Telus Reports Q2 645151

VANCOUVER -- TELUS Corporation today reported its financial results for the second quarter of 2007. Revenue increased four per cent to $2.23 billion from a year ago due to continued wireless and data growth.

Reported earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by $12.5 million in the second quarter when compared to the same period in 2006. EBITDA was negatively impacted by increased wireless expenses in the first full quarter of wireless number portability (WNP) in Canada as well as increased wireline expenses from the implementation of a new billing and client care system in Alberta. Wireless customer acquisition and retention costs increased by an estimated $47 million largely from the introduction of WNP, while the implementation of the new system resulted in a negative revenue adjustment and increased operating costs totaling $29 million.

Excluding tax related adjustments, net income was up $4.5 million and earnings per share (EPS) increased by four cents per share. Including tax related adjustments, net income decreased by $103.5 million in the quarter, while EPS declined 27 cents when compared to the same period a year ago. Second quarter net income and EPS included favourable tax related adjustments of $10 million or 3 cents per share, compared to $118 million or 34 cents a year ago. EPS was also negatively impacted by four cents due to TELUS' venture investment and business with AMP'd Mobile, Inc., which recently entered into bankruptcy proceedings in the U.S. Free cash flow this quarter was $162 million, down 15 per cent due to higher wireless capital expenditures and lower operating profit.

During the second quarter TELUS continued to repurchase shares under its normal course issuer bid (NCIB) program, completing $170 million of share buy backs - shares outstanding are three per cent lower from a year ago. Since the repurchase program began in December 2004, a total of 45.6 million shares have been repurchased for $2.14 billion resulting in a 7.5% reduction in shares outstanding.

Table 1: FINANCIAL HIGHLIGHTS

Darren Entwistle, TELUS president and CEO, said "I am less than satisfied with these quarterly results. While wireless revenue and subscriber growth of 11 per cent and wireline data revenue growth of eight per cent remained robust, earnings did not meet expectations. This was largely caused by excess costs associated with the implementation of the new wireline billing and client care system as well as from the introduction of wireless number portability and the commercial failure of the launch of AMP'd Mobile. We are dedicated to much better performance in coming quarters, as evidenced by the reiteration of our public guidance for 2007."

Telus Corp. (NYSE: TU; Toronto: T)