CEO's letter to our investors
A message from our CEO
Learn how we are realizing the benefits of our major strategic investments.
Watch video messageOur Strategy
TELUS' track record of success can be attributed to the con- sistent execution of our proven national growth strategy focused on wireless and data. In fact, TELUS is the only telco in the world that has the same strategy today that it did 10 years ago. Notably, it is as relevant today, or even more so, as when we launched it in 2000.
Our strategy is founded on our strategic intent – to unleash the power of the Internet to deliver the best solutions to Canadians at home, in the workplace and on the move. Successfully driving our team's actions are four leadership values, including having the courage to innovate. Six strategic imperatives have guided our efforts since 2000 and the following is a discussion of key accomplishments in 2010 as they relate to these imperatives.
Building national capabilities
We continued extending the reach and speed of both our advanced wireline and wireless broadband networks to bring innovative services to more Canadians. These investments are enabling us to provide better service offerings for customers and meet competitive challenges.
In late 2009, the launch of Canada's fastest* coast-to-coast HSPA+ network was a massive undertaking that propelled us ahead of the competition, positioning us for profitable growth and improved market share. Moreover, it gave TELUS clients more choices, including early access to the newest devices such as the iPhone 4 and BlackBerry smartphones, and international roaming to more than 200 countries.
Through 2010, we continued to enhance the HSPA+ network with the addition of new 4G dual-cell technology, which, when complete in 2011, will approximately double data download speeds. Our innovative approach includes leveraging our network sharing agreement with Bell Canada, a strategy that enables us to deploy network enhancements faster and more cost effectively than most of our competitors, whilst vigorously competing against each other in the retail market.
We also enhanced and expanded our wireline broadband network to enable faster speeds, advanced Internet services and greater reach for our Optik TV service. Our footprint now reaches more than two million households in B.C., Alberta and Eastern Quebec. Additionally, we are implementing VDSL2 technology, which enables even faster network speeds and more HD channels into the home, and expect to complete the overlay this summer. Moreover, we continue to build fibre-to- the-home access to connect new residential developments.
innovation in action
To demonstrate the power and potential of TELUS' communications solutions, we have set up six TELUS Innovation Centres across Canada that showcase our suite of current and emerging products and services and engage visitors in an interactive environment.
Using the latest technology and our leading IP-based wireline and high-speed wireless networks, these centres offer real-life demonstrations of a variety of innovative solutions. An example includes our Integrated Bedside Terminal for healthcare, which gives patients access to communications and entertainment services and healthcare professionals access to patient information.
Focusing relentlessly on data and wireless
During 2010, TELUS experienced solid growth in data and wireless with combined revenues now representing almost three-quarters of TELUS' total revenue of $9.8 billion.
We improved our position in the smartphone marketplace with our HSPA+ network investment, which enabled us to offer a wide array of compelling devices to meet the growing demand of customers across Canada. Smartphone subscribers now represent approximately one-third of TELUS' postpaid subscriber base, up substantially from one-fifth a year earlier.
We have also introduced leading-edge devices running on the newest operating systems from Apple, Research In Motion (RIM), Android and Windows Phone 7, that offer customers enhanced applications and functionality.
Koodo Mobile®, our postpaid value brand, continues to position us well against new wireless entrants. We have evolved the Koodo® brand strategy from basic talk and text to include a limited selection of feature-rich smartphones. Late in the year, we also adjusted our Koodo pricing to remain competitive.
In the wireline business market, we maintained our focus on five key verticals – the public sector, healthcare, financial services, energy and telecom wholesale. In 2010, we completed the implementation of the Department of National Defence contract and, in 2011, we will complete the implementation of the Government of Quebec long-term contract worth up to innovation in action $900 million. These managed data solutions will increasingly contribute to revenue and earnings in 2011 and beyond.
Providing integrated solutions
We introduced the Optik brand in June, which brings together TELUS' most innovative IP-delivered services – Optik TV, powered by Microsoft Mediaroom, and Optik High Speed Internet, which can be accessed wirelessly from anywhere in the home. TELUS Optik TV, which includes PVR Anywhere and Remote Recording using a wireless smartphone, offers more choice, flexibility and control, greatly enhancing the entertainment experience for customers. Another innovative approach we pursued was to be among the first service providers in the world to use Microsoft's Xbox as a set-top box.
Optik TV is a superior customer entertainment service compared to cable-TV offerings and customer reaction has been distinctly positive. In 2010, total TV net additions were a record 144,000, 57 per cent higher than in 2009. We expect the momentum to continue in 2011.
Our approach to TV content is not to pursue content acquisitions as other major competitors have done. We are striving to deliver the world's widest and best selection of content and applications to our customers. We believe that our best strategy is to partner as a distributor and remain a pure- play communications company that is adding value through the bundling of products and services
in our channels. Indeed, owning content could negatively impact our relationships with other content suppliers. Finally, we recognize that managing legacy broadcast and media properties is not currently a core competency of TELUS and would not address the ongoing shift to social media content and applications.
We are advancing our position in healthcare and, in 2010, became the first in Canada to launch an innovative e-health platform, called TELUS Health Space®. This complements TELUS' leadership position in electronic health records in Canada's medical systems. Based on an exclusive partnership to host and operate Microsoft HealthVault, this platform enables Canadians to create, store and manage their personal health records and securely share them with their care providers. Through trials with 2,000 team members and 200 patients and caregivers in Quebec, we are actively shaping new services that should soon be available to millions of Canadians.
Notably, TELUS has earned recognition as the number one Canadian Healthcare Technology Company by Branham Group for three years in a row.
Partnering, acquiring and divesting
In early 2011, TELUS acquired Smart Communications, a TELUS retail partner in Western Canada. This acquisition adds 21 premium retail locations, further strengthening our wireless distribution presence in Canada.
In September, TELUS began to offer wireless customers coverage in Saskatchewan on SaskTel's new HSPA+ wireless network through an enhanced network sharing agreement. This offers improved roaming and wireless speeds for business customers, such as those in the oil and gas sectors, and coverage to 95 per cent of the province's consumer population.
Clear & Simple innovation
Our Clear & Simple rate plans, which offer simplified pricing and no system access or carrier 911 charges, make it easy for wireless customers to choose a plan that is right for them. In 2010, we added a Clear and Simple Device Upgrade program to help customers obtain new phones before their contracts end. We also launched free TELUS Data Notifications to help customers manage their data usage and a service that identifies lower roaming rates for customers travelling abroad.
Investing in customer excellence
In 2010, we intensified our focus on delivering an exceptional customer experience and made significant advances in strengthening our business ownership culture across the organization. In June, we introduced Customers First, an innovative internal program to heighten our focus on the customer experience. This initiative brought all senior managers to the front line to listen to our customers and learn from fellow team members. The initiatives identified are leading to meaningful and measurable improvements.
This ongoing program is already empowering team members to put customers first in all that we do and many important initiatives are underway. Examples include an overhaul of our interactive voice response (IVR) systems to simplify the customer experience, more flexible and convenient appointment times for installations, and a number of data service improvements for small and medium business customers.
Our Clear & Simple rate plans, introduced in late 2009 and enhanced in 2010, have resonated well with customers and differentiated us from our competitors.
We believe that a company can only deliver the best results in the industry by having the best team, a team that is dedicated to making information, communications and technology beneficial for customers. We continue to introduce innovative initiatives to create a more enjoyable and productive work environment. For example, more than half our team members are equipped to utilize mobile or work-at-home options. We measure our progress through an annual Pulsecheck employee survey and, in 2010, an improved engagement score was achieved, putting us in the top category for large unionized companies.
TELUS is committed to fostering diversity and inclusiveness within both the workplace and the community, and our efforts have garnered external recognition. TELUS has been recognized by Waterstone Human Capital as having one of Canada's 10 Most Admired Corporate Cultures for the 2009 to 2011 award timeframe. Moreover, TELUS was selected by Mediacorp Canada as one of Canada's Best Diversity Employers for the third consecutive year.
Going to market with one brand
Our brand promise – the future is friendly – reflects our culture, values and desire to make communications technology relevant, accessible and enjoyable for individuals and businesses.
The power and consistency of our brand and the emotive relationship it creates with people give TELUS instant recognition in the marketplace, allowing us to realize a greater return on our advertising spend. The TELUS brand is one of the top brands in Canada, most recently valued at $1.9 billion by Brand Finance, a leading global brand valuation consultancy.
We have also advanced from our single brand strategy, initiated a decade ago. Our Koodo brand was launched in 2008 to address competitive market developments and allow us to build new wireless distribution for TELUS in a cost-effective way. This brand, which is clearly differentiated from the TELUS brand, earned recognition from Strategy Magazine as a 2010 Brand of the Year.