Telus CEO says capital spending will drop in 2023

Telus Corp. chief executive Darren Entwistle said Friday that the telecommunications company will be able to reduce capital spending to $2.5 billion a year or less in 2023, after an accelerated investment plant announced this week.

The Vancouver-based company and owner of one of Canada's three national wireless networks said Thursday it has raised its 2021 capital budget by $750 million, to $3.5 billion.

Our CEO Darren Entwistle on how our world-leading network kept Canadians connected when it mattered most. #TELUSresults #AmazingNetwork pic.twitter.com/aAFbgTqyRo

— TELUS (@TELUS) May 7, 2021

Entwistle told analysts Friday that about 90 per cent of the accelerated spending plan will be on fibre optic networks, 5G wireless networks and improvements to business processes.

"Those are the three headlines in terms of the capex investment," Entwistle said on the company's first-quarter conference call.

"Furthermore ... the trajectory of our capex decline will be steeper than previously expected. Commencing in 2023, our annual capex is expected to decline to $2.5 billion, or less."

The investments will also support long-term dividend growth, he added.

Earlier Friday, the company raised its quarterly dividend half a penny to 31.62 cents per share, up from 31.12 cents per share.

Telus also reported its first-quarter profit fell 5.7 per cent compared with a year ago as a number of higher expense items offset revenue growth at many of its business units.

Telus said its net income attributable to common shares totalled $331 million or 25 cents per share for the quarter ended March 31 compared with $350 million or 28 cents per share a year ago.

On an adjusted basis, Telus said it earned 27 cents per share in its most recent quarter compared with an adjusted profit of 32 cents per share a year ago.

Operating revenues and other income rose to $4 billion compared with $3.7 billion in the first quarter of 2020 — which included retail store closures during the early stages of the COVID-19 pandemic.

Revenue from the Telus mobile network edged down 0.5 per cent, or $8 million, mostly because of reduced roaming fees due to travel restrictions and less from overage fees because of a trend to plans with large or unlimited monthly data caps.

But those factors were partly offset by a higher subscriber base, which has grown 5.5 per cent over the past 12 months.

Telus chief financial officer Doug French said in an interview Friday that average revenue per mobile user will start moving up again in the next quarter due to subscriber additions.

In the quarter, the wireless business — which operates the Telus, Koodo and Public Mobile brands — added 31,000 mobile phone subscribers and 63,000 subscribers to other connected devices.

In addition, Telus added 33,000 internet, 11,000 TV and 17,000 security customer connections to its networks in Alberta, British Columbia and Quebec. The gains were partly offset by residential voice losses of 10,000 customers.

"So we loaded significant wireline customers, or 51,000, in the quarter. And we've continued to have that kind of a run rate for the last little while," French said.

He added that internet subscriber additions was due to expansion into new neighbourhoods or winning customers from competitors.

In addition, he said, some customers have chosen to move from copper-wire based internet service once they can get faster fibre optics to the home.