Along with BCE and Rogers Communications, Telus is one of Canada's big three wireless carriers. Telus said Friday that the dividend reduction would leave approximately C$2.7 billion (US$1.9 billion) in its hands each year.
The cut comes under new CEO Victor Dodig, who is looking to repair the balance sheet. Dodig, who previously led Canadian Imperial Bank of Commerce, was chosen in February and succeeded longtime chief Darren Entwistle on July 1. After spending heavily on acquisitions and building out fiber and 5G networks, Telus is trying to bring its debt down.
Telus will pay 75 Canadian cents per share annually after reducing its dividend by 55%. Shares lost more than 12% on July 31, touching their lowest intraday level since November 2011.
TD Cowan analyst Vince Valentini said, "Both the dividend cut and the changes to 2026 guidance were worse than expected."
"Our focus is on disciplined execution and ensuring maximum returns on every dollar of capital we deploy," Dodig said.
The broader deleveraging effort is meant to give the company more flexibility after years of heavy spending. Telus is directing cash toward debt repayment and network priorities, and the asset-sale talks are part of the same plan.
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The dividend had become central to Telus's identity with investors under Entwistle. The company took on significant debt to expand its fiber-optic network, acquire wireless spectrum, and buy businesses across its ecosystem. As interest rates climbed, carrying that debt became more expensive, putting pressure on the company's finances.
Under Dodig, the emphasis has shifted from returning cash to shareholders to repairing the balance sheet. Because the debt load is the main constraint, the dividend cut and asset sales are designed to create more breathing room for network investment and future growth.
Service revenue is now expected to be flat to down 2%, compared with the earlier forecast of 2% to 4% growth.
Capital spending guidance was increased, while the free cash flow forecast was cut by 27%, to C$1.8 billion for the year.
The dividend cut marks a major shift for Telus, which had become known for consistently increasing its payout to shareholders. Dodig was brought in to tighten financial management. His decision to slash the dividend aligns with that mandate and resets expectations for income investors who had come to rely on Telus's payout.
Future capital spending will be focused on wireless and wireline networks, along with digital and AI infrastructure, the company said. A more detailed corporate strategy is expected in November.
A conference call with analysts and investors is scheduled for 12:30 p.m. New York time.
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