Byron Capital’s Goff raises target on Telus to $69

Byron Capital analyst Rob Goff says Telus's wireless numbers stood out for him. While  telco peers such as BCE and Rogers have been posting improving wireless numbers for some time now, the Byron analyst says that with wireless representing 62% of EBITDA, Telus has an enviable business mix.

Byron Capital analyst Rob Goff says Telus’s wireless numbers stood out for him. While telco peers such as BCE and Rogers have been posting improving wireless numbers for some time now, the Byron analyst says that with wireless representing 62% of EBITDA, Telus has an enviable business mix.

On Friday, Telus (TSX:T) reported its Q3 results. The Vancouver-based telecom’s revenue rose 6% to $2.8-billion, while EBITDA increased 5% to $1-billion. Following the quarter, the company announced it would increase its quarterly dividend by 3 cents to 64 cents.

Telus CEO Darren Entwistle said the improved results were the result of longer term strategies.

“Our long-standing strategy to invest in broadband wireless and wireline data technology, services and applications within our core businesses, coupled with a focus on putting customers first, has resulted in strong quarterly operational and financial growth,” he said.

Byron Capital analyst Rob Goff says Telus’s wireless numbers stood out for him. While telco peers such as BCE and Rogers have been posting improving wireless numbers for some time now, the Byron analyst says that with wireless representing 62% of EBITDA, Telus has an enviable business mix. He notes that BCE derives just 27% of EBITDA from its wireless business. Goff says improved visibility in the area is supporting a stronger five year forecast for the underpinnings of Telus. In a research update to clients this morning, Goff maintained his HOLD rating on Telus, but raised his price target to $69 from his previous $65.

Founded in 1990, Vancouver-based Telus provides a range of telecommunications products and services, including wireless, wireline, data, digital television, and IP services. The company was created by the government of Alberta to facilitate the privatization of a crown corporation, called the Alberta Government Telephones Commission. The Telus we know today was created by the 1999 merger of Telus and BC Tel, a move that instantly made it Canada’s second largest telecom behind Bell Canada. The company’s stock has been a star performer; in the past decade it has moved from under $8 to more than $60.

Goff says that while competition in Western Canada is generally less prevalent than it is in the east, the battle between Telus and Shaw can be fierce. He says Shaw’s Wi-Fi network should emerge as a significant competitor over the next year, a move he expects Telus to counter with and expansion of its own.

Shares of Telus on the TSX closed today up .9% to $65.10.

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