TELUS Corporation

Good day, everyone. Welcome to the TELUS 2022 Q2 earnings conference call. I would like to introduce your speaker, Mr. Robert Mitchell. Please go ahead.

Thanks, Mihai. Hello, everyone, and thanks for joining us today. Our second quarter 2022 results, news release, MD&A financial statements, and detailed supplemental investor information were posted on our website this morning at telus.com slash investors. On our call today, we'll start off with remarks by Doug and Darren for the For the Q&A portion of our call, we will be joined by Zainal Malgi, who leads our home solutions and customer excellence, Jim Senko, who heads up mobility solutions, and Naveen Arora, who leads business solutions, and Tony Guerin, COO. As well, Michael Dingle, who recently joined TELUS Health as Chief Operating Officer, is joining our call today. 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 our second quarter 2022 MD&A, our annual 2021 MD&A, and filings with securities commissions in Canada and the U.S. With that, over to you, Darren.

Thanks, Mitchie, and hello, everyone. In the second quarter, the TELUS team once again demonstrated continued execution excellence, characterized by the consistent combination of industry-leading customer growth, resulting again in strong operational and financial results across our business. Our robust performance reflects the potency of our globally leading broadband networks and customer-centric culture, which enabled record second quarter loading in terms of 247,000 net customer additions. This reflects strong demand for our superior bundled offerings and customer service over our world-leading broadband networks. Furthermore, our leading customer growth is underpinned by our consistent industry-best client loyalty across our mobile and fixed product lines. Notably again this quarter, and for seven of the last nine quarters, blended mobile phone, pure fiber internet, optic TV, security, and voice churn are were all below 1%. Moreover, since the onset of the pandemic at the beginning of 2020, we've now welcomed more than 2.1 million new mobility and fixed customers. This represents an industry-leading result, including outpacing our next closest peer by a multiple of more than two times and supports strong financial performance today and well into the future. In the second quarter, Telus achieved strong consolidated revenue growth of 7.1%, while EBITDA was higher by 8.9% or 9.4% on an organic basis. Strength in our core telecom operations continues to be complemented by our highly differentiated and powerful asset mix that's geared towards high-growth, technology-oriented verticals. Let's turn now to have a look at our mobile operating results. to help us achieve healthy customer growth of 185,000 net additions. This included strong mobile phone net additions of 93,000, up close to 5% over last year, and our best second quarter result since 2011. It also included 92,000 connected device net additions, which is up 10% on a year-over-year basis. Importantly, our team delivered another quarter of industry-best loyalty results, which, as you well know, is the hallmark of the Telus organization and our customer's first culture. Blended mobile phone churn was 0.81%, similar to this time last year, and only one basis point off our all-time lowest churn rate ever achieved. Moreover, our industry-leading post-paid mobile phone churn of 0.64% was unchanged over the prior year period. This represents the seventh quarter out of the last 10 that we've realized a postpaid mobile phone churn rate below 0.8%. Our consistently strong operating and financial performance is buttressed by our highly engaged team who are passionate about delivering superior service offerings and digital capabilities over our world-leading wireless and pure fiber broadband networks. Without question, More than ever before, Canadians value fast and reliable connections. The consistent recognition from a range of independent organizations worldwide reinforces the superior performance and attributes of TELUS's world-leading networks. Last month, U.S.-based Oogla once again named TELUS the fastest mobile service provider in Canada for the 10th consecutive time. Furthermore, in June, TELUS was once again named the fastest internet service provider in Canada by U.S.-based PCMag for the third consecutive year. These acknowledgments, alongside the numerous other third-party network awards that our skilled and dedicated team has earned, reinforce TELUS's leadership in terms of offering customers the fastest, most expansive, and most reliable service in Canada across both our wireless networks. and pure fiber networks. Moreover, this recognition of the leadership of TELUS's national broadband networks underscores the value of our significant generational investments in world-leading network technologies, which will continue to drive extensive socioeconomic benefits to Canadians from coast to coast, as well as meaningful future free cash flow for decades to come that will benefit all stakeholders of this organization, including securities holders. To close on mobile, second quarter ARPU was up 2.1% on a year-over-year basis. This was supported by higher roaming revenues that are now at 100% of pre-pandemic levels. Notably, mobile phone lifetime revenue of $7,100 was up 30% and that was a significant delta versus our peers in terms of being 30% higher within our peer group contrast. This is reflective of the combination of our consistent focus on high-quality customer growth and leading client loyalty. Let's take a look now at our fixed operating results. TELUS delivered another quarter of industry-best wireline customer growth. We achieved industry-leading second quarter internet net additions of 34,000, up 4,000 on a year-over-year basis, despite modestly higher churn compared to the very low rates during heightened pandemic restrictions this time last year. We continue to drive healthy growth in TV, with net additions of 15,000, which were up 4,000 over the prior year. Furthermore, residential voice line losses of 7,000 were down 3,000 on a year-over-year basis. Strong security net additions of 20,000 were up 1,000 over this time last year. Overall, industry-leading total external fixed net additions of 62,000 were up 12,000, or some 24% on a year-over-year basis, representing an all-time second quarter record for the TELUS organization. What a great testament to the team's commitment and execution and the receptivity of our services in terms of customer affinity. This reflects the strength of our unique and highly attractive bundled offers across our industry best portfolio of products and services, buttressed by our ever expanding broadband networks, our leading customer centric culture, as well as our strong and differentiated social capitalism attributes that underpin the TELUS brand. Now let's take a look at our TELUS health operations. Our team once again drove attractive year-over-year health services revenue growth while continuing to meaningfully scale our health operations, including covering now more than 22 million lives in Canada with our health care programs, an increase of 24%, on a year-over-year basis. It includes executing 145 million digital health transactions during the quarter, which is up 6% over last year. And it includes earning 1.4 million net new virtual healthcare members in the last 12 months, increasing our membership now to 3.6 million, representing a 64% increase on a year-over-year basis. We continue to leverage our leading position in healthcare technology solutions and data analytics to deliver improved health outcomes for employees and citizens alike through access to better health information, which of course has never been more critical within our society. Just last week, we had the pleasure of welcoming Michael Dingell as our Chief Operating Officer at TELUS Health. Michael is on the call with us today brings deep experience at the intersection of health and technology. Most recently as Chief Products and Technology Officer and Partner at PWC in the health and technology practices. TELUS Health Scale will, of course, be significantly enhanced by our acquisition of LifeWorks, announced in June and approved yesterday by LifeWorks shareholders. The potent combination of the respective skills and capabilities of LifeWorks and TELUS Health will create a world-leading end-to-end digital-first employee primary and preventative healthcare, mental health, and wellness platform covering more than 50 million lives in Canada and beyond our borders. Importantly, LifeWorks international relationships will be complemented by TELUS International's proven expertise in digital analytics, and cloud transformation capabilities and of course their client service excellence as well as their expansive client base and delivery teams now spanning 30 countries worldwide to allow us to extend our digital health offerings to customers globally and to buttress the distribution strength on an international basis that we will secure through the Lifeworks acquisition. We remain highly confident in receiving the appropriate regulatory approvals, and in turn, closing this transaction in the second half of the year, and look forward to welcoming LifeWorks employees and their significant product and capabilities on the technology front, as well as their venerable customer base into the wider TELUS Health family, and we look forward to realizing the significant potential for these assets in the years ahead. Let's turn now to Telus Agriculture and Consumer Goods, recently rebranded to reflect a broader business strategy to deliver data insights and a wide range of digital solutions to consumer packaged goods producers and customers across the agricultural sector and beyond. As we continue to scale our business globally, we have a compelling opportunity to create more value for the entire value chain whilst improving the safety, quality, and sustainability of food and other goods, all in a way that is traceable and clear to the end consumer. This includes a significant opportunity to help effectively manage the disconcerting amount of goods that never end up in the hands of consumers due to wastage, spoilage, quality issues, and inaccurate forecasting. something that can be addressed by better data analytics and dynamic insights. At TELUS Agriculture and Consumer Goods, our team drove revenue growth of 40% over the same period last year as a result of our team's ongoing efforts to integrate and grow this compelling business and the assets that we're assembling and integrating. This performance is illustrative of the significant value we are creating as the leading provider of agriculture and consumer goods technology solutions around the world as we advance the sector's efficiency and effectiveness through data analytics. Let's turn now and take a look at TELUS International. Earlier today, Telus International once again announced excellent double-digit revenue growth coupled with leading profitability and strong cash flow growth in the quarter. TI's continued robust results demonstrate its consistent execution, its attractive end-to-end digital capabilities, and the position of TI as the leading partner of choice for premier digital customer experiences and IT services for some of the world's largest companies and best-known brands. Doug is going to have an opportunity to provide further commentary on both T-TECH and TELUS International Financial shortly. In closing, our confidence in the strong outlook for our business and the long-term sustainability of our industry-leading dividend growth program is underpinned by our ongoing smart investment in technology infrastructure, including 5G and our accelerated broadband build program, our digital capabilities, our leading data analytics, and our exploitation of the significant opportunities that we have in growth markets that enable the continued advancement of our robust operational and financial performance because we do those two things in concert at TELUS. Our compelling free cash flow outlook and dip and end affordability will be backed by our strong EBITDA growth outlook in our telecom data services portfolio, complemented by significant value creation in our TI, health, and agriculture and consumer goods businesses. This will be further bolstered by the significant reduction in capital expenditures in terms of the reduction in our run rate by approximately a billion dollars beginning in 2023 as our fiber bill approaches completion. It will also be supported by enhanced efficiencies as we largely conclude our copper to fiber migrations by year end and continue retiring our remaining copper infrastructure whilst pursuing other increased digitization and cost reduction programs that are available to this organization. Finally, I'd like to recognize the way our TELUS team continues to give where we live day in and day out. By way of example, thus far in 2022, 65,000 TELUS team members, retirees, and their families have volunteered for our 17th annual TELUS Days of Giving now celebrated in 20 countries on a global basis. It's thanks to their passionate and their committed level of dedication that TELUS is the most giving company in the world and well on our way to achieving our goal of contributing one and a half million hours of volunteerism in 2022 to improve outcomes for people in need around the world. I remain exceedingly grateful to the entire TELUS team for exemplifying our world leadership in social capitalism as we strive to deliver outstanding results for all of our stakeholders in pursuit of making the future friendly for everyone. And on that note, I'll hand the call over to Uncle Doug. Uncle Doug, over to you.