S&P Global Ratings cut Telus Corp's outlook to “Stable” and affirmed its BBB- issuer credit rating. The expected increase in leverage following a downward revision to the new management team's performance outlook was cited as the reason.
S&P Global Ratings reportedly changed Telus Corp's outlook from Positive to Stable and affirmed its BBB- issuer credit rating. The company's financial outlook was revised following the downward revision issued by Telus's new CEO.
The company's 2026 outlook calls for revenue to range from flat growth to a decline of 2%, while EBITDA is expected to decrease by 2–4%. Capital expenditure is expected to increase to C$2.26 billion. Free operating cash flow is expected to fall substantially to approximately C$1.8 billion, with leverage projected at approximately 4.0x at the end of 2026 and approximately 3.8x in 2027.
The rating agency cited intensifying competition in the wireless communications market and pressure on growth prospects in raising its previous threshold to 4.0x and setting out the conditions for a review of Telus's rating. It also referred to financial measures including a substantial dividend cut and the elimination of the DRIP discount.
Following the revision to the performance outlook, Telus's new CEO postponed achievement of the 3.0x target leverage ratio to 2028. Wireless ARPU across the industry is expected to come under pressure and subscriber growth to slow, with growth from 2026 through 2028 expected to be below previous assumptions. Broadband growth is expected to remain below 1% through 2028.
The rating agency pointed to the risk of a downgrade if interest-bearing debt to EBITDA exceeds 4.0x after S&P's review, while also indicating that an upgrade could be possible if debt reduction and deleveraging progress. An upgrade within the next 24 months is unlikely, although this could change depending on conditions.