TU — TELUS Corporation

TELUS Q2 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Customer Growth: Added 198,000 total customers, with 167,000 mobile and 31,000 fixed customer additions.
• Churn Rates: Postpaid mobile phone churn remained stable at 0.9%.
• EBITDA Growth: TTech (including TELUS Health) EBITDA grew by 4%, with adjusted EBITDA margin at 41.7%.
• Revenue: TELUS Health revenues increased by 16%, and adjusted EBITDA grew by 29%.
• Free Cash Flow: Increased by 11% to $535 million.
• Net Income: Adjusted net income was $342 million, with an EPS of $0.22.
• Capital Expenditures: Decreased by 2% to $2.5 billion, maintaining a capital intensity of 13%.

2. Strategic Updates and Business Highlights

• Investment in Broadband: Announced a $2 billion investment to expand broadband services in Ontario and Quebec.
• Tower Monetization: Formed a partnership with La Caisse to create Terrion, a tower infrastructure operator, monetizing TELUS' tower assets while maintaining operational control.
• TELUS Health: Continued strong growth with synergies from the LifeWorks acquisition exceeding initial targets.
• Product Differentiation: Focus on bundling services, including AI-driven solutions, health care, and smart home technologies, to enhance customer value.
• Sustainability Initiatives: Ongoing efforts in recycling and reducing greenhouse gas emissions through copper monetization.

3. Forward Guidance and Outlook

• 2025 Targets: Reiterated guidance for TTech operating revenue growth of 2-4% and adjusted EBITDA growth of 3-5%.
• Free Cash Flow: Targeting consolidated free cash flow of $2.15 billion for 2025.
• Leverage Goals: Aiming for a net debt-to-EBITDA ratio of 3x by 2027, with current leverage at 3.7x.

4. Challenges and Points of Concern

• ARPU Decline: Mobile ARPU declined by 3.3%, attributed to competitive pressures and lower overage and roaming revenues.
• Churn in Internet Services: Noted an uptick in churn rates, which management is addressing through enhanced customer engagement and pricing strategies.
• Impairment Adjustment: Recorded a non-cash impairment adjustment to goodwill, reflecting updated financial assumptions.
• Competitive Pressures: Ongoing competitive intensity in the market, particularly impacting pricing strategies and customer retention.

5. Notable Q&A Insights

• Strategic Shift: The decision to privatize TIXT is aimed at supporting deleveraging goals, with no broader implications for other tech ventures.
• Market Pricing: Management expressed cautious optimism about a potential return to rational pricing in the wireless market, driven by economic fundamentals.
• Tower Expansion: The partnership with Terrion will allow for the construction of new towers, funded through a mix of TELUS and partner capital, enhancing operational flexibility.
• AI Integration: TELUS is leveraging AI to improve operational efficiencies and customer service, with promising early results from AI-driven initiatives.
• Long-Term Growth: Management emphasized the importance of diversified growth across wireless, wireline, and emerging business segments, including health and IoT.

This summary encapsulates TELUS' performance and strategic direction for Q2 2025, highlighting both achievements and challenges as the company navigates a competitive landscape.