NYSE:TU TELUS Q2 2023 Earnings Report $15.30 +0.23 (+1.53%) Closing price 05/6/2025 03:59 PM EasternExtended Trading$15.23 -0.07 (-0.43%) As of 05/6/2025 07:57 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast TELUS EPS ResultsActual EPS$0.14Consensus EPS $0.18Beat/MissMissed by -$0.04One Year Ago EPSN/ATELUS Revenue ResultsActual Revenue$3.68 billionExpected Revenue$3.72 billionBeat/MissMissed by -$32.89 millionYoY Revenue GrowthN/ATELUS Announcement DetailsQuarterQ2 2023Date8/4/2023TimeN/AConference Call DateFriday, August 4, 2023Conference Call Time12:00PM ETUpcoming EarningsTELUS' Q1 2025 earnings is scheduled for Friday, May 9, 2025, with a conference call scheduled at 1:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptInterim ReportEarnings HistoryCompany ProfilePowered by TELUS Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 4, 2023 ShareLink copied to clipboard.There are 12 speakers on the call. Operator00:00:02Good day and welcome to the TELUS 2023 Q2 Earnings Conference Call. I would like to introduce your speaker, Robert Mitchell. Please go ahead. Speaker 100:00:14Hello, everyone. Thank you for joining us today. Our second Quarter 2023 results, news release, MD and A and financial statements and detailed supplemental investor information were posted on our website this morning. On our call today, we'll begin with remarks by Darren and Doug. As usual for the Q and A portion of our call, we will be joined by a range of other executive leaders, Bano Nalgi, Consumer Solutions Nuveen Arora, Business Solutions Jim Senko, Chief Product Officer Tony Guerin, COO Jeff Pierrot, President and CEO of TI and Sid Khosaraju, President, TELUS Health. Speaker 100:00:46Briefly, this presentation and answers questions contain forward looking statements. Actual results could vary materially from these statements. The assumptions on which they are based and the material risks that could With that, Darren, Speaker 200:01:05over to you. Speaker 300:01:07Thanks, Ramos, and hello, everyone. In the Q2, our Tele team once again demonstrated execution strength In our TTEC business segment characterized by the potent combination of leading overall customer growth complemented by strong operational and financial results. The robust performance in our Communications Technology business continues to be underpinned by our globally leading broadband networks and of course our customer centric culture. This enabled our strongest second quarter on record with total customer net additions of 293,000, up 19% on a year over year basis, driven by strong demand for our superior product portfolio and service excellence. Our leading customer growth is reflective of our consistent industry best client loyalty across both mobile and our fixed product lines. Speaker 300:02:02The TELUS team's passion for delivering customer experience excellence contributed to blended and postpaid mobile phone, PureFibre Internet and residential voice churn all being below 1% Yet again this quarter, I'll pick it up here on the interruption. I was speaking to the fact that mobile phone churn is now in its 10th consecutive year being less than 1% and our PureFibre Internet product has been below the 1% threshold now for 14 consecutive quarters. This is quite the unique combination that certainly bodes well for the future of the organization. In the Q2, we delivered strong consolidated revenue growth of 13% and resilient EBITDA growth of 5%, in spite of the macroeconomic challenges impacting TELUS International. Alongside that, We generated strong free cash flow growth of 36%. Speaker 300:03:06Let's turn now to have a look at our mobile operating results at TELUS. TELUS achieved leading wireless customer growth of 234,000 net additions in the Q2. This included strong mobile phone net additions of 110,000, our best second quarter results since 2010. Notably, this strength was driven alongside our continued focus on high quality and profitable customer growth. It also included record 2nd quarter connected device net additions of 124,000, which were up 35% on a year over year basis. Speaker 300:03:49This reflects continued strong momentum with respect to our 5 gs and our IoT B2B solutions that are so critical for the future. Importantly, our team delivered another quarter of industry fast loyalty results, which continues of course to be the hallmark of the TELUS organization and is emblematic of our customers' first culture in action in terms of the empirical results it generates. Blood in mobile phone churn was an industry low 0.91%. Moreover, our industry leading postpaid mobile phone churn of 0.73% represents the 10th quarter This clearly distinguishes TELUS from our competitors and indeed it is a result that is unsurpassed in North America with a churn rate that is amongst the lowest globally. Our consistently strong performance is powered by our highly engaged team, who passionately deliver superior service offerings and digital capabilities over our world leading broadband networks, offering customers the fastest, most expensive and most reliable service in Canada. Speaker 300:05:19The close on mobile industry leading second quarter ARPU growth of 1.8% over last year was supported by roaming improvements as a result of increased international travel. It was also buttressed by higher domestic monthly recurring revenue as well as our industry based churn rate, whereby we are retaining our highest value customers in addition of course to growth in connected devices and IoT revenues. This once again drove strong industry best organic network revenue growth of 6% in the quarter. Notably, our leading mobile phone lifetime revenue continues to exceed our national peers by up to 70%. This has been a consistent story at the TELUS organization for a very long time. Speaker 300:06:15This is reflective of the combination of our continued focus on high quality customer growth and leading client loyalty delivered consistently as is the hallmark of our company. Turning now to our fixed operating results. Portellus delivered industry leading 2nd quarter wireline customer growth. Our team achieved leading Internet net additions Up 35,000 in the quarter, up 3% on a year over year basis, powered by leading customer loyalty in combination with the significant advantages of TELUS' expansive PureFibre network. We continue to drive leading growth in our TV product line with net additions of 17,000, which was up 13% on a year over year basis. Speaker 300:07:08Furthermore, residential voice losses were again an industry low at 8,000 and were relatively flat over this time last year. Notably, this leading performance reflects our continued momentum with respect to multi product intensity and the inherent churn benefits that have been so consistently successful for the TELUS organization. Healthy and leading security net additions of 15,000 further reflect our successful strategy of driving profitable customer growth and multi product penetration. Overall, we drove robust and industry leading external fixed net additions of 59,000 in the second quarter. This performance is indicative of the strength of our unique and highly attractive bundled offerings across our truly unmatched portfolio of products and services, buttressed by our ever expanding globally leading Pure fiber and 5 gs networks, all wrapped within our customer centric culture. Speaker 300:08:23Indeed, the generational investments that we've made in the global best network technologies that are the cornerstone of our leading customer growth and the significant ongoing profitable market share gains that we have driven over so many years and will continue to do so on a go forward basis. Furthermore, these investments will continue to drive important and extensive socioeconomic benefits for our communities and Canadian citizens for many, many, many decades to come. Let's turn now and take a look at TELUS Business Solutions. Our team within TELUS Business Solutions continues to deliver on its track record of contributing meaningfully to the success of the wider TELUS organization. Notably, this includes delivering another strong quarter with 6% revenue growth and profitable EBITDA contribution growth across our B2B product lines. Speaker 300:09:27This is enabled by a team that is absolutely dedicated to propelling its position as one of the leading B2B organizations on the planet. And it's a story of differentiation at TELUS versus our peers. During the quarter, our team secured several notable wins to bring our highly differentiated assets and capabilities to meet the evolving needs of our customers. This included one of the world's leading retailers. We recently moved our TELUS Agriculture and Consumer Goods business or TAC into TBS. Speaker 300:10:15This will clearly support enhanced efficiency and effectiveness measures and is reflective of our collective commitment in respect of realizing quantum growth in our compelling CAC business. 2nd quarter Talos Agriculture and Consumer Good revenues of $79,000,000 were relatively flat on a year over year basis and this disappoints us. It reflects headwinds in our agribusiness vertical due to softness related to macroeconomic challenges and as well it reflects one time professional services revenues that were realized in the Q2 of 2022. We continue to expect progress on our top line and to see that flow through to profitability in this business for the second half of twenty twenty three, resulting in positive annual growth. The TELUS Agriculture and Consumer Goods team We'll leverage the expertise, we'll leverage the experience and we'll leverage the high performance culture and talent of our TBS team, ensuring that we are well positioned to accelerate our customers for sales, marketing, channel and holistic go to market efforts, including exciting and plentiful cross selling opportunities. Speaker 300:11:43TELUS remains steadfast in our objective to accelerate and significantly scale our tax business into a potent asset of consequence focused on becoming the world's largest global independent provider of digital technologies and data insights connecting customers from producers to consumers across the agricultural products, food and packaged goods industries. Let's turn now and take a look at our TELUS Health business unit. We achieved 2nd quarter revenues of 4 and $28,000,000 in TELUS Health, up 2 12%. Notably, when normalizing for LifeWorks, EBITDA grew by 11%. These results reflect the continued growth and increasing scale of our health operations since our acquisition of LifeWorks in 2022, enabling us to make meaningful progress on our goal to be the most trusted well-being company in the world. Speaker 300:12:53And this includes covering more than 68,000,000 lives around the world with our healthcare services and healthcare programs, an increase of nearly $46,000,000 on a year over year basis and includes supporting health outcomes on nearly 153,000,000 digital health transactions during the Q2 of 2023. This was up more than 5% over the same period a year ago. It includes increasing our virtual care membership to $5,300,000 up nearly 50% over the prior year. We expect LASL to continue its sustained growth and its sustained expansion underpinned by the integration and innovation of our diverse product suite and care delivery that enables us to support the evolving needs of our customers around the world. Importantly, since acquiring LifeWorks, our team has now committed to driving $425,000,000 in annualized synergies by the end of 2025, up from $250,000,000 This includes $325,000,000 expected to be realized through operating cost synergies from continued integration, continued optimizing of our organizational structure, systems And of course, optimizing the real estate portfolio of TELUS Health within the wider TELUS pool. Speaker 300:14:32Furthermore, we expect to drive at least $100,000,000 from revenue synergies over this same period, fueled by cross selling health services and the potent products that we have within our portfolio to our TELUS Health customer base, but also across the wider TELUS portfolio of assets. The realization of these synergies will allow us to reinvest in the growth of the business and improve our profitability, Whilst we focus on delivering efficient, effective, secure and truly best in class health and wellness solutions to our customers. Notably, to date, we've achieved 100 and Now let's take a look at TELUS International. As we announced in July, increasing macroeconomic pressure has temporarily impacted service demand from some of TI's larger tech clients as they aggressively address their own cost structures, slowing expected revenue and profit growth for 2023. In response, our TI team has actioned TI importantly is also driving additional automation and generative AI enabled solutions to further optimize its cost structure and of course its go to market sales opportunities, which are significant. Speaker 300:16:21Despite these near term challenges, We at TELUS remain highly confident in TI's strategy, the team and their investment thesis. This is amplified by meaningful opportunities in respect of digital transformation, particularly within generative AI adoption and the continuing critical importance of differentiated digital customer experience solutions in the market, which remains a vibrant tailwind for TI's medium and long term growth and profitability. Doug will provide further commentary on both TTEC and TELUS International's 2nd quarter results in just a moment. Before I close, let me turn to the significant investment, which we are announcing today in an extensive efficiency and effectiveness initiative across KELUS. This is against the backdrop of rapid transformation in our industry and the ways in which our customers want to engage with us. Speaker 300:17:24Furthermore, it is in response to the evolving regulatory, competitive and macroeconomic environment that we currently face and where we want to realize success within. Importantly, the transformational investments that we are prudently making Now, our building upon the sanguine investments that TELUS has made over the course of 2 decades in building the best culture and enabling industry leading customer experiences over our globally leading wireless and PureFibre Broadband Networks, and they are allowing us to accelerate our well progressed plans to digitally revolutionize our business and further streamline operating costs meaningfully that bodes so well for the future success of this organization. The generational investments we have made are fueling significant economic efficiencies and will ensure we remain market leaders in driving innovation and value for our customers, realizing profitable growth for our shareholders and supporting our team members and the communities within which we live, work and serve. The accelerated program we are announcing today will yield expected cumulative annual cost savings of more than $325,000,000 Building smartly upon the terrific digital progress that this organization has made on a leading basis over the last few years aided and abetted by the TELUS International Organization. Whilst this investment will temporarily dilute our strong free cash flow in 2023, importantly, it will support stronger free cash flow expansion in the years ahead, as well as the progression and affordability of our leading multiyear dividend growth program. Speaker 300:19:39Given the scale of this incremental program, it is with a heavy heart that we are proceeding with 6,000 staff reductions across our global footprint, including approximately 4,000 in TTEC and 2,000 at TELUS International, including offering early retirement and voluntary departure packages. As a result of these extremely difficult decisions, We now expect incremental restructuring investments of up to $475,000,000 Speaker 100:20:13in 2023. Speaker 300:20:15Our winning strategy at TELUS remains unchanged and our transformational efforts We'll be buttressed by our decades long track record of successfully navigating exogenous factors from regulatory and competitive the macroeconomic and most recently through the global pandemic where we distinguished ourselves so admirably. Our resilience and ability to embrace change and continuously evolve the way we operate are corner and all the success that we will realize. In closing, I'd like to extend my sincere appreciation To our more than 80,000 team members, retirees, family members and friends who have collectively volunteered In 260 communities across 32 countries thus far for our 18th annual TELUS Days of Giving making 2023 our most giving year yet. Indeed, since 2000, our TELUS family has contributed 2,200,000 days of volunteerism, more than any other company in the world, helping to improve the lives of people across the globe that need a helping hand. Myself, our leadership team and the TELUS Board of Directors Remain exceedingly grateful for our team's passionate efforts to support our global communities as we strive to deliver outstanding results for all of our stakeholders, exemplifying our world leadership in social capitalism. Speaker 300:22:00And on that note, I'll hand the call over to Doug. Speaker 400:22:04Thank you, Darren, and hi, everyone. Mobile network revenue increased by 6% year over year, our 9th straight quarter of strong year over year growth, driven by high quality customer additions, which has been supported by record population growth along with higher mobile ARPU. Our growth has been also supported by our superior product bundling across home and mobile, customer service excellence and globally leading networks. Our ARPU growth of 1.8% in Q2 reflects 1.8% in Q2 reflects the We anticipate roaming to remain positive contributor to growth in Q3 and Q4, but in smaller increments. Despite a highly competitive operating environment, particularly in the flanker space, we delivered positive year over year growth in domestic ARPU in the Q2, reflecting high quality loading and strong base management. Speaker 400:23:10As we progress through the back half of the year, We are targeting ARPU growth approaching 2% for 2023. Fixed data services revenue growth grew by 6.2% year over year, driven primarily by strong customer growth across Internet, Security and TV and higher revenue per Internet customer. Within fixed, we also achieved strong B2B growth of 5%. Our leading fixed customer growth reflects our superior bundled offers and our leading PureFibre network. Customers are continuing to move to our higher Internet speed tiers, Recognizing the superior customer excellence of our PureFibre network, the compelling value of symmetrical speeds and the value and reliability of our leading portfolio bundled offerings. Speaker 400:23:59On the B2B front, inclusive of both mobile and fixed services, we continue to see positive financial results with revenue and EBITDA contribution up year over year. And Health revenue increased by 291,000,000 in Q2 over last year, primarily reflecting the contribution of LifeWorks as well as organic growth. EBITDA contribution in our Health business area continues to grow steadily along with margins in the mid which we anticipate to increase over time. As part of our broader cost efficiency program, our health team is improving their cost structure as we actively and complete the LifeWorks integration. Longer term, we continue to anticipate meaningful health revenue synergies from cross selling opportunities and continued margin expansion benefiting from the cost optimization. Speaker 400:24:57Overall, TTEC revenues were up nearly 14% over last year and adjusted EBITDA grew by 8.1%. In TI, we pre released the Q2 results on July 13. Operating revenues from external were higher by 7.6% year over year, driven by additional services provided by existing clients and new clients, including those from our WillowTree acquisition. A strengthening of the U. S. Speaker 400:25:26To Canadian dollar exchange also benefit the DLCX revenue growth. DLCX adjusted EBITDA was down 19% consistent with their pre release last month earlier this month, primarily due to the reduction in service revenues from larger tech clients combined with higher service delivery costs in our AI business. These imbalances are due to the timing of some of the European labor reduction regulations and will be part of our future and cost reduction initiatives. Our TELUS PI team remains firmly focused on managing through these near term headwinds with a keen eye on efficiency and effectiveness in order to support their margin and cash flow generation. Overall, consolidated Operating revenues increased by 13% year over year and adjusted EBITDA grew by 5%. Speaker 400:26:19Consolidated Net income and EPS were both down approximately 60% due to higher depreciation and amortization from our growing asset base, including LifeWorks, WillowTree and our generational investments in PureFibre and 5 gs Networks. Macroeconomics, Notably, our DLCX operating segment also impacted EPS and higher financing costs from our higher debt outstanding, reflecting the investments in our growth strategy as well as higher reflecting the investments in our growth strategy as well as higher interest rates. In Q2, net income and EPS were also impacted by higher restructuring costs as it relates to our cost efficiency initiatives. Free cash flow of 2.70 This was partially offset by the increase in cash, interest paid, higher restructuring, primarily lump sum payments from the ratification of our TWU agreement and our ongoing efficiency programs. As announced in July 13, we revised our annual target for consolidated revenue and adjusted EBITDA to reflect TELUS International's updated outlook. Speaker 400:27:32Notably, the implied annual financial target for our TTEC operating segment remains unchanged. Today, we updated our 2023 free cash flow guidance to reflect the higher expected restructuring disbursements related to the accelerated cost efficiency programs throughout all parts of our organization. While these decisions are difficult to undertake, they reflect our innovation for our customers and are required The requirement to address the pressures from the current regulatory competitive macroeconomic environments, while embracing our significant digital progression. Restructuring costs are now anticipated to be up to $750,000,000 for the full year, an increase of $475,000,000 from our original assumption. As Darren highlighted, the annual cost savings from the incremental accelerated program are anticipated to be approximately $325,000,000 for the full year and about 80% of that will be to the TTEC segment. Speaker 400:28:34Of the $325,000,000 we anticipate a small portion of the benefits to Expenditures of our $2,600,000,000 target to be in the 1st 3 quarters of the year and we reaffirmed our 2.6 1,000,000,000 guidance for the year on CapEx. The expected decline in our capital program in Q4 is aligned with our seasonal fill plan. Our growth profile and robust balance sheet position continue to and our well established dividend program will continue into the future. Initiatives we take today will be supporting all of that. We will continue to focus on executing our cost efficiency and effectiveness opportunities, Driving down our cost structure on a permanent basis. Speaker 400:29:28With that, we'll turn over to Robert for the Q and A. Speaker 100:29:31Thank you, Doug. Frederic, could we please proceed with questions? Operator00:29:36Certainly. So the first question we have is coming from Jerome Zubairi of Desjardins. Please go ahead. Speaker 500:29:54Hi. Thanks for taking my questions. First one I have is, I'm interested in the digitization of your operations. Obviously, you've invested a lot in this over the last Speaker 300:30:07Do you believe that you're Speaker 500:30:09a bit in advance in terms of your digitization versus what global peers Might have done. Speaker 300:30:19Jeff, why don't you take that and I'll top up if necessary. Speaker 600:30:23Yes. I think there is no doubt at all that the impact our digital transformation is having and has had on the business has given us a competitive advantage. I think it does 2 things concurrently. And historically, I think these have been perceived to be mutually exclusive, But we've demonstrated that that's not the case. 1, it has meaningfully improved the cost to serve in terms of driving efficiency and effectiveness in those systems that we rely upon to support our customers. Speaker 600:30:55And then equally importantly, I think it's improved the client experience by making it easier for them to do business with us to procure our products and services to request changes, add positions, etcetera. And as a consequence, that's driving better adoption, increased subscriber net adds, increased share of wallet and lifetime average revenue. So I think it is beyond contestation that having been an early adopter of digitally Speaker 300:31:23enabled interactions with our team members and our customers That gives us an advantage in the marketplace. Without the investments and progress that we've made on the digital front, the AI front and currently and prospectively degenerative AI front. We would not be capable of realizing The cost efficiencies that we've articulated today, we're realizing these cost efficiencies and looking to contemporaneously increased the service quotient of this organization. And I think that's a huge competitive differentiator for TELUS versus our peer group and the relationship between TELUS and TI has been absolutely key to realizing this position And what it portends for the future. Speaker 500:32:16Great. And second one I would have, you've updated your guidance at mid July. Now you're updating it again this time. Has anything changed since mid July? Or is it just that the restructuring decision and paperwork had to be done after? Speaker 300:32:33Doug, why don't you go on this one? Speaker 400:32:36Yes. Nothing has changed from the perspective of 2 weeks ago. It was in essence bringing this forward with the overall story and Execution of our results, I think it would have been hard to do that in a pre release. And so we wanted to I have the fulsome picture of our overall operating results concurrent with the restructuring initiatives and finalizing those to Speaker 100:33:05the extent we discuss today. Thank you. Thanks, Ram. Frederic, next question please. Operator00:33:12Okay. Our next question comes from Maher Yaghi of Scotiabank. Please go ahead. Speaker 700:33:22Great. Thank you for taking my Speaker 300:33:24I would like to start just by asking you Speaker 700:33:27a question on your leverage and capital allocation priorities. Over the last year, we have seen your leverage go from 3.2 to 3.8. I mean, you invested heavily in CapEx For sure, but also in acquisitions. This ratio is now above your long term range. And can you help us understand the expected pace of the decline that you think this ratio is going to take, especially given the upcoming Spectrum Auctions coming up. Speaker 700:34:00Any targets on leverage that you can share with us here? And just a follow-up on to this question. You have supported TI in several ways, more recently through a couple of Stock buyback acquisitions. Can you provide us some understanding as to how much more You are willing to support TI specifically when it comes to stock acquisition, Because this is a question that keeps coming up with investors, and I think some clarity on that would be helpful. Thank you. Speaker 300:34:39Okay. I'll let Doug take the first part of the question and I'll top up on the second part. Speaker 400:34:47I think when you look at our industry leading EBITDA growth and the fact that we've been coming to the end of our Accelerated capital spend in this year's the decrease in capital spend was a good example of that. You're going to see that Capital continue to be moderated into the future. With even the initiatives we talked about today on bringing down our long term cost structure for enhanced Margins, we have full confidence we're going to delever very well into the future on free cash flow And that these initiatives, if anything, will solidify even a stronger balance sheet into the future. So when you look at the growth areas we have, confidence in EBITDA growth and Valugen in consistence with the demand on CapEx going forward coming down. Speaker 300:35:44I think it's pretty clear that TELUS is now in a period where the sources of cash will chronically exceed the uses of cash and that bodes well for the balance sheet of the organization as well as our strategic positioning from an investment thesis. Secondly, as you would know, Doug and the team have done a superb job Timing the balance sheet of the organization with the investment profiles that we have undertaken in areas like fiber And 5 gs, we've got an average term to maturity on our debt profile of 11 years and our cost of debt is quite attractive, just a touch over 4%. And of course, that debt is tax affected given the taxpaying position of this organization. In terms of TI, yes, we have made investments in TI on the Edge in the past. We've done that because we have a high degree of confidence in the TI organization and its growth prospects. Speaker 300:36:57But it's not just because we are confident in its external growth prospects. We recognize critically as we've just spoken to that TI is a critical enabler of TELUS' growth strategy, Supporting everything that we're doing from customer service excellence to the digital transformation of our organization that's put us in such a strong position. We as an organization believe, as you would expect, that TI is significantly undervalued. And as it deals up the macroeconomic challenges in front of it with the right moves, the medium and longer term prospects for the organization are exceedingly strong. Having said that, we expect TI to stand on its own 2 feet And that's policy. Speaker 300:37:50So in terms of answering or fielding any questions that you're getting in that regard, We do not intend to buy TI back into the TELUS organization. Anything that we might do would be entirely opportunistic And only around the edges. We expect the organization to stand on its own 2 feet and drive growth. And we think that the organization, particularly post the efficiency measures that they're now implementing is going to have a fantastic platform for future growth and a very eager anchor tenant within the TELUS organization, but tremendous prospects on an external basis, Particularly leveraging what we think are terrific accelerators for TI in respect of generative AI and how uniquely the TELUS International Organization is positioned in that regard. It's also a huge opportunity for TI to product The success that has helped drive Atellus and drive those solutions not just across the comms and media sector, But on a wider basis within its external client perimeter. Speaker 300:39:02So that's policy. TI will stand on its own 2 feet. I think the future will be very bright. Operator00:39:10Thank you. Speaker 500:39:12Next question please. Operator00:39:16Okay. Thank you. Our next question comes from Drew McReynolds of RBC. Please go ahead. Speaker 800:39:26Yes. Thanks very much. Just 2 for me. First, I guess maybe for you Doug on the restructuring. Obviously, I think you're the only one that includes this in free cash flow guidance and everyone's restructuring. Speaker 800:39:40So there shouldn't be any surprise there. But It feels a little bit of back foot, front foot. There's part of this that is required probably because of some Cost inflation, but also front foot because of your ability to be ahead of the curve and digitize. So maybe comment on If that's correct. And then just secondly on the $325,000,000 in run rate annualized saving, how should we think about that flowing through in 2024. Speaker 800:40:11I think by our calculation, it's about 500 basis Points of year over year EBITDA growth, but I'm sure it's not that simple as adding that 2024 because there's other things that I'm sure are offset. So just Setting expectations here just broadly on that front. Thank you. Speaker 300:40:28All right, Doug, go for it. Thanks, Drew. Speaker 400:40:33So we do plan to execute majority of the plan within 2023. There are some of the restructuring initiatives though that do have a longer term benefit and there would be some that would be call it multi year in that Payback such as the real estate rationalization as an example. And you are right, there will definitely be some give and takes between The cost efficiencies versus other pressures within the market dynamics as highlighted by Darren earlier. So I would profile majority of it coming through in the early to mid part of next year, but balanced through with Some of the items that we've talked about lapping, roaming as an example, you'll see that that will slow down into 2024 as we Last the COVID uptick and then it's declining and less of an impact into the future. And that's just one Example of where you'd see that partial offset. Speaker 400:41:37But when we look at it, it is a long term plan. It is looking through the initiatives in front of us And driving the efficiency savings as quickly as possible is definitely at our desired outcome. Speaker 100:41:52Thank you. It's Frederic. Next question please. Operator00:41:57Thank you. Our next This question comes from Simon Flannery of Morgan Stanley. Please go ahead. Speaker 400:42:06Great. Thank you very much. I wanted to talk a little bit more about competition. I think you talked about increased flanker competition. Perhaps you could just characterize that. Speaker 400:42:16And do you think this is temporary Or longer term change? And to what extent is there a risk of trade down from the premium plans? And maybe specifically on the West, we've had Yes, several months of Shaw and Rogers integration. You put up some good KPIs, but what are you seeing on the ground there? Is there any real change in the competitive intensity on the converged Speaker 300:42:39Thanks, Simon. Jim Zano, 102 hit that one. Speaker 900:42:46Okay. Why don't I go first? The headwinds I think are pretty well known, But we're also seeing some good tailwinds. So bring your own phone customer growth is strong And that's growth without device subsidies. 5 gs plus is holding its value versus 5 gs and 4 gs. Speaker 900:43:12And we're seeing bundling accelerating, especially not just in the West, but we're also seeing good bundling opportunities in Eastern Canada now, which has been great. Look, we're pleased with how we navigated Q2. We had our best new customer growth since 2010. Are the only major carrier sustaining ARPU growth, continued churn leadership, significant industry lead on customer lifetime value. Our roaming growth is 145 percent versus pre pandemic. Speaker 900:43:43So those were all solid. Bundling 5 gs plus Family discount are protecting our premium customers. We're sustaining our customer renewal volumes with the year over year step up. So We've been able to manage our margins in areas like access points to device subsidies. We relaunched public mobile's balanced customer growth and margins. Speaker 900:44:06So 100% digital, 100% redesigned for simplicity. The cost to serve is 6 times lower than TELUS, allows us to Meet prices while maintaining premium margins. And I think going forward, we're confident in our Prospects for continued best backed by our consistent strategy really best networks and customer experience bundling focused on execution. We anticipate ongoing subscriber strength from the growth in integration and from product intensity. We continue to manage our margins with thoughtful mix of digital, bring your own phone and access points to device subsidies. Speaker 900:44:46We actually believe the retail flanker 5 gs price points will drive step up especially from the growth we're getting on BYOP newcomer growth. So that we see as a positive. And then 5 gs plus bundling bring it back family discounts are all holding and attracting our premium customers. So we continue to expect a full year ARPU growth and we're very, very relentlessly focused on customer margin. Daniel, I don't know if you want to top out. Speaker 1000:45:18Yes. Maybe I will add a few points with respect to the West, as you highlighted there And the competitive intensity. So to build on Jim's points, we're going to be ultra focused on AMPU driving wallet Share and product intensity and the customer loyalty that we continue to build on in Gartner as well as The superiority of our network capabilities and also the real product differentiation we're able to offer our customers From areas like home security and automation to consumer health are absolutely unique in the market. And so those are areas where we're continuing to see the opportunity to grow wallet share and grow our customer loyalty And so in terms of what we're seeing in the competitive environment, we're really seeing consistency with respect to how we're executing on our Strategy from the get go. You're seeing us able to monetize some of the elements of our strategy from a cost takeout perspective and the digitization perspective. Speaker 1000:46:29But to Darren's earlier point, that's been on the back of Foundational investments we've made in both the network and the digital side. And it's also enabled our ability to do rapid Product development and rapid go to market for our new product capabilities. And so that's serving us incredibly well. We're continuing to see strong outputs on the back of our PureFibre 5 gs bundling. We see better wallet share and customer household growth and better loyalty and as well as better cost to serve across the board. Speaker 1000:47:07And we're just heads down and focused on continuing to drive that strategy and seeing as you've seen in our results continued traction in that strategy. Speaker 900:47:18Great. Thanks for the color. Speaker 300:47:20It's pretty simple, Simon, 5 point strategy that you'll see from this organization Quarter in, quarter out, which is leverage best network, leverage best customer service, leverage best product portfolio, leverage best Channels and Digital Capabilities and Leverage Best Cost Base. That's the 5 point plan. Operator00:47:42Thank you. Speaker 100:47:44Thanks, Simon. Next question please. Operator00:47:48Thank you. Our next question comes from Vince Valentini of TD Securities. Please go ahead. Speaker 200:47:56Yes. Thanks very much. First, Sorry if I missed it. The cost savings from the new restructuring program, I didn't see anything in the TELUS International release, but it's a public company. So I assume they have to provide some numbers. Speaker 200:48:11So hopefully you can help us out. How much of the $325,000,000 will be on the TELUS side versus the GI side? Speaker 600:48:21So I think we did actually reference that in our call earlier today, Vince. It was $40,000,000 in year. And that's USD, not Canadian? Speaker 300:48:35Yes, yes. 40 annual run rate. No, in year. Speaker 900:48:41That's restructuring dollars. Speaker 800:48:43Yes. Speaker 200:48:44That's restructuring debt, sorry. Okay. Yes. So 40 $1,000,000 out of the CAD475 restructuring costs is on the TI side. Do you have a similar figure on the 325 Ongoing operating savings? Speaker 400:49:01About 20% of that was TI. Speaker 200:49:05So I wanted to ask that first because my follow-up would be if I take 80% of that 3.25% and then I take The new very impressive synergy target you're throwing out on LifeWorks getting up to $425,000,000 by the end of 2025. Even with before we even add a dollar of revenue growth, is it safe to assume that the EBITDA run rate in 2025 is surpassed $600,000,000 higher than what we're seeing this year? Speaker 400:49:36I think Vince will update guidance for next I think Drew's question on some of the offsets that may happen including ARPU and some of the Other pressures on the market size would potentially be a bit of volatility factor that this Speaker 100:49:52is going to hedge against. Speaker 400:49:54So I think The cost savings are yes, down the path you suggested, but I think there's other initiatives that will balance that as we look into 2024. But we're expecting to still have industry leading growth as you're implying and the efficiencies will be holistically lucrative. Speaker 200:50:15Okay. Thank you. Speaker 100:50:18Thanks, Vince. Next question please, Frederic. Operator00:50:21Our next question comes from Tim Casey of BMO. Please go ahead. Speaker 1100:50:29Thanks. Two questions. 1, I'm wondering if The challenges you've had at TELUS International, how that is influencing, How you're approaching TELUS Health and its path to some sort of corporate event? And second, we are getting questions on how you're thinking about your dividend growth plan and your 3 year commitments to 7 Wondering if you could frame that in light of I guess the headwinds in TELUS International, but Your announcement today of restructuring and restructuring savings going forward. Speaker 300:51:13Okay. Let me kick it off with TI and tell us how to Very explicitly answer your question, Tim. I think TI despite what's transpired in Q2 remains an exemplary model for TELUS Health. The TI organization has had An excellent track record of success historically, has surpassed expectations on many instances in the past leading up to add and post the IPO process. I think TI's track record of success on differentiation, product development, Client Affinity has been absolutely key for that organization And the duration of the success, I think, is quite telling in that regard. Speaker 300:52:14So the hiccup that's transpired in Q2 It does not diminish TI. I think it's the right model as it relates to TELUS Health. And one of the other key attributes of TI's success Is the duality of the performance in terms of both organic growth and smart inorganic moves that were Well integrated and significant value was created from those acquisitions. And I think that again is a good model for the Telehealth organization to follow. Our expectations of TELUS Health remain undiminished. Speaker 300:52:52And if anything, I would They're emboldened and accelerating. The other thing that is clear and maybe we need to make it more clear Is TI is not just a terrific enabler of TELUS on everything from customer service to digital progression, but TI is a significant enabler of TELUS Health itself. As TELUS Health goes through its improvements on Cost efficiency, customer service excellence, product development and digital and gen AI progression, They will be aided and embedded by TI every single step of the way. And of course, TI, which focuses on the health vertical as well, We'll take those capabilities and not only serve Jellis Health well, but productize them within the overall external market. And so I think that's quite a compelling composition. Speaker 300:53:52And we're very much looking forward to realizing the Synergies that we've articulated for TELUS Health at the $425,000,000 level where we've highlighted $325,000,000 of part synergies in terms of key efficiencies that TI will be supporting along the way to make That we deliver against that $325,000,000 number and I look forward to significantly improving upon the $100,000,000 of revenue synergies from the plentiful cross selling opportunities that we have. Speaker 400:54:27And on the dividend growth side, If anything, the initiatives we talked about today will Speaker 300:54:35solidify Speaker 400:54:36our Passion to continue that going and our commitment to keeping that going. When you our decisions are off of free cash flow and to Darren's point and our discussion that Free cash flow will accelerate as we move into the future. We don't see our commitment to that changing at all. Speaker 300:54:57Thank you. Quite the reverse. Speaker 100:55:02Thanks, Tim. Frederic, next question please. Operator00:55:06Thank you. Our next question comes from Stephanie Price of CIBC. Please go ahead. Speaker 1000:55:13Good morning. Hoping I can get your thoughts around capital allocation between the base business and TI and the growth businesses. As you noted, free cash flow is expected to accelerate from here. I'm just curious how you're thinking about where that marginal dollar should go. I've got another question about. Speaker 800:55:33So if you look at the Speaker 300:55:37preponderance of our capital composition, how we've Executed discretionary decisions on capital allocation. Firstly, TI has to stand on its own 2 feet, Leveraging its own balance sheet and its own transaction currency, which is why we're interested in valuation improvement for that organization. For TELUS, I think it's been fairly transparent. The big consumers of capital, which I think have paid off handsomely and you can see it in the best in class operating results that we have generated. Number 1, we have invested and will continue to invest in wireless network technologies from 4 gs plus to 5 gs to 5 gs plus and of course the spectrum that fuels our capacity along the way. Speaker 300:56:332nd, you'll see us continue to invest in PureFibre Broadband with its attendant attributes of Product intensity realization, significantly above 3. A cost to serve in terms of the external network That's 70% better than copper, a revenue per home that's 20% better than copper, a margin for home that's 25% better than copper and a churn rate that's 20% better than copper. You'll continue to see us make those investments. Number 3 has been our focus on digital, Digital progression, digital transformation, AI and generative AI moving that continuum along the way. We wouldn't be able to do what we're doing today in terms of staff level efficiencies without what we've done over the last 36 months in that regard. Speaker 300:57:37And that's a really critical factor for us because To be able to make those moves and because of our digital competency and capabilities that did not miss a beat in our go to market operations or our customer service excellence, I think it's a really distinguishing story. 4th area for us is success based capital and this is Demonstrably within the core business of this organization and you can see it reflected within our operational loading features. And then the last area is supporting the growth of our data centric businesses. Data centric businesses on health and if you look at what's happening around the world today, the efficacy of what we're doing on Data insights on health or data insights on ag or data insights on consumer packaged goods is stronger today than what it's ever been. And so that's where we will be focusing the preponderance of our capital. Speaker 300:58:36And I think what we have spent And how we have spent it from a composition point of view historically is prescient in terms of what you can expect us to do prospectively. Speaker 1000:58:48Thanks for that. And just a quick follow-up on the cost efficiency program. We've seen some headcount reductions from the telecom unit already. Just curious if you can talk a bit about the staff Goals for the telecom unit specifically? Speaker 300:59:02Yes. So the staff reduction goals are 4,000 within Our TTEC business incremental and 2,000 within TELUS International And potentially some incremental steps on TI over the remainder of the year in terms of optimizing its Staff levels within its organization. The 4,000 within our telecoms business or communications technology business is 4,000 incremental to the 1,000 that we already had within our base plan for 2023. So it brings the total to 5,000 within the TTEC part of the business. And we think that's the right quantum right now to support what we want to achieve in terms of profitability and cash flow for 202420252026. Speaker 301:00:01And I think it sets us up well. And when you look at that improved profitability because of those moves with a diminished Capital appetite in 2024, 2025 and 2026. I do think that The lucrative efficiencies that I mentioned earlier and the way that they will buttress and amplify our EBITDA Results within our TTEC business in combination with a slowing capital consumption profile will be hugely generative to the cash profile of the organization, which is why I made the comment on our Dividend growth model of quite the reverse. I think our dividend growth model is crystallized in a stronger fashion than what it's ever been In terms of delivering against our forecast and what our management's expectations in terms of the accretion of our dividend within the 7% to 10% range over the next 36 months. And it's not lost on me as a personal investor and TELUS that this is over and above The 6% yield that the dividend currently represents on our trading price. Speaker 1001:01:27Thanks for the color. Speaker 101:01:29Thanks, Stephanie. Frederic, we have time for 2 more questions, please. Operator01:01:34Okay. Certainly. Our next question comes from David Barden of Bank of America. Please go ahead. David Barden of Bank of America. Operator01:01:52David, you're on mute. Speaker 501:01:57Sorry about that. It's Dave. I'm not sitting in for Dave. Sorry about that mute. On my first question, you referenced the regulatory competitive and macro factors as sort of driving forces We're influencing forces behind that cost efficiency program. Speaker 501:02:18I was wondering if you could add some context. Are you seeing this as kind of an increasing area of uncertainty as you're looking into 2024 and beyond? Or are those just Are they stable factors that are always being considered that are just driving the Speaker 701:02:36need and Speaker 501:02:37the investment case for digital transformation and it's not an And it's not an increasing level of uncertainty for you. And secondly, on bundling, which is referenced Yes, repeatedly and it's a source of strength for the organization. Is there any sort of additional color you could provide on Where you are on that journey? How much is left? Which services you're finding the most traction bundling? Speaker 501:03:03Which ones might be growing in their bundling outlook? Just any kind of color on where that stands would be helpful. Thank you. Speaker 301:03:15Okay. Dana, why don't I ask you to speak to the bundling front, and I'll kick it off with an answer on the regulatory side of things. Firstly, I think we've made an error in calling regulatory factors exogenous. Clearly, if we've learned anything over the last 23 years, regulatory factors are endogenous within our industry. And there's an aspect of development Within the regulatory environment that seems to have characterized every single year that I have been with the organization. Speaker 301:04:02And That's just something that we have to live with on a normalized basis in terms of The strategy of this organization and the operating tempo. We have clearly, in terms of both magnitude and diversity, I've seen every form of regulatory challenge over the past 20 years, hence the endogenous comment. And I do think that this organization has distinguished itself with a demonstrable track record that is Truly second to none in processing these challenges and in some cases opportunities and moving the business forward with Terrific success. And that's no different than what's happening within 2023, Whether it relates to mandated access components when it relates to the development of the MD and O model, whether it relates To facility based competition and the like, I would say right now all of those developments are just normalized within The overall TELUS strategy and we get on with absorbing them, with mitigating them and with coming up with strategies to overcome those regulatory impediments to our business. And the most demonstrable example is what we have done today. Speaker 301:05:32When you look at the efficiencies that we're driving, they are preemptive in terms of how we see certain regulatory challenges evolving in the months and the years ahead And we want to get ahead of it. Our ability to take cost out of the business today will prepare us to better absorb any regulatory impediment at T plus X. And we're an organization that just wants to control our own destiny along the way. The other thing That we are doing is we will always tune our employment and our investment According to the regulatory environment and if we are seeing regulatory challenges or impediments That is going to see us diminish the job profile within the TELUS organization in response to that and or also diminish the investment profile, we will put shareholder money to work in the areas that can generate The best return overall for our stakeholders. And then thirdly, We challenged the regulatory environment by doing what we think is right for our country. Speaker 301:07:02And when you look at the affordability of the solutions that are out there at now from wireless to wireline And do a deep dive on the value propositions of each of the 3 brands within our wireless ecosystem. Clearly, clearly, we are evidencing the affordability objective being met in a very fulsome fashion. We are also delivering a quality of service within our portfolio to Canadian citizens In terms of regulatory oversight, that is second to none globally. We have the best networks and the best customer service on the planet. And then the 3rd axiom to our regulatory agenda is to invest in areas where there's a lighter regulatory touch, a benign regulatory environment or less regulatory intrusion and disruption. Speaker 301:08:01And clearly, when you see what we're doing with TELUS International and the growth prospects there, as that business returns to both double Digit revenue growth and margins that are well in excess of 20% or what we're doing globally with TELUS Health On the digital front or what we're doing globally with TELUS Agriculture and Consumer Goods on the digital front, leveraging data insights on a disruptive basis to drive growth within those industries. Those are areas that fall outside the yoke of the Canadian regulatory paradigm and I think they will yield significant value creation for investors prospectively. So that is the regulatory theorem for this organization. And I think we have evidentiary documentation and empirical track record that says we've run that particular game plan well over the past 2 decades. Dana? Speaker 1001:09:02Thanks, Karen. So I think it would be overtly simplistic to think about bundling From only a wireline wireless perspective, I think we look at bundling across the journey. We have several brands. Some of those brands help us to identify new prospects that we can bring into our ecosystem. And then we look At the level of product intensity and it's a self fulfilling prophecy because as you add products and as you add Other digital touch points into the customer's journey and into the household, you improve the economies of Scope and scale you improve the revenue and you improve the cost structure. Speaker 1001:09:49And so because we have such a significant breadth of products, As I highlighted across our home security automation, our online security, our consumer health portfolio, In addition to the incredible products we have across our core services and our entertainment and other portfolios, We look at this from a perspective of continuous growth and that drives both revenue and cost to serve. And so as you look even if you looked at for example a newcomer journey that customers need and that Customers' desires in terms of what they need in their household is going to change over time. So there's a significant base management opportunity And we look at the journey across the multitude of our products. We have the most products relative to our peers continue to build and deploy new product categories, some of which will be aligned to the product Areas we're in and some of it of which will be net new areas that we can grow new digital relationships with our customers. Speaker 501:11:02Okay. All very helpful. Thank you so much. Speaker 101:11:04Thanks, Matt. Final question please, Frederic. Operator01:11:08Okay. And our final question comes from Sebastiano Petit of JPMorgan. Please go ahead. Speaker 501:11:17Hi. Thanks for taking the question. I just wanted to see if you can provide a bit more color on perhaps maybe the margin in TTEC within the second quarter. Was there anything one time nature or anything we should be thinking about in terms of comps. And in the context of The back half trajectory, obviously, you have some LifeWorks synergies coming in, but you're also comping LifeWorks in September beginning in September of last year. Speaker 501:11:46And so some of the puts and takes around that and how you should perhaps be thinking about Underlying growth within TTEC on an ex synergy or ex LifeWorks basis? Thank you. Speaker 301:12:00Okay, Doug, we'll kick this one off. Thank you. Speaker 401:12:04Yes, in the second half, there are a couple one time items from last year. We did have a toehold investment in LifeWorks, which on the execution of the Execution of the deal created a gain and you would have seen that through and we disclosed that in the Q3 of last year. That would be our main one. There's a Couple of small, call it, put option gains that occur periodically through quarters that also would be in the second half of the year. But the toehold would be the main one to acknowledge for Q3. Speaker 301:12:42Would also be a mistake to because of the lapping of LifeWorks assume that the Growth profile of Q4 relative to Q3 is significantly diminished. We are forecasting a more Speaker 501:13:08Great. Thank you very much. Speaker 101:13:10Thanks, Sebastiano. Thank you, everyone, for joining Today, please feel free to reach out to the IR team if you have any follow ups. And for those in Canada, we wish you a wonderful long weekend. Operator01:13:24Thank you. And this concludes the TELUS 2023 Q2 earnings conference call. Thank you for your participation and have a nice day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallTELUS Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsInterim report TELUS Earnings HeadlinesTELUS wins prestigious Mercure for AI-driven productivity enhancementMay 6 at 4:38 PM | tmcnet.comWhere Will Telus Stock Be in 6 Years?May 6 at 1:24 AM | msn.comURGENT: Someone's Moving Gold Out of London...People who don’t understand the gold market are about to lose a lot of money. Unfortunately, most so-called “gold analysts” have it all wrong… They tell you to invest in gold ETFs - because the popular mining ETFs will someday catch fire and close the price gap with spot gold. May 7, 2025 | Golden Portfolio (Ad)Telus tops Canadian watchdog’s telecom complaints ranking: reportApril 30, 2025 | msn.comAdvancing trustworthy AI globally: TELUS is the first Canadian company to embrace newly-launched Hiroshima AI Process (HAIP) Reporting FrameworkApril 30, 2025 | prnewswire.comTech-Enabled, Human-Centered: TELUS Digital and Ryan Strategic Advisory Reveal New Trust, Safety & Security Priorities for 2025April 30, 2025 | businesswire.comSee More TELUS Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like TELUS? Sign up for Earnings360's daily newsletter to receive timely earnings updates on TELUS and other key companies, straight to your email. Email Address About TELUSTELUS (NYSE:TU), together with its subsidiaries, provides a range of telecommunications and information technology products and services in Canada. It operates through Technology Solutions and Digitally-Led Customer Experiences segments. The Technology Solutions segment offers a range of telecommunications products and services; network services; healthcare services; mobile technologies equipment; data services, such as internet protocol; television; hosting, managed information technology, and cloud-based services; software, data management, and data analytics-driven smart food-chain and consumer goods technologies; home and business security; healthcare software and technology solutions; and voice and other telecommunications services, as well as mobile and fixed voice and data telecommunications services and products. The Digitally-Led Customer Experiences segment provides digital customer experience and digital-enablement transformation solutions, including artificial intelligence and content management solutions. The company was formerly known as TELUS Communications Inc. and changed its name to TELUS Corporation in February 2005. 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There are 12 speakers on the call. Operator00:00:02Good day and welcome to the TELUS 2023 Q2 Earnings Conference Call. I would like to introduce your speaker, Robert Mitchell. Please go ahead. Speaker 100:00:14Hello, everyone. Thank you for joining us today. Our second Quarter 2023 results, news release, MD and A and financial statements and detailed supplemental investor information were posted on our website this morning. On our call today, we'll begin with remarks by Darren and Doug. As usual for the Q and A portion of our call, we will be joined by a range of other executive leaders, Bano Nalgi, Consumer Solutions Nuveen Arora, Business Solutions Jim Senko, Chief Product Officer Tony Guerin, COO Jeff Pierrot, President and CEO of TI and Sid Khosaraju, President, TELUS Health. Speaker 100:00:46Briefly, this presentation and answers questions contain forward looking statements. Actual results could vary materially from these statements. The assumptions on which they are based and the material risks that could With that, Darren, Speaker 200:01:05over to you. Speaker 300:01:07Thanks, Ramos, and hello, everyone. In the Q2, our Tele team once again demonstrated execution strength In our TTEC business segment characterized by the potent combination of leading overall customer growth complemented by strong operational and financial results. The robust performance in our Communications Technology business continues to be underpinned by our globally leading broadband networks and of course our customer centric culture. This enabled our strongest second quarter on record with total customer net additions of 293,000, up 19% on a year over year basis, driven by strong demand for our superior product portfolio and service excellence. Our leading customer growth is reflective of our consistent industry best client loyalty across both mobile and our fixed product lines. Speaker 300:02:02The TELUS team's passion for delivering customer experience excellence contributed to blended and postpaid mobile phone, PureFibre Internet and residential voice churn all being below 1% Yet again this quarter, I'll pick it up here on the interruption. I was speaking to the fact that mobile phone churn is now in its 10th consecutive year being less than 1% and our PureFibre Internet product has been below the 1% threshold now for 14 consecutive quarters. This is quite the unique combination that certainly bodes well for the future of the organization. In the Q2, we delivered strong consolidated revenue growth of 13% and resilient EBITDA growth of 5%, in spite of the macroeconomic challenges impacting TELUS International. Alongside that, We generated strong free cash flow growth of 36%. Speaker 300:03:06Let's turn now to have a look at our mobile operating results at TELUS. TELUS achieved leading wireless customer growth of 234,000 net additions in the Q2. This included strong mobile phone net additions of 110,000, our best second quarter results since 2010. Notably, this strength was driven alongside our continued focus on high quality and profitable customer growth. It also included record 2nd quarter connected device net additions of 124,000, which were up 35% on a year over year basis. Speaker 300:03:49This reflects continued strong momentum with respect to our 5 gs and our IoT B2B solutions that are so critical for the future. Importantly, our team delivered another quarter of industry fast loyalty results, which continues of course to be the hallmark of the TELUS organization and is emblematic of our customers' first culture in action in terms of the empirical results it generates. Blood in mobile phone churn was an industry low 0.91%. Moreover, our industry leading postpaid mobile phone churn of 0.73% represents the 10th quarter This clearly distinguishes TELUS from our competitors and indeed it is a result that is unsurpassed in North America with a churn rate that is amongst the lowest globally. Our consistently strong performance is powered by our highly engaged team, who passionately deliver superior service offerings and digital capabilities over our world leading broadband networks, offering customers the fastest, most expensive and most reliable service in Canada. Speaker 300:05:19The close on mobile industry leading second quarter ARPU growth of 1.8% over last year was supported by roaming improvements as a result of increased international travel. It was also buttressed by higher domestic monthly recurring revenue as well as our industry based churn rate, whereby we are retaining our highest value customers in addition of course to growth in connected devices and IoT revenues. This once again drove strong industry best organic network revenue growth of 6% in the quarter. Notably, our leading mobile phone lifetime revenue continues to exceed our national peers by up to 70%. This has been a consistent story at the TELUS organization for a very long time. Speaker 300:06:15This is reflective of the combination of our continued focus on high quality customer growth and leading client loyalty delivered consistently as is the hallmark of our company. Turning now to our fixed operating results. Portellus delivered industry leading 2nd quarter wireline customer growth. Our team achieved leading Internet net additions Up 35,000 in the quarter, up 3% on a year over year basis, powered by leading customer loyalty in combination with the significant advantages of TELUS' expansive PureFibre network. We continue to drive leading growth in our TV product line with net additions of 17,000, which was up 13% on a year over year basis. Speaker 300:07:08Furthermore, residential voice losses were again an industry low at 8,000 and were relatively flat over this time last year. Notably, this leading performance reflects our continued momentum with respect to multi product intensity and the inherent churn benefits that have been so consistently successful for the TELUS organization. Healthy and leading security net additions of 15,000 further reflect our successful strategy of driving profitable customer growth and multi product penetration. Overall, we drove robust and industry leading external fixed net additions of 59,000 in the second quarter. This performance is indicative of the strength of our unique and highly attractive bundled offerings across our truly unmatched portfolio of products and services, buttressed by our ever expanding globally leading Pure fiber and 5 gs networks, all wrapped within our customer centric culture. Speaker 300:08:23Indeed, the generational investments that we've made in the global best network technologies that are the cornerstone of our leading customer growth and the significant ongoing profitable market share gains that we have driven over so many years and will continue to do so on a go forward basis. Furthermore, these investments will continue to drive important and extensive socioeconomic benefits for our communities and Canadian citizens for many, many, many decades to come. Let's turn now and take a look at TELUS Business Solutions. Our team within TELUS Business Solutions continues to deliver on its track record of contributing meaningfully to the success of the wider TELUS organization. Notably, this includes delivering another strong quarter with 6% revenue growth and profitable EBITDA contribution growth across our B2B product lines. Speaker 300:09:27This is enabled by a team that is absolutely dedicated to propelling its position as one of the leading B2B organizations on the planet. And it's a story of differentiation at TELUS versus our peers. During the quarter, our team secured several notable wins to bring our highly differentiated assets and capabilities to meet the evolving needs of our customers. This included one of the world's leading retailers. We recently moved our TELUS Agriculture and Consumer Goods business or TAC into TBS. Speaker 300:10:15This will clearly support enhanced efficiency and effectiveness measures and is reflective of our collective commitment in respect of realizing quantum growth in our compelling CAC business. 2nd quarter Talos Agriculture and Consumer Good revenues of $79,000,000 were relatively flat on a year over year basis and this disappoints us. It reflects headwinds in our agribusiness vertical due to softness related to macroeconomic challenges and as well it reflects one time professional services revenues that were realized in the Q2 of 2022. We continue to expect progress on our top line and to see that flow through to profitability in this business for the second half of twenty twenty three, resulting in positive annual growth. The TELUS Agriculture and Consumer Goods team We'll leverage the expertise, we'll leverage the experience and we'll leverage the high performance culture and talent of our TBS team, ensuring that we are well positioned to accelerate our customers for sales, marketing, channel and holistic go to market efforts, including exciting and plentiful cross selling opportunities. Speaker 300:11:43TELUS remains steadfast in our objective to accelerate and significantly scale our tax business into a potent asset of consequence focused on becoming the world's largest global independent provider of digital technologies and data insights connecting customers from producers to consumers across the agricultural products, food and packaged goods industries. Let's turn now and take a look at our TELUS Health business unit. We achieved 2nd quarter revenues of 4 and $28,000,000 in TELUS Health, up 2 12%. Notably, when normalizing for LifeWorks, EBITDA grew by 11%. These results reflect the continued growth and increasing scale of our health operations since our acquisition of LifeWorks in 2022, enabling us to make meaningful progress on our goal to be the most trusted well-being company in the world. Speaker 300:12:53And this includes covering more than 68,000,000 lives around the world with our healthcare services and healthcare programs, an increase of nearly $46,000,000 on a year over year basis and includes supporting health outcomes on nearly 153,000,000 digital health transactions during the Q2 of 2023. This was up more than 5% over the same period a year ago. It includes increasing our virtual care membership to $5,300,000 up nearly 50% over the prior year. We expect LASL to continue its sustained growth and its sustained expansion underpinned by the integration and innovation of our diverse product suite and care delivery that enables us to support the evolving needs of our customers around the world. Importantly, since acquiring LifeWorks, our team has now committed to driving $425,000,000 in annualized synergies by the end of 2025, up from $250,000,000 This includes $325,000,000 expected to be realized through operating cost synergies from continued integration, continued optimizing of our organizational structure, systems And of course, optimizing the real estate portfolio of TELUS Health within the wider TELUS pool. Speaker 300:14:32Furthermore, we expect to drive at least $100,000,000 from revenue synergies over this same period, fueled by cross selling health services and the potent products that we have within our portfolio to our TELUS Health customer base, but also across the wider TELUS portfolio of assets. The realization of these synergies will allow us to reinvest in the growth of the business and improve our profitability, Whilst we focus on delivering efficient, effective, secure and truly best in class health and wellness solutions to our customers. Notably, to date, we've achieved 100 and Now let's take a look at TELUS International. As we announced in July, increasing macroeconomic pressure has temporarily impacted service demand from some of TI's larger tech clients as they aggressively address their own cost structures, slowing expected revenue and profit growth for 2023. In response, our TI team has actioned TI importantly is also driving additional automation and generative AI enabled solutions to further optimize its cost structure and of course its go to market sales opportunities, which are significant. Speaker 300:16:21Despite these near term challenges, We at TELUS remain highly confident in TI's strategy, the team and their investment thesis. This is amplified by meaningful opportunities in respect of digital transformation, particularly within generative AI adoption and the continuing critical importance of differentiated digital customer experience solutions in the market, which remains a vibrant tailwind for TI's medium and long term growth and profitability. Doug will provide further commentary on both TTEC and TELUS International's 2nd quarter results in just a moment. Before I close, let me turn to the significant investment, which we are announcing today in an extensive efficiency and effectiveness initiative across KELUS. This is against the backdrop of rapid transformation in our industry and the ways in which our customers want to engage with us. Speaker 300:17:24Furthermore, it is in response to the evolving regulatory, competitive and macroeconomic environment that we currently face and where we want to realize success within. Importantly, the transformational investments that we are prudently making Now, our building upon the sanguine investments that TELUS has made over the course of 2 decades in building the best culture and enabling industry leading customer experiences over our globally leading wireless and PureFibre Broadband Networks, and they are allowing us to accelerate our well progressed plans to digitally revolutionize our business and further streamline operating costs meaningfully that bodes so well for the future success of this organization. The generational investments we have made are fueling significant economic efficiencies and will ensure we remain market leaders in driving innovation and value for our customers, realizing profitable growth for our shareholders and supporting our team members and the communities within which we live, work and serve. The accelerated program we are announcing today will yield expected cumulative annual cost savings of more than $325,000,000 Building smartly upon the terrific digital progress that this organization has made on a leading basis over the last few years aided and abetted by the TELUS International Organization. Whilst this investment will temporarily dilute our strong free cash flow in 2023, importantly, it will support stronger free cash flow expansion in the years ahead, as well as the progression and affordability of our leading multiyear dividend growth program. Speaker 300:19:39Given the scale of this incremental program, it is with a heavy heart that we are proceeding with 6,000 staff reductions across our global footprint, including approximately 4,000 in TTEC and 2,000 at TELUS International, including offering early retirement and voluntary departure packages. As a result of these extremely difficult decisions, We now expect incremental restructuring investments of up to $475,000,000 Speaker 100:20:13in 2023. Speaker 300:20:15Our winning strategy at TELUS remains unchanged and our transformational efforts We'll be buttressed by our decades long track record of successfully navigating exogenous factors from regulatory and competitive the macroeconomic and most recently through the global pandemic where we distinguished ourselves so admirably. Our resilience and ability to embrace change and continuously evolve the way we operate are corner and all the success that we will realize. In closing, I'd like to extend my sincere appreciation To our more than 80,000 team members, retirees, family members and friends who have collectively volunteered In 260 communities across 32 countries thus far for our 18th annual TELUS Days of Giving making 2023 our most giving year yet. Indeed, since 2000, our TELUS family has contributed 2,200,000 days of volunteerism, more than any other company in the world, helping to improve the lives of people across the globe that need a helping hand. Myself, our leadership team and the TELUS Board of Directors Remain exceedingly grateful for our team's passionate efforts to support our global communities as we strive to deliver outstanding results for all of our stakeholders, exemplifying our world leadership in social capitalism. Speaker 300:22:00And on that note, I'll hand the call over to Doug. Speaker 400:22:04Thank you, Darren, and hi, everyone. Mobile network revenue increased by 6% year over year, our 9th straight quarter of strong year over year growth, driven by high quality customer additions, which has been supported by record population growth along with higher mobile ARPU. Our growth has been also supported by our superior product bundling across home and mobile, customer service excellence and globally leading networks. Our ARPU growth of 1.8% in Q2 reflects 1.8% in Q2 reflects the We anticipate roaming to remain positive contributor to growth in Q3 and Q4, but in smaller increments. Despite a highly competitive operating environment, particularly in the flanker space, we delivered positive year over year growth in domestic ARPU in the Q2, reflecting high quality loading and strong base management. Speaker 400:23:10As we progress through the back half of the year, We are targeting ARPU growth approaching 2% for 2023. Fixed data services revenue growth grew by 6.2% year over year, driven primarily by strong customer growth across Internet, Security and TV and higher revenue per Internet customer. Within fixed, we also achieved strong B2B growth of 5%. Our leading fixed customer growth reflects our superior bundled offers and our leading PureFibre network. Customers are continuing to move to our higher Internet speed tiers, Recognizing the superior customer excellence of our PureFibre network, the compelling value of symmetrical speeds and the value and reliability of our leading portfolio bundled offerings. Speaker 400:23:59On the B2B front, inclusive of both mobile and fixed services, we continue to see positive financial results with revenue and EBITDA contribution up year over year. And Health revenue increased by 291,000,000 in Q2 over last year, primarily reflecting the contribution of LifeWorks as well as organic growth. EBITDA contribution in our Health business area continues to grow steadily along with margins in the mid which we anticipate to increase over time. As part of our broader cost efficiency program, our health team is improving their cost structure as we actively and complete the LifeWorks integration. Longer term, we continue to anticipate meaningful health revenue synergies from cross selling opportunities and continued margin expansion benefiting from the cost optimization. Speaker 400:24:57Overall, TTEC revenues were up nearly 14% over last year and adjusted EBITDA grew by 8.1%. In TI, we pre released the Q2 results on July 13. Operating revenues from external were higher by 7.6% year over year, driven by additional services provided by existing clients and new clients, including those from our WillowTree acquisition. A strengthening of the U. S. Speaker 400:25:26To Canadian dollar exchange also benefit the DLCX revenue growth. DLCX adjusted EBITDA was down 19% consistent with their pre release last month earlier this month, primarily due to the reduction in service revenues from larger tech clients combined with higher service delivery costs in our AI business. These imbalances are due to the timing of some of the European labor reduction regulations and will be part of our future and cost reduction initiatives. Our TELUS PI team remains firmly focused on managing through these near term headwinds with a keen eye on efficiency and effectiveness in order to support their margin and cash flow generation. Overall, consolidated Operating revenues increased by 13% year over year and adjusted EBITDA grew by 5%. Speaker 400:26:19Consolidated Net income and EPS were both down approximately 60% due to higher depreciation and amortization from our growing asset base, including LifeWorks, WillowTree and our generational investments in PureFibre and 5 gs Networks. Macroeconomics, Notably, our DLCX operating segment also impacted EPS and higher financing costs from our higher debt outstanding, reflecting the investments in our growth strategy as well as higher reflecting the investments in our growth strategy as well as higher interest rates. In Q2, net income and EPS were also impacted by higher restructuring costs as it relates to our cost efficiency initiatives. Free cash flow of 2.70 This was partially offset by the increase in cash, interest paid, higher restructuring, primarily lump sum payments from the ratification of our TWU agreement and our ongoing efficiency programs. As announced in July 13, we revised our annual target for consolidated revenue and adjusted EBITDA to reflect TELUS International's updated outlook. Speaker 400:27:32Notably, the implied annual financial target for our TTEC operating segment remains unchanged. Today, we updated our 2023 free cash flow guidance to reflect the higher expected restructuring disbursements related to the accelerated cost efficiency programs throughout all parts of our organization. While these decisions are difficult to undertake, they reflect our innovation for our customers and are required The requirement to address the pressures from the current regulatory competitive macroeconomic environments, while embracing our significant digital progression. Restructuring costs are now anticipated to be up to $750,000,000 for the full year, an increase of $475,000,000 from our original assumption. As Darren highlighted, the annual cost savings from the incremental accelerated program are anticipated to be approximately $325,000,000 for the full year and about 80% of that will be to the TTEC segment. Speaker 400:28:34Of the $325,000,000 we anticipate a small portion of the benefits to Expenditures of our $2,600,000,000 target to be in the 1st 3 quarters of the year and we reaffirmed our 2.6 1,000,000,000 guidance for the year on CapEx. The expected decline in our capital program in Q4 is aligned with our seasonal fill plan. Our growth profile and robust balance sheet position continue to and our well established dividend program will continue into the future. Initiatives we take today will be supporting all of that. We will continue to focus on executing our cost efficiency and effectiveness opportunities, Driving down our cost structure on a permanent basis. Speaker 400:29:28With that, we'll turn over to Robert for the Q and A. Speaker 100:29:31Thank you, Doug. Frederic, could we please proceed with questions? Operator00:29:36Certainly. So the first question we have is coming from Jerome Zubairi of Desjardins. Please go ahead. Speaker 500:29:54Hi. Thanks for taking my questions. First one I have is, I'm interested in the digitization of your operations. Obviously, you've invested a lot in this over the last Speaker 300:30:07Do you believe that you're Speaker 500:30:09a bit in advance in terms of your digitization versus what global peers Might have done. Speaker 300:30:19Jeff, why don't you take that and I'll top up if necessary. Speaker 600:30:23Yes. I think there is no doubt at all that the impact our digital transformation is having and has had on the business has given us a competitive advantage. I think it does 2 things concurrently. And historically, I think these have been perceived to be mutually exclusive, But we've demonstrated that that's not the case. 1, it has meaningfully improved the cost to serve in terms of driving efficiency and effectiveness in those systems that we rely upon to support our customers. Speaker 600:30:55And then equally importantly, I think it's improved the client experience by making it easier for them to do business with us to procure our products and services to request changes, add positions, etcetera. And as a consequence, that's driving better adoption, increased subscriber net adds, increased share of wallet and lifetime average revenue. So I think it is beyond contestation that having been an early adopter of digitally Speaker 300:31:23enabled interactions with our team members and our customers That gives us an advantage in the marketplace. Without the investments and progress that we've made on the digital front, the AI front and currently and prospectively degenerative AI front. We would not be capable of realizing The cost efficiencies that we've articulated today, we're realizing these cost efficiencies and looking to contemporaneously increased the service quotient of this organization. And I think that's a huge competitive differentiator for TELUS versus our peer group and the relationship between TELUS and TI has been absolutely key to realizing this position And what it portends for the future. Speaker 500:32:16Great. And second one I would have, you've updated your guidance at mid July. Now you're updating it again this time. Has anything changed since mid July? Or is it just that the restructuring decision and paperwork had to be done after? Speaker 300:32:33Doug, why don't you go on this one? Speaker 400:32:36Yes. Nothing has changed from the perspective of 2 weeks ago. It was in essence bringing this forward with the overall story and Execution of our results, I think it would have been hard to do that in a pre release. And so we wanted to I have the fulsome picture of our overall operating results concurrent with the restructuring initiatives and finalizing those to Speaker 100:33:05the extent we discuss today. Thank you. Thanks, Ram. Frederic, next question please. Operator00:33:12Okay. Our next question comes from Maher Yaghi of Scotiabank. Please go ahead. Speaker 700:33:22Great. Thank you for taking my Speaker 300:33:24I would like to start just by asking you Speaker 700:33:27a question on your leverage and capital allocation priorities. Over the last year, we have seen your leverage go from 3.2 to 3.8. I mean, you invested heavily in CapEx For sure, but also in acquisitions. This ratio is now above your long term range. And can you help us understand the expected pace of the decline that you think this ratio is going to take, especially given the upcoming Spectrum Auctions coming up. Speaker 700:34:00Any targets on leverage that you can share with us here? And just a follow-up on to this question. You have supported TI in several ways, more recently through a couple of Stock buyback acquisitions. Can you provide us some understanding as to how much more You are willing to support TI specifically when it comes to stock acquisition, Because this is a question that keeps coming up with investors, and I think some clarity on that would be helpful. Thank you. Speaker 300:34:39Okay. I'll let Doug take the first part of the question and I'll top up on the second part. Speaker 400:34:47I think when you look at our industry leading EBITDA growth and the fact that we've been coming to the end of our Accelerated capital spend in this year's the decrease in capital spend was a good example of that. You're going to see that Capital continue to be moderated into the future. With even the initiatives we talked about today on bringing down our long term cost structure for enhanced Margins, we have full confidence we're going to delever very well into the future on free cash flow And that these initiatives, if anything, will solidify even a stronger balance sheet into the future. So when you look at the growth areas we have, confidence in EBITDA growth and Valugen in consistence with the demand on CapEx going forward coming down. Speaker 300:35:44I think it's pretty clear that TELUS is now in a period where the sources of cash will chronically exceed the uses of cash and that bodes well for the balance sheet of the organization as well as our strategic positioning from an investment thesis. Secondly, as you would know, Doug and the team have done a superb job Timing the balance sheet of the organization with the investment profiles that we have undertaken in areas like fiber And 5 gs, we've got an average term to maturity on our debt profile of 11 years and our cost of debt is quite attractive, just a touch over 4%. And of course, that debt is tax affected given the taxpaying position of this organization. In terms of TI, yes, we have made investments in TI on the Edge in the past. We've done that because we have a high degree of confidence in the TI organization and its growth prospects. Speaker 300:36:57But it's not just because we are confident in its external growth prospects. We recognize critically as we've just spoken to that TI is a critical enabler of TELUS' growth strategy, Supporting everything that we're doing from customer service excellence to the digital transformation of our organization that's put us in such a strong position. We as an organization believe, as you would expect, that TI is significantly undervalued. And as it deals up the macroeconomic challenges in front of it with the right moves, the medium and longer term prospects for the organization are exceedingly strong. Having said that, we expect TI to stand on its own 2 feet And that's policy. Speaker 300:37:50So in terms of answering or fielding any questions that you're getting in that regard, We do not intend to buy TI back into the TELUS organization. Anything that we might do would be entirely opportunistic And only around the edges. We expect the organization to stand on its own 2 feet and drive growth. And we think that the organization, particularly post the efficiency measures that they're now implementing is going to have a fantastic platform for future growth and a very eager anchor tenant within the TELUS organization, but tremendous prospects on an external basis, Particularly leveraging what we think are terrific accelerators for TI in respect of generative AI and how uniquely the TELUS International Organization is positioned in that regard. It's also a huge opportunity for TI to product The success that has helped drive Atellus and drive those solutions not just across the comms and media sector, But on a wider basis within its external client perimeter. Speaker 300:39:02So that's policy. TI will stand on its own 2 feet. I think the future will be very bright. Operator00:39:10Thank you. Speaker 500:39:12Next question please. Operator00:39:16Okay. Thank you. Our next question comes from Drew McReynolds of RBC. Please go ahead. Speaker 800:39:26Yes. Thanks very much. Just 2 for me. First, I guess maybe for you Doug on the restructuring. Obviously, I think you're the only one that includes this in free cash flow guidance and everyone's restructuring. Speaker 800:39:40So there shouldn't be any surprise there. But It feels a little bit of back foot, front foot. There's part of this that is required probably because of some Cost inflation, but also front foot because of your ability to be ahead of the curve and digitize. So maybe comment on If that's correct. And then just secondly on the $325,000,000 in run rate annualized saving, how should we think about that flowing through in 2024. Speaker 800:40:11I think by our calculation, it's about 500 basis Points of year over year EBITDA growth, but I'm sure it's not that simple as adding that 2024 because there's other things that I'm sure are offset. So just Setting expectations here just broadly on that front. Thank you. Speaker 300:40:28All right, Doug, go for it. Thanks, Drew. Speaker 400:40:33So we do plan to execute majority of the plan within 2023. There are some of the restructuring initiatives though that do have a longer term benefit and there would be some that would be call it multi year in that Payback such as the real estate rationalization as an example. And you are right, there will definitely be some give and takes between The cost efficiencies versus other pressures within the market dynamics as highlighted by Darren earlier. So I would profile majority of it coming through in the early to mid part of next year, but balanced through with Some of the items that we've talked about lapping, roaming as an example, you'll see that that will slow down into 2024 as we Last the COVID uptick and then it's declining and less of an impact into the future. And that's just one Example of where you'd see that partial offset. Speaker 400:41:37But when we look at it, it is a long term plan. It is looking through the initiatives in front of us And driving the efficiency savings as quickly as possible is definitely at our desired outcome. Speaker 100:41:52Thank you. It's Frederic. Next question please. Operator00:41:57Thank you. Our next This question comes from Simon Flannery of Morgan Stanley. Please go ahead. Speaker 400:42:06Great. Thank you very much. I wanted to talk a little bit more about competition. I think you talked about increased flanker competition. Perhaps you could just characterize that. Speaker 400:42:16And do you think this is temporary Or longer term change? And to what extent is there a risk of trade down from the premium plans? And maybe specifically on the West, we've had Yes, several months of Shaw and Rogers integration. You put up some good KPIs, but what are you seeing on the ground there? Is there any real change in the competitive intensity on the converged Speaker 300:42:39Thanks, Simon. Jim Zano, 102 hit that one. Speaker 900:42:46Okay. Why don't I go first? The headwinds I think are pretty well known, But we're also seeing some good tailwinds. So bring your own phone customer growth is strong And that's growth without device subsidies. 5 gs plus is holding its value versus 5 gs and 4 gs. Speaker 900:43:12And we're seeing bundling accelerating, especially not just in the West, but we're also seeing good bundling opportunities in Eastern Canada now, which has been great. Look, we're pleased with how we navigated Q2. We had our best new customer growth since 2010. Are the only major carrier sustaining ARPU growth, continued churn leadership, significant industry lead on customer lifetime value. Our roaming growth is 145 percent versus pre pandemic. Speaker 900:43:43So those were all solid. Bundling 5 gs plus Family discount are protecting our premium customers. We're sustaining our customer renewal volumes with the year over year step up. So We've been able to manage our margins in areas like access points to device subsidies. We relaunched public mobile's balanced customer growth and margins. Speaker 900:44:06So 100% digital, 100% redesigned for simplicity. The cost to serve is 6 times lower than TELUS, allows us to Meet prices while maintaining premium margins. And I think going forward, we're confident in our Prospects for continued best backed by our consistent strategy really best networks and customer experience bundling focused on execution. We anticipate ongoing subscriber strength from the growth in integration and from product intensity. We continue to manage our margins with thoughtful mix of digital, bring your own phone and access points to device subsidies. Speaker 900:44:46We actually believe the retail flanker 5 gs price points will drive step up especially from the growth we're getting on BYOP newcomer growth. So that we see as a positive. And then 5 gs plus bundling bring it back family discounts are all holding and attracting our premium customers. So we continue to expect a full year ARPU growth and we're very, very relentlessly focused on customer margin. Daniel, I don't know if you want to top out. Speaker 1000:45:18Yes. Maybe I will add a few points with respect to the West, as you highlighted there And the competitive intensity. So to build on Jim's points, we're going to be ultra focused on AMPU driving wallet Share and product intensity and the customer loyalty that we continue to build on in Gartner as well as The superiority of our network capabilities and also the real product differentiation we're able to offer our customers From areas like home security and automation to consumer health are absolutely unique in the market. And so those are areas where we're continuing to see the opportunity to grow wallet share and grow our customer loyalty And so in terms of what we're seeing in the competitive environment, we're really seeing consistency with respect to how we're executing on our Strategy from the get go. You're seeing us able to monetize some of the elements of our strategy from a cost takeout perspective and the digitization perspective. Speaker 1000:46:29But to Darren's earlier point, that's been on the back of Foundational investments we've made in both the network and the digital side. And it's also enabled our ability to do rapid Product development and rapid go to market for our new product capabilities. And so that's serving us incredibly well. We're continuing to see strong outputs on the back of our PureFibre 5 gs bundling. We see better wallet share and customer household growth and better loyalty and as well as better cost to serve across the board. Speaker 1000:47:07And we're just heads down and focused on continuing to drive that strategy and seeing as you've seen in our results continued traction in that strategy. Speaker 900:47:18Great. Thanks for the color. Speaker 300:47:20It's pretty simple, Simon, 5 point strategy that you'll see from this organization Quarter in, quarter out, which is leverage best network, leverage best customer service, leverage best product portfolio, leverage best Channels and Digital Capabilities and Leverage Best Cost Base. That's the 5 point plan. Operator00:47:42Thank you. Speaker 100:47:44Thanks, Simon. Next question please. Operator00:47:48Thank you. Our next question comes from Vince Valentini of TD Securities. Please go ahead. Speaker 200:47:56Yes. Thanks very much. First, Sorry if I missed it. The cost savings from the new restructuring program, I didn't see anything in the TELUS International release, but it's a public company. So I assume they have to provide some numbers. Speaker 200:48:11So hopefully you can help us out. How much of the $325,000,000 will be on the TELUS side versus the GI side? Speaker 600:48:21So I think we did actually reference that in our call earlier today, Vince. It was $40,000,000 in year. And that's USD, not Canadian? Speaker 300:48:35Yes, yes. 40 annual run rate. No, in year. Speaker 900:48:41That's restructuring dollars. Speaker 800:48:43Yes. Speaker 200:48:44That's restructuring debt, sorry. Okay. Yes. So 40 $1,000,000 out of the CAD475 restructuring costs is on the TI side. Do you have a similar figure on the 325 Ongoing operating savings? Speaker 400:49:01About 20% of that was TI. Speaker 200:49:05So I wanted to ask that first because my follow-up would be if I take 80% of that 3.25% and then I take The new very impressive synergy target you're throwing out on LifeWorks getting up to $425,000,000 by the end of 2025. Even with before we even add a dollar of revenue growth, is it safe to assume that the EBITDA run rate in 2025 is surpassed $600,000,000 higher than what we're seeing this year? Speaker 400:49:36I think Vince will update guidance for next I think Drew's question on some of the offsets that may happen including ARPU and some of the Other pressures on the market size would potentially be a bit of volatility factor that this Speaker 100:49:52is going to hedge against. Speaker 400:49:54So I think The cost savings are yes, down the path you suggested, but I think there's other initiatives that will balance that as we look into 2024. But we're expecting to still have industry leading growth as you're implying and the efficiencies will be holistically lucrative. Speaker 200:50:15Okay. Thank you. Speaker 100:50:18Thanks, Vince. Next question please, Frederic. Operator00:50:21Our next question comes from Tim Casey of BMO. Please go ahead. Speaker 1100:50:29Thanks. Two questions. 1, I'm wondering if The challenges you've had at TELUS International, how that is influencing, How you're approaching TELUS Health and its path to some sort of corporate event? And second, we are getting questions on how you're thinking about your dividend growth plan and your 3 year commitments to 7 Wondering if you could frame that in light of I guess the headwinds in TELUS International, but Your announcement today of restructuring and restructuring savings going forward. Speaker 300:51:13Okay. Let me kick it off with TI and tell us how to Very explicitly answer your question, Tim. I think TI despite what's transpired in Q2 remains an exemplary model for TELUS Health. The TI organization has had An excellent track record of success historically, has surpassed expectations on many instances in the past leading up to add and post the IPO process. I think TI's track record of success on differentiation, product development, Client Affinity has been absolutely key for that organization And the duration of the success, I think, is quite telling in that regard. Speaker 300:52:14So the hiccup that's transpired in Q2 It does not diminish TI. I think it's the right model as it relates to TELUS Health. And one of the other key attributes of TI's success Is the duality of the performance in terms of both organic growth and smart inorganic moves that were Well integrated and significant value was created from those acquisitions. And I think that again is a good model for the Telehealth organization to follow. Our expectations of TELUS Health remain undiminished. Speaker 300:52:52And if anything, I would They're emboldened and accelerating. The other thing that is clear and maybe we need to make it more clear Is TI is not just a terrific enabler of TELUS on everything from customer service to digital progression, but TI is a significant enabler of TELUS Health itself. As TELUS Health goes through its improvements on Cost efficiency, customer service excellence, product development and digital and gen AI progression, They will be aided and embedded by TI every single step of the way. And of course, TI, which focuses on the health vertical as well, We'll take those capabilities and not only serve Jellis Health well, but productize them within the overall external market. And so I think that's quite a compelling composition. Speaker 300:53:52And we're very much looking forward to realizing the Synergies that we've articulated for TELUS Health at the $425,000,000 level where we've highlighted $325,000,000 of part synergies in terms of key efficiencies that TI will be supporting along the way to make That we deliver against that $325,000,000 number and I look forward to significantly improving upon the $100,000,000 of revenue synergies from the plentiful cross selling opportunities that we have. Speaker 400:54:27And on the dividend growth side, If anything, the initiatives we talked about today will Speaker 300:54:35solidify Speaker 400:54:36our Passion to continue that going and our commitment to keeping that going. When you our decisions are off of free cash flow and to Darren's point and our discussion that Free cash flow will accelerate as we move into the future. We don't see our commitment to that changing at all. Speaker 300:54:57Thank you. Quite the reverse. Speaker 100:55:02Thanks, Tim. Frederic, next question please. Operator00:55:06Thank you. Our next question comes from Stephanie Price of CIBC. Please go ahead. Speaker 1000:55:13Good morning. Hoping I can get your thoughts around capital allocation between the base business and TI and the growth businesses. As you noted, free cash flow is expected to accelerate from here. I'm just curious how you're thinking about where that marginal dollar should go. I've got another question about. Speaker 800:55:33So if you look at the Speaker 300:55:37preponderance of our capital composition, how we've Executed discretionary decisions on capital allocation. Firstly, TI has to stand on its own 2 feet, Leveraging its own balance sheet and its own transaction currency, which is why we're interested in valuation improvement for that organization. For TELUS, I think it's been fairly transparent. The big consumers of capital, which I think have paid off handsomely and you can see it in the best in class operating results that we have generated. Number 1, we have invested and will continue to invest in wireless network technologies from 4 gs plus to 5 gs to 5 gs plus and of course the spectrum that fuels our capacity along the way. Speaker 300:56:332nd, you'll see us continue to invest in PureFibre Broadband with its attendant attributes of Product intensity realization, significantly above 3. A cost to serve in terms of the external network That's 70% better than copper, a revenue per home that's 20% better than copper, a margin for home that's 25% better than copper and a churn rate that's 20% better than copper. You'll continue to see us make those investments. Number 3 has been our focus on digital, Digital progression, digital transformation, AI and generative AI moving that continuum along the way. We wouldn't be able to do what we're doing today in terms of staff level efficiencies without what we've done over the last 36 months in that regard. Speaker 300:57:37And that's a really critical factor for us because To be able to make those moves and because of our digital competency and capabilities that did not miss a beat in our go to market operations or our customer service excellence, I think it's a really distinguishing story. 4th area for us is success based capital and this is Demonstrably within the core business of this organization and you can see it reflected within our operational loading features. And then the last area is supporting the growth of our data centric businesses. Data centric businesses on health and if you look at what's happening around the world today, the efficacy of what we're doing on Data insights on health or data insights on ag or data insights on consumer packaged goods is stronger today than what it's ever been. And so that's where we will be focusing the preponderance of our capital. Speaker 300:58:36And I think what we have spent And how we have spent it from a composition point of view historically is prescient in terms of what you can expect us to do prospectively. Speaker 1000:58:48Thanks for that. And just a quick follow-up on the cost efficiency program. We've seen some headcount reductions from the telecom unit already. Just curious if you can talk a bit about the staff Goals for the telecom unit specifically? Speaker 300:59:02Yes. So the staff reduction goals are 4,000 within Our TTEC business incremental and 2,000 within TELUS International And potentially some incremental steps on TI over the remainder of the year in terms of optimizing its Staff levels within its organization. The 4,000 within our telecoms business or communications technology business is 4,000 incremental to the 1,000 that we already had within our base plan for 2023. So it brings the total to 5,000 within the TTEC part of the business. And we think that's the right quantum right now to support what we want to achieve in terms of profitability and cash flow for 202420252026. Speaker 301:00:01And I think it sets us up well. And when you look at that improved profitability because of those moves with a diminished Capital appetite in 2024, 2025 and 2026. I do think that The lucrative efficiencies that I mentioned earlier and the way that they will buttress and amplify our EBITDA Results within our TTEC business in combination with a slowing capital consumption profile will be hugely generative to the cash profile of the organization, which is why I made the comment on our Dividend growth model of quite the reverse. I think our dividend growth model is crystallized in a stronger fashion than what it's ever been In terms of delivering against our forecast and what our management's expectations in terms of the accretion of our dividend within the 7% to 10% range over the next 36 months. And it's not lost on me as a personal investor and TELUS that this is over and above The 6% yield that the dividend currently represents on our trading price. Speaker 1001:01:27Thanks for the color. Speaker 101:01:29Thanks, Stephanie. Frederic, we have time for 2 more questions, please. Operator01:01:34Okay. Certainly. Our next question comes from David Barden of Bank of America. Please go ahead. David Barden of Bank of America. Operator01:01:52David, you're on mute. Speaker 501:01:57Sorry about that. It's Dave. I'm not sitting in for Dave. Sorry about that mute. On my first question, you referenced the regulatory competitive and macro factors as sort of driving forces We're influencing forces behind that cost efficiency program. Speaker 501:02:18I was wondering if you could add some context. Are you seeing this as kind of an increasing area of uncertainty as you're looking into 2024 and beyond? Or are those just Are they stable factors that are always being considered that are just driving the Speaker 701:02:36need and Speaker 501:02:37the investment case for digital transformation and it's not an And it's not an increasing level of uncertainty for you. And secondly, on bundling, which is referenced Yes, repeatedly and it's a source of strength for the organization. Is there any sort of additional color you could provide on Where you are on that journey? How much is left? Which services you're finding the most traction bundling? Speaker 501:03:03Which ones might be growing in their bundling outlook? Just any kind of color on where that stands would be helpful. Thank you. Speaker 301:03:15Okay. Dana, why don't I ask you to speak to the bundling front, and I'll kick it off with an answer on the regulatory side of things. Firstly, I think we've made an error in calling regulatory factors exogenous. Clearly, if we've learned anything over the last 23 years, regulatory factors are endogenous within our industry. And there's an aspect of development Within the regulatory environment that seems to have characterized every single year that I have been with the organization. Speaker 301:04:02And That's just something that we have to live with on a normalized basis in terms of The strategy of this organization and the operating tempo. We have clearly, in terms of both magnitude and diversity, I've seen every form of regulatory challenge over the past 20 years, hence the endogenous comment. And I do think that this organization has distinguished itself with a demonstrable track record that is Truly second to none in processing these challenges and in some cases opportunities and moving the business forward with Terrific success. And that's no different than what's happening within 2023, Whether it relates to mandated access components when it relates to the development of the MD and O model, whether it relates To facility based competition and the like, I would say right now all of those developments are just normalized within The overall TELUS strategy and we get on with absorbing them, with mitigating them and with coming up with strategies to overcome those regulatory impediments to our business. And the most demonstrable example is what we have done today. Speaker 301:05:32When you look at the efficiencies that we're driving, they are preemptive in terms of how we see certain regulatory challenges evolving in the months and the years ahead And we want to get ahead of it. Our ability to take cost out of the business today will prepare us to better absorb any regulatory impediment at T plus X. And we're an organization that just wants to control our own destiny along the way. The other thing That we are doing is we will always tune our employment and our investment According to the regulatory environment and if we are seeing regulatory challenges or impediments That is going to see us diminish the job profile within the TELUS organization in response to that and or also diminish the investment profile, we will put shareholder money to work in the areas that can generate The best return overall for our stakeholders. And then thirdly, We challenged the regulatory environment by doing what we think is right for our country. Speaker 301:07:02And when you look at the affordability of the solutions that are out there at now from wireless to wireline And do a deep dive on the value propositions of each of the 3 brands within our wireless ecosystem. Clearly, clearly, we are evidencing the affordability objective being met in a very fulsome fashion. We are also delivering a quality of service within our portfolio to Canadian citizens In terms of regulatory oversight, that is second to none globally. We have the best networks and the best customer service on the planet. And then the 3rd axiom to our regulatory agenda is to invest in areas where there's a lighter regulatory touch, a benign regulatory environment or less regulatory intrusion and disruption. Speaker 301:08:01And clearly, when you see what we're doing with TELUS International and the growth prospects there, as that business returns to both double Digit revenue growth and margins that are well in excess of 20% or what we're doing globally with TELUS Health On the digital front or what we're doing globally with TELUS Agriculture and Consumer Goods on the digital front, leveraging data insights on a disruptive basis to drive growth within those industries. Those are areas that fall outside the yoke of the Canadian regulatory paradigm and I think they will yield significant value creation for investors prospectively. So that is the regulatory theorem for this organization. And I think we have evidentiary documentation and empirical track record that says we've run that particular game plan well over the past 2 decades. Dana? Speaker 1001:09:02Thanks, Karen. So I think it would be overtly simplistic to think about bundling From only a wireline wireless perspective, I think we look at bundling across the journey. We have several brands. Some of those brands help us to identify new prospects that we can bring into our ecosystem. And then we look At the level of product intensity and it's a self fulfilling prophecy because as you add products and as you add Other digital touch points into the customer's journey and into the household, you improve the economies of Scope and scale you improve the revenue and you improve the cost structure. Speaker 1001:09:49And so because we have such a significant breadth of products, As I highlighted across our home security automation, our online security, our consumer health portfolio, In addition to the incredible products we have across our core services and our entertainment and other portfolios, We look at this from a perspective of continuous growth and that drives both revenue and cost to serve. And so as you look even if you looked at for example a newcomer journey that customers need and that Customers' desires in terms of what they need in their household is going to change over time. So there's a significant base management opportunity And we look at the journey across the multitude of our products. We have the most products relative to our peers continue to build and deploy new product categories, some of which will be aligned to the product Areas we're in and some of it of which will be net new areas that we can grow new digital relationships with our customers. Speaker 501:11:02Okay. All very helpful. Thank you so much. Speaker 101:11:04Thanks, Matt. Final question please, Frederic. Operator01:11:08Okay. And our final question comes from Sebastiano Petit of JPMorgan. Please go ahead. Speaker 501:11:17Hi. Thanks for taking the question. I just wanted to see if you can provide a bit more color on perhaps maybe the margin in TTEC within the second quarter. Was there anything one time nature or anything we should be thinking about in terms of comps. And in the context of The back half trajectory, obviously, you have some LifeWorks synergies coming in, but you're also comping LifeWorks in September beginning in September of last year. Speaker 501:11:46And so some of the puts and takes around that and how you should perhaps be thinking about Underlying growth within TTEC on an ex synergy or ex LifeWorks basis? Thank you. Speaker 301:12:00Okay, Doug, we'll kick this one off. Thank you. Speaker 401:12:04Yes, in the second half, there are a couple one time items from last year. We did have a toehold investment in LifeWorks, which on the execution of the Execution of the deal created a gain and you would have seen that through and we disclosed that in the Q3 of last year. That would be our main one. There's a Couple of small, call it, put option gains that occur periodically through quarters that also would be in the second half of the year. But the toehold would be the main one to acknowledge for Q3. Speaker 301:12:42Would also be a mistake to because of the lapping of LifeWorks assume that the Growth profile of Q4 relative to Q3 is significantly diminished. We are forecasting a more Speaker 501:13:08Great. Thank you very much. Speaker 101:13:10Thanks, Sebastiano. Thank you, everyone, for joining Today, please feel free to reach out to the IR team if you have any follow ups. And for those in Canada, we wish you a wonderful long weekend. Operator01:13:24Thank you. And this concludes the TELUS 2023 Q2 earnings conference call. Thank you for your participation and have a nice day.Read morePowered by