TU — TELUS Corporation

TELUS Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Customer Growth: TELUS achieved 1.1 million net additions in mobile and fixed customers for 2025, including 377,000 in Q4 alone.
• Adjusted EBITDA: Increased by 3.1% for 2025, within guidance, with a margin expansion to 40.9% in Q4.
• Free Cash Flow: Reached a record $2.2 billion for the full year, an 11% increase from 2024, contributing to a forecast of double-digit growth through 2028.
• ARPU: Experienced a decline of 1.6% in Q4, but showed signs of stabilization and improvement compared to previous quarters.
• Churn Rate: Maintained an industry-leading postpaid mobile phone churn of 0.97% for 2025, marking the 12th consecutive year below 1%.

2. Strategic Updates and Business Highlights:

• Leadership Transition: Darren Entwistle announced his retirement effective June 30, 2026, with Victor Dodig appointed as the new CEO. Dodig is expected to maintain continuity in TELUS' strategic direction.
• TELUS Health Growth: Continued strong performance with double-digit revenue and EBITDA growth, driven by strategic investments and successful integration of LifeWorks.
• AI Initiatives: TELUS Digital reported a 44% increase in AI-enabling capabilities revenue in Q4, with a target to grow this segment from $800 million in 2025 to approximately $2 billion by 2028.
• Cost Efficiency: The company is focused on operational efficiencies, including a projected $150 million to $200 million in annual cash synergies from integrating TELUS Digital.

3. Forward Guidance and Outlook:

• 2026 Guidance: TELUS expects consolidated service revenue growth of 2% to 4%, adjusted EBITDA growth of 2% to 4%, and free cash flow of approximately $2.45 billion.
• Capital Expenditures: Projected to be around $2.3 billion, reflecting a decrease in CapEx intensity from 12% to approximately 10%.
• Deleveraging Strategy: Aiming for a net debt-to-EBITDA ratio of approximately 3.3x by the end of 2026 and 3x or better by the end of 2027.

4. Bad News, Challenges, or Points of Concern:

• Competitive Pressures: The wireless environment is becoming more promotional, leading to concerns about maintaining premium brand value and pricing discipline.
• ARPU Decline: While there are signs of stabilization, the ongoing decline in ARPU remains a concern, and any setbacks could impact revenue growth.
• Market Dynamics: Analysts expressed concerns about potential irrational pricing tactics within the industry that could undermine TELUS' premium positioning.

5. Notable Q&A Insights:

• CEO Transition Impact: Analysts inquired about potential changes in capital allocation or dividend policy with the new CEO. Management emphasized continuity in strategy and commitment to shareholder value.
• ARPU Improvement: Management confirmed the recent improvement in ARPU is organic and not influenced by unusual factors, indicating a positive trend moving forward.
• AI Strategy: The integration of AI capabilities is expected to drive cost efficiencies and enhance customer experience, with TELUS positioned as a leader in CX AI applications.

Overall, TELUS reported strong operational performance in Q4 2025, with significant customer growth and financial discipline, while navigating competitive pressures and preparing for a leadership transition. The outlook for 2026 remains positive, with a focus on sustainable growth and efficiency.