Telus Corporation 2026 Q2 Earnings Call

Please go ahead. Thank you, Carl.

Hello, everyone. Thank you for joining us. Our second quarter 2026 news release, MD&A, financial statements, and detailed supplemental investor information were posted on our website earlier this morning. Today's agenda will include opening remarks from Victor Dodig, TELUS President and Chief Executive Officer, and Gopi Chande, our Executive Vice President and Chief Financial Officer. After the presentation, there will be a question and answer period, followed by brief closing remarks by Victor. Turning to slide two. Prepared remarks, slides, and answers to questions contain forward-looking statements. Actual results could vary from these statements. Additionally, please note that all dollar amounts referenced today are in Canadian dollars, unless otherwise stated.

The assumptions on which they are based and the material risks that could cause them to differ are outlined in our public filings with securities commissions in Canada and the United States, including our Q2 2026, and 2025 annual MD&A. With that, let me turn the meeting over to Victor, beginning on slide three.

Thank you, Ian. Hello, everyone. Thank you for joining us on today's earnings call, which is my first as President and CEO of TELUS. I'm excited to be here. I look forward to working with all of you. I want to start by recognizing Darren Entwistle. Over the past 26 years, together with our team, Darren built the network, the culture, and the foundation of our company. We are grateful for his service and the impact that he's had. For those of you who are new to TELUS or are new to me, let me provide a brief background for context. Prior to joining TELUS as CEO, I was President and CEO of CIBC for 11 years. Before my planned retirement in October 2025, I spent over 20 years with the bank, leading businesses and gaining financial and operational experience.

Working for and leading CIBC has given me a deep understanding and appreciation for customer service excellence, managing in highly regulated industries, building a collaborative culture, and nurturing the strategic plan, talent, and execution discipline required to transform an organization. In addition, I've served as a director of the TELUS board for three years, which has provided the on-ramp to shepherd the work we need to do here going forward. Please turn to slide four. Today, I will discuss how we're accelerating the TELUS transformation and driving progress with intentionality and with speed to deliver improved performance. The plan which I will outline will see us build on our strong foundation. We will drive financial discipline. We will simplify our business. We will restore balance sheet strength.

We will drive greater operational discipline, we will focus investments in our core telecom business and digital infrastructure, which are our crown jewel assets. All of this to ensure that TELUS is in the best position to deliver sustained value to our customers, opportunity for our team members, and returns to our shareholders over the long term. These guiding principles of focus, of simplicity, and of discipline are central to our plan. Importantly, our second quarter 2026 results and our 2026 guidance update underscore a company that's in active transition, leveraging our strengths and addressing challenges to position TELUS for long-term success. Gopi will cover our performance and outlook in greater detail later on in the call. Turning to slide five. To support our plan, we made strategic changes to our executive leadership team and organizational structure.

First, I'm excited to be joined by our new CFO, Gopi Chande, who's right here in the room with me as we execute together on our transformation and deliver value for all our stakeholders. Further, as you saw last week, I'm also very pleased to welcome Dave Fuller back to TELUS, now as Executive Vice President and Group President of Communications. Dave brings 25 years of telecom industry experience, including 15 years at TELUS, in a number of senior executive roles across both our business and consumer organizations. Dave will lead our newly established telecom business, which will be known as TELUS Communications, that brings together our consumer and business solutions teams under a single accountable leader. This structure is designed to simplify decision-making, to sharpen our operational focus, and to accelerate execution against our priorities. I look forward to working closely with Dave in the years ahead.

Navin Arora, now as Executive Vice President and Group President, will lead our global platform businesses, a portfolio that includes TELUS Digital, TELUS Health, and TELUS Agriculture and Consumer Goods. In addition, Navin will assume oversight of enterprise corporate strategy, corporate development, our AI data center strategy and execution, as well as TELUS Global Ventures, bringing together the strategic and financial discipline governing this portfolio together under one leader. These changes give us clear lines of accountability, a focused operator leading our core telecom business, and a disciplined steward managing our global platform portfolio. This is an important step as we set up to execute the priorities ahead with focus and with speed. As part of these changes, Zainul Mawji will depart TELUS September the 1st. Her numerous contributions to our company over the past 25 years are immeasurable, and we wish Zainul every success going forward.

Please turn to slide six. Now let me spend a few minutes and offer some initial observations about our business and current industry dynamics. This is really important context for the discussion on strategy that's going to follow. On the 1st of May, I joined the management team at TELUS as CEO designate. During the two months before becoming President and CEO on July the 1st, I worked alongside Darren and the rest of the leadership team to gain a deep understanding of our business from all angles, which surfaced important insights into our company and our operating environment. The inherent strength of our organization is undeniable. We have a true leadership position in our TELUS PureFibre network, sustained customer growth and loyalty, and we're advancing the next generation of AI-enabling capabilities.

We're investing in true nation-building infrastructure projects, including sustainable sovereign AI data centers that will support Canada's technological independence and drive economic prosperity. This foundation is strong, and it offers TELUS real opportunities for growth. Yet at the same time, we have challenges. While I'm mindful that our industry is inherently competitive, we're navigating macroeconomic headwinds, namely lower immigration, which is translating into lower demand for certain core products across all carriers. In addition, there's a need for greater simplicity at TELUS and a return to our roots. To that end, I see a real opportunity to focus on our core business, harness our technology, and encourage a culture of innovation and a culture of efficiency. I see the opportunity to further deepen our customer relationships, something our TELUS team is exceptional at, and double down on our competitive advantage here.

I see the opportunity to invest in the technology and infrastructure that will play a vital role in Canada's economic growth and prosperity at a critical moment for our country. Now, to be certain, our strategic plan is built on what we can control and execute on. With that backdrop, let me turn to our priorities going forward. Moving to slide seven. Today, we're introducing our transformation strategy, which comprises three financial and operational priorities. The first is to strengthen our financial foundation, which means getting our balance sheet to where it needs to be, so TELUS has the financial flexibility to invest, to return capital, and to operate from a position of strength. This includes a capital allocation framework that is sustainable and sets us up for long-term success.

The second is to hone our operational discipline, to control our costs, and to reinvest in our core business. This is about running our business with greater rigor and discipline and a sharp focus on efficiency and returns on deployed capital. This will continue to enable competitive advantage across our telecom business and digital infrastructure. The third priority flows from the first two. As we strengthen our financial foundation and hone our operational efficiency, we'll be in a better position to generate robust free cash flow and deploy resources to drive profitable, sustainable growth and returns to our shareholders over the long run. These three priorities will frame how I look at and how I talk about our performance going forward. We expect this plan to deliver minimum compounded annual free cash flow growth of 10% over 2027 and 2028.

This is a number I'm holding myself and our team accountable to. Let me walk through each of these priorities more specifically. If you would please turn to slide 8, I'll start with the first priority, which is to strengthen our financial foundation. First, fortifying our balance sheet is the prerequisite for everything else. We're carrying approximately 3.5 times net debt to adjusted EBITDA. Our updated target is 3 times or lower by the end of 2028, a commitment that we are confident in achieving. The dividend reset we announced today is a direct action to accelerate that path to lower debt. We expect approximately CAD 2.7 billion of cumulative cash savings from the dividend reset that we will use toward debt reduction. Specifically effective October 1, our quarterly dividend will be CAD 0.1875 per share, which represents CAD 0.75 per share annually, a reduction of 55%.