Telus profit up on wireless growth, boosts outlook

Sat Aug 4, 2012 8:26am EDT
 
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By Allison Martell

(Reuters) - Telus Corp (T.TO: Quote), one of Canada's largest telecommunications providers, reported a higher quarterly profit on Friday on strong results at its wireless business and it raised its outlook for revenue and cash flow growth this year.

Telus shares rose after the company said wireless margins were higher in the second quarter and revenue climbed 7.1 percent. Both the total number of subscribers and their average bills rose.

"I thought they were exceptional wireless results," said Canaccord Genuity analyst Dvai Ghose.

But Ghose said margins were likely helped by the fact that few high-profile devices launched early in the quarter.

The recent launch of Samsung's Galaxy S3 and Apple's next iPhone, widely expected this fall, may make it difficult for Telus to sustain the margin improvement.

Wireless providers like Telus typically subsidize purchases of sought-after phones for postpaid subscribers, who sign multi-year contracts and pay more each month than prepaid users.

Ghose was impressed with Telus's lower monthly churn, or the average proportion of subscribers that cancel their service each month, which he attributes in part to strong customer service.

Churn fell to 1.39 percent, from 1.67 percent in the same quarter last year. Churn for postpaid subscribers fell to 1.00 percent from 1.34 percent.   Continued...