TORONTO, July 31, 2026, 11:00 a.m. EDT (market open)tsx.com TELUS Corporation (TSE:T) shares declined at the open on Thursday as the company’s dividend reset removed its yield premium over some rivals.
TELUS shares dropped 12.3% to C$13.22 following a 55% reduction in its dividend.
The updated indicated yield stands at roughly 5.7%, close to BCE Inc. (TSE:BCE)’s yield of 5.8%.
The projection for free cash flow in 2026 was cut by 27%, down to C$1.8 billion.
TELUS stock dropped 12.3% to C$13.22 as of 10:56 a.m. on Friday. Shares hit a new 52-week low at C$12.93. Trading volume climbed to 22.4 million, nearly triple the typical average.
The dividend adjustment stripped TELUS of its primary income edge. Its stated yield dropped to 5.7%, coming close to BCE’s 5.8% yield. Prior to Friday, TELUS had provided about 11.1% based on Thursday’s closing level. The difference in yields disappeared.
Metric
TELUS before reset
TELUS after reset
BCE
Reference share price
C$15.08
C$13.22
C$30.29
Indicated annual dividend
C$1.6736
C$0.75
C$1.75
Indicated yield
11.1%
5.7%
5.8%
Yield premium to BCE
5.3 points
Minus 0.1 point
—
TELUS’s prior yield is based on Thursday’s closing price. The post-reset comparison draws on intraday prices.
This puts more emphasis on cash flow and leverage in the valuation assessment. Net debt was equal to 3.5 times adjusted EBITDA. TELUS aims to reduce this ratio to 3.0 times or below by the end of 2028.
The board reduced the quarterly dividend to C$0.1875, down from C$0.4184. TELUS targets C$2.7 billion in total savings by 2028. The company will end its dividend reinvestment-plan discount on October 1.
An annualized calculation provides a view of the ongoing cash requirement. Factoring in 1.57 billion shares, the revised dividend results in approximately C$1.18 billion per year. This represents 65% of the latest 2026 free-cash-flow forecast. Since the policy relies on historical cash flow, this figure is not the disclosed 2026 payout ratio.
Dividend measure
Previous framework
New framework
Difference
Quarterly dividend per share
C$0.4184
C$0.1875
Decreased by 55%
Annualized dividend per share
C$1.6736
C$0.75
Decreased by 55%
Estimated annual cash outlay
C$2.63 billion
C$1.18 billion
C$1.45 billion reduction
Target payout range
60%-75% of prospective FCF
45%-60% of trailing FCF
Narrower band; updated basis
Basic calculation based on 1.57 billion shares. This does not represent TELUS’s disclosed 2026 dividend payout.
Operating cash flow increased by 15% for the quarter, while free cash flow edged up 2%. Adjusted net income dropped 26%, and adjusted EBITDA declined by 2%.
Q2 measure
2026
2025
Change
Revenue and other income
C$4.929 billion
C$5.082 billion
Falls 3%
Adjusted EBITDA
C$1.777 billion
C$1.812 billion
Decreases 2%
Adjusted net income
C$254 million
C$342 million
Slides 26%
Adjusted EPS
C$0.16
C$0.22
Declines 27%
Operating cash flow
C$1.342 billion
C$1.166 billion
Rises 15%
Free cash flow
C$545 million
C$535 million
Gains 2%
TELUS reported a non-cash impairment of C$2.1 billion for TELUS Digital. The company announced a net loss of C$1.83 billion. Adjusted net income reached C$254 million.
Management reduced its forecasts for revenue, EBITDA and cash flow, while increasing projected capital spending. Free cash flow declined by 27%, and capital expenditure increased by 13%.
2026 outlook
Previous
Updated
Change
Service revenue growth
Up 2%-4%
Flat to down 2%
Midpoint off 4 points
Adjusted EBITDA growth
Up 2%-4%
Down 2%-4%
Midpoint off 6 points
Capital expenditure
About C$2.3 billion
About C$2.6 billion
Rises 13%
Free cash flow
About C$2.45 billion
About C$1.8 billion
Falls 27%
Restructuring assumptions climbed to C$900 million, up from C$500 million. Anticipated cash restructuring payments grew to C$650 million from C$450 million.
Wireless stayed relatively stable. Revenue from mobile networks increased by 1%. Average revenue per user (ARPU) for mobile decreased by 0.4% to C$56.36. The churn rate rose slightly to 1.08%.
TELUS Health posted a 1% increase in adjusted EBITDA. Revenue at TELUS Digital was down C$75 million, with adjusted EBITDA declining 20%.
Chief Executive Victor Dodig stated, “The macro environment has shifted and we are responding with clarity and discipline.” Newswire
TELUS is seeking buyers for non-core Health businesses and property holdings. Funds raised will go towards lowering debt. A comprehensive capital plan will be detailed alongside third-quarter results in November.
Wider market declines remained limited. The S&P/TSX Composite started the session down 0.13%. BCE fell roughly 0.4%, highlighting the specific effect tied to TELUS.
The analyst call is set to begin at 12:30 p.m. EDT. Investors plan to examine the schedule for asset sales and the pace of cash recovery.
Risks: The strategy relies on cash recovery, reduced capital intensity and asset disposals. Greater price competition, regulatory pressures and increased restructuring may hinder deleveraging.
TS2 TECH • EXTENDED COVERAGE
Further analysis
Editorial insight
What caused the sharp decline in TELUS shares today?
At 10:37 a.m. ET, TELUS shares changed hands at C$13.28, falling 11.9%. The stock touched a new 52-week trough at C$12.93 earlier in the session. The S&P/TSX Composite dipped just 0.13% at the open, suggesting the decline was tied specifically to the company. The sharp drop followed a 55% reset to the dividend and significant guidance cuts. This movement was not driven by the broader index. Google
How disappointing were TELUS's financial results for the second quarter?
Operating revenues and other income decreased by 3% to C$4.929 billion. Adjusted EBITDA was down 2% from the prior year at C$1.777 billion. Adjusted net income posted a 26% year-over-year decline to C$254 million. Adjusted earnings per share slipped 27% to C$0.16. The company reported a loss of C$1.83 billion, primarily due to a non-cash impairment of C$2.1 billion. Free cash flow rose 2% year over year, reaching C$545 million. Contentful
By what amount did management reduce its forecast for 2026?
Service revenue is now projected to be flat or decline by up to 2%, compared with the previous forecast of 2% to 4% growth. Adjusted EBITDA is anticipated to fall by 2% to 4%, reversing earlier expectations for a 2% to 4% increase. Free cash flow guidance has been reduced by C$650 million, moving from C$2.45 billion to C$1.8 billion. Guidance for capital expenditures has been raised by C$300 million, reaching about C$2.6 billion. Contentful
Has the 55% reduction made the dividend more secure?
The quarterly dividend is reduced to C$0.1875, totaling C$0.75 per year. At the C$13.28 share price, this results in a forward dividend yield of around 5.6%. With approximately 1.589 billion shares, total annual dividend payments amount to about C$1.19 billion. Free cash flow for the trailing twelve months was C$2.313 billion as of June 30, putting the revised dividend at about 52% of trailing free cash flow. This payout ratio falls within management’s updated target range of 45% to 60%. There is no longer a commitment to dividend growth. Telus
Is TELUS on track to achieve its leverage goal?
Net debt stood at C$25.963 billion, representing 3.5 times adjusted EBITDA. The leverage ratio was down from 3.7 times a year earlier. TELUS aims to reduce this to 3.0 times or less by December 2028, after previously targeting the end of December 2027. Dividend savings are expected to reach C$2.7 billion by the end of 2028. While asset disposals could contribute, weaker earnings and cash flow add uncertainty. Contentful
What level of exposure does TELUS have to interest expenses and refinancing risk?
Interest expense climbed 19% year-on-year in the second quarter, reaching C$448 million. The average rate on long-term debt edged up to 4.81%. Fixed rates applied to 88% of total long-term borrowings. Average long-term debt maturity stayed extended at 14.8 years. TELUS retained access to C$657 million through its revolving credit line. Its leverage ratio of 3.5 times continued to sit under the covenant cap of 4.25 times. While refinancing obligations are staggered, borrowing costs are rising. Contentful
Are the wireless and fibre businesses continuing to perform well?
Mobile network revenue climbed 1% from a year earlier to C$1.743 billion. Mobile average revenue per user dipped 0.4% to C$56.36. The blended mobile phone churn rate edged higher to 1.08% from 1.06%. Net mobile phone additions were 17,000, a fall of 38,000 from a year ago. Net internet additions totaled 20,000, 7,000 lower than the previous year. TTech adjusted EBITDA held steady compared to the prior year. The company's core business remains stable, but growth is subdued. Contentful
To what extent has the situation at TELUS Digital declined?
TELUS Digital posted a 10% decrease in external revenue from a year earlier, reaching C$654 million. Adjusted EBITDA dropped 20% versus the same quarter last year. The company booked a C$2.1 billion pre-tax, non-cash impairment charge related to Digital. Management pointed to reduced client activity and negative foreign-exchange impacts in the period. TELUS Health delivered stronger results, increasing revenue by 3% and adjusted EBITDA by 1%. Digital remains the most significant short-term risk to overall earnings. Contentful
What differences have emerged since TELUS appointed its new leadership team?
Victor Dodig took over as TELUS chief executive as of July 1, 2026, with Gopi Chande stepping in as chief financial officer on the same day. On July 31, the company reset its dividends, guidance, and capital allocation as part of a strategic package. The management team is assessing non-core assets, including TELUS Health and real-estate holdings, for potential sale. A comprehensive capital returns framework is expected alongside third-quarter results in November. Investors’ response to the strategy shift will be shaped by management’s execution. Telus
Which valuation and pricing levels appear justifiable at this point?
TELUS's market capitalization stood at roughly C$20.56 billion with shares trading at C$13.28. This reflects about 11.4 times the management's projected free cash flow of C$1.8 billion. With a dividend yield of 6.25%, the stock would be priced around C$12.00. A 5.0% yield would set the share price at approximately C$15.00, and a 4.5% yield corresponds to about C$16.67. This suggests a cautious C$12-to-C$17 range for the next twelve months. This is not an official analyst price target. Achieving the top of the range requires deleveraging, and further downward guidance could put the range at risk. Google
Iwona Majkowska is a financial markets journalist at TS2.tech, specializing in stocks, artificial intelligence and technology. A graduate of the Warsaw School of Economics, she previously worked in equity research and financial analysis before focusing on market reporting. Her daily coverage helps investors follow major developments across U.S. and global markets. Follow Iwona Majkowska on Google News.
