* Targets 2011 revenue growth of 1 to 4 percent
* Sees EBITDA 1 to 6 pct above 2010 levels
* Shares rise 0.9 pct, up 35 pct since start of 2010 (Adds details from analyst call, share price)
By Alastair Sharp
TORONTO, Dec 14 (Reuters) - Telus Corp T.TO said on Tuesday it expects earnings and revenues to increase in 2011, driven primarily by growth in its wireless and data businesses and helped by lower financing costs.
The company, which provides phone, Internet and television services, mostly in Western Canada, said it is targeting 2011 revenue growth of 1 to 4 percent and expects earnings before interest, taxes, depreciation and amortization (EBITDA) to rise by 1 to 6 percent over 2010 levels.
Dvai Ghose, an analyst at Canaccord Genuity, said that while the guidance offered few surprises it was “very robust” and “supports the bull thesis that Telus can increase dividends and buy back a ton of shares next year”.
Telus upped its dividend twice in 2010 to end at an annualized rate of C$2.10 per share, but did not lay out a share buyback plan. It has declined to say if it plans a dividend increase in 2011.
Telus said earnings should increase by 9 to 22 percent in 2011 to between C$3.50 and C$3.90 per share, on revenue of between C$9.93 billion and C$10.23 billion. It did not change its 2010 forecasts.
Analysts, on average, expect earnings, excluding some items, of C$3.57 per share on revenue of C$9.97 billion, according to Thomson Reuters I/B/E/S.
“Next year’s results are expected to benefit from the continuation of healthy wireless subscriber loading and accelerating adoption of wireless data services,” Chief Financial Officer Robert McFarlane said in a statement.
Shares in the Vancouver-based company rose 0.9 percent by early Tuesday afternoon to C$46.82 on the Toronto Stock Exchange and are up 35 percent since the start of 2010.
Its third-quarter results, released in early November, impressed analysts with strong growth in wireless and television. [ID:nN05280098]
Canaccord’s Ghose said the discrepancy between sales and earnings forecasts could reflect the company’s expectation of strong net additions for its Internet protocol television product, Optik, which would help revenue but hurt EBITDA in the near term.
Telus said revenue from its fixed line business could register a dip of as much as 2 percent, while earnings for the unit could fall as much as 6 percent.
As is the case throughout the industry, Telus’s revenue from fixed-line operations is sliding as customers increasingly shift to mobile devices.
Wireless data contributed 11 percent of revenue in the 12 months to the end of September, while wireless voice contributed 40 percent.
Telus has spent heavily to build an HSPA+ wireless network, which it launched a year ago and shares with BCE’s BCE.TO Bell Canada.
“The adoption of smartphones really, at least in Canada, has hit a tipping point,” McFarlane said on a conference call with analysts, pointing out the more powerful and expensive devices raise both Telus’s subsidy costs and its average revenue per user.
The company said free cash flow should increase by 7 to 27 percent next year.
It also said it would make a C$200 million ($198 million) voluntary contribution to its defined benefit pension fund early in 2011, which will reduce overall cash taxes by C$57 million and mean the fund’s costs are 97 percent funded.
Rival Bell said last week it would pay C$750 million into its defined benefit pension plan, which it expects to be in surplus by 2014. [ID:nSGE6B908F]
$1=$1.01 Canadian Additional reporting by Euan Rocha, editing by Gerald E. McCormick, Peter Galloway and Rob Wilson