Telus sees Netflix as opportunity

Instead of being viewed as only a threat, online movie service Netflix could be bundled in with TV packages, Telus CEO Darren Entwistle said Thursday. Telus has “no regrets” about not owning any media or broadcast assets to provide the telecommunications company with content for TV, smartphones and tablets, Entwistle said after the company’s annual meeting.

MONTREAL — Instead of being viewed as only a threat, online movie service Netflix could be bundled in with TV packages, Telus CEO Darren Entwistle said Thursday.

Telus has “no regrets” about not owning any media or broadcast assets to provide the telecommunications company with content for TV, smartphones and tablets, Entwistle said after the company’s annual meeting.

“It’s a threat, but it’s also an opportunity for us without a shadow of a doubt,” Entwistle said of U.S.-based Netflix which has about two million Canadian subscribers.

“We could potentially bundle Netflix as a part of a Telus solution. We could perhaps buy it on a wholesale basis and brand it accordingly,” he said in an interview.

There’s also nothing stopping Telus from developing over-the-top applications to compete with Netflix, he added.

A number of Canada’s TV providers are offering on-demand services or developing platforms to compete with Netflix.

Bell wants to buy Astral Media in a revised $3.4-billion deal to use the shows and movies from the Montreal-based specialty, pay TV and radio company to compete with Netflix and other Internet-based TV and movie providers.

Entwistle said it’s important that Telus (TSX:T) have a game plan to deal with Netflix and similar competitors.

“If there are really people that want a subscription model for second-generation movies, why not us offer that and make it part of our package? ” he said.

“I would like to do to really try to differentiate us from the competition, from the Netflix of this world in a meaningful way.”

Entwistle also said that consumers want more flexibility when it comes to choosing their TV channels.

“I think consumers only want to pay for what they want to view. The fact that, that should be viewed as a radical concept is a bit frightening.”

Entwistle, who has been CEO of Telus since 2000, said he sees plenty of growth left at his company within Canada with wireless, high-speed Internet, TV and electronic health-cares services. He isn’t looking outside the country at this point for growth.

“If you don’t have a highly robust domestic foundation, your international expansion plans will be problematic. And so for me, I would like to fulfil our growth destiny, so to speak, within the Canadian franchise.”

In its financial results released earlier Thursday, Telus raised its quarterly dividend and reported an increase in first-quarter profits from a year ago, helped by higher revenue.

Telus said it will pay a quarterly dividend of 34 cents, up from 32 cents and also announced it will spend up to $500 million to buy back up to 15 million of its shares this year.

The company has set a target of semi-annual increases of its dividend of around 10 per cent annually.Telus added 59,000 postpaid net subscribers in the quarter. These subscribers are generally on three-year BlackBerry, Android and iPhone smartphone contracts and are a measure of a telecom company’s competitive health.

By comparison, Rogers added 32,000 net postpaid customers and Bell added nearly 60,000 in their respective first quarters.

Total wireless subscribers were up 4.6 per cent from a year ago to 7.7 million, overtaking Bell which said it had 7.67 million subscribers. Rogers had almost 10 million wireless subscribers.

Entwistle said the company also plans to continue the share purchase plan for up to $500 million in shares for each of the next three calendar years.

The increased dividend and share buy-back came as Telus reported a first-quarter profit of $362 million or 56 cents per share, up from $319 million or 49 cents per share a year ago.

Revenue was $2.76 billion, up from $2.63 billion in the first quarter of 2012.

Shares in Telus closed up 47 cents at $37.17 on Thursday on the Toronto Stock Exchange.

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