By Ahmad Hathout
Under new management, Telus is resetting its dividend and pausing acquisitions to get its debt level in check.
Starting October 1, the corporation will issue a quarterly dividend of $0.1875 cents per share, which is 75 cents on an annualized basis – a reduction of 55 per cent from the existing distribution. It is also eliminating the discount on dividend reinvestments.
“It served a clear purpose during the peak of our network build, preserving cash when capital intensity was at its highest,” Telus CEO Victor Dodig said Friday about the dividend reinvestment plan in his first earnings call as head of the company, which was reporting its second-quarter numbers. “With our network build maturing and free-cash flow growing, that mechanism is no longer necessary.”
Dodig also said the company is putting a pause on acquisitions “to demonstrate our discipline.”
“Once we reach out targeted leverage level and fortify our balance sheet, we will revisit our capital allocation priorities,” he said, adding the company will also focus on monetizing non-core assets to “optimize our portfolio and pay down debt, which will ultimately support a stronger financial foundation for Telus.”
The moves are part of a larger reset that Dodig said reflects a “business in transition” that will “embrace technology, eliminate redundancies, and ensure every dollar is deployed with discipline” as it reinvests in its core.
“Our focus is on executing it with discipline and positioning Telus to deliver sustainable, profitable growth and returns over the long term,” he said. “We are moving with clarity, and we’re moving with urgency, and I’m confident, very confident, in the ability of our team to deliver.”
Ahead of its earnings release, Telus earlier this month consolidated its telecom businesses under “Telus Communications” with a change in the makeup of the executive leadership.
The new direction follows the sale to La Caisse of a 49.9 per cent interest in Terrion, which holds the company’s portfolio of towers. The deal was conjured up to reduce company debt.
“Through our partnership, Terrion now thrives as a standalone entity, providing superior network quality and service that Telus customers continue to rely upon,” Dodig said.
Despite that, Telus will spend slightly more this year, with a capital expenditure target of $2.6 billion, up from the previously communicated $2.3 billion. That, company executives said, is due to pricing inflation, supply chain dynamics impacting customer premise equipment and a “modest strategic investment directed towards our AI data centres, including network infrastructure upgrades and site enablement” to support the centres in Rimouski and Kamloops.
Telus will also spend a little more in a “deliberate shift towards customer-based management, such as addressing customer pain points, eliminating friction from interactions, and expanding wallet share within existing relationships, each of which improves churn economics and lifetime customer value,” said CFO Gopi Chande, adding that will include making sure customers can use digital when they want to – an investment he said will continue into next year. (The CRTC is requiring telecoms to institute a system by April 2027 to allow customers to change or cancel their plans without the need for a live agent.)
By the end of 2028, company executives said they expect to see cash savings of approximately $2.7 billion to be used to reduce debt.
Against the period that ended June 30 last year, overall revenue was down 2 per cent to $4.9 billion, in part from lower service revenue and lower mobile equipment revenue. The company suffered a net loss or $1.8 billion from the after-tax impacts of a decline in operating income and greater financing costs.
Telus added 17,000 net new postpaid wireless subscribers, down 69 per cent compared to the same period last year. Gross additions were down 7 per cent to 348,000 this quarter. The prepaid segment is not parceled out. The total mobile phone sub base by quarter-end was 10.3 million.
Churn was up two basis points to 1.08 per cent, while average revenue per user (APRU) was $56.36, down 22 cents.
Internet net additions were 20,000, down 26 per cent, for a total base of 2.8 million – up 3 per cent.
Connected device net additions was 187,000, up 67 per cent, for a total base of 4.8 million – up 20 per cent.
