Telus Hold Rating: Mixed Q3 Performance and Cautious Growth Outlook

Analyst Aravinda Galappatthige of Canaccord Genuity maintained a Hold rating on Telus, retaining the price target of C$21.00.

Aravinda Galappatthige has given his Hold rating due to a combination of factors related to Telus’s recent financial performance. The company’s Q3 results showed a lower-than-expected growth in adjusted EBITDA, which only increased by 1% compared to the anticipated 3.5%. This shortfall was primarily attributed to underperformance in the TELUS Digital segment. Although the formal guidance for fiscal 2025 remained unchanged, management indicated that the operating revenue for TTech, including Health, would likely be at the lower end of the guidance range due to decreased mobile phone equipment revenue.
Additionally, while TELUS Health showed strong growth with a 24% increase in adjusted EBITDA, the wireless segment experienced a decline in service revenue growth and a slight increase in mobile phone churn rate. The wireline segment also faced challenges, with internet net additions exceeding expectations but TV net additions and fixed data services revenue falling short. These mixed results, along with the company’s balance sheet leverage ratio of 3.5x, contribute to the Hold rating, as they suggest a cautious outlook on Telus’s ability to meet growth expectations in the near term.