Telus Corp. $48.42 - Toronto symbol T.A

TELUS CORP. $48.42 (Toronto symbol T.A; SI Rating: Above average) provides local and long distance telephone service in B.C., Alberta and parts of Quebec, and wireless service across Canada. In the three months ended September 30, 2007, Telus’s earnings per share excluding unusual items rose 10.5%, to $0.95 from $0.86 a year earlier. Revenue rose 4.5%, to $2.31 billion from $2.21 billion. Strong gains at its wireless and high-speed Internet operations offset lower local and long-distance revenues. The company recently raised its dividend rate by 20%. The new annual rate of $1.80 yields 3.1%. Recent auctions of new radio frequencies (or wireless spectrum) to let new cell phone firms such as Videotron and Shaw Cable enter the market will increase competition. Ottawa will also force incumbents like Telus to lease towers and other equipment to these new competitors for five years while they build their own networks. But Telus’s strong reputation for customer service and its focus on more affluent users and long-term customers should help it continue to expand its wireless profits, which account for half of its total earnings. Telus has also acquired TSX-listed Emergis Inc. for $763 million. Emergis makes software that helps businesses and hospitals automate, secure, store and process electronic transactions and patient data. Emergis’s expertise should help Telus sell more communication services to businesses, including Emergis’s high-quality clientele. Telus is still a buy.