Telus provides free cash flow growth target, to step down discounted DRIP

Telus (TU) provided an updated mid-term outlook and further details of its capital allocation framework, including a new multi-year free cash flow growth target. In addition, Telus will systematically step down its discounted DRIP beginning in early 2026 and pause its dividend growth while continuing to pay its quarterly dividend at the most recent level of 41.84c per share. These actions augment Telus’ plan to reduce its net debt to EBITDA leverage ratio to approximately 3-times by the end of 2027. As of September 30, 2025, the Company’s leverage ratio improved to 3.5-times. The company expects further improvement to approximately 3.3-times by the end of 2026. Consistent with public targets, Telus expects to generate approximately $2.15B in free cash flow in 2025. For the subsequent three years, from 2026 through 2028, Telus expects to grow its free cash flow at a minimum 10% compounded annual growth rate. The preliminary target for free cash flow for 2026 is $2.4B, with capital expenditure target for 2026 at approximately $2.3B. Concurrently, Telus’ free cash flow projections translate into a cash dividend coverage ratio of approximately 75% of free cash flow on a prospective basis, for each of these three years. Telus plans a step down of its current discounted DRIP of 2% to a discount of 1.75% for dividends declared in February and May 2026, moving to 1.5%t for dividends declared in August and November 2026, and to 1% for dividends declared in 2027, with zero discount starting in 2028.