Telus Q3 profits up with help from smartphone users driving up data revenue

Telus Corp.’s profit surged in the third quarter as its smartphone customers used more wireless data services, continuing a trend that has been fuelling revenue growth for the telecom company.

Telus (TSX:T) said wireless data revenue accounted about $546 million in revenue during the quarter, up $102 million or 23 per cent from a year earlier.

“That growth and appetite for data, whether it’s email or surfing the web or social media, is really driving that in a big way,” chief commercial officer Joe Natale said in an interview.

Natale said 63 per cent of Telus’s postpaid base of wireless subscribers is using smartphones.

“There’s no reason why that wouldn’t go to 100 per cent over time. As customers come on smartphones they truly become the remote control for your life,” Natale said.

He noted more tablets like the iPad are being connected to networks — part of a growing range of devices with connectivity, including cameras and hydro meters.

“I think the appetite for mobile data has only just begun. We are becoming a society that is always online, always connected.”

The company also announced Friday that its dividend will rise by three cents to 64 cents per share.

Chief executive Darren Entwistle said Telus’s higher dividend represents a 10.3 per cent increase from a year ago, and is due to increased net income and free cash flow generation.

“We look forward to continuing to deliver strong operational and financial result to support the realization of our dividend growth ambitions through 2013 and, importantly, beyond,” he said on a conference call with analysts.

The increased dividend is payable on Jan. 2 to shareholders of record as of Dec. 11.

In its financial results, Telus earned 1.07 per diluted share on its net profit of $351 million. That’s up from $325 million or $1 per diluted share in the same 2011 quarter.

Overall revenue rose 5.8 per cent to $2.77 billion from just over $2.6 billion in the third quarter of 2011.

Analysts estimates compiled by Thomson Reuters called for revenue of $2.74 billion.

Blended average revenue per user in the wireless division increased by 90 cents, or 1.5 per cent, to $61.42 a month.

Telus said it attracted 116,000 net new postpaid wireless customers in its third quarter, usually on lucrative three-year smartphone contracts.

By comparison, Bell (TSX:BCE) previously reported it had 149,000 net new wireless postpaid subscribers in its third quarter and Rogers (TSX:RCI.B) had 76,000.

Wireline revenue, which includes TV, Internet and traditional phone services, grew by four per cent to $1.27 billion.

Telus added 42,000 new TV customers, down 8,000 year-over-year.

The total number of Telus TV subscribers increased 41 per cent to 637,000, up by 184,000 from a year ago.

Telus had net additions of 26,000 customers for its high-speed Internet, 18 per cent higher than the same quarter in 2011. The company has 1.3 subscribers for its high-speed Internet, up seven per cent year-over-year.

Total network access lines declined 5.3 per cent from a year ago to 3.45 million.

Residential lines are down 7.7 per cent year-over-year, reflecting ongoing competition and wireless and Internet substitution.

Telus is slated to have a single class of shares after shareholders voted strongly in favour of the idea last month, defeating a U.S. hedge fund’s attempt to get a premium for holders of the company’s voting shares. The vote still needs court approval, which could come by the end of November.

Telus and New York’s Mason Capital Management battled for months over the company’s one-for-one share conversion plan with no premium.

Entwistle has slammed the hedge fund for what he called its “empty voting” tactics and said Telus would push for regulatory change to prevent that in future.

Telus said its chief financial officer Robert McFarlane will retire at the end of the year after 12 years with the company.

He will be replaced by John Gossling effective January 1 after a transition period. Gossling was CFO of CTVglobemedia from 2008 to 2011.

Shares in Telus were up $1.26, or two per cent, to $64.79 in afternoon trading on the Toronto Stock Exchange.