1 / 29

Q4 2006 TELUS investor conference call Robert McFarlane • EVP & Chief Financial Officer

Q4 2006 TELUS investor conference call Robert McFarlane • EVP & Chief Financial Officer. February 16, 2006. 2006 – fourth quarter wireless review. Wireless segment – financial results. Q4-05. Q4-06. Change. Revenue. $877M. $1.02B. . 16%. EBITDA 1. 326M. 432M. . 33%. .

valora
Télécharger la présentation

Q4 2006 TELUS investor conference call Robert McFarlane • EVP & Chief Financial Officer

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Q4 2006 TELUS investor conference call Robert McFarlane • EVP & Chief Financial Officer February 16, 2006

  2. 2006 – fourth quarter wireless review Wireless segment – financial results • Q4-05 • Q4-06 • Change • Revenue • $877M • $1.02B •  • 16% • EBITDA1 • 326M • 432M •  • 33% •  • Capital expenditures • 144M • 106M • 26% 1 Q4-06 includes $3M in restructuring & workforce reduction costs Record fourth quarter EBITDA 16

  3. Wireless subscriber results Net additions Total wireless subscribers 235K 977K 92K 182K Prepaid 19% 4.1M 52K 143K 130K Postpaid 81% 61% 71% Q4-05 Q4-06 5.1 million total Total subscribers up 12% and strong postpaid mix 17

  4. Wireless ARPU growth Data ARPU $64.50 $62.54 $6.16 $3.17 59.37 58.34 Q4-05 Q4-06 ARPU growth driven by 94% increase in data 18

  5. Profitable growth strategy • Q4-05 • Q4-06 • Change • ARPU • $62.54 • $64.50 •  • 3.1% • Blended churn • 1.42% • 1.33% •  • 9 bps •  • 10% • $4404 • $4850 • Lifetime revenue •  • $449 • $436 • 3.0% • COA •  • 120 bps • 9.0% • COA/lifetime revenue • 10.2% TELUS subscriber economics improving & remain best in class 19

  6. 2006 wireless results compared to original targets • met or exceeded • 2006 actual • results • 2006 original • targets1 ü • Revenue • $3.86B • $3.775 to $3.825B ü • EBITDA • $1.75B • $1.7 to $1.75B ü • Capex • $427M • approx. $450M  • Wireless net adds • 535K • > 550K 1 Provided on December 16, 2005 Met or exceeded three of four targets 20

  7. 2006 – fourth quarter wireline review Wireline revenue profile • Q4-05 • Q4-06 • Change • Voice – Local • $537M • $528M • 1.7% •  • Voice – Long Distance • 212M • 198M •  • 6.7% •  • Data • 400M • 435M • 8.8% •  • Other • 61M • 74M • 21% •  External Revenue $1.21B $1.23B • 2.0% Solid data growth offsets erosion in local and LD 21

  8. High-speed Internet subscriber growth Total Internet subscribers High-speed Internet net additions 194K Dial-up 17% 44K High-speed 83% 27K 917K 1.1 million total Q4-05 Q4-06 Continued strong net addition growth 22

  9. Wireline segment – financial results • Q4-05 • Q4-06 • Change •  • Revenue • $1.21B • $1.23B • 2.0% • EBITDA1 • 409M • 447M •  • 9.2% • Capital expenditures • Capital expenditures • 230M • 230M • 309M • 309M •  •  • 34% • 34% 1 Includes $36M and $5M in wireline restructuring costs in Q4-05 and Q4-06 respectively; Q4-05 EBITDA includes $50M net expense impact of labour disruption. 23

  10. Wireline EBITDA normalization • Q4-05 • Q4-06 • % Change • $447M • 9.2% • EBITDA (reported) •  • $409M • 50M • Labour disruption impact • - • Restructuring costs • 36M • 5M • EBITDA (subtotal)1 • $494M • $452M • 4.3% • EBITDA (adjusted for cost of sales related to FFH) •  Adjusted EBITDA down 4.3% 24

  11. Non-ILEC revenue and EBITDA ($M) Revenue EBITDA 172 165 11 7.1 Q4-05 Q4-06 Q4-05 Q4-06 Central Canada Non-ILEC profitability continues to improve 25

  12. Network access line results % of network access lines lost, YoY Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 -2.4% -2.6% -2.7% -2.8% -3.0% Increased residential losses due to increased competition, partially offset by business line growth 26

  13. TELUS total subscriber connections 10.7 (millions) 10.2 9.7 Res NALs Bus NALs Dial-up Internet High-speed Internet Wireless Q4-05 Q4-06 Q4-04 Connections increasing with strong wireless and Internet growth 27

  14. 2006 wireline results compared to original targets • met or exceeded • 2006 actual • results • 2006 original • targets1  • Revenue • $4.82B • $4.825 to $4.875B ü • Non-ILEC Revenue • $657M • $650 to $700M ü • EBITDA • $1.84B • $1.8 to $1.85B ü • $25 to $40M • Non-ILEC EBITDA • $32M  • Capex • $1.05 to $1.1B • $1.19B ü • High-speed net adds • > 100K • 154K 1 Provided on December 16, 2005 Met original EBITDA and non-ILEC targets with significant outperformance in high speed Internet additions 28

  15. 2006 – fourth quarter consolidated review TELUS Consolidated • Q4-05 • Q4-06 • Change • Revenue • $2.09B • $2.25B •  • 8.0% • EBITDA1 • $734M • $878M •  • 20% •  • EPS • $0.22 • $0.70 • 218% •  • Capex • $374M • $415M • 11% 1 Q4-05 EBITDA includes $52M net expenses, excluding any revenue or indirect impacts, from labour disruption Strong growth in revenue driven by data and wireless 29

  16. Consolidated EBITDA normalization • Q4-05 • Q4-06 • % Change • $878M • 20% • EBITDA (reported) •  • $734M • 52M • Labour disruption impact • - • Restructuring costs • 36M • 8M • EBITDA (subtotal) • 822M • 886M • 6.1% • EBITDA (adjusted for (wireless/FFH) cost of sales) •  Adjusted for acquisition costs, EBITDA up 6.1% 30

  17. EPS normalization • Q4-05 • Q4-06 • % Change •  • $0.70 • 218% • EPS (reported) • $0.22 • 0.10 • Labour disruption impact • - • Tax related adjustments • 0.01 • (0.06) • Early bond redemption • 0.06 • - •  • 64% • EPS (Adjusted)1 • $0.39 • $0.64 1 Adjusted further for restructuring costs, EPS would have been $0.46 and $0.66 for Q4-05 and Q4-06, respectively, up 43% Adjusted EPS up 64% 31

  18. EPS continuity  $0.70 $0.01  $0.02  $0.03  $0.07  $0.08  $0.10  $0.17 $0.22 EBITDA growth 2005 lab. dis. costs Lower financing costs Tax- related adjustments Other Lower depr’n & amortiz’n Decr. in avg o/s shares Q4-06 Q4-05 Tremendous growth evident in underlying EPS, led by EBITDA 32

  19. 2006 consolidated results compared to original targets • met or exceeded • 2006 actual • results • 2006 original • targets1 ü • Revenue • $8.68B • $8.6 to $8.7B ü • $3.59B • EBITDA2 • $3.5 to $3.6B ü • $2.40 to $2.60 • EPS3 • $3.27  • $1.5 to $1.55B • $1.62B • Capex ü • $1.55 to $1.65B • $1.60B • Free cash flow 1 Provided on December 16, 2005 2 Original targets included restructuring & workforce reduction costs of approx. $100M, vs. actual 2006 results of $68M 3 2006 EPS includes $0.48 of positive tax-related adjustments TELUS achieved 4 out of 5 original targets driven by wireless 33

  20. Share repurchase programs • 2004 • 2005 • 2006 • Total • $78 • $892 • $800 • $1,770 • Total cost ($M) • Total shares (M) • 2.2 • 20.8 • 16.4 • 39.4 • % of totalprogram • 85%1 • 73%2 • 79% • Total end of period shares outstanding (M) • 358.5 • 350.1 • 337.9 • 20.6  1Twelve month 25.5 million share repurchase program to Dec. 19, 2005 2 Twelve month 24 million share repurchase program to Dec. 19, 2006 Track record of share repurchases leading to 6% reduction in shares outstanding 34

  21. Strong record of returning capital $ per share Share repurchases 4 3.90 Dividends 3.43 3.30 3 2.40 2.33 2.50 2 1.50 0.82 1 1.10 0.60 0.22 0.80 0.60 2003 2004 2005 2006 2007E1,2 1 Annualized dividend, plus share repurchases in 2006 as estimate for 2007. Assumes lower average shares outstanding of 330 million to 335 million in 2007. 2 See forward looking statement caution. Assumes continuation of share repurchase program 35

  22. Cash settled options program update • Introducing cash settlement for vested options • Mitigates share dilution by avoiding treasury issuance • Expect  non-recurring, non-cash pre-tax operating expense of $150M to $200M in Q1-07 • $120M to $150M in wireline, $30M to $50M in wireless • Reported EPS impact of $0.30 to $0.40 • Cash payments deductible for tax purposes when options exercised and cash paid out • Cash tax savings of up to $70M over 3 years Shareholder friendly initiative 36

  23. Pension update • Strong investment performance in 2006 • In aggregate, TELUS pension funds are now in going concern surplus • Expect to make $112M in cash contributions in 2007 (DB plans) • Major pension assumptions unchanged • Discount rate of 5.0% • Long term rate of return of 7.25% TELUS pension plans fully funded in aggregate 37

  24. Financing update • TELUS has commitments from 18 financial institutions for new $2 billion credit facility • More favourable terms and extends maturity to 2012 • Can be utilized to back up CP issuance • Replaces $1.6 billion of existing credit facilities • $800 million facility expiring May 2008 • $800 million facility expiring May 2010 • Accounts receivable securitization agreement extended by one year to July 18, 2008 • Current plan for $1.5B 2007 note refinancing is through combination of L-T debt issuance and new CP program TELUS liquidity position remains very strong 38

  25. Corporate governance update Stock option issuance practices, backdating • Voluntary internal audit of stock option and long term incentive practices resulted in a “well controlled” rating Sarbanes-Oxley • Have completed all work required for SOX 404 compliance • 90 processes and 740 key controls addressed • Ready to certify compliance with SOX 404 on internal control over financial reporting for Dec. 31, 2006 audited financial statements Leading the way in corporate governance 39

  26. 2007 Consolidated targets summary • 2007 targets • change • Revenue • $9.175 to 9.275B • 6 to 7% •  •  • 4 to 7% • Normalized EBITDA1 • $3.725 to 3.825B •  • 16 to 24% • Normalized EPS1,2 • $3.25 to 3.45 •  • Capex • approx. $1.75B • 8% 1 Excluding $150M to $200M of non-recurring, non-cash expenses associated with cash settlement of options, EPS impact of $0.30 to $0.40 2 Year over year growth rate normalized for $0.48 of positive tax-related adjustments in 2006 2007 targets reflect healthy performance expected in wireless 40

  27. investor relations 1-800-667-4871 telus.com ir@telus.com

  28. Appendix Free cash flow • Q4-05 • Q4-06 • ($M) • EBITDA • $734 • $878 • Capex • (374) • (415) • Cash Restructuring Payments (in excess of expense) • 5 • (6) • Net Cash Interest • (306) • (218) • Non-Cash Share Based Compensation • 3 • (10) • Net Cash Tax Recovery • 47 • 5 • Free cash flow • $110 • $233 • Share Issuance (non-public) • 19 • 22 • (229) • (200) • Purchase of shares for cancellation (NCIB) • Dividends • (97) • (127) • Accounts Receivable Securitization • 350 • 150 • (30) • (58) • Working capital & other • $124 • $20 • Funds avail. for debt redemption • (6) • (1,437) • Funds applied to redemption of debt • Net change in cash • ($1,313) • $14 42

  29. Appendix Definitions • EBITDA: Earnings, after restructuring and workforce reduction costs, before interest, taxes, depreciation and amortization • Capital intensity: capex divided by total revenue • Cash flow: EBITDA less capex • Free cash flow: EBITDA, adding Restructuring and workforce reduction costs, cash interest received and excess of share compensation expense over share compensation payments, subtracting cash interest paid, cash taxes, capital expenditures, and cash restructuring payments TELUS definitions for non-GAAP measures

More Related