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12 . TELUS 2010 annual report
review of operations
WIRELINE
New TELUS revenue streams
to offset legacy service declines
The Canadian wireline market is mature with flat to negative revenue growth.
The convergence of IT and telecommunications is causing a migration to IP-based
integrated and managed services. Many companies, including cable-TV companies,
are pursuing these opportunities with voice over IP (VoIP) services, particularly in
the small and medium business (SMB) market. In the residential market, local,
long distance and Internet services remain very competitive, while TV entertainment
continues to be a key area of growth.
For incumbent telcos, combined IP, voice, data and video solutions create cost
efficiencies to partially compensate for margin pressures caused by migration from
legacy voice and long distance services.
All sectors of the wireline market were competitive in 2010, with aggressive
introductory promotions and discounting on service bundles being typical in the
residential market.
TELUS is offering a series of business solutions targeting specific high-value enterprise
and public sector segments. As well, we are strengthening our SMB offerings.
TELUS focused on expanding our network coverage footprint with the continued
roll-out of advanced technologies. This larger footprint, combined with the launch of
enhanced IP TV service powered by the Microsoft Mediaroom platform, drove increasing
customer demand. Branded and mass marketed as Optik, our TV and High Speed
Internet suite of services enjoyed widespread acceptance in urban markets in Alberta
and B.C. Our superior TV entertainment experience, bundled with other TELUS
services, is helping to slow erosion of legacy voice services.
TELUS wireline revenue declined slightly in 2010 due to lower legacy voice and
long distance revenues, partially offset by data growth. The wireline EBITDA margin
increased to 33 per cent, reflecting effective cost control.
A HISTORY OF INNOVATION
2001 Opened two world-class
Internet data hosting
centres
2004 Introduced TELUS Future
Friendly Home® strategy,
offering new digital home
solutions to consumers
2006 Began significant multi-
year broadband expansion,
with array of new tech-
nologies, as our platform
for future growth
2010 Launched Optik brand
for our IP-based TV and
High Speed Internet
services
2010 Introduced TELUS Health
Space, an e-health records
platform for consumers
2010 RESULTS – WIRELINE (share of TELUS consolidated)
revenue (external)
$4.77 billion
EBITDA
$1.61 billion
49%
share
44%
share
2011 TARGETS – WIRELINE1 (share of TELUS consolidated)
revenue (external)
$4.725 to $4.875 billion
EBITDA
$1.525 to $1.625 billion
48%
share
42%
share
1 See Caution regarding forward-looking statements on page 38 of this report.