Industry-Best Total Mobile and Fixed customer growth of 347,000 driven by strong demand for our leading portfolio of services across Mobility and Fixed
Strong Mobile Phone and Connected Device net additions of 130,000 and 159,000, respectively; industry-leading postpaid mobile phone churn of 0.90 per cent
Robust third quarter Fixed customer net additions of 58,000, including 34,000 internet customer additions, driven by our leading TELUS PureFibre network and premier portfolio of bundled services across Mobile and Home
TTech Operating Revenue and Adjusted EBITDA growth of 1.9 per cent and 5.6 per cent, respectively, alongside strong margin expansion of 110 basis points to 39 per cent reflecting a lower cost-to-serve and focus on driving higher margin per user, gains from copper and real estate monetization and continued double digit momentum in health services EBITDA contribution growth
Net income and earnings per share higher by 88 per cent and 111 per cent, respectively and on an adjusted basis increased by 11 and 12 per cent; Consolidated free cash flow up 58 per cent
Quarterly dividend increased to $0.4023, up 7.0 per cent over the same period last year, representing a dividend yield of approximately 7.7 per cent
2024 target for TTech operating revenue growth updated to slightly below the lower end of the original range; targets for TTech Adjusted EBITDA, along with our Consolidated targets for Capital Expenditures and Free cash flow, remain unchanged as provided with the release of our second quarter 2024 results in August
VANCOUVER, BC, Nov. 8, 2024 /PRNewswire/ – TELUS Corporation today released its unaudited results for the third quarter of 2024. Consolidated operating revenues and other income increased by 1.8 per cent over the same period a year ago to $5.1 billion. This growth was driven by higher service revenue and other income from copper and real estate monetization in our TELUS technology solutions (TTech) segment, alongside higher other offset by lower service revenue in our TELUS digital experience segment (TELUS Digital).
Within TTech, higher revenue from the expansion of mobile network, residential internet, TV and security subscribers, health services, agriculture and consumer goods services, along with increases in managed, unmanaged and other fixed data services; partially offset by rate reductions in mobile network, residential internet, and security services, as well as declines in TV and fixed legacy voice services revenues. The decline in TELUS Digital operating revenues were from lower external revenues reflecting: (i) lower revenues from leading social media client and other technology clients; (ii) a reduction in revenue in other industry verticals, notably among communications (excluding the TTech segment) and eCommerce clients; and (iii) a persistently challenging macroeconomic environment and competitive conditions in the industry. See Third Quarter 2024 Operating Highlights within this news release for a discussion on TTech and TELUS Digital results.
“In the third quarter, our team’s dedication to operational excellence led to industry-leading customer growth and robust financial results, harnessing our premier asset portfolio and focused commitment to cost efficiency and effectiveness,” said Darren Entwistle, President and CEO. “Our results demonstrate our ability to deliver sustainable profitable growth, anchored by our strategic emphasis on margin-accretive customer expansion, globally leading broadband networks, and a customer-centric culture. This enabled industry-best total customer net additions of 347,000, including robust mobile phone customer additions of 130,000, strong gains in connected devices with 159,000 net additions, and total fixed net additions of 58,000. Our team’s passion for delivering customer service excellence contributed once again to leading loyalty across our key product lines. Notably, postpaid mobile phone churn was 0.90 per cent, while churn for TELUS-branded mobility and home households nationally was below one per cent, underscoring the consistent strength of our unmatched bundled product offerings across Mobile and Home, over our industry-leading PureFibre and wireless broadband networks.”
“Within TELUS Health, our team achieved revenue growth of four per cent as strategic investments in our products, sales, and distribution channels generate strong momentum across our health portfolio. Our team also achieved 50 per cent Adjusted EBITDA contribution growth, supported by higher revenue and the realization of $331 million in combined annualized synergies since acquiring LifeWorks in 2022. This includes $277 million in cost synergies and $54 million in cross-selling, as we work towards our overall objective of $427 million by the end of 2025. Additionally, we drove a 9.2 per cent year-over-year increase in global lives covered to 76 million. Similarly, within TELUS Agriculture & Consumer Goods, we continue to see positive outcomes, strengthening our market position and delivering a more than 20 per cent increase in revenue alongside strong profitability growth and margin contribution. Our commitment to maximizing the full potential of these distinctive global businesses is underscored by leveraging the expertise, experience, and high-performance culture of our team. This also includes capitalizing on significant cross-selling opportunities across all our businesses, demonstrating the collective talent and effectiveness of our team in driving our success.”
“Importantly, our significant broadband network investments, and the profitable growth they drive, enable the continued advancement of our financial and operational performance and the long-term sustainability of our industry-leading dividend growth program,” continued Darren. “The 7.0 per cent year-over-year dividend increase announced today represents the twenty-seventh increase since we initiated our multi-year dividend growth program in 2011, now in its fourteenth year. Since 2004, TELUS has returned more than $26 billion to shareholders, including over $21 billion in dividends, representing approximately $18 per share.”
“Demonstrating our organization’s long-standing belief in the symbiotic relationship between doing well in business and doing good in the global communities where our team members live, work and serve, last month we celebrated the one-year anniversary of the TELUS Student Bursary,” added Darren. “Through the TELUS Student Bursary, we are creating the circumstances necessary to empower young people in Canada to realize their full potential. In addition to being the largest bursary fund in the country, the TELUS Student Bursary is also unique because of its focus on social purpose and its holistic approach to supporting and developing our future leaders. This academic year alone, the TELUS Friendly Future Foundation awarded $2.2 million to more than 500 students in financial need. Since the inception of the bursary program, the Foundation has provided over $4 million to nearly 1,000 students.”
“Earlier today, TELUS Digital Experience (TELUS Digital) also reported its third quarter results, delivering stable financial performance as compared to the prior quarter, signifying a positive step on the recovery trajectory, and we are eager to drive further improvements as we advance our growth objectives. Indeed, TELUS Digital’s comprehensive and growing suite of leading AI solutions continues to demonstrate strong momentum, capturing new client engagements and broader recognition in the market, exemplifying our progress in next generation technology applications. Moreover, the strength of TELUS Digital’s transformational generative AI-powered solutions and tools created for all lines of business at TELUS, continues to enhance their go-to-market efforts with new and prospective clients. Our confidence in TELUS Digital’s fundamental drivers of value creation remains unwavering, particularly given the company’s leadership in key areas such as trust and safety, the digitization of its own and its clients’ customer experience operations, and the broader evolution of its business towards a technology-centric model. Importantly, we see TELUS Digital creating positive momentum for its medium and long-term growth.”
Doug French, Executive Vice-president and CFO said, “Our solid performance during the third quarter continues to highlight our consistent track record of operational execution excellence as we navigate a dynamic operating environment. This quarter, TTech operating revenue growth of approximately two per cent continued to improve relative to the first half of the year, driven by stable mobile network growth, alongside a steady improvement within fixed data, as well as strong contribution from our global health and agriculture and consumer goods businesses. Furthermore, we delivered strong TTech Adjusted EBITDA growth of 5.6 per cent accompanied by margin expansion of 110 basis points to 39 per cent. This growth was driven by our longstanding emphasis on profitable customer growth, combined with driving a lower cost-to-serve through our ongoing focus on cost efficiency and effectiveness, as well as continued financial gains related to our copper and real estate monetization program. For 2024, we now anticipate restructuring expenses to be approximately $450 million as we continue to optimize our cost structure to drive EBITDA expansion, margin accretion, and accelerated free cash flow growth.”
“As we continue through the final quarter of the year, our financial position remains strong. At the end of the third quarter, we had approximately $3.2 billion of available liquidity, our average cost of long-term debt was 4.40 per cent, the average term to maturity of long-term debt is approximately 11 years, and our net debt to EBITDA ratio was 3.83 times. As we look toward future years, we anticipate an improvement in our leverage ratio as we work towards our target ratio through continued EBITDA growth, declining capital intensity toward the 10 per cent level, and ongoing free cash flow expansion.”
“For the full year, our 2024 target for TTech operating revenue growth is now anticipated to be slightly below the lower end of our original target range. This updated outlook reflects the competitive market conditions and our team’s continued focus on operational execution excellence. Importantly, targets for TTech Adjusted EBITDA, along with our consolidated targets for capital expenditures and free cash flow, remain unchanged as previously communicated in our second quarter earnings release in August. Despite the dynamic and competitive environment in the near-term, we are confident in our ability to drive strong, sustainable, and margin-accretive growth. This confidence is rooted in our persistent focus on operational efficiency and effectiveness. The strength and resilience of our business continues to demonstrate our superior asset mix, and we are enthusiastic about the promising future prospects for our organization in Canada and internationally through our global growth assets. This includes our expectations for continued free cash flow expansion in the coming years, driven by sustained strong EBITDA growth and moderating capital expenditure intensity. This is supplemented by our copper and real estate monetization programs that will continue for years to come. All of these support the long-term sustainability and quality of our long-standing and industry-leading dividend growth program,” concluded Doug.
As compared to the same period a year ago, net income in the quarter of $257 million was up 88 per cent and Basic earnings per share (EPS) of $0.19 increased by 111 per cent. These increases were driven by higher Adjusted EBITDA as detailed below, partially offset by higher financing costs, driven by the impact of unrealized changes in virtual power purchase agreements forward element, increased long-term debt, associated with our investments in spectrum and PureFibre technology, and higher interest rates on both floating-rate and recent fixed-rate issuances. In addition to the Adjusted EBITDA growth drivers discussed below, EBITDA also reflects lower restructuring and other costs, primarily related to significant investments in cost efficiency and effectiveness programs, including real estate rationalization, which predominantly took place during the third quarter of 2023.
As it relates to EPS, the trends also reflect the effect of a higher number of Common shares outstanding. When excluding certain costs and other adjustments (see ‘Reconciliation of adjusted Net income‘ in this news release), adjusted net income of $413 million increased by 11 per cent over the same period last year, while adjusted basic EPS of $0.28 was up 12 per cent over the same period last year. 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.
Compared to the same period last year, consolidated EBITDA increased by 16 per cent to approximately $1.8 billion and Adjusted EBITDA increased by 1.3 per cent to more than $1.8 billion. The growth in Adjusted EBITDA reflects: (i) mobile network, residential internet, TV and security subscriber growth; (ii) broad-based cost reduction efforts, synergies achieved between LifeWorks® and our legacy health business, and an increase in TTech leveraging TELUS Digital, as well as savings in marketing costs; (iii) higher gains on real estate projects and reversals of business combination-related provisions; (iv) growth in health services margin; (v) higher agriculture and consumer goods margins; and (vi) growth in fixed data services to new and existing business customers. These factors were partly offset by: (i) lower mobile phone ARPU; (ii) lower operational growth in TELUS Digital (excluding other income); (iii) declining TV and fixed legacy voice margins; (iv) lower mobile equipment margins; (v) higher network operations costs; (vi) higher bad debt expense; and (vii) higher costs related to the scaling of our digital capabilities.
In the third quarter of 2024, we added 347,000 net customer additions, down 59,000 over the same period last year, and inclusive of 130,000 mobile phones and 159,000 connected devices, in addition to 34,000 internet, 21,000 TV and 12,000 security customer connections. This was partly offset by residential voice losses of 9,000. Our total TTech subscriber base of 19.8 million is up 6.4 per cent over the last twelve months, reflecting a 4.2 per cent increase in our mobile phones subscriber base to over 10.0 million and a 21 per cent increase in our connected devices subscriber base to over 3.5 million. Additionally, our internet connections grew by 5.1 per cent over the last twelve months to over 2.7 million customer connections, our TV customer base stands at more than 1.3 million customer connections, and our security subscriber base increased by 7.5 per cent to more than 1.1 million customer connections. Lastly, our residential voice subscriber base declined slightly by 3.0 per cent to more than 1.0 million.
In health services, as of the end of the third quarter of 2024, virtual care members were 6.5 million and healthcare lives covered were 76.0 million, up 18 per cent and 9.2 per cent over the past twelve months, respectively. Digital health transactions in the third quarter of 2024 were 161.5 million, up 7.2 per cent over the third quarter of 2023.
Cash provided by operating activities of $1.4 billion increased by 10 per cent in the third quarter of 2024, primarily driven by EBITDA growth, partially offset by increased restructuring and other costs disbursements, net of expense, and increased interest paid.
Free cash flow of $561 million increased by 58 per cent compared to the same period a year ago, reflecting higher EBITDA and lower capital expenditures. These factors were partly offset by increased interest paid and greater lease payments. Our definition of free cash flow, for which there is no industry alignment, excludes impacts of accounting standards that do not impact cash, such as IFRS 15 and IFRS 16.
Consolidated capital expenditures of $668 million, including $28 million for real estate development, decreased by $101 million or 13 per cent in the third quarter of 2024. TTech operations drove $90 million of the decrease in the third quarter of 2024, primarily driven by the planned slowdown of our fibre and wireless network builds and systems development. As at September 30, 2024, our 5G network covered approximately 32.1 million Canadians, representing approximately 87 per cent of the population. TTech real estate development capital expenditures increased by $6 million in the third quarter of 2024, reflecting an increase in capital investment to support construction of multi-year development projects, including TELUS OceanTM, TELUS Living residential buildings and other commercial buildings in British Columbia. TELUS Digital capital expenditures decreased by $5 million in the third quarter of 2024, primarily due to slower demand for client growth.
Consolidated Financial Highlights
C$ millions, except footnotes and unless noted otherwise
Three months ended
September 30
Per cent
(unaudited)
2024
2023
change
Operating revenues (arising from contracts with customers)
5,042
4,990
1.0
Operating revenues and other income
5,099
5,008
1.8
Total operating expenses
4,311
4,491
(4.0)
Net income
257
137
87.6
Net income attributable to common shares
280
136
105.9
Adjusted Net income(1)
413
373
10.7
Basic EPS ($)
0.19
0.09
111.1
Adjusted basic EPS(1) ($)
0.28
0.25
12.0
EBITDA(1)
1,756
1,517
15.8
Adjusted EBITDA(1)
1,842
1,820
1.3
Capital expenditures(2)
668
769
(13.1)
Cash provided by operating activities
1,432
1,307
9.6
Free cash flow(1)
561
355
58.0
Total telecom subscriber connections(3) (thousands)
19,847
18,652
6.4
Healthcare lives covered (millions)
76.0
69.6
9.2
Notations used in the table above: n/m – not meaningful.
(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. Refer to Note 31 of the 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 for the first quarter of 2024, with retrospective application to January 1, 2023, we reduced our mobile phone subscriber base by 283,000 subscribers to remove a subset of our public services customers that are now subject to dynamic pricing auction models. We believe adjusting our base for these low margin customers provides a more meaningful reflection of the underlying performance of our mobile phone business and our focus on profitable growth. As a result of this change, associated operating statistics (ARPU and churn) have also been adjusted. Effective January 1, 2024, on a prospective basis, we adjusted our TV subscriber base to remove 97,000 subscribers as we have ceased marketing our Pik TV® product.
Third Quarter 2024 Operating Highlights
TELUS technology solutions (TTech)
Mobile products and services
Fixed products and services
Health services
Agriculture and consumer goods services
TELUS Digital
TELUS 2024 financial targets
TELUS’ financial targets for 2024 are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2023 annual MD&A.
For the full year, our 2024 target for TTech operating revenue growth is now anticipated to be slightly below the lower end of our original target range, reflecting the competitive market conditions. Our annual targets for TTech Adjusted EBITDA, along with our consolidated targets for capital expenditures and free cash flow, remain unchanged as previously communicated in our second quarter earnings release in August.
2024 targets
Original 2024 targets
TTech Operating revenues(1)
Growth of 2 to 4%
(Slightly below the lower end of the range)
Growth of 2 to 4%
TTech Adjusted EBITDA
Growth of 5.5 to 7.5%
(Lower end of the range)
Growth of 5.5 to 7.5%
Consolidated Free cash flow
Approximately $2.1 billion
Approximately $2.3 billion
Consolidated Capital expenditures(2)
Approximately $2.6 billion
(Unchanged)
Approximately $2.6 billion
(1)
For 2024, we are guiding on TTech Operating revenues, which excludes other income. TTech Operating revenues for 2023 were $17,106 million.
(2)
Excludes approximately $100 million targeted towards real estate development initiatives.
Consolidated operating revenues and Adjusted EBITDA can be approximated when combining our TTech targets referenced above with the 2024 financial targets set by TELUS Digital, as announced August 2, 2024.
The preceding disclosure respecting TELUS’ 2024 financial targets is forward-looking information and is fully qualified by the ‘Caution regarding forward-looking statements’ below and based on management’s expectations and assumptions as set out below and in Section 9.3 TELUS assumptions for 2024 in the 2023 annual MD&A and updated in Sections 9 and 10 of our third quarter 2024 interim MD&A. This disclosure is presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2024 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes.
Dividend Declaration
The TELUS Board of Directors declared a quarterly dividend of $0.4023 per share on the issued and outstanding Common Shares of the Company payable on January 2, 2025 to holders of record at the close of business on December 11, 2024. This quarterly dividend reflects an increase of 7.0 per cent from the $0.3761 per share dividend declared one year earlier and consistent with our multi-year dividend growth program. When a dividend payment date falls on a weekend or holiday, the payment shall be made on the next succeeding day that is a business day.
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:
Community Highlights
Giving Back to Our Communities
Empowering Canadians with Connectivity
Access to Quarterly results information
Interested 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 2024 conference call is scheduled for Friday, November 8, 2024 at 12:00 pm ET (9:00 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 December 8, 2024 at 1-855-201-2300. Please quote conference access code 54931# and playback access code 54931#. 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, the Company, 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 expectations regarding trends in the telecommunications industry (including demand for data and ongoing subscriber base growth), and our financing plans (including 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.
The assumptions for our 2024 outlook, as described in Section 9 in our 2023 annual MD&A, remain the same, except for the following:
