TELUS Q1 2025: Steady Earnings Amid Strategic Shifts and Customer Momentum

TELUS Corporation’s Q1 2025 earnings report paints a picture of resilience and strategic progress. Despite headwinds in certain segments, the telecom giant maintained its adjusted earnings stability while driving customer growth and unlocking value across its diversified portfolio. Here’s why investors should take notice.

Customer Growth Drives Operational Strength

TELUS added 218,000 net customers in Q1 2025, a 9,000 increase from the same period last year, marking its strongest first-quarter performance on record. The momentum is fueled by two pillars: mobile/connected devices and fixed services.

• Mobile & IoT: 20,000 new mobile phone subscribers and 148,000 IoT devices underscore TELUS’s push into emerging technologies. Its IoT portfolio now totals 3.9 million connections, a 21% year-over-year jump, reflecting demand for smart home, agriculture, and industrial solutions.
• Fixed Services: 50,000 net additions in internet, TV, and security/automation services offset declines in legacy voice products. Internet and TV connections grew 2% and 8%, respectively, while security/automation surged 5%, signaling adoption of next-gen home tech.

TELUS’s total TTech subscriber base now exceeds 20.3 million, with mobile phone subscribers hitting 10.1 million. This scale positions TELUS to capitalize on long-term service contracts and recurring revenue.

Financials: A Mixed Bag, But Strategic Wins Shine Through

Operating revenues rose 3% to $5.018 billion, driven by TTECH, TELUS Health, and TELUS Digital. However, segment performance was uneven:

• TTech: Adjusted EBITDA grew 3% to $1.841 billion, aided by cost efficiencies and asset sales. A 0.84% mobile churn rate—the 12th straight quarter below 1%—highlights retention excellence.
• TELUS Health: A star performer, with EBITDA surging 30% and revenue climbing 12% to $54 million. The acquisition of Workplace Options expanded its reach to 88 million employees globally, solidifying its position in health benefits and virtual pharmacy services.
• TELUS Digital: Adjusted EBITDA dipped 1% due to higher operational spending and lower provision reversals. However, revenue rose 4% to $1.027 billion, buoyed by new clients and foreign exchange gains—though Google and fintech account declines posed headwinds.

Net income jumped 115% to $301 million, while Basic EPS rose 133% to $0.21, reflecting lower financing costs and a higher share count. Meanwhile, consolidated free cash flow soared 22% to $488 million, a critical metric for funding dividends and growth.

Dividends: A Beacon of Stability

TELUS announced a 7% dividend hike to $0.4163 per share, extending its 14-year dividend growth streak. The dividend yield of ~8% remains among the highest in the sector. Looking ahead, the 2026–2028 dividend growth program targets 3–8% annual increases, backed by projected $2.15 billion in free cash flow by 2025 and a deleveraging strategy. With net debt/EBITDA trending toward a 3x target by 2027, TELUS is prioritizing financial flexibility while rewarding shareholders.

Strategic Moves and Risks

• Network Efficiency: Capital expenditures fell 19% to $587 million, as TELUS leans on partner-built fiber networks to expand 5G coverage to 87% of Canadians. This cost discipline contrasts with rivals’ heavy CapEx spending.
• Healthcare Dominance: TELUS Health’s standalone segment now serves 76.5 million healthcare lives, with global ambitions. Its $2.15 billion free cash flow target by 2025 reinforces its ability to fund acquisitions.
• Weaknesses: Mobile ARPU fell $2.18 to $57.13, due to competitive pricing and reduced overage fees. Fixed internet additions slowed, signaling saturation in traditional broadband markets.

Conclusion: A Solid Foundation for Long-Term Growth

TELUS’s Q1 results reflect a company balancing near-term challenges with long-term ambition. Its dividend resilience, customer momentum, and TELUS Health’s breakout performance position it to outperform in 2025 and beyond. Key data points reinforce this thesis:

• 30% EBITDA growth in TELUS Health and 20% revenue gains in Agriculture & Consumer Goods highlight diversification success.
• Free cash flow growth of 22% and $488 million in Q1 underscore operational health.
• A 7% dividend hike and 8% yield make TELUS a compelling income play, especially as peers face regulatory headwinds.

Investors should monitor execution risks, such as IoT adoption rates and TELUS Digital’s margin recovery. However, with a 3x net debt/EBITDA target and a $2.5 billion CapEx plan focused on high-return projects, TELUS is primed to deliver shareholder value. For those seeking stability in a volatile market, TELUS remains a buy-and-hold staple with room to grow.

This analysis synthesizes TELUS’s operational and financial metrics, emphasizing its strategic pivots and the durability of its income stream. The data points to a company leveraging scale, innovation, and prudent capital allocation to navigate industry shifts—and investors would be wise to follow suit.