Telus (NYSE: TU) reported that while first-quarter 2013 external wireline revenues rose CAD 36 million (USD 35.6 million) or 2.9 percent year-over-year to CAD 1.8 billion (USD 1.78 billion) due to an uptick in data service revenue, those results were partially offset by expected declines in legacy consumer and business voice revenues.
Overall company revenue rose 4.8 percent year-on-year to CAD 2.76 billion (USD 2.75 billion) while EBITDA increased by more than 5 percent to CAD 1.03 billion (USD 1.02 billion).
The telco's wireline data service and equipment revenues were up CAD 64 million (USD 63.3 million) or 9.1 percent due to growth in Telus TV subscribers, broadband Internet and enhanced data services and an increase in TV and broadband rates.
At the same time, wireline EBIDTA rose CAD 7 million (USD 6.92 million), or 1.9 percent year-over-year to CAD 368 million (USD 364 million) as the result of improving Optik TV and Internet margins driven by what it said was "a lower cost of subscriber acquisition and subscriber growth."
While Telus added over 34,000 video subscribers during the quarter, total TV additions were down by 10,000 versus the same quarter a year ago. Telus said that the lower "lower gross additions were partly offset by a lower churn rate." As of the end of the quarter, Telus had a total of 712,000 TV subscribers, up by 159,000, or 29 percent, over Q1 2013.
Similar to U.S. service providers AT&T (NYSE: T) and Verizon (NYSE: VZ), Telus reported that pull-through of Optik TV sales helped keep broadband net additions of 16,000 stable year-over-year. Telus' high-speed subscriber base of 1.3 million is up 85,000, or 6.8 percent from a year ago.
"We added approximately one Internet subscriber for every 2 TV net additions," said Joseph M. Natale, chief commercial officer and EVP of Telus, during the earnings call. "We continue to see positive momentum in the overall economics of Optik TV and Internet, including ARPU, churn and COA."
Natale added that "ARPU continues to increase as a larger proportion of our TV customers come off introductory pricing and add channels and content to their packages" and "from the impact of rate increases."
As expected, the telco's total network access lines declined by 4.9 percent over Q1 2012 to 3.4 million. Residential lines declined 7.2 percent year-over-year, reflecting the ongoing trend of wireless and over-the-top VoIP substration and competition, while business lines declined 2.3 percent due to the ongoing price-based competition in the small and medium business market and customer adoption of IP services.
TELUS reaffirmed the full year 2013 revenue forecast it issued in mid-February of between CAD 11.4 billion (USD 11.3 billion) and CAD 11.6 billion (USD 11.5 billion).
Shares of Telus were listed at $37.08, down 4 cents in Monday morning trading on the New York Stock Exchange.
- see the earnings release
- here's the call transcript (sub. req.)
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