The Toronto Stock Exchange has performed remarkably well amid heightened geopolitical risks in 2026. Heavyweight sectors like energy and financial services continue to lift the Canadian stock market. However, communication services, where an oligopoly exists, remain the laggard with its 12% year-to-date loss versus the broad market’s plus-13.9% gain.
Among the three dominant telco giants, TELUS (TSX: T) is the worst performer. Last year’s slump has carried into the current year. While the telco stock is beaten down, losing 30.3% thus far in 2026, it presents an enticing long-term buying opportunity. The $11.86 share price is a bargain, but you shouldn’t go all-in right now.
The downtrend is understandable, with a turnaround story developing. A structured scaling plan is the best approach if you were to invest in TELUS.
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The headwinds
Several factors, not a single event, led to the sell-off in TELUS. Regulatory intervention was persistent. The Canadian Radio-television and Telecommunications Commission (CRTC) wants telecoms to lower consumer prices, increase network competition, and remove unfair fees. An aggressive price war erupted across the industry, hurting corporate profits.
Rising interest rates and heavy capital expenditures increased debt-servicing costs, forcing TELUS to protect the balance sheet. The telco also reset its dividend policy, including a 55% cut in its quarterly dividend effective October 1, 2026. If you invest today, the dividend yield is 6.3%, down from an unsustainable 14%.
TELUS has withdrawn its multi-year dividend growth program or semi-annual dividend increases. Future hikes will be reviewed and evaluated every quarter, based on earnings, free cash flow (FCF), and economic outlook. The Dividend Reinvestment Plan (DRIP) discount was likewise terminated. With the dividend reset, management targets a 45% to 60% FCF payout, leaving ample room to reduce debt.
Financial performance
In Q2 2026, consolidated revenue declined 3% to $4.9 billion compared to Q2 2025, while net loss widened to $1.8 billion, up from $245 million a year ago. FCF was nearly flat at $545 million. A comprehensive review of its asset portfolio is underway to optimize capital allocation. Any proceeds generated will go toward debt repayment and reduction.
Its President and CEO, Victor Dodig, said TELUS will focus on disciplined execution and ensure maximum returns on every dollar of capital deployed. “The actions we are taking establish the financial conditions for strong, profitable growth and durable, compounding free cash flow growth,” added Gopi Chande, Chief Financial Officer of TELUS.
The 3-tranche play
Whatever amount you intend to invest in TELUS, do it systematically, not at a single-entry price. Assuming $10,000, I’d allocate 35% ($3,500) at the current share price. If the stock dips to the $11–$11.35 range, I’d add another 35% ($3,500) to lower my cost basis. I will reserve the remaining 30% ($3,000) of my budget once a trend reversal occurs or a new uptrend is confirmed.
The staggered play manages downside risk while I wait for the turnaround or price stabilization. Also, the dividend compensates for the temporary stock weakness.
Conclusion
TELUS’ franchise remains indispensable, while communications services are essential. The balance sheet clean-up and dividend reset should improve its financial health. With these structural changes, the rebound might come sooner rather than later.
