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Tuesday, 22 May 2012

Telus profit tops estimates on mobile growth



TORONTO • If the mantra “kill them with kindness” can be successfully employed as a business model, Telus Corp. has become the standard bearer.

The Vancouver-based telecommunications giant is seeing its fortunes boom in its mobile business with key performance metrics again jumping ahead of competitors in the latest quarter. A relatively new television service called Optik also kept up its steady assault on market share.

The novel approach: Convince customers to like you.

“We are experiencing meaningful progress on our No. 1 corporate priority — which is to be the most recommended company in the hearts and minds of our customers,” Darren Entwistle, chief executive, said at the company’s shareholder meeting in Edmonton.

The company is adding contract mobile subscribers at a faster clip than rivals Rogers Communications Inc. and BCE’s Bell Mobility, while its “churn,” or rate at which customers leave the carrier, is the lowest in the industry. Roughly 63,000 new customers signed on with Telus in the quarter, compared with 47,000 at market leader Rogers.

By streamlining rate plans, lowering costs on things like roaming and generally fostering a better relationship with subscribers, Telus is winning hearts and minds — and growth.

Further evidence can be found in Telus’ “ARPU” or the average monthly revenue it generates per wireless subscriber. Telus has opened a gulf between it and competitors in recent quarters, up nearly another two percentage points to $58.87.

In a later interview, Mr. Entwistle expanded: “It’s putting our investments and actions into a model that says, ‘Let’s give customers what they want and let’s stop doing what we know irritates our clients.


“It’s amazing the success you can have when you listen … and at the same time have the discipline and maturity to stop what they have found troublesome about our industry,” he said.

The new strategy was adopted a few years ago just as new wireless players Wind Mobile, Mobilicity and others launched. The returns have been obvious for investors. Mr. Entwistle, who has taken his compensation entirely in stock since, noted that Telus’ share price has appreciated by more than 25% since the beginning of last year, up sharply compared to all in the sector save for BCE, which has climbed 13.5%.

BCE and Telus have jointly benefited from a wireless network upgrade made in late 2009 wiping out advantages Rogers held over them. New entrant firms have also been slower to deploy out West, making for a less competitive environment for the Vancouver-based firm, analysts say.

On wireline, 44,000 additional customers were signed up to Optik as heavy promotions featuring free Xboxes convinced many to switch providers. Telus has gained 550,000 TV subscribers — or roughly a fifth of the market — in Alberta and British Columbia since launching Optik two years ago, directly eating into the base of chief Western Canadian cable competitor Shaw Communications Inc.

The company’s months-long battle with New York hedge fund Mason Capital was settled before the meeting when Telus dropped plans to merge voting and non-voting shares into a common equity pool. Mason, which has shorted its position in non-voting stock while buying up enough votes to strike down the motion, is poised to benefit as the latter shares float back to a historical discount.

An angry Mr. Entwistle said regulators must address the loophole in securities governance.

He was nevertheless upbeat about Telus’ operational prospects. Firing on all cylinders, a dividend growth commitment remains intact for this year and next.

 


Raj Rajput  [  MBA ] 
Mobile Reviews Expert 

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