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TELUS to Invest $95 Million in Quebec for Upgrading Network

Zacks Equity Research

Recently, TELUS Corporation TU announced that it is going to invest $95 million in wireless and fiber optic networks across rural communities in Greater Quebec City and Eastern Quebec this year. Notably, this amount includes a contribution of $25.7 million from the federal Connect to Innovate and provincial Québec branché programs to help modernize networks.

The move is aimed at fostering the company’s deployment of ultra-high-speed and fiber optic networks to 34,000 new families and businesses in 80 remote locations. As part of strategy, TELUS will deploy its PureFibre network to homes and businesses in more than 70 remote and low-density communities in the regional community municipalities (RCM) of des Chenaux, Côte-de-Gaspé, Haute-Côte-Nord, Haute-Gaspésie, L’Islet/Montmagny, Matapédia, Mitis, Mékinac, Portneuf and Sept-Rivières.

The company will also commence one of the largest digital infrastructure projects north of the 49th parallel. For the first time, the communities of Blanc-Sablon, Middle Bay, Pakuashipi, Rivière-Saint-Paul, Saint-Augustin and Vieux Fort will have access to high-speed Internet and LTE mobile phone service. TELUS is actively working to enhance coverage, speed and reliability of its wireless network by upgrading infrastructure with the latest LTE and small-cell technologies. It will further add about 10 new sites in the next months, including in the RCM of Beauce-Sartigan, Manicouagan and Sept-Rivières.

Furthermore, TELUS is 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. Reportedly, the Canadian telecommunications company is investing $175 million in networks across Quebec in 2019, more than half of which is dedicated to the rural communities.

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, the company plans to offer direct fiber access to 93% of Greater Quebec City and Eastern Quebec residents.

TELUS is focused on strategy execution along with amplifying efforts on cost efficiency for margin accretive customer growth and investment to support its growth 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 to support the expansion of Canadian business enterprises.

In 2019, TELUS plans to generate positive 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 10.2% on an average compared with the industry’s rise of 3.7% in the past three months.

Currently, TELUS has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Deutsche Telekom AG DTEGY, Telstra Corporation Limited TLSYY and Telecom Italia S.p.A. 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 a long-term earnings growth expectation of 8.8%.

Telstra has a long-term earnings growth expectation of 3.7%.

Telecom Italia currently has a forward P/E (F1) of 7.8x.

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