TELUS Slashes Dividend 55% as New CEO Victor Dodig Unveils Transformation Plan
Former CIBC chief targets debt reduction and operational discipline, promising minimum 10% annual free cash flow growth through 2028.
New Leadership Charts Course Correction
TELUS Corporation unveiled a sweeping transformation strategy on its second-quarter earnings call, with new President and CEO Victor Dodig announcing a 55% dividend cut and setting aggressive debt reduction targets as the $15 billion telecom pivots toward financial discipline.
Effective October 1, TELUS will reduce its quarterly dividend to $0.1875 per share from the previous level, representing an annual dividend of $0.75 per share. The company expects "approximately $2.7 billion of cumulative cash savings from the dividend reset that we will use toward debt reduction" (earnings call, 2026-07-31).
Dodig, who joined TELUS on July 1 after 11 years leading CIBC, told analysts this marks his first earnings call as CEO and outlined three core priorities: strengthening the financial foundation, honing operational discipline, and generating sustainable free cash flow growth.
Debt Reduction Takes Priority
The Vancouver-based telecommunications company is carrying approximately 3.5x net debt to adjusted EBITDA and has set a new target of "3x or lower by the end of 2028," Dodig stated. The company also announced a new dividend payout ratio target of 45% to 60% of trailing 12-month free cash flow, replacing its previous policy.
TELUS is terminating the discount on its dividend reinvestment plan effective October 1, which Dodig said "served a clear purpose during the peak of our network build" but is "no longer necessary" as free cash flow grows.
The company has also implemented "a moratorium on acquisitions" until it reaches its targeted leverage level, according to the earnings call.
Organizational Restructuring Underway
Dodig announced significant executive changes, including the appointment of Gopi Chande as CFO and the return of Dave Fuller as Executive Vice President and Group President of a newly unified TELUS Communications division combining consumer and business units. Navin Arora will lead global platform businesses including TELUS Digital, TELUS Health, and TELUS Agriculture & Consumer Goods.
The CEO acknowledged both strengths and challenges facing the company, citing "macroeconomic headwinds" and "lower immigration, which is translating into lower demand for certain core products across all carriers."
Free Cash Flow Growth Target
Dodig committed to delivering "minimum compounded annual free cash flow growth of 10%" over 2027 and 2028, calling it "the number I'm holding myself and our team accountable to."
While capital expenditure is "going up slightly due to supply chain dynamics and inflation as well as an incremental strategic investment in our infrastructure," the company maintains its commitment to a "multiyear 10% capital intensity target," Dodig said.
The company is conducting "extensive work" on cost structure optimization, with Dodig promising to "provide a detailed overview of the scope of this work on or before our third quarter earnings call in November."
TELUS shares closed at C$13.38 prior to the earnings announcement. MarginX data shows the company's next dividend payment of $0.1875 is scheduled for September 10, 2026.
This article was generated by MarginX from the earnings call on 2026-07-31. It is not investment advice.