Telus sets three-year free cash flow targets

Executive Summary

• Telus Corp. announced an updated midterm outlook, establishing a new multi-year free cash flow growth target of a minimum 10% compounded annual growth rate through 2028.
• The company outlined a plan to systematically step down its discounted Dividend Reinvestment Plan (DRIP) starting in early 2026, while pausing dividend growth (maintaining the current quarterly dividend of 41.84 cents per share) to prioritize deleveraging.
• Telus aims to reduce its net-debt-to-EBITDA leverage ratio to approximately 3.3 times by the end of 2026 and approximately 3 times by the end of 2027, supported by strategic partnerships, asset divestitures, and strong cash flow generation.

Key Details

• Free Cash Flow Targets:
  • 2025 Expected Free Cash Flow: Approximately $2.15 billion.
  • 2026 Preliminary Free Cash Flow Target: $2.4 billion.
  • 2026 Capital Expenditure Target: Approximately $2.3 billion.
  • Growth Target: Minimum 10% compounded annual growth rate in free cash flow from 2026 through 2028.
• Dividend Policy Changes:
  • Current Quarterly Dividend: 41.84 cents per share.
  • Dividend Growth: Paused until share price and dividend yield better reflect growth prospects.
  • Cash Dividend Coverage Ratio: Expected to be approximately 75% of free cash flow on a prospective basis for 2026–2028.
• Discounted DRIP (DDRIP) Stepdown Schedule:
  • February and May 2026: Discount reduced to 1.75%.
  • August and November 2026: Discount reduced to 1.5%.
  • 2027: Discount reduced to 1%.
  • 2028: Zero discount (standard DRIP).
• Deleveraging Strategy:
  • Current Leverage (as of Sept 30, 2025): 3.5 times.
  • 2026 Leverage Target: Approximately 3.3 times.
  • 2027 Leverage Target: Approximately 3 times.
  • Drivers for Deleveraging: Terrion partnership, hybrid note issuances, strategic partnerships, non-core asset divestitures, Telus Digital cash flow, and monetization of real estate and copper assets.
• Strategic Initiatives:
  • Pursuing a strategic partner for Telus Health.
  • Accelerated monetization of considerable real estate and copper assets.

Notable Quotes

• "Telus is advancing its capital allocation strategy, supported by strong business fundamentals and significant free cash flow generation... Our confidence in delivering free cash flow growth at a minimum 10-per-cent compounded annual growth rate through 2028 reflects our strong financial momentum." — Darren Entwistle, President and CEO
• "Importantly, it is our intention to continue paying the dividend at its current nominal level. We will, however, moderate our dividend growth model of 3 to 8 per cent according to our dividend yield, including pausing our dividend growth until such time as our share price and associated dividend yield better reflects the considerable growth prospects of Telus." — Darren Entwistle, President and CEO