Telus’ customer service strategy improving churn in wireline: CEO

The customer service strategy that Telus Corp. has been employing for over a decade in its wireless business has been gaining momentum in its wireline segment, CEO Darren Entwistle said on a call with analysts Friday, explaining the company’s wireline improvement in the second quarter. The company reported record low internet and TV customer defections and the lowest landline losses in 14 years for the quarter, which ended June 30. It added 29,000 internet subscribers, up 70.6 per cent compared to the same quarter last year and increased its TV segment by 15,000 versus 5,000 last year for a combined 44,000 new subscribers in those segments. It lost just 10,000 landline customers compared to 19,000 last year, and 20,000 the previous two second quarters. “The efficacy of that approach on the customer service excellence front has been gaining increasing traction within the wireline business as well,” Entwistle said following the company’s second quarter earnings report. “We’ve applied the same formula, the same level of focus, the same level of investment and we’ve been seeing improvement continuing to gain traction.” Telus has been holding steady at a sub-one-per cent churn in its postpaid wireless division for a while, including a 0.79 per cent in the second quarter last year and a mid 0.8 this year. For this quarter, it reported a 0.83 per cent postpaid churn and a 0.6 per cent improvement in its average billing per user to $67.24. But it’s not the only telecom paying tribute to customer service initiatives that has slashed churn rates for that segment. Rogers Communications Inc. said that it hopes that strategy will eventually pull its defection rate to below one per cent. It recently reported a further decline in its wireless churn rate to 1.01 last month. BCE Inc. reported consecutive years of lower year-over-year churn earlier this year. Telus added 87,000 new postpaid wireless subscribers in the quarter, though that was shy of the 99,000 it added in the same quarter last year. However, it added 4,000 new prepaid wireless subscribers in the quarter compared to a loss of 16,000 in the same period in 2017. Total postpaid subscribers were up 4.6 per cent year-over-year to 8.1 million, while the prepaid base was down 5.6 per cent to 894,000. “We want to look at channel strategies” for growth, Entwistle said, before suggesting that the company “cultivate a prepaid base and harvest that base as it relates to pre-to-post migrations and expand our revenue profile with the customer. That’s a smart thing for this organization to do.” Such initiatives have already been taken by Bell, for example with its Lucky Mobile brand. Overall revenues increased over the year by 5.3 per cent to $3.45 billion, while net income was up marginally by 0.3 per cent to $397 million in the quarter. Total wireline connections were up slightly by 0.2 per cent to 4.12 million in the second quarter. The internet base was up 5.3 per cent to roughly 1.8 million, while TV subscribers were down 2.2 per cent to 1.05 million. All figures are compared to the same quarter last year. Entwistle also spoke to competitive pressures that have nudged the wireless industry into what he called relatively new territory, which focuses primarily on price-based promotions over discounts on devices. He noted that geographic and new entrant pressures, such as from Shaw Communications Inc.’s Freedom, have been less of a force compared to effect of the established players in the industry on its ABPU numbers. ”I think the ABPU pressure is related to the competitive intensity between Telus, Rogers and Bell and amongst that group, the entities that are leading rate-based promotions” and growth in data buckets for the same or less money reflective of massive gigabyte promotions, Entwistle said. He pointed to 23 out of the 26 weeks at the beginning of the year that focused on those price-based promotions and said “that’s been the more pressurizing effect.” Though some of that pressure has come from Freedom, which instigated an industry-wide frenzy during the holiday season with the release of its Big Gig data plans that impacted Telus and pushed the established players to respond. Freedom continues to test the industry’s waters with its rate-based competitive responses, including unveiling its own low-cost data-only plans last month. Entwistle then used that point to reinforce a previous argument that there should be less regulatory intervention because competition is fierce as it is, suggesting telecom pricing lately has been “bordering on the irrational.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Telus’ customer service strategy improving churn in wireline: CEO

News | August 3, 2018

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