Telus Earnings Deep-Dive: Is it a Buy?

This episode is a numbers- and strategy-focused deep dive into TELUS, right as earnings drop. Mike explains why TELUS used to be an attractive mix of a telecom cash cow plus “tech-like” growth segments—but why that story has become far less convincing as revenue stagnates, debt pressure remains high, and dividend growth has been paused.

The core takeaway isn’t “buy” or “sell.” It’s: build an investment thesis, define your rules, and track tangible metrics. If TELUS executes, the stock could follow an “Enbridge-style” recovery path. If the math doesn’t improve, hope won’t save the dividend—or your returns.

Download the Dividend Rock Stars List!

You’ll Learn

1) TELUS “frozen dividend” and the real question: cut risk vs. patience
Mike frames the episode around the elephant in the room: TELUS earnings are out, the dividend has already been “frozen,” and investors are wondering if a cut is next. The dividend growth pause is framed as less damaging than a cut—but it still raises doubts about the plan’s reliability.

Dividend growth pause is not a dividend cut, but it signals stress
The key issue: can TELUS grow free cash flow fast enough to protect the dividend long-term?
2026–2027 are presented as make-or-break years

2) Business model: the core cash cow vs. “nice but small” growth segments
TELUS is broken into clear segments, which helps interpret results and expectations. The problem isn’t that TELUS has growth initiatives—it’s that most of them are still too small (or too inconsistent) to move the needle.

T-Tech (wireless + wireline): the engine, but currently under revenue pressure
TELUS Health: the most credible growth segment (helped by acquisitions), but still much smaller than T-Tech
TELUS Digital (formerly TELUS International): messy history (spinoff, then buyback) and currently more “potential” than proven growth
TELUS Agriculture: still struggling to establish itself; revenue continues to disappoint

3) The “Enbridge scenario”: sentiment can be awful… and still recover
Mike draws a parallel—not in business type, but in market psychology. His point: a stock can be hated for valid reasons, yet still recover if management executes and cash flow improves.

Negative sentiment doesn’t automatically mean “permanent loss.”
Recovery depends on execution, not optimism
Investors need rules, not hope

4) What’s pressuring TELUS: debt + slow growth in a tougher competitive landscape
TELUS’s vulnerabilities stack up: high debt, higher interest costs, slow revenue growth, and increasing competition encouraged by government policy. Add in the capital intensity of the business, and the margin for error shrinks.

Balance sheet pressure (debt + higher interest expense)
Revenue growth is difficult across Canadian telcos
Government policy aims to encourage more competition in wireless
Heavy CapEx needs make telcos “utility-like” (rate-sensitive, slower growth)

5) The December 30, 2025, dividend growth pause is explained through “Joe”
Mike uses a personal-finance analogy: TELUS is like someone with a tight budget, trying to reduce spending and improve income—but still facing cracks if the plan doesn’t go smoothly. The “plan” is logical; the risk is execution.

Improve free cash flow (growth + lower CapEx over time)
Asset monetization (e.g., selling part of the tower’s stake) to pay down debt
Reduce dilution by ending the DRIP discount starting in 2027
The unknown: what happens if growth doesn’t materialize?

6) Q4 2025 results: weak revenue/earnings, but cash flow improving
The quarter isn’t described as catastrophic—but it’s not inspiring either. Revenue and EPS were down, yet operating cash flow and free cash flow improved (which matters more for capital-intensive firms).

Revenue down ~2% YoY; T-Tech down ~4–5%
TELUS Health up ~13% (positive, but smaller segment)
TELUS Digital up ~3% (helped by FX, not pure organic strength)
EPS down ~20%
Operating cash flow up ~5%; free cash flow up ~7%
CapEx up ~18% (a negative in this context, even if partly acquisition-related)

7) Mike’s framework: thesis ? rules ? measurable checkpoints
Mike emphasizes that “wait and see” is not a strategy. Whether you hold or buy depends on your strategy (dividend growth, income, or turnaround) and on whether TELUS is meeting measurable targets.

If you’re a dividend growth investor, a freeze is often a deal-breaker
If you’re more income/turnaround-oriented, the question becomes: do you trust the plan and the math?
Set a timeline and metrics (cash flow, CapEx, guidance execution) and review quarterly