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Telus says no immediate plan to cut spending, raise rates as it monitors CRTC rulings

Telus Corp.
The Telus offices are seen in Ottawa on Friday, Aug. 4, 2023.THE CANADIAN PRESS/Justin Tang

Telus Corp. has no plans to halt its own fibre network build in response to recent regulatory actions, but says the CRTC needs to strike a balance between promoting  competition and maintaining incentives for large carriers to invest in their networks.

Chief financial officer Doug French said Friday that the Vancouver-based telecommunications company agrees with some of its rivals that large providers are facing "a significant amount of challenges."

"You need to have a return on assets at some point," he said in an interview after the company reported fourth-quarter earnings.

"Giving away or getting access to an asset at discounted rates doesn't promote you to go and build more."

A day earlier, the parent company of Bell Canada announced it was slashing nine per cent of its workforce and warned it could further scale back network spending as it remains at odds with the CRTC over what it calls "predetermined" regulatory direction.

The CRTC announced last November it would temporarily require large telephone companies, namely Bell and Telus, to provide competitors with access to their fibre-to-the-home networks in Ontario and Quebec within six months. (The rule doesn't apply to Canada's other major carrier, Rogers Communications Inc., which uses a cable network.)

The decision was meant to stimulate competition for internet services, as the CRTC said at the time its review could potentially make that direction permanent and apply it to other provinces. The regulator is hold a hearing next week as part of that review.

Bell responded by reducing its network investment plans by $1.1 billion by 2025 including a minimum reduction of $500 million this year. It said Thursday that more cutbacks are possible if further unfavourable decisions are handed down by the regulator.

French said Telus would continue as scheduled with its own network investments but it is reviewing "economics and returns" on an ongoing basis.

"Depending on how things roll out over the next little bit, we may make some other choices," he said.

"But at the moment ... we've been able to execute very well in a dynamic market and we will proceed as planned, unless there are anything that would change how we look at economics and how we look at our ability to build that out on affordability."

Telus had announced its own 6,000 job cuts last August in order to adapt to a “rapidly transforming industry,” saying at the time that issues such as regulation and competition prompted the need to reduce its payroll. The company said the restructuring would cost $475 million in 2023, but lead to annual savings of more than $325 million.

French said Friday that those cuts were 75 to 80 per cent complete by the end of last year, however some restructuring costs would spill over to the first quarter of 2024.

Telus reported fourth-quarter net income attributable to common shares of $288 million, up from $248 million a year earlier. The company said the profit amounted to 20 cents per share for the quarter ended Dec. 31, up from 17 cents per share in the last three months of 2022.

Operating revenue and other income totalled $5.20 billion, up from $5.06 billion in the same quarter a year earlier. On an adjusted basis, Telus says it earned 24 cents per share for its fourth quarter, the same as its fourth quarter of 2022.

In the fourth quarter, Telus said it saw a total of 404,000 net customer additions across its services.

The company's 126,000 net mobile phone subscriber additions in the quarter was up 13 per cent from the same quarter a year earlier. But Telus' monthly churn rate for mobile subscribers — a measure of subscribers who cancelled their service — was 1.40 per cent, up from 1.22 per cent during its previous fourth quarter, which it said was largely due to heightened seasonal promotional activity.

Telus’ mobile phone average revenue per user was $58.50, down 19 cents or 0.3 per cent from the fourth quarter of the prior year. The company attributed the decrease to lower overage revenues as customers continue to adopt larger or unlimited data and voice allotments in their rate plans.

French said Telus is "not banking on price increases" for 2024 in light of that decline in revenue per user.

"I don't expect the competitiveness to slow at all. If anything, it continues to be very intense and it's very difficult to increase prices in an intense competitive market," he said.

Recent price hikes by other telecoms have attracted attention from federal politicians and backlash from some customers.

Members of the Standing Committee on Industry and Technology discussed the topic last month after Rogers confirmed prices were going up by an average of $5 for wireless customers not on contract. Some Bell customers also received notices earlier this year informing them their wireless bills were set to increase.

Despite no immediate plans to follow suit, French said he hopes Ottawa and the CRTC will take note of Statistics Canada's inflation reports that suggest telecom prices have been coming down. 

Cellular costs have declined more than 47 per cent over the past five years in contrast to an overall inflation increase of 19 per cent for the same period, according to data compiled by the Canadian Telecommunications Association.

He said Telus is asking for "transparency and consistency" from the regulator as it makes its decisions.

"There's always a good time to, say, tout when we apparently are doing something wrong, but we don't get the credit we deserve for how we've helped fuel the economy and how prices are coming down," said French.

"The competitive nature of our industry is very, very intense and I think that's underestimated."

 This report by The Canadian Press was first published Feb. 9, 2024.

Companies in this story: (TSX:T, TSX:BCE)

Sammy Hudes, The Canadian Press