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Telus sat out ‘uneconomic’ pricing competition for mobile customers in Q3: CEO

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Telus Corp.’s wireless business faced bruising competition from aggressive pricing during the back-to-school period, but chief executive Darren Entwistle told analysts Thursday his company chose to “remain on the sidelines” during some of the most intense rivalry.

The Vancouver-based company, which operates the Telus, Koodo and Public Mobile wireless services, reported 111,000 net mobile phone additions during the three months ended Sept. 30 — 10,000 lower than last year’s third quarter, but better than some analyst estimates.

“The year-over-year decline was largely due to Telus purposely choosing to remain on the sidelines for some of the more aggressive and uneconomic competitive activity that occurred in the quarter,” Entwistle told a conference call.

Analyst Aravinda Galappatthige wrote in a report for Canaccord Genuity that the Telus wireless net additions topped his estimate of 105,000 net additions. Drew McReynolds of RBC Dominion Securities had expected 115,000 additions, but noted the consensus had been 109,000.

Entwistle said many customers opted for unlimited data plans with a higher monthly cost than they had previously, but without the potential for overage fees for going over usage limits.

He said the simplified pricing structure helped reduce the number of calls to customer support and quicker marketing and support calls, which are part of company’s cost of acquiring and cost of retaining customers.

However, Entwistle said reduction of those costs was “significantly moderated” by “competitive intensity around device promotions and the persistence of the subsidy model alongside unlimited data by some of our peers.”

The comments came after Telus reported $440 million or 72 cents per share in net income for the three months ended Sept. 30, down from $447 million or 74 cents per share a year ago.

On an adjusted basis, Telus earned 76 cents per share for the quarter, up from an adjusted profit of 74 cents per share a year ago.

Analysts on average had expected a profit of 75 cents per share, according to financial markets data firm Refinitiv.

Operating revenue totalled nearly $3.7 billion, down from $3.77 billion a year ago when the company saw $171 million in one-time equity income related to the sale of Telus Garden.

Wireless operating revenue was $2.1 billion, up $23 million from a year earlier after excluding the impact of Telus Garden. Wireline operating revenue, including home television and internet, was up 0.1 per cent at $1.68 billion.

Telus said it will increase its quarterly dividend to 58.25 cents per share, up from 56.25 cents per share, and expects to spend about $2.75 billion per year on capital projects in both 2020 and 2021. 

Telus was the last of Canada’s three national wireless companies to report quarterly results since they all introduced a new pricing strategy and new device financing options.

Both Bell Canada and Freedom Mobile, a regional carrier that competes with Telus in parts of Ontario, Alberta and British Columbia, said last week they used subsidies to reduce their customers’ cost of new devices.

Rogers said it also offered device subsidies during the back-to-school period but indicated that it’s strategy is to eliminate or reduce that expense as much as possible.  

Several analysts lowered their expectations for the sector after Rogers slashed its revenue expectations for this year, primarily because of the swift adoption of new unlimited data plans and intense price competition on mobile devices.

This report by The Canadian Press was first published Nov. 7, 2019.

Companies in this story: (TSX:T, TSX:RCI.B, TSX:BCE, TSX:SJR.B)

 

David Paddon, The Canadian Press


The post Telus sat out ‘uneconomic’ pricing competition for mobile customers in Q3: CEO appeared first on Canadian Business – Your Source For Business News.



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A $645 Billion Manager Says Calling the Market Bottom Is ‘A Mug’s Game’

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(Bloomberg) — The coronavirus market sell-off is probably past its worst, strategists at Morgan Stanley have said. Jeffrey Gundlach sees bigger losses ahead, while Howard Marks went from bearish to more optimistic in a week.For another veteran investor, calls on whether equities have reached a bottom are nothing short of futile.“I think it’s a mug’s game,” said Hugh Young, head of Asia Pacific at the $644.5 billion manager Aberdeen Standard Investments. “Nobody has the answer.”Shares across the world have recovered some of their losses from the rout spurred by the virus. An index of global equities has risen more than 20% from its low in March, technically entering a bull market, though it’s still down more than 18% this year.For Young, it’s possible markets have reached a bottom, but it’s far too early to say with certainty.“It feels as though this is going to go on for a fair old time,” he said. “And to an extent that must be in prices. But then we’re seeing some quite sharp government action, whether it’s bank dividends or changing rules on loans, foreclosures and all sorts of things. So it’s very hard to be precise.”Young argues that global lenders’ moves to halt dividend payments after pressure from regulators came “slightly out of the blue.” More knock-on effects of the coronavirus crisis are likely, he says, and it’s impossible for them to be fully incorporated in prices.Aberdeen’s flagship Asia Pacific Equity Fund has fallen about 18% this year, according to data compiled by Bloomberg. Over a three-year period, it’s beaten 66% of peers.Young said his cynicism about confident market calls is born out of more than 30 years’ investment experience. Even if someone correctly times the market once, they’re unlikely to repeat the feat, he said. And bottoms, he said, are only easy to identify after the fact.Hindsight Benefit“I’m sure the market bottom, as it always is, will be obvious with hindsight,” he said. “People identify it with one particular thing that it happened to coincide with. Again, in my experience, that’s often not quite right. But it’s an easy explanation for people with hindsight. I’m afraid you never know.”What, then, can an investor such as Young say with confidence? For one, the crisis will last for at least several more months, and many businesses worldwide will come under severe stress. There’s still a lot of pain to come through, Young said.“Our best guess is that this year’s a write-off and then things will normalize at the beginning of next year,” Young said.At current depressed price levels, people should be investing, he said. But there’s a big caveat: only if they have “secure cash flows,” which are much more elusive in the current crisis.Nobody KnowsAnother veteran money manager echoed Young’s view about attempting to call the low, while saying statistically there could be more pain ahead.“No one can know if we are at the bottom in index terms,” said Mark Mobius, who set up Mobius Capital Partners last year after three decades at Franklin Templeton Investments. “We do know that historically for all markets the average bear market decline has been about 50% with a range of 23% to 70%. So if history is our guide, then we could have more to go.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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3 strategies small business owners are using to get their SBA stimulus loans faster

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Subscribe to Outbreak, a daily roundup of stories on the coronavirus pandemic and its impact on global business, delivered free to your inbox.

Small business owner Leah Sherrill is desperate for an SBA loan.

Her preschool and childcare center in Midland, Texas plunged from over 100 kids to around 45 as a result of the coronavirus slowdown. That’s forced her to make difficult decisions like cutting staff hours and laying off two employees. She says her business needs a lifeline, in the form of the forgivable small business loans that is part of the $2.2 trillion coronavirus stimulus bill. But the program’s rollout has been messy and confusing, and businesses are losing precious days as they try to navigate the process. Fortune spoke to Sherrill and other small business owners currently going through the loan application process to learn about what they’re doing to increase their odds of getting paid sooner rather than later.

Make multiple loan applications

For Sherrill, her biggest a-ha was not to put all her eggs in one basket. She has applications in at five different banks for the loans. She’s not the only one. Several small business owners told Fortune they’ve applied for the loans at multiple banks in hopes of speeding up approval and getting the funds sooner. Once approved, Sherrill says she’d cancel the other applications. “We’re losing money. We don’t know how much longer we can hold on … This PPP loan could be game changer for us,” she says.

When applications for the Paycheck Protection Program loans opened on Friday, many banks were still figuring out the nuances of the loans and weren’t ready for the rush of applications. That delay caused business owners like Sherrill to turn to banks they’ve never patronized before in an attempt to speed up getting their chunk of the $349 billion set aside for the loans, which can forgiven if used for things like payroll and rent.

One banking industry source told Fortune they don’t have a problem with business owners applying at multiple banks for PPP loans, and it isn’t any different than a customer shopping around for a loan in normal times. But not everyone was as supportive.

“It is really unfair for the banks. I would discourage people from doing that,” said Frank Sorrentino, CEO of ConnectOne Bank based in New Jersey. It could end up bogging down the whole application process, he says. “They could impact other people. Just like with the toilet paper [run], don’t take more than you need.”

But some desperate small business owners, who have businesses like hotels and restaurants that have been hit hardest by the coronavirus slowdown, are willing to go to great lengths to speed up getting the funds. Including dumping their long-time trusted banks for credit unions or banks that can get them the money fastest.

Calculate carefully

“Last week was one of the most turbulent and chaotic weeks in my career. There were so many rumors on how the program was going to be set and what paperwork was needed” said Matthew Roger, a certified public accountant who owns his firm in New Orleans. He has more than 50 small business clients who were scrambling to figure out what documents and information they needed to apply.

Roger, who also applied for the Paycheck Protection Program loan for his own firm, advises that when submitting applications that small business owners make sure they are correctly calculating their average monthly payroll cost. That average payroll cost includes things like salaries and bonuses, but also retirement benefits, parental leave and health care benefits. This average monthly payroll cost is multiplied by 2.5 to determine how much the business can borrow (topping out at $10 million).

But it’s easy for employers to incorrectly calculate their average monthly cost—given the calculation’s nuances. For example, the portion of employee salary in excess of $100,000 is excluded from the payroll calculation. If small businesses incorrectly calculates average payroll, banks could ask them to resubmit their paperwork, thus delaying the funds, says Charlie Epstein, a financial advisor and author of Paychecks for Life. And if businesses leave out costs from their average payroll figures, it means they’d get a smaller loan than would otherwise be possible.

Get your lender’s credit department on the phone

Small business owners and bankers told Fortune it’s helpful to speak with someone from the bank before applying.

If at all possible, “make sure you speak with the credit officer of your bank—that is the person who must approve the PPP loan. Get on the phone with them and walk through your calculations,” Epstein said. He recommends borrowers be kind to the credit officer. This person will help small business owners make sure they didn’t make an application mistake—which would slow down funds—and is the person who submits the loan through the bank portal and gets an approval code.

And after that? Small business owners like Sherrill then just have to cross their fingers and wait—hopefully not too much longer.

More must-read finance coverage from Fortune:

—What small businesses applying to the SBA’s Paycheck Protection Program need to know
—The banks and lenders accepting SBA Paycheck Protection Program loan applications
—JP Morgan’s Jamie Dimon lays out a future worse than 2008 in his annual letter
Are we headed for a depression? Economists weigh in
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—VIDEO: 401(k) withdrawal penalties waived for anyone hurt by COVID-19

Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.



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Meralco rate rises in April

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By Adam J. Ang

Households in Metro Manila will likely see an increase in their electricity bills in April with a typical households set to see a P21 hike, Manila Electric Co. (Meralco) said on Thursday.

The rate hike comes amid falling demand in Luzon where most economic activities have been halted due to the enhanced community quarantine.

In a statement, Meralco said that the overall electricity rate rose by P0.1050 per kilowatt-hour (kWh) to P8.9951/kWh from March’s P8.8901/kWh.

Households consuming 300 kWh, 400 kWh, and 500 kWh could expect their monthly bills to rise by P31.50, P42.00, and P52.50, respectively.

The rate increase was due to the normalization of the universal charge, after a one-time refund in the universal charge-NPC stranded contract costs (UC-SCC).

Last March, the Energy Regulatory Commission (ERC) ordered Meralco to implement a P0.1453/kWh rate reversal in the UC-SCC, representing collections in excess of the amount due to Power Sector Assets and Liabilities Management Corporation (PSALM).

Universal charges are remitted to the government for the electrification in off-grid areas, the National Power Corporation’s financial obligations in excess of privatization proceeds, and watershed rehabilitation and management.

However, Meralco noted that the April rate is still “significantly” lower compared to the rate in the same month in 2019.

It said the rate hike is tempered by the P0.0495/kWh decrease in the feed-in tariff allowance (FiT-All) for April, following the suspension of its collection as ordered by the ERC.

Recently, Meralco claimed a force majeure event during the Luzon-wide enhanced community quarantine, bringing down generation charges for its customers.

The distribution utility invoked a force majeure provision in its Power Supply Agreements (PSA), lowering fixed charges for generation capacity that was not consumed, as power demand dropped.

The National Grid Corp. of the Philippines earlier noted that electricity demand in the Luzon grid declined around 20-30% amid the Luzon-wide lockdown due to the coronavirus disease 2019 (COVID-19) pandemic.

Generation charges for this month dropped by P0.0247/kWh to P4.6385/kWh, significantly lower compared to the April 2019 generation rate of P5.6322/kWh.

A force majeure event is an uncontrollable event that makes it impossible for power plant operators to fulfill their obligations. Without this, Meralco said that generation rate would have increased by P0.0259/kWh from last month’s rate.

Cost of power from its PSAs, which accounts to 51% of Meralco’s total electricity supply, was lowered to P0.1696/kWh, while charges from Independent Power Producers, which supplies 38% of the utility’s power needs, also decreased by P0.0965 due to higher average plant dispatch and Peso appreciation.

Moreover, charges from the Wholesale Electricity Spot Market, which has an 11% share in its supply needs, fell by P0.9429/kWh driven by improved supply conditions in the Luzon grid.

Earlier, Meralco announced a one-month extension of payments of bills falling from March 1 to April 14 in part of its measures to help households affected by the ECQ. Bills for the period will be computed based on customers’ average electricity consumption from January to March.

The ECQ has been extended until end-April.



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