UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of May 2024
Commission File Number 001-15144
TELUS
CORPORATION
(Translation of registrant's name into English)
23rd
Floor, 510 West Georgia Street
Vancouver, British Columbia V6B 0M3
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F
¨
Form 40-F x
Signatures
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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TELUS
CORPORATION |
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By: |
/s/ Andrea Wood |
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Name: |
Andrea Wood |
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Title: |
Executive Vice President and Chief Legal and Governance Officer |
Date: May 9, 2024
Exhibit Index
Exhibit 99.1
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News
Release |
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May 9, 2024
TELUS
reports operational and financial results for first quarter 2024
Total Mobile and Fixed customer growth of
209,000, up 46,000 over last year, and our strongest first quarter on record, driven by strong demand for our leading portfolio of Mobility
and Fixed services
Robust Mobile Phone net additions of 45,000
and record first quarter Connected Device net additions of 101,000; industry-leading postpaid mobile phone churn of 0.91 per cent
Record first quarter Fixed customer net
additions of 63,000, including 30,000 internet customer additions, driven by TELUS’ PureFibre network and leading portfolio of
bundled services across Mobile and Home
Industry-leading customer growth enabling
Mobile Network Revenue and Fixed Data Services Revenue growth of 2.9 per cent and 2.7 per cent, respectively; TTech Adjusted EBITDA growth
of 4.1 per cent and strong margin expansion of 160 basis points to 39.4 per cent reflecting cost savings from ongoing efficiency programs
Quarterly dividend raised to $0.3891, an
increase of 7.0 per cent over the same period last year and our twenty-sixth increase since May 2011, representing a yield of approximately
7.0 per cent; Leading dividend growth program supported by Adjusted EBITDA growth outlook and strong annual free cash flow expansion
Reiterating our 2024 Financial Targets including
TTech Operating Revenues and Adjusted EBITDA growth of 2 to 4 per cent and 5.5 to 7.5 per cent, respectively, Consolidated Capital Expenditures
of approximately $2.6 billion and Free Cash Flow of approximately $2.3 billion
Vancouver, B.C. –
TELUS Corporation today released its unaudited results for the first quarter of 2024. Consolidated operating revenues and other income
decreased by 0.6 per cent over the same period a year ago to $4.9 billion. This decline was driven by lower service revenues in our two
reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences – TELUS International (DLCX). Within
TTech, higher mobile network, residential internet and security revenues, largely driven by subscriber growth, as well as growth in managed,
unmanaged and other fixed data services to new and existing business customers was offset by declines in TV and fixed legacy voice services
revenues due to technological substitution. The decline in DLCX operating revenues resulted from lower external revenues in the DLCX
segment across most of its industry verticals. See First Quarter 2024 Operating Highlights within this news release for a discussion
on TTech and DLCX results.
"In the first quarter, our team once again delivered against
our differentiated growth strategy, leveraging our superior asset portfolio, consistent execution track record and proactive cost efficiency
initiatives to deliver industry-leading customer additions and solid financial results against the backdrop of a dynamic operating
environment,” said Darren Entwistle, President and CEO. “Our robust performance is underpinned by our strategic focus on
margin accretive customer growth, globally leading broadband networks and customer-centric culture, which enabled our strongest first
quarter on record, with total customer net additions of 209,000, up 28 per cent, year-over-year. This included strong mobile phone net
additions of 45,000, and record first quarter customer additions for both connected devices of 101,000 and total fixed net additions
of 63,000. TELUS’ industry-leading growth reflects the consistent potency of our operational execution, and our unmatched bundled
product offerings across Mobile and Home. Our team’s passion for delivering customer service excellence contributed to continued
leading loyalty across our key product lines. Notably, postpaid mobile phone churn was 0.91 per cent, as we begin the 11th consecutive
year below the one per cent level.”
“Within our global businesses, today, TELUS International
(TI) also reported its first quarter results, delivering robust profitability and cash flows amidst what remains a challenging
global macroeconomic operating environment, resulting in a difficult prior year comparable. Despite the near-term top line
challenges, our TI team has executed against significant cost efficiency programs over the past ten months, positioning the business
to achieve further EBITDA growth and incremental margin expansion, along with strong cash flow generation, as we move through the
course of the year. We remain highly confident in TI’s strategy and investment thesis, which 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, creating a vibrant tailwind for
TI’s medium- and long-term growth and profitability. In TELUS Health, we achieved first quarter revenues of $420 million,
alongside 28 per cent EBITDA contribution growth. This was supported by the achievement of $251 million in combined annualized
synergies, towards our overall objective of $427 million by the end of 2025. Furthermore, we drove a seven per cent year-over-year
increase in our global lives covered to nearly 72 million. We continue to make strong progress scaling TELUS Health and TELUS
Agriculture & Consumer Goods, where we remain focused on accelerating the significant growth profile these differentiated
global businesses represent by leveraging the expertise, experience, and high-performance culture and talent of our entire team,
inclusive of leveraging significant cross-sell synergies across all lines of our business.”
“The record customer growth we continue to report 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. In addition to driving extensive socio-economic benefits for Canadians in
communities from coast-to-coast, for decades to come, the significant broadband network investments we have made enable the
continued advancement of our financial and operational performance, and the long-term sustainability of our industry-leading
dividend growth program. Today, we are announcing a seven per cent dividend increase, reflecting our unwavering commitment to
delivering superior value to our shareholders. Furthermore, it builds on our consistent track record of delivering on our multi-year
dividend growth program established in 2011, and most recently extended through 2025, targeting annual growth in the range of seven
to 10 per cent. Today’s increase represents our 26th over the last 14 years and reflects our unwavering confidence in
delivering leading operational and financial results on a sustained basis. Importantly, our strong outlook 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 dividend growth program.”
“Reflecting our team’s long-standing belief in the synergistic
relationship between doing well in business and doing good in our communities, May marks the official kick-off of our 19th annual
TELUS Days of Giving,” continued Darren. “This year, with the support of our extended TELUS family, I have every confidence
that we will exceed our goal of inspiring 80,000 volunteers supporting positive outcomes in communities across the 32 countries in which
we operate. It is thanks to this unparalleled level of caring and commitment that our team members and retirees, globally, have contributed
2.2 million days of giving since 2000 – more than any other company on the planet.”
Doug French, Executive Vice-president and CFO said, “In the
first quarter of 2024, our team navigated a highly competitive environment across mobility and fixed to deliver healthy operational and
financial results. Within our global businesses, investments in our channel and distribution strength is starting to pay dividends with
good momentum on increased sales, however, in the short term, the challenging macroeconomic climate continues to elongate sales cycles,
impacting top line growth. We expect to see this steadily improve over the coming quarters. Despite the revenue pressures however, we
delivered robust consolidated Adjusted EBITDA growth of 4.3 per cent and strong consolidated margin expansion of 170 basis points year
over year to 37.6 per cent. Furthermore, within our TTech segment, Adjusted EBITDA was higher by 4.1 per cent and margin of 39.4 per
cent improved by 160 basis points over the same period a year ago. This strong performance reflects our unrelenting focus on efficiency
and effectiveness to drive significant cost reductions on a permanent basis. As we move through the rest of the year, we remain focused
on driving towards achieving our financial targets for 2024, which we reiterated today.”
“During the first quarter, our team advanced our leadership
position in sustainability, issuing our sixth sustainability-linked bond (SLB), linking our financing to the achievement of ambitious
environmental targets,” added Doug. “Furthermore, our latest SLB offering affirms TELUS as having the largest SLB program
in the Canadian fixed income market and reinforces our sustainability commitments as a global leader in ESG. At the end of the quarter,
our average cost of long-term debt was 4.37 per cent, our average term to maturity of long-term debt is nearly 11 years and our net debt
to EBITDA ratio was 3.78 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.”
“Our leading growth profile, and robust balance sheet position,
support our well-established dividend growth program. Our commitment to deliver on this program is underpinned by our confidence in executing
our growth strategy and generating meaningful free cash flow on a sustained basis from our leading EBITDA growth profile and low capital
intensity. This is balanced against other capital allocation priorities, including ongoing strategic investments along with maintaining
a strong balance sheet to provide us ample flexibility to further support our growth ambitions and shareholder capital returns,”
concluded Doug.
As compared to the same period a year ago, net income in the quarter
of $140 million was down 38 per cent and Basic earnings per share (EPS) of $0.09 decreased by 40 per cent. These decreases were driven
by the impacts from: (i) higher depreciation and amortization from network leases and increased real estate rationalization; increases
related to the addition of capital assets acquired in business acquisitions; growth in capital assets in support of the expansion of
our broadband footprint, including our generational investment to connect homes and businesses to TELUS PureFibre and 5G technology coverage;
successful internet, TV and security subscriber loading; and investments in our fibre-optic technology to support our technology strategy
to improve network coverage and capacity, including the ongoing build-out of our 5G network; (ii) higher financing costs reflecting
an increase in average long-term debt balances outstanding, attributable in part to business acquisitions, an increase in the effective
interest rate and an increase in unrealized changes in virtual power purchase agreements forward element which represent the estimated
unrealized amounts recorded from our virtual power purchase agreements (VPPAs) with renewable energy projects as of March 31, 2024;
and (iii) higher restructuring and other costs, primarily related to cost efficiency and effectiveness programs, including workforce
reductions, real estate rationalization, and personnel-related restructuring and other costs that were recorded in the prior year. As
it relates to EPS, the trends also reflect the effect of a higher number of Common shares outstanding. When excluding certain costs and
other adjustments (see ‘Reconciliation of adjusted Net income’ in this news release), adjusted net income of $390
million increased by 1.0 per cent over the same period last year, while adjusted basic EPS of $0.26 was down 3.7 per cent over the same
period last year. Adjusted net income is a non-GAAP financial measure and adjusted basic EPS is a non-GAAP ratio. For further explanation
of these measures, see ‘Non-GAAP and other specified financial measures’ in this news release.
Compared to the same period last year, consolidated EBITDA increased
by 1.1 per cent to more than $1.6 billion and Adjusted EBITDA increased by 4.3 per cent to approximately $1.9 billion. The growth in
Adjusted EBITDA reflects: (i) broad-based cost reduction efforts across both the TTech and DLCX segments, including workforce reductions,
synergies achieved between LifeWorks® and our legacy Health business, and an increase in TTech outsourcing to DLCX resulting
in competitive benefits given the lower cost structure in DLCX, as well as savings in marketing, discretionary and administrative costs;
(ii) higher mobile network, residential internet and security revenues, largely driven by subscriber growth; (iii) higher net
gains in other income; and (iv) growth in managed, unmanaged and other fixed data services to new and existing business customers.
These factors were partly offset by: (i) lower mobile phone ARPU; (ii) merit-based compensation increases; (iii) labour
cost imbalances arising from reductions in service volume demand in the DLCX segment; (iv) declining TV and fixed legacy voice margins;
(v) lower mobile equipment margins; (vi) lower health and agriculture and consumer goods revenues from increased client churn;
(vii) higher costs related to the scaling of our digital capabilities, inclusive of increased subscription-based licences, and cloud
usage costs; and (viii) higher bad debt expense.
In the first quarter, we added 209,000 net customer additions, up
46,000 over the same period last year, and inclusive of 45,000 mobile phones and 101,000 connected devices, in addition to 30,000 internet,
19,000 TV and 22,000 security customer connections. This was partly offset by residential voice losses of 8,000. Our total TTech subscriber
base of approximately 19.2 million is up 6.8 per cent over the last twelve months, reflecting a 4.7 per cent increase in our mobile phones
subscriber base to over 9.8 million, and a 23 per cent increase in our connected devices subscriber base to more than 3.2 million. Additionally,
our internet connections grew by 5.5 per cent over the last twelve months to approximately 2.7 million customer connections, our TV customer
base stands at 1.3 customers, and our security subscriber base increased by 7.8 per cent to approximately 1.1 million customers. Lastly,
our residential voice subscriber base declined slightly by 2.8 per cent to approximately 1.1 million.
In health services, as of the end of the first quarter of 2024, virtual
care members were 5.9 million and healthcare lives covered were 71.7 million, up 14 per cent and 7.0 per cent over the past twelve months,
respectively. Digital health transactions in the first quarter of 2024 were 159.0 million, up 6.8 per cent over the first quarter of
2023.
Cash provided by operating activities of $950 million increased by
$189 million in the first quarter of 2024 and free cash flow of $396 million decreased by $139 million compared to the same period a
year ago. Consistent with our internal plan, the decrease in free cash flow was driven by increased restructuring and other costs disbursements,
net of expense and increased interest paid, partly offset by lower income taxes paid. Our definition of free cash flow, for which there
is no industry alignment, is unaffected by accounting standards that do not impact cash.
Consolidated capital expenditures of $725 million, including $14 million
for real estate development, increased by 1.7 per cent in the first quarter of 2024. TTech real estate development capital expenditures
increased by $9 million in the first quarter of 2024 due to an increase in capital investment to support construction of multi-year development
projects, including TELUS OceanTM and other commercial buildings in British Columbia. DLCX capital expenditures increased
by $6 million in the first quarter of 2024, primarily driven by expansion in our Asia-Pacific and Central America and others regions
(notably Africa), and software investments in our managed digital solutions business. As at March 31, 2024, our 5G network covered
approximately 31.8 million Canadians, representing approximately 86 per cent of the population, and more than 3.2 million households
and businesses in B.C., Alberta and Eastern Quebec were connected to fibre-optic cable, which provides these premises with immediate
access to our fibre-optic technology.
Consolidated Financial Highlights
| C$ millions, except footnotes and unless noted otherwise | |
Three months
ended
March 31 | | |
Per cent | |
| (unaudited) | |
2024 | | |
2023 | | |
change | |
| Operating revenues (arising from contracts with
customers) | |
| 4,866 | | |
| 4,925 | | |
| (1.2 | ) |
| Operating revenues and other income | |
| 4,932 | | |
| 4,964 | | |
| (0.6 | ) |
| Total operating expenses | |
| 4,357 | | |
| 4,365 | | |
| (0.2 | ) |
| Net income | |
| 140 | | |
| 224 | | |
| (37.5 | ) |
| Net income attributable to common shares | |
| 127 | | |
| 217 | | |
| (41.5 | ) |
| Adjusted
Net income(1) | |
| 390 | | |
| 386 | | |
| 1.0 | |
| Basic EPS ($) | |
| 0.09 | | |
| 0.15 | | |
| (40.0 | ) |
| Adjusted
basic EPS(1) ($) | |
| 0.26 | | |
| 0.27 | | |
| (3.7 | ) |
| EBITDA(1) | |
| 1,638 | | |
| 1,621 | | |
| 1.1 | |
| Adjusted
EBITDA(1) | |
| 1,856 | | |
| 1,779 | | |
| 4.3 | |
| Capital
expenditures(2) | |
| 725 | | |
| 713 | | |
| 1.7 | |
| Cash provided by operating activities | |
| 950 | | |
| 761 | | |
| 24.8 | |
| Free
cash flow(1) | |
| 396 | | |
| 535 | | |
| (26.0 | ) |
| Total
telecom subscriber connections(3) (thousands) | |
| 19,168 | | |
| 17,953 | | |
| 6.8 | |
| Healthcare
lives covered(4) (millions) | |
| 71.7 | | |
| 67.0 | | |
| 7.0 | |
Notations used in the table above: n/m –
not meaningful.
| (1) | These are non-GAAP and other specified financial measures, which do not
have standardized meanings under IFRS-IASB and might not be comparable to those used by other
issuers. For further definitions and explanations of these measures, see ‘Non-GAAP
and other specified financial measures’ in this news release. |
| (2) | Capital expenditures include assets purchased, excluding right-of-use
lease assets, but not yet paid for, and consequently differ from Cash payments for capital
assets, excluding spectrum licences, as reported in the interim consolidated financial statements.
Refer to Note 31 of the interim consolidated financial statements for further information. |
| (3) | The sum of active mobile phone subscribers, connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers
and security subscribers, measured at the end of the respective periods based on information in billing and other source systems. Effective
for the first quarter of 2024, with retrospective application to January 1, 2023, we reduced our mobile phone subscriber base by 283,000
subscribers to remove a subset of our public services customers that are now subject to dynamic pricing auction models. We believe adjusting
our base for these low-margin customers provides a more meaningful reflection of the underlying performance of our mobile phone business
and our focus on profitable growth. As a result of this change, associated operating statistics (ARPU and churn) have also been adjusted.
Effective January 1, 2024, on a prospective basis, we adjusted our TV subscriber base to remove 97,000 subscribers as we have ceased marketing
our Pik TV® product. |
First Quarter 2024 Operating Highlights
TELUS technology solutions (TTech)
| · | TTech
operating revenues (arising from contracts with customers) increased by $15 million or 0.4
per cent in the first quarter of 2024, primarily reflecting increases in mobile network revenue
and fixed data services revenues, as described below. Decreases in mobile equipment and other
service revenues, fixed voice services revenues, fixed equipment and other service revenues,
health services and agriculture and consumer goods services were partial offsets. |
| · | TTech
EBITDA decreased by $2 million or 0.1 per cent in the first quarter of 2024, while TTech
Adjusted EBITDA increased by $66 million or 4.1 per cent, reflecting: (i) broad-based
cost reduction efforts, including workforce reductions, synergies achieved between LifeWorks
and our legacy Health business, and increase in TTech outsourcing to DLCX resulting in competitive benefits given the lower cost structure in DLCX, as well as savings
in marketing, discretionary and administrative costs; (ii) higher mobile network, residential
internet and security revenues, largely driven by subscriber growth; and (iii) growth
in managed, unmanaged and other fixed data services to new and existing business customers.
These factors were partially offset by: (i) lower mobile phone ARPU (ii) merit-based
compensation increases; (iii) a decline in TV and legacy voice margins driven by technological
substitution; (iv) lower equipment margins; (v) lower gains in other income; (vi) lower
health and agriculture and consumer goods revenues from increased client churn; (vii) higher
costs |
| | | related
to the scaling of our digital capabilities, inclusive of increased subscription-based licences,
and cloud usage costs; and (viii) higher bad debt expense. |
Mobile products and services
| · | Mobile network revenue
increased by $49 million or 2.9 per cent in the first quarter of 2024, largely due to growth
in our mobile phone and connected device subscriber base, as well as roaming revenue growth.
These impacts were partly offset by the impact of lower prices in base rate plans and a decline
in overage revenues. |
| · | Mobile equipment and other
service revenues decreased by $36 million or 7.0 per cent in the first quarter of 2024, due
to a reduction in contracted volumes attributable to our efforts to match only on economical
offers due to the aggressive promotional activity in addition to the growing number of customers
taking advantage of bring your own device plan offerings. These were partly offset by the
impact of higher-value smartphones in the sales mix. |
| · | TTech mobile products and
services direct contribution increased by $13 million or 0.8 per cent in the first quarter
of 2024, largely reflecting mobile subscriber growth and higher roaming margins associated
with rising international travel volumes. These were partly offset by the impact of lower
prices in base rate plans and a decline in overage revenues, lower equipment margin contribution
from lower contracted volume and increased competitor-driven discounting and higher amortization
of commissions attributable to rising retail traffic in prior periods. |
| · | Mobile phone ARPU was $59.31
in the first quarter of 2024, a decrease of $1.07 or 1.8 per cent, attributable to the adoption
of base rate plans with lower prices in response to more aggressive marketing and promotional
activities targeting both new and existing customers, which began to intensify in the second
quarter of 2023 and have continued through the first quarter of 2024, and a decline in overage
revenues. These factors were partly offset by higher roaming revenues as a result of increased
travel. |
| · | Mobile phone gross additions
were 376,000 in the first quarter of 2024, an increase of 76,000, driven by growth in postpaid
gross additions in response to ongoing aggressive promotional activity, as discussed above,
and growth in the Canadian population. |
| · | Mobile phone net additions
were 45,000 in the first quarter of 2024, a decrease of 2,000, reflecting a higher mobile
phone churn rate, as described below, partially offset by higher mobile phone gross additions. |
| · | Our mobile phone churn
rate was 1.13 per cent in the first quarter of 2024, compared to 0.90 per cent in the first
quarter of 2023, largely as a result of customer switching decisions in response to more
aggressive marketing and promotional activities, as discussed above. These factors have been
partly mitigated by our continued focus on customer retention through our industry-leading
service and network quality, along with successful promotions and bundled offerings. |
| · | Connected device net additions
were 101,000 in the first quarter of 2024, an increase of 43,000, attributable to growth
in IoT connections from customers in the transportation, smart buildings and healthcare industries. |
Fixed products and services
| · | Fixed data services revenues
increased by $31 million or 2.7 per cent in the first quarter of 2024, driven by an increase
in our internet, security and TV subscribers and growth in managed, unmanaged and other services
to new and existing business customers. Our revenue per internet customer remained consistent
with the prior year, while fixed data services growth was partially offset by lower TV revenue
per customer, reflecting an increased mix of customers selecting smaller TV combination packages
and technological substitution. |
| · | Fixed voice services revenues
decreased by $13 million or 6.8 per cent in the first quarter of 2024, reflecting the ongoing
decline in legacy voice revenues as a result of technological substitution and price plan
changes. Declines were partly mitigated by the success of our bundled product offerings,
our retention efforts and the migration from legacy to IP services offerings. |
| · | Fixed equipment and other
service revenues decreased by $11 million or 8.6 per cent in the first quarter of 2024, largely
due to a reduction in business premises equipment sales, as equipment sales tend to be more
one-time in nature, and in the first quarter of 2023, there were more hardware sales related
to one large contract. |
| · | TTech fixed products and
services direct contribution increased by $7 million or 0.5 per cent in the first quarter
of 2024, reflecting increased internet, business data and security margins, driven by subscriber |
| |
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growth. These were partly offset by declines in TV and legacy voice margins attributable to technological substitution, as well
as lower health and agriculture revenues driven by customer churn. |
| · | Internet net additions
were 30,000 in the first quarter of 2024, a decrease of 5,000, attributable to a higher churn
rate due to macroeconomic and competitive pressures that have continued to impact consumer
purchasing decisions, partly offset by our success in driving strong gross additions in both
the consumer and business markets through diversified product offerings. |
| · | TV net additions were 19,000
in the first quarter of 2024, an increase of 10,000, attributable to our diverse offerings
catered towards the changing needs of our consumers, partly offset by a higher churn rate
due to the same factors impacting internet net additions. |
| · | Security net additions
were 22,000 in the first quarter of 2024, consistent with the prior year, attributable to
offsetting dynamics of higher demand for our bundled offerings and diverse suite of products
and services, and a higher churn rate due to the same factors impacting internet net additions. |
| · | Residential voice net losses
were 8,000 in the first quarter of 2024, consistent with the prior year. |
Health services
| · | Through TELUS Health, we
are leveraging technology to deliver connected solutions and services, improving access to
care and revolutionizing the flow of information while facilitating collaboration, efficiency,
and productivity across the healthcare ecosystem, progressing our vision of transforming
healthcare and empowering people to live healthier lives. |
| · | Health services revenues decreased by $3 million or 0.7 per cent in
the first quarter of 2024, driven by customer churn outpacing the growth of new clients, partly offset by an increase in pharmacy management
software revenue and virtual pharmacy sales. |
| · | At the end of the first
quarter of 2024, 5.9 million members were enrolled in our virtual care services, an increase
of 0.7 million over the past 12 months, attributable to the continued adoption of virtual
solutions that keep Canadians and others safely connected to health and wellness care. |
| · | At the end of the first
quarter of 2024, our healthcare programs covered 71.7 million lives, an increase of 4.7 million
over the past 12 months, mainly reflecting robust growth in our employee and family assistance
programs from both new and existing clients across all of our regions, in addition to continued
demand for virtual solutions. |
| · | Digital health transactions
totalled 159.0 million in the first quarter of 2024, an increase of 10.1 million, largely
driven by increased paid exchange of healthcare data between our health benefits management
system and care providers resulting from higher patient demand for elective health services. |
Agriculture and consumer goods services
| · | Through TELUS Agriculture &
Consumer Goods, we provide innovative digital solutions and actionable data-insights that
better connect the global supply chain, driving more efficient production processes and improving
the safety, quality and sustainability of food and consumer goods. Importantly, these efforts
are also enabling better traceability to the end consumer, further supporting improved food
outcomes. |
| · | Agriculture and consumer
goods services revenues decreased by $2 million or 2.4 per cent, reflecting transient headwinds
and macroeconomic challenges and an increase of customer churn in our program management
offerings for agricultural input manufacturers. These impacts were partly offset by further
diversifying our agriculture and consumer goods solutions and growth in our animal agriculture
pharmacy and research revenues. Our agriculture and consumer goods revenues are largely earned
in U.S. dollars, and in the first quarter of 2024 compared to the first quarter of 2023,
the exchange rate of the Canadian dollar against the U.S. dollar was consistent. |
Digitally-led customer experiences – TELUS International
(DLCX)
| · | DLCX operating revenues
(arising from contracts with customers) decreased by $74 million or 9.8 per cent in the first
quarter of 2024. The decrease was primarily attributable
to lower revenues from a leading social media client and a reduction in revenue in other
industry verticals, notably in eCommerce and fintech and travel and hospitality reflecting
macroeconomic conditions, which were partially offset by growth in services provided to existing
clients, including Google, as well as new clients added since the same period in the prior
year. Changes in foreign currency exchange rates did not materially impact our DLCX revenue
growth. Revenues from contracts denominated in U.S. dollars, European euros and other currencies
will be affected by changes in foreign exchange rates. |
| · | Revenue
from our tech and games industry vertical decreased by $14 million or 3.6 per cent in the
first quarter of 2024, primarily due to lower revenue from a leading social media client,
partially offset by growth in revenue from Google and other clients within this industry
vertical. |
| · | Revenue
from our communications and media industry vertical increased by $9 million or 4.3 per cent
in the first quarter of 2024, driven primarily by more services provided to our TTech segment,
partially offset by lower service revenue from certain other telecommunication clients. |
| · | Revenue
from our eCommerce and fintech industry vertical decreased by $15 million or 14 per cent
in the first quarter of 2024, due to lower service volume demand from a large eCommerce client
as well as certain fintech clients. |
| · | Revenue
from our healthcare industry vertical increased by $12 million or 22 per cent in the first
quarter of 2024, primarily due to additional services provided to the healthcare business
unit of our TTech segment. |
| · | Revenue
from our banking, financial services and insurance industry vertical decreased by $11 million
or 18 per cent in the first quarter of 2024, primarily due to lower service volume demand
from a global financial institution client. |
| · | All
other verticals decreased by $24 million or 21 per cent in the first quarter of 2024 due
to lower revenue across various client accounts notably in the travel and hospitality industry
vertical. |
| · | DLCX
EBITDA increased by $29 million or 17 per cent in the first quarter of 2024 while DLCX Adjusted
EBITDA increased by $21 million or 11 per cent for the same period. The increases in EBITDA
and Adjusted EBITDA was primarily due to other income arising from the revaluation of our
provisions for written put options, and lower share-based compensation expenses, which were
partially offset by lower revenue. |
Corporate Highlights
TELUS makes significant contributions and investments in the communities
where team members live, work and serve and to the Canadian economy on behalf of customers, shareholders and team members. These include:
| · | Paying, collecting and
remitting more than $605 million in the first quarter of 2024 to federal, provincial and
municipal governments in Canada consisting of corporate income taxes, sales taxes, property
taxes, employer portion of payroll taxes and various regulatory fees. Since 2000, we have
remitted approximately $36 billion in these taxes. |
| · | Investing $725 million
in capital expenditures primarily in communities across Canada in the first quarter of 2024
and over $54 billion since 2000. |
| · | Disbursing spectrum renewal
fees of $55 million to Innovation, Science and Economic Development Canada in the first quarter
of 2024. Since 2000, our total tax and spectrum remittances to federal, provincial and municipal
governments in Canada have totalled more than $44 billion. |
| · | Spending $2.4 billion in
total operating expenses in the first quarter of 2024, including goods and services purchased
of approximately $1.2 billion. Since 2000, we have spent $161 billion and $109 billion, respectively,
in these areas. |
| · | Generating a total team
member payroll of $1 billion in the first quarter of 2024, including wages and other employee
benefits, and payroll taxes of $79 million. Since 2000, total team member payroll totals
$62 billion. |
| · | Returning approximately
$554 million in dividends declared through April 2024 to individual shareholders, mutual
fund owners, pensioners and institutional investors. Since 2004, we have returned more than
$25 billion to shareholders through our dividend and share purchase programs, including over
$20 billion in dividends and $5.2 billion in share repurchases, representing more than $17
per share. |
Dividend Declaration
The TELUS Board of Directors declared a quarterly dividend of $0.3891
per share on the issued and outstanding Common Shares of the Company payable on July 2, 2024 to holders of record at the close of business
on June 10, 2024. This quarterly dividend reflects an increase of 7.0 per cent from the $0.3636 per share dividend declared one year earlier
and consistent with our multi-year dividend growth program. When a dividend payment date falls on a weekend or holiday, the payment shall
be made on the next succeeding day that is a business day.
Community Highlights
Giving Back to Our Communities
| · | Currently, we have 19 TELUS
Community Boards operating in Canada and around the world. Our Community Boards entrust local
leaders to make recommendations on the allocation of grants in their communities. These grants
support registered charities that offer health, education or technology programs to help
youth thrive. Since 2005, our 19 TELUS Community Boards and TELUS Friendly Future Foundation®
(the Foundation) have supported more than 33 million youth in-need in Canada and around
the world by granting over $126 million in cash donations to more than 10,000 initiatives. |
| · | Working
in close collaboration with our 13 Canadian TELUS Community Boards, the Foundation provides
grants to charities that promote education, health and well-being for youth across the country.
Additionally, the Foundation provides bursaries for post-secondary students who are facing
financial barriers and are committed to making a difference in their communities through
the TELUS Student Bursary program. During the first quarter of 2024, the Foundation supported
265,000 youth by granting $3.2 million to more than 200 Canadian registered charities. Since
its inception in 2018, the Foundation has provided $50 million in cash donations to our communities,
helping 15.4 million youth reach their full potential. For more information about the TELUS
Student Bursary program, please visit friendlyfuture.com/bursary. |
Empowering Canadians with Connectivity
| · | Throughout the first quarter
of 2024, we continued to leverage our Connecting for Good® programs to support
marginalized individuals by enhancing their access to both technology and healthcare, as
well as our TELUS Wise® program to improve digital literacy and online safety
knowledge. Since the launch of these programs, they have provided support for over 1.2 million
individuals. |
| ○ | During the quarter, we welcomed more than 2,500 new households
to our Internet for Good® program. Since we launched the program in 2016,
we have connected over 57,600 households and 182,400 low-income family members and seniors,
persons in need who are living with disabilities, government-assisted refugees and youth
leaving foster care with low-cost, high-speed internet service. |
| ○ | Our Mobility for Good® program offers free or low-cost
smartphones and mobile phone rate plans to all youth aging out of foster care and to low-income
seniors receiving the Guaranteed Income Supplement across Canada. During the quarter, we
added over 1,400 youth and seniors, as well as Indigenous women at risk of or surviving violence,
government-assisted refugees and other marginalized individuals to the program. Since we
launched Mobility for Good in 2017, the program has provided support for more than 53,700
people. |
| ○ | Our Health for Good® mobile health clinics facilitated
15,000 patient visits during the first three months of 2024. Since the program’s inception,
we have enabled 215,000 cumulative patient visits in 25 communities across Canada, bringing
primary and mental healthcare to individuals experiencing homelessness. |
| ○ | During the quarter, our Tech for Good® program provided
access to a personalized one-on-one assessment, recommendations and training on mobile devices,
computers, laptops and related assistive technology and/or access to discounted mobile plans
for over 850 Canadians living with disabilities, helping them improve their independence
and quality of life. Since the program’s inception in 2017, we have supported more
than 9,600 individuals in Canada who are living with disabilities through the program and/or
the TELUS Wireless Accessibility Discount. |
| ○ | During the quarter, more than 61,800 individuals in Canada and
around the world participated in virtual TELUS Wise workshops and events to improve digital
literacy and online safety, bringing total cumulative participation to over 740,000 individuals
since the program launched in 2013. |
Investing in Social Impact
| · | During the quarter, TELUS
Pollinator Fund for Good® led an equity investment round in U.K.-based Waymap,
a technology company offering an accessibility-first, highly accurate navigation app that
works outdoors, indoors and even deep underground. Since its inception in 2020, the Fund
has invested in over 30 socially innovative companies, with 40 per cent led by women and
50 per cent led by Indigenous or racialized founders. |
Global Social Capitalism awards and recognition
| · | In January 2024, we
were included in the Corporate Knights 2024 Global 100 Most Sustainable Corporations in the
World; this was the 12th time we have been included since inception of the recognition in
2005. |
| · | In January 2024, we
were recognized as the highest-valued telecom brand in Canada. In Brand Finance's Global
500 2024 most valuable brands report, it valued our 2024 brand at US$8.6 billion (C$11.7
billion), up 12.4 per cent year-over-year, moving up 37 spots in its ranking and representing
our highest third-party brand valuation ever. |
| · | We were recognized by Mediacorp
Canada Inc. during the quarter as one of Canada’s Top Employers for Young People (2024)
in January and Canada’s Best Diversity Employers (2024) in March. |
Access to Quarterly results information
Interested investors, the media and
others may review this quarterly earnings news release, management’s discussion and analysis, quarterly results slides, audio and
transcript of the investor webcast call, supplementary financial information at telus.com/investors.
TELUS’ first quarter 2024 conference
call is scheduled for Thursday, May 9, 2024 at 1:30 pm ET (10:30 am PT) and will feature a presentation followed by a question
and answer period with investment analysts. Interested parties can access the webcast at telus.com/investors. An audio
recording will be available approximately 60 minutes after the call until June 9, 2024 at 1-855-201-2300. Please quote conference
access code 13252# and playback access code 0114441#. An archive of the webcast will also be available at telus.com/investors
and a transcript will be posted on the website within a few business days.
Caution regarding forward-looking statements
This news release contains forward-looking statements about expected
events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, we, us
and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.
Forward-looking statements include any statements that do not refer
to historical facts. They include, but are not limited to, statements relating to our objectives and our strategies to achieve those
objectives, our expectations regarding trends in the telecommunications industry (including demand for data and ongoing subscriber base
growth), and our financing plans (including our multi-year dividend growth program). Forward-looking statements are typically identified
by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional
verbs such as aim, anticipate, believe, could, expect, intend, may, plan, predict,
seek, should, strive and will. These statements are made pursuant to the “safe harbour” provisions
of applicable securities laws in Canada and the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements are subject to inherent
risks and uncertainties and are based on assumptions, including assumptions about future economic conditions and courses of action. These
assumptions may ultimately prove to have been inaccurate and, as a result, our actual results or other events may differ materially from
expectations expressed in or implied by the forward-looking statements.
The assumptions for our 2024 outlook, as described in Section 9
in our 2023 annual MD&A, remain the same, except for the following:
| · | Our revised estimates
for 2024 economic growth in Canada, B.C., Alberta, Ontario and Quebec are 1.1%, 0.8%, 1.9%,
0.8% and 0.6%, respectively (compared to 0.6%, 0.4%, 1.1%, 0.4% and 0.4%, respectively, as
reported in our 2023 annual MD&A). |
| · | Our revised estimates
for 2024 annual inflation rates in B.C., Alberta, Ontario and Quebec are 2.5%, 2.6%, 2.6%
and 2.6%, respectively (compared to 2.4%, 2.4%, 2.4% and 2.5%, respectively, as reported
in our 2023 annual MD&A). |
| · | Our revised estimates
for 2024 annual unemployment rates in Canada, B.C., Alberta, Ontario and Quebec are 6.3%,
6.0%, 6.5%, 7.0% and 5.4%, respectively (compared to 6.4%, 6.1%, 6.3%, 6.7% and 5.5%, respectively,
as reported in our 2023 annual MD&A). |
| · | Our revised estimates
for 2024 annual rates of housing starts on an unadjusted basis in Canada, B.C., Alberta,
Ontario and Quebec are 237,000 units, 46,000 units, 40,000 units, 86,000 units and 43,000
units, respectively (compared to 234,000 units, 42,000 units, 36,000 units, 79,000 units
and 46,000 units, respectively, as reported in our 2023 annual MD&A). |
| · | While Innovation,
Science and Economic Development Canada (ISED) had initially announced its intention to hold
its millimetre wave spectrum auction in 2024, it is possible that the auction may be deferred
until after 2024. We do not expect to be materially impacted should the timing of the auction
be after 2024. |
The extent to which the economic growth estimates
affect us and the timing of their impact will depend upon the actual experience of specific sectors of the Canadian economy.
Risks and uncertainties that could cause actual
performance or other events to differ materially from the forward-looking statements made herein and in other TELUS filings include,
but are not limited to, the following:
| · | Regulatory matters.
We operate in a number of highly regulated industries and are therefore subject to a wide
variety of laws and regulations domestically and internationally. Policies and practices
of elected officials and regulatory decisions, reviews and government activity may have strategic,
operational and/or financial implications (including on revenue and free cash flow). |
Risks and uncertainties include:
| ○ | changes to our regulatory
regime or the outcomes of proceedings, cases or inquiries relating to its application, including
but not limited to those set out in Section 9.1 Communications industry regulatory
developments and proceedings in our first quarter 2024 MD&A; |
| ○ | the potential for government
to allow consolidation of competitors in our industry or conversely for government to intervene
with the intent of further increasing competition, for example, through mandated wholesale
access, including to fibre-to-the-premises (FTTP) facilities; |
| ○ | the potential for additional
government intervention on pricing, including internet overage charges, roaming fees and
other service charges; |
| ○ | changes to federal or provincial
legislation or its application (including consumer protection legislation); |
| ○ | the introduction of new privacy
legislation by the federal, provincial or territorial governments or in non-Canadian jurisdictions
where we do business that could materially expand or alter the scope of consumer privacy
rights, include significant administrative monetary penalties and a private right of action,
and implement a new regulatory regime for the use of artificial intelligence (AI) in the
private sector, with significant enforcement powers; |
| ○ | potential threats to unitary
federal regulatory authority over communications in Canada; |
| ○ | potential threats to the CRTC’s
ability to enforce competitive safeguards such as the Standstill Rule and the Wholesale
Code, which aim to ensure the fair treatment by vertically integrated firms of rival
competitors operating as both broadcasting distributors and programming services; |
| ○ | amendments to the Competition
Act and/or regulatory action by the Competition Bureau or other regulatory agencies; |
| ○ | spectrum allocation and compliance
with licences, including our compliance with licence conditions, changes to spectrum licence
fees, spectrum policy determinations such as restrictions on the purchase, sale, subordination,
use and transfer of spectrum licences, the cost and availability of spectrum and timing of
spectrum allocation, and ongoing and future consultations and decisions on spectrum licensing
and policy frameworks, auctions and allocation; |
| ○ | draft legislation permitting
the government to restrict the use in telecommunications networks of equipment provided by
specified companies for the purpose of securing the Canadian telecommunications system, which
the government has initially proposed to include Huawei and ZTE; |
| ○ | draft legislation imposing
new cybersecurity reporting requirements; the request by the Minister of Innovation, Science
and Industry to telecommunications service providers, including TELUS, |
| |
|
to improve network resiliency, along with CRTC proceedings to investigate network reliability and resiliency; |
| ○ | restrictions on non-Canadian
ownership and control of the common shares of TELUS Corporation (Common Shares) and the ongoing
monitoring of, and compliance with, such restrictions; |
| ○ | unanticipated changes to the
current copyright regime, which could impact obligations for internet service providers or
broadcasting undertakings; |
| ○ | our ability to comply with
complex and changing regulation of the healthcare, virtual care and medical devices industries
in the jurisdictions in which we operate, including as an operator of health clinics; and
risks related to the quality of care and provision of insured/uninsured services; and |
| ○ | our ability to comply with,
or facilitate our clients’ compliance with, numerous, complex and sometimes conflicting
legal regimes, both domestically and internationally. |
| · | Competitive environment.
Competitor expansion, activity and intensity (pricing, including discounting, bundling),
as well as non-traditional competition, disruptive technology and disintermediation, may
alter the nature of the market and impact our market share and financial results (including
revenue and free cash flow). |
Risks and uncertainties include:
| ○ | our ability to continue to
retain customers by providing a customer service experience that meets or exceeds expectations,
a range of relevant products and services and a reliable state-of-the-art network; |
| ○ | the intensity of competition,
including aggressive promotional offers and device financing strategies and the ability of
industry competitors to offer bundled and/or discounted services; |
| ○ | competition across all services
with communications companies and virtual broadcast distribution undertakings and other over-the-top
(OTT) services, which, among other things, places pressures on current and future average
revenue per subscriber per month (ARPU), cost of acquisition, cost of retention and churn
rates for all services; |
| ○ | consolidation, mergers and acquisitions of industry competitors
(including the acquisition of Shaw by Rogers and associated assets divested to Videotron),
as well as any related regulatory actions; |
| ○ | regional operators leveraging
wholesale access regulations to enter the market; |
| ○ | low-earth-orbit satellite
internet services becoming available in urban areas; |
| ○ | our ability to obtain and
offer content on a timely basis across multiple devices on mobile and TV platforms at a reasonable
cost as content costs per unit continue to grow; |
| ○ | vertical integration in the
broadcasting industry resulting in competitors owning broadcast content services, and timely
and effective enforcement of related regulatory safeguards; |
| ○ | TI’s ability to compete
with professional services companies that offer consulting services, information technology
companies with digital capabilities, and traditional contact centre and business process
outsourcing companies that are expanding their capabilities to offer higher-margin and higher-growth
digital services including artificial intelligence (AI)-enabled products and services; |
| ○ | in our TELUS Health business, our ability to compete with other
providers of employee and family assistance programs, benefits administration, electronic
medical records and pharmacy management products, claims adjudicators, systems integrators
and health service providers, including competitors with a vertically integrated mix of health
services delivery, IT solutions and related services, global providers that could achieve
expanded Canadian footprints, and providers of virtual healthcare services, preventative
health services and personal emergency response services; and |
| ○ | in our TELUS Agriculture &
Consumer Goods business, our ability to compete with focused software and IoT competitors. |
| · | Technology.
Consumer adoption of alternative technologies and changing customer expectations have
the potential to impact our revenue streams and customer churn rates. |
Risks and uncertainties include:
| ○ | reduced utilization and increased
commoditization of traditional fixed voice services (local and long distance) resulting from
impacts of OTT applications and mobile substitution; |
| ○ | a declining overall market
for TV services, resulting in part from content piracy and signal theft, a rise in OTT direct-to-consumer
video offerings and virtual multichannel video programming distribution platforms; |
| ○ | the increasing number of households
with only mobile and/or internet-based telephone services; |
| ○ | potential decline in ARPU
as a result of, among other factors, substitution by messaging and OTT applications; substitution
by increasingly available Wi-Fi services; |
| ○ | disruptive technologies, such
as OTT IP services, including software-defined networks in the business market that may displace
or cause us to reprice our existing data services, and self-installed technology solutions; |
| ○ | any failure to innovate, maintain
technological advantages or respond effectively and in a timely manner to changes in technology; |
| ○ | high subscriber demand for
data that challenges wireless networks and spectrum capacity levels and may be accompanied
by increases in delivery cost; |
| ○ | the roll-out, anticipated
benefits and efficiencies, and ongoing evolution of wireless broadband technologies and systems; |
| ○ | availability of resources
and our ability to build out adequate broadband capacity; |
| ○ | our reliance on wireless network
access agreements, which have facilitated our deployment of mobile technologies; |
| ○ | our choice of suppliers and
those suppliers’ ability to maintain and service their product lines, which could affect
the success of upgrades to, and evolution of, technology that we offer; |
| ○ | supplier limitations and concentration
and market power for products such as network equipment, TELUS TV and mobile handsets; |
| ○ | our expected long-term need
to acquire additional spectrum capacity through future spectrum auctions and from third parties
to address increasing demand for data, and our ability to utilize spectrum we acquire; |
| ○ | deployment and operation of
new fixed broadband network technologies at a reasonable cost and the availability and success
of new products and services to be rolled out using such network technologies; |
| ○ | network reliability and change
management; and |
| ○ | our deployment of self-learning
tools and automation, which may change the way we interact with customers. |
| · | Security and data
protection. Our ability to detect and identify potential threats and vulnerabilities
depends on the effectiveness of our security controls in protecting our infrastructure and
operating environment, and our timeliness in responding to attacks and recovering business
operations. A successful attack may impede the operations of our network or lead to the unauthorized
interception, destruction, use or dissemination of customer, team member or business information. |
| · | Generative AI (GenAI).
GenAI exposes us to numerous risks including risks related to the responsible use of AI,
data privacy and cybersecurity, and the possibility that our use of AI may produce inaccurate
or inappropriate content or create negative perceptions among companies and regulators that
could affect demand for our services. |
| · | Climate and the Environment.
Natural disasters, pandemics, disruptive events and climate change may impact our operations,
customer satisfaction and team member experience. |
Risks and uncertainties include:
| ○ | loss of employee work time
as a result of illness or injury; |
| ○ | public concerns related to
radio frequency emissions; |
| ○ | climate-related risks (such
as extreme weather events and other natural hazards); |
| ○ | waste and waste recycling; |
| ○ | risks relating to fuel systems
on our properties and the environmental impact of our network including legacy network equipment;
and |
| ○ | changing government and public
expectations regarding environmental matters and our responses. |
Our goals to achieve carbon neutrality and reduce our greenhouse
gas (GHG) emissions in our operations are subject to our ability to identify, procure and implement solutions to reduce energy consumption
and adopt cleaner sources of energy, our ability to identify and make suitable investments in renewable energy, including in the form
of virtual power purchase agreements, and our ability to continue to realize significant absolute reductions in energy use and the resulting
GHG emissions in our operations.
| · | Operational performance
and business combination. Investments and acquisitions present opportunities to
expand our operational scope, but may expose us to new risks. We may be unsuccessful in gaining
market traction/share and realizing benefits, and integration efforts may divert resources
from other priorities. |
Risks and uncertainties include:
| ○ | our ability to identify suitable
candidates for partnerships or strategic transactions and our ability to complete these transactions; |
| ○ | our reliance on legacy systems
and our ability to implement and support new products and services and business operations
in a timely manner; |
| ○ | our ability to manage the
requirements of large enterprise deals; |
| ○ | our ability to implement effective
change management for system replacements and upgrades, process redesigns, cost efficiency
programs and business integrations (such as our ability in a timely manner to successfully
complete and integrate acquisitions into our operations and culture, complete divestitures
or establish partnerships and realize expected strategic benefits, including those following
compliance with any regulatory orders); |
| ○ | our ability to identify and
manage new risks inherent in new service offerings that we may provide, including as a result
of acquisitions, which could result in damage to our brand, our business in the relevant
area or as a whole, and additional exposure to litigation or regulatory proceedings; |
| ○ | our ability to effectively
manage the growth of our infrastructure and integrate new team members; |
| ○ | our reliance on third-party
cloud-based computing services to deliver our IT services; and |
| ○ | economic, political and other
risks associated with doing business globally (including war and other geopolitical developments),
as we have assets and operations located outside Canada and the U.S. |
| · | Customer service.
Our service delivery directly impacts customer experience, customer churn rates, and likelihood
to recommend outcomes. We may not be able to deliver the excellence our customers expect
or maintain our competitive advantage in this area. |
Risks and uncertainties include:
| ○ | our ability to successfully
implement cost reduction initiatives (including efficiency and effectiveness programs, business
integrations, business product simplification, business process automation and outsourcing,
offshoring, reorganizations, procurement initiatives, and real estate rationalization). |
| · | Our systems and processes.
Systems and technology innovation, maintenance and management may impact our IT systems
and network reliability, as well as our operating costs. |
Risks and uncertainties include:
| ○ | our ability to maintain customer
service and operate our network in the event of human error or human-caused threats, such
as cyberattacks and equipment failures that could cause various degrees of network outages; |
| ○ | technical disruptions and
infrastructure breakdowns; |
| ○ | delays and rising costs, including
as a result of government restrictions or trade actions; and |
| ○ | the completeness and effectiveness
of business continuity and disaster recovery plans and responses. |
| · | Our team.
The rapidly evolving and highly competitive nature of our markets and operating environment,
along with the globalization and evolving demographic profile of our workforce, and the effectiveness
of our internal training, development, succession and health and well-being programs, may
impact our ability to attract, develop and retain team members with the skills required to
meet the changing needs of our customers and our business. There may be greater physical
and mental health challenges faced by team members (and their families) as a result of the
pandemic, and the effect of other significant change initiatives at the organization may
result in the loss of key team members through short-term and long-term disability. |
Risks and uncertainties include:
| ○ | recruitment, retention and
appropriate training in a highly competitive industry (including retention of team members
leading recently acquired businesses in emerging areas of our business); |
| ○ | the level of our employee
engagement and impact on engagement or other aspects of our business or any unresolved collective
agreements; |
| ○ | our ability to maintain our
unique culture and team member engagement as we grow and implement organizational changes
and cost reduction initiatives; |
| ○ | the risk that certain independent
contractors in our business could be classified as employees; and |
| ○ | the physical and mental health
of our team, which are critical to engagement and productivity. |
| · | Suppliers.
We may be impacted by supply chain disruptions and lack of resiliency in relation to global
or local events. Dependence on a single supplier for products, components, service delivery
or support may impact our ability to efficiently meet constantly changing and rising customer
expectations while maintaining quality of service. |
| · | Real estate matters.
Real estate investments are exposed to possible financing risks and uncertainty related
to future demand, occupancy and rental rates, especially following the pandemic. Future real
estate developments may not be completed on budget or on time and may not obtain lease commitments
as planned. |
| · | Financing, debt and
dividends. Our ability to access funding at optimal pricing may be impacted by
general market conditions and changing assessments in the fixed-income and capital markets
regarding our ability to generate sufficient future cash flow to service our debt. Our current
intention to pay dividends to shareholders could constrain our ability to invest in our operations
to support future growth. |
| · | Risks and uncertainties
include: |
| ○ | Our ability to use equity
as consideration in business acquisitions is impacted by stock market valuations of TELUS
Common Shares and TI subordinate voting shares. |
Our capital expenditure levels and potential outlays for
spectrum licences in auctions or purchases from third parties affect and are affected by: our broadband initiatives, including connecting
more homes and businesses directly to fibre; our ongoing deployment of newer mobile technologies, including wireless small cells that
can improve coverage and capacity; investments in network technology required to comply with laws and regulations relating to the security
of cyber systems, including bans on the products and services of certain vendors; investments in network resiliency and reliability;
the allocation of resources to acquisitions and future spectrum auctions held by Innovation, Science and Economic Development Canada
(ISED), including the millimetre wave spectrum auction, which may commence after 2024. Our capital expenditure levels could be impacted
if we do not achieve our targeted operational and financial results or if there are changes to our regulatory environment.
Lower than planned free cash flow could constrain our ability
to invest in operations, reduce leverage or return capital to shareholders. This program may be affected by factors such as the competitive
environment, fluctuations in the Canadian economy or the global economy, our earnings and free cash flow (which may be affected by restructuring
and other costs resulting from initiatives such as post-acquisition integration and cost efficiency programs), our levels of capital
expenditures and spectrum licence purchases, acquisitions, the management of our capital structure, regulatory decisions and developments,
and business continuity events. Quarterly dividend decisions are subject to assessment and determination by our Board of Directors based
on our financial position and outlook. There can be no assurance that our dividend growth program will be maintained through 2025 or
renewed.
Factors that may affect TI’s financial performance
are described in TI’s public filings available on SEDAR+ and EDGAR. TI may choose to publicize targets or provide other guidance
regarding its
business and it may not achieve such targets. Failure to
meet these targets could affect TELUS’ ability to achieve targets for the organization as a whole and could result in a decline
in the trading price of the TI subordinate voting shares or the TELUS Common Shares or both.
| · | Tax matters.
Complexity of domestic and foreign tax laws, regulations and reporting requirements applying
to TELUS and our international operating subsidiaries may impact financial results, effective
governance of tax considerations and compliance. International acquisitions and expansion
of operations heighten our exposure to multiple forms of taxation. |
Risks and uncertainties include:
| ○ | interpretation of complex
domestic and foreign tax laws by the relevant tax authorities that may differ from our interpretations; |
| ○ | the timing and character of
income and deductions, such as depreciation and operating expenses; |
| ○ | tax credits or other attributes; |
| ○ | changes in tax laws, including
tax rates; |
| ○ | tax expenses that are materially
different than anticipated, including the taxability of income and deductibility of tax attributes
or retroactive application of new legislation; |
| ○ | elimination of income tax
deferrals; and |
| ○ | changes to the interpretation
of tax laws, including those resulting from changes to applicable accounting standards or
the adoption of more aggressive auditing practices by tax authorities, tax reassessments
or adverse court decisions impacting the tax payable by us. |
| · | The economy.
Changing global economic conditions, including a potential recession and alternating expectations
about inflation, as well as our effectiveness in monitoring and revising growth assumptions
and contingency plans, may impact the achievement of our corporate objectives, our financial
results (including free cash flow), and our defined benefit pension plans. |
Risks and uncertainties include:
| ○ | the state of the economy in
Canada, which may be influenced by economic and other developments outside of Canada, including
potential outcomes of future policies and actions of foreign governments; |
| ○ | expectations regarding future
interest rates; |
| ○ | effects of volatility in oil
prices; |
| ○ | effects of low business spending
(such as reducing investments and cost structure); |
| ○ | pension investment returns
and factors affecting pension benefit obligations, funding and solvency discount rates; |
| ○ | fluctuations in exchange rates
of the currencies of various countries in which we operate; |
| ○ | sovereign credit ratings and
effects on the cost of borrowing; |
| ○ | the impact of tariffs on trade
between Canada and the United States; and |
| ○ | global implications of the
dynamics of trade relationships among major world economies. |
| · | Litigation and legal
matters. Complexity of, and compliance with, laws, regulations, commitments and
expectations may have a financial and reputational impact. |
Risks and uncertainties include:
| ○ | our ability to successfully
respond to investigations and regulatory proceedings; |
| ○ | our ability to defend against
existing and potential claims and lawsuits (including intellectual property infringement
claims and class actions based on consumer claims, data, privacy or security breaches and
secondary market liability), or our ability to negotiate and exercise indemnity rights or
other protections in respect of such claims and lawsuits; and |
| ○ | the complexity of legal compliance
in domestic and foreign jurisdictions, including compliance with competition, anti-bribery
and foreign corrupt practices laws. |
These risks and assumptions underlying our forward-looking statements
are described in additional detail in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings
and Section 10 Risks and risk management in our 2023 annual MD&A. Those descriptions are incorporated by reference
in this cautionary statement but are not intended to be a complete list of the risks that could affect the Company or of our assumptions.
Many of these risks and uncertainties are beyond our control or outside
of our current expectations or knowledge. Additional risks and uncertainties that are not currently known to us or that we currently
deem to be immaterial may also have a material adverse effect on our financial position, financial performance, cash flows, business
or reputation. Except as otherwise indicated in this document, the forward-looking statements made herein do not reflect the potential
impact of any non-recurring or special items or any mergers, acquisitions, dispositions or other business combinations or transactions
that may be announced or that may occur after the date of this document.
Readers are cautioned not to place undue reliance on forward-looking
statements. Forward-looking statements in this document describe our expectations, and are based on our assumptions, as at the date of
this document and are subject to change after this date. Except as required by law, we disclaim any intention or obligation to update
or revise any forward-looking statements.
This cautionary statement qualifies all of the forward-looking statements
in this document.
Non-GAAP and other specified financial measures
We have issued guidance on and report certain non-GAAP measures that
are used to evaluate the performance of TELUS, as well as to determine compliance with debt covenants and to manage our capital structure.
As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other
issuers. For certain financial metrics, there are definitional differences between TELUS and TELUS International reporting. These differences
largely arise from TELUS International adopting definitions consistent with practice in its industry. Securities regulations require
such measures to be clearly defined, qualified and reconciled with their nearest GAAP measure. Certain of the metrics do not have generally
accepted industry definitions.
Adjusted Net income and adjusted
basic earnings per share (EPS): These are non-GAAP measures that do not have any standardized meaning prescribed by IFRS-IASB
and are therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted Net income excludes the effects
of restructuring and other costs, income tax-related adjustments, other equity (income) losses related to real estate joint ventures,
long-term debt prepayment premium, unrealized changes in virtual power purchase agreements forward element, and other adjustments (identified
in the following tables). Adjusted basic EPS is calculated as adjusted Net income divided by the basic weighted-average number of Common
Shares outstanding. These measures are used to evaluate performance at a consolidated level and exclude items that, in management’s
view, may obscure underlying trends in business performance or items of an unusual nature that do not reflect our ongoing operations.
They should not be considered alternatives to Net income and basic EPS in measuring TELUS’ performance.
Reconciliation of adjusted Net income
| | |
Three months
ended
March 31 | |
| C$ and in millions | |
2024 | |
2023 | |
| Net income attributable to Common Shares | |
| 127 | |
| 217 | |
| Add (deduct) amounts of net of amount attributable
to non-controlling interests: | |
| | |
| | |
| Restructuring and other costs | |
| 213 | |
| 149 | |
| Tax effect of restructuring and other
costs | |
| (48 | ) |
| (32 | ) |
| Real estate rationalization-related
restructuring impairments | |
| 68 | |
| 52 | |
| Tax effect of real estate rationalization-related
restructuring impairments | |
| (18 | ) |
| (14 | ) |
| Income tax-related adjustments | |
| — | |
| 1 | |
| Other equity income related to real
estate joint ventures | |
| — | |
| (1 | ) |
| Unrealized changes in virtual power
purchase agreements forward element | |
| 66 | |
| 19 | |
| Tax effect of unrealized changes in
virtual power purchase agreements forward element | |
| (18 | ) |
| (5 | ) |
| Adjusted Net income | |
| 390 | |
| 386 | |
Reconciliation of adjusted basic EPS
| | |
Three months
ended
March 31 | |
| C$ | |
2024 | |
2023 | |
| Basic EPS | |
| 0.09 | |
| 0.15 | |
| Add (deduct) amounts of net of amount attributable to non-controlling
interests: | |
| | |
| | |
| Restructuring and other costs, per share | |
| 0.14 | |
| 0.10 | |
| Tax effect of restructuring and other
costs, per share | |
| (0.03 | ) |
| (0.02 | ) |
| Real estate rationalization-related
restructuring impairments, per share | |
| 0.04 | |
| 0.04 | |
| Tax effect of real estate rationalization-related
restructuring impairments, per share | |
| (0.01 | ) |
| (0.01 | ) |
| Unrealized changes in virtual power
purchase agreements forward element, per share | |
| 0.04 | |
| 0.01 | |
| Tax effect of unrealized changes in
virtual power purchase agreements forward element, per share | |
| (0.01 | ) |
| — | |
| Adjusted basic EPS | |
| 0.26 | |
| 0.27 | |
EBITDA (earnings before
interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used
to evaluate performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as
an indicator of a company’s operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should
not be considered as an alternative to Net income in measuring TELUS’ performance, nor should it be used as a measure of cash flow.
EBITDA as calculated by TELUS is equivalent to Operating revenues and other income less the total of Goods and services purchased expense
and Employee benefits expense.
We also calculate Adjusted EBITDA to exclude items of an unusual
nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should
not be included in an assessment of our ability to service or incur debt.
EBITDA
and Adjusted EBITDA reconciliations
| Three-month periods ended | |
TTech | | |
DLCX | | |
Eliminations3 | | |
Total | |
| March 31 (C$ millions) | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Net income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 140 | | |
| 224 | |
| Financing costs | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 394 | | |
| 320 | |
| Income taxes | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 41 | | |
| 55 | |
| EBIT | |
| 494 | | |
| 536 | | |
| 91 | | |
| 63 | | |
| (10 | ) | |
| — | | |
| 575 | | |
| 599 | |
| Depreciation | |
| 644 | | |
| 597 | | |
| 46 | | |
| 43 | | |
| — | | |
| | | |
| 690 | | |
| 640 | |
| Amortization of intangible assets | |
| 313 | | |
| 320 | | |
| 60 | | |
| 62 | | |
| — | | |
| — | | |
| 373 | | |
| 382 | |
| EBITDA1,2 | |
| 1,451 | | |
| 1,453 | | |
| 197 | | |
| 168 | | |
| (10 | ) | |
| — | | |
| 1,638 | | |
| 1,621 | |
| Add restructuring and other costs included
in EBITDA | |
| 208 | | |
| 141 | | |
| 10 | | |
| 18 | | |
| — | | |
| — | | |
| 218 | | |
| 159 | |
| EBITDA – excluding restructuring and other costs | |
| 1,659 | | |
| 1,594 | | |
| 207 | | |
| 186 | | |
| (10 | ) | |
| — | | |
| 1,856 | | |
| 1,780 | |
| Other equity income related to real estate joint ventures | |
| — | | |
| (1 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1 | ) |
| Adjusted EBITDA1,2 | |
| 1,659 | | |
| 1,593 | | |
| 207 | | |
| 186 | | |
| (10 | ) | |
| — | | |
| 1,856 | | |
| 1,779 | |
Adjusted EBITDA less capital expenditures
is calculated for our reportable segments, as it represents a simple cash flow view that may be more comparable to other issuers.
Adjusted
EBITDA less capital expenditures reconciliations
| Three-months ended | |
TTech | | |
DLCX | | |
Eliminations3 | | |
Total | |
| March 31 (C$ millions) | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Adjusted
EBITDA1,2 | |
| 1,659 | | |
| 1,593 | | |
| 207 | | |
| 186 | | |
| (10 | ) | |
| — | | |
| 1,856 | | |
| 1,779 | |
| Capital expenditures | |
| (707 | ) | |
| (693 | ) | |
| (26 | ) | |
| (20 | ) | |
| 8 | | |
| — | | |
| (725 | ) | |
| (713 | ) |
| Adjusted
EBITDA less capital expenditures1 | |
| 952 | | |
| 900 | | |
| 181 | | |
| 166 | | |
| (2 | ) | |
| — | | |
| 1,131 | | |
| 1,066 | |
| (1) | See Section 11.1 Non-GAAP and other specified financial measures
in our first quarter 2024 MD&A for additional details. |
| (2) | For certain financial metrics, there are definitional differences between
TELUS and TELUS International reporting. These differences largely arise from TELUS International
adopting definitions consistent with practice in its industry. |
| (3) | See Intersegment revenues in Section 5.5 of our first
quarter 2024 MD&A for additional details. |
Free cash flow: We report
this measure as a supplementary indicator of our operating performance, and there is no generally accepted industry definition of free
cash flow. It should not be considered as an alternative to the measures in the condensed interim consolidated statements of cash flows.
Free cash flow excludes certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets
and other sources and uses of cash, as found in the condensed interim consolidated statements of cash flows. It provides an indication
of how much cash generated by operations is available after capital expenditures that may be used to, among other things, pay dividends,
repay debt, purchase shares or make other investments. We exclude impacts of accounting standards that do not impact cash, such as IFRS
15 and IFRS 16. Free cash flow may be supplemented from time to time by proceeds from divested assets or financing activities.
Free
cash flow calculation
| | |
Three
months ended
March 31 | |
| C$
and in millions | |
2024 | | |
2023 | |
| EBITDA | |
| 1,638 | | |
| 1,621 | |
| Restructuring
and other costs, net of disbursements | |
| (11 | ) | |
| 85 | |
| Effects
of contract asset, acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment device financing | |
| 34 | | |
| 32 | |
| Effects
of lease principal (IFRS 16 impact) | |
| (178 | ) | |
| (130 | ) |
| Items
from the condensed interim statements of cash flows: | |
| | | |
| | |
| Share-based
compensation, net | |
| 27 | | |
| 43 | |
| Net
employee defined benefit plans expense | |
| 17 | | |
| 15 | |
| Employer
contributions to employee defined benefit plans | |
| (8 | ) | |
| (9 | ) |
| Loss
from equity accounted investments and other | |
| 5 | | |
| — | |
| Interest
paid | |
| (334 | ) | |
| (286 | ) |
| Interest
received | |
| 11 | | |
| 4 | |
| Capital
expenditures1 | |
| (725 | ) | |
| (713 | ) |
| Free
cash flow before income taxes | |
| 476 | | |
| 662 | |
| Income
taxes paid, net of refunds | |
| (80 | ) | |
| (127 | ) |
| Free
cash flow | |
| 396 | | |
| 535 | |
Free
cash flow reconciliation with Cash provided by operating activities
| | |
Three
months ended
March 31 | |
| C$
and in millions | |
2024 | | |
2023 | |
| Free
cash flow | |
| 396 | | |
| 535 | |
| Add
(deduct): | |
| | | |
| | |
| Capital
expenditures1 | |
| 725 | | |
| 713 | |
| Effect
of lease principal | |
| 178 | | |
| 130 | |
| Net
change in non-cash operating working capital not included in receding line items and other individually immaterial items included
in Net income neither providing nor using cash | |
| (349 | ) | |
| (617 | ) |
| Cash
provided by operating activities | |
| 950 | | |
| 761 | |
| (1) | Refer to Note 31 of the interim consolidated financial statements
for further information. |
Mobile phone average revenue per
subscriber per month (ARPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges;
divided by the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month.
Appendix
Operating revenues and other income –
TTech segment
| C$
millions, except footnotes and unless noted otherwise | |
Three
months ended
March 31 | | |
Per
cent | |
| (unaudited) | |
2024 | | |
2023 | | |
change | |
| Mobile
network revenue | |
| 1,746 | | |
| 1,697 | | |
| 2.9 | |
| Mobile
equipment and other service revenues | |
| 481 | | |
| 517 | | |
| (7.0 | ) |
| Fixed
data services(1) | |
| 1,159 | | |
| 1,128 | | |
| 2.7 | |
| Fixed
voice services | |
| 179 | | |
| 192 | | |
| (6.8 | ) |
| Fixed
equipment and other service revenues | |
| 117 | | |
| 128 | | |
| (8.6 | ) |
| Health
services | |
| 420 | | |
| 423 | | |
| (0.7 | ) |
| Agriculture
and consumer goods services | |
| 82 | | |
| 84 | | |
| (2.4 | ) |
| Operating
revenues (arising from contracts with customers) | |
| 4,184 | | |
| 4,169 | | |
| 0.4 | |
| Other
income | |
| 27 | | |
| 39 | | |
| (30.8 | ) |
| External
Operating revenues and other income | |
| 4,211 | | |
| 4,208 | | |
| 0.1 | |
| Intersegment
revenues | |
| 3 | | |
| 4 | | |
| (25.0 | ) |
| TTech
Operating revenues and other income | |
| 4,214 | | |
| 4,212 | | |
| 0.0 | |
(1) Excludes health services and agriculture and consumer goods
services.
Operating revenues and other income – DLCX segment
| C$
millions, except footnotes and unless noted otherwise | |
Three
months ended
March 31 | | |
Per
cent | |
| (unaudited) | |
2024 | | |
2023 | | |
change | |
| Operating
revenues (arising from contracts with customers) | |
| 682 | | |
| 756 | | |
| (9.8 | ) |
| Other
income | |
| 39 | | |
| — | | |
| n/m | |
| External
Operating revenues and other income | |
| 721 | | |
| 756 | | |
| (4.6 | ) |
| Intersegment
revenues | |
| 203 | | |
| 172 | | |
| 18.0 | |
| DLCX
Operating revenues and other income | |
| 924 | | |
| 928 | | |
| (0.4 | ) |
Notations used in the table above: n/m –
not meaningful.
About TELUS
TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications
technology company with more than $20 billion in annual revenue and over 19 million customer connections spanning wireless, data, IP,
voice, television, entertainment, video, and security. Our social purpose is to leverage our global-leading technology and compassion
to drive social change and enable remarkable human outcomes. Our longstanding commitment to putting our customers first fuels every aspect
of our business, making us a distinct leader in customer service excellence and loyalty. The numerous, sustained accolades TELUS has
earned over the years from independent, industry-leading network insight firms showcase the strength and speed of TELUS’ global-leading
networks, reinforcing our commitment to provide Canadians with access to superior technology that connects us to the people, resources
and information that make our lives better.
Operating in 32 countries around the world, TELUS International (TSX
and NYSE: TIXT) is a leading digital customer experience innovator that designs, builds, and delivers next-generation solutions, including
AI and content moderation, for global and disruptive brands across strategic industry verticals, including tech and games, communications
and media, eCommerce and fintech, banking, financial services and insurance, healthcare, and others.
TELUS Health is a global healthcare leader, which provides employee
and family primary and preventive healthcare and wellbeing solutions. Our TELUS team, along with our 100,000 health professionals, are
leveraging the combination of TELUS’ strong digital and data analytics capabilities with our unsurpassed client service to dramatically
improve remedial, preventive and mental health outcomes covering nearly 72 million lives, and growing, around the world. As the largest
provider of digital solutions and digital insights of its kind, TELUS Agriculture & Consumer Goods enables efficient and sustainable
production from seed to store, helping improve the safety and quality of food and other goods in a way that is traceable to end consumers.
Driven by our determination and vision to connect all citizens for
good, our deeply meaningful and enduring philosophy to give where we live has inspired TELUS and our team to contribute $1.7 billion,
including 2.2 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most
giving company in the world. Together, let’s make the future friendly.
For more information
about TELUS, please visit telus.com, follow us at @TELUSNews on X and @Darren_Entwistle on
Instagram.
Investor Relations
Robert Mitchell
(647) 837-1606
ir@telus.com
Media Relations
Steve Beisswanger
(514) 865-2787
Steve.Beisswanger@telus.com
Telus (NYSE:TU)
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