Telus to Cut Costs, Reduces Expectations

Telus, the 2nd largest mobile telecom in Canada, has posted a Q3 profit of $285.3 million ($0.89 per shar), down from $409.3 million ($1.23 per share) year over year. The company earned $2.45 billion in revenue, down from $2.31 billion YoY. The lower profits were essentially expected. Telus now plans to materially cut costs even more than it originally planned. Telus recently has made varoius large investments, including in Koodoo, a subsidary discount telecom, has invested in network upgrades with Bell (who shared the costs – both use CDMA networks), and also spent $882 million in a government airwave spectrum auction. Telus has also lowered its expected fiscal 08 total revenue.

Telus currently offers the most smartphone selection in Canada, and is the only carrier to offer unlimited internet on mobile phones (however, there are still some restrictions in the TOS). Bell and Telus are believed to make the switch to the more desirable GSM mobile network standard from the current CDMA systems. This will help the companies offer more selection, and it will also bring some competition to the GSM Canadian mobile market space where Rogers (also owns Fido) currently has a complete monopoly over. The transition will likely take about 3 years to complete.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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