After a few years of increasing financial and industry turmoil, telecom giant Telus Corporation (TSX: T) is making some changes. It’s still early, but the plan looks sound and progress is being made. But can these changes bring Telus’ stock price back from current lows? Telus’ stock price is trading under $13 after having fallen approximately 40% in the last year.
For investors looking for yield, Telus stock’s dividend yield of 6% definitely looks interesting. But there are some questions we need to ask before taking the plunge.
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Is this dividend sustainable?
Of course, with any situation like this, there are risks. There’s the risk that the macro environment does not cooperate and facilitate plan execution. There’s also the risk that the company cannot financially handle all of the steps that need to be taken.
But, with a 6% yield, we know there are risks. Visibility is limited, as is predictability. This is not what most of us want, yet we are being compensated somewhat with that yield. Also, investors can use diversification and risk-mitigating strategies to help spread and minimize the risk to their portfolios. That said, let’s look at Telus’s current financial situation and its ability to cover its dividend.
Telus stock currently carries approximately $31 billion in debt. In the first nine months of 2026, Telus’ financing costs represented 29% of operating cash flow and 21% of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). This is reasonable.
Looking ahead, Telus’ goal is to strengthen its financial foundation by reducing debt, focusing on its core telecom business, and implementing its monetization strategy.
What about capital expenditures?
The telecom industry is an extremely capital-intensive one. While Telus is refocusing on its core telecom business and squeezing out savings and efficiencies, the company is also planning to invest in its fibre network and artificial intelligence infrastructure, that is, data centres.
In order to free up capital to do all of this, Telus is hard at work honing its operational discipline – controlling costs and increasing efficiencies. In fact, the company is targeting $900 million in annualized cost savings exiting 2028. This will be achieved through driving down operating costs and margin improvements, as well as increasing capital expenditure efficiencies.
The savings will be redeployed to, first of all, reduce debt. Telus’ goal is a debt-to-EBITDA leverage ratio of three times or less by the end of 2028. It was 3.6 times at the end of Q3. Once this is achieved, management will consider dividend increases and/or share buybacks, depending on capital expenditure needs and the success of monetization strategies.
Telus is also working to divest some of its non-core assets in Telus Health and Telus Digital, which will provide more of this much-needed liquidity for the company. Finally, Telus is looking to unlock equity value for its pure fibre network. All of this would help Telus pay down debt and grow organically.
Telus – Q3 earnings results
Telus’ Q3 earnings result was as expected. Messy, with revenue and earnings declines overshadowing the glimmers of positivity. These positives included average revenue per unit (ARPU) stabilizing, the lowest churn in three years, and fixed data revenue up versus last year.
The bottom line
Telus’ attempt to reinvent itself is clearly not without risks. But Telus stock’s 6% dividend yield reflects this risk. It’s up to each of us to decide if this yield is strong enough compensation for it.
The future looks promising. I think there’s a lot of value in Telus and its assets, as digital connectivity and artificial intelligence are only increasing in importance. Telus is right there, well-positioned to capitalize on the potential.
