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TELUS' (TU) Earnings and Revenues Miss Estimates in Q4
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Leading Canadian telecom operator, TELUS Corp. (TU - Free Report) reported disappointing financial results in the fourth quarter of 2016 wherein both the top line and bottom line fell short of the respective Zacks Consensus Estimate.
The Canadian telecom market has become intensely competitive with rival companies offering newer quad-play bundled services comprising wireless, wireline, high-speed broadband and voice products. This Zacks Rank #3 (Hold) company competes with the likes of Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and BCE Inc. (BCE - Free Report) in the Canadian telecom market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GAAP net income was approximately $60.8 million, down a significant 69% year over year. GAAP earnings per share were 11 cents, exhibiting a plunge of 68.2% year over year. Fourth-quarter adjusted earnings per share were 40 cents, way below the Zacks Consensus Estimate of 46 cents.
Total revenue came in at approximately $2,475.4 million, up 2.7% year over year but lagged the Zacks Consensus Estimate of $2,518 million. Service revenues were $2,309.3 million, up 4.6% year over year. Equipment revenues totaled $156.8 million, down 14% year over year while other revenues were $12.8 million, slumping 45.2% year over year.
Quarterly operating income was $177 million, down a substantial 48.7% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $832.5 million, up 3.1% year over year. Quarterly adjusted EBITDA margin was 33.7% compared with 33.5% in the year-ago quarter.
Cash Flow & Liquidity
During the fourth quarter of 2016, TELUS generated approximately $549 million of cash from operations, down 15.9% year over year. Free cash flow, in the reported quarter was a negative $143.3 million compared with a positive $148 million in the year-ago quarter.
TELUS exited 2016 with $324 million of cash & marketable securities and $8,778 million of outstanding debt compared with $171.04 million and $8,576.6 million, respectively, at the end of 2015. At the end of 2016, the debt-to-capitalization ratio was 0.59 compared with 0.32 at the end of 2015.
Segmental Results
Wireless revenues increased 3.7% year over year to approximately $1,392 million in the reported quarter. Wireless network revenues rose 5.4% year over year to roughly $1,260.8 million. Equipment and Other revenues declined 8.8% to around $116.3 million. Other income decreased 28.6% to $3.7 million. Intersegment network revenues were $11.3 million, down 11.8% year over year.
Blended ARPU inched up 3.9% year over year to around $49.68. The monthly blended subscriber churn rate improved to 1.25% from 1.32% in the year-ago quarter. Postpaid customer churn rate was 0.98% compared with 1.01% in the year-ago quarter.
Net wireless subscriber gain in the reported quarter was 78,000. Postpaid customer net addition was 87,000, up 40.3% year over year. Prepaid customer net loss was 9,000. As of Dec 31, 2016, TELUS had 8.585 million wireless subscribers, up 1.5% year over year. Postpaid users were 7.55 million, up 2.7% while the prepaid user count was 1.035 million, down 6.3%.
Wireline revenues increased 1.7% year over year to approximately $1,136.3 million. Data service & equipment revenues came in at $788.3 million, up 6.1%. Voice revenues were $255 million, down 5%. Other services and equipment revenues were $45.8 million, down 15.3% and other operational revenues were nearly $9 million, down a considerable 50%. Intersegment revenues grossed around $38.3 million, up 15.9% year over year.
During the reported quarter, TELUS added 16,000 TV subscribers, reaching a total count of 1,059,000 customers (up 5.4% year over year). High-speed Internet subscriber addition was 24,000, reaching a total count of 1,655,000, up 5.7% year over year. Residential NALs were down 22,000, reaching 1.374 million (down 6.3% year over).
Guidance
For 2017, TELUS expects revenues to fall within the range of C$13.12–C$13.25 billion. EBITDA will be within the range of C$4.85–C$4.995 billion. Basic EPS will be C$2.49–C$2.64. Capital expenditures will be approximately C$2.9 billion.
TELUS Corporation Price, Consensus and EPS Surprise
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TELUS' (TU) Earnings and Revenues Miss Estimates in Q4
Leading Canadian telecom operator, TELUS Corp. (TU - Free Report) reported disappointing financial results in the fourth quarter of 2016 wherein both the top line and bottom line fell short of the respective Zacks Consensus Estimate.
The Canadian telecom market has become intensely competitive with rival companies offering newer quad-play bundled services comprising wireless, wireline, high-speed broadband and voice products. This Zacks Rank #3 (Hold) company competes with the likes of Rogers Communications Inc. (RCI - Free Report) , Shaw Communications Inc. and BCE Inc. (BCE - Free Report) in the Canadian telecom market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GAAP net income was approximately $60.8 million, down a significant 69% year over year. GAAP earnings per share were 11 cents, exhibiting a plunge of 68.2% year over year. Fourth-quarter adjusted earnings per share were 40 cents, way below the Zacks Consensus Estimate of 46 cents.
Total revenue came in at approximately $2,475.4 million, up 2.7% year over year but lagged the Zacks Consensus Estimate of $2,518 million. Service revenues were $2,309.3 million, up 4.6% year over year. Equipment revenues totaled $156.8 million, down 14% year over year while other revenues were $12.8 million, slumping 45.2% year over year.
Quarterly operating income was $177 million, down a substantial 48.7% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $832.5 million, up 3.1% year over year. Quarterly adjusted EBITDA margin was 33.7% compared with 33.5% in the year-ago quarter.
Cash Flow & Liquidity
During the fourth quarter of 2016, TELUS generated approximately $549 million of cash from operations, down 15.9% year over year. Free cash flow, in the reported quarter was a negative $143.3 million compared with a positive $148 million in the year-ago quarter.
TELUS exited 2016 with $324 million of cash & marketable securities and $8,778 million of outstanding debt compared with $171.04 million and $8,576.6 million, respectively, at the end of 2015. At the end of 2016, the debt-to-capitalization ratio was 0.59 compared with 0.32 at the end of 2015.
Segmental Results
Wireless revenues increased 3.7% year over year to approximately $1,392 million in the reported quarter. Wireless network revenues rose 5.4% year over year to roughly $1,260.8 million. Equipment and Other revenues declined 8.8% to around $116.3 million. Other income decreased 28.6% to $3.7 million. Intersegment network revenues were $11.3 million, down 11.8% year over year.
Blended ARPU inched up 3.9% year over year to around $49.68. The monthly blended subscriber churn rate improved to 1.25% from 1.32% in the year-ago quarter. Postpaid customer churn rate was 0.98% compared with 1.01% in the year-ago quarter.
Net wireless subscriber gain in the reported quarter was 78,000. Postpaid customer net addition was 87,000, up 40.3% year over year. Prepaid customer net loss was 9,000. As of Dec 31, 2016, TELUS had 8.585 million wireless subscribers, up 1.5% year over year. Postpaid users were 7.55 million, up 2.7% while the prepaid user count was 1.035 million, down 6.3%.
Wireline revenues increased 1.7% year over year to approximately $1,136.3 million. Data service & equipment revenues came in at $788.3 million, up 6.1%. Voice revenues were $255 million, down 5%. Other services and equipment revenues were $45.8 million, down 15.3% and other operational revenues were nearly $9 million, down a considerable 50%. Intersegment revenues grossed around $38.3 million, up 15.9% year over year.
During the reported quarter, TELUS added 16,000 TV subscribers, reaching a total count of 1,059,000 customers (up 5.4% year over year). High-speed Internet subscriber addition was 24,000, reaching a total count of 1,655,000, up 5.7% year over year. Residential NALs were down 22,000, reaching 1.374 million (down 6.3% year over).
Guidance
For 2017, TELUS expects revenues to fall within the range of C$13.12–C$13.25 billion. EBITDA will be within the range of C$4.85–C$4.995 billion. Basic EPS will be C$2.49–C$2.64. Capital expenditures will be approximately C$2.9 billion.
TELUS Corporation Price, Consensus and EPS Surprise
TELUS Corporation Price, Consensus and EPS Surprise | TELUS Corporation Quote
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>