TELUS was faced with a challenging telecom & regulatory environment in 2002. Remarkably, we still executed operationally to overcome these business obstacles and met or exceeded analyst expectations on key profitability measures. Our results for the first quarter of 2003, and the market's positive response to those results, are a clear validation of our growth strategy and give the Company a clear line of sight to a successful year.
first quarter 2003 results
Consolidated operating revenue increased by 2.5% for the first quarter of 2003 when compared to same quarter a year ago.
A real highlight in this quarter is a14% increase in EBITDA. This is due to tremendous results for our Mobility unit and significant cost structure improvements in our Communications unit.
We generated a $275 million improvement in free cash flow to $376 million this quarter, up 272% from last year, allowing us to further reduce our debt level by almost $200 million this quarter.
It should be noted that Moody's credit rating agency in April changed the outlook on TELUS debt from negative to stable, which is a pre-condition to returning to an investment grade rating with that agency.
Our progress in our central Canadian non-incumbent (Non-ILEC for short) business is showing gains. For the first quarter, our Non-ILEC operations generated $141 million in revenue versus $117 million for the same quarter last year.
We have now reported six consecutive quarters of improving profitability trending from the trough of negative $38 million in the first quarter of 2001 to only negative $15 million in this quarter.
upward guidance revision
Based on our results, we are revising our 2003 guidance upwards. We are revising upwards our EPS guidance of 35 to 55 cents per share to a new range of 50 to 70 cents per share.
We have increased our free cash flow outlook to $500 to $600 million, the top end of the original range. This reflects our favourable tax developments.
We are also making revisions to our Mobility guidance. Subscriber net additions are being lowered to approximately 350 thousand; indicative of an industry-wide trend. More importantly we are revising Mobility's EBITDA upward by $50 million to $675 to $700 million.
"The bottom line is that while many other Telcos have been making excuses about tough regulatory and economic conditions, TELUS has gone out and proven that it can execute and deliver results, which gives us a great deal of confidence in our forecasts for this year and next."
Source: Vince Valentini, TD Newcrest, May 1 2003
For more information, please visit our Investor Relations site or e-mail us at scope@telus.com.
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