...TELUS is a leading national telecommunications company in Canada, with $9.6 billion of annual revenue and 12 million customer connections including 6.7 million wireless subscribers, 3.8 million wire line network access lines and 1.2 million Internet subscribers and 228,000 TELUS TV customers. According to the SWOT analysis of TELUS, TELUS started to diversify product and service. Therefore, customers who use mobile phone and home phone are primary target market. TV and Internet clients are secondary target market. Journal Article Summaries Telus's new generation An interview with Karen Redford, president of Telus Partner Solutions, is presented. She says that the company is on net more than 75% of Canada and 95% if wireless is included, with its partners. She mentions that the people behind Telus, including her, established themselves as the Internet protocol (IP) leader. She adds that Telus is not competing against big carriers in Canada and that it focuses only on providing business. Alan Burkitt-Gray. (2007, November). Telus's new generation: Karen Radford of Telus Partner Solutions. Global Telecoms Business,1. Retrieved October 11, 2010, from ABI/INFORM Complete. (Document ID: 1409567411). Telus goes to the washroom. The article reports that Telus Corp. is taking toilet humour to a new level in a campaign that promotes high-speed Internet service in British Columbia and Alberta. The telco is placing multimedia ads, done by DDB Vancouver, in bar and restaurant...
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...To: Natasha Burns From: Judith Ayala Rojas, Jason Campbell, Joshua Garcia Re: Cost of Capital for Telus Corporation. Date: February 13, 2014 Executive Summary Barb Williams and Rick Thomas, while attending an executive education course at a well-known business school, came across a case which involved calculating the cost of capital for Telus Corporation (Telus). Basic data such as the Balance Sheet, Income Statement, Data on Telus’ Common Stock, Market Index, and the Average Annual Returns in North American Capital Markets were provided. In order to calculate Telus’ cost of capital we need to calculate the company’s Cost of Equity, Cost of Debt, and Tax Rate along with their weighted cost and then apply these to the Weighted Average Cost of Capital (WACC). Once the cost of capital has been calculated then we can proceed to make recommendations in regards to the company’s future investments. Cost of Equity To calculate Telus’ cost of capital we decided to use the CAPM model simply because this model accounts for risk which will also provide a more realistic estimate. Formula: CAPM = Rf + β(RFm – Rf) Given: Rf = 5.82% β = 0.75 RFm = 11% (Using U.S. Geometric Average for Equities (Market))1 Solution: CAPM = 5.82 + 0.75(11-5.82) CAPM or Cost of Equity (rE) = 9.7% Cost of Debt To calculate cost of debt we used both short-term and long-term debt before taxes. The reason why we used short-term debt is to account for future short-term debt borrowing...
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...Part 3 Fundamentals of Financial Institutions Chapter 7 Why Do Financial Institutions Exist? Chapter Preview A vibrant economy requires a financial system that moves funds from savers to borrowers. But how does it ensure that your hard-earned dollars are used by those with the best productive investment opportunities? Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-3 Chapter Preview In this chapter, we take a closer look at why financial institutions exist and how they promote economic efficiency. Topics include: •Basic Facts About Financial Structure Throughout the World •Transaction Costs •Asymmetric Information: Adverse Selection and Moral Hazard Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-4 Chapter Preview (cont.) • The Lemons Problem: How Adverse Selection Influences Financial Structure • How Moral Hazard Affects the Choice Between Debt and Equity Contracts • How Moral Hazard Influences Financial Structure in Debt Markets • Conflicts of Interest Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-5 Basic Facts About Financial Structure Throughout the World • The financial system is a complex structure including many different financial institutions: banks, insurance companies, mutual funds, stock and bonds markets, etc. Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-6 Basic Facts About Financial Structure Throughout the World • The chart on the next slide shows how nonfinancial business attain...
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...In the case Telus: The Cost of Capital, Barb and Rick have their work cut out for them. It is understandable to be confused when trying to decide what information to include in calculations, or even which calculations are the best to use for that matter. The following is an explanation for Rick and Barb in helping them understand how to calculate the Weighted Average Cost of Capital and how to interpret the results. When calculating the cost of equity, there are two approaches. First is the dividend growth model approach. The main concern with this approach however is the varying ways to calculate the value of g (for growth) in the dividend growth model equation of P0=D1/[Re-g]. (All following calculations can be found in Exhibit A.) First in calculating the value of g, you could take a historical average using the calculation $0.30*(1+g)^30=$1.40 and then solve for g. In this equation, the data is derived from Exhibit 3. $0.30 comes from the Common Dividend per share of 1969, and the sum of $1.40 comes from the Common Dividend per share of 2000. G then ,is the average growth rate over the 31 years. It is important to note that the growth rate is to the power of 30 since there are 30 growth periods, in 31 years. This is a common mistake that is easy to make in calculations. The second way to calculate g is to multiply the retention ratio by the return on equity. The retention ratio is easy enough to calculate given that the case provides the information, dividing retained...
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...Executive Summary TELUS is one of Canada’s leading telecommunications companies. The revenue of the company is generated mostly through residential and corporate phone service. The company has been able to stay ahead of the competition by innovating and providing the best solution to Canadians at home, in the workplace, and on the move. For them to continue to strive, they need accurate financial reporting and up-to-date accounting policies in today’s competitive environment. Introduction The telecom industry can be visualized as the largest operational network in the world. A global network that binds us all together; allowing us to connect with eachother regardless of geographical location. Although this industry was originally dominated by government owned monopolies, the industry has now turned to rapid deregulation which has resulted in a massive pool of new competitors. MARKET & STRATEGY Basic telephone calls were the first revenue generator in the industry; but now texting and high speed internet is pushing the market to new frontiers. Residential and small business markets are the toughest, with literally hundreds of players in the market relying heavily on price and brand name strength (Porter). The corporate market on the otherhand is more concerned with quality, reliability, and data delivery – while being less price sensititive than other customers (Porter). Although the telecommunications industry has been very competitive as new key players enter...
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...Telus Case Analysis Executive Summary TELUS is one of Canada’s leading telecommunications companies. The revenue of the company is generated mostly through residential and corporate phone service. The company has been able to stay ahead of the competition by innovating and providing the best solution to Canadians at home, in the workplace, and on the move. For them to continue to strive, they need accurate financial reporting and up-to-date accounting policies in today’s competitive environment. Introduction The telecom industry can be visualized as the largest operational network in the world. A global network that binds us all together; allowing us to connect with eachother regardless of geographical location. Although this industry was originally dominated by government owned monopolies, the industry has now turned to rapid deregulation which has resulted in a massive pool of new competitors. MARKET & STRATEGY Basic telephone calls were the first revenue generator in the industry; but now texting and high speed internet is pushing the market to new frontiers. Residential and small business markets are the toughest, with literally hundreds of players in the market relying heavily on price and brand name strength (Porter). The corporate market on the otherhand is more concerned with quality, reliability, and data delivery – while being less price sensititive than other customers (Porter). Although the telecommunications industry has been very competitive as new key players...
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...November 27, 2014 MBA 607 TERM PROJECT FOR PROFESSOR TOMEK KOPCZYNSKI FINANCIAL STATEMENT ANALYSIS AND INVESTMENT RECOMMENDATION FOR: ROGERS COMMUNICATION INC AND TELUS CORPORATION Group 6 El Nasser Imam Amin Arun Kumar Durairaj Vinay Paramanand Ali Movahedin Yasir Siddiqui EXECUTIVE SUMMARY The Canadian telecommunications industry is attractive to investors because wireless, internet and telecommunication services are an integral part of the Canadian economy. Rogers Communications Inc. and TELUS Corporation are two of the five major players in this industry. Following the recession, TELUS has focused on key strategic markets, acquisitions and diversifications to achieve growth in revenues. Since 2009, TELUS Corporation has not only provided high returns to its shareholders but the firm have also solidified its position as the growth leader by achieving a significant increase in its market capitalization. TELUS has demonstrated great maturity in managing its operational activities such as net income and free cash flow, investing activities such as effective asset deployment and long-term investment, and financing activities such as long-term borrowings and stock split. In this report, we will analyze Rogers and TELUS using the following five considerations: How well are the companies performing overall? How well do the companies manage short-term and long-term borrowings? How effective are the companies with long-term borrowings...
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...Harvard Business School 9-296-088 rP os t Rev. May 16, 1997 Netscape's Initial Public Offering op yo August 8, 1995 had taken an unexpected turn for Netscape Communications Corporation’s board of directors. Earlier that morning, the day before the company’s scheduled initial public offering (IPO), Netscape’s lead underwriters proposed to the board a 100% increase in the original offering price from $14 to $28 per share. This recommendation came in response to the remarkable oversubscription for Netscape’s shares, which had already prompted the underwriters to increase the number of shares to be offered from 3.5 million to 5 million. Under the current proposal, a company with a net book value of just over $16 million that had yet to turn a profit, was suddenly valued at over $1 billion. The Board faced a pricing dilemma within the context of an extremely unpredictable industry. While its members wanted to be responsive to Wall Street’s current zeal, they also wanted to make sure that the fundamentals of Netscape justified such a dramatic increase in valuation. Netscape Communications tC Founded in April 1994, Netscape Communications Corporation provided a comprehensive line of client, server, and integrated applications software for communications and commerce on the Internet and private Internet Protocol (IP) networks. These products enabled the growing network of servers on the World Wide Web to communicate through multimedia, including...
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...A Financial Analysis of Rogers Communications Inc. and Telus Corporation Table of Contents Introduction 1 Analysis of Income Statements 4 Analysis of Cash Flow Statements 5 Analysis of Balance Statements 6 Analysis of Ratios 8 Conclusion and Recommendations 16 References 19 Appendix A 20 Appendix B 22 Appendix C 26 Appendix D 28 Introduction Telecommunications Industry Canada’s telecommunication industry encompasses a broad range of services: cable, telephone (wireless and landlines) and internet service. These services are an integral part of Canadians' day to day lives and of Canada's economy. The wireless industry alone was responsible for contributing 22.4 billion to Canada’s Gross Domestic Product in 2013. (2) Despite the importance of the telecommunication industry to Canada’s economy, this market is dominated by only three key players: Rogers (34%), TELUS (28%), and Bell Canada (28%). (3) Canada’s stringent foreign ownership rules have limited entry form outside competition for these three giants and thus have allowed them to extract maximum profits from the market. However...
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... consumer switching behaviour, as outlined by Susan Keaveney (1995) in her study of the service industry, and identifies additional factors specific to the cellular industry. The focus of the study is to identify the most important factors that cause consumers to switch. Using primary research, the author evaluates how TELUS Mobility is rated on each of the factors against the competition, by its own clients and the competitor's clients. Finally, the author provides recommendations to TELUS Mobility to effectively enhance its customer retention and build long-term client relationships. EXECUTIVE SUMMARY Increase in demand for cellular phone service in the Canadian market has led to new entrants into the cellular industry. However, with the major players looking at expanding nationally, there have been a number of acquisitions. Until 2000, there were five service providers in the industry. With the acquisition of Clearnet by TELUS Mobility in 2000 and Microcell by Rogers AT&T earlier this year, there are only three large players left in the industry- Rogers Cantel, Bell Mobility and TELUS Mobility. The biggest challenge faced by the cellular industry today is the churn rate. Almost 30 percent of a company's subscribers leave per year and the cost of acquiring new subscribers is high, $600 CAD to $700 CAD per subscriber. This paper looks at the reasons for consumer switching behaviour and is based on ...
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...(1)Revenue Recognition Telus has three major revenue source: (1)wireless; (2)wireline; (3)voice local and voice long distance For “Voice and data” recognition of revenue: * based upon access to, and usage of telecommunications infrastructure and upon contract fees (note a) * Advance billings/activation, deferred recognized when services are provided (note b) For “Other and wireless equipment “: * Recognized when products are delivered and accepted by the end-user customers * From operating lease, recognized on straight-line basis over the term of the lease For “Non-high cost serving area deferral account”: It is a very specific recognition and Rogers doesn’t have this recognition. Comparison with Rogers: Telus | Rogers | For other and wireless equipment, Telus recognizes revenue when the products are delivered an accepted by the end-user customers. (note a) | For wireless and cable equipment, Rogers recognizes revenue when the equipment is delivered and accepted by the independent dealer or subscriber. (note b) | (2) Operating Expenses Telus | Rogers | Goods and services purchased | Operating costs (cost of equipment sales and direct channel subsides, merchandise for resale, other external purchases, employee salaries and benefits and stock-based compensation) | Employee benefits expense | Restructuring, acquisition and other expenses | Depreciation | Depreciation and amortization | Amortization of intangible assets | Impairment of...
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...and make a recommendation on how Telus should employ their cost of capital." Introduction: In introducing this case the basic problem do be solved deals with determining the cost of capital within the organization of Telus. Barb Williams and Rick Thomas both managers from service firms, were attending a business seminar when given an assignment to calculate the cost of capital for Telus. They were given basic data including balance sheets, income statement, data on Telus common stock, market index, and average annual returns in North America capital markets. This information was given to them in order to calculate the cost of capital within the company and to make a recommendation on how to employ their cost of Capital. In order to determine the actual cost of capital, various steps need to be taken in finding out cost of debt, equity, preferred shares in order to determine the overall weighted average cost of capital (WACC) within the company. What is WACC? Weighted average cost of Capital is defined as a calculation of a firm’s cost of capital in which each category of capital is properly weighted. All capital resources are used in determining this cost which includes common stock, preferred stock, bonds and any other long term debt. Calculating overall WACC. Use of short and Long term debt When calculating the cost of debt for this case, it is necessary to take into account both the long and short term components of Telus’ financing via debt. Although case...
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...Financial Data 2 TELUS Confidential 2 Market Problem and Opportunity Wireless IP Solution Portfolio – Problem and Opportunity What was this portfolio designed for? capabilities - Originally designed to support CDMA Architecture 7 years ago - Built to implement 2 to 3 enterprise clients per month - Focused on modem market in the enterprise segment (C BAN Only) - Mostly in ILEC territories with MPLS network (in Canada) Where does this need to evolve to? - Support M2M & Non M2M (Smartphone) growth on LTE network and beyond - >500K+ loads annually and more in coming years - Across ENT, TBS and Partner segments for all devices (Modems, POS, Routers, Smartphones, Tablets, ATMs, Cars) - Across ILEC / Non ILEC territories (TELUS, Non TELUS, Internet) and even international connectivity 4 TELUS Confidential TELUS restricted and confidential– not for distribution 4 Mobile Business Drivers the courage to innovate TBS Segment • Provide controlled real-time access to business applications and systems for mobile workers in the business market Machine-to-Machine • Provide secure closed remote access to monitored data devices used for alarming, dispatch, visual display, systems control with controlled usage costs Multiple Profiles (Smartphone, tablet, PC) • Enable business and personal communications and management on a single device (cellular or wifi enabled) while showing separate data usage costs 5 TELUS Confidential TELUS restricted...
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...invention of the telephone, by Alexander Graham Bell(1). In 1885, the Bell Telephone Company commenced operations in Alberta, Canada. A century later, in 1990, the Telus Corporation is established, via the largest IPO in Canadian history up to this time, raising $896 million (2). Telus is a leading national telecommunications company in Canada providing a wide range of communications tools for individuals and businesses (3). It is governed by the CRTC regulations and in direct competition with Bell Canada Enterprises and Rogers Communications Inc. These three companies represent 95% of the Canadian telecommunications market (4), with BCE leading at 44%, RCI at 28% and Telus a close third, with 23% market share. The company is focused on growing through innovation and efficient utilization of their intellectual capital, their core values, and establishing itself as the Canadian market leader. Bibliography 1. Matthews, Tom L. Always Inventing: A Photobiography of Alexander Graham Bell. Washington, DC: National Geographic Society, 1999. ISBN 0-7922-7391-5. 2. Telus Website (history) http://about.telus.com/community/english/news_centre/company_overview/company_history - accessed 9 Nov 2011 3. http://about.telus.com/community/english/news_centre/company_overview/telus_at_a_glance - accessed 9 Nov 2011 4. Rogers, Bell, Telus: The most profitable cellphones around http://www.cbc.ca/news/technology/story/2008/09/04/tech-profit.html - accessed 9 Nov 2011 5....
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...9B01N019 TELUS: THE COST OF CAPITAL Professor Stephen R. Foerster revised this case (originally prepared by Professors James E. Hatch and David C. Shaw) solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. This material is not covered under authorization from CanCopy or any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2001, Ivey Management Services Version: (A) 2002-04-16 OVERVIEW Barb Williams and Rick Thomas, two managers from service firms, were attending a weeklong executive education course at a well-known business school in November 2001. Both had read an article dealing with the cost of capital as preparation for the next day’s classroom session. As they vigorously discussed the concept, it became clear that they had several differences of opinion. Their assignment was to calculate the cost of capital for Telus Corporation (Telus). Telus was a...
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