UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of February 2025
Commission File Number 001-15144
TELUS
CORPORATION
(Translation of registrant's name into English)
23rd
Floor, 510 West Georgia Street
Vancouver, British Columbia V6B 0M3
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F
¨
Form 40-F x
Signatures
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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TELUS CORPORATION |
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By: |
/s/ Andrea Wood |
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Name: |
Andrea Wood |
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Title: |
Executive Vice President and Chief Legal and Governance Officer |
Date: February 13, 2025
Exhibit Index
Exhibit 99.1
 | News Release |
February 13, 2025
TELUS
reports robust operational and financial results for fourth quarter 2024; announces 2025 financial targets
Industry-leading total
Mobile and Fixed customer growth of 328,000 in the fourth quarter, driven by strong demand for our leading portfolio of bundled services
across Mobility and Fixed in combination with TELUS’ leading and pervasive broadband networks
Strong customer growth includes Mobile Phone
and Connected Device net additions of 70,000 and 194,000, respectively, alongside industry-leading Fixed customer net additions of 64,000,
including 37,000 internet customer additions
Mobility and Fixed customer additions of
1,216,000 for the full year, representing the third consecutive year of net additions above the one million threshold
TTech Operating Revenues higher by 4.1 per
cent and strong TTech Adjusted EBITDA growth 7.0 per cent in the fourth quarter, reflecting important cost-to-serve efficiency improvements
yielding higher margin per user, gains from real estate and copper monetization, in addition to continued double digit momentum in health
EBITDA contribution growth
For the full year, TTech Operating Revenue
higher by 1.8 per cent, TTech Adjusted EBITDA increased 5.5 per cent achieving low end of target range alongside margin expansion of 110
basis points to 38.2 per cent; Consolidated Free Cash Flow of approximately $2.0 billion, up 12 per cent over prior year
Targeting 2025 TTech Operating Revenues and
Adjusted EBITDA to increase by circa 2 to 4 per cent and circa 3 to 5 per cent, respectively; Consolidated Capital Expenditures excluding
real estate of approximately $2.5 billion; Consolidated Free Cash Flow of approximately $2.15 billion in 2025, supporting balance sheet
strength and continued deleveraging along with our industry-leading dividend growth program
Vancouver, B.C. –
TELUS Corporation today released its unaudited results for the fourth quarter of 2024. Consolidated operating revenues and other income
increased by 3.5 per cent over the same period a year ago to $5.4 billion. This growth was driven by higher service revenue and higher
other income from real estate and copper monetization in our TELUS technology solutions (TTech) segment, offset by lower service revenue
in our TELUS digital experience segment (TELUS Digital).
Within TTech, higher revenue from the expansion of mobile, residential
internet, TV and security subscribers, health services, agriculture and consumer goods services, were partially offset by rate reductions
in mobile network, lower fixed legacy voice and TV services revenues due to technological substitution. The decline in TELUS Digital operating
revenues were from lower external revenues reflecting reduced revenue from certain technology and eCommerce clients, partially offset
by the favourable foreign currency impact. See Fourth Quarter 2024 Operating Highlights within this news release for a discussion
on TTech and TELUS Digital results.
“In the fourth quarter, our team’s relentless pursuit of
operational excellence continued to differentiate the TELUS organization, driving significant customer growth and robust financial results,”
said Darren Entwistle, President and CEO. “Through our premier asset portfolio and unwavering commitment to cost efficiency, we
delivered strong profitable growth to close out 2024 - momentum we intend to build upon in 2025. Our focus on margin-accretive customer
expansion, globally leading broadband networks, and a customer-centric culture enabled us to achieve industry-best total customer net
additions in the fourth quarter of 328,000, with 70,000 mobile phone customer additions, 194,000 connected devices, and 64,000 fixed net
additions. Furthermore, this growth culminated in our third consecutive year of surpassing one million mobility and fixed customer additions,
with a total of more than 1.2 million new customer additions. This performance is a testament to our unmatched bundled product offerings
across Mobile and Home, powered by our PureFibre and wireless broadband networks. Indeed, our team’s passion for delivering customer
service excellence contributed to continued strong loyalty across our key product lines, once again this quarter. Notably, postpaid mobile
phone churn of 0.99 per cent for the full year marks the eleventh consecutive year at less than one per cent.”
“Within our global data businesses, our team is delivering strong
results. In TELUS Health, our team achieved accelerated revenue growth in the fourth quarter of 10 per cent, fueled by strategic investments
with strong execution in acquisitions, products, sales, and distribution channels. We also saw a 20 per cent Adjusted EBITDA contribution
growth, driven by increased revenue and a focus on cost controls leveraging both technology and synergy enablers. Since acquiring LifeWorks,
we have achieved $355 million in combined annualized synergies, inclusive of $294 million in cost synergies and $61 million in cross-selling,
and we remain on track to deliver our stated goal of $427 million by year end 2025. Additionally, we drove a 9.6 per cent year-over-year
increase in global lives covered to over 76 million. TELUS Agriculture & Consumer Goods demonstrated robust performance, with
revenue increasing by 16 per cent, supported by increasing profitability and margin contributions. These results underscore our commitment
to leveraging our unique global businesses to maximize shareholder value and progress our leadership in social capitalism, and we look
forward to continuing the momentum in these businesses in 2025 and beyond.”
Darren further commented, “Our strategic investments in our leading
broadband network, particularly in our highly valuable fibre and wireless assets, underpin the continued advancement of our financial
and operational performance. These investments enable consistent, long-term profitable growth, supported by our unique asset base, customer
experience leadership, and world-leading networks. This gives us confidence in the robust outlook for our business and our ability to
deliver on the annual targets for 2025 that we announced today. These targets include TTech Operating Revenue and Adjusted EBITDA growth
of up to 4 per cent and 5 per cent, respectively; Consolidated Free Cash Flow of approximately $2.15 billion; supported by moderating
Consolidated Capital Expenditures of approximately $2.5 billion. Our team’s exceptional skill and execution excellence, alongside
our attractive Free Cash Growth outlook, underpin our sustainable multi-year dividend growth program, now in its fifteenth year. This
is buttressed by one of the lowest industry capital intensity ratios globally, alongside compelling monetization opportunities that we
anticipate supporting meaningful deleveraging, also a key area of focus for 2025 and beyond. Indeed, we are targeting to achieve a net
debt to EBITDA ratio of approximately 3-times in 2027, in conjunction with the contemporaneous removal of the discounted dividend re-investment
plan, preceded by a ratcheting down of the plan in 2026. In May, per our established cycle, we will provide an update on our dividend
growth program for 2026 through 2028 and, more generally, for the return of capital to shareholders.”
“Our TELUS team is equally committed to driving positive social
outcomes in our communities,” continued Darren. “Demonstrating our passion for making the future friendly, our TELUS team
members and retirees volunteered 1.5 million hours, globally, in 2024, marking our eighth consecutive year surpassing one million volunteer
hours and making 2024 our most giving year ever. Since 2000, our TELUS family has volunteered 2.4 million days of giving – more
than any other company in the world.”
Doug French, Executive Vice-president and CFO, said, “Our fourth
quarter results underscore our consistent operational execution amidst a dynamic environment. We achieved TTech operating revenue growth
of 4.1 per cent driven by mobile equipment and fixed data revenue growth, as well as strong financial contributions from our health and
agriculture and consumer goods lines of service. Notably, TTech Adjusted EBITDA increased by 7 per cent in the fourth quarter, and for
the full year, TTech Adjusted EBITDA growth was 5.5 per cent, achieving the low end of our full year target, demonstrating our unparalleled
track record of execution excellence. This growth was driven by our consistent emphasis on profitable customer growth, the benefits from
our ongoing focus on cost efficiency and effectiveness, gains from our real estate and copper monetization program, as well as increasing
margin contribution from TELUS Health and TELUS Agriculture & Consumer Goods. Free cash flow of approximately $2.0 billion was
slightly below our updated full year target from the effects of contract asset and device financing, associated with our strong growth
in contracted volumes, and increased restructuring payments. This was partially offset by lower capital expenditures, which came in below
our full year target."
"Our financial and balance sheet position remains healthy as we
begin 2025. At the end of the fourth quarter, we had approximately $2.9 billion of available liquidity, an average cost of long-term debt
of 4.37 per cent, and an average term to maturity of long-term debt of more than 10 years. We expect our net debt to EBITDA ratio to improve
in 2025, supported by sustainable EBITDA growth and prudent capital allocation initiatives.”
"For 2025, we are confident in driving strong, sustainable growth
despite a competitive market, supported by our robust asset mix and resilient business strategy. We anticipate continued free cash flow
expansion underpinned by strong EBITDA growth and stable capital expenditures as we drive towards the 10 per cent capital intensity level.
Our asset monetization opportunities, including our ongoing real estate and copper initiatives, as well as other strategic levers, will
support our deleveraging plans and ensures we remain well-equipped to deliver strong, sustainable growth well into the future," concluded
Doug.
As compared to the same period a year ago, net income in the quarter
of $320 million was up 3.2 per cent and Basic earnings per share (EPS) of $0.24 increased by 20 per cent. These increases were driven
by the after-tax impacts of growth in operating income partially offset by an increase in financing costs, driven by the impact of unrealized
changes in virtual power purchase agreements forward element and higher interest expense.
As it relates to EPS, the increase also reflects the effect of a higher
number of Common shares outstanding. When excluding certain costs and other adjustments (see ‘Reconciliation of adjusted Net
income’ in this news release), adjusted net income of $380 million increased by 11 per cent over the same period last year,
while adjusted basic EPS of $0.25 was up 4.2 per cent over the same period last year. Adjusted net income is a non-GAAP financial measure
and adjusted basic EPS is a non-GAAP ratio. For further explanation of these measures, see ‘Non-GAAP and other specified financial
measures’ in this news release.
Compared to the same period last year, consolidated EBITDA increased
by 3.7 per cent to approximately $1.8 billion and reflects lower restructuring and other costs, primarily related to significant investments
in cost efficiency and effectiveness programs, inclusive of real estate rationalization. Adjusted EBITDA decreased modestly by 0.6 per
cent to more than $1.8 billion and reflects: (i) mobile, residential internet, security, and TV subscriber growth (excluding the first
quarter 2024 Pik TV subscriber base adjustment); (ii) broad-based cost reduction efforts, including workforce reductions, synergies achieved
between LifeWorks and our legacy health business, and increased adoption of TELUS Digital’s solutions across TTech operations,
resulting in competitive benefits given the lower cost structure in TELUS Digital, as well as reductions in administrative and marketing
costs; (iii) higher gains on real estate and increases in reversals of business combination-related provision; (iv) higher health services
margin; and (v) higher agriculture and consumer goods margins. These factors were partly offset by: (i) lower mobile phone ARPU; (ii)
declining fixed legacy voice and TV margins; (iii) an increase in bad debt expense; (iv) higher network operations costs; (v) increased
costs of subscription-based licences and cloud usage; and (vi) lower TELUS Digital Adjusted EBITDA driven in part by higher investments
in corporate initiatives such as expansion of its commercial sales team and operational effectiveness programs.
In the fourth quarter of 2024, we added 328,000 net customer additions,
down 76,000 over the same period last year, and inclusive of 70,000 mobile phones and 194,000 connected devices, in addition to 37,000
internet, 27,000 TV and 10,000 security customer connections. This was partly offset by residential voice losses of 10,000. Our total
TTech subscriber base of 20.2 million is up 5.9 per cent over the last twelve months, reflecting a 3.5 per cent increase in our mobile
phones subscriber base to over 10.1 million and a 20 per cent increase in our connected devices subscriber base to over
3.7 million. Additionally, our internet connections grew by 5.1 per cent over the last twelve months to approximately 2.8 million customer
connections, our TV customer base stands at approximately 1.4 million customer connections, and our security subscriber base increased
by 6.1 per cent to more than 1.1 million customer connections. Our residential voice subscriber base declined slightly by 3.3 per cent
to more than 1.0 million.
In health services, as of the end of the fourth quarter of 2024, virtual
care members were 6.5 million and healthcare lives covered were 76.2 million, up 16 per cent and 9.6 per cent over the past twelve months,
respectively. Digital health transactions in the fourth quarter of 2024 were 169.8 million, up 7.5 per cent over the fourth quarter of
2023.
Cash provided by operating activities of $1.1 billion decreased by
18 per cent in the fourth quarter of 2024, primarily driven by other working capital changes and an increase in income taxes paid, net,
partially offset by increased EBITDA.
Free cash flow of $534 million decreased by 10 per cent compared to
the same period a year ago, reflecting the timing related to device subsidy repayments and associated revenue recognition and our TELUS
Easy Payment device financing program, increased income taxes paid, and increased interest paid. These factors were partly offset by lower
capital expenditures.
Consolidated capital expenditures of $551 million,
increased by $18 million or 3.4 per cent in the fourth quarter of 2024. The increase primarily reflects TTech real estate development
capital expenditures of $128 million, which increased by $81 million in the fourth quarter of 2024. This was partially offset by TTech
operations, which drove a $58 million decrease in the fourth quarter of 2024, primarily as a result of the planned slowdown of our fibre
and wireless network builds. TELUS Digital capital expenditures increased by $11 million in the fourth quarter of 2024, primarily driven
by increased spend in the development and enablement of Fuel iXTM and AI platforms and customer experience facilities
expansion.
As at December 31, 2024, our 5G network covered approximately
32.3 million Canadians, representing over 87 per cent of the population.
Consolidated Financial Highlights
| C$ millions, except footnotes and unless noted otherwise | |
Three months ended
December 31 | | |
Per cent | |
| (unaudited) | |
2024 | | |
2023 | | |
change | |
| Operating revenues (arising from contracts with customers) | |
| 5,331 | | |
| 5,156 | | |
| 3.4 | |
| Operating revenues and other income | |
| 5,381 | | |
| 5,198 | | |
| 3.5 | |
| Total operating expenses | |
| 4,622 | | |
| 4,534 | | |
| 1.9 | |
| Net income | |
| 320 | | |
| 310 | | |
| 3.2 | |
| Net income attributable to common shares | |
| 358 | | |
| 288 | | |
| 24.3 | |
| Adjusted Net income(1) | |
| 380 | | |
| 341 | | |
| 11.4 | |
| Basic EPS ($) | |
| 0.24 | | |
| 0.20 | | |
| 20.0 | |
| Adjusted basic EPS(1) ($) | |
| 0.25 | | |
| 0.24 | | |
| 4.2 | |
| EBITDA(1) | |
| 1,770 | | |
| 1,705 | | |
| 3.7 | |
| Adjusted EBITDA(1) | |
| 1,838 | | |
| 1,847 | | |
| (0.6 | ) |
| Capital expenditures(2) | |
| 551 | | |
| 533 | | |
| 3.4 | |
| Cash provided by operating activities | |
| 1,077 | | |
| 1,314 | | |
| (18.0 | ) |
| Free cash flow(1) | |
| 534 | | |
| 595 | | |
| (10.3 | ) |
| Total telecom subscriber connections(3) (thousands) | |
| 20,175 | | |
| 19,056 | | |
| 5.9 | |
| Healthcare lives covered (millions) | |
| 76.2 | | |
| 69.5 | | |
| 9.6 | |
| (1) | These are non-GAAP and other specified financial measures, which do not have standardized meanings under IFRS Accounting Standards
and might not be comparable to those used by other issuers. For further definitions and explanations of these measures, see ‘Non-GAAP
and other specified financial measures’ in this news release. |
| | | |
| (2) | Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and consequently differ
from Cash payments for capital assets, excluding spectrum licences, as reported in the consolidated financial statements. Refer to Note
31 of the consolidated financial statements for further information. |
| | | |
| (3) | The sum of active mobile phone subscribers, connected device subscribers, internet subscribers, residential voice subscribers, TV
subscribers and security subscribers, measured at the end of the respective periods based on information in billing and other source systems.
Effective for the first quarter of 2024, with retrospective application to January 1, 2023, we reduced our mobile phone subscriber
base by 283,000 subscribers to remove a subset of our public services customers that are now subject to dynamic pricing auction models.
We believe adjusting our base for these low margin customers provides a more meaningful reflection of the underlying performance of our
mobile phone business and our focus on profitable growth. As a result of this change, associated operating statistics (ARPU and churn)
have also been adjusted. Effective January 1, 2024, on a prospective basis, we adjusted our TV subscriber base to remove 97,000 subscribers,
as we have ceased marketing our Pik TV® product. |
Fourth Quarter 2024 Operating Highlights
TELUS technology solutions (TTech)
| · | TTech operating revenues (arising from contracts with customers) increased by $180 million or 4.1 per cent in the fourth quarter of
2024, primarily reflecting increases in mobile equipment and other service revenues, fixed data services revenues, fixed equipment and
other service revenues, health services and agriculture and consumer goods services, as described below. Decreases in fixed voice services
revenues and mobile network revenue were partial offsets. |
| · | TTech EBITDA increased by $194 million or 13 per cent in the fourth
quarter of 2024, while TTech Adjusted EBITDA increased by $113 million or 7.0 per cent, reflecting: (i) mobile, residential internet,
security, and TV subscriber growth (excluding the first quarter 2024 Pik TV subscriber base adjustment); (ii) broad-based cost reduction
efforts, including workforce reductions, synergies achieved between LifeWorks and our legacy health business, and increased adoption of
TELUS Digital’s solutions across TTech operations, resulting in competitive benefits given the lower cost structure in TELUS Digital,
as well as reduction in administrative and marketing costs; (iii) higher gains on real estate projects; (iv) higher health services margin;
and (v) higher agriculture and consumer goods margins. These factors were partially offset by: (i) lower mobile phone ARPU; (ii) higher
bad debt expense; (iii) declining fixed legacy voice and TV margins; (iv) lower mobile equipment margins; (v) higher network operations
costs; and (vi) increased subscription-based licences and cloud usage costs. |
Mobile products and services
| · | Mobile network revenue decreased by $1 million or 0.1 per cent in the fourth quarter of 2024, largely due to lower mobile phone ARPU,
offset by growth in our mobile phone subscriber base and an increase in IoT connections. |
| · | Mobile equipment and other service revenues increased by $79 million or 11 per cent in the fourth quarter of 2024, due to higher contracted
volumes attributable to aggressive promotional activity during the fourth quarter and the impact of higher-value smartphones in the sales
mix. |
| · | TTech mobile products and services direct contribution decreased by
$34 million or 2.2 per cent in the fourth quarter of 2024, largely reflecting the impact of lower mobile phone ARPU, higher amortization
of deferred commissions attributable to growth in retail traffic in the fourth quarter and prior periods, and lower mobile equipment margin
from increased discounting, despite higher contracted volume. These factors were partly offset by mobile phone subscriber growth. |
| · | Mobile phone ARPU was $58.05 in the fourth quarter of 2024, reflecting
a decrease of $2.15 or 3.6 per cent, attributable to the adoption of base rate plans with lower prices in response to more intense marketing
and promotional price competition targeting both new and existing customers, and a decline in overage and roaming revenues, partly offset
by higher IoT revenue. We are seeing a continuing increase in the adoption of unlimited data and Canada-U.S.-Mexico plans which provide
higher and more stable ARPU on a monthly basis while also giving customers cost certainty in lower roaming fees to the U.S. and Mexico
and lower data overage fees, respectively. |
| · | Mobile phone gross additions were 523,000 in the fourth quarter of
2024, reflecting a decrease of 22,000, driven by decelerating growth in the Canadian population and a greater emphasis on premium and
profitable loading, partly offset by our shift to digital loading. The deceleration in immigration growth, observed later in 2024, is
limiting our ability to add to our subscriber base. |
| · | Mobile phone net additions were 70,000 in the fourth quarter of 2024, reflecting a decrease of 56,000, driven by a higher mobile phone
churn rate and lower mobile phone gross additions. |
| · | Our mobile phone churn rate was 1.50 per cent in the fourth quarter
of 2024, compared to 1.44 per cent in the fourth quarter of 2023, largely as a result of customer switching decisions in response to more
intense marketing and promotional price competition, in addition to an increase in the adoption of BYOD plans. These factors have been
partly mitigated by our continued focus on customer retention and our industry-leading service and network quality, along with successful
promotions and bundled offerings. |
| · | Connected device net additions were 194,000 in the fourth quarter of 2024, and were largely comparable to the 203,000 net additions
in the prior year. |
Fixed products and services
| · | Fixed data services revenues increased by $40 million or 3.5 per cent
in the fourth quarter of 2024, driven by growth in our internet, security and TV subscriber bases. These factors were partially offset
by lower TV revenue per customer, reflecting an increased mix of customers selecting smaller TV combination packages and technological
substitution. |
| · | Fixed voice services revenues decreased by $15 million or 8.0 per cent in the fourth quarter of 2024, reflecting the ongoing decline
in legacy voice revenues as a result of technological substitution and price plan changes. Declines were partly mitigated by the success
of our bundled product offerings and our retention efforts. |
| · | Fixed equipment and other service revenues increased by $18 million or 17 per cent in the fourth quarter of 2024, largely due to higher
one-time business sales. |
| · | TTech fixed products and services direct contribution increased by $65 million or 5.0 per cent in the fourth quarter of 2024, primarily
driven by continued internet and security subscriber growth, growth in health services revenue, and increased agriculture and consumer
goods revenues. These were partly offset by declines in legacy voice and TV margins attributable to technological substitution. |
| · | Internet net additions were 37,000 in the fourth quarter of 2024, reflecting
an increase of 1,000, attributable to driving strong gross additions through robust sales strategies and the strength of our fibre optic
offering. These factors were partially offset by a slightly elevated churn rate. |
| · | TV net additions were 27,000 in the fourth quarter of 2024, reflecting
an increase of 4,000, attributable to our diverse offerings, which address the changing needs and preferences of consumers, partially
offset by a higher churn rate due to the same factors also impacting internet net additions. |
| · | Security net additions were 10,000 in the fourth quarter of 2024, reflecting
a decrease of 13,000, primarily due to a higher churn rate related to an increased mix of self-monitored plans in our subscriber base
and modestly lower gross additions. |
| · | Residential voice net losses were 10,000 in the fourth quarter of 2024, reflecting an increase of 3,000 losses. Our bundled product
and lower-priced offerings have been successful in mitigating losses and minimizing substitution to mobile and internet-based services. |
Health services
| · | Through TELUS Health, we are leveraging technology to deliver connected solutions and services, improving access to care and revolutionizing
the flow of information while facilitating collaboration, efficiency, and productivity across the healthcare ecosystem, progressing our
vision of transforming healthcare and empowering people to live healthier lives. |
| · | Health services revenues increased by $43 million or 10 per cent in
the fourth quarter of 2024, primarily driven by business acquisitions related to employee and family assistance programs and organic growth,
virtual pharmacy sales, and an increase in the demand for health benefits management services and retirement benefits solutions. |
| · | At the end of the fourth quarter of 2024, 6.5 million members were
enrolled in our virtual care services, an increase of 0.9 million over the past 12 months, attributable to the ongoing adoption of virtual
solutions that keep Canadians and others safely connected to health and wellness care. |
| · | At the end of the fourth quarter of 2024, our healthcare programs covered
76.2 million lives, an increase of 6.7 million over the past 12 months, mainly reflecting robust growth in our employee and family assistance
programs by both new and existing clients across all of our operating regions, in addition to continued demand for virtual solutions. |
| · | Digital health transactions were 169.8 million in the fourth quarter
of 2024, reflecting an increase of 11.9 million, largely driven by growth in the paid exchange of healthcare data between our health benefits
management system and care providers. |
Agriculture and consumer goods services
| · | Through TELUS Agriculture & Consumer Goods, we provide innovative digital solutions and actionable data-insights that better
connect the global supply chain, driving more efficient production processes and improving the safety, quality and sustainability of food
and consumer goods. Importantly, these efforts are also enabling better traceability to the end consumer, further supporting improved
food outcomes. |
| · | Agriculture and consumer goods services revenues increased by $16 million
or 16 per cent, primarily attributable to business acquisitions and improving organic growth in consumer goods services. These factors
were partially offset by a higher agriculture customer churn rate due to competitive pressures. |
TELUS Digital
| · | TELUS Digital operating revenues (arising from contracts with customers) decreased by $5 million or 0.7 per cent in the fourth quarter
of 2024, due to lower revenue from certain technology and eCommerce clients, partially offset by the favourable foreign currency impact.
Revenues from contracts denominated in U.S. dollars, European euros and other currencies will be affected by changes in foreign exchange
rates. |
| · | TELUS Digital operating revenues increased by $27 million or 2.9 per
cent in the fourth quarter of 2024 as described below. |
| ○ | Revenue from our tech and games industry vertical increased by $6 million or 1.5 per cent in the fourth quarter of 2024, due to a
favourable foreign currency impact, despite lower volumes, partially offset by growth from new and existing clients. |
| ○ | Revenue from our communications and media industry vertical increased by $5 million or 2.0 per cent in the fourth quarter of 2024,
driven primarily by more services provided to the TTech segment, partially offset by lower service revenue from certain other telecommunication
clients. |
| ○ | Revenue from our eCommerce and fintech industry vertical decreased
by $6 million or 6.3 per cent in the fourth quarter of 2024, due to a decline in service volumes from certain clients. |
| ○ | Revenue from our healthcare industry vertical increased by $4 million or 6.7 per cent in the fourth quarter of 2024, primarily due
to additional services provided to the healthcare business unit of the TTech segment. |
| ○ | Revenue from our banking, financial services and insurance industry vertical increased by $11 million or 24 per cent in the fourth
quarter of 2024, due to growth from certain Canadian-based banks and smaller regional financial services firms in North America. |
| ○ | All other verticals increased by $7 million or 7.5 per cent in the fourth quarter of 2024, due to seasonality and higher service volume
demand from certain clients in the travel and hospitality, and retail and consumer packaged goods industry verticals. |
| · | TELUS Digital EBITDA decreased by $113 million or 47 per cent in the
fourth quarter of 2024 while TELUS Digital Adjusted EBITDA decreased by $106 million or 42 per cent. The decrease in Adjusted EBITDA was
primarily due to: (i) higher investments in strategic areas, including expansion of our commercial sales team, development and launch
of new products and services, such as Fuel iX, and programs to enable operational efficiencies, which resulted in increases in salaries
and benefits and goods and services purchased for the period; (ii) higher share-based compensation in the current period; (iii) prior
period’s other income arising from business combination related provisions related to the WillowTree put revaluation; and (iv) certain
non-recurring items, which benefited the fourth quarter in 2023. |
TELUS sets 2025 financial targets
TELUS’ financial targets for 2025 are guided by a number of long-term
financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2024 annual MD&A. With these policies
in mind, our financial targets for 2025 are presented below.
| |
2025 targets |
| TTech Operating revenues(1) |
Growth of 2 to 4% |
| TTech Adjusted EBITDA |
Growth of 3 to 5% |
| Consolidated Free cash flow |
Approximately $2.15 billion |
| Consolidated Capital expenditures(2) |
Approximately $2.5 billion |
| (1) | For 2025, we are guiding on TTech Operating revenues, which excludes other income. TTech Operating revenues for 2024 were $17,407
million. |
| (2) | Excludes $100 million targeted towards real estate development initiatives. |
The preceding disclosure respecting TELUS’ 2025 financial
targets is forward-looking information and is fully qualified by the ‘Caution regarding forward-looking
statements’ in the 2024 annual MD&A filed on the date hereof on SEDAR+, especially Section 10 Risks and Risk
Management thereof which is hereby incorporated by reference, and is based on management’s expectations and assumptions as
set out in Section 9.3 TELUS assumptions for 2025 in the 2024 annual MD&A. This
disclosure is presented for the purpose of assisting our investors and others in understanding certain key elements of our expected
2025 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate
for other purposes.
Dividend Declaration
The TELUS Board of Directors declared a quarterly dividend
of $0.4023 per share on the issued and outstanding Common Shares of the Company payable on April 1, 2025 to holders of record at the close
of business on March 11, 2025. This quarterly dividend reflects an increase of 7.0 per cent from the $0.3761 per share dividend declared
one year earlier and consistent with our multi-year dividend growth program. When a dividend payment date falls on a weekend or holiday,
the payment shall be made on the next succeeding day that is a business day.
Corporate Highlights
TELUS makes significant contributions and investments in the communities
where team members live, work and serve and to the Canadian economy on behalf of customers, shareholders and team members. These include:
| · | Paying, collecting and remitting approximately $2.3 billion in 2024 to federal, provincial and municipal governments in Canada consisting
of corporate income taxes, sales taxes, property taxes, employer portion of payroll taxes and various regulatory fees. Since 2000, we
have remitted in excess of $38 billion in these taxes. |
| · | Investing approximately $2.6 billion in capital expenditures primarily
in communities across Canada in 2024 and over $56 billion since 2000. |
| · | Disbursing spectrum renewal fees of more than $56 million to Innovation, Science and Economic Development Canada in 2024. Since 2000,
our total tax and spectrum remittances to federal, provincial and municipal governments in Canada have totalled more than $46 billion. |
| · | Spending $9.9 billion in total operating expenses in 2024, including goods and services purchased of $6.7 billion. Since 2000, we
have spent $169 billion and $114 billion, respectively, in these areas. |
| · | Generating a total team member payroll of $3.7 billion in 2024, including wages and other employee benefits, and payroll taxes of
approximately $190 million. Since 2000, total team member payroll totals $65 billion. |
| · | Returning approximately $2.3 billion in 2024 to individual shareholders, mutual fund owners, pensioners and institutional investors.
Since 2004, we have returned more than $27 billion to shareholders through our dividend and share purchase programs, including over $22
billion in dividends and $5.2 billion in share repurchases, representing approximately $18 per share. |
Community Highlights
Empowering Canadians with Connectivity
| ● | Throughout 2024, we continued to leverage our TELUS Connecting for Good® programs to support marginalized individuals
by enhancing their access to both technology and healthcare, as well as our TELUS Wise® program to improve digital literacy
and the awareness of online safety knowledge. Since the launch of these programs, they have provided support for over 1.3 million Canadians. |
| ○ | During the year, we welcomed over 8,400 new households to our Internet for Good® program. Since we launched the program
in 2016, we have connected 63,500 households, making low-cost high-speed internet available to 200,000 low-income seniors and members
of low-income families, persons with disabilities, government-assisted refugees and youth leaving foster care. |
| ○ | Our Mobility for Good® program offers free or low-cost smartphones and mobility plans to youth aging out of foster
care, low-income seniors and families across Canada, as well as government-assisted refugees and Indigenous women at risk of, or experiencing
violence. During the year, we added more than 9,500 marginalized individuals to the program. Since we launched Mobility for Good in 2017,
the program has provided support for over 61,800 people. |
| ■ | In May 2024, we expanded Mobility for Good to 800,000 eligible low-income families that are receiving the maximum Canada Child
Benefit. |
| ■ | During the second quarter of 2024, we expanded the Mobility for Good for Indigenous Women at Risk program to include the province
of Quebec, in partnership with Quebec Native Women and Quebec First Nations Women’s Space. Since we launched Mobility for Good for
Indigenous Women at Risk in 2021, we have provided support for over 4,200 individuals nationally. |
| ○ | Our Health for Good® mobile health clinics facilitated 60,000 patient visits during the year. Since the program’s
inception in 2014, we have enabled 260,000 cumulative patient visits in 27 communities across Canada, bringing primary and mental healthcare
to individuals experiencing homelessness. |
| ■ | In September 2024, we raised our overall commitment to the TELUS Health for Good program to more than $16 million through 2027
and launched a new mobile health clinic, bringing primary care and harm reduction services directly to people experiencing homelessness
across the B.C. Interior. |
| ○ | During the year, our Tech for Good® program provided access to personalized assessments, recommendations and training
on mobile devices, computers, laptops and related assistive technology and/or access to discounted mobile plans for more than 3,800 Canadians
living with disabilities, enabling them to make improvements in their quality of life and independence. Since its inception in 2017, we
have provided support for over 12,600 individuals in Canada who are living with disabilities, through the program and/or the TELUS Wireless
Accessibility Discount. |
| ○ | During 2024, 120,300 individuals in Canada and around the world participated in virtual TELUS Wise workshops and events to improve
their digital literacy and awareness of online safety, bringing the total cumulative number of participants to over 800,000 since the
program launched in 2013. |
Giving Back to Our Communities
| ● | Currently, we have 19 TELUS Community Boards, 13 operating in Canada and six internationally. Our Community Boards entrust local leaders
to make recommendations on the allocation of grants in their communities. These grants support registered charities that offer health,
education or technology programs to help youth. Since 2005, our 19 TELUS Community Boards and TELUS Friendly Future Foundation®
(the Foundation) have supported 34.5 million youth in need across Canada, and around the world, by granting more than $135 million in
cash donations to 10,600 charitable initiatives. |
| ○ | During the third quarter of 2024, we announced a major milestone in charitable giving in Canada, as the TELUS Community Board program
reached a total of $100 million in donations to local charities across the country since inception in 2005. |
| ● | Working in close partnership with the 13 TELUS Community Boards in Canada, the Foundation distributes grants to charities that promote
education, health and well-being for youth across the country. In addition, through the TELUS Student Bursary program, the Foundation
provides bursaries for post-secondary students who face financial barriers and are committed to making a difference in their communities.
During 2024, the Foundation provided support to 1.3 million youth by granting $10.8 million in cash donations and bursaries to more
than 550 Canadian registered charities, community partners and projects. Since its inception in 2018, the Foundation has directed $57.6
million in cash donations to our communities and in bursary grants, helping 16.5 million youth reach their full potential. |
| ○ | In June 2024, the Foundation hosted its inaugural fundraising gala. More than 700 guests attended the event, which raised over
$2.5 million to provide support to youth from underserved communities. |
| ○ | During
the fourth quarter of 2024, the Foundation awarded $2.2 million in bursaries to more than
500 post-secondary students. This is an investment in the future, empowering the next generation
of changemakers on their educational path. Since the program’s inception in 2023, the
Foundation has awarded bursaries totalling over $4 million to more than 1,000 students across
Canada. For more information about the TELUS Student Bursary program, please visit friendlyfuture.com/bursary. |
| ● | The TELUS Indigenous Communities Fund offers grants for Indigenous-led social, health and community programs. In 2024, the Fund allocated
$350,000 in cash donations to Indigenous-led organizations across Canada. Since its inception in 2021, the Fund has distributed $935,000
in cash donations to 42 community programs supporting food security, education, cultural and linguistic revitalization, wildfire relief
efforts, and the health, mental health and well-being of Indigenous Peoples across Canada. |
| ● | In 2024, our global TELUS family volunteered 1.5 million hours for the second consecutive year, with more than one million hours volunteered
in each of the past eight years |
| ○ | In May 2024, our 19th annual TELUS Days of Giving® inspired 83,000 TELUS team members, retirees, family and friends
to volunteer across 33 countries in support of our local communities, overtaking the record set in the previous year and making this year
our most giving year to date. |
| ● | In August 2024, in support of the many people impacted by the wildfires in Jasper, Alberta, TELUS, our team members, customers
and the Foundation have enabled more than $200,000 in cash donations and in-kind contributions. Our assistance included the distribution
of disaster kits, deployment of our portable cell towers on wheels to ensure 9-1-1 access and partnership with the Red Cross to establish
recovery centres. |
Leading in ESG and Sustainability
| ● | Throughout 2024, we maintained our global leadership in sustainability, in line with our commitment to support a nature-positive future.
Key milestones over the past year included: |
| ○ | Planting over eight million trees across more than 5,300 hectares of land through TELUS Environmental Solutions, a subsidiary that
provides reforestation services and partners with like-minded organizations to offer a range of climate solutions that can have positive
social and environmental impacts around the world. Over the past two decades, we have planted over 13 million trees across more than
8,600 hectares. |
| ○ | Supporting the circular economy with our program of reusing, repairing and recycling wireless devices, which has diverted more than
15 million devices from landfills since 2005. |
| ○ | Reducing TELUS’ energy intensity by 57 per cent and GHG emissions by 51 per cent since 2010. |
Investing in Social Impact
| ● | TELUS Pollinator Fund for Good® made multiple equity investments during 2024, including U.K.-based Waymap, a technology
company offering an accessibility-first, highly accurate navigation app that works outdoors, indoors and even deep underground. During
the second quarter of 2024, one of the Fund’s portfolio investments, Dryad Networks, a Germany-based company that offers Internet
of Things (IoT) sensors for ultra-early wildfire detection within minutes, entered into a TELUS reseller agreement. Since it was established
in 2020, the Fund has invested over $50 million in more than 30 socially innovative companies, with 39 per cent led by women and 45 per
cent led by Indigenous or other racialized founders. |
Global Awards and Third Party Recognition
| ● | During the year, we received recognition for our global leadership in social capitalism, including: |
| ○ | In January 2024, we were included in the Corporate Knights 2024 Global 100 Most Sustainable Corporations in the World –
the 12th time we have been included since its inception in 2005. |
| ○ | In June 2024, we were recognized by TIME Magazine and Statista in their inaugural list of the World’s Most Sustainable
Companies, placing 21st among 500 companies globally. We were named the most sustainable telecommunications company in Canada and the
second most sustainable Canadian company overall, in recognition of more than 20 years of global leadership in corporate citizenship and
philanthropy, innovation management, and environmental and social impact reporting. |
| ○ | In June 2024, we were named to the Corporate Knights Best 50 Corporate Citizens in Canada for the 18th time. |
| ○ | In October 2024, we were selected by March of Dimes Canada as the recipient of its Corporate Changemaker of the Year Award,
in recognition of our efforts in support of equity and inclusion for people with disabilities. |
| ○ | At the World Sustainability Awards 2024 held in Amsterdam during the fourth quarter of 2024, we were recognized with the Sustainability
Excellence Award for our global leadership and commitment to building a better, more sustainable future. |
| ○ | During the fourth quarter of 2024, we were named as one of Canada’s Most Responsible Companies 2025 by Newsweek and Statista,
ranking in the top three and placing first in the media and telecommunication sector. |
| ○ | In December 2024, we were named to the Dow Jones Sustainability North America Index for the 24th consecutive year. |
| ● | In April 2024, we were recognized as one of the top 10 most valuable
brands in Canada for the third consecutive year, as well as the most valuable Canadian telecom brand. In its Canada 100 2024 Ranking
report, Brand Finance valued our 2024 brand at $11.7 billion (US$8.6 billion), up more than 12 per cent year-over-year – our
highest third-party brand valuation ever. |
| ● | In January 2025, Brand Finance valued our brand at US$9.0 billion, up 4.6 per cent year-over-year, in its Global 500 2025
Ranking. This ranks us as the most valuable telecom brand in Canada, the eighth most valuable Canadian brand overall and the 15th
most valuable telecom brand in the world. |
| ● | In October 2024, Forbes named us one of its 2024 World’s Best Employers, the only Canadian telecommunications company included
in this ranking. |
| ○ | In October 2024, we received a Response and Recovery Award from the Disaster Recovery Institute Canada (DRI) for crisis management
during the 2024 Jasper wildfires. This was our third consecutive award, recognizing outstanding business continuity and disaster recovery,
and our delivery of customer support and community service in a challenging situation. |
| ● | In November 2024, we released our sixth annual Indigenous Reconciliation and Connectivity Report, with concrete examples of the
ways our acts of reconciliation, in close partnership with Indigenous communities, are helping deliver sustained, positive social, cultural
and economic outcomes that reach far beyond connectivity. |
| ● | We were recognized by Mediacorp Canada Inc. during 2024 as one of Canada’s Top Employers for Young People (2024) in January,
one of Canada’s Best Diversity Employers (2024) in March and one of Canada’s Greenest Employers (2024) in April. |
Access to Quarterly results information
Interested investors, the media and
others may review this quarterly earnings news release, management’s discussion and analysis, quarterly results slides, audio and
transcript of the investor webcast call, supplementary financial information at telus.com/investors.
TELUS’ fourth quarter 2024 conference
call is scheduled for Thursday, February 13, 2025 at 12:30 pm ET (9:30 am PT) and will feature a presentation followed by
a question and answer period with investment analysts. Interested parties can access the webcast at telus.com/investors.
An audio recording will be available approximately 60 minutes after the call until March 13, 2025 at 1-855-201-2300. Please quote
conference access code 77442# and playback access code 77442#. An archive of the webcast will also be available at telus.com/investors
and a transcript will be posted on the website within a few business days.
Caution regarding forward-looking statements
This news release contains forward-looking statements
about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, we,
us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.
Forward-looking statements include any statements that do not refer
to historical facts. They include, but are not limited to, statements relating to our objectives and our strategies to achieve those objectives,
our expectations regarding trends in the telecommunications industry (including demand for data and ongoing subscriber base growth), and
our financing plans (including our planned leverage ratio in 2027, our multi-year dividend growth program and our approach to reducing
the discount offered under our dividend re-investment plan). Forward-looking statements are typically identified by the words assumption,
goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim,
anticipate, believe, could, expect, intend, may, plan, predict, seek, should,
strive and will. These statements are made pursuant to the “safe harbour” provisions of applicable securities
laws in Canada and the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements are subject to inherent
risks and uncertainties and are based on assumptions, including assumptions about future economic conditions and courses of action. These
assumptions may ultimately prove to have been inaccurate and, as a result, our actual results or events may differ materially from expectations
expressed in or implied by the forward-looking statements.
Our general outlook and assumptions for 2025 are presented in Section 9
General trends, outlook and assumptions, and regulatory developments and proceedings in our 2024 annual Management’s discussion
and analysis (MD&A).
Our assumptions in support of our 2025 outlook are generally based
on industry analysis, including our estimates regarding economic and telecom industry growth, as well as our 2024 results and trends discussed
in Section 5 in our 2024 annual MD&A. Our 2025 key assumptions are listed below and in Section 9.3 TELUS assumptions
for 2025 in the 2024 annual MD&A:
| · | Estimated economic growth rates in Canada, B.C., Alberta, Ontario and Quebec
of 1.9%, 1.8%, 2.4%, 1.7% and 1.5%, respectively. |
| · | Estimated inflation rates in Canada, B.C., Alberta, Ontario and Quebec of
2.0%, 1.8%, 2.0%, 1.9% and 1.8%, respectively. |
| · | Estimated annual unemployment rates in Canada, B.C., Alberta, Ontario and
Quebec of 6.6%, 6.0%, 7.0%, 7.1% and 5.8%, respectively. |
| · | Estimated annual rates of housing starts on an unadjusted basis in Canada,
B.C., Alberta, Ontario and Quebec of 245,000 units, 47,000 units, 45,000 units, 81,000 units and 48,000 units, respectively. |
| · | Decelerated growth observed in immigration in the latter half of 2024
has slowed our ability to grow our subscriber base more than anticipated and may continue into 2025. See Section 1.2 in our 2024
annual MD&A. |
| · | No announced material adverse regulatory rulings or government actions against
TELUS. |
| · | Participation in ISED’s auction in the mmWave band, if the auction
commences in 2025. |
| · | Impacts on our international operations from the global macroeconomic
environment and its effect on other national and local economies, as well as continued exchange rate volatility, which may have an impact
on our outlook. Canadian dollar to U.S. dollar average exchange rate of C$1.40: US$1.00 (2024 actual – C$1.37: US$1:00); U.S. dollar
to European euro average exchange rate of US$1.04: €1.00 (2024 actual – US$1.08: €1.00). |
| · | The potential imposition of U.S. trade tariffs may adversely impact the greater
macroeconomic environment, our operations, and supply chain economics, including through foreign exchange and interest rate volatility,
increased equipment costs and impacts on cross-border partnerships, which may lead to a reduction in long-term economic growth in the
regions in which we operate. |
| · | Continued focus on our customers first initiatives and maintaining our customers’ likelihood-to-recommend. |
| · | Continued intense mobile products and services competition and fixed products
and services competition in both consumer and business markets. |
| · | Continued increase in mobile phone industry penetration in the Canadian market. |
| · | Ongoing subscriber adoption of, and upgrades to, data-intensive smartphones,
as customers seek more mobile connectivity to the internet at faster speeds. |
| · | Mobile products and services revenue growth resulting from improvements
in subscriber loading, with continued competitive pressure on blended ARPU. |
| · | Continued pressure on mobile products and services acquisition and retention
expenses, arising from gross loading and customer renewal volumes, competitive intensity and changes in customer preferences, resulting
in the effects of contract asset, acquisition and fulfilment and TELUS Easy Payment device financing being a net cash outflow of approximately
$150 million to $250 million (2024 actual – $201 million net cash outflow). Continued connected devices growth, as our IoT offerings
diversify and expand. |
| · | Continued growth in fixed products and services data revenue, reflecting
an increase in internet, TV and security subscribers, speed upgrades, rate plans with larger data buckets or unlimited data usage, and
expansion of our broadband infrastructure, healthcare solutions, agriculture and consumer goods solutions and home and business security
offerings. |
| · | Continued erosion of residential voice revenue as a result of technological
substitution and greater use of inclusive long distance. |
| · | Continued growth of health services revenue and expansion of our diverse
portfolio of services through business acquisitions. We anticipate being able to generate cross-selling opportunities between our business
units and rising customer demand for digital health solutions, preventative and precision health services, and growth in employer offerings
as more employers provide benefits to their team members. We expect this growth to be partially offset by higher operating costs associated
with growth related to scaling our digital health offerings, with a focus on deploying value-added services effectively and optimizing
efficiency. |
| · | Continued expansion of our agriculture and consumer goods services
business through business acquisitions and organic growth. |
| · | Continued scaling of growth and profitability in TELUS Digital supported
by our differentiated digital customer experience solutions and continued optimization of the cost structure, enabled by automation and
generative AI solutions and investments in sales capacity and capabilities to expand engagement with existing and new clients. |
| · | Continuation of our digitization efforts to simplify the many ways
our customers do business with us, introduce new products and services, respond to customer and market needs, and provide highly reliable
service. |
| · | Employee defined benefit pension plans: current service costs of approximately
$59 million recorded in Employee benefits expense, $3 million recorded in Employee benefits expense for past service costs and interest
expense of approximately $11 million recorded in Financing costs; a rate of 4.65% for discounting the obligation and a rate of 4.80% for
current service costs for employee defined benefit pension plan accounting purposes; and defined benefit pension plan funding of approximately
$20 million. |
| · | Restructuring and other costs of approximately $400 million (2024 actual
– $493 million) for ongoing operational effectiveness initiatives, with margin enhancement initiatives to mitigate pressures related
to intense competition, technological substitution, repricing of our services, rising costs of subscriber growth and retention, and integration
costs associated with business acquisitions. We expect total cash restructuring and other disbursements of approximately $500 million
in 2025. |
| · | Depreciation and Amortization of intangible assets of approximately $4.0
billion to $4.2 billion (2024 actual – $4.0 billion). |
| · | Net cash Interest paid of approximately $1.3 billion to $1.4 billion
(2024 actual – $1.3 billion). |
| · | Income
taxes computed at an applicable statutory rate of 24.5 to 25.1% and cash income tax payments of approximately $500 million to $580
million (2024 actual – $358 million). |
The extent to which the economic growth estimates affect
us and the timing of their impact will depend upon the actual experience of specific sectors of the Canadian economy.
Risks and uncertainties that could cause actual
performance or events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are
not limited to, the following:
| · | Regulatory matters. We operate in a number of highly regulated
industries and are therefore subject to a wide variety of laws and regulations domestically and internationally. Policies and approaches
advanced by elected officials and regulatory decisions, reviews and other government activity may have strategic, operational and/or financial
impacts (including on revenue and free cash flow). |
Risks and uncertainties include:
| o | potential changes to our regulatory regime or the outcomes of proceedings,
cases or inquiries relating to its application, including, but not limited to, those set out in Section 9.4 Communications industry
regulatory developments and proceedings in our 2024 MD&A; |
| o | our ability to comply with complex and changing regulation of the healthcare, virtual care and medical devices industries in the jurisdictions
in which we operate, including as an operator of health clinics; and |
| o | our ability to comply with, or facilitate our clients’ compliance with, numerous, complex and sometimes conflicting legal regimes,
both domestically and internationally. |
| · | Competitive environment. Competitor expansion, activity
and intensity (pricing, including discounting, bundling), as well as non-traditional competition, disruptive technology and disintermediation,
may alter the nature of the markets in which we compete and impact our market share and financial results (including revenue and free
cash flow). TELUS Digital, TELUS Health and TELUS Agriculture & Consumer Goods also face intense competition in their
respective different markets. |
| · | Technology. Consumer adoption of alternative technologies
and changing customer expectations have the potential to impact our revenue streams and customer churn rates. |
Risks and uncertainties include:
| o | disruptive technologies, including software-defined networks in the business market, that may displace or cause us to reprice our
existing data services, and self-installed technology solutions; |
| o | any failure to innovate, maintain technological advantages or respond effectively and in a timely manner to changes in technology; |
| o | the roll-out, anticipated benefits and efficiencies, and ongoing evolution of wireless broadband technologies and systems; |
| o | our reliance on wireless network access agreements, which have facilitated our deployment of mobile technologies; |
| o | our expected long-term need to acquire additional spectrum through future spectrum auctions and from third parties to meet growing
demand for data, and our ability to utilize spectrum we acquire; |
| o | deployment and operation of new fixed broadband network technologies at a reasonable cost and the availability and success of new
products and services to be rolled out using such network technologies; and |
| o | our deployment of self-learning tools and automation, which may change the way we interact with customers. |
| · | Security and data protection. Our ability to detect and
identify potential threats and vulnerabilities depends on the effectiveness of our security controls in protecting our infrastructure
and operating environment, and our timeliness in responding to attacks and restoring business operations. A successful attack may impede
the operations of our network or lead to the unauthorized access to, interception, destruction, use or dissemination of, customer, team
member or business information. |
| · | Generative AI (GenAI). GenAI exposes us to numerous risks,
including risks related to the operational reliability, responsible AI usage, data privacy and cybersecurity, and the possibility that
our use of AI may generate inaccurate or inappropriate content or create negative perceptions among customers, and regulation could also
affect future implementation that could affect demand for our services. |
| · | Climate and the environment. Natural disasters, pandemics,
disruptive events and climate change may impact our operations, customer satisfaction and team member experience. |
Our goals to achieve carbon neutrality and reduce our greenhouse
gas (GHG) emissions in our operations are subject to our ability to identify, procure and implement solutions that reduce energy consumption
and adopt cleaner sources of energy, our ability to identify and make suitable investments in renewable energy, including in the form
of virtual power purchase agreements, and our ability to continue to realize significant absolute reductions in energy use and the resulting
GHG emissions from our operations.
| · | Operational performance and business combination. Investments
and acquisitions present opportunities to expand our operational scope, but may expose us to new risks. We may be unsuccessful in gaining
market traction/share and realizing benefits, and integration efforts may divert resources from other priorities. |
Risks include:
| o | our reliance on third-party cloud-based computing services to deliver our IT services; and |
| o | economic, political and other risks associated with doing business globally (including war and other geopolitical developments). |
| · | Our systems and processes. Systems and technology innovation,
maintenance and management may impact our IT systems and network reliability, as well as our operating costs. |
Risks and uncertainties include:
| o | our ability to maintain customer service and operate our network in the event of human error or human-caused threats, such as cyberattacks
and equipment failures that could cause network outages; |
| o | technical disruptions and infrastructure breakdowns; |
| o | delays and rising costs, including as a result of government restrictions or trade actions; and |
| o | the completeness and effectiveness of business continuity and disaster recovery plans and responses. |
| · | Our team. The rapidly evolving and highly competitive nature
of our markets and operating environment, along with the globalization and evolving demographic profile of our workforce, and the effectiveness
of our internal training, development, succession and health and well-being programs, may impact our ability to attract, develop and retain
team members with the skills required to meet the changing needs of our customers and our business. Team members may face greater mental
health challenges associated with the significant change initiatives at the organization, which may result in the loss of key team members
through short-term and long-term disability. Integration of international business acquisitions and concurrent integration activities
may impact operational efficiency, organizational culture and engagement. |
| · | Suppliers. We may be impacted by supply chain disruptions
and lack of resiliency in relation to global or local events. Dependence on a single supplier for products, components, service delivery
or support may impact our ability to efficiently meet constantly changing and rising customer expectations while maintaining quality of
service. Our suppliers’ ability to maintain and service their product lines could affect the success of upgrades to, and
evolution of, technology that we offer. |
| · | Real estate matters. Real estate investments are exposed
to possible financing risks and uncertainty related to future demand, occupancy and rental rates, especially following the pandemic. Future
real estate developments may not be completed on budget or on time and may not obtain lease commitments as planned. |
| · | Financing, debt and dividends. Our ability to access funding
at optimal pricing may be impacted by general market conditions and changing assessments in the fixed-income and equity capital markets
regarding our ability to generate sufficient future cash flow to service our debt. Our current intention to pay dividends to shareholders
could constrain our ability to invest in our operations to support future growth. |
Risks and uncertainties include:
| o | our ability to use equity as a form of consideration in business acquisitions is impacted by stock market valuations of TELUS Common
Shares and TELUS International (Cda) Inc. subordinate voting shares; |
| o | our capital expenditure levels and potential outlays for spectrum licences in auctions or purchases from third parties affect and
are affected by: our broadband initiatives; our ongoing deployment of newer mobile technologies; investments in network technology required
to comply with laws and regulations relating to the security of cyber systems, including bans on the products and services of certain
vendors; investments in network resiliency and reliability; the allocation of resources to acquisitions and future spectrum auctions held
by Innovation, Science and Economic Development Canada (ISED). Our capital expenditure levels could be impacted if we do not achieve our
targeted operational and financial results or if there are changes to our regulatory environment; and |
| o | lower than planned free cash flow could constrain our ability to invest in operations, reduce leverage or return capital to shareholders.
Quarterly dividend decisions are made by our Board of Directors based on our financial position and outlook. There can be no assurance
that our dividend growth program will be maintained through 2025 or renewed. |
| o | our plan to reduce the discount offered under dividend re-investment plan in 2026 and to eliminate the discount contemporaneously
with achieving a net debt to EBITDA ratio of approximately 3 times in 2027 is also subject to the evaluation of this metric, general market
conditions and our financial condition by our Board of Directors. |
| o | TELUS Digital’s ability to achieve targets or other guidance regarding its business, which if not achieved could affect TELUS’
ability to achieve targets for the organization as a whole and could result in a decline in the trading price of the TELUS International
(Cda) Inc. subordinate voting shares or the TELUS Common Shares or both. Factors that may affect TELUS Digital’s financial performance
are described in TELUS International (Cda) Inc. public filings available on SEDAR+ and EDGAR. |
| · | Tax matters. Complexity of domestic and foreign tax laws,
regulations and reporting requirements that apply to TELUS and our international operating subsidiaries may impact financial results.
International acquisitions and expansion of operations heighten our exposure to multiple forms of taxation. |
| · | The economy. Changing global economic conditions, including
a potential recession and alternating expectations about inflation, as well as our effectiveness in monitoring and revising growth assumptions
and contingency plans, may impact the achievement of our corporate objectives, our financial results (including free cash flow), and our
defined benefit pension plans. Geopolitical uncertainties and potential tariffs or non-tariff trade actions present a risk of recession
and may cause customers to reduce or delay discretionary spending, impacting new service purchases or volumes of use, and consider substitution
by lower-priced alternatives. |
| · | Litigation and legal matters. Complexity of, and compliance
with, laws, regulations, commitments and expectations may have a financial and reputational impact. |
Risks include:
| o | our ability to defend against existing and potential claims or our ability to negotiate and exercise indemnity rights or other protections
in respect of such claims; and |
| o | the complexity of legal compliance in domestic and foreign jurisdictions, including compliance with competition, anti-bribery and
foreign corrupt practices laws. |
The assumptions underlying our forward-looking statements are described
in additional detail in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings and Section
10 Risks and risk management in our 2024 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement
but are not intended to be a complete list of the risks that could affect
the Company, or of our assumptions.
Additional risks and uncertainties that are not currently known to
us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, financial performance,
cash flows, business or reputation. Except as otherwise indicated in this document, the forward-looking statements made herein do not
reflect the potential impact of any non-recurring or special items or any mergers, acquisitions, dispositions or other business combinations
or transactions that may be announced or that may occur after the date of this document.
Readers are cautioned not to place undue reliance on forward-looking
statements. Forward-looking statements in this document describe our expectations, and are based on our assumptions, as at the date of
this document and are subject to change after this date. We disclaim any intention or obligation
to update or revise any forward-looking statements except as required
by law.
This cautionary statement qualifies all of the forward-looking statements
in this document.
Non-GAAP and other specified financial measures
We have issued guidance on and report certain non-GAAP measures that
are used to evaluate the performance of TELUS, as well as to determine compliance with debt covenants and to manage our capital structure.
As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers.
For certain financial metrics, there are definitional differences between TELUS and TELUS Digital Experience reporting. These differences
largely arise from TELUS Digital adopting definitions consistent with practice in its industry. Securities regulations require such measures
to be clearly defined, qualified and reconciled with their nearest GAAP measure. Certain of the metrics do not have generally accepted
industry definitions.
Adjusted Net income and adjusted basic earnings per share (EPS):
These are non-GAAP measures that do not have any standardized meaning prescribed by IFRS Accounting Standards and are therefore unlikely
to be comparable to similar measures presented by other issuers. Adjusted Net income excludes the effects of restructuring and other costs,
income tax-related adjustments, long-term debt prepayment premium and other adjustments (identified in the following tables). Effective
for 2024, with retrospective application, we have revised our definition of adjusted Net income to remove other equity (income) losses
related to real estate joint ventures to conform with the way management currently evaluates performance. Adjusted basic earnings per
share is calculated as adjusted net income divided by basic weighted-average common shares outstanding. These measures are used to evaluate
performance at a consolidated level and exclude items that, in management’s view, may obscure underlying trends in business performance
or items of an unusual nature that do not reflect our ongoing operations. They should not be considered alternatives to Net income and
basic earnings per share in measuring TELUS’ performance.
Reconciliation of adjusted Net income
| | |
Three months ended
December 31 | |
| C$ and in millions | |
2024 | | |
2023 | |
| Net income attributable to Common Shares | |
| 358 | | |
| 288 | |
| Add (deduct) amounts net of amount attributable to non-controlling interests: | |
| | | |
| | |
| Restructuring and other costs | |
| 60 | | |
| 140 | |
| Tax effects of restructuring and other costs | |
| (13 | ) | |
| (37 | ) |
| Real estate rationalization-related restructuring impairments | |
| (20 | ) | |
| 8 | |
| Tax effect of real estate rationalization-related restructuring impairments | |
| 5 | | |
| (2 | ) |
| Income tax-related adjustments | |
| (11 | ) | |
| (13 | ) |
| Unrealized changes in virtual power purchase agreements forward element | |
| 3 | | |
| (59 | ) |
| Tax effect of unrealized changes in virtual power purchase agreements forward element | |
| (2 | ) | |
| 16 | |
| Adjusted Net income | |
| 380 | | |
| 341 | |
Reconciliation of adjusted basic EPS
| | |
Three months ended
December 31 | |
| C$ | |
2024 | | |
2023 | |
| Basic EPS | |
| 0.24 | | |
| 0.20 | |
| Add (deduct) amounts net of amount attributable to non-controlling interests: | |
| | | |
| | |
| Restructuring and other costs, per share | |
| 0.04 | | |
| 0.09 | |
| Tax effect of restructuring and other costs, per share | |
| (0.01 | ) | |
| (0.02 | ) |
| Real estate rationalization-related restructuring impairments, per share | |
| (0.01 | ) | |
| 0.01 | |
| Income tax-related adjustments, per share | |
| (0.01 | ) | |
| (0.01 | ) |
| Unrealized changes in virtual power purchase agreements forward element, per share | |
| — | | |
| (0.04 | ) |
| Tax effect of unrealized changes in virtual power purchase agreements forward element | |
| — | | |
| 0.01 | |
| Adjusted basic EPS | |
| 0.25 | | |
| 0.24 | |
EBITDA (earnings before
interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used
to evaluate performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as
an indicator of a company’s operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should
not be considered an alternative to Net income in measuring TELUS’ performance, nor should it be used as a measure of cash flow.
EBITDA as calculated by TELUS is equivalent to Operating revenues and other income less the total of Goods and services purchased expense
and Employee benefits expense.
We also calculate Adjusted EBITDA to exclude items of an unusual
nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should
not be included in an assessment of our ability to service or incur debt.
EBITDA
and Adjusted EBITDA reconciliations
| Three-month periods ended | |
TTech | | |
TELUS Digital | | |
Eliminations | | |
Total | |
| December 31 (C$ millions) | |
2024 | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Net income | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 320 | | |
| 310 | |
| Financing costs | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 321 | | |
| 278 | |
| Income taxes | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 118 | | |
| 76 | |
| EBIT | |
| 768 | |
| 535 | | |
| 7 | | |
| 129 | | |
| (16 | ) | |
| — | | |
| 759 | | |
| 664 | |
| Depreciation | |
| 562 | |
| 615 | | |
| 56 | | |
| 50 | | |
| — | | |
| — | | |
| 618 | | |
| 665 | |
| Amortization of intangible assets | |
| 330 | |
| 316 | | |
| 63 | | |
| 60 | | |
| — | | |
| — | | |
| 393 | | |
| 376 | |
| EBITDA | |
| 1,660 | |
| 1,466 | | |
| 126 | | |
| 239 | | |
| (16 | ) | |
| — | | |
| 1,770 | | |
| 1,705 | |
| Add restructuring and other costs included in EBITDA | |
| 51 | |
| 132 | | |
| 17 | | |
| 10 | | |
| — | | |
| — | | |
| 68 | | |
| 142 | |
| Adjusted EBITDA | |
| 1,711 | |
| 1,598 | | |
| 143 | | |
| 249 | | |
| (16 | ) | |
| — | | |
| 1,838 | | |
| 1,847 | |
Adjusted EBITDA less capital expenditures is calculated for
our reportable segments, as it represents a performance measure that may be more comparable to similar measures presented by other issuers.
| Adjusted EBITDA less capital expenditures reconciliation |
| |
| Three-month periods ended December 31 (C$ | |
TTech | | |
TELUS Digital | | |
Eliminations | | |
Total | |
| millions) | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Adjusted EBITDA | |
| 1,711 | | |
| 1,598 | | |
| 143 | | |
| 249 | | |
| (16 | ) | |
| — | | |
| 1,838 | | |
| 1,847 | |
| Capital expenditures | |
| (520 | ) | |
| (497 | ) | |
| (47 | ) | |
| (36 | ) | |
| 16 | | |
| — | | |
| (551 | ) | |
| (533 | ) |
| Adjusted EBITDA less capital expenditures | |
| 1,191 | | |
| 1,101 | | |
| 96 | | |
| 213 | | |
| — | | |
| — | | |
| 1,287 | | |
| 1,314 | |
Free cash flow: We report this measure as a supplementary indicator
of our operating performance, and there is no generally accepted industry definition of free cash flow. It should not be considered as
an alternative to the measures in the Consolidated statements of cash flows. Free cash flow excludes certain working capital changes (such
as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as reported in the Consolidated
statements of cash flows. It provides an indication of how much cash generated by operations is available after capital expenditures that
may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting
standards that do not impact cash, such as IFRS 15 and IFRS 16. Free cash flow may be supplemented from time to time by proceeds from
divested assets or financing activities.
| Free cash flow calculation |
| |
| | |
Three months ended
December 31 | |
| C$ millions | |
2024 | | |
2023 | |
| EBITDA | |
| 1,770 | | |
| 1,705 | |
| Restructuring and other costs, net of disbursements | |
| (39 | ) | |
| 16 | |
| Effects of contract asset, acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment mobile device financing | |
| (230 | ) | |
| (175 | ) |
| Effects of lease principal (IFRS 16 impact) | |
| (158 | ) | |
| (144 | ) |
| Items from the statements of cash flows: | |
| | | |
| | |
| Share-based compensation, net of employee share purchase plan cash outflows | |
| 42 | | |
| 22 | |
| Net employee defined benefit plans expense | |
| 23 | | |
| 26 | |
| Employer contributions to employee defined benefit plans | |
| (6 | ) | |
| (5 | ) |
| Loss from equity accounted investments and other | |
| 5 | | |
| 26 | |
| Interest paid | |
| (319 | ) | |
| (308 | ) |
| Interest received | |
| 3 | | |
| 12 | |
| Capital expenditures1 (excluding acquisition from related party) | |
| (458 | ) | |
| (533 | ) |
| Capital expenditure for acquisition from related party | |
| (93 | ) | |
| — | |
| Related part construction credit facility repayment made concurrent with capital expenditure for acquisition from related party | |
| 94 | | |
| — | |
| Free cash flow before income taxes | |
| 634 | | |
| 642 | |
| Income taxes paid, net of refunds | |
| (100 | ) | |
| (47 | ) |
| Free cash flow | |
| 534 | | |
| 595 | |
| Reconciliation of free cash flow with Cash provided by operating
activities |
| |
| | |
Three months ended
December 31 | |
| C$ millions | |
2024 | | |
2023 | |
| Free cash flow | |
| 534 | | |
| 595 | |
| Add (deduct): | |
| | | |
| | |
| Capital expenditures1 | |
| 551 | | |
| 533 | |
| Effects of lease principal | |
| 158 | | |
| 144 | |
| Net change in non-cash operating working capital not included in preceding line items and other individually immaterial items included in Net income neither providing nor using cash | |
| (166 | ) | |
| 42 | |
| Cash provided by operating activities | |
| 1,077 | | |
| 1,314 | |
| (1) | Refer to Note 31 of the consolidated financial statements for further information. |
Mobile phone average revenue per subscriber
per month (ARPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges; divided by
the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month.
Appendix
Operating revenues and other income –
TTech segment
| C$ millions | |
Three months ended
December 31 | | |
Per cent | |
| (unaudited) | |
2024 | | |
2023 | | |
change | |
| Mobile network revenue | |
| 1,758 | | |
| 1,759 | | |
| (0.1 | ) |
| Mobile equipment and other service revenues | |
| 776 | | |
| 697 | | |
| 11.3 | |
| Fixed data services(1) | |
| 1,196 | | |
| 1,156 | | |
| 3.5 | |
| Fixed voice services | |
| 173 | | |
| 188 | | |
| (8.0 | ) |
| Fixed equipment and other service revenues | |
| 127 | | |
| 109 | | |
| 16.5 | |
| Health services | |
| 475 | | |
| 432 | | |
| 10.0 | |
| Agriculture and consumer goods services | |
| 117 | | |
| 101 | | |
| 15.8 | |
| Operating revenues (arising from contracts with customers) | |
| 4,622 | | |
| 4,442 | | |
| 4.1 | |
| Other income | |
| 52 | | |
| 15 | | |
| n/m | |
| External Operating revenues and other income | |
| 4,674 | | |
| 4,457 | | |
| 4.9 | |
| Intersegment revenues | |
| 3 | | |
| 3 | | |
| - | |
| TTech Operating revenues and other income | |
| 4,677 | | |
| 4,460 | | |
| 4.9 | |
| (1) | Excludes health services and agriculture and consumer goods services. |
Operating revenues and other income – TELUS digital
experience segment
| C$ millions | |
Three months ended
December 31 | | |
Per cent | |
| (unaudited) | |
2024 | | |
2023 | | |
change | |
| Operating revenues (arising from contracts with customers) | |
| 709 | | |
| 714 | | |
| (0.7 | ) |
| Other income | |
| (2 | ) | |
| 27 | | |
| n/m | |
| External Operating revenues and other income | |
| 707 | | |
| 741 | | |
| (4.6 | ) |
| Intersegment revenues | |
| 260 | | |
| 228 | | |
| 14.0 | |
| TELUS Digital Operating revenues and other income | |
| 967 | | |
| 969 | | |
| (0.2 | ) |
Notations used in the tables above: n/m –
not meaningful.
About TELUS
TELUS (TSX: T, NYSE: TU) is a world-leading
communications technology company, generating over $20 billion in annual revenue and connecting more than 20 million customers through
our advanced suite of broadband services for consumers, businesses and the public sector. We are committed to leveraging our technology
to enable remarkable human outcomes. TELUS is passionate about putting our customers and communities first, leading the way globally
in client service excellence and social capitalism. Our TELUS Health business is enhancing 76 million lives worldwide through innovative
preventive medicine and well-being technologies. Our TELUS Agriculture & Consumer Goods business utilizes digital technologies
and data insights to optimize the connection between producers and consumers. Guided by our enduring 'give where we live' philosophy,
TELUS and our 140,000 team members have contributed $1.7 billion and volunteered 2.2 million days of service since 2000, earning us the
distinction of the world’s most giving company. For more information, visit telus.com or follow @TELUSNews on X and
@Darren_Entwistle on Instagram.
Investor Relations
Robert Mitchell
(647) 837-1606
ir@telus.com
Media Relations
Steve Beisswanger
(514) 865-2787
Steve.Beisswanger@telus.com
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