Telus (TSX: T) may not look like an obvious bargain after falling 41% over the past year to $13.41, but that’s exactly what makes the shares of this Canadian telecom giant interesting right now. Investors are understandably cautious after its disappointing second-quarter results, reduced 2026 guidance, and a 55% dividend reset. However, that lower dividend should save Telus roughly $2.7 billion through 2028, giving the company greater flexibility to reduce debt and strengthen its balance sheet. And even after the reset, the shares still offer an annualized yield of about 5.6%.
Here’s why Telus could be an attractive buying opportunity on the TSX today while investor sentiment remains subdued.
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Telus stock
After falling sharply over the last year, Telus stock currently trades at $13.41 per share with a market cap of about $21.3 billion. With this, the stock is now just 4% above its 52-week low. Despite its recent dividend reset, Telus still offers an annualized yield of roughly 5.6% at the current market price.
Of course, investors did not push the stock down this far without reason, as Telus has been facing aggressive promotional pricing in wireless, while slower population growth has weakened its subscriber demand. Pressure at Telus Digital and elevated leverage have added to investors’ concerns.
Its latest financial results clearly reflected some of those challenges. In the second quarter, Telus’s operating revenue and other income fell 3% year over year (YoY) to about $4.9 billion. Consolidated service revenue slipped 1%, mainly due to weaker Telus Digital revenue, lower mobile average revenue per user, and declining legacy voice revenue.
Similarly, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) dropped by 2% YoY to about $1.8 billion.
However, not everything moved in the wrong direction for Telus in the latest quarter, as it generated about $1.3 billion in cash from operating activities, up 15% YoY. The company’s free cash flow also climbed 2% from a year ago to $545 million. On top of that, its telecom subscriber base grew 6% over the previous 12 months to 17.9 million connections.
Why the selloff could create an opportunity
For investors willing to look past Telus’s near-term challenges, its balance-sheet strategy makes this beaten-down stock attractive.
Reducing leverage is now one of the company’s biggest priorities. Telus ended the second quarter with a net debt-to-adjusted EBITDA ratio of 3.5 times. And the telecom giant wants to bring that figure down to roughly three times or lower by the end of 2028.
Moreover, Telus’s controversial dividend reset should help it get there. If you don’t know it already, the company recently reduced its quarterly dividend by 55% to $0.1875 per share, bringing the annualized payout to $0.75. While that is painful for existing income investors, the company expects the change to generate about $2.7 billion in cumulative cash savings through 2028. Those savings are expected to go toward debt reduction.
That is not the only step Telus is taking. The company is also reviewing non-core assets, including Telus Health-related assets and real estate, with proceeds from potential monetizations also intended for deleveraging. At the same time, Telus expects capital intensity to decline over the multi-year horizon as its PureFibre network build approaches completion.
Still, investors should keep their expectations realistic as Telus recently lowered its 2026 free cash flow guidance to about $1.8 billion and now expects adjusted EBITDA to decline between 2% and 4%. Simply put, this is unlikely to be an overnight turnaround.
But Telus’s 41% decline has already reflected plenty of that pessimism. If the company can consistently reduce leverage, improve fundamentals, grow free cash flow, and keep its core wireless and fibre businesses strong, it can see a handsome recovery in the years to come.
