UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of July 2020
Commission File Number 001-15144
TELUS CORPORATION
(Translation of registrants name into English)
23rd Floor, 510 West Georgia Street
Vancouver, British Columbia V6B 0M3
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F o Form 40-F x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1). o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7). o
Incorporation by Reference
This report on Form 6-K and the exhibits hereto are specifically incorporated by reference into the registration statement on Form F-10 (File No. 333-238061), the registration statement on Form F-3D (File No. 333-232967) and the registration statements on Form S-8 (File Nos. 333-181463 and 333-125486), of TELUS Corporation.
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.
|
TELUS CORPORATION | |
|
| |
|
By: |
/s/ Andrea Wood |
|
|
Name: Andrea Wood |
|
|
Title: Chief Legal and Governance Officer |
|
| |
Date: July 31, 2020 |
|
Exhibit Index
Exhibit Number |
|
Description of Document |
|
|
|
99.1 |
|
|
99.2 |
|
|
101.INS |
|
XBRL Instance Document |
101.SCH |
|
XBRL Taxonomy Extension Schema |
101.CAL |
|
XBRL Taxonomy Extension Scheme Calculation Linkbase |
101.DEF |
|
XBRL Taxonomy Extension Scheme Definition Linkbase |
101.LAB |
|
XBRL Taxonomy Extension Scheme Label Linkbase |
101.PRE |
|
XBRL Taxonomy Extension Scheme Presentation Linkbase |
TELUS CORPORATION
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2020
condensed interim consolidated statements of income and other comprehensive income |
(unaudited) |
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions except per share amounts) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
OPERATING REVENUES |
|
|
|
|
|
|
|
|
|
|
| ||||
Service |
|
|
|
$ |
3,250 |
|
$ |
3,086 |
|
$ |
6,495 |
|
$ |
6,106 |
|
Equipment |
|
|
|
406 |
|
501 |
|
824 |
|
970 |
| ||||
Revenues arising from contracts with customers |
|
6 |
|
3,656 |
|
3,587 |
|
7,319 |
|
7,076 |
| ||||
Other operating income |
|
7 |
|
72 |
|
10 |
|
103 |
|
27 |
| ||||
|
|
|
|
3,728 |
|
3,597 |
|
7,422 |
|
7,103 |
| ||||
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
| ||||
Goods and services purchased |
|
|
|
1,458 |
|
1,466 |
|
2,870 |
|
2,887 |
| ||||
Employee benefits expense |
|
8 |
|
911 |
|
758 |
|
1,784 |
|
1,464 |
| ||||
Depreciation |
|
17 |
|
505 |
|
470 |
|
1,028 |
|
940 |
| ||||
Amortization of intangible assets |
|
18 |
|
220 |
|
163 |
|
422 |
|
310 |
| ||||
|
|
|
|
3,094 |
|
2,857 |
|
6,104 |
|
5,601 |
| ||||
OPERATING INCOME |
|
|
|
634 |
|
740 |
|
1,318 |
|
1,502 |
| ||||
Financing costs |
|
9 |
|
202 |
|
189 |
|
394 |
|
357 |
| ||||
INCOME BEFORE INCOME TAXES |
|
|
|
432 |
|
551 |
|
924 |
|
1,145 |
| ||||
Income taxes |
|
10 |
|
117 |
|
31 |
|
256 |
|
188 |
| ||||
NET INCOME |
|
|
|
315 |
|
520 |
|
668 |
|
957 |
| ||||
OTHER COMPREHENSIVE INCOME |
|
11 |
|
|
|
|
|
|
|
|
| ||||
Items that may subsequently be reclassified to income |
|
|
|
|
|
|
|
|
|
|
| ||||
Change in unrealized fair value of derivatives designated as cash flow hedges |
|
|
|
(97 |
) |
10 |
|
125 |
|
(39 |
) | ||||
Foreign currency translation adjustment arising from translating financial statements of foreign operations |
|
|
|
(10 |
) |
11 |
|
42 |
|
17 |
| ||||
|
|
|
|
(107 |
) |
21 |
|
167 |
|
(22 |
) | ||||
Items never subsequently reclassified to income |
|
|
|
|
|
|
|
|
|
|
| ||||
Employee defined benefit plan re-measurements |
|
|
|
(669 |
) |
8 |
|
(353 |
) |
32 |
| ||||
|
|
|
|
(776 |
) |
29 |
|
(186 |
) |
10 |
| ||||
COMPREHENSIVE INCOME |
|
|
|
$ |
(461 |
) |
$ |
549 |
|
$ |
482 |
|
$ |
967 |
|
NET INCOME ATTRIBUTABLE TO: |
|
|
|
|
|
|
|
|
|
|
| ||||
Common Shares |
|
|
|
$ |
290 |
|
$ |
517 |
|
$ |
640 |
|
$ |
945 |
|
Non-controlling interests |
|
|
|
25 |
|
3 |
|
28 |
|
12 |
| ||||
|
|
|
|
$ |
315 |
|
$ |
520 |
|
$ |
668 |
|
$ |
957 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO: |
|
|
|
|
|
|
|
|
|
|
| ||||
Common Shares |
|
|
|
$ |
(477 |
) |
$ |
543 |
|
$ |
451 |
|
$ |
949 |
|
Non-controlling interests |
|
|
|
16 |
|
6 |
|
31 |
|
18 |
| ||||
|
|
|
|
$ |
(461 |
) |
$ |
549 |
|
$ |
482 |
|
$ |
967 |
|
NET INCOME PER COMMON SHARE* |
|
12 |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
|
|
$ |
0.23 |
|
$ |
0.43 |
|
$ |
0.51 |
|
$ |
0.79 |
|
Diluted |
|
|
|
$ |
0.23 |
|
$ |
0.43 |
|
$ |
0.51 |
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL WEIGHTED AVERAGE COMMON SHARES OUTSTANDING* |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
|
|
1,278 |
|
1,203 |
|
1,263 |
|
1,202 |
| ||||
Diluted |
|
|
|
1,280 |
|
1,203 |
|
1,264 |
|
1,202 |
|
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
condensed interim consolidated statements of financial position |
(unaudited) |
As at (millions) |
|
Note |
|
June 30, |
|
December 31, |
| ||
ASSETS |
|
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
|
| ||
Cash and temporary investments, net |
|
|
|
$ |
971 |
|
$ |
535 |
|
Accounts receivable |
|
6(b) |
|
2,004 |
|
1,962 |
| ||
Income and other taxes receivable |
|
|
|
18 |
|
127 |
| ||
Inventories |
|
1(c) |
|
335 |
|
437 |
| ||
Contract assets |
|
6(c) |
|
538 |
|
737 |
| ||
Prepaid expenses |
|
20 |
|
544 |
|
547 |
| ||
Current derivative assets |
|
4(d) |
|
10 |
|
8 |
| ||
|
|
|
|
4,420 |
|
4,353 |
| ||
Non-current assets |
|
|
|
|
|
|
| ||
Property, plant and equipment, net |
|
17 |
|
14,559 |
|
14,232 |
| ||
Intangible assets, net |
|
18 |
|
13,630 |
|
12,844 |
| ||
Goodwill, net |
|
18 |
|
6,132 |
|
5,309 |
| ||
Contract assets |
|
6(c) |
|
212 |
|
328 |
| ||
Other long-term assets |
|
20 |
|
1,355 |
|
919 |
| ||
|
|
|
|
35,888 |
|
33,632 |
| ||
|
|
|
|
$ |
40,308 |
|
$ |
37,985 |
|
|
|
|
|
|
|
|
| ||
LIABILITIES AND OWNERS EQUITY |
|
|
|
|
|
|
| ||
Current liabilities |
|
|
|
|
|
|
| ||
Short-term borrowings |
|
22 |
|
$ |
100 |
|
$ |
100 |
|
Accounts payable and accrued liabilities |
|
23 |
|
2,873 |
|
2,749 |
| ||
Income and other taxes payable |
|
|
|
155 |
|
55 |
| ||
Dividends payable |
|
13 |
|
372 |
|
352 |
| ||
Advance billings and customer deposits |
|
24 |
|
696 |
|
675 |
| ||
Provisions |
|
25 |
|
83 |
|
288 |
| ||
Current maturities of long-term debt |
|
26 |
|
562 |
|
1,332 |
| ||
Current derivative liabilities |
|
4(d) |
|
9 |
|
23 |
| ||
|
|
|
|
4,850 |
|
5,574 |
| ||
Non-current liabilities |
|
|
|
|
|
|
| ||
Provisions |
|
25 |
|
613 |
|
590 |
| ||
Long-term debt |
|
26 |
|
17,956 |
|
17,142 |
| ||
Other long-term liabilities |
|
27 |
|
1,157 |
|
806 |
| ||
Deferred income taxes |
|
|
|
3,352 |
|
3,214 |
| ||
|
|
|
|
23,078 |
|
21,752 |
| ||
Liabilities |
|
|
|
27,928 |
|
27,326 |
| ||
Owners equity |
|
|
|
|
|
|
| ||
Common equity |
|
28 |
|
12,046 |
|
10,548 |
| ||
Non-controlling interests |
|
|
|
334 |
|
111 |
| ||
|
|
|
|
12,380 |
|
10,659 |
| ||
|
|
|
|
$ |
40,308 |
|
$ |
37,985 |
|
Contingent Liabilities |
|
29 |
|
|
|
|
|
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
condensed interim consolidated statements of changes in owners equity |
(unaudited) |
|
|
|
|
Common equity |
|
|
|
|
| |||||||||||||||||
|
|
|
|
Equity contributed |
|
|
|
Accumulated |
|
|
|
|
|
|
| |||||||||||
|
|
|
|
Common Shares (Note 28) |
|
|
|
|
|
other |
|
|
|
Non- |
|
|
| |||||||||
(millions) |
|
Note |
|
Number of |
|
Share |
|
Contributed |
|
Retained |
|
comprehensive |
|
Total |
|
controlling |
|
Total |
| |||||||
Balance as at January 1, 2019 |
|
|
|
1,197 |
|
$ |
5,390 |
|
$ |
383 |
|
$ |
4,321 |
|
$ |
11 |
|
$ |
10,105 |
|
$ |
74 |
|
$ |
10,179 |
|
Net income |
|
|
|
|
|
|
|
|
|
945 |
|
|
|
945 |
|
12 |
|
957 |
| |||||||
Other comprehensive income |
|
11 |
|
|
|
|
|
|
|
32 |
|
(28 |
) |
4 |
|
6 |
|
10 |
| |||||||
Dividends |
|
13 |
|
|
|
|
|
|
|
(668 |
) |
|
|
(668 |
) |
|
|
(668 |
) | |||||||
Dividends reinvested and optional cash payments |
|
13(b), 14(c) |
|
2 |
|
46 |
|
|
|
|
|
|
|
46 |
|
|
|
46 |
| |||||||
Equity accounted share-based compensation |
|
|
|
|
|
1 |
|
(1 |
) |
|
|
|
|
|
|
|
|
|
| |||||||
Issue of Common Shares in business combination |
|
|
|
3 |
|
72 |
|
|
|
|
|
|
|
72 |
|
|
|
72 |
| |||||||
Balance as at June 30, 2019 |
|
|
|
1,202 |
|
$ |
5,509 |
|
$ |
382 |
|
$ |
4,630 |
|
$ |
(17 |
) |
$ |
10,504 |
|
$ |
92 |
|
$ |
10,596 |
|
Balance as at January 1, 2020 |
|
|
|
1,209 |
|
$ |
5,660 |
|
$ |
398 |
|
$ |
4,371 |
|
$ |
119 |
|
$ |
10,548 |
|
$ |
111 |
|
$ |
10,659 |
|
Net income |
|
|
|
|
|
|
|
|
|
640 |
|
|
|
640 |
|
28 |
|
668 |
| |||||||
Other comprehensive income |
|
11 |
|
|
|
|
|
|
|
(353 |
) |
164 |
|
(189 |
) |
3 |
|
(186 |
) | |||||||
Dividends |
|
13 |
|
|
|
|
|
|
|
(743 |
) |
|
|
(743 |
) |
|
|
(743 |
) | |||||||
Dividends reinvested and optional cash payments |
|
13(b), 14(c) |
|
11 |
|
262 |
|
|
|
|
|
|
|
262 |
|
|
|
262 |
| |||||||
Equity accounted share-based compensation |
|
14(b) |
|
|
|
|
|
58 |
|
|
|
|
|
58 |
|
|
|
58 |
| |||||||
Common Shares issued |
|
28(a) |
|
58 |
|
1,453 |
|
|
|
|
|
|
|
1,453 |
|
|
|
1,453 |
| |||||||
Change of ownership interests of subsidiary |
|
28(d) |
|
|
|
|
|
17 |
|
|
|
|
|
17 |
|
192 |
|
209 |
| |||||||
Balance as at June 30, 2020 |
|
|
|
1,278 |
|
$ |
7,375 |
|
$ |
473 |
|
$ |
3,915 |
|
$ |
283 |
|
$ |
12,046 |
|
$ |
334 |
|
$ |
12,380 |
|
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
condensed interim consolidated statements of cash flows |
|
(unaudited) |
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
|
|
$ |
315 |
|
$ |
520 |
|
$ |
668 |
|
$ |
957 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
|
|
725 |
|
633 |
|
1,450 |
|
1,250 |
| ||||
Deferred income taxes |
|
10 |
|
36 |
|
(39 |
) |
(25 |
) |
(8 |
) | ||||
Share-based compensation expense, net |
|
14(a) |
|
41 |
|
20 |
|
64 |
|
39 |
| ||||
Net employee defined benefit plans expense |
|
15(a) |
|
25 |
|
19 |
|
52 |
|
39 |
| ||||
Employer contributions to employee defined benefit plans |
|
|
|
(12 |
) |
(12 |
) |
(27 |
) |
(28 |
) | ||||
Non-current contract assets |
|
|
|
51 |
|
15 |
|
116 |
|
36 |
| ||||
Non-current unbilled customer finance receivables |
|
20 |
|
(53 |
) |
9 |
|
(94 |
) |
15 |
| ||||
Loss from equity accounted investments |
|
7, 21 |
|
5 |
|
1 |
|
13 |
|
1 |
| ||||
Other |
|
|
|
(75 |
) |
(22 |
) |
(42 |
) |
51 |
| ||||
Net change in non-cash operating working capital |
|
31(a) |
|
404 |
|
16 |
|
464 |
|
(402 |
) | ||||
Cash provided by operating activities |
|
|
|
1,462 |
|
1,160 |
|
2,639 |
|
1,950 |
| ||||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| ||||
Cash payments for capital assets, excluding spectrum licences |
|
31(a) |
|
(694 |
) |
(645 |
) |
(1,474 |
) |
(1,438 |
) | ||||
Cash payments for spectrum licences |
|
|
|
|
|
(931 |
) |
|
|
(931 |
) | ||||
Cash payments for acquisitions, net |
|
18(b) |
|
(107 |
) |
(26 |
) |
(1,211 |
) |
(188 |
) | ||||
Advances to, and investment in, real estate joint ventures and associate |
|
21 |
|
(8 |
) |
(9 |
) |
(88 |
) |
(17 |
) | ||||
Real estate joint venture receipts |
|
21 |
|
1 |
|
1 |
|
3 |
|
2 |
| ||||
Other |
|
|
|
(15 |
) |
10 |
|
(12 |
) |
10 |
| ||||
Cash used by investing activities |
|
|
|
(823 |
) |
(1,600 |
) |
(2,782 |
) |
(2,562 |
) | ||||
FINANCING ACTIVITIES |
|
31(b) |
|
|
|
|
|
|
|
|
| ||||
Common Shares issued |
|
|
|
|
|
|
|
1,495 |
|
|
| ||||
Dividends paid to holders of Common Shares |
|
13(a) |
|
(240 |
) |
(307 |
) |
(462 |
) |
(610 |
) | ||||
Issue (repayment) of short-term borrowings, net |
|
|
|
|
|
(400 |
) |
|
|
|
| ||||
Long-term debt issued |
|
26 |
|
1,000 |
|
2,422 |
|
2,377 |
|
3,588 |
| ||||
Redemptions and repayment of long-term debt |
|
26 |
|
(1,479 |
) |
(1,617 |
) |
(2,967 |
) |
(2,534 |
) | ||||
Shares of subsidiary issued to non-controlling interests |
|
28(d) |
|
|
|
|
|
209 |
|
|
| ||||
Other |
|
|
|
(7 |
) |
(29 |
) |
(73 |
) |
(29 |
) | ||||
Cash provided (used) by financing activities |
|
|
|
(726 |
) |
69 |
|
579 |
|
415 |
| ||||
CASH POSITION |
|
|
|
|
|
|
|
|
|
|
| ||||
Increase (decrease) in cash and temporary investments, net |
|
|
|
(87 |
) |
(371 |
) |
436 |
|
(197 |
) | ||||
Cash and temporary investments, net, beginning of period |
|
|
|
1,058 |
|
588 |
|
535 |
|
414 |
| ||||
Cash and temporary investments, net, end of period |
|
|
|
$ |
971 |
|
$ |
217 |
|
$ |
971 |
|
$ |
217 |
|
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest paid |
|
|
|
$ |
(199 |
) |
$ |
(147 |
) |
$ |
(376 |
) |
$ |
(326 |
) |
Interest received |
|
|
|
$ |
3 |
|
$ |
3 |
|
$ |
6 |
|
$ |
5 |
|
Income taxes paid, net |
|
|
|
|
|
|
|
|
|
|
| ||||
In respect of comprehensive income |
|
|
|
$ |
(11 |
) |
$ |
(122 |
) |
$ |
(104 |
) |
$ |
(458 |
) |
In respect of business acquisitions |
|
|
|
(2 |
) |
|
|
(33 |
) |
(15 |
) | ||||
|
|
|
|
$ |
(13 |
) |
$ |
(122 |
) |
$ |
(137 |
) |
$ |
(473 |
) |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
notes to condensed interim consolidated financial statements |
(unaudited) |
JUNE 30, 2020
TELUS Corporation is one of Canadas largest telecommunications companies, providing a wide range of telecommunications services and products, including wireless and wireline voice and data. Data services include: internet protocol; television; hosting, managed information technology and cloud-based services; healthcare solutions; customer care and business services; and home and business smart technology (including security).
TELUS Corporation was incorporated under the Company Act (British Columbia) on October 26, 1998, under the name BCT.TELUS Communications Inc. (BCT). On January 31, 1999, pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act among BCT, BC TELECOM Inc. and the former Alberta-based TELUS Corporation (TC), BCT acquired all of the shares of BC TELECOM Inc. and TC in exchange for Common Shares and Non-Voting Shares of BCT, and BC TELECOM Inc. was dissolved. On May 3, 2000, BCT changed its name to TELUS Corporation and in February 2005, TELUS Corporation transitioned under the Business Corporations Act (British Columbia), successor to the Company Act (British Columbia). TELUS Corporation maintains its registered office at Floor 7, 510 West Georgia Street, Vancouver, British Columbia, V6B 0M3.
The terms TELUS, we, us, our or ourselves are used to refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.
Notes to condensed interim consolidated financial statements |
|
Page | |
General application |
|
| |
1. |
Condensed interim consolidated financial statements |
|
7 |
2. |
Accounting policy developments |
|
7 |
3. |
Capital structure financial policies |
|
7 |
4. |
Financial instruments |
|
10 |
Consolidated results of operations focused |
|
| |
5. |
Segment information |
|
16 |
6. |
Revenue from contracts with customers |
|
18 |
7. |
Other operating income |
|
19 |
8. |
Employee benefits expense |
|
20 |
9. |
Financing costs |
|
20 |
10. |
Income taxes |
|
21 |
11. |
Other comprehensive income |
|
22 |
12. |
Per share amounts |
|
24 |
13. |
Dividends per share |
|
24 |
14. |
Share-based compensation |
|
25 |
15. |
Employee future benefits |
|
28 |
16. |
Restructuring and other costs |
|
29 |
Consolidated financial position focused |
|
| |
17. |
Property, plant and equipment |
|
30 |
18. |
Intangible assets and goodwill |
|
31 |
19. |
Leases |
|
33 |
20. |
Other long-term assets |
|
34 |
21. |
Real estate joint ventures and investment in associate |
|
34 |
22. |
Short-term borrowings |
|
37 |
23. |
Accounts payable and accrued liabilities |
|
37 |
24. |
Advance billings and customer deposits |
|
37 |
25. |
Provisions |
|
38 |
26. |
Long-term debt |
|
39 |
27. |
Other long-term liabilities |
|
42 |
28. |
Owners equity |
|
42 |
29. |
Contingent liabilities |
|
44 |
Other |
|
|
|
30. |
Related party transactions |
|
45 |
31. |
Additional statement of cash flow information |
|
47 |
notes to condensed interim consolidated financial statements |
(unaudited) |
1 condensed interim consolidated financial statements
(a) Basis of presentation
The notes presented in our condensed interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our interim consolidated financial statements are referred to as condensed. Our condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2019.
Our condensed interim consolidated financial statements are expressed in Canadian dollars and follow the same accounting policies and methods of their application as set out in our consolidated financial statements for the year ended December 31, 2019. The generally accepted accounting principles that we use are International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) and Canadian generally accepted accounting principles. Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.
These consolidated financial statements for the three-month and six-month periods ended June 30, 2020, were authorized by our Board of Directors for issue on July 31, 2020.
(b) Use of estimates and judgments
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates (including about the future effects of the COVID-19 pandemic), assumptions and judgments that affect: the reported amounts of assets and liabilities at the date of the financial statements; the disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(c) Inventories
Our inventories primarily consist of wireless handsets, parts and accessories totalling $266 million at June 30, 2020 (December 31, 2019 $375 million) and communications equipment held for resale. Costs of goods sold for the three-month and six-month periods ended June 30, 2020, totalled $384 million (2019 $484 million) and $786 million (2019 $943 million), respectively.
2 accounting policy developments
Initial application of standards, interpretations and amendments to standards and interpretations in the reporting period
In October 2018, the International Accounting Standards Board amended IFRS 3, Business Combinations, seeking to clarify whether an acquisition transaction results in the acquisition of an asset or the acquisition of a business. The amendments are effective for acquisition transactions on or after January 1, 2020, although earlier application was permitted. The amended standard has a narrower definition of a business, which could result in the recognition of fewer business combinations than under the previous standard; the implication of this is that amounts which may have been recognized as goodwill in a business combination under the previous standard may now be recognized as allocations to net identifiable assets acquired under the amended standard (with an associated effect in an entitys results of operations that would differ from the effect of goodwill having been recognized). We have applied the standard prospectively from January 1, 2020. The effects of the amended standard on our financial performance and disclosure will be dependent on the facts and circumstances of any future acquisition transactions and have not been material in the current fiscal year.
3 capital structure financial policies
General
Our objective when managing capital is to maintain a flexible capital structure that optimizes the cost and availability of capital at acceptable risk.
In the management of capital and in its definition, we include common equity (excluding accumulated other comprehensive income), long-term debt (including long-term credit facilities, commercial paper backstopped by long-term credit facilities and any hedging assets or liabilities associated with long-term debt items, net of amounts recognized
notes to condensed interim consolidated financial statements |
(unaudited) |
in accumulated other comprehensive income), cash and temporary investments, and short-term borrowings arising from securitized trade receivables.
We manage our capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of our business. In order to maintain or adjust our capital structure, we may adjust the amount of dividends paid to holders of Common Shares, purchase Common Shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or increase or decrease the amount of trade receivables sold to an arms-length securitization trust.
During 2020, our financial objectives, which are reviewed annually, were unchanged from 2019, excepting for a change in methodology of our dividend payout ratio. We believe that our financial objectives are supportive of our long-term strategy.
We monitor capital utilizing a number of measures, including: net debt to earnings before interest, income taxes, depreciation and amortization (EBITDA*) excluding restructuring and other costs ratio; coverage ratios; and dividend payout ratios.
Debt and coverage ratios
Net debt to EBITDA excluding restructuring and other costs is calculated as net debt at the end of the period, divided by 12-month trailing EBITDA excluding restructuring and other costs. This measure, historically, is substantially similar to the leverage ratio covenant in our credit facilities. Net debt and EBITDA excluding restructuring and other costs are measures that do not have any standardized meanings prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other companies. The calculation of these measures is set out in the following table. Net debt is one component of a ratio used to determine compliance with debt covenants.
As at, or for the 12-month periods ended, June 30 ($ in millions) |
|
Objective |
|
2020 |
|
2019 |
| ||
Components of debt and coverage ratios |
|
|
|
|
|
|
| ||
Net debt 1 |
|
|
|
$ |
17,664 |
|
$ |
16,602 |
|
EBITDA excluding restructuring and other costs 2 |
|
|
|
$ |
5,769 |
|
$ |
5,649 |
|
Net interest cost 3 |
|
|
|
$ |
797 |
|
$ |
706 |
|
Debt ratio |
|
|
|
|
|
|
| ||
Net debt to EBITDA excluding restructuring and other costs |
|
2.20 2.704 |
|
3.06 |
|
2.94 |
| ||
Coverage ratios |
|
|
|
|
|
|
| ||
Earnings coverage 5 |
|
|
|
3.6 |
|
4.2 |
| ||
EBITDA excluding restructuring and other costs interest coverage 6 |
|
|
|
7.2 |
|
8.0 |
|
(1) Net debt and total capitalization are calculated as follows:
As at June 30 |
|
Note |
|
2020 |
|
2019 |
| ||
Long-term debt |
|
26 |
|
$ |
18,518 |
|
$ |
16,579 |
|
Debt issuance costs netted against long-term debt |
|
|
|
96 |
|
105 |
| ||
Derivative (assets) liabilities, net |
|
|
|
(392 |
) |
92 |
| ||
Accumulated other comprehensive income amounts arising from financial instruments used to manage interest rate and currency risks associated with U.S. dollar-denominated long-term debt excluding tax effects |
|
|
|
313 |
|
(57 |
) | ||
Cash and temporary investments, net |
|
|
|
(971 |
) |
(217 |
) | ||
Short-term borrowings |
|
22 |
|
100 |
|
100 |
| ||
Net debt |
|
|
|
17,664 |
|
16,602 |
| ||
Common equity |
|
|
|
12,046 |
|
10,504 |
| ||
Less: accumulated other comprehensive income included in common equity above |
|
|
|
(283 |
) |
17 |
| ||
Total capitalization |
|
|
|
$ |
29,427 |
|
$ |
27,123 |
|
(2) EBITDA excluding restructuring and other costs is calculated as follows:
|
|
EBITDA |
|
Restructuring |
|
EBITDA |
| |||
Add |
|
|
|
|
|
|
| |||
Six-month period ended June 30, 2020 |
|
$ |
2,768 |
|
$ |
130 |
|
$ |
2,898 |
|
Year ended December 31, 2019 |
|
5,554 |
|
134 |
|
5,688 |
| |||
Deduct |
|
|
|
|
|
|
| |||
Six-month period ended June 30, 2019 |
|
(2,752 |
) |
(65 |
) |
(2,817 |
) | |||
EBITDA excluding restructuring and other costs |
|
$ |
5,570 |
|
$ |
199 |
|
$ |
5,769 |
|
* EBITDA does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define EBITDA as operating revenues less goods and services purchased and employee benefits expense. We have issued guidance on, and report, EBITDA because it is a key measure that management uses to evaluate the performance of our business, and it is also utilized in measuring compliance with certain debt covenants.
notes to condensed interim consolidated financial statements |
(unaudited) |
(3) Net interest cost is defined as financing costs, excluding employee defined benefit plans net interest, recoveries on long-term debt prepayment premium and repayment of debt, calculated on a 12-month trailing basis (expenses recorded for long-term debt prepayment premium, if any, are included in net interest cost) (see Note 9).
(4) Our long-term objective range for this ratio is 2.20 2.70 times. The ratio as at June 30, 2020, is outside the long-term objective range. We may permit, and have permitted, this ratio to go outside the objective range (for long-term investment opportunities), but we will endeavour to return this ratio to within the objective range in the medium term (following upcoming spectrum auctions), as we believe that this range is supportive of our long-term strategy. We are in compliance with the leverage ratio covenant in our credit facilities, which states that we may not permit our net debt to operating cash flow ratio to exceed 4.00:1.00 (see Note 26(d)); the calculation of the debt ratio is substantially similar to the calculation of the leverage ratio covenant in our credit facilities.
(5) Earnings coverage is defined by Canadian Securities Administrators National Instrument 41-101 as net income before borrowing costs and income tax expense, divided by borrowing costs (interest on long-term debt; interest on short-term borrowings and other; long-term debt prepayment premium), and adding back capitalized interest, all such amounts excluding amounts attributable to non-controlling interests.
(6) EBITDA excluding restructuring and other costs interest coverage is defined as EBITDA excluding restructuring and other costs, divided by net interest cost. This measure is substantially similar to the coverage ratio covenant in our credit facilities.
Net debt to EBITDA excluding restructuring and other costs was 3.06 times as at June 30, 2020, up from 2.94 times one year earlier. The effect of the increase in net debt was exceeded by the effect of growth in EBITDA excluding restructuring and other costs. The earnings coverage ratio for the twelve-month period ended June 30, 2020, was 3.6 times, down from 4.2 times one year earlier. Higher borrowing costs reduced the ratio by 0.5 and a decrease in income before borrowing costs and income taxes decreased the ratio by 0.1. The EBITDA excluding restructuring and other costs interest coverage ratio for the twelve-month period ended June 30, 2020, was 7.2 times, down from 8.0 times one year earlier. Growth in EBITDA excluding restructuring and other costs increased the ratio by 0.2, while an increase in net interest costs reduced the ratio by 1.0.
Dividend payout ratio
Commencing in 2020, so as to be consistent with the way we manage our business, we updated our revised dividend payout ratio presented to be a historical measure calculated as the sum of the last four quarters dividends declared for Common Shares as recorded in the financial statements, net of dividend reinvestment plan effects (see Note 13), divided by the sum of free cash flow* amounts for the most recent four quarters for interim reporting periods (divided by annual free cash flow if the reported amount is in respect of a fiscal year).
For the 12-month periods ended June 30 |
|
Objective |
|
2020 |
|
2019 |
|
Determined using management measures |
|
|
|
|
|
|
|
Dividend payout ratio net of dividend reinvestment plan effects |
|
60%75% 1 |
|
61 |
% |
133 |
% |
Determined using most comparable IFRS-IASB measures |
|
|
|
|
|
|
|
Ratio of dividends declared to cash provided by operating activities less capital expenditures (excluding spectrum licences) |
|
|
|
84 |
% |
122 |
% |
(1) Our objective range for the dividend payout ratio is 60%-75% of free cash flow on a prospective basis.
12-month periods ended June 30 (millions) |
|
2020 |
|
2019 |
| ||
Dividends declared |
|
$ |
1,433 |
|
$ |
1,307 |
|
Amount of dividends declared reinvested in Common Shares |
|
(516 |
) |
(90 |
) | ||
Dividends declared, net of dividend reinvestment plan effects |
|
$ |
917 |
|
$ |
1,217 |
|
* Free cash flow does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define free cash flow as EBITDA (operating revenues less goods and services purchased and employee benefits expense) excluding certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the consolidated statements of cash flows. We have issued guidance on, and report, free cash flow because it is a key measure that management, and investors, use to evaluate the performance of our business.
notes to condensed interim consolidated financial statements |
(unaudited) |
Our calculation of free cash flow, and the reconciliation to cash provided by operating activities, is as follows:
12-month periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
| ||
EBITDA |
|
5 |
|
$ |
5,570 |
|
$ |
5,336 |
|
Deduct non-cash gains from sale of property, plant and equipment |
|
|
|
(13 |
) |
(43 |
) | ||
Restructuring and other costs, net of disbursements |
|
|
|
22 |
|
43 |
| ||
Effects of contract asset, acquisition and fulfilment and TELUS Easy Payment device financing |
|
|
|
43 |
|
(172 |
) | ||
Effects of lease principal |
|
31(b) |
|
(346 |
) |
(152 |
) | ||
Leases accounted for as finance leases prior to adoption of IFRS 16 |
|
|
|
136 |
|
26 |
| ||
Deduct non-recurring gains and equity income related to real estate joint ventures |
|
21(b) |
|
|
|
(171 |
) | ||
Donation to TELUS Friendly Future Foundation in Common Shares |
|
|
|
|
|
100 |
| ||
Items from consolidated statements of cash flows: |
|
|
|
|
|
|
| ||
Share-based compensation, net |
|
14 |
|
23 |
|
2 |
| ||
Net employee defined benefit plans expense |
|
15 |
|
91 |
|
85 |
| ||
Employer contributions to employee defined benefit plans |
|
|
|
(40 |
) |
(46 |
) | ||
Interest paid |
|
|
|
(764 |
) |
(654 |
) | ||
Interest received |
|
|
|
8 |
|
9 |
| ||
Capital expenditures (excluding spectrum licences) |
|
5 |
|
(2,911 |
) |
(2,889 |
) | ||
Free cash flow before income taxes |
|
|
|
1,819 |
|
1,474 |
| ||
Income taxes paid, net of refunds |
|
|
|
(308 |
) |
(562 |
) | ||
Free cash flow |
|
|
|
1,511 |
|
912 |
| ||
Add (deduct): |
|
|
|
|
|
|
| ||
Capital expenditures (excluding spectrum licences) |
|
5 |
|
2,911 |
|
2,889 |
| ||
Adjustments to reconcile to Cash provided by operating activities |
|
|
|
194 |
|
163 |
| ||
Cash provided by operating activities |
|
|
|
$ |
4,616 |
|
$ |
3,964 |
|
4 financial instruments
(a) Credit risk
Excluding credit risk, if any, arising from currency swaps settled on a gross basis, the best representation of our maximum exposure (excluding income tax effects) to credit risk, which is a worst-case scenario and does not reflect results we expect, is set out in the following table:
As at (millions) |
|
June 30, |
|
December 31, |
| ||
Cash and temporary investments, net |
|
$ |
971 |
|
$ |
535 |
|
Accounts receivable |
|
2,323 |
|
2,187 |
| ||
Contract assets |
|
750 |
|
1,065 |
| ||
Derivative assets |
|
423 |
|
84 |
| ||
|
|
$ |
4,467 |
|
$ |
3,871 |
|
Cash and temporary investments, net
Credit risk associated with cash and temporary investments is managed by ensuring that these financial assets are placed with: governments; major financial institutions that have been accorded strong investment grade ratings by a primary rating agency; and/or other creditworthy counterparties. An ongoing review evaluates changes in the status of counterparties.
Accounts receivable
Credit risk associated with accounts receivable is inherently managed by the size and diversity of our large customer base, which includes substantially all consumer and business sectors in Canada. We follow a program of credit evaluations of customers and limit the amount of credit extended when deemed necessary. Accounts are considered to be past due (in default) when customers have failed to make the contractually required payments when due, which is generally within 30 days of the billing date. Any late payment charges are levied at an industry-based market or negotiated rate on outstanding non-current customer account balances.
notes to condensed interim consolidated financial statements |
|
(unaudited) |
As at (millions) |
|
|
|
June 30, 2020 |
|
December 31, 2019 |
| ||||||||||||||
|
|
Note |
|
Gross |
|
Allowance |
|
Net 1 |
|
Gross |
|
Allowance |
|
Net 1 |
| ||||||
Customer accounts receivable, net of allowance for doubtful accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Less than 30 days past billing date |
|
|
|
$ |
826 |
|
$ |
(22 |
) |
$ |
804 |
|
$ |
803 |
|
$ |
(10 |
) |
$ |
793 |
|
30-60 days past billing date |
|
|
|
262 |
|
(15 |
) |
247 |
|
331 |
|
(8 |
) |
323 |
| ||||||
61-90 days past billing date |
|
|
|
129 |
|
(14 |
) |
115 |
|
74 |
|
(5 |
) |
69 |
| ||||||
More than 90 days past billing date |
|
|
|
114 |
|
(27 |
) |
87 |
|
73 |
|
(14 |
) |
59 |
| ||||||
Unbilled customer finance receivables |
|
|
|
717 |
|
(26 |
) |
691 |
|
523 |
|
(18 |
) |
505 |
| ||||||
|
|
|
|
$ |
2,048 |
|
$ |
(104 |
) |
$ |
1,944 |
|
$ |
1,804 |
|
$ |
(55 |
) |
$ |
1,749 |
|
Current |
|
|
|
$ |
1,719 |
|
$ |
(94 |
) |
$ |
1,625 |
|
$ |
1,570 |
|
$ |
(46 |
) |
$ |
1,524 |
|
Non-current |
|
20 |
|
329 |
|
(10 |
) |
319 |
|
234 |
|
(9 |
) |
225 |
| ||||||
|
|
|
|
$ |
2,048 |
|
$ |
(104 |
) |
$ |
1,944 |
|
$ |
1,804 |
|
$ |
(55 |
) |
$ |
1,749 |
|
(1) Net amounts represent customer accounts receivable for which an allowance had not been made as at the dates of the Consolidated statements of financial position (see Note 6(b)).
We maintain allowances for lifetime expected credit losses related to doubtful accounts. Current economic conditions (including forward-looking macroeconomic data), historical information (including credit agency reports, if available), reasons for the accounts being past due and the line of business from which the customer accounts receivable arose are all considered when determining whether to make allowances for past-due accounts. The same factors are considered when determining whether to write off amounts charged to the allowance for doubtful accounts against the customer accounts receivable; amounts charged to the customer accounts receivable allowance for doubtful accounts that were written off but were still subject to enforcement activity as at June 30, 2020, totalled $541 million (December 31, 2019 $449 million). The doubtful accounts expense is calculated on a specific-identification basis for customer accounts receivable above a specific balance threshold and on a statistically derived allowance basis for the remainder. No customer accounts receivable are written off directly to the doubtful accounts expense.
The following table presents a summary of the activity related to our allowance for doubtful accounts.
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Balance, beginning of period |
|
$ |
56 |
|
$ |
43 |
|
$ |
55 |
|
$ |
53 |
|
Additions (doubtful accounts expense) |
|
46 |
|
10 |
|
58 |
|
21 |
| ||||
Accounts written off, net of recoveries |
|
(6 |
) |
(11 |
) |
(18 |
) |
(33 |
) | ||||
Other |
|
8 |
|
|
|
9 |
|
1 |
| ||||
Balance, end of period |
|
$ |
104 |
|
$ |
42 |
|
$ |
104 |
|
$ |
42 |
|
Contract assets
Credit risk associated with contract assets is inherently managed by the size and diversity of our large customer base, which includes substantially all consumer and business sectors in Canada. We follow a program of credit evaluations of customers and limit the amount of credit extended when deemed necessary.
As at (millions) |
|
June 30, 2020 |
|
December 31, 2019 |
| ||||||||||||||
|
|
Gross |
|
Allowance |
|
Net (Note 6(c)) |
|
Gross |
|
Allowance |
|
Net (Note 6(c)) |
| ||||||
Contract assets, net of impairment allowance |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
To be billed and thus reclassified to accounts receivable during: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
The 12-month period ending one year hence |
|
$ |
730 |
|
$ |
(41 |
) |
$ |
689 |
|
$ |
952 |
|
$ |
(42 |
) |
$ |
910 |
|
The 12-month period ending two years hence |
|
209 |
|
(12 |
) |
197 |
|
322 |
|
(14 |
) |
308 |
| ||||||
Thereafter |
|
16 |
|
(1 |
) |
15 |
|
21 |
|
(1 |
) |
20 |
| ||||||
|
|
$ |
955 |
|
$ |
(54 |
) |
$ |
901 |
|
$ |
1,295 |
|
$ |
(57 |
) |
$ |
1,238 |
|
We maintain allowances for lifetime expected credit losses related to contract assets. Current economic conditions, historical information (including credit agency reports, if available), and the line of business from which the contract asset arose are all considered when determining impairment allowances. The same factors are considered when determining whether to write off amounts charged to the impairment allowance for contract assets against contract assets.
Derivative assets (and derivative liabilities)
Counterparties to our share-based compensation cash-settled equity forward agreements and foreign exchange derivatives are major financial institutions that have been accorded investment grade ratings by a primary credit rating agency. The total dollar amount of credit exposure under contracts with any one financial institution is limited and counterparties credit ratings are monitored. We do not give or receive collateral on swap agreements and hedging items
notes to condensed interim consolidated financial statements |
|
(unaudited) |
due to our credit rating and those of our counterparties. While we are exposed to the risk of potential credit losses due to the possible non-performance of our counterparties, we consider this risk remote. Our derivative liabilities do not have credit risk-related contingent features.
(b) Liquidity risk
As a component of our capital structure financial policies, discussed further in Note 3, we manage liquidity risk by:
· maintaining a daily cash pooling process that enables us to manage our available liquidity and our liquidity requirements according to our actual needs;
· maintaining an agreement to sell trade receivables to an arms-length securitization trust and bilateral bank facilities (Note 22), a commercial paper program (Note 26(c)) and syndicated credit facilities (Note 26(d),(e));
· maintaining an in-effect shelf prospectus;
· continuously monitoring forecast and actual cash flows; and
· managing maturity profiles of financial assets and financial liabilities.
Our debt maturities in future years are as disclosed in Note 26(g). As at June 30, 2020, we could offer $2.5 billion of debt or equity securities pursuant to a shelf prospectus that is in effect until June 2022 (December 31, 2019 $2.0 billion pursuant to a shelf prospectus that was in effect until August 2021). We believe that our investment grade credit ratings contribute to reasonable access to capital markets.
We closely match the contractual maturities of our derivative financial liabilities with those of the risk exposures they are being used to manage.
The expected maturities of our undiscounted financial liabilities do not differ significantly from the contractual maturities, other than as noted below. The contractual maturities of our undiscounted financial liabilities, including interest thereon (where applicable), are set out in the following tables:
|
|
Non-derivative |
|
Derivative |
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
|
Composite long-term debt |
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
|
Non-interest |
|
|
|
Long-term |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
|
|
bearing |
|
|
|
excluding |
|
|
|
Currency swap agreement |
|
|
|
Currency swap agreement |
|
|
| ||||||||||||||
As at June 30, 2020 |
|
financial |
|
Short-term |
|
leases 1 |
|
Leases |
|
amounts to be exchanged 2 |
|
|
|
amounts to be exchanged |
|
|
| ||||||||||||||
(millions) |
|
liabilities |
|
borrowings 1 |
|
(Note 26) |
|
(Note 26) |
|
(Receive) |
|
Pay |
|
Other |
|
(Receive) |
|
Pay |
|
Total |
| ||||||||||
2020 (balance of year) |
|
$ |
2,329 |
|
$ |
|
|
$ |
352 |
|
$ |
213 |
|
$ |
(80 |
) |
$ |
73 |
|
$ |
4 |
|
$ |
(251 |
) |
$ |
244 |
|
$ |
2,884 |
|
2021 |
|
161 |
|
101 |
|
867 |
|
398 |
|
(160 |
) |
151 |
|
1 |
|
(203 |
) |
205 |
|
1,521 |
| ||||||||||
2022 |
|
10 |
|
|
|
1,904 |
|
252 |
|
(160 |
) |
151 |
|
8 |
|
|
|
|
|
2,165 |
| ||||||||||
2023 |
|
8 |
|
|
|
1,137 |
|
214 |
|
(160 |
) |
150 |
|
|
|
|
|
|
|
1,349 |
| ||||||||||
2024 |
|
8 |
|
|
|
1,694 |
|
177 |
|
(160 |
) |
150 |
|
|
|
|
|
|
|
1,869 |
| ||||||||||
2025-2029 |
|
20 |
|
|
|
9,153 |
|
475 |
|
(2,451 |
) |
2,393 |
|
|
|
|
|
|
|
9,590 |
| ||||||||||
Thereafter |
|
|
|
|
|
10,975 |
|
418 |
|
(3,168 |
) |
3,020 |
|
|
|
|
|
|
|
11,245 |
| ||||||||||
Total |
|
$ |
2,536 |
|
$ |
101 |
|
$ |
26,082 |
|
$ |
2,147 |
|
$ |
(6,339 |
) |
$ |
6,088 |
|
$ |
13 |
|
$ |
(454 |
) |
$ |
449 |
|
$ |
30,623 |
|
|
|
|
|
|
|
Total (Note 26(g)) |
|
|
|
$ |
27,978 |
|
|
|
|
|
|
|
|
|
(1) Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at June 30, 2020.
(2) The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar-denominated long-term debt, and the corresponding amounts in the long-term debt currency swaps receive column, have been determined based upon the currency exchange rates in effect as at June 30, 2020. The hedged U.S. dollar-denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swaps pay column as gross cash flows are exchanged pursuant to the currency swap agreements.
notes to condensed interim consolidated financial statements |
|
(unaudited) |
|
|
Non-derivative |
|
Derivative |
|
|
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Composite long-term debt |
|
|
|
|
|
|
|
|
| |||||||||||||||||
|
|
Non-interest |
|
|
|
Construction |
|
Long-term |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
As at |
|
bearing |
|
|
|
credit facilities |
|
debt, |
|
|
|
Currency swap agreement |
|
|
|
Currency swap agreement |
|
|
| |||||||||||||||
December 31, |
|
financial |
|
Short-term |
|
commitment |
|
excluding |
|
|
|
amounts to be exchanged 2 |
|
|
|
amounts to be exchanged |
|
|
| |||||||||||||||
2019 (millions) |
|
liabilities |
|
borrowings 1 |
|
(Note 21) |
|
leases 1 |
|
Leases |
|
(Receive) |
|
Pay |
|
Other |
|
(Receive) |
|
Pay |
|
Total |
| |||||||||||
2020 |
|
$ |
2,639 |
|
$ |
3 |
|
$ |
10 |
|
$ |
1,657 |
|
$ |
373 |
|
$ |
(1,140 |
) |
$ |
1,153 |
|
$ |
|
|
$ |
(917 |
) |
$ |
921 |
|
$ |
4,699 |
|
2021 |
|
43 |
|
103 |
|
|
|
1,698 |
|
338 |
|
(119 |
) |
118 |
|
|
|
|
|
|
|
2,181 |
| |||||||||||
2022 |
|
7 |
|
|
|
|
|
2,235 |
|
207 |
|
(119 |
) |
118 |
|
8 |
|
|
|
|
|
2,456 |
| |||||||||||
2023 |
|
5 |
|
|
|
|
|
1,021 |
|
189 |
|
(119 |
) |
118 |
|
|
|
|
|
|
|
1,214 |
| |||||||||||
2024 |
|
5 |
|
|
|
|
|
1,595 |
|
157 |
|
(119 |
) |
118 |
|
|
|
|
|
|
|
1,756 |
| |||||||||||
2025-2029 |
|
4 |
|
|
|
|
|
7,311 |
|
429 |
|
(1,919 |
) |
1,944 |
|
|
|
|
|
|
|
7,769 |
| |||||||||||
Thereafter |
|
|
|
|
|
|
|
10,102 |
|
388 |
|
(3,019 |
) |
3,020 |
|
|
|
|
|
|
|
10,491 |
| |||||||||||
Total |
|
$ |
2,703 |
|
$ |
106 |
|
$ |
10 |
|
$ |
25,619 |
|
$ |
2,081 |
|
$ |
(6,554 |
) |
$ |
6,589 |
|
$ |
8 |
|
$ |
(917 |
) |
$ |
921 |
|
$ |
30,566 |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
27,735 |
|
|
|
|
|
|
|
|
|
(1) Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at December 31, 2019.
(2) The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar-denominated long-term debt, and the corresponding amounts in the long-term debt currency swaps receive column, have been determined based upon the currency exchange rates in effect as at December 31, 2019. The hedged U.S. dollar-denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swaps pay column as gross cash flows are exchanged pursuant to the currency swap agreements.
(c) Market risks
Net income and other comprehensive income for the six-month periods ended June 30, 2020 and 2019, could have varied if the Canadian dollar: U.S. dollar exchange rate, the U.S. dollar: European euro exchange rate, market interest rates and our Common Share price varied by reasonably possible amounts from their actual statement of financial position date amounts.
The sensitivity analysis of our exposure to currency risk at the reporting date has been determined based upon a hypothetical change taking place at the relevant statement of financial position date. The U.S. dollar-denominated and European euro-denominated balances and derivative financial instrument notional amounts as at the statement of financial position dates have been used in the calculations.
The sensitivity analysis of our exposure to interest rate risk at the reporting date has been determined based upon a hypothetical change taking place at the beginning of the relevant fiscal year and being held constant through to the statement of financial position date. The relevant statement of financial position date principal and notional amounts have been used in the calculations.
The sensitivity analysis of our exposure to other price risk arising from share-based compensation at the reporting date has been determined based upon a hypothetical change taking place at the relevant statement of financial position date. The relevant notional number of Common Shares at the relevant statement of financial position date, which includes those in the cash-settled equity swap agreements, has been used in the calculations.
Income tax expense, which is reflected net in the sensitivity analysis, reflects the applicable statutory income tax rates for the reporting periods.
Six-month periods ended June 30 |
|
Net income |
|
Other comprehensive income |
|
Comprehensive income |
| ||||||||||||
(increase (decrease) in millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||||
Reasonably possible changes in market risks 1 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
10% change in C$: US$ exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Canadian dollar appreciates |
|
$ |
4 |
|
$ |
|
|
$ |
(66 |
) |
$ |
(55 |
) |
$ |
(62 |
) |
$ |
(55 |
) |
Canadian dollar depreciates |
|
$ |
(4 |
) |
$ |
|
|
$ |
66 |
|
$ |
55 |
|
$ |
62 |
|
$ |
55 |
|
10% change in US$: exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
U.S. dollar appreciates |
|
$ |
|
|
$ |
|
|
$ |
(55 |
) |
$ |
|
|
$ |
(55 |
) |
$ |
|
|
U.S. dollar depreciates |
|
$ |
|
|
$ |
|
|
$ |
55 |
|
$ |
|
|
$ |
55 |
|
$ |
|
|
25 basis point change in interest rates |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest rates increase |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Canadian interest rate |
|
$ |
|
|
$ |
|
|
$ |
118 |
|
$ |
94 |
|
$ |
118 |
|
$ |
94 |
|
US interest rate |
|
$ |
|
|
$ |
|
|
$ |
(129 |
) |
$ |
(90 |
) |
$ |
(129 |
) |
$ |
(90 |
) |
Combined |
|
$ |
|
|
$ |
|
|
$ |
(11 |
) |
$ |
4 |
|
$ |
(11 |
) |
$ |
4 |
|
Interest rates decrease |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Canadian interest rate |
|
$ |
|
|
$ |
|
|
$ |
(124 |
) |
$ |
(99 |
) |
$ |
(124 |
) |
$ |
(99 |
) |
US interest rate |
|
$ |
|
|
$ |
|
|
$ |
137 |
|
$ |
95 |
|
$ |
137 |
|
$ |
95 |
|
Combined |
|
$ |
|
|
$ |
|
|
$ |
13 |
|
$ |
(4 |
) |
$ |
13 |
|
$ |
(4 |
) |
notes to condensed interim consolidated financial statements |
|
(unaudited) |
Six-month periods ended June 30 |
|
Net income |
|
Other comprehensive income |
|
Comprehensive income |
| ||||||||||||
(increase (decrease) in millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||||
25% 2 change in Common Share price 3 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Price increases |
|
$ |
(8 |
) |
$ |
(4 |
) |
$ |
3 |
|
$ |
1 |
|
$ |
(5 |
) |
$ |
(3 |
) |
Price decreases |
|
$ |
13 |
|
$ |
19 |
|
$ |
(3 |
) |
$ |
(1 |
) |
$ |
10 |
|
$ |
18 |
|
(1) These sensitivities are hypothetical and should be used with caution. Changes in net income and/or other comprehensive income generally cannot be extrapolated because the relationship of the change in assumption to the change in net income and/or other comprehensive income may not be linear. In this table, the effect of a variation in a particular assumption on the amount of net income and/or other comprehensive income is calculated without changing any other factors; in reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.
The sensitivity analysis assumes that we would realize the changes in exchange rates and market interest rates; in reality, the competitive marketplace in which we operate would have an effect on this assumption.
No consideration has been made for a difference in the notional number of Common Shares associated with share-based compensation awards made during the reporting period that may have arisen due to a difference in the Common Share price.
(2) To facilitate ongoing comparison of sensitivities, a constant variance of approximate magnitude has been used. Reflecting a six-month data period and calculated on a monthly basis, the volatility of our Common Share price as at June 30, 2020, was 22.8% (2019 12.5%).
(3) The hypothetical effects of changes in the price of our Common Shares are restricted to those which would arise from our share-based compensation awards that are accounted for as liability instruments and the associated cash-settled equity swap agreements.
(d) Fair values
Derivative
The derivative financial instruments that we measure at fair value on a recurring basis subsequent to initial recognition are set out in the following table.
As at (millions) |
|
June 30, 2020 |
|
December 31, 2019 |
| |||||||||||||||||||
|
|
Designation |
|
Maximum |
|
Notional |
|
Fair value 1 and |
|
Price or |
|
Maximum |
|
Notional |
|
Fair value 1 and |
|
Price or |
| |||||
Current Assets 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivatives used to manage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Currency risk arising from U.S. dollar-denominated purchases |
|
HFH 3 |
|
2021 |
|
$ |
249 |
|
$ |
8 |
|
US$1.00: C$1.32 |
|
|
|
$ |
|
|
$ |
|
|
|
| |
Currency risk arising from U.S. dollar revenues |
|
HFT 4 |
|
2021 |
|
$ |
76 |
|
2 |
|
US$1.00: C$1.36 |
|
2020 |
|
$ |
36 |
|
1 |
|
US$1.00: C$1.30 |
| |||
Changes in share-based compensation costs (Note 14(b)) |
|
HFH 3 |
|
|
|
$ |
|
|
|
|
|
|
2020 |
|
$ |
72 |
|
4 |
|
$ |
24.40 |
* | ||
Currency risk associated with European euro-denominated business acquisition |
|
HFH 3 |
|
|
|
$ |
|
|
|
|
|
|
2020 |
|
$ |
472 |
|
3 |
|
1.00: US$1.12 |
| |||
|
|
|
|
|
|
|
|
$ |
10 |
|
|
|
|
|
|
|
$ |
8 |
|
|
| |||
Other Long-Term Assets 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivatives used to manage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Currency risks arising from U.S. dollar-denominated long-term debt 6 (Note 26(b)-(c)) |
|
HFH 3 |
|
2049 |
|
$ |
5,495 |
|
$ |
413 |
|
US$1.00: C$1.30 |
|
2048 |
|
$ |
3,068 |
|
$ |
76 |
|
US$1.00: C$1.28 |
| |
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
|
(unaudited) |
As at (millions) |
|
June 30, 2020 |
|
December 31, 2019 |
| |||||||||||||||||||
|
|
Designation |
|
Maximum |
|
Notional |
|
Fair value 1 and |
|
Price or |
|
Maximum |
|
Notional |
|
Fair value 1 and |
|
Price or |
| |||||
Current Liabilities 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivatives used to manage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Currency risk arising from U.S. dollar-denominated purchases |
|
HFH 3 |
|
2021 |
|
$ |
123 |
|
$ |
3 |
|
US$1.00: C$1.40 |
|
2020 |
|
$ |
412 |
|
$ |
6 |
|
US$1.00: C$1.32 |
| |
Changes in share-based compensation costs (Note 14(b)) |
|
HFH 3 |
|
2020 |
|
$ |
72 |
|
4 |
|
$ |
24.39 |
* |
|
|
$ |
|
|
|
|
|
| ||
Currency risk arising from U.S. dollar-denominated long-term debt (Note 26(b)-(c)) |
|
HFH 3 |
|
|
|
$ |
|
|
|
|
|
|
2020 |
|
$ |
1,037 |
|
17 |
|
US$1.00: C$1.32 |
| |||
Currency risk arising from European euro functional currency operations purchased with U.S. dollar-denominated long-term debt 7 (Notes 18(b), 26(e)) |
|
HFH 5 |
|
2024 |
|
$ |
33 |
|
2 |
|
1.00: US$1.09 |
|
|
|
$ |
|
|
|
|
|
| |||
Interest rate risk associated with non-fixed rate credit facility amounts drawn (Note 26(e)) |
|
HFH 3 |
|
2022 |
|
$ |
8 |
|
|
|
2.64 |
% |
2022 |
|
$ |
8 |
|
|
|
2.64 |
% | |||
|
|
|
|
|
|
|
|
$ |
9 |
|
|
|
|
|
|
|
$ |
23 |
|
|
| |||
Other Long-Term Liabilities 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivatives used to manage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Currency risk arising from U.S. dollar-denominated long-term debt 6 (Note 26(b)-(c)) |
|
HFH 3 |
|
|
|
$ |
|
|
$ |
|
|
|
|
2049 |
|
$ |
2,485 |
|
22 |
|
US$1.00: C$1.34 |
| ||
Currency risk arising from European euro functional currency operations purchased with U.S. dollar-denominated long-term debt 7 (Notes 18(b), 26(e)) |
|
HFH 5 |
|
2025 |
|
$ |
563 |
|
19 |
|
1.00: US$1.09 |
|
|
|
$ |
|
|
|
|
|
| |||
Interest rate risk associated with non-fixed rate credit facility amounts drawn (Note 26(e)) |
|
HFH 3 |
|
2022 |
|
$ |
133 |
|
8 |
|
2.64 |
% |
2022 |
|
$ |
130 |
|
4 |
|
2.64 |
% | |||
|
|
|
|
|
|
|
|
$ |
27 |
|
|
|
|
|
|
|
$ |
26 |
|
|
| |||
(1) Fair value measured at reporting date using significant other observable inputs (Level 2).
(2) Derivative financial assets and liabilities are not set off.
(3) Designated as held for hedging (HFH) upon initial recognition (cash flow hedging item); hedge accounting is applied. Unless otherwise noted, hedge ratio is 1:1 and is established by assessing the degree of matching between the notional amounts of hedging items and the notional amounts of the associated hedged items.
(4) Designated as held for trading (HFT) and classified as fair value through net income upon initial recognition; hedge accounting is not applied.
(5) Designated as a hedge of a net investment in a foreign operation and hedge accounting is applied. Hedge ratio is 1:1 and is established by assessing the degree of matching between the notional amounts of hedging items and the notional amounts of the associated hedged items.
(6) We designate only the spot element as the hedging item. As at June 30, 2020, the foreign currency basis spread included in the fair value of the derivative instruments, and which is used for purposes of assessing hedge ineffectiveness, was $92 (December 31, 2019 $38).
(7) We designate only the spot element as the hedging item. As at June 30, 2020, the foreign currency basis spread included in the fair value of the derivative instruments, and which is used for purposes of assessing hedge ineffectiveness was $2.
Non-derivative
Our long-term debt, which is measured at amortized cost, and the fair value thereof, are set out in the following table.
As at (millions) |
|
June 30, 2020 |
|
December 31, 2019 |
| ||||||||
|
|
Carrying |
|
Fair value |
|
Carrying |
|
Fair value |
| ||||
Long-term debt, excluding leases (Note 26) |
|
$ |
16,797 |
|
$ |
18,121 |
|
$ |
16,813 |
|
$ |
17,930 |
|
(e) Recognition of derivative gains and losses
The following table sets out the gains and losses, excluding income tax effects, arising from derivative instruments that are classified as cash flow hedging items and their location within the Consolidated statements of income and other comprehensive income.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
Credit risk associated with such derivative instruments, as discussed further in (a), would be the primary source of hedge ineffectiveness. There was no ineffective portion of the derivative instruments classified as cash flow hedging items for the periods presented.
|
|
|
|
Amount of gain (loss) |
|
Gain (loss) reclassified from other comprehensive |
| ||||||||||
|
|
|
|
(effective portion) (Note 11) |
|
|
|
Amount |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
Location |
|
2020 |
|
2019 |
| ||||
THREE-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivatives used to manage currency risk |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Arising from U.S. dollar-denominated purchases |
|
|
|
$ |
(13 |
) |
$ |
(7 |
) |
Goods and services purchased |
|
$ |
5 |
|
$ |
4 |
|
Arising from U.S. dollar-denominated long-term debt 1 |
|
26(b)-(c) |
|
(216 |
) |
(29 |
) |
Financing costs |
|
(129 |
) |
(58 |
) | ||||
Arising from net investment in a foreign operation 2 |
|
|
|
(21 |
) |
|
|
Financing costs |
|
(3 |
) |
|
| ||||
|
|
|
|
(250 |
) |
(36 |
) |
|
|
(127 |
) |
(54 |
) | ||||
Derivatives used to manage other market risk |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Arising from changes in share-based compensation costs and other |
|
14(b) |
|
|
|
(5 |
) |
Employee benefits expense |
|
1 |
|
(1 |
) | ||||
|
|
|
|
$ |
(250 |
) |
$ |
(41 |
) |
|
|
$ |
(126 |
) |
$ |
(55 |
) |
SIX-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivatives used to manage currency risk |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Arising from U.S. dollar-denominated purchases |
|
|
|
$ |
18 |
|
$ |
(15 |
) |
Goods and services purchased |
|
$ |
7 |
|
$ |
9 |
|
Arising from U.S. dollar-denominated long-term debt 1 |
|
26(b)-(c) |
|
424 |
|
(151 |
) |
Financing costs |
|
223 |
|
(123 |
) | ||||
Arising from net investment in a foreign operation 2 |
|
|
|
(22 |
) |
|
|
Financing costs |
|
|
|
|
| ||||
|
|
|
|
420 |
|
(166 |
) |
|
|
230 |
|
(114 |
) | ||||
Derivatives used to manage other market risk |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Arising from changes in share-based compensation costs and other |
|
14(b) |
|
(10 |
) |
5 |
|
Employee benefits expense |
|
(1 |
) |
6 |
| ||||
|
|
|
|
$ |
410 |
|
$ |
(161 |
) |
|
|
$ |
229 |
|
$ |
(108 |
) |
(1) Amounts recognized in other comprehensive income are net of the change in the foreign currency basis spread (which is used for purposes of assessing hedge ineffectiveness) included in the fair value of the derivative instruments; such amount for the three-month and six-month periods ended June 30, 2020, were $(4) (2019 $NIL) and $54 (2019 $7), respectively.
(2) Amounts recognized in other comprehensive income are net of the change in the foreign currency basis spread (which is used for purposes of assessing hedge ineffectiveness) included in the fair value of the derivative instruments; such amount for the three-month and six-month periods ended June 30, 2020, were $2 and $2, respectively.
The following table sets out the gains and losses arising from derivative instruments that are classified as held for trading and that are not designated as being in a hedging relationship, and their location within the Consolidated statements of income and other comprehensive income.
|
|
|
|
Gain recognized in income on derivatives |
| ||||||||||
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Location |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Derivatives used to manage currency risk |
|
Financing costs |
|
$ |
3 |
|
$ |
3 |
|
$ |
4 |
|
$ |
5 |
|
5 segment information
General
Operating segments are components of an entity that engage in business activities from which they earn revenues and incur expenses (including revenues and expenses related to transactions with the other component(s)), the operations of which can be clearly distinguished and for which the operating results are regularly reviewed by a chief operating decision-maker to make resource allocation decisions and to assess performance. Effective January 1, 2020, we embarked upon modifying our internal and external reporting processes, systems and internal controls to accommodate the technology convergence-driven cessation of the historical distinction between our wireless and wireline operations at the level of regularly reported discrete performance measures that are provided to our chief operating decision-maker. Prior to the World Health Organization characterizing COVID-19 as a pandemic, we had anticipated transitioning to a new segment reporting structure during 2020, but did not, and do not, anticipate a substantive change to our products and services revenue reporting from such transition; we will continue to report wireless and wireline operations until such transition is substantially completed, but the timing of such transition may be impacted as we prioritize managing through the pandemic.
The wireless segment includes network revenues and equipment sales arising from mobile technologies. The wireline segment includes data revenues (which include internet protocol; television; hosting, managed information
notes to condensed interim consolidated financial statements |
(unaudited) |
technology and cloud-based services; customer care and business services; certain healthcare solutions; and home and business security), voice and other telecommunications services revenues (excluding wireless arising from mobile technologies), and equipment sales. Segmentation has been based on similarities in technology (mobile versus fixed), the technical expertise required to deliver the services and products, customer characteristics, the distribution channels used and regulatory treatment. Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties.
The segment information regularly reported to our Chief Executive Officer (our chief operating decision-maker), and the reconciliations thereof to our products and services view of revenues, other revenues and income before income taxes, are set out in the following table.
Three-month periods ended |
|
Wireless |
|
Wireline |
|
Eliminations |
|
Consolidated |
| ||||||||||||||||
June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||||||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
External revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service |
|
$ |
1,485 |
|
$ |
1,534 |
|
$ |
1,765 |
|
$ |
1,552 |
|
$ |
|
|
$ |
|
|
$ |
3,250 |
|
$ |
3,086 |
|
Equipment |
|
347 |
|
444 |
|
59 |
|
57 |
|
|
|
|
|
406 |
|
501 |
| ||||||||
Revenues arising from contracts with customers |
|
1,832 |
|
1,978 |
|
1,824 |
|
1,609 |
|
|
|
|
|
3,656 |
|
3,587 |
| ||||||||
Other operating income |
|
(1 |
) |
5 |
|
73 |
|
5 |
|
|
|
|
|
72 |
|
10 |
| ||||||||
|
|
1,831 |
|
1,983 |
|
1,897 |
|
1,614 |
|
|
|
|
|
3,728 |
|
3,597 |
| ||||||||
Intersegment revenues |
|
15 |
|
14 |
|
64 |
|
60 |
|
(79 |
) |
(74 |
) |
|
|
|
| ||||||||
|
|
$ |
1,846 |
|
$ |
1,997 |
|
$ |
1,961 |
|
$ |
1,674 |
|
$ |
(79 |
) |
$ |
(74 |
) |
$ |
3,728 |
|
$ |
3,597 |
|
EBITDA 1 |
|
$ |
870 |
|
$ |
919 |
|
$ |
489 |
|
$ |
454 |
|
$ |
|
|
$ |
|
|
$ |
1,359 |
|
$ |
1,373 |
|
CAPEX, excluding spectrum licences 2 |
|
$ |
234 |
|
$ |
223 |
|
$ |
522 |
|
$ |
547 |
|
$ |
|
|
$ |
|
|
$ |
756 |
|
$ |
770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues external (above) |
|
$ |
3,728 |
|
$ |
3,597 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
Goods and services purchased |
|
1,458 |
|
1,466 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Employee benefits expense |
|
911 |
|
758 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
EBITDA (above) |
|
1,359 |
|
1,373 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
505 |
|
470 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Amortization |
|
220 |
|
163 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Operating income |
|
634 |
|
740 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
202 |
|
189 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
432 |
|
$ |
551 |
|
Six-month periods ended |
|
Wireless |
|
Wireline |
|
Eliminations |
|
Consolidated |
| ||||||||||||||||
June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||||||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
External revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service |
|
$ |
3,008 |
|
$ |
3,034 |
|
$ |
3,487 |
|
$ |
3,072 |
|
$ |
|
|
$ |
|
|
$ |
6,495 |
|
$ |
6,106 |
|
Equipment |
|
709 |
|
863 |
|
115 |
|
107 |
|
|
|
|
|
824 |
|
970 |
| ||||||||
Revenues arising from contracts with customers |
|
3,717 |
|
3,897 |
|
3,602 |
|
3,179 |
|
|
|
|
|
7,319 |
|
7,076 |
| ||||||||
Other operating income |
|
(2 |
) |
10 |
|
105 |
|
17 |
|
|
|
|
|
103 |
|
27 |
| ||||||||
|
|
3,715 |
|
3,907 |
|
3,707 |
|
3,196 |
|
|
|
|
|
7,422 |
|
7,103 |
| ||||||||
Intersegment revenues |
|
29 |
|
27 |
|
127 |
|
116 |
|
(156 |
) |
(143 |
) |
|
|
|
| ||||||||
|
|
$ |
3,744 |
|
$ |
3,934 |
|
$ |
3,834 |
|
$ |
3,312 |
|
$ |
(156 |
) |
$ |
(143 |
) |
$ |
7,422 |
|
$ |
7,103 |
|
EBITDA 1 |
|
$ |
1,804 |
|
$ |
1,827 |
|
$ |
964 |
|
$ |
925 |
|
$ |
|
|
$ |
|
|
$ |
2,768 |
|
$ |
2,752 |
|
CAPEX, excluding spectrum licences 2 |
|
$ |
428 |
|
$ |
400 |
|
$ |
993 |
|
$ |
1,016 |
|
$ |
|
|
$ |
|
|
$ |
1,421 |
|
$ |
1,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
Operating revenues external (above) |
|
$ |
7,422 |
|
$ |
7,103 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
Goods and services purchased |
|
2,870 |
|
2,887 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Employee benefits expense |
|
1,784 |
|
1,464 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
EBITDA (above) |
|
2,768 |
|
2,752 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
1,028 |
|
940 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Amortization |
|
422 |
|
310 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Operating income |
|
1,318 |
|
1,502 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
394 |
|
357 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
924 |
|
$ |
1,145 |
|
notes to condensed interim consolidated financial statements |
(unaudited) |
(1) Earnings before interest, income taxes, depreciation and amortization (EBITDA) does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define EBITDA as operating revenues less goods and services purchased and employee benefits expense. We have issued guidance on, and report, EBITDA because it is a key measure that management uses to evaluate the performance of our business, and it is also utilized in measuring compliance with certain debt covenants.
(2) Total capital expenditures (CAPEX); see Note 31(a) for a reconciliation of capital expenditures, excluding spectrum licences to cash payments for capital assets, excluding spectrum licences reported in the Consolidated statements of cash flows.
6 revenue from contracts with customers
(a) Revenues
In the determination of the minimum transaction prices in contracts with customers, amounts are allocated to fulfilling, or completion of fulfilling, future contracted performance obligations. These unfulfilled, or partially unfulfilled, future contracted performance obligations are largely in respect of services to be provided over the duration of the contract. The following table sets out our aggregate estimated minimum transaction prices allocated to remaining unfulfilled, or partially unfulfilled, future contracted performance obligations and the timing of when we might expect to recognize the associated revenues; actual amounts could differ from these estimates due to a variety of factors, including the unpredictable nature of: customer behaviour; industry regulation; the economic environments in which we operate; and competitor behaviour.
As at (millions) |
|
June 30, |
|
December 31, |
| ||
Estimated minimum transaction price allocated to remaining unfulfilled, or partially unfulfilled, performance obligations to be recognized as revenue in a future period 1, 2 |
|
|
|
|
| ||
During the 12-month period ending one year hence |
|
$ |
2,227 |
|
$ |
2,405 |
|
During the 12-month period ending two years hence |
|
748 |
|
930 |
| ||
Thereafter |
|
33 |
|
40 |
| ||
|
|
$ |
3,008 |
|
$ |
3,375 |
|
(1) Excludes constrained variable consideration amounts, amounts arising from contracts originally expected to have a duration of one year or less and, as a permitted practical expedient, amounts arising from contracts that are not affected by revenue recognition timing differences arising from transaction price allocation or from contracts under which we may recognize and bill revenue in an amount that corresponds directly with our completed performance obligations.
(2) IFRS-IASB requires the explanation of when we expect to recognize as revenue the amounts disclosed as the estimated minimum transaction price allocated to remaining unfulfilled, or partially unfulfilled, performance obligations. The estimated amounts disclosed are based upon contractual terms and maturities. Actual minimum transaction price revenues recognized, and the timing thereof, will differ from these estimates primarily due to the frequency with which the actual durations of contracts with customers do not match their contractual maturities.
(b) Accounts receivable
As at (millions) |
|
Note |
|
June 30, |
|
December 31, |
| ||
Customer accounts receivable |
|
|
|
$ |
1,719 |
|
$ |
1,570 |
|
Accrued receivables customer |
|
|
|
220 |
|
180 |
| ||
Allowance for doubtful accounts |
|
4(a) |
|
(94 |
) |
(46 |
) | ||
|
|
|
|
1,845 |
|
1,704 |
| ||
Accrued receivables other |
|
|
|
159 |
|
258 |
| ||
Accounts receivable current |
|
|
|
$ |
2,004 |
|
$ |
1,962 |
|
notes to condensed interim consolidated financial statements |
(unaudited) |
(c) Contract assets
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Balance, beginning of period |
|
|
|
$ |
1,069 |
|
$ |
1,449 |
|
$ |
1,238 |
|
$ |
1,475 |
|
Net additions arising from operations |
|
|
|
176 |
|
350 |
|
347 |
|
671 |
| ||||
Amounts billed in period and thus reclassified to accounts receivable 1 |
|
|
|
(343 |
) |
(357 |
) |
(688 |
) |
(703 |
) | ||||
Change in impairment allowance, net |
|
4(a) |
|
(2 |
) |
(2 |
) |
3 |
|
(4 |
) | ||||
Other |
|
|
|
1 |
|
1 |
|
1 |
|
2 |
| ||||
Balance, end of period |
|
|
|
$ |
901 |
|
$ |
1,441 |
|
$ |
901 |
|
$ |
1,441 |
|
To be billed and thus reclassified to accounts receivable during: |
|
|
|
|
|
|
|
|
|
|
| ||||
The 12-month period ending one year hence |
|
|
|
|
|
|
|
$ |
689 |
|
$ |
1,019 |
| ||
The 12-month period ending two years hence |
|
|
|
|
|
|
|
197 |
|
407 |
| ||||
Thereafter |
|
|
|
|
|
|
|
15 |
|
15 |
| ||||
Balance, end of period |
|
|
|
|
|
|
|
$ |
901 |
|
$ |
1,441 |
| ||
Reconciliation of contract assets presented in the Consolidated statements of financial position current |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross contract assets |
|
|
|
|
|
|
|
$ |
689 |
|
$ |
1,019 |
| ||
Reclassification to contract liabilities of contracts with contract assets less than contract liabilities |
|
24 |
|
|
|
|
|
(9 |
) |
(5 |
) | ||||
Reclassification from contract liabilities of contracts with contract liabilities less than contract assets |
|
24 |
|
|
|
|
|
(142 |
) |
(155 |
) | ||||
|
|
|
|
|
|
|
|
$ |
538 |
|
$ |
859 |
|
(1) For the three-month and six-month periods ended June 30, 2020, amounts billed for our wireless products and services and reclassified to accounts receivable totalled $268 (2019 $330) and $557 (2019 $650), respectively.
7 other operating income
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Government assistance |
|
|
|
$ |
3 |
|
$ |
5 |
|
$ |
6 |
|
$ |
12 |
|
Other sublet revenue |
|
19 |
|
|
|
1 |
|
1 |
|
1 |
| ||||
Investment income, gain (loss) on disposal of assets and other |
|
21 |
|
(3 |
) |
3 |
|
(9 |
) |
12 |
| ||||
Interest income |
|
21(b) |
|
1 |
|
1 |
|
2 |
|
2 |
| ||||
Changes in business combination-related provisions |
|
25 |
|
71 |
|
|
|
103 |
|
|
| ||||
|
|
|
|
$ |
72 |
|
$ |
10 |
|
$ |
103 |
|
$ |
27 |
|
We receive government assistance, as defined by IFRS-IASB, from a number of sources and include such amounts received in Other operating income. We recognize such amounts on an accrual basis as the subsidized services are provided or as the subsidized costs are incurred.
CRTC subsidy
Local exchange carriers costs of providing the level of residential basic telephone services that the CRTC requires to be provided in high cost serving areas are greater than the amounts the CRTC allows the local exchange carriers to charge for the level of service. To ameliorate the situation, the CRTC directs the collection of contribution payments, in a central fund, from all registered Canadian telecommunications service providers (including voice, data and wireless service providers) that are then disbursed to incumbent local exchange carriers as subsidy payments to partially offset the costs of providing residential basic telephone services in non-forborne high cost serving areas. The subsidy payment disbursements are based upon a total subsidy requirement calculated on a per network access line/per band subsidy rate. For the three-month and six-month periods ended June 30, 2020, our subsidy receipts were $2 million (2019 $4 million) and $5 million (2019 $8 million), respectively.
Government of Quebec
Salaries for qualifying employment positions in the province of Quebec, mainly in the information technology sector, are eligible for tax credits. In respect of such tax credits, for the three-month and six-month periods ended June 30, 2020, we recorded $1 million (2019 $4 million) and $1 million (2019 $4 million), respectively.
notes to condensed interim consolidated financial statements |
|
(unaudited) |
8 employee benefits expense
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Employee benefits expense gross |
|
|
|
|
|
|
|
|
|
|
| ||||
Wages and salaries |
|
|
|
$ |
901 |
|
$ |
762 |
|
$ |
1,781 |
|
$ |
1,465 |
|
Share-based compensation |
|
14 |
|
46 |
|
30 |
|
78 |
|
64 |
| ||||
Pensions defined benefit |
|
15(a) |
|
25 |
|
19 |
|
52 |
|
39 |
| ||||
Pensions defined contribution |
|
15(b) |
|
25 |
|
20 |
|
46 |
|
43 |
| ||||
Restructuring costs |
|
16(a) |
|
10 |
|
19 |
|
20 |
|
34 |
| ||||
Other |
|
|
|
43 |
|
47 |
|
89 |
|
89 |
| ||||
|
|
|
|
1,050 |
|
897 |
|
2,066 |
|
1,734 |
| ||||
Capitalized internal labour costs, net |
|
|
|
|
|
|
|
|
|
|
| ||||
Contract acquisition costs |
|
20 |
|
|
|
|
|
|
|
|
| ||||
Capitalized |
|
|
|
(16 |
) |
(12 |
) |
(33 |
) |
(24 |
) | ||||
Amortized |
|
|
|
13 |
|
11 |
|
26 |
|
23 |
| ||||
Contract fulfilment costs |
|
20 |
|
|
|
|
|
|
|
|
| ||||
Capitalized |
|
|
|
(1 |
) |
|
|
(2 |
) |
(1 |
) | ||||
Amortized |
|
|
|
1 |
|
|
|
2 |
|
1 |
| ||||
Property, plant and equipment |
|
|
|
(83 |
) |
(90 |
) |
(170 |
) |
(175 |
) | ||||
Intangible assets subject to amortization |
|
|
|
(53 |
) |
(48 |
) |
(105 |
) |
(94 |
) | ||||
|
|
|
|
(139 |
) |
(139 |
) |
(282 |
) |
(270 |
) | ||||
|
|
|
|
$ |
911 |
|
$ |
758 |
|
$ |
1,784 |
|
$ |
1,464 |
|
9 financing costs
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest on long-term debt, excluding lease liabilities gross |
|
|
|
$ |
169 |
|
$ |
161 |
|
$ |
339 |
|
$ |
311 |
|
Interest on long-term debt, excluding lease liabilities - capitalized 1 |
|
18(a) |
|
(9) |
|
(4 |
) |
(17 |
) |
(4 |
) | ||||
Interest on long-term debt, excluding lease liabilities |
|
|
|
160 |
|
157 |
|
322 |
|
307 |
| ||||
Interest on lease liabilities |
|
19 |
|
17 |
|
16 |
|
35 |
|
32 |
| ||||
Interest on short-term borrowings and other |
|
|
|
2 |
|
3 |
|
4 |
|
8 |
| ||||
Interest accretion on provisions |
|
25 |
|
4 |
|
5 |
|
9 |
|
11 |
| ||||
Long-term debt prepayment premium |
|
26(a) |
|
18 |
|
|
|
18 |
|
|
| ||||
|
|
|
|
201 |
|
181 |
|
388 |
|
358 |
| ||||
Employee defined benefit plans net interest |
|
15 |
|
4 |
|
|
|
8 |
|
|
| ||||
Foreign exchange |
|
|
|
(1 |
) |
11 |
|
1 |
|
4 |
| ||||
|
|
|
|
204 |
|
192 |
|
397 |
|
362 |
| ||||
Interest income |
|
|
|
(2 |
) |
(3 |
) |
(3 |
) |
(5 |
) | ||||
|
|
|
|
$ |
202 |
|
$ |
189 |
|
$ |
394 |
|
$ |
357 |
|
Net interest cost |
|
3 |
|
|
|
|
|
$ |
403 |
|
$ |
361 |
| ||
Interest on long-term debt, excluding lease liabilities - capitalized 1 |
|
|
|
|
|
|
|
(17 |
) |
(4 |
) | ||||
Employee defined benefit plans net interest |
|
|
|
|
|
|
|
8 |
|
|
| ||||
|
|
|
|
|
|
|
|
$ |
394 |
|
$ |
357 |
|
(1) Interest on long-term debt, excluding lease liabilities, interest at a composite rate of 4.33% was capitalized to intangible assets with indefinite lives in the period.
notes to condensed interim consolidated financial statements |
|
(unaudited) |
10 income taxes
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Current income tax expense |
|
|
|
|
|
|
|
|
| ||||
For the current reporting period |
|
$ |
83 |
|
$ |
71 |
|
$ |
285 |
|
$ |
197 |
|
Adjustments recognized in the current period for income taxes of prior periods |
|
(2 |
) |
(1 |
) |
(4 |
) |
(1 |
) | ||||
|
|
81 |
|
70 |
|
281 |
|
196 |
| ||||
Deferred income tax expense |
|
|
|
|
|
|
|
|
| ||||
Arising from the origination and reversal of temporary differences |
|
32 |
|
83 |
|
(28 |
) |
114 |
| ||||
Revaluation of deferred income tax liability to reflect future income tax rates |
|
(2 |
) |
(121 |
) |
(5 |
) |
(121 |
) | ||||
Adjustments recognized in the current period for income taxes of prior periods |
|
6 |
|
(1 |
) |
8 |
|
(1 |
) | ||||
|
|
36 |
|
(39 |
) |
(25 |
) |
(8 |
) | ||||
|
|
$ |
117 |
|
$ |
31 |
|
$ |
256 |
|
$ |
188 |
|
Our income tax expense and effective income tax rate differ from those calculated by applying the applicable statutory rates for the following reasons:
Three-month periods ended June 30 ($ in millions) |
|
2020 |
|
2019 |
| ||||||
Income taxes computed at applicable statutory rates |
|
$ |
113 |
|
26.2 |
% |
$ |
147 |
|
26.7 |
% |
Revaluation of deferred income tax liability to reflect future income tax rates |
|
(2 |
) |
(0.5 |
) |
(121 |
) |
(22.0 |
) | ||
Adjustments recognized in the current period for income taxes of prior periods |
|
4 |
|
0.9 |
|
(2 |
) |
(0.3 |
) | ||
Other |
|
2 |
|
0.5 |
|
7 |
|
1.2 |
| ||
Income tax expense per Consolidated statements of income and other comprehensive income |
|
$ |
117 |
|
27.1 |
% |
$ |
31 |
|
5.6 |
% |
Six-month periods ended June 30 ($ in millions) |
|
2020 |
|
2019 |
| ||||||
Income taxes computed at applicable statutory rates |
|
$ |
243 |
|
26.3 |
% |
$ |
308 |
|
26.9 |
% |
Revaluation of deferred income tax liability to reflect future income tax rates |
|
(5 |
) |
(0.5 |
) |
(121 |
) |
(10.6 |
) | ||
Adjustments recognized in the current period for income taxes of prior periods |
|
4 |
|
0.4 |
|
(2 |
) |
(0.2 |
) | ||
Other |
|
14 |
|
1.5 |
|
3 |
|
0.3 |
| ||
Income tax expense per Consolidated statements of income and other comprehensive income |
|
$ |
256 |
|
27.7 |
% |
$ |
188 |
|
16.4 |
% |
notes to condensed interim consolidated financial statements |
(unaudited) |
11 other comprehensive income
. |
|
Items that may subsequently be reclassified to income |
|
Item never |
|
|
|
Item never |
|
|
| ||||||||||||||||||||||||||
|
|
Change in unrealized fair value of derivatives designated as cash flow hedges in current period (Note 4(e)) |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
Derivatives used to manage currency risk |
|
Derivatives used to manage other market risks |
|
|
|
Cumulative |
|
Change in |
|
|
|
Employee |
|
|
| ||||||||||||||||||||
Periods ended June 30 (millions) |
|
Gains |
|
Prior period |
|
Total |
|
Gains |
|
Prior period |
|
Total |
|
Total |
|
foreign |
|
measurement |
|
Accumulated |
|
defined |
|
Other |
| ||||||||||||
THREE-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Accumulated balance as at April 1, 2019 |
|
|
|
|
|
$ |
(70 |
) |
|
|
|
|
$ |
2 |
|
$ |
(68 |
) |
$ |
28 |
|
$ |
|
|
$ |
(40 |
) |
|
|
|
| ||||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Amount arising |
|
$ |
(36 |
) |
$ |
54 |
|
18 |
|
$ |
(5 |
) |
$ |
1 |
|
(4 |
) |
14 |
|
11 |
|
|
|
25 |
|
$ |
16 |
|
$ |
41 |
| ||||||
Income taxes |
|
$ |
(4 |
) |
$ |
9 |
|
5 |
|
$ |
(2 |
) |
$ |
1 |
|
(1 |
) |
4 |
|
|
|
|
|
4 |
|
8 |
|
12 |
| ||||||||
Net |
|
|
|
|
|
13 |
|
|
|
|
|
(3 |
) |
10 |
|
11 |
|
|
|
21 |
|
$ |
8 |
|
$ |
29 |
| ||||||||||
Accumulated balance as at June 30, 2019 |
|
|
|
|
|
$ |
(57 |
) |
|
|
|
|
$ |
(1 |
) |
$ |
(58 |
) |
$ |
39 |
|
$ |
|
|
$ |
(19 |
) |
|
|
|
| ||||||
Accumulated balance as at April 1, 2020 |
|
|
|
|
|
$ |
294 |
|
|
|
|
|
$ |
(7 |
) |
$ |
287 |
|
$ |
94 |
|
$ |
12 |
|
$ |
393 |
|
|
|
|
| ||||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Amount arising |
|
$ |
(250 |
) |
$ |
127 |
|
(123 |
) |
$ |
|
|
$ |
(1 |
) |
(1 |
) |
(124 |
) |
(10 |
) |
|
|
(134 |
) |
$ |
(901 |
) |
$ |
(1,035 |
) | ||||||
Income taxes |
|
$ |
(43 |
) |
$ |
16 |
|
(27 |
) |
$ |
1 |
|
$ |
(1 |
) |
|
|
(27 |
) |
|
|
|
|
(27 |
) |
(232 |
) |
(259 |
) | ||||||||
Net |
|
|
|
|
|
(96 |
) |
|
|
|
|
(1 |
) |
(97 |
) |
(10 |
) |
|
|
(107 |
) |
$ |
(669 |
) |
$ |
(776 |
) | ||||||||||
Accumulated balance as at June 30, 2020 |
|
|
|
|
|
$ |
198 |
|
|
|
|
|
$ |
(8 |
) |
$ |
190 |
|
$ |
84 |
|
$ |
12 |
|
$ |
286 |
|
|
|
|
|
notes to condensed interim consolidated financial statements |
(unaudited) |
|
|
Items that may subsequently be reclassified to income |
|
Item never |
|
|
|
Item never |
|
|
| ||||||||||||||||||||||||||
|
|
Change in unrealized fair value of derivatives designated as cash flow hedges in current period (Note 4(e)) |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
Derivatives used to manage currency risk |
|
Derivatives used to manage other market risks |
|
|
|
Cumulative |
|
Change in |
|
|
|
|
|
|
| ||||||||||||||||||||
Periods ended June 30 (millions) |
|
Gains |
|
Prior period |
|
Total |
|
Gains |
|
Prior period |
|
Total |
|
Total |
|
foreign |
|
measurement |
|
Accumulated |
|
Employee |
|
Other |
| ||||||||||||
SIX-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Accumulated balance as at January 1, 2019 |
|
|
|
|
|
$ |
(19 |
) |
|
|
|
|
$ |
|
|
$ |
(19 |
) |
$ |
22 |
|
$ |
|
|
$ |
3 |
|
|
|
|
| ||||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Amount arising |
|
$ |
(166 |
) |
$ |
114 |
|
(52 |
) |
$ |
5 |
|
$ |
(6 |
) |
(1 |
) |
(53 |
) |
17 |
|
|
|
(36 |
) |
$ |
49 |
|
$ |
13 |
| ||||||
Income taxes |
|
$ |
(32 |
) |
$ |
18 |
|
(14 |
) |
$ |
1 |
|
$ |
(1 |
) |
|
|
(14 |
) |
|
|
|
|
(14 |
) |
17 |
|
3 |
| ||||||||
Net |
|
|
|
|
|
(38 |
) |
|
|
|
|
(1 |
) |
(39 |
) |
17 |
|
|
|
(22 |
) |
$ |
32 |
|
$ |
10 |
| ||||||||||
Accumulated balance as at June 30, 2019 |
|
|
|
|
|
$ |
(57 |
) |
|
|
|
|
$ |
(1 |
) |
$ |
(58 |
) |
$ |
39 |
|
$ |
|
|
$ |
(19 |
) |
|
|
|
| ||||||
Accumulated balance as at January 1, 2020 |
|
|
|
|
|
$ |
66 |
|
|
|
|
|
$ |
(1 |
) |
$ |
65 |
|
$ |
42 |
|
$ |
12 |
|
$ |
119 |
|
|
|
|
| ||||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Amount arising |
|
$ |
420 |
|
$ |
(230 |
) |
190 |
|
$ |
(10 |
) |
$ |
1 |
|
(9 |
) |
181 |
|
42 |
|
|
|
223 |
|
$ |
(475 |
) |
$ |
(252 |
) | ||||||
Income taxes |
|
$ |
100 |
|
$ |
(42 |
) |
58 |
|
$ |
(2 |
) |
$ |
|
|
(2 |
) |
56 |
|
|
|
|
|
56 |
|
(122 |
) |
(66 |
) | ||||||||
Net |
|
|
|
|
|
132 |
|
|
|
|
|
(7 |
) |
125 |
|
42 |
|
|
|
167 |
|
$ |
(353 |
) |
$ |
(186 |
) | ||||||||||
Accumulated balance as at June 30, 2020 |
|
|
|
|
|
$ |
198 |
|
|
|
|
|
$ |
(8 |
) |
$ |
190 |
|
$ |
84 |
|
$ |
12 |
|
$ |
286 |
|
|
|
|
| ||||||
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
283 |
|
|
|
|
| |||||||||||
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
286 |
|
|
|
|
|
notes to condensed interim consolidated financial statements |
(unaudited) |
12 per share amounts
Basic net income per Common Share is calculated by dividing net income attributable to Common Shares by the total weighted average number of Common Shares outstanding during the period. Diluted net income per Common Share is calculated to give effect to share option awards and restricted share units.
The following table presents reconciliations of the denominators of the basic and diluted per share computations. Net income was equal to diluted net income for all periods presented.
|
|
Three months |
|
Six months |
| ||||
Periods ended June 30 (millions) |
|
2020 |
|
2019* |
|
2020 |
|
2019* |
|
Basic total weighted average number of Common Shares outstanding |
|
1,278 |
|
1,203 |
|
1,263 |
|
1,202 |
|
Effect of dilutive securities Restricted share units |
|
2 |
|
|
|
1 |
|
|
|
Diluted total weighted average number of Common Shares outstanding |
|
1,280 |
|
1,203 |
|
1,264 |
|
1,202 |
|
For the three-month and six-month periods ended June 30, 2020, no outstanding equity-settled restricted share unit awards were excluded in the computation of diluted income per common share. For the three-month and six-month periods ended June 30, 2020, NIL and 2 million, respectively, outstanding TELUS Corporation share option awards were excluded in the calculation of diluted net income per Common Share.
13 dividends per share
(a) Dividends declared
Six-month periods ended June 30 |
|
2020 |
|
2019 |
| ||||||||||||||||
|
|
Declared |
|
Paid to |
|
|
|
Declared |
|
Paid to |
|
|
| ||||||||
Common Share dividends |
|
Effective |
|
Per share* |
|
shareholders |
|
Total |
|
Effective |
|
Per share* |
|
shareholders |
|
Total |
| ||||
Quarter 1 dividend |
|
Mar. 11, 2020 |
|
$ |
0.29125 |
|
Apr. 1, 2020 |
|
$ |
371 |
|
Mar. 11, 2019 |
|
$ |
0.27250 |
|
Apr. 1, 2019 |
|
$ |
329 |
|
Quarter 2 dividend |
|
Jun. 10, 2020 |
|
0.29125 |
|
Jul. 2, 2020 |
|
372 |
|
Jun. 10, 2019 |
|
0.28125 |
|
Jul. 2, 2019 |
|
339 |
| ||||
|
|
|
|
$ |
0.58250 |
|
|
|
$ |
743 |
|
|
|
$ |
0.55375 |
|
|
|
$ |
668 |
|
On July 30, 2020, the Board of Directors declared a quarterly dividend of $0.29125 per share on our issued and outstanding Common Shares payable on October 1, 2020, to holders of record at the close of business on September 10, 2020. The final amount of the dividend payment depends upon the number of Common Shares issued and outstanding at the close of business on September 10, 2020.
(b) Dividend Reinvestment and Share Purchase Plan
We have a Dividend Reinvestment and Share Purchase Plan under which eligible holders of Common Shares may acquire additional Common Shares by reinvesting dividends and by making additional optional cash payments to the trustee. Under this plan, we have the option of offering Common Shares from Treasury or having the trustee acquire Common Shares in the stock market. We may, at our discretion, offer Common Shares at a discount of up to 5% from the market price under the plan. Effective with our dividends paid October 1, 2019, we offered Common Shares from Treasury at a discount of 2%. In respect of Common Shares held by eligible shareholders who have elected to participate in the plan, dividends declared during the three-month and six-month periods ended June 30, 2020, of $131 million (2019 $15 million) and $253 million (2019 $28 million), respectively, were to be reinvested in Common Shares.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
14 share-based compensation
(a) Details of share-based compensation expense
Reflected in the Consolidated statements of income and other comprehensive income as Employee benefits expense and in the Consolidated statements of cash flows are the following share-based compensation amounts:
Periods ended June 30 (millions) |
|
|
|
2020 |
|
2019 |
| ||||||||||||||
|
|
Note |
|
Employee |
|
Associated |
|
Statement |
|
Employee |
|
Associated |
|
Statement |
| ||||||
THREE-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Restricted share units |
|
(b) |
|
$ |
38 |
|
$ |
|
|
$ |
38 |
|
$ |
17 |
|
$ |
(1 |
) |
$ |
16 |
|
Employee share purchase plan |
|
(c) |
|
5 |
|
(5 |
) |
|
|
9 |
|
(9 |
) |
|
| ||||||
Share option awards |
|
(d) |
|
3 |
|
|
|
3 |
|
4 |
|
|
|
4 |
| ||||||
|
|
|
|
$ |
46 |
|
$ |
(5 |
) |
$ |
41 |
|
$ |
30 |
|
$ |
(10 |
) |
$ |
20 |
|
SIX-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Restricted share units |
|
(b) |
|
$ |
60 |
|
$ |
|
|
$ |
60 |
|
$ |
40 |
|
$ |
(7 |
) |
$ |
33 |
|
Employee share purchase plan |
|
(c) |
|
14 |
|
(14 |
) |
|
|
18 |
|
(18 |
) |
|
| ||||||
Share option awards |
|
(d) |
|
4 |
|
|
|
4 |
|
6 |
|
|
|
6 |
| ||||||
|
|
|
|
$ |
78 |
|
$ |
(14 |
) |
$ |
64 |
|
$ |
64 |
|
$ |
(25 |
) |
$ |
39 |
|
For the three-month and six-month periods ended June 30, 2020, the associated operating cash outflows in respect of restricted share units were net of cash inflows arising from cash-settled equity forward agreements of $1 million (2019 $2 million) and $2 million (2019 $3 million), respectively. For the three-month and six-month periods ended June 30, 2020, the income tax benefit arising from share-based compensation was $11 million (2019 $8 million) and $19 million (2019 $17 million), respectively.
(b) Restricted share units
TELUS Corporation restricted share units
We also award restricted share units that largely have the same features as our general restricted share units, but have a variable payout (0% 200%) that depends upon the achievement of our total customer connections performance condition (with a weighting of 25%) and the total shareholder return on our Common Shares relative to an international peer group of telecommunications companies (with a weighting of 75%). The grant-date fair value of the notional subset of our restricted share units affected by the total customer connections performance condition equals the fair market value of the corresponding Common Shares at the grant date, and thus the notional subset has been included in the presentation of our restricted share units with only service conditions. The estimate, which reflects a variable payout, of the fair value of the notional subset of our restricted share units affected by the relative total shareholder return performance condition is determined using a Monte Carlo simulation. Grants of restricted share units in 2019 are accounted for as equity-settled as that was their expected manner of settlement when granted.
The following table presents a summary of outstanding TELUS Corporation non-vested restricted share units.
Number of non-vested restricted share units as at |
|
June 30, |
|
December 31, |
|
Restricted share units without market performance conditions |
|
|
|
|
|
Restricted share units with only service conditions |
|
8,930,974 |
|
6,186,854 |
|
Notional subset affected by total customer connections performance condition |
|
449,850 |
|
282,100 |
|
|
|
9,380,824 |
|
6,468,954 |
|
Restricted share units with market performance conditions |
|
|
|
|
|
Notional subset affected by relative total shareholder return performance condition |
|
1,349,549 |
|
846,298 |
|
|
|
10,730,373 |
|
7,315,252 |
|
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
The following table presents a summary of the activity related to TELUS Corporation restricted share units without market performance conditions.
Periods ended June 30, 2020 |
|
Three months |
|
Six months |
| ||||||||||
|
|
Number of restricted |
|
Weighted |
|
Number of restricted |
|
Weighted |
| ||||||
|
|
Non-vested |
|
Vested |
|
fair value |
|
Non-vested |
|
Vested |
|
fair value |
| ||
Outstanding, beginning of period * |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Non-vested |
|
9,060,044 |
|
|
|
$ |
24.06 |
|
6,468,954 |
|
|
|
$ |
23.37 |
|
Vested |
|
|
|
12,342 |
|
$ |
19.10 |
|
|
|
30,800 |
|
$ |
22.02 |
|
Issued |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Initial award |
|
288,443 |
|
|
|
$ |
22.63 |
|
2,910,882 |
|
|
|
$ |
25.40 |
|
In lieu of dividends |
|
121,198 |
|
308 |
|
$ |
21.52 |
|
195,615 |
|
308 |
|
$ |
22.92 |
|
Vested |
|
(17,008 |
) |
17,008 |
|
$ |
24.00 |
|
(28,311 |
) |
28,311 |
|
$ |
23.84 |
|
Settled in cash |
|
|
|
(17,149 |
) |
$ |
24.01 |
|
|
|
(46,910 |
) |
$ |
23.89 |
|
Forfeited and cancelled |
|
(71,853 |
) |
|
|
$ |
24.29 |
|
(166,316 |
) |
|
|
$ |
23.80 |
|
Outstanding, end of period |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Non-vested |
|
9,380,824 |
|
|
|
$ |
23.98 |
|
9,380,824 |
|
|
|
$ |
23.98 |
|
Vested |
|
|
|
12,509 |
|
$ |
19.15 |
|
|
|
12,509 |
|
$ |
19.15 |
|
(1) Excluding the notional subset of restricted share units affected by the relative total shareholder return performance condition.
With respect to 2.9 million TELUS Corporation restricted share units vesting in the year ending December 31, 2020, we have entered into cash-settled equity forward agreements that fix our cost at $24.39 per restricted share unit.
TELUS International (Cda) Inc. restricted share units
We also award restricted share units that largely have the same features as the TELUS Corporation restricted share units, but have a variable payout (0% 150%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions.
The following table presents a summary of the activity related to TELUS International (Cda) Inc. restricted share units.
Periods ended June 30, 2020 |
|
Three months |
|
Six months |
| ||||||
|
|
Number of |
|
Weighted |
|
Number of |
|
Weighted |
| ||
Outstanding, beginning of period |
|
463,978 |
|
US$ |
27.55 |
|
465,245 |
|
US$ |
27.49 |
|
Granted |
|
59,929 |
|
US$ |
52.85 |
|
59,929 |
|
US$ |
52.85 |
|
Forfeited |
|
(1,475 |
) |
US$ |
27.81 |
|
(2,742 |
) |
US$ |
27.93 |
|
Outstanding, end of period |
|
522,432 |
|
US$ |
30.45 |
|
522,432 |
|
US$ |
30.45 |
|
(c) Employee share purchase plan
We have an employee share purchase plan under which eligible employees up to a certain job classification can purchase our Common Shares through regular payroll deductions. In respect of Common Shares held within the employee share purchase plan, Common Share dividends declared during the three-month and six-month periods ended June 30, 2020, of $9 million (2019 $8 million) and $18 million (2019 $17 million), respectively, were to be reinvested in Common Shares acquired by the trustee from Treasury, with no discount applicable prior to October 1, 2019; subsequent to that date, a discount was applicable as set out in Note 13(b).
(d) Share option awards
TELUS Corporation share options
Employees may be granted options to purchase Common Shares at an exercise price equal to the fair market value at the time of grant. Share option awards granted under the plan may be exercised over specific periods not to exceed seven years from the time of grant. No share option awards were granted in fiscal 2019.
These share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
The following table presents a summary of the activity related to the TELUS Corporation share option plan.
Periods ended June 30, 2020 |
|
Three months |
|
Six months |
| ||||||
|
|
Number of |
|
Weighted |
|
Number of |
|
Weighted |
| ||
Outstanding, beginning of period* |
|
2,522,700 |
|
$ |
21.19 |
|
|
|
$ |
|
|
Granted |
|
558,600 |
|
$ |
22.88 |
|
3,081,300 |
|
$ |
21.50 |
|
Forfeited |
|
(6,300 |
) |
$ |
21.19 |
|
(6,300 |
) |
$ |
21.19 |
|
Outstanding, end of period |
|
3,075,000 |
|
$ |
21.50 |
|
3,075,000 |
|
$ |
21.50 |
|
(1) The weighted average remaining contractual life is 6.8 years. No options were exercisable as at the balance sheet date.
The weighted average fair value of share option awards granted, and the weighted average assumptions used in the fair value estimation at the time of grant, calculated by using the Black-Scholes model (a closed-form option pricing model), are as follows:
Periods ended June 30, 2020 |
|
Three months |
|
Six months |
| ||
Share option award fair value (per share option) |
|
$ |
0.63 |
|
$ |
0.65 |
|
Risk free interest rate |
|
0.37 |
% |
0.97 |
% | ||
Expected lives(1) (years) |
|
4.25 |
|
4.25 |
| ||
Expected volatility |
|
12.1 |
% |
12.3 |
% | ||
Dividend yield |
|
5.1 |
% |
5.4 |
% | ||
(1) The maximum contractual term of the share option awards granted in 2020 was seven years.
Share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature.
TELUS International (Cda) Inc. share options
Employees may receive equity share options (equity-settled) to purchase TELUS International (Cda) Inc. common shares at a price equal to, or a multiple of, the fair market value at the time of grant and/or phantom share options (cash-settled) that provide them with exposure to TELUS International (Cda) Inc. common share price appreciation. Share option awards granted under the plan may be exercised over specific periods not to exceed ten years from the time of grant. All equity share option awards and most phantom share option awards have a variable payout (0% 100%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions.
The following table presents a summary of the activity related to the TELUS International (Cda) Inc. share option plan.
Periods ended June 30, 2020 |
|
Three months and six months |
| ||||||||
|
|
US$ denominated |
|
Canadian $ denominated |
| ||||||
|
|
Number |
|
Weighted |
|
Number |
|
Share |
| ||
Outstanding, beginning and end of period |
|
996,620 |
|
US$ |
31.11 |
|
53,832 |
|
$ |
21.36 |
|
(1) The range of share option prices is US$21.90 US$40.26 per TELUS International (Cda) Inc. equity share and the weighted average remaining contractual life is 7.0 years.
(2) The weighted average remaining contractual life is 5.9 years.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
|
(unaudited) |
15 employee future benefits
(a) Defined benefit pension plans details
Our defined benefit pension plan expense (recovery) was as follows:
Three-month periods ended June 30 |
|
2020 |
|
2019 |
| ||||||||||||||||||||
Recognized in |
|
Employee |
|
Financing |
|
Other |
|
Total |
|
Employee |
|
Financing |
|
Other |
|
Total |
| ||||||||
Current service cost |
|
$ |
23 |
|
$ |
|
|
$ |
|
|
$ |
23 |
|
$ |
18 |
|
$ |
|
|
$ |
|
|
$ |
18 |
|
Past service costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net interest; return on plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest expense arising from defined benefit obligations accrued |
|
|
|
74 |
|
|
|
74 |
|
|
|
83 |
|
|
|
83 |
| ||||||||
Return, including interest income, on plan assets 1 |
|
|
|
(71 |
) |
(467 |
) |
(538 |
) |
|
|
(86 |
) |
(131 |
) |
(217 |
) | ||||||||
Interest effect on asset ceiling limit |
|
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
3 |
| ||||||||
|
|
|
|
4 |
|
(467 |
) |
(463 |
) |
|
|
|
|
(131 |
) |
(131 |
) | ||||||||
Administrative fees |
|
2 |
|
|
|
|
|
2 |
|
1 |
|
|
|
|
|
1 |
| ||||||||
Re-measurements arising from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Financial assumptions 2 |
|
|
|
|
|
1,396 |
|
1,396 |
|
|
|
|
|
|
|
|
| ||||||||
Changes in the effect of limiting net defined benefit assets to the asset ceiling |
|
|
|
|
|
(28 |
) |
(28 |
) |
|
|
|
|
115 |
|
115 |
| ||||||||
|
|
$ |
25 |
|
$ |
4 |
|
$ |
901 |
|
$ |
930 |
|
$ |
19 |
|
$ |
|
|
$ |
(16 |
) |
$ |
3 |
|
Six-month periods ended June 30 |
|
2020 |
|
2019 |
| ||||||||||||||||||||
Recognized in |
|
Employee |
|
Financing |
|
Other |
|
Total |
|
Employee |
|
Financing |
|
Other |
|
Total |
| ||||||||
Current service cost |
|
$ |
46 |
|
$ |
|
|
$ |
|
|
$ |
46 |
|
$ |
36 |
|
$ |
|
|
$ |
|
|
$ |
36 |
|
Past service costs |
|
3 |
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
| ||||||||
Net interest; return on plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest expense arising from defined benefit obligations accrued |
|
|
|
148 |
|
|
|
148 |
|
|
|
167 |
|
|
|
167 |
| ||||||||
Return, including interest income, on plan assets 1 |
|
|
|
(142 |
) |
(32 |
) |
(174 |
) |
|
|
(172 |
) |
(490 |
) |
(662 |
) | ||||||||
Interest effect on asset ceiling limit |
|
|
|
2 |
|
|
|
2 |
|
|
|
5 |
|
|
|
5 |
| ||||||||
|
|
|
|
8 |
|
(32 |
) |
(24 |
) |
|
|
|
|
(490 |
) |
(490 |
) | ||||||||
Administrative fees |
|
3 |
|
|
|
|
|
3 |
|
3 |
|
|
|
|
|
3 |
| ||||||||
Re-measurements arising from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Financial assumptions 2 |
|
|
|
|
|
507 |
|
507 |
|
|
|
|
|
|
|
|
| ||||||||
Changes in the effect of limiting net defined benefit assets to the asset ceiling |
|
|
|
|
|
|
|
|
|
|
|
|
|
441 |
|
441 |
| ||||||||
|
|
$ |
52 |
|
$ |
8 |
|
$ |
475 |
|
$ |
535 |
|
$ |
39 |
|
$ |
|
|
$ |
(49 |
) |
$ |
(10 |
) |
(1) The interest income on the plan assets portion of the employee defined benefit plans net interest amount included in Financing costs reflects a rate of return on plan assets equal to the discount rate used in determining the defined benefit obligations accrued.
(2) The discount rate used to estimate the defined benefit obligations accrued as at June 30, 2020, was 2.75% (December 31, 2019 3.10%).
(b) Defined contribution plans expense
Our total defined contribution pension plan costs recognized were as follows:
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Union pension plan and public service pension plan contributions |
|
$ |
5 |
|
$ |
5 |
|
$ |
10 |
|
$ |
11 |
|
Other defined contribution pension plans |
|
20 |
|
15 |
|
36 |
|
32 |
| ||||
|
|
$ |
25 |
|
$ |
20 |
|
$ |
46 |
|
$ |
43 |
|
notes to condensed interim consolidated financial statements |
|
(unaudited) |
16 restructuring and other costs
(a) Details of restructuring and other costs
With the objective of reducing ongoing costs, we incur associated incremental non-recurring restructuring costs, as discussed further in (b) following. We may also incur atypical charges when undertaking major or transformational changes to our business or operating models or post-acquisition business integration. In other costs, we include incremental atypical external costs incurred in connection with business acquisition or disposition activity, as well as significant litigation costs, in respect of losses or settlements, adverse retrospective regulatory decisions and certain incremental atypical costs incurred due to the COVID-19 pandemic.
Restructuring and other costs are presented in the Consolidated statements of income and other comprehensive income, as set out in the following table:
|
|
Restructuring (b) |
|
Other (c) |
|
Total |
| ||||||||||||
Periods ended June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||||
THREE-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Goods and services purchased |
|
$ |
43 |
|
$ |
7 |
|
$ |
17 |
|
$ |
1 |
|
$ |
60 |
|
$ |
8 |
|
Employee benefits expense |
|
10 |
|
19 |
|
|
|
2 |
|
10 |
|
21 |
| ||||||
|
|
$ |
53 |
|
$ |
26 |
|
$ |
17 |
|
$ |
3 |
|
$ |
70 |
|
$ |
29 |
|
SIX-MONTH |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Goods and services purchased |
|
$ |
89 |
|
$ |
19 |
|
$ |
21 |
|
$ |
7 |
|
$ |
110 |
|
$ |
26 |
|
Employee benefits expense |
|
20 |
|
34 |
|
|
|
5 |
|
20 |
|
39 |
| ||||||
|
|
$ |
109 |
|
$ |
53 |
|
$ |
21 |
|
$ |
12 |
|
$ |
130 |
|
$ |
65 |
|
(b) Restructuring provisions
Employee-related provisions and other provisions, as presented in Note 25, include amounts in respect of restructuring activities. In 2020, restructuring activities included ongoing and incremental efficiency initiatives, some of which involved personnel-related costs and rationalization of real estate. These initiatives were intended to improve our long-term operating productivity and competitiveness.
(c) Other
During the three-month and six-month periods ended June 30, 2020, incremental external costs were incurred in connection with business acquisition activity. In connection with business acquisitions, non-recurring atypical business integration expenditures that would be considered neither restructuring costs nor part of the fair value of the net assets acquired have been included in other costs.
Also during the three-month and six-month periods ended June 30, 2020, other costs were incurred in connection with the COVID-19 pandemic. Incremental costs were incurred due to proactive steps we elected to take to keep our customers and employees safe, including adjustments to real estate cleaning and maintenance frequency, among other items. As well, costs that have been incurred in the normal course but which are unable to contribute normally to the earning of revenues have been deemed atypical.
notes to condensed interim consolidated financial statements |
|
(unaudited) |
17 property, plant and equipment
|
|
|
|
Owned assets |
|
Right-of-use lease assets (Note 19) |
|
|
| |||||||||||||||||||||||||||
(millions) |
|
Note |
|
Network |
|
Buildings and |
|
Other |
|
Land |
|
Assets under |
|
Total |
|
Network |
|
Real |
|
Other |
|
Total |
|
Total |
| |||||||||||
AT COST |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
As at January 1, 2020 |
|
|
|
$ |
31,713 |
|
$ |
3,314 |
|
$ |
1,373 |
|
$ |
48 |
|
$ |
421 |
|
$ |
36,869 |
|
$ |
219 |
|
$ |
1,267 |
|
$ |
60 |
|
$ |
1,546 |
|
$ |
38,415 |
|
Additions |
|
|
|
393 |
|
15 |
|
24 |
|
5 |
|
666 |
|
1,103 |
|
54 |
|
131 |
|
7 |
|
192 |
|
1,295 |
| |||||||||||
Additions arising from business acquisitions |
|
18(b) |
|
4 |
|
12 |
|
7 |
|
|
|
|
|
23 |
|
|
|
41 |
|
1 |
|
42 |
|
65 |
| |||||||||||
Dispositions, retirements and other |
|
|
|
(379 |
) |
1 |
|
(122 |
) |
|
|
|
|
(500 |
) |
1 |
|
(24 |
) |
(9 |
) |
(32 |
) |
(532 |
) | |||||||||||
Assets under construction put into service |
|
|
|
263 |
|
39 |
|
55 |
|
|
|
(357 |
) |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Net foreign exchange differences |
|
|
|
2 |
|
5 |
|
9 |
|
|
|
|
|
16 |
|
|
|
13 |
|
|
|
13 |
|
29 |
| |||||||||||
As at June 30, 2020 |
|
|
|
$ |
31,996 |
|
$ |
3,386 |
|
$ |
1,346 |
|
$ |
53 |
|
$ |
730 |
|
$ |
37,511 |
|
$ |
274 |
|
$ |
1,428 |
|
$ |
59 |
|
$ |
1,761 |
|
$ |
39,272 |
|
ACCUMULATED DEPRECIATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
As at January 1, 2020 |
|
|
|
$ |
21,060 |
|
$ |
2,052 |
|
$ |
875 |
|
$ |
|
|
$ |
|
|
$ |
23,987 |
|
$ |
6 |
|
$ |
174 |
|
$ |
16 |
|
$ |
196 |
|
$ |
24,183 |
|
Depreciation 1 |
|
|
|
767 |
|
62 |
|
75 |
|
|
|
|
|
904 |
|
14 |
|
101 |
|
9 |
|
124 |
|
1,028 |
| |||||||||||
Dispositions, retirements and other |
|
|
|
(387 |
) |
(10 |
) |
(106 |
) |
|
|
|
|
(503 |
) |
|
|
(3 |
) |
(3 |
) |
(6 |
) |
(509 |
) | |||||||||||
Net foreign exchange differences |
|
|
|
1 |
|
2 |
|
6 |
|
|
|
|
|
9 |
|
|
|
2 |
|
|
|
2 |
|
11 |
| |||||||||||
As at June 30, 2020 |
|
|
|
$ |
21,441 |
|
$ |
2,106 |
|
$ |
850 |
|
$ |
|
|
$ |
|
|
$ |
24,397 |
|
$ |
20 |
|
$ |
274 |
|
$ |
22 |
|
$ |
316 |
|
$ |
24,713 |
|
NET BOOK VALUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
As at December 31, 2019 |
|
|
|
$ |
10,653 |
|
$ |
1,262 |
|
$ |
498 |
|
$ |
48 |
|
$ |
421 |
|
$ |
12,882 |
|
$ |
213 |
|
$ |
1,093 |
|
$ |
44 |
|
$ |
1,350 |
|
$ |
14,232 |
|
As at June 30, 2020 |
|
|
|
$ |
10,555 |
|
$ |
1,280 |
|
$ |
496 |
|
$ |
53 |
|
$ |
730 |
|
$ |
13,114 |
|
$ |
254 |
|
$ |
1,154 |
|
$ |
37 |
|
$ |
1,445 |
|
$ |
14,559 |
|
(1) For the six-month period ended June 30, 2020, depreciation includes $5 in respect of impairment of real estate right-of-use lease assets.
As at June 30, 2020, our contractual commitments for the acquisition of property, plant and equipment totalled $205 million over a period ending December 31, 2022 (December 31, 2019 $136 million over a period ending December 31, 2022).
notes to condensed interim consolidated financial statements |
|
(unaudited) |
18 intangible assets and goodwill
(a) Intangible assets and goodwill, net
|
|
|
|
Intangible assets subject to amortization |
|
Intangible |
|
|
|
|
|
|
| |||||||||||||||||
(millions) |
|
Note |
|
Customer contracts, |
|
Software 1 |
|
Access to |
|
Assets |
|
Total |
|
Spectrum |
|
Total |
|
Goodwill 1, 2 |
|
Total |
| |||||||||
AT COST |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As at January 1, 2020 |
|
|
|
$ |
1,032 |
|
$ |
5,870 |
|
$ |
135 |
|
$ |
254 |
|
$ |
7,291 |
|
$ |
9,937 |
|
$ |
17,228 |
|
$ |
5,673 |
|
$ |
22,901 |
|
Additions |
|
|
|
|
|
42 |
|
1 |
|
281 |
|
324 |
|
|
|
324 |
|
|
|
324 |
| |||||||||
Additions arising from business acquisitions |
|
(b) |
|
735 |
|
20 |
|
47 |
|
|
|
802 |
|
9 |
|
811 |
|
772 |
|
1,583 |
| |||||||||
Dispositions, retirements and other (including capitalized interest) |
|
9 |
|
48 |
|
(333 |
) |
(29 |
) |
|
|
(314 |
) |
17 |
|
(297 |
) |
|
|
(297 |
) | |||||||||
Assets under construction put into service |
|
|
|
|
|
232 |
|
|
|
(232 |
) |
|
|
|
|
|
|
|
|
|
| |||||||||
Net foreign exchange differences |
|
|
|
37 |
|
2 |
|
|
|
|
|
39 |
|
|
|
39 |
|
51 |
|
90 |
| |||||||||
As at June 30, 2020 |
|
|
|
$ |
1,852 |
|
$ |
5,833 |
|
$ |
154 |
|
$ |
303 |
|
$ |
8,142 |
|
$ |
9,963 |
|
$ |
18,105 |
|
$ |
6,496 |
|
$ |
24,601 |
|
ACCUMULATED AMORTIZATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As at January 1, 2020 |
|
|
|
$ |
285 |
|
$ |
4,028 |
|
$ |
71 |
|
$ |
|
|
$ |
4,384 |
|
$ |
|
|
$ |
4,384 |
|
$ |
364 |
|
$ |
4,748 |
|
Amortization |
|
|
|
97 |
|
322 |
|
3 |
|
|
|
422 |
|
|
|
422 |
|
|
|
422 |
| |||||||||
Dispositions, retirements and other |
|
|
|
(13 |
) |
(334 |
) |
3 |
|
|
|
(344 |
) |
|
|
(344 |
) |
|
|
(344 |
) | |||||||||
Net foreign exchange differences |
|
|
|
12 |
|
1 |
|
|
|
|
|
13 |
|
|
|
13 |
|
|
|
13 |
| |||||||||
As at June 30, 2020 |
|
|
|
$ |
381 |
|
$ |
4,017 |
|
$ |
77 |
|
$ |
|
|
$ |
4,475 |
|
$ |
|
|
$ |
4,475 |
|
$ |
364 |
|
$ |
4,839 |
|
NET BOOK VALUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As at December 31, 2019 |
|
|
|
$ |
747 |
|
$ |
1,842 |
|
$ |
64 |
|
$ |
254 |
|
$ |
2,907 |
|
$ |
9,937 |
|
$ |
12,844 |
|
$ |
5,309 |
|
$ |
18,153 |
|
As at June 30, 2020 |
|
|
|
$ |
1,471 |
|
$ |
1,816 |
|
$ |
77 |
|
$ |
303 |
|
$ |
3,667 |
|
$ |
9,963 |
|
$ |
13,630 |
|
$ |
6,132 |
|
$ |
19,762 |
|
(1) The opening balance of software and goodwill have been adjusted as set out in (c).
(2) Accumulated amortization of goodwill is amortization recorded prior to 2002; there are no accumulated impairment losses in the accumulated amortization of goodwill.
As at June 30, 2020, our contractual commitments for the acquisition of intangible assets totalled $48 million over a period ending December 31, 2024 (December 31, 2019 $45 million over a period ending December 31, 2024).
notes to condensed interim consolidated financial statements |
|
(unaudited) |
(b) Business acquisitions
Competence Call Center
On January 31, 2020, we acquired 100% of Competence Call Center, a provider of higher-value-added business services with a focus on customer relationship management and content moderation. The acquisition is complementary to, and was made with a view to growing, our existing lines of business and has been consolidated with our TELUS International (Cda) Inc. subsidiary.
The primary factor that contributed to the recognition of goodwill was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the acquired workforce and the benefits of acquiring an established business). The amount assigned to goodwill is not expected to be deductible for income tax purposes.
Individually immaterial transactions
During the six-month period ended June 30, 2020, we acquired 100% ownership of businesses complementary to our existing lines of business. The primary factor that gave rise to the recognition of goodwill was the earnings capacity of the acquired businesses in excess of the net tangible and intangible assets acquired (such excess arising from the low level of tangible assets relative to the earnings capacities of the businesses). A portion of the amounts assigned to goodwill may be deductible for income tax purposes.
Acquisition-date fair values
Acquisition-date fair values assigned to the assets acquired and liabilities assumed are set out in the following table:
|
|
Competence |
|
Individually |
|
Total 1 |
| |||
Assets |
|
|
|
|
|
|
| |||
Current assets |
|
|
|
|
|
|
| |||
Cash |
|
$ |
90 |
|
$ |
1 |
|
$ |
91 |
|
Accounts receivable 2 |
|
64 |
|
2 |
|
66 |
| |||
Other |
|
2 |
|
1 |
|
3 |
| |||
|
|
156 |
|
4 |
|
160 |
| |||
Non-current assets |
|
|
|
|
|
|
| |||
Property, plant and equipment |
|
|
|
|
|
|
| |||
Owned assets |
|
21 |
|
2 |
|
23 |
| |||
Right-of-use lease assets |
|
40 |
|
2 |
|
42 |
| |||
Intangible assets subject to amortization 3 |
|
754 |
|
48 |
|
802 |
| |||
Intangible assets with indefinite lives |
|
|
|
9 |
|
9 |
| |||
Other |
|
2 |
|
|
|
2 |
| |||
|
|
817 |
|
61 |
|
878 |
| |||
Total identifiable assets acquired |
|
973 |
|
65 |
|
1,038 |
| |||
Liabilities |
|
|
|
|
|
|
| |||
Current liabilities |
|
|
|
|
|
|
| |||
Accounts payable and accrued liabilities |
|
42 |
|
4 |
|
46 |
| |||
Income and other taxes payable |
|
65 |
|
|
|
65 |
| |||
Advance billings and customer deposits |
|
|
|
5 |
|
5 |
| |||
Current maturities of long-term debt |
|
11 |
|
5 |
|
16 |
| |||
|
|
118 |
|
14 |
|
132 |
| |||
Non-current liabilities |
|
|
|
|
|
|
| |||
Long-term debt |
|
214 |
|
1 |
|
215 |
| |||
Deferred income taxes |
|
218 |
|
10 |
|
228 |
| |||
|
|
432 |
|
11 |
|
443 |
| |||
Total liabilities assumed |
|
550 |
|
25 |
|
575 |
| |||
Net identifiable assets acquired |
|
423 |
|
40 |
|
463 |
| |||
Goodwill |
|
724 |
|
48 |
|
772 |
| |||
Net assets acquired |
|
$ |
1,147 |
|
$ |
88 |
|
$ |
1,235 |
|
Acquisition effected by way of: |
|
|
|
|
|
|
| |||
Cash consideration |
|
$ |
1,147 |
|
$ |
84 |
|
$ |
1,231 |
|
Accounts payable and accrued liabilities |
|
|
|
4 |
|
4 |
| |||
|
|
$ |
1,147 |
|
$ |
88 |
|
$ |
1,235 |
|
(1) The purchase price allocation, primarily in respect of customer contracts, related customer relationships and leasehold interests and deferred income taxes, had not been finalized as of the date of issuance of these consolidated financial statements. As is customary in a business acquisition transaction, until the time of
notes to condensed interim consolidated financial statements |
|
(unaudited) |
acquisition of control, we did not have full access to the books and records of the acquired businesses. Upon having sufficient time to review the books and records of the acquired businesses, we expect to finalize our purchase price allocations.
(2) The fair value of accounts receivable is equal to the gross contractual amounts receivable and reflects the best estimates at the acquisition dates of the contractual cash flows expected to be collected.
(3) Customer contracts and customer relationships (including those related to customer contracts) are generally expected to be amortized over periods of 10 years; software is expected to be amortized over periods of 3-5 years.
Pro forma disclosures
The following pro forma supplemental information represents certain results of operations as if the business acquisitions noted above had been completed at the beginning of the fiscal 2020 year.
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30, 2020 (millions except per share amounts) |
|
As reported 1 |
|
Pro forma 2 |
|
As reported 1 |
|
Pro forma 2 |
| ||||
Operating revenues |
|
$ |
3,728 |
|
$ |
3,730 |
|
$ |
7,422 |
|
$ |
7,475 |
|
Net income |
|
$ |
315 |
|
$ |
315 |
|
$ |
668 |
|
$ |
668 |
|
Net income per Common Share* |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
0.23 |
|
$ |
0.23 |
|
$ |
0.51 |
|
$ |
0.51 |
|
Diluted |
|
$ |
0.23 |
|
$ |
0.23 |
|
$ |
0.51 |
|
$ |
0.51 |
|
(1) Operating revenues and net income for the three-month period ended June 30, 2020, include: $141 and $9, respectively, in respect of Competence Call Center. Operating revenues and net income (loss) for the six-month period ended June 30, 2020, include: $226 and $(11), respectively, in respect of Competence Call Center.
(2) Pro forma amounts for the three-month and six-month periods ended June 30, 2020, reflect the acquired businesses. The results of the acquired businesses have been included in our Consolidated statements of income and other comprehensive income effective the dates of acquisition.
The pro forma supplemental information is based on estimates and assumptions that are believed to be reasonable. The pro forma supplemental information is not necessarily indicative of our consolidated financial results in future periods or the actual results that would have been realized had the business acquisitions been completed at the beginning of the periods presented. The pro forma supplemental information includes incremental property, plant and equipment depreciation, intangible asset amortization, financing and other charges as a result of the acquisitions, net of the related tax effects.
(c) Business acquisitions prior period
In 2019, we acquired businesses that were complimentary to our existing lines of business. As at December 31, 2019, purchase price allocations had not been finalized. During the six-month period ended June 30, 2020, the preliminary acquisition-date values for software, goodwill and deferred income taxes were increased (decreased) by $32 million, $(22 million) and $10 million, respectively; as required by IFRS-IASB, comparative amounts have been adjusted so as to reflect those increases (decreases) effective the acquisition date.
(d) Business acquisitions subsequent to reporting period
Mobile Klinik
On July 1, 2020, we acquired 100% of Mobile Klinik, a storefront wireless device repair and sales business complementary to our existing wireless lines of business. Consideration of $165 million consisted of: cash of $138 million; working capital adjustments; and contingent consideration of $31 million, payment of which is dependent upon achieving revenue, profitability, store expansion and wireless subscriber addition targets through 2023. The investment was made with a view to growing our wireless business.
As of July 31, 2020, our initial provision for the net identifiable assets is in the range of $65 million $85 million; as is customary in a business acquisition transaction, until the time of acquisition of control, we did not have full access to the books and records of the acquired business. Upon having sufficient time to review the books and records of the acquired business, as well as obtaining new and additional information about the facts and circumstances as of the acquisition date, we will adjust the provisional amounts for identifiable assets acquired and liabilities assumed and thus finalize our purchase price allocation.
19 leases
Maturity analyses of lease liabilities are set out in Note 4(b) and Note 26(g); the period interest expense in respect thereof is set out in Note 9. The additions to, the depreciation charges for, and the carrying amount of, right-of-use lease assets are set out in Note 17. We have not currently elected to exclude low-value and short-term leases from lease accounting.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
|
(unaudited) |
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Income from subleasing right-of-use lease assets |
|
|
|
|
|
|
|
|
|
|
| ||||
Co-location sublet revenue included in operating service revenues |
|
|
|
$ |
5 |
|
$ |
4 |
|
$ |
9 |
|
$ |
9 |
|
Other sublet revenue included in other operating income |
|
7 |
|
$ |
|
|
$ |
1 |
|
$ |
1 |
|
$ |
1 |
|
Lease payments |
|
|
|
$ |
98 |
|
$ |
81 |
|
$ |
200 |
|
$ |
184 |
|
20 other long-term assets
As at (millions) |
|
Note |
|
June 30, |
|
December 31, |
| ||
Pension assets |
|
|
|
$ |
1 |
|
$ |
155 |
|
Unbilled customer finance receivables |
|
4(a) |
|
319 |
|
225 |
| ||
Derivative assets |
|
4(d) |
|
413 |
|
76 |
| ||
Costs incurred to obtain or fulfill a contract with a customer |
|
|
|
100 |
|
109 |
| ||
Real estate joint venture advances |
|
21(b) |
|
114 |
|
104 |
| ||
Investment in real estate joint venture |
|
21(b) |
|
2 |
|
3 |
| ||
Investment in associate |
|
21 |
|
72 |
|
|
| ||
Portfolio investments 1 |
|
|
|
122 |
|
110 |
| ||
Prepaid maintenance |
|
|
|
61 |
|
55 |
| ||
Other |
|
|
|
151 |
|
82 |
| ||
|
|
|
|
$ |
1,355 |
|
$ |
919 |
|
(1) Fair value measured at reporting date using significant other observable inputs (Level 2).
The costs incurred to obtain and fulfill contracts with customers are set out in the following table:
Periods ended June 30, 2020 (millions) |
|
Three months |
|
Six months |
| ||||||||||||||
|
|
Costs incurred to |
|
|
|
Costs incurred to |
|
|
| ||||||||||
|
|
Obtain |
|
Fulfill contracts |
|
Total |
|
Obtain |
|
Fulfill contracts |
|
Total |
| ||||||
Balance, beginning of period |
|
$ |
331 |
|
$ |
14 |
|
$ |
345 |
|
$ |
344 |
|
$ |
14 |
|
$ |
358 |
|
Additions |
|
54 |
|
1 |
|
55 |
|
113 |
|
2 |
|
115 |
| ||||||
Amortization |
|
(71 |
) |
(1 |
) |
(72 |
) |
(143 |
) |
(2 |
) |
(145 |
) | ||||||
Balance, end of period |
|
$ |
314 |
|
$ |
14 |
|
$ |
328 |
|
$ |
314 |
|
$ |
14 |
|
$ |
328 |
|
Current 1 |
|
|
|
|
|
|
|
$ |
221 |
|
$ |
7 |
|
$ |
228 |
| |||
Non-current |
|
|
|
|
|
|
|
93 |
|
7 |
|
100 |
| ||||||
|
|
|
|
|
|
|
|
$ |
314 |
|
$ |
14 |
|
$ |
328 |
|
(1) Presented on the Consolidated statements of financial position in prepaid expenses.
21 real estate joint ventures and investment in associate
(a) General
Real estate joint ventures
In 2013, we partnered, as equals, with two arms-length parties in a residential, retail and commercial real estate redevelopment project, TELUS Sky, in Calgary, Alberta. The new-build tower, scheduled for completion in 2020, is to be built to the LEED Platinum standard.
Associate
On January 13, 2020, for cash consideration of approximately $73 million, we acquired a 28% basic equity interest in Miovision Technologies Incorporated, an associate that is complementary to, and is viewed to grow, our existing Internet of Things business; our judgment is that we obtained significant influence over the associate concurrent with obtaining the newly acquired equity interest.
notes to condensed interim consolidated financial statements |
|
(unaudited) |
(b) Real estate joint ventures
Summarized financial information
As at (millions) |
|
June 30, |
|
December 31, |
|
As at (millions) |
|
June 30, |
|
December 31, |
| ||||
ASSETS |
|
|
|
|
|
LIABILITIES AND OWNERS EQUITY |
|
|
|
|
| ||||
Current assets |
|
|
|
|
|
Current liabilities |
|
|
|
|
| ||||
Cash and temporary investments, net |
|
$ |
8 |
|
$ |
15 |
|
Accounts payable and accrued liabilities |
|
$ |
40 |
|
$ |
25 |
|
Other |
|
17 |
|
18 |
|
Construction holdback liabilities |
|
|
|
15 |
| ||||
|
|
25 |
|
33 |
|
|
|
40 |
|
40 |
| ||||
Non-current assets |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
| ||||
Investment property under development |
|
331 |
|
318 |
|
Construction credit facilities |
|
342 |
|
312 |
| ||||
Other |
|
14 |
|
2 |
|
Other |
|
|
|
3 |
| ||||
|
|
345 |
|
320 |
|
|
|
342 |
|
315 |
| ||||
|
|
|
|
|
|
|
|
382 |
|
355 |
| ||||
|
|
|
|
|
|
Owners equity |
|
|
|
|
| ||||
|
|
|
|
|
|
TELUS 1 |
|
(3 |
) |
1 |
| ||||
|
|
|
|
|
|
Other partners |
|
(9 |
) |
(3 |
) | ||||
|
|
|
|
|
|
|
|
(12 |
) |
(2 |
) | ||||
|
|
$ |
370 |
|
$ |
353 |
|
|
|
$ |
370 |
|
$ |
353 |
|
(1) The equity amounts recorded by the real estate joint venture differ from those recorded by us by the amount of the deferred gains on our real estate contributed and the valuation provision we have recorded in excess of that recorded by the real estate joint venture.
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Depreciation and amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Interest expense 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Net income (loss) and comprehensive income (loss) 2 |
|
$ |
(31 |
) |
$ |
|
|
$ |
(33 |
) |
$ |
(1 |
) |
(1) During the three-month and six-month periods ended June 30, 2020, the real estate joint venture capitalized $1 (2019 $3) and $4 (2019 $6), respectively, of financing costs.
(2) As the real estate joint ventures are partnerships, no provision for income taxes of the partners is made in determining the real estate joint ventures net income and comprehensive income.
Our real estate joint ventures activity
Our real estate joint ventures investment activity is set out in the following table.
|
|
2020 |
|
2019 |
| ||||||||||||||
Three-month periods ended June 30 (millions) |
|
Loans and |
|
Equity 2 |
|
Total |
|
Loans and |
|
Equity 2 |
|
Total |
| ||||||
Related to real estate joint ventures statements of income and other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Comprehensive income attributable to us 3 |
|
$ |
|
|
$ |
(10 |
) |
$ |
(10 |
) |
$ |
|
|
$ |
|
|
$ |
|
|
Related to real estate joint ventures statements of financial position |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Items not affecting currently reported cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Construction credit facilities financing costs charged by us and other (Note 7) |
|
1 |
|
|
|
1 |
|
1 |
|
|
|
1 |
| ||||||
Cash flows in the current reporting period |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Construction credit facilities |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Amounts advanced |
|
3 |
|
|
|
3 |
|
9 |
|
|
|
9 |
| ||||||
Financing costs paid to us |
|
(1 |
) |
|
|
(1 |
) |
(1 |
) |
|
|
(1 |
) | ||||||
Funds we advanced or contributed, excluding construction credit facilities |
|
|
|
5 |
|
5 |
|
|
|
|
|
|
| ||||||
Net increase |
|
3 |
|
(5 |
) |
(2 |
) |
9 |
|
|
|
9 |
| ||||||
Real estate joint ventures carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, beginning of period |
|
111 |
|
(10 |
) |
101 |
|
77 |
|
5 |
|
82 |
| ||||||
Valuation provision recorded in beginning of period balance now recorded in joint venture |
|
|
|
6 |
|
6 |
|
|
|
|
|
|
| ||||||
Balance, end of period |
|
$ |
114 |
|
$ |
(9 |
) |
$ |
105 |
|
$ |
86 |
|
$ |
5 |
|
$ |
91 |
|
notes to condensed interim consolidated financial statements |
|
(unaudited) |
|
|
2020 |
|
2019 |
| ||||||||||||||
Six-month periods ended June 30 (millions) |
|
Loans and |
|
Equity 2 |
|
Total |
|
Loans and |
|
Equity 2 |
|
Total |
| ||||||
Related to real estate joint ventures statements of income and other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Comprehensive income attributable to us 3 |
|
$ |
|
|
$ |
(11 |
) |
$ |
(11 |
) |
$ |
|
|
$ |
|
|
$ |
|
|
Related to real estate joint ventures statements of financial position |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Items not affecting currently reported cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Construction credit facilities financing costs charged by us (Note 7) |
|
2 |
|
|
|
2 |
|
2 |
|
|
|
2 |
| ||||||
Cash flows in the current reporting period |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Construction credit facilities |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Amounts advanced |
|
10 |
|
|
|
10 |
|
17 |
|
|
|
17 |
| ||||||
Financing costs paid to us |
|
(2 |
) |
|
|
(2 |
) |
(2 |
) |
|
|
(2 |
) | ||||||
Funds we advanced or contributed, excluding construction credit facilities |
|
|
|
5 |
|
5 |
|
|
|
|
|
|
| ||||||
Funds repaid to us and earnings distributed |
|
|
|
(1 |
) |
(1 |
) |
|
|
|
|
|
| ||||||
Net increase |
|
10 |
|
(7 |
) |
3 |
|
17 |
|
|
|
17 |
| ||||||
Real estate joint ventures carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, beginning of period |
|
104 |
|
(2 |
) |
102 |
|
69 |
|
5 |
|
74 |
| ||||||
Balance, end of period |
|
$ |
114 |
|
$ |
(9 |
) |
$ |
105 |
|
$ |
86 |
|
$ |
5 |
|
$ |
91 |
|
(1) Loans and receivables are included in our Consolidated statements of financial position as Real estate joint venture advances and are comprised of advances under construction credit facilities.
(2) We account for our interests in the real estate joint ventures using the equity method of accounting. As at June 30, 2020, and December 31, 2019, we had recorded equity losses in excess of our recorded equity investment in respect of one of the real estate joint ventures; such resulting balance has been included in long-term liabilities (Note 27).
(3) As the real estate joint ventures are partnerships, no provision for income taxes of the partners is made in determining the real estate joint ventures net income and comprehensive income.
We have entered into a lease agreement with the TELUS Sky real estate joint venture; for lease accounting purposes, the lease commenced during the three-month period ended March 31, 2019.
Real estate joint ventures commitments and contingent liabilities
Construction commitments
The TELUS Sky real estate joint venture is expected to spend a total of approximately $475 million (December 31, 2019 $450 million) on the construction of a mixed-use tower. As at June 30, 2020, the real estate joint ventures construction-related contractual commitments were approximately $23 million through to 2020 (December 31, 2019 $37 million through to 2020).
Construction credit facilities
The TELUS Sky real estate joint venture has a credit agreement, maturing August 31, 2021, with Canadian financial institutions (as 66-2/3% lender) and TELUS Corporation (as 33-1/3% lender) to provide $342 million of construction financing for the project. The construction credit facilities contain customary real estate construction financing representations, warranties and covenants and are secured by demand debentures constituting first fixed and floating charge mortgages over the underlying real estate assets. The construction credit facilities are available by way of bankers acceptance or prime loan and bear interest at rates in line with similar construction financing facilities.
As at (millions) |
|
Note |
|
June 30, |
|
December 31, |
| ||
Construction credit facilities commitment TELUS Corporation |
|
|
|
|
|
|
| ||
Undrawn |
|
4(b) |
|
$ |
|
|
$ |
10 |
|
Advances |
|
|
|
114 |
|
104 |
| ||
|
|
|
|
114 |
|
114 |
| ||
Construction credit facilities commitment other |
|
|
|
228 |
|
228 |
| ||
|
|
|
|
$ |
342 |
|
$ |
342 |
|
notes to condensed interim consolidated financial statements |
|
(unaudited) |
22 short-term borrowings
On July 26, 2002, one of our subsidiaries, TELUS Communications Inc., entered into an agreement with an arms-length securitization trust associated with a major Schedule I bank under which it is able to sell an interest in certain trade receivables up to a maximum of $500 million (December 31, 2019 $500 million). The term of this revolving-period securitization agreement ends December 31, 2021, and it requires minimum cash proceeds of $100 million from monthly sales of interests in certain trade receivables. TELUS Communications Inc. is required to maintain a credit rating of at least BB (December 31, 2019 BB) from DBRS Limited or the securitization trust may require the sale program to be wound down prior to the end of the term.
Sales of trade receivables in securitization transactions are recognized as collateralized short-term borrowings and thus do not result in our de-recognition of the trade receivables sold. When we sell our trade receivables, we retain reserve accounts, which are retained interests in the securitized trade receivables, and servicing rights. As at June 30, 2020, we had sold to the trust (but continued to recognize) trade receivables of $118 million (December 31, 2019 $124 million). Short-term borrowings of $100 million (December 31, 2019 $100 million) are comprised of amounts advanced to us by the arms-length securitization trust pursuant to the sale of trade receivables.
The balance of short-term borrowings (if any) is comprised of amounts drawn on our bilateral bank facilities.
23 accounts payable and accrued liabilities
As at (millions) |
|
June 30, |
|
December 31, |
| ||
Accrued liabilities |
|
$ |
1,102 |
|
$ |
1,091 |
|
Payroll and other employee-related liabilities |
|
482 |
|
422 |
| ||
Restricted share units liability |
|
95 |
|
77 |
| ||
|
|
1,679 |
|
1,590 |
| ||
Trade accounts payable |
|
834 |
|
892 |
| ||
Interest payable |
|
170 |
|
160 |
| ||
Other |
|
190 |
|
107 |
| ||
|
|
$ |
2,873 |
|
$ |
2,749 |
|
24 advance billings and customer deposits
As at (millions) |
|
June 30, |
|
December 31, |
| ||
Advance billings |
|
$ |
548 |
|
$ |
522 |
|
Deferred customer activation and connection fees |
|
8 |
|
9 |
| ||
Customer deposits |
|
14 |
|
14 |
| ||
Contract liabilities |
|
570 |
|
545 |
| ||
Other |
|
126 |
|
130 |
| ||
|
|
$ |
696 |
|
$ |
675 |
|
Contract liabilities represent our future performance obligations to customers in respect of services and/or equipment and for which we have received consideration from the customer or for which an amount is due from the customer. Our contract liability balances, and the changes in those balances, are set out in the following table:
notes to condensed interim consolidated financial statements |
(unaudited) |
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Balance, beginning of period |
|
|
|
$ |
824 |
|
$ |
814 |
|
$ |
801 |
|
$ |
811 |
|
Revenue deferred in previous period and recognized in current period |
|
|
|
(593 |
) |
(642 |
) |
(577 |
) |
(647 |
) | ||||
Net additions arising from operations |
|
|
|
571 |
|
638 |
|
573 |
|
641 |
| ||||
Additions arising from business acquisitions |
|
18(b) |
|
|
|
1 |
|
5 |
|
6 |
| ||||
Balance, end of period |
|
|
|
$ |
802 |
|
$ |
811 |
|
$ |
802 |
|
$ |
811 |
|
Current |
|
|
|
|
|
|
|
$ |
721 |
|
$ |
732 |
| ||
Non-current |
|
27 |
|
|
|
|
|
|
|
|
| ||||
Deferred revenues |
|
|
|
|
|
|
|
70 |
|
65 |
| ||||
Deferred customer activation and connection fees |
|
|
|
|
|
|
|
11 |
|
14 |
| ||||
|
|
|
|
|
|
|
|
$ |
802 |
|
$ |
811 |
| ||
Reconciliation of contract liabilities presented in the consolidated statements of financial position current |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross contract liabilities |
|
|
|
|
|
|
|
$ |
721 |
|
$ |
732 |
| ||
Reclassification to contract assets for contracts with contract liabilities less than contract assets |
|
|
|
|
|
|
|
(142 |
) |
(155 |
) | ||||
Reclassification from contract assets for contracts with contract assets less than contract liabilities |
|
|
|
|
|
|
|
(9 |
) |
(5 |
) | ||||
|
|
|
|
|
|
|
|
$ |
570 |
|
$ |
572 |
|
25 provisions
(millions) |
|
Asset |
|
Employee- |
|
Written put |
|
Other |
|
Total |
| |||||
As at April 1, 2020 |
|
$ |
497 |
|
$ |
41 |
|
$ |
182 |
|
$ |
122 |
|
$ |
842 |
|
Additions |
|
|
|
10 |
|
|
|
75 |
|
85 |
| |||||
Reversal |
|
|
|
|
|
(70 |
) |
(2 |
) |
(72 |
) | |||||
Use |
|
(1 |
) |
(9 |
) |
(103 |
) |
(42 |
) |
(155 |
) | |||||
Interest effect |
|
4 |
|
|
|
|
|
|
|
4 |
| |||||
Effects of foreign exchange, net |
|
|
|
(1 |
) |
(6 |
) |
(1 |
) |
(8 |
) | |||||
As at June 30, 2020 |
|
$ |
500 |
|
$ |
41 |
|
$ |
3 |
|
$ |
152 |
|
$ |
696 |
|
As at January 1, 2020 |
|
$ |
495 |
|
$ |
64 |
|
$ |
196 |
|
$ |
123 |
|
$ |
878 |
|
Additions |
|
|
|
20 |
|
|
|
95 |
|
115 |
| |||||
Reversal |
|
|
|
|
|
(103 |
) |
(16 |
) |
(119 |
) | |||||
Use |
|
(2 |
) |
(43 |
) |
(104 |
) |
(51 |
) |
(200 |
) | |||||
Interest effect |
|
7 |
|
|
|
2 |
|
|
|
9 |
| |||||
Effects of foreign exchange, net |
|
|
|
|
|
12 |
|
1 |
|
13 |
| |||||
As at June 30, 2020 |
|
$ |
500 |
|
$ |
41 |
|
$ |
3 |
|
$ |
152 |
|
$ |
696 |
|
Current |
|
$ |
10 |
|
$ |
35 |
|
$ |
|
|
$ |
38 |
|
$ |
83 |
|
Non-current |
|
490 |
|
6 |
|
3 |
|
114 |
|
613 |
| |||||
As at June 30, 2020 |
|
$ |
500 |
|
$ |
41 |
|
$ |
3 |
|
$ |
152 |
|
$ |
696 |
|
Asset retirement obligation
We establish provisions for liabilities associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development and/or normal operation of the assets. We expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur proximate to the dates these assets are retired.
Employee-related
The employee-related provisions are largely in respect of restructuring activities (as discussed further in Note 16(b)). The timing of the cash outflows in respect of the balance accrued as at the financial statement date is substantially short-term in nature.
Written put options
In connection with certain business acquisitions, we have established provisions for written put options in respect of non-controlling interests. Provisions for written put options are determined based on the net present value of estimated future earnings results and require us to make key economic assumptions about the future. No cash outflows for the written put options are expected prior to their initial exercisability.
notes to condensed interim consolidated financial statements |
(unaudited) |
Other
The provisions for other include: legal claims; non-employee-related restructuring activities; contract termination costs and onerous contracts related to business acquisitions; and costs incurred in connection with the COVID-19 pandemic. Other than as set out following, we expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur over an indeterminate multi-year period.
As discussed further in Note 29, we are involved in a number of legal claims and we are aware of certain other possible legal claims. In respect of legal claims, we establish provisions, when warranted, after taking into account legal assessments, information presently available, and the expected availability of recourse. The timing of cash outflows associated with legal claims cannot be reasonably determined.
In connection with business acquisitions, we have established provisions for contingent consideration, contract termination costs and onerous contracts acquired.
26 long-term debt
(a) Details of long-term debt
As at (millions) |
|
Note |
|
June 30, |
|
December 31, |
| ||
Senior unsecured |
|
|
|
|
|
|
| ||
TELUS Corporation senior notes |
|
(b) |
|
$ |
14,729 |
|
$ |
14,479 |
|
TELUS Corporation commercial paper |
|
(c) |
|
|
|
1,015 |
| ||
TELUS Communications Inc. debentures |
|
|
|
622 |
|
621 |
| ||
Secured |
|
|
|
|
|
|
| ||
TELUS International (Cda) Inc. credit facility |
|
(e) |
|
1,167 |
|
431 |
| ||
Other |
|
|
|
279 |
|
267 |
| ||
|
|
|
|
16,797 |
|
16,813 |
| ||
Lease liabilities |
|
(f) |
|
1,721 |
|
1,661 |
| ||
Long-term debt |
|
|
|
$ |
18,518 |
|
$ |
18,474 |
|
Current |
|
|
|
$ |
562 |
|
$ |
1,332 |
|
Non-current |
|
|
|
17,956 |
|
17,142 |
| ||
Long-term debt |
|
|
|
$ |
18,518 |
|
$ |
18,474 |
|
(b) TELUS Corporation senior notes
The notes are senior unsecured and unsubordinated obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated obligations, are senior in right of payment to all of our existing and future subordinated indebtedness, and are effectively subordinated to all existing and future obligations of, or guaranteed by, our subsidiaries. The indentures governing the notes contain certain covenants that, among other things, place limitations on our ability, and the ability of certain of our subsidiaries, to: grant security in respect of indebtedness; enter into sale-leaseback transactions; and incur new indebtedness.
Interest is payable semi-annually. The notes require us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture.
At any time prior to the respective maturity dates set out in the table below, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 days and not more than 60 days prior notice. On or after the respective redemption present value spread cessation dates set out in the table below, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 days and not more than 60 days prior notice, at redemption prices equal to 100% of the principal amounts thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption.
|
|
|
|
|
|
|
|
|
|
Principal face amount |
|
Redemption present |
| |||||||
Series |
|
Issued |
|
Maturity |
|
Issue |
|
Effective |
|
Originally |
|
Outstanding at |
|
Basis |
|
Cessation |
| |||
3.60% Notes, Series CM |
|
November 2013 |
|
January 2021 2 |
|
$ |
997.15 |
|
3.65 |
% |
$ |
400 million |
|
$ |
NIL |
|
35 |
3 |
N/A |
|
3.20% Notes, Series CO |
|
April 2014 |
|
April 2021 2 |
|
$ |
997.39 |
|
3.24 |
% |
$ |
500 million |
|
$ |
NIL |
|
30 |
3 |
Mar. 5, 2021 |
|
2.35% Notes, Series CT |
|
March 2015 |
|
March 2022 |
|
$ |
997.31 |
|
2.39 |
% |
$ |
1.0 billion |
|
$ |
1.0 billion |
|
35.5 |
3 |
Feb. 28, 2022 |
|
3.35% Notes, Series CJ |
|
December 2012 |
|
March 2023 |
|
$ |
998.83 |
|
3.36 |
% |
$ |
500 million |
|
$ |
500 million |
|
40 |
3 |
Dec. 15, 2022 |
|
3.35% Notes, Series CK |
|
April 2013 |
|
April 2024 |
|
$ |
994.35 |
|
3.41 |
% |
$ |
1.1 billion |
|
$ |
1.1 billion |
|
36 |
3 |
Jan. 2, 2024 |
|
3.75% Notes, Series CQ |
|
September 2014 |
|
January 2025 |
|
$ |
997.75 |
|
3.78 |
% |
$ |
800 million |
|
$ |
800 million |
|
38.5 |
3 |
Oct. 17, 2024 |
|
notes to condensed interim consolidated financial statements |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Principal face amount |
|
Redemption present |
| ||||||||||
Series |
|
Issued |
|
Maturity |
|
Issue |
|
Effective |
|
Originally |
|
Outstanding at |
|
Basis |
|
Cessation |
| ||||||
3.75% Notes, Series CV |
|
December 2015 |
|
March 2026 |
|
$ |
992.14 |
|
3.84 |
% |
$ |
600 million |
|
$ |
600 million |
|
53.5 |
3 |
Dec. 10, 2025 |
| |||
2.75% Notes, Series CZ |
|
July 2019 |
|
July 2026 |
|
$ |
998.73 |
|
2.77 |
% |
$ |
800 million |
|
$ |
800 million |
|
33 |
3 |
May 8, 2026 |
| |||
2.80% U.S. Dollar Notes 4 |
|
September 2016 |
|
February 2027 |
|
US$ |
991.89 |
|
2.89 |
% |
US$ |
600 million |
|
US$ |
600 million |
|
20 |
5 |
Nov. 16, 2026 |
| |||
3.70% U.S. Dollar Notes 4 |
|
March 2017 |
|
September 2027 |
|
US$ |
998.95 |
|
3.71 |
% |
US$ |
500 million |
|
US$ |
500 million |
|
20 |
5 |
June 15, 2027 |
| |||
2.35% Notes, Series CAC |
|
May 2020 |
|
January 2028 |
|
$ |
997.25 |
|
2.39 |
% |
$ |
600 million |
|
$ |
600 million |
|
48 |
3 |
Nov. 27, 2027 |
| |||
3.625% Notes, Series CX |
|
March 2018 |
|
March 2028 |
|
$ |
989.49 |
|
3.75 |
% |
$ |
600 million |
|
$ |
600 million |
|
37 |
3 |
Dec. 1, 2027 |
| |||
3.30% Notes, Series CY |
|
April 2019 |
|
May 2029 |
|
$ |
991.75 |
|
3.40 |
% |
$ |
1.0 billion |
|
$ |
1.0 billion |
|
43.5 |
3 |
Feb. 2, 2029 |
| |||
3.15% Notes, Series CAA |
|
December 2019 |
|
February 2030 |
|
$ |
996.49 |
|
3.19 |
% |
$ |
600 million |
|
$ |
600 million |
|
39.5 |
3 |
Nov. 19, 2029 |
| |||
4.40% Notes, Series CL |
|
April 2013 |
|
April 2043 |
|
$ |
997.68 |
|
4.41 |
% |
$ |
600 million |
|
$ |
600 million |
|
47 |
3 |
Oct. 1, 2042 |
| |||
5.15% Notes, Series CN |
|
November 2013 |
|
November 2043 |
|
$ |
995.00 |
|
5.18 |
% |
$ |
400 million |
|
$ |
400 million |
|
50 |
3 |
May 26, 2043 |
| |||
4.85% Notes, Series CP |
|
Multiple 6 |
|
April 2044 |
|
$ |
987.91 |
6 |
4.93 |
%6 |
$ |
500 million |
6 |
$ |
900 million |
6 |
46 |
3 |
Oct. 5, 2043 |
| |||
4.75% Notes, Series CR |
|
September 2014 |
|
January 2045 |
|
$ |
992.91 |
|
4.80 |
% |
$ |
400 million |
|
$ |
400 million |
|
51.5 |
3 |
July 17, 2044 |
| |||
4.40% Notes, Series CU |
|
March 2015 |
|
January 2046 |
|
$ |
999.72 |
|
4.40 |
% |
$ |
500 million |
|
$ |
500 million |
|
60.5 |
3 |
July 29, 2045 |
| |||
4.70% Notes, Series CW |
|
Multiple 7 |
|
March 2048 |
|
$ |
998.06 |
7 |
4.71 |
%7 |
$ |
325 million |
7 |
$ |
475 million |
7 |
58.5 |
3 |
Sept. 6, 2047 |
| |||
4.60% U.S. Dollar Notes 4 |
|
June 2018 |
|
November 2048 |
|
US$ |
987.60 |
|
4.68 |
% |
US$ |
750 million |
|
US$ |
750 million |
|
25 |
5 |
May 16, 2048 |
| |||
4.30% U.S. Dollar Notes 4 |
|
May 2019 |
|
June 2049 |
|
US$ |
990.48 |
|
4.36 |
% |
US$ |
500 million |
|
US$ |
500 million |
|
25 |
5 |
Dec. 15, 2048 |
| |||
3.95% Notes, Series CAB |
|
Multiple 8 |
|
February 2050 |
|
$ |
997.54 |
8 |
3.97 |
%8 |
$ |
400 million |
8 |
$ |
800 million |
8 |
57.5 |
3 |
Aug. 16, 2049 |
| |||
(1) The effective interest rate is that which the notes would yield to an initial debt holder if held to maturity.
(2) On May 22, 2020, we exercised our right to early redeem, on June 23, 2020, all of our 3.60% Notes, Series CM and all of our 3.20% Notes, Series CO. The long-term debt prepayment premium recorded in the three-month period ended June 30, 2020, was $18 million before income taxes (see Note 9).
(3) The redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread calculated over the period to maturity, other than in the case of the Series CT, Series CU, Series CV, Series CW, Series CX, Series CY, Series CZ, Series CAA, Series CAB and Series CAC notes, for which it is calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof.
(4) We have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively converted the principal payments and interest obligations to Canadian dollar obligations as follows:
Series |
|
Interest rate |
|
Canadian dollar |
|
Exchange |
| ||
2.80% U.S. Dollar Notes |
|
2.95 |
% |
$ |
792 million |
|
$ |
1.3205 |
|
3.70% U.S. Dollar Notes |
|
3.41 |
% |
$ |
667 million |
|
$ |
1.3348 |
|
4.60% U.S. Dollar Notes |
|
4.41 |
% |
$ |
974 million |
|
$ |
1.2985 |
|
4.30% U.S. Dollar Notes |
|
4.27 |
% |
$ |
672 million |
|
$ |
1.3435 |
|
(5) The redemption price is equal to the greater of (i) the present value of the notes discounted at the U.S. Adjusted Treasury Rate plus the redemption present value spread calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof.
(6) $500 million of 4.85% Notes, Series CP were issued in April 2014 at an issue price of $998.74 and an effective interest rate of 4.86%. This series of notes was reopened in December 2015 and a further $400 million of notes were issued at an issue price of $974.38 and an effective interest rate of 5.02%.
(7) $325 million of 4.70% Notes, Series CW were issued in March 2017 at an issue price of $990.65 and an effective interest rate of 4.76%. This series of notes was reopened in February 2018 and a further $150 million of notes were issued at an issue price of $1,014.11 and an effective interest rate of 4.61% in March 2018.
(8) $400 million of 3.95% Notes, Series CAB were issued in December 2019 at an issue price of $991.54 and an effective interest rate of 4.00%. This series of notes was reopened in May 2020 and a further $400 million of notes were issued at an issue price of $1,003.53 and an effective interest rate of 3.93%.
(c) TELUS Corporation commercial paper
TELUS Corporation has an unsecured commercial paper program, which is backstopped by our $2.25 billion syndicated credit facility (see (d)) and is to be used for general corporate purposes, including capital expenditures and investments. This program enables us to issue commercial paper, subject to conditions related to debt ratings, up to a maximum aggregate amount at any one time of $1.4 billion (December 31, 2019 $1.4 billion). Foreign currency forward contracts are used to manage currency risk arising from issuing commercial paper denominated in U.S. dollars. Commercial paper debt is due within one year and is classified as a current portion of long-term debt, as the amounts are fully supported, and we expect that they will continue to be supported, by the revolving credit facility, which has no repayment requirements within the next year. As at June 30, 2020, we had $NIL (December 31, 2019 $1,015 million) of commercial paper outstanding, which was denominated in U.S. dollars (US$NIL; December 31, 2019 US$781 million).
(d) TELUS Corporation credit facility
As at June 30, 2020, TELUS Corporation had an unsecured revolving $2.25 billion bank credit facility, expiring on May 31, 2023, with a syndicate of financial institutions, which is to be used for general corporate purposes, including the backstopping of commercial paper.
The TELUS Corporation credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers acceptance rate or London interbank offered rate (LIBOR) (as such terms are used or defined in the credit facility), plus applicable
notes to condensed interim consolidated financial statements |
(unaudited) |
margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter-end ratio tests. These tests are that our leverage ratio must not exceed 4.25:1.00 and our operating cash flow to interest expense ratio must not be less than 2.00:1.00, all as defined in the credit facility.
Continued access to the TELUS Corporation credit facility is not contingent upon TELUS Corporation maintaining a specific credit rating.
As at (millions) |
|
June 30, |
|
December 31, |
| ||
Net available |
|
$ |
2,250 |
|
$ |
1,235 |
|
Backstop of commercial paper |
|
|
|
1,015 |
| ||
Gross available |
|
$ |
2,250 |
|
$ |
2,250 |
|
We had $191 million of letters of credit outstanding as at June 30, 2020 (December 31, 2019 $184 million), issued under various uncommitted facilities; such letter of credit facilities are in addition to the ability to provide letters of credit pursuant to our committed bank credit facility.
(e) TELUS International (Cda) Inc. credit facility
As at June 30, 2020, TELUS International (Cda) Inc. had a credit facility, secured by its assets, expiring on January 28, 2025 (December 31, 2019 December 20, 2022), with a syndicate of financial institutions (as 87.5% lender) and, joined in 2020, TELUS Corporation (as 12.5% lender). The credit facility is comprised of a US$600 million (December 31, 2019 US$350 million) revolving component and an amortizing US$600 million (December 31, 2019 US$120 million) term loan component. The credit facility is non-recourse to TELUS Corporation. The outstanding revolving component and term loan component had a weighted average interest rate of 2.68% as at June 30, 2020. In connection with the acquisition of Competence Call Center during the three-month period ended March 31, 2020, as discussed further in Note 18(b), incremental amounts were drawn on the facility.
|
|
June 30, 2020 |
|
December 31, 2019 |
| ||||||||||||||
As at (millions) |
|
Revolving |
|
Term loan |
|
Total |
|
Revolving |
|
Term loan |
|
Total |
| ||||||
Available |
|
US$ |
204 |
|
US$ |
N/A |
|
US$ |
204 |
|
US$ |
121 |
|
US$ |
N/A |
|
US$ |
121 |
|
Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Due to other |
|
347 |
|
518 |
|
865 |
|
229 |
|
107 |
|
336 |
| ||||||
Due to TELUS Corporation |
|
49 |
|
74 |
|
123 |
|
N/A |
|
N/A |
|
N/A |
| ||||||
|
|
US$ |
600 |
|
US$ |
592 |
|
US$ |
1,192 |
|
US$ |
350 |
|
US$ |
107 |
|
US$ |
457 |
|
(1) We have entered into a receive-floating interest rate, pay-fixed interest rate exchange agreement that effectively converts our interest obligations on US$103 of the debt to a fixed rate of 2.64%.
Relative to amounts owed to the syndicate of financial institutions, excluding TELUS Corporation, we have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively convert an amortizing amount of US$415 of the principal payments and associated interest obligations to European euro obligations with an effective fixed interest rate of 0.65% and an effective fixed economic exchange rate of US$1.0932:1.00. These have been accounted for as a net investment hedge in a foreign operation (see Note 4).
TELUS International (Cda) Inc.s credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter-end ratio tests. TELUS International (Cda) Inc.s quarter-end net debt to operating cash flow ratio must not exceed: 4.75:1.00 during fiscal 2020; 4.25:1.00 during fiscal 2021; and 3.50:1.00 subsequently. The quarter-end operating cash flow to debt service (interest and scheduled principal repayment) ratio must not be less than 1.50:1.00, all as defined in the credit facility.
The term loan is subject to an amortization schedule which requires that 5% of the principal advanced be repaid each year of the term of the agreement, with the balance due at maturity.
(f) Lease liabilities
Lease liabilities are subject to amortization schedules, which results in the principal being repaid over various periods, including reasonably expected renewals. The weighted average interest rate on lease liabilities was approximately 4.37% as at June 30, 2020.
notes to condensed interim consolidated financial statements |
(unaudited) |
(g) Long-term debt maturities
Anticipated requirements to meet long-term debt repayments, calculated for long-term debts owing as at June 30, 2020, are as follows:
Composite long-term debt |
|
Canadian dollars |
|
U.S. dollars |
|
Other |
|
|
| ||||||||||||||||||||||
Years ending December 31 |
|
Long-term |
|
Leases |
|
|
|
Long-term |
|
Leases |
|
Currency swap agreement |
|
|
|
Leases |
|
|
| ||||||||||||
(millions) |
|
leases |
|
(Note 19) |
|
Total |
|
leases |
|
(Note 19) |
|
(Receive) 1 |
|
Pay |
|
Total |
|
(Note 19) |
|
Total |
| ||||||||||
2020 (remainder of year) |
|
$ |
7 |
|
$ |
144 |
|
$ |
151 |
|
$ |
18 |
|
$ |
11 |
|
$ |
(14 |
) |
$ |
14 |
|
$ |
29 |
|
$ |
23 |
|
$ |
203 |
|
2021 |
|
188 |
|
267 |
|
455 |
|
36 |
|
23 |
|
(28 |
) |
28 |
|
59 |
|
44 |
|
558 |
| ||||||||||
2022 |
|
1,263 |
|
144 |
|
1,407 |
|
36 |
|
22 |
|
(28 |
) |
28 |
|
58 |
|
34 |
|
1,499 |
| ||||||||||
2023 |
|
529 |
|
122 |
|
651 |
|
36 |
|
18 |
|
(28 |
) |
28 |
|
54 |
|
29 |
|
734 |
| ||||||||||
2024 |
|
1,115 |
|
110 |
|
1,225 |
|
36 |
|
8 |
|
(28 |
) |
28 |
|
44 |
|
23 |
|
1,292 |
| ||||||||||
2025-2029 |
|
4,686 |
|
299 |
|
4,985 |
|
2,516 |
|
15 |
|
(1,935 |
) |
1,907 |
|
2,503 |
|
46 |
|
7,534 |
| ||||||||||
Thereafter |
|
4,788 |
|
301 |
|
5,089 |
|
1,704 |
|
1 |
|
(1,703 |
) |
1,646 |
|
1,648 |
|
20 |
|
6,757 |
| ||||||||||
Future cash outflows in respect of composite long-term debt principal repayments |
|
12,576 |
|
1,387 |
|
13,963 |
|
4,382 |
|
98 |
|
(3,764 |
) |
3,679 |
|
4,395 |
|
219 |
|
18,577 |
| ||||||||||
Future cash outflows in respect of associated interest and like carrying costs 2 |
|
6,452 |
|
375 |
|
6,827 |
|
2,672 |
|
19 |
|
(2,575 |
) |
2,409 |
|
2,525 |
|
49 |
|
9,401 |
| ||||||||||
Undiscounted contractual maturities (Note 4(b)) |
|
$ |
19,028 |
|
$ |
1,762 |
|
$ |
20,790 |
|
$ |
7,054 |
|
$ |
117 |
|
$ |
(6,339 |
) |
$ |
6,088 |
|
$ |
6,920 |
|
$ |
268 |
|
$ |
27,978 |
|
(1) Where applicable cash flows reflect foreign exchange rates as at June 30, 2020.
(2) Future cash outflows in respect of associated interest and like carrying costs for commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the rates in effect as at June 30, 2020.
27 other long-term liabilities
As at (millions) |
|
Note |
|
June 30, |
|
December 31, |
| ||
Contract liabilities |
|
24 |
|
$ |
70 |
|
$ |
70 |
|
Other |
|
|
|
6 |
|
7 |
| ||
Deferred revenues |
|
|
|
76 |
|
77 |
| ||
Pension benefit liabilities |
|
|
|
934 |
|
580 |
| ||
Other post-employment benefit liabilities |
|
|
|
58 |
|
53 |
| ||
Restricted share unit and deferred share unit liabilities |
|
|
|
13 |
|
42 |
| ||
Derivative liabilities |
|
4(d) |
|
27 |
|
26 |
| ||
Investment in real estate joint ventures |
|
21(b) |
|
11 |
|
5 |
| ||
Other |
|
|
|
27 |
|
10 |
| ||
|
|
|
|
1,146 |
|
793 |
| ||
Deferred customer activation and connection fees |
|
24 |
|
11 |
|
13 |
| ||
|
|
|
|
$ |
1,157 |
|
$ |
806 |
|
28 owners equity
(a) Common Share capital general
Our authorized share capital is as follows:
As at |
|
June 30, |
|
December 31, |
|
First Preferred Shares |
|
1 billion |
|
1 billion |
|
Second Preferred Shares |
|
1 billion |
|
1 billion |
|
Common Shares |
|
4 billion |
|
4 billion |
* |
Only holders of Common Shares may vote at our general meetings, with each holder of Common Shares entitled to one vote per Common Share held at all such meetings so long as not less than 66-2/3% of the issued and outstanding Common Shares are owned by Canadians. With respect to priority in payment of dividends and in the distribution of
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
assets in the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding up our affairs, preferences are as follows: First Preferred Shares; Second Preferred Shares; and finally Common Shares.
During the three-month period ended March 31, 2020, we issued approximately 58 million* shares for gross proceeds of $1.5 billion.
As at June 30, 2020, approximately 32 million* Common Shares were reserved for issuance, from Treasury, under a dividend reinvestment and share purchase plan (see Note 13(b)), approximately 24 million* Common Shares were reserved for issuance, from Treasury, under a restricted share unit plan (see Note 14(b)) and approximately 93 million* Common Shares were reserved for issuance, from Treasury, under a share option plan (see Note 14(d)).
(b) Common Share split
On February 13, 2020, we announced a subdivision of our Common Shares on a two-for-one basis to be effected March 17, 2020. All references, unless otherwise indicated, to the number of shares authorized, the number of shares outstanding, the number of shares reserved; per share amounts and share-based compensation information in the consolidated financial statements have been retrospectively restated to reflect the impact of the subdivision.
(c) Purchase of Common Shares for cancellation pursuant to normal course issuer bid
As referred to in Note 3, we may purchase a portion of our Common Shares for cancellation pursuant to normal course issuer bids in order to maintain or adjust our capital structure. In December 2019, we received approval for a normal course issuer bid to purchase and cancel up to 16 million* of our Common Shares (up to a maximum amount of $250 million) from January 2, 2020, to January 1, 2021.
(d) Subsidiary with significant non-controlling interest
Our TELUS International (Cda) Inc. subsidiary is incorporated under the Business Corporations Act (British Columbia) and has geographically dispersed operations with principal places of business in Asia, Central America, Europe and North America. During the three-month period ended March 31, 2020, non-controlling shareholders purchased TELUS International (Cda) Inc. shares from treasury for $209 million, which resulted in the non-controlling interests ownership interest increasing to 37.7% as at March 31, 2020, up from 35.9% as at December 31, 2019. Associated with the transaction, an adjustment reflecting the approximately 1.8% increase in the non-controlling interest in the net book value of the subsidiary was credited to non-controlling interests in our Consolidated statement of changes in owners equity, and the net balance of proceeds was credited to contributed surplus.
On a continuing basis, we review our corporate organization and effect changes as appropriate so as to enhance the value of TELUS Corporation. This process can affect our subsidiaries, including TELUS International (Cda) Inc.; during the three-month period ended June 30, 2020, this process resulted in the non-controlling interests ownership interest decreasing to 36.2% as at June 30, 2020, with an adjustment reflecting the approximately 1.5% decrease in the non-controlling interest in the net book value of the subsidiary having been credited to non-controlling interests in our Consolidated statement of changes in owners equity, offset by an equal amount having been charged to contributed surplus.
Summarized financial information
|
|
Three months |
|
Six months |
|
|
| |||||||||
As at, or for the three-month and six-month periods ended (millions) 1 |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
December 31, |
| |||||
Statement of financial position |
|
|
|
|
|
|
|
|
|
|
| |||||
Current assets |
|
|
|
|
|
$ |
591 |
|
|
|
$ |
437 |
| |||
Non-current assets |
|
|
|
|
|
$ |
2,763 |
|
|
|
$ |
1,057 |
| |||
Current liabilities |
|
|
|
|
|
$ |
586 |
|
|
|
$ |
531 |
| |||
Non-current liabilities |
|
|
|
|
|
$ |
1,838 |
|
|
|
$ |
647 |
| |||
Statement of income and other comprehensive income |
|
|
|
|
|
|
|
|
|
|
| |||||
Revenue |
|
$ |
611 |
|
$ |
336 |
|
$ |
1,077 |
|
$ |
645 |
|
|
| |
Net income |
|
$ |
71 |
|
$ |
8 |
|
$ |
78 |
|
$ |
33 |
|
|
| |
Comprehensive income |
|
$ |
45 |
|
$ |
19 |
|
$ |
85 |
|
$ |
51 |
|
|
|
(1) As required by IFRS-IASB, this summarized financial information excludes inter-company eliminations.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
29 contingent liabilities
Claims and lawsuits
General
A number of claims and lawsuits (including class actions and intellectual property infringement claims) seeking damages and other relief are pending against us and, in some cases, other wireless carriers and telecommunications service providers. As well, we have received notice of, or are aware of, certain possible claims (including intellectual property infringement claims) against us and, in some cases, other wireless carriers and telecommunications service providers.
It is not currently possible for us to predict the outcome of such claims, possible claims and lawsuits due to various factors, including: the preliminary nature of some claims; uncertain damage theories and demands; an incomplete factual record; uncertainty concerning legal theories and procedures and their resolution by the courts, at both the trial and the appeal levels; and the unpredictable nature of opposing parties and their demands.
However, subject to the foregoing limitations, management is of the opinion, based upon legal assessments and information presently available, that it is unlikely that any liability, to the extent not provided for through insurance or otherwise, would have a material effect on our financial position and the results of our operations, including cash flows, with the exception of the items enumerated following.
Certified class actions
Certified class actions against us include the following:
Per minute billing class action
In 2008 a class action was brought in Ontario against us alleging breach of contract, breach of the Ontario Consumer Protection Act, breach of the Competition Act and unjust enrichment, in connection with our practice of rounding up wireless airtime to the nearest minute and charging for the full minute. The action sought certification of a national class. In November 2014, an Ontario class only was certified by the Ontario Superior Court of Justice in relation to the breach of contract, breach of Consumer Protection Act, and unjust enrichment claims; all appeals of the certification decision have now been exhausted. At the same time, the Ontario Superior Court of Justice declined to stay the claims of our business customers notwithstanding an arbitration clause in our customer service agreements with those customers. This latter decision was appealed and on May 31, 2017, the Ontario Court of Appeal dismissed our appeal. The Supreme Court of Canada granted us leave to appeal this decision and on April 4, 2019, granted our appeal and stayed the claims of business customers.
Call set-up time class actions
In 2005 a class action was brought against us in British Columbia alleging that we have engaged in deceptive trade practices in charging for incoming calls from the moment the caller connects to the network, and not from the moment the incoming call is connected to the recipient. In 2011, the Supreme Court of Canada upheld a stay of all of the causes of action advanced by the plaintiff in this class action, with one exception, based on the arbitration clause that was included in our customer service agreements. The sole exception was the cause of action based on deceptive or unconscionable practices under the British Columbia Business Practices and Consumer Protection Act, which the Supreme Court of Canada declined to stay. In January 2016, the British Columbia Supreme Court certified this class action in relation to the claim under the Business Practices and Consumer Protection Act. The class is limited to residents of British Columbia who contracted wireless services with us in the period from January 21, 1999, to April 2010. We have appealed the certification decision. A companion class action was brought against us in Alberta at the same time as the British Columbia class action. The Alberta class action duplicates the allegations in the British Columbia action, but has not proceeded to date and is not certified. Subject to a number of conditions, including court approval, we have now settled both the British Columbia and the Alberta class actions.
Uncertified class actions
Uncertified class actions against us include:
9-1-1 class actions
In 2008 a class action was brought in Saskatchewan against us and other Canadian telecommunications carriers alleging that, among other matters, we failed to provide proper notice of 9-1-1 charges to the public, have been deceitfully passing them off as government charges, and have charged 9-1-1 fees to customers who reside in areas where 9-1-1 service is not available. The plaintiffs advance causes of action in breach of contract, misrepresentation
notes to condensed interim consolidated financial statements |
(unaudited) |
and false advertising and seek certification of a national class. A virtually identical class action was filed in Alberta at the same time, but the Alberta Court of Queens Bench declared that class action expired against us as of 2009. No steps have been taken in this proceeding since 2016.
Public Mobile class actions
In 2014 class actions were brought against us in Quebec and Ontario on behalf of Public Mobiles customers, alleging that changes to the technology, services and rate plans made by us contravene our statutory and common law obligations. In particular, the Quebec action alleges that our actions constitute a breach of the Quebec Consumer Protection Act, the Quebec Civil Code, and the Ontario Consumer Protection Act. It has not yet proceeded to an authorization hearing. The Ontario class action alleges negligence, breach of express and implied warranty, breach of the Competition Act, unjust enrichment, and waiver of tort. No steps have been taken in this proceeding since it was filed and served.
Handset subsidy class action
In 2016 a class action was brought in Quebec against us and other telecommunications carriers alleging that we breached the Quebec Consumer Protection Act and the Civil Code of Quebec by making false or misleading representations relating to the handset subsidy provided to our wireless customers, and by charging our wireless customers inflated rate plan prices and termination fees higher than those permitted under the Act. The claim was later amended to also seek compensation for amounts paid by class members to unlock their mobile devices. The authorization hearing was held on April 30 and May 1, 2019, and on July 15, 2019, the Quebec Superior Court dismissed the authorization application. The Plaintiff has appealed this decision.
Other claims
Claims and possible claims received by us include:
Area code 867 blocking claim
In 2018 a claim was brought against us alleging breach of a Direct Connection Call Termination Services Agreement, breach of a duty of good faith, and intentional interference with economic relations. The plaintiffs allege that we have improperly blocked calls to area code 867 (including to customers of a plaintiff), for which a second plaintiff provides wholesale session initiation trunking services. The plaintiffs seek damages of $135 million. On April 23, 2019, the Ontario Superior Court stayed this claim on the ground that the court has no jurisdiction over, or is not the appropriate forum, for the subject matter of this action.
Summary
We believe that we have good defences to the above matters. Should the ultimate resolution of these matters differ from managements assessments and assumptions, a material adjustment to our financial position and the results of our operations, including cash flows, could result. Managements assessments and assumptions include that reliable estimates of any such exposure cannot be made considering the continued uncertainty about: the nature of the damages that may be sought by the plaintiffs; the causes of action that are being, or may ultimately be, pursued; and, in the case of the uncertified class actions, the causes of action that may ultimately be certified.
30 related party transactions
(a) Transactions with key management personnel
Our key management personnel have authority and responsibility for overseeing, planning, directing and controlling our activities and consist of our Board of Directors and our Executive Leadership Team.
Total compensation expense for key management personnel, and the composition thereof, is as follows:
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
Short-term benefits |
|
$ |
2 |
|
$ |
2 |
|
$ |
4 |
|
$ |
5 |
|
Post-employment pension 1 and other benefits |
|
1 |
|
1 |
|
2 |
|
2 |
| ||||
Share-based compensation 2 |
|
11 |
|
5 |
|
10 |
|
20 |
| ||||
|
|
$ |
14 |
|
$ |
8 |
|
$ |
16 |
|
$ |
27 |
|
(1) Our Executive Leadership Team members are members of our Pension Plan for Management and Professional Employees of TELUS Corporation and certain other non-registered, non-contributory supplementary defined benefit pension plans.
(2) In respect of restricted share units with neither an equity settlement feature nor market performance conditions, we accrue a liability equal to the product of the number of vesting restricted share units multiplied by the fair market value of the corresponding Common Shares at the end of the reporting period. Similarly,
notes to condensed interim consolidated financial statements |
(unaudited) |
we accrue a liability for the notional subset of our restricted share units without an equity settlement feature and with market performance conditions using a Monte Carlo simulation-determined fair value. Restricted share units that have an equity settlement feature are accounted for as equity instruments. The expense for restricted share units that do not ultimately vest is reversed against the expense that was previously recorded in their respect.
As disclosed in Note 14, we made initial awards of share-based compensation in 2020 and 2019, including, as set out in the following table, to our key management personnel. As most of these awards are cliff-vesting or graded-vesting and have multi-year requisite service periods, the related expense will be recognized rateably over a period of years and thus only a portion of the 2020 and 2019 initial awards are included in the amounts in the table above.
Six-month periods ended June 30 |
|
2020 |
|
2019 |
| ||||||||||||
($ in millions) |
|
Number of |
|
Notional |
|
Grant-date |
|
Number of |
|
Notional |
|
Grant-date |
| ||||
Awarded in period |
|
811,954 |
|
$ |
20 |
|
$ |
28 |
|
|
|
$ |
|
|
$ |
|
|
(1) Notional value is determined by multiplying the Common Share price at the time of award by the number of units awarded. The grant-date fair value differs from the notional value because the fair values of some awards have been determined using a Monte Carlo simulation (see Note 14(b)). No share options were awarded to our key management personnel in fiscal 2020 or 2019.
The liability amounts accrued for share-based compensation awards to key management personnel are as follows:
As at (millions) |
|
June 30, |
|
December 31, |
| ||
Restricted share units |
|
$ |
26 |
|
$ |
25 |
|
Deferred share units 1 |
|
3 |
|
23 |
| ||
|
|
$ |
29 |
|
$ |
48 |
|
(1) Our Directors Deferred Share Unit Plan provides that, in addition to his or her annual equity grant of deferred share units, a director may elect to receive his or her annual retainer and meeting fees in deferred share units, Common Shares or cash. Deferred share units entitle directors to a specified number of, or a cash payment based on the value of, our Common Shares. Deferred share units are paid out when a director ceases to be a director, for any reason, at a time elected by the director in accordance with the Directors Deferred Share Unit Plan; during the three-month and six-month periods ended June 30, 2020, $NIL (2019 $3) and $NIL (2019 $3), respectively, was paid out.
Employment agreements with members of the Executive Leadership Team typically provide for severance payments if an executives employment is terminated without cause: generally 1824 months of base salary, benefits and accrual of pension service in lieu of notice, and 50% of base salary in lieu of an annual cash bonus. In the event of a change in control, Executive Leadership Team members are not entitled to treatment any different than that given to our other employees with respect to non-vested share-based compensation.
(b) Transactions with defined benefit pension plans
During the three-month and six-month periods ended June 30, 2020, we provided management and administrative services to our defined benefit pension plans; the charges for these services were on a cost recovery basis and amounted to $1 million (2019 $2 million) and $3 million (2019 $3 million), respectively.
(c) Transactions with real estate joint venture and associate
During the three-month and six-month periods ended June 30, 2020 and 2019, we had transactions with the TELUS Sky real estate joint ventures, which is a related party, as set out in Note 21. As at June 30, 2020, we had recorded lease liabilities of $76 million (December 31, 2019 $77 million) in respect of our TELUS Sky lease and monthly cash payments are made in accordance with the lease agreement; one-third of the amounts is due to our economic interest in the real estate joint venture.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
notes to condensed interim consolidated financial statements |
(unaudited) |
31 additional statement of cash flow information
(a) Statements of cash flows operating activities and investing activities
|
|
|
|
Three months |
|
Six months |
| ||||||||
Periods ended June 30 (millions) |
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| ||||
Net change in non-cash operating working capital |
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts receivable |
|
|
|
$ |
(1 |
) |
$ |
(197 |
) |
$ |
24 |
|
$ |
(223 |
) |
Inventories |
|
|
|
33 |
|
25 |
|
102 |
|
42 |
| ||||
Contract assets |
|
|
|
114 |
|
3 |
|
199 |
|
1 |
| ||||
Prepaid expenses |
|
|
|
52 |
|
(26 |
) |
5 |
|
(110 |
) | ||||
Accounts payable and accrued liabilities |
|
|
|
210 |
|
253 |
|
90 |
|
190 |
| ||||
Income and other taxes receivable and payable, net |
|
|
|
67 |
|
(53 |
) |
145 |
|
(269 |
) | ||||
Advance billings and customer deposits |
|
|
|
1 |
|
(3 |
) |
16 |
|
3 |
| ||||
Provisions |
|
|
|
(72 |
) |
14 |
|
(117 |
) |
(36 |
) | ||||
|
|
|
|
$ |
404 |
|
$ |
16 |
|
$ |
464 |
|
$ |
(402 |
) |
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| ||||
Cash payments for capital assets, excluding spectrum licences |
|
|
|
|
|
|
|
|
|
|
| ||||
Capital asset additions |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross capital expenditures |
|
|
|
|
|
|
|
|
|
|
| ||||
Property, plant and equipment |
|
17 |
|
$ |
(693 |
) |
$ |
(718 |
) |
$ |
(1,295 |
) |
$ |
(1,357 |
) |
Intangible assets subject to amortization |
|
18 |
|
(174 |
) |
(166 |
) |
(324 |
) |
(299 |
) | ||||
|
|
|
|
(867 |
) |
(884 |
) |
(1,619 |
) |
(1,656 |
) | ||||
Additions arising from leases |
|
17 |
|
110 |
|
110 |
|
192 |
|
232 |
| ||||
Additions arising from non-monetary transactions |
|
|
|
1 |
|
4 |
|
6 |
|
8 |
| ||||
Capital expenditures |
|
5 |
|
(756 |
) |
(770 |
) |
(1,421 |
) |
(1,416 |
) | ||||
Change in associated non-cash investing working capital |
|
|
|
62 |
|
125 |
|
(53 |
) |
(22 |
) | ||||
|
|
|
|
$ |
(694 |
) |
$ |
(645 |
) |
$ |
(1,474 |
) |
$ |
(1,438 |
) |
notes to condensed interim consolidated financial statements |
(unaudited) |
(b) Changes in liabilities arising from financing activities
|
|
|
|
Statement of cash flows |
|
Non-cash changes |
|
|
| ||||||||||
(millions) |
|
Beginning |
|
Issued or |
|
Redemptions, |
|
Foreign |
|
Other |
|
End of |
| ||||||
THREE-MONTH PERIOD ENDED JUNE 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Dividends payable to holders of Common Shares |
|
$ |
329 |
|
$ |
|
|
$ |
(329 |
) |
$ |
|
|
$ |
339 |
|
$ |
339 |
|
Dividends reinvested in shares from Treasury |
|
|
|
|
|
22 |
|
|
|
(22 |
) |
|
| ||||||
|
|
$ |
329 |
|
$ |
|
|
$ |
(307 |
) |
$ |
|
|
$ |
317 |
|
$ |
339 |
|
Short-term borrowings |
|
$ |
500 |
|
$ |
|
|
$ |
(400 |
) |
$ |
|
|
$ |
|
|
$ |
100 |
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
TELUS Corporation senior notes |
|
$ |
12,136 |
|
$ |
1,674 |
|
$ |
|
|
$ |
(70 |
) |
$ |
(25 |
) |
$ |
13,715 |
|
TELUS Corporation commercial paper |
|
1,105 |
|
748 |
|
(1,554 |
) |
(6 |
) |
|
|
293 |
| ||||||
TELUS Communications Inc. debentures |
|
621 |
|
|
|
|
|
|
|
|
|
621 |
| ||||||
TELUS International (Cda) Inc. credit facility |
|
405 |
|
|
|
(2 |
) |
(8 |
) |
1 |
|
396 |
| ||||||
Lease liabilities |
|
1,508 |
|
|
|
(64 |
) |
(8 |
) |
118 |
|
1,554 |
| ||||||
Derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt liability (asset) |
|
41 |
|
1,554 |
|
(1,551 |
) |
76 |
|
(28 |
) |
92 |
| ||||||
|
|
15,816 |
|
3,976 |
|
(3,171 |
) |
(16 |
) |
66 |
|
16,671 |
| ||||||
To eliminate effect of gross settlement of derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt |
|
|
|
(1,554 |
) |
1,554 |
|
|
|
|
|
|
| ||||||
|
|
$ |
15,816 |
|
$ |
2,422 |
|
$ |
(1,617 |
) |
$ |
(16 |
) |
$ |
66 |
|
$ |
16,671 |
|
THREE-MONTH PERIOD ENDED JUNE 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Dividends payable to holders of Common Shares |
|
$ |
371 |
|
$ |
|
|
$ |
(371 |
) |
$ |
|
|
$ |
372 |
|
$ |
372 |
|
Dividends reinvested in shares from Treasury |
|
|
|
|
|
131 |
|
|
|
(131 |
) |
|
| ||||||
|
|
$ |
371 |
|
$ |
|
|
$ |
(240 |
) |
$ |
|
|
$ |
241 |
|
$ |
372 |
|
Short-term borrowings |
|
$ |
100 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
100 |
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
TELUS Corporation senior notes |
|
$ |
14,763 |
|
$ |
1,000 |
|
$ |
(900 |
) |
$ |
(132 |
) |
$ |
(2 |
) |
$ |
14,729 |
|
TELUS Corporation commercial paper |
|
459 |
|
|
|
(454 |
) |
(5 |
) |
|
|
|
| ||||||
TELUS Communications Inc. debentures |
|
621 |
|
|
|
|
|
|
|
1 |
|
622 |
| ||||||
TELUS International (Cda) Inc. credit facility |
|
1,285 |
|
|
|
(68 |
) |
(50 |
) |
|
|
1,167 |
| ||||||
Other |
|
281 |
|
|
|
(3 |
) |
|
|
1 |
|
279 |
| ||||||
Lease liabilities |
|
1,699 |
|
|
|
(81 |
) |
(6 |
) |
109 |
|
1,721 |
| ||||||
Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt liability (asset) |
|
(655 |
) |
461 |
|
(434 |
) |
158 |
|
78 |
|
(392 |
) | ||||||
|
|
18,453 |
|
1,461 |
|
(1,940 |
) |
(35 |
) |
187 |
|
18,126 |
| ||||||
To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt |
|
|
|
(461 |
) |
461 |
|
|
|
|
|
|
| ||||||
|
|
$ |
18,453 |
|
$ |
1,000 |
|
$ |
(1,479 |
) |
$ |
(35 |
) |
$ |
187 |
|
$ |
18,126 |
|
notes to condensed interim consolidated financial statements |
(unaudited) |
|
|
|
|
Statement of cash flows |
|
Non-cash changes |
|
|
| ||||||||||
(millions) |
|
Beginning |
|
Issued or |
|
Redemptions, |
|
Foreign |
|
Other |
|
End of |
| ||||||
SIX-MONTH PERIOD ENDED JUNE 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Dividends payable to holders of Common Shares |
|
$ |
326 |
|
$ |
|
|
$ |
(655 |
) |
$ |
|
|
$ |
668 |
|
$ |
339 |
|
Dividends reinvested in shares from Treasury |
|
|
|
|
|
45 |
|
|
|
(45 |
) |
|
| ||||||
|
|
$ |
326 |
|
$ |
|
|
$ |
(610 |
) |
$ |
|
|
$ |
623 |
|
$ |
339 |
|
Short-term borrowings |
|
$ |
100 |
|
$ |
407 |
|
$ |
(407 |
) |
$ |
|
|
$ |
|
|
$ |
100 |
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
TELUS Corporation senior notes |
|
$ |
12,186 |
|
$ |
1,674 |
|
$ |
|
|
$ |
(122 |
) |
$ |
(23 |
) |
$ |
13,715 |
|
TELUS Corporation commercial paper |
|
774 |
|
1,901 |
|
(2,363 |
) |
(19 |
) |
|
|
293 |
| ||||||
TELUS Communications Inc. debentures |
|
620 |
|
|
|
|
|
|
|
1 |
|
621 |
| ||||||
TELUS International (Cda) Inc. credit facility |
|
419 |
|
13 |
|
(21 |
) |
(17 |
) |
2 |
|
396 |
| ||||||
Lease liabilities |
|
1,483 |
|
|
|
(152 |
) |
(13 |
) |
236 |
|
1,554 |
| ||||||
Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt liability (asset) |
|
(73 |
) |
2,363 |
|
(2,361 |
) |
141 |
|
22 |
|
92 |
| ||||||
|
|
15,409 |
|
5,951 |
|
(4,897 |
) |
(30 |
) |
238 |
|
16,671 |
| ||||||
To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt |
|
|
|
(2,363 |
) |
2,363 |
|
|
|
|
|
|
| ||||||
|
|
$ |
15,409 |
|
$ |
3,588 |
|
$ |
(2,534 |
) |
$ |
(30 |
) |
$ |
238 |
|
$ |
16,671 |
|
SIX-MONTH PERIOD ENDED JUNE 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Dividends payable to holders of Common Shares |
|
$ |
352 |
|
$ |
|
|
$ |
(723 |
) |
$ |
|
|
$ |
743 |
|
$ |
372 |
|
Dividends reinvested in shares from Treasury |
|
|
|
|
|
261 |
|
|
|
(261 |
) |
|
| ||||||
|
|
$ |
352 |
|
$ |
|
|
$ |
(462 |
) |
$ |
|
|
$ |
482 |
|
$ |
372 |
|
Short-term borrowings |
|
$ |
100 |
|
$ |
200 |
|
$ |
(200 |
) |
$ |
|
|
$ |
|
|
$ |
100 |
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
TELUS Corporation senior notes |
|
$ |
14,479 |
|
$ |
1,000 |
|
$ |
(900 |
) |
$ |
150 |
|
$ |
|
|
$ |
14,729 |
|
TELUS Corporation commercial paper |
|
1,015 |
|
612 |
|
(1,692 |
) |
65 |
|
|
|
|
| ||||||
TELUS Communications Inc. debentures |
|
621 |
|
|
|
|
|
|
|
1 |
|
622 |
| ||||||
TELUS International (Cda) Inc. credit facility |
|
431 |
|
765 |
|
(68 |
) |
45 |
|
(6 |
) |
1,167 |
| ||||||
Other |
|
267 |
|
|
|
(191 |
) |
|
|
203 |
|
279 |
| ||||||
Lease liabilities |
|
1,661 |
|
|
|
(165 |
) |
17 |
|
208 |
|
1,721 |
| ||||||
Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt liability (asset) |
|
(37 |
) |
1,699 |
|
(1,650 |
) |
(194 |
) |
(210 |
) |
(392 |
) | ||||||
|
|
18,437 |
|
4,076 |
|
(4,666 |
) |
83 |
|
196 |
|
18,126 |
| ||||||
To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt |
|
|
|
(1,699 |
) |
1,699 |
|
|
|
|
|
|
| ||||||
|
|
$ |
18,437 |
|
$ |
2,377 |
|
$ |
(2,967 |
) |
$ |
83 |
|
$ |
196 |
|
$ |
18,126 |
|
TELUS CORPORATION
Managements discussion and analysis
2020 Q2
TELUS Corporation Managements discussion and analysis 2020 Q2
Caution regarding forward-looking statements
The terms TELUS, the Company, we, us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.
This document contains forward-looking statements about expected events and our financial and operating performance. Forward-looking statements include any statements that do not refer to historical facts. They include, but are not limited to, statements relating to our objectives and our strategies to achieve those objectives, our targets, outlook, updates, our plans and expectations regarding the impact of the COVID-19 pandemic and responses to it, and our multi-year dividend growth program. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, predict, seek, should, strive and will. These statements are made pursuant to the safe harbour provisions of applicable securities laws in Canada and the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements are subject to inherent risks and uncertainties and are based on assumptions, including assumptions about future economic conditions and courses of action. These assumptions may ultimately prove to have been inaccurate and, as a result, our actual results or events may differ materially from expectations expressed in or implied by the forward-looking statements.
Risks and uncertainties that could cause actual performance or events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following:
· The COVID-19 pandemic including its impacts on our customers, our team members and our communities, as well as changes resulting from the pandemic to our business and operations including to the demand for and supply of the products and services that we offer and the channels through which we offer them.
· Regulatory decisions and developments including changes to our regulatory regime (the timing of announcement or implementation of which are uncertain) or the outcomes of proceedings, cases or inquiries relating to its application, including but not limited to those set out in Section 9.1 Communications industry regulatory developments and proceedings in this Managements discussion and analysis (MD&A), such as the potential for government intervention to further increase competition, for example, through mandated wholesale access; the potential for additional government intervention on pricing, including the March 2020 announcement by the federal government (reiterated in June 2020) targeting a 25% price reduction in wireless plans using between two to six GB of data over a two year period by the national wireless carriers; federal and provincial consumer protection legislation and regulation; amendments to existing federal legislation; potential threats to unitary federal regulatory authority over telecommunications; potential threats to the CRTCs ability to enforce the Wholesale Code, which aims to ensure the fair treatment by vertically integrated firms of rival broadcasting distributors and programming services; regulatory action by the Competition Bureau or other regulatory agencies; spectrum and compliance with licences, including our compliance with licence conditions, changes to spectrum licence fees, spectrum policy determinations such as restrictions on the purchase, sale, subordination and transfer of spectrum licences, the cost, availability and timing of spectrum, and ongoing and future consultations and decisions on spectrum allocation; the impact on us and other Canadian telecommunications carriers of government or regulatory actions with respect to certain countries or suppliers, including the executive order signed by U.S. President Donald Trump permitting the Secretary of Commerce to block certain technology transactions deemed to constitute national security risks and the imposition of additional licence requirements on the export, re-export and transfer of goods, services and technology to Huawei Technologies Co. Ltd. and its non-U.S. affiliates, and decisions of other foreign governments; restrictions on non-Canadian ownership and control of TELUS Common Shares and the ongoing monitoring of and compliance with such restrictions; unanticipated changes to the current copyright regime; and our ability to comply with complex and changing regulation of the healthcare and medical devices industry in the jurisdictions in which we operate, including as an operator of health clinics.
· Competitive environment including: our ability to continue to retain customers through an enhanced customer service experience, including through the deployment and operation of evolving wireless and wireline infrastructure; intense wireless competition, including the ability of industry competitors to successfully combine a mix of internet services and, in some cases, wireless services under one bundled and/or discounted monthly rate, along with their existing broadcast or satellite-based TV services; the success of new products, services and supporting systems, such as home automation security and Internet of Things (IoT) services for internet-connected devices; wireline voice and data competition, including continued intense rivalry across all services among wireless and wireline telecommunications companies, cable companies, other communications companies and over-the-top (OTT) services, which, among other things, places pressures on current and future mobile phone average billing per subscriber per month (ABPU), mobile phone average revenue per subscriber per month (ARPU), cost of acquisition, cost of retention and churn rate for all services, as do customer usage patterns, increased data bucket sizes or flat-rate pricing trends for voice and data, such as our Peace of Mind plans and comparable plans, inclusive rate plans for voice and data and availability of Wi-Fi networks for data; mergers and acquisitions of industry competitors; pressures on internet and TV ARPU and churn rate resulting from market conditions, government actions and customer usage patterns; residential voice and business network access line losses; subscriber additions and retention volumes, and associated costs for wireless, TV and internet services; our ability to obtain and offer content on a timely basis across multiple devices on wireless and TV platforms at a reasonable cost as content costs per unit continue to grow; vertical integration in the broadcasting industry resulting in competitors owning broadcast content services, and timely and effective enforcement of related regulatory safeguards; our ability to compete successfully in our TELUS International customer care and business services given our competitors brand recognition, consolidation and strategic alliances, as well as technology development; in our TELUS Health business, our ability to compete with other
providers of electronic medical records and pharmacy management products, systems integrators and health service providers including those that own a vertically integrated mix of health services delivery, IT solutions, and related services, and global providers that could achieve expanded Canadian footprints; and our ability to successfully develop our smart data solutions business.
· Technological substitution including: reduced utilization and increased commoditization of traditional wireline voice services (local and long distance) resulting from impacts of OTT applications and wireless substitution; a declining overall market for paid TV services, including as a result of content piracy and signal theft, a rise in OTT direct-to-consumer video offerings and virtual multichannel video programming distribution platforms; the increasing number of households that have only wireless and/or internet-based telephone services; potential declines in mobile phone ABPU and ARPU as a result of, among other factors, substitution by messaging and OTT applications; substitution by increasingly available Wi-Fi services; and disruptive technologies, such as OTT IP services, including software-defined networks in the business market, that may displace or cause us to reprice our existing data services.
· Challenges to our ability to deploy technology including: high subscriber demand for data that challenges wireless networks and spectrum capacity levels and may be accompanied by increases in delivery cost; our reliance on information technology and our ability to streamline our legacy systems; the roll-out and evolution of wireless broadband technologies and systems, including video distribution platforms and telecommunications network technologies (broadband initiatives, such as fibre to the premises (FTTP), wireless small-cell deployment, 5G wireless and availability of resources and our ability to build out adequate broadband capacity); our reliance on wireless network access agreements, which have facilitated our deployment of wireless technologies; our choice of suppliers and those suppliers ability to maintain and service their product lines, which could affect the success of upgrades to, and evolution of, technology that we offer; supplier limitations and concentration and market power for products such as network equipment, TELUS TV® and wireless handsets; our expected long-term need to acquire additional spectrum capacity through future spectrum auctions and from third parties to address increasing demand for data and our ability to utilize spectrum we acquire; deployment and operation of new wireline broadband network technologies at a reasonable cost and the availability and success of new products and services to be rolled out using such network technologies; network reliability and change management; and our deployment of self-learning tools and automation that may change the way we interact with customers.
· Capital expenditure levels and potential outlays for spectrum licences in auctions or purchases from third parties, affect and are affected by: our broadband initiatives, including connecting more homes and businesses directly to fibre; our ongoing deployment of newer wireless technologies, including wireless small cells to improve coverage and capacity; investments in network resiliency and reliability; including to address changes in usage resulting from restrictions imposed in response to COVID-19; the allocation of resources to acquisitions and future wireless spectrum auctions held by Innovation, Science and Economic Development Canada (ISED), including the 3500 MHz and millimetre wave spectrum auctions with both currently expected to take place in 2021, and the announcement of a formal consultation on the auctioning of 3800 MHz spectrum, expected to take place in 2022. Our capital expenditure levels could be impacted if we do not achieve our targeted operational and financial results or by changes to our regulatory environment.
· Operational performance and business combination risks including: our reliance on legacy systems and ability to implement and support new products and services and business operations in a timely manner; our ability to manage the requirements of large enterprise deals; our ability to implement effective change management for system replacements and upgrades, process redesigns and business integrations (such as our ability to successfully integrate acquisitions, complete divestitures or establish partnerships in a timely manner and realize expected strategic benefits, including those following compliance with any regulatory orders); our ability to identify and manage new risks inherent in new service offerings that we may provide, including as a result of acquisitions, which could result in damage to our brand, our business in the relevant area or as a whole, and additional exposure to litigation or regulatory proceedings.
· Data protection including risks that malfunctions or unlawful acts could result in unauthorized access to, change, loss, or distribution of data, which may compromise the privacy of individuals and could result in financial loss and harm to our reputation and brand.
· Security threats including intentional damage or unauthorized access to our physical assets or our IT systems and networks, which could prevent us from providing reliable service or result in unauthorized access to our information or that of our customers.
· Ability to successfully implement cost reduction initiatives and realize planned savings, net of restructuring and other costs, without losing customer service focus or negatively affecting business operations. Examples of these initiatives are: our operating efficiency and effectiveness program to drive improvements in financial results; business integrations; business product simplification; business process automation and outsourcing; offshoring and reorganizations; procurement initiatives; and real estate rationalization.
· Foreign operations and our ability to successfully manage operations in foreign jurisdictions, including managing risks such as currency fluctuations.
· Business continuity events including: our ability to maintain customer service and operate our network in the event of human error or human-caused threats, such as cyberattacks and equipment failures that could cause various degrees of network outages; supply chain disruptions, delays and economics, including as a result of government restrictions or trade actions; natural disaster threats; epidemics; pandemics (including the ongoing COVID-19 pandemic); political instability in certain international locations; information security and privacy breaches, including data loss or theft of data; and the completeness and effectiveness of business continuity and disaster recovery plans and responses.
· Human resource matters including: recruitment, retention and appropriate training in a highly competitive industry, the level of our employee engagement, and the health of our team.
· Financing and debt requirements including: our ability to carry out financing activities, refinance our maturing debt and/or maintain investment grade credit ratings in the range of BBB+ or the equivalent. Our business plans and growth could be negatively affected if existing financing is not sufficient to cover our funding requirements.
· Lower than planned free cash flow could constrain our ability to invest in operations, reduce leverage or return capital to shareholders, and could affect our ability to sustain our dividend growth program through 2022. This program may be affected by factors such as the competitive environment, economic performance in Canada, our earnings and free cash flow, our levels of capital expenditures and spectrum licence purchases, acquisitions, the management of our capital structure, regulatory decisions and developments, and business continuity events. Quarterly dividend decisions are subject to assessment and determination by our Board of Directors based on our financial position and outlook. Shares may be purchased under our normal course issuer bid (NCIB) when and if we consider it opportunistic, based on our financial position and outlook, and the market price of TELUS Common Shares. There can be no assurance that our dividend growth program or any NCIB will be maintained, not changed and/or completed.
· Taxation matters including: interpretation of complex domestic and foreign tax laws by the relevant tax authorities that may differ from our interpretations; the timing and character of income and deductions, such as tax depreciation and operating expenses; tax credits or other attributes; changes in tax laws, including tax rates; tax expenses being materially different than anticipated, including the taxability of income and deductibility of tax attributes; elimination of income tax deferrals through the use of different tax year-ends for operating partnerships and corporate partners; and changes to the interpretation of tax laws, including those resulting from changes to applicable accounting standards or the adoption of more aggressive auditing practices by tax authorities, tax reassessments or adverse court decisions impacting the tax payable by us.
· Litigation and legal matters including: our ability to successfully respond to investigations and regulatory proceedings; our ability to defend against existing and potential claims and lawsuits (including intellectual property infringement claims and class actions based on consumer claims, data, privacy or security breaches and secondary market liability), or to negotiate and execute upon indemnity rights or other protections in respect of such claims and lawsuits; and the complexity of legal compliance in domestic and foreign jurisdictions, including compliance with competition, anti-bribery and foreign corrupt practices laws.
· Health, safety and the environment including: lost employee work time resulting from illness or injury, public concerns related to radio frequency emissions, environmental issues affecting our business, including climate change, waste and waste recycling, risks relating to fuel systems on our properties, changing government and public expectations regarding environmental matters and our responses; and challenges associated with the COVID-19 pandemic and our response to it, which may add to or accentuate these factors.
· Economic growth and fluctuations including: the state of the economy in Canada, which may be influenced by economic and other developments outside of Canada, including potential outcomes of yet unknown policies and actions of foreign governments and the ongoing COVID-19 pandemic as well as public and private sector responses to the pandemic; expectations of future interest rates; inflation; unemployment levels; effects of fluctuating oil prices; effects of low business spending (such as reducing investments and cost structure); pension investment returns, funding and solvency discount rates; fluctuations in foreign exchange rates of the currencies in the regions in which we operate; the impact of tariffs on trade between Canada and the U.S., and global implications of the trade dynamic between major world economies.
These risks are described in additional detail in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings and Section 10 Risks and risk management in our 2019 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement but are not intended to be a complete list of the risks that could affect the Company.
Many of these factors are beyond our control or our current expectations or knowledge. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation. Except as otherwise indicated in this document, the forward-looking statements made herein do not reflect the potential impact of any non-recurring or special items or any mergers, acquisitions, dispositions or other business combinations or transactions that may be announced or that may occur after the date of this document.
Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements in this document describe our expectations, and are based on our assumptions, as at the date of this document and are subject to change after this date. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements.
This cautionary statement qualifies all of the forward-looking statements in this MD&A.
Managements discussion and analysis (MD&A)
July 31, 2020
Contents
Section |
|
Description | ||
1. |
|
Introduction |
|
1.1 Preparation of the MD&A 1.2 The environment in which we operate 1.3 Consolidated highlights |
2. |
|
Core business and strategy |
|
|
3. |
|
Corporate priorities for 2020 |
|
|
4. |
|
Capabilities |
|
4.1 Principal markets addressed and competition 4.2 Operational resources 4.3 Liquidity and capital resources 4.4 Changes in internal control over financial reporting |
5. |
|
Discussion of operations |
|
5.1 General 5.2 Summary of consolidated quarterly results and trends 5.3 Consolidated operations 5.4 Wireless segment 5.5 Wireline segment |
6. |
|
Changes in financial position |
|
|
7. |
|
Liquidity and capital resources |
|
7.1 Overview 7.2 Cash provided by operating activities 7.3 Cash used by investing activities 7.4 Cash provided (used) by financing activities 7.5 Liquidity and capital resource measures 7.6 Credit facilities 7.7 Sale of trade receivables 7.8 Credit ratings 7.9 Financial instruments, commitments and contingent liabilities 7.10 Outstanding share information 7.11 Transactions between related parties |
8. |
|
Accounting matters |
|
8.1 Critical accounting estimates and judgments 8.2 Accounting policy developments |
9. |
|
Update to general trends, outlook and assumptions, and regulatory developments and proceedings |
|
9.1 Communications industry regulatory developments and proceedings |
10. |
|
Risks and risk management |
|
|
11. |
|
Definitions and reconciliations |
|
11.1 Non-GAAP and other financial measures 11.2 Operating indicators |
Copyright © 2020 TELUS Corporation. All rights reserved. Certain products and services named in this report are trademarks. The symbols TM and ® indicate those owned by TELUS Corporation or its subsidiaries. All other trademarks are the property of their respective owners.
1. Introduction
The forward-looking statements in this section including, for example, statements relating to the expected impact of the COVID-19 pandemic on our operations and financial condition, on demand for our products and services, and effect on our assets are qualified by the Caution regarding forward-looking statements at the beginning of this Managements discussion and analysis (MD&A).
1.1 Preparation of the MD&A
The following sections are a discussion of our consolidated financial position and financial performance for the three-month and six-month periods ended June 30, 2020, and should be read together with our June 30, 2020, condensed interim consolidated statements of income and other comprehensive income, statements of financial position, statements of changes in owners equity and statements of cash flows, and the related notes (collectively referred to as the interim consolidated financial statements). The generally accepted accounting principles (GAAP) that we use are International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Canadian GAAP. In this MD&A, the term IFRS refers to these standards. In our discussion, we also use certain non-GAAP financial measures to evaluate our performance, monitor compliance with debt covenants and manage our capital structure. These measures are defined, qualified and reconciled with their nearest GAAP measures in Section 11.1. All currency amounts are in Canadian dollars, unless otherwise specified.
Additional information relating to the Company, including our annual information form and other filings with securities commissions or similar regulatory authorities in Canada, is available on SEDAR (sedar.com). Our filings with the Securities and Exchange Commission in the United States, including Form 40-F, are available on EDGAR (sec.gov).
Our disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management on a timely basis, so that appropriate decisions can be made regarding public disclosure. This MD&A and the interim consolidated financial statements were reviewed by our Audit Committee and authorized by our Board of Directors (Board) for issuance on July 31, 2020.
In this MD&A, unless otherwise indicated, results for the second quarter of 2020 (three-month period ended June 30, 2020) and the six-month period ended June 30, 2020 are compared with results for the second quarter of 2019 (three-month period ended June 30, 2019) and the six-month period ended June 30, 2019.
On February 13, 2020, we announced a subdivision of our Common Shares on a two-for-one basis. On March 17, 2020, TELUS shareholders received one additional share for each share owned on the record date of March 13, 2020. All information pertaining to shares and per-share amounts in this MD&A for periods before March 17, 2020, reflects retrospective treatment of the share split.
1.2 The environment in which we operate
The success of our business and the challenges we face can best be understood with reference to the environment in which we operate, including broader economic factors that affect our customers and us, and the competitive nature of our operations.
COVID-19
The COVID-19 pandemic, which emerged in the first quarter of 2020, continued to have a pervasive global impact throughout the second quarter of 2020. Our Emergency Management Operating Committee (EMOC) continues to meet every week and provides ongoing reports to our Executive Team while continuing to leverage the expertise of the TELUS Medical Advisory Council (MAC), which is composed of five doctors including an infectious disease physician. Our persistent focus has been on keeping Canadians connected and the health, safety and well-being of our team members, our customers and our communities.
As of the date of this MD&A, we have re-opened approximately 90% of our conventional retail stores that were previously closed and have once again started to enter customers premises to perform more complex installations and repairs relating to our TELUS home services, all while following strict operating procedures. Our re-opening plans follow advice from the TELUS MAC, government and health agencies, as well as our own best practices.
Impacts to our financial condition and results of operations
Throughout the pandemic, we have continued to see unparalleled demand in all facets of our network, including an increase in wireless voice calls, short message service (SMS) traffic, multimedia message service (MMS) traffic, home internet usage, voice network traffic, and usage of 1-800 phone numbers and teleconference bridges, compared to the same period last year. Despite the increased traffic volumes, we are keeping our customers connected and providing them with a reliable, fast and consistent experience on our wireless and wireline broadband network, in both urban and rural communities across the country.
We remain committed to supporting Canadians throughout the pandemic. We continue to offer flexible payment options for consumers and small business customers who have been financially affected by the pandemic (herein referred to as COVID-19 customer measures). During the pandemic period through to June 30, 2020, we have deferred planned price increases, extended promotional periods, delayed suspensions, cancellations and write-offs
for our customers who were in collections, accepted payment arrangements, waived wireless roaming fees up to April 30, 2020, and waived home internet overage charges for customers without unlimited data plans up to June 30, 2020. We continue to offer free channel previews on Optik TV® and Pik TV®, including educational content for youth in partnership with Microsoft, and content spanning health and wellness as well as how-to technology videos. Families currently participating in our Internet for Good program have been provided with a credit for two months of free service. We recently expanded our Internet for Good program to people living with disabilities who receive financial disability assistance from the provincial governments in B.C., Alberta and Quebec. We also offer the first month free of TELUS Online Security Standard. Through our Mobility for Good program, we have donated close to 14,000 devices and tablets up to June 30, many with $0 rate plans, to enable isolated seniors, hospitalized patients and vulnerable Canadians stay connected. We also expanded our Mobility for Good program to hospital workers, providing a credit for two months of wireless service up to June 30 to frontline healthcare workers at select hospitals in the areas across the country that have been significantly impacted by the COVID-19 pandemic.
In support of Canadian small businesses, our Business Solutions team launched the #StandWithOwners initiative. Through this social media campaign, we committed $500,000 in direct revenue, marketing and expert advice, exceeding our target in just four days.
The COVID-19 pandemic has impacted our operations and financial condition and we expect this to continue into the second half of 2020 and into 2021. Both revenue and earnings before interest, income taxes, depreciation and amortization (EBITDA) in addition to certain operational metrics have been negatively impacted, which is expected to continue in the near term. We continue to take steps to mitigate the negative effects of the pandemic, including on cash flow.
With respect to our wireless segment, we have experienced decreases in roaming revenues with the closure of borders and corresponding decline in customer travel, as well as with our decision to temporarily waive fees for customers who were outside of Canada to ensure they were kept connected to the people and information they need. We expect declines in roaming revenue to persist throughout the pandemic as border closures remain and decreases in customer travel continue.
Operational challenges
The federal government has categorized all telecommunications providers, including TELUS, as essential services for purposes of the COVID-19 pandemic. In addition, emergency measures taken by most provincial and territorial governments also recognize telecommunications providers as essential service providers that must continue operations. We anticipate this recognition will continue for the duration of the pandemic. As a result, we should be permitted to continue operations during these times.
Health and safety of our customers and team members
The health and safety of our employees and our customers is our top priority. For the past decade, our Work Styles® program has provided employees with flexible work options, both in and out of the office, to support the balance between work and personal life. As a result, when the COVID-19 pandemic struck, we were well-prepared, with a substantial portion of our domestic team already equipped to work from home.
In our first quarter 2020 MD&A, we reported that approximately 95% of domestic team members were working from home. In July, we invited approximately 5% of those team members back to our buildings. These are employees that we have determined require access to one of our buildings to be fully productive, such as employees requiring access to specialized equipment. We have put extensive health and safety measures in place in all of our offices, including physical distancing markers, enhanced cleaning protocols, elevator occupancy limits and common area/washroom limits. Team members working in our buildings are required to:
· Complete an online health self-assessment before entering
· Abide by face mask requirements at all times
· Maintain physical distancing
· Complete thermal screening where applicable.
The balance of team members will continue to work productively from home. If team members experience difficulties balancing COVID-19 pandemic-related impacts such as school closures, we are providing alternate arrangements including:
· Allowing normal weekly hours of work to be spread over the entire calendar week
· Supporting hours of work outside of traditional business hours
· Allowing the work day to be split into multiple, shorter segments.
We have also enabled more than 90% of our international team members to work and support customers from home and in other modified work locations. Our TELUS International (Cda) Inc. (TI) operations worldwide are continuing to execute and refine their return to office plan into the third quarter of 2020 as restrictions ease in their operational regions. TI will continue to monitor the situation and take steps based on guidance from local authorities as well as advice from TELUS MAC and its own best practices.
Retail
As reported in our first quarter 2020 MD&A, we made the decision to close approximately 90% of our conventional retail stores. The remaining 10% of stores were open for essential customer support and were operating with reduced hours, with all essential stores having external access (i.e. not located in shopping malls).
During the second quarter of 2020, in line with the lifting of various provincial and federal government restrictions, we started to re-open our retail stores. As of the date of this MD&A, we have re-opened approximately 90% of conventional retail stores that were previously closed as a result of the COVID-19 pandemic. All of our stores follow strict procedures to protect our customers and team members, including:
· Limiting the number of customers in the store; customers not wishing to wait are able to leave their contact information and receive a call back
· Implementing physical distancing measures in the store, including a new format of stores and kiosks
· Enhancing in-store hygiene measures.
Field technicians
We rolled out our virtual technician model in the first quarter of 2020. This model enables technicians to perform their work without entering a customers premises. The technician provisions the equipment, sanitizes it, leaves it at the customers door and then guides the customer through the installation process via a smartphone app. This model has been successful and continues to be our preferred method of serving customers. During the last three weeks of the second quarter, upon agreement from both the customer and technician, technicians wearing the appropriate personal protective equipment have entered customers premises to perform complex installations and repairs that could not be done virtually.
Sustainability impacts
Through initiatives taken during the pandemic such as: (i) the hibernation of most floors in our administrative office buildings; and (ii) the increased utilization of our Work Styles program where team members do not have to commute to an office building, we have observed a decrease in our associated domestic greenhouse gas emissions when compared to the pre-pandemic period. These initiatives are being evaluated for long-term application and contribution to our target of having our operations become net carbon neutral by 2030 (see Section 3).
Scorecard
The 2020 corporate scorecard, including targets, has been simplified and re-prioritized reflecting the new operating environment in response to the COVID-19 pandemic. The adjustment response is consistent with past practice reflecting strategy changes and matters beyond those considered by the Human Resources and Compensation Committee (HRCC) and Board at the time the performance measures were approved. Concurrent with the review and approval of the first quarter of 2020 corporate scorecard results, the HRCC and Board reviewed and approved the revised scorecard targets for the second quarter of 2020 to fourth quarter of 2020. The revised 2020 corporate scorecard metrics and targets formed the baseline for the business unit scorecards, which were also revised in the second quarter of 2020.
Internal control over financial reporting
Employees responsible for financial reporting systems, internal controls over financial reporting, and disclosure controls and procedures were equipped to work from home with the Work Styles program prior to the COVID-19 pandemic, and as such, we do not expect any substantive changes to these controls and procedures.
Impacts to demand for our products and services
As previously described, our network traffic has significantly increased since the start of the pandemic through the second quarter of 2020 and the increased volumes of traffic are expected to continue into the last two quarters of 2020.
We experienced decreases of wireless gross additions, net additions, customer renewals and mobile phone churn rate during the second quarter of 2020 with the closure of our retail stores. However, we expect that the opening of previously closed stores will mitigate these temporary declines. We continue to adjust our operations and have seen increased utilization of our digital assets including telus.com to support the purchase of new devices and migrations to electronic billing, as well as experiencing increased activity on the MyTELUS mobile app. Consistent with lower gross additions, our cash outlays for mobile phones correspondingly decreased with lower equipment
financing or subsidies. The number of traditional wireline installations has decreased and accordingly, our TV net additions decreased. We have experienced lower churn of our wireline products, and we continue to evolve our operations and support our customers virtually. With respect to small and medium-sized business (SMB), we expect lower EBITDA contribution from our business customers as SMB enterprises close and/or have reduced their operations.
For TELUS Health, increased demand for virtual care solutions carried into the second quarter of 2020. With the introduction of virtual fee codes by every provincial government to enable remote patient care during the COVID-19 pandemic, TELUS Health launched its pre-built video visit functionality integrated with TELUS electronic medical records (EMR). This feature enabled 26,000 Canadian clinicians on a core TELUS EMR solution to conduct virtual visits with their patients. We are seeing continued demand for our one-on-one virtual health solutions, with accelerated adoption of both Akira by TELUS Health by publicly-funded and business customers as well as increased demand for Babylon by TELUS Health. We are also seeing increased demand for Home Health Monitoring (HHM) solutions with certain provinces, as well as increased demand for our LivingWell Companion and DirectAlert by TELUS Health, enabling Canadians to access 24/7 emergency support. In addition, our seven Medisys Health Group clinics and our four Copeman Healthcare centres re-opened in July for in-clinic services while maintaining virtual consultation offerings to clients. Virtual consultations were launched as part of a COVID-19 business impact assessment strategy and as a result of their successful client adoption, virtual consultations will be maintained in a post-COVID-19 environment.
For our TI customer care and business services, operations have been impacted by government announcements that resulted in the closure of certain centres, particularly those delivered through our locations in the Philippines and Central America. Despite these closures, our TI teams managed to enable more than 90% of our team members to provide remote support from home and in other modified work locations. TI clients also experienced significant changes, in particular clients in travel and hospitality-related businesses; however, the decline in business from these clients was more than offset by increases in business from clients in the gaming, media and ecommerce food delivery industries.
Impacts to our capital and financial resources, overall liquidity position and outlook
We have a strong liquidity position with a robust outlook and are not relying on a COVID-19-related supplier finance programs to manage our cash flow. During the second quarter of 2020, our long-term debt issue and early redemptions of 2021 Notes were successful, as described in Section 1.3. Our access to capital has not been materially impacted by the COVID-19 pandemic. Our credit facilities have not changed and are not reasonably likely to change due to the pandemic. We had liquidity of over $3.6 billion at June 30, 2020, composed of cash and temporary investments of approximately $1.0 billion, a TELUS Corporation credit facility of approximately $2.25 billion and our trade receivables securitization program of $400 million. Also at June 30, 2020, we could offer $2.5 billion of debt or equity securities pursuant to a shelf prospectus that is in effect until June 2022. Our sources and uses of cash have not been materially impacted by the COVID-19 pandemic. Following the maturity of our June 2021 TELUS Communications Inc. 10.65% debentures, Series 3 totalling $175 million, our next TELUS Corporation notes mature in March 2022.
Our COVID-19 customer measures did not materially affect our financial condition or liquidity. We have not provided concessions or modified terms of arrangements or modified other contractual arrangements in response to the COVID-19 pandemic that may materially impact our financial condition, liquidity or capital resources.
Funding sources, covenants, debt and other obligations
COVID-19 related impacts have not affected our ability to access traditional funding sources as were available to us in recent periods. As described in Section 1.3, on May 29, 2020, we issued $400 million of Series CAB notes at 3.95% and $600 million of Series CAC notes at 2.35%, which had the lowest Canadian dollar yields in 30-year and 7-year tenors in our history, respectively.
We have not provided additional collateral, guarantees or equity to obtain funding nor have we had material changes to our cost of capital due to the COVID-19 pandemic. As described in Section 7.8, there have been no changes to our credit ratings during the pandemic.
There is no material uncertainty about our ongoing ability to meet the covenants of our TELUS Corporation credit agreements. Our TI subsidiary continues to forecast being in compliance with its leverage ratio under its credit facility and will take appropriate mitigating actions if necessary.
At June 30, 2020, our fixed-rate debt as a proportion of total indebtedness (excluding lease liabilities and other long-term debt) was 96%, the average term to maturity of our long-term debt (excluding the revolving component of the TI credit facility, lease liabilities and other long-term debt) was approximately 13 years, and the weighted average
cost of our long-term debt (excluding the revolving component of the TI credit facility, lease liabilities and other long-term debt) was 3.86% (see section 7.5 Liquidity and capital resource measures).
We have been able to service our debt and other obligations on a regular basis without material changes compared to pre-COVID-19 levels. We have taken advantage of some payment deferrals that various levels of government have provided. For example, corporate income tax instalments, property tax payments and spectrum licence remittances have been deferred until August and September 2020. However, we do not foresee any liquidity challenges once these accommodations end.
COVID-19 effect on assets
Due to the widespread, pre-COVID-19 adoption of our Work Styles program, our finance operations have not been consequentially impacted by the COVID-19 pandemic. We expect to experience delays in collection of accounts receivable as the pandemic has created financial hardships for many of our customers. We recognize these challenges our customers are facing and we have implemented COVID-19 customer measures as noted under Impacts to our financial condition and results of operations to help alleviate some of the pressure. We have experienced an increase in bad debt expense compared to pre-pandemic periods, as we have provided for the financial and operational impacts of these considerations and concessions to our customers. We will continue to work with our customers who require hardship assistance in addition to government programs that are intended to support those financially impacted. Various levels of government to which we remit funds have deferred short-term payment requirements for certain items, which will result in atypical decreases in some prepaid assets and increases in some liabilities in the short-term as most are expected to be paid in the second half of 2020. We do not expect significant changes in judgments in determining the fair value of assets.
Material impairments
The carrying values of intangible assets with indefinite lives and goodwill are periodically tested for impairment and our accounting policy is that we, at a minimum, perform this test annually in December. When we perform the test, the recoverable amounts of the cash-generating units assets are determined based on a fair value less costs of disposal calculation. As of the date of this MD&A, the COVID-19 pandemic has not materially changed our cash flow projections or key assumptions and there are no other indicators of impairment, so, as a result, we have not tested and compared the carrying values of our cash-generating units with their recoverable amounts subsequent to the December 2019 test.
Business continuity plans
For many years, we have had, and continue to have, business continuity plans in place, including an established EMOC, which includes representatives of all of our business units. EMOC had been monitoring COVID-19 prior to it being characterized as a pandemic. As COVID-19 progressed, in early March 2020, EMOC was activated to a heightened state of readiness. We do not foresee requiring material expenditures to implement our business continuity plans relating to the COVID-19 pandemic and do not face any material resource constraints in implementing our plans.
Supply chain and methods of distribution
We continue to leverage our digital capabilities as a key sales channel. Given the continuing challenges that our suppliers may have in sourcing their own materials, and their historic disposition to launch next-generation devices at certain times of the year, there may be delays to the launches of their latest devices causing a ripple effect with associated equipment revenues.
We do not expect the anticipated impact of the pandemic to materially change the relationship between our costs and revenues.
Capital expenditures and other capital resources
Keeping Canadians connected during the pandemic is of utmost importance to our team. Some planned capital expenditure activity has been deferred in response to customer requests and/or our inability to access work sites. However, we have redirected other capital expenditures to ensure our networks continue to operate at leading levels and to facilitate millions of Canadians now working and learning from home and the resultant increased demand for services such as 1-800 phone numbers, conference bridges, video streaming and online activity. Other capital expenditures that have been expedited to take advantage of equipment and deployment cost opportunities include advancing our fibre investment in Alberta which reinforces our commitment to support Alberta and its economy, as well as network upgrades.
We have in place a normal course issuer bid that concludes on January 1, 2021. We will purchase Common Shares only when and if we consider it opportunistic. We have not reduced or suspended dividend payments;
however our Board determined it would be prudent to sustain the current dividend per share and defer any dividend increase until the release of our third quarter 2020 results in November. We have not ceased any material business operations nor reduced our human capital resource expenditures.
Constraints or other impacts on human capital resources and productivity
To the extent practicable, substantially all retail team members who were impacted by store closures were redeployed to other areas of our business where we saw an increased need for customer support, including our call centre operations. To help support our team members mental well-being during the pandemic, we maintained an online COVID-19 hub, which is a virtual gathering place for team members to learn, connect, work and be well together. In addition, team members receive regular communications from our Chief Neuroscience Officer (CNO) on topics related to supporting mental well-being, and team members are invited to attend virtual town halls with our CNO to ask questions related to mental and physical health.
TI has been impacted by government-mandated site closures in some countries. To the extent possible, work from those sites that are subject to a government-mandated closure has been redistributed to less-impacted locations. TELUS International also has a significant proportion of its workforce using our Work Styles program in every country in which it operates, therefore enabling it to serve the majority of its customers with minimal service interruptions.
Travel restrictions and border closure impacts
Thanks to the effectiveness of our technology in bridging geographic divides, travel restrictions and border closures are not expected to have a material impact on our ability to operate or achieve business goals. For example, our 2020 annual general meeting of shareholders was held using a virtual-only format via a live webcast.
1.3 Consolidated highlights
Our Board of Directors
At our 2020 annual general meeting held on May 7, 2020, the nominees listed in the TELUS 2020 information circular were elected as directors of TELUS, including a new nominee, Thomas Flynn. Tom is the Chief Financial Officer of BMO Financial Group, a position he has held since March 2011. Prior to that, he held several leadership positions at the Bank of Montreal, including Executive Vice President and Chief Risk Officer, Executive Vice President Finance and Treasurer, and Head of the Financial Services Corporate and Investment Banking Group in BMO Capital Markets.
During the second quarter of 2020, Stockwell Day stepped down from our Board.
Long-term debt issue and early redemption of 2021 Notes
On May 21, 2020, we announced a dual-tranche offering of $400 million through the re-opening of Series CAB notes at 3.95% maturing on February 16, 2050, and $600 million of senior unsecured 2.35% Notes, Series CAC, maturing on January 27, 2028, which were issued on May 29, 2020. The net proceeds were used for the early redemption of notes described in the following paragraph and for general corporate purposes.
On June 23, 2020, we early redeemed all of our $400 million 3.60%, Series CM Notes, due January 26, 2021, and all of our $500 million 3.20%, Series CO Notes, due April 5, 2021. The long-term debt prepayment premium for both redemptions recorded in the three-month period ended June 30, 2020, was approximately $18 million before income taxes ($0.01 per share after income taxes). Subsequent to this early redemption, we no longer have any TELUS Corporation notes maturing in 2021.
5G launch
In June 2020, we launched the first wave of our 5G network in Vancouver, Montreal, Calgary, Edmonton and the Greater Toronto Area. We will continue to expand to an additional 26 markets across Canada throughout the remainder of the year. TELUS 5G is being made available at no additional cost on our Peace of Mind plans.
Mobile Klinik acquisition
On July 1, 2020, we acquired 100% of Mobile Klinik, a storefront wireless device repair and sales business complementary to our existing wireless lines of business. Consideration of $165 million consisted of: cash of $138 million; working capital adjustments; and contingent consideration of $31 million, payment of which is dependent upon achieving revenue, profitability, store expansion and wireless subscriber addition targets through 2023. The investment was made with a view to growing our wireless business.
Consolidated highlights
($ millions, except footnotes and unless |
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
noted otherwise) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Consolidated statements of income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
3,728 |
|
3,597 |
|
3.6 |
% |
7,422 |
|
7,103 |
|
4.5 |
% |
Operating income |
|
634 |
|
740 |
|
(14.3 |
)% |
1,318 |
|
1,502 |
|
(12.3 |
)% |
Income before income taxes |
|
432 |
|
551 |
|
(21.6 |
)% |
924 |
|
1,145 |
|
(19.3 |
)% |
Net income |
|
315 |
|
520 |
|
(39.4 |
)% |
668 |
|
957 |
|
(30.2 |
)% |
Net income attributable to Common Shares |
|
290 |
|
517 |
|
(43.9 |
)% |
640 |
|
945 |
|
(32.3 |
)% |
Adjusted Net income1 |
|
316 |
|
416 |
|
(24.0 |
)% |
716 |
|
869 |
|
(17.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (EPS) ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS |
|
0.23 |
|
0.43 |
|
(46.5 |
)% |
0.51 |
|
0.79 |
|
(35.4 |
)% |
Adjusted basic EPS1 |
|
0.25 |
|
0.35 |
|
(28.6 |
)% |
0.57 |
|
0.73 |
|
(21.9 |
)% |
Diluted EPS |
|
0.23 |
|
0.43 |
|
(46.5 |
)% |
0.51 |
|
0.79 |
|
(35.4 |
)% |
Dividends declared per Common Share ($) |
|
0.29125 |
|
0.28125 |
|
3.6 |
% |
0.58250 |
|
0.55375 |
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average Common Shares outstanding (millions) |
|
1,278 |
|
1,203 |
|
6.2 |
% |
1,263 |
|
1,202 |
|
5.1 |
% |
Consolidated statements of cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
1,462 |
|
1,160 |
|
26.0 |
% |
2,639 |
|
1,950 |
|
35.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used by investing activities |
|
(823 |
) |
(1,600 |
) |
(48.6 |
)% |
(2,782 |
) |
(2,562 |
) |
8.6 |
% |
Acquisitions |
|
(107 |
) |
(26 |
) |
n/m |
|
(1,211 |
) |
(188 |
) |
n/m |
|
Capital expenditures2 |
|
(756 |
) |
(770 |
) |
(1.8 |
)% |
(1,421 |
) |
(1,416 |
) |
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided (used) by financing activities |
|
(726 |
) |
69 |
|
n/m |
|
579 |
|
415 |
|
39.5 |
% |
Other highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber connections3 (thousands) |
|
|
|
|
|
|
|
15,411 |
|
14,254 |
|
8.1 |
% |
EBITDA1 |
|
1,359 |
|
1,373 |
|
(1.0 |
)% |
2,768 |
|
2,752 |
|
0.6 |
% |
Restructuring and other costs1 |
|
70 |
|
29 |
|
141.4 |
% |
130 |
|
65 |
|
100.0 |
% |
Adjusted EBITDA1,4 |
|
1,361 |
|
1,402 |
|
(2.9 |
)% |
2,836 |
|
2,817 |
|
0.7 |
% |
Adjusted EBITDA margin1 (%) |
|
37.2 |
|
39.0 |
|
(1.8 |
)pts. |
38.6 |
|
39.7 |
|
(1.1 |
)pts. |
Free cash flow1 |
|
511 |
|
324 |
|
57.7 |
% |
1,056 |
|
477 |
|
121.4 |
% |
Net debt to EBITDA excluding restructuring and other costs1 (times) |
|
|
|
|
|
|
|
3.06 |
|
2.94 |
|
0.12 |
|
Notations used in MD&A: n/m not meaningful; pts. percentage points.
(1) These are non-GAAP and other financial measures. See Section 11.1 Non-GAAP and other financial measures.
(2) Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and consequently differ from Cash payments for capital assets, excluding spectrum licences, as reported in the interim consolidated financial statements. Refer to Note 31 of the interim consolidated financial statements for further information.
(3) The sum of active mobile phone subscribers, mobile connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers and security subscribers, measured at the end of the respective periods based on information in billing and other source systems. Effective for the third quarter of 2019, with retrospective application to the launch of TELUS-branded security services at the beginning of the third quarter of 2018, we have added security subscriber connections to our total subscriber connections. December 31, 2019 security subscriber connections have been increased to include approximately 490,000 subscribers related to our acquisition of ADT Security Services Canada, Inc. (ADT Canada) (acquired on November 5, 2019).
(4) Adjusted EBITDA for all periods excludes restructuring and other costs (see Section 11.1 for restructuring and other costs amounts). Adjusted EBITDA for the second quarter of 2020 and first six months of 2020 excludes a retirement of a provision arising from business acquisition-related written put options within TI as well as lease-up period and other equity losses related to real estate joint ventures.
Operating highlights
· Consolidated operating revenues increased by $131 million in the second quarter of 2020 and $319 million in the first six months of 2020:
Service revenues increased by $164 million in the second quarter of 2020 and $389 million in the first six months of 2020, due to growth in wireline data services revenue. This growth was partly offset by the impacts of the COVID-19 pandemic and the ongoing declines in wireline legacy voice and legacy data service revenues.
Equipment revenues decreased by $95 million in the second quarter of 2020 and $146 million in the first six months of 2020, reflecting lower wireless contracted volumes related to COVID-19 pandemic impacts including the temporary closure of approximately 90% of our conventional retail stores, in addition to device financing programs.
Other operating income increased by $62 million in the second quarter of 2020 and $76 million in the first six months of 2020, primarily due to a gain on a retirement of a provision arising from business acquisition-related written put options within TI.
For additional details on operating revenues, see Section 5.4 Wireless segment and Section 5.5 Wireline segment.
· During the 12-month period ending on June 30, 2020, our total subscriber connections increased by 1,157,000. This reflects an increase of 2.4% in mobile phone subscribers, 21.2% in mobile connected device subscribers, 6.4% in internet subscribers, 4.4% in TV subscribers and 546,000 in security subscribers, including the acquired 490,000 ADT Canada customers, partly offset by a decline of 3.8% in residential voice subscribers.
Our mobile phone net additions were 61,000 in the second quarter of 2020 and 82,000 in the first six months of 2020, down 21,000 and 11,000, respectively, from the same periods in 2019. The decreases in net additions were driven by the temporary closure of approximately 90% of conventional retail stores and fewer customer additions attributed to restricted travel, partly offset by our customers first initiatives including the enhanced use of our digital footprint and our leading network quality. Lower customer additions were partly offset by lower mobile phone churn. Our mobile phone churn rate was 0.80% in the second quarter of 2020 and 0.87% in the first six months of 2020, down from 1.01% in both the second quarter of 2019 and the first six months of 2019, reflecting reduced switching activity between carriers due to the COVID-19 pandemic partially attributed to the temporary closure of certain sales channels referenced above. Mobile connected device net additions were 33,000 in the second quarter of 2020 and 82,000 in the first six months of 2020, down 39,000 for both the quarter and the six-month period, primarily due to lower Internet of Things (IoT) gross additions from a reduction in business customer activity as these customers delayed purchasing decisions during the pandemic. (See Section 5.4 Wireless segment for additional details.)
Internet net additions were 37,000 in the second quarter of 2020 and 63,000 in the first six months of 2020, up 12,000 and 16,000, respectively, from the same periods in 2019, due to continued net new demand from consumers and businesses as we keep our customers connected as well as lower customer churn. TV net additions were 8,000 in the second quarter of 2020 and 16,000 in the first six months of 2020, down 8,000 in the quarter and 17,000 in the six-month period, mainly due to lower gross additions as a result of the COVID-19 pandemic and the changing landscape of increased streaming services, partly offset by lower churn. Our continued focus on expanding our addressable high-speed internet and Optik TV footprint, connecting more homes and businesses directly to fibre, diversifying our product offerings, and bundling these products and services together, as well as our ongoing focus on our customer service and reliability, contributed to combined internet and TV subscriber growth of 173,000 or 5.7% over the last 12 months. We had made TELUS PureFibre® available to approximately 73% of our broadband footprint by June 30, 2020. Security net additions were 12,000 in the second quarter of 2020 and 27,000 in the first six months of 2020, up 1,000 and 10,000, respectively, from the same periods in 2019, reflecting strong organic growth as we keep our customers connected and protected. (See Section 5.5 Wireline segment for additional details.)
· Operating income decreased by $106 million in the second quarter of 2020 and $184 million in the first six months of 2020. Excluding the effects of a gain on a retirement of a provision arising from business acquisition-related written put options within TI of $71 million, Operating income decreased by $177 million in the second quarter of 2020 and $255 million in the first six months of 2020 reflecting multiple impacts from the COVID-19 pandemic, increased depreciation and amortization, declines in wireline legacy voice and legacy data services, higher non-labour-related restructuring and other costs, and lease-up period and other equity losses related to real estate joint ventures.
EBITDA, which includes restructuring and other costs and lease-up period and other equity losses related to real estate joint ventures, decreased by $14 million or 1.0% in the second quarter of 2020 and increased by $16 million or 0.6% in the first six months of 2020.
Adjusted EBITDA, which excludes restructuring and other costs, lease-up period and other equity losses related to real estate joint ventures and a gain on a retirement of a provision arising from business acquisition-related written put options within TI, decreased by $41 million or 2.9% in the second quarter of 2020, reflecting multiple impacts from the COVID-19 pandemic and declines in wireline legacy voice and legacy data services. This was partly offset by growth in wireline data service margins resulting from business acquisitions, expanded services and subscriber base growth, an increased EBITDA contribution from our organic TI business and enhanced cost efficiency programs.
Adjusted EBITDA increased by $19 million or 0.7% in the first six months of 2020, reflecting growth in wireline data service margins resulting from business acquisitions, expanded services and subscriber base growth, an increased EBITDA contribution from our organic TI business and a decrease in a provision arising from business
acquisition-related written put options within TI. This growth was partly offset by multiple impacts from the COVID-19 pandemic and by declines in wireline legacy voice and legacy data services. (See Section 5.3 Consolidated operations for additional details.)
· Income before income taxes decreased by $119 million in the second quarter of 2020 and $221 million in the first six months of 2020 as a result of lower Operating income, as noted above, and increased Financing costs. The increase in Financing costs resulted primarily from the $18 million long-term debt prepayment premium in the second quarter of 2020 and higher average long-term debt outstanding, in part attributable to the acquisition of spectrum licences and business acquisitions. (See Financing costs in Section 5.3.)
· Income taxes increased by $86 million in the second quarter of 2020 and $68 million in the first six months of 2020. The effective tax rate increased from 5.6% to 27.1% in the second quarter of 2020 and from 16.4% to 27.7% in the first six months of 2020. These increases were predominantly attributed to the prior year revaluation of the deferred income tax liability for the multi-year reduction in the Alberta provincial corporate tax rate that was substantively enacted in the second quarter of 2019.
· Net income attributable to Common Shares decreased by $227 million in the second quarter of 2020 and $305 million in the first six months of 2020. These decreases resulted from the after-tax impacts of lower Operating income and higher Financing costs.
Adjusted Net income excludes the effects of restructuring and other costs, income tax-related adjustments, lease-up period and other equity losses related to real estate joint ventures, long-term debt prepayment premium and a gain on a retirement of a provision arising from business acquisition-related written put options within TI. Adjusted Net income decreased by $100 million or 24.0% in the second quarter of 2020 and $153 million or 17.6% in the first six months of 2020.
Reconciliation of adjusted Net income
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Net income attributable to Common Shares |
|
290 |
|
517 |
|
(227 |
) |
640 |
|
945 |
|
(305 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other costs, after income taxes |
|
42 |
|
22 |
|
20 |
|
89 |
|
47 |
|
42 |
|
Income tax-related adjustments |
|
2 |
|
(123 |
) |
125 |
|
(1 |
) |
(123 |
) |
122 |
|
Lease-up period and other equity losses related to real estate joint ventures |
|
3 |
|
|
|
3 |
|
9 |
|
|
|
9 |
|
Long-term debt prepayment premium, after income taxes |
|
14 |
|
|
|
14 |
|
14 |
|
|
|
14 |
|
Retirement of a provision arising from business acquisition-related written put options within TI, after income taxes |
|
(35 |
) |
|
|
(35 |
) |
(35 |
) |
|
|
(35 |
) |
Adjusted Net income |
|
316 |
|
416 |
|
(100 |
) |
716 |
|
869 |
|
(153 |
) |
· Basic EPS decreased by $0.20 or 46.5% in the second quarter of 2020 and $0.28 or 35.4% in the first six months of 2020 as a result of the after-tax impacts of lower Operating income and higher Financing costs as well as the effect of a higher number of Common Shares outstanding.
Adjusted basic EPS excludes the effects of restructuring and other costs, income tax-related adjustments, lease-up period and other equity losses related to real estate joint ventures, long-term debt prepayment premium and a gain on a retirement of a provision arising from business acquisition-related written put options within TI. Adjusted basic EPS decreased by $0.10 or 28.6% in the second quarter of 2020 and $0.16 or 21.9% in the first six months of 2020.
Reconciliation of adjusted basic EPS
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Basic EPS |
|
0.23 |
|
0.43 |
|
(0.20 |
) |
0.51 |
|
0.79 |
|
(0.28 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other costs, after income taxes, per share |
|
0.04 |
|
0.02 |
|
0.02 |
|
0.07 |
|
0.04 |
|
0.03 |
|
Income tax-related adjustments, per share |
|
|
|
(0.10 |
) |
0.10 |
|
|
|
(0.10 |
) |
0.10 |
|
Lease-up period and other equity losses related to real estate joint ventures, per share |
|
|
|
|
|
|
|
0.01 |
|
|
|
0.01 |
|
Long-term debt prepayment premium, after income taxes, after income taxes, per share |
|
0.01 |
|
|
|
0.01 |
|
0.01 |
|
|
|
0.01 |
|
Retirement of a provision arising from business acquisition-related written put options within TI, after income taxes, per share |
|
(0.03 |
) |
|
|
(0.03 |
) |
(0.03 |
) |
|
|
(0.03 |
) |
Adjusted basic EPS |
|
0.25 |
|
0.35 |
|
(0.10 |
) |
0.57 |
|
0.73 |
|
(0.16 |
) |
· Dividends declared per Common Share were $0.29125 in the second quarter of 2020, up 3.6% from one year earlier. The Board elected to declare a third quarter dividend of $0.29125 per share on our issued and outstanding Common Shares, payable on October 1, 2020, to shareholders of record at the close of business on September 10, 2020. The third quarter dividend increased by $0.01 per share or 3.6% from the $0.28125 per share dividend declared one year earlier.
Liquidity and capital resource highlights
· Net debt to EBITDA excluding restructuring and other costs ratio was 3.06 times at June 30, 2020, up from 2.94 times at June 30, 2019, as the increase in net debt, partly attributed to the acquisition of spectrum licences and business acquisitions, exceeded the effect of the increase in EBITDA excluding restructuring and other costs as the COVID-19 pandemic impacts reduced EBITDA. As at June 30, 2020, the acquisition of spectrum licences increased the ratio by approximately 0.21 and business acquisitions over the last 12 months increased the ratio by approximately 0.33. (See Section 4.3 Liquidity and capital resources and Section 7.5 Liquidity and capital resource measures.)
· Cash provided by operating activities increased by $302 million in the second quarter of 2020 and $689 million in the first six months of 2020, largely attributable to decreased income tax payments, which mainly reflected a higher final income tax payment of $270 million in the first six months of 2019 for the 2018 income tax year, which did not recur to the same extent in the first six months of 2020, as well as the deferral of income tax instalment payments, other operating working capital changes, and lower restructuring and other costs disbursements, net of expense.
· Cash used by investing activities decreased by $777 million in the second quarter of 2020, primarily attributed to the $931 million cash payments for the 600 MHz spectrum auction in the second quarter of 2019. Cash used by investing activities increased by $220 million in the first six months of 2020, largely attributed to acquisitions. Acquisitions increased by $81 million in the second quarter of 2020 and $1,023 million in the first six months of 2020, as we made larger cash payments for business acquisitions, including our Competence Call Center acquisition on January 31, 2020. Capital expenditures decreased by $14 million in the second quarter of 2020 due to timing of our fibre build activities and lower success-based capital congruent with the decline in gross loading during the pandemic. Capital expenditures increased by $5 million in the first six months of 2020, due to increased investments in our 5G network, in addition to investments to increase system capacity and reliability during the pandemic. We had made TELUS PureFibre available to approximately 73% of our broadband footprint by June 30, 2020. (See Section 7.3 Cash used by investing activities.)
· Cash provided by financing activities decreased by $795 million in the second quarter of 2020, primarily reflecting increased redemptions of long-term debt, net of issuances. Cash provided by financing activities increased by $164 million in the first six months of 2020, largely attributed to our February 26, 2020 equity issue. (See Section 7.4 Cash provided (used) by financing activities.)
· Free cash flow increased by $187 million in the second quarter of 2020 and $579 million in the first six months of 2020, resulting primarily from decreased income tax payments as there was a higher final income tax payment of $270 million in the first quarter of 2019 for the 2018 income tax year in addition to the deferral of income tax instalment payments into the third quarter of 2020; the timing related to device subsidy repayments and associated revenue recognition and our TELUS Easy Payment® device financing program; and lower restructuring and other costs disbursements. The free cash flow increases in the second quarter of 2020 and the first six months of 2020
were partly offset by increased interest paid. Our definition of free cash flow, for which there is no industry alignment, is unaffected by accounting changes that do not impact cash, such as IFRS 15 and IFRS 16. (See calculation in Section 11.1 Non-GAAP and other financial measures.)
2. Core business and strategy
Our core business and our strategic imperatives were described in our 2019 annual MD&A.
3. Corporate priorities for 2020
Our annual corporate priorities are used to advance our long-term strategic imperatives and address near-term opportunities and challenges. However, these priorities have been affected by the COVID-19 pandemic and we have focused on keeping Canadians connected and the safety and well-being of our team members, our customers and our communities (see Section 1.2 for further discussion on COVID-19 pandemic impacts.) The following table provides a discussion of activities and initiatives that relate to our 2020 corporate priorities.
Honouring our customers, communities and social purpose by our team delivering on our brand promise
· In May 2020, the Commission for Complaints for Telecom-television Services (CCTS) issued its mid-year report for the period ended August 1, 2019 to January 31, 2020, and TELUS was again the subject of the fewest customer complaints among national carriers with 696 accepted complaints, while Koodo® was again the subject of the fewest complaints among the national flanker brands with 316 accepted complaints. TELUS, Koodo and Public Mobile each saw year-over-year reductions in the total customer complaints accepted by the CCTS with improvements of (7)%, (5)% and (8)%, respectively.
· In 2011, we initiated our first set of long-term energy and greenhouse gas emission reduction goals and surpassed them in early 2019, ahead of our 2020 target. As such, in our 2019 Sustainability Report issued during the second quarter of 2020, we released our new transformational climate action targets, including having our operations become net carbon neutral by 2030.
· During the quarter, we were recognized by the Business Continuity Institute Americas with the Most Effective Recovery award for our response to the 2019 wildfires in Northern Alberta.
· In April 2020, we launched our broadband push-to-talk service for business and government customers, which includes secure push-to-talk, live location tracking and mapping, and secure group multimedia messaging.
· In May 2020, both TELUS and Koodo launched a free optional Call Control feature that helps screen out unwanted robo-callers.
· In May 2020, we launched our #StandWithOwners program in support of Canadian small businesses through the COVID-19 pandemic, committing $500,000 in direct revenue, marketing and expert advice to support, promote and celebrate small business owners.
· As part of our Data for Good program, we have partnered with the Natural Sciences and Engineering Research Council of Canada (NSERC) to provide de-identified and aggregated network mobility data free of charge until September 2020 in support of COVID-19 research. For research projects that qualify, NSERC will offer a $50,000 grant as part of their NSERC Alliance COVID-19 grants program.
· Throughout the second quarter of 2020, we continued to leverage our Connecting for Good programs to support vulnerable Canadians through the global pandemic and also expanded program eligibility to support those who need it most.
· In April 2020, we expedited access to our Internet for Good program by partnering with B.C. and Alberta school boards and enabling schools and teachers to extend the program to students in need and supporting them to continue learning from the safety of their home during the COVID-19 pandemic.
· In July 2020, we expanded our Internet for Good program to include people living with disabilities who receive financial disability assistance from the provincial governments in B.C., Alberta and Quebec.
· We added over 1,200 new households to our Internet for Good program in the second quarter, resulting in 65,000 cumulative low-income family members now having access to low-cost, high-speed internet.
· Through our Mobility for Good program, we donated close to 14,000 devices and tablets, many with $0 rate plans valued at nearly $9 million to over 325 not-for-profit organizations in the first and second quarters. This enabled at-risk individuals to sustain contact with health practitioners and social workers, while helping hospitalized patients and vulnerable seniors stay connected with family. The $0 rate plans will be supported until December 31, 2020.
· We expanded our Mobility for Good program across Canada in the second quarter. The program is now available nationally to youth aging out of foster care.
· We added close to 900 vulnerable youth to our Mobility for Good program, providing them with a free smartphone and data plan. Since program inception, close to 5,300 vulnerable Canadians have benefitted from Mobility for Good.
· Throughout the second quarter, we continued to mobilize our Health for Good clinics to support COVID-19 response efforts, with our mobile clinics operating as testing centres and assessment clinics in Halifax, Vancouver, Ottawa and the Waterloo region, our Mississauga-Brampton region clinic supporting people leaving isolation and recovering from COVID-19, and our Edmonton clinic supporting its emergency isolation and quarantine shelter.
· In May 2020, our newest mobile health clinic, in partnership with the Fraser Health Authority, commenced operations in Surrey, B.C. to provide childhood immunizations and work through the backlog resulting from immunization clinic closures due to the COVID-19 pandemic.
· In the second quarter, over 9,600 visits were made to our mobile health clinics, resulting in nearly 36,000 cumulative visits since the inception of our Health for Good program.
· In the second quarter of 2020, three-packs of TELUS-branded, non-medical masks were made available in adult and youth sizes, with all proceeds going to the TELUS Friendly Future Foundation to support COVID-19 relief efforts. As of June 30, 2020, we have sold 2,700 masks, raising over $44,000 for the Foundation.
· In May 2020, we reached out to rally our TELUS team, retirees and fellow Canadians to join our annual TELUS Days of Giving through safe Acts of Giving to support our local communities. Collectively, we contributed over 200,000 Acts of Giving in quarter, including 450,000 volunteer hours served and 131,000 masks sewn.
· Since the start of the pandemic through to June 30, 2020, the TELUS Friendly Future Foundation has contributed $5.5 million to 326 charitable health projects.
· We continued to offer free TELUS Wise® online workshops for youth and, in June 2020, we held five virtual workshops hosted by our Canadian Football League and Hockey Canada partners, reinforcing the importance of staying safe online. Over 43,000 Canadians participated in online TELUS Wise workshops during the second quarter of 2020, with over 68,000 engaging year to date.
· Through a partnership with Albertas science centres (TELUS Spark in Calgary and TELUS World of Science Edmonton) and Microsoft, we have collaborated to bring science camps online with the launch of Virtual Summer Camps powered by TELUS.
· We ranked #20 on the Corporate Knights Top 50 Corporate Citizens in Canada list for 2020, up from #38 in 2019.
Leveraging our broadband networks to drive TELUS growth and fuel our future
· As described in Section 1.3, we launched the first wave of our 5G network.
· In June 2020, we launched TELUS PureFibre 1.5 Gigabit Internet with up to 1,500 Mbps download and 940 Mbps upload speeds for homes and businesses in B.C. and Alberta.
· In the J.D. Power 2020 Canada Wireless Network Quality Study, TELUS ranked first in network quality in the East region and in Ontario.
· In the Opensignal report The State of Mobile Network Experience 2020: One Year into the 5G Era released in May 2020, Canada tied with South Korea for the fastest Download Speed Experience in the world and Canada continues to have the fastest Download Speed Experience among the G7 countries. This builds upon Opensignals Mobile Network Experience Canada February 2020 where we won the category for best Download Speed Experience in Canada among national operators. Additionally, in Opensignals State of Rural Canadas Mobile Network Experience report dated May 2020, we were recognized as having the fastest network in rural Canada. If Canadas rural networks were categorized as a stand-alone country, rural Canada would rank second only to Japan among the G7 countries, which is notable given Canadas vast geography and population dispersion.
· In the PCMag report The Fastest ISPs of 2020: Canada released in June 2020, we were ranked as the fastest internet service provider (ISP) in Canada among major ISPs.
· In the report Canada: State of Mobile Networks April 2020 published by Tutela, based on data from September 1, 2019 to February 29, 2020, we won three of the national awards for Core Consistent Quality, Download Throughput and Latency, and tied for Excellent Consistent Quality. Additionally, in Tutelas report Canada: Mobile Experience Report June 2020, based on data from March 1, 2020 to May 31, 2020, our wireless network was rated as best in consistent quality, lowest latency and fastest download speeds.
· Building upon our November 2019 announcement where we provided several communities in Quebecs Lower North Shore region with access to high-speed internet and wireless phone services for the first time, we continued this deployment in June 2020 to the communities of Kegaska and La Romaine.
· During the quarter, we made an announcement regarding the connection of homes and businesses to our TELUS PureFibre infrastructure to the Village of Keremeos, B.C., which is expected to be completed by the end of September 2020.
· We have enhanced and automated our processes to better support the hiring and remote onboarding for new team members including recent graduates and co-op students.
Driving emerging opportunities to build scale in TELUS Health and TELUS Agriculture
· During the ongoing COVID-19 pandemic, both our Akira by TELUS Health and our Babylon by TELUS Health virtual care offerings have benefitted from significant adoption, which has helped to alleviate pressure on the in-person healthcare system. Video consultations from the safety of ones own home decreases unnecessary visits to the emergency room, freeing up capacity to respond to the viral outbreak. By July 2020, Babylon by TELUS Health has provided 67% of Canadians with the opportunity to see a general practitioner virtually with availability in B.C., Alberta, Saskatchewan and Ontario.
· Our LivingWell Companion and DirectAlert by TELUS Health personal emergency response services (PERS) continue to support the health and well-being of seniors across Canada. COVID-19 continues to disproportionately impact the elderly PERS can help seniors stay connected to emergency support and offers a remote caregiving solution to those who may feel the burden of being unable to physically support their elderly loved ones as we continue in a pandemic environment.
· Through the pandemic, the TELUS Healthy Living Network® has been providing Optik TV customers with informative content related to COVID-19 prevention and well-being, and helping them to stay active at home with new content from partners such as YYOGA.
· In April 2020, TELUS Health announced it was enabling 26,000 Canadian clinicians to conduct virtual visits with their patients by integrating patient videoconferencing into its electronic medical records across Canada. This new feature allows clinicians to virtually support their own roster of patients while maintaining continuity of care and fully up-to-date health records.
· In June 2020, TELUS Health announced the expansion of our Home Health Monitoring solution to digitally monitor the recovery of lung transplant patients across Saskatchewan. Launched in partnership with the Saskatchewan Health Authority and eHealth Saskatchewan, this digital health dashboard enables a virtual healthcare team to provide medical support remotely for patients in real-time as they recover in their own homes.
· We are building scale in TELUS Agriculture through additional business acquisitions and expanding our reach in the emerging agriculture technology sector by leveraging technology to help produce food more efficiently, safely and in a more environmentally-friendly manner.
Driving growth in TELUS International to fuel further scaling opportunities
· While rapidly enabling over 90% of TELUS International team members to provide remote support from home and in other modified work locations, TELUS International has been able to leverage this capability and apply it in new ways to their clients. For example, in the second quarter, TELUS International trained and equipped a team to support a new client through 100% virtual training and remote servicing, foregoing the traditional in-person training at a brick and mortar facility.
4. Capabilities
The forward-looking statements in this section, including statements regarding our dividend growth program and our financial objectives in Section 4.3, are qualified by the Caution regarding forward-looking statements at the beginning of this MD&A.
4.1 Principal markets addressed and competition
For a discussion of our principal markets and an overview of competition, refer to Section 4.1 of our 2019 annual MD&A.
4.2 Operational resources
Wireless
Since mid-2013, we have invested more than $4.9 billion to acquire wireless spectrum licences in spectrum auctions and other private transactions. This has more than doubled our national spectrum holdings in support of our top corporate priority to put customers first. Wireless data consumption has been increasing rapidly and is expected to continue growing as the industry transitions to 5G, and we have responded by investing to extend our coverage and expand the capacity of our leading network quality to support the additional data consumption and growth in our wireless subscriber base in a geographically diverse country. This includes investments in wireless small cells connected directly to our fibre technology to improve coverage and capacity utilized in our 5G network launch.
As at June 30, 2020, our 4G LTE technology covered 99% of Canadas population, consistent with June 30, 2019. Furthermore, we have continued to invest in the roll-out of our LTE advanced technology, which covered almost 95% of Canadas population at March 31, 2020, slightly higher than one year before.
Wireline
We are continuing to invest in our incumbent local exchange carrier (ILEC) urban and rural communities with commitments to deliver broadband technology capabilities to as many Canadians in these communities as possible. We are expanding our fibre footprint by connecting more homes and businesses directly to fibre in communities across B.C., Alberta and Eastern Quebec. In addition, we have increased broadband internet speeds, expanded our IP TV video-on-demand library and high-definition content, including 4K TV and 4K HDR capabilities, and enhanced the marketing of data products and bundles resulting in improved churn rates. Our fibre technology is also an essential component of our wireless access technology and has enabled our 5G deployment as referenced above. Our home and business smart technology lines of business integrate security and safety monitoring with smart devices.
As at June 30, 2020, our high-speed broadband footprint covered more than 3.2 million households and businesses in B.C., Alberta and Eastern Quebec, including approximately 2.33 million households and businesses covered with
fibre-optic cable (representing approximately 73% of our total high-speed broadband footprint), which provides these premises with immediate access to our fibre-optic technology. This is up from approximately 2.04 million households and businesses in the second quarter of 2019.
4.3 Liquidity and capital resources
Capital structure financial policies
Our objective when managing capital is to maintain a flexible capital structure that optimizes the cost and availability of capital at acceptable risk.
In the management of capital and in its definition, we include Common Share equity (excluding Accumulated other comprehensive income), Long-term debt (including long-term credit facilities, commercial paper backstopped by long-term credit facilities and any hedging assets or liabilities associated with Long-term debt items, net of amounts recognized in Accumulated other comprehensive income), Cash and temporary investments, and short-term borrowings arising from securitized trade receivables.
We manage our capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of our business. In order to maintain or adjust our capital structure, we may adjust the amount of dividends paid to holders of Common Shares, purchase Common Shares for cancellation pursuant to normal course issuer bid (NCIB) programs, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics, and/or increase or decrease the amount of trade receivables sold to an arms-length securitization trust.
We monitor capital utilizing a number of measures, including our net debt to EBITDA excluding restructuring and other costs ratio, coverage ratios and dividend payout ratios. (See definitions in Section 11.1 Non-GAAP and other financial measures.)
Financing and capital structure management plans
Report on financing and capital structure management plans
Pay dividends to the holders of Common Shares under our multi-year dividend growth program
· In May 2019, we announced our intention to target ongoing semi-annual dividend increases, with the annual increase in the range of 7 to 10% from 2020 through to the end of 2022, thereby extending the policy first announced in May 2011. However, given the uncertain magnitude, duration and potential outcomes of the COVID-19 pandemic, in May 2020, the Board determined that it would be prudent to sustain the current dividend per share and defer any dividend increase until the release of our third quarter 2020 results in November. Dividend decisions will continue to be subject to our Boards assessment and the determination of our financial position and outlook on a quarterly basis. Our long-term dividend payout ratio guideline is 60 to 75% of free cash flow on a prospective basis. (See Section 7.5 Liquidity and capital resource measures.) There can be no assurance that we will maintain a dividend growth program or that it will be unchanged through 2022. (See Caution regarding forward-looking statements Ability to sustain our dividend growth program through 2022 and Section 10.13 Financing, debt and dividends in our 2019 annual MD&A.)
· On July 30, 2020, the Board elected to declare a third quarter dividend of $0.29125 per share, payable on October 1, 2020, to shareholders of record at the close of business on September 10, 2020. The third quarter dividend for 2020 reflects a cumulative increase of $0.01 per share or 3.6% from the $0.28125 per share dividend declared one year earlier.
· Our dividend reinvestment and share purchase (DRISP) plan trustee acquired shares from Treasury for the DRISP plan, rather than acquiring Common Shares in the stock market. We may, at our discretion, offer Common Shares at a discount of up to 5% from the market price under the plan. Effective with the dividends paid beginning on October 1, 2019, we offered Common Shares from Treasury at a discount of 2%. During the second quarter of 2020, our DRISP plan trustee acquired from Treasury approximately 6 million dividend reinvestment Common Shares for $131 million. For the dividends paid on July 2, 2020, the DRISP participation rate, calculated as the DRISP investment of $140 million (including the employee share purchase plan) as a percentage of gross dividends, was approximately 37%.
Purchase Common Shares
· During the three-month and six-month periods ended June 30, 2020, and up to the date of this MD&A, we did not purchase or cancel any shares pursuant to our NCIB.
Use proceeds from securitized trade receivables (Short-term borrowings), bank facilities and commercial paper as needed, to supplement free cash flow and meet other cash requirements
· Our issued and outstanding commercial paper was $NIL at June 30, 2020, which was denominated in U.S. dollars (US$NIL million), compared to $1,015 million (US$781 million) at December 31, 2019, and $293 million (US$224 million) at June 30, 2019.
· Net draws due to a syndicate of financial institutions (excluding TELUS Corporation) on the TELUS International (Cda) Inc. credit facility were US$865 million at June 30, 2020, compared to US$336 million at December 31, 2019, and US$307 million at June 30, 2019. The credit facility is non-recourse to TELUS Corporation.
· Proceeds from securitized trade receivables were $100 million at June 30, 2020, unchanged from December 31, 2019 and June 30, 2019.
Report on financing and capital structure management plans
Maintain compliance with financial objectives
· Maintain investment grade credit ratings in the range of BBB+ or the equivalent On July 31, 2020, investment grade credit ratings from the four rating agencies that cover TELUS were in the desired range. (See Section 7.8 Credit ratings.)
· Net debt to EBITDA excluding restructuring and other costs ratio of 2.20 to 2.70 times As measured at June 30, 2020, this ratio was 3.06 times, outside of the objective range, primarily due to the reduction of EBITDA caused by the COVID-19 pandemic as well as the acquisition of spectrum licences and business acquisitions. Given the cash demands of the 2019 and upcoming spectrum auctions and the inability to quantify impacts of the COVID-19 pandemic, the assessment of the guideline and return to the objective range remains to be determined; however, it is our intent to return to a ratio below 2.70 times in the medium term (following upcoming spectrum auctions), consistent with our long-term strategy. (See Section 7.5 Liquidity and capital resource measures.)
· Dividend payout ratio of 60 to 75% of free cash flow on a prospective basis Our objective range is on a prospective basis. The dividend payout ratio we present in this MD&A is a historical measure utilizing the last four quarters of dividends declared, net of dividend reinvestment plan effects, and free cash flow, and is disclosed for illustrative purposes in evaluating our target guideline. As at June 30, 2020, the ratio was 61%. During the 12-month period ended June 30, 2020, the historical measure of our dividend payout ratio was at the lower end of the range due to the discounted DRISP participation level. (See Section 7.5 Liquidity and capital resource measures.)
· Generally maintain a minimum of $1 billion in unutilized liquidity As at June 30, 2020, our unutilized liquidity on a consolidated basis was approximately $2.9 billion. (See Section 7.6 Credit facilities.)
4.4 Changes in internal control over financial reporting
For the three-month and six-month periods ended June 30, 2020, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
5. Discussion of operations
This section contains forward-looking statements, including those with respect to mobile phone average billing per subscriber per month (ABPU) and mobile phone average revenue per subscriber per month (ARPU) growth, wireless trends regarding loading and retention spending, equipment margins, subscriber growth and various future trends. There can be no assurance that we have accurately identified these trends based on past results or that these trends will continue, in particular given uncertainty with regard to the COVID-19 pandemic and associated economic impacts. See Caution regarding forward-looking statements at the beginning of this MD&A.
5.1 General
A significant judgment we make is in respect of distinguishing between our wireless and wireline operations and cash flows (and this extends to allocations of both direct and indirect expenses and capital expenditures). The clarity of this distinction has been increasingly affected by the convergence and integration of our wireless and wireline telecommunications infrastructure technology and operations. Recently, our judgment was that our wireless and wireline telecommunications infrastructure technology and operations had not experienced sufficient convergence to objectively make their respective operations and cash flows practically indistinguishable. The continued build-out of our technology-agnostic fibre-optic infrastructure, in combination with converged edge network technology, has significantly affected this judgment, as have the commercialization of fixed-wireless telecommunications solutions for customers and the consolidation of our non-customer facing operations. As a result, it has become increasingly difficult and impractical to objectively and clearly distinguish between our wireless and wireline operations and cash flows, and the assets from which those cash flows arise. Our judgment as to whether these operations can continue to be judged to be individual components of the business and discrete operating segments has changed. Effective January 1, 2020, we embarked upon modifying our internal and external reporting processes, systems and internal controls to accommodate the technology convergence-driven cessation of the historical distinction between our wireless and wireline operations at the level of regularly reported discrete performance measures that are provided to our Chief Executive Officer (CEO) (our chief operating decision-maker). Prior to the World Health Organization characterizing COVID-19 as a pandemic, we had anticipated transitioning to a new segment reporting structure during 2020 but did not, and do not, anticipate a substantive change to our products and services revenue and related performance indicator reporting from such transition; we will continue to report wireless and wireline operations until such transition is substantially completed, but the timing of such transition may be impacted as we prioritize managing through the pandemic. Segmented information in Note 5 of the interim consolidated financial statements is regularly reported to our CEO.
5.2 Summary of consolidated quarterly results and trends
Summary of quarterly results
($ millions, except per share amounts) |
|
2020 Q2 |
|
2020 Q1 |
|
2019 Q4 |
|
2019 Q3 |
|
2019 Q2 |
|
2019 Q1 |
|
2018 Q4 |
|
2018 Q3 |
|
Operating revenues1 |
|
3,728 |
|
3,694 |
|
3,858 |
|
3,697 |
|
3,597 |
|
3,506 |
|
3,764 |
|
3,774 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goods and services purchased2,3 |
|
1,458 |
|
1,412 |
|
1,681 |
|
1,502 |
|
1,466 |
|
1,421 |
|
1,784 |
|
1,685 |
|
Employee benefits expense2 |
|
911 |
|
873 |
|
809 |
|
761 |
|
758 |
|
706 |
|
745 |
|
740 |
|
Depreciation and amortization |
|
725 |
|
725 |
|
678 |
|
649 |
|
633 |
|
617 |
|
586 |
|
572 |
|
Total operating expenses |
|
3,094 |
|
3,010 |
|
3,168 |
|
2,912 |
|
2,857 |
|
2,744 |
|
3,115 |
|
2,997 |
|
Operating income |
|
634 |
|
684 |
|
690 |
|
785 |
|
740 |
|
762 |
|
649 |
|
777 |
|
Financing costs before long-term debt prepayment premium |
|
184 |
|
192 |
|
175 |
|
173 |
|
189 |
|
168 |
|
159 |
|
162 |
|
Long-term debt prepayment premium |
|
18 |
|
|
|
|
|
28 |
|
|
|
|
|
|
|
34 |
|
Income before income taxes |
|
432 |
|
492 |
|
515 |
|
584 |
|
551 |
|
594 |
|
490 |
|
581 |
|
Income taxes |
|
117 |
|
139 |
|
136 |
|
144 |
|
31 |
|
157 |
|
122 |
|
134 |
|
Net income |
|
315 |
|
353 |
|
379 |
|
440 |
|
520 |
|
437 |
|
368 |
|
447 |
|
Net income attributable to Common Shares |
|
290 |
|
350 |
|
368 |
|
433 |
|
517 |
|
428 |
|
357 |
|
443 |
|
Net income per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (EPS) |
|
0.23 |
|
0.28 |
|
0.30 |
|
0.36 |
|
0.43 |
|
0.36 |
|
0.30 |
|
0.37 |
|
Adjusted basic EPS4 |
|
0.25 |
|
0.32 |
|
0.32 |
|
0.39 |
|
0.35 |
|
0.38 |
|
0.35 |
|
0.37 |
|
Diluted EPS |
|
0.23 |
|
0.28 |
|
0.30 |
|
0.36 |
|
0.43 |
|
0.36 |
|
0.30 |
|
0.37 |
|
Dividends declared per Common Share |
|
0.29125 |
|
0.29125 |
|
0.29125 |
|
0.28125 |
|
0.28125 |
|
0.27250 |
|
0.27250 |
|
0.26250 |
|
Additional information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA4 |
|
1,359 |
|
1,409 |
|
1,368 |
|
1,434 |
|
1,373 |
|
1,379 |
|
1,235 |
|
1,349 |
|
Restructuring and other costs3,4 |
|
70 |
|
60 |
|
40 |
|
29 |
|
29 |
|
36 |
|
75 |
|
173 |
|
Lease-up period and other equity losses related to real estate joint ventures |
|
3 |
|
6 |
|
5 |
|
|
|
|
|
|
|
|
|
|
|
Non-recurring gains and equity income related to real estate joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171 |
|
Retirement of a provision arising from business acquisition-related written put options within TI |
|
71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA4 |
|
1,361 |
|
1,475 |
|
1,413 |
|
1,463 |
|
1,402 |
|
1,415 |
|
1,310 |
|
1,351 |
|
Cash provided by operating activities |
|
1,462 |
|
1,177 |
|
829 |
|
1,148 |
|
1,160 |
|
790 |
|
948 |
|
1,066 |
|
Free cash flow4 |
|
511 |
|
545 |
|
135 |
|
320 |
|
324 |
|
153 |
|
132 |
|
303 |
|
(1) In the third quarter of 2018, we recorded equity income related to real estate joint ventures of $171 million arising from the sale of TELUS Garden.
(2) Goods and services purchased and Employee benefits expense amounts include restructuring and other costs.
(3) In the third quarter of 2018, we recorded a donation to the TELUS Friendly Future Foundation of $118 million as part of other costs.
(4) See Section 11.1 Non-GAAP and other financial measures.
Trends
COVID-19 was characterized as a pandemic in March 2020. The nature of the pandemic and the uncertainty of its magnitude, length and the time to recovery are not currently able to be estimated. Therefore, trends identified prior to the first quarter of 2020 and described below may not be indicative of trends effective from the first quarter of 2020 onwards, as the COVID-19 pandemic prevents us and our customers from operating in the normal course of business in certain areas.
The trend of year-over-year increases in consolidated revenue reflects: (i) wireless network revenue generated from growth in our subscriber base, partially reduced by COVID-19 pandemic impacts such as reduced roaming revenue; (ii) growth in wireline service revenue this segment includes TELUS International (Cda) Inc. (TI) revenues, internet and third wave data services revenues, health revenues, TV revenues, home and business smart technology (including security) revenues, and other advanced application offerings; partly offset by moderating equipment revenue growth as well as COVID-19 pandemic impacts such as the temporary closure of Medisys and Copeman health clinics and the clinics being unable to offer their full suite of core services upon re-opening, and business customers faced with reduced and/or closed operations. Increased wireline data services revenues also include revenues from business acquisitions, including our acquisitions of ADT Security Services Canada, Inc. (ADT Canada) on November 5, 2019 (where there was
significant integration and customer retention costs in 2019 and will continue to be throughout 2020 and early 2021, the full expected operations rate is expected after that time), and Competence Call Center (CCC) on January 31, 2020. Increased internet and TV service revenues are being generated by subscriber growth and higher internet revenue per customer, and there has been increased customer adoption of our home and business smart technology (including security). For additional information on wireless and wireline revenue and subscriber trends, see Section 5.4 Wireless segment and Section 5.5 Wireline segment.
The trend of year-over-year increases in Goods and services purchased, excepting the effects of the application of IFRS 16 first evidenced in the first quarter of 2019, reflects higher wireless equipment expenses associated with higher-value smartphones in the sales mix, partly offset by a general decrease in new wireless contracts; increases in external labour, administrative and other expenses to support growth in our TI business, our subscriber base and business acquisitions; and increased wireline TV costs of sales associated with a growing subscriber base.
In the third quarter of 2018, Operating revenues included equity income related to real estate joint ventures of $171 million arising from the sale of TELUS Garden. Additionally, in the third quarter of 2018, Goods and services purchased included a non-recurring $118 million donation to the TELUS Friendly Future Foundation. There have also been, and will continue to be, less significant asset dispositions.
The trend of year-over-year increases in net Employee benefits expense reflects increases in the number of employees related to business acquisitions and those supporting TI revenue growth, the expansion of our health offerings and growth in our other complementary businesses. This was partly offset by moderating salaries expense resulting from reductions in the number of full-time equivalent (FTE) domestic employees, excluding business acquisitions, related to cost efficiency and effectiveness programs. We experienced year-over-year increases in net Employee benefits expense in the first quarter of 2020 and through most of 2019 related to April 2019 compensation increases.
The trend of year-over-year increases in Depreciation and amortization reflects increases due to growth in capital assets, which is supporting the expansion of our broadband footprint, including our generational investment to connect homes and businesses to TELUS PureFibre and enhanced LTE technology coverage, growth in business acquisitions and growth in internet, TV and security loading. The investments in our fibre-optic technology also support our small-cell technology strategy to improve coverage and capacity while preparing for a more efficient and timely evolution to 5G where we launched the first wave of our 5G network in June 2020. Depreciation and amortization under the application of IFRS 16 are higher than would have been the case prior to IFRS 16.
The trend of year-over-year increases in Financing costs reflects an increase in long-term debt outstanding, mainly associated with our investments in spectrum, fibre and wireless technology, and our business acquisitions. Financing costs include a long-term debt prepayment premium of $18 million in the second quarter of 2020, $28 million in the third quarter of 2019 and $34 million in the third quarter of 2018. Moreover, Financing costs are net of capitalized interest related to spectrum licences acquired during the 600 MHz wireless spectrum auction, which we expect to deploy into our existing network in future periods. Financing costs also includes Interest accretion on provisions (asset retirement obligations and written put options) and Employee defined benefit plans net interest. Additionally, for the eight periods shown, Financing costs include varying amounts of foreign exchange gains or losses and varying amounts of interest income. Under the application of IFRS 16, Financing costs are higher than would have been the case prior to IFRS 16, driven by interest on lease liabilities.
The trend in Net income reflects the items noted above, as well as non-cash adjustments arising from substantively enacted income tax changes and adjustments recognized in the current periods for income taxes of prior periods. Historically, the trend in basic EPS has reflected trends in Net income.
The general trend of year-over-year increases in Cash provided by operating activities reflects lower year-over-year income taxes paid partly offset by higher interest payments arising from increases in debt outstanding and year-over-year variations in fixed-term interest rates. Cash provided by operating activities was impacted by IFRS 16, which prospectively results in the principal component of lease payments being reflected as a financing activity use of cash. The general trend of year-over-year increases in free cash flow reflects the factors affecting Cash provided by operating activities, except that accounting policies that do not impact cash (IFRS 15 and IFRS 16) do not affect the determination of free cash flow. For further discussion on these trends, see Section 5.4 Wireless segment and Section 5.5 Wireline segment.
5.3 Consolidated operations
The following is a discussion of our consolidated financial performance. Segment information in Note 5 of the interim consolidated financial statements is regularly reported to our CEO. We discuss the performance of our segments in Section 5.4 Wireless segment and Section 5.5 Wireline segment. Refer to Section 1.2 for further discussion of the COVID-19 pandemic and its impacts on our consolidated operations.
Operating revenues
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Service |
|
3,250 |
|
3,086 |
|
5.3 |
% |
6,495 |
|
6,106 |
|
6.4 |
% |
Equipment |
|
406 |
|
501 |
|
(19.0 |
)% |
824 |
|
970 |
|
(15.1 |
)% |
Revenues arising from contracts with customers |
|
3,656 |
|
3,587 |
|
1.9 |
% |
7,319 |
|
7,076 |
|
3.4 |
% |
Other operating income |
|
72 |
|
10 |
|
n/m |
|
103 |
|
27 |
|
n/m |
|
Operating revenues |
|
3,728 |
|
3,597 |
|
3.6 |
% |
7,422 |
|
7,103 |
|
4.5 |
% |
Consolidated operating revenues increased by $131 million in the second quarter of 2020 and $319 million in the first six months of 2020.
· Service revenues increased by $164 million in the second quarter of 2020 and $389 million in the first six months of 2020, reflecting growth in wireline data services revenues resulting from business acquisitions, expanded services and subscriber base growth, partly offset by the impacts of the COVID-19 pandemic and continued declines in wireline legacy voice and legacy data service revenues.
· Equipment revenues decreased by $95 million in the second quarter of 2020 and $146 million in the first six months of 2020, reflecting lower wireless contracted volumes as a result of customers reducing their general shopping habits and the temporary closure of a significant number of conventional sales channels beginning in March 2020 through a majority of the second quarter of 2020 due to the COVID-19 pandemic. Device financing programs, which provide transparency of full device costs resulting in customers deferring device upgrade purchases, also contributed to the decrease.
· Other operating income increased by $62 million in the second quarter of 2020 and $76 million in the first six months of 2020, primarily due to a gain on retirement of a provision arising from business acquisition-related written put options within TI, partly offset by lease-up period and other equity losses related to real estate joint ventures and lower net gains from the sale of certain assets. The increase in the first six months of 2020 also reflects a decrease in the aforementioned provision.
Operating expenses
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Goods and services purchased |
|
1,458 |
|
1,466 |
|
(0.5 |
)% |
2,870 |
|
2,887 |
|
(0.6 |
)% |
Employee benefits expense |
|
911 |
|
758 |
|
20.2 |
% |
1,784 |
|
1,464 |
|
21.9 |
% |
Depreciation |
|
505 |
|
470 |
|
7.4 |
% |
1,028 |
|
940 |
|
9.4 |
% |
Amortization of intangible assets |
|
220 |
|
163 |
|
35.0 |
% |
422 |
|
310 |
|
36.1 |
% |
Operating expenses |
|
3,094 |
|
2,857 |
|
8.3 |
% |
6,104 |
|
5,601 |
|
9.0 |
% |
Consolidated operating expenses increased by $237 million in the second quarter of 2020 and $503 million in the first six months of 2020.
· Goods and services purchased decreased by $8 million in the second quarter of 2020 and $17 million in the first six months of 2020, primarily arising from lower wireless equipment sales expenses, as well as enhanced cost-savings initiatives in response to the economic impacts of the COVID-19 pandemic. These decreases were partly offset by higher operating and administrative costs associated with business acquisitions, in addition to supporting organic TI revenue growth, as well as increases to our bad debt expense and non-labour restructuring and other costs related to the pandemic.
· Employee benefits expense increased by $153 million in the second quarter of 2020 and $320 million in the first six months of 2020, largely due to higher compensation and benefit costs resulting from an increase in the number of employees from business acquisitions, in addition to supporting organic TI revenue growth. These employee benefits expense increases were partly offset by lower labour-related restructuring and other costs, and a decrease in the number of domestic FTEs, excluding business acquisitions.
· Depreciation increased by $35 million in the second quarter of 2020 and $88 million in the first six months of 2020, primarily due to growth in capital assets over the last 12 months, including our expanded fibre footprint and business acquisitions. Additionally, in the first six months of 2020, we had increased asset retirement activity, which generated accelerated depreciation on those assets.
· Amortization of intangible assets increased by $57 million in the second quarter of 2020 and $112 million in the first six months of 2020, reflecting higher expenditures associated with the intangible asset base over the last 12 months, including those arising from business acquisitions.
Operating income
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Wireless EBITDA1 (See Section 5.4) |
|
870 |
|
919 |
|
(5.3 |
)% |
1,804 |
|
1,827 |
|
(1.2 |
)% |
Wireline EBITDA1 (See Section 5.5) |
|
489 |
|
454 |
|
7.7 |
% |
964 |
|
925 |
|
4.2 |
% |
EBITDA1 |
|
1,359 |
|
1,373 |
|
(1.0 |
)% |
2,768 |
|
2,752 |
|
0.6 |
% |
Depreciation and amortization (discussed above) |
|
(725 |
) |
(633 |
) |
14.5 |
% |
(1,450 |
) |
(1,250 |
) |
16.0 |
% |
Operating income |
|
634 |
|
740 |
|
(14.3 |
)% |
1,318 |
|
1,502 |
|
(12.3 |
)% |
(1) See Section 11.1 Non-GAAP and other financial measures.
Operating income decreased by $106 million in the second quarter of 2020 and $184 million in the first six months of 2020, while EBITDA decreased by $14 million in the second quarter of 2020 and increased by $16 million in the first six months of 2020. Excluding the effects of a gain on a retirement of a provision arising from business acquisition-related written put options of $71 million within TI, Operating income decreased by $177 million in the second quarter of 2020 and $255 million in the first six months of 2020, while EBITDA decreased by $85 million in the second quarter of 2020 and $55 million in the first six months of 2020. These declines reflect the impacts of the COVID-19 pandemic, including: (i) the decline in roaming revenues attributed to restricted travel; (ii) the temporary closure of approximately 90% of our conventional retail stores; (iii) the temporary disruptions to our TI business due to government-mandated site closures; (iv) the temporary closure of our Medisys and Copeman clinics, and reduced health benefit claims; (v) increases to our bad debt expense; and (vi) higher non-labour-related restructuring and other costs. EBITDA also declined from lower wireline legacy voice and legacy data services, higher non-labour-related restructuring and other costs related to efficiency initiatives, and lease-up period and other equity losses related to real estate joint ventures. EBITDA declines were partly offset by growth in wireline data service margins resulting from business acquisitions, expanded services and subscriber base growth, an increased EBITDA contribution from our organic TI business, and enhanced cost efficiency programs in response to the pandemic. Declines in the first six months of 2020 were also moderated by a decrease in a provision arising from business acquisition-related written put options within TI.
Adjusted EBITDA
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Wireless Adjusted EBITDA1 (See Section 5.4) |
|
890 |
|
924 |
|
(3.7 |
)% |
1,830 |
|
1,841 |
|
(0.6 |
)% |
Wireline Adjusted EBITDA1 (See Section 5.5) |
|
471 |
|
478 |
|
(1.2 |
)% |
1,006 |
|
976 |
|
3.1 |
% |
Adjusted EBITDA1 |
|
1,361 |
|
1,402 |
|
(2.9 |
)% |
2,836 |
|
2,817 |
|
0.7 |
% |
(1) See Section 11.1 Non-GAAP and other financial measures.
Adjusted EBITDA decreased by $41 million or 2.9% in the second quarter of 2020, reflecting the impacts of the COVID-19 pandemic as described above, and lower wireline legacy voice and legacy data services. This was partly offset by growth in wireline data service margins resulting from business acquisitions, expanded services and subscriber base growth, an increased EBITDA contribution from our organic TI business, and enhanced cost efficiency programs in response to the pandemic.
In the first six months of 2020, Adjusted EBITDA increased by $19 million or 0.7%, which reflects growth in wireline data service margins resulting from business acquisitions, expanded services and subscriber base growth and an increased EBITDA contribution from our organic TI business, and a decrease in a provision arising from business acquisition-related written put options within TI. Adjusted EBITDA growth was partly offset by the impacts of the COVID-19 pandemic as described above and from lower wireline legacy voice and legacy data services.
Financing costs
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Interest on long-term debt, excluding lease liabilities gross |
|
169 |
|
161 |
|
5.0 |
% |
339 |
|
311 |
|
9.0 |
% |
Interest on long-term debt interest, excluding lease liabilities capitalized |
|
(9 |
) |
(4 |
) |
125.0 |
% |
(17 |
) |
(4 |
) |
n/m |
|
Interest on lease liabilities |
|
17 |
|
16 |
|
6.3 |
% |
35 |
|
32 |
|
9.4 |
% |
Interest on short-term borrowings and other |
|
2 |
|
3 |
|
(33.3 |
)% |
4 |
|
8 |
|
(50.0 |
)% |
Interest accretion on provisions |
|
4 |
|
5 |
|
(20.0 |
)% |
9 |
|
11 |
|
(18.2 |
)% |
Long-term debt prepayment premium |
|
18 |
|
|
|
n/m |
|
18 |
|
|
|
n/m |
|
Interest expense |
|
201 |
|
181 |
|
11.0 |
% |
388 |
|
358 |
|
8.4 |
% |
Employee defined benefit plans net interest |
|
4 |
|
|
|
n/m |
|
8 |
|
|
|
n/m |
|
Foreign exchange (gains) losses |
|
(1 |
) |
11 |
|
n/m |
|
1 |
|
4 |
|
(75.0 |
)% |
Interest income |
|
(2 |
) |
(3 |
) |
(33.3 |
)% |
(3 |
) |
(5 |
) |
(40.0 |
)% |
Financing costs |
|
202 |
|
189 |
|
6.9 |
% |
394 |
|
357 |
|
10.4 |
% |
Financing costs increased by $13 million in the second quarter of 2020 and $37 million in the first six months of 2020, mainly due to the following factors:
· Interest expense increased by $20 million in the second quarter of 2020 and $30 million in the first six months of 2020. The increased interest expense largely resulted from:
· Gross interest on long-term debt, excluding lease liabilities, increased by $8 million in the second quarter of 2020 and $28 million in the first six months of 2020, driven by an increase in average long-term debt balances outstanding in part attributable to the acquisition of spectrum licences and business acquisitions (including ADT Canada and CCC), partially offset by a decrease in the effective interest rate. Our weighted average interest rate on long-term debt (excluding commercial paper, the revolving component of the TI credit facility, lease liabilities and other long-term debt) was 3.86% at June 30, 2020, as compared to 4.12% one year earlier. (See Long-term debt issues and repayments in Section 7.4.)
· Capitalized long-term debt interest is in respect of debt incurred for the purchase of spectrum licences during the 600 MHz wireless spectrum auction held in April 2019 by Innovation, Science and Economic Development Canada (ISED), which we expect to deploy in our existing network in future periods. Capitalization of long-term debt interest will continue until substantially all of the activities necessary to prepare the spectrum for its intended use are complete.
· We recorded a long-term debt prepayment premium of $18 million before income taxes related to the early redemption of all of our $400 million Series CM Notes and all of our $500 million Series CO Notes as described in Section 1.3.
· Employee defined benefit plans net interest increased by $4 million in the second quarter of 2020 and $8 million in the first six months of 2020, primarily due to the change in the defined benefit plan deficit as at December 31, 2019 to $425 million (net of the plan asset ceiling limit of $121 million), compared to a defined benefit plan surplus of $57 million (net of the plan asset ceiling limit of $263 million) one year earlier, partly offset by a decrease in the discount rate.
· Foreign exchange (gains) losses have fluctuated, primarily reflecting changes in the value of the Canadian dollar relative to the U.S. dollar.
Income taxes
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions, except tax rates) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Income taxes computed at applicable statutory rates (%) |
|
26.2 |
|
26.7 |
|
(0.5 |
)pts. |
26.3 |
|
26.9 |
|
(0.6 |
)pts. |
Revaluation of deferred income tax liability to reflect future income tax rates (%) |
|
(0.5 |
) |
(22.0 |
) |
21.5 |
pts. |
(0.5 |
) |
(10.6 |
) |
10.1 |
pts. |
Adjustments recognized in the current period for income taxes of prior periods (%) |
|
0.9 |
|
(0.3 |
) |
1.2 |
pts. |
0.4 |
|
(0.2 |
) |
0.6 |
pts. |
Other (%) |
|
0.5 |
|
1.2 |
|
(0.7 |
)pts. |
1.5 |
|
0.3 |
|
1.2 |
pts. |
Effective tax rate (%) |
|
27.1 |
|
5.6 |
|
21.5 |
pts. |
27.7 |
|
16.4 |
|
11.3 |
pts. |
Income tax computed at applicable statutory rates |
|
113 |
|
147 |
|
(23.1 |
)% |
243 |
|
308 |
|
(21.1 |
)% |
Revaluation of deferred income tax liability to reflect future income tax rates |
|
(2 |
) |
(121 |
) |
(98.3 |
)% |
(5 |
) |
(121 |
) |
(95.9 |
)% |
Adjustments recognized in the current period for income taxes of prior periods |
|
4 |
|
(2 |
) |
n/m |
|
4 |
|
(2 |
) |
n/m |
|
Other |
|
2 |
|
7 |
|
(71.4 |
)% |
14 |
|
3 |
|
n/m |
|
Income taxes |
|
117 |
|
31 |
|
n/m |
|
256 |
|
188 |
|
36.2 |
% |
Total income tax expense increased by $86 million in the second quarter of 2020 and $68 million in the first six months of 2020, while income taxes paid in respect of comprehensive income per the condensed interim consolidated statement of cash flows decreased by $111 million in the second quarter of 2020 and $354 million in the first six months of 2020. The effective tax rate increased from 5.6% to 27.1% in the second quarter of 2020 and from 16.4% to 27.7% in the first six months of 2020, predominantly attributed to the prior year revaluation of the deferred income tax liability for the multi-year reduction in the Alberta provincial corporate tax rate that was substantively enacted in the second quarter of 2019.
Comprehensive income
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Net income |
|
315 |
|
520 |
|
(39.4 |
)% |
668 |
|
957 |
|
(30.2 |
)% |
Other comprehensive income (net of income taxes): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be subsequently reclassified to income |
|
(107 |
) |
21 |
|
n/m |
|
167 |
|
(22 |
) |
n/m |
|
Items never subsequently reclassified to income |
|
(669 |
) |
8 |
|
n/m |
|
(353 |
) |
32 |
|
n/m |
|
Comprehensive income |
|
(461 |
) |
549 |
|
n/m |
|
482 |
|
967 |
|
(50.2 |
)% |
Comprehensive income decreased by over $1.0 billion in the second quarter of 2020 and $485 million in the first six months of 2020, primarily as a result of changes in employee defined benefit plan re-measurement amounts arising from the effect of a decrease in the discount rate being applied to our accrued projected defined benefit obligation in addition to lower Net income. Items that may subsequently be reclassified to income are composed of changes in the unrealized fair value of derivatives designated as cash flow hedges and foreign currency translation adjustments arising from translating financial statements of foreign operations. Items never subsequently reclassified to income are composed of employee defined benefit plans re-measurement amounts.
5.4 Wireless segment
Wireless trends and seasonality
COVID-19 was characterized as a pandemic in March 2020. The nature of the pandemic and the uncertainty of its magnitude, length and the time to recovery are not currently able to be estimated. Therefore, trends identified prior to the first quarter of 2020 and described below may not be indicative of trends effective from the first quarter of 2020 onwards, as the COVID-19 pandemic prevents us and our customers from operating in the normal course of business in certain areas. For example, with government and border restrictions, consumer and business travel levels are uncertain. As well, our business customers who use our wireless services are faced with reduced and/or closed operations. Refer to Section 1.2 for further discussion of the COVID-19 pandemic and its impacts on our wireless operations.
The historical trend over the last eight quarters in wireless network revenue reflects growth in our subscriber base, as well as higher-value smartphones in the sales mix of gross additions and retention units. Equipment revenue growth has been moderating as an increase of higher-value smartphones in the sales mix have been offset by a lower volume of new contracts due to: (i) heightened market aggression; (ii) the improving quality and increasing cost of popular devices that result in customers deferring upgrades; (iii) the industry introduction of device financing programs, which provide transparency of full device costs and result in customers deferring device upgrades; and (iv) most recently, the effects of the COVID-19 pandemic on customers, the industry, our supply chain and methods of distribution, and the Canadian
economy. The general trend of year-over-year increases in mobile phone subscriber net additions resulted from: (i) the success of our promotions and the leveraging of our digital sales channels; (ii) the effects of market growth arising from a growing population, changing population demographics and an increasing number of customers with multiple devices; (iii) continuous improvements in the speed and quality of our network, combined with our low churn rate, which reflect our focus on customers first initiatives; and (iv) customer behaviour using additional devices while traveling; however, this trend has been altered by the pandemic. Our capital expenditures on network improvements increase capacity and coverage, allowing us to grow revenue through net additions of wireless subscribers.
Mobile phone ABPU growth has been moderating, primarily due to: (i) carriers offering larger allotments of data, as well as rate plans that include plans with bonus data and unlimited data plans, data sharing and, prior to the COVID-19 pandemic and the significant impact to travel, international roaming features; and (ii) consumer behavioural response to more frequent customer data usage notifications and offloading of data traffic to increasingly available Wi-Fi hotspots; partly offset by (iii) an increased mix of higher-value rate plans, in addition to an increase in higher-value smartphones in the sales mix, including the effects of customers financing more of the cost of these devices through our TELUS Easy Payment program, which we launched in the third quarter of 2019, and an increased proportion of higher-value customers in the subscriber mix. As a result of changing industry dynamics, customers have been able to gain access to higher network speeds and larger allotments of data included for a given price point, further limiting mobile phone ABPU expansion, as customers are continuing to obtain lower cost per megabyte plans.
The trend of our comparatively low mobile phone blended churn rate reflects our customers first efforts, retention programs and focus on building, maintaining and enhancing our high-quality network and more recently, the impact from the COVID-19 pandemic and the resulting effect of less customers switching between carriers.
Our connected device subscriber base has been growing primarily through our expanded Internet of Things (IoT) offerings, partly offset by our strategic decision to reduce loading of low or negative-margin tablets.
Wireless operating indicators
As at June 30 |
|
|
|
|
|
|
|
2020 |
|
2019 |
|
Change |
|
Subscribers1 (000s): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile phones |
|
|
|
|
|
|
|
8,754 |
|
8,552 |
|
2.4 |
% |
Mobile connected devices |
|
|
|
|
|
|
|
1,621 |
|
1,338 |
|
21.2 |
% |
Total |
|
|
|
|
|
|
|
10,375 |
|
9,890 |
|
4.9 |
% |
HSPA+ population coverage2 (millions) |
|
|
|
|
|
|
|
37.0 |
|
37.0 |
|
|
% |
LTE population coverage2 (millions) |
|
|
|
|
|
|
|
37.0 |
|
36.9 |
|
0.3 |
% |
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
|
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Mobile phones gross additions (000s): |
|
268 |
|
336 |
|
(20.2 |
)% |
533 |
|
605 |
|
(11.9 |
)% |
Subscriber net additions (000s): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile phones |
|
61 |
|
82 |
|
(25.6 |
)% |
82 |
|
93 |
|
(11.8 |
)% |
Mobile connected devices |
|
33 |
|
72 |
|
(54.2 |
)% |
82 |
|
121 |
|
(32.2 |
)% |
Total |
|
94 |
|
154 |
|
(39.0 |
)% |
164 |
|
214 |
|
(23.4 |
)% |
Mobile phones ABPU, per month3 ($) |
|
69.65 |
|
73.43 |
|
(5.1 |
)% |
70.97 |
|
72.81 |
|
(2.5 |
)% |
Mobile phones ARPU, per month3 ($) |
|
56.82 |
|
60.30 |
|
(5.8 |
)% |
57.71 |
|
59.81 |
|
(3.5 |
)% |
Mobile phones churn, per month3 (%) |
|
0.80 |
|
1.01 |
|
(0.21 |
)pts. |
0.87 |
|
1.01 |
|
(0.14 |
)pts. |
(1) Effective January 1, 2020 on a prospective basis, as a result of subscribers substantially loaded prior to 2019 and were identified as having limited or no cellular voice capability through an in-depth review of our mobile phone subscriber base, we made an adjustment to transfer approximately 60,000 mobile phone subscribers to our mobile connected devices subscriber base.
(2) Including network access agreements with other Canadian carriers.
(3) See Section 11.2 Operating indicators. These are industry measures useful in assessing operating performance of a wireless company, but are not measures defined under IFRS-IASB.
Operating revenues Wireless segment
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Network revenue |
|
1,472 |
|
1,523 |
|
(3.3 |
)% |
2,983 |
|
3,015 |
|
(1.1 |
)% |
Equipment and other service revenues |
|
360 |
|
455 |
|
(20.9 |
)% |
734 |
|
882 |
|
(16.8 |
)% |
Revenues arising from contracts with customers |
|
1,832 |
|
1,978 |
|
(7.4 |
)% |
3,717 |
|
3,897 |
|
(4.6 |
)% |
Other operating income |
|
(1 |
) |
5 |
|
n/m |
|
(2 |
) |
10 |
|
n/m |
|
External operating revenues |
|
1,831 |
|
1,983 |
|
(7.7 |
)% |
3,715 |
|
3,907 |
|
(4.9 |
)% |
Intersegment revenues |
|
15 |
|
14 |
|
7.1 |
% |
29 |
|
27 |
|
7.4 |
% |
Wireless operating revenues |
|
1,846 |
|
1,997 |
|
(7.6 |
)% |
3,744 |
|
3,934 |
|
(4.8 |
)% |
Wireless operating revenues decreased by $151 million in the second quarter of 2020 and $190 million in the first six months of 2020.
Network revenue decreased by $51 million or 3.3% in the second quarter of 2020 and $32 million in the first six months of 2020 or 1.1%, due to declining mobile phone ARPU primarily from reduced roaming revenue, as discussed below, partly offset by growth of 4.9% in the subscriber base over the last 12 months.
Mobile phone ABPU was $69.65 in the second quarter of 2020 and $70.97 in the first six months of 2020, reflecting decreases of $3.78 or 5.1% for the quarter and $1.84 or 2.5% for the six-month period. These decreases reflect the impacts caused by the COVID-19 pandemic including: (i) significantly reduced roaming revenue from changing customer behaviour related to travel restrictions, as well as our decision to temporarily waive roaming charges for customers in response to the pandemic; (ii) the temporary closure of approximately 90% of our conventional retail stores beginning in March 2020 through a majority of the second quarter which hindered customer opportunities for device upgrades and the upgrade or selection of higher-tier plans; (iii) decreases in chargeable data usage as more people work from home and offload their mobile devices onto Wi-Fi networks; and (iv) our decision to temporarily waive late payment charges, partly offset by: (v) increased chargeable voice usage revenue primarily generated in the early stages of the pandemic prior to the easing of certain related restrictions. Mobile phone ABPU is also impacted by continued declines in chargeable data usage, and the impact of the competitive environment putting pressure on base rate plan prices in the current and prior periods. Mobile phone ABPU declination was partly offset by growth resulting from our combined TELUS Easy Payment device financing, Peace of Mind endless data plans and TELUS Family Discount offerings, which we introduced at the beginning of the third quarter of 2019, with customers selecting plans with endless data or larger data buckets and higher-value smartphones in the sales mix.
Mobile phone ARPU was $56.82 in the second quarter of 2020 and $57.71 in the first six months of 2020, reflecting decreases of $3.48 or 5.8% for the quarter and $2.10 or 3.5% for the six-month period. Mobile phone ARPU was impacted by the same items noted above in mobile phone ABPU, with the exception of: (i) our TELUS Easy Payment device financing program; (ii) prior to our TELUS Easy Payment device financing program, devices with subsidies; and (iii) contracted device upgrades.
· Mobile phone gross additions were 268,000 in the second quarter of 2020 and 533,000 for the first six months of 2020, reflecting decreases of 68,000 for the quarter and 72,000 for the six-month period, as reduced customer-switching activity between carriers and the temporary closure of certain conventional sales channels referenced above more than offset growth in the Canadian population, successful promotions and expanded channels. During the pandemic period, as we temporarily closed our conventional retail stores to ensure the safety of our customers and team members by not having them enter a physical premises, we successfully executed our customers first initiatives including the enhanced use of our digital footprint.
· Our mobile phone churn rate was 0.80% in the second quarter of 2020 and 0.87% in the first six months of 2020, compared to 1.01% in both the second quarter of 2019 and the first six months of 2019. The decrease in the mobile phone churn rate reflects the impacts of reduced switching activity between carriers due to the COVID-19 pandemic as customers reduced their general shopping habits. This was in addition to the utilization of our TELUS Easy Payment device financing program, Peace of Mind endless data plans, Bring-It-Back and TELUS Family Discount offerings, our focus on executing customers first initiatives and retention programs, and our leading network quality.
· Mobile phone net additions were 61,000 in the second quarter of 2020 and 82,000 in the first six months of 2020, reflecting decreases of 21,000 for the quarter and 11,000 for the six-month period, in part due to reduced gross additions resulting from the temporary closure of certain conventional sales channels previously referenced, in addition to fewer customer additions attributed to restricted travel, partly offset by lower mobile phone churn, as described above.
· Mobile connected device net additions were 33,000 in the second quarter of 2020 and 82,000 in the first six months of 2020, reflecting decreases of 39,000 for both the quarter and the six-month period, primarily due to lower IoT gross additions from a reduction in business customer activity as these customers delayed purchasing decisions during the pandemic, partly offset by growth in our consumer health personal emergency response system devices.
Subscriber loading results discussed above were impacted in the final weeks of March 2020 and throughout the second quarter of 2020 due to the COVID-19 pandemic and from the restrictions put in place to protect our customers and team members, including the closure of certain stores in shopping malls and other conventional retail outlets. Our digital sales channels are well-equipped to handle the additional traffic left unaddressed by physical sales.
Equipment and other service revenues decreased by $95 million in the second quarter of 2020 and $148 million in the first six months of 2020, reflecting lower contracted volumes, due to customers reducing their general shopping habits primarily attributed to the temporary closure of certain sales channels due to the COVID-19 pandemic discussed above. Device financing programs, which provide transparency of full device costs resulting in customers deferring device upgrade purchases, also contributed to the decrease.
Other operating income decreased by $6 million in the second quarter of 2020 and $12 million in the first six months of 2020, mainly due to lower net gains from the sale of certain assets and lease-up period and other equity losses related to real estate joint ventures.
Intersegment revenues represent network services that are eliminated upon consolidation, along with the associated wireline expenses.
Operating expenses Wireless segment
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Goods and services purchased: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales expenses |
|
340 |
|
443 |
|
(23.3 |
)% |
696 |
|
865 |
|
(19.5 |
)% |
Network operating expenses |
|
191 |
|
198 |
|
(3.5 |
)% |
377 |
|
382 |
|
(1.3 |
)% |
Marketing expenses |
|
76 |
|
101 |
|
(24.8 |
)% |
162 |
|
190 |
|
(14.7 |
)% |
Other1 |
|
202 |
|
165 |
|
22.4 |
% |
379 |
|
346 |
|
9.5 |
% |
Employee benefits expense1 |
|
167 |
|
171 |
|
(2.3 |
)% |
326 |
|
324 |
|
0.6 |
% |
Wireless operating expenses |
|
976 |
|
1,078 |
|
(9.5 |
)% |
1,940 |
|
2,107 |
|
(7.9 |
)% |
(1) Includes restructuring and other costs. See Section 11.1 Non-GAAP and other financial measures.
Wireless operating expenses decreased by $102 million in the second quarter of 2020 and $167 million in the first six months of 2020.
Equipment sales expenses decreased by $103 million in the second quarter of 2020 and $169 million in the first six months of 2020, largely due to lower contracted volumes, as discussed above.
Network operating expenses decreased by $7 million in the second quarter of 2020 and $5 million in the first six months of 2020, mainly due to network site utilities savings and lower roaming expense resulting from decreased travel, partly offset by increased expenses related to the Canadian Radio-television and Telecommunications Commission (CRTC) Broadband Fund.
Marketing expenses decreased by $25 million in the second quarter of 2020 and $28 million in the first six months of 2020, driven by a reduction in advertising and promotional activities in response to the COVID-19 pandemic, as well as lower commissions expense partly due to an increased mix of digital sales, as our digital sales channels were well-equipped to handle the additional traffic left unaddressed by physical sales.
Other goods and services purchased increased by $37 million in the second quarter of 2020 and $33 million in the first six months of 2020, mostly resulting from the economic impacts and response to the COVID-19 pandemic, including an increase in our bad debt expense and higher non-labour-related restructuring and other costs, partly offset by enhanced cost efficiency programs.
Employee benefits expense decreased by $4 million in the second quarter of 2020 and increased by $2 million in the first six months of 2020, as the temporary closure of approximately 90% of our conventional retail stores in response to the COVID-19 pandemic caused a significant reduction in front-line labour hours, however, we took proactive efforts to redeploy substantially all team members to other areas of the business requiring support.
EBITDA Wireless segment
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions, except margins) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
EBITDA |
|
870 |
|
919 |
|
(5.3 |
)% |
1,804 |
|
1,827 |
|
(1.2 |
)% |
Add restructuring and other costs included in EBITDA |
|
19 |
|
5 |
|
n/m |
|
22 |
|
14 |
|
n/m |
|
Add lease-up period and other equity losses related to real estate joint ventures |
|
1 |
|
|
|
n/m |
|
4 |
|
|
|
n/m |
|
Adjusted EBITDA1 |
|
890 |
|
924 |
|
(3.7 |
)% |
1,830 |
|
1,841 |
|
(0.6 |
)% |
EBITDA margin (%) |
|
47.1 |
|
46.0 |
|
1.1 |
pts. |
48.2 |
|
46.4 |
|
1.8 |
pts. |
Adjusted EBITDA margin2 (%) |
|
48.2 |
|
46.3 |
|
1.9 |
pts. |
48.8 |
|
46.8 |
|
2.0 |
pts. |
(1) See description under EBITDA in Section 11.1 Non-GAAP and other financial measures.
(2) Adjusted EBITDA margin is Adjusted EBITDA divided by Operating revenues, where the calculation of Operating revenues excludes lease-up period and other equity losses related to real estate joint ventures.
Wireless EBITDA decreased by $49 million or 5.3% in the second quarter of 2020 and $23 million or 1.2% in the first six months of 2020. Wireless Adjusted EBITDA decreased by $34 million or 3.7% in the second quarter of 2020 and $11 million or 0.6% in the first six months of 2020, reflecting the impacts of the COVID-19 pandemic, including lower roaming revenue resulting from restricted travel, the temporary closure of approximately 90% of our conventional retail stores, decreases in chargeable data usage as more people work from home and offload their mobile devices onto Wi-Fi networks, our increased bad debt expense and temporary waives of late payment charges. This was partially offset by higher equipment margins, incremental voice usage and enhanced cost efficiency programs in response to the pandemic.
5.5 Wireline segment
Wireline trends
COVID-19 was characterized as a pandemic in March 2020. The nature of the pandemic and the uncertainty of its magnitude, length and the time to recovery are not currently able to be estimated. Therefore, trends identified prior to the first quarter of 2020 and described below may not be indicative of trends effective from the first quarter of 2020 onwards, as the COVID-19 pandemic prevents us and our customers from operating in the normal course of business in certain areas. For example, the COVID-19 pandemic has constrained our ability to complete installations in the traditional manner. As well, our business customers are faced with reduced and/or closed operations. Refer to Section 1.2 for further discussion of the COVID-19 pandemic and its impacts on our wireline operations.
The trend over the last eight quarters of increases in wireline service revenue reflects growth in internet and third wave data services, TI revenues, TV revenues, health revenues, and home and business smart technology (including security) revenues, and is partly offset by declining wireline legacy voice and legacy data revenues. As well, increased wireline data services revenues include revenues from business acquisitions, including our acquisitions of ADT Canada on November 5, 2019 (where there was significant integration and customer retention costs in 2019 and will continue to be throughout 2020 and early 2021, the full expected operations rate is expected after that time), and CCC acquired on January 31, 2020. The increases in year-over-year internet and TV service revenues are being generated by subscriber growth and higher internet revenue per customer resulting from upgrades to faster speeds, larger data usage rate plans, diverse bundled product offerings, and the expansion of our fibre footprint. We expect continued internet subscriber base growth as we continue our investments in expanding our fibre-optic infrastructure. The total number of TV subscribers has increased as a result of higher net additions in response to diverse product offerings, fibre expansion and bundled product offerings, combined with our low customer churn rate. Security subscriber base growth is increasing as a result of business acquisitions and organic growth. Wireline growth has also been attributed to the adoption of the TELUS Whole Home bundle to meet the demand of multiple services per home. The COVID-19 pandemic and physical distancing requirements impacted security installations as access to homes and businesses were restricted, however, this was partly mitigated as we kept our customers connected and protected through offering a range of installation options, including virtually. Residential voice subscriber losses continue to reflect the ongoing trend of substitution by wireless and internet-based services, but have been partly mitigated by the success of our bundled service offerings and lower-priced offerings. The trend of declining legacy wireline voice revenues is due to technological substitution, greater use of inclusive long distance coupled with lower long distance minutes used, and intensification of competition in the small and medium-sized business market, however, our rate of decline has been moderating with our utilization of bundled product offerings and successful retention efforts. The migration of business product and service offerings to IP services and the introduction of new competitors have yielded inherently lower margins compared to some legacy business product and service offerings.
Wireline operating indicators
At June 30 (000s) |
|
|
|
|
|
|
|
2020 |
|
2019 |
|
Change |
|
Subscriber connections: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet |
|
|
|
|
|
|
|
2,044 |
|
1,921 |
|
6.4 |
% |
TV |
|
|
|
|
|
|
|
1,176 |
|
1,126 |
|
4.4 |
% |
Residential voice |
|
|
|
|
|
|
|
1,181 |
|
1,228 |
|
(3.8 |
)% |
Security1,2 |
|
|
|
|
|
|
|
635 |
|
89 |
|
n/m |
|
Total wireline subscriber connections1,2 |
|
|
|
|
|
|
|
5,036 |
|
4,364 |
|
15.4 |
% |
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
(000s) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Subscriber connection net additions (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet |
|
37 |
|
25 |
|
48.0 |
% |
63 |
|
47 |
|
34.0 |
% |
TV |
|
8 |
|
16 |
|
(50.0 |
)% |
16 |
|
33 |
|
(51.5 |
)% |
Residential voice |
|
(10 |
) |
(9 |
) |
(11.1 |
)% |
(23 |
) |
(20 |
) |
(15.0 |
)% |
Security1 |
|
12 |
|
11 |
|
9.1 |
% |
27 |
|
17 |
|
58.8 |
% |
Total wireline subscriber connection net additions |
|
47 |
|
43 |
|
9.3 |
% |
83 |
|
77 |
|
7.8 |
% |
(1) Effective for the third quarter of 2019, with retrospective application to the launch of TELUS-branded security services at the beginning of the third quarter of 2018, we have added security subscriber connections to our total wireline subscriber connections.
(2) December 31, 2019 security subscriber connections have been increased to include approximately 490,000 subscribers related to our acquisition of ADT Canada (acquired on November 5, 2019).
Operating revenues Wireline segment
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Data services |
|
1,493 |
|
1,265 |
|
18.0 |
% |
2,937 |
|
2,484 |
|
18.2 |
% |
Voice services |
|
236 |
|
249 |
|
(5.2 |
)% |
472 |
|
502 |
|
(6.0 |
)% |
Other services and equipment |
|
95 |
|
95 |
|
|
% |
193 |
|
193 |
|
|
% |
Revenues arising from contracts with customers |
|
1,824 |
|
1,609 |
|
13.4 |
% |
3,602 |
|
3,179 |
|
13.3 |
% |
Other operating income |
|
73 |
|
5 |
|
n/m |
|
105 |
|
17 |
|
n/m |
|
External operating revenues |
|
1,897 |
|
1,614 |
|
17.5 |
% |
3,707 |
|
3,196 |
|
16.0 |
% |
Intersegment revenues |
|
64 |
|
60 |
|
6.7 |
% |
127 |
|
116 |
|
9.5 |
% |
Wireline operating revenues |
|
1,961 |
|
1,674 |
|
17.1 |
% |
3,834 |
|
3,312 |
|
15.8 |
% |
Wireline operating revenues increased by $287 million in the second quarter of 2020 and $522 million in the first six months of 2020.
· Data services revenues increased by $228 million in the second quarter of 2020 and $453 million in the first six months of 2020. The increases were driven by: (i) growth in TI revenues primarily driven by the acquisition of CCC, growth in business volumes resulting from expanded services for existing customers and customer growth, partly offset by temporary disruptions due to government-mandated site closures in response to the COVID-19 pandemic; (ii) increased revenues from home and business smart technology (including security), driven by business acquisitions, including ADT Canada, and expanded services; (iii) increased internet and third wave data service revenues, reflecting a 6.4% increase in our internet subscribers over the last 12 months and higher revenue per customer from faster internet speed upgrades, larger data usage internet rate plans, and rate changes, partly offset by initiatives to assist customers during the pandemic, including temporarily waiving overage charges; (iv) increased TV revenues, reflecting subscriber growth of 4.4% over the last 12 months; and (v) increased revenues from our virtual care solutions. This growth was partly offset by other impacts caused by the pandemic, including a decline in health revenue mainly from the temporary closures of our conventional Medisys and Copeman clinics for all non-essential services and reduced health benefit claims, in addition to lower revenue from our business customers as they redeploy their resources. Additionally, data services revenues were partially offset by the ongoing decline in legacy data service revenues.
· Voice services revenues decreased by $13 million in the second quarter of 2020 and $30 million in the first six months of 2020, reflecting the ongoing decline in legacy voice revenues resulting from technological substitution, greater use of inclusive long distance plans and price plan changes. Declines were moderated with our utilization of bundled product offerings and successful retention efforts, as well as a temporary increase in long distance usage as customers remained connected during the COVID-19 pandemic.
· Wireline subscriber connection net additions were 47,000 in the second quarter of 2020 and 83,000 in the first six months of 2020, reflecting increases of 4,000 for the quarter and 6,000 for the six-month period.
· Internet net additions were 37,000 in the second quarter of 2020 and 63,000 in the first six months of 2020, reflecting increases of 12,000 for the quarter and 16,000 for the six-month period, due to continued net new demand from consumers and businesses as we continued to keep our customers connected through offering a range of installation options, as well as lower customer churn resulting from our customers first initiatives and retention programs and reduced switching activity between providers due to the COVID-19 pandemic. Our continued focus on connecting more homes and businesses directly to fibre (with TELUS PureFibre available to approximately 73% of our broadband footprint at the end of the second quarter of 2020), expanding and enhancing our addressable high-speed internet and Optik TV footprint, and bundling these services together, contributed to combined internet and TV subscriber growth of 173,000 over the last 12 months.
· TV net additions were 8,000 in the second quarter of 2020 and 16,000 in the first six months of 2020, reflecting decreases of 8,000 for the quarter and 17,000 for the six-month period, mainly due to lower gross additions as a result of the impact of the COVID-19 pandemic and the changing landscape of increased streaming services, partly offset by a lower customer churn rate from strong retention efforts and reduced switching activity due to the pandemic.
· Residential voice net losses were 10,000 in the second quarter of 2020 and 23,000 in the first six months of 2020, as compared to residential voice net losses of 9,000 and 20,000, respectively, in the same periods in 2019. The residential voice subscriber losses continue to reflect the trend of substitution by wireless and internet-based services, partially mitigated by our expanding fibre footprint and bundled product offerings and our strong retention efforts, including lower-priced offerings.
· Security net additions were 12,000 in the second quarter of 2020 and 27,000 in the first six months of 2020, reflecting increases of 1,000 for the quarter and 10,000 for the six-month period, driven from strong organic growth as we continued to keep our customers connected and protected through offering a range of installation options and demand from our bundled product offerings.
Subscriber loading results discussed above were impacted in the final weeks of March 2020 and throughout the second quarter of 2020 due to the COVID-19 pandemic and from the restrictions put in place to protect our customers and our team members, including physical distancing, which has impacted our ability to enter homes and businesses to complete installations. Where possible, we have successfully evolved our processes to permit customers to install their own equipment with the support of our technicians via a smartphone.
Other operating income increased by $68 million in the second quarter of 2020 and $88 million in the first six months of 2020, primarily due to a gain on a retirement of a provision arising from business acquisition-related written put options within TI. The first six months of 2020 were also impacted by a decrease in a provision arising from business acquisition-related written put options within TI.
Intersegment revenues represent services provided to the wireless segment, including those from TI. Such revenue is eliminated upon consolidation, together with the associated expenses in wireless.
Operating expenses Wireline segment
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Goods and services purchased1 |
|
728 |
|
633 |
|
15.0 |
% |
1,412 |
|
1,247 |
|
13.2 |
% |
Employee benefits expense1 |
|
744 |
|
587 |
|
26.7 |
% |
1,458 |
|
1,140 |
|
27.9 |
% |
Wireline operating expenses |
|
1,472 |
|
1,220 |
|
20.7 |
% |
2,870 |
|
2,387 |
|
20.2 |
% |
(1) Includes restructuring and other costs. See Section 11.1 Non-GAAP and other financial measures.
Wireline operating expenses increased by $252 million in the second quarter of 2020 and $483 million in the first six months of 2020.
Goods and services purchased increased by $95 million in the second quarter of 2020 and $165 million in the first six months of 2020, due to higher operating and administrative costs associated with business acquisitions and TI revenue growth, increases in non-labour-related restructuring and other costs related to efficiency initiatives and the COVID-19 pandemic, and higher bad debt expense resulting from the pandemic. The increase in Goods and services purchased was partly offset by savings achieved from the enhanced cost-saving initiatives in response to the economic impacts of the pandemic.
Employee benefits expense increased by $157 million in the second quarter of 2020 and $318 million in the first six months of 2020, primarily due to increases in compensation and benefits costs, including pension expense resulting from an increase in the number of employees from business acquisitions, as well as supporting organic TI revenue growth. Higher internal labour costs resulting from April 2019 compensation increases contributed to the increase in the first six months of 2020. These factors were partly offset by lower labour-related restructuring and other costs and a decrease in the number of domestic FTEs.
EBITDA Wireline segment
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ in millions, except margins) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
EBITDA1 |
|
489 |
|
454 |
|
7.7 |
% |
964 |
|
925 |
|
4.2 |
% |
Add restructuring and other costs included in EBITDA |
|
51 |
|
24 |
|
n/m |
|
108 |
|
51 |
|
n/m |
|
Add lease-up period and other equity losses related to real estate joint ventures |
|
2 |
|
|
|
n/m |
|
5 |
|
|
|
n/m |
|
Deduct retirement of a provision arising from business acquisition-related written put options within TI |
|
(71 |
) |
|
|
n/m |
|
(71 |
) |
|
|
n/m |
|
Adjusted EBITDA1 |
|
471 |
|
478 |
|
(1.2 |
)% |
1,006 |
|
976 |
|
3.1 |
% |
EBITDA margin (%) |
|
25.0 |
|
27.1 |
|
(2.1 |
)pts. |
25.1 |
|
27.9 |
|
(2.8 |
)pts. |
Adjusted EBITDA margin1,2 (%) |
|
24.9 |
|
28.5 |
|
(3.6 |
)pts. |
26.7 |
|
29.5 |
|
(2.8 |
)pts. |
(1) See description under EBITDA in Section 11.1 Non-GAAP and other financial measures.
(2) Adjusted EBITDA margin is Adjusted EBITDA divided by Operating revenues, where the calculation of Operating revenues excludes lease-up period and other equity losses related to real estate joint ventures and a retirement of a provision arising from business acquisition-related written put options within TI.
Wireline EBITDA increased by $35 million or 7.7% in the second quarter of 2020 and $39 million or 4.2% in the first six months of 2020. Excluding the effects of a gain on a retirement of a provision arising from business acquisition-related written put options within TI of $71 million, wireline EBITDA decreased by $36 million or 7.9% in the second quarter of 2020 and $32 million or 3.5% in the first six months of 2020.
Wireline Adjusted EBITDA decreased by $7 million or 1.2% in the second quarter of 2020. The decline is reflective of the COVID-19 pandemic impacts, including the temporary capacity disruptions in our TI business due to government-mandated site closures, the impacts to our health business from the temporary closures of Medisys and Copeman clinics and reduced health benefit claims, customers first initiatives including temporarily waiving overage charges, and increased bad debt expense. As well, lower Adjusted EBITDA in the second quarter of 2020 was impacted by continued declines in legacy voice and legacy data services, higher employee benefits expense, and a decline in the EBITDA contribution from our legacy business services. These factors were partly offset by an increased contribution from the TI acquisition of CCC, expanded services for existing customers and customer growth; growth from our home and business smart technology (including security), driven by business acquisitions and expanded services; and higher internet margins.
Wireline Adjusted EBITDA increased by $30 million or 3.1% in the first six months of 2020. The increase is reflective of the aforementioned contribution from TI, home and business smart technology (including security) and internet margins, as well as a decrease in a provision arising from business acquisition-related written put options within TI. These factors were partly offset by COVID-19 pandemic impacts as described above, the continued decline of legacy voice, legacy data, and legacy business services, as well as higher employee benefits expense and other costs related to business acquisitions.
6. Changes in financial position
Financial position at: |
|
June 30 |
|
Dec. 31 |
|
|
|
|
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
Change includes: |
Current assets |
|
|
|
|
|
|
|
|
Cash and temporary investments, net |
|
971 |
|
535 |
|
436 |
|
See Section 7 Liquidity and capital resources |
Accounts receivable |
|
2,004 |
|
1,962 |
|
42 |
|
Increased primarily due to the acquisition of Competence Call Center, as well as an increase in unbilled customer finance receivables from our Bring-It-Back program and the TELUS Easy Payment device financing program, partly offset by timing of wireless wholesale customer receipts and decreases in dealer and retailer receivables corresponding with the temporary closure of approximately 90% of our conventional retail locations |
Income and other taxes receivable |
|
18 |
|
127 |
|
(109 |
) |
Instalments to date are less than the expense |
Inventories |
|
335 |
|
437 |
|
(102 |
) |
A decrease in the volume of handsets |
Contract assets |
|
538 |
|
737 |
|
(199 |
) |
Refer to description in non-current contract assets. |
Prepaid expenses |
|
544 |
|
547 |
|
(3 |
) |
|
Current derivative assets |
|
10 |
|
8 |
|
2 |
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Short-term borrowings |
|
100 |
|
100 |
|
|
|
See Section 7.7 Sale of trade receivables |
Accounts payable and accrued liabilities |
|
2,873 |
|
2,749 |
|
124 |
|
Increases in commodity taxes, payroll and other employee-related liabilities, partly offset by the timing of accounts payable |
Income and other taxes payable |
|
155 |
|
55 |
|
100 |
|
Increase mainly due to the deferral of income tax instalments related to the COVID-19 pandemic as well as acquisition activity in the period |
Dividends payable |
|
372 |
|
352 |
|
20 |
|
Effects of increases in the number of shares outstanding |
Advance billings and customer deposits |
|
696 |
|
675 |
|
21 |
|
An increase in advance billings reflecting increased wireless subscriber growth during the period. See Note 24 of the interim consolidated financial statements |
Provisions |
|
83 |
|
288 |
|
(205 |
) |
A retirement of a written put provision and disbursements exceeding new provisions |
Current maturities of long-term debt |
|
562 |
|
1,332 |
|
(770 |
) |
A decrease in outstanding commercial paper, partly offset by an increase from reclassification from long-term debt relating to the upcoming 2021 maturity of $175 million of our 10.65% debentures, Series 3, in June 2021 |
Current derivative liabilities |
|
9 |
|
23 |
|
(14 |
) |
A decrease in the notional amount of U.S. currency hedging items. |
Working capital (Current assets subtracting Current liabilities) |
|
(430 |
) |
(1,221 |
) |
791 |
|
TELUS normally has a negative working capital position. See Financing and capital structure management plans in Section 4.3 and the Liquidity risk discussion in Section 7.9. |
Financial position at: |
|
June 30 |
|
Dec. 31 |
|
|
|
|
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
Change includes: |
Non-current assets |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
14,559 |
|
14,232 |
|
327 |
|
See Capital expenditures in Section 7.3 Cash used by investing activities and Depreciation in Section 5.3 Consolidated operations |
Intangible assets, net |
|
13,630 |
|
12,844 |
|
786 |
|
See Capital expenditures in Section 7.3 Cash used by investing activities and Amortization of intangible assets in Section 5.3 Consolidated operations |
Goodwill, net |
|
6,132 |
|
5,309 |
|
823 |
|
An increase primarily driven by the acquisition of Competence Call Center. See Note 18 of the interim consolidated financial statements |
Contract assets |
|
212 |
|
328 |
|
(116 |
) |
A decrease primarily driven by the introduction of our TELUS Easy Payment device financing program. Additionally, there were fewer subsidized devices and we experienced a higher proportion of customers who brought their own device |
Other long-term assets |
|
1,355 |
|
919 |
|
436 |
|
An increase in derivative assets due to the combined effect of the movement of foreign exchange rates relative to hedged rates with the relative movement between U.S. and Canadian interest rates partly offset by a decrease in pension assets resulting from financial assumption re-measurements exceeding the effects of pension plan returns greater than the discount rate. |
Non-current liabilities |
|
|
|
|
|
|
|
|
Provisions |
|
613 |
|
590 |
|
23 |
|
An increase in non-current restructuring provisions, net of amounts reclassified to current |
Long-term debt |
|
17,956 |
|
17,142 |
|
814 |
|
See Section 7.4 Cash provided (used) by financing activities |
Other long-term liabilities |
|
1,157 |
|
806 |
|
351 |
|
An increase in pension liabilities resulting from losses arising from financial assumption re-measurements exceeding the effects of pension plan returns greater than the discount rate |
Deferred income taxes |
|
3,352 |
|
3,214 |
|
138 |
|
An overall increase in temporary differences between the accounting and tax basis of assets and liabilities including those from acquisition activity. |
Owners equity |
|
|
|
|
|
|
|
|
Common equity |
|
12,046 |
|
10,548 |
|
1,498 |
|
See Consolidated statements of changes in owners equity in the interim consolidated financial statements |
Non-controlling interests |
|
334 |
|
111 |
|
223 |
|
See Consolidated statements of changes in owners equity in the interim consolidated financial statements. |
7. Liquidity and capital resources
This section contains forward-looking statements, including those with respect to our dividend payout ratio and net debt to EBITDA excluding restructuring and other costs ratio. See Caution regarding forward-looking statements at the beginning of this MD&A. Refer to Section 1.2 for further discussion on the COVID-19 pandemic and its impacts on our liquidity and capital resources.
7.1 Overview
Our capital structure financial policies and financing and capital structure management plans are described in Section 4.3.
Cash flows
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cash provided by operating activities |
|
1,462 |
|
1,160 |
|
302 |
|
2,639 |
|
1,950 |
|
689 |
|
Cash used by investing activities |
|
(823 |
) |
(1,600 |
) |
777 |
|
(2,782 |
) |
(2,562 |
) |
(220 |
) |
Cash provided (used) by financing activities |
|
(726 |
) |
69 |
|
(795 |
) |
579 |
|
415 |
|
164 |
|
Increase (decrease) in Cash and temporary investments, net |
|
(87 |
) |
(371 |
) |
284 |
|
436 |
|
(197 |
) |
633 |
|
Cash and temporary investments, net, beginning of period |
|
1,058 |
|
588 |
|
470 |
|
535 |
|
414 |
|
121 |
|
Cash and temporary investments, net, end of period |
|
971 |
|
217 |
|
754 |
|
971 |
|
217 |
|
754 |
|
7.2 Cash provided by operating activities
Analysis of changes in cash provided by operating activities
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
EBITDA1 (see Section 5.4 and Section 5.5) |
|
1,359 |
|
1,373 |
|
(14 |
) |
2,768 |
|
2,752 |
|
16 |
|
Restructuring and other costs, net of disbursements |
|
14 |
|
1 |
|
13 |
|
26 |
|
(32 |
) |
58 |
|
Employee defined benefit plans expense, net of employer contributions |
|
13 |
|
7 |
|
6 |
|
25 |
|
11 |
|
14 |
|
Share-based compensation expense, net of payments |
|
41 |
|
20 |
|
21 |
|
64 |
|
39 |
|
25 |
|
Interest paid, net of interest received |
|
(196 |
) |
(144 |
) |
(52 |
) |
(370 |
) |
(321 |
) |
(49 |
) |
Income taxes paid, net of recoveries received |
|
(13 |
) |
(122 |
) |
109 |
|
(137 |
) |
(473 |
) |
336 |
|
Other operating working capital changes |
|
244 |
|
25 |
|
219 |
|
263 |
|
(26 |
) |
289 |
|
Cash provided by operating activities |
|
1,462 |
|
1,160 |
|
302 |
|
2,639 |
|
1,950 |
|
689 |
|
(1) See description under EBITDA in Section 11.1 Non-GAAP and other financial measures.
Cash provided by operating activities increased by $302 million in the second quarter of 2020 and $689 million in the first six months of 2020.
· Restructuring and other costs, net of disbursements, represented a net change of $13 million in the second quarter of 2020 and $58 million in the first six months of 2020. We made lower restructuring and other costs disbursements net of expense, related to improving our overall cost structure and operational effectiveness. In the second quarter of 2020, we incurred restructuring and other costs related to the COVID-19 pandemic. Additionally, in the first six months of 2020, we incurred restructuring and other costs in connection with our acquisition of Competence Call Center (CCC).
· Interest paid, net of interest received, increased by $52 million in the second quarter of 2020 and $49 million in the first six months of 2020, largely due to the prepayment premium described in Section 5.3, in addition to an increase in the average long-term debt balance, which was partially offset by a lower weighted-average interest rate on long-term debt.
· Income taxes paid, net of recoveries received, decreased by $109 million in the second quarter of 2020 and $336 million in the first six months of 2020, primarily due to a final income tax payment of $270 million in the first quarter of 2019 for the 2018 income tax year, which did not recur to the same extent in the first six months of 2020. Additionally, as a result of the COVID-19 pandemic, various levels of government have allowed us to defer income tax instalment payments until the third quarter of 2020.
· For a discussion of Other operating working capital changes, see Section 6 Changes in financial position and Note 31(a) of the interim consolidated financial statements.
7.3 Cash used by investing activities
Analysis of changes in cash used by investing activities
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cash payments for capital assets, excluding spectrum licences |
|
(694 |
) |
(645 |
) |
(49 |
) |
(1,474 |
) |
(1,438 |
) |
(36 |
) |
Cash payments for spectrum licences |
|
|
|
(931 |
) |
931 |
|
|
|
(931 |
) |
931 |
|
Cash payments for acquisitions, net |
|
(107 |
) |
(26 |
) |
(81 |
) |
(1,211 |
) |
(188 |
) |
(1,023 |
) |
Advances to, and investment in, real estate joint ventures and associate, net of real estate joint venture receipts |
|
(7 |
) |
(8 |
) |
1 |
|
(85 |
) |
(15 |
) |
(70 |
) |
Other |
|
(15 |
) |
10 |
|
(25 |
) |
(12 |
) |
10 |
|
(22 |
) |
Cash used by investing activities |
|
(823 |
) |
(1,600 |
) |
777 |
|
(2,782 |
) |
(2,562 |
) |
(220 |
) |
Cash used by investing activities decreased by $777 million in the second quarter of 2020 and increased by $220 million in the first six months of 2020.
· The increase in Cash payments for capital assets, excluding spectrum licences for both the second quarter of 2020 and the first six months of 2020, was composed of:
· Higher capital expenditure payments with respect to payment timing differences, as the change in associated Accounts payable and accrued liabilities decreased by $63 million in the second quarter of 2020 and $31 million in the first six months of 2020.
· A decrease in capital expenditures of $14 million in the second quarter of 2020 and an increase in capital expenditures of $5 million in the first six months of 2020 (see the Capital expenditure measures table and discussion below).
· Cash payments for spectrum licences in the second quarter of 2019 and the first six months of 2019 relate to the 600 MHz spectrum auction.
· In the second quarter of 2020, we made cash payments for individually immaterial acquisitions complementary to our existing lines of business. In addition to the activity from the second quarter of 2020, in the first six months of 2020, we made cash payments for CCC and other individually immaterial acquisitions complementary to our existing lines of business. This is compared to business acquisition activity in the first six months of 2019 that included the acquisition of a telecommunications business and other individually immaterial acquisitions.
· Advances to, and investment in, real estate joint ventures and associate, net of real estate joint venture receipts decreased by $1 million in the second quarter of 2020 and increased by $70 million in the first six months of 2020 related to our acquisition of a 28% basic equity interest in Miovision Technologies Incorporated.
Capital expenditure measures
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ millions, except capital expenditure intensity) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Capital expenditures1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless segment |
|
234 |
|
223 |
|
4.9 |
% |
428 |
|
400 |
|
7.0 |
% |
Wireline segment |
|
522 |
|
547 |
|
(4.6 |
)% |
993 |
|
1,016 |
|
(2.3 |
)% |
Consolidated |
|
756 |
|
770 |
|
(1.8 |
)% |
1,421 |
|
1,416 |
|
0.4 |
% |
Wireless segment capital expenditure intensity (%) |
|
13 |
|
11 |
|
2 |
pts. |
11 |
|
10 |
|
1 |
pt. |
Wireline segment capital expenditure intensity (%) |
|
27 |
|
33 |
|
(6 |
)pts. |
26 |
|
31 |
|
(5 |
)pts. |
Consolidated capital expenditure intensity2 (%) |
|
20 |
|
21 |
|
(1 |
)pt. |
19 |
|
20 |
|
(1 |
)pt. |
(1) Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and therefore differ from Cash payments for capital assets, excluding spectrum licences, as reported in the condensed interim consolidated statements of cash flows. Refer to Note 31 of the interim consolidated financial statements for further information.
(2) See Section 11.1 Non-GAAP and other financial measures.
Consolidated capital expenditures decreased by $14 million in the second quarter of 2020 due to the timing of our fibre build activities and lower success-based capital congruent with the decline in gross loading activity during the pandemic, partially offset by increased investments in our 5G network. Consolidated capital expenditures increased by $5 million in the first six months of 2020 primarily due to increased investments in our 5G network, in addition to investments to increase system capacity and reliability during the pandemic. These increased investments were partially offset by the timing of our fibre build activities, and efficiencies in our 4G network spend. With our ongoing investments, we are advancing wireless speeds and coverage that enabled our 5G network launch, continuing to connect additional homes and businesses directly to our fibre-optic technology, and supporting systems reliability and operational efficiency and effectiveness efforts. These investments also support our internet, TV and security subscriber growth, address our customers demand for faster internet speeds, and extend the reach and functionality of our business and healthcare solutions. By June 30, 2020, we had made TELUS PureFibre available to approximately 73% of our broadband footprint.
7.4 Cash provided (used) by financing activities
Analysis of changes in cash provided (used) by financing activities
|
|
Second quarters ended June 30 |
|
Six-month periods ended June 30 |
| ||||||||
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Common Shares issued |
|
|
|
|
|
|
|
1,495 |
|
|
|
1,495 |
|
Dividends paid to holders of Common Shares |
|
(240 |
) |
(307 |
) |
67 |
|
(462 |
) |
(610 |
) |
148 |
|
Issue (repayment) of short-term borrowings, net |
|
|
|
(400 |
) |
400 |
|
|
|
|
|
|
|
Long-term debt (redemption and repayments, net of issuances) issued, net of redemptions and repayment |
|
(479 |
) |
805 |
|
(1,284 |
) |
(590 |
) |
1,054 |
|
(1,644 |
) |
Shares of subsidiary issued to non-controlling interests |
|
|
|
|
|
|
|
209 |
|
|
|
209 |
|
Other |
|
(7 |
) |
(29 |
) |
22 |
|
(73 |
) |
(29 |
) |
(44 |
) |
Cash provided (used) by financing activities |
|
(726 |
) |
69 |
|
(795 |
) |
579 |
|
415 |
|
164 |
|
Cash provided by financing activities decreased by $795 million in the second quarter of 2020 and increased by $164 million in the first six months of 2020.
Common Shares issued
Common Shares issued reflect 57,500,000 Common Shares issued in the first six months of 2020.
Dividends paid to holders of Common Shares
Our dividend reinvestment and share purchase (DRISP) plan trustee acquired shares from Treasury for the DRISP plan, rather than acquiring Common Shares in the stock market. Effective with the dividends paid on October 1, 2019, we offered Common Shares from Treasury at a discount of 2%. Cash payments for dividends decreased by $67 million in the second quarter of 2020 and $148 million in the first six months of 2020, which reflected the DRISP plan trustee acquiring an increased number of Common Shares from Treasury for the DRISP plan. This was partly offset by higher dividend rates under our dividend growth program (see Section 4.3) and an increase in the number of shares outstanding. During the second quarter of 2020, our DRISP plan trustee acquired Common Shares for $131 million.
In July 2020, we paid dividends of $232 million to the holders of Common Shares and the trustee acquired dividend reinvestment Common Shares from Treasury for $140 million, totalling $372 million.
Issue (repayment) of short-term borrowings, net
In the first six months of 2020, we drew-down and repaid $200 million advanced to us from an arms-length securitization trust. In the second quarter of 2019, we drew-down $400 million advanced to us from an arms-length securitization trust to finance working capital.
Long-term debt issues and repayments
In the second quarter of 2020, long-term debt redemptions and repayments, net of issues, were $479 million, a change of $1,284 million, compared to long-term debt issues, net of repayments, of $805 million in the second quarter of 2019, primarily composed of:
· A net decrease in commercial paper outstanding, including foreign exchange effects, of $459 million to a balance of $NIL (US$NIL) at June 30, 2020, from a balance of $459 million (US$323 million) at March 31, 2020. Our commercial paper program, when utilized, provides low-cost funds and is fully backstopped by the five-year committed credit facility (see Section 7.6 Credit facilities).
· A decrease in net draws on the TELUS International (Cda) Inc. credit facility, including foreign exchange effects, of $118 million. As at June 30, 2020, net draws due to a syndicate of financial institutions (excluding TELUS Corporation) were US$865 million, whereas as at March 31, 2020, net draws were US$913 million. The credit facility is non-recourse to TELUS Corporation. In connection with the acquisition of CCC during the three-month period ended March 31, 2020, as described in Note 18(b) of the interim consolidated financial statements, incremental amounts were drawn on the facility.
· The May 29, 2020 issues of $600 million of senior unsecured 2.35% Notes, Series CAC, due January 27, 2028, and $400 million through the re-opening of 3.95% Notes, Series CAB, due February 16, 2050. The net proceeds of this offering were used for the early full redemption of $400 million 3.60% Series CM notes due January 26, 2021 and the early full redemption of $500 million 3.20% Series CO notes due April 5, 2021 and for general corporate purposes. The long-term debt prepayment premium for the entire $400 million Series CM and $500 million Series CO notes redemptions recorded in the three-month period ended June 30, 2020 was $18 million before income taxes.
For the first six months of 2020, long-term debt redemptions and repayments, net of issues, were $590 million, resulting in a change of $1,644 million from the first six months of 2019. In addition to some activity from the second quarter of 2020, the change in balance for the first six months of 2020 was primarily composed of:
· A net decrease in commercial paper outstanding, including foreign exchange effects, of $1,015 million from a balance of $1,015 million (US$781 million) at December 31, 2019.
· An increase in net draws on the TELUS International (Cda) Inc. credit facility, including foreign exchange effects, of $736 million. As at December 31, 2019, net draws due to a syndicate of financial institutions (excluding TELUS Corporation) were US$336 million.
· In connection with our acquisition of CCC, we repaid acquired other long-term debt of $185 million.
The average term to maturity of our long-term debt (excluding commercial paper, the revolving component of the TELUS International (Cda) Inc. credit facility, lease liabilities and other long-term debt) was approximately 13.0 years as at June 30, 2020, increasing from approximately 12.8 years as at December 31, 2019, and from approximately 12.5 years as at June 30, 2019. Additionally, the weighted average cost of our long-term debt (excluding commercial paper, the revolving component of the TELUS International (Cda) Inc. credit facility, lease liabilities and other long-term debt) was 3.86% as at June 30, 2020, decreasing from 3.94% as at December 31, 2019 and from 4.12% as at June 30, 2019.
Shares of subsidiary issued to non-controlling interests
In the first six months of 2020, our TELUS International (Cda) Inc. subsidiary issued shares to non-controlling interests related to our acquisition of CCC.
Other
During the second quarter of 2020, we incurred certain debt issuance costs. In the first six months of 2020, in connection with our 57,500,000 Common Shares issued, we incurred certain equity issuance costs.
7.5 Liquidity and capital resource measures
Net debt was $17.7 billion at June 30, 2020, an increase of $1.1 billion compared to one year earlier, resulting mainly from the 2019 issuances of $800 million of Series CZ notes, $600 million of Series CAA notes and $400 million of Series CAB notes, as well as the issuances of $600 million of Series CAC notes and the re-opening of $400 million of Series CAB notes described in Section 7.4, and an increase in net draws due to a syndicate of financial institutions on the TELUS International (Cda) Inc. credit facility. These factors were partially offset by the 2019 early redemption of Series CH notes, as well as the early redemptions of Series CM notes and Series CO notes described in Section 7.4, a decrease in commercial paper outstanding and higher Cash and temporary investments.
Fixed-rate debt as a proportion of total indebtedness excludes lease liabilities and other long-term debt, and was 96% as at June 30, 2020, flat from one year earlier, mainly due to the 2019 issuances of Series CZ notes, Series CAA notes and Series CAB notes, as well as the issuances of Series CAC notes and the re-opening of Series CAB notes as described in Section 7.4, offset by the 2019 early redemption of Series CH notes, as well as the early redemptions of Series CM notes and Series CO notes. In addition, there was a decrease in commercial paper outstanding, which is classified as floating-rate debt in this calculation. These factors were offset by an increase in the amounts drawn on the TELUS International (Cda) Inc. credit facility due to a syndicate of financial institutions, which is non-recourse to TELUS Corporation.
Net debt to EBITDA excluding restructuring and other costs ratio was 3.06 times, as measured at June 30, 2020, up from 2.94 times one year earlier. Our long-term objective for this measure is within a range of 2.20 to 2.70 times, which we believe is consistent with maintaining investment grade credit ratings in the range of BBB+, or the equivalent, and providing reasonable access to capital. As at June 30, 2020, this ratio remains outside of the long-term objective range due to prior issuances of incremental debt, primarily due to the acquisition of spectrum licences and business acquisitions, partially offset by growth in EBITDA excluding restructuring and other costs. EBITDA growth was reduced by COVID-19 pandemic impacts. As at June 30, 2020, the acquisition of spectrum licences increased the ratio by approximately 0.21 and business acquisitions over the last 12 months increased the ratio by approximately 0.33. Our recent acquisitions of spectrum licences have more than doubled our national spectrum holdings and represent an investment to extend our network capacity to support continuing data consumption growth, as well as growth in our wireless subscriber base. Given the cash demands of the 2019 and upcoming spectrum auctions and the inability to quantify impacts of the COVID-19 pandemic, the assessment of the guideline and return to the objective range remains to be determined; however, it is our intent to return to a ratio below 2.70 times in the medium term (following upcoming spectrum auctions), consistent with our long-term strategy. While this ratio exceeds our long-term objective range, we are well in compliance with the leverage ratio covenant in our credit facilities, which states that we may not permit our leverage ratio to exceed 4.25 to 1.00 at June 30, 2020 (see Section 7.6 Credit facilities).
Liquidity and capital resource measures
|
|
|
|
|
|
|
|
As at, or 12-month periods ended, June 30 |
|
2020 |
|
2019 |
|
Change |
|
Components of debt and coverage ratios1 ($ millions) |
|
|
|
|
|
|
|
Net debt |
|
17,664 |
|
16,602 |
|
1,062 |
|
EBITDA excluding restructuring and other costs |
|
5,769 |
|
5,649 |
|
120 |
|
Net interest cost |
|
797 |
|
706 |
|
91 |
|
Debt ratios |
|
|
|
|
|
|
|
Fixed-rate debt as a proportion of total indebtedness (excluding lease liabilities and other long-term debt) (%) |
|
96 |
|
96 |
|
|
pts. |
Average term to maturity of long-term debt (excluding commercial paper, the revolving component of the TELUS International (Cda) Inc. credit facility, lease liabilities and other long-term debt) (years) |
|
13.0 |
|
12.5 |
|
0.5 |
|
Weighted average interest rate on long-term debt (excluding commercial paper, the revolving component of the TELUS International (Cda) Inc. credit facility, lease liabilities and other long-term debt) (%) |
|
3.86 |
|
4.12 |
|
(0.26 |
)pts. |
Net debt to EBITDA excluding restructuring and other costs1 (times) |
|
3.06 |
|
2.94 |
|
0.12 |
|
Coverage ratios1 (times) |
|
|
|
|
|
|
|
Earnings coverage |
|
3.6 |
|
4.2 |
|
(0.6 |
) |
EBITDA excluding restructuring and other costs interest coverage |
|
7.2 |
|
8.0 |
|
(0.8 |
) |
Other measures1 (%) |
|
|
|
|
|
|
|
Determined using management measures |
|
|
|
|
|
|
|
Dividend payout ratio net of dividend reinvestment plan effects |
|
61 |
|
133 |
|
(72 |
)pts. |
Determined using most comparable IFRS-IASB measures |
|
|
|
|
|
|
|
Ratio of dividends declared to cash provided by operating activities less capital expenditures (excluding spectrum licences) |
|
84 |
|
122 |
|
(38 |
)pts. |
(1) See Section 11.1 Non-GAAP and other financial measures.
Earnings coverage ratio for the 12-month period ended June 30, 2020 was 3.6 times, down from 4.2 times one year earlier. A decrease in income before borrowing costs and income taxes reduced the ratio by 0.1, while an increase in borrowing costs reduced the ratio by 0.5.
EBITDA excluding restructuring and other costs interest coverage ratio for the 12-month period ended June 30, 2020 was 7.2 times, down from 8.0 times one year earlier. Growth in EBITDA excluding restructuring and other costs increased the ratio by 0.2, while an increase in net interest costs reduced the ratio by 1.0.
Dividend payout ratios: Actual dividend payout decisions will continue to be subject to our Boards assessment and the determination of our financial position and outlook, as well as our long-term dividend payout objective range of 60 to 75% of prospective free cash flow. Commencing in 2020, so as to be consistent with the way we manage our business, we updated our revised dividend payout ratio presented to be a historical measure calculated as the sum of the last four quarters dividends declared for Common Shares, as recorded in the financial statements, net of dividend reinvestment plan effects, divided by the sum of the last four quarters free cash flow amounts for interim reporting periods. For fiscal years, the denominator is annual free cash flow (free cash flow is a non-GAAP measure, see Section 11.1). The historical measure for the 12-month period ended June 30, 2020 is presented for illustrative purposes in evaluating our target guideline. During the 12-month period ended June 30, 2020, the historical measure of our dividend payout ratio was at the lower end of the range due to the discounted DRISP participation level.
7.6 Credit facilities
At June 30, 2020, we had approximately $2.25 billion of available liquidity from the TELUS revolving credit facility and $244 million of available liquidity from the TELUS International (Cda) Inc. credit facility with a syndicate of financial institutions (excluding TELUS Corporation). In addition, we had $400 million available under our trade receivables securitization program (see Section 7.7 Sale of trade receivables). We are well within our objective of generally maintaining at least $1.0 billion of available liquidity.
TELUS revolving credit facility
We have a $2.25 billion (or U.S. dollar equivalent) unsecured revolving credit facility with a syndicate of financial institutions, expiring May 31, 2023. The revolving credit facility is used for general corporate purposes, including the backstop of commercial paper, as required.
TELUS revolving credit facility at June 30, 2020
($ millions) |
|
Expiry |
|
Size |
|
Drawn |
|
Outstanding |
|
Backstop for |
|
Available |
|
Revolving credit facility 1 |
|
May 31, 2023 |
|
2,250 |
|
|
|
|
|
|
|
2,250 |
|
(1) Canadian dollars or U.S. dollar equivalent.
Our revolving credit facility contains customary covenants, including a requirement that we not permit our consolidated leverage ratio to exceed 4.25 to 1.00 and that we not permit our consolidated coverage ratio to be less than 2.00 to 1.00 at the end of any financial quarter. As at June 30, 2020, our consolidated leverage ratio was 3.06 to 1.00 and our consolidated coverage ratio was approximately 7.24 to 1.00. These ratios are expected to remain well within the covenants. There are certain minor differences in the calculation of the leverage ratio and coverage ratio under the revolving credit facility, as compared with the calculation of Net debt to EBITDA excluding restructuring and other costs and EBITDA excluding restructuring and other costs interest coverage. Historically, the calculations have not been materially different. The covenants are not impacted by revaluation, if any, of Property, plant and equipment, Intangible assets or Goodwill for accounting purposes. Continued access to our credit facilities is not contingent on maintaining a specific credit rating.
Commercial paper
TELUS Corporation has an unsecured commercial paper program, which is backstopped by our revolving credit facility, enabling us to issue commercial paper up to a maximum aggregate amount at any one time of $1.4 billion as at June 30, 2020. Foreign currency forward contracts are used to manage currency risk arising from issuing commercial paper denominated in U.S. dollars. The commercial paper program is to be used for general corporate purposes, including, but not limited to, capital expenditures and investments. Our ability to reasonably access the commercial paper market in the U.S. is dependent on our credit ratings (see Section 7.8 Credit ratings).
TELUS International (Cda) Inc. credit facility
As at June 30, 2020, TELUS International (Cda) Inc. had a credit facility, secured by its assets, expiring on January 28, 2025, with a syndicate of financial institutions (as 87.5% lender) and, joined in 2020, TELUS Corporation (as 12.5% lender). The credit facility is composed of a US$600 million revolving component and an amortizing US$600 million term loan component. The credit facility is non-recourse to TELUS Corporation. The outstanding revolving component and term loan components had a weighted average interest rate of 2.68% as at June 30, 2020.
In connection with the acquisition of CCC during the three-month period ended March 31, 2020, incremental amounts were drawn on the facility.
Other letter of credit facilities
At June 30, 2020, we had $191 million of letters of credit outstanding issued under various uncommitted facilities; such letter of credit facilities are in addition to the ability to provide letters of credit pursuant to our committed bank credit facility. Available liquidity under various uncommitted letters of credit facilities was $130 million at June 30, 2020.
7.7 Sale of trade receivables
TELUS Communications Inc., a wholly owned subsidiary of TELUS, is a party to an agreement with an arms-length securitization trust associated with a major Schedule I Canadian bank, under which it is able to sell an interest in certain trade receivables for an amount up to a maximum of $500 million. The agreement is in effect until December 31, 2021, and available liquidity was $400 million as at June 30, 2020. (See Note 22 of the interim consolidated financial statements.) Sales of trade receivables in securitization transactions are recognized as collateralized Short-term borrowings and thus do not result in our de-recognition of the trade receivables sold.
TELUS Communications Inc. is required to maintain a credit rating of at least a BB by DBRS Ltd. or the securitization trust may require the sale program to be wound down prior to the end of the term. The minimum credit rating was exceeded as of July 31, 2020.
7.8 Credit ratings
There were no changes to our investment grade credit ratings during the second quarter of 2020, or as of July 31, 2020.
7.9 Financial instruments, commitments and contingent liabilities
Financial instruments
Our financial instruments, their accounting classification and the nature of certain risks that they may be subject to were described in Section 7.9 of our 2019 annual MD&A.
Liquidity risk
As a component of our capital structure financial policies, discussed in Section 4.3 Liquidity and capital resources, we manage liquidity risk by: maintaining a daily cash pooling process that enables us to manage our available liquidity and our liquidity requirements according to our actual needs; maintaining an agreement to sell trade receivables to an arms-length securitization trust; maintaining bilateral bank facilities and syndicated credit facilities; maintaining a commercial paper program; maintaining an in-effect shelf prospectus; continuously monitoring forecast and actual cash flows; and managing maturity profiles of financial assets and financial liabilities.
As at June 30, 2020, we could offer $2.5 billion of debt or equity securities pursuant to a shelf prospectus that is in effect until June 2022.
As at June 30, 2020, we had $2.25 billion of available liquidity from the TELUS revolving credit facility and approximately $244 million of available liquidity from the TELUS International (Cda) Inc. credit facility with a syndicate of financial institutions (excluding TELUS Corporation) (see Section 7.6 Credit facilities), as well as $400 million available under our trade receivables securitization program (see Section 7.7 Sale of trade receivables). Excluding the TELUS International (Cda) Inc. credit facility and including cash and temporary investments of approximately $1.0 billion, we had total liquidity of over $3.6 billion at June 30, 2020. This adheres to our objective of generally maintaining at least $1 billion of available liquidity. We believe that our investment grade credit ratings contribute to reasonable access to capital markets.
Commitments and contingent liabilities
Purchase obligations
As at June 30, 2020, our contractual commitments related to the acquisition of property, plant and equipment were $205 million through to December 31, 2022, as compared to $136 million over a period ending December 31, 2022 reported as at December 31, 2019. The increase was primarily attributed to new projects entered into prior to June 30, 2020.
Claims and lawsuits
A number of claims and lawsuits (including class actions and intellectual property infringement claims) seeking damages and other relief are pending against us and, in some cases, other wireless carriers and telecommunications service providers. As well, we have received notice of, or are aware of, certain possible claims (including intellectual property infringement claims) against us and, in some cases, other wireless carriers and telecommunications service providers.
It is not currently possible for us to predict the outcome of such claims, possible claims and lawsuits due to various factors, including: the preliminary nature of some claims; uncertain damage theories and demands; an incomplete factual record; uncertainty concerning legal theories and procedures and their resolution by the courts, at both the trial and the appeal levels; and the unpredictable nature of opposing parties and their demands.
However, subject to the foregoing limitations, management is of the opinion, based upon legal assessments and information presently available, that it is unlikely that any liability, to the extent not provided for through insurance or otherwise, would have a material effect on our financial position and the results of our operations, including cash flows, with the exception of the items disclosed in Note 29 of the interim consolidated financial statements.
7.10 Outstanding share information
Outstanding shares (millions) |
|
June 30, 2020 |
|
July 31, 2020 |
|
Common Shares |
|
1,278 |
|
1,284 |
|
Common Share options all exercisable (one for one) |
|
3 |
|
3 |
|
7.11 Transactions between related parties
Transactions with key management personnel
Our key management personnel have authority and responsibility for overseeing, planning, directing and controlling our activities and consist of our Board of Directors and our Executive Leadership Team. Total compensation expense for key management personnel was $14 million and $16 million in the second quarter of 2020 and first six months of 2020, respectively, compared to $8 million and $27 million in the comparable periods in 2019. Compensation expense for key management personnel increased in the second quarter of 2020 related to greater share-based compensation. Compensation expense for key management personnel decreased in the first six months of 2020 due to greater share-based compensation in the second quarter of 2019 primarily arising from mark-to-market metrics affecting performance condition-based restricted share units. See Note 30(a) of the interim consolidated financial statements for additional details.
Transactions with defined benefit pension plans
We provided management and administrative services to our defined benefit pension plans. Charges for these services were on a cost recovery basis and were immaterial.
Transactions with real estate joint venture and associates
In the second quarter of 2020, we had transactions with the TELUS Sky real estate joint venture, which is a related party to us, as set out in Note 21 of the interim consolidated financial statements.
For the TELUS Sky real estate joint venture, commitments and contingent liabilities include construction-related contractual commitments through to 2020 (approximately $23 million at June 30, 2020) and construction financing ($342 million, with Canadian financial institutions as 66-2/3% lender and TELUS as 33-1/3% lender) under a credit agreement maturing August 31, 2021. We have entered into a lease agreement with the TELUS Sky real estate joint venture; for lease accounting purposes, the lease commenced during the three-month period ended March 31, 2019.
During the six-month period ended June 30, 2020, our activity with our associate included our investment in equity of $73 million.
8. Accounting matters
8.1 Critical accounting estimates and judgments
Our significant accounting policies are described in Note 1 of the Consolidated financial statements for the year ended December 31, 2019. The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates, assumptions and judgments that affect: the reported amounts of assets and liabilities at the date of the financial statements; the disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our critical accounting estimates and significant judgments are discussed with our Audit Committee each quarter and are described in Section 8.1 of our 2019 annual MD&A, which is hereby incorporated by reference. See Note 1(b) of the interim consolidated financial statements for details of our use of estimates and judgments, including about the future effects of the COVID-19 pandemic.
8.2 Accounting policy developments
Our accounting policy developments were discussed in Section 8.2 Accounting policy developments of our 2019 annual MD&A. See Note 2 of the interim consolidated financial statements for additional details.
9. Update to general trends, outlook and assumptions, and regulatory developments and proceedings
This section contains forward-looking statements, which should be read together with the Caution regarding forward-looking statements at the beginning of this MD&A.
The assumptions on which our 2020 outlook was based were described in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings of our 2019 annual MD&A and were issued on February 13, 2020 under the basis that we would be operating in the normal course of business. The extent of the COVID-19 pandemic, including its interruption of the global and Canadian economies, the governmental measures put into place to contain the risk of transmission, and proactive measures we have been taking to ensure the safety and well-being of our customers, our team members, and our communities, are matters we did not predict upon issuing our assumptions for 2020, and we no longer believe that these assumptions are valid. Therefore, in May 2020, given the uncertain magnitude, duration and potential outcomes of the pandemic, we withdrew our 2020 outlook and the assumptions on which it was based.
Due to the wide range of possible outcomes of the COVID-19 pandemic and the uncertainty with regard to the length of the pandemic and measures in place to limit its spread and transmission, the impact on our business cannot be accurately forecasted as of the date of this MD&A. Consequently, our operations and financial results could be materially different than predicted in our previously issued guidance and in May 2020, we withdrew our existing 2020 consolidated financial guidance, which was provided in our news release dated February 13, 2020 and filed on SEDAR.
We intend to revisit our assumptions and consider updating our outlook and guidance when we issue our third quarter 2020 MD&A for the three-month and nine-month periods ending September 30, 2020.
9.1 Communications industry regulatory developments and proceedings
Our telecommunications, broadcasting and radiocommunication services are regulated under federal laws by various authorities, including the Canadian Radio-television and Telecommunications Commission (CRTC), Innovation, Science and Economic Development Canada (ISED), Canadian Heritage and the Competition Bureau.
The following is a summary of certain significant regulatory developments and proceedings relevant to our business and our industry. This summary is not intended to be a comprehensive legal analysis or description of all of the specific issues described. Although we have indicated those issues for which we do not currently expect the outcome of a development or proceeding to be material to us, there can be no assurance that the expected outcome will occur or that our current assessment of its likely impact on us will be accurate. See Section 10.3 Regulatory matters of our 2019 annual MD&A.
Radiocommunication licences and spectrum-related matters
ISED regulates, among other matters, the allocation and use of radio spectrum in Canada and licenses radio apparatus, frequency bands and/or radio channels within various frequency bands to service providers and private users. The department also establishes the terms and conditions attached to such radio authorizations, including restrictions on licence transfers, coverage obligations, research and development obligations, annual reporting, and obligations concerning mandated roaming and antenna site sharing with competitors.
3500 MHz spectrum auction to support 5G
On June 5, 2019, ISED released its Decision on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary Decisions on Changes to the 3800 MHz Band followed on March 5, 2020 by its Policy and Licensing Framework for Spectrum in the 3500 MHz Band, which defines the auction rules and conditions of licence for the 3500 MHz band. The auction framework provides for a 50 MHz set-aside in all markets where 50 MHz or more spectrum is available; in markets with a large population centre and less than 50 MHz of auction supply, all the auction supply will be set-aside. This is on top of the competitive imbalance that has already been introduced to the band by ISEDs transition decision for the band last year. That decision left nearly 90 MHz of the 200 MHz band in the hands of band incumbents. A combination of the transition decision, by way of a clawback and the asymmetric design of the auction framework, which sets aside a significant portion of the spectrum under auction exclusively for certain carriers in any given licence area, raises the risk that we will not be able to acquire all the spectrum we need in the auction process and we will be required to pay more than we might otherwise pay. The deadline for receipt of applications and financial deposits for participation in the 3500 MHz spectrum auction had been postponed due to the COVID-19 pandemic and is now April 6, 2021 and auction bidding is expected to start on June 15, 2021.
mmWave and 3800 MHz spectrum auctions to support 5G
On June 5, 2019, ISED released its Decision on Releasing Millimetre Wave Spectrum to Support 5G, repurposing several tranches of mmWave spectrum for mobile use. ISED will consult on a licensing framework (i.e. auction rules and conditions of licence) for these mmWave bands in the future and is targeting an auction for this spectrum in 2021. There is a risk that the auction rules will favour certain carriers over us and impact our ability to acquire an adequate quantity of mmWave band spectrum.
The 3800 MHz spectrum is seen as an extension to the 3500 MHz band. The Minister of Innovation, Science and Industry has announced that a consultation on the 3800 MHz band would be launched in August 2020. We expect two consultations: an August 2020 consultation to address the band plan and treatment of satellite incumbents, followed by a second consultation on an auction framework for the 3800 MHz band. The spectrum auction is currently anticipated to take place in 2022. There is a risk that the auction rules will favour certain carriers over us and impact our ability to acquire an adequate quantity of 3800 MHz band spectrum.
Regulatory and federal government reviews
The CRTC and the federal government have initiated public proceedings to review various matters. They are discussed below.
Review of mobile wireless services
On February 28, 2019, the CRTC released its anticipated consultation to review the regulatory framework for mobile wireless services. The review is examining three major issues the level of competition in the retail market, the current wholesale mobile wireless service regulatory framework, with a focus on wholesale mobile virtual network operator (MVNO) access, and the future of mobile wireless services in Canada, with a focus on reducing barriers to infrastructure deployment. The CRTC also provided a preliminary view that there should be more opportunity for MVNOs. We have participated throughout this proceeding and have filed evidence to demonstrate the high performance of Canadian wireless services on dimensions including network coverage, network quality, availability of service and pricing. We participated in all stages of this proceeding, including the oral hearing in February 2020. The proceeding is now closed.
The impact of this proceeding on us will not be known until a decision is issued by the CRTC. That decision is not expected until late 2020, at the earliest.
Wireline wholesale services follow-up
On July 22, 2015, the CRTC released Review of wholesale wireline services and associated policies, Telecom Regulatory Policy CRTC 2015-326 (TRP 2015-326). The major component of this decision was that the CRTC ordered the introduction of a disaggregated wholesale high-speed internet access service for internet service provider (ISP) competitors. This includes access to fibre-to-the-premises (FTTP) facilities. The FTTP follow-up activities directed in TRP 2015-326 remain ongoing.
On June 11, 2020, the CRTC released Call for comments Appropriate network configuration for disaggregated wholesale high-speed access services, Telecom Notice of Consultation CRTC 2020-187 (TNC 2020-187), where it will address the appropriate network and service configurations for the disaggregated wholesale high-speed access (HSA) service regime for all wholesale HSA service providers across the country. This new process takes the place of the previous follow-up proceedings and now has a common process for incumbent local exchange carriers (ILECs) and cable companies across Canada.
This new proceeding results from an application to the CRTC filed by the Canadian Network Operators Consortium Inc. (CNOC) to review and vary TRP 2015-326 and to seek, among other things, interim relief that would remove a speed cap pursuant to which the existing aggregated wholesale access regime will not apply to speeds in excess of 100 Mbps pending the introduction of disaggregated service; and permanent relief granting wholesale access to FTTP facilities on an aggregated basis. On March 20, 2019, the CRTC granted CNOCs application for interim relief. We have been granted leave to appeal that decision to the Federal Court of Appeal. The CRTCs decision with respect to the permanent relief sought by CNOC will now be made as part of TNC 2020-187 or as part of future follow-up proceedings. We anticipate no material adverse impact in the short term with respect to CNOCs application for interim relief. It is too early to determine the impact TRP 2015-326 will have on us in the longer term.
Final rates for aggregated wholesale internet access services
On August 15, 2019, the CRTC released Telecom Order CRTC 2019-288, which finalized rates for the aggregated wholesale internet services of the ILEC and incumbent cable companies. The final rates were considerably lower than the interim rates, and the CRTC ordered the rates to apply retroactively to October 6, 2016. The financial impact of this decision was not material to us, given the volume of wholesale internet customers we currently serve.
On September 13, 2019, Bell Canada and affiliated companies and a collection of cable companies filed separate applications with the Federal Court of Appeal to seek leave to appeal Telecom Order CRTC 2019-288. Bell Canada and the cable companies also sought a stay of the order. On November 22, 2019, the Federal Court of Appeal allowed both leave applications and granted a stay pending the disposition of the appeal. The appeal was heard on June 25 and 26, 2020, and we anticipate a decision by the end of 2020.
Separately, on November 13, 2019, we filed a petition to the Governor in Council seeking to refer back to Telecom Order CRTC 2019-288 for redetermination of the rates and seeking to vary Telecom Order CRTC 2019-288 to remove its retroactive effect, all on the basis that the rates and retroactive component of the order will threaten future investment. Bell Canada and a coalition of cable companies filed similar petitions on the same day. The Governor in Council has yet to issue its decision on these petitions.
Also, on November 13, 2019, we filed an application to the CRTC to review and vary Telecom Order CRTC 2019-288, primarily on the basis that the CRTC made errors in calculating the carriers costs. Finally, on December 13, 2019, Bell Canada and a collection of cable companies also brought applications to the CRTC to review and vary Telecom Order CRTC 2019-288. The CRTC has yet to issue its decision on these applications.
Phase-out of the local service subsidy regime
On June 26, 2018, the CRTC issued Phase-out of the local service subsidy regime, Telecom Regulatory Policy CRTC 2018-213. In this decision, the CRTC determined that it would phase out the existing local service subsidy over three years, from January 1, 2019 to December 31, 2021. In September 2018, the Independent Telecommunications Providers Association (ITPA), which represents small ILECs, brought an application to the CRTC to review and vary this decision. In its application, the ITPA seeks to keep the existing local service subsidy regime in place. On February 4, 2020, the CRTC issued Independent Telecommunications Providers Association Application to review and vary Telecom Regulatory Policy 2018-213, Telecom Decision CRTC 2020-41, in which it denied the ITPAs application. We and the ITPA have independently sought leave to appeal Telecom Decision CRTC 2020-41 to the Federal Court of Appeal. The impact of these CRTC decisions and our application for leave to appeal are not expected to be material.
Review of the price cap and local forbearance regimes
Simultaneously with the release of the Phase-out of the local service subsidy regime decision noted above, the CRTC issued Review of the price cap and local forbearance regimes, Telecom Notice of Consultation CRTC 2018-214. In this
proceeding, the CRTC reviewed, among other things: pricing constraints for residential local exchange services; whether compensation to ILECs is required given that the local service subsidy is being eliminated further to the Phase-out of the local service subsidy regime decision; whether there is still a need for an exogenous factor mechanism in the price cap regimes; and whether changes are necessary to test for local forbearance. On February 4, 2020, the CRTC released Review of the price cap and local forbearance regimes, Telecom Regulatory Policy CRTC 2020-40, in which it affirmed its 2018 determination to phase-out the local service subsidy regime by 2021, and declined to provide compensation in the form of additional pricing flexibility for regulated primary exchange services in high-cost serving areas, including making no changes to the local forbearance regime. The impact of this decision is not material.
5G security review Public Safety Canada
In September 2018, the federal government announced a review of national cybersecurity requirements for Canadas 5G networks. When complete, the review is expected to provide policy clarity on what security controls or restrictions the government intends to impose on 5G networks in Canada. The timelines for the conclusion of this review have not been released by the federal government, and the government has not indicated its intentions regarding 5G cybersecurity requirements. Given the range of potential government or regulatory action that may result from this review, the impact on us, and on Canadian wireless service providers generally, cannot currently be predicted.
International security developments
On May 16, 2019, U.S. President Donald Trump signed an executive order permitting the Secretary of Commerce to block certain technology transactions deemed to constitute national security risks. Additionally, the Bureau of Industry and Security of the United States Department of Commerce (BIS) amended the U.S. Export Administration Regulations to add Huawei Technologies Co. Ltd. and its non-U.S. affiliates (collectively, Huawei) to the BIS Entity List, which resulted in the imposition of additional licence requirements (the Restrictions) on the export, re-export and transfer of goods, services and technology to Huawei by persons subject to the Restrictions. Subsequently, on May 20, 2019, the BIS adopted a final rule creating a 90-day temporary general licence (TGL) partially restoring the BIS former licensing requirements for exports, re-exports and transfer to Huawei in connection with certain transactions, including in connection with the continued operation of existing networks and equipment and the provision of support to existing handsets. The BIS has extended the validity of the final rule multiple times. Most recently, a final rule effective May 15, 2020, extended the TGLs validity to August 13, 2020. The BIS also issued an interim final rule that extended Export Administration Regulations (EAR) to apply to items, such as semiconductor designs, that are the direct product of certain U.S. Commerce Control List (CCL) software and technology; and items, such as chipsets, that are the direct product of certain CCL semiconductor manufacturing equipment located outside the U.S.
Reversing an earlier position that would allow limited Huawei 5G in the U.K., on July 14, 2020, the U.K. government announced plans to legislate a ban on the purchase of all new 5G infrastructure from Huawei by December 31, 2020, and to require the removal of Huawei 5G networks deployed in the U.K. by 2027.
Given the range of potential government or regulatory actions by foreign governments with respect to Huawei, the impact on us, and on Canadian wireless service providers generally, cannot currently be predicted.
CRTC proceeding regarding device financing
On August 30, 2019, the CRTC commenced a proceeding to inquire into device financing plans for wireless handsets and asked certain parties, including us, to show cause why their device financing plans are permitted under the Wireless Code. This proceeding followed the introduction of device financing plans by us, Rogers and Bell in July 2019, including, for Rogers and us, plans with terms longer than 24 months. Under these plans, customers who cancel wireless services contracts are required to repay immediately the outstanding financing balance in full. On August 2, 2019, the CRTC issued a letter stating that wireless service providers were to stop offering device financing plans beyond 24 months so it could review the practice. In the proceeding, the CRTC sought comment on the effects on consumers of financing plans beyond 24 months and how the provisions of the Wireless Code apply to device financing. We intervened to inform the CRTC that: device financing is desired by customers; customers benefit from longer financing periods because upfront device costs are lower and the cost of devices can be spread over a longer period, thereby reducing the monthly cost; the objective of the Wireless Code should be to benefit customers; and longer device financing periods further the federal governments affordability agenda for wireless services. Until the CRTC issues a decision on its intended treatment of financing plans, it is too early to determine the impact of this proceeding on us.
CRTC proceeding regarding potential barriers to the deployment of broadband-capable networks in underserved areas in Canada
On December 10, 2019, the CRTC issued Call for comments regarding potential barriers to the deployment of broadband-capable networks in underserved areas in Canada, Telecom Notice of Consultation CRTC 2019-406. In this proceeding, the CRTC is seeking comment on barriers that service providers and communities face in building new facilities, or interconnecting to or accessing existing facilities, to extend networks into underserved areas in order to offer universal service objective-level services. The CRTC has specifically identified access to affordable transport services
and efficient use of support structures as potential barriers. We are participating fully in the proceeding. It is too early to determine the impact of the proceeding on us.
Government mobile wireless affordability election commitment
Affordability of wireless services was a campaign topic during the October 2019 federal election. On March 5, 2020, the Liberal government clarified its expectation that we, Bell, and Rogers (including flanker brands) lower mobile wireless prices for postpaid, bring your own device plans in the 2 to 6 GB range by 25% by January 2022. The government reiterated this statement on June 5, 2020. To track progress, the government will report quarterly on wireless pricing. We are unable to determine the full impact of this commitment at this time. The announcement or implementation of specific regulations or other actions intended to reduce cell phone plan prices could precipitate a material reduction in operating expenditures and capital expenditures to ameliorate this impact.
CRTC review of rate setting for wholesale telecommunications services
On April 24, 2020, the CRTC issued Call for comments Review of the approach to rate setting for wholesale telecommunications services, Telecom Notice of Consultation CRTC 2020-131. In this proceeding, the CRTC is seeking comment on whether to change its methodology of setting wholesale rates and, if so, how. The CRTC has stated its intent to use the proceeding to establish a more transparent and efficient rate-setting process. We intend to participate fully in all stages of the proceeding. It is too early to determine the impact of the proceeding on us.
CRTC review of availability of mobile wireless plans for Canadians with disabilities
On June 1, 2020, the CRTC issued Call for comments Accessibility mobile wireless service plans that meet the needs of Canadians with various disabilities, Telecom Notice of Consultation 2020-178. In this proceeding, the CRTC is examining whether retail wireless service providers are meeting their requirements to offer mobile wireless plans that meet the needs of Canadians with disabilities; to promote those plans in ways that are accessible (including through stores, websites and customer service representatives); and whether new regulatory measures are required. We intend to participate fully in this proceeding to demonstrate how we are complying with existing requirements. The impact of this proceeding is not expected to be material.
Broadcasting-related issues
Broadcasting licences held by TELUS
Our regional licences to operate broadcasting distribution undertakings in B.C. and Alberta were granted renewals in Broadcasting Decision CRTC 2018-267, which extends the licence terms to August 31, 2023. Our licence to operate a regional broadcasting distribution undertaking in areas of Quebec was renewed on June 28, 2019 in Broadcasting Decision CRTC 2019-230, extending the licence term to August 31, 2024. Our licence to operate a national video-on-demand service was renewed to August 31, 2023, as part of Broadcasting Decision CRTC 2018-20. We have applied to the CRTC for authorization to operate a pay-per-view undertaking, which is currently being reviewed by the CRTC as part of Broadcasting Notice of Consultation CRTC 2020-75.
Review of the Telecommunications Act, the Radiocommunication Act and the Broadcasting Act
On January 29, 2020, the Broadcasting and Telecommunications Legislative Review panel released its final report entitled Canadas Communications Future: Time to Act. The report contains 97 recommendations to update legislation governing broadcasting, telecommunications and radiocommunication for the Government of Canada to consider. Although no immediate changes or legal consequences flow from the release of the report, the Minister of Canadian Heritage has signaled his intention to introduce new legislation to amend the Broadcasting Act during the fall parliamentary session. It is too early to determine if any resulting legislation will have a material impact on us.
Review of the Copyright Act and Copyright Board reforms
The Copyright Acts statutorily mandated five-year review was due in 2017, and a process for conducting the review via parliamentary committee was announced in December 2017. The Standing Committee on Industry, Science and Technology (INDU Committee), with the assistance of the Standing Committee on Canadian Heritage, completed the review early in 2019, and both committees presented reports to the House of Commons in May and June of 2019. Although the INDU Committee had requested that a comprehensive government response be tabled by September 1, 2019, the government did not respond. Following the October 2019 federal election, the timeline for potential changes to the Copyright Act is uncertain. The policy approach for copyright has traditionally been based on a balance of interests of creators and consumers, and as a result, any changes to the Copyright Act are not expected to have a negative material impact on us.
Legal challenge to the CRTCs ability to regulate affiliation agreements
The CRTCs ability to regulate affiliation agreements between broadcasting distributors and programming services is currently being challenged by vertically integrated broadcasting entities before the Federal Court of Appeal. We were granted leave to intervene in the case and defended the CRTCs regulatory powers as a cornerstone of its vertical integration framework, which aims to ensure the fair treatment by vertically integrated firms of rival broadcasting
distributors and programming services. The Federal Court of Appeals decision is not expected before late 2020, at the earliest. While an adverse decision could weaken our negotiating position vis-a-vis vertically integrated firms that supply must-have channels to our broadcasting distribution business, it is too early to determine the impact it would have on our broadcasting distribution activities.
10. Risks and risk management
Reference is made as well to the summary of risks and uncertainties in the Caution regarding forward-looking statements at the beginning of this MD&A. The principal risks and uncertainties that could affect our future business results and associated risk mitigation activities were described in our 2019 annual MD&A and have not materially changed since December 31, 2019, except for the following updates:
COVID-19
On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus identified as COVID-19 to be a pandemic. In Canada, throughout March 2020, each province and territory either declared a state of emergency or a public health emergency. The nature of the pandemic and the responses to it and to its impacts by governments and the public sector, as well as by the private sector, are all continuing to evolve quickly and often unpredictably. Responses to date have included unprecedented restrictions on individuals movements and on gatherings of individuals, including international travel restrictions, and restrictions on how or whether businesses and institutions including schools may operate. Although processes are underway to ease these restrictions in certain jurisdictions, there is no assurance that such easing will continue in all jurisdictions or that such restrictions will not be imposed again.
Due to the wide range of possible COVID-19 pandemic outcomes and the uncertainty with regard to the duration and impact of both the pandemic and government policies implemented to limit its spread, we cannot accurately forecast the impact of the COVID-19 pandemic on our future operations. However, the COVID-19 pandemic may, directly or indirectly, materially and adversely affect our operations, condition and financial results.
Risks and uncertainties that could affect our business results, as described in our 2019 annual MD&A, as well as the price of our securities, and which could be accentuated by the COVID-19 pandemic or by any future pandemic or similar event include, but are not limited to:
a) The extent and duration of restrictions on movement, business and other activities that are currently imposed by governments and regulatory bodies or other public sector actors or that may be imposed in the future in response to the pandemic, such as the required closing of conventional retail stores and travel bans (see also Section 10.3 of our 2019 annual MD&A regarding regulatory matters)
b) The impact of the pandemic and the restrictions imposed in response to it on our customers, both directly and indirectly, as a result of the deterioration of global and local economic conditions. This could result in financial hardship for our customers and could accentuate challenges faced by certain customers due to fluctuations in the price of oil, and these factors could affect our customers ability to pay for our products and services, or result in a material reduction in the demand for or profitability of the products and services that we offer (such as roaming and mobile data) (see also Section 10.5 of our 2019 annual MD&A regarding technology and Section 10.15 regarding the economy)
c) Supply chain disruption and lack of resiliency in relation to the pandemic or related restrictions, which could result in supply shortages/price increases and extended lead times across electronic component and other product manufacturing segments, affecting our ability to maintain or upgrade our network and delaying the introduction of new products such as mobile phones (see also Section 10.6 of our 2019 annual MD&A regarding suppliers)
d) The impact on the health and well-being of our team, due to illness or due to changing responsibilities in their lives outside work (see also Section 10.11 of our 2019 annual MD&A regarding our team)
e) Increased capital expenditures required to maintain our leading network and adjust in short timeframes to changes in our customers usage, as well as increase expenses to meet the significantly increased demand for our virtual care solutions, such as Babylon by TELUS Health and Akira by TELUS Health, and impacts on the availability of capital and the cost of such capital in uncertain global markets (see also Section 10.13 of our 2019 annual MD&A regarding financing).
Mitigation: See Section 1.2 for a description of the operational measures currently undertaken or planned to address risks to our business relating to the COVID-19 pandemic. Although we believe these measures to mitigate these risks are reasonable, there can be no assurance that they will effectively or fully address the risks described.
11. Definitions and reconciliations
11.1 Non-GAAP and other financial measures
We have issued guidance on and report certain non-GAAP measures that are used to evaluate the performance of TELUS, as well as to determine compliance with debt covenants and to manage our capital structure. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined, qualified and reconciled with their nearest GAAP measure. Certain of the metrics do not have generally accepted industry definitions.
Adjusted Net income and adjusted basic earnings per share: These measures are used to evaluate performance at a consolidated level and exclude items that may obscure the underlying trends in business performance. These measures should not be considered alternatives to Net income and basic earnings per share in measuring TELUS performance. Items that may, in managements view, obscure the underlying trends in business performance include, but are not limited to significant gains or losses associated with real estate development partnerships, gains on exchange of wireless spectrum licences, restructuring and other costs, long-term debt prepayment premiums (when applicable), income tax-related adjustments, asset retirements related to restructuring activities and gains arising from business combinations. (See Reconciliation of adjusted Net income and Reconciliation of adjusted basic EPS in Section 1.3.)
Capital expenditure intensity: This measure is calculated as capital expenditures (excluding spectrum licences) divided by total operating revenues. This measure provides a basis for comparing the level of capital expenditures to those of other companies of varying size within the same industry.
Dividend payout ratio: Commencing in 2020, this is a historical measure calculated as the sum of the last four quarterly dividends declared, as reported in the financial statements, net of dividend reinvestment plan effects, divided by the sum of free cash flow amounts for the most recent four quarters for interim reporting periods. For fiscal years, the denominator is annual free cash flow. Our objective range for the annual dividend payout ratio is on a prospective basis, rather than on a trailing basis. (See Section 7.5 Liquidity and capital resource measures.)
Calculation of Dividend payout ratio, net of dividend reinvestment plan effects
Determined using management measures
12-month periods ended June 30 ($ millions, except ratio) |
|
2020 |
|
2019 |
|
Sum of the last four quarterly dividends declared |
|
1,433 |
|
1,307 |
|
Sum of the last four quarterly amount of dividends declared reinvested in Common Shares |
|
(516 |
) |
(90 |
) |
Numerator Sum of the last four quarterly dividends declared, net of dividend reinvestment plan effects |
|
917 |
|
1,217 |
|
Denominator Free cash flow |
|
1,511 |
|
912 |
|
Ratio (%) |
|
61 |
|
133 |
|
Calculation of ratio of dividends declared to cash provided by operating activities less capital expenditures (excluding spectrum licences)
Determined using most comparable IFRS-IASB measures
12-month periods ended June 30 ($ millions, except ratio) |
|
2020 |
|
2019 |
|
Numerator Sum of the last four quarterly dividends declared per Common Share |
|
1,433 |
|
1,307 |
|
Cash provided by operating activities |
|
4,616 |
|
3,964 |
|
Less: |
|
|
|
|
|
Capital expenditures (excluding spectrum licences) |
|
(2,911 |
) |
(2,889 |
) |
Denominator Cash provided by operating activities less capital expenditures (excluding spectrum licences) |
|
1,705 |
|
1,075 |
|
Ratio (%) |
|
84 |
|
122 |
|
Earnings coverage: This measure is defined in the Canadian Securities Administrators National Instrument 41-101 and related instruments, and is calculated as follows:
Calculation of Earnings coverage
12-month periods ended June 30 ($ millions, except ratio) |
|
2020 |
|
2019 |
|
Net income attributable to Common Shares |
|
1,441 |
|
1,745 |
|
Income taxes (attributable to Common Shares) |
|
517 |
|
432 |
|
Borrowing costs (attributable to Common Shares)1 |
|
765 |
|
682 |
|
Numerator |
|
2,723 |
|
2,859 |
|
Denominator Borrowing costs |
|
765 |
|
682 |
|
Ratio (times) |
|
3.6 |
|
4.2 |
|
(1) Interest on Long-term debt plus Interest on short-term borrowings and other plus long-term debt prepayment premium, adding capitalized interest and deducting borrowing costs attributable to non-controlling interests.
EBITDA (earnings before interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used to evaluate performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a companys operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should not be considered an alternative to Net income in measuring TELUS performance, nor should it be used as a measure of cash flow. EBITDA as calculated by TELUS is equivalent to Operating revenues less the total of Goods and services purchased expense and Employee benefits expense.
We calculate EBITDA excluding restructuring and other costs, as it is a component of the EBITDA excluding restructuring and other costs interest coverage ratio and the Net debt to EBITDA excluding restructuring and other costs ratio.
We also calculate Adjusted EBITDA to exclude items of an unusual nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should not be included in an assessment of our ability to service or incur debt.
EBITDA reconciliation
|
|
Second quarters |
|
Six-month periods |
| ||||
($ millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net income |
|
315 |
|
520 |
|
668 |
|
957 |
|
Financing costs |
|
202 |
|
189 |
|
394 |
|
357 |
|
Income taxes |
|
117 |
|
31 |
|
256 |
|
188 |
|
Depreciation |
|
505 |
|
470 |
|
1,028 |
|
940 |
|
Amortization of intangible assets |
|
220 |
|
163 |
|
422 |
|
310 |
|
EBITDA |
|
1,359 |
|
1,373 |
|
2,768 |
|
2,752 |
|
Add restructuring and other costs included in EBITDA |
|
70 |
|
29 |
|
130 |
|
65 |
|
EBITDA excluding restructuring and other costs |
|
1,429 |
|
1,402 |
|
2,898 |
|
2,817 |
|
Add lease-up period and other equity losses related to real estate joint ventures |
|
3 |
|
|
|
9 |
|
|
|
Deduct retirement of a provision arising from business acquisition-related written put options within TI |
|
(71 |
) |
|
|
(71 |
) |
|
|
Adjusted EBITDA |
|
1,361 |
|
1,402 |
|
2,836 |
|
2,817 |
|
Calculation of Adjusted EBITDA margin
|
|
Second quarters |
|
Six-month periods |
| ||||
($ millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Numerator Adjusted EBITDA |
|
1,361 |
|
1,402 |
|
2,836 |
|
2,817 |
|
Adjusted Operating revenues: |
|
|
|
|
|
|
|
|
|
Operating revenues |
|
3,728 |
|
3,597 |
|
7,422 |
|
7,103 |
|
Lease-up period and other equity losses related to real estate joint ventures |
|
3 |
|
|
|
9 |
|
|
|
Retirement of a provision arising from business acquisition-related written put options within TI |
|
(71 |
) |
|
|
(71 |
) |
|
|
Denominator Adjusted Operating revenues |
|
3,660 |
|
3,597 |
|
7,360 |
|
7,103 |
|
Adjusted EBITDA margin (%) |
|
37.2 |
|
39.0 |
|
38.6 |
|
39.7 |
|
EBITDA excluding restructuring and other costs interest coverage: This measure is defined as EBITDA excluding restructuring and other costs, divided by Net interest cost, calculated on a 12-month trailing basis. This measure is similar to the coverage ratio covenant in our credit facilities, as described in Section 7.6 Credit facilities.
Free cash flow: We report this measure as a supplementary indicator of our operating performance, and there is no generally accepted industry definition of free cash flow. It should not be considered an alternative to the measures in the Consolidated statements of cash flows. Free cash flow excludes certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the Consolidated statements of cash flows. It provides an indication of how much cash generated by operations is available after capital expenditures (excluding purchases of spectrum licences) that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting changes that do not impact cash, such as IFRS 15 and IFRS 16. Free cash flow may be supplemented from time to time by proceeds from divested assets or financing activities.
Free cash flow calculation
|
|
Second quarters |
|
Six-month periods |
| ||||
($ millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
EBITDA |
|
1,359 |
|
1,373 |
|
2,768 |
|
2,752 |
|
Add non-cash losses (deduct non-cash gains) from the sale of property, plant and equipment |
|
1 |
|
(5 |
) |
(2 |
) |
(10 |
) |
Restructuring and other costs, net of disbursements |
|
14 |
|
1 |
|
26 |
|
(32 |
) |
Effects of contract asset, acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment device financing |
|
102 |
|
15 |
|
214 |
|
53 |
|
Effects of lease principal (IFRS 16 impact) |
|
(81 |
) |
(64 |
) |
(165 |
) |
(152 |
) |
Leases formerly accounted for as finance leases (IFRS 16 impact) |
|
27 |
|
13 |
|
54 |
|
26 |
|
Items from the condensed interim consolidated statements of cash flows: |
|
|
|
|
|
|
|
|
|
Share-based compensation, net |
|
41 |
|
20 |
|
64 |
|
39 |
|
Net employee defined benefit plans expense |
|
25 |
|
19 |
|
52 |
|
39 |
|
Employer contributions to employee defined benefit plans |
|
(12 |
) |
(12 |
) |
(27 |
) |
(28 |
) |
Interest paid |
|
(199 |
) |
(147 |
) |
(376 |
) |
(326 |
) |
Interest received |
|
3 |
|
3 |
|
6 |
|
5 |
|
Capital expenditures (excluding spectrum licences)1 |
|
(756 |
) |
(770 |
) |
(1,421 |
) |
(1,416 |
) |
Free cash flow before income taxes |
|
524 |
|
446 |
|
1,193 |
|
950 |
|
Income taxes paid, net of refunds |
|
(13 |
) |
(122 |
) |
(137 |
) |
(473 |
) |
Free cash flow |
|
511 |
|
324 |
|
1,056 |
|
477 |
|
(1) Refer to Note 31 of the interim consolidated financial statements for further information.
The following reconciles our definition of free cash flow with cash provided by operating activities.
Free cash flow reconciliation with Cash provided by operating activities
|
|
Second quarters |
|
Six-month periods |
| ||||
($ millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Free cash flow |
|
511 |
|
324 |
|
1,056 |
|
477 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
Capital expenditures (excluding spectrum licences) |
|
756 |
|
770 |
|
1,421 |
|
1,416 |
|
Adjustments to reconcile to Cash provided by operating activities |
|
195 |
|
66 |
|
162 |
|
57 |
|
Cash provided by operating activities |
|
1,462 |
|
1,160 |
|
2,639 |
|
1,950 |
|
Free cash flow calculation
12-month periods ended June 30 ($ millions) |
|
2020 |
|
2019 |
|
EBITDA |
|
5,570 |
|
5,336 |
|
Deduct non-cash gains from the sale of property, plant and equipment |
|
(13 |
) |
(43 |
) |
Restructuring and other costs, net of disbursements |
|
22 |
|
43 |
|
Effects of contract asset, acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment device financing |
|
43 |
|
(172 |
) |
Effects of lease principal (IFRS 16 impact) |
|
(346 |
) |
(152 |
) |
Leases formerly accounted for as finance leases (IFRS 16 impact) |
|
136 |
|
26 |
|
Deduct non-recurring gains and equity income related to real estate joint ventures |
|
|
|
(171 |
) |
Donation to TELUS Friendly Future Foundation in TELUS Common Shares |
|
|
|
100 |
|
Items from the Consolidated statements of cash flows: |
|
|
|
|
|
Share-based compensation, net |
|
23 |
|
2 |
|
Net employee defined benefit plans expense |
|
91 |
|
85 |
|
Employer contributions to employee defined benefit plans |
|
(40 |
) |
(46 |
) |
Interest paid |
|
(764 |
) |
(654 |
) |
Interest received |
|
8 |
|
9 |
|
Capital expenditures (excluding spectrum licences)1 |
|
(2,911 |
) |
(2,889 |
) |
Free cash flow before income taxes |
|
1,819 |
|
1,474 |
|
Income taxes paid, net of refunds |
|
(308 |
) |
(562 |
) |
Free cash flow |
|
1,511 |
|
912 |
|
(1) Refer to Note 31 of the interim consolidated financial statements for further information.
Free cash flow reconciliation with Cash provided by operating activities
12-month periods ended June 30 ($ millions) |
|
2020 |
|
2019 |
|
Free cash flow |
|
1,511 |
|
912 |
|
Add: |
|
|
|
|
|
Capital expenditures (excluding spectrum licences) |
|
2,911 |
|
2,889 |
|
Adjustments to reconcile to Cash provided by operating activities |
|
194 |
|
163 |
|
Cash provided by operating activities |
|
4,616 |
|
3,964 |
|
Net debt: We believe that net debt is a useful measure because it represents the amount of Short-term borrowings and long-term debt obligations that are not covered by available Cash and temporary investments. The nearest IFRS measure to net debt is Long-term debt, including Current maturities of Long-term debt. Net debt is a component of the Net debt to EBITDA excluding restructuring and other costs ratio.
Calculation of Net debt
As at June 30 ($ millions) |
|
2020 |
|
2019 |
|
Long-term debt including current maturities |
|
18,518 |
|
16,579 |
|
Debt issuance costs netted against long-term debt |
|
96 |
|
105 |
|
Derivative (assets) liabilities, net |
|
(392 |
) |
92 |
|
Accumulated other comprehensive income amounts arising from financial instruments used to manage interest rate and currency risks associated with U.S. dollar-denominated long-term debt (excluding tax effects) |
|
313 |
|
(57 |
) |
Cash and temporary investments, net |
|
(971 |
) |
(217 |
) |
Short-term borrowings |
|
100 |
|
100 |
|
Net debt |
|
17,664 |
|
16,602 |
|
Net debt to EBITDA excluding restructuring and other costs: This measure is defined as net debt at the end of the period divided by 12-month trailing EBITDA excluding restructuring and other costs. (See discussion in Section 7.5 Liquidity and capital resource measures.) This measure is similar to the leverage ratio covenant in our credit facilities, as described in Section 7.6 Credit facilities.
Net interest cost: This measure is the denominator in the calculation of EBITDA excluding restructuring and other costs interest coverage. Net interest cost is defined as financing costs, excluding capitalized long-term debt interest, employee defined benefit plans net interest and recoveries on redemption and repayment of debt, calculated on a 12-month trailing basis. Expenses recorded for the long-term debt prepayment premium, if any, are included in net interest cost. Net interest cost was $797 million in the 12-month period ended June 30, 2020, and $706 million in the 12-month period ended June 30, 2019.
Restructuring and other costs: With the objective of reducing ongoing costs, we incur associated incremental, non-recurring restructuring costs. We may also incur atypical charges, which are included in other costs, when undertaking
major or transformational changes to our business or operating models or post-acquisition business integration. In other costs, we include incremental atypical external costs incurred in connection with business acquisition or disposition activity, as well as significant litigation costs in respect of losses or settlements, adverse retrospective regulatory decisions and incremental atypical costs incurred due to the COVID-19 pandemic.
Components of restructuring and other costs
|
|
Second quarters |
|
Six-month periods |
| ||||
($ millions) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Goods and services purchased |
|
60 |
|
8 |
|
110 |
|
26 |
|
Employee benefits expense |
|
10 |
|
21 |
|
20 |
|
39 |
|
Restructuring and other costs included in EBITDA |
|
70 |
|
29 |
|
130 |
|
65 |
|
11.2 Operating indicators
The following measures are industry metrics that are useful in assessing the operating performance of a wireless and wireline telecommunications entity, but do not have a standardized meaning under IFRS-IASB.
Mobile phone average billing per subscriber per month (ABPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges, as well as monthly re-payments of the outstanding device balance owing from customers on contract; divided by the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month.
Mobile phone average revenue per subscriber per month (ARPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges; divided by the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month.
Churn is calculated as the number of subscribers deactivated during a given period divided by the average number of subscribers on the network during the period, and is expressed as a rate per month. Mobile phone churn refers to the aggregate average of both prepaid and postpaid mobile phone churn. A TELUS, Koodo or Public Mobile brand prepaid mobile phone subscriber is deactivated when the subscriber has no usage for 90 days following expiry of the prepaid credits.
Mobile connected device subscriber means a TELUS subscriber on an active service plan with a recurring revenue-generating portable unit (e.g. tablets, internet keys, Internet of Things, wearables and connected cars) that is connected to the TELUS network and is intended for limited or no cellular voice capability.
Mobile phone subscriber means a TELUS subscriber on an active service plan with a recurring revenue-generating portable unit (e.g. feature phones and smartphones) that is connected to the TELUS network and provides voice, text and/or data connectivity.
Internet subscriber means a TELUS subscriber on an active internet plan with a recurring revenue-generating fixed unit that is connected to the TELUS network and provides internet connectivity.
Residential voice subscriber means a TELUS subscriber on an active phone plan with a recurring revenue-generating fixed unit that is connected to the TELUS network and provides voice service.
Security subscriber means a TELUS subscriber on an active security plan with a recurring revenue-generating fixed unit that is connected to the TELUS security and automation platform.
TV subscriber means a TELUS subscriber on an active TV plan with a recurring revenue-generating fixed unit subscription for video services from a TELUS TV platform (e.g. Optik TV and Pik TV).
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end
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end
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end
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end
Document and Entity Information |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Document and Entity Information | |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2020 |
Entity Registrant Name | TELUS Corporation |
Entity Central Index Key | 0000868675 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
condensed interim consolidated statements of financial position - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Current assets | ||
Cash and temporary investments, net | $ 971 | $ 535 |
Accounts receivable | 2,004 | 1,962 |
Income and other taxes receivable | 18 | 127 |
Inventories | 335 | 437 |
Contract assets | 538 | 737 |
Prepaid expenses | 544 | 547 |
Current derivative assets | 10 | 8 |
Total | 4,420 | 4,353 |
Non-current assets | ||
Property, plant and equipment, net | 14,559 | 14,232 |
Intangible assets, net | 13,630 | 12,844 |
Goodwill, net | 6,132 | 5,309 |
Contract assets | 212 | 328 |
Other long-term assets | 1,355 | 919 |
Total | 35,888 | 33,632 |
Total | 40,308 | 37,985 |
Current liabilities | ||
Short-term borrowings | 100 | 100 |
Accounts payable and accrued liabilities | 2,873 | 2,749 |
Income and other taxes payable | 155 | 55 |
Dividends payable | 372 | 352 |
Advance billings and customer deposits | 696 | 675 |
Provisions | 83 | 288 |
Current maturities of long-term debt | 562 | 1,332 |
Current derivative liabilities | 9 | 23 |
Total | 4,850 | 5,574 |
Non-current liabilities | ||
Provisions | 613 | 590 |
Long-term debt | 17,956 | 17,142 |
Other long-term liabilities | 1,157 | 806 |
Deferred income taxes | 3,352 | 3,214 |
Total | 23,078 | 21,752 |
Liabilities | 27,928 | 27,326 |
Owners' equity | ||
Common equity | 12,046 | 10,548 |
Non-controlling interests | 334 | 111 |
Total | 12,380 | 10,659 |
Total | 40,308 | 37,985 |
Contingent Liabilities |
condensed interim consolidated statements of changes in owners' equity - CAD ($) shares in Millions, $ in Millions |
Equity contributed, Common shares |
Contributed surplus |
Retained earnings |
Accumulated other comprehensive income |
Common equity |
Non-controlling interests |
Total |
||
---|---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2018 | [1] | 1,197 | |||||||
Balance at Dec. 31, 2018 | $ 5,390 | $ 383 | $ 4,321 | $ 11 | $ 10,105 | $ 74 | $ 10,179 | ||
Net income | 945 | 945 | 12 | 957 | |||||
Other comprehensive income | 32 | (28) | 4 | 6 | 10 | ||||
Dividends | (668) | (668) | (668) | ||||||
Dividends reinvested and optional cash payments (in shares) | [1] | 2 | |||||||
Dividends reinvested and optional cash payments | $ 46 | 46 | 46 | ||||||
Equity accounted share-based compensation | 1 | (1) | |||||||
Issue of Common Shares in business combination | $ 72 | 72 | 72 | ||||||
Issue of Common Shares in business combination (in shares) | [1] | 3 | |||||||
Balance (in shares) at Jun. 30, 2019 | [1] | 1,202 | |||||||
Balance at Jun. 30, 2019 | $ 5,509 | 382 | 4,630 | (17) | 10,504 | 92 | 10,596 | ||
Balance (in shares) at Dec. 31, 2019 | [1] | 1,209 | |||||||
Balance at Dec. 31, 2019 | $ 5,660 | 398 | 4,371 | 119 | 10,548 | 111 | 10,659 | ||
Dividends | (371) | ||||||||
Balance (in shares) at Dec. 31, 2019 | [1] | 1,209 | |||||||
Balance at Dec. 31, 2019 | $ 5,660 | 398 | 4,371 | 119 | 10,548 | 111 | 10,659 | ||
Net income | 640 | 640 | 28 | 668 | |||||
Other comprehensive income | (353) | 164 | (189) | 3 | (186) | ||||
Dividends | (743) | (743) | (743) | ||||||
Dividends reinvested and optional cash payments (in shares) | [1] | 11 | |||||||
Dividends reinvested and optional cash payments | $ 262 | 262 | 262 | ||||||
Equity accounted share-based compensation | 58 | 58 | 58 | ||||||
Common Shares issued | $ 1,453 | 1,453 | 1,453 | ||||||
Change of ownership interests of subsidiary | 17 | 17 | 192 | 209 | |||||
Balance (in shares) at Jun. 30, 2020 | [1] | 1,278 | |||||||
Balance at Jun. 30, 2020 | $ 7,375 | 473 | 3,915 | 283 | 12,046 | 334 | $ 12,380 | ||
Common Shares issued (in shares) | 58 | ||||||||
Net income | $ 315 | ||||||||
Other comprehensive income | (776) | ||||||||
Dividends | (372) | ||||||||
Balance (in shares) at Jun. 30, 2020 | [1] | 1,278 | |||||||
Balance at Jun. 30, 2020 | $ 7,375 | $ 473 | $ 3,915 | $ 283 | $ 12,046 | $ 334 | $ 12,380 | ||
Common Shares issued (in shares) | [1] | 58 | |||||||
|
condensed interim consolidated statements of cash flows - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
OPERATING ACTIVITIES | ||||
Net income | $ 315 | $ 520 | $ 668 | $ 957 |
Adjustments to reconcile net income to cash provided by operating activities: | ||||
Depreciation and amortization | 725 | 633 | 1,450 | 1,250 |
Deferred income taxes | 36 | (39) | (25) | (8) |
Share-based compensation expense, net | 41 | 20 | 64 | 39 |
Net employee defined benefit plans expense | 25 | 19 | 52 | 39 |
Employer contributions to employee defined benefit plans | (12) | (12) | (27) | (28) |
Non-current contract assets | 51 | 15 | 116 | 36 |
Non-current unbilled customer finance receivables | (53) | 9 | (94) | 15 |
Loss from equity accounted investments | 5 | 1 | 13 | 1 |
Other | (75) | (22) | (42) | 51 |
Net change in non-cash operating working capital | 404 | 16 | 464 | (402) |
Cash provided by operating activities | 1,462 | 1,160 | 2,639 | 1,950 |
INVESTING ACTIVITIES | ||||
Cash payments for capital assets, excluding spectrum licences | (694) | (645) | (1,474) | (1,438) |
Cash payments for spectrum licences | (931) | (931) | ||
Cash payments for acquisitions, net | (107) | (26) | (1,211) | (188) |
Advances to, and investment in, real estate joint ventures and associate | (8) | (9) | (88) | (17) |
Real estate joint venture receipts | 1 | 1 | 3 | 2 |
Other | (15) | 10 | (12) | 10 |
Cash used by investing activities | (823) | (1,600) | (2,782) | (2,562) |
FINANCING ACTIVITIES | ||||
Common Shares issued | 1,495 | |||
Dividends paid to holders of Common Shares | (240) | (307) | (462) | (610) |
Issue (repayment) of short-term borrowings, net | (400) | |||
Long-term debt issued | 1,000 | 2,422 | 2,377 | 3,588 |
Redemptions and repayment of long-term debt | (1,479) | (1,617) | (2,967) | (2,534) |
Shares of subsidiary issued to non-controlling interests | 209 | |||
Other | (7) | (29) | (73) | (29) |
Cash provided (used) by financing activities | (726) | 69 | 579 | 415 |
CASH POSITION | ||||
Increase (decrease) in cash and temporary investments, net | (87) | (371) | 436 | (197) |
Cash and temporary investments, net, beginning of period | 1,058 | 588 | 535 | 414 |
Cash and temporary investments, net, end of period | 971 | 217 | 971 | 217 |
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS | ||||
Interest paid | (199) | (147) | (376) | (326) |
Interest received | 3 | 3 | 6 | 5 |
Income taxes paid, net | ||||
In respect of comprehensive income | (11) | (122) | (104) | (458) |
In respect of business acquisitions | (2) | (33) | (15) | |
Income taxes paid, net | $ (13) | $ (122) | $ (137) | $ (473) |
condensed interim consolidated financial statements |
6 Months Ended |
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Jun. 30, 2020 | |
condensed interim consolidated financial statements | |
condensed interim consolidated financial statements | 1 condensed interim consolidated financial statements (a) Basis of presentation The notes presented in our condensed interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our interim consolidated financial statements are referred to as condensed. Our condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2019. Our condensed interim consolidated financial statements are expressed in Canadian dollars and follow the same accounting policies and methods of their application as set out in our consolidated financial statements for the year ended December 31, 2019. The generally accepted accounting principles that we use are International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) and Canadian generally accepted accounting principles. Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented. These consolidated financial statements for the three-month and six-month periods ended June 30, 2020, were authorized by our Board of Directors for issue on July 31, 2020. (b) Use of estimates and judgments The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates (including about the future effects of the COVID-19 pandemic), assumptions and judgments that affect: the reported amounts of assets and liabilities at the date of the financial statements; the disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Inventories Our inventories primarily consist of wireless handsets, parts and accessories totalling $266 million at June 30, 2020 (December 31, 2019 – $375 million) and communications equipment held for resale. Costs of goods sold for the three-month and six-month periods ended June 30, 2020, totalled $384 million (2019- $484 million) and $786 million (2019 - $943 million), respectively.
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accounting policy developments |
6 Months Ended |
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Jun. 30, 2020 | |
accounting policy developments | |
accounting policy developments | 2 accounting policy developments Initial application of standards, interpretations and amendments to standards and interpretations in the reporting period In October 2018, the International Accounting Standards Board amended IFRS 3, Business Combinations, seeking to clarify whether an acquisition transaction results in the acquisition of an asset or the acquisition of a business. The amendments are effective for acquisition transactions on or after January 1, 2020, although earlier application was permitted. The amended standard has a narrower definition of a business, which could result in the recognition of fewer business combinations than under the previous standard; the implication of this is that amounts which may have been recognized as goodwill in a business combination under the previous standard may now be recognized as allocations to net identifiable assets acquired under the amended standard (with an associated effect in an entity’s results of operations that would differ from the effect of goodwill having been recognized). We have applied the standard prospectively from January 1, 2020. The effects of the amended standard on our financial performance and disclosure will be dependent on the facts and circumstances of any future acquisition transactions and have not been material in the current fiscal year.
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capital structure financial policies |
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capital structure financial policies | 3 capital structure financial policies General Our objective when managing capital is to maintain a flexible capital structure that optimizes the cost and availability of capital at acceptable risk. In the management of capital and in its definition, we include common equity (excluding accumulated other comprehensive income), long-term debt (including long-term credit facilities, commercial paper backstopped by long-term credit facilities and any hedging assets or liabilities associated with long-term debt items, net of amounts recognized in accumulated other comprehensive income), cash and temporary investments, and short-term borrowings arising from securitized trade receivables. We manage our capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of our business. In order to maintain or adjust our capital structure, we may adjust the amount of dividends paid to holders of Common Shares, purchase Common Shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or increase or decrease the amount of trade receivables sold to an arm’s-length securitization trust. During 2020, our financial objectives, which are reviewed annually, were unchanged from 2019, excepting for a change in methodology of our dividend payout ratio. We believe that our financial objectives are supportive of our long-term strategy. We monitor capital utilizing a number of measures, including: net debt to earnings before interest, income taxes, depreciation and amortization (EBITDA*) – excluding restructuring and other costs ratio; coverage ratios; and dividend payout ratios. Debt and coverage ratios Net debt to EBITDA – excluding restructuring and other costs is calculated as net debt at the end of the period, divided by 12-month trailing EBITDA – excluding restructuring and other costs. This measure, historically, is substantially similar to the leverage ratio covenant in our credit facilities. Net debt and EBITDA – excluding restructuring and other costs are measures that do not have any standardized meanings prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other companies. The calculation of these measures is set out in the following table. Net debt is one component of a ratio used to determine compliance with debt covenants.
*EBITDA does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define EBITDA as operating revenues less goods and services purchased and employee benefits expense. We have issued guidance on, and report, EBITDA because it is a key measure that management uses to evaluate the performance of our business, and it is also utilized in measuring compliance with certain debt covenants.
Net debt to EBITDA – excluding restructuring and other costs was 3.06 times as at June 30,2020, up from 2.94 times one year earlier. The effect of the increase in net debt was exceeded by the effect of growth in EBITDA – excluding restructuring and other costs. The earnings coverage ratio for the twelve-month period ended June 30, 2020, was 3.6 times, down from 4.2 times one year earlier. Higher borrowing costs reduced the ratio by 0.5 and a decrease in income before borrowing costs and income taxes decreased the ratio by 0.1. The EBITDA – excluding restructuring and other costs interest coverage ratio for the twelve-month period ended June 30,2020, was 7.2 times, down from 8.0 times one year earlier. Growth in EBITDA – excluding restructuring and other costs increased the ratio by 0.2, while an increase in net interest costs reduced the ratio by 1.0. Dividend payout ratio Commencing in 2020, so as to be consistent with the way we manage our business, we updated our revised dividend payout ratio presented to be a historical measure calculated as the sum of the last four quarters’ dividends declared for Common Shares as recorded in the financial statements, net of dividend reinvestment plan effects (see Note 13), divided by the sum of free cash flow* amounts for the most recent four quarters for interim reporting periods (divided by annual free cash flow if the reported amount is in respect of a fiscal year).
* Free cash flow does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define free cash flow as EBITDA (operating revenues less goods and services purchased and employee benefits expense) excluding certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the consolidated statements of cash flows. We have issued guidance on, and report, free cash flow because it is a key measure that management, and investors, use to evaluate the performance of our business. Our calculation of free cash flow, and the reconciliation to cash provided by operating activities, is as follows:
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financial instruments |
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financial instruments | 4 financial instruments (a) Credit risk Excluding credit risk, if any, arising from currency swaps settled on a gross basis, the best representation of our maximum exposure (excluding income tax effects) to credit risk, which is a worst-case scenario and does not reflect results we expect, is set out in the following table:
Cash and temporary investments, net Credit risk associated with cash and temporary investments is managed by ensuring that these financial assets are placed with: governments; major financial institutions that have been accorded strong investment grade ratings by a primary rating agency; and/or other creditworthy counterparties. An ongoing review evaluates changes in the status of counterparties. Accounts receivable Credit risk associated with accounts receivable is inherently managed by the size and diversity of our large customer base, which includes substantially all consumer and business sectors in Canada. We follow a program of credit evaluations of customers and limit the amount of credit extended when deemed necessary. Accounts are considered to be past due (in default) when customers have failed to make the contractually required payments when due, which is generally within 30 days of the billing date. Any late payment charges are levied at an industry-based market or negotiated rate on outstanding non-current customer account balances.
We maintain allowances for lifetime expected credit losses related to doubtful accounts. Current economic conditions (including forward-looking macroeconomic data), historical information (including credit agency reports, if available), reasons for the accounts being past due and the line of business from which the customer accounts receivable arose are all considered when determining whether to make allowances for past-due accounts. The same factors are considered when determining whether to write off amounts charged to the allowance for doubtful accounts against the customer accounts receivable; amounts charged to the customer accounts receivable allowance for doubtful accounts that were written off but were still subject to enforcement activity as at June 30, 2020, totalled $541 million (December 31, 2019 – $449 million). The doubtful accounts expense is calculated on a specific-identification basis for customer accounts receivable above a specific balance threshold and on a statistically derived allowance basis for the remainder. No customer accounts receivable are written off directly to the doubtful accounts expense. The following table presents a summary of the activity related to our allowance for doubtful accounts.
Contract assets Credit risk associated with contract assets is inherently managed by the size and diversity of our large customer base, which includes substantially all consumer and business sectors in Canada. We follow a program of credit evaluations of customers and limit the amount of credit extended when deemed necessary.
We maintain allowances for lifetime expected credit losses related to contract assets. Current economic conditions, historical information (including credit agency reports, if available), and the line of business from which the contract asset arose are all considered when determining impairment allowances. The same factors are considered when determining whether to write off amounts charged to the impairment allowance for contract assets against contract assets. Derivative assets (and derivative liabilities) Counterparties to our share-based compensation cash-settled equity forward agreements and foreign exchange derivatives are major financial institutions that have been accorded investment grade ratings by a primary credit rating agency. The total dollar amount of credit exposure under contracts with any one financial institution is limited and counterparties’ credit ratings are monitored. We do not give or receive collateral on swap agreements and hedging items due to our credit rating and those of our counterparties. While we are exposed to the risk of potential credit losses due to the possible non-performance of our counterparties, we consider this risk remote. Our derivative liabilities do not have credit risk-related contingent features. (b) Liquidity risk As a component of our capital structure financial policies, discussed further in Note 3, we manage liquidity risk by:
Our debt maturities in future years are as disclosed in Note 26(g). As at June 30, 2020, we could offer $2.5 billion of debt or equity securities pursuant to a shelf prospectus that is in effect until June 2022 (December 31, 2019 – $2.0 billion pursuant to a shelf prospectus that was in effect until August 2021). We believe that our investment grade credit ratings contribute to reasonable access to capital markets. We closely match the contractual maturities of our derivative financial liabilities with those of the risk exposures they are being used to manage. The expected maturities of our undiscounted financial liabilities do not differ significantly from the contractual maturities, other than as noted below. The contractual maturities of our undiscounted financial liabilities, including interest thereon (where applicable), are set out in the following tables:
(c) Market risks Net income and other comprehensive income for the six-month periods ended June 30, 2020 and 2019, could have varied if the Canadian dollar: U.S. dollar exchange rate, the U.S. dollar: European euro exchange rate, market interest rates and our Common Share price varied by reasonably possible amounts from their actual statement of financial position date amounts. The sensitivity analysis of our exposure to currency risk at the reporting date has been determined based upon a hypothetical change taking place at the relevant statement of financial position date. The U.S. dollar-denominated and European euro-denominated balances and derivative financial instrument notional amounts as at the statement of financial position dates have been used in the calculations. The sensitivity analysis of our exposure to interest rate risk at the reporting date has been determined based upon a hypothetical change taking place at the beginning of the relevant fiscal year and being held constant through to the statement of financial position date. The relevant statement of financial position date principal and notional amounts have been used in the calculations. The sensitivity analysis of our exposure to other price risk arising from share-based compensation at the reporting date has been determined based upon a hypothetical change taking place at the relevant statement of financial position date. The relevant notional number of Common Shares at the relevant statement of financial position date, which includes those in the cash-settled equity swap agreements, has been used in the calculations. Income tax expense, which is reflected net in the sensitivity analysis, reflects the applicable statutory income tax rates for the reporting periods.
The sensitivity analysis assumes that we would realize the changes in exchange rates and market interest rates; in reality, the competitive marketplace in which we operate would have an effect on this assumption.
No consideration has been made for a difference in the notional number of Common Shares associated with share-based compensation awards made during the reporting period that may have arisen due to a difference in the Common Share price.
(d) Fair values Derivative The derivative financial instruments that we measure at fair value on a recurring basis subsequent to initial recognition are set out in the following table.
* Amounts reflect retrospective application of March 17, 2020, share split (See Note 28(b)).
Non-derivative Our long-term debt, which is measured at amortized cost, and the fair value thereof, are set out in the following table.
(e) Recognition of derivative gains and losses The following table sets out the gains and losses, excluding income tax effects, arising from derivative instruments that are classified as cash flow hedging items and their location within the Consolidated statements of income and other comprehensive income. Credit risk associated with such derivative instruments, as discussed further in (a), would be the primary source of hedge ineffectiveness. There was no ineffective portion of the derivative instruments classified as cash flow hedging items for the periods presented.
The following table sets out the gains and losses arising from derivative instruments that are classified as held for trading and that are not designated as being in a hedging relationship, and their location within the Consolidated statements of income and other comprehensive income.
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segment information |
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segment information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
segment information | 5 segment information General Operating segments are components of an entity that engage in business activities from which they earn revenues and incur expenses (including revenues and expenses related to transactions with the other component(s)), the operations of which can be clearly distinguished and for which the operating results are regularly reviewed by a chief operating decision-maker to make resource allocation decisions and to assess performance. Effective January 1, 2020, we embarked upon modifying our internal and external reporting processes, systems and internal controls to accommodate the technology convergence-driven cessation of the historical distinction between our wireless and wireline operations at the level of regularly reported discrete performance measures that are provided to our chief operating decision-maker. Prior to the World Health Organization characterizing COVID-19 as a pandemic, we had anticipated transitioning to a new segment reporting structure during 2020, but did not, and do not, anticipate a substantive change to our products and services revenue reporting from such transition; we will continue to report wireless and wireline operations until such transition is substantially completed, but the timing of such transition may be impacted as we prioritize managing through the pandemic. The wireless segment includes network revenues and equipment sales arising from mobile technologies. The wireline segment includes data revenues (which include internet protocol; television; hosting, managed information technology and cloud-based services; customer care and business services; certain healthcare solutions; and home and business security), voice and other telecommunications services revenues (excluding wireless arising from mobile technologies), and equipment sales. Segmentation has been based on similarities in technology (mobile versus fixed), the technical expertise required to deliver the services and products, customer characteristics, the distribution channels used and regulatory treatment. Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties. The segment information regularly reported to our Chief Executive Officer (our chief operating decision-maker), and the reconciliations thereof to our products and services view of revenues, other revenues and income before income taxes, are set out in the following table.
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revenue from contracts with customers |
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revenue from contracts with customers | 6 revenue from contracts with customers (a) Revenues In the determination of the minimum transaction prices in contracts with customers, amounts are allocated to fulfilling, or completion of fulfilling, future contracted performance obligations. These unfulfilled, or partially unfulfilled, future contracted performance obligations are largely in respect of services to be provided over the duration of the contract. The following table sets out our aggregate estimated minimum transaction prices allocated to remaining unfulfilled, or partially unfulfilled, future contracted performance obligations and the timing of when we might expect to recognize the associated revenues; actual amounts could differ from these estimates due to a variety of factors, including the unpredictable nature of: customer behaviour; industry regulation; the economic environments in which we operate; and competitor behaviour.
(b) Accounts receivable
(c) Contract assets
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other operating income |
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other operating income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
other operating income | 7 other operating income
We receive government assistance, as defined by IFRS-IASB, from a number of sources and include such amounts received in Other operating income. We recognize such amounts on an accrual basis as the subsidized services are provided or as the subsidized costs are incurred. CRTC subsidy Local exchange carriers’ costs of providing the level of residential basic telephone services that the CRTC requires to be provided in high cost serving areas are greater than the amounts the CRTC allows the local exchange carriers to charge for the level of service. To ameliorate the situation, the CRTC directs the collection of contribution payments, in a central fund, from all registered Canadian telecommunications service providers (including voice, data and wireless service providers) that are then disbursed to incumbent local exchange carriers as subsidy payments to partially offset the costs of providing residential basic telephone services in non-forborne high cost serving areas. The subsidy payment disbursements are based upon a total subsidy requirement calculated on a per network access line/per band subsidy rate. For the three-month and six-month periods ended June 30, 2020, our subsidy receipts were $2 million (2019 – $4 million) and $5 million (2019 – $8 million), respectively. Government of Quebec Salaries for qualifying employment positions in the province of Quebec, mainly in the information technology sector, are eligible for tax credits. In respect of such tax credits, for the three-month and six-month periods ended June 30, 2020, we recorded $1 million (2019 – $4 million) and $1 million (2019 – $4 million), respectively. |
employee benefits expense |
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employee benefits expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
employee benefits expense | 8 employee benefits expense
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financing costs |
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financing costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
financing costs | 9 financing costs
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income taxes |
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income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
income taxes | 10 income taxes
Our income tax expense and effective income tax rate differ from those calculated by applying the applicable statutory rates for the following reasons:
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other comprehensive income |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
other comprehensive income | 11 other comprehensive income
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per share amounts |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
per share amounts | 12 per share amounts Basic net income per Common Share is calculated by dividing net income attributable to Common Shares by the total weighted average number of Common Shares outstanding during the period. Diluted net income per Common Share is calculated to give effect to share option awards and restricted share units. The following table presents reconciliations of the denominators of the basic and diluted per share computations. Net income was equal to diluted net income for all periods presented.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
For the three-month and six-month periods ended June 30, 2020, no outstanding equity-settled restricted share unit awards were excluded in the computation of diluted income per common share. For the three-month and six-month periods ended June 30, 2020, NIL and 2 million, respectively, outstanding TELUS Corporation share option awards were excluded in the calculation of diluted net income per Common Share. |
dividends per share |
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
dividends per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
dividends per share | 13 dividends per share (a) Dividends declared
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). On July 30, 2020, the Board of Directors declared a quarterly dividend of $0.29125 per share on our issued and outstanding Common Shares payable on October 1, 2020, to holders of record at the close of business on September 10, 2020. The final amount of the dividend payment depends upon the number of Common Shares issued and outstanding at the close of business on September 10, 2020. (b) Dividend Reinvestment and Share Purchase Plan We have a Dividend Reinvestment and Share Purchase Plan under which eligible holders of Common Shares may acquire additional Common Shares by reinvesting dividends and by making additional optional cash payments to the trustee. Under this plan, we have the option of offering Common Shares from Treasury or having the trustee acquire Common Shares in the stock market. We may, at our discretion, offer Common Shares at a discount of up to 5% from the market price under the plan. Effective with our dividends paid October 1, 2019, we offered Common Shares from Treasury at a discount of 2%. In respect of Common Shares held by eligible shareholders who have elected to participate in the plan, dividends declared during the three-month and six-month periods ended June 30, 2020, of $131 million (2019 - $15 million) and $253 million (2019- $28 million), respectively, were to be reinvested in Common Shares.
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share-based compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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share-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
share-based compensation |
14 share-based compensation (a) Details of share-based compensation expense Reflected in the Consolidated statements of income and other comprehensive income as Employee benefits expense and in the Consolidated statements of cash flows are the following share-based compensation amounts:
For the three-month and six-month periods ended June 30, 2020, the associated operating cash outflows in respect of restricted share units were net of cash inflows arising from cash-settled equity forward agreements of $1 million (2019 – $2 million) and $2 million (2019 - $3 million), respectively. For the three-month and six-month periods ended June 30, 2020, the income tax benefit arising from share-based compensation was $11 million (2019 - $8 million) and $19 million (2019 - $17 million), respectively. (b) Restricted share units TELUS Corporation restricted share units We also award restricted share units that largely have the same features as our general restricted share units, but have a variable payout (0% – 200%) that depends upon the achievement of our total customer connections performance condition (with a weighting of 25%) and the total shareholder return on our Common Shares relative to an international peer group of telecommunications companies (with a weighting of 75%). The grant-date fair value of the notional subset of our restricted share units affected by the total customer connections performance condition equals the fair market value of the corresponding Common Shares at the grant date, and thus the notional subset has been included in the presentation of our restricted share units with only service conditions. The estimate, which reflects a variable payout, of the fair value of the notional subset of our restricted share units affected by the relative total shareholder return performance condition is determined using a Monte Carlo simulation. Grants of restricted share units in 2019 are accounted for as equity-settled as that was their expected manner of settlement when granted. The following table presents a summary of outstanding TELUS Corporation non-vested restricted share units.
The following table presents a summary of the activity related to TELUS Corporation restricted share units without market performance conditions.
*Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
With respect to 2.9 million TELUS Corporation restricted share units vesting in the year ending December 31, 2020, we have entered into cash-settled equity forward agreements that fix our cost at $24.39 per restricted share unit.
TELUS International (Cda) Inc. restricted share units We also award restricted share units that largely have the same features as the TELUS Corporation restricted share units, but have a variable payout (0% – 150%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions.
The following table presents a summary of the activity related to TELUS International (Cda) Inc. restricted share units.
(c) Employee share purchase plan We have an employee share purchase plan under which eligible employees up to a certain job classification can purchase our Common Shares through regular payroll deductions. In respect of Common Shares held within the employee share purchase plan, Common Share dividends declared during the three-month and six-month periods ended June 30, 2020, of $9 million (2019 - $8 million) and $18 million (2019 – $17 million), respectively, were to be reinvested in Common Shares acquired by the trustee from Treasury, with no discount applicable prior to October 1, 2019; subsequent to that date, a discount was applicable as set out in Note 13(b). (d) Share option awards TELUS Corporation share options Employees may be granted options to purchase Common Shares at an exercise price equal to the fair market value at the time of grant. Share option awards granted under the plan may be exercised over specific periods not to exceed seven years from the time of grant. No share option awards were granted in fiscal 2019. These share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature. The following table presents a summary of the activity related to the TELUS Corporation share option plan.
*Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
The weighted average fair value of share option awards granted, and the weighted average assumptions used in the fair value estimation at the time of grant, calculated by using the Black-Scholes model (a closed-form option pricing model), are as follows:
Share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature.
TELUS International (Cda) Inc. share options Employees may receive equity share options (equity-settled) to purchase TELUS International (Cda) Inc. common shares at a price equal to, or a multiple of, the fair market value at the time of grant and/or phantom share options (cash-settled) that provide them with exposure to TELUS International (Cda) Inc. common share price appreciation. Share option awards granted under the plan may be exercised over specific periods not to exceed ten years from the time of grant. All equity share option awards and most phantom share option awards have a variable payout (0% – 100%)that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non‑market quality-of-service performance conditions. The following table presents a summary of the activity related to the TELUS International (Cda) Inc. share option plan.
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employee future benefits |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
employee future benefits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
employee future benefits | 15 employee future benefits (a) Defined benefit pension plans – details Our defined benefit pension plan expense (recovery) was as follows:
(b) Defined contribution plans – expense Our total defined contribution pension plan costs recognized were as follows:
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restructuring and other costs |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
restructuring and other costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
restructuring and other costs | 16 restructuring and other costs (a) Details of restructuring and other costs With the objective of reducing ongoing costs, we incur associated incremental non-recurring restructuring costs, as discussed further in (b) following. We may also incur atypical charges when undertaking major or transformational changes to our business or operating models or post-acquisition business integration. In other costs, we include incremental atypical external costs incurred in connection with business acquisition or disposition activity, as well as significant litigation costs, in respect of losses or settlements, adverse retrospective regulatory decisions and certain incremental atypical costs incurred due to the COVID-19 pandemic. Restructuring and other costs are presented in the Consolidated statements of income and other comprehensive income, as set out in the following table:
(b) Restructuring provisions Employee-related provisions and other provisions, as presented in Note 25, include amounts in respect of restructuring activities. In 2020, restructuring activities included ongoing and incremental efficiency initiatives, some of which involved personnel-related costs and rationalization of real estate. These initiatives were intended to improve our long-term operating productivity and competitiveness. (c) Other During the three-month and six-month periods ended June 30, 2020, incremental external costs were incurred in connection with business acquisition activity. In connection with business acquisitions, non-recurring atypical business integration expenditures that would be considered neither restructuring costs nor part of the fair value of the net assets acquired have been included in other costs. Also during the three-month and six-month periods ended June 30, 2020, other costs were incurred in connection with the COVID-19 pandemic. Incremental costs were incurred due to proactive steps we elected to take to keep our customers and employees safe, including adjustments to real estate cleaning and maintenance frequency, among other items. As well, costs that have been incurred in the normal course but which are unable to contribute normally to the earning of revenues have been deemed atypical. |
property, plant and equipment |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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property, plant and equipment | 17 property, plant and equipment
As at June 30, 2020, our contractual commitments for the acquisition of property, plant and equipment totalled $205 million over a period ending December 31, 2022 (December 31, 2019 – $136 million over a period ending December 31, 2022). |
intangible assets and goodwill |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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intangible assets and goodwill | 18 intangible assets and goodwill (a) Intangible assets and goodwill, net
As at June 30, 2020, our contractual commitments for the acquisition of intangible assets totalled $48 million over a period ending December 31, 2024 (December 31, 2019 – $45 million over a period ending December 31, 2024). (b) Business acquisitions Competence Call Center On January 31, 2020, we acquired 100% of Competence Call Center, a provider of higher-value-added business services with a focus on customer relationship management and content moderation. The acquisition is complementary to, and was made with a view to growing, our existing lines of business and has been consolidated with our TELUS International (Cda) Inc. subsidiary. The primary factor that contributed to the recognition of goodwill was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the acquired workforce and the benefits of acquiring an established business). The amount assigned to goodwill is not expected to be deductible for income tax purposes. Individually immaterial transactions During the six-month period ended June 30, 2020, we acquired 100% ownership of businesses complementary to our existing lines of business. The primary factor that gave rise to the recognition of goodwill was the earnings capacity of the acquired businesses in excess of the net tangible and intangible assets acquired (such excess arising from the low level of tangible assets relative to the earnings capacities of the businesses). A portion of the amounts assigned to goodwill may be deductible for income tax purposes. Acquisition-date fair values Acquisition-date fair values assigned to the assets acquired and liabilities assumed are set out in the following table:
Pro forma disclosures The following pro forma supplemental information represents certain results of operations as if the business acquisitions noted above had been completed at the beginning of the fiscal 2020 year.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). The pro forma supplemental information is based on estimates and assumptions that are believed to be reasonable. The pro forma supplemental information is not necessarily indicative of our consolidated financial results in future periods or the actual results that would have been realized had the business acquisitions been completed at the beginning of the periods presented. The pro forma supplemental information includes incremental property, plant and equipment depreciation, intangible asset amortization, financing and other charges as a result of the acquisitions, net of the related tax effects. (c) Business acquisitions – prior period In 2019, we acquired businesses that were complimentary to our existing lines of business. As at December 31, 2019, purchase price allocations had not been finalized. During the six-month period ended June 30, 2020, the preliminary acquisition-date values for software, goodwill and deferred income taxes were increased (decreased) by $32 million, $(22 million) and $10 million, respectively; as required by IFRS-IASB, comparative amounts have been adjusted so as to reflect those increases (decreases) effective the acquisition date. (d) Business acquisitions - subsequent to reporting period Mobile Klinik On July 1, 2020, we acquired 100% of Mobile Klinik, a storefront wireless device repair and sales business complementary to our existing wireless lines of business. Consideration of $165 million consisted of: cash of $138 million; working capital adjustments; and contingent consideration of $31 million, payment of which is dependent upon achieving revenue, profitability, store expansion and wireless subscriber addition targets through 2023. The investment was made with a view to growing our wireless business.
As of July 31, 2020, our initial provision for the net identifiable assets is in the range of $65 million – $85 million; as is customary in a business acquisition transaction, until the time of acquisition of control, we did not have full access to the books and records of the acquired business. Upon having sufficient time to review the books and records of the acquired business, as well as obtaining new and additional information about the facts and circumstances as of the acquisition date, we will adjust the provisional amounts for identifiable assets acquired and liabilities assumed and thus finalize our purchase price allocation. |
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leases | 19 leases Maturity analyses of lease liabilities are set out in Note 4(b) and Note 26(g); the period interest expense in respect thereof is set out in Note 9. The additions to, the depreciation charges for, and the carrying amount of, right-of-use lease assets are set out in Note 17. We have not currently elected to exclude low-value and short-term leases from lease accounting.
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other long-term assets | 20 other long-term assets
The costs incurred to obtain and fulfill contracts with customers are set out in the following table:
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real estate joint ventures and investment in associate | 21 real estate joint ventures and investment in associate (a) General Real estate joint ventures In 2013, we partnered, as equals, with two arm’s-length parties in a residential, retail and commercial real estate redevelopment project, TELUS Sky, in Calgary, Alberta. The new-build tower, scheduled for completion in 2020, is to be built to the LEED Platinum standard. Associate
On January 13, 2020, for cash consideration of approximately $73 million, we acquired a 28% basic equity interest in Miovision Technologies Incorporated, an associate that is complementary to, and is viewed to grow, our existing Internet of Things business; our judgment is that we obtained significant influence over the associate concurrent with obtaining the newly acquired equity interest.
(b) Real estate joint ventures Summarized financial information
Our real estate joint ventures activity Our real estate joint ventures investment activity is set out in the following table.
We have entered into a lease agreement with the TELUS Sky real estate joint venture; for lease accounting purposes, the lease commenced during the three-month period ended March 31, 2019. Real estate joint ventures commitments and contingent liabilities Construction commitments The TELUS Sky real estate joint venture is expected to spend a total of approximately $475 million (December 31, 2019 – $450 million) on the construction of a mixed-use tower. As at June 30, 2020, the real estate joint venture’s construction-related contractual commitments were approximately $23 million through to 2020 (December 31, 2019 – $37 million through to 2020). Construction credit facilities The TELUS Sky real estate joint venture has a credit agreement, maturing August 31, 2021, with Canadian financial institutions (as 66‑2/3% lender) and TELUS Corporation (as 33‑1/3% lender) to provide $342 million of construction financing for the project. The construction credit facilities contain customary real estate construction financing representations, warranties and covenants and are secured by demand debentures constituting first fixed and floating charge mortgages over the underlying real estate assets. The construction credit facilities are available by way of bankers’ acceptance or prime loan and bear interest at rates in line with similar construction financing facilities.
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short-term borrowings |
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short-term borrowings | 22 short-term borrowings On July 26, 2002, one of our subsidiaries, TELUS Communications Inc., entered into an agreement with an arm’s-length securitization trust associated with a major Schedule I bank under which it is able to sell an interest in certain trade receivables up to a maximum of $500 million (December 31, 2019 – $500 million). The term of this revolving-period securitization agreement ends December 31, 2021, and it requires minimum cash proceeds of $100 million from monthly sales of interests in certain trade receivables. TELUS Communications Inc. is required to maintain a credit rating of at least BB (December 31, 2019 – BB) from DBRS Limited or the securitization trust may require the sale program to be wound down prior to the end of the term. Sales of trade receivables in securitization transactions are recognized as collateralized short-term borrowings and thus do not result in our de-recognition of the trade receivables sold. When we sell our trade receivables, we retain reserve accounts, which are retained interests in the securitized trade receivables, and servicing rights. As at June 30, 2020, we had sold to the trust (but continued to recognize) trade receivables of $118 million (December 31, 2019 – $124 million). Short-term borrowings of $100 million (December 31, 2019 – $100 million) are comprised of amounts advanced to us by the arm’s-length securitization trust pursuant to the sale of trade receivables. The balance of short-term borrowings (if any) is comprised of amounts drawn on our bilateral bank facilities.
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accounts payable and accrued liabilities | 23 accounts payable and accrued liabilities
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advance billings and customer deposits | 24 advance billings and customer deposits
Contract liabilities represent our future performance obligations to customers in respect of services and/or equipment and for which we have received consideration from the customer or for which an amount is due from the customer. Our contract liability balances, and the changes in those balances, are set out in the following table:
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provisions | 25 provisions
Asset retirement obligation We establish provisions for liabilities associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development and/or normal operation of the assets. We expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur proximate to the dates these assets are retired. Employee-related The employee-related provisions are largely in respect of restructuring activities (as discussed further in Note 16(b)). The timing of the cash outflows in respect of the balance accrued as at the financial statement date is substantially short‑term in nature. Written put options In connection with certain business acquisitions, we have established provisions for written put options in respect of non-controlling interests. Provisions for written put options are determined based on the net present value of estimated future earnings results and require us to make key economic assumptions about the future. No cash outflows for the written put options are expected prior to their initial exercisability. Other The provisions for other include: legal claims; non-employee-related restructuring activities; contract termination costs and onerous contracts related to business acquisitions; and costs incurred in connection with the COVID-19 pandemic. Other than as set out following, we expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur over an indeterminate multi-year period. As discussed further in Note 29, we are involved in a number of legal claims and we are aware of certain other possible legal claims. In respect of legal claims, we establish provisions, when warranted, after taking into account legal assessments, information presently available, and the expected availability of recourse. The timing of cash outflows associated with legal claims cannot be reasonably determined. In connection with business acquisitions, we have established provisions for contingent consideration, contract termination costs and onerous contracts acquired. |
long-term debt |
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long-term debt | 26 long-term debt (a) Details of long-term debt
(b) TELUS Corporation senior notes The notes are senior unsecured and unsubordinated obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated obligations, are senior in right of payment to all of our existing and future subordinated indebtedness, and are effectively subordinated to all existing and future obligations of, or guaranteed by, our subsidiaries. The indentures governing the notes contain certain covenants that, among other things, place limitations on our ability, and the ability of certain of our subsidiaries, to: grant security in respect of indebtedness; enter into sale-leaseback transactions; and incur new indebtedness.
Interest is payable semi-annually. The notes require us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture.
At any time prior to the respective maturity dates set out in the table below, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 days’ and not more than 60 days’ prior notice. On or after the respective redemption present value spread cessation dates set out in the table below, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 days’ and not more than 60 days’ prior notice, at redemption prices equal to 100% of the principal amounts thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption.
(c) TELUS Corporation commercial paper TELUS Corporation has an unsecured commercial paper program, which is backstopped by our $2.25 billion syndicated credit facility (see (d)) and is to be used for general corporate purposes, including capital expenditures and investments. This program enables us to issue commercial paper, subject to conditions related to debt ratings, up to a maximum aggregate amount at any one time of $1.4 billion (December 31, 2019 – $1.4 billion). Foreign currency forward contracts are used to manage currency risk arising from issuing commercial paper denominated in U.S. dollars. Commercial paper debt is due within one year and is classified as a current portion of long-term debt, as the amounts are fully supported, and we expect that they will continue to be supported, by the revolving credit facility, which has no repayment requirements within the next year. As at June 30, 2020, we had $NIL (December 31, 2019 - $1,015 million) of commercial paper outstanding, which was denominated in U.S. dollars (US$NIL; December 31, 2019 - US$781 million). (d) TELUS Corporation credit facility As at June 30, 2020, TELUS Corporation had an unsecured revolving $2.25 billion bank credit facility, expiring on May 31, 2023, with a syndicate of financial institutions, which is to be used for general corporate purposes, including the backstopping of commercial paper. The TELUS Corporation credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (as such terms are used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter‑end ratio tests. These tests are that our leverage ratio must not exceed 4.25:1.00 and our operating cash flow to interest expense ratio must not be less than 2.00:1.00, all as defined in the credit facility. Continued access to the TELUS Corporation credit facility is not contingent upon TELUS Corporation maintaining a specific credit rating.
We had $191 million of letters of credit outstanding as at June 30, 2020 (December 31, 2019 – $184 million), issued under various uncommitted facilities; such letter of credit facilities are in addition to the ability to provide letters of credit pursuant to our committed bank credit facility. (e) TELUS International (Cda) Inc. credit facility As at June 30, 2020, TELUS International (Cda) Inc. had a credit facility, secured by its assets, expiring on January 28, 2025 (December 31, 2019 - December 20, 2022), with a syndicate of financial institutions (as 87.5% lender) and, joined in 2020, TELUS Corporation (as 12.5% lender). The credit facility is comprised of a US$600 million (December 31, 2019 – US$350 million) revolving component and an amortizing US$600 million (December 31, 2019 – US$120 million) term loan component. The credit facility is non-recourse to TELUS Corporation. The outstanding revolving component and term loan component had a weighted average interest rate of 2.68% as at June 30, 2020. In connection with the acquisition of Competence Call Center during the three-month period ended March 31, 2020, as discussed further in Note 18(b), incremental amounts were drawn on the facility.
Relative to amounts owed to the syndicate of financial institutions, excluding TELUS Corporation, we have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively convert an amortizing amount of US$415 of the principal payments and associated interest obligations to European euro obligations with an effective fixed interest rate of 0.65% and an effective fixed economic exchange rate of US$1.0932:€1.00. These have been accounted for as a net investment hedge in a foreign operation (see Note 4). TELUS International (Cda) Inc.’s credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter‑end ratio tests. TELUS International (Cda) Inc.’s quarter-end net debt to operating cash flow ratio must not exceed: 4.75:1.00 during fiscal 2020; 4.25:1.00 during fiscal 2021; and 3.50:1.00 subsequently. The quarter-end operating cash flow to debt service (interest and scheduled principal repayment) ratio must not be less than 1.50:1.00, all as defined in the credit facility. The term loan is subject to an amortization schedule which requires that 5% of the principal advanced be repaid each year of the term of the agreement, with the balance due at maturity. (f) Lease liabilities Lease liabilities are subject to amortization schedules, which results in the principal being repaid over various periods, including reasonably expected renewals. The weighted average interest rate on lease liabilities was approximately 4.37% as at June 30, 2020. (g) Long-term debt maturities Anticipated requirements to meet long-term debt repayments, calculated for long-term debts owing as at June 30, 2020, are as follows:
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other long-term liabilities | 27 other long-term liabilities
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owners' equity |
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owners' equity | 28 owners' equity (a) Common Share capital - general Our authorized share capital is as follows:
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
Only holders of Common Shares may vote at our general meetings, with each holder of Common Shares entitled to one vote per Common Share held at all such meetings so long as not less than 66‑2/3% of the issued and outstanding Common Shares are owned by Canadians. With respect to priority in payment of dividends and in the distribution of assets in the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding up our affairs, preferences are as follows: First Preferred Shares; Second Preferred Shares; and finally Common Shares. During the three-month period ended March 31, 2020, we issued approximately 58 million* shares for gross proceeds of $1.5 billion. As at June 30, 2020, approximately 32 million* Common Shares were reserved for issuance, from Treasury, under a dividend reinvestment and share purchase plan (see Note 13(b)), approximately 24 million* Common Shares were reserved for issuance, from Treasury, under a restricted share unit plan (see Note 14(b)) and approximately 93 million* Common Shares were reserved for issuance, from Treasury, under a share option plan (see Note 14(d)). (b) Common Share split On February 13, 2020, we announced a subdivision of our Common Shares on a two-for-one basis to be effected March 17, 2020. All references, unless otherwise indicated, to the number of shares authorized, the number of shares outstanding, the number of shares reserved; per share amounts and share-based compensation information in the consolidated financial statements have been retrospectively restated to reflect the impact of the subdivision. (c) Purchase of Common Shares for cancellation pursuant to normal course issuer bid As referred to in Note 3, we may purchase a portion of our Common Shares for cancellation pursuant to normal course issuer bids in order to maintain or adjust our capital structure. In December 2019, we received approval for a normal course issuer bid to purchase and cancel up to 16 million* of our Common Shares (up to a maximum amount of $250 million) from January 2, 2020, to January 1, 2021.
(d) Subsidiary with significant non-controlling interest Our TELUS International (Cda) Inc. subsidiary is incorporated under the Business Corporations Act (British Columbia) and has geographically dispersed operations with principal places of business in Asia, Central America, Europe and North America. During the three-month period ended March 31, 2020, non-controlling shareholders purchased TELUS International (Cda) Inc. shares from treasury for $209 million, which resulted in the non-controlling interests’ ownership interest increasing to 37.7% as at March 31, 2020, up from 35.9% as at December 31, 2019. Associated with the transaction, an adjustment reflecting the approximately 1.8% increase in the non-controlling interest in the net book value of the subsidiary was credited to non-controlling interests in our Consolidated statement of changes in owners’ equity, and the net balance of proceeds was credited to contributed surplus. On a continuing basis, we review our corporate organization and effect changes as appropriate so as to enhance the value of TELUS Corporation. This process can affect our subsidiaries, including TELUS International (Cda) Inc.; during the three-month period ended June 30, 2020, this process resulted in the non-controlling interests’ ownership interest decreasing to 36.2% as at June 30, 2020, with an adjustment reflecting the approximately 1.5% decrease in the non-controlling interest in the net book value of the subsidiary having been credited to non-controlling interests in our Consolidated statement of changes in owners’ equity, offset by an equal amount having been charged to contributed surplus. Summarized financial information
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). |
contingent liabilities NTD - legal edits not reflected |
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contingent liabilities NTD - legal edits not reflected | |
contingent liabilities NTD - legal edits not reflected | Claims and lawsuits General A number of claims and lawsuits (including class actions and intellectual property infringement claims) seeking damages and other relief are pending against us and, in some cases, other wireless carriers and telecommunications service providers. As well, we have received notice of, or are aware of, certain possible claims (including intellectual property infringement claims) against us and, in some cases, other wireless carriers and telecommunications service providers. It is not currently possible for us to predict the outcome of such claims, possible claims and lawsuits due to various factors, including: the preliminary nature of some claims; uncertain damage theories and demands; an incomplete factual record; uncertainty concerning legal theories and procedures and their resolution by the courts, at both the trial and the appeal levels; and the unpredictable nature of opposing parties and their demands. However, subject to the foregoing limitations, management is of the opinion, based upon legal assessments and information presently available, that it is unlikely that any liability, to the extent not provided for through insurance or otherwise, would have a material effect on our financial position and the results of our operations, including cash flows, with the exception of the items enumerated following. Certified class actions Certified class actions against us include the following: Per minute billing class action In 2008 a class action was brought in Ontario against us alleging breach of contract, breach of the Ontario Consumer Protection Act, breach of the Competition Act and unjust enrichment, in connection with our practice of “rounding up” wireless airtime to the nearest minute and charging for the full minute. The action sought certification of a national class. In November 2014, an Ontario class only was certified by the Ontario Superior Court of Justice in relation to the breach of contract, breach of Consumer Protection Act, and unjust enrichment claims; all appeals of the certification decision have now been exhausted. At the same time, the Ontario Superior Court of Justice declined to stay the claims of our business customers notwithstanding an arbitration clause in our customer service agreements with those customers. This latter decision was appealed and on May 31, 2017, the Ontario Court of Appeal dismissed our appeal. The Supreme Court of Canada granted us leave to appeal this decision and on April 4, 2019, granted our appeal and stayed the claims of business customers. Call set-up time class actions In 2005 a class action was brought against us in British Columbia alleging that we have engaged in deceptive trade practices in charging for incoming calls from the moment the caller connects to the network, and not from the moment the incoming call is connected to the recipient. In 2011, the Supreme Court of Canada upheld a stay of all of the causes of action advanced by the plaintiff in this class action, with one exception, based on the arbitration clause that was included in our customer service agreements. The sole exception was the cause of action based on deceptive or unconscionable practices under the British Columbia Business Practices and Consumer Protection Act, which the Supreme Court of Canada declined to stay. In January 2016, the British Columbia Supreme Court certified this class action in relation to the claim under the Business Practices and Consumer Protection Act. The class is limited to residents of British Columbia who contracted wireless services with us in the period from January 21, 1999, to April 2010. We have appealed the certification decision. A companion class action was brought against us in Alberta at the same time as the British Columbia class action. The Alberta class action duplicates the allegations in the British Columbia action, but has not proceeded to date and is not certified. Subject to a number of conditions, including court approval, we have now settled both the British Columbia and the Alberta class actions. Uncertified class actions Uncertified class actions against us include: 9-1-1 class actions In 2008 a class action was brought in Saskatchewan against us and other Canadian telecommunications carriers alleging that, among other matters, we failed to provide proper notice of 9-1-1 charges to the public, have been deceitfully passing them off as government charges, and have charged 9-1-1 fees to customers who reside in areas where 9-1-1 service is not available. The plaintiffs advance causes of action in breach of contract, misrepresentation and false advertising and seek certification of a national class. A virtually identical class action was filed in Alberta at the same time, but the Alberta Court of Queen’s Bench declared that class action expired against us as of 2009. No steps have been taken in this proceeding since 2016. Public Mobile class actions In 2014 class actions were brought against us in Quebec and Ontario on behalf of Public Mobile’s customers, alleging that changes to the technology, services and rate plans made by us contravene our statutory and common law obligations. In particular, the Quebec action alleges that our actions constitute a breach of the Quebec Consumer Protection Act, the Quebec Civil Code, and the Ontario Consumer Protection Act. It has not yet proceeded to an authorization hearing. The Ontario class action alleges negligence, breach of express and implied warranty, breach of the Competition Act, unjust enrichment, and waiver of tort. No steps have been taken in this proceeding since it was filed and served. Handset subsidy class action In 2016 a class action was brought in Quebec against us and other telecommunications carriers alleging that we breached the Quebec Consumer Protection Act and the Civil Code of Quebec by making false or misleading representations relating to the handset subsidy provided to our wireless customers, and by charging our wireless customers inflated rate plan prices and termination fees higher than those permitted under the Act. The claim was later amended to also seek compensation for amounts paid by class members to unlock their mobile devices. The authorization hearing was held on April 30 and May 1, 2019, and on July 15, 2019, the Quebec Superior Court dismissed the authorization application. The Plaintiff has appealed this decision. Other claims Claims and possible claims received by us include: Area code 867 blocking claim In 2018 a claim was brought against us alleging breach of a Direct Connection Call Termination Services Agreement, breach of a duty of good faith, and intentional interference with economic relations. The plaintiffs allege that we have improperly blocked calls to area code 867 (including to customers of a plaintiff), for which a second plaintiff provides wholesale session initiation trunking services. The plaintiffs seek damages of $135 million. On April 23, 2019, the Ontario Superior Court stayed this claim on the ground that the court has no jurisdiction over, or is not the appropriate forum, for the subject matter of this action. Summary We believe that we have good defences to the above matters. Should the ultimate resolution of these matters differ from management’s assessments and assumptions, a material adjustment to our financial position and the results of our operations, including cash flows, could result. Management’s assessments and assumptions include that reliable estimates of any such exposure cannot be made considering the continued uncertainty about: the nature of the damages that may be sought by the plaintiffs; the causes of action that are being, or may ultimately be, pursued; and, in the case of the uncertified class actions, the causes of action that may ultimately be certified.
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related party transactions |
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related party transactions | 30 related party transactions (a) Transactions with key management personnel Our key management personnel have authority and responsibility for overseeing, planning, directing and controlling our activities and consist of our Board of Directors and our Executive Leadership Team. Total compensation expense for key management personnel, and the composition thereof, is as follows:
As disclosed in Note 14, we made initial awards of share-based compensation in 2020 and 2019, including, as set out in the following table, to our key management personnel. As most of these awards are cliff-vesting or graded-vesting and have multi-year requisite service periods, the related expense will be recognized rateably over a period of years and thus only a portion of the 2020 and 2019 initial awards are included in the amounts in the table above.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
The liability amounts accrued for share-based compensation awards to key management personnel are as follows:
Employment agreements with members of the Executive Leadership Team typically provide for severance payments if an executive’s employment is terminated without cause: generally 18–24 months of base salary, benefits and accrual of pension service in lieu of notice, and 50% of base salary in lieu of an annual cash bonus. In the event of a change in control, Executive Leadership Team members are not entitled to treatment any different than that given to our other employees with respect to non-vested share-based compensation. (b) Transactions with defined benefit pension plans During the three-month and six-month periods ended June 30, 2020, we provided management and administrative services to our defined benefit pension plans; the charges for these services were on a cost recovery basis and amounted to $1 million (2019 – $2 million) and $3 million (2019 – $3 million), respectively. (c) Transactions with real estate joint venture and associate During the three-month and six-month periods ended June 30, 2020 and 2019, we had transactions with the TELUS Sky real estate joint ventures, which is a related party, as set out in Note 21. As at June 30, 2020, we had recorded lease liabilities of $76 million (December 31, 2019 – $77 million) in respect of our TELUS Sky lease and monthly cash payments are made in accordance with the lease agreement; one-third of the amounts is due to our economic interest in the real estate joint venture. |
additional statement of cash flow information |
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additional statement of cash flow information | 31 additional statement of cash flow information (a) Statements of cash flows – operating activities and investing activities
(b) Changes in liabilities arising from financing activities
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condensed interim consolidated financial statements (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
condensed interim consolidated financial statements | |
Basis of presentation | (a) Basis of presentation The notes presented in our condensed interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our interim consolidated financial statements are referred to as condensed. Our condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2019. Our condensed interim consolidated financial statements are expressed in Canadian dollars and follow the same accounting policies and methods of their application as set out in our consolidated financial statements for the year ended December 31, 2019. The generally accepted accounting principles that we use are International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) and Canadian generally accepted accounting principles. Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented. These consolidated financial statements for the three-month and six-month periods ended June 30, 2020, were authorized by our Board of Directors for issue on July 31, 2020. |
Use of estimates and judgments | (b) Use of estimates and judgments The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates (including about the future effects of the COVID-19 pandemic), assumptions and judgments that affect: the reported amounts of assets and liabilities at the date of the financial statements; the disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Inventories | (c) Inventories Our inventories primarily consist of wireless handsets, parts and accessories totalling $266 million at June 30, 2020 (December 31, 2019 – $375 million) and communications equipment held for resale. Costs of goods sold for the three-month and six-month periods ended June 30, 2020, totalled $384 million (2019- $484 million) and $786 million (2019 - $943 million), respectively. |
capital structure financial policies (Tables) |
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capital structure financial policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of financial objectives that support the entity's long-term strategy |
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Disclosure of the dividend payout ratio |
* Free cash flow does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define free cash flow as EBITDA (operating revenues less goods and services purchased and employee benefits expense) excluding certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the consolidated statements of cash flows. We have issued guidance on, and report, free cash flow because it is a key measure that management, and investors, use to evaluate the performance of our business. Our calculation of free cash flow, and the reconciliation to cash provided by operating activities, is as follows:
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financial instruments (Tables) |
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Schedule of maximum exposure (excluding income tax effects) to credit risk |
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Analysis of the age of customer accounts receivable |
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Summary of activity related to the allowance for doubtful accounts |
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Summary of contract assets and related impairment allowance activity |
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Schedule of contractual maturities of undiscounted financial liabilities, Non-derivative |
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Schedule of contractual maturities of undiscounted financial liabilities, Derivative |
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Sensitivity analysis of exposure to market risks |
The sensitivity analysis assumes that we would realize the changes in exchange rates and market interest rates; in reality, the competitive marketplace in which we operate would have an effect on this assumption.
No consideration has been made for a difference in the notional number of Common Shares associated with share-based compensation awards made during the reporting period that may have arisen due to a difference in the Common Share price.
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Schedule of derivative financial instruments measured at fair value on a recurring basis |
* Amounts reflect retrospective application of March 17, 2020, share split (See Note 28(b)).
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Schedule of long-term debt amortized cost and fair value |
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Schedule of gains and losses, excluding income tax effects, on derivative instruments classified as cash flow hedging items |
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Schedule of gains and losses arising from derivative instruments classified as held for trading |
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segment information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
segment information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of revenue and income before income taxes by segment |
|
revenue from contracts with customers (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
revenue from contracts with customers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues |
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Schedule of accounts receivable |
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Schedule of contract assets |
|
other operating income (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
other operating income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other operating income |
|
employee benefits expense (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
employee benefits expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of employee benefit expenses |
|
financing costs (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
financing costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financing costs |
|
income taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense composition |
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Rate reconciliations |
|
other comprehensive income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other comprehensive income |
|
per share amounts (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the denominators of the basic and diluted per share computations |
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). |
dividends per share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
dividends per share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends per share |
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). |
share-based compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of share-based compensation expense |
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TELUS Corporation restricted share units | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of restricted share units | The following table presents a summary of outstanding TELUS Corporation non-vested restricted share units.
The following table presents a summary of the activity related to TELUS Corporation restricted share units without market performance conditions.
*Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). |
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TELUS International (Cda) Inc. restricted share units | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of restricted share units |
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TELUS Corporation share options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of stock options |
*Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average fair value of share option award granted |
|
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TELUS International (Cda) Inc. share options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of stock options |
The weighted average remaining contractual life is 5.9 years. |
employee future benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
employee future benefits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of defined benefit pension plan expense (recovery) |
|
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Schedule of defined contribution pension plan expense |
|
restructuring and other costs (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
restructuring and other costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring and other costs presented in the Consolidated statements of income and other comprehensive income |
|
property, plant and equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
property, plant and equipment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property, plant and equipment |
|
intangible assets and goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
intangible assets and goodwill | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible assets and goodwill, net |
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Schedule of acquisition-date fair values assigned to the assets acquired and liabilities assumed |
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Schedule of pro forma information of business acquisition operating results |
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)). |
leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income from subleasing right-of-use lease assets and lease payments |
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other long-term assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
other long-term assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other long-term assets |
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Schedule of costs incurred to obtain and fulfill contracts with customers |
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real estate joint ventures and investment in associate (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
real estate joint ventures and investment in associate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of real estate joint ventures financial information |
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Schedule of joint ventures investment activity |
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Schedule of construction credit facility |
|
accounts payable and accrued liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
accounts payable and accrued liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts payable and accrued liabilities |
|
advance billings and customer deposits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
advance billings and customer deposits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of advance billings and customer accounts |
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Schedule of changes in contract liabilities |
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provisions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
provisions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other provisions |
|
long-term debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
long-term debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of details of long-term debt |
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Schedule of long-term debt maturities |
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TELUS Corporation senior notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
long-term debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt maturities |
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TELUS Corporation credit facility | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
long-term debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt maturities |
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TELUS International (Cda) Inc. credit facility | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
long-term debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt maturities |
Relative to amounts owed to the syndicate of financial institutions, excluding TELUS Corporation, we have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively convert an amortizing amount of US$415 of the principal payments and associated interest obligations to European euro obligations with an effective fixed interest rate of 0.65% and an effective fixed economic exchange rate of US$1.0932:€1.00. These have been accounted for as a net investment hedge in a foreign operation (see Note 4). |
other long-term liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
other long-term liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other long-term liabilities |
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owners' equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
owners' equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of authorized share capital |
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
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Schedule of summarized financial information of Subsidiary with significant non-controlling interest |
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related party transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
related party transactions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of transactions with key management personnel |
As disclosed in Note 14, we made initial awards of share-based compensation in 2020 and 2019, including, as set out in the following table, to our key management personnel. As most of these awards are cliff-vesting or graded-vesting and have multi-year requisite service periods, the related expense will be recognized rateably over a period of years and thus only a portion of the 2020 and 2019 initial awards are included in the amounts in the table above.
* Amounts reflect retrospective application of March 17, 2020, share split (see Note 28(b)).
The liability amounts accrued for share-based compensation awards to key management personnel are as follows:
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additional statement of cash flow information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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additional statement of cash flow information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of operating activities and investing activities |
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Schedule of changes in liabilities arising from financing activities |
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condensed interim consolidated financial statements (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
condensed interim consolidated financial statements | |||||
Wireless handsets, parts and accessories | $ 266 | $ 266 | $ 375 | ||
Costs of goods sold | $ 384 | $ 484 | $ 786 | $ 943 |
capital structure financial policies (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | 24 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Components of debt and coverage ratios | |||||||||||
Net debt | $ 17,664 | $ 16,602 | $ 17,664 | $ 16,602 | $ 17,664 | $ 16,602 | $ 17,664 | ||||
EBITDA - excluding restructuring and other costs | 2,898 | 2,817 | 5,769 | $ 5,688 | 5,649 | ||||||
Net interest cost | 403 | 361 | $ 797 | $ 706 | |||||||
Debt ratio | |||||||||||
Net debt to EBITDA - excluding restructuring and other costs | 3.06 | 2.94 | |||||||||
Coverage ratios | |||||||||||
Earnings coverage ratio | 3.6 | 4.2 | |||||||||
EBITDA - excluding restructuring and other costs interest coverage ratio | 7.2 | 8.0 | |||||||||
Net debt and total capitalization | |||||||||||
Long-term debt | 18,518 | 16,579 | 18,518 | 16,579 | $ 18,518 | 18,474 | $ 16,579 | 18,518 | |||
Debt issuance costs netted against long-term debt | 96 | 105 | 96 | 105 | 96 | 105 | 96 | ||||
Derivative (assets) liabilities, net | (392) | 92 | (392) | 92 | (392) | 92 | (392) | ||||
Accumulated other comprehensive income amounts arising from financial instruments used to manage interest rate and currency risks associated with U.S. dollar-denominated long-term debt - excluding tax effects | 313 | (57) | 313 | (57) | 313 | (57) | 313 | ||||
Cash and temporary investments, net | (971) | (217) | (971) | (217) | (971) | (535) | (217) | (971) | $ (1,058) | $ (588) | $ (414) |
Short-term borrowings | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | |||
Net debt | 17,664 | 16,602 | 17,664 | 16,602 | 17,664 | 16,602 | 17,664 | ||||
Common equity | 12,046 | 10,504 | 12,046 | 10,504 | 12,046 | 10,548 | 10,504 | 12,046 | |||
Less: accumulated other comprehensive income included in common equity above | (286) | 19 | (286) | 19 | (286) | (119) | 19 | (286) | $ (393) | $ 40 | $ (3) |
Total capitalization | 29,427 | 27,123 | 29,427 | 27,123 | 29,427 | 27,123 | $ 29,427 | ||||
Calculation of EBITDA - excluding restructuring and other costs | |||||||||||
EBITDA | 1,359 | 1,373 | 2,768 | 2,752 | 5,570 | 5,554 | 5,336 | ||||
Restructuring and other costs | 70 | 29 | 130 | 65 | 199 | 134 | |||||
EBITDA - excluding restructuring and other costs | 2,898 | 2,817 | $ 5,769 | $ 5,688 | $ 5,649 | ||||||
Changes in debt and coverage ratios | |||||||||||
Net debt to EBITDA - excluding restructuring and other costs ratio | 3.06 | 2.94 | |||||||||
Net debt to operating cash flow ratio maximum | 4.00 | ||||||||||
Earnings Coverage Ratio | 3.6 | 4.2 | |||||||||
Increase (decrease) in earnings coverage ratio due to an (increase) decrease in borrowing costs | (0.5) | ||||||||||
Increase (decrease) in earnings coverage ratio due to an increase (decrease) in income before borrowing costs and income taxes | (0.1) | ||||||||||
EBITDA - excluding restructuring and other costs interest coverage ratio | 7.2 | 8.0 | |||||||||
Increase (decrease) in EBITDA - excluding restructuring and other costs interest coverage ratio due to an increase (decrease) in EBITDA | 0.2 | ||||||||||
Increase (decrease) in EBITDA - excluding restructuring and other costs interest coverage ratio due to an (increase) decrease in net interest costs | (1.0) | ||||||||||
Dividend payout ratio | |||||||||||
Dividend payout ratio - net of dividend reinvestment plan effects, (as a per cent) | 61.00% | 133.00% | |||||||||
Ratio of dividends declared as a percentage of cash provided by operating activities less capital expenditures (excluding spectrum licenses) | 84.00% | 122.00% | |||||||||
Dividends declared | $ 1,433 | $ 1,307 | |||||||||
Amount of dividends declared reinvested in Common Shares | (516) | (90) | |||||||||
Dividends declared, net of dividend reinvestment plan effects | $ 917 | 1,217 | |||||||||
Minimum | |||||||||||
Debt ratio | |||||||||||
Target Net debt to EBITDA - excluding restructuring and other costs | 2.20 | ||||||||||
Dividend payout ratio | |||||||||||
Target dividend payout ratio, (as a per cent) | 60.00% | ||||||||||
Target ratio from free cash flow | 60.00% | ||||||||||
Maximum | |||||||||||
Debt ratio | |||||||||||
Target Net debt to EBITDA - excluding restructuring and other costs | 2.70 | ||||||||||
Dividend payout ratio | |||||||||||
Target dividend payout ratio, (as a per cent) | 75.00% | ||||||||||
Target ratio from free cash flow | 75.00% | ||||||||||
Common equity | |||||||||||
Net debt and total capitalization | |||||||||||
Less: accumulated other comprehensive income included in common equity above | $ (283) | $ 17 | $ (283) | $ 17 | $ (283) | $ 17 | $ (283) |
capital structure financial policies - reconciliation (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
|
capital structure financial policies | |||||||
EBITDA | $ 1,359 | $ 1,373 | $ 2,768 | $ 2,752 | $ 5,570 | $ 5,554 | $ 5,336 |
Deduct non-cash gains from sale of property, plant and equipment | (13) | (43) | |||||
Restructuring and other costs, net of disbursements | 22 | 43 | |||||
Effects of contract asset, acquisition and fulfilment and TELUS Easy Payment device financing | 43 | (172) | |||||
Effects of lease principal | (346) | (152) | |||||
Leases accounted for as finance leases prior to adoption of IFRS 16 | 136 | 26 | |||||
Deduct non-recurring gains and equity income related to real estate joint ventures | (171) | ||||||
Donation to TELUS Friendly Future Foundation in Common Shares | 100 | ||||||
Share-based compensation expense, net | 41 | 20 | 64 | 39 | 23 | 2 | |
Net employee defined benefit plans expense | 25 | 19 | 52 | 39 | 91 | 85 | |
Employer contributions to employee defined benefit plans | (12) | (12) | (27) | (28) | (40) | (46) | |
Interest paid | (199) | (147) | (376) | (326) | (764) | (654) | |
Interest received | 3 | 3 | 6 | 5 | 8 | 9 | |
Capital expenditures (excluding spectrum licences) | (2,911) | (2,889) | |||||
Free cash flow before income taxes | 1,819 | 1,474 | |||||
Income taxes paid, net of refunds | 13 | 122 | 137 | 473 | (308) | (562) | |
Free cash flow | 1,511 | 912 | |||||
Adjustments to reconcile to Cash provided by operating activities | 404 | 16 | 464 | (402) | 194 | 163 | |
Cash provided by operating activities | $ 1,462 | $ 1,160 | $ 2,639 | $ 1,950 | $ 4,616 | $ 3,964 |
financial instruments - Credit risk (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Credit risk | ||
Maximum exposure (excluding income tax effects) to credit risk | $ 4,467 | $ 3,871 |
Cash and temporary investments, net | ||
Credit risk | ||
Maximum exposure (excluding income tax effects) to credit risk | 971 | 535 |
Customer accounts receivable | ||
Credit risk | ||
Maximum exposure (excluding income tax effects) to credit risk | 2,323 | 2,187 |
Contract assets | ||
Credit risk | ||
Maximum exposure (excluding income tax effects) to credit risk | 750 | 1,065 |
Derivatives | ||
Credit risk | ||
Maximum exposure (excluding income tax effects) to credit risk | $ 423 | $ 84 |
financial instruments - Accounts receivable (Details) - CAD ($) $ in Millions |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Credit risk | ||||||
Receivable account balances - Non-current | $ 122 | $ 110 | ||||
Customer accounts receivable | ||||||
Credit risk | ||||||
Days after the billing date that accounts receivables are considered to be past due (in default) | 30 days | |||||
Receivable account balances | $ 1,944 | 1,749 | ||||
Receivable account balances - Current | 1,625 | 1,524 | ||||
Receivable account balances - Non-current | 319 | 225 | ||||
Written off amounts charged to allowance for doubtful accounts still subject to enforcement | 541 | 449 | ||||
Accounts receivable written off directly to doubtful accounts expense | 0 | |||||
Customer accounts receivable | Less than 30 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 804 | 793 | ||||
Customer accounts receivable | 30-60 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 247 | 323 | ||||
Customer accounts receivable | 61-90 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 115 | 69 | ||||
Customer accounts receivable | More than 90 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 87 | 59 | ||||
Customer accounts receivable | Unbilled customer finance receivables | ||||||
Credit risk | ||||||
Receivable account balances | 691 | 505 | ||||
Cost/Gross amount | Customer accounts receivable | ||||||
Credit risk | ||||||
Receivable account balances | 2,048 | 1,804 | ||||
Receivable account balances - Current | 1,719 | 1,570 | ||||
Receivable account balances - Non-current | 329 | 234 | ||||
Cost/Gross amount | Customer accounts receivable | Less than 30 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 826 | 803 | ||||
Cost/Gross amount | Customer accounts receivable | 30-60 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 262 | 331 | ||||
Cost/Gross amount | Customer accounts receivable | 61-90 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 129 | 74 | ||||
Cost/Gross amount | Customer accounts receivable | More than 90 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | 114 | 73 | ||||
Cost/Gross amount | Customer accounts receivable | Unbilled customer finance receivables | ||||||
Credit risk | ||||||
Receivable account balances | 717 | 523 | ||||
Allowance for doubtful accounts | Customer accounts receivable | ||||||
Credit risk | ||||||
Receivable account balances | (104) | $ (56) | (55) | $ (42) | $ (43) | $ (53) |
Receivable account balances - Current | (94) | (46) | ||||
Receivable account balances - Non-current | (10) | (9) | ||||
Allowance for doubtful accounts | Customer accounts receivable | Less than 30 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | (22) | (10) | ||||
Allowance for doubtful accounts | Customer accounts receivable | 30-60 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | (15) | (8) | ||||
Allowance for doubtful accounts | Customer accounts receivable | 61-90 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | (14) | (5) | ||||
Allowance for doubtful accounts | Customer accounts receivable | More than 90 days past billing date | ||||||
Credit risk | ||||||
Receivable account balances | (27) | (14) | ||||
Allowance for doubtful accounts | Customer accounts receivable | Unbilled customer finance receivables | ||||||
Credit risk | ||||||
Receivable account balances | $ (26) | $ (18) |
financial instruments - Activity related to allowance for doubtful accounts (Details) - Customer accounts receivable - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Summary of activity related to allowance for doubtful accounts | ||||
Balance, beginning of period | $ (1,749) | |||
Balance, end of period | $ (1,944) | (1,944) | ||
Allowance for doubtful accounts | ||||
Summary of activity related to allowance for doubtful accounts | ||||
Balance, beginning of period | 56 | $ 43 | 55 | $ 53 |
Additions (doubtful accounts expense) | 46 | 10 | 58 | 21 |
Accounts written off, net of recoveries | (6) | (11) | (18) | (33) |
Other | 8 | 9 | 1 | |
Balance, end of period | $ 104 | $ 42 | $ 104 | $ 42 |
financial instruments - Contract assets (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|---|---|
Credit risk | ||||||
Contract assets | $ 901 | $ 1,069 | $ 1,238 | $ 1,441 | $ 1,449 | $ 1,475 |
Cost/Gross amount | ||||||
Credit risk | ||||||
Contract assets | 955 | 1,295 | ||||
Allowance for doubtful accounts | ||||||
Credit risk | ||||||
Contract assets | (54) | (57) | ||||
The 12-month period ending one year hence | ||||||
Credit risk | ||||||
Contract assets | 689 | 910 | 1,019 | |||
The 12-month period ending one year hence | Cost/Gross amount | ||||||
Credit risk | ||||||
Contract assets | 730 | 952 | ||||
The 12-month period ending one year hence | Allowance for doubtful accounts | ||||||
Credit risk | ||||||
Contract assets | (41) | (42) | ||||
The 12-month period ending two years hence | ||||||
Credit risk | ||||||
Contract assets | 197 | 308 | 407 | |||
The 12-month period ending two years hence | Cost/Gross amount | ||||||
Credit risk | ||||||
Contract assets | 209 | 322 | ||||
The 12-month period ending two years hence | Allowance for doubtful accounts | ||||||
Credit risk | ||||||
Contract assets | (12) | (14) | ||||
Thereafter | ||||||
Credit risk | ||||||
Contract assets | 15 | 20 | $ 15 | |||
Thereafter | Cost/Gross amount | ||||||
Credit risk | ||||||
Contract assets | 16 | 21 | ||||
Thereafter | Allowance for doubtful accounts | ||||||
Credit risk | ||||||
Contract assets | $ (1) | $ (1) |
financial instruments - Liquidity risk (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Liquidity risk | ||
Total | $ 30,623 | $ 30,566 |
Debt or equity securities pursuant to a shelf prospectus expiring June, 2022 | ||
Liquidity risk | ||
Debt or equity securities that may be offered pursuant to a shelf prospectus | 2,500 | |
Debt or equity securities pursuant to a shelf prospectus expiring August, 2021 | ||
Liquidity risk | ||
Debt or equity securities that may be offered pursuant to a shelf prospectus | 2,000 | |
Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 2,536 | 2,703 |
Short-term borrowings | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 101 | 106 |
Construction credit facility commitment | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 10 | |
Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 26,082 | 25,619 |
Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 2,147 | 2,081 |
Composite long-term debt | ||
Liquidity risk | ||
Total | 27,978 | |
Other | ||
Liquidity risk | ||
Contractual maturities, derivative liabilities | 13 | 8 |
First year | ||
Liquidity risk | ||
Total | 2,884 | 4,699 |
First year | Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 2,329 | 2,639 |
First year | Short-term borrowings | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 3 | |
First year | Construction credit facility commitment | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 10 | |
First year | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 352 | 1,657 |
First year | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 213 | 373 |
First year | Other | ||
Liquidity risk | ||
Contractual maturities, derivative liabilities | 4 | |
2 years hence | ||
Liquidity risk | ||
Total | 1,521 | 2,181 |
2 years hence | Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 161 | 43 |
2 years hence | Short-term borrowings | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 101 | 103 |
2 years hence | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 867 | 1,698 |
2 years hence | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 398 | 338 |
2 years hence | Other | ||
Liquidity risk | ||
Contractual maturities, derivative liabilities | 1 | |
3 years hence | ||
Liquidity risk | ||
Total | 2,165 | 2,456 |
3 years hence | Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 10 | 7 |
3 years hence | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 1,904 | 2,235 |
3 years hence | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 252 | 207 |
3 years hence | Other | ||
Liquidity risk | ||
Contractual maturities, derivative liabilities | 8 | 8 |
4 years hence | ||
Liquidity risk | ||
Total | 1,349 | 1,214 |
4 years hence | Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 8 | 5 |
4 years hence | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 1,137 | 1,021 |
4 years hence | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 214 | 189 |
5 years hence | ||
Liquidity risk | ||
Total | 1,869 | 1,756 |
5 years hence | Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 8 | 5 |
5 years hence | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 1,694 | 1,595 |
5 years hence | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 177 | 157 |
5 years hence and 10 years before | ||
Liquidity risk | ||
Total | 9,590 | 7,769 |
5 years hence and 10 years before | Non-interest bearing financial liabilities | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 20 | 4 |
5 years hence and 10 years before | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 9,153 | 7,311 |
5 years hence and 10 years before | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 475 | 429 |
Thereafter | ||
Liquidity risk | ||
Total | 11,245 | 10,491 |
Thereafter | Long-term debt excluding leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 10,975 | 10,102 |
Thereafter | Leases | ||
Liquidity risk | ||
Contractual maturities, non-derivative liabilities | 418 | 388 |
Currency risk related to long-term debt | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (6,339) | (6,554) |
Amounts to be exchanged, Pay | 6,088 | 6,589 |
Currency risk related to long-term debt | Composite long-term debt | ||
Liquidity risk | ||
Total | 27,978 | 27,735 |
Currency risk related to long-term debt | First year | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (80) | (1,140) |
Amounts to be exchanged, Pay | 73 | 1,153 |
Currency risk related to long-term debt | 2 years hence | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (160) | (119) |
Amounts to be exchanged, Pay | 151 | 118 |
Currency risk related to long-term debt | 3 years hence | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (160) | (119) |
Amounts to be exchanged, Pay | 151 | 118 |
Currency risk related to long-term debt | 4 years hence | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (160) | (119) |
Amounts to be exchanged, Pay | 150 | 118 |
Currency risk related to long-term debt | 5 years hence | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (160) | (119) |
Amounts to be exchanged, Pay | 150 | 118 |
Currency risk related to long-term debt | 5 years hence and 10 years before | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (2,451) | (1,919) |
Amounts to be exchanged, Pay | 2,393 | 1,944 |
Currency risk related to long-term debt | Thereafter | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (3,168) | (3,019) |
Amounts to be exchanged, Pay | 3,020 | 3,020 |
Currency risk related to foreign currency transactions | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (454) | (917) |
Amounts to be exchanged, Pay | 449 | 921 |
Currency risk related to foreign currency transactions | First year | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (251) | (917) |
Amounts to be exchanged, Pay | 244 | $ 921 |
Currency risk related to foreign currency transactions | 2 years hence | Currency swap agreement | ||
Liquidity risk | ||
Amounts to be exchanged, (Receive) | (203) | |
Amounts to be exchanged, Pay | $ 205 |
financial instruments - Market risks (Details) - CAD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Interest rate risk | ||
Market risks | ||
Percentage of reasonably possible changes in market risk variable | 0.25% | 0.25% |
Other comprehensive income sensitivity to increase in risk variable | $ (11) | $ 4 |
Comprehensive income sensitivity to increase in risk variable | (11) | 4 |
Other comprehensive income sensitivity to decrease in risk variable | 13 | (4) |
Comprehensive income sensitivity to decrease in risk variable | $ 13 | (4) |
Canadian Dollars | Currency risk | ||
Market risks | ||
Percentage of reasonably possible changes in market risk variable | 10.00% | |
Net income sensitivity to increase in risk variable | $ 4 | |
Other comprehensive income sensitivity to increase in risk variable | (66) | (55) |
Comprehensive income sensitivity to increase in risk variable | (62) | (55) |
Net income sensitivity to decrease in risk variable | (4) | |
Other comprehensive income sensitivity to decrease in risk variable | 66 | 55 |
Comprehensive income sensitivity to decrease in risk variable | 62 | 55 |
Canadian Dollars | Interest rate risk | ||
Market risks | ||
Other comprehensive income sensitivity to increase in risk variable | 118 | 94 |
Comprehensive income sensitivity to increase in risk variable | 118 | 94 |
Other comprehensive income sensitivity to decrease in risk variable | (124) | (99) |
Comprehensive income sensitivity to decrease in risk variable | $ (124) | (99) |
U.S. Dollars | Currency risk | ||
Market risks | ||
Percentage of reasonably possible changes in market risk variable | 10.00% | |
Other comprehensive income sensitivity to increase in risk variable | $ (55) | |
Comprehensive income sensitivity to increase in risk variable | (55) | |
Other comprehensive income sensitivity to decrease in risk variable | 55 | |
Comprehensive income sensitivity to decrease in risk variable | 55 | |
U.S. Dollars | Interest rate risk | ||
Market risks | ||
Other comprehensive income sensitivity to increase in risk variable | (129) | (90) |
Comprehensive income sensitivity to increase in risk variable | (129) | (90) |
Other comprehensive income sensitivity to decrease in risk variable | 137 | 95 |
Comprehensive income sensitivity to decrease in risk variable | $ 137 | $ 95 |
Equity contributed, Common shares | ||
Market risks | ||
Data period for share price volatility | 6 months | 6 months |
Share price volatility for sensitivity analysis (as a per cent) | 22.80% | 12.50% |
Equity contributed, Common shares | Other market risk | ||
Market risks | ||
Percentage of reasonably possible changes in market risk variable | 25.00% | 25.00% |
Net income sensitivity to increase in risk variable | $ (8) | $ (4) |
Other comprehensive income sensitivity to increase in risk variable | 3 | 1 |
Comprehensive income sensitivity to increase in risk variable | (5) | (3) |
Net income sensitivity to decrease in risk variable | 13 | 19 |
Other comprehensive income sensitivity to decrease in risk variable | (3) | (1) |
Comprehensive income sensitivity to decrease in risk variable | $ 10 | $ 18 |
financial instruments - Fair Values Derivatives (Details) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020
CAD ($)
$ / €
$ / $
|
Dec. 31, 2019
CAD ($)
$ / €
$ / $
|
|
Disclosure of detailed information about financial instruments | ||
Current Assets, Fair value and carrying value | $ 10,000,000 | $ 8,000,000 |
Current Liabilities, Fair value and carrying value | $ 9,000,000 | $ 23,000,000 |
Derivatives | Cash flow hedging item (HFH) | ||
Disclosure of detailed information about financial instruments | ||
Hedge ratio | 100.00% | 100.00% |
Current Asset derivatives | ||
Disclosure of detailed information about financial instruments | ||
Current Assets, Fair value and carrying value | $ 10,000,000 | $ 8,000,000 |
Current Asset derivatives | Currency risk related to purchases | Cash flow hedging item (HFH) | U.S. Dollars | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2021 | - |
Current Assets, Notional amount | $ 249,000,000 | |
Current Assets, Fair value and carrying value | $ 8,000,000 | |
Rate | $ / $ | 1.32 | |
Current Asset derivatives | Currency risk related to revenues | HFT | U.S. Dollars | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2021 | 2020 |
Current Assets, Notional amount | $ 76,000,000 | $ 36,000,000 |
Current Assets, Fair value and carrying value | $ 2,000,000 | $ 1,000,000 |
Rate | $ / $ | 1.36 | 1.30 |
Current Asset derivatives | Other market risk | Cash flow hedging item (HFH) | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | - | 2020 |
Current Assets, Notional amount | $ 72,000,000 | |
Current Assets, Fair value and carrying value | 4,000,000 | |
Price | $ 24.40 | |
Current Asset derivatives | Currency risk related to business acquisition | Cash flow hedging item (HFH) | European euro | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | - | 2020 |
Current Assets, Notional amount | $ 472,000,000 | |
Current Assets, Fair value and carrying value | $ 3,000,000 | |
Rate | $ / € | 1.12 | |
Other Long-Term Asset derivatives | Currency risk related to long-term debt | Cash flow hedging item (HFH) | U.S. Dollars | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2049 | 2048 |
Rate | $ / $ | 1.30 | 1.28 |
Other Long-Term Assets, Notional amount | $ 5,495,000,000 | $ 3,068,000,000 |
Other Long-Term Assets, Fair value and carrying value | 413,000,000 | 76,000,000 |
Current Liabilities derivatives | ||
Disclosure of detailed information about financial instruments | ||
Current Liabilities, Fair value and carrying value | $ 9,000,000 | $ 23,000,000 |
Current Liabilities derivatives | Currency risk related to purchases | Cash flow hedging item (HFH) | U.S. Dollars | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2021 | 2020 |
Rate | $ / $ | 1.40 | 1.32 |
Current Liabilities, Notional amount | $ 123,000,000 | $ 412,000,000 |
Current Liabilities, Fair value and carrying value | $ 3,000,000 | $ 6,000,000 |
Current Liabilities derivatives | Other market risk | Cash flow hedging item (HFH) | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2020 | - |
Price | $ 24.39 | |
Current Liabilities, Notional amount | 72,000,000 | |
Current Liabilities, Fair value and carrying value | $ 4,000,000 | |
Current Liabilities derivatives | Currency risk related to long-term debt | Cash flow hedging item (HFH) | U.S. Dollars | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | - | 2020 |
Rate | $ / $ | 1.32 | |
Current Liabilities, Notional amount | $ 1,037,000,000 | |
Current Liabilities, Fair value and carrying value | $ 17,000,000 | |
Current Liabilities derivatives | Currency risk related to long-term debt | Cash flow hedging item (HFH) | European euro | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2024 | - |
Rate | $ / € | 1.09 | |
Current Liabilities, Notional amount | $ 33,000,000 | |
Current Liabilities, Fair value and carrying value | $ 2,000,000 | |
Current Liabilities derivatives | Interest rate risk | Cash flow hedging item (HFH) | 2.64% non-fixed rate credit facility | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2022 | 2022 |
Current Liabilities, Notional amount | $ 8,000,000 | $ 8,000,000 |
Interest rate on borrowings | 2.64% | 2.64% |
Other Long-Term Liabilities derivatives | ||
Disclosure of detailed information about financial instruments | ||
Other Long-Term Liabilities, Fair value and carrying value | $ 27,000,000 | $ 26,000,000 |
Other Long-Term Liabilities derivatives | Currency risk related to long-term debt | Cash flow hedging item (HFH) | U.S. Dollars | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | - | 2049 |
Rate | $ / $ | 1.34 | |
Other Long-Term Liabilities, Notional amount | $ 2,485,000,000 | |
Other Long-Term Liabilities, Fair value and carrying value | 22,000,000 | |
Spread included in fair value of derivative instruments | $ 92,000,000 | $ 38,000,000 |
Other Long-Term Liabilities derivatives | Currency risk related to long-term debt | Cash flow hedging item (HFH) | European euro | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2025 | - |
Rate | $ / € | 1.09 | |
Other Long-Term Liabilities, Notional amount | $ 563,000,000 | |
Other Long-Term Liabilities, Fair value and carrying value | 19,000,000 | |
Spread included in fair value of derivative instruments | $ 2,000,000 | |
Other Long-Term Liabilities derivatives | Interest rate risk | Cash flow hedging item (HFH) | 2.64% non-fixed rate credit facility | ||
Disclosure of detailed information about financial instruments | ||
Maximum maturity date | 2022 | 2022 |
Other Long-Term Liabilities, Notional amount | $ 133,000,000 | $ 130,000,000 |
Other Long-Term Liabilities, Fair value and carrying value | $ 8,000,000 | $ 4,000,000 |
Interest rate on borrowings | 2.64% | 2.64% |
financial instruments - Fair values Non-derivative (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Disclosure of detailed information about financial instruments | ||
Long-term debt, excluding leases | $ 16,797 | $ 16,813 |
Measured at amortized cost but fair value disclosed | ||
Disclosure of detailed information about financial instruments | ||
Long-term debt, excluding leases | 18,121 | 17,930 |
Carrying value | ||
Disclosure of detailed information about financial instruments | ||
Long-term debt, excluding leases | $ 16,797 | $ 16,813 |
financial instruments - Derivative gains and losses (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Currency risk | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | $ (250) | $ (36) | $ 420 | $ (166) |
Gain (loss) reclassified from other comprehensive income to income (effective portion) | (127) | (54) | 230 | (114) |
Derivatives | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | (250) | (41) | 410 | (161) |
Gain (loss) reclassified from other comprehensive income to income (effective portion) | (126) | (55) | 229 | (108) |
Derivatives | Currency risk | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | (250) | (36) | 420 | (166) |
Gain (loss) reclassified from other comprehensive income to income (effective portion) | (127) | (54) | 230 | (114) |
Derivatives held for hedging | Currency risk related to purchases | U.S. Dollars | Goods and services purchased | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | (13) | (7) | 18 | (15) |
Gain (loss) reclassified from other comprehensive income to income (effective portion) | 5 | 4 | 7 | 9 |
Derivatives held for hedging | Currency risk related to long-term debt | U.S. Dollars | Financing costs | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | (216) | (29) | 424 | (151) |
Gain (loss) reclassified from other comprehensive income to income (effective portion) | (129) | (58) | 223 | (123) |
Spread included in fair value of derivative instruments | (4) | (4) | 54 | 7 |
Derivatives held for hedging | Currency risk related to investment in a foreign operation | Financing costs | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | (21) | (22) | ||
Gain (loss) reclassified from other comprehensive income to income (effective portion) | (3) | |||
Spread included in fair value of derivative instruments | 2 | 2 | ||
Derivatives held for hedging | Other market risk | Employee benefits expense | ||||
Disclosure of detailed information about financial instruments | ||||
Amount of gain (loss) recognized in other comprehensive income (effective portion) | (5) | (10) | 5 | |
Gain (loss) reclassified from other comprehensive income to income (effective portion) | 1 | (1) | (1) | 6 |
Derivatives held for trading | Currency risk | Financing costs | ||||
Disclosure of detailed information about financial instruments | ||||
Gain recognized in income on derivatives | $ 3 | $ 3 | 4 | 5 |
Cash flow hedging item (HFH) | Derivatives held for hedging | ||||
Disclosure of detailed information about financial instruments | ||||
Ineffective portion of derivative instruments classified as cash flow hedging items | $ 0 | $ 0 |
segment information - Operating revenue (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
|
Operating revenues | |||||||
Revenues arising from contracts with customers | $ 3,656 | $ 3,587 | $ 7,319 | $ 7,076 | |||
Other operating income | 72 | 10 | 103 | 27 | |||
Total | 3,728 | 3,597 | 7,422 | 7,103 | |||
EBITDA | 1,359 | 1,373 | 2,768 | 2,752 | $ 5,570 | $ 5,554 | $ 5,336 |
Capital expenditures (excluding spectrum licences) | $ (2,911) | $ (2,889) | |||||
Wireless | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 1,832 | 1,978 | 3,717 | 3,897 | |||
Other operating income | (1) | 5 | (2) | 10 | |||
Total external revenues | 1,831 | 1,983 | 3,715 | 3,907 | |||
Intersegment revenues | 15 | 14 | 29 | 27 | |||
Total | 1,846 | 1,997 | 3,744 | 3,934 | |||
EBITDA | 870 | 919 | 1,804 | 1,827 | |||
Capital expenditures (excluding spectrum licences) | 234 | 223 | 428 | 400 | |||
Wireless | Service | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 1,485 | 1,534 | 3,008 | 3,034 | |||
Wireless | Equipment | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 347 | 444 | 709 | 863 | |||
Wireline | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 1,824 | 1,609 | 3,602 | 3,179 | |||
Other operating income | 73 | 5 | 105 | 17 | |||
Total external revenues | 1,897 | 1,614 | 3,707 | 3,196 | |||
Intersegment revenues | 64 | 60 | 127 | 116 | |||
Total | 1,961 | 1,674 | 3,834 | 3,312 | |||
EBITDA | 489 | 454 | 964 | 925 | |||
Capital expenditures (excluding spectrum licences) | 522 | 547 | 993 | 1,016 | |||
Wireline | Service | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 1,765 | 1,552 | 3,487 | 3,072 | |||
Wireline | Equipment | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 59 | 57 | 115 | 107 | |||
Consolidated | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 3,656 | 3,587 | 7,319 | 7,076 | |||
Other operating income | 72 | 10 | 103 | 27 | |||
Total external revenues | 3,728 | 3,597 | 7,422 | 7,103 | |||
Total | 3,728 | 3,597 | 7,422 | 7,103 | |||
EBITDA | 1,359 | 1,373 | 2,768 | 2,752 | |||
Capital expenditures (excluding spectrum licences) | 756 | 770 | 1,421 | 1,416 | |||
Consolidated | Service | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 3,250 | 3,086 | 6,495 | 6,106 | |||
Consolidated | Equipment | |||||||
Operating revenues | |||||||
Revenues arising from contracts with customers | 406 | 501 | 824 | 970 | |||
Eliminations | |||||||
Operating revenues | |||||||
Intersegment revenues | (79) | (74) | (156) | (143) | |||
Total | $ (79) | $ (74) | $ (156) | $ (143) |
segment information - Income before income taxes (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
|
Income before income taxes | |||||||
Operating revenues external | $ 3,728 | $ 3,597 | $ 7,422 | $ 7,103 | |||
Goods and services purchased | 1,458 | 1,466 | 2,870 | 2,887 | |||
Employee benefits expense | 911 | 758 | 1,784 | 1,464 | |||
EBITDA | 1,359 | 1,373 | 2,768 | 2,752 | $ 5,570 | $ 5,554 | $ 5,336 |
Depreciation | 505 | 470 | 1,028 | 940 | |||
Amortization | 220 | 163 | 422 | 310 | |||
Operating income | 634 | 740 | 1,318 | 1,502 | |||
Financing costs | 202 | 189 | 394 | 357 | |||
Income before income taxes | $ 432 | $ 551 | $ 924 | $ 1,145 |
revenue from contracts with customers - Revenues (Details) - Minimum - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Disclosure of transaction price allocated to remaining performance obligations | ||
Transaction price allocated to remaining performance obligations | $ 3,008 | $ 3,375 |
The 12-month period ending one year hence | ||
Disclosure of transaction price allocated to remaining performance obligations | ||
Transaction price allocated to remaining performance obligations | 2,227 | 2,405 |
The 12-month period ending two years hence | ||
Disclosure of transaction price allocated to remaining performance obligations | ||
Transaction price allocated to remaining performance obligations | 748 | 930 |
Thereafter | ||
Disclosure of transaction price allocated to remaining performance obligations | ||
Transaction price allocated to remaining performance obligations | $ 33 | $ 40 |
revenue from contracts with customers - Accounts receivable (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
revenue from contracts with customers | ||
Customer accounts receivable | $ 1,719 | $ 1,570 |
Accrued receivables - customer | 220 | 180 |
Allowance for doubtful accounts | (94) | (46) |
Total | 1,845 | 1,704 |
Accrued receivables - other | 159 | 258 |
Accounts receivable - current | $ 2,004 | $ 1,962 |
revenue from contracts with customers - Contract assets (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Contract assets | |||||
Contract assets at beginning of period | $ 1,069 | $ 1,449 | $ 1,238 | $ 1,475 | |
Net additions arising from operations | 176 | 350 | 347 | 671 | |
Amounts billed in period and thus reclassified to accounts receivable | (343) | (357) | (688) | (703) | |
Change in impairment allowance, net | (2) | (2) | 3 | (4) | |
Other | 1 | 1 | 1 | 2 | |
Contract assets at end of period | 901 | 1,441 | 901 | 1,441 | |
Reconciliation of contract assets presented in the Consolidated statements of financial position - current | |||||
Gross contract assets | 689 | 1,019 | 689 | 1,019 | |
Reclassification to contract liabilities of contracts with contract assets less than contract liabilities | (9) | (5) | (9) | (5) | |
Reclassification from contract liabilities of contracts with contract liabilities less than contract assets | (142) | (155) | (142) | (155) | |
Current contract assets | 538 | 859 | 538 | 859 | $ 737 |
Wireless segment | |||||
Contract assets | |||||
Amounts billed in period and thus reclassified to accounts receivable | (268) | (330) | (557) | (650) | |
The 12-month period ending one year hence | |||||
Contract assets | |||||
Contract assets at beginning of period | 910 | ||||
Contract assets at end of period | 689 | 1,019 | 689 | 1,019 | |
The 12-month period ending two years hence | |||||
Contract assets | |||||
Contract assets at beginning of period | 308 | ||||
Contract assets at end of period | 197 | 407 | 197 | 407 | |
Thereafter | |||||
Contract assets | |||||
Contract assets at beginning of period | 20 | ||||
Contract assets at end of period | $ 15 | $ 15 | $ 15 | $ 15 |
other operating income (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
other operating income | ||||
Government assistance | $ 3 | $ 5 | $ 6 | $ 12 |
Other sublet revenue | 1 | 1 | 1 | |
Investment income, gain (loss) on disposal of assets and other | (3) | 3 | (9) | 12 |
Interest income | 1 | 1 | 2 | 2 |
Changes in business combination-related accrued receivables and provisions | 71 | 103 | ||
Total | 72 | 10 | 103 | 27 |
Subsidy receipts | 2 | 4 | 5 | 8 |
Quebec employment positions tax credit | $ 1 | $ 4 | $ 1 | $ 4 |
employee benefits expense (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Employee benefits expense - gross | ||||
Wages and salaries | $ 901 | $ 762 | $ 1,781 | $ 1,465 |
Share-based compensation | 46 | 30 | 78 | 64 |
Pensions - defined benefit | 25 | 19 | 52 | 39 |
Pensions - defined contribution | 25 | 20 | 46 | 43 |
Restructuring costs | 10 | 19 | 20 | 34 |
Other | 43 | 47 | 89 | 89 |
Total | 1,050 | 897 | 2,066 | 1,734 |
Capitalized internal labour costs, net | ||||
Capitalized contract acquisition costs | (16) | (12) | (33) | (24) |
Amortized contract acquisition costs | 13 | 11 | 26 | 23 |
Capitalized contract fulfilment costs | (1) | (2) | (1) | |
Amortized contract fulfilment costs | 1 | 2 | 1 | |
Property, plant and equipment | (83) | (90) | (170) | (175) |
Intangible assets subject to amortization | (53) | (48) | (105) | (94) |
Total | (139) | (139) | (282) | (270) |
Net | $ 911 | $ 758 | $ 1,784 | $ 1,464 |
financing costs (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Interest expense | ||||||
Interest on long-term debt, excluding lease liabilities - gross | $ 169 | $ 161 | $ 339 | $ 311 | ||
Interest on long-term debt, excluding lease liabilities - capitalized | (9) | (4) | (17) | (4) | ||
Interest on long-term debt, excluding lease liabilities | 160 | 157 | 322 | 307 | ||
Interest on lease liabilities | 17 | 16 | 35 | 32 | ||
Interest on short-term borrowings and other | 2 | 3 | 4 | 8 | ||
Interest accretion on provisions | 4 | 5 | 9 | 11 | ||
Long-term debt prepayment premium | 18 | 18 | ||||
Total | 201 | 181 | 388 | 358 | ||
Employee defined benefit plans net interest | 4 | 8 | ||||
Foreign exchange | (1) | 11 | 1 | 4 | ||
Total | 204 | 192 | 397 | 362 | ||
Interest income | (2) | (3) | (3) | (5) | ||
Net | 202 | 189 | 394 | 357 | ||
Net interest cost | 403 | 361 | $ 797 | $ 706 | ||
Interest on long-term debt, excluding lease liabilities - capitalized | (9) | $ (4) | (17) | $ (4) | ||
Employee defined benefit plans net interest | $ 4 | $ 8 | ||||
Composite interest rate on long-term debt, excluding lease liabilities (as a percent) | 4.33% |
income taxes - Expense composition (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Current income tax expense | ||||
For the current reporting period | $ 83 | $ 71 | $ 285 | $ 197 |
Adjustments recognized in the current period for income taxes of prior periods | (2) | (1) | (4) | (1) |
Total | 81 | 70 | 281 | 196 |
Deferred income tax expense | ||||
Arising from the origination and reversal of temporary differences | 32 | 83 | (28) | 114 |
Revaluation of deferred income tax liability to reflect future income tax rates | (2) | (121) | (5) | (121) |
Adjustments recognized in the current period for income taxes of prior periods | 6 | (1) | 8 | (1) |
Total | 36 | (39) | (25) | (8) |
Income taxes | $ 117 | $ 31 | $ 256 | $ 188 |
income taxes - Rate reconciliations (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Reconciliation of effective tax rate | ||||
Income taxes computed at applicable statutory rates | $ 113 | $ 147 | $ 243 | $ 308 |
Revaluation of deferred income tax liability to reflect future income tax rates | (2) | (121) | (5) | (121) |
Adjustments recognized in the current period for income taxes of prior periods | 4 | (2) | 4 | (2) |
Other | 2 | 7 | 14 | 3 |
Income taxes | $ 117 | $ 31 | $ 256 | $ 188 |
Reconciliation of effective tax rate (as a percent) | ||||
Applicable statutory rate (as a percent) | 26.20% | 26.70% | 26.30% | 26.90% |
Tax rate effect for revaluation of deferred income tax liability to reflect future income tax rates (as a percent) | (0.50%) | (22.00%) | (0.50%) | (10.60%) |
Tax rate effect for adjustments recognized in the current period for income taxes of prior periods (as a percent) | 0.90% | (0.30%) | 0.40% | (0.20%) |
Tax rate effect for other (as a percent) | 0.50% | 1.20% | 1.50% | 0.30% |
Tax rate for Income tax expense per Consolidated statements of income and other comprehensive income (as a percent) | 27.10% | 5.60% | 27.70% | 16.40% |
other comprehensive income (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Items that may subsequently be reclassified to income | ||||
Accumulated change in unrealized fair value of derivatives designated as cash flow hedge balance beginning | $ 287 | $ (68) | $ 65 | $ (19) |
Changes in unrealized fair value of derivatives designated as cash flow hedges total, before tax | (124) | 14 | 181 | (53) |
Income tax relating to changes in unrealized fair value of derivatives designated as cash flow hedges total | (27) | 4 | 56 | (14) |
Changes in unrealized fair value of derivatives designated as cash flow hedges total, net | (97) | 10 | 125 | (39) |
Accumulated change in unrealized fair value of derivatives designated as cash flow hedge balance ending | 190 | (58) | 190 | (58) |
Accumulated foreign currency translation balance beginning | 94 | 28 | 42 | 22 |
Cumulative foreign currency translation adjustment, before tax | (10) | 11 | 42 | 17 |
Cumulative foreign currency translation adjustment, net | (10) | 11 | 42 | 17 |
Accumulated foreign currency translation balance ending | 84 | 39 | 84 | 39 |
Accumulated other comprehensive income balance beginning | 393 | (40) | 119 | 3 |
Accumulated other comprehensive income excluding employee defined benefit plan re-measurements, before tax | (134) | 25 | 223 | (36) |
Income tax relating to accumulated other comprehensive income | (27) | 4 | 56 | (14) |
Accumulated other comprehensive income excluding employee defined benefit plan re-measurements, net | (107) | 21 | 167 | (22) |
Accumulated other comprehensive income balance ending | 286 | (19) | 286 | (19) |
Item never reclassified to income | ||||
Accumulated available-for-sale financial assets balance beginning | 12 | 12 | ||
Accumulated available-for-sale financial assets balance ending | 12 | 12 | ||
Employee defined benefit plans re-measurements, before tax | (901) | 16 | (475) | 49 |
Income tax relating to employee defined benefit plan re-measurements | (232) | 8 | (122) | 17 |
Employee defined benefit plans re-measurements, net | (669) | 8 | (353) | 32 |
Other comp. income, before tax | (1,035) | 41 | (252) | 13 |
Aggregated income tax relating to components of other comprehensive income | (259) | 12 | (66) | 3 |
Total | (776) | 29 | (186) | 10 |
Attributable to: | ||||
Accumulated other comprehensive income | 286 | (19) | 286 | (19) |
Currency risk | ||||
Items that may subsequently be reclassified to income | ||||
Changes in unrealized fair value of derivatives designated as cash flow hedges gains (losses) arising, before tax | (250) | (36) | 420 | (166) |
Income tax relating to changes in unrealized fair value of derivatives designated as cash flow hedges gains (losses) arising | (43) | (4) | 100 | (32) |
Changes in unrealized fair value of derivatives designated as cash flow hedges gains (losses) transferred to net income, before tax | (127) | (54) | 230 | (114) |
Income tax relating to change in unrealized fair value of derivatives designated as cash flow hedges (gains) losses transferred to net income | 16 | 9 | (42) | 18 |
Accumulated change in unrealized fair value of derivatives designated as cash flow hedge balance beginning | 294 | (70) | 66 | (19) |
Changes in unrealized fair value of derivatives designated as cash flow hedges total, before tax | (123) | 18 | 190 | (52) |
Income tax relating to changes in unrealized fair value of derivatives designated as cash flow hedges total | (27) | 5 | 58 | (14) |
Changes in unrealized fair value of derivatives designated as cash flow hedges total, net | (96) | 13 | 132 | (38) |
Accumulated change in unrealized fair value of derivatives designated as cash flow hedge balance ending | 198 | (57) | 198 | (57) |
Other market risk | ||||
Items that may subsequently be reclassified to income | ||||
Changes in unrealized fair value of derivatives designated as cash flow hedges gains (losses) arising, before tax | (5) | (10) | 5 | |
Income tax relating to changes in unrealized fair value of derivatives designated as cash flow hedges gains (losses) arising | 1 | (2) | (2) | 1 |
Changes in unrealized fair value of derivatives designated as cash flow hedges gains (losses) transferred to net income, before tax | 1 | (1) | 1 | 6 |
Income tax relating to change in unrealized fair value of derivatives designated as cash flow hedges (gains) losses transferred to net income | (1) | 1 | (1) | |
Accumulated change in unrealized fair value of derivatives designated as cash flow hedge balance beginning | (7) | 2 | (1) | |
Changes in unrealized fair value of derivatives designated as cash flow hedges total, before tax | (1) | (4) | (9) | (1) |
Income tax relating to changes in unrealized fair value of derivatives designated as cash flow hedges total | (1) | (2) | ||
Changes in unrealized fair value of derivatives designated as cash flow hedges total, net | (1) | (3) | (7) | (1) |
Accumulated change in unrealized fair value of derivatives designated as cash flow hedge balance ending | (8) | (1) | (8) | (1) |
Common equity | ||||
Items that may subsequently be reclassified to income | ||||
Accumulated other comprehensive income balance ending | 283 | (17) | 283 | (17) |
Item never reclassified to income | ||||
Total | (189) | 4 | ||
Attributable to: | ||||
Accumulated other comprehensive income | 283 | $ (17) | 283 | (17) |
Non-controlling interests | ||||
Items that may subsequently be reclassified to income | ||||
Accumulated other comprehensive income balance ending | 3 | 3 | ||
Item never reclassified to income | ||||
Total | 3 | $ 6 | ||
Attributable to: | ||||
Accumulated other comprehensive income | $ 3 | $ 3 |
per share amounts (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|||
Effect of dilutive securities | ||||||
Basic total weighted average number of Common Shares outstanding | [1] | 1,278 | 1,203 | 1,263 | 1,202 | |
Effect of dilutive securities - Restricted share units | 2 | 1 | ||||
Diluted total weighted average number of Common Shares outstanding | 1,280 | 1,203 | 1,264 | 1,202 | ||
Restricted share units | ||||||
Effect of dilutive securities | ||||||
Outstanding share awards excluded in the calculation of diluted net income per Common Share | 0 | 0 | ||||
Share option awards | ||||||
Effect of dilutive securities | ||||||
Outstanding share awards excluded in the calculation of diluted net income per Common Share | 0 | 2 | ||||
|
dividends per share (Details) - CAD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jul. 30, 2020 |
Oct. 01, 2019 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Dividends per share | ||||||||
Dividends per share | $ 0.29125 | $ 0.29125 | $ 0.29125 | $ 0.28125 | $ 0.27250 | $ 0.58250 | $ 0.55375 | |
Dividends Declared | $ 372 | $ 371 | $ 339 | $ 329 | $ 743 | $ 668 | ||
Dividend reinvestment and share purchase plan | ||||||||
Dividends per share | ||||||||
Maximum discount on common shares (as a percent) | 5.00% | |||||||
Offering price discount on Common Shares from Treasury (as a percent) | 2.00% | |||||||
Dividend reinvestment in Common Shares | $ 131 | $ 15 | $ 253 | $ 28 |
share-based compensation - Expense (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
share-based compensation | ||||||
Employee benefits expense | $ 46 | $ 30 | $ 78 | $ 64 | ||
Associated operating cash outflows | (5) | (10) | (14) | (25) | ||
Statement of cash flows adjustment | 41 | 20 | 64 | 39 | $ 23 | $ 2 |
Income tax benefit arising from share-based compensation | 11 | 8 | 19 | 17 | ||
Restricted share units | ||||||
share-based compensation | ||||||
Employee benefits expense | 38 | 17 | 60 | 40 | ||
Associated operating cash outflows | (1) | (7) | ||||
Statement of cash flows adjustment | 38 | 16 | 60 | 33 | ||
Cash inflows from cash-settled equity forward agreements | 1 | 2 | 2 | 3 | ||
Employee share purchase plan | ||||||
share-based compensation | ||||||
Employee benefits expense | 5 | 9 | 14 | 18 | ||
Associated operating cash outflows | (5) | (9) | (14) | (18) | ||
Share option awards | ||||||
share-based compensation | ||||||
Employee benefits expense | 3 | 4 | 4 | 6 | ||
Statement of cash flows adjustment | $ 3 | $ 4 | $ 4 | $ 6 |
share-based compensation - Restricted share units (Details) - EquityInstruments |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
|
TELUS Corporation restricted share units | |||
share-based compensation | |||
Outstanding | 10,730,373 | 7,315,252 | |
Restricted share units with performance condition | Maximum | |||
share-based compensation | |||
Variable payout (as a percent) | 200.00% | ||
Restricted share units with performance condition | Minimum | |||
share-based compensation | |||
Variable payout (as a percent) | 0.00% | ||
Restricted share units with total customer connections performance condition | |||
share-based compensation | |||
Total customer connection payout weight (as a per cent) | 25.00% | ||
Outstanding | 449,850 | 282,100 | |
Restricted share units with relative total shareholder return performance condition | |||
share-based compensation | |||
Relative total shareholder return payout weight (as a per cent) | 75.00% | ||
Outstanding | 1,349,549 | 846,298 | |
Restricted share units with only service conditions | |||
share-based compensation | |||
Outstanding | 8,930,974 | 6,186,854 | |
Restricted share units without market performance conditions | |||
share-based compensation | |||
Outstanding | 9,380,824 | 9,060,044 | 6,468,954 |
share-based compensation - TELUS Corp restricted share units activity (Details) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2020
EquityInstruments
$ / shares
|
Jun. 30, 2020
EquityInstruments
$ / shares
|
Dec. 31, 2020
EquityInstruments
$ / shares
|
|
Restricted share units without market performance conditions | |||
Number of restricted share units - Non-vested | |||
Outstanding, beginning of period | 9,060,044 | 6,468,954 | |
Granted | 288,443 | 2,910,882 | |
In lieu of dividends | 121,198 | 195,615 | |
Forfeited and cancelled | (71,853) | (166,316) | |
Outstanding, end of period | 9,380,824 | 9,380,824 | |
Number of restricted share units - vested | |||
Outstanding, beginning of period | 12,342 | 30,800 | |
In lieu dividends | 308 | 308 | |
Vested | 17,008 | 28,311 | |
Settled in cash | (17,149) | (46,910) | |
Outstanding, end of period | 12,509 | 12,509 | |
Weighted average grant-date fair value | |||
Outstanding, beginning of period, non-vested | $ / shares | $ 24.06 | $ 23.37 | |
Outstanding, beginning of period, vested | $ / shares | 19.10 | 22.02 | |
Issued - initial award | $ / shares | 22.63 | 25.40 | |
In lieu of dividends | $ / shares | 21.52 | 22.92 | |
Vested | $ / shares | 24.00 | 23.84 | |
Settled in cash | $ / shares | 24.01 | 23.89 | |
Forfeited and cancelled | $ / shares | 24.29 | 23.80 | |
Outstanding, end of period, non-vested | $ / shares | 23.98 | 23.98 | |
Outstanding, end of period, vested | $ / shares | $ 19.15 | $ 19.15 | |
Number of Rsu's | 12,509 | 12,509 | |
Next six months | |||
Weighted average grant-date fair value | |||
Number of Rsu's | 2,900,000 | ||
Cash settled for cost of share | $ / shares | $ 24.39 |
share-based compensation - TELUS International (Cda) Inc. restricted share units (Details) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2020
EquityInstruments
$ / shares
|
Jun. 30, 2020
EquityInstruments
$ / shares
|
|
TELUS International (Cda) Inc. restricted share units | Maximum | ||
share-based compensation | ||
Variable payout (as a percent) | 150.00% | 150.00% |
TELUS International (Cda) Inc. restricted share units | Minimum | ||
share-based compensation | ||
Variable payout (as a percent) | 0.00% | 0.00% |
TELUS International (Cda) Inc. Restricted Share Units US Dollar Denominated | ||
Number of restricted share units - Non-vested | ||
Outstanding, beginning of period | EquityInstruments | 463,978 | 465,245 |
Granted | EquityInstruments | 59,929 | 59,929 |
Forfeited | EquityInstruments | (1,475) | (2,742) |
Outstanding, end of period | EquityInstruments | 522,432 | 522,432 |
Weighted average grant-date fair value | ||
Outstanding, beginning of period, non-vested | $ / shares | $ 27.55 | $ 27.49 |
Granted | $ / shares | 52.85 | 52.85 |
Forfeited and cancelled | $ / shares | 27.81 | 27.93 |
Outstanding, end of period, non-vested | $ / shares | $ 30.45 | $ 30.45 |
share-based compensation - Employee share purchase plan (Details) - Employee share purchase plan - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Sep. 30, 2019 |
|
share-based compensation | |||||
Dividend reinvestment in Common Shares | $ 9 | $ 8 | $ 18 | $ 17 | |
Purchase plan discount | 0.00% |
share-based compensation - TELUS Corporation share options (Details) - TELUS Corporation share options |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jun. 30, 2020
EquityInstruments
$ / shares
|
Jun. 30, 2020
EquityInstruments
$ / shares
|
Dec. 31, 2019
EquityInstruments
|
Mar. 31, 2020
EquityInstruments
|
|
share-based compensation | ||||
Number of share options outstanding, beginning of period | 2,522,700 | |||
Share options granted | 558,600 | 3,081,300 | 0 | |
Number of share options forfeited | (6,300) | (6,300) | ||
Number of share options outstanding, end of period | 3,075,000 | 3,075,000 | ||
Weighted average share price of options outstanding, beginning of period | $ / shares | $ 21.19 | |||
Weighted average share price of options granted | $ / shares | 22.88 | $ 21.50 | ||
Weighted average share price of options forfeited | $ / shares | 21.19 | 21.19 | ||
Weighted average share price of options outstanding, end of period | $ / shares | $ 21.50 | $ 21.50 | ||
Weighted average remaining contractual life (years) | 6 years 9 months 18 days | |||
Number of options exercisable | 0 | 0 | 0 | 0 |
Maximum | ||||
share-based compensation | ||||
Exercise period | 7 years | 7 years |
share-based compensation - Weighted average assumptions used (Details) |
3 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Jun. 30, 2020
Y
$ / shares
|
Jun. 30, 2020
Y
$ / shares
|
Dec. 31, 2020
CAD ($)
|
|
share-based compensation | |||
Share option award fair value (per share option) | $ 0.63 | $ 0.65 | |
Risk free interest rate | 0.37% | 0.97% | |
Expected lives(1) (years) | 4.25 | 4.25 | 7 |
Expected volatility | 12.10% | 12.30% | |
Dividend yield | 5.10% | 5.40% |
share-based compensation - TELUS International (Cda) Inc. share options (Details) |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2020
Options
$ / shares
|
Jun. 30, 2020
Options
$ / shares
|
Mar. 31, 2020
Options
$ / shares
|
Mar. 31, 2020
Options
$ / shares
|
|
Telus International (Cda) Inc. share options, U.S. $ denominated | ||||
share-based compensation | ||||
Number of options outstanding | Options | 996,620 | 996,620 | 996,620 | 996,620 |
Weighted average share price of options outstanding | $ 31.11 | $ 31.11 | ||
Weighted average remaining contractual life (years) | 7 years | |||
TELUS International (Cda) Inc. share options, Canadian $ denominated | ||||
share-based compensation | ||||
Number of options outstanding | Options | 53,832 | 53,832 | 53,832 | 53,832 |
Weighted average share price of options outstanding | $ 21.36 | $ 21.36 | ||
Weighted average remaining contractual life (years) | 5 years 10 months 24 days | |||
Minimum | TELUS International (Cda) Inc. share options | ||||
share-based compensation | ||||
Variable payout (as a percent) | 0.00% | 0.00% | ||
Minimum | Telus International (Cda) Inc. share options, U.S. $ denominated | ||||
share-based compensation | ||||
Option price | $ 21.90 | |||
Maximum | TELUS International (Cda) Inc. share options | ||||
share-based compensation | ||||
Exercise period | 10 years | |||
Variable payout (as a percent) | 100.00% | 100.00% | ||
Maximum | Telus International (Cda) Inc. share options, U.S. $ denominated | ||||
share-based compensation | ||||
Option price | $ 40.26 |
employee future benefits - Defined benefit pension plans expense (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Defined benefit pension plan expense (recovery) | |||||
Total | $ 25 | $ 19 | $ 52 | $ 39 | |
Pension plans | Pension plan | |||||
Defined benefit pension plan expense (recovery) | |||||
Current service cost | 23 | 18 | 46 | 36 | |
Past service costs | 3 | ||||
Interest expense arising from defined benefit obligations accrued | 74 | 83 | 148 | 167 | |
Return, including interest income, on plan assets | (538) | (217) | (174) | (662) | |
Interest effect on asset ceiling limit | 1 | 3 | 2 | 5 | |
Total | (463) | (131) | (24) | (490) | |
Administrative fees | 2 | 1 | 3 | 3 | |
Re-measurements arising from financial assumptions | 1,396 | 507 | |||
Changes in the effect of limiting net defined benefit assets to the asset ceiling | (28) | 115 | 441 | ||
Total | $ 930 | 3 | $ 535 | (10) | |
Discount rate used to determine defined benefit obligations | 2.75% | 2.75% | 3.10% | ||
Pension plans | Pension plan | Employee benefits expense | |||||
Defined benefit pension plan expense (recovery) | |||||
Current service cost | $ 23 | 18 | $ 46 | 36 | |
Past service cost | 3 | ||||
Administrative fees | 2 | 1 | 3 | 3 | |
Total | 25 | 19 | 52 | 39 | |
Pension plans | Pension plan | Financing costs | |||||
Defined benefit pension plan expense (recovery) | |||||
Interest expense arising from defined benefit obligations accrued | 74 | 83 | 148 | 167 | |
Return, including interest income, on plan assets | (71) | (86) | (142) | (172) | |
Interest effect on asset ceiling limit | 1 | 3 | 2 | 5 | |
Total | 4 | 8 | |||
Total | 4 | 8 | |||
Pension plans | Pension plan | Other comprehensive income | |||||
Defined benefit pension plan expense (recovery) | |||||
Re-measurements arising from financial assumptions | 1,396 | 507 | |||
Return, including interest income, on plan assets | (467) | (131) | (32) | (490) | |
Total | (467) | (131) | (32) | (490) | |
Changes in the effect of limiting net defined benefit assets to the asset ceiling | (28) | 115 | 441 | ||
Defined benefit pension plan expense (recovery) | $ 901 | $ (16) | $ 475 | $ (49) |
employee future benefits - Defined contribution pension plans expense (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
employee future benefits | ||||
Union pension plan and public service pension plan contributions | $ 5 | $ 5 | $ 10 | $ 11 |
Other defined contribution pension plans | 20 | 15 | 36 | 32 |
Total | $ 25 | $ 20 | $ 46 | $ 43 |
restructuring and other costs (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
|
restructuring and other costs | ||||||
Goods and services purchased | $ 60 | $ 8 | $ 110 | $ 26 | ||
Employee benefits expense | 10 | 21 | 20 | 39 | ||
Total | 70 | 29 | 130 | 65 | $ 199 | $ 134 |
Restructuring | ||||||
restructuring and other costs | ||||||
Goods and services purchased | 43 | 7 | 89 | 19 | ||
Employee benefits expense | 10 | 19 | 20 | 34 | ||
Total | 53 | 26 | 109 | 53 | ||
Other | ||||||
restructuring and other costs | ||||||
Goods and services purchased | 17 | 1 | 21 | 7 | ||
Employee benefits expense | 2 | 5 | ||||
Total | $ 17 | $ 3 | $ 21 | $ 12 |
property, plant and equipment (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | $ 14,232 | ||||
Depreciation | $ 505 | $ 470 | 1,028 | $ 940 | |
Property, plant and equipment at end of period | 14,559 | 14,559 | |||
Contractual commitments for the acquisition of property, plant and equipment | 205 | 205 | $ 136 | ||
Owned assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 12,882 | ||||
Property, plant and equipment at end of period | 13,114 | 13,114 | |||
Owned assets | Network assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 10,653 | ||||
Property, plant and equipment at end of period | 10,555 | 10,555 | |||
Owned assets | Buildings and leasehold improvements | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 1,262 | ||||
Property, plant and equipment at end of period | 1,280 | 1,280 | |||
Owned assets | Other | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 498 | ||||
Property, plant and equipment at end of period | 496 | 496 | |||
Owned assets | Land | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 48 | ||||
Property, plant and equipment at end of period | 53 | 53 | |||
Owned assets | Assets under construction | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 421 | ||||
Property, plant and equipment at end of period | 730 | 730 | |||
Right-of-use lease assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 1,350 | ||||
Property, plant and equipment at end of period | 1,445 | 1,445 | |||
Right-of-use lease assets | Network assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 213 | ||||
Property, plant and equipment at end of period | 254 | 254 | |||
Right-of-use lease assets | Real estate | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 1,093 | ||||
Property, plant and equipment at end of period | 1,154 | 1,154 | |||
Impairment of assets | 5 | ||||
Right-of-use lease assets | Other | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 44 | ||||
Property, plant and equipment at end of period | 37 | 37 | |||
Cost/Gross amount | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 38,415 | ||||
Additions | 1,295 | ||||
Additions arising from business acquisitions | 65 | ||||
Dispositions, retirements and other | (532) | ||||
Net foreign exchange differences | 29 | ||||
Property, plant and equipment at end of period | 39,272 | 39,272 | |||
Cost/Gross amount | Owned assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 36,869 | ||||
Additions | 1,103 | ||||
Additions arising from business acquisitions | 23 | ||||
Dispositions, retirements and other | (500) | ||||
Net foreign exchange differences | 16 | ||||
Property, plant and equipment at end of period | 37,511 | 37,511 | |||
Cost/Gross amount | Owned assets | Network assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 31,713 | ||||
Additions | 393 | ||||
Additions arising from business acquisitions | 4 | ||||
Dispositions, retirements and other | (379) | ||||
Assets under construction put into service | 263 | 263 | |||
Net foreign exchange differences | 2 | ||||
Property, plant and equipment at end of period | 31,996 | 31,996 | |||
Cost/Gross amount | Owned assets | Buildings and leasehold improvements | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 3,314 | ||||
Additions | 15 | ||||
Additions arising from business acquisitions | 12 | ||||
Dispositions, retirements and other | 1 | ||||
Assets under construction put into service | 39 | 39 | |||
Net foreign exchange differences | 5 | ||||
Property, plant and equipment at end of period | 3,386 | 3,386 | |||
Cost/Gross amount | Owned assets | Other | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 1,373 | ||||
Additions | 24 | ||||
Additions arising from business acquisitions | 7 | ||||
Dispositions, retirements and other | (122) | ||||
Assets under construction put into service | 55 | 55 | |||
Net foreign exchange differences | 9 | ||||
Property, plant and equipment at end of period | 1,346 | 1,346 | |||
Cost/Gross amount | Owned assets | Land | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 48 | ||||
Additions | 5 | ||||
Property, plant and equipment at end of period | 53 | 53 | |||
Cost/Gross amount | Owned assets | Assets under construction | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 421 | ||||
Additions | 666 | ||||
Assets under construction put into service | (357) | (357) | |||
Property, plant and equipment at end of period | 730 | 730 | |||
Cost/Gross amount | Right-of-use lease assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 1,546 | ||||
Additions | 192 | ||||
Additions arising from business acquisitions | 42 | ||||
Dispositions, retirements and other | (32) | ||||
Net foreign exchange differences | 13 | ||||
Property, plant and equipment at end of period | 1,761 | 1,761 | |||
Cost/Gross amount | Right-of-use lease assets | Network assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 219 | ||||
Additions | 54 | ||||
Dispositions, retirements and other | 1 | ||||
Property, plant and equipment at end of period | 274 | 274 | |||
Cost/Gross amount | Right-of-use lease assets | Real estate | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 1,267 | ||||
Additions | 131 | ||||
Additions arising from business acquisitions | 41 | ||||
Dispositions, retirements and other | (24) | ||||
Net foreign exchange differences | 13 | ||||
Property, plant and equipment at end of period | 1,428 | 1,428 | |||
Cost/Gross amount | Right-of-use lease assets | Other | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | 60 | ||||
Additions | 7 | ||||
Additions arising from business acquisitions | 1 | ||||
Dispositions, retirements and other | (9) | ||||
Property, plant and equipment at end of period | 59 | 59 | |||
Accumulated depreciation | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (24,183) | ||||
Depreciation | 1,028 | ||||
Dispositions, retirements and other | (509) | ||||
Net foreign exchange differences | 11 | ||||
Property, plant and equipment at end of period | (24,713) | (24,713) | |||
Accumulated depreciation | Owned assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (23,987) | ||||
Depreciation | 904 | ||||
Dispositions, retirements and other | (503) | ||||
Net foreign exchange differences | 9 | ||||
Property, plant and equipment at end of period | (24,397) | (24,397) | |||
Accumulated depreciation | Owned assets | Network assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (21,060) | ||||
Depreciation | 767 | ||||
Dispositions, retirements and other | (387) | ||||
Net foreign exchange differences | 1 | ||||
Property, plant and equipment at end of period | (21,441) | (21,441) | |||
Accumulated depreciation | Owned assets | Buildings and leasehold improvements | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (2,052) | ||||
Depreciation | 62 | ||||
Dispositions, retirements and other | (10) | ||||
Net foreign exchange differences | 2 | ||||
Property, plant and equipment at end of period | (2,106) | (2,106) | |||
Accumulated depreciation | Owned assets | Other | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (875) | ||||
Depreciation | 75 | ||||
Dispositions, retirements and other | (106) | ||||
Net foreign exchange differences | 6 | ||||
Property, plant and equipment at end of period | (850) | (850) | |||
Accumulated depreciation | Right-of-use lease assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (196) | ||||
Depreciation | 124 | ||||
Dispositions, retirements and other | (6) | ||||
Net foreign exchange differences | 2 | ||||
Property, plant and equipment at end of period | (316) | (316) | |||
Accumulated depreciation | Right-of-use lease assets | Network assets | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (6) | ||||
Depreciation | 14 | ||||
Property, plant and equipment at end of period | (20) | (20) | |||
Accumulated depreciation | Right-of-use lease assets | Real estate | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (174) | ||||
Depreciation | 101 | ||||
Dispositions, retirements and other | (3) | ||||
Net foreign exchange differences | 2 | ||||
Property, plant and equipment at end of period | (274) | (274) | |||
Accumulated depreciation | Right-of-use lease assets | Other | |||||
property, plant and equipment | |||||
Property, plant and equipment at beginning of period | (16) | ||||
Depreciation | 9 | ||||
Dispositions, retirements and other | (3) | ||||
Property, plant and equipment at end of period | $ (22) | $ (22) |
intangible assets and goodwill (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
intangible assets and goodwill | |||||
Balance at beginning of the period | $ 18,153 | ||||
Amortization | $ (220) | $ (163) | (422) | $ (310) | |
Net foreign exchange differences | 13 | ||||
Balance at end of the period | 19,762 | 19,762 | |||
Accumulated impairment losses of goodwill | 6,132 | 6,132 | $ 5,309 | ||
Contractual commitments for the acquisition of intangible assets | 48 | 48 | $ 45 | ||
Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 22,901 | ||||
Additions | 324 | ||||
Additions arising from business acquisitions | 1,583 | ||||
Dispositions, retirements and other | (297) | ||||
Net foreign exchange differences | 90 | ||||
Balance at end of the period | 24,601 | 24,601 | |||
Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (4,748) | ||||
Amortization | 422 | ||||
Dispositions, retirements and other | (344) | ||||
Balance at end of the period | (4,839) | (4,839) | |||
Allowance for doubtful accounts | |||||
intangible assets and goodwill | |||||
Accumulated impairment losses of goodwill | 0 | 0 | |||
Spectrum licences | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 9,937 | ||||
Balance at end of the period | 9,963 | 9,963 | |||
Spectrum licences | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 9,937 | ||||
Additions arising from business acquisitions | 9 | ||||
Dispositions, retirements and other | 17 | ||||
Balance at end of the period | 9,963 | 9,963 | |||
Total intangible assets | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 12,844 | ||||
Net foreign exchange differences | 13 | ||||
Balance at end of the period | 13,630 | 13,630 | |||
Total intangible assets | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 17,228 | ||||
Additions | 324 | ||||
Additions arising from business acquisitions | 811 | ||||
Dispositions, retirements and other | (297) | ||||
Net foreign exchange differences | 39 | ||||
Balance at end of the period | 18,105 | 18,105 | |||
Total intangible assets | Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (4,384) | ||||
Amortization | 422 | ||||
Dispositions, retirements and other | (344) | ||||
Balance at end of the period | (4,475) | (4,475) | |||
Intangible assets subject to amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 2,907 | ||||
Net foreign exchange differences | 13 | ||||
Balance at end of the period | 3,667 | 3,667 | |||
Intangible assets subject to amortization | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 7,291 | ||||
Additions | 324 | ||||
Additions arising from business acquisitions | 802 | ||||
Dispositions, retirements and other | (314) | ||||
Net foreign exchange differences | 39 | ||||
Balance at end of the period | 8,142 | 8,142 | |||
Intangible assets subject to amortization | Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (4,384) | ||||
Amortization | 422 | ||||
Dispositions, retirements and other | (344) | ||||
Balance at end of the period | (4,475) | (4,475) | |||
Customer contracts, related customer relationships and leasehold interests | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 747 | ||||
Net foreign exchange differences | 12 | ||||
Balance at end of the period | 1,471 | 1,471 | |||
Customer contracts, related customer relationships and leasehold interests | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 1,032 | ||||
Additions arising from business acquisitions | 735 | ||||
Dispositions, retirements and other | 48 | ||||
Net foreign exchange differences | 37 | ||||
Balance at end of the period | 1,852 | 1,852 | |||
Customer contracts, related customer relationships and leasehold interests | Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (285) | ||||
Amortization | 97 | ||||
Dispositions, retirements and other | (13) | ||||
Balance at end of the period | (381) | (381) | |||
Software | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 1,842 | ||||
Net foreign exchange differences | 1 | ||||
Balance at end of the period | 1,816 | 1,816 | |||
Software | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 5,870 | ||||
Additions | 42 | ||||
Additions arising from business acquisitions | 20 | ||||
Dispositions, retirements and other | (333) | ||||
Assets under construction put into service | 232 | ||||
Net foreign exchange differences | 2 | ||||
Balance at end of the period | 5,833 | 5,833 | |||
Software | Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (4,028) | ||||
Amortization | 322 | ||||
Dispositions, retirements and other | (334) | ||||
Balance at end of the period | (4,017) | (4,017) | |||
Access to rights-of-way and other | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 64 | ||||
Balance at end of the period | 77 | 77 | |||
Access to rights-of-way and other | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 135 | ||||
Additions | 1 | ||||
Additions arising from business acquisitions | 47 | ||||
Dispositions, retirements and other | (29) | ||||
Balance at end of the period | 154 | 154 | |||
Access to rights-of-way and other | Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (71) | ||||
Amortization | 3 | ||||
Dispositions, retirements and other | 3 | ||||
Balance at end of the period | (77) | (77) | |||
Assets under construction | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 254 | ||||
Balance at end of the period | 303 | 303 | |||
Assets under construction | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 254 | ||||
Additions | 281 | ||||
Assets under construction put into service | (232) | ||||
Balance at end of the period | 303 | 303 | |||
Goodwill | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 5,309 | ||||
Balance at end of the period | 6,132 | 6,132 | |||
Goodwill | Cost/Gross amount | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | 5,673 | ||||
Additions arising from business acquisitions | 772 | ||||
Net foreign exchange differences | 51 | ||||
Balance at end of the period | 6,496 | 6,496 | |||
Goodwill | Accumulated amortization | |||||
intangible assets and goodwill | |||||
Balance at beginning of the period | (364) | ||||
Balance at end of the period | $ (364) | $ (364) |
intangible assets and goodwill - Business acquisitions (Details) - CAD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jan. 31, 2020 |
|
Acquisition effected by way of: | ||
Shares issued | $ 1,453 | |
Customer contracts and related customer relationships | ||
Acquisition effected by way of: | ||
Useful life of intangible assets | 10 years | |
Software | Minimum | ||
Acquisition effected by way of: | ||
Useful life of intangible assets | 3 years | |
Software | Maximum | ||
Acquisition effected by way of: | ||
Useful life of intangible assets | 5 years | |
Combined acquisitions | ||
Current assets | ||
Cash | $ 91 | |
Accounts receivable | 66 | |
Other | 3 | |
Total current assets | 160 | |
Non-current assets | ||
Intangible assets subject to amortization | 802 | |
Intangible assets with indefinite lives | 9 | |
Other | 2 | |
Total non-current assets | 878 | |
Total identifiable assets acquired | 1,038 | |
Current liabilities | ||
Accounts payable and accrued liabilities | 46 | |
Income and other taxes payable | 65 | |
Advance billings and customer deposits | 5 | |
Current maturities of long-term debt | 16 | |
Total current liabilities | 132 | |
Non-current liabilities | ||
Long-term debt | 215 | |
Deferred income taxes | 228 | |
Total non-current liabilities | 443 | |
Total liabilities assumed | 575 | |
Net assets acquired | 463 | |
Goodwill | 772 | |
Net assets acquired | 1,235 | |
Acquisition effected by way of: | ||
Cash consideration | 1,231 | |
Accounts payable and accrued liabilities | 4 | |
Total consideration transferred | 1,235 | |
Combined acquisitions | Owned assets | ||
Non-current assets | ||
Property, plant and equipment | 23 | |
Combined acquisitions | Right-of-use lease assets | ||
Non-current assets | ||
Property, plant and equipment | $ 42 | |
Individually immaterial transactions | ||
Business acquisition | ||
Ownership interest in businesses acquired (as a percentage) | 100.00% | |
Current assets | ||
Cash | $ 1 | |
Accounts receivable | 2 | |
Other | 1 | |
Total current assets | 4 | |
Non-current assets | ||
Intangible assets subject to amortization | 48 | |
Intangible assets with indefinite lives | 9 | |
Total non-current assets | 61 | |
Total identifiable assets acquired | 65 | |
Current liabilities | ||
Accounts payable and accrued liabilities | 4 | |
Advance billings and customer deposits | 5 | |
Current maturities of long-term debt | 5 | |
Total current liabilities | 14 | |
Non-current liabilities | ||
Long-term debt | 1 | |
Deferred income taxes | 10 | |
Total non-current liabilities | 11 | |
Total liabilities assumed | 25 | |
Net assets acquired | 40 | |
Goodwill | 48 | |
Net assets acquired | 88 | |
Acquisition effected by way of: | ||
Cash consideration | 84 | |
Accounts payable and accrued liabilities | 4 | |
Total consideration transferred | 88 | |
Individually immaterial transactions | Owned assets | ||
Non-current assets | ||
Property, plant and equipment | 2 | |
Individually immaterial transactions | Right-of-use lease assets | ||
Non-current assets | ||
Property, plant and equipment | $ 2 | |
Competence Call Center | ||
Business acquisition | ||
Ownership interest in businesses acquired (as a percentage) | 100.00% | |
Current assets | ||
Cash | $ 90 | |
Accounts receivable | 64 | |
Other | 2 | |
Total current assets | 156 | |
Non-current assets | ||
Intangible assets subject to amortization | 754 | |
Other | 2 | |
Total non-current assets | 817 | |
Total identifiable assets acquired | 973 | |
Current liabilities | ||
Accounts payable and accrued liabilities | 42 | |
Income and other taxes payable | 65 | |
Current maturities of long-term debt | 11 | |
Total current liabilities | 118 | |
Non-current liabilities | ||
Long-term debt | 214 | |
Deferred income taxes | 218 | |
Total non-current liabilities | 432 | |
Total liabilities assumed | 550 | |
Net assets acquired | 423 | |
Goodwill | 724 | |
Net assets acquired | 1,147 | |
Acquisition effected by way of: | ||
Cash consideration | 1,147 | |
Total consideration transferred | 1,147 | |
Competence Call Center | Owned assets | ||
Non-current assets | ||
Property, plant and equipment | 21 | |
Competence Call Center | Right-of-use lease assets | ||
Non-current assets | ||
Property, plant and equipment | $ 40 |
intangible assets and goodwill - Business acquisition pro forma information (Details) - CAD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|||
Pro forma Information | ||||||
Reported Operating revenues | $ 3,728 | $ 3,597 | $ 7,422 | $ 7,103 | ||
Reported Net income | 315 | $ 520 | 668 | $ 957 | ||
Pro forma Operating revenues | 3,730 | 7,475 | ||||
Pro forma Net income | $ 315 | $ 668 | ||||
Net income per Common Share | ||||||
Basic | [1] | $ 0.23 | $ 0.43 | $ 0.51 | $ 0.79 | |
Diluted | [1] | 0.23 | $ 0.43 | 0.51 | $ 0.79 | |
Pro forma Basic | 0.23 | 0.51 | ||||
Pro forma Diluted | $ 0.23 | $ 0.51 | ||||
Competence Call Center | ||||||
Net income per Common Share | ||||||
Reported Operating revenues of acquiree | $ 141 | $ 226 | ||||
Reported Net income of acquiree | $ 9 | $ (11) | ||||
|
intangible assets and goodwill - Business acquisitions - prior period (Details) - Business that is complimentary to existing lines $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2020
CAD ($)
| |
Business acquisition | |
Increase (decrease) in software | $ 32 |
Increase (decrease) in goodwill | (22) |
Increase (decrease) in deferred income taxes | $ 10 |
intangible assets and goodwill - Business acquisition - subsequent to reporting period (Details) - Mobile Klinik - CAD ($) $ in Thousands |
Jul. 31, 2020 |
Jul. 01, 2020 |
---|---|---|
Business acquisition | ||
Percentage of voting equity interests acquired | 100.00% | |
Cash consideration | $ 138,000 | |
Contingent consideration | 31,000 | |
Consideration for acquisition | $ 165,000 | |
Minimum | ||
Business acquisition | ||
Initial provision for the net identifiable assets acquired | $ 65,000 | |
Maximum | ||
Business acquisition | ||
Initial provision for the net identifiable assets acquired | $ 85,000 |
leases (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income from subleasing right-of-use lease assets | ||||
Co-location sublet revenue included in operating service revenues | $ 5 | $ 4 | $ 9 | $ 9 |
Other sublet revenue included in other operating income | 1 | 1 | 1 | |
Lease payments | $ 98 | $ 81 | $ 200 | $ 184 |
other long-term assets (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
other long-term assets | ||
Pension assets | $ 1 | $ 155 |
Unbilled customer finance receivables | 319 | 225 |
Derivative assets | 413 | 76 |
Costs incurred to obtain or fulfill a contract with a customer | 100 | 109 |
Real estate joint venture advances | 114 | 104 |
Investment in real estate joint venture | 2 | 3 |
Investment in associate | 72 | |
Portfolio investments | 122 | 110 |
Prepaid maintenance | 61 | 55 |
Other | 151 | 82 |
Total | $ 1,355 | $ 919 |
other long-term assets - Costs incurred to obtain and fulfill contracts with customers (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Disclosure of assets recognised from costs to obtain or fulfil contracts with customers [line items] | ||||
Balance, beginning of period | $ 345 | $ 358 | ||
Additions | 55 | 115 | ||
Amortization | (72) | (145) | ||
Balance, end of period | 328 | 328 | ||
Current | $ 228 | |||
Non-current | 100 | $ 109 | ||
Total | 328 | 328 | 328 | 358 |
Costs incurred to obtain contracts with customers | ||||
Disclosure of assets recognised from costs to obtain or fulfil contracts with customers [line items] | ||||
Balance, beginning of period | 331 | 344 | ||
Additions | 54 | 113 | ||
Amortization | (71) | (143) | ||
Balance, end of period | 314 | 314 | ||
Current | 221 | |||
Non-current | 93 | |||
Total | 314 | 314 | 314 | 344 |
Costs incurred to fulfill contracts with customers | ||||
Disclosure of assets recognised from costs to obtain or fulfil contracts with customers [line items] | ||||
Balance, beginning of period | 14 | 14 | ||
Additions | 1 | 2 | ||
Amortization | (1) | (2) | ||
Balance, end of period | 14 | 14 | ||
Current | 7 | |||
Non-current | 7 | |||
Total | $ 14 | $ 14 | $ 14 | $ 14 |
real estate joint ventures and investment in associate - Summarized financial information (Details) $ in Millions |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2013
item
|
Jun. 30, 2020
CAD ($)
|
Mar. 31, 2020
CAD ($)
|
Jan. 13, 2020
CAD ($)
|
Dec. 31, 2019
CAD ($)
|
Jun. 30, 2019
CAD ($)
|
Mar. 31, 2019
CAD ($)
|
Dec. 31, 2018
CAD ($)
|
|
Current assets | ||||||||
Cash and temporary investments, net | $ 971 | $ 1,058 | $ 535 | $ 217 | $ 588 | $ 414 | ||
Total | 4,420 | 4,353 | ||||||
Non-current assets | ||||||||
Other | 1,355 | 919 | ||||||
Total | 35,888 | 33,632 | ||||||
Total | 40,308 | 37,985 | ||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 2,873 | 2,749 | ||||||
Total | 4,850 | 5,574 | ||||||
Non-current liabilities | ||||||||
Non-current | 17,956 | 17,142 | ||||||
Other | 1,157 | 806 | ||||||
Total | 23,078 | 21,752 | ||||||
Liabilities | 27,928 | 27,326 | ||||||
Owners' equity | ||||||||
TELUS | 12,046 | 10,548 | 10,504 | |||||
Other partners | 334 | 111 | ||||||
Total | 12,380 | 10,659 | $ 10,596 | $ 10,179 | ||||
Total | 40,308 | 37,985 | ||||||
Miovision Technologies Incorporated | ||||||||
Disclosure of associates | ||||||||
Consideration in cash | $ 73 | |||||||
Ownership interest in businesses acquired (as a percentage) | 28.00% | |||||||
Real estate joint ventures | ||||||||
Current assets | ||||||||
Cash and temporary investments, net | 8 | 15 | ||||||
Other | 17 | 18 | ||||||
Total | 25 | 33 | ||||||
Non-current assets | ||||||||
Investment property under development | 331 | 318 | ||||||
Other | 14 | 2 | ||||||
Total | 345 | 320 | ||||||
Total | 370 | 353 | ||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 40 | 25 | ||||||
Construction holdback liabilities | 15 | |||||||
Total | 40 | 40 | ||||||
Non-current liabilities | ||||||||
Other | 3 | |||||||
Total | 342 | 315 | ||||||
Liabilities | 382 | 355 | ||||||
Owners' equity | ||||||||
TELUS | (3) | 1 | ||||||
Other partners | (9) | (3) | ||||||
Total | (12) | (2) | ||||||
Total | 370 | 353 | ||||||
Real estate joint ventures | Construction credit facility commitment | ||||||||
Non-current liabilities | ||||||||
Non-current | $ 342 | $ 312 | ||||||
TELUS Sky real estate joint venture | ||||||||
Real estate joint ventures | ||||||||
Number of other partners in the transaction | item | 2 |
real estate joint ventures and investment in associate - Net income (loss) and comprehensive income (loss) (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Real estate joint ventures | |||||
Interest expense | $ 204 | $ 192 | $ 397 | $ 362 | |
Net income | 315 | 520 | 668 | 957 | |
Comprehensive income | (461) | 549 | 482 | 967 | |
Real estate joint ventures | |||||
Real estate joint ventures | |||||
Net income | (31) | (33) | (1) | ||
Comprehensive income | 0 | 0 | 0 | 0 | |
Capitalized financing costs | 1 | 3 | 4 | 6 | |
Provision for income taxes of the partners recognized in net income and comprehensive income | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
real estate joint ventures and investment in associate - Investment activity (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Related to real estate joint ventures' statements of income and other comprehensive income | ||||
Comprehensive income attributable to us | $ (477) | $ 543 | $ 451 | $ 949 |
Real estate joint ventures | ||||
Related to real estate joint ventures' statements of income and other comprehensive income | ||||
Comprehensive income attributable to us | 10 | 11 | ||
Items not affecting currently reported cash flows | ||||
Construction credit facilities financing costs charged by us and other | 1 | 1 | 2 | 2 |
Cash flows in the current reporting period | ||||
Construction credit facilities amounts advanced | 3 | 9 | 10 | 17 |
Financing costs paid to us | (1) | (1) | (2) | (2) |
Funds we advanced or contributed, excluding construction credit facilities | 5 | 5 | ||
Funds repaid to us and earnings distributed | (1) | |||
Net increase | (2) | 9 | 3 | 17 |
Real estate joint ventures carrying amounts | ||||
Balance, beginning of period | 101 | 82 | 102 | 74 |
Valuation provision recorded in beginning of period balance now recorded in joint venture | 6 | |||
Balance, end of period | 105 | 91 | 105 | 91 |
Real estate joint ventures | Equity | ||||
Related to real estate joint ventures' statements of income and other comprehensive income | ||||
Comprehensive income attributable to us | 10 | 11 | ||
Cash flows in the current reporting period | ||||
Funds we advanced or contributed, excluding construction credit facilities | 5 | 5 | ||
Funds repaid to us and earnings distributed | (1) | |||
Net increase | (5) | (7) | ||
Real estate joint ventures carrying amounts | ||||
Balance, beginning of period | (10) | 5 | (2) | 5 |
Valuation provision recorded in beginning of period balance now recorded in joint venture | 6 | |||
Balance, end of period | (9) | 5 | (9) | 5 |
Real estate joint ventures | Loans and receivables | ||||
Items not affecting currently reported cash flows | ||||
Construction credit facilities financing costs charged by us and other | 1 | 1 | 2 | 2 |
Cash flows in the current reporting period | ||||
Construction credit facilities amounts advanced | 3 | 9 | 10 | 17 |
Financing costs paid to us | (1) | (1) | (2) | (2) |
Net increase | 3 | 9 | 10 | 17 |
Real estate joint ventures carrying amounts | ||||
Balance, beginning of period | 111 | 77 | 104 | 69 |
Balance, end of period | $ 114 | $ 86 | $ 114 | $ 86 |
real estate joint ventures and investment in associate - Commitments and contingent liabilities (Details) - CAD ($) $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
|
real estate joint venture | |||
Advances | $ 18,518 | $ 18,474 | $ 16,579 |
Real estate joint ventures | |||
real estate joint venture | |||
Construction financing amount | 342 | 342 | |
Real estate joint ventures | TELUS Corporation Construction Credit Facility | |||
real estate joint venture | |||
Construction financing amount | 114 | 114 | |
Undrawn | 10 | ||
Advances | 114 | 104 | |
Real estate joint ventures | Construction Credit Facility - Other | |||
real estate joint venture | |||
Construction financing amount | 228 | 228 | |
TELUS Sky real estate joint venture | |||
real estate joint venture | |||
Real estate joint venture approximate total capital spending | 475 | 450 | |
Contractual capital commitments | $ 23 | $ 37 | |
Percentage of financing provided | 33.333% | ||
Construction financing amount | $ 342 | ||
TELUS Sky real estate joint venture | Three Canadian financial institutions | |||
real estate joint venture | |||
Percentage of financing provided | 66.667% |
short-term borrowings (Details) - CAD ($) $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
|
Disclosure of detailed information about borrowings | |||
Short-term borrowings | $ 100 | $ 100 | $ 100 |
TELUS Communications Inc. | Revolving period securitization agreement | |||
Disclosure of detailed information about borrowings | |||
Cash proceeds from monthly sales | 100 | 100 | |
Trade receivables sold | 118 | 124 | |
Short-term borrowings | 100 | 100 | |
TELUS Communications Inc. | Revolving period securitization agreement | Maximum | |||
Disclosure of detailed information about borrowings | |||
Trade receivables that can be sold under the securitization agreement | $ 500 | $ 500 |
accounts payable and accrued liabilities (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
accounts payable and accrued liabilities | ||
Accrued liabilities | $ 1,102 | $ 1,091 |
Payroll and other employee-related liabilities | 482 | 422 |
Restricted share units liability | 95 | 77 |
Total | 1,679 | 1,590 |
Trade accounts payable | 834 | 892 |
Interest payable | 170 | 160 |
Other | 190 | 107 |
Total | $ 2,873 | $ 2,749 |
advance billings and customer deposits (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
---|---|---|---|
advance billings and customer deposits | |||
Advance billings | $ 548 | $ 522 | |
Deferred customer activation and connection fees | 8 | 9 | |
Customer deposits | 14 | 14 | |
Contract liabilities | 570 | 545 | $ 572 |
Other | 126 | 130 | |
Total | $ 696 | $ 675 |
advance billings and customer deposits - Contract liabilities (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
advance billings and customer deposits | ||||
Contract liabilities at beginning of period | $ 824 | $ 814 | $ 801 | $ 811 |
Revenue deferred in previous period and recognized in current period | (593) | (642) | (577) | (647) |
Net additions arising from operations | 571 | 638 | 573 | 641 |
Additions arising from business acquisitions | 1 | 5 | 6 | |
Contract liabilities at end of period | 802 | 811 | 802 | 811 |
Current | 721 | 732 | 721 | 732 |
Non-current | ||||
Deferred revenues | 70 | 65 | 70 | 65 |
Deferred customer activation and connection fees | $ 11 | $ 14 | $ 11 | $ 14 |
advance billings and customer deposits - Reconciliation of contract liabilities (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
---|---|---|---|
advance billings and customer deposits | |||
Gross contract liabilities | $ 721 | $ 732 | |
Reclassification to contract assets for contracts with contract liabilities less than contract assets | (142) | (155) | |
Reclassification from contract assets for contracts with contract assets less than contract liabilities | (9) | (5) | |
Contract liabilities | $ 570 | $ 545 | $ 572 |
provisions (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2020 |
Jun. 30, 2020 |
|
provisions reconciliation | |||
Balance at beginning of period | $ 842 | $ 878 | |
Additions | 85 | 115 | |
Reversal | (72) | (119) | |
Use | (155) | (200) | |
Interest effect | 4 | 9 | |
Effects of foreign exchange, net | (8) | 13 | |
Balance at end of period | 696 | 696 | |
Current | $ 83 | ||
Non-current | 613 | ||
Total | 696 | 696 | 696 |
Asset retirement obligation | |||
provisions reconciliation | |||
Balance at beginning of period | 497 | 495 | |
Use | (1) | (2) | |
Interest effect | 4 | 7 | |
Balance at end of period | 500 | 500 | |
Current | 10 | ||
Non-current | 490 | ||
Total | 500 | 500 | 500 |
Employee-related | |||
provisions reconciliation | |||
Balance at beginning of period | 41 | 64 | |
Additions | 10 | 20 | |
Use | (9) | (43) | |
Effects of foreign exchange, net | (1) | ||
Balance at end of period | 41 | 41 | |
Current | 35 | ||
Non-current | 6 | ||
Total | 41 | 41 | 41 |
Written put options | |||
provisions reconciliation | |||
Balance at beginning of period | 182 | 196 | |
Reversal | (70) | (103) | |
Use | (103) | (104) | |
Interest effect | 2 | ||
Effects of foreign exchange, net | (6) | 12 | |
Balance at end of period | 3 | 3 | |
Non-current | 3 | ||
Total | 3 | 3 | 3 |
Other | |||
provisions reconciliation | |||
Balance at beginning of period | 122 | 123 | |
Additions | 75 | 95 | |
Reversal | (2) | (16) | |
Use | (42) | (51) | |
Effects of foreign exchange, net | (1) | 1 | |
Balance at end of period | 152 | 152 | |
Current | 38 | ||
Non-current | 114 | ||
Total | $ 152 | $ 152 | $ 152 |
long-term debt (Details) $ in Millions, $ in Millions |
Jun. 30, 2020
CAD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2019
CAD ($)
|
Jun. 30, 2019
CAD ($)
|
---|---|---|---|---|
Details of long-term debt | ||||
Long-term debt excluding Lease liabilities | $ 16,797 | $ 16,813 | ||
Lease liabilities | 1,721 | 1,661 | ||
Long-term debt | 18,518 | 18,474 | $ 16,579 | |
Current liabilities | 562 | 1,332 | ||
Non-current | 17,956 | 17,142 | ||
TELUS Corporation senior notes | ||||
Details of long-term debt | ||||
Long-term debt excluding Lease liabilities | 14,729 | 14,479 | ||
TELUS Corporation commercial paper | ||||
Details of long-term debt | ||||
Long-term debt excluding Lease liabilities | 1,015 | |||
Long-term debt | $ 781 | 1,015 | ||
TELUS Communications Inc. debentures | ||||
Details of long-term debt | ||||
Long-term debt excluding Lease liabilities | 622 | 621 | ||
TELUS International (Cda) Inc. credit facility | ||||
Details of long-term debt | ||||
Long-term debt excluding Lease liabilities | 1,167 | 431 | ||
Other | ||||
Details of long-term debt | ||||
Long-term debt excluding Lease liabilities | $ 279 | $ 267 |
long-term debt - TELUS Corporation senior notes (Details) $ in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020
CAD ($)
|
Jun. 30, 2020
CAD ($)
|
Jun. 30, 2020
USD ($)
$ / NotesSeries
$ / NotesSeries
$ / $
|
Jun. 30, 2020
CAD ($)
$ / NotesSeries
$ / NotesSeries
$ / $
|
Jun. 23, 2020 |
May 31, 2020
CAD ($)
$ / NotesSeries
|
Dec. 31, 2019
CAD ($)
$ / NotesSeries
|
Jun. 30, 2019
CAD ($)
|
Mar. 31, 2018 |
Feb. 28, 2018
CAD ($)
$ / NotesSeries
|
Mar. 31, 2017
CAD ($)
$ / NotesSeries
|
Dec. 31, 2015
CAD ($)
$ / NotesSeries
|
Apr. 30, 2014
CAD ($)
$ / NotesSeries
|
|
TELUS Corporation notes | |||||||||||||
Long-term debt | $ 18,518 | $ 18,474 | $ 16,579 | ||||||||||
Long-term debt prepayment premium | $ 18 | $ 18 | |||||||||||
TELUS Corporation senior notes | |||||||||||||
TELUS Corporation notes | |||||||||||||
Repurchase offer price, expressed as percentage of principal | 101.00% | ||||||||||||
Redemption price percentage | 100.00% | ||||||||||||
3.60% Notes, Series CM | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.60% | 3.60% | 3.60% | ||||||||||
Issued | November 2013 | ||||||||||||
Maturity | January 2021 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.15 | 997.15 | |||||||||||
Effective interest rate | 3.65% | 3.65% | |||||||||||
Principal face amount: Originally issued | $ 400 | ||||||||||||
Redemption present value spread - Basis points | 0.35% | 0.35% | |||||||||||
Redemption present value spread - Cessation date | N/A | ||||||||||||
3.20% Notes, Series CO | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.20% | 3.20% | 3.20% | ||||||||||
Issued | April 2014 | ||||||||||||
Maturity | April 2021 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.39 | 997.39 | |||||||||||
Effective interest rate | 3.24% | 3.24% | |||||||||||
Principal face amount: Originally issued | $ 500 | ||||||||||||
Redemption present value spread - Basis points | 0.30% | 0.30% | |||||||||||
Redemption present value spread - Cessation date | Mar. 5, 2021 | ||||||||||||
2.35% Notes, Series CT | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 2.35% | 2.35% | |||||||||||
Issued | March 2015 | ||||||||||||
Maturity | March 2022 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.31 | 997.31 | |||||||||||
Effective interest rate | 2.39% | 2.39% | |||||||||||
Principal face amount: Originally issued | $ 1,000 | ||||||||||||
Long-term debt | $ 1,000 | ||||||||||||
Redemption present value spread - Basis points | 0.355% | 0.355% | |||||||||||
Redemption present value spread - Cessation date | Feb. 28, 2022 | ||||||||||||
3.35% Notes, Series CJ | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.35% | 3.35% | |||||||||||
Issued | December 2012 | ||||||||||||
Maturity | March 2023 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 998.83 | 998.83 | |||||||||||
Effective interest rate | 3.36% | 3.36% | |||||||||||
Principal face amount: Originally issued | $ 500 | ||||||||||||
Long-term debt | $ 500 | ||||||||||||
Redemption present value spread - Basis points | 0.40% | 0.40% | |||||||||||
Redemption present value spread - Cessation date | Dec. 15, 2022 | ||||||||||||
3.35% Notes, Series CK | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.35% | 3.35% | |||||||||||
Issued | April 2013 | ||||||||||||
Maturity | April 2024 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 994.35 | 994.35 | |||||||||||
Effective interest rate | 3.41% | 3.41% | |||||||||||
Principal face amount: Originally issued | $ 1,100 | ||||||||||||
Long-term debt | $ 1,100 | ||||||||||||
Redemption present value spread - Basis points | 0.36% | 0.36% | |||||||||||
Redemption present value spread - Cessation date | Jan. 2, 2024 | ||||||||||||
3.75% Notes, Series CQ | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.75% | 3.75% | |||||||||||
Issued | September 2014 | ||||||||||||
Maturity | January 2025 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.75 | 997.75 | |||||||||||
Effective interest rate | 3.78% | 3.78% | |||||||||||
Principal face amount: Originally issued | $ 800 | ||||||||||||
Long-term debt | $ 800 | ||||||||||||
Redemption present value spread - Basis points | 0.385% | 0.385% | |||||||||||
Redemption present value spread - Cessation date | Oct. 17, 2024 | ||||||||||||
3.75% Notes, Series CV | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.75% | 3.75% | |||||||||||
Issued | December 2015 | ||||||||||||
Maturity | March 2026 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 992.14 | 992.14 | |||||||||||
Effective interest rate | 3.84% | 3.84% | |||||||||||
Principal face amount: Originally issued | $ 600 | ||||||||||||
Long-term debt | $ 600 | ||||||||||||
Redemption present value spread - Basis points | 0.535% | 0.535% | |||||||||||
Redemption present value spread - Cessation date | Dec. 10, 2025 | ||||||||||||
2.75% Notes, Series CZ | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 2.75% | 2.75% | |||||||||||
Issued | July 2019 | ||||||||||||
Maturity | July 2026 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 998.73 | 998.73 | |||||||||||
Effective interest rate | 2.77% | 2.77% | |||||||||||
Principal face amount: Originally issued | $ 800 | ||||||||||||
Long-term debt | $ 800 | ||||||||||||
Redemption present value spread - Basis points | 0.33% | 0.33% | |||||||||||
Redemption present value spread - Cessation date | May 8, 2026 | ||||||||||||
2.80% U.S. Dollar Notes | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 2.80% | 2.80% | |||||||||||
Issued | September 2016 | ||||||||||||
Maturity | February 2027 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 991.89 | 991.89 | |||||||||||
Effective interest rate | 2.89% | 2.89% | |||||||||||
Principal face amount: Originally issued | $ 600 | ||||||||||||
Long-term debt | $ 600 | ||||||||||||
Redemption present value spread - Basis points | 0.20% | 0.20% | |||||||||||
Redemption present value spread - Cessation date | Nov. 16, 2026 | ||||||||||||
2.80% U.S. Dollar Notes | Foreign exchange derivative | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 2.95% | 2.95% | |||||||||||
Principal face amount: Originally issued | $ 792 | ||||||||||||
Fixed exchange rate | $ / $ | 1.3205 | 1.3205 | |||||||||||
3.70% U.S. Dollar Notes | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.70% | 3.70% | |||||||||||
Issued | March 2017 | ||||||||||||
Maturity | September 2027 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 998.95 | 998.95 | |||||||||||
Effective interest rate | 3.71% | 3.71% | |||||||||||
Principal face amount: Originally issued | $ 500 | ||||||||||||
Long-term debt | $ 500 | ||||||||||||
Redemption present value spread - Basis points | 0.20% | 0.20% | |||||||||||
Redemption present value spread - Cessation date | June 15, 2027 | ||||||||||||
3.70% U.S. Dollar Notes | Foreign exchange derivative | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.41% | 3.41% | |||||||||||
Principal face amount: Originally issued | $ 667 | ||||||||||||
Fixed exchange rate | $ / $ | 1.3348 | 1.3348 | |||||||||||
2.35% Notes, Series CAC | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 2.35% | 2.35% | |||||||||||
Issued | May 2020 | ||||||||||||
Maturity | January 2028 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.25 | 997.25 | |||||||||||
Effective interest rate | 2.39% | 2.39% | |||||||||||
Principal face amount: Originally issued | $ 600 | ||||||||||||
Long-term debt | $ 600 | ||||||||||||
Redemption present value spread - Basis points | 0.48% | 0.48% | |||||||||||
Redemption present value spread - Cessation date | Nov. 27, 2027 | ||||||||||||
3.625% Notes, Series CX | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.625% | 3.625% | |||||||||||
Issued | March 2018 | ||||||||||||
Maturity | March 2028 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 989.49 | 989.49 | |||||||||||
Effective interest rate | 3.75% | 3.75% | |||||||||||
Principal face amount: Originally issued | $ 600 | ||||||||||||
Long-term debt | $ 600 | ||||||||||||
Redemption present value spread - Basis points | 0.37% | 0.37% | |||||||||||
Redemption present value spread - Cessation date | Dec. 1, 2027 | ||||||||||||
3.30% Notes, Series CY | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.30% | 3.30% | |||||||||||
Issued | April 2019 | ||||||||||||
Maturity | May 2029 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 991.75 | 991.75 | |||||||||||
Effective interest rate | 3.40% | 3.40% | |||||||||||
Principal face amount: Originally issued | $ 1,000 | ||||||||||||
Long-term debt | $ 1,000 | ||||||||||||
Redemption present value spread - Basis points | 0.435% | 0.435% | |||||||||||
Redemption present value spread - Cessation date | Feb. 2, 2029 | ||||||||||||
3.15% Notes, Series CAA | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.15% | 3.15% | |||||||||||
Issued | December 2019 | ||||||||||||
Maturity | February 2030 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 996.49 | 996.49 | |||||||||||
Effective interest rate | 3.19% | 3.19% | |||||||||||
Principal face amount: Originally issued | $ 600 | ||||||||||||
Long-term debt | $ 600 | ||||||||||||
Redemption present value spread - Basis points | 0.395% | 0.395% | |||||||||||
Redemption present value spread - Cessation date | Nov. 19, 2029 | ||||||||||||
4.40% Notes, Series CL | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.40% | 4.40% | |||||||||||
Issued | April 2013 | ||||||||||||
Maturity | April 2043 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.68 | 997.68 | |||||||||||
Effective interest rate | 4.41% | 4.41% | |||||||||||
Principal face amount: Originally issued | $ 600 | ||||||||||||
Long-term debt | $ 600 | ||||||||||||
Redemption present value spread - Basis points | 0.47% | 0.47% | |||||||||||
Redemption present value spread - Cessation date | Oct. 1, 2042 | ||||||||||||
5.15% Notes, Series CN | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 5.15% | 5.15% | |||||||||||
Issued | November 2013 | ||||||||||||
Maturity | November 2043 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 995.00 | 995.00 | |||||||||||
Effective interest rate | 5.18% | 5.18% | |||||||||||
Principal face amount: Originally issued | $ 400 | ||||||||||||
Long-term debt | $ 400 | ||||||||||||
Redemption present value spread - Basis points | 0.50% | 0.50% | |||||||||||
Redemption present value spread - Cessation date | May 26, 2043 | ||||||||||||
4.85% Notes, Series CP | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.85% | 4.85% | 4.85% | ||||||||||
Issued | Multiple | ||||||||||||
Maturity | April 2044 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 987.91 | 987.91 | 974.38 | 998.74 | |||||||||
Effective interest rate | 4.93% | 4.93% | 5.02% | 4.86% | |||||||||
Principal face amount: Originally issued | $ 500 | $ 400 | $ 500 | ||||||||||
Long-term debt | $ 900 | ||||||||||||
Redemption present value spread - Basis points | 0.46% | 0.46% | |||||||||||
Redemption present value spread - Cessation date | Oct. 5, 2043 | ||||||||||||
4.75% Notes, Series CR | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.75% | 4.75% | |||||||||||
Issued | September 2014 | ||||||||||||
Maturity | January 2045 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 992.91 | 992.91 | |||||||||||
Effective interest rate | 4.80% | 4.80% | |||||||||||
Principal face amount: Originally issued | $ 400 | ||||||||||||
Long-term debt | $ 400 | ||||||||||||
Redemption present value spread - Basis points | 0.515% | 0.515% | |||||||||||
Redemption present value spread - Cessation date | July 17, 2044 | ||||||||||||
4.40% Notes, Series CU | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.40% | 4.40% | |||||||||||
Issued | March 2015 | ||||||||||||
Maturity | January 2046 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 999.72 | 999.72 | |||||||||||
Effective interest rate | 4.40% | 4.40% | |||||||||||
Principal face amount: Originally issued | $ 500 | ||||||||||||
Long-term debt | $ 500 | ||||||||||||
Redemption present value spread - Basis points | 0.605% | 0.605% | |||||||||||
Redemption present value spread - Cessation date | July 29, 2045 | ||||||||||||
4.70% Notes, Series CW | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.70% | 4.70% | 4.70% | ||||||||||
Issued | Multiple | ||||||||||||
Maturity | March 2048 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 998.06 | 998.06 | 1,014.11 | 990.65 | |||||||||
Effective interest rate | 4.71% | 4.71% | 4.61% | 4.76% | |||||||||
Principal face amount: Originally issued | $ 325 | $ 150 | $ 325 | ||||||||||
Long-term debt | $ 475 | ||||||||||||
Redemption present value spread - Basis points | 0.585% | 0.585% | |||||||||||
Redemption present value spread - Cessation date | Sept. 6, 2047 | ||||||||||||
4.60% U.S. Dollar Notes | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.60% | 4.60% | |||||||||||
Issued | June 2018 | ||||||||||||
Maturity | November 2048 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 987.60 | 987.60 | |||||||||||
Effective interest rate | 4.68% | 4.68% | |||||||||||
Principal face amount: Originally issued | $ 750 | ||||||||||||
Long-term debt | $ 750 | ||||||||||||
Redemption present value spread - Basis points | 0.25% | 0.25% | |||||||||||
Redemption present value spread - Cessation date | May 16, 2048 | ||||||||||||
4.60% U.S. Dollar Notes | Foreign exchange derivative | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.41% | 4.41% | |||||||||||
Principal face amount: Originally issued | $ 974 | ||||||||||||
Fixed exchange rate | $ / $ | 1.2985 | 1.2985 | |||||||||||
4.30% U.S. Dollar Notes | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.30% | 4.30% | |||||||||||
Issued | May 2019 | ||||||||||||
Maturity | June 2049 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 990.48 | 990.48 | |||||||||||
Effective interest rate | 4.36% | 4.36% | |||||||||||
Principal face amount: Originally issued | $ 500 | ||||||||||||
Long-term debt | $ 500 | ||||||||||||
Redemption present value spread - Basis points | 0.25% | 0.25% | |||||||||||
Redemption present value spread - Cessation date | Dec. 15, 2048 | ||||||||||||
4.30% U.S. Dollar Notes | Foreign exchange derivative | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 4.27% | 4.27% | |||||||||||
Principal face amount: Originally issued | $ 672 | ||||||||||||
Fixed exchange rate | $ / $ | 1.3435 | 1.3435 | |||||||||||
3.95% Notes, Series CAB | |||||||||||||
TELUS Corporation notes | |||||||||||||
Fixed interest rate | 3.95% | 3.95% | 3.95% | ||||||||||
Issued | Multiple | ||||||||||||
Maturity | February 2050 | ||||||||||||
Issue price per $1000 increment of debt | $ / NotesSeries | 997.54 | 997.54 | 1,003.53 | 991.54 | |||||||||
Effective interest rate | 3.97% | 3.97% | 3.93% | 4.00% | |||||||||
Principal face amount: Originally issued | $ 400 | $ 400 | $ 400 | ||||||||||
Long-term debt | $ 800 | ||||||||||||
Redemption present value spread - Basis points | 0.575% | 0.575% | |||||||||||
Redemption present value spread - Cessation date | Aug. 16, 2049 | ||||||||||||
Prior to maturity date | Foreign exchange derivative | |||||||||||||
TELUS Corporation notes | |||||||||||||
Redemption price percentage | 100.00% | ||||||||||||
Prior to maturity date | TELUS Corporation senior notes | Minimum | |||||||||||||
TELUS Corporation notes | |||||||||||||
Redemption period | 30 days | ||||||||||||
Prior to maturity date | TELUS Corporation senior notes | Maximum | |||||||||||||
TELUS Corporation notes | |||||||||||||
Redemption period | 60 days | ||||||||||||
On or after the redemption cessation date | TELUS Corporation senior notes | Minimum | |||||||||||||
TELUS Corporation notes | |||||||||||||
Redemption period | 30 days | ||||||||||||
On or after the redemption cessation date | TELUS Corporation senior notes | Maximum | |||||||||||||
TELUS Corporation notes | |||||||||||||
Redemption period | 60 days |
long-term debt - TELUS Corporation commercial paper (Details) $ in Millions, $ in Millions |
Jun. 30, 2020
CAD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2019
CAD ($)
|
Jun. 30, 2019
CAD ($)
|
---|---|---|---|---|
TELUS Corporation commercial paper | ||||
Maximum aggregate amount of credit facility | $ 2,250 | $ 2,250 | ||
Current portion of non-current borrowings | 562 | 1,332 | ||
Long-term debt | 18,518 | 18,474 | $ 16,579 | |
TELUS Corporation commercial paper | ||||
TELUS Corporation commercial paper | ||||
Maximum aggregate amount of credit facility | 1,400 | 1,400 | ||
Long-term debt | $ 781 | $ 1,015 | ||
TELUS Corporation credit facility | ||||
TELUS Corporation commercial paper | ||||
Maximum aggregate amount of credit facility | 2,250 | |||
Current portion of non-current borrowings | $ 0 |
long-term debt - TELUS Corporation credit facility (Details) $ in Millions, $ in Millions |
Jun. 30, 2020
CAD ($)
item
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2019
CAD ($)
|
Jun. 30, 2019
CAD ($)
|
---|---|---|---|---|
TELUS Corporation credit facility | ||||
Net available | $ 2,250 | $ 1,235 | ||
Gross available | 2,250 | 2,250 | ||
Long-term debt | $ 18,518 | 18,474 | $ 16,579 | |
TELUS Corporation credit facility | ||||
TELUS Corporation credit facility | ||||
Number of financial ratio tests | item | 2 | |||
Gross available | $ 2,250 | |||
Letters of credit outstanding | $ 191 | 184 | ||
TELUS Corporation credit facility | Maximum | ||||
TELUS Corporation credit facility | ||||
Leverage ratio | 4.25 | |||
TELUS Corporation credit facility | Minimum | ||||
TELUS Corporation credit facility | ||||
Operating cash flow to interest expense ratio | 2.00 | |||
TELUS Corporation commercial paper | ||||
TELUS Corporation credit facility | ||||
Gross available | $ 1,400 | 1,400 | ||
Long-term debt | $ 781 | $ 1,015 |
long-term debt - TELUS International (Cda) Inc. credit facility, Other and Lease Liabilities (Details) $ in Millions, $ in Millions |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
item
|
Jun. 30, 2020
CAD ($)
item
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2019
CAD ($)
|
Jun. 30, 2019
CAD ($)
|
|
long-term debt | |||||
Maximum aggregate amount of credit facility | $ 2,250 | $ 2,250 | |||
Long-term debt | 18,518 | 18,474 | $ 16,579 | ||
Undrawn borrowing facilities | 2,250 | 1,235 | |||
Interest obligations | $ 170 | $ 160 | |||
TELUS Corporation, share of lending, as a percent | 87.50% | ||||
Lease liabilities | |||||
long-term debt | |||||
Weighted average interest rate | 4.37% | 4.37% | |||
Minimum | First year | |||||
long-term debt | |||||
Leverage ratio | 4.75 | 4.75 | |||
Minimum | 2021 | |||||
long-term debt | |||||
Leverage ratio | 4.25 | 4.25 | |||
Minimum | Thereafter | |||||
long-term debt | |||||
Leverage ratio | 3.50 | 3.50 | |||
TELUS International (Cda) Inc. credit facility | |||||
long-term debt | |||||
Maximum aggregate amount of credit facility | $ 1,192 | $ 457 | |||
Undrawn borrowing facilities | $ 204 | 121 | |||
Number of financial ratio tests | item | 2 | 2 | |||
Percentage of principal advance required to be repaid each year of the term of the agreement | 5.00% | ||||
TELUS International (Cda) Inc. credit facility | Minimum | |||||
long-term debt | |||||
Operating cash flow to debt service ratio | 1.50 | 1.50 | |||
TELUS International (Cda) Inc. credit facility | Foreign exchange derivative | |||||
long-term debt | |||||
Fixed interest rate | 0.65% | 0.65% | |||
Amortizing amount, convertible | $ 415 | ||||
TELUS International (Cda) Inc. credit facility | Foreign exchange derivative | U.S. Dollars | |||||
long-term debt | |||||
Derivative Exchange Rate | 1.0932 | ||||
TELUS International (Cda) Inc. credit facility | Foreign exchange derivative | European euro | |||||
long-term debt | |||||
Derivative Exchange Rate | 1.00 | ||||
Revolving component | |||||
long-term debt | |||||
Maximum aggregate amount of credit facility | $ 600 | 350 | |||
Undrawn borrowing facilities | $ 204 | 121 | |||
Weighted average interest rate | 2.68% | 2.68% | |||
Term loan component | |||||
long-term debt | |||||
Maximum aggregate amount of credit facility | $ 600 | 120 | |||
Outstanding | $ 592 | 107 | |||
Weighted average interest rate | 2.68% | 2.68% | |||
Term loan component | Fixed interest rate | |||||
long-term debt | |||||
Interest obligations | $ 103 | ||||
Fixed interest rate | 2.64% | 2.64% | |||
Other | TELUS International (Cda) Inc. credit facility | |||||
long-term debt | |||||
Outstanding | $ 865 | 336 | |||
Other | Revolving component | |||||
long-term debt | |||||
Outstanding | 347 | 229 | |||
Other | Term loan component | |||||
long-term debt | |||||
Outstanding | $ 518 | $ 107 | |||
TELUS Corporation | |||||
long-term debt | |||||
TELUS Corporation, share of lending, as a percent | 12.50% | ||||
TELUS Corporation | TELUS International (Cda) Inc. credit facility | |||||
long-term debt | |||||
Outstanding | $ 123 | ||||
TELUS Corporation | Revolving component | |||||
long-term debt | |||||
Outstanding | 49 | ||||
TELUS Corporation | Term loan component | |||||
long-term debt | |||||
Outstanding | $ 74 |
long-term debt - Long-term debt maturities (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | $ 1,721 | $ 1,661 |
Total | 30,623 | 30,566 |
Composite long-term debt | ||
Long-term debt maturities | ||
Total | 18,577 | |
Total | 9,401 | |
Total | 27,978 | |
Canadian Dollars | ||
Long-term debt maturities | ||
Total | 13,963 | |
Future cash outflows in respect of associated interest and like carrying costs | 6,827 | |
Undiscounted contractual maturities | 20,790 | |
Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 12,576 | |
Future cash outflows in respect of associated interest and like carrying costs | 6,452 | |
Undiscounted contractual maturities | 19,028 | |
Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 1,387 | |
Future cash outflows in respect of associated interest and like carrying costs - Finance leases | 375 | |
Undiscounted contractual maturities - Finance leases | 1,762 | |
U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 4,382 | |
Future cash outflows in respect of associated interest and like carrying costs | 2,672 | |
Undiscounted contractual maturities | 7,054 | |
U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 98 | |
Future cash outflows in respect of associated interest and like carrying costs - Finance leases | 19 | |
Undiscounted contractual maturities - Finance leases | 117 | |
U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (3,764) | |
Future cash outflows in respect of associated interest and like carrying costs - Derivative Liabilities | (2,575) | |
Undiscounted contractual maturities - Derivative Liabilities, Receive | (6,339) | |
U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 3,679 | |
Future cash outflows in respect of associated interest and like carrying costs - Derivative Liabilities | 2,409 | |
Undiscounted contractual maturities - Derivative Liabilities, Pay | 6,088 | |
U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 4,395 | |
Total | 2,525 | |
Total | 6,920 | |
Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 219 | |
Future cash outflows in respect of associated interest and like carrying costs - Finance leases | 49 | |
Undiscounted contractual maturities - Finance leases | 268 | |
First year | ||
Long-term debt maturities | ||
Total | 2,884 | 4,699 |
First year | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 203 | |
First year | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 151 | |
First year | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 7 | |
First year | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 144 | |
First year | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 18 | |
First year | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 11 | |
First year | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (14) | |
First year | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 14 | |
First year | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 29 | |
First year | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 23 | |
2 years hence | ||
Long-term debt maturities | ||
Total | 1,521 | 2,181 |
2 years hence | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 558 | |
2 years hence | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 455 | |
2 years hence | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 188 | |
2 years hence | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 267 | |
2 years hence | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 36 | |
2 years hence | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 23 | |
2 years hence | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (28) | |
2 years hence | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 28 | |
2 years hence | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 59 | |
2 years hence | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 44 | |
3 years hence | ||
Long-term debt maturities | ||
Total | 2,165 | 2,456 |
3 years hence | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 1,499 | |
3 years hence | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 1,407 | |
3 years hence | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 1,263 | |
3 years hence | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 144 | |
3 years hence | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 36 | |
3 years hence | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 22 | |
3 years hence | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (28) | |
3 years hence | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 28 | |
3 years hence | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 58 | |
3 years hence | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 34 | |
4 years hence | ||
Long-term debt maturities | ||
Total | 1,349 | 1,214 |
4 years hence | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 734 | |
4 years hence | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 651 | |
4 years hence | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 529 | |
4 years hence | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 122 | |
4 years hence | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 36 | |
4 years hence | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 18 | |
4 years hence | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (28) | |
4 years hence | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 28 | |
4 years hence | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 54 | |
4 years hence | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 29 | |
5 years hence | ||
Long-term debt maturities | ||
Total | 1,869 | 1,756 |
5 years hence | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 1,292 | |
5 years hence | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 1,225 | |
5 years hence | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 1,115 | |
5 years hence | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 110 | |
5 years hence | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 36 | |
5 years hence | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 8 | |
5 years hence | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (28) | |
5 years hence | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 28 | |
5 years hence | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 44 | |
5 years hence | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 23 | |
5 years hence and 10 years before | ||
Long-term debt maturities | ||
Total | 9,590 | 7,769 |
5 years hence and 10 years before | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 7,534 | |
5 years hence and 10 years before | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 4,985 | |
5 years hence and 10 years before | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 4,686 | |
5 years hence and 10 years before | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 299 | |
5 years hence and 10 years before | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 2,516 | |
5 years hence and 10 years before | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 15 | |
5 years hence and 10 years before | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (1,935) | |
5 years hence and 10 years before | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 1,907 | |
5 years hence and 10 years before | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 2,503 | |
5 years hence and 10 years before | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 46 | |
Thereafter | ||
Long-term debt maturities | ||
Total | 11,245 | $ 10,491 |
Thereafter | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 6,757 | |
Thereafter | Canadian Dollars | ||
Long-term debt maturities | ||
Total | 5,089 | |
Thereafter | Canadian Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 4,788 | |
Thereafter | Canadian Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 301 | |
Thereafter | U.S. Dollars | Long-term debt | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments | 1,704 | |
Thereafter | U.S. Dollars | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | 1 | |
Thereafter | U.S. Dollars | Derivative Liability Receive | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | (1,703) | |
Thereafter | U.S. Dollars | Derivative Liability Pay | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Derivative Liabilities | 1,646 | |
Thereafter | U.S. Dollars | Composite long-term debt | ||
Long-term debt maturities | ||
Total | 1,648 | |
Thereafter | Other currencies | Lease liabilities | ||
Long-term debt maturities | ||
Future cash outflows in respect of composite long-term debt principal repayments - Leases | $ 20 |
other long-term liabilities (Details) - CAD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
other long-term liabilities | ||
Contract liabilities | $ 70 | $ 70 |
Other | 6 | 7 |
Deferred revenues | 76 | 77 |
Pension benefit liabilities | 934 | 580 |
Other post-employment benefit liabilities | 58 | 53 |
Restricted share unit and deferred share unit liabilities | 13 | 42 |
Derivative liabilities | 27 | 26 |
Investment in real estate joint ventures | 11 | 5 |
Other | 27 | 10 |
Subtotal | 1,146 | 793 |
Deferred customer activation and connection fees | 11 | 13 |
Other long-term liabilities | $ 1,157 | $ 806 |
owners' equity (Details) shares in Millions, $ in Millions |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Mar. 17, 2020
EquityInstruments
|
Dec. 31, 2019
CAD ($)
shares
|
Mar. 31, 2020
CAD ($)
shares
|
Jun. 30, 2020
CAD ($)
shares
|
Jun. 30, 2019
Vote
|
|
Common Share capital | |||||
Minimum percentage of common shares issued and outstanding owned by Canadians | 66.67% | ||||
Common Shares issued (in shares) | 58 | ||||
Gross proceeds of shares issued | $ | $ 1,500 | $ 1,495 | |||
Share split ratio | EquityInstruments | 2 | ||||
Dividend reinvestment and share purchase plan | |||||
Common Share capital | |||||
Shares reserved for issuance | 32 | ||||
Restricted share units | |||||
Common Share capital | |||||
Shares reserved for issuance | 24 | ||||
TELUS Corporation share options | |||||
Common Share capital | |||||
Shares reserved for issuance | 93 | ||||
First Preferred Shares | |||||
Common Share capital | |||||
Shares authorized | 1,000 | 1,000 | |||
Second Preferred Shares | |||||
Common Share capital | |||||
Shares authorized | 1,000 | 1,000 | |||
Common Shares | |||||
Common Share capital | |||||
Shares authorized | 4,000 | 4,000 | |||
Number of votes per common share | Vote | 1 | ||||
Common Shares | Maximum | |||||
Common Share capital | |||||
Purchase of common shares related to normal course issuer bid | 16 | ||||
Cost of purchase of common shares related to normal course issuer bid | $ | $ 250 |
owners' equity - Subsidiary with significant non-controlling interest (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Statement of financial position | ||||||
Current assets | $ 4,420 | $ 4,420 | $ 4,353 | |||
Non-current assets | 35,888 | 35,888 | 33,632 | |||
Current liabilities | 4,850 | 4,850 | 5,574 | |||
Non-current liabilities | 23,078 | 23,078 | $ 21,752 | |||
Statement of income and other comprehensive income | ||||||
Revenue | 3,728 | $ 3,597 | 7,422 | $ 7,103 | ||
Net income | 315 | 520 | 668 | 957 | ||
Comprehensive income | $ (461) | 549 | 482 | 967 | ||
Subsidiary with significant non-controlling interest | ||||||
Subsidiary with significant non-controlling interest | ||||||
Treasury shares value purchased | $ 209 | |||||
Ownership interest percentage | 36.20% | 37.70% | 35.90% | |||
Percentage of increase in non-controlling interests | 1.80% | |||||
Percentage of decrease in non-controlling interests | 1.50% | |||||
Statement of financial position | ||||||
Current assets | $ 591 | 591 | $ 437 | |||
Non-current assets | 2,763 | 2,763 | 1,057 | |||
Current liabilities | 586 | 586 | 531 | |||
Non-current liabilities | 1,838 | 1,838 | $ 647 | |||
Statement of income and other comprehensive income | ||||||
Revenue | 611 | 336 | 1,077 | 645 | ||
Net income | 71 | 8 | 78 | 33 | ||
Comprehensive income | $ 45 | $ 19 | $ 85 | $ 51 |
contingent liabilities NTD - legal edits not reflected (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2020
CAD ($)
| |
Claims and lawsuits | Area Code 867 blocking claim | |
Claims and lawsuits | |
Damages sought | $ 135 |
related party transactions (Details) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020
CAD ($)
|
Jun. 30, 2019
CAD ($)
|
Jun. 30, 2020
CAD ($)
EquityInstruments
|
Jun. 30, 2019
CAD ($)
|
Dec. 31, 2019
CAD ($)
|
|
Transactions with defined benefit pension plans | |||||
Charges for management and administrative services to our defined benefit pension plans | $ 1,000,000 | $ 2,000,000 | $ 3,000,000 | $ 3,000,000 | |
Transactions with real estate joint venture and associate | |||||
Lease liabilities | 1,721,000,000 | 1,721,000,000 | $ 1,661,000,000 | ||
Key management personnel | |||||
Transactions with key management personnel | |||||
Short-term benefits | 2,000,000 | 2,000,000 | 4,000,000 | 5,000,000 | |
Post-employment pension and other benefits | 1,000,000 | 1,000,000 | 2,000,000 | 2,000,000 | |
Share-based compensation | 11,000,000 | 5,000,000 | 10,000,000 | 20,000,000 | |
Total | 14,000,000 | 8,000,000 | $ 16,000,000 | 27,000,000 | |
Share options awarded | 0 | 0 | |||
Liability amounts accrued for share-based compensation awards to key management personnel | |||||
Restricted share units | 26,000,000 | $ 26,000,000 | $ 25,000,000 | ||
Deferred share units | 3,000,000 | 3,000,000 | 23,000,000 | ||
Total | 29,000,000 | $ 29,000,000 | 48,000,000 | ||
Annual cash bonus as a percentage of base salary upon termination without cause | 50.00% | ||||
Minimum | Key management personnel | |||||
Liability amounts accrued for share-based compensation awards to key management personnel | |||||
Number of months base salary considered for severance payments | 18 months | ||||
Maximum | Key management personnel | |||||
Liability amounts accrued for share-based compensation awards to key management personnel | |||||
Number of months base salary considered for severance payments | 24 months | ||||
Restricted share units | Key management personnel | |||||
Transactions with key management personnel | |||||
Number of restricted share units Awarded in period (in shares) | EquityInstruments | 811,954 | ||||
Notional value Awarded in period | $ 20,000,000 | ||||
Grant-date fair value Awarded in period | 28,000,000 | 28,000,000 | |||
Directors' Deferred Share Unit Plan | Key management personnel | |||||
Liability amounts accrued for share-based compensation awards to key management personnel | |||||
Deferred share units paid out | $ 3,000,000 | $ 3,000,000 | |||
TELUS Sky | |||||
Transactions with real estate joint venture and associate | |||||
Lease liabilities | $ 76,000,000 | $ 76,000,000 | $ 77,000,000 |
additional statement of cash flow information (Details) - CAD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Net change in non-cash operating working capital | ||||||
Accounts receivable | $ (1) | $ (197) | $ 24 | $ (223) | ||
Inventories | 33 | 25 | 102 | 42 | ||
Contract assets | 114 | 3 | 199 | 1 | ||
Prepaid expenses | 52 | (26) | 5 | (110) | ||
Accounts payable and accrued liabilities | 210 | 253 | 90 | 190 | ||
Income and other taxes receivable and payable, net | 67 | (53) | 145 | (269) | ||
Advance billings and customer deposits | 1 | (3) | 16 | 3 | ||
Provisions | (72) | 14 | (117) | (36) | ||
Total | 404 | 16 | 464 | (402) | $ 194 | $ 163 |
Cash payments for capital assets, excluding spectrum licences | ||||||
Property, plant and equipment | (693) | (718) | (1,295) | (1,357) | ||
Intangible assets subject to amortization | (174) | (166) | (324) | (299) | ||
Total | (867) | (884) | (1,619) | (1,656) | ||
Additions arising from leases | 110 | 110 | 192 | 232 | ||
Additions arising from non-monetary transactions | 1 | 4 | 6 | 8 | ||
Capital expenditures | (756) | (770) | (1,421) | (1,416) | ||
Change in associated non-cash investing working capital | 62 | 125 | (53) | (22) | ||
Total | $ (694) | $ (645) | $ (1,474) | $ (1,438) |
additional statement of cash flow information - Financing activities (Details) - CAD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Changes in liabilities arising from financing activities | ||
Beginning | $ 352 | |
Redemptions, repayments or payments | (462) | |
Other | 482 | |
Ending | 372 | |
Dividends payable to holders of Common Shares | ||
Changes in liabilities arising from financing activities | ||
Beginning | 352 | $ 326 |
Redemptions, repayments or payments | (723) | (655) |
Other | 743 | 668 |
Ending | 372 | 339 |
Dividends reinvested in shares from Treasury | ||
Changes in liabilities arising from financing activities | ||
Redemptions, repayments or payments | 261 | 45 |
Other | (261) | (45) |
Dividends payable to holders of Common Shares net of dividends reinvested in shares from treasury | ||
Changes in liabilities arising from financing activities | ||
Beginning | 326 | |
Redemptions, repayments or payments | (610) | |
Other | 623 | |
Ending | 339 | |
Short-term borrowings | ||
Changes in liabilities arising from financing activities | ||
Beginning | 100 | 100 |
Issued or received | 200 | 407 |
Redemptions, repayments or payments | (200) | (407) |
Ending | 100 | 100 |
Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 18,437 | 15,409 |
Issued or received | 4,076 | 5,951 |
Redemptions, repayments or payments | (4,666) | (4,897) |
Foreign exchange movement (Note 4(e)) | 83 | (30) |
Other | 196 | 238 |
Ending | 18,126 | 16,671 |
Long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 18,437 | 15,409 |
Issued or received | 2,377 | 3,588 |
Redemptions, repayments or payments | (2,967) | (2,534) |
Foreign exchange movement (Note 4(e)) | 83 | (30) |
Other | 196 | 238 |
Ending | 18,126 | 16,671 |
TELUS Corporation senior notes | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 14,479 | 12,186 |
Issued or received | 1,000 | 1,674 |
Redemptions, repayments or payments | (900) | |
Foreign exchange movement (Note 4(e)) | 150 | (122) |
Other | (23) | |
Ending | 14,729 | 13,715 |
TELUS Corporation commercial paper | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 1,015 | 774 |
Issued or received | 612 | 1,901 |
Redemptions, repayments or payments | (1,692) | (2,363) |
Foreign exchange movement (Note 4(e)) | 65 | (19) |
Ending | 293 | |
TELUS Communications Inc. debentures | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 621 | 620 |
Other | 1 | 1 |
Ending | 622 | 621 |
TELUS International (Cda) Inc. credit facility | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 431 | 419 |
Issued or received | 765 | 13 |
Redemptions, repayments or payments | (68) | (21) |
Foreign exchange movement (Note 4(e)) | 45 | (17) |
Other | (6) | 2 |
Ending | 1,167 | 396 |
Other | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 267 | |
Redemptions, repayments or payments | (191) | |
Other | 203 | |
Ending | 279 | |
Lease liabilities | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | 1,661 | 1,483 |
Redemptions, repayments or payments | (165) | (152) |
Foreign exchange movement (Note 4(e)) | 17 | (13) |
Other | 208 | 236 |
Ending | 1,721 | 1,554 |
Derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt - liability (asset) | Long-term debt including derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Beginning | (37) | (73) |
Issued or received | 1,699 | 2,363 |
Redemptions, repayments or payments | (1,650) | (2,361) |
Foreign exchange movement (Note 4(e)) | (194) | 141 |
Other | (210) | 22 |
Ending | (392) | 92 |
To eliminate effect of gross settlement of derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt | ||
Changes in liabilities arising from financing activities | ||
Issued or received | (1,699) | (2,363) |
Redemptions, repayments or payments | $ 1,699 | $ 2,363 |
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