TELUS plans $2.8 bn Capex ahead of 5G launch in 2020

TELUS announced it is targeting a Capex of $2.85 billion in 2019 as compared with $2.9 billion in 2018.
TELUS CTO Eros SpadottoCapex of TELUS fell 3.8 percent in Q4 2018 over last year reflecting a 9.5 percent decline in wireline Capex. TELUS expanded its fiber footprint to over 61 percent.

Wireless Capex increased 8.5 percent as TELUS increased LTE Advance infrastructure to reach over 93 percent of Canadians, and 4G LTE coverage to cover over 99 percent of all Canadians. Eros Spadotto, executive vice president of Technology Strategy and Business Transformation at TELUS, is responsible for network roll outs.

Capex of $2.9 billion declined 5.8 percent in 2018, representing a capital intensity of 20 percent, a 300 basis point improvement over 2017.

TELUS CEO Darren Entwistle said the company will not be deploying 5G before the second half of 2020 in Canada. The main reason for the delay in 5G launch is related to the clarity on the auction of 3.5 GHs spectrum.

TELUS on Huawei

TELUS is not using Huawei network equipment in its core network. Darren Entwistle said TELUS may face an incremental non-recurring financial cost — if there is a ban supplier ban on Huawei network in the future.

TELUS CEO also appreciated the contribution of network equipment from Huawei, a leading telecom network maker from China.

“TELUS’s security framework involves several protocols that preclude Chinese equipment from the sensitive parts of our network also known as our core and limits the equipments used to the edge of our network with a less sensitive radio and antenna components reside,” Darren Entwistle said.

“Our partnership has allowed it to be innovative with our network deployment taking into account the realities of Canada’s vast geography and demographics, our unique spectrum position in this country,” Darren Entwistle said.

TELUS revenue

TELUS reported revenue of $3.8 billion (+6.3 percent) and EBITDA of $1.2 billion (+1.1 percent) due to higher revenue growth and higher wireless equipment margins in Q4 2018.

TELUS CFO Doug French said TELUS net debt to EBITDA ratio finished the year at 2.54-times, on the back of EBITDA growth of nearly 5 percent.

“This solid growth reflects our strong asset mix focused on wireless and data, and the consistent execution of our long-term focused growth strategy, combined with an unrelenting focus on cost efficiency,” Doug French said.

TELUS has added 112,000 wireless post-paid connections, 28,000 Internet subscribers and 24,000 TELUS TV customers in Q4.

TELUS has wireless subscriber base of 9.2 million (+3.6 percent) including 8.3 million (4.2 percent) post-paid customers, 1.9 million (+6.6 percent) Internet connections and 1.1 million TELUS TV subscribers in 2018.

Baburajan K