TELUS Corporation is the second largest telecommunications company in Canada, offering a wide range of communications products and services including data, IP, voice, television, entertainment and video.
The company has ~ 16 million customer connections, including 10.6 million mobile phone subscribers, 2.2 million Internet subscribers, 1.2 million home network connections and 1.2 million TELUS TV customers. It’s also Canada’s largest digital healthcare provider and has been a major player in telemedicine for over a decade.
Telecommunications has a strong presence in the wireless segment, which accounts for 55% of total sales, while the wireline segment accounts for the remaining 45%. Almost 70% of total revenues come from the wireless segment. The wireline segment includes data, voice and other services and devices.
The new operating segments of TELUS are TELUS Technology Solutions (TTech) and Digitally-Led Customer Experiences – TELUS International (DLCX).
Its 5G network now covers more than 10.6 million Canadians and TELUS Health now has 2 million Canadian members.
Telus is also available as a dual-listed stock trading under TU on the NYSE.
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Sales growth & market presence
TELUS ‘focus on excellent customer service and technology leadership has resulted in the company having customers with one of the highest loyalty rates. The company has industry-leading turnover rates of less than 1%, which is an important metric for measuring customer relationships.
The company generates recurring monthly fees from its subscribers that keep growing. It should maintain its leading market share position in the Canadian telecommunications industry given its world-class networks, customer-centric approach and operational efficiency. Its PureFibre broadband network is designed to provide direct, super-fast, reliable connections to homes and has already covered over 2.5 million rooms.
TELUS also plans to invest $ 2 billion to connect over 90% of Calgary homes and businesses to its PureFibre network. Higher sales from cellular networks and wired data services should drive sales growth further.
Telekom offers fee-based services as well as bundling options that support sustainable customer growth. It also has robust digital adoption and an increasing number of online transactions. TELUS has a strong presence in the personal, business and healthcare sectors that provide a diversified income stream, and the company has expanded into agricultural technology solutions as well.
The company posted 227,000 net customer additions for the combined cellular and fixed line segments in the last quarter. Throughout the pandemic, the company saw increased traffic on its network and increased demand for virtual care solutions in its healthcare business.
The company posted year-over-year sales and EBITDA growth of 8.9% and 1.9%, respectively. During the quarter, the company acquired licenses for 3500 MHz spectrum through commercial transactions. TELUS recorded higher margins in fixed line data services through growing subscribers and expanded services, growth through business takeovers in the international segment and improved cost efficiency programs.
For the full year 2021, TELUS International is aiming for double-digit sales and EBITDA growth.
The company has gradually increased its dividend since 2002, increasing it at a rate of over 9% CAGR over the past decade. This Canadian dividend aristocrat has returned nearly $ 19 billion to its shareholders since 2004. The company has a dividend yield of 3.5% and its most recent annual dividend increase of 6%, which is the 19th increase since 2011.
The company is aiming for a multi-year dividend growth program, now in its 11th year.the Year. The multi-year dividend growth program is supported by a robust capital structure and healthy cash flow generation. Although TELUS has a high payout ratio, recession-proof cash flows should support its dividend plan. The company aims for a free cash flow payout ratio of 60% to 75%.
TELUS continues to invest in the expansion and upgrading of 5G networks. TELUS ‘5G network covered almost 28% of the Canadian population. The company has raised its investment forecast for 2021 to ~ $ 3.5 billion and expects investments to decrease to $ 2.5 billion or less from 2023 upon completion of the accelerated broadband build in 2022.
In addition, the healthcare business is also experiencing an upswing, driven by the accelerated demand for virtual care. The company expects total revenue and EBITDA growth of 8-10% and 6-8%, respectively, for the full year 2021.
Because TELUS is one of the largest telecommunications companies in Canada, it regularly benefits from strong cash flows. The company should continue its growth path thanks to investments in broadband technology, a strong asset mix with a focus on cellular and data and a long-term growth strategy.
Telekom continues to make good progress on its broadband network investment program. Decent earnings growth along with moderate capital spending should support free cash flow and the multi-year dividend growth program.
The company operates in a highly competitive environment. The Canadian telecommunications sector is an oligopoly dominated by three big players – TELUS, Rogers Communications and BCE. These three companies have strong marketing power that prevents new entrants from entering the market.
A strong focus on customer growth, continuous network investments and increased efficiency should help TELUS maintain its industry leadership. Shaw Communications is the new wireless player with deep enough pockets to keep you connected.
Not having outdated media resources and instead doing healthcare and international businesses are considered strong competitive advantages for Telus.
TELUS strong performance is backed by customer loyalty across all major product lines, including low cell phone and internet churn. The company is well positioned to benefit from the high speed, quality and coverage of its world-leading 5G and fiber optic networks.
The asset mix is more geared towards high-growth and technology-oriented industries. In addition to its broadband growth engine, TELUS results are strongly supported by its unique TELUS Health and TELUS International businesses. The extensive networks of TELUS should enable new growth opportunities and open up new sources of income.
The company continues to make aggressive investments to become a leading digital services company in Canada. His strong financial position and sustained free cash flow growth allow him to pursue strategic growth initiatives such as acquisitions and returning cash to shareholders.
Historical P / E ratio may seem high based on historical data points, but keep in mind that the company is now operating in a few more growth segments alongside its core telecommunications business, which positions the company for growth and reflects that in PE.
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