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Q2 2013 TELUS investor conference call August 8, 2013

Q2 2013 TELUS investor conference call August 8, 2013. Darren Entwistle President & Chief Executive Officer Joe Natale EVP & Chief Commercial Officer John Gossling EVP & Chief Financial Officer. TELUS forward looking statement.

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Q2 2013 TELUS investor conference call August 8, 2013

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  1. Q2 2013 TELUS investor conference call August 8, 2013 Darren Entwistle President & Chief Executive Officer Joe Natale EVP & Chief Commercial Officer John Gossling EVP & Chief Financial Officer
  2. TELUS forward looking statement Today's presentation and answers to questions contain statements about financial and operating performance of TELUS and future events, including with respect to future normal course issuer bids, that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and predictions and are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from that expressed in the forward-looking statements. Accordingly, our comments are subject to the disclaimer and qualified by the assumptions (including assumptions for 2013 annual guidance,CEO three-year goals to 2013 for EPS and free cash flow growth to 2013 excluding spectrum costs, semi-annual dividend increases to 2016, ability to sustain and complete multi-year share purchase programs to 2016), qualifications and risk factors referred to in the first quarter and second quarter Management’s discussion and analysis and in the 2012 annual report, and in other TELUS public disclosure documents and filings with securities commissions in Canada (on SEDAR at sedar.com) and in the United States (on EDGAR at sec.gov). Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements, and reserves the right to change, at any time at its sole discretion, its current practice of updating annual targets and guidance.
  3. Agenda CEO Introduction Q2 operational highlights Q2 financial results Questions and Answers
  4. CEO introduction Welcoming competition – advocating for a level playing field Reporting solid Q2 results – wireless and wireline Returning value to shareholders through NCIB, dividends and efficiency TELUS demonstrating strong results and executing on shareholder friendly initiatives
  5. Robust postpaid net additions Wireless subscribers Postpaid net adds (000s) 1.1M prepaid 112 100 14% 92 7.7M total 86% 6.6M postpaid Q2-12 Q2-13 Q2-11 Solid postpaid net adds with postpaid base up 5.1% y/y
  6. Strong smartphone adoption and ARPU growth $61.12 $60.29 $58.88 6.6 6.3 5.9 19.25 26.44 23.32 71% 59% 42% 39.63 36.97 34.68 Q2-11 Q2-12 Q2-13 Q2-11 Q2-12 Q2-13 Postpaid subscribers (millions) Voice ARPU Smartphone % of postpaid Data ARPU Smartphone penetration up 12 points to 71% of postpaid base supporting ARPU growth of 1.4% in Q2
  7. Industry leading wireless churn Blended Postpaid 1.67% 1.40% 1.39% 1.34% 1.03% 1.00% Q2-12 Q2-13 Q2-11 Q2-12 Q2-13 Q2-11 Blended and postpaid churn low and stable
  8. Industry leading lifetime revenue per susbcriber1 $4,366 $4,337 $3,526 Q2-11 Q2-12 Q2-13 Customer First focus generating leading lifetime revenue per subscriber 1 Lifetime revenue derived by dividing ARPU by blended churn rate
  9. New innovative SharePlus rate plans Latest TELUS innovation in evolution of Clear and Simple customer approach Features include unlimited nationwide talk and text, and ability to share data with your family or small business Anticipated positive impact on subscriber economics Churn benefits from shared plans and consolidation of households More-for-more value proposition Enhanced simplicity supports efficiency Next evolution of Clear and Simple supports leading subscriber economics
  10. Healthy TV and Internet growth TELUS TV (000s) High-speed Internet (000s) 6.1% 1,355 25% 1,277 743 1,196 595 403 Q2-11 Q2-12 Q2-13 Q2-11 Q2-12 Q2-13 Continued healthy Internet and TV subscriber growth balanced with focus on enhanced profitability
  11. Q2 2013 wireless financial results TELUS delivers another good quarter of wireless results despite increased competitive intensity 1EBITDA does not have any standardized meaning prescribed by IFRS-IASB. For definition and explanation, see Section 11.1 in the 2013 second quarter Management’s discussion and analysis (MD&A). 2 EBITDA as percentage of total network revenue
  12. Wireless data revenue ($M) 601 512 402 Q2-12 Q2-11 Q2-13 Strong Q2 data revenue growth of 17% year-over-year Data now 43% of wireless network revenue, up 4points
  13. Q2 2013 wireline financial results Strong revenue growth driven by Data Normalized EBITDA up 7.3% 1.Normalized EBITDA does not have any standardized meaning prescribed by IFRS-IASB. This term is defined in this presentation as EBITDA excluding restructuring and other like costs, and the gain net of equity losses related to TELUS Garden residential real estate partnership. 2. EBITDA as percentage of total revenue.
  14. Wireline data revenue ($M) 792 689 635 Q2-12 Q2-11 Q2-13 Strong data revenue growth of 15% driven by TV and Internet Data revenue 60% of external revenue, up 4 points
  15. Q2 2013 consolidated financial results Strong growth in revenue, earnings and simple cash flow 1. Normalized EBITDA does not have any standardized meaning prescribed by IFRS-IASB. This term is defined in this presentation as EBITDA excluding restructuring and other like costs, and the gain net of equity losses related to TELUS Garden residential real estate partnership. 2. Adjusted EPS does not have any standardized meaning prescribed by IFRS-IASB. See appendix for definition.
  16. Analysis of Adjusted EPS Adjusted EPS up 12.5% y/y 1 After-tax gain net of equity losses related to TELUS Garden residential real estate partnership.
  17. Adjusted EPS continuity analysis Depr & Amort Q2-12 Adjusted Normalized EBITDA1 Higher Blended Statutory Tax Rates Normalized Financing costs2 Q2-13 Adjusted Adjusted EPS growth driven by strong EBITDA growth 1Normalized EBITDA excludes restructuring and other like costs and after-tax gain net of equity losses related to TELUS Garden residential real estate partnership. 2 Normalized financing excludes long-term debt prepayment premium.
  18. investor relations 1-800-667-4871 telus.com/investors ir@telus.com
  19. Appendix – Q2 2013 free cash flow comparison
  20. Glossary Adjusted EPSdoes not have any standardized meaning prescribed by IFRS-IASB. This term is defined in this presentation as excluding (after income taxes): 1) Gain net of equity losses related to TELUS Garden residential real estate partnership; 2) Restructuring and other like costs; 3) Long-term debt pre-payment premium; and 4) Income tax-related adjustments. For further analysis of the aforementioned items see Section 1.3 in the 2013 second quarter Management’s discussion and analysis.
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