Despite increased competition and slimming margins, Telus is optimistic for 2011 performance

Telus has revealed some optimistic predictions for its 2011 performance.

The Vancouver-based teleco expects both earnings and revenue to increase next year, driven by growth in its wireless and data businesses, and also helped by lower financing costs. Quoth the Globe and Mail:

The company, which provides phone, Internet and television services, mostly in Western Canada, said it is targeting 2011 revenue growth of 1 to 4 per cent, while it expects earnings before interest, taxes, depreciation and amortization (EBITDA) to rise by 1 to 6 per cent over 2010 levels.

Dvai Ghose, an analyst at Canaccord Genuity, said that while the guidance offered few surprises it was “very robust” and “supports the bull thesis that Telus can increase dividends and buy back a ton of shares next year”.

Telus said earnings per share should increase by 9 to 22 per cent in 2011. It did not change its forecasts for 2010.

“Next year’s results are expected to benefit from the continuation of healthy wireless subscriber loading and accelerating adoption of wireless data services,” said chief financial officer Robert McFarlane.

Telus said that revenue from its fixed line business could register a dip of as much as two percent. Earnings for the unit could also fall as much as six per cent. Revenue from fixed-line operations is sliding as more customers shift to mobile devices – wireless data contributed 11 pe cent of revenue in the past year, while wireless voice contributed 40 percent.

Telus has spent heavily to build a HSPA+ wireless network, which it launched a year ago and shares with BCE’s Bell Canada.

The company said free cash flow should increase by 7 to 27 per cent next year.

It said also it would make a $200-million voluntary pension contribution, which will reduce overall cash taxes by $57-million. It did not lay out a share buyback plan.