TELUS Q2 Earnings Call Highlights

TELUS is resetting its strategy under CEO Victor Dodig, cutting its quarterly dividend by 55% to C$0.1875 and targeting approximately C$2.7 billion in cash savings through 2028 for debt reduction. The company aims to reduce net leverage from 3.5x to 3x or lower by the end of 2028 and has paused acquisitions. Second-quarter results were pressured by a C$2.1 billion non-cash impairment at TELUS Digital, reflecting faster declines in legacy services as customers automate functions with artificial intelligence. Service revenue fell 1% to C$4.4 billion and adjusted EBITDA declined 2% to C$1.8 billion, although operating cash flow rose 15%. TELUS lowered its 2026 outlook, now expecting service revenue to range from flat to down 2%, adjusted EBITDA to decline 2% to 4%, and free cash flow to be approximately C$1.8 billion. Capital expenditure expectations increased to about C$2.6 billion, partly due to AI data-center investments and higher restructuring costs.

TELUS NYSE: TU outlined a transformation plan alongside its second-quarter 2026 results, cutting its dividend, reducing its financial outlook and setting a target to lower leverage as new President and CEO Victor Dodig seeks to focus the company on its core telecommunications operations. Dodig, who became TELUS president and CEO on July 1 after previously leading CIBC, said the company will prioritize strengthening its balance sheet, tightening operational discipline and deploying capital toward profitable growth. He said TELUS expects the plan to produce minimum compounded annual free-cash-flow growth of 10% over 2027 and 2028.

“Our focus is on executing with discipline and positioning TELUS to deliver sustainable, profitable growth and returns over the long term,” Dodig said.

TELUS said it will reduce its quarterly dividend by 55%, to C$0.1875 per share from Oct. 1, equivalent to C$0.75 annually. The company also will end the discount associated with its dividend reinvestment plan on that date.

The company expects the dividend reset to generate approximately C$2.7 billion in cumulative cash savings through the end of 2028, with the funds directed toward debt reduction. TELUS also changed its dividend payout target to 45% to 60% of trailing 12-month free cash flow, compared with its prior target range of 60% to 75% on a prospective basis.

TELUS reported net debt-to-adjusted EBITDA of 3.5 times as of June 30, down from 3.7 times a year earlier. Its updated target is to reduce leverage to 3 times or lower by the end of 2028. The company has also placed a moratorium on acquisitions while it works toward that target.

Dodig said TELUS is pursuing sales of non-core assets and is continuing work on real estate monetization. He cited the September 2025 sale of a 49.9% stake in wireless tower subsidiary Terrion to La Caisse as an example of the company’s approach. That transaction generated C$1.26 billion in proceeds and lowered leverage by 0.17 turns, according to TELUS.

The company said it remains active in discussions involving certain non-core assets within TELUS Health and is progressing efforts to monetize core non-real-estate assets. Dodig said the company is reviewing its portfolio, including TELUS Ventures, but did not provide a specific dollar target for potential divestitures.

For the second quarter, TELUS reported service revenue of C$4.4 billion, down 1% from a year earlier, while adjusted EBITDA declined 2% to C$1.8 billion. The company said underlying telecom performance was resilient, b...