TELUS Corp. TU reported impressive second-quarter 2015 financial results wherein both the top line and bottom line outpaced the respective Zacks Consensus Estimate.
GAAP net income in the second quarter of 2015 was approximately $277.3 million, down 10.5% year over year. GAAP earnings per share were 46 cents, down 9.7% year over year. However, adjusted earnings per share in the reported quarter were 54 cents, surpassing the Zacks Consensus Estimate of 51 cents.
Total revenue came in at approximately $2,522.2 million, up 5.1% year over year and also above the Zacks Consensus Estimate of $2,454 million. Service revenues stood at $2,345 million, up 4.9%. Equipment revenues totaled $169.1 million, up 10.1% while Other revenues totaled $8.1 million, down 23.1%.
Quarterly operating income was $501.7 million, down 1.9% year over year. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $926.9 million, up 5.1% year over year. Quarterly adjusted EBITDA margin stood at 36.8% against 36.7% in the prior-year quarter.
Cash Flow & Liquidity
During the second quarter of 2015, TELUS generated approximately $766.8 million of cash from operations, up 10.3% year over year. Free cash flow, in the reported quarter, was around $243.9 million, up 42.9% year over year. TELUS exited the reported quarter with $62.6 million of cash & marketable securities and $9,023.8 million of outstanding debt compared with $49.7 million of cash & marketable securities and $7,583.1 million of outstanding debt at the end of 2014. At the end of second-quarter 2015, the debt-to-capitalization ratio was 0.58 against 0.55 at the end of 2014.
Segmental Results
Wireless revenues rose 7.4% year over year to approximately $1,411.5 million in the reported quarter. Wireless network revenues grew 6.1% year over year to $1,275 million. Equipment and Other revenues rose 22.2% to around $125.2 million. Intersegment network revenues climbed 7.7% to $11.4 million. Within Network revenues, data revenues improved 18% while Voice revenues slid 5.3%.
Blended ARPU (average revenue per month) grew 2.9% year over year to around $51.62. The monthly blended subscriber churn rate improved to 1.17% from 1.37% in the year-ago quarter. Postpaid customer churn rate was 0.86% compared with 0.90% in the year-ago quarter.
Net wireless subscriber addition in the reported quarter was 63,000, up 28.6% year over year. Postpaid customer net addition stood at 76,000, down 2.6% year over year. TELUS lost 13,000 prepaid customers in the second quarter against a loss of 29,000 in the year-ago quarter. As of Jun 30, 2015, TELUS had 8.352 million wireless subscribers, up 3.3% year over year. Postpaid users were 7.221 million, up 5% and prepaid users were 1.131 million, down 6.6%.
Wireline revenues increased 2.3% year over year to approximately $1,157 million. Data service & equipment revenues came in at $754.6 million, up 7.8%. Voice revenues stood at $311.4 million, down 6.6%. Other services and equipment revenues were $46.3 million, down 9.5% and Other operational revenues were $9.8 million, down 7.7%. Intersegment revenues grossed $35 million, down 2.3%.
During the reported quarter, TELUS added 17,000 TV subscribers, reaching the total count to 954,000 customers (up 10.3% year over year). High-speed Internet subscriber addition was 22,000, reaching the total tally at the end of second quarter to 1.52 million (up 6.2% year over year). As of Jun 30, 2015, total wireline subscriber count was 5.589 million, up 1.4% year over year.
Zacks Rank & Stocks to Consider
TELUS currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the same industry include Chunghwa Telecom Co. Ltd. CHT, Nippon Telegraph and Telephone Corp. NTT and NTT DoCoMo Inc. DCM. All three stocks currently sport a Zacks Rank #1 (Strong Buy).
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