■ Cut · August 1, 2026
Telus (TU) Cuts Dividend 55%, Lowers 2026 Guidance
Telus slashes dividend by 55%, cuts 2026 outlook, and reports Q2 loss, sending shares down over 11%.
Dividend Cut and Guidance Reset
Telus Corporation (TU) announced a 55% reduction to its annual dividend and lowered its 2026 revenue, EBITDA, and free cash flow guidance, marking a significant shift in its financial strategy. The company also reported a C$2.1 billion non-cash impairment at TELUS Digital, resulting in a net loss of C$1.8 billion for the second quarter of 2026. Adjusted earnings per share and revenue missed expectations, contributing to a sharp decline in the stock price.
Financial and Balance Sheet Impact
The company's 2026 adjusted EBITDA is now expected to decline by 2% to 4%, a reversal from previous growth projections. Capital expenditures are set to increase to C$2.6 billion, up from C$2.3 billion, with investments directed toward infrastructure and AI data centers. Telus also plans to end its dividend reinvestment plan (DRIP) discount and pursue asset monetization to reduce net debt-to-EBITDA to approximately 3.0x by 2028.
Telus's balance sheet shows elevated leverage, with total debt-to-equity at 2.0 and long-term debt around C$26 billion. Interest coverage stands at 5.4x, and the current ratio is 0.7, indicating weak liquidity. Revenue for the trailing twelve months is approximately C$20.35 billion, with gross margin at 62% and EBITDA margin at 30.5%, but net margins are thin at 3–5% due to heavy depreciation and interest costs.
Market Reaction and Analyst Actions
Following the earnings release, TU shares dropped more than 8% premarket and closed down 11.23% on August 1, 2026. The stock fell from a weekly high of around $11.21 to a low of $9.22 before closing near $9.56. Several analysts downgraded the stock: CIBC moved to Neutral, Barclays cut its price target to $12, and Morgan Stanley initiated an Underweight rating with a C$13 target, citing concerns about the health business and competition from Starlink.
Technically, the stock has broken down, with resistance at $10.50 and support near $9.00. The dominant trend is bearish, and the recent price action reflects the market's repricing of Telus's growth and income prospects.
What it means for income investors
The dividend cut and reduced guidance signal a period of lower income and growth for Telus. Income investors should note the reduced payout and the company's focus on deleveraging, which may limit future dividend increases until financial metrics improve.
Reporting based on: timothysykes.com. Figures verified against market data where available.