Telus Corp

TELUS reported Q2 2026 service revenue of $4.4 billion, down 1% year over year, and adjusted EBITDA of $1.8 billion, down 2%. Adjusted EPS was $0.16 versus $0.22 a year ago; cash from operations rose 15%, and free cash flow was $545 million, up 2%. TTech service revenue was $3.3 billion and adjusted EBITDA was $1.6 billion, both roughly flat; TELUS Health service revenue was $533 million, up 4%, with adjusted EBITDA of $99 million, up 1%; and Agriculture & Consumer Goods service revenue was $90 million, up 6%. TELUS Digital recorded a pretax noncash carrying value impairment of $2.1 billion. For 2026, management now expects consolidated service revenue of flat to negative 2%, consolidated adjusted EBITDA of negative 2% to negative 4%, and free cash flow of approximately $1.8 billion; this compares with prior expectations of 2% to 4% growth for revenue and EBITDA and about $2.45 billion of free cash flow. 2026 CapEx is now expected to be about $2.6 billion, up from about $2.3 billion previously communicated. Management reiterated a target of net debt to adjusted EBITDA of 3x or lower by the end of 2028 and said the dividend reset should create about $2.7 billion of cumulative cash savings through 2028.

Victor Dodig framed the quarter as the start of a transformation, emphasizing focus, simplicity, financial discipline, and a return to TELUS’s core strengths in telecom and digital infrastructure. He said the company is taking decisive actions on leadership, portfolio review, dividend policy, and capital allocation, while describing the telecom business as the “crown jewel” and highlighting opportunities in PureFibre, 5G, AI-enabling infrastructure, and sovereign AI data centers. His tone was urgent but confident, with repeated emphasis on acting with “focus and speed” and on delivering long-term value through a simplified business.

Gopi Chande focused on the financial reset and the reasons behind the guidance cut. He said Q2 service revenue was $4.4 billion, adjusted EBITDA was $1.8 billion, adjusted EPS was $0.16, and free cash flow was $545 million; he also cited the $2.1 billion TELUS Digital impairment and said leverage was 3.5x net debt to adjusted EBITDA at June 30, down from 3.7x a year ago. On capital allocation, he explained that the dividend was reset to $0.1875 per quarter, the payout ratio target is now 45% to 60% of trailing 12-month free cash flow, and 2026 CapEx will be about $2.6 billion due to inflation, AI data center investments, and customer-base management initiatives. He reiterated the company’s 3x leverage target by end-2028 and said the revised outlook reflects a weaker environment, lower-than-expected growth, and about 200 basis points of headwind from 2025 nonrecurring items.

Analysts pressed management on the large guidance reset, asking how much of the EBITDA revision came from each segment and whether Q2 was representative of TELUS Digital’s future run rate. Gopi said about 2 points of the guidance gap versus the old midpoint came from TELUS Digital, 1 point from Health, 1 point from pausing real estate JVs, and 1 point from telecom; he also said half 2 is weaker for Digital than half 1, with CXAI and AI data solutions still promising. Questions also focused on portfolio monetization, capital allocation, and whether the company would change incentives to emphasize ROIC; Victor said everything is on the table for review, but the goal is to monetize only assets that are better in someone else’s hands and to align management with profitable growth and shareholder returns.