VANCOUVER, Nov. 7 Telus-Q3-results
Record wireless subscriber loading
Dividend increased
VANCOUVER, Nov. 7 /PRNewswire-FirstCall/ - TELUS Corporation today reported its financial results for the third quarter of 2008, including revenue of $2.4 billion, a six per cent increase from a year ago. Wireless revenue grew nine per cent based on record year to date subscriber growth while wireline revenue grew four per cent driven by data growth. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, decreased 0.6 per cent when compared to the same period a year ago due to higher costs including those supporting subscriber growth and implementing service for new large enterprise customers.
Net income in the quarter was $285 million and earnings per share (EPS) were $0.89, down 30 per cent and 28 per cent, respectively, compared to the same period in 2007. The third quarter of 2007 included favourable income tax-related adjustments of $93 million or 28 cents per share while the third quarter of 2008 includes an unfavourable after-tax adjustment for a provincial sales tax reassessment relating to prior years of approximately $8 million, or two cents per share. Excluding tax-related adjustments and the impact of adopting the net-cash settlement feature for options in 2007 and 2008, net income and EPS were lower by 5.3% and 4.2%, respectively.
Free cash flow of $452 million, excluding the payment for AWS spectrum licenses, decreased 10 per cent driven primarily by higher capital expenditures, lower EBITDA and higher interest and restructuring payments. Free cash flow including the $882 million payment for spectrum was negative $430 million. During the third quarter TELUS continued to repurchase shares under its normal course issuer bid, buying 1.97 million shares for $75 million.
FINANCIAL HIGHLIGHTS
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C$ in millions, except per share amounts3 months ended
September 30
(unaudited) 2008 2007 % Change
-------------------------------------------------------------------------
Operating revenues 2,449.3 2,309.9 6.0
EBITDA(1) 974.1 987.0 (1.3)
EBITDA (as adjusted)(2) 974.4 979.8 (0.6)
Income before income taxes and
non-controlling interest 411.2 490.2 (16.6)
Net income(3) 285.1 409.9 (30.4)
Earnings per share (EPS), basic(3) 0.89 1.24 (28.2)
Cash provided by operating activities 987.5 831.8 18.7
Capital expenditures 472.3 434.1 8.8
Free cash flow (including wireless
spectrum licences)(4)(429.8)502.9 n.m.
(1) Earnings before interest, taxes, depreciation and amortization
(EBITDA) is defined as Operating revenues less Operations expense
less Restructuring costs. See Section 11.1 of Management's discussion
and analysis.
(2) Excludes a charge (recovery) of $0.3 million and $(7.2) million to
Operations expense in 2008 and 2007, respectively, for introducing a
net-cash settlement feature for share option awards granted prior to
2005.
(3) Net income and EPS for the three month period in 2008 included no
favourable income tax-related adjustments compared to $93 million or
28 cents for the same period in 2007.
(4) See Section 11.2 of Management's discussion and analysis.
Darren Entwistle, TELUS president and CEO said, "The third quarter saw continued revenue growth generated by our national strategy focused on data and wireless, highlighted by record wireless subscriber loading and excellent wireless data revenue growth."
Mr. Entwistle stated, "TELUS continues to progress investments that are strategic in nature but dilutive to earnings and cash flow in the near term. These investments are key to growing shareholder value over the longer term and includes launching a new basic wireless service under the Koodo brand, rolling out TELUS TV and implementing large, managed data network contracts for corporate and public sector clients. TELUS is determined to offset the costs associated with these strategic programs as well as the cash consumed by the advanced wireless spectrum auction and our recent wireless technology evolution to LTE (4G). Therefore, TELUS is augmenting its operating efficiency program to materially and sustainably rationalize costs over the remainder of 2008 and into 2009 and beyond. To this end, we are increasing our restructuring costs for 2008 by $20 million to $50 million."
Robert McFarlane TELUS executive vice president and CFO said, "As a result of prudent financial policies and stewardship, TELUS has maintained a strong balance sheet with ample liquidity and an enviable debt maturity profile. Traditional sources of capital have consistently been open and available to TELUS throughout the recent period of capital market volatility. The combination of our strong financial situation with confidence in our future prospects is the basis for the Board decision announced today to increase the TELUS dividend for the fifth consecutive year."
Full year 2008 guidance has been revised to reflect year to date results and an increase in the expected restructuring costs related to ongoing operating efficiency program initiatives.
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This news release contains statements about expected future events and
financial and operating results of TELUS that are forward-looking. By
their nature, forward-looking statements require the Company to make
assumptions and are subject to inherent risks and uncertainties. There is
significant risk that the forward-looking statements will not prove to be
accurate. Readers are cautioned not to place undue reliance on forward-
looking statements as a number of factors could cause actual future
results and events to differ materially from that expressed in the
forward-looking statements. Accordingly this news release is subject to
the disclaimer and qualified by the assumptions (including assumptions
for 2008 revised guidance and share purchases), qualifications and risk
factors referred to in the Management's discussion and analysis in the
2007 annual report and 2008 first, second and third quarter reports.
Except as required by law, TELUS disclaims any intention or obligation to
update or revise forward-looking statements, and reserves the right to
change, at any time at its sole discretion, its current practice of
updating annual guidance.
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OPERATING HIGHLIGHTS
TELUS wireless
- External revenues increased by $96.5 million or 8.7% to
$1.2 billion in the third quarter of 2008, compared with the same
period in 2007
- Wireless data revenue increased $65 million or 56% due to the
continued adoption of full function smartphones and increased
adoption of data services such as text messaging and e-mail
- ARPU (average revenue per subscriber unit per month) declined by 1%
to $64.14 compared to the same quarter a year ago, but was up
sequentially from the second quarter of 2008 by $1.41. The
fast-growing data component of $10.19, represented 16% of ARPU, while
the voice component continued to decline as a result of pricing
pressure, lower Mike service ARPU, use of included-minute rate plans,
subscriber loading from the new basic Koodo Mobile service and lower
inbound roaming
- Total wireless subscriber base reached the 6 million milestone.
Normalized net subscriber additions increased by 32% to 176,900 from
the same quarter in 2007, a TELUS third quarter record. Postpaid net
additions were 158,500, an increase of 61%, while net prepaid loading
decreased to 18,400. When including the impact of the analogue
network turndown, net additions increased 11% to 149,300. These
results include those from TELUS' postpaid Koodo service launched in
March 2008
- EBITDA as adjusted of $525 million increased slightly by $2 million
over the third quarter of 2007, as increased network revenue was
offset by higher cost of acquisition expense and network and other
expenses to support the 11% growth in the wireless subscriber base,
higher data revenue and the launch of the Koodo basic service brand.
Retention expenses increased due to higher retention volumes and
continued increases in smartphone adoption
- Cost of acquisition per gross addition decreased 10% year-over-year
to $341 reflecting slightly higher advertising and promotions costs
spread over the 23% increase in gross additions, a higher proportion
of new subscribers from lower cost distribution channels and
efficient marketing spending on a per-unit basis
- Normalized blended monthly subscriber churn increased slightly to
1.52% from 1.43% a year ago, excluding 27,600 deactivations from the
analogue network turndown this quarter
- Simple cash flow (EBITDA as adjusted less capital expenditures)
increased slightly by $1.2 million to $393 million in the quarter due
to relatively flat EBITDA as adjusted and continued low level of
capital spending.
TELUS wireline
- External revenues increased by $43 million or 3.6% to $1.25 billion
in the third quarter of 2008, when compared with the same period in
2007, as data growth more than offset the moderate declines in local
and long distance revenues
- Data revenues increased by $69 million or 16% due to revenues from
the two January acquisitions (Emergis and Fastvibe), increased
enhanced data and hosting services, as well as high-speed Internet
subscriber growth. When adjusted for the two acquisitions and a
regulatory adjustment in the third quarter of 2008, underlying data
growth was approximately 4%
- TELUS added 13,300 net high-speed Internet subscribers, a 58%
decrease from a year ago, due to increased competition and a maturing
market
- EBITDA as adjusted of $449 million declined by $7.4 million or 1.6%
due primarily to increased cost of sales for TELUS TV and upfront
costs for implementing large complex enterprise customer services and
higher restructuring costs
- Network access lines (NALs) declined by 43,000 in the quarter, and
3.6% from a year ago. Consistent with experience in recent years,
residential NAL losses were due to ongoing competitive activity and
wireless substitution, partially mitigated by an increase in business
access lines
- Simple cash flow (EBITDA as adjusted less capital expenditures)
decreased $45 million to $109 million in the quarter due to lower
EBITDA and a $37 million increase in capital expenditures. The
increase in capital primarily relates to supporting new enterprise
and broadband service customers
Corporate Developments
TELUS announces next generation network build
TELUS recently announced its commitment to Long Term Evolution (LTE) as the technology for its fourth generation wireless broadband network. In October, the Company announced it was beginning the immediate construction of a national next generation wireless network based on HSPA (high speed packet access) technology with service to be launched by early 2010. The HSPA network is expected to augment TELUS' existing wireless service portfolio and position the Company for a smoother future transition to LTE. The benefits of the investment in HSPA are expected to include: increased international roaming, access to increased global roaming revenues, fast network speeds, more devices and lower handset costs over time due to the larger HSPA device ecosystem, and lower network development and ongoing operating costs. TELUS plans to operate and support its CDMA and iDEN networks for the foreseeable future.
TELUS also announced it has entered into an HSPA network sharing agreement with Bell Canada, using existing 1900 MHz and 850 MHz spectrum. This agreement builds on and enhances an agreement signed in 2001 and is expected to enable TELUS to lower the cost, accelerate deployment of the next generation wireless voice and data services on a national basis, optimize cell-site utilization, and maximize potential operating efficiencies. Initial capital expenditures for the new network are included in TELUS' original capital expenditure guidance of approximately $1.9 billion for 2008. For 2009, TELUS expects total wireless capital expenditures, including those related to the HSPA network, of approximately $750 million, which would be temporarily higher than historic annual levels.
AWS spectrum developments
In early September, each of the successful Advanced Wireless Services (AWS) spectrum auction bidders, including TELUS, were required to make full payment for the licences, and demonstrate compliance with Canadian ownership requirements. In total, TELUS paid Industry Canada $882 million for the licences and related auction charges financed through a combination of a draw down on its credit facilities and cash on hand. Industry Canada is expected to turn over the licences to respective spectrum auction winners following an eligibility review process.
TELUS expects to face new competition in the future as a result of this auction. Notwithstanding, the number, geographic coverage, and timing of launch of new entrants remain to be determined.
TELUS invests in Quebec to open greenest Internet data centre
In October, TELUS announced an investment of more than $33 million in the company's greenest Internet data centre (IDC), which will be located in Laval, Quebec. IDCs are highly secure buildings housing extremely powerful computer servers hosting data on behalf of clients around the world. TELUS currently operates eight interconnected IDCs across Canada, each serving as a secure platform for providing Managed Information Technology (IT), Unified Communications and Contact Centre Solutions.
TELUS' newest IDC in Laval is expected to be a 44,500 square foot facility connected to six mega-volt-amps of power, equivalent to the needs of more than 5,000 homes. To counter the heat generated by the computer servers, its high-density power design and efficient heat exchange system will turn Quebec's cold climate into "free cooling" during two thirds of the year. Large, highly efficient air conditioning units will be used when "free cooling" is unavailable. The state-of-the-art facility is being designed according to the Leadership in Energy and Environmental Design (LEED) standards. Retrofitting of the existing structure has begun and hosting new clients will begin in 2010.
TELUS TV now available in high definition in Eastern Quebec
TELUS is pleased to announce the availability of its high definition television service to all TELUS TV users in Eastern Quebec. Thanks to an exceptional sound and image quality, an innovative, user-friendly interactive guide, and access to 25 high definition channels, TELUS subscribers can enjoy a larger-than-life TV experience.
City of Vancouver awards TELUS IP telephony system contract
The City of Vancouver awarded TELUS a $7 million contract to supply, install and support the City's new IP telephony system and contact centre suite. TELUS' system will support 200 city sites including City Hall, the 311 Contact Centre, the Vancouver Police Department, the Vancouver Fire and Rescue Department, the Vancouver Board of Parks and Recreation, and the Vancouver Public Library. TELUS was awarded the contract after an extensive RFP review process. Implementation is expected to be complete in 2011.
TELUS selected to provide Keal Technology with data management services
TELUS and Keal Technology have signed a $3 million agreement whereby TELUS Internet data centres will manage Keal's data technology solutions, providing increased information security and efficiency for both Keal and its clients. Since 2003, Keal has created and maintained numerous hosted data sites acting as an Application Service Provider for brokers throughout Canada. With the demand for hosted solutions increasing, Keal chose to outsource and consolidate its hosting services through TELUS to achieve increased stability and redundancy for its clients. Keal has already begun migrating clients to TELUS, and expects to be complete by year-end. Initially, TELUS will host more than 500 Keal users with capacity for future expansion
TELUS launches advanced business centre in Toronto
In October, TELUS announced the launch of the new TELUS Business Centre at the Toronto Board of Trade. The Business Centre will provide local businesses with advanced communications solutions such as work stations, thin-client computers, access to video and audio conferencing, and printing facilities to help them optimize operations and grow their business. The Business Centre will also demonstrate the latest in technology applications for business including GPS and TELUS Visual Voice Mail.
TELUS believes in smartphones for all!
In August, TELUS launched its "smartphone for all" campaign and announced it would be the first North American carrier to offer the HTC Touch Diamond smartphone. When combined with the flexibility of TELUS' affordable rate plans and access to Canada's largest 3G network, TELUS' wide range of smartphones and touchscreen handsets give TELUS clients the freedom to choose the phone reflecting their own needs and lifestyle.
Also in the quarter, TELUS launched TELUS Quick Find, its new search engine for phones operating on the PCS network. Service is available on the HTC Touch dual and MOTORAZR VE20, with more devices scheduled to launch in the near future. TELUS also launched the Samsung Instinct, the LG KEYBO, the LG Dare, and the LG Voyager.
TELUS launching Blackberry Storm smartphone
TELUS announced that it expects to offer customers Research In Motion's first touchscreen device, the BlackBerry(R) Storm 9530 smartphone, in time for the holiday season. The Storm is the world's first BlackBerry smartphone delivering a high resolution display with an innovative, clickable touchscreen giving users precise and responsive text input. It promises to deliver a rich multimedia experience combined with the excellent communications experience expected from BlackBerry smartphones - email, messaging, reliability, security. The BlackBerry Storm smartphone is a world edition device, so it can be used almost everywhere customers travel.
Clients interested in learning more about the BlackBerry Storm 9530 from TELUS can visit and register online at www.telus.com/storm.
New contract ratified by members of the Syndicat des agents de maitrise
de TELUS
A majority of the members of the Syndicat des agents de maitrise de TELUS (SAMT) voted to accept the Memorandum of Agreement reached with TELUS on July 4, 2008. The SAMT represents more than 500 TELUS team members employed in professional and supervisory positions working in the Lower Saint Lawrence, the Gaspe, Montreal, Quebec, Sainte-Marie, Saint-Georges, Baie-Comeau and Sept-Iles regions. Under the terms of the new contract, SAMT members will enjoy a progressive performance bonus increase based on meeting personal and corporate objectives and more flexible insurance coverage. The terms of the new collective agreement will remain in effect until December 31, 2011.
TELUS creating jobs in Quebec
In order to continue offering superior client care to its growing customer base across Canada, TELUS announced the creation of 149 new jobs in the Quebec technical support team. The wide array of TELUS wireless phones and the diverse functions they offer call for advanced technical skills and specialized training for technicians assisting customers. TELUS will therefore also be investing more than $1.6 million in a value-added training program, $405,000 of which will come from Emploi-Quebec. Emploi-Quebec's support will go toward improving TELUS' training to increasingly incorporate a greater number of interactive and multimedia tools.
TELUS World Skins Game to be held in Quebec's capital region in
June, 2009
TELUS will host elite golfers from around the globe next June when the TELUS World Skins Game is played at La Tempete Golf Club in the Quebec City region. Next year's game should improve the quality of life for thousands of sick kids for years to come as the money raised during the event will support Operation Enfant Soleil, an organization that invests in the development of quality paediatric care in Quebec. The charity will use the money raised to equip the Centre hospitalier universitaire de Quebec's Centre mere-enfant's surgical unit with the latest in multimedia technology to facilitate complex pediatric heart surgeries. This will be the popular Canadian golf event's first visit to the Quebec City region in its 16-year history.
TELUS hooks up with the Quebec City Remparts hockey club
TELUS became a major partner and the official provider of telecommunications services to the Quebec City Remparts hockey club for the next three years. TELUS has been supporting junior hockey in Quebec for eight years through its partnerships with the Quebec Major Junior Hockey League (QMJHL), the Montreal Junior, the Rimouski Oceanic, the Baie-Comeau Drakkar and, now, the Quebec City Remparts. Remparts games, like all those of the QMJHL, may be viewed free of charge, live or delayed, on telus.com/lhjmq. Quebec City Remparts ring tones and images are available exclusively to TELUS wireless subscribers.
Awards/Recognition
TELUS annual report ranked # 3 in world
TELUS was recognized for having produced one of the best annual reports in the world, according to a global survey of annual reports. The Annual Report on Annual Reports 2008 gave TELUS a rating of A+ (up from last year's A rating) and listed the TELUS report as the third best in the world. TELUS is one of only 25 Canadian companies on the list and the only telecommunications company globally to achieve the A+ rating.
TELUS named to global Dow Jones Sustainability Index for eighth year
For eight years in a row TELUS has been listed on the North American and World Dow Jones Sustainability Indexes (DJSI). These indexes recognize companies from around the world that demonstrate operational excellence from a combined economic, social and environmental perspective. TELUS is the only North American telecommunications company and one of only 10 Canadian companies on the World Index. TELUS' overall score improved over last year, placing the company just behind industry leader, BT Group. TELUS scored the highest in the overall economic dimension among industry peers and the areas of corporate citizenship/philanthropy and privacy protection.
TELUS named best in directory assistance
TELUS has been recognized as the top national directory assistance provider in Canada by The Paisley Group. The TELUS Operator Services team's drive for continuous improvement helped it to achieve its best results in three years. TELUS placed first in passed calls, the key benchmark of directory assistance. This measure combines customer fulfillment and customer care to measure whether a customer received correct information while being treated in a professional manner by call answer agents. The Paisley Group, a directory assistance/operator services consulting company, conducts an annual audit of directory customer service.
In addition, TELUS Operator Services also won an "Excellence in Directory Information Services Automation" Award from the Pelorus Group in September. The Pelorus Group is an independent market research and consultancy company in the financial services and telecommunications industries.
Karen Radford named Woman of Distinction by YWCA
Karen Radford, executive vice-president and president of TELUS Quebec and TELUS Partner Solutions, was recognized in the Business and Professions category at the Women's Y Foundation's Women of Distinction Gala in September. Radford, who has distinguished herself through her personality and actions in the advancement of women and the enrichment of the community, was one of 11 women who made their mark in different sectors of activity in 2008. This award is another in a series of honours bestowed upon Karen in recent years, recognizing her leadership and her support for women in business and in the community. This Gala is one of the principal sources of fundraising for the Women's Y Foundation, and it raised $230,000 to help finance programs offered to the 36,000 Montreal women who use the YWCA services each year.
TELUS receives videoconferencing award
Consulting firm Frost & Sullivan selected TELUS as the recipient of the 2008 North American Award for Market Leadership in the Canadian videoconferencing services market. Each year Frost & Sullivan presents this award to the company that has exhibited market share leadership through the implementation of market strategy. TELUS has consistently had excellent results in terms of market share, revenues, installed base, and breadth of solution offerings in this fast evolving market.
Community investment
TELUS and Operation Enfant Soleil: partnering for a healthy Quebec
TELUS has again made a commitment to Operation Enfant Soleil to support the development of quality pediatric care and to contribute to social intervention projects for children across Quebec. As a major partner of Operation Enfant Soleil since 1998, TELUS has committed to donate more than $375,000 to the organization by the end of 2010. This new contribution will bring TELUS' total donation to more than $1.1 million since the partnership was formed.
General Rick Hillier named chair of new TELUS Atlantic Canada Community
Board
Through a newly created TELUS Atlantic Canada Community Board, TELUS team members and Atlantic Canada community leaders will collaborate to donate $250,000 to local charities each year on TELUS' behalf. General Rick Hillier will be the Chairman of the Board, working with TELUS and the Board members to develop a charitable giving and community program in Atlantic Canada. Local charitable organizations are invited to apply for up to $20,000 in one-time funding for projects in the areas of health and well-being in our environment, education and sport, and arts and culture, with a focus on young Canadians and the innovative use of technology.
The TELUS Atlantic Canada Community Board is part of a national philanthropic program that now includes nine TELUS community boards across Canada. Since their inception in 2005, the TELUS Community Boards have allocated $11.5 million to local charities, supporting more than 800 community projects.
TELUS technology helps to preserve 32 B.C. First Nations' languages
FirstVoices is an online archive that brings First Nations' youth and elders together to keep their languages and cultures vibrant and accessible for future generations. The site's administrator, the First Peoples' Council, is working with TELUS to create more than 225 short video clips illustrating phrases and words of everyday activities. Once integrated into FirstVoices this winter, the video clips will provide valuable visual cues to assist language learners with the meanings of verbs and phrases. TELUS has funded the entire $25,000 budget of this project for FirstVoices and hired two First Nations youths as apprentices during the production process.
Dividend Declaration - fifth increase in five years
The Board of Directors has declared a quarterly dividend of forty-seven and one half cents ($0.475) Canadian per share on the issued and outstanding Common shares and forty-seven and one half cents ($0.475) Canadian per share on the issued and outstanding Non-Voting shares of the Company payable on January 2, 2009 to holders of record at the close of business on December 11, 2008.
This quarterly dividend represents a two and one half cent (10 cents annualized) or 5.6 per cent increase from the $0.45 quarterly dividend paid on January 1, 2008. This is the fifth annual increase in five years.
About TELUS
TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications company in Canada, with $9.5 billion of annual revenue and 11.5 million customer connections including 6 million wireless subscribers, 4.3 million wireline network access lines and 1.2 million Internet subscribers. TELUS provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. Committed to being Canada's premier corporate citizen, we give where we live. Since 2000, TELUS and our team members have contributed $113 million to charitable and not-for-profit organizations and volunteered more than 2.1 million hours of service to local communities. Nine TELUS Community Boards across Canada lead our local philanthropic initiatives. For more information about TELUS, please visit telus.com.
TELUS Corporation
interim consolidated statements of income and
other comprehensive income(unaudited)
Periods ended September 30
(millions except Three monthsNine months
per share amounts) 2008200720082007
-------------------------------------------------------------------------
OPERATING REVENUES $ 2,449.3 $ 2,309.9 $ 7,198.6 $ 6,743.6
-------------------------------------------------------------------------
OPERATING EXPENSES
Operations 1,465.4 1,316.5 4,336.4 4,093.4
Restructuring costs9.8 6.421.014.3
Depreciation 344.0 332.5 1,033.2 968.5
Amortization of
intangible assets92.170.1 244.5 192.2
-------------------------------------------------------------------------
1,911.3 1,725.5 5,635.1 5,268.4
-------------------------------------------------------------------------
OPERATING INCOME 538.0 584.4 1,563.5 1,475.2
Other expense, net 5.6 8.024.830.3
Financing costs 121.286.2 344.9 331.0
-------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES
AND NON-CONTROLLING INTEREST 411.2 490.2 1,193.8 1,113.9
Income taxes 125.178.6 348.0 251.6
Non-controlling interests 1.0 1.7 2.7 4.5
-------------------------------------------------------------------------
NET INCOME AND COMMON SHARE
AND NON-VOTING SHARE INCOME 285.1 409.9 843.1 857.8
OTHER COMPREHENSIVE INCOME
Change in unrealized fair
value of derivatives
designated as cash flow
hedges4.7 8.5(5.6) 64.3
Foreign currency
translation adjustment
arising from translating
financial statements of
self-sustaining foreign
operations2.2(1.1) (1.7) (4.9)
Change in unrealized fair
value of available-for-sale
financial assets (5.6) (0.2) (2.1) (0.3)
-------------------------------------------------------------------------
1.3 7.2(9.4) 59.1
-------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 286.4 $ 417.1 $ 833.7 $ 916.9
-------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
AND NON-VOTING SHARE
- Basic $0.89 $1.24 $2.62 $2.57
- Diluted$0.89 $1.23 $2.61 $2.55
DIVIDENDS DECLARED PER
COMMON SHARE AND
NON-VOTING SHARE $0.45 $ 0.375 $1.35 $ 1.125
TOTAL WEIGHTED AVERAGE
COMMON SHARES AND
NON-VOTING SHARES
OUTSTANDING
- Basic 319.3 330.1 321.3 333.5
- Diluted320.3 332.8 322.6 336.2
TELUS Corporation
interim consolidated balance sheets (unaudited)
September 30, December 31,
As at (millions)20082007
-------------------------------------------------------------------------
ASSETS
Current Assets
Cash and temporary investments, net $ 35.9 $ 19.9
Short-term investments -42.4
Accounts receivable 954.2 710.9
Income and other taxes receivable 69.0 120.9
Inventories 276.0 243.3
Prepaid expenses and other 238.9 199.5
Derivative assets 8.6 3.8
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1,582.6 1,340.7
-------------------------------------------------------------------------
Capital Assets, Net
Property, plant, equipment and other 7,171.2 7,196.1
Intangible assets subject to amortization 1,280.6 959.4
Intangible assets with indefinite lives2,966.5 2,966.5
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11,418.311,122.0
-------------------------------------------------------------------------
Other Assets
Payment for advanced wireless services spectrum
licences881.6 -
Deferred charges 1,473.2 1,318.0
Investments 21.038.9
Goodwill 3,543.8 3,168.0
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5,919.6 4,524.9
-------------------------------------------------------------------------
$ 18,920.5 $ 16,987.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities$ 1,470.2 $ 1,476.6
Income and other taxes payable12.5 7.3
Restructuring accounts payable and accrued
liabilities 20.834.9
Dividends payable143.6 -
Advance billings and customer deposits 643.3 631.6
Current maturities of long-term debt 4.6 5.4
Current portion of derivative liabilities 61.526.6
Current portion of future income taxes 725.6 503.6
-------------------------------------------------------------------------
3,082.1 2,686.0
-------------------------------------------------------------------------
Long-Term Debt 6,033.4 4,583.5
-------------------------------------------------------------------------
Other Long-Term Liabilities 1,588.0 1,717.9
-------------------------------------------------------------------------
Future Income Taxes 1,128.8 1,048.1
-------------------------------------------------------------------------
Non-Controlling Interests 21.925.9
-------------------------------------------------------------------------
Shareholders' Equity 7,066.3 6,926.2
-------------------------------------------------------------------------
$ 18,920.5 $ 16,987.6
-------------------------------------------------------------------------
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TELUS Corporation
interim consolidated statements of cash flows (unaudited)
Periods ended Three monthsNine months
September 30 (millions) 2008200720082007
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 285.1 $ 409.9 $ 843.1 $ 857.8
Adjustments to reconcile
net income to cash
provided by operating
activities:
Depreciation and
amortization436.1 402.6 1,277.7 1,160.7
Future income taxes 113.5 222.7 290.4 393.4
Share-based compensation 8.4(3.3) 24.8 126.4
Net employee defined
benefit plans expense (25.3) (24.0) (74.8) (69.0)
Employer contributions
to employee defined
benefit plans (26.6) (18.9) (77.9) (67.5)
Restructuring costs,
net of cash payments (9.4)3.3 (14.1) (21.0)
Amortization of deferred
gains on sale-leaseback
of buildings,
amortization of deferred
charges and other, net0.3 5.9(5.3)1.1
Net change in non-cash
working capital 204.0 (166.4) (191.6) (27.6)
-------------------------------------------------------------------------
Cash provided by operating
activities986.1 831.8 2,072.3 2,354.3
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures
excluding advance wireless
services spectrum licences (472.3) (434.1) (1,227.6) (1,297.8)
Payment for advanced wireless
services spectrum licences (881.6) - (881.6) -
Acquisitions(4.5) - (695.8) -
Proceeds from the sale of
property and other assets 9.3 4.112.6 5.4
Change in non-current
materials and supplies,
purchase of investments and
other (3.6) - 2.6(7.7)
-------------------------------------------------------------------------
Cash used by investing
activities (1,352.7) (430.0) (2,789.8) (1,300.1)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Common Shares and
Non-Voting Shares issued0.1 0.1 0.4 0.7
Dividends to shareholders - - (289.5) (250.9)
Purchase of Common Shares
and Non-Voting Shares for
cancellation (75.1) (232.2) (274.3) (602.4)
Long-term debt issued2,970.5 2,682.5 9,544.8 4,774.1
Redemptions and repayment
of long-term debt (2,538.7) (2,853.4) (8,243.3) (4,958.0)
Dividends paid by a
subsidiary to non-
controlling interests - -(4.6) (4.3)
Other - - -(0.9)
-------------------------------------------------------------------------
Cash provided (used) by
financing activities 356.8 (403.0) 733.5(1,041.7)
-------------------------------------------------------------------------
CASH POSITION
Increase (decrease) in
cash and temporary
investments, net (9.8) (1.2) 16.012.5
Cash and temporary
investments, net,
beginning of period45.7 2.219.9 (11.5)
-------------------------------------------------------------------------
Cash and temporary
investments, net, end
of period $35.9 $ 1.0 $35.9 $ 1.0
-------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE
OF CASH FLOWS
Interest (paid)$ (43.1) $ (41.1) $ (263.9) $ (283.2)
-------------------------------------------------------------------------
Interest received $ 0.4 $ 1.4 $ 2.4 $ 8.9
-------------------------------------------------------------------------
Income taxes (inclusive of
Investment Tax Credits
(paid) received, net $(1.7) $(1.7) $(8.3) $ 0.9
-------------------------------------------------------------------------
TELUS Corporation
segmented information (unaudited)
Three-month periods
ended September 30Wireline Wireless
(millions) 2008 2007 2008 2007
-------------------------------------------------------------------------
Operating revenues
External revenue$ 1,247.5 $ 1,204.6 $ 1,201.8 $ 1,105.3
Intersegment revenue 33.8 29.76.87.0
-------------------------------------------------------------------------
1,281.31,234.31,208.61,112.3
-------------------------------------------------------------------------
Operating expenses
Operations expense 823.8 761.6 682.2 591.6
Restructuring costs 8.76.41.1 -
-------------------------------------------------------------------------
832.5 768.0 683.3 591.6
-------------------------------------------------------------------------
EBITDA(1) $ 448.8 $ 466.3 $ 525.3 $ 520.7
-------------------------------------------------------------------------
CAPEX(2) $ 340.0 $ 302.6 $ 132.3 $ 131.5
-------------------------------------------------------------------------
EBITDA less CAPEX $ 108.8 $ 163.7 $ 393.0 $ 389.2
-------------------------------------------------------------------------
Operating expenses
(as adjusted)(3)
Operations expense
(as adjusted)(3) 823.2 771.1 682.5 589.3
Restructuring costs 8.76.41.1 -
-------------------------------------------------------------------------
831.9 777.5 683.6 589.3
-------------------------------------------------------------------------
EBITDA (as adjusted)(3) $ 449.4 $ 456.8 $ 525.0 $ 523.0
-------------------------------------------------------------------------
CAPEX(2) $ 340.0 $ 302.6 $ 132.3 $ 131.5
-------------------------------------------------------------------------
EBITDA (as adjusted) less
CAPEX$ 109.4 $ 154.2 $ 392.7 $ 391.5
-------------------------------------------------------------------------
(unaudited)
Three-month periods
ended September 30 Eliminations Consolidated
(millions) 2008 2007 2008 2007
-------------------------------------------------------------------------
Operating revenues
External revenue$ - $ - $ 2,449.3 $ 2,309.9
Intersegment revenue(40.6) (36.7) - -
-------------------------------------------------------------------------
(40.6) (36.7) 2,449.32,309.9
-------------------------------------------------------------------------
Operating expenses
Operations expense (40.6) (36.7) 1,465.41,316.5
Restructuring costs - -9.86.4
-------------------------------------------------------------------------
(40.6) (36.7) 1,475.21,322.9
-------------------------------------------------------------------------
EBITDA(1) $ - $ - $ 974.1 $ 987.0
-------------------------------------------------------------------------
CAPEX(2) $ - $ - $ 472.3 $ 434.1
-------------------------------------------------------------------------
EBITDA less CAPEX $ - $ - $ 501.8 $ 552.9
-------------------------------------------------------------------------
Operating expenses
(as adjusted)(3)
Operations expense
(as adjusted)(3) (40.6) (36.7) 1,465.11,323.7
Restructuring costs - -9.86.4
-------------------------------------------------------------------------
(40.6) (36.7) 1,474.91,330.1
-------------------------------------------------------------------------
EBITDA (as adjusted)(3) $ - $ - $ 974.4 $ 979.8
-------------------------------------------------------------------------
CAPEX(2) $ - $ - $ 472.3 $ 434.1
-------------------------------------------------------------------------
EBITDA (as adjusted) less
CAPEX$ - $ - $ 502.1 $ 545.7
-------------------------------------------------------------------------
EBITDA (as adjusted)
(from above) $ 974.4 $ 979.8
Incremental charge(3) 0.3 (7.2)
-------------------------------------------
EBITDA (from above) 974.1 987.0
Depreciation344.0 332.5
Amortization 92.1 70.1
-------------------------------------------
Operating income 538.0 584.4
Other expense, net 5.68.0
Financing costs 121.2 86.2
-------------------------------------------
Income before income
taxes and non-
controlling interests411.2 490.2
Income taxes 125.1 78.6
Non-controlling
interests 1.01.7
-------------------------------------------
Net income$ 285.1 $ 409.9
-------------------------------------------
-------------------------------------------
(1) Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is a measure that does not have any standardized meaning
prescribed by GAAP and is therefore unlikely to be comparable to
similar measures presented by other issuers; EBITDA is defined by the
Company as operating revenues less operations expense and
restructuring costs. The Company has issued guidance on, and reports,
EBITDA because it is a key measure used by management to evaluate
performance of its business segments and is utilized in measuring
compliance with certain debt covenants.
(2) Total capital expenditures ("CAPEX").
(3) Substantially all of the Company's share option awards that were
granted prior to January 1, 2005, and which were outstanding on
January 1, 2007, were amended by adding a net-cash settlement
feature; such amendment resulted in an incremental charge to
(recovery from) operations of $0.3 (2007 - $(7.2)) and did not result
in an immediate cash outflow (inflow). In respect of 2008 and 2007
results provided to the Company's chief operating decision maker,
operations expense and EBITDA are being presented both with, and
without, the impact of such amendment.
TELUS Corporation
segmented information (unaudited)
Nine-month periods
ended September 30Wireline Wireless
(millions) 2008 2007 2008 2007
-------------------------------------------------------------------------
Operating revenues
External revenue$ 3,754.4 $ 3,590.3 $ 3,444.2 $ 3,153.3
Intersegment revenue 96.9 83.5 21.0 20.0
-------------------------------------------------------------------------
3,851.33,673.83,465.23,173.3
-------------------------------------------------------------------------
Operating expenses
Operations expense2,503.72,439.11,950.61,757.8
Restructuring costs 19.3 13.61.70.7
-------------------------------------------------------------------------
2,523.02,452.71,952.31,758.5
-------------------------------------------------------------------------
EBITDA(1) $ 1,328.3 $ 1,221.1 $ 1,512.9 $ 1,414.8
-------------------------------------------------------------------------
CAPEX(2) $ 916.1 $ 882.0 $ 311.5 $ 415.8
-------------------------------------------------------------------------
EBITDA less CAPEX $ 412.2 $ 339.1 $ 1,201.4 $ 999.0
-------------------------------------------------------------------------
Operating expenses (as
adjusted)(3)
Operations expense (as
adjusted)(3) 2,503.82,295.51,950.31,733.3
Restructuring costs 19.3 13.61.70.7
-------------------------------------------------------------------------
2,523.12,309.11,952.01,734.0
-------------------------------------------------------------------------
EBITDA (as adjusted)(3) $ 1,328.2 $ 1,364.7 $ 1,513.2 $ 1,439.3
-------------------------------------------------------------------------
CAPEX(2) $ 916.1 $ 882.0 $ 311.5 $ 415.8
-------------------------------------------------------------------------
EBITDA (as adjusted) less
CAPEX$ 412.1 $ 482.7 $ 1,201.7 $ 1,023.5
-------------------------------------------------------------------------
(unaudited)
Nine-month periods
ended September 30 Eliminations Consolidated
(millions) 2008 2007 2008 2007
-------------------------------------------------------------------------
Operating revenues
External revenue$ - $ - $ 7,198.6 $ 6,743.6
Intersegment revenue (117.9)(103.5) - -
-------------------------------------------------------------------------
(117.9)(103.5) 7,198.66,743.6
-------------------------------------------------------------------------
Operating expenses
Operations expense (117.9)(103.5) 4,336.44,093.4
Restructuring costs - - 21.0 14.3
-------------------------------------------------------------------------
(117.9)(103.5) 4,357.44,107.7
-------------------------------------------------------------------------
EBITDA(1) $ - $ - $ 2,841.2 $ 2,635.9
-------------------------------------------------------------------------
CAPEX(2) $ - $ - $ 1,227.6 $ 1,297.8
-------------------------------------------------------------------------
EBITDA less CAPEX $ - $ - $ 1,613.6 $ 1,338.1
-------------------------------------------------------------------------
Operating expenses (as
adjusted)(3)
Operations expense (as
adjusted)(3) (117.9)(103.5) 4,336.23,925.3
Restructuring costs - - 21.0 14.3
-------------------------------------------------------------------------
(117.9)(103.5) 4,357.23,939.6
-------------------------------------------------------------------------
EBITDA (as adjusted)(3) $ - $ - $ 2,841.4 $ 2,804.0
-------------------------------------------------------------------------
CAPEX(2) $ - $ - $ 1,227.6 $ 1,297.8
-------------------------------------------------------------------------
EBITDA (as adjusted) less
CAPEX$ - $ - $ 1,613.8 $ 1,506.2
-------------------------------------------------------------------------
EBITDA (as adjusted)
(from above) $ 2,841.4 $ 2,804.0
Incremental charge(3) 0.2 168.1
-------------------------------------------
EBITDA (from above) 2,841.22,635.9
Depreciation1,033.2 968.5
Amortization 244.5 192.2
-------------------------------------------
Operating income1,563.51,475.2
Other expense, net 24.8 30.3
Financing costs 344.9 331.0
-------------------------------------------
Income before income
taxes and non-
controlling interests 1,193.81,113.9
Income taxes 348.0 251.6
Non-controlling interests 2.74.5
-------------------------------------------
Net income$ 843.1 $ 857.8
-------------------------------------------
-------------------------------------------
(1) Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is a measure that does not have any standardized meaning
prescribed by GAAP and is therefore unlikely to be comparable to
similar measures presented by other issuers; EBITDA is defined by the
Company as operating revenues less operations expense and
restructuring costs. The Company has issued guidance on, and reports,
EBITDA because it is a key measure used by management to evaluate
performance of its business segments and is utilized in measuring
compliance with certain debt covenants.
(2) Total capital expenditures ("CAPEX").
(3) Substantially all of the Company's share option awards that were
granted prior to January 1, 2005, and which were outstanding on
January 1, 2007, were amended by adding a net-cash settlement
feature; such amendment resulted in an incremental charge to
operations of $0.2 (2007 - $168.1) and did not result in an immediate
cash outflow. In respect of 2008 and 2007 results provided to the
Company's chief operating decision maker, operations expense and
EBITDA are being presented both with, and without, the impact of such
amendment.
-------------------------------------------------------------------------
TELUS CORPORATION
Management's discussion and analysis
2008 Q3
-------------------------------------------------------------------------
Caution regarding forward-looking statements
-------------------------------------------------------------------------
This document and Management's discussion and analysis contain forward-
looking statements about expected future events and financial and
operating results of TELUS Corporation (TELUS or the Company, and where
the context of the narrative permits, or requires, its subsidiaries). By
their nature, forward-looking statements require the Company to make
assumptions and are subject to inherent risks and uncertainties. There is
significant risk that assumptions (see below), predictions and other
forward-looking statements will not prove to be accurate. Readers are
cautioned not to place undue reliance on forward-looking statements as a
number of factors could cause actual future results, conditions, actions
or events to differ materially from the targets, expectations, estimates
or intentions expressed in the forward-looking statements. The Company
disclaims any intention or obligation to update or revise any forward-
looking statements, whether as a result of new information, future events
or otherwise, except as required by law. In the case of annual guidance,
it is the current practice of the Company to evaluate and, where it deems
appropriate, provide updates (see Section 9). Subject to legal
requirements, this practice may be changed at any time at the Company's
sole discretion.
Assumptions for 2008 guidance include:
--------------------------------------
Reduced 2008 economic growth with an estimated Canadian gross domestic
product (GDP) growth rate of 0.7% and above average growth in the
provinces of Alberta and British Columbia; an average 2008 exchange rate
of approximately C$1.00 to U.S.$0.95 (after averaging U.S.$0.98 for the
first nine months of 2008); increased wireline competition in both
business and consumer markets, particularly from cable-TV and VoIP (voice
over Internet protocol) companies; impact from the acquisition of Emergis
in mid-January; Canadian wireless industry market penetration gain of
4.5% to 5%; the target for consolidated capital expenditures explicitly
excluded the payment for wireless spectrum licences acquired in the
advanced wireless services (AWS) spectrum auction; in addition to capital
expenditures, payment for AWS spectrum licences in the third quarter of
2008 was $881.6 million; no new wireless competitive entrants are assumed
for 2008; approximately $50 million restructuring expenses (up from
$20.4 million in 2007); a blended statutory tax rate of approximately
30.5% to 31.5%; a discount rate of 5.5% (50 basis points higher than
2007) and expected long-term return of 7.25% for pension accounting
(unchanged from 2007); and average shares outstanding of approximately
320 million (down from 331.7 million in 2007). Earnings per share (EPS),
cash balances, net debt and common equity may be affected by purchases of
up to 20 million TELUS shares over a 12-month period under the normal
course issuer bid that commenced December 20, 2007.
Factors that could cause actual results to differ materially include, but
-------------------------------------------------------------------------
are not limited to:
-------------------
Competition (including more active price competition and the likelihood
of new wireless competitors beginning to offer services in 2009 following
the AWS spectrum auction); economic growth and fluctuations (including
the global credit crisis, and pension performance, funding and expenses);
capital expenditure levels (potentially increased in 2009 and future
years by the Company's fourth generation (4G) wireless deployment
strategy and any new Industry Canada wireless spectrum auctions);
financing and debt requirements (including ability to carry out
refinancing activities and fund share repurchases); tax matters
(including acceleration or deferral of required payments of significant
amounts of cash taxes); human resource developments; business
integrations and internal reorganizations (including post-acquisition
integration of Emergis); technology (including reliance on systems and
information technology, broadband and wireless technology options and
choice of suppliers, expected technology and evolution path and
transition to 4G technology, expected future benefits and performance of
HSPA (high speed packet access)/LTE (long-term evolution) wireless
technology, successful implementation of the network build and sharing
arrangement with Bell Canada to achieve cost efficiencies and reduce
deployment risks, successful deployment and operation of new wireless
networks and successful introduction of new products, services and
supporting systems); regulatory approvals and developments (including
interpretation and application of tower sharing and roaming rules, the
design and impact of future spectrum auctions, the new media proceeding
and possible changes to foreign ownership restrictions); process risks
(including conversion of legacy systems and billing system integrations);
health, safety and environmental developments; litigation and legal
matters; business continuity events (including manmade and natural
threats); any prospective acquisitions or divestitures; and other risk
factors discussed herein and listed from time to time in TELUS' reports
and public disclosure documents, including its annual report, annual
information form, and other filings with securities commissions in Canada
(on www.sedar.com) and in its filings in the United States, including
Form 40-F (on EDGAR at www.sec.gov).
For further information, see Section 10: Risks and risk management of
TELUS' 2007 annual and 2008 first and second quarter Management's
discussions and analyses, as well as updates in Section 10 of this
document.
-------------------------------------------------------------------------
Management's discussion and analysis
November 5, 2008
The following is a discussion of the consolidated financial condition and results of operations of TELUS Corporation for the three-month and nine-month periods ended September 30, 2008 and 2007, and should be read together with TELUS' interim Consolidated financial statements. This discussion contains forward-looking information that is qualified by reference to, and should be read together with, the Caution regarding forward-looking statements above.
TELUS' interim Consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP), which differ in certain respects from U.S. GAAP. The principal differences between Canadian and U.S. GAAP, as they relate to TELUS, are summarized in Note 20 of the interim Consolidated financial statements. Management's discussion and analysis and the interim Consolidated financial statements were reviewed by TELUS' Audit Committee and approved by TELUS' Board of Directors. All amounts are in Canadian dollars unless otherwise specified.
TELUS has issued guidance on and reports on certain non-GAAP measures used by management to evaluate performance of business units, segments and the Company. Non-GAAP measures are also used to determine compliance with debt covenants and manage the capital structure. Because non-GAAP measures do not have a standardized meaning, securities regulations require that non-GAAP measures be clearly defined and qualified, and reconciled with their nearest GAAP measure. For the reader's reference, the definition, calculation and reconciliation of consolidated non-GAAP measures are provided in Section 11: Reconciliation of non-GAAP measures and definitions.
Management's discussion and analysis contents
-------------------------------------------------------------------------
Section Contents
-------------------------------------------------------------------------
1. Introduction Introduction and summary of TELUS'
consolidated results for the third quarter
and first nine months of 2008
-------------------------------------------------------------------------
2. Core business, visionA discussion of activities in support of
and strategy TELUS' six strategic imperatives
-------------------------------------------------------------------------
3. Key performance drivers A listing of corporate priorities for 2008
-------------------------------------------------------------------------
4. Capability to deliverA description of the factors that affect the
results capability to execute strategies, manage key
performance drivers and deliver results
-------------------------------------------------------------------------
5. Results from operations A detailed discussion of operating results
for the third quarter and first nine months
of 2008
-------------------------------------------------------------------------
6. Financial condition A discussion of significant changes in
TELUS' balance sheets for the nine-month
period ended September 30, 2008
-------------------------------------------------------------------------
7. Liquidity and capitalA discussion of cash flow, liquidity, credit
resourcesfacilities and other disclosures
-------------------------------------------------------------------------
8. Critical accounting A description of accounting estimates that
estimates andare critical to determining financial
accounting policyresults, and changes to accounting policies
developments
-------------------------------------------------------------------------
9. Annual guidance for TELUS' revised annual guidance compared to
2008 original targets
-------------------------------------------------------------------------
10. Risks and risk An update on certain risks and uncertainties
management facing TELUS and how the Company manages
these risks
-------------------------------------------------------------------------
11. Reconciliation ofA description, calculation and
non-GAAP measures andreconciliation of certain measures used by
definitions management
-------------------------------------------------------------------------
1. Introduction
The following discussion is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of Management's discussion and analysis. It is also qualified by Section 10: Risks and risk management of TELUS' 2007 annual Management's discussion and analysis, and updates in TELUS' 2008 first, second and this third quarter Management's discussion and analyses.
1.1 Materiality for disclosures
Management determines whether or not information is material based on whether it believes a reasonable investor's decision to buy, sell or hold securities in the Company would likely be influenced or changed if the information were omitted or misstated.
1.2 Canadian economic environment
There is economic uncertainty related to tightening of credit markets worldwide. The credit situation is fluid and it is difficult to predict future outcomes. TELUS' capital structure financial policies, which are discussed under Capabilities - Section 4.3 Liquidity and capital resources, were designed with credit cycles in mind. The Company believes that these financial policies and guidelines, and maintaining credit ratings in the range of BBB+ to A-, or the equivalent, provide reasonable access to capital markets.
The Company's undiscounted financial liability contractual maturities are presented in Liquidity risk under Section 7.8 Financial instruments.
1.3 Canadian telecommunications industry
Wireless developments - advanced wireless service (AWS) and other
spectrum auction in the 2 GHz range
Industry Canada conducted a wireless spectrum licence auction between May 27 and July 21, 2008 for 90 MHz of AWS spectrum (including 40 MHz set aside for new entrants), 10 MHz for personal communications network (PCS) service extension, and 5 MHz for another small band. The auction concluded after 331 rounds with Industry Canada reporting total proceeds of $4,255 million (average of $1.55/MHz/POP for AWS and PCS spectrum, where POP refers to person of population). TELUS was the successful bidder on 59 spectrum licences (see table), providing additional spectrum depth nationally in markets TELUS already covers. The average spectrum acquired by TELUS was 16.2 MHz at an average cost of $1.82/MHz/POP.
Each of the successful spectrum bidders, including TELUS, was required to remit a 20% deposit in August and complete full payment for the licences in September, as well as demonstrate compliance with Canadian ownership requirements. Industry Canada is expected to turn over licences to the respective spectrum auction winners following a closed-door eligibility review process. For additional discussion, see Section 2 - Building national capabilities, Section 4.1 Principal markets addressed and competitors and Section 10.1 Regulatory.
In the third quarter, TELUS paid Industry Canada $881.6 million for the licences and related auction charges. The Company paid the amount th
