Telus profit rises five percent on TV, data growth

Fri Feb 10, 2012 2:00pm EST
 
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By Alastair Sharp

(Reuters) - Quarterly profit at Telus (T.TO: Quote) rose by a weaker-than-expected 5 percent as higher costs to sign up new customers offset strong growth in smartphone and Internet TV subscribers, dragging down the Canadian telecom's shares on Friday.

Vancouver-based Telus said it added 148,000 net wireless subscribers on lucrative "postpaid" contracts, comfortably beating expectations for the fourth quarter. It also signed up 56,000 Optik customers as it expanded the reach of the Internet-based television service.

But the cost of acquiring wireless customers and signing them up for multi-year contracts jumped 18.5 percent to C$421 as a result of higher subsidies and stepped-up competition. The television growth also hurt the bottom line as Telus forked out to install the service and subsidize set-top boxes.

Even so, analysts viewed Optik as a positive for the company as it helps offset a steady decline in profitable local and long-distance phone services, an industrywide trend.

"Video is now contributing enough on the wireline side to mitigate the decline in profitability on legacy products," Desjardins analyst Maher Yaghi said.

Indeed, Telus's wireline business, which includes fixed line telephone and Internet services, showed a net increase in customers in 2011 for the first time in seven years thanks to the contribution of Optik.

The success of Optik helped Telus sign up more customers to landline Internet, with 24,000 new lines in the quarter, as it bundled the products together.

The company added voice and gesture control for Optik this month and also released a mobile version so customers can watch the same content on smartphones and tablets.   Continued...