December 16, 2011 / 1:58 PM / in 6 years

UPDATE 3-Telus to gain from smartphone, internet TV growth

* Targets 2012 revenue growth of 4-6.5 pct

* Sees EBITDA 1-6 pct above 2011 levels

* Expects wireless EBITDA to be 5-9 pct higher next yr (Adds details from conference call, CFO and analyst comments, updates share movement)

Dec 16 (Reuters) - Telus Corp, Canada’s third-largest wireless operator, forecast 2012 to be better than this year, as it expects to win more smartphone customers and Internet-based television subscribers.

The company, which provides phone, Internet and television services, expects its wireless and data services to boost revenue by up to 6.5 percent to C$11 billion ($10.62 billion) next year.

“They certainly are best in class in terms of data growth and we expect it to be positive ARPU (average revenue per user) in 2012,” BMO Capital Markets analyst Peter Rhamey said.

Telus likes to be very conservative in guidance, Rhamey added.

Telus, which competes with Canada’s Rogers Communications and BCE Inc and operates in the residential market in western Canada, said 2012 earnings could rise up to 12 percent to C$4.15 a share.

“We are more exposed to western Canada and certainly the western provinces are in a healthy state in growing,” Chief Financial Officer Robert McFarlane told Reuters.

The Vancouver-based telecom services provider plans to spend about C$1.85 billion next year, 3 percent higher than 2011, as it upgrades wireless capacity and deploys a new long-term evolution (LTE) wireless network in urban markets.

Telus, which has been the most modest in upgrading its network to LTE technology among the three wireless majors in the country, said in November that the upgrade was on track for an early 2012 launch.

“This growth is being generated by continued healthy additions of wireless smartphones along with Optik TV and high-speed Internet service subscriptions,” the CFO said.

The company expects 2012 free cash flow to increase 15-35 percent before dividends and potential wireless spectrum purchase costs.

Telus said wireless earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to be 5-9 higher next year.

However, wireline EBITDA is expected to be lower by 5 percent to higher by 2 percent.

“This is a very well-managed company that has taken the challenge of TV very seriously and is probably producing the best results than any cable company in North America,” said Dvai Ghose, an analyst at Canaccord Genuity.

RICH DIVIDENDS

The company, which in November said it would increase its dividend to 58 Canadian cents a quarter, said it plans to raise its dividend twice next year as well just as it did this year.

“This represents the second of six semiannual dividend increases targeted to 2013,” CFO McFarlane said on a conference call with analysts.

Canaccord Genuity’s Ghose said Telus’ overall dividend growth model of about 10 percent per year over the next three years, starting this year, is achievable.

Earlier this month, BCE, Canada’s largest telecom company, raised its 2012 dividend by about 5 percent to C$2.17 per share.

Telus said it would make a C$100 million voluntary contribution to its defined benefit pension fund in early 2012, which will add to its EBITDA and EPS. In 2011, it was C$200 million.

Telus shares, which have gained about a fourth of their value this year, were down 54 Canadian cents at C$55.98 on Friday afternoon on the Toronto Stock Exchange. They touched a four-year high of C$57 earlier in the session.

”There are no major surprises, so anyone who was expecting to sell on today’s results never really got anything to tickle the incremental, said Canaccord Genuity’s Ghose.

“There is a little bit of profit taking.” ($1 = 1.0360 Canadian dollars) (Reporting by Gowri Jayakumar and Bhaswati Mukhopadhyay in Bangalore; Editing by Joyjeet Das, Sriraj Kalluvila)

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