TELUS Corporation

Good day and welcome to the TELUS 2024 Q1 earnings conference call. I would like to introduce your speaker, Robert Mitchell. Please go ahead.

Hello, everyone. Thank you for joining us today. Our first quarter 2024 news release, MD&A financial statements and detailed supplemental investor information were posted on our website earlier this morning. On our call today, we will begin with remarks by Darren and Doug. For the Q&A portion, we will be joined by other members of our executive leadership team, Briefly, prepared remarks, slides, and answers to questions contain forward-looking statements. Actual results could differ materially from those statements. The assumptions in which they're based and the material risks that could cause them to differ are outlined in our public plans with securities commissions in Canada and the U.S., including our first quarter 2024 and annual 2023 MD&A. With that, over to you, Darren.

Thanks, Rick. Hello, everyone. In the first quarter, our team once again delivered against our differentiated growth strategy leveraging our superior asset portfolio, consistent execution track record, and proactive cost efficiency initiatives to deliver industry-leading customer additions and solid financial results. This was achieved against the backdrop of a pretty dynamic operating environment, as you all well know. Our robust performance is underpinned by our strategic focus on margin and creative customer growth, our customer-centric culture, and our globally leading broadband networks. This enabled our strongest first quarter on record, with industry-leading total customer net additions of 209,000, up 28% on a year-over-year basis. TELUS's industry-best growth reflects the consistent potency of our operational execution and our unmatched bundled portfolio offerings across mobile and home. Our team's passion for delivering customer service excellence contributed to continued leading loyalty across our key product lines. The first quarter TELUS achieved resilient EBITDA growth of 4.3% and margin expansion of 170 basis points. These results reflect the progression of our ongoing transformational efficiency programs that are clearly bearing fruit. Looking at our T-Check mobile results, Telus realized robots first quarter customer growth of 146,000 net additions, our strongest first quarter on record. This included healthy mobile phone net additions of 45,000, relatively stable as compared to this time last year. This consistent result was driven alongside our continued focus on profitable, margin accretive customer growth, and of course, that's a hallmark of our organization. Indeed, we are continuing and now doubling down on this consistent and disciplined approach as we progress through 2024 and beyond. Our efforts in this regard will ensure our mobile customer growth drives EBITDA and cash flow accretion. That is the formula for this organization. Mobile subscriber growth also included record first quarter connected device net additions of 101,000, which represents a 74% increase over the prior year. This reflects continued strong momentum with respect to our 5G and IoT B2B solutions. Importantly, our team delivered another quarter of leading loyalty results, which continues to be the hallmark of the TELUS team. Bledded mobile phone churn of 1.13% was up against the backdrop of elevated competitive activity relative to seasonal trends and not clearly at a level where this organization is content. However, this represented an industry best result by a substantial margin of up to 46 basis points versus our peers. Notably, postpaid mobile phone churn was 0.91%. as we now have entered the 11th consecutive year below the 1% level. This is an outstanding result, and it's an outstanding result on a global basis, reflective of the industry-based customer experience that we deliver that's best in class, and it's done time and again by our TELUS team. delivering over our world-leading broadband networks. And that, for us, is the blend. Network excellence combined with the excellence of our people and our digital technology at work. The close on mobile, first quarter ARPU of $59.31 was down year over year. This was a result of intense promotional market activity and heightened competition, and in particular, across device financing subsidies. Our flanker brands offer strong customer value in certain segments with lower associated ARPU, however notably attractive AMPU attributes. Through digital transformation, we are lowering our cost to serve across the board. inclusive of supporting a compelling ANPU for BYOD and flanker activity. Furthermore, with respect to our premium brand, we are doubling down to reinforce our longstanding and distinctive focus on ANPU accretive loading. Notably, last week, we implemented changes to evolve our go-to-market offerings across our brands, and particularly in order to enrich our premium TELUS offerings, and afford customers enhanced and differentiated value. These efforts will continue to be supported by our team's passion for winning and retaining profitable customers whilst remaining highly disciplined in respect of device subsidies. Furthermore, we continue to expect connected devices and IoT to increasingly contribute to network revenue, ARPU and ANPU growth as we move forward, regardless of the external environment within which we find ourselves. First quarter ARPU, alongside leading customer loyalty, continue to drive our industry best mobile phone lifetime revenue, which consistently exceeds our national peers by a considerable margin. A considerable margin of up to 44% again in Q1. Now let's take a look at our T-TECH fixed operating results, where TELUS delivered another quarter of industry-best total wireline customer growth. Indeed, our team achieved robots first quarter internet net additions of 30,000. We also continue to drive healthy growth in our TV product line with industry-leading net additions of 19,000, more than double the prior year. Modest. Residential voice losses of some 8,000 were flat over last year and again represented an industry best result. Strong and leading security net additions of 22,000 were also similar to last year and continue to reflect our successful multi-product penetration strategy and also reflect a distinctive performance premium on loading versus our peers And of course, that's reflected as well within the way we bundle security within the FFH portfolio at TELUS. Overall, our industry-leading external fixed net additions of 63,000, notably, again, a Q1 record, demonstrate the strength of our unique and highly attractive bundled offers across our unmatched portfolio of products and services. These will be further enhanced by continued and significant innovation on our home automation roadmap and the products that are resident within that particular ecosystem that really does create a level of excitement in terms of new revenue sources to come in the quarters ahead. Our superior bundled offerings are buttressed by our leading customer experience over our ever-expanding, world-leading pure fiber and wireless broadband networks. These results are also bolstered by our strong and highly differentiated social capitalism attributes that truly underpin the strength of the TELUS brand. Let's turn now and look at TELUS Business Solutions, or TBS, which delivered another strong quarter and again, differentiates us from telco B2B performance on a global basis. In the first quarter, TBS achieved robust EBITDA and cash flow contribution growth of 4% and 9% on a respective basis. Building on our track record of continued profitable growth, TBS experienced strong demand and product growth across all areas of our business. These efforts are progressing our goal of leading the market across both core telecom capabilities as well as our 5G-powered software-as-a-service and data insights industry solutions. In terms of agriculture and consumer goods, on the back of record sales performances over the past two quarters, we accelerated our momentum in the first quarter. Indeed, we achieved a 36% year-over-year increase in bookings in consumer goods and agribusiness. Furthermore, we delivered 8% revenue growth in animal agriculture. We remain confident in the strong growth potential in this business and anticipate positive mid to high single-digit revenue growth in the second half of the year. Let's turn now and take a look at our TELUS Health business. We achieved first quarter revenues of $420 million alongside 28% EBITDA contribution growth. On the back of on-target sales and bookings in Q1, we expect steady improvement in health services revenue growth in the quarters ahead. Strong first quarter EBITDA growth was supported by the achievement of $251 million in combined annualized LifeWorks integration and other cost synergies to date, leveraging TELUS International along the way. We continue to work towards our overall TELUS Health synergy objective of $427 million to be realized by the end of 2025, as we've committed to the street in that regard. Furthermore, we drove a 7% year-over-year increase in our globalized coverage that is now reaching nearly 72 million people. Moreover, we supported health outcomes on close to 160 million digital health transactions in the quarter, up 7% on a year-over-year basis. In addition, we increased our virtual care membership to nearly 6 million people, up 13.5% on a year-over-year basis again. As we continue to make strong progress scaling Telus Health and Telus Agriculture and Consumer Goods, we remain intensely focused on accelerating the significant growth profile of these highly differentiated global businesses that are thirsty for digital disruption to deliver better client outcomes. Importantly, we are leveraging the expertise, experience, and high-performance culture and talents of our entire team, inclusive of leveraging significant cross-selling synergies across all lines of our business. This is buttressed by the blue-chip customer relationships, leading digital customer experience, and AI cost transformation capabilities of TELUS International. On that note, earlier today, TI also reported its first quarter results. Jeff and the team announced robust cash flow generation amidst what remains a challenging global macroeconomic operating environment and a difficult prior year comparable. Despite the near-term top-line challenges, our TI team has executed against significant cost efficiency programs over the past 10 months. These efforts are positioning the business to deliver a strong 2024 in totality. TI's capacity to generate strong cash flows remains highly visible in its quarterly results. Committed to delivering profitable growth, TI's ability to service further efficiency gains will also help fuel its investment in sales and marketing, along with ongoing technology innovation. Telus remains highly confident in TI's strategy and investment thesis. This is amplified by meaningful opportunities in respect of digital transformation, and particularly with TI's capabilities in AI solutions, including generative AI and this technology's proliferation on a worldwide basis. The continuing critical importance of differentiated digital customer experience solutions in the market including a welcome and needed disruption from Gen AI, is enabling us to serve customers better and win incremental business along the way. This is creating a vibrant tailwind for both TI and Telus that will bear fruit over the medium and longer term in terms of growth and profitability. Doug's going to have an opportunity in a minute to provide further commentary on both T-TECH and Telus International's results. In closing, the record customer growth we continue to report is underpinned by our dedicated team who are passionate about delivering superior service offerings and digital capabilities over our world-leading wireless and pure fiber broadband networks. The significant broadband network investments we've made are driving extensive socioeconomic benefits for Canadians in communities across the country and will continue to do so for decades to come. These investments also enable the continued advancement of our financial and operational performance at TELUS and the long-term sustainability of our industry-leading dividend growth program. Today, we announced a 7% dividend increase, reflecting our unwavering commitment in delivering superior value to our shareholders. This builds on our extraordinarily consistent track record of delivering on our multi-year dividend growth program first established in 2011 and most recently extended through 2025, targeting annual growth in the range of seven to 10%. Today's increase represents our 26th over the past 14 years. It also reflects our unwavering confidence in delivering leading operational and financial results on a chronic basis prospectively. Importantly, our strong outlook includes anticipated and continued free cash flow expansion in the years ahead, driven by ongoing strong EBITDA growth and moderating CapEx intensity. This will further support the long-term sustainability and the quality and growth of our dividend expansion program. Finally, reflecting our team's long-standing belief in the synergistic relationship between doing well in business and doing good in our communities, May marks the official kickoff of our 19th annual TELUS Days of Giving. And we're glad that we've created emulators in this regard. given the societal benefit for all. This year, with the support of our extended TELUS family, I have every confidence that we will exceed our goal of inspiring 80,000 volunteers supporting positive outcomes in communities across the 32 countries in which we now operate as an organization. Indeed, it is thanks to the unparalleled level of caring and commitment that our team members and retirees globally have contributed 2.2 million days of giving since 2000. And this is more than any other company on the planet. And the cultural connection that we have to giving back and what it does for engagement at TELUS is the same recipe that underpins the customer service excellence at this organization and the very low churn rates that we consistently deliver against. such as the alchemy in that regard. Myself, our leadership team, and our board of directors remain consistently and exceedingly grateful for our team's passionate efforts to support our global communities as we strive to deliver outstanding results for all of the stakeholders that we serve. And on that note, I'll turn the call over to Uncle Doug.