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TELUS (TU) Beats Earnings and Revenue Estimates in Q2
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Leading Canadian telecom operator TELUS Corp. (TU - Free Report) reported strong financial results in the second quarter of 2016. Both revenues and earnings outpaced the respective Zacks Consensus Estimate.
This Zacks Rank #4 (Sell) company competes with its peers Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and BCE Inc. (BCE - Free Report) in the highly competitive Canadian telecom market.
GAAP net income was approximately $323 million, up 22% year over year. GAAP earnings per share were 54 cents, up 25% year over year. Second-quarter adjusted earnings per share were also 54 cents, ahead of the Zacks Consensus Estimate of 52 cents.
Total revenue came in at approximately $2,444 million, up 1.5% year over year and ahead of the Zacks Consensus Estimate of $2,427 million. Service revenues were $2,292 million, up 2.4% year over year. Equipment revenues totaled $127.3 million, down 21.2% year over year while Other revenues were $24.8 million, up a whopping 220% year over year.
Quarterly operating income was $535.7 million, up 11.8% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $922.4 million, up 4.3% year over year. Quarterly adjusted EBITDA margin was 37.7% compared with 36.8% in the prior-year quarter.
Cash Flow & Liquidity
During the second quarter of 2016, TELUS generated approximately $592.5 million of cash from operations, down 5.4% year over year. Free cash flow, in the reported quarter, was around $97.8 million, down a significant 58% year over year.
TELUS exited the second quarter of 2016 with $332.3 million of cash & marketable securities and $8,491.5 million of outstanding debt compared with $167.1 million and $9,018.9 million, respectively, at the end of 2015. At the end of the reported quarter, the debt-to-capitalization ratio was 0.57, down from 0.61 at the end of 2015.
Wireless revenues increased 1.8% year over year to approximately $1,372.7 million in the reported quarter. Wireless network revenues rose 2.6% year over year to roughly $1,248.5 million. Equipment and Other revenues declined 21.2% to around $95.5 million. Intersegment network revenues were $10.9 million, flat year over year. Other operational revenues were nearly $17.9 million. Within Network revenues, data revenues improved 7.5% while Voice revenues slid 3.4%.
Blended ARPU inched up 1.4% year over year to around $50. The monthly blended subscriber churn rate improved to 1.15% from 1.17% in the year-ago quarter. Postpaid customer churn rate was 0.90% compared with 0.86% in the year-ago quarter.
Net wireless subscriber gain in the reported quarter was 40,000. Postpaid customer net addition was 61,000, down 19.7% year over year. Prepaid customer net loss was 21,000, up 61.5% year over year. As of Jun 30, 2016, TELUS had 8.427 million wireless subscribers, up 0.9% year over year. Postpaid users were 7.376 million, up 2.1% while the prepaid user count was 1.051 million, down 7.1%.
Wireline revenues increased 1.3% year over year to approximately $1,119.6 million. Data service & equipment revenues came in at $768.6 million, up 6.7%. Voice revenues were $264 million, down 11.2%. Other services and equipment revenues were $42.7 million, down 3.5% and Other operational revenues were nearly $7 million, down 25%. Intersegment revenues grossed around $37.3 million, up 11.6% year over year.
During the reported quarter, TELUS added 13,000 TV subscribers, reaching a total count of 1,029,000 customers (up 7.9% year over year). High-speed Internet subscriber addition was 18,000, reaching 1.617 million (up 6.4% year over year). Residential NALs were down 20,000, reaching 1.421 million (down 6.3% year over year). Total wireline subscriber count was 4.067 million, up 1.9% year over year.
2016 Guidance
The company maintained its 2016 guidance for revenues of C$12.750–C$12.875 billion and earnings per share between C$2.40 and C$2.56. TELUS projects capital expenditure of approximately C$2.85 billion. Wireless network revenues are projected in the range of C$6.425–C$6.490 billion whereas wireline revenues are likely to be between C$5.680 billion and C$5.735 billion.
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TELUS (TU) Beats Earnings and Revenue Estimates in Q2
Leading Canadian telecom operator TELUS Corp. (TU - Free Report) reported strong financial results in the second quarter of 2016. Both revenues and earnings outpaced the respective Zacks Consensus Estimate.
This Zacks Rank #4 (Sell) company competes with its peers Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and BCE Inc. (BCE - Free Report) in the highly competitive Canadian telecom market.
GAAP net income was approximately $323 million, up 22% year over year. GAAP earnings per share were 54 cents, up 25% year over year. Second-quarter adjusted earnings per share were also 54 cents, ahead of the Zacks Consensus Estimate of 52 cents.
Total revenue came in at approximately $2,444 million, up 1.5% year over year and ahead of the Zacks Consensus Estimate of $2,427 million. Service revenues were $2,292 million, up 2.4% year over year. Equipment revenues totaled $127.3 million, down 21.2% year over year while Other revenues were $24.8 million, up a whopping 220% year over year.
Quarterly operating income was $535.7 million, up 11.8% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $922.4 million, up 4.3% year over year. Quarterly adjusted EBITDA margin was 37.7% compared with 36.8% in the prior-year quarter.
Cash Flow & Liquidity
During the second quarter of 2016, TELUS generated approximately $592.5 million of cash from operations, down 5.4% year over year. Free cash flow, in the reported quarter, was around $97.8 million, down a significant 58% year over year.
TELUS exited the second quarter of 2016 with $332.3 million of cash & marketable securities and $8,491.5 million of outstanding debt compared with $167.1 million and $9,018.9 million, respectively, at the end of 2015. At the end of the reported quarter, the debt-to-capitalization ratio was 0.57, down from 0.61 at the end of 2015.
TELUS CORP Price, Consensus and EPS Surprise
TELUS CORP Price, Consensus and EPS Surprise | TELUS CORP Quote
Segmental Results
Wireless revenues increased 1.8% year over year to approximately $1,372.7 million in the reported quarter. Wireless network revenues rose 2.6% year over year to roughly $1,248.5 million. Equipment and Other revenues declined 21.2% to around $95.5 million. Intersegment network revenues were $10.9 million, flat year over year. Other operational revenues were nearly $17.9 million. Within Network revenues, data revenues improved 7.5% while Voice revenues slid 3.4%.
Blended ARPU inched up 1.4% year over year to around $50. The monthly blended subscriber churn rate improved to 1.15% from 1.17% in the year-ago quarter. Postpaid customer churn rate was 0.90% compared with 0.86% in the year-ago quarter.
Net wireless subscriber gain in the reported quarter was 40,000. Postpaid customer net addition was 61,000, down 19.7% year over year. Prepaid customer net loss was 21,000, up 61.5% year over year. As of Jun 30, 2016, TELUS had 8.427 million wireless subscribers, up 0.9% year over year. Postpaid users were 7.376 million, up 2.1% while the prepaid user count was 1.051 million, down 7.1%.
Wireline revenues increased 1.3% year over year to approximately $1,119.6 million. Data service & equipment revenues came in at $768.6 million, up 6.7%. Voice revenues were $264 million, down 11.2%. Other services and equipment revenues were $42.7 million, down 3.5% and Other operational revenues were nearly $7 million, down 25%. Intersegment revenues grossed around $37.3 million, up 11.6% year over year.
During the reported quarter, TELUS added 13,000 TV subscribers, reaching a total count of 1,029,000 customers (up 7.9% year over year). High-speed Internet subscriber addition was 18,000, reaching 1.617 million (up 6.4% year over year). Residential NALs were down 20,000, reaching 1.421 million (down 6.3% year over year). Total wireline subscriber count was 4.067 million, up 1.9% year over year.
2016 Guidance
The company maintained its 2016 guidance for revenues of C$12.750–C$12.875 billion and earnings per share between C$2.40 and C$2.56. TELUS projects capital expenditure of approximately C$2.85 billion. Wireless network revenues are projected in the range of C$6.425–C$6.490 billion whereas wireline revenues are likely to be between C$5.680 billion and C$5.735 billion.
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