SaskTel Reports 2011 Annual Results

April 23, 2012

SaskTel today reported 2011 net income of $154.0 million, up $4.5 million (3.0%) from 2010 and operating revenues of $1,125.8 million, up $12.8 million (1.2%) from 2010. The performance was driven by Max™ Entertainment Services revenues due to increased number of customers and increased revenue per customer, and wireless revenue due to increased number of customers, increased smartphone sales and increased data usage. SaskTel also recognized gains on the sale of two subsidiaries which significantly increased net income for the year.

"These results demonstrate the success of SaskTel’s ongoing commitment to capital investment in wireless and broadband technologies," said Bill Boyd, Minister Responsible for SaskTel. "SaskTel has always had an innovative business model, and together with an innovative workforce, the company will continue to deliver solid financial results to the Province of Saskatchewan."

"To drive sustainability for SaskTel in such a complex industry, we must ensure we always think of our customers, engage our employees, and improve how we work while simplifying our business," said Ron Styles, SaskTel President and CEO. "To achieve success in the future, we will need to continually reinvent our networks and find business simplification solutions that set us apart from our competitors by employing innovative back-end systems and processes that make the customer experience the best it can be."

Financial Highlights

• SaskTel 2011 Net Income - $154.0 million
• SaskTel 2011 Revenues - $1,125.8 million
• EBITDA Margin – 25.9%
• Return on Equity – 20.7%
• Dividend of $138.6 million declared to Crown Investments Corporation (CIC) in 2011
• Industry-leading debt ratio of 37.6%.

Operating Highlights

Wireless Services

• Wireless revenues increased by $6.0 million in 2011 primarily driven by continued strong customer growth in wireless services
• Total wireless accesses increased to 594,405 at year end, up 25,501 from 2010
• Average revenue per wireless subscriber was $59.40
• At year end, SaskTel had 270,687 data capable wireless devices, up from 167,960 in 2010.

Max Entertainment, Internet and Data Services

• Revenues from Max, Internet and data services increased to $253.9 million in 2011, up $21.7 million from 2010.
• At year end there were 93,960 Max customers compared to 85,537 at the end of 2010. 
• At year end there were 234,676 Internet accesses, up from 230,996 in 2010 – driven by continued expansion of service to more Saskatchewan communities

Advertising and Directory Services

• Advertising and directory revenues increased to $43.4 million in 2011, up $0.1 million from 2010 – driven by increased sales of online digital products and services while the traditional print product remained stable.

Security Monitoring Services

• Security monitoring revenues increased to $19.8 million in 2011, up $1.1 million from 2010 due to an increase in customers.

Capital Spending

• SaskTel’s capital spending for the year was $265.7 million, down $39.3 million from 2010.  SaskTel continued to focus its capital expenditures on growth initiatives, including cellular network upgrades and expansion, Max Entertainment enhancements and high speed Internet coverage.  A significant portion of SaskTel’s 2011 capital program was spent on the Rural Infrastructure Program, cellular network expansion, the 4G wireless network, customers service delivery enhancement, and on expanding Max Entertainment Services to eight additional locations in 2011.

Corporate and Business Highlights

• $98.3 million in additional investment on the Saskatchewan Infrastructure Improvement Program (SIIP).  A portion of SIIP, the Rural Infrastructure Improvement Program (RIP), is a SaskTel partnership with the Government of Saskatchewan to provide last-mile broadband to 100% of rural Saskatchewan, cellular.
• $72.5 million in additional investment in the Access and Core Network Growth program to ensure the SaskTel wireline and wireless network continues to meet customer needs.
• $19.9 million in additional investment in Customer Relationship Management (CRM) program to enhance service delivery to customers.
• $7.7 million in capital expenditures to enhance Max Entertainment Services.
• $12.8 million in spending on the wireline and wireless networks to ensure the SaskTel network remains a leader in quality while still being able to meet growth in customer demand.
• In January, SaskTel sold its interest in the Saskatoon Square resulting in a gain of $27.0 million.
• SaskTel also disposed on the net assets of Hospitality Network resulting in a gain of $3.7 million.
• In 2011, the Association of Professional Engineers and Geoscientists of Saskatchewan (APEGS) honoured SaskTel with an Exceptional Engineering/Geoscience Project Award for the work involved in its 4G network.
• In J.D. Power and Associates 2011 Canadian Wireless Customer Satisfaction StudySM SaskTel ranked first in the West in four categories: network quality, account management, customer service, and offerings and promotions.

• SaskTel received several awards in 2011, recognizing its Corporate Social Responsibility values and achievements.

• For the twelfth consecutive year, SaskTel was named one of Canada's Top 100 Employers by Mediacorp Canada Inc.
• SaskTel was recognized in 2011 as one of Canada’s Best Diversity Employers for employers who demonstrate exceptional diversity and inclusiveness programs.
• Named one of Saskatchewan’s Top Employers for the fifth consecutive year
• For the third consecutive year, SaskTel was named one of Canada’s 50 Greenest Employers. SaskTel was the only Saskatchewan-based company to win the award in 2011.

SaskTel’s full Corporate Social Responsibility Report is available online at sasktel.com (http://sasktel.com/about-us/company-information/financial-reports/attachments/11-sasktel-corporate-responsibility-report.pdf).

Looking Forward
Looking at 2012 and beyond, the telecommunications industry will continue to be intensely competitive and rapidly changing due to increasing customer demand for the latest technologies and devices.  SaskTel is laying the foundation to be able to capitalize on opportunities, bring our customers the best products and services, and remain a competitive force within the industry.

• To meet future demand for our products and services, SaskTel will focus on deploying fibre to customer’s homes and rolling out the LTE network.  SaskTel’s LTE and fibre networks will be key to meeting additional demand; among the many benefits, customers can expect a better end user experience with greatly increased speeds and improved stability.

SaskTel’s four strategic objectives looking forward – Customer, People, Operational Excellence and Financial – are positioned to address the critical issues we have identified in an effort to achieve long-term sustainability.

• Customer – SaskTel will have satisfied and loyal customers that want to do business with us, resulting in a growing customer base.
• People – SaskTel will have a skilled, engaged and enabled workforce that is aligned with business needs.
• Operational Excellence – SaskTel will continuously improve on operational excellence.
• Financial – SaskTel will have sustained long-term value for our stakeholders.

About SaskTel
Saskatchewan Telecommunications Holding Corporation (SaskTel) is the leading full service communications provider in Saskatchewan, with $1.1 billion in annual revenue and over 1.4 million customer connections including over 594,000 wireless accesses, 514,000 wireline network accesses, 234,000 internet accesses and 93,000 Max™ (TV) subscribers.  SaskTel offers a wide range of communications products and services including competitive voice, data, internet, entertainment, national security, messaging, cellular, wireless data and directory services. In addition, SaskTel International offers software solutions and project consulting in countries around the world.  SaskTel and its wholly-owned subsidiaries have a workforce of approximately 4,000 full-time equivalent employees (FTEs). Visit SaskTel at www.sasktel.com.

For more information, please contact:
Michelle Englot, SaskTel Director of External Communications
Phone: (306) 777-4476   
E-mail: michelle.englot@sasktel.sk.ca