TELUS Corporation

Good morning, ladies and gentlemen. Welcome to the TELUS 2020 Q3 earnings conference call. I would like to introduce your speaker, Mr. Robert Mitchell.

Please go ahead. Hello, everyone. Thank you for joining us today. Our third quarter 2020 results, news release, MD&A, and financial statements and detailed customer investor information were posted on our website this morning. On our call today, we will have remarks by Darren Entwistle, President and CEO of Jeff Puritt, Executive Vice President and President and CEO of TELUS International, and Doug French, Executive Vice President and CFO. And for the Q&A portion of today's call, we also have Daniel Maugy, President, Home Solutions, Jim Senko, President, Mobility Solutions, Francois Graton, Group President and Chair of TELUS Health and TELUS Quebec, and Tony Guerin, EBP and Chief Customer Officer. Briefly on slide two, this presentation and answers to questions contain forward-looking statements that are subject to risks and uncertainties and made based on certain assumptions. Accordingly, actual performance could differ from statements made today, so we ask that you do not place undue reliance upon them. We disclaim any obligation to update forward-looking statements except as required by law. And we refer you to the risks and assumptions as outlined in our public disclosures, including third quarter 2020 MD&A and 2019 MD&A, and filings with securities commissions in Canada and the U.S. With that, over to you, Darren.

Thanks, Rodrigo. And hello, everyone. For the third quarter, TELUS once again achieved strong operational and financial results characterized by excellent execution, and record high customer growth of 277,000 net additions. This accomplishment realized amidst an unprecedented operating environment reflects the effectiveness of our world-leading performance culture underpinned by our highly engaged team. Indeed, Telesys' recent recognition as the top Canadian organization on Forbes' World's Best Employers ranking is a testament to the skill, passion, and grit of our high-performing global team. Leveraging this differentiation alongside the strength of our digital capabilities and product superiority, we continue to achieve robust customer growth in both wireless and wireline in the quarter. Furthermore, this achievement was supported by strong and enhanced customer loyalty across key product lines, backed by the Telus team's dedication to delivering premium customer experiences over our world-leading wireless and fiber broadband networks. In Q3, consolidated revenue was up 7.7%, while EBITDA decreased moderately by 0.6%, reflecting pandemic-related impacts. Thanks to our team's resiliency, including a relentless focus on improving our cost structure and realizing important growth opportunities, we mitigated some of the downside pressures. Notably, had it not been for the exogenous net impact of COVID-19, EBITDA would have grown by approximately 5% at the consolidated level for TELUS. Let's take a look now at our wireless business. Third quarter network revenue decreased profitable growth continues to be impacted by reduced roaming revenue. As a result, wireless EBITDA was down 1.6%, partially mitigated by an intense focus on cost management. Leveraging the strength of our superior customer experience, our world-leading wireless network, last 111,000 mobile phone net additions in the third quarter of 2020. In terms of connected devices, we realized strong net additions of 87,000, up 6% on a year-over-year basis. Overall wireless net additions, inclusive of mobile phones and connected devices, were 198,000 in the quarter, up 3% over last year. Importantly, our team delivered another quarter of best-in-class loyalty results. Notably, blended mobile phone churn was 0.99%, representing a 10 basis point improvement over last year, and it represents a third consecutive quarter of blended wireless churn at sub-1%. Underlying this result, post-page churn of 0.85% was better by three basis points compared to last year. TELUS's broadband network continues to perform exceedingly well through the current environment characterized by evolving usage patterns. The efficacy of our ongoing technology investments is again reflected in numerous awards from leading independent network authorities. By way of example, UK-based OpenSignal ranked Telus as having the fastest network in the world in their September Global Mobile Network Experience Awards. This award builds on our multiple third-party acknowledgments, including US-based PCMag ranking Telus as having the fastest mobile network in Canada. latency, and download throughput across our national wireless network. Each of these accolades have been received now for three or more years in a row. As we continue to roll out our 5G and our fiber networks in the months and years to come, Canadians will continue having access to the world's best speed, the world's best quality, and the world's most expansive coverage. To close our wireless results, both APU and ARPU declined by approximately 5% in the quarter. This reflects industry-wide pressure on roaming associated with pandemic-related restrictions and reduced travel, while at the same time, we continue to thoughtfully migrate our base to our endless data plans and hold the line on our premium brand, ARPU. Importantly, we continue to pursue strategies focused on offerings with attractive economic characteristics, including... The strong and steady adoption of our TELUS peace of mind data plans and family discount offerings contributing to more than 60% of all rate plan changes being either step-ups or flat in the quarter, a 10% increase as compared to Q2. And TELUS easy payment device financing plans, all of which are performing exceedingly well. Additionally, we continue to seek out and secure new avenues of wireless revenue growth in high-margin areas with respect to Internet of Things across numerous important verticals for our company. We remain enthusiastic about prospects in this space and the opportunities that the increased commercialization of 5G will unlock in terms of new growth curves that initiate revenue and EBITDA growth, and as well cash flow accretion, allowing us to further monetize our critical network investments. These growth opportunities include catalyzing dramatic innovations in health, educational, environmental, and socioeconomic outcomes, and as well enabling our including facilitating major investments in ag tech, smart cities, and home automation, to name but a few. Turning now to our wireline results, TELUS once again delivered a very strong quarter. Third quarter wireline revenues increased by 18% and EBITDA increased by 1.6%, reflecting the increased contributions from TELUS's Internet growth and our smart security technology, as well as TELUS International delivering once again. TELUS's wireline financials were driven by data revenue growth of 23%. and solutions. This includes robust growth in internet and third wave data services as well as a resilient performance in TV. It also includes strong growth in home and business smart security technology amplified by the inclusion of ADT Canada. Our growth includes increased revenues from the hyperscaling of our virtual healthcare solutions As we indicated at that time, we continue to move forward with the plans for the TI IPO, which we are now targeting for the first quarter of 2021. Whilst we have seen some recovery, we continue to experience transient, offsetting COVID-19 related impacts from some business customers as they navigate their own pandemic activities, including price increases that were postulated across our customer base, as well as absorb impacts related to site closures or restricted access in respect of and the dilution from G-curve investments in critical growth areas such as security, health, and our ag tech investments. This was all partially offset by strong cost containment across our business, which is a hallmark of our organization. quarter internet net additions of 50,000, an increase of 18,000 additions year over year, and our highest quarterly loading since 2002. This was further supported by an internet churn rate below 1%, which, alongside an up to 25% increase in monthly recurring revenue of new consumer additions, bodes well for future lifetime economics from our HSIA business. We also realized healthy TV net additions of 19,000, including a double-digit churn improvement to 1% within our optic operations. Notably, residential voice line losses came in at 8,000 in Q3, representing an impressive 4,000 improvement over last year and the lowest quarterly residential voice line losses since 2004. Furthermore, industry-leading security additions of 18,000 at TELUS increased These results underscored the unique and attractive bundled offers available to customers across our superior product portfolio, and our teams focused on leveraging the competitive differentiation inherent in our pure fiber network. As a result, total wireline RGU net additions of 79,000 were up 26,000 year over year, which is a notable achievement of the contagion. During the quarter, our team expanded our pure fiber coverage to approximately 78% of our high-speed broadband footprint, a positive progression for 5G as well, given the significant synergies that exist between the two technologies, the synergies between fiber and 5G, which is indeed extremely potent. Like our wireless network, our fiber network continues to receive important recognition, and boy have we come a long way in respect of our pure fiber footprint and all that it enables. Notably, U.S.-based PCMag recently ranked TELUS as the fastest Internet service provider in Canada. This reinforces PCMag's previous recognition of TELUS as best for gaming and amplified with the progression on the 5G front enabled by the underlying fiber network when we think about low latency applications, including mobile gaming. On the back of strong, a very strong third quarter performance operationally and financially, earlier today we announced the resumption of our multi-year dividend growth program Again, we are targeting annual growth between 7% and 10% through 2022. The 7% increase reflects our confidence in the outlook for our business, the sustainability of our strategy, expansion prospectively, as we're now entering a period where, chronically, our sources of cash will exceed our uses. This marks the 19th dividend increase since 2011 and reinforces the strength of our financial and operational performance, which has enabled us to successfully execute on our industry-leading returned nearly $19 billion to shareholders, including $13.6 billion in dividends, representing approximately $15 per share since 2004, which represents an enviable and atypical track record. As we continue to advance our broadband leadership, We remain highly confident in the opportunities before us to further accelerate our growth strategy, particularly with the significant digital acceleration that's happening within both our economy and our society. Speaking of growth opportunities, earlier this morning we announced the planned acquisition of Lionbridge AI, a market-leading global provider of data annotation services used in the development of AI algorithms to train machine learning models. This acquisition advances TELUS's commitment to harness the power of technology and data to provide outstanding customer experiences on a global basis. Lionbridge AI will help accelerate the digital transformation and strategic growth journey of TELUS International by adding key capabilities and diversity to its suite of next-generation digital solutions, which Jeff will talk about in a moment. And it's highly complementary to the investment and the scale Our planned IPO of TELUS International in Q1 will amplify this asset as a strategic growth vehicle for TELUS by supporting continued organic expansion as well as progression in key areas through selective smart acquisitions that we can inject, implement, and deliver future organic growth prospects upon. As we manage through the ongoing global pandemic, the TELUS team continues to do good in the communities where we live, where we work, and where we serve. Notably, we expanded our Internet for Good program in the quarter and have now provided low-cost, high-speed Internet to 68,000 low-income family members and people with disabilities. Similarly, through our National Mobility for Good program, we've enabled 20,000 kids making the difficult transition out of foster care and vulnerable Canadians with free smartphones and free data plans to help them stay connected to what matters most as they endure that difficult transition. Our team's commitment to improving outcomes for our fellow citizens in concert with our leading operational execution Telus' leadership in social capitalism, not just in Canada, but on a global basis. This was further reinforced by the Wall Street Journal, which ranked Telus 29th in their 100 most sustainably managed companies in the world report and 15th globally in respect of the subcategory of social capitalism. This international study assessed more than 5,500 publicly traded companies based on numerous sustainability metrics as well as leadership and governance practices in respect of creating value for shareholders over the longer term. And clearly ethical investing is front of mind within this contemporary period that we live in and all the changes that we're going through economically and at a societal level. by the team, and I remain exceedingly proud and grateful to the entire team in that regard. On that positive note, Jeff, I'm gonna hand the call over to you to talk about the exciting progress at TI.