Telus Corp. joined the club of Canadian wireless providers that posted stronger subscriber growth in the first quarter, although its additions paled in comparison to those of its national telecom rivals.
The Vancouver-based company’s postpaid wireless subscriber base grew by 48,000 in the quarter, up 9.1 per cent over last year.
Telus also added 22,000 high-speed internet customers and 6,000 Telus TV subscribers – about the same level as the first quarter of 2017.
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By comparison, Rogers and BCE’s Bell posted higher year-over-year growth in postpaid subscribers, customers who have signed fixed-term contracts and represent the vast majority of their wireless base.
Competition for wireless customers is stiff among Canada’s telecommunications companies because it is a high-margin, growing part of their business.
Rogers Communications Inc. reported in April it added 95,000 net postpaid subscribers, up 58 per cent from a year earlier. BCE Inc. reported its postpaid subscribers grew to 68,000, up 91 per cent from the same quarter a year ago for its best first-quarter performance since 2011.
Canaccord Genuity analyst Aravinda Galappatthige wrote that Telus performed better in wireless than he expected but “it does appear relatively modest” given recent performance from Rogers, BCE’s Bell and Shaw’s Freedom.
Freedom’s addition of 93,500 postpaid subscribers, offset by a loss of 3,800 prepaid customers, also beat estimates but they aren’t directly comparable because its quarter included December and ended Feb. 28.
However, Shaw stock is up 6.2 per cent over the past month, just ahead of a 5.2 per cent increase in Rogers shares over the same period. Telus shares are up a modest 0.6 per cent in the same period, while BCE stock is down 2.6 per cent since April 10.
Telus continued to lead its peers in customer retention, with first quarter churn, the rate at which customers stop subscribing, at 0.95 per cent. Churn at Rogers over the same period was 1.08 per cent and Bell’s was 1.13 per cent.
Still, Telus’s churn was up 0.02 from a year ago. Barclays Capital analyst Phillip Huang wrote he was surprised Telus churn increased and “we expect this will be an area of focus given Shaw’s growing wireless ambitions.”
Telus chief executive Darren Entwistle stressed on a conference call with analysts that the first-quarter churn included a spike in January due in the aftermath of a pre-Christmas sales push by the Big Three and Shaw.
Earlier Thursday, Telus reported its net profit for the three months ended March 31 was slightly lower than last year, largely because of higher financing costs and higher income taxes.
Its profit attributable to shareholders was $410 million, or 69 cents per share, for the quarter ended March 31, down from $414 million or 70 cents per share a year ago.
That included $151 million of income taxes, which were up $8 million from a year earlier due to a higher tax rate in British Columbia, and $156 million of financing costs, up $18 milion from a year earlier.
The increased financing costs were due largely to higher debts associated with investments in fibre networks to homes and in wireless technology.
On an adjusted basis, Telus earned $435 million or 73 cents per share for the quarter compared with $418 million or 71 cents per share a year ago.
Analysts on average had expected a profit of 75 cents per share, according to Thomson Reuters Eikon.
Operating revenue for the quarter totalled nearly $3.38 billion, up about six per cent from $3.18 billion in the same quarter last year, primarily due to higher wireless service revenue and wireline data services revenue.
Chief financial officer Doug French said in an interview that the investments in fiber infrastructure and wireless technology are both necessary for the commerical introduction of fifth-generation wireless in 2019 or 2020.
“The investment is going to be the enabler to the future of providing internet, not only from a wireline perspective but also from a wireless perspective,” French said.
He noted that first-quarter free cash flow, which helps determine what Telus spends on dividends and capital projects, had more than doubled from the same time last year to $443 million from $217 million.
The company also announced Thursday that it will raise its quarterly dividend to shareholders for the second time in a year. It will pay 52.5 cents per share in July, up from 49.25 cents per share in July 2017 and 50.5 cents per share in January.