telus

TELUS CORP. (Toronto symbols T $47 and T.A $45; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 337.4 million; Market cap: $14.8 billion; SI Rating: Above average) earned $291.0 million in the three months ended March 31, 2008, up 49.4% from $194.8 million a year earlier. Per-share earnings rose 57.9%, to $0.90 from $0.57, due to fewer shares outstanding. If you disregard a one-time charge in the year-earlier quarter, earnings per share were unchanged. Revenues increased 6.8%, to $2.35 billion from $2.2 billion, thanks to a 19% rise in revenue from Telus’s high-speed Internet services. Wireless revenue rose 10% due of the growing use of smartphones. These devices let users access email and web pages. Strong demand for these services is helping Telus offset weaker growth at its traditional telephone business. Telus is a buy. The cheaper, non-voting ‘A’ shares are the better choice.

TELUS CORP. (Toronto symbols T $57 and T.A $56; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 337.9 million; Market cap: $19.3 billion; SI Rating: Above average) is the second-largest provider of telecommunication services in Canada, after BCE Inc. It has over 4.5 million regular telephone customers and 1.1 million Internet subscribers in British Columbia, Alberta and parts of Quebec. These operations account for about 55% of Telus’s revenue and 50% of its earnings. The rest comes from Telus’s wireless business, which has 5.1 million customers nationwide. Telus’s revenue grew from $7.0 billion in 2002 to $8.7 billion in 2006, or 5.6% compounded annually. The company lost $0.72 a share (total $227.1 million) in 2002, due to restructuring costs following the Clearnet acquisition. But thanks to strong demand for wireless service, Telus’s profits grew from $0.93 a share ($329.8 million) in 2003 to $3.23 a share ($1.1 billion) in 2006. Cash flow per share more than doubled, from $3.88 in 2002 to $8.78 in 2006....

TRANSCANADA CORP. $38.06, Toronto symbol TRP, has teamed up with U.S.-based Williams Companies Ltd. to evaluate the Sunstone project, a proposed pipeline that would transport natural gas from the Rockies to the western United States. Sunstone could begin operations in 2011. Both companies already operate pipelines in the region, which cuts the risk of this project. TransCanada is a buy. TRANSALTA CORP. $30.36, Toronto symbol TA, fell 10% this week after activist shareholder Luminus Management withdrew its slate of director nominees....

ISHARES DIVIDEND INDEX FUND $20.28 (Toronto symbol XDV; buy or sell through a broker) began trading in December, 2005. The fund currently holds the 30 highest yielding Canadian stocks. These stocks are included in the index based on their dividend growth, yield and average payout ratio. The weight of any one stock in the fund is limited to 10% of the fund’s assets. Its MER is 0.50%. iShares Dividend Index Fund now yields 3.2%. The fund’s top holdings are: CIBC at 7.6%; Manitoba Telecom at 5.7%; Bank of Montreal, 5.7%; National Bank, 5.2%; TD Bank, 5.0%; Royal Bank, 4.5%; Russel Metals, 4.4%; Telus Corp., 4.1%; Bank of Nova Scotia, 3.9%; IGM Financial, 3.7%; Rothmans, 3.5%; TransCanada Corporation, 3.3%; BCE Inc., 3.3%; Laurentian Bank, 3.2%; and Enbridge, 3.1%....

TELUS CORP. $40.87 (Toronto symbol T.A; SI Rating: Above average) is considering making its CDMA wireless system compatible with the rival GSM standard. CDMA, or code division multiple access technology, is common in North America. Most of the world uses the GSM standard, or global system for mobile communications. This upgrade would cost Telus $500 million, which is 60% more than the $312 million or $0.95 a share it earned in the third quarter of 2007, excluding unusual items. However, a switch would help Telus capture more roaming fees from foreign tourists and business travelers who use GSM phones while in Canada. It would also give Telus access to a wider selection of mobile phones, including Apple’s iPhone....

TELUS CORP. (Toronto symbols T $46 and T.A $45; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 327.4 million; Market cap: $15.1 billion; SI Rating: Above average) plans to spend $1.9 billion on capital improvements in 2008, up $150 million or 8.8% from 2007. Most of the spending will go to expanding its high-speed wireless coverage and capacity in Alberta and British Columbia. Telus also plans to improve its high-speed Internet services. Better services will help Telus hang on to its current customers, and attract new ones. That will also help expand Telus’s earnings in 2008 to $3.65 a share, up 10.6% from the $3.30 a share it likely earned in 2007. The stock trades at 12.6 times the new estimate (12.3 times for the ‘A’ shares). That should help Telus raise its $1.80 dividend, which yields 3.9% (4.0% for the ‘A’ shares)....

Today many people seem sure that the subprime situation and associated problems will bring on a long-term market decline that could carry stock prices much lower. When conclusions like these become widespread, the conclusion or the timing or both are often wrong. Think back to how many people agreed with former Federal Reserve Board Chairman Alan Greenspan’s famous (or notorious) ‘irrational exuberance’ speech, in December, 1996. Yet nearly four years passed before the market hit its ultimate peak. In between the Greenspan speech and 2000 market peak, we went through a market setback in response to an economic crisis that started in Thailand in 1997....

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....

Telus faces competitive challenges from both rival phone companies and from cable firms. New cell phone licenses recently won by new entrants could sharply increase competition in that market. However, we still think Telus is well positioned to compete and grow. 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%....

TELUS CORP. (Toronto symbols T $56 and T.A $54; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 331.7 million; Market cap: $18.5 billion; SI Rating: Above average) provides local and long distance telephone service in British Columbia, Alberta and parts of Quebec, and wireless service across Canada. A big part of the company’s success in the past few years is its wireless operations, which now account for 40% of its total revenue. Telus prefers to focus on long-term customers, which cuts the need for expensive promotions such as free phones. That has helped keep its wireless profit margins high compared to its main competitors (BCE and Rogers). Telus also tends to hang on to its customers longer....