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Introduction & Market Context
TELUS (NYSE:TU) Corporation (TSX:T) reported its second quarter 2025 results on August 1, revealing a mixed performance that saw solid customer growth and revenue increases, but an earnings per share miss that triggered a market reaction. The company’s stock fell 2.78% to close at CAD 21.70 following the announcement, reflecting investor concerns over the EPS shortfall despite several positive developments.
The telecommunications giant reported consolidated operating revenues of CAD 5.0 billion, representing a 3% year-over-year increase, while adjusted EBITDA grew by a modest 1% to CAD 1.8 billion. However, the company’s earnings per share of CAD 0.22 fell short of analyst expectations of CAD 0.2314, resulting in a 4.93% negative surprise.
Quarterly Performance Highlights
TELUS demonstrated strong customer growth in Q2, adding 198,000 total customers across its various services. The company maintained industry-leading postpaid mobile phone churn of 0.90%, reflecting its continued focus on customer retention.
In the mobility segment, TELUS added 55,000 mobile phone net additions and 112,000 connected device net additions. However, mobile phone average revenue per user (ARPU) declined by 3.3% year-over-year to $56.58, indicating pricing pressure in the competitive Canadian wireless market.
As shown in the following mobility operating results:
The fixed services segment also showed positive momentum with 31,000 total net additions, including 27,000 internet, 12,000 TV, and 9,000 security and automation net additions, partially offset by 17,000 residential voice net losses. The company attributed this growth to its "superior product portfolio and world-leading PureFibre network technology."
The fixed operating results demonstrate this growth trajectory:
Detailed Financial Analysis
TELUS Technology Solutions, the company’s core business segment, reported relatively flat operating revenues at $3.8 billion, with mobile network revenue up 1% to $1.7 billion and fixed data services revenue increasing 3% to $1.2 billion. Adjusted EBITDA for this segment grew by 3% year-over-year to $1.6 billion.
The financial performance of TELUS Technology Solutions is illustrated here:
The standout performer was TELUS Health, which continued its impressive growth trajectory with external revenues increasing 16% to $517 million and adjusted EBITDA surging 29% to $91 million. The company significantly expanded its healthcare coverage to 157.1 million lives, an increase of 82 million year-over-year, largely due to the Workplace Options acquisition.
The strong performance of TELUS Health is highlighted in these results:
Meanwhile, TELUS Digital Experience showed mixed results with external revenues growing 2% to $722 million, but adjusted EBITDA margin declining 5.3 percentage points year-over-year to 13.7%. The company noted that "TELUS Digital continues to see stabilization in performance, with quarterly results in line with expectations."
On a consolidated basis, TELUS reported free cash flow of $535 million, representing an 11% increase year-over-year, while capital expenditures decreased by 2% to $657 million.
The consolidated financial results are summarized here:
Strategic Initiatives
A major highlight of the quarter was TELUS’s announcement of a transformative partnership with La Caisse, which will acquire a 49.9% interest in the newly formed wireless tower infrastructure operator Terrion for $1.26 billion. This deal values Terrion at over $2.5 billion and is expected to reduce TELUS’s net debt by approximately $1.26 billion, or by approximately 0.17x of its current leverage ratio.
The company described this as a "transformative partnership" that "unlocks significant TELUS shareholder value, accelerates our path to 3.0x net debt-to-EBITDA by 2027, and positions Canada as a world leader in wireless technology."
The details of this strategic tower monetization are outlined here:
TELUS also highlighted its $2 billion investment to expand PureFibre in Ontario and Quebec, reinforcing its commitment to network infrastructure development. The company noted that it is connecting over 3.5 million premises to leading fibre technology, with its 5G network now reaching over 88% of Canadians.
On the capital allocation front, TELUS declared a quarterly dividend of $0.4163 payable on October 1, 2025, representing a 7% year-over-year increase. The company is targeting annual dividend growth of 3-8% from 2026 through 2028, while simultaneously focusing on balance sheet deleveraging to reach 3x net debt to EBITDA by 2027.
The company’s capital allocation priorities are detailed here:
Forward-Looking Statements
Looking ahead, TELUS reiterated its 2025 financial targets, projecting TTech operating revenue growth (including TELUS Health) of 2-4% and adjusted EBITDA growth of 3-5%. The company expects consolidated free cash flow of approximately $2.15 billion and capital expenditures of approximately $2.5 billion.
The company’s leverage ratio stood at 3.7x as of June 30, 2025, down 0.2x from March 31, 2025, reflecting progress toward its deleveraging goal. TELUS maintains a strong liquidity position with available liquidity of over $6.1 billion and a weighted average cost of long-term debt of 4.71%.
TELUS’s 2025 financial targets are outlined here:
Despite the positive operational results and strategic initiatives, the market’s reaction to TELUS’s Q2 results suggests investors remain concerned about the company’s ability to translate revenue growth into earnings growth. However, the strong performance of TELUS Health and the strategic tower monetization deal provide potential catalysts for future value creation as the company continues to execute on its growth and deleveraging strategy.
Full presentation:
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