber base increased by 4.0 per cent to approximately 1.3
million customers.
In health services, as of the end of the first quarter of 2022,
virtual care members were 3.3 million and healthcare lives covered
were 21.9 million, up 65 per cent and 25 per cent over the past 12
months, respectively. Digital health transactions in the first
quarter of 2022 were 139.6 million, up 4.7 per cent over the first
quarter of 2021.
Cash provided by operating activities increased by $196 million
in the first quarter of 2022 and free cash flow of $415 million
increased by $94 million compared to the same period a year ago.
The increase in free cash flow was driven by lower income taxes
paid and higher EBITDA, partly offset by higher capital
expenditures aligned with our planned accelerated capital
investments.
Consolidated capital expenditures increased by $148 million in
the first quarter of 2022, due to accelerated investments in our 5G
network, broadband build, enhanced product development, and
digitization to increase system capacity and reliability as
announced on March 25, 2021. In addition, we advanced the purchase
of customer equipment inventory to mitigate supply chain risks and
support continued subscriber growth. This was partly offset by
reduced spend resulting from efficiencies in our 4G network.
On March 25, 2021, we announced that we intended to accelerate
$1.5 billion of capital spending in 2021 and 2022, with up to $750
million of accelerated capital in 2021 and the remainder brought
forward into 2022. During the first quarter of 2022, $200 million
of accelerated capital was invested. This spend has enabled: (i)
acceleration of premises to be connected to our fibre network; (ii)
acceleration of our copper-to-fibre migration program; (iii)
expansion of our fibre build to a number of additional communities,
including many rural and Indigenous communities; (iv) advancement
of our 5G network build, which covered 74 per cent of the Canadian
population at March 31, 2022; and (v) progress on the
implementation of our digital strategy and product enhancement
efforts, which will bolster both long-term revenue growth and
operating expense efficiency.
At March 31, 2022, our TELUS PureFibre network covered
approximately 2.8 million premises, up from more than 2.5 million
premises at the end of the first quarter of 2021. Furthermore, as
at March 31, 2022, approximately 10 per cent of our TV and internet
customers within our PureFibre footprint are serviced by copper,
down from 11 per cent at December 31, 2021. The majority of the
remaining customers are expected to be substantially migrated to
TELUS PureFibre by the end of 2022.
Consolidated Financial Highlights
C$
millions, except footnotes and unless noted otherwise |
Three months ended March 31 |
Per cent |
(unaudited) |
2022 |
2021 |
change |
Operating revenues (arising from contracts with customers) |
4,256 |
4,022 |
5.8 |
Operating revenues and other
income |
4,282 |
4,024 |
6.4 |
Total operating expenses |
3,555 |
3,352 |
6.1 |
Net income |
404 |
333 |
21.3 |
Net income attributable to common
shares |
385 |
331 |
16.3 |
Adjusted net income(1) |
414 |
359 |
15.3 |
Basic EPS ($) |
0.28 |
0.25 |
12.0 |
Adjusted basic EPS(1) ($) |
0.30 |
0.27 |
11.1 |
EBITDA(1) |
1,569 |
1,461 |
7.4 |
Adjusted EBITDA(1) |
1,608 |
1,503 |
7.0 |
Capital expenditures (excluding
spectrum licenses)(2) |
833 |
685 |
21.6 |
Cash provided by operating
activities |
1,135 |
939 |
20.9 |
Free cash flow(1) |
415 |
321 |
29.3 |
Total telecom subscriber
connections(3) (thousands) |
17,001 |
16,072 |
5.8 |
(1) These are non-GAAP and other specified financial measures,
which do not have standardized meanings under IFRS-IASB and might
not be comparable to those used by other issuers. For further
definitions and explanations of these measures, see ‘Non-GAAP and
other specified financial measures’ in this news release.(2)
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 for the first quarter of 2022. Refer to Note 31 in our
interim consolidated financial statements for further information.
(3) The sum of active mobile phone subscribers, 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. Effective January 1, 2022 on a prospective basis,
following an in-depth review of our definition of a subscriber, we
adjusted our connected devices subscriber base to remove 34,000
subscribers within a legacy reporting system.
First Quarter 2022 Operating Highlights
As noted in Section 1.2 of our first quarter 2022 Management’s
Discussion and Analysis (MD&A), the COVID-19 pandemic, which
emerged in the first quarter of 2020, continued to have a pervasive
global impact into 2022. We expect the pandemic to continue to
affect our operations until at least 2023. Whether this occurs will
depend on both domestic and international factors, including
vaccination progress and the potential proliferation of COVID-19
variants of concern. In April 2022, the Chief Public Health Officer
of Canada declared that the sixth wave of the pandemic was underway
in Canada. 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. Our results discussed below are compared to the equivalent
period in 2021, unless otherwise indicated.
TELUS technology solutions (TTech)
- TTech operating revenues (arising from contracts with
customers) increased by $125 million or 3.6 per cent in the first
quarter of 2022, primarily reflecting increases in mobile network
revenue, fixed data services revenues, agriculture services
revenues and health services revenues, as described below.
Decreases in mobile equipment and other service revenues and fixed
voice services revenues were a partial offset.
- TTech EBITDA increased by $64 million or 4.8 per cent in the
first quarter of 2022, while TTech Adjusted EBITDA increased by $70
million or 5.1 per cent, reflecting an increase in direct
contribution from mobile and fixed products and services, as
outlined below. This was partially offset by higher employee
benefits expense, higher costs related to the scaling of our
digital capabilities, inclusive of increased Software as a Service
(SaaS) licences, and higher costs related to business
acquisitions.
Mobile products and services
- Mobile network revenue increased by $74 million or 4.9 per cent
in the first quarter of 2022, due to growth in the mobile phones
and connected device subscriber base over the past 12 months, in
addition to higher mobile phone ARPU. As compared to the first
quarter 2019, network revenue is higher by 5.7 per cent.
- Mobile equipment and other service revenues decreased by $33
million or 7.0 per cent in the first quarter of 2022, reflecting
lower mobile handset upgrade volumes as a result of changes in
customer preferences to hold onto devices for longer periods of
time. This is partly offset by the impacts of higher-value
smartphones in the sales mix.
- TTech mobile products and services direct contribution
increased by $78 million or 5.8 per cent in the first quarter of
2022, due to higher network revenues and higher equipment
margins.
- Mobile phone ARPU was $56.45 in the first quarter of 2022, an
increase of $0.35 or 0.6 per cent, largely due to roaming
improvements as a result of increased international travel volumes,
albeit still below our pre-pandemic baseline. This was partially
offset by the impact of the competitive environment putting
pressure on base rate plan prices in the current and prior periods,
lower chargeable usage revenues as customers continue to adopt
larger data allotments in their rate plans, in addition to offering
higher family discount and bundling credits to our customers which
helps us drive lower churn and results in greater lifetime
value.
- Mobile phone gross additions were 272,000 in the first quarter
of 2022, an increase of 2,000, driven by improvements in retail
traffic as pandemic-related restrictions had lessened when compared
to the prior year, as well as our successful promotions, including
the bundling of mobility and home services.
- Mobile phone net additions were 46,000 in the first quarter of
2022, an increase of 15,000, bolstered by consistently low customer
churn as described below, particularly among high-value customers,
while also realizing improvements driven by increased retail
traffic compared to the prior year.
- Our mobile phone churn rate was 0.81 per cent in the first
quarter of 2022, compared to 0.89 per cent in the first quarter of
2021, reflecting the overall continued focus on customer retention
through increased family discount and bundling efforts, and changes
in customer preferences to hold onto devices for longer periods of
time. Churn continues to benefit from our successful bundling of
mobility and home services, our focus on executing customers first
initiatives and upgrade volume programs, and our leading network
quality.
- Connected device net additions were 46,000 in the first quarter
of 2022, a decrease of 17,000, largely due to churn from the
rationalization with a large customer, as well as Internet of
Things customer loading delays stemming from global semiconductor
part shortages and supply constraints impacting the industry.
Fixed products and services
- Fixed data services revenues increased by $52 million or 5.2
per cent in the first quarter of 2022. The increase was driven by:
(i) increased internet and data service revenues, reflecting higher
revenue per customer resulting from internet speed upgrades, larger
allotted data internet rate plans and rate changes, in addition to
a 6.8 per cent increase in our internet subscriber base over the
past 12 months; (ii) increased revenues from home and business
security driven by expanded services as well as customer growth of
15 per cent over the past 12 months; and (iii) higher TV revenues,
reflecting subscriber growth of 4.0 per cent over the past 12
months, partly offset by an increased mix of customers selecting
smaller TV combination packages and technological substitution.
This growth was partly offset by the impact of the fourth quarter
2021 disposition of our financial solutions business and the
ongoing decline in legacy data service revenues.
- Fixed voice services revenues decreased by $14 million or 6.5
per cent in the first quarter of 2022, reflecting the ongoing
decline in legacy voice revenues resulting from technological
substitution and price plan changes. Declines were partly mitigated
by the success of our bundled product offerings, retention efforts
and the migration from legacy to IP services offerings.
- Fixed equipment and other service revenues increased by $6
million in the first quarter of 2022, reflecting higher sales
volume and lower discounts on business and consumer premise
equipment.
- TTech fixed product and services direct contribution increased
by $52 million or 4.8 per cent in the first quarter of 2022 due to
growth in margins for internet and data, health and agriculture
services. This was partly offset by declining legacy data and
legacy voice margins.
- Internet net additions were 30,000 in the first quarter of
2022, a decrease of 3,000, due to modestly higher churn compared to
relatively low churn rates earlier in the pandemic. This more than
offset our success in driving strong gross additions through
bundled product offerings, including the TELUS Whole Home bundle
and our bundling of mobility and home services.
- TV net additions were 10,000 in the first quarter of 2022, a
decrease of 1,000, mainly due to modestly higher churn compared to
relatively low churn rates earlier in the pandemic, offset by
strong loading in the business market.
- Security net additions were 26,000 in the first quarter of
2022, an increase of 9,000, driven by strong growth in new
connections through demand for our bundled product offerings and
diverse suite of products and services.
- Our continued focus on connecting more homes and businesses
directly to fibre, expanding and enhancing our addressable
high-speed internet and Optik TV footprint, and bundling these
services together, contributed to combined internet, TV and
security subscriber growth of 301,000 over the past 12 months.
- Residential voice net losses were 10,000 in the first quarter
of 2022, unchanged compared to the same period a year ago. The
residential voice subscriber losses continue to reflect the trend
of substitution to mobile and internet-based services, mostly
mitigated by our expanding fibre footprint and bundled product
offerings, as well as our strong retention efforts, including
lower-priced offerings.
Health services
- Through TELUS Health, we are leveraging technology to deliver
connected solutions and services, improving access to care and
revolutionizing the flow of information while facilitating
collaboration, efficiency, and productivity across the healthcare
ecosystem, progressing our vision of transforming healthcare and
empowering people to live healthier lives.
- Health services revenues increased by $17 million or 14 per
cent in the first quarter of 2022, driven by: (i) higher adoption
of our virtual pharmacy solutions, inclusive of organic growth and
business acquisitions; (ii) growth in health benefits management
services with plan members resuming the use of elective health
services; (iii) higher revenues from the continued adoption of our
virtual care solutions; (iv) growth in our LivingWell Companion
subscriber base; and (v) growth in collaborative health records
adoption.
- At the end of the first quarter of 2022, 3.3 million members
were enrolled in our virtual care services, an increase of 1.3
million over the past 12 months due to the continued adoption of
virtual solutions to keep Canadians safely connected to health and
wellness care during the pandemic.
- At the end of the first quarter of 2022, our healthcare
programs covered 21.9 million lives, an increase of 4.4 million
over the past 12 months, mainly due to the continued demand for
virtual solutions, an increase in value-added services including
vaccination solutions, and an increase in coverage related to
elective health services.
- Digital health transactions were 139.6 million in the first
quarter of 2022, an increase of 6.3 million, largely driven by
higher adjudication and collaborative health transactions as plan
members resume the utilization of elective health services with
pandemic restrictions easing.
Agriculture services
- Through TELUS Agriculture, we provide innovative digital
solutions and actionable data-insights that better connect the
global supply chain, driving more efficient production processes
and improving the safety, quality and sustainability of food and
consumer goods. Importantly, these efforts are also enabling better
traceability to the end consumer, further supporting improved food
outcomes.
- Agriculture services revenues increased by $23 million or 37
per cent, largely reflecting the impacts of business acquisitions,
particularly with increased revenues from SaaS-based revenue
management software for consumer goods manufacturers, in addition
to organic contributions from increased animal agriculture pharmacy
and research revenues. Our agriculture revenues are largely earned
in U.S. dollars, and in the first quarter of 2022 compared to the
first quarter of 2021, the Canadian dollar remained steady against
the U.S. dollar.
Digitally-led customer experiences – TELUS International
(DLCX)
- DLCX operating revenues (arising from contracts with customers)
increased by $109 million or 20 per cent in the first quarter of
2022. The increase was attributable primarily from strong growth in
our tech and games industry vertical, due to the expansion in our
TELUS International AI Data Solutions (TIAI) business and continued
growth arising from our existing clients as well as new clients
added since the prior year. The growth was partially offset by the
strengthening of the U.S. dollar against the European euro,
resulting in an unfavourable foreign currency impact on our
euro-denominated operating results. In the first quarter of 2022
compared to the first quarter of 2021, the Canadian dollar remained
steady against the U.S. dollar, the primary operating currency of
DLCX.
- DLCX EBITDA increased by $44 million or 35 per cent in the
first quarter of 2022, while DLCX Adjusted EBITDA increased by $35
million or 25 per cent for the same period. The increases in EBITDA
and Adjusted EBITDA were primarily from revenue growth, as
discussed above, partly offset by business growth leading to a
higher team member count coupled with higher salaries and wages as
well as higher contractor costs from the expansion of our TIAI
business. These increases were offset in part, by lower share-based
compensation expense associated with a decrease in the share price
of TELUS International during the quarter and the related
mark-to-market adjustment on liability-accounted awards, as
compared to the increase in the TELUS International share price in
the comparative quarter following the initial public offering in
February 2021.
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 approximately $594 million in
the first quarter of 2022 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. Since 2000, we have remitted approximately
$32 billion in these taxes.
- Investing $833 million in capital expenditures primarily in
communities across Canada in the first quarter of 2022 and over $48
billion since 2000.
- Disbursing spectrum renewal fees of approximately $52 million
to Innovation, Science and Economic Development Canada in the first
quarter of 2022. Since 2000, our total tax and spectrum remittances
to federal, provincial and municipal governments in Canada have
totalled more than $38 billion.
- Spending $2.0 billion in total operating expenses in the first
quarter of 2022, including goods and services purchased of
approximately $1.4 billion. Since 2000, we have spent $142 billion
and $96 billion, respectively, in these areas.
- Generating a total team member payroll of approximately $800
million in the first quarter of 2022, including wages and other
employee benefits, and payroll taxes of $64 million. Since 2000,
total team member payroll totals $54 billion.
- Returning approximately $900 million in dividends through two
quarterly dividend payments in the first four months of 2022 to
individual shareholders, mutual fund owners, pensioners and
institutional investors. Since 2004, we have returned more than $21
billion to shareholders through our dividend and share purchase
programs, including over $16 billion in dividends and $5.2 billion
in share repurchases, representing more than $15 per share.
Dividend Declaration The TELUS Board of
Directors declared a quarterly dividend of $0.3386 per share on the
issued and outstanding Common Shares of the Company payable on July
4, 2022 to holders of record at the close of business on June 10,
2022. This quarterly dividend reflects an increase of 7.1 per cent
from the $0.3162 per share dividend declared one year earlier.
TELUS extends multi-year dividend growth
programTELUS announced its intention to target ongoing
semi-annual dividend increases, with the annual increase in the
range of 7 to 10 per cent from 2023 through to the end of 2025.
This announcement further extends our dividend program originally
announced in May 2011 and extended for three additional years in
each of May 2013, May 2016 and May 2019. Dividend decisions will
continue to be subject to our Board’s assessment and the
determination of our financial situation and outlook on a quarterly
basis. There can be no assurance that we will maintain a dividend
growth program or that it will be unchanged through 2025.
Victor Dodig to join TELUS Board of
DirectorsTELUS is pleased to announce Victor Dodig as a
new nominee to our Board of Directors, to be elected at the TELUS
annual general meeting held today, May 6, 2022, further
strengthening and complementing the current skills and capabilities
of the Board by bringing expertise in finance and accounting, human
resources management and executive compensation, customer
experience and senior executive leadership.
Victor has been the President and Chief Executive Officer of the
CIBC group of companies since September 2014. He brings more than
25 years of extensive business and banking experience, including
leading CIBC’s Wealth Management, Asset Management and Retail
Banking businesses. Over his career, Victor also led several
businesses with UBS and Merrill Lynch in Canada and
internationally, and was a management consultant with McKinsey
& Company. He serves on the board of the C.D. Howe Institute
and the Business Council of Canada. Victor is a vocal advocate for
inclusion in the workplace and is chair of the Inclusion and
Diversity Leadership Council at CIBC and a co-chair of the
BlackNorth Initiative. He is past chair of the Catalyst Canada
Advisory Board and past chair of the 30 per cent Club Canada. In
2017, Victor was recognized as a Catalyst Canada Honours Champion
for his leadership in advancing gender diversity.
Community HighlightsDemonstrating our global
support for Ukraine:
- We have facilitated almost $4 million in community giving to
support the humanitarian response to the Ukraine crisis through
cash and in-kind contributions from TELUS, our team members and
customers, the TELUS Friendly Future Foundation (TFFF) and TELUS
International. The TFFF is directing $2 million in funding to
grassroots and national Canadian charities that are providing
emergency assistance to families in Ukraine and those displaced by
the conflict, as well as support for local charities providing
settlement assistance to refugees arriving in Canada.
- We are also offering support for Ukrainians arriving in Canada,
connecting newcomers with TELUS in-market offers, by working in
partnership with resettlement agencies and charities. We are also
providing value-added services including TELUS Health MyCare, job
aids from Windmill Microlending and workshops from MOSAIC (our
national multicultural resource group for team members) and our
People & Culture team.
- We are providing international support through our TELUS
Agriculture teams. In partnership with RefuAid, TELUS is part of
the next cohort of organizations sponsoring 50 arriving Ukrainians
in the United Kingdom. Through TELUS Agriculture, we are providing
employment opportunities, temporarily accommodating displaced
families in team member homes, and donating resources and time to
support Ukrainians displaced by the conflict.
Giving back to our communities:
- The TFFF and TELUS Community Boards are directing all 2022
support to charitable initiatives helping youth and marginalized
populations. This quarter, the TFFF has granted more than $4.7
million to over 275 charitable organizations. Since its inception
in 2018, the TFFF has approved $30 million in cash donations to our
communities, supported by the work of our TELUS Community
Boards.
- In the first quarter of 2022, we expanded our community boards
in Western Canada. The TELUS Vancouver Community Board expanded to
include Vancouver Coastal communities and was renamed to the TELUS
Vancouver and Coastal Community Board. The TELUS Thompson Okanagan
Community Board expanded to include Dawson Creek, Fort St. John,
Prince George, Quesnel and Cranbrook and was renamed to the TELUS
Interior and Northern B.C. Community Board. The TELUS Manitoba
Community Board expanded to include Saskatchewan and was renamed to
the TELUS Manitoba and Saskatchewan Community Board.
Empowering Canadians with connectivity:
- We welcomed almost 4,300 new households to our Internet for
Good® program this quarter, resulting in almost 116,000 low-income
family members, persons with disabilities and youth leaving foster
care all benefiting from low-cost internet since the launch of the
program in 2016. In January and February 2022, we expanded Internet
for Good to provide thousands of low-income seniors in British
Columbia and Alberta, as well as Quebec (within our ILEC
footprint), with the tools and connectivity they need to
succeed.
- We added more than 2,500 youth, seniors and other marginalized
Canadians to our Mobility for Good program this quarter, which
offers free or subsidized smartphones and mobile phone rate plans
to all youth aging out of foster care and to low-income seniors
across Canada receiving the guaranteed income supplement. Since we
launched the program in 2017, more than 30,000 individuals have
benefited.
- To further support the humanitarian crisis in Ukraine, and with
the backing of partner organizations supporting newcomers from
Ukraine, the Mobility for Good program is providing 2,500 free SIM
cards with $100 prepaid vouchers to Ukrainians with financial
barriers who are arriving in Canada.
- Almost 48,000 Canadians participated in virtual TELUS Wise
workshops and events in the first quarter of 2022, bringing our
cumulative participation to nearly 500,000 Canadians since the
program launched in 2013. In February 2022, the TELUS Wise BE BRAVE
#EndBullying virtual event reached close to 30,000 students on Pink
Shirt Day.
Transforming healthcare:
- Our Health for Good® mobile health clinics, now serving 22
communities across Canada, supported more than 10,000 patient
visits during the quarter. Since the program’s inception, we have
provided over 105,000 cumulative patient visits, helping us care
for our most vulnerable.
Driving Social Impact:
- Our Pollinator Fund led a US$8.4 million Series A investment
round into Virtual Gurus, a talent-as-a-service platform connecting
organizations to virtual assistants from underrepresented
communities. Virtual Gurus is led by the visionary Bobbie Racette,
who is one of the first Indigenous women to close a Series A
investment round in the Canadian technology market.
Global Social Capitalism awards and recognition:
- In January 2022, we were named to the Corporate Knights 2021
Global 100 Most Sustainable Corporations in the World for the 10th
time since inception of the recognition in 2005.
- In February 2022, we were named one of Canada’s Top Employers
for Young People 2022 by Mediacorp Canada Inc.
- In March 2022, we were recognized by Brand Finance as the most
valuable telecom brand in Canada, with our brand value growing by
23 per cent to more than $10 billion, according to the Brand
Finance Canada 100 2022 report.
- In May 2022, TELUS was named the most trusted Telecom brand in
Canada for the fourth consecutive year by Canadian consumers in the
Gustavson Brand Trust Index presented by the Peter B. Gustavson
School of Business at the University of Victoria.
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’ first quarter 2022 conference call is scheduled for
Friday, May 6, 2022 at 1:30 pm ET (10:30 am 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 June 5,
2022 at 1-855-201-2300. Please quote conference access code 87851#
and playback access code 0112209#. 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 plans and expectations regarding the impact
of the COVID-19 pandemic and responses to it, our expectations
regarding mobile data consumption and ongoing internet subscriber
base growth, 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 our expectations expressed in or implied by
the forward-looking statements.
The assumptions for our 2022 outlook, as described in Section 9
in our 2021 annual MD&A, remain the same, except for the
following:
- Our revised estimates for 2022 economic
growth in Canada, B.C., Alberta, Ontario and Quebec are 3.9%, 4.1%,
5.1%, 3.8% and 3.1%, respectively (compared to 4.3%, 4.2%, 4.4%,
4.5% and 3.7%, respectively, as reported in our 2021 annual
MD&A).
- Our revised estimates for 2022 annual unemployment rates in
Canada, B.C., Alberta, Ontario and Quebec are 5.4%, 4.8%, 6.4%,
5.8% and 4.4%, respectively (compared to 6.1%, 5.2%, 7.1%, 6.1% and
5.3%, respectively, as reported in our 2021 annual MD&A).
- Our revised estimates for 2022 annual rates of housing starts
on an unadjusted basis in Canada, B.C., Alberta, Ontario and Quebec
are 240,000 units, 40,000 units, 32,000 units, 87,000 units and
59,000 units, respectively (compared to 224,000 units, 39,000
units, 30,000 units, 83,000 units and 55,000 units, respectively,
as reported in our 2021 annual MD&A).
The extent to which the economic growth estimates affect us and
the timing of their impact will depend upon the actual experience
of specific sectors of the Canadian economy.
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, suppliers and vendors, our team members
and our communities, as well as changes resulting from the pandemic
to our business and operations, including changes 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 the first quarter 2022 MD&A, such as the potential for
government to allow consolidation of competitors in our industry or
conversely for government intervention intended to further increase
competition, for example, through mandated wholesale access; the
potential for additional government intervention on pricing;
federal and provincial consumer protection legislation and the
possible re-introduction by the federal government of privacy
legislation to give consumers new privacy rights and to impose new
monetary penalties for non-compliance; amendments to existing
federal legislation; potential threats to unitary federal
regulatory authority over communications in Canada; potential
threats to the CRTC’s ability to enforce competitive safeguards
such as the Standstill Rule and 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, use and transfer of spectrum licences, the cost and
availability of spectrum and timing of spectrum allocation, and
ongoing and future consultations and decisions on spectrum
licensing and policy frameworks, auctions and allocation; the
impact on us and other Canadian telecommunications carriers of
government or regulatory actions with respect to certain countries
or suppliers, including U.S. federal regulations pertaining to
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,
which could result in a general shortage of chipsets and other
equipment; restrictions on non-Canadian ownership and control of
the common shares of TELUS Corporation (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. The
jurisdictions in which we operate, as well as the contracts that we
enter into (particularly contracts entered into by TELUS
International (Cda) Inc. (TELUS International or TI)), require us
to comply with or facilitate our clients’ compliance with numerous,
complex and sometimes conflicting legal regimes, both domestically
and internationally. See TELUS International’s financial
performance which impacts our financial performance below.
- Competitive environment including: our
ability to continue to retain customers through an enhanced
customer service experience that is differentiated from our
competitors, including through the deployment and operation of
evolving network infrastructure; intense competition, including the
ability of industry competitors to successfully combine a mix of
new service offerings and, in some cases, under one bundled and/or
discounted monthly rate, along with their existing 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; continued intense competition across
all services among telecommunications companies, cable companies,
other communications companies and over-the-top (OTT) services,
which, among other things, places pressures on current and future
average revenue per subscriber per month (ARPU), cost of
acquisition, cost of retention and churn rates for all services, as
do market conditions, government actions, customer usage patterns,
increased data bucket sizes or flat-rate pricing trends for voice
and data, inclusive rate plans for voice and data and availability
of Wi-Fi networks for data; consolidation, mergers and acquisitions
of industry competitors; subscriber additions, losses and retention
volumes; our ability to obtain and offer content on a timely basis
across multiple devices on mobile 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; TI’s ability to
compete with professional services companies that offer consulting
services, information technology companies with digital
capabilities, and traditional contact centre and business process
outsourcing companies that are expanding their capabilities to
offer higher-margin and higher-growth digital services; in our
TELUS Health business, our ability to compete with other providers
of electronic medical records and pharmacy management products,
claims adjudicators, systems integrators and health service
providers including those that own a vertically integrated mix of
health services delivery, IT solutions and related services, global
providers that could achieve expanded Canadian footprints, and in
the provision of virtual healthcare services, preventative health
services and personal emergency response services; and in our TELUS
Agriculture business, our ability to compete with focused software
and IoT competitors.
- Technological substitution including:
reduced utilization and increased commoditization of traditional
fixed voice services (local and long distance) resulting from
impacts of OTT applications and mobile substitution; a declining
overall market for 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
mobile and/or internet-based telephone services; potential decline
in 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, and self-installed technology solutions.
- 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, anticipated benefits and efficiencies, and
the 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 mobile
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 mobile 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 fixed 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, which 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 mobile
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 the COVID-19 pandemic; the allocation of
resources to acquisitions and future spectrum auctions held by
Innovation, Science and Economic Development Canada (ISED),
including the announcement of a second consultation on the
auctioning of the 3800 MHz spectrum, which the Minister of
Innovation, Science and Industry stated is expected to take place
in 2023, and the millimetre wave spectrum auction, which is
expected to commence in 2024. 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 our
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 in
a timely manner to successfully complete and integrate acquisitions
into our operations and culture, complete divestitures or establish
partnerships 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; and our ability to effectively manage the
growth of our infrastructure and integrate new team members.
- 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 or attempted access, to our physical
assets or our IT systems and networks, or those of our customers or
vendors, 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 and exposure to
various economic, international trade, political and other risks of
doing business globally. See also TELUS International’s financial
performance which impacts our financial performance.
- 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; technical disruptions and
infrastructure breakdowns; supply chain disruptions, delays and
rising costs, including as a result of government restrictions or
trade actions; natural disaster threats; extreme weather events;
epidemics; pandemics (including the ongoing COVID-19 pandemic);
political instability in certain international locations;
information security and privacy breaches, including loss or theft
of data; and the completeness and effectiveness of business
continuity and disaster recovery plans and responses.
- TELUS International’s financial
performance which impacts our financial performance. Factors that
may affect TI’s financial performance are described in TI’s public
filings available on SEDAR and EDGAR and may include: intense
competition from companies offering similar services; attracting
and retaining qualified team members to support its operations;
TI’s ability to grow and maintain profitability if changes in
technology or if client expectations outpace service offerings and
internal tools and processes; TI maintaining its culture as it
grows; effects of economic and geopolitical conditions on its
clients’ businesses and demand for its services; a significant
portion of TI’s revenue being dependent on a limited number of
large clients; continued consolidation in many of the verticals in
which TI offers services could result in the loss of a client;
adverse impacts of the COVID-19 pandemic on TI’s business and
financial results; TI’s business being adversely affected if
certain independent contractors were classified as employees, and
the costs associated with defending, settling or resolving any
future lawsuits (including demands for arbitration) relating to the
independent contractor classification; TI’s ability to successfully
identify, complete, integrate and realize the benefits of
acquisitions and manage associated risks; cyberattacks or
unauthorized disclosure resulting in access to sensitive or
confidential information and data of its clients or their end
customers, which could have a negative impact on its reputation and
client confidence; TI’s business not developing in ways it
currently anticipates due to negative public reaction to offshore
outsourcing, proposed legislation or otherwise; ability to meet
client expectations regarding its content moderation services being
adversely impacted due to factors beyond its control and its
content moderation team members suffering adverse emotional or
cognitive effects in the course of performing their work; and TI’s
short history operating as a separate, publicly traded company.
TELUS International’s primary functional and reporting currency is
the U.S. dollar and the contribution to our consolidated results of
positive results in our digitally-led customer experiences – TELUS
International (DLCX) segment may be offset by any strengthening of
the Canadian dollar (our reporting currency) compared to the U.S.
dollar. The price of the subordinate voting shares of TI (TI
Subordinate Voting Shares) may be volatile and is likely to
fluctuate due to a number of factors beyond its control, including
actual or anticipated changes in profitability; general economic,
social or political developments; changes in industry conditions;
changes in governance regulation; inflation; low trading volume;
the general state of the securities markets; and other material
events. TI may choose to publicize targets or provide other
guidance regarding its business and it may not achieve such
targets. Failure to do so could also result in a reduction in the
trading price of the TI Subordinate Voting Shares. A reduction in
the trading price of the TI Subordinate Voting Shares due to these
or other factors could result in a reduction in the fair value of
TI multiple voting shares held by TELUS.
- Human resource matters including:
recruitment, retention and appropriate training in a highly
competitive industry (including retention of team members leading
recent acquisitions in emerging areas of our business), the level
of our employee engagement and impact on engagement or other
aspects of our business or any unresolved collective agreements,
our ability to maintain our unique culture as we grow, the risk
that certain independent contractors in our business could be
classified as employees, unanticipated reaction to our COVID-19
vaccine policy or the reopening of our administrative offices and
the health of our team.
- Financing and debt requirements
including: our ability to carry out financing activities, refinance
our maturing debt, lower our net debt to EBITDA ratio to our
objective range given the cash demands of spectrum auctions, and/or
our ability to 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 2025 and any further
dividend growth programs. This program may be affected by factors
such as the competitive environment, fluctuations in the Canadian
economy or the global economy, 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. Common 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 our Common Shares. There can be no assurance that
our dividend growth program or our NCIB will be maintained,
unchanged 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 or
retroactive application of new legislation; 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 exercise 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-related risk (such as extreme weather events and other
natural hazards), 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 epidemics or pandemics, including 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
regarding 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 and factors affecting pension benefit
obligations, funding and solvency discount rates; fluctuations in
exchange rates of the currencies in the regions in which we
operate; sovereign credit ratings and effects on the cost of
borrowing; the impact of tariffs on trade between Canada and the
United States; and global implications of the dynamics of trade
relationships among major world economies.
- Energy use including: our ability to
identify and implement solutions to reduce energy consumption and
adopt cleaner sources of energy; our ability to identify and make
suitable investments in renewable energy, including in the form of
virtual power purchase agreements; our ability to continue to
realize significant absolute reductions in energy use and the
resulting greenhouse gas (GHG) emissions in our operations
(including as a result of programs and initiatives focused on our
buildings and network); and other risks associated with achieving
our goals to achieve carbon neutrality and reduce our GHG emissions
by 2030.
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 2021 annual 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 the
Company.
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 2022 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 specified financial
measures
We 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. For certain financial metrics,
there are definitional differences between TELUS and TELUS
International reporting. These differences largely arise from TELUS
International adopting definitions consistent with practice in its
industry. 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 are non-GAAP measures that do not have any
standardized meaning prescribed by IFRS-IASB and are therefore
unlikely to be comparable to similar measures presented by other
issuers. Adjusted Net income excludes the effects of restructuring
and other costs, income tax-related adjustments, other equity
losses related to real estate joint ventures, long-term debt
prepayment premium and other adjustments (identified in the
following tables). Adjusted basic earnings per share is calculated
as adjusted net income divided by basic weighted-average common
shares outstanding. These measures are used to evaluate performance
at a consolidated level and exclude items that, in management’s
view, may obscure underlying trends in business performance or
items of an unusual nature that do not reflect our ongoing
operations. They should not be considered alternatives to Net
income and basic earnings per share in measuring TELUS’
performance.
Reconciliation of adjusted net income
|
Three months ended March 31 |
C$ and
in millions |
2022 |
2021 |
Net income attributable to Common Shares |
385 |
331 |
Add (deduct) amounts of net of
amount attributable to non-controlling interests: |
|
|
Restructuring and other costs |
37 |
35 |
Tax effects of restructuring and other costs |
(8) |
(8) |
Other equity losses related to real estate joint ventures |
— |
1 |
Adjusted Net income |
414 |
359 |
Reconciliation of adjusted basic EPS
|
Three months ended March 31 |
C$ |
2022 |
2021 |
Basic EPS |
0.28 |
0.25 |
Add (deduct) amounts of net of
amount attributable to non-controlling interests: |
|
|
Restructuring and other costs, per share |
0.03 |
0.03 |
Tax effect of restructuring and other costs, per share |
(0.01) |
(0.01) |
Other equity losses related to real estate joint ventures, per
share |
— |
— |
Adjusted basic EPS |
0.30 |
0.27 |
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
and other income 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 and Adjusted EBITDA reconciliations |
|
|
|
|
|
|
|
TTech |
DLCX |
Total |
Three-month periods ended March 31 (C$ millions) |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
Net income |
|
|
|
|
404 |
333 |
Financing costs |
|
|
|
|
179 |
207 |
Income
taxes |
|
|
|
|
144 |
132 |
EBIT |
641 |
627 |
86 |
45 |
727 |
672 |
Depreciation |
514 |
489 |
37 |
35 |
551 |
524 |
Amortization of intangible assets |
245 |
220 |
46 |
45 |
291 |
265 |
EBITDA |
1,400 |
1,336 |
169 |
125 |
1,569 |
1,461 |
Add
restructuring and other costs included in EBITDA |
35 |
28 |
4 |
13 |
39 |
41 |
EBITDA – excluding restructuring and other
costs |
1,435 |
1,364 |
173 |
138 |
1,608 |
1,502 |
Other equity losses related to
real estate joint ventures |
— |
1 |
— |
— |
— |
1 |
Adjusted EBITDA |
1,435 |
1,365 |
173 |
138 |
1,608 |
1,503 |
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
condensed interim 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 condensed interim
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
standards 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 March 31 |
C$ and
in millions |
2022 |
2021 |
EBITDA |
1,569 |
1,461 |
Restructuring and other costs,
net of disbursements |
(25) |
(12) |
Effects of contract asset,
acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment
device financing |
78 |
52 |
Effects of lease principal
(IFRS 16 impact) |
(123) |
(123) |
Items from the condensed
interim consolidated statements of cash flows: |
|
|
Share-based compensation, net |
26 |
35 |
Net employee defined benefit plans expense |
27 |
26 |
Employer contributions to employee defined benefit plans |
(17) |
(16) |
Interest paid |
(180) |
(199) |
Interest received |
1 |
2 |
Capital expenditures (excluding spectrum licences)1 |
(833) |
(685) |
Free cash flow before income taxes |
523 |
541 |
Income taxes paid, net of
refunds |
(108) |
(220) |
Free cash flow |
415 |
321 |
Free cash flow reconciliation with Cash provided by
operating activities |
|
|
|
Three months ended March 31 |
C$ and
in millions |
2022 |
2021 |
Free cash flow |
415 |
321 |
Add (deduct): |
|
|
Capital expenditures (excluding spectrum licences)1 |
833 |
685 |
Effects of lease principal and leases accounted for as finance
leases prior to adoption of IFRS 16 |
123 |
123 |
Individually immaterial items included in Net income neither
providing nor using cash |
(236) |
(190) |
Cash provided by operating activities |
1,135 |
939 |
(1) Refer to Note 31 of the interim consolidated financial
statements for further information.
Mobile phone average revenue per subscriber per month
(ARPU) is calculated as network revenue derived from
monthly service plan, roaming and usage charges; divided by the
average number of mobile phone subscribers on the network during
the period, and is expressed as a rate per month.
About TELUS TELUS (TSX: T, NYSE: TU) is a
dynamic, world-leading communications technology company with $17
billion in annual revenue and 17 million customer connections
spanning wireless, data, IP, voice, television, entertainment,
video, and security. Our social purpose is to leverage our
global-leading technology and compassion to drive social change and
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. The numerous, sustained accolades TELUS has earned over
the years from independent, industry-leading network insight firms
showcase the strength and speed of TELUS’ global-leading networks,
reinforcing our commitment to provide Canadians with access to
superior technology that connects us to the people, resources and
information that make our lives better.
TELUS Health is Canada’s leader in digital health technology,
improving access to health and wellness services and
revolutionizing the flow of health information across the continuum
of care. TELUS Agriculture provides innovative digital solutions
throughout the agriculture value chain, supporting better food
outcomes from improved agri-business data insights and processes.
TELUS International (TSX and NYSE: TIXT) is a leading digital
customer experience innovator that designs, builds, and delivers
next-generation solutions, including AI and content management, for
global and disruptive brands across high-growth industry verticals,
including tech and games, communications and media, and ecommerce
and FinTech. TELUS and TELUS International operate in 25+ countries
around the world.
Driven by our determination and vision to connect all citizens
for good, our deeply meaningful and enduring philosophy to give
where we live has inspired TELUS, our team members and retirees to
contribute more than $900 million in cash, in-kind contributions,
time and programs and 1.8 million days of service since 2000. This
unprecedented generosity and unparalleled volunteerism have made
TELUS the most giving company in the world. Together, let’s make
the future friendly.
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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