Open this photo in gallery:
Telus reported a $660-million net loss in its third quarter on Friday.Justin Tang/The Canadian Press
Telus Corp. T-T reported lower third-quarter revenue, a net loss of $660-million and an $800-million writedown in its health business, as the company’s new CEO aims to refocus the company on its core telecom business while pursuing new cost savings.
The company also made progress on some telecom metrics during the quarter and, in its release on Friday, recommitted to asset sales and outlined plans to expand its investments in artificial-intelligence data centres.
The results represent another mixed quarter for Telus, which has suffered a 27-per-cent share-price slide since the beginning of the year, despite recent efforts by executives to course correct after years of heavy spending on numerous acquisitions that the company struggled to fully integrate.
In support of deleveraging and future profitability, Telus said it plans to save approximately $900-million per year from the end of 2028 onward, with approximately $250-million of expected savings in 2027, by cutting operating costs and capital expenditures.
About 80 per cent of the cash savings are expected to come from the telecom segment.
“There’s real intentional and strategic pivot to profitable growth,” chief executive officer Victor Dodig said in an interview Friday morning. “We’re looking at this and saying, ‘Let’s just go back to our core and do that really well,’ because there’s a need to invest at home.”
The company took an $800-million non-cash impairment charge for its Telus Health business during the quarter as it determined that the recoverable amount it could earn from the unit was less than what is currently accounted for in its books.
This was “due to updated growth expectations, broader market conditions and valuation update within the health portfolio as a result of the active divestiture process,” the company said in its release.
Mr. Dodig said the company is in “advanced stages with a serious buyer” regarding the sale of one of the health division’s three segments, and plans to bring a second segment to market this month. The company is also prioritizing the monetization of its agriculture and consumer-goods business.
It’s the second quarter in a row that the company has taken a writedown on assets. Last quarter, the company took a $2.1-billion impairment charge for its Telus Digital unit, at the same time as it halved its dividend payout.
Telus Corp. is also exploring how it can unlock equity value from its fibre network while maintaining control. This could be similar to the partnership approach it took with its wireless towers, where it sold a minority stake to the Caisse de dépôt et placement du Québec.
“We’re early in the process, and conversations with potential investment partners are encouraging,” Mr. Dodig said during an analyst call Friday morning.
Some of the proceeds of a potential fibre deal would go toward paying down debt, and some toward future network buildout, said Telus chief financial officer Gopi Chande.
“Ultimately, we look forward to being in a position to return capital to shareholders and potentially even stock buybacks, but as Victor mentioned, it’s early stages,” she told analysts.
Analysts were hopeful that the quarterly results represent a more cost-focused business, with progress in respect to the core telecom business.
The company added 84,000 net new mobile customers, above analyst expectations of 55,000. It also reduced its churn – the percentage of customers that leave during a defined period – and had flat average revenue per customer, a change from previous declines.
“This is a confidence-inspiring first quarter under new telecom leadership,” said TD Cowen analyst Vince Valentini in a note to investors, referring to the company’s new head of telecom, David Fuller, who rejoined Telus in September.
Meanwhile, the company will continue to expand its data-centre strategy. The tripartite plan involves expanding the company’s existing centres in Rimouski, Que., and Kamloops, B.C., helping other companies by providing network connectivity, and assessing a new initiative in data-centre shells with secured power.
This strategy is a shift from the direction under previous leadership, which prioritized building data centres and supplying the compute technology, a strategy seen by some investors as overly risky.
The company’s third-quarter net loss of $660-million, compared with a net gain of $431-million in the same period last year, was the result of the writedown in the health care business, lower operating income and higher financing costs. Adjusted net income, excluding certain costs, was also down 32 per cent year over year.
The Vancouver-based telecom company reported operating revenue and other income fell 2 per cent. Its service revenue – arising from contracts with customers – was down 1 per cent. Its revenue from its wireless business grew by one per cent.
At the end of the quarter, the company’s long-term debt stood at $25.9-billion, down about 5 per cent from the previous quarter.