Telus reports operational and financial results for second quarter 2024

• Total Mobile and Fixed customer growth of 332,000, up 39,000 over last year, representing a record second quarter

Robust Mobile Phone net additions of 101,000, and record second quarter Connected Device net  additions of 161,000; industry-leading postpaid mobile phone churn of 0.89 per cent 

Record second quarter Fixed customer net additions of 70,000, including 33,000 internet customer  additions, driven by our leading TELUS PureFibre network, premier portfolio of bundled services  across Mobile and Home, and leading household client loyalty 

TTech Adjusted EBITDA growth of 5.1 per cent and strong margin expansion of 150 basis points to  38.2 per cent reflecting a lower cost to serve and focus on driving higher margin per user and  continued double digit momentum in health services EBITDA contribution growth 

Net income and earnings per share higher by 13 per cent and 7.1 per cent, respectively and on an  adjusted basis increased by 34 and 32 per cent; Adjusted Consolidated EBITDA higher by 5.6 per  cent and margin increased 170 basis points to 36.1 per cent; Consolidated free cash flow increased  by 71 per cent 

Full year 2024 TTech operating revenues and Adjusted EBITDA trending to lower end of their  respective original target growth ranges; Consolidated free cash flow being updated to  approximately $2.1 billion fully reflecting the flow through from TELUS Digital Experience’s revised  EBITDA outlook; Consolidated capital expenditures of approximately $2.6 billion remains unchanged

Vancouver, B.C. – TELUS Corporation today released its unaudited results for the second quarter of 2024.  Consolidated operating revenues and other income increased by 0.6 per cent over the same period a year  ago to $5.0 billion. This growth was driven by higher service revenue in our TELUS technology solutions  (TTech) segment offset by lower service revenue in our TELUS digital experience segment (TELUS Digital),  formerly known as Digitally-led customer experiences – TELUS International. Within TTech, higher revenue  from mobile network, residential internet and security services, driven largely by subscriber growth, higher  organic growth across multiple lines of business in health services and higher agriculture and consumer  goods service revenues related to business acquisitions and improving organic growth across certain lines of  business in agriculture services was partially offset by declines in TV and fixed legacy voice services  revenues due to technological substitution. The decline in TELUS Digital operating revenues were from  lower external revenues reflecting macroeconomic conditions. See Second Quarter 2024 Operating  Highlights within this news release for a discussion on TTech and TELUS digital experience results. 

"In the second quarter, our team built upon our track record of execution excellence to drive industry-leading  customer growth and strong financial results, leveraging our premier portfolio of assets, coupled with a  relentless pursuit to drive cost efficiency and effectiveness,” said Darren Entwistle, President and CEO. “Our  results demonstrate how we are delivering sustainable profitable growth, underpinned by our consistent  strategic focus on margin-accretive customer expansion, globally leading broadband networks and  customer-centric culture. This enabled a record second quarter, with total customer net additions of 332,000,  up 13 per cent, year-over-year, including healthy mobile phone net additions of 101,000, and record second  quarter customer additions for both connected devices of 161,000 and total fixed net additions of 70,000.  Our team’s passion for delivering customer service excellence once again contributed to leading loyalty  across our key product lines. Notably, postpaid mobile phone churn was 0.89 per cent, alongside PureFibre  churn circa one per cent, further showcasing the consistent potency of our unmatched bundled product  offerings across Mobile and Home, over our industry-best PureFibre and wireless broadband networks.” 

“Today, TELUS International, which will formally complete its rebranding to TELUS Digital Experience  (TELUS Digital) in the third quarter, reported its second quarter results that reflect a macroeconomic and  operating environment that remains challenged. Notwithstanding the persistent headwinds, TELUS Digital  continues to generate consistently strong cash flows that are being leveraged to reinvest into the business to  support the reacceleration of top line growth along with an ongoing focus on surfacing cost efficiency  initiatives to optimize its operations. As our TELUS Digital team advances opportunities with existing and  prospective clients, their comprehensive and growing suite of AI solutions is capturing customer demand as  demonstrated by the double-digit revenue growth within its AI Data Solutions line of service in the first half of  this year. Furthermore, the strength of the generative AI fueled solutions, and tools created for TELUS  across all areas of our business, fortify their go-to-market efforts with other clients. While we are encouraged  by these positive indicators of longer-term growth opportunities, the challenged near-term environment  impacts the expected levels of revenue and profit for 2024, leading TELUS Digital to revise its annual  outlook for the full year. Our confidence in TELUS Digital remains steadfast as the business continues its  evolution to a technology-centric model with significant opportunities in respect of digital transformation. This  includes driving innovative generative AI solutions for our customers to elevate leading and differentiated  digital client experiences in the market, creating a positive tailwind for TELUS Digital’s medium- and long term growth.” 

“Within TELUS Health, we are pleased with the solid performance, returning to positive top line growth of  four per cent as investments in our products, sales and distribution channels deliver strong momentum  across multiple lines of service. This includes MyCare, pharmacy management systems, virtual pharmacy,  retirement benefits solutions, health benefits management, our precision health, and our employee  assistance programmes. Our team also delivered over 33 per cent adjusted EBITDA contribution growth.  This was supported by the aforementioned revenue growth along with the achievement of $297 million in  combined annualized synergies since the acquisition of LifeWorks in 2022, including $248 million in cost  synergies along with $49 million in cross selling, as we work towards our overall objective of $427 million by  the end of 2025. Furthermore, we drove a 10 per cent year-over-year increase in our global lives covered to  more than 75 million. Similarly, within TELUS Agriculture & Consumer Goods, we are yielding positive  outcomes as we strengthen our market position, delivering strong revenue growth of more than 15 per cent  reflecting inorganic growth from tuck-in acquisitions, and improving organic revenue performance in our  consumer goods, precision agronomy, and animal agriculture businesses. This comes on the heels of  continuing strong sales performance where we have more than doubled our year-to-date sales bookings  versus this time last year. Our commitment to amplifying the substantial growth potential of these distinctive  global businesses is underscored by harnessing the expertise, experience and high-performance culture and  talent of our entire team. This includes capitalizing on the significant cross-selling opportunities across all of  our businesses, showcasing the collective talent and effectiveness of our team in propelling our success.” 

“Our TELUS team remains deeply committed to making the world a better place,” added Darren. “This is  reflected in the incredible work of our TELUS Community Boards, which leverage the expertise of local  leaders to ensure charitable funding is directed to where it will have the most impact, as well as the TELUS  Friendly Future Foundation, with a mission to help youth realize their full potential. Impressively, since 2005,  our 19 TELUS Community Boards around the world and the Foundation have contributed close to $130  million in cash donations in support of 10,300 initiatives, positively impacting the lives of 33.5 million youth,  globally.”

Doug French, Executive Vice-president and CFO said, "Our strong performance during the second quarter is  a testament to our consistent track record of operational execution excellence. Despite facing a challenging  competitive and macroeconomic environment, we are executing against our strategic objectives, including  our significant cost efficiency programs. In the quarter, this supported strong consolidated EBITDA growth of  5.6 per cent, alongside margin expansion of 170 basis points to 36.1 per cent. Our unrelenting focus on  efficiency and effectiveness is further demonstrated by surpassing our full year assumption on restructuring  investments in the first half of the year as we look to maximize the in-year financial benefit. For 2024, we  now anticipate restructuring expense to be $400 million as we further optimize our cost structure to drive  EBITDA expansion, margin accretion and accelerated cash flow growth.” 

"As we enter the back half of the year, our financial position remains strong. At the end of the second  quarter, we had approximately $2.5 billion of available liquidity, our average cost of long-term debt was 4.42  per cent, our average term to maturity of long-term debt is 11 years and our net debt to EBITDA ratio was  3.85 times. As we progress through 2024 and into future years, we anticipate our leverage ratio to improve  as we work back towards our target ratio through continued EBITDA growth, declining capital intensity  toward the 10 per cent level and ongoing free cash flow expansion.” 

"Looking ahead, in light of the highly competitive environment in mobility and fixed, we are trending to the  lower end of our 2024 growth target for TTech operating revenues. Despite these industry pressures, we  remain confident in our commitment to driving strong, sustainable and margin accretive growth. This will be  supported by maintaining our keen focus on driving a lower cost to serve as we work towards achieving the  lower end of our annual TTech Adjusted EBITDA growth target. Consolidated free cash flow is being  updated to approximately $2.1 billion, fully reflecting the flow through from TELUS Digital’s lower EBITDA  outlook. Our confidence in the strength and resilience of our business remains unwavering, and we are  excited about the future prospects that lie ahead for our organization. This includes our expectations for  continued free cash flow expansion in the years ahead, driven by ongoing strong EBITDA growth and  moderating capital expenditure intensity, further supporting the long-term sustainability and quality of our  long-standing and leading dividend growth program,” concluded Doug. 

To view the full release in PDF format, please download here.