Q4 2013 and 2014 targets
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Q4 2013 and 2014 targets investor conference call February 13, 2014 PowerPoint PPT Presentation


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Q4 2013 and 2014 targets investor conference call February 13, 2014. Darren Entwistle President & Chief Executive Officer Joe Natale EVP & Chief Commercial Officer John Gossling EVP & Chief Financial Officer. TELUS forward looking statement.

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Q4 2013 and 2014 targets investor conference call February 13, 2014

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Q4 2013 and 2014 targets investor conference call february 13 2014

Q4 2013 and 2014 targets

investor conference call

February 13, 2014

Darren Entwistle

President & Chief Executive Officer

Joe Natale

EVP & Chief Commercial Officer

John Gossling

EVP & Chief Financial Officer


Telus forward looking statement

TELUS forward looking statement

Today's presentation and answers to questions contain statements about financial and operating performance of TELUS (the Company) and future events, including with respect to future dividend increases and normal course issuer bids to 2016 and the 2014 annual targets that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and predictions and are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from that expressed in the forward-looking statements. Accordingly, our comments are subject to the disclaimer and qualified by the assumptions (including assumptions for the 2014 annual targets, semi-annual dividend increases through 2016, ability to sustain and complete multi-year share purchase programs through 2016), qualifications and risk factors referred to in the fourth quarter Management’s review of operations and Management’s discussion and analysis in the other 2013 quarterly reports, in the 2012 annual report, and in other TELUS public disclosure documents and filings with securities commissions in Canada (on SEDAR at sedar.com) and in the United States (on EDGAR at sec.gov). Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements, and reserves the right to change, at any time at its sole discretion, its current practice of updating annual targets and guidance.


Agenda

Agenda

  • CEO Introduction

  • Q4 operational highlights

  • Q4 financial results

  • 2014 annual targets and key assumptions

  • Questions and Answers


Ceo introduction

CEO introduction

  • Executing on our strategy focused on wireless and data

  • Building on momentum – 2014 targets

  • Investing for future sustainable growth

  • Delivering our 2014 corporate priorities

TELUS demonstrating strong results

and executing on shareholder friendly initiatives


2014 corporate priorities

2014 Corporate Priorities

  • Delivering on TELUS’ future friendly brand promise by putting customers first and pursuing global leadership in the likelihood of our clients to recommend our products, services and people

  • Elevating our winning culture for a sustained competitive advantage

  • Strengthening our operational reliability, including our speed and resiliency

  • Increasing our competitive advantage through reliable and client-centric technology leadership

  • Driving TELUS’ leadership position in its chosen business and public sector markets

  • Advancing TELUS’ leadership in healthcare information management


Healthy postpaid net additions

Healthy postpaid net additions

Wireless

subscribers1

Postpaid net adds (000s)

1.06M

prepaid

123

113

14%

7.8M

total

86%

6.75M

postpaid

Q4-12

Q4-13

Healthypostpaid net adds with postpaid base up 3% y/y

1. Wireless subscribers excludes 222K prepaid subscribers from Public Mobile at December 31, 2013.


Industry leading wireless churn

Industry-leading wireless churn

Blended

Postpaid

1.67%

1.51%

1.41%

1.23%

1.12%

0.97%

Q4-12

Q4-13

Q4-11

Q4-12

Q4-13

Q4-11

Industry-leading low churn results

Postpaid down 15 basis points to reach lowest level in seven years


Smartphone data adoption driving arpu growth

Smartphone & data adoption driving ARPU growth

$61.86

$60.95

6.8

$59.08

6.5

6.1

21.65

28.17

25.29

77%

66%

53%

37.43

35.66

33.69

Q4-11

Q4-12

Q4-13

Q4-11

Q4-12

Q4-13

Postpaid subscribers (millions)

Voice ARPU

Smartphone % of postpaid

Data ARPU

Q4 smartphone penetration up 11 points to 77%of postpaid base supporting data ARPU growth of 11%


Industry leading lifetime revenue per susbcriber 1

Industry-leading lifetime revenue per susbcriber1

$4,387

$4,036

$3,538

Q4-11

Q4-12

Q4-13

Customers First focus generating

industry-leading lifetime revenue per subscriber

1 Lifetime revenue derived by dividing ARPU by blended churn rate


Strong future friendly home subscriber growth

Strong Future Friendly Home subscriber growth

TELUS TV

59K

53K

High-speed Internet

50K

44K

Residential NALs

38K

34K

34K

31K

21K

19K

16K

13K

(25)K

(32)K

(34)K

(33)K

Q1-13

Q2-13

Q3-13

Q4-13

Combined TV and high-speed Internet net additions exceeded residential NAL losses by 2.4 times – best ratio in over 2 years


Continued optik tv innovations

Continued Optik TV innovations

Now offering Optik on the go with live TV


Q4 2013 wireless financial results

Q4 2013 wireless financial results

TELUS delivers another solid quarter of wireless results

1EBITDA does not have any standardized meaning prescribed by IFRS-IASB. See appendix for definition.

2EBITDA as percentage of total network revenue.


Wireless data revenue m

Wireless data revenue ($M)

648

570

466

Q4-12

Q4-11

Q4-13

Strong Q4 data revenue growth of 14% year-over-year

Data now 45% of wireless network revenue, up 4points


Q4 2013 wireline financial results

Q4 2013 wireline financial results

Strong revenue growth driven by Data

EBITDA excluding restructuring up 3.5% and stable margin of 27%

1.EBITDA as percentage of total revenue.


Wireline data revenue m

Wireline data revenue ($M)

851

770

680

Q4-12

Q4-11

Q4-13

Data revenue growth of over 10% driven by TV and Internet

Data revenue 62% of external revenue, up 4 points


Q4 2013 consolidated financial results

Q4 2013 consolidated financial results

Strong growth in revenue and profitability

Continued capex investments to support sustainable growth

1. Adjusted EPS does not have any standardized meaning prescribed by IFRS-IASB. See appendix for definition.


Eps continuity analysis

EPS continuity analysis

$0.47

($0.01)

$0.02

($0.01)

$0.02

$0.05

$0.40

Q4-12

(as reported)

EBITDA

(ex. Public Mobile)

Depr &

Amort

Lower O/S shares

Financing

& Other

Q4-13

(as reported)

Public

Mobile

Strong double digit EPS growth


Q4 2013 and 2014 targets investor conference call february 13 2014

2014 targets

and key assumptions

See forward-looking statement in TELUS fourth quarter 2013 and 2014 targets news release


2014 segmented targets 1 2

2014 segmented targets1,2

Segmented targets building on our

strong momentum achieved in 2013

1 See forward looking statement caution and assumptions in Section 1.5 of fourth quarter 2013 Management’s review of operations.

2 2014 wireless targets and growth rates exclude Public Mobile.


2014 consolidated targets 1 2

2014 consolidated targets1,2

Targets demonstrate benefits of ongoing network and service-related investments, combined with customer-focused operational execution

1 See forward looking statement caution and assumptions in Section 1.5 of fourth quarter 2013 Management’s review of operations.

2 2014 consolidated targets and growth rates exclude Public Mobile.


2014 key assumptions 1

2014 key assumptions1

  • Pension accounting discount rate of 4.75%

  • Defined benefit pension expense of approx. $87M (approx. $85M in operating expenses and $2M in financing costs)

  • Defined benefit pension plan cash funding of approx. $105M

  • Restructuring and other like costs of approx. $75M

  • Cash taxes in the range of $540 to $600M

  • Statutory income tax rate of 26.0 to 26.5%

  • Integration of Public Mobile is expected to negatively impact consolidated and wireless EBITDA by approx. $40M and EPS by approx. 6 cents

Key assumptions and sensitivities listed in section 1.5

in Q4 Management’s review of operations

1 See forward looking statement caution and assumptions in Section 1.5 of fourth quarter 2013 Management’s review of operations

21


Our balance sheet strength

Our balance sheet strength

  • Long-term net debt to EBITDA ratio of 1.8x at year end 2013

  • Excellent debt maturity schedule with average maturity at 9.4 years and average cost of debt at approx. 5%

  • Over $2 billion of available liquidity

  • Investment grade credit ratings providing ready access to capital market funding

Strong balance sheet supporting broadband investments, spectrum purchases and returning capital to shareholders


Q4 2013 and 2014 targets investor conference call february 13 2014

investor relations

1-800-667-4871

telus.com/investors

[email protected]


Appendix q4 2013 free cash flow comparison

Appendix – Q4 2013 free cash flow comparison


Appendix glossary

Appendix - Glossary

  • EBITDA does not have any standardized meaning prescribed by IFRS-IASB. We have issued guidance on and report EBITDA because it is a key measure used to evaluate performance at a consolidated level and the contribution of our two segments. For definition and explanation, see Section 7.1 in the 2013 fourth quarter Management’s review of operations.

  • Adjusted EPS does not have any standardized meaning prescribed by IFRS-IASB. This term is defined in this presentation as excluding (after income taxes): 1) Restructuring and other like costs; 2) favourableincome tax-related adjustments. For further analysis of the aforementioned items see Section 1.3 in the 2013 fourth quarter Management’s review of operations.


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