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iPhones position Telus well for Q4, network upgrades will pay off long-term: CEO

TORONTO — The head of Telus Corp. thinks the recent launch of Apple's most expensive and advanced smart phone to date is good for the Canadian telecom industry, even though the supply of the devices can't keep up with demand.

The iPhone is positive for the company (TSX:T) because its data usage drives up average revenue per user, or ARPU, and because of consumer loyalty to the Apple devices, Telus CEO Darren Entwistle said Thursday in a conference call.

"It's interesting, going into the seasonal selling periods in Q4 as we go through Black Friday, and Cyber Monday and the holiday period," he said. "We've never . . . enjoyed a broader iPhone device lineup than we have right now."

The most recent device is the iPhone X, an ultra-expensive device available to consumers since last Friday. In Canada, the smartphone with a lush screen and facial recognition technology is being listed between $1,350 or $1,570 before carrier discounts. There's also the iPhone 8 that's been available since September.

In addition, the year-old iPhone 7 and the iPhone 6 remain available and likely to get a boost from the promotional activity surrounding the newer iPhones, Entwistle said.

"Which, I think, positions us well as an industry for the seasonal selling periods that are going to come to fruition in Q4 and, over the medium to longer term, leverage the positive characteristics in terms of ARPU and (customer) retention."

On the longer term, Entwistle said the company's investments in advanced wireless networks and fibre optics are beginning the pay off because they complement each other and position Telus for future growth.

In early 2018, Telus will be able to serve half of its customer territory with its most advanced fibre-optic service to the home and by the end of 2019 the goal is to have fibre optics in two-thirds of its footprint, he said.

Telus is also preparing for a move into fifth-generation wireless technology, which Entwistle expects to begin commercialization by 2019 and ramp up thereafter.

"I see it as a real game-changer as it relates to key verticals — what it can do within the transportation industry, the financial services, agri-tech, oil and gas, health care."

In addition, he said the faster fibre optic and wireless networks will have a potent effect on consumer lifestyles, through automated home services, home health services and home security.

"I think there's a better way to expand our wallet share within the home."

Entwistle said the company has been good at balancing the cost of its capital projects and acquisitions with the returns it pays to investors.

Earlier Thursday, Telus also said it will raise its dividend for the second time in 2017 to 50.5 cents per share, up from 49.25 cents per share.

The increase came as the company grew its profit attributable to shareholders to $367 million or 62 cents per diluted share, up from $348 million or 59 cents per diluted share a year ago. Operating revenue totalled $3.37 billion, up from $3.24 billion.

On an adjusted basis, Telus said it earned $391 million or 66 cents per share in its latest quarter, up from $383 million or 65 cents per share in the same quarter last year.

In the quarter, the company says it added 124,000 wireless customers, including 115,000 postpaid net additions, 19,000 high-speed Internet subscribers and 9,000 Telus TV customers.

Telus shares closed Thursday at $47.52, just short of a 52-week high of $47.80 set on Oct. 26. 

David Paddon, The Canadian Press

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