February 9, 2017 / 11:14 AM / 2 years ago

Telus profit misses as it spends more to win wireless customers

(Reuters) - Telus Corp (T.TO), one of Canada’s three big telecom providers, reported a smaller-than-expected quarterly profit on Thursday as operating expenses rose and it paid more to win wireless customers.

Telus is spending billions of dollars to expand its wireless and broadband networks as it competes with BCE Inc (BCE.TO) and Rogers Communications Inc (RCIb.TO) for wireless customers across the country, and with Shaw Communications Inc (SJRb.TO) for television, internet and phone customers in Western Canada.

Shares of Vancouver-based Telus fell as much as 2.4 percent to C$43.10 in afternoon trading.

The company said it added 87,000 net postpaid wireless customers, 25,000 more than a year ago.

In the same period, market leader Rogers Communications Inc (RCIb.TO) added 93,000 wireless customers, and BCE Inc (BCE.TO), Telus’ network-sharing partner, signed on nearly 112,000.

Telus’s wireless customers, on average, including those on contracts and those who pay upfront for cellular service, paid C$66.24 per month, about 4 percent higher than a year earlier.

However, the company’s cost of acquiring wireless customers rose about 6 percent to C$500 per gross subscriber addition.

The company’s operating expenses rose 11.3 percent to C$3.07 billion in the quarter ended Dec. 31.

The company said it added 24,000 internet connections, up 2,000 from a year ago, reflecting an ongoing expansion of its broadband business.

“Telus produced far better than expected internet net adds, potentially moderating concerns in the market around losing ground to its cable competitor,” Canaccord Genuity analysts wrote in a note.

Telus forecast 2017 revenue of C$13.12 billion-C$13.25 billion, compared with analysts’ average estimate of C$13.19 billion, according to Thomson Reuters I/B/E/S.

Fourth-quarter net income fell 67 percent to C$87 million ($66.31 million), or 14 Canadian cents per share.

Excluding items, which included a restructuring charge of C$255 million, the company earned 53 Canadian cents per share, missing estimates of 58 Canadian cents.

Telus’ operating revenue rose 2.7 percent to C$3.31 billion, also missing estimates of C$3.33 billion.

Up to Wednesday’s close, the company’s shares had risen about 10 percent in the past 12 months.

($1 = 1.3120 Canadian dollars)

Reporting by Komal Khettry in Bengaluru; Editing by Shounak Dasgupta

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