• Telecom Net New Customer Additions: Over 1.2 million for 2024, with 328,000 in Q4.
• Post-Paid Mobile Phone Churn: 0.99% for the full year.
• TTech EBITDA Growth: 5.5% for 2024, 7% in Q4.
• Mobile Net Additions: 264,000 total, including 70,000 mobile phone and 194,000 connected devices in Q4.
• Wireline Internet Net Additions: 37,000 in Q4.
• Fixed Data Services Revenue Growth: 3.5% in Q4.
• TELUS Health Revenue Growth: 10% in Q4.
• TELUS Agriculture and Consumer Goods Revenue Growth: 16% in Q4.
• Net Income Growth: 3.2% year over year.
• Basic EPS Growth: 20% year over year.
• Adjusted Net Income and EPS Growth: 11% and 4.2%, respectively.
• Free Cash Flow: Approximately $2 billion for the full year.
• Capital Expenditures: $2.5 billion targeted for 2025.
• Leverage Ratio: 3.9 times at the end of 2024, targeting 3 times by 2027.

• Warning! GuruFocus has detected 7 Warning Signs with TU.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TELUS Corp (NYSE:TU) achieved its third consecutive year of surpassing 1 million mobility and fixed customer additions, with over 1.2 million net new customer additions in 2024.
• The company reported strong TTech EBITDA growth of 7% in Q4 2024 and 5.5% for the full year, meeting its target range.
• TELUS Health achieved accelerated revenue growth of 10% in Q4, alongside a 20% growth in its EBITDA contribution.
• TELUS Agriculture and Consumer Goods reported revenue growth of 16%, marking eight consecutive quarters of record sales performance.
• The company is on track to achieve $427 million in annualized synergies from its LifeWorks acquisition by year-end 2025.

Negative Points

• Mobile phone ARPU declined by 3.6% in Q4 2024, reflecting ongoing competitive pressures in the market.
• Free cash flow for 2024 was approximately $2 billion, slightly below the target of $2.1 billion due to higher-than-expected cash impacts from contract assets and device financing.
• TELUS Corp (NYSE:TU) expressed disappointment in its share price performance over the past year despite strong operational and financial metrics.
• The company's leverage ratio at the end of 2024 was 3.9 times, with a commitment to deleveraging to a net debt-to-EBITDA ratio of approximately 3 times by 2027.
• Higher financing costs impacted net income, mainly due to unrealized changes in virtual power purchase agreements and increased long-term debt interest rates.

Q & A Highlights

Q: Can you elaborate on TELUS's target of achieving a 3 times leverage ratio by 2027 and the role of asset divestitures in this plan? Also, what are the merits of maintaining a long-term dividend plan given the high dividend yield? A: Doug French, CFO, stated that TELUS has a placeholder of approximately $500 million for asset divestitures in their three-year plan. The focus is on deleveraging through free cash flow and capital intensity reductions. Darren Entwistle, CEO, emphasized the dividend growth model's success over 15 years and the priority of improving the balance sheet. He highlighted the strong free cash flow outlook, supporting the dividend growth model's sustainability.

Q: What is driving the acceleration in fixed data services revenue growth, and how is the pricing environment affecting this? A: Zainul Mawji, EVP, President - Consumer Solutions, explained that the growth is based on significant customer base expansion and profitable growth strategies. The diversified portfolio of services and increased customer demand for higher speeds contribute to this growth. Pricing dynamics are aligned with network reliability and capacity improvements. Navin Arora, EVP, President - Telus Business Solutions, added that strong volume growth and market share penetration in B2B and SMB segments are also key drivers.

Q: Can you discuss the strategy for TELUS's move into the Ontario internet market and the uptake so far? A: Zainul Mawji noted that TELUS has been strategically acquiring assets and offering Koodo Internet, seeing good product intensity and customer uptake. The focus is on smart economics and providing value-added services, such as security and reliability, to grow profitably without dilutive offers.

Q: What are TELUS's expectations for wireless market volume growth in 2025, and how does the potential inability to access TPIA in the East affect growth prospects? A: Zainul Mawji emphasized leveraging existing customers and product differentiation to drive growth, regardless of macroeconomic conditions. Navin Arora highlighted strong growth opportunities in SMB and B2B segments. Darren Entwistle expressed confidence in regulatory decisions supporting TELUS's market strategy and emphasized the significant growth potential within the existing client base.

Q: How does TELUS plan to achieve the 3 times leverage target, and what infrastructure assets might be monetized? A: Darren Entwistle outlined a multi-faceted approach, including EBITDA growth, cost efficiency, reduced capital intensity, and monetization of real estate and copper assets. TELUS Health and Agriculture businesses offer potential for partner involvement and IPOs. While fiber monetization is not planned, tower monetization is a possibility if favorable conditions arise.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.