Telus feels recession in Q2

Telus Corp. (TSX:T) lowered its sales and earnings expectations for the year as a weak economy continues to influence how much customers are willing to spend on its services and restructuring costs rise.

VANCOUVER — Telus Corp. (TSX:T) lowered its sales and earnings expectations for the year as a weak economy continues to influence how much customers are willing to spend on its services and restructuring costs rise.

The downgrade at Telus, Canada’s second largest telecommunications service provider, came as the company said profit fell nine per cent in the second quarter and revenues stalled.

“Clearly there is industry softness in this economy that is affecting all carriers,” chief financial officer Robert McFarlane told a conference call Friday.

Earnings were $244 million or 77 cents per share in the three months ended June 30, compared with $268 million or 83 cents per share in the prior-year period. That included favourable income tax-related adjustments of about $19 million or six cents per share.

Stripping out those one-time items, net income and earnings per share fell 16 and 14 per cent, respectively.

Revenue edged down $22 million or one per cent to $2.38 billion, which Telus said reflects continued declines in voice revenues that more than offset growth in data revenues.

Wireless revenue — which includes mobile phones and related services — increased by $4 million to $1.1 billion in the quarter versus last year.

Network revenue growth was largely offset by lower equipment sales.

Wireline revenue — for such services as home phone, Internet and conferencing — fell by $26 million or 2.1 per cent to $1.2 billion. Telus said the drop was due to declines in voice local and long distance revenues.

“The second-quarter results continue to reflect the impacts of the recession on our western and nationally based businesses,” said president and CEO Darren Entwistle.

“In light of moderating revenues, our solid progress on operational efficiency initiatives has helped mitigate the effect of current economic conditions and better position the organization for accelerated performance when the economy recovers.”

With pressures on its businesses expected to continue, Telus dropped its expectations for the year.

The company has cut about 1,500 jobs in the first six months of the year, including the equivalent of 300 jobs in the second quarter. Telus currently employs about 34,400 people.

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