TELUS Targets CAD 900 Million Savings After Q3 Earnings Slide

TELUS (NYSE:TU) has committed to CAD 900 million in annualized cash savings by the end of 2028, a pledge that anchors an efficiency program announced alongside a weaker third quarter and a reaffirmed full-year outlook.

The Vancouver-based telecom reported consolidated service revenue down 1% year over year at CAD 4.5 billion. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) fell 5% to CAD 1.8 billion. President and CEO Victor Dodig said the savings plan combines cost reductions and capital efficiencies with asset sales and a potential investment partnership around the PureFibre network, with proceeds earmarked for debt reduction and investment in core telecom and Canadian artificial intelligence infrastructure.

What drove the earnings decline?

CFO Gopi Chande attributed the EBITDA drop primarily to weaker results at TELUS Digital and CAD 78 million of one-time items recorded in the prior-year quarter. Excluding those items, adjusted EBITDA fell 2%.

Free cash flow declined 35% to CAD 396 million on lower EBITDA and higher capital expenditures. Adjusted earnings per share slipped to CAD 0.16 from CAD 0.24. Basic EPS was negative CAD 0.42, reflecting a CAD 800 million non-cash goodwill impairment at TELUS Health.

Chande said the impairment reflected updated growth expectations, broader market conditions and valuation perspectives from ongoing strategic processes. She declined to value the business and cautioned against reading conclusions about individual asset values from the charge.

How does the savings math work?

The CAD 900 million target equates to a monthly run rate of CAD 75 million in December 2028, multiplied by 12, Chande explained. Roughly 80% of benefits should come from telecom operations, with the remainder from global platform businesses. TELUS expects to invest about CAD 150 million to reach the target, primarily in capital expenditures and weighted toward the early phase of the program.

The split between benefit categories shifted during the call. Chande initially described savings as roughly evenly divided between capital expenditures and EBITDA. David Fuller, EVP and group president of TELUS Communications, later said EBITDA-enhancing initiatives, mainly operating expense reductions, would account for closer to 55% of the target.

Actions already taken, including shifting home security and TV offerings to a capital-light model, should deliver approximately CAD 250 million in structural cash savings, predominantly capital-related, with the full run rate beginning in 2027. That figure sits within the broader target.

Leverage remains the central constraint. Net debt-to-adjusted EBITDA stood at 3.6 times at the end of September, up from 3.5 times a year earlier. TELUS reiterated its goal of 3 times or less by end-2028 and reaffirmed a quarterly dividend of CAD 0.1875 per share, following the dividend reset announced with second-quarter results.

Which assets are on the block?

Dodig said TELUS is prioritizing its Health and Agriculture & Consumer Goods businesses in non-core asset monetization. One Health asset is in advanced discussions with a prospective buyer, and a process for another Health asset begins this month.

On the PureFibre network, TELUS is in early discussions with potential partners about unlocking equity value. Fuller said the company intends to retain control and is not contemplating a sale of the entire asset. Dodig added that TELUS sees an opportunity to build fiber to more than one million homes in Ontario and Quebec, subject to available resources.

What is the AI infrastructure play?

TELUS projects approximately CAD 500 million in cumulative digital infrastructure revenue over the next three years, subject to market factors. Navin Arora, EVP and group president of Global Platform Businesses, said the estimate covers connectivity for other operators' data centers and expansion of TELUS's existing facilities, but excludes a third initiative involving potential powered data center shells.

Dodig said TELUS has secured 38 megawatts of power across its sites, to be brought online through the end of 2028. Arora said GPU capacity expansion will match signed customer contracts.

What did the core telecom business deliver?

In the TTech segment, service revenue rose 1% to CAD 3.3 billion while adjusted EBITDA fell 5% to CAD 1.6 billion. Mobile network revenue grew 1%, and TELUS added 84,000 mobile phone subscribers on a net basis. Blended mobile phone churn improved to 1.01%, the lowest quarterly result in three years.

Fuller said net additions came from improved retention rather than more aggressive pricing. Internet net additions totaled 10,000, as Chande said the company prioritized margins and capital efficiency over subsidized volume.

For 2026, TELUS reaffirmed guidance of flat-to-2%-lower service revenue, adjusted EBITDA down 2% to 4%, capital expenditures of approximately CAD 2.6 billion and free cash flow of approximately CAD 1.8 billion. The company will publish its 2027 outlook with fourth-quarter results in February.