What TELUS (TU) Said on Its Q3 Earnings Call

Key Points

• TELUS plans to generate CAD 900 million in annualized cash savings by the end of 2028, mainly through telecom cost reductions and capital efficiencies. It expects to invest about CAD 150 million to achieve the target and use asset-sale proceeds to reduce debt and fund core businesses.
• Third-quarter results weakened: service revenue fell 1% to CAD 4.5 billion, adjusted EBITDA declined 5% to CAD 1.8 billion, and free cash flow dropped 35% to CAD 396 million. Basic EPS was negative CAD 0.42, including a CAD 800 million non-cash goodwill impairment at TELUS Health.
• The company reaffirmed its 2026 outlook, including free cash flow of about CAD 1.8 billion, and its goal to reduce net debt-to-adjusted EBITDA from 3.6 times to 3 times or less by the end of 2028. TELUS is exploring sales of non-core assets and a partnership involving PureFibre while retaining control of the network.

TELUS NYSE: TU outlined a plan to generate CAD 900 million in annualized cash savings by the end of 2028, as the telecommunications company reported lower third-quarter earnings and reaffirmed its full-year outlook.

President and Chief Executive Officer Victor Dodig said the company plans to combine cost reductions and capital efficiencies with asset sales and a potential investment partnership involving its PureFibre network. TELUS aims to use the proceeds to reduce debt and invest in its core telecom and Canadian artificial intelligence infrastructure businesses.

Consolidated service revenue fell 1% from a year earlier to CAD 4.5 billion, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) declined 5% to CAD 1.8 billion. Chief Financial Officer Gopi Chande attributed the EBITDA decline primarily to weaker results at TELUS Digital and CAD 78 million in one-time items recorded in the prior-year quarter. Excluding those items, adjusted EBITDA fell 2%.

Free cash flow declined 35% to CAD 396 million, reflecting lower EBITDA and higher capital expenditures. Adjusted earnings per share fell to CAD 0.16 from CAD 0.24 a year earlier. Basic earnings per share were negative CAD 0.42, reflecting a CAD 800 million non-cash goodwill impairment at TELUS Health.

Efficiency plan and debt reduction

The savings target represents a monthly run rate of CAD 75 million in December 2028, multiplied by 12, Chande said. Approximately 80% of the benefits are expected to come from telecom and the remainder from global platform businesses. TELUS expects to invest about CAD 150 million to achieve the target, primarily in capital expenditures and weighted toward the earlier part of the program.

Chande initially described the anticipated savings as roughly evenly split between capital expenditures and EBITDA. David Fuller, executive vice president and group president of TELUS Communications, later said EBITDA-enhancing initiatives, primarily operating expense reductions, would account for closer to 55% of the target.

Dodig said actions already taken, including shifting home security and TV offerings to a capital-light model, are expected to deliver approximately CAD 250 million in structural cash savings, predominantly capital-related, with the full run rate beginning in 2027. That amount is included in the broader target.

TELUS ended September with a net debt-to-adjusted EBITDA ratio of 3.6 times, up from 3.5 times a year earlier. The company reiterated its goal of reducing the ratio to 3 times or less by the end of 2028. It also reaffirmed its quarterly dividend of CAD 0.1875 per share, following a dividend reset announced with second-quarter results.

Asset sales and fiber partnership

Dodig said TELUS is prioritizing its Health and Agriculture & Consumer Goods businesses in its non-core asset monetization strategy. One Health asset is in advanced discussions with a prospective buyer, and the company plans to begin a process for another Health asset this month.

Chande said the Health impairment reflected updated growth expectations, broader market conditions and valuation perspectives from ongoing strategic processes. She declined to provide a valuation for the business and cautioned against drawing conclusions about the value of individual assets from the impairment.

TELUS is also in early discussions with potential partners about unlocking equity value from its PureFibre network. Fuller said the company intends to retain control and is not contemplating a sale of the entire asset. Dodig said TELUS sees an opportunity to build fiber to more than one million homes in Ontario and Quebec, subject to the resources available.

AI infrastructure and operating results

TELUS projects approximately CAD 500 million in cumulative digital infrastructure revenue over the next three years, subject to market factors. Navin Arora, executive vice president and group president of Global Platform Businesses, said the estimate covers connectivity for other operators’ data centers and the expansion of TELUS’s existing facilities. It excludes a third initiative involving potential powered data center shells.

Dodig said TELUS has secured 38 megawatts of power across its sites, which it plans to bring online through the end of 2028. Arora said the company would match GPU capacity expansion with signed customer contracts.

In the core TTech business, service revenue rose 1% to CAD 3.3 billion, while adjusted EBITDA fell 5% to CAD 1.6 billion. Mobile network revenue increased 1%, and TELUS added 84,000 mobile phone subscribers on a net basis. Blended mobile phone churn improved to 1.01%, the company’s lowest quarterly result in three years.

Fuller said the net additions were driven by improved retention rather than more aggressive pricing. TELUS recorded 10,000 internet net additions as it prioritized margins and capital efficiency over subsidized volume, Chande said.

For 2026, TELUS reaffirmed its guidance for service revenue to range from flat to a 2% decline, adjusted EBITDA to fall 2% to 4%, capital expenditures of approximately CAD 2.6 billion and free cash flow of approximately CAD 1.8 billion. The company plans to provide its 2027 outlook with fourth-quarter results in February.

About TELUS (NYSE:TU)

TELUS is a Canadian telecommunications and technology company headquartered in Vancouver, British Columbia. Its core services include wireless voice and data, internet, television and home phone offerings, as well as communications and technology solutions for businesses and public-sector organizations.

The company also operates TELUS Health, which provides digital health services and technology, and TELUS Agriculture & Consumer Goods, which offers technology and data solutions for the agriculture and food industries.

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