Labor relations clouds sunny results from Telus

Canadian carrier TELUS Corporation achieved solid growth and market-leading EBITDA across its wireless and wireline businesses in its second quarter despite a heated battle with labor unions that has resulted in strikes and lockouts.

Overall operating revenues of $2 billion grew 8% from last year’s second quarter and operating income was up 24%.

Telus Mobility had the strongest quarter with 19% revenue growth to $802 million. The company emphasized its improvement in EBITDA, which increased by 28%, or $80 million, and accounted for 45% of revenue.

Telus’ average revenue per user increased by $2 to $61. This is $10 and $11 higher than Rogers and BCE Wireless reported respectively in their second quarters according to Telus.

“Our strategy of profitable subscriber growth continues to be successfully executed. While capturing our fair share of net additions, we are achieving a disproportionate share of EBITDA and cash-flow growth…despite having fewer subscribers,” said George Cope, president and CEO of Telus Mobility. The wireless organization added 131,000 subscribers in the quarter, which was 15% higher than a year ago, and improved its cost of customer acquisition from $381.00 to $342.00. Post-paid subscribers accounted for 79% of new customers. Churn increased slightly from 1.32% to 1.37%.

The wireline side of the business, Telus Communications, reported strong growth from its data business and was able to hold the line on long-distance revenue by keeping revenue flat. Operating revenue was up 2% from last year’s second quarter to $1.2 billion, driven by a 10% jump in data revenue and a 19% increase in non-incumbent revenue in Ontario and Quebec.

The group added 17,100 new high-speed Internet subscribers while access lines disappeared by 1.8% or 86,000.

Telus achieved its growth despite a strike by the 13,000 workers represented by the Telecommunications Communications Workers Union (TWU) that escalated the 4.5-year standoff over a collective bargaining agreement. Telus also escalated the pressure from it side by issuing a lockout order on April 25th which was expanded in both May and July.

According to Telus, their contract offer has never been presented by the TWU to its membership for a ratification vote and that, although not legally required given TELUS' implementation of lockout measures, the last union strike vote was conducted in January 2004. In response to the TWU's escalation of strike activity, TELUS implemented its contingency plans designed to minimize the impact on customers, and on July 22 commenced implementation of its Offer.

Telus had plenty of time to prepare for the work action and Darren Entwistle, president and CEO of Telus said that thanks in part to automating some processes, “We are answering calls now faster than we were before the strike.”