Telus Sees Big Things for 2011

by Jordan Richardson on December 15, 2010

Telus may have been through an industry storm in 2010, but that hasn’t stopped them from issuing a sunny projection for 2011. It announced on Tuesday that it expects revenues and earnings to increase in 2011.

This prediction comes on the back of anticipated growth in wireless and data. Lower financing costs should also help improve the bottom line, they say.

This supports the initiative to increase company dividends and buy back a pile of shares in 2011, which would certainly mean good things for the provider. The company’s main projections for 2011 were a target of one to four percent in revenue growth and an improvement of one to six percent in earnings before interest, taxes and so forth.

Telus saw gains in 2010 and drew more subscribers than many anticipated thanks to support for smart phones on their networks. The new carriers didn’t appear to make much of a dent, even if a few regulatory issues did appear to fog the picture somewhat. Overall, however, the new wireless carriers didn’t really threaten the bottom line and the gathering storm clouds were generally free of trouble.

That’s not to say that Telus didn’t spend much of the year bracing for impact, of course. And 2011 will contain a similar batten down the hatches approach with the Shaw launch coming in the wind. “We expect to see an impact when Shaw launches – I think it would be naive not to,” Robert McFarlane, Telus’s chief financial officer, said. “We always view them as a serious competitor.”

Telus’ earnings did suffer dilution from the launch of Optik TV, but many expect the company to rebound nicely. With plenty of data customers to clean up on, the carrier should see a good deal of growth from smart phones and mobile data sticks. Subsidies tightened belts at Telus, as they had to cover the spread of smart phone conversions for many customers, but the company appears to have weathered it well enough.

Like most carriers across the country, Telus is bleeding fast from landline customers. Both residential and business customers are finding other ways to do things, so Telus will doubtlessly continue to lose out there. The question is whether data can smooth over the losses in that sector. With the landline sector rolling downhill, Optik TV takes on special meaning. This, too, represents a bit of trouble as Telus will have to spend more to roll out the system if it wants to successfully tempt customers away from Shaw.

Some consider this move to be a mistake, like Scotia Capital analyst Jeff Fan. “Telus is spending a lot of money (in TV distribution) and I don’t see the returns,” he says. “It’s more of a defensive move. Let’s not turn this around and make it an offensive game that Telus is undertaking here.”

Whether Telus is playing offence or defence going into 2011, it’s hard to sink the optimism this company has for the upcoming year. As the telecom sector begins to solidify, we can look forward to a year of positioning and play-making. Telus will be one to watch, as will all of the Big Three, as the fight for telecom supremacy in this country has just begun.

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Written by: Jordan Richardson. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS >, Twitter >, Identi.ca >, or Friendfeed >

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