events archive
events archive
Q1 2003 investor conference call - Darren Entwistle presentation
Good morning and thank you for joining us. I think that you're all familiar with our priorities for 2003, so let's move on quickly to slide 5.
Our first priority for 2003 is delivering on our operational efficiency program where we continue to make good progress. We've reduced our staffing levels in the first quarter of 2003 by a further 600 people bringing our overall staff reductions to 5800 positions or roughly 89% of our 6500 target by the end of 2003.
By 2004 we are intent on achieving the $550 million of ongoing savings resulting from our operational efficiency efforts and we are clearly on track to achieve this goal with $245 million achieved in cost reductions thus far. We're also dedicated to driving a further $300 million in cost reductions in 2003 and we are clearly on track with $95 million in cost savings realized in the first quarter of this year alone.
Turning to slide 6, I thought I would show you a chart reflecting the true positive impact of the operational efficiency program on TELUS Communications underlying EBITDA growth. When one backs out the price cap and the increase to pension expense, you can see that the 6% EBITDA increase equates to a 13.6% increase in the EBITDA of our traditional Wireline business reflecting the margin expansion emanating from the operational efficiency program.
As we reduce our costs we're also committed to our second priority, which is reflected on slide 7, which is, of course, driving improved levels of customer service. Despite the challenges we faced last year, our performance thus far in 2003 is equal to or better than it was two years ago when we first embarked on our operational efficiency initiative. We are now turning our focus to improving systems and processes, eliminating bureaucracy, increasing training and putting more decision-making power into the hands of the employees at the front line.
The third priority for TELUS is to enhance our leadership position in the North American wireless industry by delivering significant margin expansion and accelerated cash generation. We clearly delivered in the first quarter with TELUS Mobility generating a 46% increase in EBITDA and an impressive 7-point increase in margin from 29% to 36%. Moreover cash flow increased $99 million, almost 5 fold this quarter, to $124 million. George will give you a little bit more color on the performance at TELUS Mobility in a few minutes.
On to slide 8 which reflects our fourth priority, which is to strengthen our credit position. We have three investment-grade credit ratings and we intend to make it four as we increase our cash flow and work to reduce our debt. Just two weeks ago Moodys changed it's outlook on TELUS from negative to stable, which of course is a precondition to any future upgrade. Bob will provide you with more detail on the strengthening of our financial position in just a second.
Our fifth priority is to continue focusing on improving the operating and economic fundamentals of our business expansion into Ontario and Quebec. Investors can watch for a two-step approach at developing our Wireline operation in central Canada. First we are intent on driving the EBITDA breakeven by 2004 at the latest, and to that end we have now reported 6 consecutive quarters of improved EBITDA. Our next step, of course, is to have central Canada as a financially self-sufficient operation with the funding in our expansion reliant solely on the cash generated from our incumbent operation in the province of Quebec.
Our sixth and final priority is shown on slide 9 and it relates to labor relations. This quarter we agreed to an extended conciliation process with our union that is currently scheduled to run through the third quarter of this year. TELUS committed to achieve in a settlement in 2003 with our unionized employees, in Alberta and BC, that reflects the competitive marketplace, balances the needs of all employees and provides the flexibility to meet the evolving needs of our customers. We will continue to keep you fully updated on the process developments in this regard.
In conclusion, I'd like to say that given our progress to date on these priorities, I am fully confident in TELUS' position to build on the valuation momentum we enjoyed in the second half of 2002 and early 2003, and that we will continue to generate value for both equity and debt holders in the years ahead, over to you, George.
Q1 2003 investor conference call - presentations
John Wheeler, vice-president, investor relations
Darren Entwistle, president and chief executive officer, TELUS Corporation
George Cope, president and chief executive officer, TELUS Mobility
Robert McFarlane, executive vice-president and chief financial officer
Question period