Q1 2022 Telus Corp Earnings Call
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The conference is now being recorded.
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Good morning, everyone welcome to the Telus 'twenty 'twenty to Q1 earnings conference call.
I'd like to introduce your speaker Mr. Robert Mitchell. Please go ahead.
Hello, everyone and thank you for joining our call today, our first quarter of 2022 results news release, MD&A and financial statements and detailed supplemental supplemental investor information were posted on our website. This morning at Telus Dot Com slash investors on our call today, we will have remarks by Darren.
John <unk> President of our Agriculture business Dove. In addition for the Q&A portion of our call will be joined by <unk> <unk>, who runs our consumer business, Jim Senko, who leads our mobility solutions business Arena, Aurora, who leads our business solutions and Tony <unk>, Our Chief operations Officer.
Briefly on slide two this presentation and answers to questions contain forward looking statements are subject to risks and uncertainties and made based on certain assumptions. Accordingly actual performance could differ from statements made today. So we ask that you do not place undue reliance on them, we disclaim any obligation to update forward looking statements, except as required by law and we refer you to the rest of the assumption as outlined in our public disclosure.
Including our first quarter of 2022, MTA, our annual 2021, MD&A and filings with Securities commissions in Canada, and the U S with that over to you Jack.
Thanks, Ricardo and Hello, everyone.
The team once again achieved strong operational and financial results in the first quarter of 2022.
Our ongoing execution excellence continues to be characterized but its consistent combination of industry, leading and profitable customer growth, yielding strong financial results across the totality of our business.
Industry, leading told total mobile and fixed customer growth of 148000 represented the strongest first quarter on record for our company.
This reflects robust demand for our superior bundled offerings and customer service over our world, leading broadband networks Mauro.
Moreover, our leading customer growth was underpinned by industry best client loyalty across our key mobile and fixed product lines.
Notably again this quarter and for five of the last eight quarters led and mobile phone pure fiber Internet optic TV security and voice churn were all below 1%.
Furthermore, since the onset of the pandemic at the beginning of 2020, we've welcomed an industry, leading one 9 million net new customers.
Telus achieved strong first quarter consolidated revenue and organic EBITDA growth of six 4% and 76% respectively.
Strength in our core telecom operations continues to be complemented by a highly differentiated and potent access mix geared towards high growth technology oriented verticals.
Notably comparing the first quarter of 2022 with that of 2019 prior to the pandemic total revenue grew by a leading 22% plus EBITDA grew by 14%.
Moreover, since the beginning of 2020 and the pandemic period.
This is driven leading cumulative revenue and EBITDA growth of over $4 billion and close to $600 million respectively.
Let's turn now to take a look at our mobile operating results.
Telus achieved industry, leading customer growth of 92000 net additions. This included 46000 connected device net additions as well as 46000 net new mobile phone customers are 48% increase over last year and the best Q1 on record since 2010.
Notably this brings the sum total to an industry, leading one 3 million net new mobile phone subscribers and connected devices achieved since the beginning of 2020 and the onset of the pandemic.
Importantly, our team yet again delivered another quarter of industry best loyalty results, which of course as you well know is the hallmark of the Telus organization and our performance culture and customers first attitude.
Blended mobile phone churn with zero down eight 1%, representing an eight basis point improvement from this time last year.
Q1 on record and only one basis point of our all time lowest churn ever.
Clearly something that we need to fix in Q2 coming forward.
Moreover, postpaid mobile phone churn of <unk> zero, 3% represented a nine basis point improvement over 2021 and puts US now in our ninth year of postpaid churn below 1%.
Well below 1%.
This consistently strong performance is backed by our highly engaged team who are passionate about delivering outstanding customer experiences in combination with superior service offering and digital capabilities over our world, leading wireless and pure fiber broadband networks.
More than ever.
<unk> value of fast.
Liable connection and the consistent recognition from independent third party organization reinforces the superiority of Telus is global bad networks.
During the quarter independent U K based open signal named tell US number one in respect to the bad bits by G download speed in Canada for the third consecutive time.
And practically open signal confirm that tell us consistently had and I quote the fastest five G download speeds of any operator since open signal started reporting on the five <unk> mobile experience in Canada close quote.
In addition, U S phase II once again named the fastest mobile operator in the first quarter confirming that intelligence ranked first in every quarter of book was B test since Q3 of 2020.
Moreover, it tell us place burst in respective by G performance for the first time according to uplink speed test.
<unk> intends to continue extending this global leadership position as we advance the development cartridge and commercialization of our <unk> network and its inherent functionality.
The numerous network awards.
Dedicated team has earned and boy have they earned it reinforces tells US leadership in terms of offering customers. The fastest most expensive service in Canada across both our wireless and pure fiber networks and of course they are integrated.
Furthermore, this recognition of the superiority of intelligent national broadband networks underscores the value of our significant generational investments in our world, leading network technology and infrastructure.
In addition to sustainable strong performance at alongside our ongoing accelerated broadband expansion program through 2022, our network technologies will drive extensive long term socio economic benefits to all Canadians.
To close on mobile first quarter or was that zero at that 6% on a year over year basis.
It was supported by higher roaming revenues.
He is still distinctly below seasonal pre pandemic level.
Notably mobile phone lifetime revenue of close to $7000 was up to 44% higher than our major peers.
Is reflective of our consistent focus on high quality customer growth and leading client loyalty.
Let's turn now and take a look at our fixed operating results.
Tell us delivered another quarter of industry best wireline customer grow.
We achieved industry, leading first quarter Internet net additions of 30000.
We are down slightly due to the modestly higher churn as compared to the very low rate. We saw earlier in the pandemic period.
Strong security net additions of 26000 were up 9000 up 53% increase over the previous year, representing our best first quarter on record a terrific performance from that team and indeed with respect to security in March brand spark named <unk>.
This smart home security as the most trusted alarm services in Canada.
Boy, we come a long way on the security fraud, and it's potent in and of itself, but it's especially effective within our fsh bundle.
This reflects the strength of our industry best portfolio of products and services, leading customer centric culture as well as our strong and differentiated social capitalism back Brad.
We continue to drive healthy growth in GB with net additions of 10000, which was essentially flat over the prior year.
Are there more residential voice line losses of 10000 or steady on a year over year basis.
Overall industry, leading total external fixed net addition of 56000 were up 10% on a year over year basis, driven by our unique and highly attractive bundled offers across our superior product portfolio as well as our leading customer loyalty and those too.
Things are great in combination.
Notably since the beginning of 2020 independent make period, we have welcomed a leading 551000 big customer additions.
Indeed, our robots wireline customer growth continues to be enhanced by the significant investments that we're making in our <unk> and fiber technologies, including our important accelerated broadband expansion program and our digital program, which we are embracing across tell us as it.
It relates to our go to market operations, and our efficiencies within our back office operation.
These generational investments well in concert fuel enhanced customer growth and operating efficiencies in combination.
At the same time, our investments will also drive positive cash flow benefits as we complete our expedited broadband build largely finish our copper to fiber migrations by year end and continue retiring our remaining copper infrastructure all the while enjoying.
Strong EBITDA expansion.
Importantly, and.
And I think this is key for investors, we expect our pure fiber network assets that have lifespans of 60 years or more.
In addition to significant social and economic benefits for all Canadian This long term infrastructure and technology will continue to drive material cash flow for decades to come.
Now, let's take a look at Telus health.
Our team once again drove double digit year over year health services revenue growth, whilst continuing to meaningfully scale our health operations.
This scaling includes our health care programs, covering 22 million lives in Canada, an increase of more than 25% on a year over year basis. This scale. It includes executing 148 million digital health transactions during the quarter up 5% over last year and in <unk>.
Includes earning $1 3 million net new virtual health care members in the last 12 months, increasing our membership that $3 3 million, which represents a 65% year over year increase.
We continue to leverage our leading position in health care technology solution to deliver improved health outcomes for employees and citizens alike through access to better health information, which of course has never been more critical.
Turning to agriculture.
Today, we're introducing expanded disclosure for tell us agriculture.
Notably Agriculture services revenue was up 37% in the first quarter on a year over year basis, driven by our team's ongoing efforts to integrate and grow this unique and differentiated global business.
This performance is illustrative of the significant value we are trading as the leading provider of agriculture, and consumer goods technology and data analytics around the world.
Importantly, weird bad in the sectors efficiency and effectiveness and food quality production through data analytics and technology solutions. We are confident that our expanding disclosure further illustrates the value and asset of consequence, we are creating in this important <unk>.
Area.
Just a moment Jon range is going to have an opportunity to provide further color on this exciting business and its exciting growth prospects.
Let's turn now and take a look at Telus International.
Earlier today, intelligent international announced strong double digit revenue EBITDA and free cash flow growth for the first quarter.
Ti's continued robust results demonstrate consistent execution attractive end to end digital capabilities and position as a leading partner of choice for Premier digital customer experiences and it services with its enviable list of clients on a global basis.
This highly differentiated offering notably includes content moderation data annotation and artificial intelligence solution and.
And it's great to see the growth coming from Ti on a revenue EBITDA and free cash flow basis, when its organic growth that we're reporting against.
Doug This is going to have an opportunity to provide further commentary on both our Telus International and T Chek financials shortly.
Importantly, our ongoing investments in technology infrastructure data analytics and growth markets enable the continued advancement of our strong operational and financial performance strengthening our confidence in the robust outlook for our business and the long term sustainability of our industry.
<unk> leading dividend growth.
Today, we announced for the fourth time since 2021, the extension of our industry best dividend growth program.
Dallas is again targeting 7% to 10% annual growth for 2023 through 2025 supported by our positive business outlook and accelerating free cash flow growth story, clearly, we're entering an era, where the sources of cash are going to chronic.
<unk> exceed the use is.
Notably the seven 1% dividend increase we announced today represents the 22nd semiannual increase over the full course of our multiyear dividend growth program. Originally introduced at the AGM in May of 2011.
Indeed since 2004 through April of 2020 to Telus has returned more than $21 billion to shareholders, including over $16 billion in dividend representing more than $15 per share with of course the shares having split twice.
Further dividend growth and affordability will be supported by a strong EBITDA growth outlook in our telecom data services portfolio complemented by significant value creation, and our T. I health and agriculture businesses. What has differentiated story that is for this organization.
It will be further bolstered by our lower future capital expenditures and our cost reduction program.
This is consistent with the preliminary guidance, we provided for significantly reduced capital investments of $2 $5 billion, beginning in 2023, and the meaningful resulting free cash flow expansion thereafter.
The clothes and from the head and from the heart I'd like to recognize the tremendous thoughtfulness of the entire <unk> team and the passion with which they give with their hearts and their hand to support community.
Ross the globe.
By way of but one example, but certainly an important one our team has contributed nearly $4 million in donations at in kind support thus far to assist those impacted by the tragic events in the Ukraine and eastern Europe .
Moreover, our team continues to demonstrate our social purpose in action through our Telus days of giving as we work together to create extra ordinary outcomes in the global communities, where we live work and serve as citizens.
I remain exceedingly grateful to the entire Telus team for exemplifying our world leadership in social capitalism, as we strive to deliver outstanding results for all of our stakeholders and our pursuit of making the future friendly.
On that note over to you Mr rains.
Okay.
Thanks, very much Darren and Hello, everyone. It's a privilege to speak with you today.
I approached six months, leading till its agriculture, my gratitude goes out to Darren and the executive leadership team, our valued customers and of course, our incredible 1600 team members around the world.
For their unwavering support and commitment to excellence over the last six months.
Tell us agriculture is much more than a production agriculture company.
Our organization spans the entire food and consumer goods value chain, which in any given year around the world is about <unk> 10 trillion dollar industry with approximately two trillion between the producer and processor and eight trillion between the processor in consumer.
The food and consumer goods value chain is woefully under digitized, including a lack of connectivity and is certainly not optimized by data, resulting in sub optimized insights and actions.
And tell US agriculture, we are the largest independent data insights and digital technology company, providing service across the value chain.
In the agriculture industry.
To further our competitive advantage, we are investing significantly in a digitized platform.
A D X or AG data exchange platform will enable us to deliver data insights and execute on data transformation from seeding prescriptions to food promotions.
Further by combining the strengths of Telus Agriculture's products and service and tell US leadership in Iot and five G. We believe we can deliver even greater value and accelerate business for our shared customers and tell us agriculture and tell us business.
One third of all food produced in the World is lost or wasted each year due to issues in processing transportation or planning.
When food is discarded.
All inputs used in producing processing and transporting is also wasted.
The food waste that ends up in our landfills has a significant impact on greenhouse gas emissions.
We have a massive opportunity to help the food industry battle against food waste and more importantly, food in security.
We can help grocers distributors and consumers reduce perishable waste and improve the safety quality and sustainability of our food.
We are utilizing machine learning to generate more accurate forecast combined with real time retail planning and execution.
This allows businesses to react in real time to variances in their plans and replenish or slowdown stocks to meet real time customer service levels in affordable way for producers retailers and our customers.
Tell us agriculture has several capabilities that allow us to digitize and optimize activities for our customers at each end of the food value chain with these anchor assets. We are now uniquely positions to optimize the supply chain by passing data not only up and down with.
And the verticals, we serve look horizontally across the entire value chain.
For example, our production assets from our farm management applications to our trade promotions and retail execution capabilities through our exceed euro and Blacksmith's acquisitions will anchor the data connections that we intend to connect the producer to the retailer.
For middle power that results from bringing these assets together through the investments in our platform is the unique value proposition that we offer in the market.
As Darin mentioned, we are proud of our 37% year over year revenue growth our penetration into over 50 countries are prestigious customer list with nine of the top 10 agricultural companies purchasing services from us and we're most proud of our talented 16.
<unk> hundred team members globally, who are dedicated to empowering the industry with digital technologies and data insights and ultimately, creating the best producer to consumer outcomes.
We are confident that our revenue and revenue growth is illustrative of the significant value we are creating as the leading provider of agriculture technology solutions around the world and further demonstrates the value and asset of consequences that we are creating.
With that I'll turn the call over to Doug for an update on tell US Q1 financial results Doug over to you.
Thank you John and Hello, everyone. Our Q1 results reflect a very good start to the year as we build off our strong and consistent performance over 2020 and 2021 mobile network revenue improved $4, 9% year over year or approximately 6% compared to the pre prints at pre pandemic.
You on 2019 period.
This is reflective of our consistency and resilience through unprecedented times and a clear ongoing focus on high quality customer growth and excellent customer base management, we continue to see a steady improvement in roaming revenue with the Q1 amount at circa 80% of pre pandemic levels.
This ongoing recovery will support <unk> growth as we progress through the year and into 2023 and.
Beyond roaming we are focused on driving sustainable our Peru improvements by executing on our five G monetization strategy, including our speed tier plans and the launch of stream plus a new OTT streaming bundle, but gives you new and existing or new and existing tells customers simplified access.
Netflix premium Apple TV, plus and discovery plus.
It's also important to clarify that when we involved our new reporting segments. In 2021, we no longer include any internal network service in our <unk> calculation.
As demonstrated again this quarter, we continue to focus on strong and profitable subscriber growth, which includes strengthening our industry leading churn profile.
Through this attractive combination and improving <unk> and leading churn in Q1, our lifetime revenue per customer was up 11% to $7000 yes.
This result is even more impressive considering our product bundling efforts across the mobile and home.
In this regard we werent seen impressive trends towards greater product intensity for example, the number of households in our.
With our four or more products is up over 11% year over year, while households, with five products is up 38% year over year.
This strong product intensity.
Trends lead to materially increases in customer lifetime value through the greater revenue per household as long as as well as strong customer loyalty.
Additionally, we continue to make meaningful investments in Digitization and simplification to drive down our cost structure, while improving the customer experience.
Fixed data revenue, which now excludes both agriculture services revenue and health services revenue grew five 2% year over year as a reminder, the prior year run rate also included solutions concentrate contributions from our divested financial solutions business, representing an impact of our quarterly.
Growth of approximately one 1%.
Underlying our fixed data growth is a result of our residential internet growth, which grew an impressive 14% year over year as we continue to drive market share gains as well as higher ARPA as customers continue to move to higher speeds and recognize the value of our superior pure fiber in bundle.
Those offerings.
On the <unk> front inclusive of both mobile and fixed services, we saw positive trends continue and revenue and EBITDA on a year over year basis.
Additionally, our three infotech business says Gee I health and Agriculture also showed attractive growth. Once again combined revenue in these three areas grew circa 20% year over year, reflecting high growth nature of our unique data centric asset mix, which again sets us apart from our global peers.
At the segment level T Tech revenue was up four 2% or 6% when excluding the low margin mobile equipment revenue, which declined from consumer behavior towards longer upgrade cycles and greater <unk> loading.
Meanwhile, <unk> adjusted EBITDA grew by 1% year over year or 6% on an organic basis, excluding the delayed the net dilutive impact of J curve M&A in the financial services divestiture.
As Jeff and Vanessa discussed in the Ti earnings call earlier today <unk> continues to drive strong results for the Telus organization and the relationship between Ti and Telus remains as strong as ever and continues to grow.
<unk> revenue was up 19% adjusted EBITDA up 25% and margins improved 120 basis points year over year.
Importantly, ti reaffirm our.
Our full year guidance and the team remains on track for another strong year of double digit growth and attractive margin profile.
Overall, our consolidated revenue grew six 4% year over year or eight dot, 2% when excluding the mobile equipment revenues.
Consolidated adjusted EBITDA grew 7% year over year or 676% on an organic basis, we anticipate our growth to continue to grow for the remainder of the year.
This growth is going to come from our Boeing ARPA improvements as we progressed through our <unk> monetization strategy in bromine recovery.
Improving <unk> trends from scaling our Iot business driving product intensity nationally and offering the best digital solutions to businesses of all sizes.
Ongoing efficiency benefits for multiple programs, including our copper to fiber program and ongoing digitization efforts.
<unk>, Scott subscriber growth as we expand our broadband coverage and more if we're more communities as our accelerated spend continues on capital and we continue to drive more product intensity and lastly, the integration of our M&A activities to drive more efficiency and effectiveness.
Based on these factors, we reaffirmed all of our financial targets for 2022.
Consolidated net income was up 21% year over year, while adjusted EPS grew 11 free cash flow of $415 million in Q1 increased $94 million over last year, largely from higher EBITDA lower cash taxes, lower handset upgrade volumes and partially offset by.
Our accelerated capital expenditure program.
For 2022, we are currently we currently continue to target free cash flow of $1 2 billion, assuming the volumes of upgrades return in the back half of the year.
Our balance sheet also remains very healthy, including total liquidity of over $2 6 billion and a weighted average pretax interest rate of $3 seven 5% down from three 8% last year, and we have minimal debt maturities until 2024.
Our net debt to EBITDA leverage ended the quarter at $3, one eight times, notably excluding the impact of acquiring spectrum licenses, our net debt to EBITDA leverage ratio at the end of the quarter would've been chewed up seven acts.
Our defined pension plan is stronger than ever with an average solvency position at the end of the first quarter estimated to be at 118%. Moreover, tell us has been in a contribution holiday for some of the registry registered funded defined benefit plan since 2018, while our forecasted employer contributions for 2022.
Two are estimated at $32 million down almost $20 million over 2020 one.
Importantly, our healthy balance sheet positive outlook on our business and attractive fleet free cash flow generation, we extended our long standing dividend program.
We also remain committed to our payout of our dividend payout guideline of 60% to 75% on a prospective basis.
Notably, excluding our accelerated capital expenditure programs, our dividend payout ratio at the end of Q1 was 63% in line with that guideline.
To conclude our Q1 results reflect our consistent execution and operational excellence to drive sustainable value creation for all stakeholders I'm confident that we will further extend his proven track record through the remainder of 2022 and in 2023 Robert back to you. Thanks, Doug Mihai can we proceed.
With question please.
Yes of course first question comes from John <unk> from dish I'm sorry. Please.
Please go ahead.
Yes. Thank you for taking my questions. The first question is on the on the pure fiber lifespan of 60 or more maybe this wasn't the filing but I haven't seen it yet.
What's being used currently for a further depreciation and second question is on is on the health care.
Division pretty decent set of Kpis that you have reported are in my view a good to see amid the reopening and definitely clashes with public valuations have done recently and that's like the I'm wondering if you expect.
Growth, we're seeing in virtual care member and over our lives covered to be sustained for a while.
Okay on your first question.
Our depreciation lives for a county are actually 30 years. So we're more conservative on that front.
And aligned more with call it industry practice, so somewhere to copper the amortization LIFO accounting was much shorter than the actual utilization of that asset.
In terms of the health care question, Yeah, we see significant opportunity to continue to scale that business.
We see significant opportunity to scale the business on a direct to consumer basis with our.
My care offering which is doing extremely well and of course, it fits very well with our home bundle as.
As it relates to our data services right up to security home automation and alike health bids elegantly within that portfolio.
And not only does it have a nice attributes in and of itself in terms of serving the health needs of the household but it helps drive better economics of the bundle in terms of the revenue per home, but also critically a lower churn rate because we get better stickiness with that service huge opportunity an employer based health care solutions.
<unk> to continue to drive this capability set with our virtual care capabilities and a significant upside and if you think about all the business relationships that Nadine and his team have across Canada.
And this market penetration is huge and what I really like about it is that our virtual care capabilities fit within the enterprise market General business services up market mid market right down to the small business market. So the.
The ability to hit all of those sectors I think is.
Tantalizing for this organization in terms of upside growth potential and then there is also scope economies because it's not just the virtual care capability, we're adding products and applications onto it all the time, including our expansion into the E. F AP market, what we are.
Doing with our virtual pharmacy capabilities, where I think there is huge upside within the virtual pharmacy, a capability set that would be extremely interesting and then folding in additional services synergize. If you will our virtual care capability with our EMR environment or with our <unk>.
<unk> environment, and so I think that's tremendously exciting and even within the clinical environment to be able to go to the almost 30000 doctor relationships that we have across Canada, and say, here's where you can take a virtual capability and married up with the physical interface.
That you have with their patients in terms of bringing new services to bear within our existing EMR. Our relationship. So I'm very bullish on these capabilities going forward and I think there's even opportunities eventually for international expansion on that front as well.
Great. Thank you that's helpful.
Thanks, Rob next question please.
Of course, our next question comes from Robyn <unk> from Canaccord. Please go ahead.
Good morning, Thanks for taking my question. The first one is on sort of the monetization around <unk> on the consumer side I think Darren you talked about that a little bit as you think about pushing that to the next step.
To offset of the spirit speed tier model and it seems like some of the others have adopted as well what are your thoughts on sort of monetizing our investments in <unk> on the consumer side are you seeing.
Newer ideas in terms of the way you want to sort of set.
Set up the pricing of used cases, and so forth. So that's the first question and then secondly, with respect to Telus health just to kind of push a little bit on that on your comments earlier is it your intent to sort of move down more of a push or maybe grow faster on the virtual care and connected care side of things or do you sort of want it.
Lean more towards the higher margin <unk> type.
Segment, especially as you think about a potential spin out down the road as well.
Wanting to get your thoughts on those.
Okay I think what we'll do is we'll kick it off with Jim to talk about <unk> monetization and consumer I'll ask after Jim Devine just to have a very short piece on the monetization opportunities are by G. On beta because I think those two bookends are important then you need to look at.
<unk> monetization Holistically and then I'll close it out in terms of my health ranking.
Thanks for the question, we're excited about the <unk> monetization and consumer.
We implemented two core parts of our consumer strategy in Q1, the implementation of speed tiers going to 100 Megabits per second in flanker 250 for five G and up to a gig for five <unk> plus <unk>.
And I think what goes hand in hand, with that is creating compelling reasons or five <unk> speed tiers.
And unlimited plans and to that end.
And Doug mentioned this week, we launched stream plus or.
New plus of the first of its kind over the top bundle of Netflix Apple TV and discovery, we saw extremely dumb.
Extremely encouraging demand out of the gate customer feedback has been very strong and sales rep feedback out of the gate.
Well as very strong loading.
And it also creates more product intense intensity nationally, including with our eastern customers, which will drive lower churn.
Yeah. So we're we're progressing and that looks very very strong.
Okay.
Yeah. Thanks, Jim I'll, just talk up a bit on the <unk> side.
<unk> <unk> is a is a very exciting area of development for us and as we've said on previous calls in B to B <unk> G is there is more of a marathon than it is a sprint.
To give you a little bit of context Iot enabled by five G is a nine figure business for us and it's driving double digit digit growth for for Telus and its a tremendous area of opportunity and an important part of our EBITDA acceleration strategy.
And allows us to continue to outrun legacy declines and B to B.
Just a few.
Examples so.
Our immediate focus is on expanding <unk> connectivity through various solutions, such as fixed wireless HSI, a monetizing mobile edge computing network slicing private <unk> networks, a basic connectivity of devices working with Oems and both base.
They can advanced fleet solutions, and then beyond connectivity. We're also building out our ecosystem of integrated Iot and SaaS solutions that address key challenges in specific verticals and Horizontals are all at once again enabled by our <unk> network. So a couple.
Quick examples on how we're commercializing and monetizing <unk> and Iot. So first in Q1, we signed our largest enterprise deal for connected worker solution.
That's really focused on improving employee safety and productivity and that was a one deal for over 500 employees are also this past quarter, we began rolling out new public safety solutions, and our smart city portfolio, So, including next generation 911, and mission critical push to X solution. So both.
First of their kind in Canada, allowing for greater information and accuracy to respond to emergencies and then one last example in agriculture, we're growing our focus on farms and ranches in Canada building on the momentum of our decisive and farm at hand acquisitions too.
Offer a broader set of Iot enabled solutions and our improved connectivity and actually I'll do one more in health, we're actually piloting connected ambulance solutions to improve real time communication and collaboration between paramedics and health providers. So so we're really excited by the quality of the use cases.
At <unk>.
<unk> will provide.
To really drive that strong commercialization and monetization in and we're quite pleased with the foundation, we've built and the growth that we're driving off that foundation.
So just to bring it home on the on the health front.
I'll give you two cuts at this in terms of how we look at the health business. So on the H B M. Brian you can look at that as the mature part of our health business.
The EMR component you can look at them as a foundational and anchor with growth attributes.
And the virtual care and virtual care plus.
<unk> is a significant growth engine opportunity so to use your vernacular H P. M would devalue EMR would be value with growth in D. C would be a growth story virtual care plus in that regard. The reason for that is the opportunity is so significant on virtual care to be able to hit the consumer market.
And all of the business market and to do it on an integrated basis with our telecommunications services and all the channels that we have to deliver that and support that.
That's a pretty potent opportunity also in the virtual care front the opportunity the opportunity keep bolting on additional applications and features and products some of which I've already articulated.
It gives us both scale economies and scope economies.
That are tremendously exciting and then the thing about virtual care is that it's so easily integrates.
So when you've got a virtual care relationship whether its business or consumer you've got an easy step to virtual pharmacy, and what we want to do to scale that part of our business. It's easy to inculcate the EMR component on that front as it relates to virtual care EAP offerings, it's great.
To be able to fold in our 16 clinics across Canada in terms of the physicality of those services and even on a regulatory basis.
The need to have both physical clinics combined with virtual care is really truly a way of the future and you can see that regulatory assistance already in place in certain regions within within Canada.
And also on the teller working side of things. If you think about our D to B E strategy and what Tony is building on five <unk> and fiber to the extent to which the working topology post the pandemic is going to be different than what it was before with more people working from home to be able to delay.
Liver, our health solutions into the home environment are Virtualized health solutions into the home environment. You know is another fantastic attribute of what we're doing and so there's just so many angles on the growth that frontier I think I would say yeah, we have a bias to that particular product line.
That's really helpful. Thank you I'll pass the line.
Thank you.
Thanks next question please.
Yes next question comes from David Joyce from Barclays Capital. Please go ahead.
Thank you two questions. Please first I was wondering how we should think about the cadence of our subscriber net addition trends this year.
Granted we're now kind of lapping some of the Covid impacts you still had very strong as expected net adds in the first quarter, but it wasn't a deceleration. So I'm just wondering what sort of seasonality, we should be thinking about this year.
And then separately I know on your footprint your your.
When you focus in the immediate term is to migrate off of copper.
But what could the expansion possibilities be in an edge outs beyond your.
Current footprint that would economically make sense, either a fund it on your own or with the various government programs. Thank you.
Great. Thanks for the question much appreciated.
As Jim <unk> Zeno <unk> to comment on the net adds front prospectively in terms of what they're seeing and then Tony can talk about where we're going.
On the technology front, both the growth related technology and decommissioning the legacy.
Oh, Thanks, I mean, we achieved another quarter.
Thanks, Don.
Outstanding performance, driven by maintaining focus on sustainable and high quality of loading.
And some of the drivers behind that you know, we're having a lot of success with our mobile in home playbook.
We are getting better and better targeted marketing and channel programs.
We are we tend to be maybe a little bit more counter cyclical and or loading.
Getting loading during low hi, lowest in periods versus highest impurities.
Which is all very encouraging and you know when you look at the competitive environment I would characterize Q1 as stable disciplined.
And there were some regression in flanker, but overall you know a pretty normal cable cut.
Environments, you know and we're seeing traffic returning tourist stores, which is good but the really interesting thing is is we're also seeing growth in digital so the progress and the gains that we've made on digital are carrying through even with their stores.
Celebrating.
And so you know we feel really bullish about the subscriber loading and feel very good about where it's going.
Okay.
The fixed side casino all top up.
What we're seeing is.
<unk> sort of.
Churn impacts on things like moving and a higher degree of mobility with respect to some of our customers late in the wireline side, but our focus is always been an expansion and acceleration of our pure fiber footprint driving penetration and on product intensity and so that contributed to.
<unk> comment on the mobile and home front, we're seeing a great opportunity to continue expanding our mobile in home based as well as product intensity beyond that in.
In Q1, you saw a very strong.
Performance on Smart home security and we will continue to drive product intensity through that vehicle as well as continue to scale, our health offerings in the in the in the BDC space and and it's the contribution of all of those activities as well as the continued desire for customers to walk.
Want to get the capacity speed reliability of pure fiber that we feel is a very sustainable trend into the longer term. So you know I think we will see some mild sort of dip.
Differences in churn behavior on a month to month basis, but from a sustainable standpoint, we feel very confident in our plan and confident in the product intensity focus that we have.
Thanks Dino.
David One other thing I think that's it.
Important to understand from the Telus approach is we've been very successful working with federal and provincial government to put out capital tool to work with a subsidy dollars from the government.
To build efficiently on time to budget with better committed achievement on outcomes. These remote and rural communities. We've had 100% success rate over the last year and a half of achieving.
All of the.
Subsidy allocations that we've submitted.
Bid on and that in part is part of our success story in terms of how we execute on the deliverable. Additionally, when we look at the opportunity to expand to adjacent areas our existing fiber footprint.
Quite often with the population and population growth, we can see new opportunities that will present, a few years ago that allow us to extend our fiber footprint and with the new technology of five G. Fixed wireless we are able to look at effective alternative solutions, which I might add would be heightened.
If there were smaller public policy on spectrum, but we could actually deploy them.
I'm getting solutions to those remote rural communities on a much faster basis, but collectively where we're really excited by the opportunity. Our current footprint represents to continue to build out and if you looked at our current penetration of bill probably is to.
Subscribe as you can see it's nearly 50% and if you think about the time it takes to build into a new build footprint to get penetration that would give you an indicator of where we are a more mature market and that really is.
A future opportunity for us to really continue that success.
Drive great customer growth on a continued basis.
Great. Thank you very much.
David next question please.
Of course.
And just to remind everyone to ask a question. Please press star one to get in the queue and the next question comes from Stephanie price from CIBC. Please go ahead.
Hi, good afternoon.
I have two questions as well the first would be just a congratulations on can you disclose it than the ads business.
This quarter I'm, hoping you could talk a little bit about the growth drivers.
But the trajectory.
And then my second question would be on churn, so Q1 churn number.
<unk> gross adds and Hyatt, Kentucky market activity.
I was going with the Jos.
And going forward.
Oh great.
Sometimes.
Thanks, Stephanie John why don't you talk to the growth drivers and the potential for the asset a consequence on the AG front.
Absolutely. Thanks for the question so.
Well the first place I'll start us off with food beverage and consumer goods were the third largest in the world as we as we think about food promotion and demand fulfillment or our technology and insights is really leading a tremendous amount of growth in that area and not only does that fuel our year over year growth, but it also creates an opportunity.
To then feed information back across.
Horizontally to the food value chain in terms of supply planning demand planning demand forecasting.
Creating tremendous value more predictive analytics more prospective value than we have today or have seen in the past in that in that supply chain. If you go to the other end.
Our growth also extends into AG retail as well as AG manufacturing, where we're helping fill demand for growers.
On the products that they buy through retail from manufacturers as well as fulfilling agronomy based services like seat scripting and fertility scripting. So these are both big areas of growth and then the key for US is our <unk> platform and the way we're building out technology to really build in between those two and feed inform.
Nation. So we can effectuate that 10 trillion dollar industry.
Yeah.
In terms of churn.
I don't think the recipe here is a well kept secret. So I'll just highlight Stephanie the components. Because this really is a huge part of the tell a story on a global basis.
So I'll start given we're a technology company with technology.
When you consistently have the best broadband networks in the world.
And we do that.
That makes a huge difference to customers are.
From the speed and components and latency considerations, but also expansiveness reach and the robustness of the service from a reliability point of view and you know we are always in the top three year in and year out on a global basis in terms of <unk>.
Where quality excellence across both wireless and wireline secondly, we've been a customers first the organization now for 14 straight years it.
It is the consistency of that focus and the application of the execution across the totality of this organization. That's made that that that difference we provide the best customer service of any telco on the planet and it's completely embedded in the ideology and the culture of this organization is our people.
Will that make up the difference or higher levels of engagement directly scientific lead translate into better customer service outcomes, which translates into not just lowered churn, but their propensity to buy additional services from us which leads me to the next point, we have an organization that launched.
The first strategic imperative back in 2000, and this is now 22 years old which is to offer integrated solutions across our wireline and wireless operations that differentiate us from the competition in a word we are bundle there's bundlers the quality products, where it's not just the product in and of itself, but how that.
<unk> products co exist and how they are interoperable to create that stickiness and that value proposition that we deliver for the clients and we're very good at doing that from product development to channel delivery in terms of our bundling thesis.
Number four we eat our own gourmet cooking. So you know you hear John talking about data analytics year, our strict health strategy in terms of data analytics, where we do data analytics that when it comes to customer service.
And there's no one that is better than not that predictive churn models and responses and in the light. So we do the math and that guides our actions because their scientific and those actions are more efficient and effective as a as a result, our next yeah. We don't just put customers first we put community's first we are the world leader in social.
Capitalism that drive the higher level of engagement and performance mentality within our culture, because we have a higher calling we have a better intimate more emotional connectivity with our communities and people know that when they give their business that tell us because of our social purpose thesis that money's going to come back into their community and.
We put to work in terms of better health outcomes, better educational outcomes, better education or environmental outcomes and also passionately. We're bridging geographic device. So there's not one growth on the digital front within the urban construct but digital extends from urban to rural and we're also bridging digital divides on this.
Social economic front, so that we don't have a society of haves and have not everyone gets a chance to realize their full potential because we arm them with the technology to do exactly that and when you have that level of affinity and intimacy with the community across all those various components people want to stay with us they want to do business.
It does because at the end of the day they get the why of the Telus organization not just what we do but why do we do it and have excellent isn't a nonrecurring event is something that you need to demonstrate year in and year out look at the longevity of our performance as it relates to world leading churn it's nine years.
<unk> now where we've been sub 1% people never thought that we would get blended churn below 1% only postpaid and look at what we've done not just on longevity, but dual horizontal cross section where five of the last eight quarters, we've been below 1% on mobile on Internet on T V.
On security and on voice services. So we've done it from new growth services. The anchor services. The legacy services all below 1% you know to me that speak to the consistency, but those aforementioned parameters are the reason why we deliver that result in I think it portends well for.
Our our positioning in the future and the comments that Jim made and they don't make in terms of our ability to continue to grow at the net adds at level and also as it relates to value because the people that are sticky clients with us are high value clients.
That's great color. Thanks, so much.
Thanks, Stephanie we'll take our next question please.
Yes of course, our next question comes from Vince Valentini from TD Securities. Please go ahead. Thanks.
Thanks very much.
Two questions on mobile Arco first a clarification you talked a couple of times about the stream plus offering front make sure. It's clear if somebody starts paying you for Netflix and other streaming services through there.
Our phone connection youre going to count that as mobile service <unk>.
I'll take it Yep Yep go ahead, Jim Okay. So.
We are reallocated to actually home solutions.
It's not impacting our view I think the thing that is driving our proof from stream plus.
Is the connection to our speed tiers, and so what we're seeing with stream plus customers are they're taking our five cheap plus plants and that's exactly what we want because this is driving that escalator like ladder up to bigger data bucket unlimited plans with higher speed.
Profiles and in our first two weeks that's exactly what we're seeing and the take up of demand is double what we had expected out of the gate. So we're we're very excited about that and you know events.
There are a few things on <unk>.
I would like to say one you know we realized nearly 6% revenue growth versus Q1 2019, we've had four straight quarters of year over year revenue growth. Our Q1 exit ARPA growth from March was one 7% and were seeing that carrying into <unk>.
Q2, so we're feeling very bullish about cut rate planned value stuff up.
Is up across Activations renewals and re plan changes all up year over year and month over month.
And we're seeing steady recovery on roaming and the price increases that have been in Poland mentioned on roaming are starting to flow through in Q2.
And we're seeing the early success from speed tiers and stream plus so when we look prospectively, we're feeling very good about where this is going.
Thanks, Josh I O T operations Yeah.
Yeah. Thanks for that clarification I wish that's why I thought you would've hit it just right just confusing the way it presented the first then the other question was.
Correct me to what you were just saying I totally understand the two year growth comparisons that your peers had much bigger drops.
And the pandemic. So they may be having just easier comps and bouncing back so you're very valid and pointing that out but I'm looking at the absolute dollar of ARPA and to be honest I'm confused because I know you guys are focused on quality loading.
Look at Q1 last year.
Your your blended ARPA at $56 10.
You know 50 to 90 cents.
Higher than for the other two national carriers and now this year in Q1, you're sort of that much lower than the other two so theres been a big swing just on the absolute dollar of RP would forgetting about the one year or two year growth percentages is there something weird going on here.
Timing of.
When I first 15 hits or something to do with the prepaid postpaid mix or something else I'm not sure why the absolute dollar ARPA would tell us would not be lower.
So I'll start Joe on the line so two things that come to play as one there's mix issues between obviously, our organization and others on the prepaid mixers is postpaid.
When we changed our segmentation in 2022.
Intercompany revenue also is now eliminated zero inter company in our pool within our organization.
And then there is and Jim can highlight the promotional activity and how Io or Io plus 15 flown through.
You take out <unk>, Yeah, I mean.
A couple of things one I think there is an appointment margin.
A dynamic that.
That is right.
So it kind of clouds the comparatives.
And that drives an amortization impact that could be a you know a few dollars actually.
So that's one aspect of it.
And Vince look you know ARPA is also not the only metric we're focused on revenue flow through to EBITDA and lifetime value are also critical and when and we're really happy with what's happening on both of those measures channel digital simplicity.
Programs have driven.
Significant cost reductions for us since some hardware and some part examples are digital and direct transition transactions are up 104% versus 2019, we've taken out 20% of all of our mobility calls.
Which have been offloaded from our call centers and yet our service levels have improved and our physical channel loading is increasing and then when you look at lifetime value.
As Darin I'd mentioned before we're up to 45% higher on lifetime value than our major national peers, and our industry, leading mobile postpaid churn of <unk> six 3% I don't think youre going to find better results than that and thats coming from bundling and it's coming from our focus on.
The high value customers and so when you take those three metrics together.
They're driving like really good revenue to EBITDA flow through outcomes for us and I think that's where the money is and that's that's that's a great outcome for us and Vince to Joe's point on the IRS 15 amortization the sooner you move to more how it does.
The planned on subsidy the sooner you were off the amortization period. So the fact that we were early in the stage of being.
More upscale upticks on our rate plans and more high value loading the amortization impact will be different as that two year runway comes to an end.
Thank you.
Thanks, Vince I mean, how do we have time for one more question. Please yes of course, our last question comes from a true Mick Reynolds from RBC capital markets. Please go ahead.
Yeah, Thanks, very much and good afternoon, two for me, maybe starting with you Doug just to level set expectations here I think we all knew how did the gate here relative to your full year guidance, we're going to get a lower year over year growth rate slightly just wondering how that are at the moment you see that.
Kind of building through 2022 in terms of cadence.
And then secondly, and no need to drill down too much on this but.
All of a sudden center in this kind of market and environment are inflation, and then kind of cyclicality of recession and I think a lot of us on this call I haven't really seen a telesat Telus health a T. I go through much of any of that so just at the high level. It would appear these assets are suddenly.
It should prove resilient for a number of reasons, but just wanted to get some high level thoughts there. Thank you.
Yeah, so on that trajectory and we expect continuous improvement as we go throughout the year.
On our our overall.
Progression on EBITDA growth when.
When you think through the <unk> initiatives that we just talked about we think about the continuation of copper to fiber migrations and.
The loading trajectory that we had the bed is margin improvement as the year progresses, and then AG and health margins as we integrate and grow.
Those portfolios all of them are on the upward trajectory.
As we look we look forward, so I'd say, it's going to be steady throughout the year and youre going to see that progression on a quarter over quarter basis from Jeff's call. This morning on the Ti call, Jeff had a very good answer to I recommend you listened to the recession side of Ti.
When you think through that what Ti has to offer.
They're actually enabling organizations, even such as tell us during a recession period with digitization with our team members that actually help them significantly through a recession. So the customers they have and the diversity. They built within the organization actually lend us very well to be an enabler and.
Helping organizations through that period, and yes, it's not quite recession proof, but the diversity as well as the enablement definitely gives them a leg up on a an opportunity front.
Darren do you want to take.
No I think that's well said Doug in terms of Ah I again, and how I don't think and I think as inflation proof, but I think these are resilient businesses for us given the essential service nature of these businesses and you know how people behave within a digital economy and and Digi.
Society, So the necessity on health and necessity on food I think gives us a strong level of resiliency. The other thing that I think John range would say.
When your data analytics thesis is driving better efficiency within the sectors that you are seeking to serve that plays very well during an inflationary period.
Other thing that I think is interesting about tell us is that we have such a diversity of our asset mix from what we're doing within our core telecoms portfolio on data services in our evolving that to what we're doing on Ti, how eager and alike.
That level of diversification gives us a better a backbone of resiliency, whether it's inflation or supply chain pressures that we're dealing up simultaneously and then you know you have to respond proactively and I don't think very many organizations have managed exogenous events over the past.
Two years are better than what we've done.
You know, whether it's equity market meltdowns, our credit crunches or regulatory decisions were inflationary periods, we seem to navigate that turbulent very well and I think that's down to the quality of the team and then we have a pretty resilient strategy. Here. So you know I think we're the most progressed in terms of our digital capability.
That that can really help us when we are experiencing wage pressures from inflation to drive that digital thesis we.
We have the.
Benefit of being able to access labor arbitrage at Ti. So yeah, we've got pressure they've got pressure, but to the extent to which we can use the ti asset to support buttress. The economics of <unk> Corporation I think all the better and then you know we got to keep being more and more efficient all the time to make some difficult decisions as it really.
Rates to cost reduction programs, but I can tell you one thing as an organization that really centers on the thesis of bundling. If you are a product intensity centric I think you'll do better during inflationary period, you'll experienced bumps, but you'll manage them better along the way.
Excellent. Thank you.
Thanks drew and thank you everyone for joining us today, please feel free to reach out to the IR team with any follow ups, Okay take care everyone.
Yeah.
This concludes the <unk>.
'twenty 'twenty to Q1 earnings call. Thank you for your participation and have an understanding.
Are your luxury at Harvard.