Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of ___December___ 2006
(Commission File No. 000-24876)
TELUS Corporation
(Translation of registrant's name into English)
21st Floor, 3777 Kingsway
Burnaby, British Columbia V5H 3Z7
Canada
(Address of principal registered offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
X
Form 20-F _____ Form 40-F _____
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
X
Yes _____ No _____
This Form 6-K consists of the following:
TELUS sets 2007 financial and operating targets
Strong record of growth in revenue and underlying profitability to
continue in 2007
VANCOUVER, Dec. 14 - TELUS Corporation (TSX: T and T.A/NYSE: TU) today
announced 2007 financial and operating targets that reflect its continued
execution of the Company's strategy focused on wireless, data and Internet
growth.
"TELUS' 2007 targets build on the financial success experienced in 2006.
TELUS expects to meet or exceed the 2006 consolidated targets set a year ago
for revenue, earnings and cash flow," said Robert McFarlane, executive vice
president and CFO.
TELUS' 2007 targets reflect the company's strong exposure to the growing
Canadian wireless industry, data growth and continued resilience in wireline.
TELUS is targeting six to seven per cent consolidated revenue growth, an
increase of approximately $550 million. Profitability targets reflect a
largely non-cash expense expected to be recorded in the first quarter of 2007
related to the planned introduction of a new cash settlement method for vested
options. Normalized for this change, underlying EBITDA growth is expected to
be in the range of four to seven per cent. Adjusting for this change to cash
settlement for options, underlying EPS is expected to be $3.25 to
$3.45 per share.
"These targets reflect the confidence of the TELUS organization in our
ability to continue to successfully execute our long-term strategy in the face
of competitive pressures," McFarlane said. "We will continue TELUS' track
record of enhancing shareholder value by both investing for future growth and
returning significant capital to our shareholders."
In addition to the previously announced 36 per cent increase in TELUS'
quarterly dividend commencing on January 1, 2007, TELUS also announced its
intention to renew a normal course issuer bid for the potential repurchase of
up to 24 million shares over the next 12 months, subject to acceptance by the
Toronto Stock Exchange.
The 2007 financial targets and updated 2006 guidance are as follows:
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2007 Targets Latest 2006 Guidance Change(1)
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Consolidated
Revenues $9.175 to 9.275 billion $8.65 to 8.7 billion 6 to 7%
EBITDA
(normalized
for 2007)(2) $3.725 to 3.825 billion(3) $3.55 to 3.6 billion 4 to 7%
Earnings
per Share
(normalized
for 2007) $3.25 to 3.45(4) $3.15 to 3.25 2 to 8%(6)
Capital
expenditures approx. $1.75 billion approx. 1.625 billion(5) 8%
Wireline
Revenue
(external) $4.85 to 4.9 billion $4.8 to 4.825 billion 1 to 2%
EBITDA
(normalized
for 2007)(2) $1.775 to $1.825 to
1.825 billion(3) 1.85 billion (1) to (3)%
Capital
expenditures approx. $1.2 billion approx. $1.2 billion(5) -
High-speed
Internet
subscriber
net adds more than 135,000 more than 135,000 -
Wireless
Revenue
(external) $4.325 to 4.375 billion $3.85 to 3.875 billion 12 to 13%
EBITDA
(normalized
for 2007)(2) $1.95 to 2.0 billion(3) 1.725 to 1.75 billion 12 to 15%
Capital
expenditures approx. $550 million approx. $425 million 29%
Wireless
subscriber
net additions more than 550,000 approx. 550,000(5) -
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(1) Annual change based on low and high-end 2007 targets compared to
midpoint of latest 2006 guidance.
(2) Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) is defined as Operating revenues less Operations expense
less restructuring and workforce reduction costs. Restructuring and
workforce reduction costs are estimated to be up to $80 million in
2006 and approximately $50 million in 2007.
(3) EBITDA normalized for expected 2007 pre-tax option expense of
$200 million consolidated ($150 million in wireline and $50 million
in wireless). Reported EBITDA in 2007 would be $3.525 to
$3.625 billion consolidated, $1.625 to $1.675 billion in wireline,
and $1.90 to $1.95 billion in wireless.
(4) EPS normalized for $0.40 for expected 2007 cash settlement option
expense. Reported EPS in 2007 would be $2.85 to $3.05.
(5) Items that have been updated since last guidance provided on
November 3, 2006.
(6) The normalized EPS increase is in the range of 17 to 24% when
adjusted for the $0.42 of positive impacts in 2006 from the
settlement of tax matters in the first nine months and the 2007
$0.40 cash settlement option expense.
In 2007, TELUS, subject to obtaining regulatory approval, is introducing
the cash settlement method for substantially all currently vested options and
those vesting in 2007. Cash settlement mitigates shareholder dilution from
issuing shares from treasury, and allows cash payments for the difference in
value between the market value and the exercise price of shares to be
deductible for tax purposes when options are exercised thus resulting in
significant future tax savings. This change results in an increased non-cash
option expense (an operating expense) for accounting purposes, which is
estimated at approximately $200 million ($150 million wireline and $50 million
wireless). The expense is expected to be substantially recorded in the first
quarter of 2007. TELUS' 2007 stated targets for segmented EBITDA, consolidated
EBITDA, and EPS have been normalized for the non-cash accounting expense
expected to be recorded in regards to implementing the cash settlement for
options.
Wireline revenue is expected to increase one to two per cent in 2007,
driven largely by data. EBITDA, normalized for the change to cash settlement
for option expense, is expected to be down one to three per cent as a result
of continued competitive pressures, initial expenses related to launch of
growth oriented products and services, and lower profitability margins.
Wireless revenue is expected to increase 12 to 13 % in 2007 due to
continued strong growth in wireless subscribers and increased wireless data
adoption and usage. Wireless EBITDA, normalized for the change to cash
settlement for option expense, is expected to increase 12 to 15 % in the year.
The expected earnings per share in 2007 reflects overall higher operating
profitability, lower financing costs as a consequence of reduced debt levels
and lower interest rates on debt refinancing, and an expected decrease in
total outstanding shares. The 2007 EPS growth rate is offset by increased
depreciation expense and a 40 cent after-tax impact from the change to cash
settlement of options. TELUS' EPS guidance for 2006 includes 42 cents of
positive impacts from the settlement of tax matters in the first nine months.
When adjusting for these tax-related factors and cash settlement option
expense, the normalized EPS growth rate for 2007 is expected to be in the
range of 17 to 24%.
TELUS continues to have long-term policy guidelines including net debt to
EBITDA of 1.5 to 2.0 times; net debt to total capital of 45 to 50%; and a
dividend payout ratio guideline of 45 to 55% of sustainable net earnings. The
latest 2007 targets and 2006 guidance announced today are in compliance with
these policy guidelines. TELUS is revising its definition of net debt to
include 100% (formerly 0%) of off balance sheet accounts receivable
securitization to conform with credit rating agency treatment of accounts
receivable securitization. TELUS may hedge all or a portion of the stock price
exposure related to its cash settled option program.
Based on an updated review of the company's tax loss position, TELUS now
expects minimal cash tax payments in 2007, a preliminary estimate of
approximately $100 million in 2008 with the payment of significant cash taxes
largely deferred to 2009, rather than 2008 as previously anticipated.
Key Assumptions & Sensitivities
For 2007 target purposes, a number of assumptions were made including:
economic growth consistent with recent provincial and national estimates by
the Conference Board of Canada, including GDP growth of 3.0% in Canada;
increased wireline competition in both business and consumer markets,
particularly from cable TV and VoIP companies; forbearance for local retail
wireline services in major urban markets by the second half of 2007; no
further price cap mandated consumer price reductions; wireless industry market
penetration gain of 4.5 to 5%; approximately $50 million restructuring and
workforce reduction expenses (up to $80 million in 2006); statutory tax rate
of approximately 34%; a discount rate of 5.0% and expected return of 7.25% for
pension accounting unchanged from 2006; and average shares outstanding of 330
to 335 million shares. EPS, cash balances, net debt and common equity may be
affected by the potential purchases of up to 24 million TELUS shares
(approximately 7% of outstanding total shares) over a 12 month period under
the normal course issuer bid, subject to acceptance by the Toronto Stock
Exchange, which could commence on December 20, 2006 (17.1 million shares
repurchased to Dec 11, 2006 under previous program).
We encourage investors to read the forward looking statements below, and
in related disclosures, for the various economic, competitive, regulatory and
company factors that could cause actual future financial and operating results
to differ from those currently expected.
Forward-looking statements
_________________________________________________________________________
This document contains statements about expected future events and
financial and operating results of TELUS Corporation ("TELUS" or the
"Company") that are forward-looking. By their nature, forward-looking
statements require the Company to make assumptions and are subject to
inherent risks and uncertainties. There is significant risk that the
assumptions (see key assumptions listed above), predictions and other
forward-looking statements will not prove to be accurate. Readers are
cautioned not to place undue reliance on forward-looking statements as a
number of factors could cause actual future results, conditions, actions
or events to differ materially from the targets, guidance, expectations,
estimates or intentions expressed in the forward-looking statements.
Factors that could cause actual results to differ materially include but
are not limited to: competition; economic growth and fluctuations
(including pension performance, funding and expenses); capital
expenditure levels (including possible spectrum asset purchases);
financing and debt requirements (including share repurchases and debt
redemptions); tax matters (including deferral of payment of significant
cash taxes); human resources; business integrations and internal
reorganizations; technology (including reliance on systems and
information technology); regulatory approvals (including acceptance of
the share repurchase program and amendments stock option plans to allow
for cash settlement of options); regulatory developments (including local
forbearance, local price cap reductions and wireless number portability);
process risks (including conversion of legacy systems and billing system
integrations); health, safety and environmental developments; litigation
and legal matters; business continuity events (including man-made and
natural threats); and other risk factors discussed herein and listed from
time to time in TELUS' reports, comprehensive public disclosure documents
including the 2005 Annual Report, and in other filings with securities
commissions in Canada (filed on SEDAR at www.sedar.com) and the United
States (filed on EDGAR at www.sec.gov).
For further information, see Section 10: Risks and risk management in
TELUS' annual 2005 Management discussion and analysis, as well as updates
reported in section 10 of TELUS' 2006 first, second and third quarter
Management's discussion and analyses.
_________________________________________________________________________
About TELUS
TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications
company in Canada, with $8.5 billion of annual revenue and 10.5 million
customer connections including 4.9 million wireless subscribers, 4.6 million
wireline network access lines and 1.1 million Internet subscribers. TELUS
provides a wide range of communications products and services including data,
Internet protocol (IP), voice, entertainment and video. Committed to being
Canada's premier corporate citizen, over the last five years TELUS has
contributed more than $62 million to charitable and non-profit organizations,
and has established seven TELUS Community Boards across Canada to lead its
local philanthropic initiatives. For more information about TELUS, please
visit telus.com.
For further information:
Media Relations: Investor Relations:
Allison Vale, John Wheeler,
(416) 629-6425, (604) 697-8154,
allison.vale(at)telus.com; ir(at)telus.com;
Robert Mitchell,
(416) 279-3219,
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: December 14, 2006
TELUS Corporation
/s/ Audrey Ho
_____________________________
Name: Audrey Ho
Title: Vice President, Legal Services and
General Counsel and Corporate Secretary