Telus Predicts Big 2012

by Jordan Richardson on December 19, 2011

Telus Corp. is apparently skirting the conspiracy theories and predicting a big 2012 for investors. The company will kick off the festivities by raising its dividend by 10 percent in fiscal 2012, bumping it up to $2.55 a share.

Revenue growth in the smartphone sector is expected to drive revenue. Wireless and data services are expected to boost revenue by as much as 6.5 percent to $11 billion.

Spending will be up for Telus, too, with the Western Canada company expected to spend as much as $1.85 billion in 2012 on wireless capacity and deploying its LTE wireless network in many urban markets. The upgrade, once on track for an early 2012 launch, looks to finally be in the works.

Some might say that Telus is making some bold predictions, especially with economic troubles impacting other companies around the world. Spain’s Telefonica, for instance, has faced material dividend risk.

But the situation in the so-called outside world doesn’t impact Telus and Canada’s other incumbents for the express reason that they operate inside the oligopoly bubble and, as such, aren’t as subject to the difficulties in Europe.

“There may be some situations in other countries where the financial position or prospects of the economy are not as robust,” Telus chief financial officer Bob McFarlane said. “Here, the telecom industry is very strong, has good growth and strong balance sheets.”

Telus apparently has a lot of confidence in its future prospects because of its multi-year plan to elevate shareholder pay-outs. The company plans to raise its dividend next year in order to keep with plans to elevate pay-out by 30 percent between last year and 2013. Macquarie Securities analyst Greg MacDonald says that such a plan is “almost unheard of.”

Telus may be benefitting from not getting into the content wars. Bell hoisted its dividend by five percent recently, but most analysts don’t expect another raise. And Rogers is expected to boost its dividend by 10 percent come February, probably an optimistic figure given the company’s fight for TV market share with the aforementioned Bell.

With Telus clear to drive the middle lane, their predictions are probably pretty close to the mark.

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