TELUS (NYSE:TU) is sharpening its focus on its telecommunications operations and AI data infrastructure while reviewing other businesses that may be better positioned under different ownership, newly appointed Executive Vice President and CFO Gopi Chande said at CIBC’s Eastern Conference.
Chande, who returned to TELUS after serving as CFO of TELUS Digital, said the company is undertaking a broader simplification effort centered on profitability, capital discipline, customer experience and a more focused portfolio. He said TELUS has paused all mergers and acquisitions as it evaluates which assets are core to its strategy.
Dividend savings directed toward leverage reduction
Chande said the company’s previously announced 55% dividend reduction and termination of its dividend reinvestment plan discount are expected to preserve approximately C$2.7 billion in capital through 2028. TELUS intends to direct that cash toward reducing leverage.
While Chande described the company’s balance sheet as strong relative to peers, he said management is prioritizing financial flexibility. TELUS has said it aims to reduce its leverage ratio to 3.0 times or lower by 2028.
Once the company reaches that target and is established within its new payout ratio, Chande said TELUS could evaluate dividend increases, share repurchases or a combination of the two.
Capital spending expected to decline in 2027
TELUS raised its capital expenditure guidance alongside its second-quarter results, a move Chande acknowledged was difficult. He attributed the increase to inflation and chipset-related costs, completion of the Kamloops data center, and the decision to finish customer-experience and digital projects already substantially underway.
However, he said capital spending should be lower in 2027 than in 2026 as TELUS narrows its internal product development efforts, applies tighter return-on-investment standards to projects, pauses acquisitions and reassesses “success-based” capital spending. The company is targeting telecom capital intensity of 10%.
TELUS also sees a fiber-building opportunity in Ontario and Quebec, where Chande said as many as 1 million homes may lack fiber connectivity. He said the company is evaluating communities individually, including areas such as Kitchener-Waterloo and Laval, rather than pursuing broad overbuilds or rural projects.
The company is currently less interested in pursuing wholesale access through third-party internet access arrangements, or TPIA, because the economics have not met expectations. “We will not chase the load,” Chande said. “We will chase the economics.”
Fiber expansion and AI infrastructure investments are intended to be pursued with partners, Chande said, allowing TELUS to support growth without compromising its leverage objectives.
Wireless strategy emphasizes profitable customer additions
On wireless operations, Chande said TELUS is seeing a more stable competitive environment than in the first quarter, including more disciplined back-to-school activity and stability in prepaid pricing. The company is seeking to direct customers toward its premium and postpaid brands.
He said TELUS is focused on profitable customer additions rather than net additions alone, although not entirely at the expense of subscriber growth. Chande noted that TELUS has reported three consecutive quarters of ARPU growth, though ARPU remains negative. He said the company expects that metric to eventually turn positive but did not provide a forecast.
Chande said management is monitoring competitors, including Quebecor, but has not yet observed a material effect from Quebecor’s western expansion in TELUS’s core markets.
TELUS Digital and Health remain under review
Chande characterized TELUS Digital as a business with varying performance across its operations. He said its core customer-experience business, including call and contact centers, is benefiting from AI tools used to assist agents and review calls. The WillowTree digital-services business is also seeing higher pipeline volume, though contract sizes have declined as AI changes the economics of software and digital work.
However, TELUS Digital’s trust-and-safety business has faced pressure as some hyperscale customers reduce human review work, while its AI and data-solutions operation needs to improve its go-to-market approach in areas including robotics and autonomous vehicles, Chande said.
TELUS is also reviewing TELUS Health, which Chande divided into retirement benefits solutions, Payvider services and employer assistance program operations. He said one business is currently in market and could be discussed by or before Nov. 6. Over the next 12 months, TELUS could retain one of the three major Health businesses or potentially none, he said.
At its Nov. 6 update, TELUS plans to provide additional details on its transformation program, AI data strategy and asset monetization efforts. Chande said the telecom business accounts for roughly 90% of TELUS EBITDA and remains stable, with potential “green shoots” in mobility.
About TELUS (NYSE:TU)
TELUS Corporation is a Canadian telecommunications and technology company headquartered in Vancouver, British Columbia. It provides wireless and wireline communications services, including mobile connectivity, internet, voice, television and home security services, primarily to consumers, businesses and public-sector organizations in Canada.
The company also operates technology-focused businesses outside its traditional telecommunications operations. TELUS Health provides digital health platforms, virtual care, electronic medical records and workplace health solutions.
