Telus says smartphone-specific adds at least on par with competitors

When paring the first quarter numbers down, Telus Corp.’s smartphone plan uptake rivaled its peers, if not beat them, despite comparatively lower new postpaid additions, a senior executive said Wednesday. Telus said it grew its postpaid wireless base by 48,000 in the year’s first quarter, but that number was dwarfed by Rogers Communications Inc.’s 95,000 and somewhat less so by BCE Inc.’s 68,487 new postpaid subscribers. “We had a lower postpaid net add number than either of our two competitors but we’re convinced after doing our analysis that if you look at core smartphone growth, we’re right up there, if not ahead of our competition,” David Fuller, executive vice-president at Telus, told TD Securities analyst Vince Valentini at the bank’s annual telecom conference in response to a question about the quality of the quarter’s adds. Telus refers to “quality loading” as a high percentage of its postpaid adds being smartphones with voice and data rate plans, company spokesman Francois Gaboury said in an email. Valentini added in an email that those “quality” new smartphone subscribers would come in at normal average revenue per user (ARPU) levels, as opposed to lower ARPU from, say, tablets, flat-rate wireless home phone service, government contract subscribers or migrations from prepaid to postpaid. Fuller said said tablet loading was down year-over-year for Telus. “We don’t believe that to be the case for all of the competition in the industry. Our prepaid to postpaid, or intersegment migrations, was also flat on a year-over-year basis,” he said. RBC Capital Markets analyst Drew McReynolds also said in an email that quality comes down to the lifetime value per subscriber, which combines measurements including ARPU and churn. For Macquarie Capital Markets analyst Greg MacDonald, it’s not that tablets are not considered quality, but he speculated in an email they “very likely” have lower average service revenue per user and higher churn, hedging that statement by saying there’s no data for that. Gaboury said the quality loading conclusions drawn by Telus were obtained from analyses and estimations that are based on “disclosures, comments by other carriers and other publicly available sources of information,” but are confidential. And because none of the companies disclose the device breakdown of their postpaid wireless subscribers, Telus’ claim cannot be independently verified. When reached for comment, a Rogers’ spokesperson deferred to comments made by the company’s chief financial officer Tony Staffieri to Valentini. That’s where, earlier Wednesday morning, Staffieri was asked to address critics who say their postpaid numbers may have been “inflated” by those other lower ARPU drivers. “In terms of balance of the customer, some of it will be tablets — not an unusual mix in the first quarter than you would’ve seen in prior quarters,” Staffieri told Valentini, adding that the company’s ARPU is up, which “speaks to the lifetime value that we’re attracting.” “We’ve always focused on trying to convert our prepaid customers to post,” Staffieri said. “In the fourth quarter as well as in the first quarter, we saw a healthy uptick in the amount of prepaid to post, but in terms of the overall subscriber mix, it continues to be very small.” He added churn, which continued to come down, contributed to the healthy postpaid figures. McReynolds added the “bulk” of postpaid adds are new subscribers because the pre-to-postpaid customers “is certainly not a large component.” During its first quarter conference call in April, Rogers’ head Joe Natale said the company’s gross adds included a “good mix of premium smartphone additions; even where we have tablet additions, a lot of them were part of an overall Share Everything plan,” which he said creates lifetime value and churn improvement. Bell did not have its own session at TD’s conference, but did at J.P. Morgan’s the day before. Telus has raised the point of quality loading in previous conference calls and said it’s a topic that should receive more coverage. Gaboury added Telus’ “long term focus on this is evidenced by our leading , churn and average lifetime revenue per wireless subscriber.” Fuller added Wednesday: “We’re pleased with and continue to be focused on a going-forward basis around the right type of loading as opposed to a specific headline number,” Fuller said. But MacDonald said the true picture of growth is going to be in the earnings before interest, taxes, depreciation and amortization (EBITDA) and service revenue figures. As for whether there will be more transparency with regard to what other devices make up the postpaid net additions, MacDonald said he suspects they could be disclosed in the future as the connected tablet segment grows as a percentage of that total. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Telus says smartphone-specific adds at least on par with competitors

News | May 18, 2018

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