TELUS reports Q1 revenue of $2.9 billion, 7.8 million wireless customers

TELUS unveiled its Q1 2014 earnings today for the period of January to March, reporting revenues of $2.9 billion, with an EPS of $0.61 and net income of $377 million.

The company added 48,000 new postpaid subscribers, ahead of Bell’s 34,000 and Roger’s anemic 2,000, but reported slower growth than the same period a year ago.

With a wireless subscriber tally of 7.8 million, TELUS continues to surge ahead of Bell as the country’s second-largest carrier, and with J.D. Power reporting that TELUS and its sub-brand Koodo once again topped satisfaction charts, things are looking good for the Vancouver-based company. Postpaid subscriber churn was once again the lowest of the Big Three at 0.99%, though all three carriers have seen churn declining with the introduction of two-year contracts.

TELUS, like Rogers and Bell, blames the introduction of the Wireless Code and its mandatory two-year contracts on slower subscriber growth, but wireless revenue was still strong at $1.44 billion, up 5.3% over the same period a year ago. With blended ARPU (average revenue per customer) sitting at $61.24, the company notes that this is the “fourteenth consecutive quarter of year-over-year growth in blended ARPU.”

Prepaid continues to be a challenge for TELUS — and all carriers — as users transition to the more attractive prospect of shared data plans and subsidized devices. The company lost 36,000 prepaid customers in the quarter, but many of them transitioned to postpaid, resulting in the aforementioned higher blended ARPU. TELUS’s proportion of postpaid subscribers is now 87%.

TELUS did not include Public Mobile’s subscribers or financials in its main results for the quarter, but noted that the prepaid-only company it bought in November last year earned $24 million for the three months ending March 31st. Public did negatively affect TELUS’ overall income by $9 million. TELUS will begin transitioning Public’s customers to its own HSPA+ network starting in late May, requiring users to purchase new devices. This has not been well-received among Public’s user base, but TELUS hopes that discounts and plan promotions will offset some of this negative sentiment.

The company also continues to pursue Mobilicity, but notes that “there is a risk that conditions may not be satisfied or waived and that a going concern transaction with Mobilicity will not be completed.:

Finally, smartphone users now make up 78% of TELUS’ postpaid base, up 10% from a year ago.