May 11, 2017 / 12:43 PM / 4 months ago

Canada's Telus surprises with strong wireless growth

TORONTO (Reuters) - Canadian telecommunications provider Telus Corp (T.TO) on Thursday reported profit that beat analysts’ forecasts as it attracted more postpaid wireless customers and got them to pay more, even in the face of heightened competition.

The Vancouver-based company’s shares rose as much as 1.3 percent in morning trading to a record high of $46.29, then pared those gains to trade flat.

Telus said it added 44,000 postpaid wireless subscribers in the first quarter ended March 31. Analysts had expected about 17,000 additions, according to Desjardins and RBC Capital Markets.

Telus’ national wireless business is bigger, more profitable and faster growing than its Western Canada-focused fixed-line operations. Its focus on providing good customer service seems to have helped it thwart efforts by rival Shaw Communications Inc (SJRb.TO) and others to win away customers, analysts said.

“Their leadership in customer service is showing in very low churn,” said Desjardins analyst Maher Yaghi. “Customers don’t seem to be as willing to switch out of Telus.”

Telus said its average monthly wireless bill was C$65.53, up 4 percent from a year earlier, as consumers increasingly stream video and other data-intensive services on their phones.

Telus is Canada’s third major wireless provider to report first-quarter results. Rogers Communications Inc (RCIb.TO) added 60,000 net postpaid wireless subscribers in its first quarter, while BCE Inc’s (BCE.TO) Bell signed on fewer than 36,000.

Telus’ capital expenditures jumped in the quarter as it modernized its broadband and wireless networks. It raised its full-year capital spending target to C$3 billion from a previous goal of C$2.9 billion.

Telus showed decent performance in Western Canada even as Shaw reported strong cable subscriber growth there, Desjardins’ Yaghi said.

Telus is in a heated battle with Shaw, which has recently beefed up its high-speed internet and cable TV products.

The strong growth for both major Western Canadian companies comes as Alberta recovers from an economic slowdown caused by a prolonged slump in oil prices from late 2014 though early 2016.

Telus also raised its dividend to the low end of its target range, and slightly raised its 2017 revenue and earnings per share targets.

Net income rose to C$441 million, or 73 Canadian cents per share, from C$378 million, or 64 Canadian cents, a year earlier. Revenue climbed 2.9 percent to C$3.20 billion.

Analysts had expected Telus to earn 71 Canadian cents a share on revenue of C$3.22 billion, according to Thomson Reuters I/B/E/S.

Additional reporting by John Benny in Bengaluru; Editing by Sai Sachin Ravikumar and James Dalgleish

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