TELUS' Debt Reduction Efforts: Tower Sale and Hybrid Issuance.

TELUS has sold its tower business and issued hybrids to reduce debt. The move is part of the company's efforts to address its financial challenges. Despite decent results, TELUS was rated a "hold" due to ongoing issues.

TELUS Corporation (TSE: T) has recently undertaken significant financial restructuring measures to address its debt burden and fund growth plans. The company has sold its tower business and issued hybrid securities, moves that are part of its broader strategy to improve its financial health.

Tower Sale to CDPQ

TELUS sold a minority stake in its nationwide cellphone tower network to the Caisse de dépôt et placement du Québec (CDPQ) for $1.26 billion. The deal, which will see the creation of a new company called Terrion, is expected to be completed by the end of September. This transaction is part of a broader trend among Canadian telecom companies to sell assets to reduce debt and fund growth plans [1].

Terrion will become the country's largest dedicated wireless tower operator, with approximately 3,000 towers across British Columbia, Alberta, Ontario, and Quebec. The agreement includes a long-term lease with Telus, which will continue to use the towers for an initial period of eight years. This lease also includes renewal options, suggesting a long-term partnership between Telus and CDPQ.

Hybrid Issuance

In addition to the tower sale, TELUS has also issued hybrid securities. These instruments combine the features of both debt and equity, allowing the company to raise capital while providing flexibility in its capital structure. This move is part of TELUS's broader strategy to reduce its debt-to-equity ratio and improve its financial position.

Financial Implications

The sale of Telus' towers and the issuance of hybrid securities are part of an industrywide push to sell assets and reduce debt. Telus had $25 billion in long-term debt as of March, and the proceeds from these transactions will be used to pay down some of this debt. This move is expected to improve TELUS's debt-to-equity ratio and enhance its financial flexibility.

Analyst Ratings and Earnings Forecasts

Despite these positive financial moves, TELUS has been rated a "hold" by many analysts. Desjardins recently reduced their Q3 2025 EPS estimates for TELUS, anticipating earnings of $0.24 per share, down from their previous estimate of $0.26. The consensus estimate for TELUS's current full-year earnings is $1.23 per share. Several other analysts have also issued varying target prices and ratings for the company [2][3].

Conclusion

TELUS's sale of its tower business and issuance of hybrid securities are strategic moves aimed at addressing its financial challenges. While these moves are expected to improve TELUS's financial position, ongoing legal challenges and petitions to the federal cabinet regarding its market expansion plans may impact its future prospects. Investors should closely monitor these developments and the company's earnings performance.

References

[1] https://www.ainvest.com/news/canada-telecom-competition-puzzle-competitors-save-day-2508/
[2] https://www.marketbeat.com/instant-alerts/desjardins-issues-pessimistic-forecast-for-telus-earnings-2025-08-06/
[3] https://www.marketbeat.com/instant-alerts/research-analysts-issue-forecasts-for-telus-fy2025-earnings-2025-08-07/