Telus operates as an entrenched national telecommunications leader in Canada with durable recurring cash generation derived from mission-critical connectivity, broadband, and wireless services. Having largely completed its heavy multi-year capital expenditure cycle for pure fibre infrastructure and 5G spectrum builds, the firm is experiencing a structural inflection where capital expenditures decline, and free cash flow expands significantly.
Furthermore, the revised dividend payout structure fundamentally de-risks the investment profile, allowing the business to self-fund balance sheet deleveraging while still providing investors with an attractive, fully covered yield.
The stock trades at just 12.6 times the company’s forward earnings forecastt. We feel this undervalues the company’s stabilizing margins, moderating capital spending, and double-digit free cash flow yield. And as capital expenditures remain disciplined at $2.5 billion annually and free cash flow comfortably covers both operations and obligations, this valuation is attractive.
TELUS CORP. (Toronto symbol T; www.telus.com) is a leading Canadian telecommunications and digital technology company providing wireless, wireline broadband, data communications, and specialized digital services across healthcare, agriculture, and customer experience solutions.
In the second quarter of 2026, the company added 17,000 new wireless phone subscribers as well as 187,000 users of other devices (both numbers are net of cancellations). It now has 10.34 million wireless and 4.78 million connected device users. However, due to greater competition, the average monthly cell phone revenue per user declined 0.4%.
As well, revenue from Telus’s legacy telephone business continues to decline. As a result, revenue in the quarter fell 3.0%, to $4.93 billion from $5.08 billion a year earlier. That missed the $5.03 billion consensus forecast.
If you exclude unusual items, earnings fell 25.7%, to $254 million from $342 million. Due to more shares outstanding, per-share earnings declined 27.3%, to $0.16 from $0.22. The lower earnings are due to lower earnings at its Telus Digital business (call centres and computer services) and higher interest costs.
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Telus’ reset dividend paves path to balance sheet strength
The Canadian telecommunications giant recently announced a 55.2% dividend cut.
Starting with the October 2026 payment, investors will receive $0.1875 a share instead of $0.4184. The new annual rate of $0.75 yields 6.4%.
The company will also end the 1.75% discount it offers to shareholders who reinvest their dividend payments in new shares.
Telus expects the lower dividend rate will save it a total of $2.7 billion by the end of 2028. It will use those savings to pay down its long-term debt of $26.43 billion (as of June 30, 2026). That’s a high 142% of its $18.6 market cap.
Telus now expects revenue for all of 2026 will decline about 1%. It will also probably earn $0.94 a share this year, and the stock trades at 12.6 times that forecast.
That’s a low p/e in light of Telus’s high quality networks and market share. The company could also free up more cash by selling part of its health division (which helps clinics, pharmacies and hospitals manage electronic patient records) and surplus real estate.
Recommendation in The Successful Investor: Telus Corp. is a buy.
