TELUS Corporation

Good day, everyone. Welcome to the TELUS 2025 Q1 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 first quarter 2025 results, news release, MD&A financial statements, and detailed supplemental investor information were posted to our website earlier this morning. On our call today, we'll begin with remarks by Darren and Doug. For the Q&A portion, we'll be joined by Zainal, Naveen, Jason, and Tobias. Briefly, prepared remarks, slides, and answers to questions contain forward-looking statements. Actual results could vary from these statements. The assumptions on which they are based and the material risks that could cause them to differ are outlined in our public filings and securities commissions in Canada and the U.S., including our first quarter 2025 and our annual 2024 MD&A. With that, over to you, Darren.

Thank you, Remington. And hello, everyone. In the first quarter, our team's dedication to operational excellence coupled with cost efficiency, empowered Telus to deliver another quarter of industry-leading customer growth and financial performance. These results were achieved within a dynamic operating environment, demonstrating the resiliency of our business and the strength of our leading portfolio of services. Our industry-best total mobile and fixed customer growth of 218,000 net additions represented our strongest first quarter on record. This performance was driven by strong demand for our highly differentiated, integrated product offerings across mobile and home, powered by our leading pure fiber and wireless broadband networks. Our team's commitment to customer service contributed to continued strong loyalty results across our key product lines once again this quarter. And notably, post-paid mobile phone churn was 0.84%. This represents a six basis point improvement over last year as we progress through our 12th consecutive year below the 1% level. Looking at our financial results, we achieved solid and resilient T-TECH EBITDA growth of 4%. In mobile, we drove Q1 total net additions of 168,000. This includes mobile phone net additions of 20,000 and record Q1 connected device net additions of 148,000. These results were supported by our ongoing focus on economic margin accretive customer growth. And this is evidenced by our consistent industry-leading lifetime revenue underpinned by our industry-best churn. Let's turn now and take a look at our wireline business. TELUS delivered another quarter of industry-leading total fixed customer additions of 50,000, alongside industry-best fixed data services revenue growth of some 3%. Furthermore, our highly differentiated technology and data-centric growth businesses continue to demonstrate impressive momentum for TELUS. Telus Health, which we'd begun to report as a separate business segment, achieved revenue and EBITDA growth of 12% and 30%, respectively. Moreover, the team drove a 7% year-over-year increase in global lives covered to 76.5 million. This was fueled by global expansion, product enhancements, expanding sales channels, and and effective cost management through technology and synergy optimization underpinned by a deeply rooted dedication to putting customers first. We are excited to maintain and build on this momentum throughout 2025 and well beyond. Notably, since acquiring Lifeworks, we've realized $376 million in combined annualized synergies. This includes $306 million from cost efficiencies and $70 million and growing from successful cross-selling strategies, and they are plentiful. We remain on track to meet our goal of $427 million by the end of 2025, and continuing to push the outside of that envelope well beyond the 2025 timeframe. In May, TELUS acquired Workplace Options, a leading global provider of integrated employee well-being solutions with 88 million employees served across 200 countries and territories. In aggregate with TELUS Health, this brings our lives covered to more than 160 million or roughly 8% of the entire global market. Together, we will offer the most comprehensive suite of health and well-being solutions globally, powered by innovative technology and delivered with unmatched service excellence. This acquisition will be made in partnership with a leading private equity investor within the healthcare vertical. with deep expertise across the healthcare landscape, and they will be a value-added partner supporting our efforts to accelerate growth and realize significant synergies. Moreover, with Intel's agriculture and consumer goods, our team demonstrated strong performance. With a 20% revenue increase on a year-over-year basis, supported by enhanced profitability and notable margin improvements. The results that we are achieving in these businesses reflect our dedicated efforts to deliver outstanding customer experiences, maximizing shareholder value, and driving our social capitalism initiatives, all the while with a data-centric, insights-based strategy, just like our core telcos. The strategic investments we've made in our leading broadband networks underpin the continued advancement of our strong financial and operational performance. This includes, obviously, growing EBITDA, which, when combined with moderating CapEx, supports meaningful and sustainable free cash flow generation, as evidenced by the 22.3% growth this quarter. This gives us a lot of confidence in the robust outlook for consistent, long-term profitable growth and the sustainability of our industry-leading multi-year dividend growth program. Today, we're announcing a 7% dividend increase, reflecting our commitment to delivering superior value to our shareholders. This builds on our consistent track record of delivering on our multi-year dividend growth program first established in 2011. Furthermore, we announced today, for the fifth time, the extension of our industry-best dividend growth program. TELUS is targeting three to eight percent annual growth for our dividend from 2026 through 2028. This moderated growth range will allow us flexibility to support the key priority of deleveraging our balance sheet and eliminating the dividend discount drift program associated within our dividend reinvestment plan. This is in line with our target of achieving a net debt to EBITDA ratio of circa three times by 2027, in conjunction with the ratcheting down and removal of the discount dividend reinvestment plan. Our dividend growth model will be supported by the best combination of EBITDA growth rates and capital intensity ratios globally, yielding meaningful and sustainable free cash flow expansion. Moreover, as we have seen today, this is augmented maturely by significant value creation in our emerging growth businesses and a succession of asset monetization opportunities that are deeply material that will further reduce TELUS's leverage and interest outlays, improving the cash story yet again at this organization. Our management team at TELUS remains laser focused on building on the strong operational and financial performance momentum with which we exited 2024 and achieved in the first quarter. We remain dedicated to achieving our robust targets for 2025 and delivering sustainable free cash flow expansion year in and year out for the foreseeable future. Reflecting our TELUS team's longstanding commitment to putting our customers and our communities first, this month we will celebrate our 20th annual TELUS Days of Giving in 33 countries now. Over the past two decades, thanks to the support of our valued clients, We have led our corporate peers globally by contributing 2.4 million days in the communities where we live, where we work, and where we serve, striving to make the future friendly for all. If you want to understand why our churn rate is where it is, you need to look quite clearly at the relationship that we built with our communities underpinned by the social purpose of this organization. In closing, I'd like to express my gratitude to our team for their efforts in this regard and for their expertise, their resiliency, their grit in executing on our consistent winning strategy to meet our commitments to all stakeholders, no matter how difficult market conditions may be. And on that note, I'll turn the call over to Doug. Thank you, Darren, and hi, everyone.