Telus reports operational and financial results for third quarter 2023

• Mobile Phone net additions of 160,000, our best third quarter on record, and a record setting quarter for Connected Device net additions of 179,000
• Robust third quarter Fixed customer net additions of 67,000, including 37,000 internet customer additions, powered by leading customer loyalty in combination with TELUS’ PureFibre network
• Consolidated Operating Revenue and Adjusted EBITDA growth of 7.2 per cent and 5.5 per cent, respectively, and Free Cash Flow growth of 7.3 per cent; Net Income lower by 75 per cent on higher efficiency-related restructuring and other costs, higher depreciation, amortization and financing costs; Adjusted Net Income down 21 per cent 
• Quarterly dividend increased to $0.3761, up 7.1 per cent over the same period last year, representing a dividend yield of approximately 6.5 per cent  
• Reconfirming our 2023 Consolidated Financial Targets

Vancouver, British Columbia – TELUS Corporation today released its unaudited results for the third quarter of 2023. Consolidated operating revenues and other income increased by 7.2 per cent over the same period a year ago to $5.0 billion. This growth was driven by higher service revenues in our two reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences – TELUS International (DLCX). TTech service revenue growth was driven by: (i) growth in health services revenues, mainly driven by our acquisition of LifeWorks on September 1, 2022 and organic growth; (ii) higher mobile network revenues attributable to subscriber and moderating roaming revenue growth; and (iii) an increase in fixed data service revenues, resulting from subscriber growth and higher, but moderating, revenue per internet customer. These factors were partly offset by lower TV and fixed legacy voice services revenues, primarily due to technological substitution. Growth in DLCX operating revenues resulted from expanded services for certain existing clients and growth from new clients, including those from our acquisition of WillowTree on January 3, 2023, and favourable foreign exchange impacts, which collectively more than offset the impact of some DLCX clients managing their own costs thus reducing our revenue. See Third Quarter 2023 Operating Highlights within this news release for a discussion on TTech and DLCX results.

“For the third quarter, our TELUS team once again demonstrated execution strength in our TTech business segment, characterized by the potent combination of leading customer growth, complemented by strong operational and financial results, alongside improving EBITDA growth and margin expansion in our DLCX segment" stated Darren Entwistle, President and CEO. “Our robust performance in our core telecom business is underpinned by our globally leading broadband networks and customer-centric culture, which enabled our strongest quarter on record, with total customer net additions of 406,000, up 17 per cent, year-over-year, driven by strong demand for our leading portfolio of bundled services across Mobility and Fixed services. This included strong mobile phone net additions of 160,000, our best third quarter on record and best quarterly result since the second quarter of 2008; all-time record third quarter connected device net additions of 179,000; and robust third quarter total fixed net additions of 67,000, including 37,000 internet customer additions, powered by leading customer loyalty in combination with TELUS’ PureFibre network. Our leading customer growth is reflective of our consistent, industry-best client loyalty across our Mobile and Fixed product lines. Our team’s passion for delivering customer experience excellence contributed to continued strong loyalty across our key product lines, once again this quarter. Notably, postpaid mobile phone churn is now in the tenth consecutive year of less than one per cent.”

“Today, TI reported steady year-over-year revenue growth, sequential profitability improvement, and reiterated its 2023 full year outlook,” continued Darren. “Revenue growth was driven by a combination of higher volumes and the ramp up of projects across key clients, notably within TI AI Data Solutions, demonstrating the significant potential for TI in the AI space. TI’s Adjusted EBITDA margin increased meaningfully quarter-over-quarter, a positive trend that we expect to see continue in the fourth quarter and into 2024. This strong improvement reflects the team’s considerable efforts to realize the significant cost savings from our cost efficiency program aimed at rebalancing supply and demand factors across TI’s operations, most notably in Europe. Despite the near-term challenges stemming from macroeconomic pressures that TI has faced this year, we remain highly confident in TI’s strategy and investment thesis. This is amplified by meaningful opportunities in respect of digital transformation – particularly with generative AI adoption – and the continuing critical importance of differentiated digital customer experience solutions in the market, which remains a vibrant tailwind for TI’s medium- and long-term growth and profitability.”

“At our TELUS Health business unit, we achieved third quarter revenues of $422 million, alongside 20 per cent EBITDA growth, normalizing for LifeWorks. We continue to execute on our global growth strategy and demonstrate our progress towards our goal to be the most trusted wellbeing company in the world, accelerated by our acquisition of LifeWorks in 2022. This includes our healthcare services and programs now covering more than 69 million lives around the world, an increase of more than 9 million year-over-year; supporting health outcomes on nearly 151 million digital health transactions during the third quarter, up more than five per cent over the same period a year ago; and increasing our virtual care membership to 5.5 million, up nearly 40 per cent over the prior year. As we evolve alongside the needs of our customers, world-wide, we foresee TELUS Health continuing its double-digit growth over the long-term. Since acquiring LifeWorks, our team has committed to driving $427 million in annualized synergies by the end of 2025. This includes $327 million expected to be realized through operating cost synergies from continued integration, and optimizing our organizational structure, systems and real estate. To date, we have achieved $194 million in combined annualized synergies, towards our overall objective. Furthermore, we anticipate $100 million from longer term revenue synergies driven by cross-selling health services products within our TELUS Health customer base, and throughout our TELUS portfolio of assets, including TI. These synergies will allow us to re-invest in the growth of our business and improve our profitability, while we focus on delivering efficient, secure and best-in-class health and wellness solutions to our customers.” 

“Our all-time record customer growth is underpinned by our dedicated team who are passionate about delivering superior service offerings, and digital capabilities, over our world-leading wireless and PureFibre broadband networks,” added Darren. “Notably, in August, TELUS was named the Fastest Internet Service Provider (ISP) in Canada, for the fourth consecutive year, and recognized as the Best ISP for Alberta and British Columbia by U.S.-based PCMag. This outstanding accomplishment illustrates the TELUS team’s steadfast commitment to connecting Canadians to the people and information that matter most, thanks to TELUS’ fast, expansive and reliable PureFibre network. Moreover, this recognition of TELUS’ national broadband network leadership underscores the tremendous value of our generational investments in world-leading wireless and wireline network technologies, which will continue to drive extensive socio-economic benefits for Canadians in communities from coast-to-coast, for decades to come.”

“Importantly, our significant broadband network investments enable the continued advancement of our financial and operational performance, and the long-term sustainability of our industry-leading dividend growth program,” continued Darren. “The 7.1 per cent year-over-year dividend increase announced today represents the twenty-fifth increase since we initiated our multi-year dividend growth program in 2011, with our program now in its thirteenth year. Since 2004, TELUS has returned more than $24 billion to shareholders, including over $19 billion in dividends, representing approximately $17 per share.”

“To buttress our consistently strong performance, against the backdrop of the rapid transformation in our industry and evolving regulatory, competitive and macroeconomic environment that we currently face, we continue to focus on executing the extensive efficiency and effectiveness initiative across TELUS, announced in August. Importantly, the transformational investments we have prudently made over the course of more than a decade in building the best culture, and enabling industry-leading customer experiences over our globally leading wireless and PureFibre broadband networks, allowed us to accelerate our well-progressed plans to digitally revolutionize our business and further streamline our operating costs. Our team’s grit, resilience and ability to embrace change and continuously evolve the way we operate have enabled us to substantially complete the targeted team member reductions. The incremental cost savings are expected to begin to be realized in the fourth quarter, with the full run-rate expected by the second quarter of next year. While this initiative has come with many difficult decisions, we have leveraged our decades-long track record of successfully navigating exogenous factors, from regulatory and competitive, to macroeconomic, and most recently, through the global pandemic, in order to rise to the current challenges and future proof our business.”

“TELUS’ global leadership in social capitalism was exemplified by the recent launch of the $50 million TELUS Student Bursary – the largest bursary fund in Canada,” concluded Darren. “Created through a $25 million endowment from TELUS, along with an additional $25 million fundraising commitment from the TELUS Friendly Future Foundation, the TELUS Student Bursary will enable thousands of young people — who might otherwise lack the means — to enrich their lives through post-secondary education at a university, college or technical vocational school. Importantly, the annual bursary program will empower these leaders of tomorrow to pursue their ambitions, realize their potential and create a brighter future for themselves and their communities. Indeed, our TELUS team is helping to make the future friendly by ensuring that no young person is left behind.”

Doug French, Executive Vice-president and CFO said, “Our third quarter results demonstrate our strong execution within a highly competitive environment and evolving global macroeconomic climate. In our domestic telecom business, our operating results showcase the power of our brand, in the communities we serve, and the strength of our leading bundled solutions across mobility and fixed, and in turn how those results are delivering robust financial outcomes as illustrated by seven per cent Adjusted EBITDA growth in our TTech segment. Within our global businesses, TI executed against its significant efficiency plans to meaningfully right size its cost structure, in response to macroeconomic pressures, as evidenced by the healthy sequential improvement in Adjusted EBITDA margins, and furthermore, putting itself in a strong position to elevate its margin profile as it exits 2023. Our TELUS Health team continues to execute its integration plan with LifeWorks, yielding significant cost efficiencies, positioning the business for strong growth in 2024 and beyond.”

“During the third quarter, we continued to execute against our cost efficiency program, across our business, as outlined with the release of our second quarter results in August. While these efforts will continue into the fourth quarter of 2023 and into early 2024, this significant program will drive permanent cost reductions across our organization, supporting our growth profile and cash flow generation, as well as our dividend growth program and balance sheet deleveraging. Our team also successfully accessed the capital markets during the third quarter, issuing $1.75 billion in new debt securities across three different maturities, including our fifth sustainability-linked bond. This offering was met with strong investor demand, within a dynamic market environment, and further demonstrates our strong access to the capital markets as we further advance our growth strategy. Our balance sheet remains strong with the average cost of our long-term debt at 4.33 per cent, well below current rates, reflecting how our team has successfully leveraged the ultra-low interest rate environment over the last decade to accelerate our growth strategy, including our generational PureFibre build. We have a strong debt maturity schedule with the average maturity of our long-term debt at nearly 12 years and our ratio of fixed-to-floating stands at 85 per cent, a strong mitigation measure in an elevated yield environment,” concluded Doug.

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