Telus reports nearly 40% profit decline due to COVID-19 in Q2

Shruti Shekar
·Telecom & Tech Reporter
·3-min read
A Telus Corporation sign is pictured in Ottawa, Ontario, Canada, November 8, 2017. REUTERS/Chris Wattie
REUTERS

Vancouver-based national carrier Telus (T.TO) reported a $315 million net income, or 23 cents per share, in Q2 2020, a nearly 40 per cent decline year-over-year, a result of COVID-19, higher income tax, and higher financing costs from a long-term debt payment.

In Q2 2019, the carrier reported $520 million in net income or 43 cents per share.

In the three months that ended on June 30, the carrier reported $3.728 billion in operating revenue, a 3.6 per cent increase, compared to the $3.597 billion that was reported in the same period a year ago.

Telus’ CEO Darren Entwistle said in the July 31 released earnings that the COVID-19 posed challenges but the carrier was able to remain resilient.

“This accomplishment realized against the backdrop of an unprecedented operating environment is reflective of our longstanding and consistent focus on creating a world-leading culture, enabled by our highly engaged team,” he said. “Importantly, our strong first-quarter results were attained as 95 per cent of our domestic team members embraced a work-from-home environment, while continuing to provide best-in-class customer service.”

On Thursday, Bloomberg first reported that the carrier was telling its staff to continue working from home until at least the year.

“We have made the decision to continue with our current working arrangements — with the vast majority of our team members working productively from home until 2021,” the memo read, according to the article. “We will revisit this policy towards the end of December and early January.”

Telus added 151,000 new wireless, internet, TV, and security customers, down 55,000 over the same quarter a year ago, the earnings said. This included 61,000 mobile phone subscribers in the quarter, a decrease of 21,000.

Mobile phone Average Billing Per User (ABPU) was $69.65, a decrease of 5.1 per cent, reflecting the “impacts caused by the COVID-19 pandemic.” The earnings said this includes waiving roaming fees because of travel restrictions, the closure of 90 per cent of retail stores, a decrease in chargeable data use because more people were working from home, and waiving late payment charges.

Mobile phone Average Revenue Per User was $56.82 in the quarter, a decrease of 5.8 per cent. The decrease was primarily driven by COVID-19 as well.

The carriers churn rate, or the measure of subscribers who deactivate their services, was 0.80 per cent, compared to the 1.01 per cent that was reported in the same period a year ago.

This reflects “the impacts of reduced switching activity between carriers duke to the COVID-19 pandemic as customers reduced their general shopping habits,” the earnings said.

During the earnings call, Entwistle said the carrier wasn’t worried about Shaw Communication’s recent announcement launching Shaw Mobile, a wireless service for B.C. and Alberta customers who will be able to add up to six mobile lines to their internet service.

“We’re not surprised, we’ve been expecting the Shaw Mobile launch for four years now,” Jim Senko, president of mobility solutions at Telus, said during the call. “We’ve been actively bundling our base. Simplifying our offers and ensuring we are simple and transparent for our customers... Overall Telus has significantly more points of distribution and more effective digital experience.”

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