Byron Capital raises rating, price target on Telus

Byron Capital analyst Rob Goff says he is increasingly bullish on Telus’s wireless business. He says increased data usage, increased postpaid wireless additions and moderated churn have improved his outlook on the company’s average-revenue-per-user (ARPU) outlook. Telus (TSX:T) Friday reported its Q4 and fiscal 2012 results. In the fourth quarter, the company earned $291-million on revenue of $2.85-billion, a 6% bump over last year’s topline.

CEO Darren Entwistle said the company performed well in all segments of its business.

“Two thousand twelve was an exceptional year for Telus, fuelled by our long-term strategy of investing in broadband data technology, and services and applications within our core business,” he said. “This has been achieved whilst maintaining an unremitting focus on putting customers first in every aspect of our business. Accordingly, in 2012 Telus earned 385,000 new customers connections across our Optik TV, high-speed Internet and wireless lines of business. Notably, our valued customers are staying with us longer, as evidenced by our industry-leading 1.12-per-cent postpaid wireless monthly churn rate. We firmly believe that Telus will continue to build on this extraordinary momentum in 2013 and beyond.”

Byron Capital analyst Rob Goff says he is increasingly bullish on Telus’s wireless business. He says increased data usage, increased postpaid wireless additions and moderated churn have improved his outlook on the company’s average-revenue-per-user (ARPU) outlook, and he believes the wireless ecosystem Telus has built is currently being discounted. In a research update to clients this morning, Goff raised his rating on Telus from HOLD to BUY, and raised his twelve-month target price from $69 to $76.

Goof says Telus management continues to deliver, and though he doesn’t agree with the company’s view on media ownership, he doesn’t see it as a significant hindrance, either. What he does like is the fact that wireless contributes 60% of the company’s consolidated EBITDA, far ahead of BCE’s 25%, second only to Rogers Wireless’s 63%.

Shares of Telus on the TSX closed today up 2.2% to $69.32.

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