TELUS Resets Dividend to Support Deleveraging After Net Loss
The communications technology company reduced its annualized dividend by 55% to $0.75 per share to generate $2.7 billion in cash savings through 2028.
TELUS Corporation (TU), the Canadian communications technology provider, reset its quarterly dividend to $0.1875 per share as part of a strategic shift to strengthen its balance sheet and reduce debt. The move represents a 55% reduction from the previous annualized amount of $1.6736 per share.
The company said the dividend reset is expected to generate approximately $2.7 billion in cumulative cash savings through 2028, which will be directed toward debt reduction. TELUS also lowered its free cash flow dividend payout ratio to a range of 45% to 60% of trailing 12-month free cash flow, down from a prior prospective range of 60% to 75%. To further reduce shareholder dilution, the company will remove the dividend reinvestment plan discount effective October 1, 2026.
These financial adjustments follow a second quarter net loss of $1.8 billion. The loss was driven by a $2.1 billion pre-tax, non-cash impairment of intangible assets and goodwill related to the TELUS Digital cash-generating unit. Consolidated service revenue for the quarter declined 1% to $4.4 billion, while adjusted EBITDA fell 2% to $1.8 billion.
Operational results showed a mix of growth and contraction. Mobile network revenue rose 1% year-over-year to $1.7 billion, supported by an average revenue per user of $56.36. The company added 17,000 mobile phone and 20,000 internet subscribers, while connected device net additions reached 187,000. Blended mobile phone churn rose to 1.08% from 1.06% in the prior year.
Segment performance varied, with TELUS Health operating revenues and other income rising 3% to $536 million. Conversely, TELUS Digital operating revenues and other income fell 6% to $774 million.
TELUS updated its full-year financial guidance, revising consolidated service revenue to a range of flat to negative 2% and consolidated adjusted EBITDA to a range of negative 2% to negative 4%. Full-year free cash flow is anticipated to be approximately $1.8 billion. Capital expenditures for the year were updated to approximately $2.6 billion, reflecting inflation, supply chain dynamics, and investments in sovereign AI data centres.
The company is targeting a net debt to adjusted EBITDA ratio of 3.0-times or lower by year-end 2028, a timeline extended from the previous target of year-end 2027. TELUS attributed this shift to reduced subscriber demand amid lower population growth and competitive pricing pressure. The company is currently conducting a comprehensive review of its asset portfolio to optimize capital allocation.