Annual report - About TELUS

management discussion and analysis
Key Priorities and Targets for 2001
TELUS is intent on delivering on six strategic imperatives
as outlined in the President and CEO’s letter on pages 6 to
9. Furthermore, the Company is focused on delivering on
six key priorities related to People, Customer Satisfaction,
Mobility, Data/IP, Growth and Financial Position – outlined
on pages 11 to 12. A key financial priority is to refinance
a significant portion of our short-term bank facilities with
mid to long-term maturities. See 2001 Financing Plan
on page 50.
In addition, there are a number of potential issues
and potential developments in 2001 that investors should
be aware of that are covered in the 2001 Targets, 2001
Financing Plan, and Risks and Uncertainties sections on
pages 14, 50 and 55 to 60, respectively.
Financial Targets and Issues
TELUS is focused on achieving solid growth in revenue
and EBITDA in 2001 facilitated by increased capital spending
and aggressive customer growth targets. The following
objectives were publicly announced on February 14,
2001. These projections are subject to the forward-looking
statements on page 49 and certain forecast sensitivities
discussed below.
2001 2000
Revenue 17–19% increase $6.43 billion
EBITDA 11–13% increase $2.46 billon
Cash Earnings 1 $270 to $290 million $571 million
Cash EPS 2 $0.93 to $1.00 $2.31
Capital expenditures $2.0 to $2.2 billion plus $1.44 billion
$356 million for
wireless spectrum
Proceeds from $900 million to $97 million
Divestitures $1 billion
1 Common share income before amortization of acquired intangible assets,
restructuring and refinancing costs net of tax, revaluation of future tax
assets, and goodwill amortization.
2 Cash EPS: Cash Earnings on a per share basis.
The revenue increase target range is generated approximately
equally from organic growth and from the full-year
inclusion of Clearnet and QuébecTel results. Contributing
to the revenue growth is the targeted increase of approximately
500,000 net additional wireless subscribers (a 23%
increase), and 95,000 new high-speed Internet subscribers
(more than double). In addition, the newly formed Global
Trading & Partner Solutions, which targets the wholesale
market, is expected to increase revenues.
> 54
Double digit EBITDA growth reflects the strength and
continued cost control of the western wireline business
offset in part by the start-up costs in new national growth
initiatives, including the negative EBITDA position of newly
acquired Clearnet
A key sensitivity to the EBITDA target is the expectation
that the CRTC decision on 2001 contribution charge
methodology will not be overturned or modified. If overturned,
it could have a negative EBITDA impact of
approximately $90 million.
TELUS management considers Cash EPS to be more
representative of economic value creation for its shareholders
because of its lack of distortion by many noncash
or non-recurring charges. Accordingly, the 2001
financial targets focus on Cash EPS rather than conventional
EPS.
Cash EPS will be lower in 2001 due primarily to full
year impact of financing costs from the Clearnet and
QuébecTel acquisitions and a higher number of shares
outstanding arising from the Clearnet acquisition.
Not included in these EPS numbers are planned first
quarter 2001 one-time restructuring and refinancing charges
estimated to be between $275 to $325 million pre-tax
related to the corporate re-organizations as well as the
Clearnet and QuébecTel acquisitions completed in 2000.
Capital expenditures are focused on generating longterm
growth, principally in the wireless and data areas. The
largest increase is at TELUS Mobility, caused by inclusion
of a full year’s expenditures and the extension of our digital
coverage footprint in all regions of Canada, which entails
new cell sites and switches plus the acquisition of additional
spectrum in 2001. Other examples of new capital
investments are high-speed ADSL Internet deployment,
next generation integrated network platforms and Webhosting
sites. Offsetting this will be lower expenditures
on the largely completed national fibre network and the
traditional local and long distance voice network.