Canadian carrier Telus takes on e-health sector

As carriers diversify away from their core businesses, Telus Canada has demonstrated valuable experience after 15 years of quietly expanding into digital health , becoming a service provider in more than 160 countries.

Healthcare is one of the areas that many telecommunications operators around the world are eager to participate in. Among them, Canadian technology and telecommunications group Telus has spent 15 years in their non-traditional field and achieved significant success.

In 2022, Telus Health, a subsidiary of Telus, had revenue of CAD 913 million (about USD 684 million), accounting for 5.8% of total service revenue.

E-health is one of the areas that many major telecommunications operators in the world want to jump into.

In fact, the health care business has only been mentioned by Telus in the last two years, and the revenue of this segment has not broken through until 2021, despite the carrier making many relatively large mergers and acquisitions.

Differences in business diversification

Telus is one of the most unusual telecom operators in terms of how it has diversified away from its core business. It does not have any foreign telecom operations. Telus' non-core businesses include Telus Health, Telus International, Telus Agriculture , and Consumer Goods.

Telus International is an IT services company that designs, builds and delivers digital customer experience solutions for global brands. The division was spun off from Telus in 2021, but the parent company retains a 55% stake.

Telus Health division bolstered by acquisitions.

Within that, Agriculture and Consumer is a relatively new business that Telus began building in 2018 but quickly gained scale through 12 acquisitions of smaller competitors in software, analytics, AI and professional services across North America in just four years. In 2022, the division recorded revenue of CAD 354 million, up from CAD 286 million a year earlier.

Like its food and agriculture businesses, Telus' healthcare business has grown largely through acquisitions. Its first move was to buy companies that owned electronic health records (EHRs) and made that data available to healthcare providers or doctors.

Telus Health currently owns 60% of all medical records in Canada and sells these records to both domestic and international partners. In addition, the division also provides managed security and cybersecurity services to health partners who need them.

"Hide and wait"

Telus has made several healthcare acquisitions since 2008, but it has refused to release any financial results until 2021, suggesting the carrier is reluctant to draw attention to its new business.

In September 2022, Telus went on to acquire LifeWorks, a provider of digital solutions for mental health, for $2.3 billion. The Canadian telecom company said it has expanded its services to 160 countries, with more than 10,000 “team members” and 30,000 independent physicians.

Today, Telus essentially owns a fast-growing digital health business, not to mention a promising food and agriculture technology joint venture with its Telus Agriculture division. Meanwhile, many telecom operators are struggling to diversify. For example, as of May 2023, Telus shares were trading at 26 times earnings per share, compared to 22 times for Bell Canada, a much larger carrier in the country.

Telus Health posted strong revenue growth in 2022, partly due to the Lifeworks acquisition. Without the contribution of its healthcare, agriculture and food businesses, Telus’ total service revenue grew by just 4.57% last year, instead of the 7.48% it reported.

A multi-year commitment to investing in its digital health business has been a key factor behind Telus’ success, but the relatively stable Canadian telecommunications market also provided the carrier with a strong foundation for its transformation.

There has been much debate over whether carriers should set up independent joint ventures separate from their core operations. Telus operates its digital health unit as a standalone business, but has not been shy about leveraging the potential of the telecommunications sector for growth. For example, the sales and marketing functions of the two sectors have been integrated seamlessly between the network and technology.

Telus continues to build a mix of telecom and non-telecom businesses. The company recently announced a focus on investing in its telecom network, but it has also mentioned building out its agricultural supply chain in Ontario and even investing directly in environmental projects.

(According to tmforum)

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