December 13, 2018

TELUS Corp (T)

                                                                            

 

Telus Corporation (T) is one of Canada’s “Big Four” massive telecommunications companies (the others being Shaw Communications (SJR/B), Rogers Communications (RCI/B), and BCE Inc. (BCE).  After Canadian Banks, they are definitely part of the “favorite” Canadian dividend stocks! It was founded in 1996 through a merger of Ed Tel and AGT.  The company brings in about 10 billion dollars of annual revenue and has over 12 million customers across Canada.  There most important market is in British Columbia but Telus expanded at great speed over the past 10 years. These include 3.7 wireline customers, 1.2 million internet customers (the vast majority of whom are high-speed) and 300,000 television subscribers.  Telus (T) also has about 7 million wireless subscribers that now account for over half of revenue and earnings.  Telus has enjoyed the recent success in the Canadian telecom sector and raised its dividend 5% in the first quarter of 2011 after reporting a 20% increase in profit over last year’s numbers.  Much of this is contributed to the 11% jump in wireless subscribers Telus seen during the first part of the year.  Telus was so flush with cash that CEO Darren Entwistle had this to say about future dividend outlooks: “In keeping with my personal goals and the three-year targets that I’ve set for the organization to achieve in respect of earnings per share and free cash flow growth, Telus is targeting annual dividend increases of circa 10 per cent from 2011 through the 2013 time period.” This is music to the ears of income starved investors looking for immediate returns on their investments.

 

Telus AdUpcoming Opportunities and Dangers:

 

Telus (T) is much like its Canadian telecom brethren in that it has a strong balance sheet, enjoys great stability, but could be in for some stagnant growth due to competition and price pressures within the sector.  It has a nice dividend and has been doing a great job of stealing bits of market share from its main competitors, but I can’t see it mounting a series challenge to BCE Inc. (BCE) as the industry leader or exploding with growth anytime soon.

 

Whereas Telus’ top three competitors have chosen to commit serious resources to acquiring major television networks, Telus (T) has committed to renew its focus on its current services.  The CEO of the company Darren Entwistle commented on that decision in the globe and mail as saying, “We’ll take our money and invest it in broadband, wireline and wireless technologies.  That’s the area we know.”  Backing up this claim is the recent decision by the telecom to invest in the ultra-high-speed wireless technology known as Long Term Evolution (LTE).  This infrastructure has been looked at as the solution for large scale video streaming and dense downloading traffic.  Its main competition in the area is Rogers Communications (RCI/B), but Telus has said that it will begin launching this product in 2012.  Verizon and AT&T have begun deploying the technology already in the USA.

 

One rumour that Telus (T) just has not been able to shake over the last few years has been that of a takeover/merger with BCE Inc.  Telus has usually denied any truth to the talks, but industry insiders are suspicious to say the least.  When you objectively look at how BCE Inc. (BCE) has chosen to diversify in certain areas and allow Telus to actively compete with Rogers (RCI/B) in the wireless market, one really has to wonder.  If the merger were to begin the federal government would have to look seriously at the possibility of a monopoly within the industry.  Obviously such speculation would likely have a positive effect on the stock price for Telus (T) shareholders.

 

A strong case can be made for a company currently enjoying a larger and larger piece of the lucrative Canadian telecommunications market (over 40 billion in annual revenues) and one that is also committed to increasing its dividend over the next few years.

 

Telus (T) Canadian Dividend Stock Graph

TSE T

 

Telus (T) Canadian Dividend Stock Metrics

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
TTELUS Corp51.594.2662.090.413065316.628867.894731

 

Trackbacks

  1. […] to diversify in order to compete with the other three major Canadian telecoms (Telus Corporation (T), BCE Inc. (BCE) and Rogers Communications (RCI/B).  Its recent forays into high-speed internet […]

  2. […] These companies (and one could argue that telecommunications companies Rogers, Bell, Shaw and Telus should be included in this category as well due to their large media presence) represent the […]

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