Back to top

Image: Bigstock

TELUS (TU) Raised to Hold, PureFibre Prospects Bright

Read MoreHide Full Article

On Sep 6, leading Canadian telecom service provider TELUS Corporation (TU - Free Report) was upgraded to a Zacks Rank #3 (Hold). The rating upgrade comes on the back of recent developments in the company’s PureFibre network business.

Growth Prospects

TELUS continues to benefit from the increased adoption of smartphones, higher average revenue per unit, accelerating wireless data services and growing wireline fiber optic networks. The company anticipates balanced growth for its wireless and wireline businesses owing to investments in high-speed broadband technology and services along with its Customer First strategy. Also, with the Internet of Things (IoT) platform paving its way into Canada, TELUS aims to consolidate its foothold in the IoT market. It has also introduced the TELUS Global IoT Connectivity platform to deliver seamless connectivity and simplified billing across 200 networks globally.

The company is also focusing on its PureFibre network business. The company aims to provide a glimpse into the future which will see homes connected to a state-of-the art fibre optic network.TELUS has also collaborated with technology leaders such as Samsung, Nokia Corporation (NOK - Free Report) and International Business Machines Corporation (IBM - Free Report) to achieve the same.

Segmental Risks

TELUS faces fierce competition both in the wireless and wireline segments.

At the wireless segment, the company competes against the likes of Rogers Communications Inc. (RCI - Free Report) and BCE Inc.’s (BCE - Free Report) subsidiary Bell Canada and small regional carriers like MTS in Manitoba and SaskTel in Saskatchewan. Such intense competitive pressure has resulted in reduced subscriber addition. In the second quarter of 2016, postpaid customer net addition was 61,000, down 19.7% year over year whereas prepaid customer net loss was 21,000, up 61.5% year over year. Moreover, Shaw Communications’ decision to venture into the Canadian wireless market with the WIND Mobile acquisition raises competition for TELUS.

The wireline segment also faces threat from cable TV operators such as Shaw Communications Inc. and requires regular capital investments in the broadband infrastructure to lure business and residential customers.

Recent Developments

In Aug 2016, the board of directors at TELUS announced plans to reward shareholders with a quarterly dividend of C$0.46 per share on the issued and outstanding common shares, at the closure of business as on Sep 9, 2016. The dividend will be paid on Oct 3, 2016.

In Jul 2016, TELUS launched two notable promotional schemes.

TELUS, being the only carrier in Western Canada, has decided to offer 4K on Optic TV. This will provide its customers with an improved TV viewing experience.

Meanwhile, TELUS Health announced the signing of an agreement to acquire the Canadian business of Nightingale Informatix Corp. (Nightingale), including its proprietary Electronic Medical Record (EMR) software solutions and related assets. Nightingale currently provides its EMR solution to 4,000 physicians in Canada, mainly in Ontario and the Atlantic provinces.

Price and Consensus

 

Price and Consensus | Quote

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

Published in