August 09, 2015 - 10:30 AM
Telus Corp. signed up the most new wireless subscribers in the second quarter among Canada's big three telecommunications companies as the battle for customers intensified against the backdrop of shorter contracts.
The Vancouver-based Telus added 76,000 subscribers during the three-month period ended June 30, it said while reporting weaker profits on Friday.
The key wireless industry metric was leaps above Rogers Communications (TSX:RCI.B) which mustered less than a third of that growth with the addition of 24,000 net customers. BCE Inc. (TSX:BCE) brought in 61,000 net new subscribers for postpaid contracts in the same period.
All of the carriers have raced to attract wireless customers who are weighing the possibility of switching carriers after the CRTC eliminated cancellation fees for wireless contracts after two years.
The new regulations, which took effect June 3, created a so-called double cohort of wireless subscribers who were able to sign a new contract.
Telus chief executive and president Joe Natale highlighted the wireless churn rate of 0.86 per cent for the period, an industry low that he said demonstrated the ability to keep customers from straying to its competitors.
"We spent the better part of the last six years getting to this place," he told analysts on a conference call.
"It wasn't like we woke up six months ago and said, 'Let's go fix churn.' We are going to continue putting the pressure on that number because it's the magic formula of our wireless business."
Like its competitors, the cost of keeping its customers came at a price for Telus.
The company said retention volumes jumped 13 per cent in the quarter, mainly from the double cohort, which meant costs also increased. It spent about $30 million more this quarter to keep customers compared to a year ago. The higher costs mainly come from subsidized phones and discounted packages that are part of customer renewals.
"We expect retention volumes to remain elevated as we head into seasonally important third and fourth quarters," Natale said.
The final half of the year is typically a busy one for the wireless industry as students activate new phones for the back-to-school season and customers buy devices ahead of the Christmas holiday. Apple has also traditionally unveiled a new version of the iPhone in the fall.
Overall, Telus (TSX:T) reported a 10.5 per cent decline in net income to $341 million, or 56 cents per share, in the second quarter, as it faced $59 million of costs related to the closure of the 59 Blacks photography stores.
Adjusted earnings, which filter out those expenses and other factors, showed a 4.9 per cent increased to $406 million or 66 cents per share.
Operating revenue was up 5.1 per cent to $3.1 billion, with the wireless division accounting for about $1.7 billion of that amount.
Telus said revenue from wireless data services was up 18 per cent, reflecting a growth in its subscriber base, an increase in higher-priced plans, an expanded network and increased adoption of smartphones and other devices that use wireless data.
News from © The Canadian Press, 2015