Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Calls/ Webcasts

TELUS reports strong operational and financial results for fourth quarter 2022; announces 2023 consolidated financial targets

Industry-leading total Mobile and Fixed customer growth of 301,000 up 29,000 over last year, and our strongest fourth quarter on record, driven by strong demand for our leading product portfolio of Mobility and Fixed Broadband services

Robust mobile phone net additions of 112,000 and record fourth quarter connected device net additions of 106,000; industry-leading postpaid churn of 0.96 per cent and Mobile Phone ARPU growth of 2.2 per cent

Best fixed customer growth on record with 83,000 net additions, including 42,000 internet customer additions, powered by leading customer loyalty in combination with TELUS' expansive PureFibre network

Record high customer additions of 1,043,000 for the full year, driven by consistently potent operational execution, unmatched bundled product offerings across Mobile and Home, and team member culture focused on delivering exceptional customer experiences over globally-leading networks

Strong quarterly financial results leading to industry-leading full year Consolidated Operating Revenues, Adjusted EBITDA and Free Cash Flow growth of 8.6 per cent, 9.5 per cent and 64 per cent, respectively; Net income for the full year up 1.2 per cent

Global industry-best growth profile, underpinned by strong operating momentum across our telecom business, bolstered by TELUS International, TELUS Health and TELUS Agriculture & Consumer Goods

Targeting 2023 Operating Revenue and Adjusted EBITDA to increase by 11 to 14 per cent and 9.5 to 11 per cent, respectively

Robust Free Cash Flow growth of circa 57 per cent to approximately $2.0 billion in 2023 supports balance sheet strength and leading dividend growth program through 2025

VANCOUVER, British Columbia, Feb. 09, 2023 (GLOBE NEWSWIRE) -- TELUS Corporation today released its unaudited results for the fourth quarter of 2022. Consolidated operating revenues and other income increased by 3.8 per cent over the same period a year ago to $5.1 billion, or 13 per cent excluding the $410 million pre-tax gain arising from the disposition of our financial solutions business, as reported in other income, in the fourth quarter of 2021. This growth was driven by higher service revenues in our two reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences ? TELUS International (DLCX). TTech service revenue growth was driven by increased health services revenues attributable to business acquisitions, including LifeWorks and organic growth, higher mobile network revenues, increased data service revenues and increased mobile equipment revenues. Increased DLCX revenues resulted from expanded services for existing clients and growth from new clients. See Fourth Quarter 2022 Operating Highlights within this news release for a discussion on TTech and DLCX results.

"Throughout 2022, TELUS achieved strong operational and financial results across our business, including leading our North American peer group with respect to 2022 Operating Revenues, Adjusted EBITDA and Free Cash Flow growth," said Darren Entwistle, President and CEO. "This is a trend the TELUS team has consistently demonstrated over the long-term. Our robust performance in the fourth quarter, and for the full year, reflects the chemistry of our globally leading broadband networks and customers first culture, driving our hallmark combination of profitable customer growth, alongside strong financial results. Industry-leading net additions of 301,000 represented our best fourth quarter on record, and concluded another year of industry-leading expansion of our customer base. Indeed, in 2022, we delivered an all-time record, surpassing total annual net additions of more than one million for the first time, including another best-ever year for Fixed subscriber growth of 274,000, and delivered our highest Mobile Phone net additions since 2010 with 401,000 net new customers. This industry-leading growth reflects the consistent potency of our operational execution, unmatched bundled product offerings across Mobile and Home, and team member culture focused on delivering exceptional customer experiences over our globally-leading PureFibre and 5G networks. Our team's passion for delivering customer experience excellence, once again contributed to strong client loyalty across our key product lines, including blended Mobile Phone, PureFibre internet, Optik TV, Security and Voice churn all below one per cent for the year. Furthermore, 2022 represented our ninth consecutive year of industry-leading postpaid wireless churn below one per cent."

"Our results are buttressed by our highly differentiated and powerful asset mix geared towards high-growth, technology-oriented verticals," continued Darren. "Despite a challenging macroeconomic environment, TELUS International (TI) delivered strong results in 2022, with double-digit revenue growth, leading profitability and robust cash flow for the full year. Indeed, TI's strong results and outlook also reflect the important relationship with TELUS as an anchor customer, enabling TELUS with superior customer service excellence and powering our digitization strategy - a unique relationship that significantly benefits both organizations. TI's continued focus on profitable growth, powered by attractive end-to-end digital capabilities, position it as a trusted advisor for premier digital customer experiences and IT services for its over 650 global clients. Earlier in January, TI completed the acquisition of WillowTree, a full service digital product provider, bolstering TI's front-end development and design competencies, unlocking attractive cross-selling opportunities. This resulted in the addition of new marquee customers that further diversify TI's enviable list of client partners, while accelerating TELUS' ongoing digital transformation and supporting key product development across our business, particularly in health and agriculture and consumer goods."  

"In 2022, health services revenue increased by 75 per cent, including four months of contribution from the acquisition of LifeWorks, nearing the $1 billion revenue milestone. As we progress into 2023, we continue to focus intensely on integrating and scaling our global health operations to build the healthiest communities and workplaces on the planet. This includes our healthcare programs, covering 68 million lives, inclusive of LifeWorks, an increase of more than 47 million over last year. In addition, digital health transactions were up five per cent year-over-year, to 580 million. Finally, we welcomed 1.7 million new virtual healthcare members in the last 12 months, increasing our membership to 4.5 million, up 61 per cent over the prior year. We anticipate strong growth within TELUS Health in 2023, including solid organic growth, as we continue to integrate and grow this business into an asset of enhanced global consequence. This will be supported by our intense focus on crystallizing meaningful synergies of $200 million or more that we expect to drive over the next three to five years, inclusive of revenue synergies from cross-selling, and $60 million in nearer-term cost synergies."

"At TELUS Agriculture & Consumer Goods, annual revenues of $354 million were up 24 per cent in 2022 over the prior year, through a combination of acquisitions and organic growth, as our team continues to integrate and grow this compelling global business. This demonstrates the significant value we are creating as a globally-leading provider of agriculture and consumer goods technology solutions around the world, as we advance the sector's efficiency and effectiveness, including food quality production, safety and waste reduction, through data analytics. We look forward to strong progress and double-digit revenue growth in this business in the year ahead, which we are confident will further illustrate the value we are creating in this important area."

"Throughout 2022, the superiority of our world-leading wireless and wireline networks were reinforced by TELUS earning numerous accolades from independent third-party organizations," Darren added. "Notably, global analytics company, Opensignal, recognized TELUS with five industry awards in the year for both our 4G and 5G networks, making TELUS Canada's most awarded network by Opensignal for the 11th consecutive time. Similarly, TELUS was honoured with three awards from U.S.-based Ookla in 2022, including being named North America's Fastest Mobile Network according to results from Speedtest by Ookla. Moreover, Canada-based Tutela recognized our wireless network with four national awards for Excellent Consistent Quality, Core Consistent Quality, 5G Excellent Consistent Quality and 5G Core Consistent Quality. Likewise, our wireline network also received praise, ranking as the fastest nationwide internet service provider (ISP) in Canada among major ISPs by PCMag for the third consecutive year. These acknowledgements clearly illustrate TELUS' leadership in offering customers the fastest, most expansive and reliable service in Canada, across both our wireless and PureFibre networks. Moreover, this recognition of TELUS' national broadband network leadership underscores the tremendous value of our generational investments in world-leading network technologies, including our now concluded accelerated broadband expansion program undertaken over the past two years, which will continue to drive extensive socio-economic benefits to Canadians in communities from coast-to-coast, for decades to come."

Darren further noted, "The TELUS team's ability to consistently drive profitable growth over the long-term, on the back of our differentiated asset base, best-in-class customer experience, world-leading networks and our unique growth businesses, provides us with confidence in the robust outlook for our business and delivering on the annual targets for 2023 that we have announced today. This includes anticipated industry-leading Operating Revenues and Adjusted EBITDA increases of 11 to 14 per cent and 9.5 to 11 per cent, respectively; capital investments of approximately $2.6 billion as previously announced; alongside Free Cash Flow of approximately $2.0 billion up nearly 60 per cent over 2022, supported by strong EBITDA growth and a material capital step-down following the successful completion of our accelerated broadband investment program. These industry-leading targets will be supported by the healthy guidance for 2023 announced this morning by TI, once again targeting double-digit Revenue and Adjusted EBITDA growth alongside leading margins as they continue to drive solid and profitable operating momentum through their end-to-end design, build and deliver capabilities, tapping into the accelerated need for premium digital customer experiences, digital transformation, content moderation and AI data solutions across its strategic industry verticals on a global basis. Furthermore, the unparalleled skill, innovation, grit and execution excellence of our team, on our consistent and winning strategy, underpins our leading multi-year dividend growth program, now in its thirteenth year, and extended last year through to the end of 2025. Since 2004, TELUS has returned $23 billion to shareholders, including $18 billion in dividends and more than $5 billion in share purchases, representing approximately $16 per share."

"Our TELUS team continues to exemplify our social purpose in action," concluded Darren. "In 2022 alone, our team members and retirees donated $125 million and volunteered 1.44 million hours in support of charitable and community organizations ? more than any other company in Canada. Indeed, since 2000, we have demonstrated our global leadership in social capitalism by gifting $1.5 billion, including two million days of global volunteerism. I continue to be inspired by the unparalleled compassion of our TELUS family and their dedication to making the future friendly for all citizens."

Doug French, Executive Vice-president and CFO said, "In the fourth quarter, our team delivered strong operational and financial results, demonstrating our ongoing cadence of execution excellence. Indeed, in 2022, we achieved our financial targets, including Operating Revenues and Adjusted EBITDA growth, supported by our record customer growth on our leading mobile and fixed broadband networks, diversified and powerful asset mix, and our company-wide focus on delivering exceptional customer service. For the year, cash flow from operations increased by nearly 10 per cent, and free cash flow increased by 64 per cent to nearly $1.3 billion, surpassing our original target for 2022."

Doug added "We achieved a number of important milestones during the year including surpassing one million customer net additions within our Mobility and Fixed portfolio, and enhanced our growth profile through key acquisitions. We also completed our accelerated broadband build, ending 2022 with approximately three million premises connected to our leading PureFibre network and now cover over 80 per cent of Canadians with our next generation 5G network. With our copper-to-fibre migration largely complete, ongoing copper decommissioning will lend significant support to our enhanced efficiency and margin expansion initiatives. In addition, in 2023, we have earmarked $75 million to support the development and monetization of excess real estate assets as a result of our early successes of our copper decommissioning program. Our team also advanced our leadership position in sustainability, issuing our second and third sustainability-linked bonds during the year, linking our financing to the achievement of ambitious environmental targets and placing TELUS at the forefront of sustainable financing."

"Our continued strong operational and financial performance supports our robust balance sheet and liquidity position," added Doug. "Against the backdrop of macroeconomic uncertainty, we have a strong debt maturity schedule with the average maturity of our long-term debt at over 12 years and only $500 million coming due in 2023. Importantly, the average cost of our long-term debt remains low at 4.03 per cent while 86 per cent of our debt is fixed. Our balance sheet strength will be further enhanced in 2023 with a meaningful increase in free cash flow with strong EBITDA growth, and as our capital expenditures take a meaningful step down, establishing a lower capital profile going forward. As a percentage of revenue, our consolidated capital intensity in 2023 will be in the zone of 13 per cent, a historical low for our company. This strong position further supports our leading dividend growth program now in place through 2025, along with de-levering our balance sheet while continuing to make strategic investments, including our participation in the 3800MHz spectrum auction later this year, to continue advancing our winning growth strategy."

"For 2023, we set ambitious financial targets, building off our leading growth profile and well established operating momentum. Our financial outlook reflects continued healthy growth within our core business, including profitable customer growth driven by continued demand for our superior bundled offerings over our leading broadband networks. In 2023, we anticipate strong contributions from our unique and high growth businesses, including TELUS International, which today released its financial targets for 2023, including double digit profitable revenue growth, as well as TELUS Health and TELUS Agriculture & Consumer Goods, which are rapidly becoming important contributors to revenue, profitability and cash flow generation. We look forward to sharing increased disclosure for these growth businesses, which we believe will further demonstrate the significant value creation and growth potential of this business," Doug concluded.

For the fourth quarter, net income of $265 million decreased by 60 per cent over the same period last year and Basic earnings per share (EPS) of $0.17 decreased by 64 per cent. These decreases were driven by the after-tax impacts of lower other income and higher financing costs, as well as higher goods and services purchased, employee benefit expense and depreciation and amortization; and, as it relates to EPS, higher shares outstanding. When excluding the effects of restructuring and other costs, income tax-related adjustments, the virtual purchase power agreement (VPPA) unrealized change in forward element in the fourth quarter of 2022 and the gain on disposition of our financial solutions business in the fourth quarter of 2021, adjusted net income of $333 million increased by 0.6 per cent over the same period last year, while adjusted basic EPS of $0.23 was flat. Adjusted net income is a non-GAAP financial measure and adjusted basic EPS is a non-GAAP ratio. For further explanation of these measures, see ?Non-GAAP and other specified financial measures' in this news release.

Compared to the same period last year, consolidated EBITDA decreased by 15 per cent to $1.6 billion, primarily due to the non-recurrence of the $410 million gain arising from the disposition of our financial solutions business in the fourth quarter of 2021. Adjusted EBITDA, which excludes restructuring and other costs, other equity (income) losses related to real estate joint ventures and the gain on disposition of our financial solutions business, increased by 11 per cent to $1.7 billion. This growth reflects: (i) higher mobile network revenues, including growth in our mobile phone and connected devices subscriber bases, in addition to ARPU growth; (ii) increased fixed data services revenues driven by business acquisitions, internet and security subscriber growth, higher revenue per internet customer and TV subscriber growth; (iii) contribution from our acquisition of LifeWorks on September 1, 2022; (iv) increased DLCX contribution; and (v) higher other income, excluding our prior year gain on the disposition of our financial solutions business. These factors were partly offset by: (i) higher employee benefits expense; (ii) higher costs related to the scaling of our digital capabilities, inclusive of increased subscription based licences; (iii) continued declines in fixed legacy voice and data services revenues; (iv) lower TV margins due to rising content costs, an increased mix of customers selecting smaller TV combination packages and technological substitution; and (v) bad debt expense returning to pre-pandemic levels driven by macroeconomic pressures compared to the prior period, which saw historically low bad debt expense.

In the fourth quarter, we added 301,000 net customer additions, up 29,000 over the same period last year, and inclusive of 112,000 mobile phones and 106,000 connected devices, in addition to 42,000 internet, 28,000 security and 17,000 TV customer connections. This was partly offset by low residential voice losses of 4,000. Our total TTech subscriber base of approximately 18 million was up 6.4 per cent over the last twelve months, reflecting a 4.3 per cent increase in our mobile phones subscriber base to approximately 9.7 million, and a 16 per cent increase in our connected devices subscriber base to approximately 2.5 million. Additionally, our internet connections grew by 6.3 per cent over the last twelve months to over 2.4 million customer connections, our security customer base expanded by 22 per cent to approximately 1.0 million customers, and our TV subscriber base increased by 4.7 per cent to more than 1.3 million customers. Lastly, our residential voice subscriber base remained relatively flat at 1.1 million.

In health services, at the end of 2022, and as compared to the end of 2021, virtual care members were 4.5 million, up 61 per cent or 1.7 million, and healthcare lives covered were 67.7 million, inclusive of LifeWorks, up 47.1 million. Digital health transactions in the fourth quarter of 2022 totaled 152.3 million, up 6.7 per cent over 2021.

Cash provided by operating activities of $1.1 billion increased by $230 million in the fourth quarter of 2022 and free cash flow of $323 million increased by $280 million compared to the same period a year ago. The increase in free cash flow was primarily driven by lower capital expenditures. Consolidated capital expenditures decreased by $249 million in the fourth quarter of 2022. This was driven by TTech, which experienced a $239 million decrease in the fourth quarter of 2022, mainly due to a planned slowdown of fibre build consistent with our annual build target, compared to the acceleration of investments through 2021, as well as the reduced purchase of proprietary software licenses.

On March 25, 2021, we announced that we intended to accelerate $1.5 billion of capital spending in 2021 and 2022, with up to $750 million of accelerated capital in 2021 and the remainder brought forward into 2022. Accelerated capital invested during the fourth quarter of 2022 and for the full year of 2022 was $132 million and $823 million, respectively. This spend has enabled: (i) acceleration of premises to be connected to our PureFibre network which at the end of 2022 connected approximately 3.0 million premises, up from more than 2.7 million at the end of 2021; (ii) acceleration of our copper-to-fibre migration program; (iii) expansion of our fibre build to a number of additional communities, including many rural and Indigenous communities; (iv) advancement of our 5G network build, which covered approximately 83 per cent of the Canadian population at December 31, 2022; and (v) progress with the implementation of our digital strategy, and enhancement of products that will bolster both long-term revenue growth and operating expense efficiency.

Consolidated Financial Highlights

C$ millions, except footnotes and unless noted otherwiseThree months ended December 31Per cent
Operating revenues (arising from contracts with customers)5,0234,46112.6 
Operating revenues and other income5,0584,8723.8 
Total operating expenses4,3893,82014.9 
Net income265663(60.0)
Net income attributable to common shares248644(61.5)
Adjusted net income(1)3333310.6 
Basic EPS ($)0.170.47(63.8)
Adjusted basic EPS(1) ($)0.230.23- 
Adjusted EBITDA(1)1,6891,51711.3 
Capital expenditures (excluding spectrum licenses)(2)660909(27.4)
Cash provided by operating activities1,12689625.7 
Free cash flow(1)32343n/m
Total telecom subscriber connections(3) (thousands)17,97116,8876.4 
Healthcare lives covered(4) (thousands)67,70020,600n/m

Notations used in the table above: n/m ? not meaningful.

(1)   These are non-GAAP and other specified financial measures, which do not have standardized meanings under IFRS-IASB and might not be comparable to those used by other issuers. For further definitions and explanations of these measures, see ?Non-GAAP and other specified financial measures' in this news release.
(2)   Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and consequently differ from Cash payments for capital assets, excluding spectrum licences, as reported in the Consolidated financial statements. Refer to Note 31 in our consolidated financial statements for further information.
(3)   The sum of active mobile phone subscribers, connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers and security subscribers, measured at the end of the respective periods based on information in billing and other source systems. Effective January 1, 2022 on a prospective basis, following an in-depth review of our definition of a subscriber, we adjusted our connected devices subscriber base to remove 34,000 subscribers within a legacy reporting system. During the second quarter of 2022, we adjusted our cumulative security subscriber connections to add approximately 75,000 subscribers as a result of a business acquisition.
(4)   Healthcare lives covered means the number of users (primary members and their dependents) enrolled in various health programs supported by TELUS Health services (e.g. virtual care, health benefits management, preventative care, personal health security and employee and family assistance programs). It is probable that some members and their dependents will be a user of multiple TELUS Health services. During the third quarter of 2022, we added 36.9 million healthcare lives covered as a result of the LifeWorks acquisition.

Fourth Quarter 2022 Operating Highlights

As noted in Section 1.2 of our annual 2022 Management's Discussion and Analysis (MD&A), the COVID-19 pandemic, which emerged in the first quarter of 2020, continued to have a global impact into 2022. We expect the pandemic to continue to affect our operations for at least the first quarter of 2023 and possibly thereafter. This will depend on both domestic and international factors, such as rates of vaccination and booster doses, as well as the potential proliferation of COVID-19 variants of concern. We are committed to prioritizing the health and safety of team members and customers.

TELUS technology solutions (TTech)

Mobile products and services

Fixed products and services

Health services

Agriculture and consumer goods services

Digitally-led customer experiences ? TELUS International (DLCX)

Corporate Highlights
TELUS makes significant contributions and investments in the communities where team members live, work and serve and to the Canadian economy on behalf of customers, shareholders and team members. These include:

TELUS sets 2023 consolidated financial targets
TELUS' consolidated financial targets for 2023 are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2022 annual MD&A.

In 2023, TELUS plans to continue generating positive financial outcomes and strong customer growth. We expect growth in EBITDA to be driven by continued demand for data in our mobile and fixed products and services; continued roaming revenue improvement; and continued ongoing investments in our leading PureFibre network and ongoing 5G deployment. Our strategic efforts to enhance operational simplicity and efficiency, in addition to our constant focus on improving the customer experience across all areas of our operations, is also expected to contribute to our growth.

Supporting our growth profile in 2023 are our unique and diversified growth assets: TELUS International, including continued demand in the digital transformation ecosystem and the acceleration of digital adoption across various sectors of the global economy as well as the acquisition of WillowTree; TELUS Health, including growing demand for our expanding portfolio of digital health services and applications as well as the acquisition of LifeWorks; and TELUS Agriculture & Consumer Goods, which is using technology to drive better food outcomes across the agriculture value chain. Our growth profile is also underpinned by a team member culture focused on delivering customer service excellence and our ongoing focus on operational effectiveness.

 2023 targets
Operating revenues(1)Growth of 11 to 14%
Adjusted EBITDAGrowth of 9.5 to 11%
Capital expenditures (excluding spectrum licences)2Approximately $2.6 billion
Free cash flowApproximately $2.0 billion

(1)   For 2023, we are guiding on operating revenues, which excludes other income. Operating revenues for 2022 were $18,292 million.
(2)   Excludes $75 million targeted towards real estate development initiatives.

The preceding disclosure respecting TELUS' 2023 financial targets is forward-looking information and is fully qualified by the ?Caution regarding forward-looking statements' in the 2022 annual MD&A filed on the date hereof on SEDAR, especially Section 10 Risks and Risk Management thereof which is hereby incorporated by reference, and is based on management's expectations and assumptions as set out in Section 9.3 TELUS assumptions for 2023 in the 2022 annual MD&A. This disclosure is presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2023 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes.

Dividend Declaration
The TELUS Board of Directors declared a quarterly dividend of $0.3511 per share on the issued and outstanding Common Shares of the Company payable on April 3, 2023 to holders of record at the close of business on March 10, 2023. This quarterly dividend reflects an increase of 7.2 per cent from the $0.3274 per share dividend declared one year earlier and consistent with our multi-year dividend growth program.

Community Highlights
Giving Back to Our Communities

Empowering Canadians with Connectivity

Investing in Social Impact

Global Social Capitalism awards and recognition

Access to Quarterly results information

Interested investors, the media and others may review this quarterly earnings news release, management's discussion and analysis, quarterly results slides, audio and transcript of the investor webcast call, supplementary financial information at telus.com/investors.

TELUS' fourth quarter 2022 conference call is scheduled for Thursday, February 9, 2023 at 1:00 pm ET (10:00 am PT) and will feature a presentation followed by a question and answer period with investment analysts. Interested parties can access the webcast at telus.com/investors. An audio recording will be available approximately 60 minutes after the call until March 9, 2023 at 1-855-201-2300. Please quote conference access code 90003# and playback access code 0113038#. An archive of the webcast will also be available at telus.com/investors and a transcript will be posted on the website within a few business days.

Caution regarding forward-looking statements

This news release contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, we, us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.

Forward-looking statements include any statements that do not refer to historical facts. They include, but are not limited to, statements relating to our objectives and our strategies to achieve those objectives, our plans and expectations regarding the impact of the COVID-19 pandemic and responses to it, our expectations regarding trends in the telecommunications industry (including demand for data and ongoing subscriber base growth), and our financing plans (including our multi-year dividend growth program). Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, predict, seek, should, strive and will. These statements are made pursuant to the "safe harbour" provisions of applicable securities laws in Canada and the United States Private Securities Litigation Reform Act of 1995.

By their nature, forward-looking statements are subject to inherent risks and uncertainties and are based on assumptions, including assumptions about future economic conditions and courses of action. These assumptions may ultimately prove to have been inaccurate and, as a result, our actual results or events may differ materially from expectations expressed in or implied by the forward-looking statements.

Our assumptions in support of our 2023 outlook are generally based on industry analysis, including our estimates regarding economic and telecom industry growth, as well as our 2022 results and trends discussed in Section 5 in our 2022 annual MD&A. Our key assumptions include the following:

The extent to which the economic growth estimates affect us and the timing of their impact will depend upon the actual experience of specific sectors of the Canadian economy.

Risks and uncertainties that could cause actual performance or events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following:

These risks are described in additional detail in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings and Section 10 Risks and risk management in our 2022 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement but are not intended to be a complete list of the risks that could affect the Company.

Many of these factors are beyond our control or outside of our current expectations or knowledge. Additional risks and uncertainties that are not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation. Except as otherwise indicated in this document, the forward-looking statements made herein do not reflect the potential impact of any non-recurring or special items or any mergers, acquisitions, dispositions or other business combinations or transactions that may be announced or that may occur after the date of this document.

Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements in this document describe our expectations, and are based on our assumptions, as at the date of this document and are subject to change after this date. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements.

This cautionary statement qualifies all of the forward-looking statements in this press release.

Non-GAAP and other specified financial measures

We have issued guidance on and report certain non-GAAP measures that are used to evaluate the performance of TELUS, as well as to determine compliance with debt covenants and to manage our capital structure. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. For certain financial metrics, there are definitional differences between TELUS and TELUS International reporting. These differences largely arise from TELUS International adopting definitions consistent with practice in its industry. Securities regulations require such measures to be clearly defined, qualified and reconciled with their nearest GAAP measure. Certain of the metrics do not have generally accepted industry definitions.

Adjusted Net income and adjusted basic earnings per share (EPS): These are non-GAAP measures that do not have any standardized meaning prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted Net income excludes the effects of restructuring and other costs, income tax-related adjustments, other equity (income) losses related to real estate joint ventures, long-term debt prepayment premium and other adjustments (identified in the following tables). Adjusted basic EPS is calculated as adjusted net income divided by the basic weighted-average number of Common Shares outstanding. These measures are used to evaluate performance at a consolidated level and exclude items that, in management's view, may obscure underlying trends in business performance or items of an unusual nature that do not reflect our ongoing operations. They should not be considered alternatives to Net income and basic EPS in measuring TELUS' performance.

Reconciliation of adjusted net income

 Three months ended
December 31
C$ and in millions        2022         2021 
Net income attributable to Common Shares248 644 
Add (deduct) amounts net of amount attributable to non-controlling interests:  
Restructuring and other costs82 43 
Tax effect of restructuring and other costs(21)(11)
Income tax-related adjustments(1)3 
Other equity (income) losses related to real estate joint ventures(3)1 
Virtual power purchase agreements unrealized change in forward
38 ? 
Tax effect of virtual power purchase agreements unrealized change in
forward element
Gain on disposition of financial solutions business? (410)
Tax effects of restructuring and other costs? 61 
Adjusted Net income333 331 

Reconciliation of adjusted basic EPS

 Three months ended
December 31
C$        2022         2021 
Basic EPS0.17 0.47 
Add (deduct) amounts of net of amount attributable to non-controlling interests:  
Restructuring and other costs, per share0.05 0.03 
Tax effect of restructuring and other costs, per share(0.01)(0.01)
Virtual power purchase agreements unrealized change in forward
element, per share
0.03 ? 
Tax effect of virtual power purchase agreements unrealized change in
forward element, per share
Gain on disposition of financial solutions business, per share? (0.30)
Tax effect of gain on disposition of financial solutions business, per share? 0.04 
Adjusted basic EPS0.23 0.23 

EBITDA (earnings before interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used to evaluate performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should not be considered as an alternative to Net income in measuring TELUS' performance, nor should it be used as a measure of cash flow. EBITDA as calculated by TELUS is equivalent to Operating revenues and other income less the total of Goods and services purchased expense and Employee benefits expense.

We also calculate Adjusted EBITDA to exclude items of an unusual nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should not be included in an assessment of our ability to service or incur debt.

EBITDA and Adjusted EBITDA reconciliations      
Three-month periods ended Dec 31 (C$ millions)2022 2021 20222021        2022         2021 
Net income    265 663 
Financing costs    322 192 
Income taxes    82 197 
EBIT586 973 8379669 1,052 
Depreciation541 508 4837589 545 
Amortization of intangible assets296 240 4445340 285 
EBITDA1,423 1,721 1751611,598 1,882 
Add restructuring and other costs included in EBITDA59 36 35894 44 
EBITDA ? excluding restructuring and other costs1,482 1,757 2101691,692 1,926 
Other equity (income) losses related to real estate joint ventures(3)1 ??(3)1 
Gain on disposition of financial solutions business? (410)??? (410)
Adjusted EBITDA1,479 1,348 2101691,689 1,517 

Free cash flow: We report this measure as a supplementary indicator of our operating performance, and there is no generally accepted industry definition of free cash flow. It should not be considered as an alternative to the measures in the Consolidated statements of cash flows. Free cash flow excludes certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the Consolidated statements of cash flows. It provides an indication of how much cash generated by operations is available after capital expenditures (excluding purchases of spectrum licences) that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting standards that do not impact cash, such as IFRS 15 and IFRS 16. Free cash flow may be supplemented from time to time by proceeds from divested assets or financing activities.

Free cash flow calculation  
 Three months ended
December 31
C$ and in millions                2022 2021 
EBITDA1,598 1,882 
Deduct gain on disposition of financial solutions business? (410)
Restructuring and other costs, net of disbursements82 3 
Effects of contract asset, acquisition and fulfilment (IFRS 15 impact) and
TELUS Easy Payment device financing
Effects of lease principal (IFRS 16 impact)(129)(131)
Items from the statements of cash flows:  
Share-based compensation, net24 16 
Net employee defined benefit plans expense25 27 
Employer contributions to employee defined benefit plans(10)(15)
Interest paid(238)(180)
Interest received6 2 
Capital expenditures (excluding spectrum licences)1(660)(909)
Free cash flow before income taxes513 168 
Income taxes paid, net of refunds(190)(186)
Effect of disposition of financial solutions business on income taxes paid? 61 
Free cash flow323 43 


Free cash flow reconciliation with Cash provided by operating activities  
 Three months ended
December 31
C$ and in millions                20222021 
Free cash flow32343 
Add (deduct):  
Capital expenditures (excluding spectrum licences)1660909 
Effects of lease principal and leases accounted for as finance leases prior to adoption of IFRS 16129131 
Gain on disposition of financial solutions business, net of effect on income
taxes paid
Individually immaterial items included in Net income neither providing nor using cash14162 
Cash provided by operating activities1,126896 

(1)   Refer to Note 31 of the consolidated financial statements for further information.

Mobile phone average revenue per subscriber per month (ARPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges; divided by the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month.

TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications technology company with $18 billion in annual revenue and 18 million customer connections spanning wireless, data, IP, voice, television, entertainment, video, and security. Our social purpose is to leverage our global-leading technology and compassion to drive social change and enable remarkable human outcomes. Our longstanding commitment to putting our customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. The numerous, sustained accolades TELUS has earned over the years from independent, industry-leading network insight firms showcase the strength and speed of TELUS' global-leading networks, reinforcing our commitment to provide Canadians with access to superior technology that connects us to the people, resources and information that make our lives better.

Operating in 30 countries around the world, TELUS International (TSX and NYSE: TIXT) is a leading digital customer experience innovator that designs, builds, and delivers next-generation solutions, including AI and content moderation, for global and disruptive brands across high-growth industry verticals, including tech and games, communications and media and eCommerce and fintech.

TELUS Health is a global healthcare leader, which provides employee and family preventative healthcare and wellness solutions. Our TELUS team, along with our 100,000 health professionals, are leveraging the combination of TELUS' strong digital and data analytics capabilities with our unsurpassed client service to dramatically improve remedial, preventative and mental health outcomes covering 68 million lives, and growing, around the world. As the largest provider of digital solutions and digital insights of its kind, TELUS Agriculture & Consumer Goods enables efficient and sustainable production from seed to store, helping improve the safety and quality of food and other goods in a way that is traceable to end consumers.

Driven by our determination and vision to connect all citizens for good, our deeply meaningful and enduring philosophy to give where we live has inspired TELUS and our team to contribute $1.5 billion, including 2 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world. Together, let's make the future friendly.

For more information about TELUS, please visit telus.com, follow us at @TELUSNews on Twitter and @Darren_Entwistle on Instagram.

Investor Relations
Robert Mitchell
(647) 837-1606
[email protected]

Media Relations
Steve Beisswanger
(514) 865-2787
[email protected]


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