TELUS Corporation's Second Quarter 2023 Results and Restructuring Plan: A Deep Dive into Growth and Efficiency Measures
TELUS Corporation, a leading telecommunications company, released its unaudited results for the second quarter of 2023, showing a significant increase in consolidated operating revenues. Despite strong performance in its core telecom business, the company faces challenges in its technology-oriented verticals. In response to the evolving economic landscape, TELUS announced a major efficiency and effectiveness initiative, which unfortunately includes a substantial reduction in staff positions.
TELUS reported a remarkable 13% increase in consolidated operating revenues over the same period the previous year, reaching $4.9 billion. The growth was driven by higher service revenues in the two reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences – TELUS International (DLCX). TTech's service revenue growth was fueled by acquisitions, higher mobile network revenues, and an increase in fixed data service revenues. DLCX's operating revenues also saw growth from expanded services for existing and new clients.
President and CEO, Darren Entwistle, praised the TTech business segment for its exceptional performance during the second quarter. The segment witnessed strong customer growth, operational excellence, and impressive financial results. Total customer net additions reached 293,000, with robust growth in mobile phone and connected device net additions, driven by leading customer loyalty and the PureFibre network.
While TTech experienced growth, TELUS International faced macroeconomic pressures that impacted service demand from some of its larger tech clients. In response, TI implemented significant cost efficiency efforts, including staff reductions, and is focusing on automation and generative AI solutions to optimize its cost structure and go-to-market strategies.
TELUS Health achieved second-quarter revenues of $428 million, reflecting 11% EBITDA growth (normalized for LifeWorks acquisition). The acquisition has allowed TELUS Health to cover over 68 million lives globally, supporting health outcomes through digital health transactions and virtual care memberships. The company remains committed to driving synergies and growth in the health and wellness sector.
TAC reported relatively flat revenues in the second quarter due to macroeconomic challenges in the Agribusiness vertical. Despite this, TAC aims for progress in the second half of 2023 and looks to leverage its integration with TELUS Business Solutions for further growth.
To address the evolving regulatory, competitive, and macroeconomic environment, TELUS announced a significant investment in an efficiency and effectiveness initiative. As part of this initiative, the company plans to reduce 6,000 staff positions across its global footprint, offering early retirement and voluntary departure packages. The program will yield expected annual cost savings of over $325 million, but restructuring investments of up to $475 million are anticipated in 2023.
TELUS Corporation's second-quarter results showcase impressive growth in core telecom business, while challenges persist in technology-oriented verticals. The company's efficiency and effectiveness initiative is a response to the changing economic landscape and aims to drive sustainable free cash flow growth. Despite the difficult decisions, TELUS remains committed to innovation, customer satisfaction, and supporting its stakeholders.
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