Telus Corp (TU), Canada’s second largest telecom carrier, has released financial targets for 2010 while lowering its forecasts for the current year. The revised target for 2009 reflects the impact of a sluggish Canadian economy on the company’s wireline business, launch of the new wireless network, cost associated with the launch of new smartphones (including the iPhone) and increase in restructuring cost in the fourth quarter.

The company now expects overall revenue for 2009 to reach C$9.6 billion (US$9.06 billion), at the lower-end of its previously forecasted range of C$9.6–C$9.7 billion (US$9.06–US$9.15 billion). Revised EBITDA target of C$3.475 billion (US$3.28 billion) for 2009 also represents the lower-end of the earlier guidance of C$3.475–C$3.575 billion (US$3.28–US$3.37 billion). However, EPS guidance remains unchanged at C$3.10–C$3.30 (US$2.92–US$3.11).

Capital expenditure (CapEx) target for 2009 has been kept unchanged at $2.1 billion (US$1.98 billion). Total restructuring expenses have been increased to C$190 million (US$179 million) from the previous forecast of C$160 million (US$151 million), reflecting the acceleration of certain cost reduction initiatives previously planned for early 2010.

For 2010, Telus expects consolidated revenue in the range of C$9.8 to C$10.1 billion (US$9.24 to US$9.53 billion), representing 2-5% year-over-year increase. EBITDA is forecasted to grow 1-6% year-over-year to between C$3.5 billion and C$3.7 billion (US$3.3 billion and US$3.5 billion). The company expects rise in depreciation and amortization expenses and financing costs to constrict EPS for 2010 which is projected at C$2.90 to C$3.30 (US$2.73 to US$3.11).

Telus expects its wireless and wireline broadband businesses to deliver healthy results in 2010 boosted by the significant investment made on them during the current year. Revenue from wireless is projected to grow 5-9% year-over-year to C$4.95-C$5.1 billion (US$4.66-US$4.81 billion) on the back of the new 3G HSPA+ network and increased data and roaming revenue. On the wireline side, growth in broadband will continue to be more than offset by sustained declines across local and long-distance voice businesses.

CapEx for 2010 are forecasted to decline year-over-year to $1.7 billion, reflecting completion of the deployment of the 3G HSPA+ wireless network in 2009. Major portion of 2010 CapEx will be devoted to the ADSL 2+ broadband network deployments and advancement to VDSL 2 network. Given the lower CapEx level, Telus expects free cash flow to increase by 40% in 2010. Restructuring expenses for 2010 are projected at C$75 million (US$71 million).

Telus is banking heavily on the new 3G wireless network launched recently in collaboration with its Canadian peer BCE Inc (BCE). The network offers peak downlink speeds of up to 21 megabits per second (Mbps). Moreover, leveraging the HSPA+ network, Telus also launched Apple’s (AAPL) iPhones (3G and 3GS), ending Rogers Communication’s (RCI) exclusivity on the iconic handset.
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