TELUS Rides On 5G Growth, Secures New Spectrum Licenses

TELUS Corporation (NYSE:TU) recently announced that it has secured new 600 MHz spectrum licenses in British Columbia, Alberta, Saskatchewan, Ontario and Quebec for a consideration of $931 million. Equating to a national average of 11.3 MHz, these licenses will likely allow the Canadian telecommunications company to provide improved mobile broadband connectivity at a time when the industry is moving from 4G LTE to 5G.

The deployment of this latest spectrum is crucial to TELUS’ 5G growth strategy coupled with better network quality, speed and coverage. The 600 MHz band can travel distances in rural areas and penetrate barriers to better reach in-building locations.

TELUS’ 4G LTE network covers 99% of the country’s population and the addition of 600 MHz spectrum will help it increase urban capacity, while expanding the rural availability of wireless broadband service. Reportedly, TELUS has made more than $6 billion spectrum-related investments since 2008 and over $54 billion in technology across the country since 2000.

TELUS is also likely to benefit from the increasing penetration of smart devices, wireless data services and wireline fiber optic networks. The company expects balanced growth in the wireless and wireline businesses supported by healthy investment in high-speed broadband technology. The company plans to invest $175 million in networks across Quebec in 2019.

Between 2013 and 2021, TELUS intends to invest more than $300 million to expand its PureFibre network in the eastern part of Quebec, with $72 million in support from the federal and provincial governments. In the next two years, it plans to offer direct fiber access to 93% of Greater Quebec City and Eastern Quebec residents.

TELUS is focused on execution of its strategies along with amplifying efforts on cost efficiency for margin-accretive customer growth and investments to support its expansion strategy. With the expansion of Internet of Things marketplace into Canada, TELUS is aiming to consolidate its foothold in the market. It has introduced the TELUS Global IoT Connectivity platform to deliver seamless connectivity and simplified billing across 200 networks globally, thus support the expansion of Canadian business enterprises.

In 2019, TELUS plans to generate subscriber growth in its key growth segments, including wireless, high-speed Internet and TELUS TV. Increasing demand for reliable access and fast-data services is expected to support customer addition. Moreover, TELUS International and TELUS Health are likely to contribute to the company’s growth profile, organically and from acquisitions.

Driven by diligent execution of operational strategies, the stock has rallied 8.6% on average compared with the industry’s rise of 1.4% in the past three months.

TELUS currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Deutsche Telekom (DE:DTEGn) AG (OTC:DTEGY) , Telenor ASA (OTC:TELNY) and Telecom Italia (MI:TLIT) S.p.A. (NYSE:TI) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Deutsche Telekom has long-term earnings growth expectation of 8.8%.

Telenor currently has forward P/E (F1) of 16.5x.

Telecom Italia currently has forward P/E (F1) of 8.3x.

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