Telus Q2: Cost cutting, video service growth offsets line loss

Telus' (Toronto: T.TO) dedication to cutting costs, while never an easy proposition for any service provider, worked in the Canadian service provider's favor in Q2. The service provider reported that net profit increased from $260 million in Q2 2009 to $288 million in Q2 2010.

Of course, there were various wins and losses in the second quarter. As seen with a number of other wireless/wireline integrated service providers, wireline subscribership was down while wireless subscriptions rose. While wireline network users declined from 5.4 million to 5.3 in comparison to Q2 2009, wireless customers were up from 6.3 million to 6.7 million.

Telus' Q2 wireline results weren't a complete washout. Although external wireline revenues were down four percent, it did see some growth in broadband data and video services. Here's a breakout of the service provider's key wireline metrics:

  • Wireline Revenues: During the second quarter, Telus' external wireline revenues were down 4.1 percent to $1.2 billion, a factor attributed to ongoing declines in continued declines in traditional local and long-distance revenues. In total, Telus lost 63,000 network access lines (NAL), bringing it to a total of 3.85 million. The growing presence of savvy cable competitors and wireless substitution drove residential NAL losses to 51,000, while business NALs declined by 12,000 mainly in Western Canada.
  • Data Growth: On the slightly brighter side, Telus' data revenues increased by $27 million or 5.1 percent due to an increase in TELUS TV subscribers, higher managed workplace revenues and increased Internet, enhanced data and hosting services. At the same time, Telus' broadband growth remained unchanged with only 3,000 new broadband subscribers.
  • Video Growth: Although Telus faces a very competitive cable TV market, it did add 29,000 subscribers in Q2, a 71 percent increase over Q2 2009. Telus attributes video growth to improved installation capabilities, enhanced services including PVR Anywhere, investment in expanded broadband coverage, and addition of TELUS Satellite TV service in mid-2009. As of the end of the quarter, Telus had 228,000 TV subscribers.

Providing both satellite TV and video over its existing copper and newer fiber-based last mile networks are likely going to continue to be a big revenue driver and focus for Telus' wireline division.

And the proof of Telus' commitment to video continues seen through various service and network initiatives. In addition to committing over $650 million to upgrade its wireline and wireless networks in its Alberta, Canada markets, the service provider launched its Optik home multimedia services suite and enables customers to leverage their Microsoft Xbox 360 devices as an IPTV set top box (STB).

For more:
- see the earnings release here
- Reuters has this story

Related articles:
Telus' Q1 results beat analyst forecasts, but revenue remains flat
Telus' wireline revenues dip, but IP services continue to shine
Weak Canadian economy drives down Telus Q3 earnings
Telus IPTV gains, satellite coverage expands
Telus starts re-selling BCE satellite TV

Q2 wireline earnings:
Click here for the ongoing summary

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