TELUS (NYSE:TU) used its fourth-quarter 2025 earnings call to outline leadership changes alongside operating momentum and an updated financial outlook that management said is supported by improving wireless trends, continued customer growth, and a multi-year plan to expand free cash flow and reduce leverage.
CEO transition announced
CEO Darren Entwistle opened the call by announcing he will retire from TELUS on June 30, 2026. Former CIBC CEO Victor Dodig is set to become chief executive effective July 1, 2026, with Entwistle staying on as an advisor to Dodig until May 2027. Entwistle said the transition follows a “robust succession planning process” and described Dodig as aligned with TELUS’ values around customers, culture, and community impact.
Customer growth and churn highlighted
- 716,000 connected device net additions (record)
- 207,000 mobile phone net additions
- 158,000 fixed net additions, marking the company’s 16th straight year of positive wireline net additions
Management emphasized customer loyalty as a differentiator, pointing to full-year postpaid mobile phone churn of 0.97%, which Entwistle said marked the 12th consecutive year below 1% and was up to 25 basis points better than peers.
In the fourth quarter, TELUS reported 377,000 total telecom customer net additions. Wireless net additions totaled 337,000, including 50,000 mobile phone additions and 287,000 connected device additions, which Entwistle characterized as an all-time quarterly record for the company. On the wireline side, TELUS posted 40,000 net additions, including 35,000 internet additions driven by its PureFibre offering.
Financial performance and 2026 guidance
Entwistle said TTech adjusted EBITDA (including health) increased 3.1% for 2025, within guidance, and that TELUS generated record free cash flow of CAD 2.2 billion for the year, up 11% from 2024 and above its annual target. He also reiterated an expectation for “double-digit free cash flow” growth through 2028, describing the multi-year outlook as foundational to TELUS’ plan.
CFO Doug French said fourth-quarter network revenue returned to positive growth while ARPU declines moderated. He noted ARPU declined 1.6% in the quarter, which he described as the strongest sequential improvement among peers, and said TTech adjusted EBITDA (excluding the impact of lower mobile equipment margin tied to lower contracted volumes) rose 2.7%. Free cash flow increased 7% in the quarter, which French attributed to higher operating performance alongside lower contracted volumes and lower cash restructuring.
For wireline, French said fixed data services revenue increased about 2% in the fourth quarter, helped by internet subscriber growth and higher internet ARPU. He noted declines in business fixed data revenue reflecting “revenue variability and customer contract changes,” partially offset by growth in small and medium business.
TELUS provided 2026 guidance that includes:
- Consolidated service revenue growth of 2% to 4%
- Consolidated adjusted EBITDA growth of 2% to 4%
- Capital expenditures of about CAD 2.3 billion (including real estate), described as roughly a 10% decrease
- Consolidated free cash flow of approximately CAD 2.45 billion (around 10% growth)
French said the free cash flow outlook reflects higher EBITDA and moderating capex, with stable impacts from contract assets, offset by higher interest and restructuring charges.
Health, Digital, AI initiatives, and cost efficiencies
Entwistle pointed to momentum in TELUS Health, citing “double-digit revenue and adjusted EBITDA growth” in the quarter, and said the company delivered CAD 431 million in LifeWorks annualized synergies, exceeding a CAD 427 million target. He broke the total into CAD 334 million of cost efficiencies and CAD 97 million of cross-selling revenue, and said the figure was nearly three times the original CAD 150 million synergy target set when LifeWorks was acquired in September 2022. He also said TELUS Health expanded to more than 161 million lives covered and highlighted a commercial initiative with M42’s Abu Dhabi Health Data Services as part of its international expansion. Entwistle added that TELUS has engaged financial advisors to explore strategic investment opportunities for TELUS Health.
French said TELUS Health operating revenues and adjusted EBITDA grew 13% and 10% in the quarter, respectively, attributing growth to the acquisition of Workplace Options and organic performance in Payer and Provider Solutions.
Following the privatization of TELUS Digital, management described a broader effort to accelerate enterprise-wide AI and data capabilities. Entwistle said AI-enabling capabilities revenue is targeted to grow from about CAD 800 million in 2025 to approximately CAD 2 billion in 2028 across TELUS Digital and TELUS Business Solutions, including contributions from “sovereign AI factories.” He said AI-enabling capabilities revenue rose 44% year-over-year to CAD 229 million in Q4 and increased 35% for the full year.
Management also discussed expected efficiencies tied to the TELUS Digital integration. Entwistle said TELUS expects annual cash synergies of about CAD 150 million to CAD 200 million, with approximately CAD 150 million expected to be realized in 2026. In Q&A, the company said it will re-segment reporting in Q1, with TELUS Digital focused on external customers while internal customer experience work will move back into telecom reporting, with restated comparatives.
Capital allocation, balance sheet, and competitive commentary
Entwistle said TELUS is reducing its dividend reinvestment plan (DRIP) discount to 1.75% from 2%, with further reductions planned through 2026 and 2027 and full removal in 2027. He said the company is maintaining the dividend at the current level until the share price and yield better reflect TELUS’ growth prospects. He put the prospective cash dividend payout ratio at about 70% and said resuming dividend growth would depend on maintaining that trajectory once the DRIP discount is fully removed, alongside free cash flow growth and achievement of deleveraging targets.
On leverage, Entwistle said TELUS ended 2025 at 3.4x net debt to EBITDA and expects to reach about 3.3x or lower by end of 2026 and 3x or better by end of 2027. He cited 2025 actions including hybrid debt issuance and a partnership involving La Caisse and Terrion, which he said reduced net debt by CAD 1.26 billion and improved the leverage ratio by about 17 basis points. French added that leverage improved from 3.9x at the end of 2024 to 3.4x at the end of 2025, and said the company completed multiple debt tenders that retired CAD 2.9 billion of outstanding debt securities. He reported average long-term debt maturity of about 14.7 years and a weighted average cost of debt of 4.75%.
In Q&A, TELUS executives described early-year wireless competition as more promotional, with Chief Customer Officer Zainul Mawji characterizing some market behavior as “irrational.” He said TELUS’ approach is to preserve premium brand economics by using flanker and prepaid brands to compete for value-oriented customers, while continuing to emphasize churn, network revenue, ARPU improvement, and cash flow. Mawji attributed ARPU trend improvements to steps that “redefined the premium,” including plan features and renewal “step up” activity, while saying the quarter’s progress was “organic.”
Executives also addressed questions about the CEO change and capital allocation, with Entwistle stating the board had unanimously approved a three-year strategic plan two months earlier and that he expects continuity across growth initiatives, capital allocation, and the deleveraging program.
About TELUS (NYSE:TU)
TELUS Corporation (NYSE: TU) is a Canadian telecommunications and technology company headquartered in Vancouver, British Columbia. It delivers a broad portfolio of consumer and business communications services across Canada, including mobile wireless, fixed-line voice, broadband internet, and television. TELUS also provides a range of enterprise services such as cloud and IT solutions, managed network services, cybersecurity and Internet of Things (IoT) offerings for business customers.
Beyond core connectivity, TELUS has expanded into health and digital services.
