The revenue picture at telecom giant Telus is shaping up better than expected due to its strong wireless division that's powered by smartphones, the company said Friday after reporting a higher second-quarter profit.
Telus said it's raising its revenue forecast by $50 million to between $10.75 billion and $11.05 billion for fiscal 2012.
"If you look across our wireless business, there really isn't one indicator that isn't firing on all cylinders across the board," said Joe Natale, chief commercial officer.
"We continue to add customers - customers that want smartphones," Natale said in an interview.
The Vancouver company's wireless business operates under the Telus and Koodo brands and had 112,000 net new postpaid subscribers in the quarter, up 22 per cent from the same quarter last year.
These customers are generally on lucrative three-year contracts for iPhone, BlackBerry and Android smartphones and are a key measure of how a telecom company's wireless division is performing.
Telus said 59 per cent of its postpaid subscribers are now using smartphones, up from 42 per cent in the same quarter last year.
By comparison, Rogers added 87,000 postpaid net subscribers in its second quarter. Smartphones users are now 63 per cent of Rogers's postpaid base.
Chief executive officer Darren Entwistle also noted how the wireless division helped improve the company's financial forecast.
"Based on our first-half results and our positive outlook for the remainder of the year, I am pleased that we're able to increase the full year 2012 consolidated guidance range for revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) driven by our excellent wireless results," Entwistle said during a conference call.
Telus is also expecting double-digit free cash-flow growth of 20 to 35 per cent this year, Entwistle told analysts. However, company earnings per share forecast for the year remain unchanged at $3.75 to $4.15.
The Vancouver-based telecom company had a second-quarter net income of $328 million, up 1.2 per cent from the same time last year. Earnings per share rose to $1.01 from 99 cents.
For the quarter, Telus had $2.7 billion in revenue during the second quarter, a four per cent increase over the same time last year.
Analyst estimates compiled by Thomson Reuters pegged earnings per share at $1 of net income and $1.01 per share on an adjusted basis. Revenue was expected to come in at $2.67 billion.
Telus said it added 43,000 new TV customers in the quarter, bringing its total TV subscribers to almost 600,000. It added 20,000 new high-speed Internet customers, for a total of 1.28 million subscribers.
RBC Capital Markets analyst Drew McReynolds said Telus's second-quarter results were "delivering on high expectations."
The second-quarter results were largely in line with expectations and McReynolds noted 2012 financial guidance was raised. "While capital expenditure was also increased by $100 million [or by six per cent], this revision reflects solid momentum within wireless ...," he said.
Telus is in a battle with U.S. hedge fund Mason Capital Management over its plan to eliminate its two classes of shares and convert into one class of common voting shares, which Mason opposes. On Thursday, the dissident investor called a meeting for those holding voting shares to vote to establish a minimum premium of 4.75 per cent, which represents the historic average trading premium of the voting shares over non-voting shares.
