TELUS Q3 2026 Earnings: An $800 Million Health Write-Down Driven by the Sale Process
TELUS Corporation’s Q3 2026 earnings, released on Friday November 6 with the conference call that morning at 9:30 a.m. ET, put adjusted basic EPS at $0.16, a cent short of the $0.17 Yahoo Finance carried as the analyst consensus. Yahoo puts the surprise at negative 6.55%, a shade wider than the 5.9% the rounded figures give, because its unrounded estimate is nearer $0.1712. Adjusted basic EPS is TELUS’s own non-GAAP ratio, and Yahoo’s reported figure for the quarter is the same $0.16, so the two sit on the same basis. It was down 33% from $0.24. The figure underneath it was a basic loss per share of $0.42, against basic EPS of $0.32 a year earlier. TELUS (TSX: T) reports in Canadian dollars, and every figure here is Canadian.
Operating revenues and other income were $5,026 million, down 2% from $5,106 million.
Guidance held, unchanged on all four lines TELUS reaffirmed “as updated with its second quarter results on July 31, 2026”: service revenue growth of flat to negative 2%, Adjusted EBITDA growth of negative 2% to negative 4%, capital expenditures of approximately $2.6 billion and free cash flow of approximately $1.8 billion. Adjusted EBITDA growth and free cash flow are TELUS’s own non-GAAP measures. Two of the assumptions beneath the outlook moved a long way.
The shares closed that Friday at $12.81, down 2.88% from Thursday’s $13.19, on Yahoo Finance closing prices, while the S&P/TSX Composite rose 0.52%. BCE’s Q3 2026 results had landed the day before; BCE fell 0.84% and Rogers Class B fell 1.30%. TELUS went into the report up 10.0% in six sessions, from $11.99 on October 28 to $13.19 on November 5, so Friday gave back less than a third of that run.
The quarter beside its prior-year comparative
| C$ millions, except per share | Q3 2026 | Q3 2025 | change |
|---|---|---|---|
| Operating revenues and other income | 5,026 | 5,106 | (2%) |
| Total operating expenses | 5,274 | 4,364 | 21% |
| Net income (loss) | (660) | 431 | n/m |
| Net income (loss) attributable to common shares | (667) | 493 | n/m |
| Adjusted net income | 251 | 370 | (32%) |
| Basic EPS | $(0.42) | $0.32 | n/m |
| Adjusted basic EPS | $0.16 | $0.24 | (33%) |
| EBITDA | 1,549 | 1,753 | (12%) |
| Adjusted EBITDA | 1,760 | 1,862 | (5%) |
| Free cash flow | 396 | 611 | (35%) |
| Telecom subscriber connections (thousands) | 18,329 | 17,214 | 6% |
| Healthcare lives covered (millions) | 154.5 | 160.6 | (4%) |
From Consolidated financial highlights in TELUS’s Q3 2026 news release. Adjusted net income, adjusted basic EPS, EBITDA, Adjusted EBITDA and free cash flow are the company’s own non-GAAP measures.
TELUS has marked Health at a $2.6 billion recoverable amount
The Q3 2026 news release states the charge plainly: in the quarter TELUS “recognized a non-cash impairment of $800 million relating to TELUS Health, as the recoverable amount of the TELUS Health cash-generating unit was less than its carrying amount as at September 30, 2026.”
The company names three contributors, not one. Its highlights bullet attributes the charge to “a reduction in the recoverable amount of the TELUS Health cash-generating unit due to updated growth expectations, broader market conditions and valuation update within the health portfolio as a result of the active divestiture process.”
Note 18(b) of the interim consolidated financial statements has the numbers behind that sentence. During the quarter TELUS “informed the TELUS health cash-generating unit recoverable amount by the active programme to identify potential strategic partners for our TELUS Health business”, and in turn “determined it necessary to downward adjust the growth projections in the projection period used for our impairment testing so as to reflect current economic conditions and updated historical information”. The September 30 test used an estimated recoverable amount of $2.6 billion and produced “an irreversible goodwill impairment of $0.8 billion”. The discount rate behind it was 9.0%, against 8.0% at December 31, 2025, the perpetual growth rate was unchanged at 2.5%, and the projection period now runs to the end of 2030 rather than 2029. A higher discount rate, lower growth projections and the sale process feeding the estimate, all inside one valuation. Our guide on how to read financial statements sets out where goodwill, a recoverable amount and a cash-generating unit each sit in a filing.
What the write-down did not do is change what the business earned. TELUS Health’s EBITDA was $77 million against $85 million and its Adjusted EBITDA $92 million against $97 million, both company measures. Health services revenue rose $11 million, on retirement and benefits solutions and payor and provider solutions, offset by a decline in employer solutions. Healthcare lives covered fell 6.1 million, “mainly reflecting churn in our employee and family assistance programs”. Segment EBIT, which carries the impairment, was negative $831 million against negative $41 million.
Operating income by quarter, from the Summary of quarterly results in TELUS’s Q3 2026 MD&A, printed page 15 of 55. The three impairment quarters are labelled.
One caution on every segment comparative above: the 2025 segment columns in this release carry the footnote “2025 results have been restated”, following the October 2025 privatization of TELUS Digital.
The nine months carry a second write-down, in a different segment
Over nine months TELUS reported a net loss of $2,346 million, against net income of $487 million. The quarter’s $660 million loss is less than a third of it.
The operating expenses table in the Q3 2026 MD&A prints impairment of intangible assets and goodwill of $800 million for the quarter and $2,935 million for the nine months, against nil and $500 million a year earlier. The narrative beside it: “In the second quarter of 2026, we recorded a $2.1 billion impairment related to the TELUS digital experience cash-generating unit.” The nine-month segment split puts $2,135 million against TELUS Digital and $800 million against TELUS Health, with the prior year’s $500 million against Digital as well. The $2.9 billion is not a health number.
Financing costs were $376 million against $154 million, and almost none of that $222 million jump is a bigger interest bill. The 2025 quarter carried a $222 million gain on purchase of long-term debt, netted against financing costs, that has not repeated, and foreign exchange gains were $62 million lower this year. On the basis TELUS prints in its own eight-quarter table, financing costs before that gain and the prior year’s $48 million prepayment premium were $376 million against $328 million. Gross interest on long-term debt fell in the quarter, to $318 million from $331 million, down 4%. Two measures do show the cost of the debt rising: the weighted average interest rate on long-term debt was 4.84% at September 30, 2026 against 4.61% a year earlier, and gross interest across the nine months was $973 million against $921 million, up 6%.
Strip the charges out and TELUS’s own reconciliation runs from the $667 million net loss attributable to common shares to adjusted net income of $251 million, each line net of the amount attributable to non-controlling interests: restructuring and other costs add $210 million and their tax effect takes off $48 million; the impairment adds $800 million and its tax effect takes off $15 million; income tax-related adjustments take off $30 million and real estate rationalization impairments add $1 million. The $210 million is the part worth pausing on, because it is a cost TELUS is incurring now and the next section is about it. On the nine months the same reconciliation gives adjusted net income of $861 million against $1,100 million, and adjusted basic EPS of $0.55 against $0.72.
What the transformation costs while it is being delivered
TELUS announced its Transformation Strategy in July 2026 on three priorities: “strengthen our financial foundation”, “hone our operational discipline and control costs”, and “deploy resources to drive profitable and sustained growth and returns”. What these results add is a figure on each side of it.
On the benefit side, an efficiency program targeting “annualized cash savings of approximately $900 million exiting 2028”, from operational cost and margin improvements and capital efficiency. Approximately 80 per cent is to come from core Telecom and the balance from the Global Platform Businesses. Victor Dodig, President and Chief Executive Officer, said the program “will support balance sheet deleveraging and sustainable profitability for the long term”.
On the cost side, restructuring and other costs in the quarter were $211 million against $109 million, which the MD&A prints as a 94% increase, in the same quarter Adjusted EBITDA fell 5%. Over nine months restructuring is $715 million against $339 million, attributed by the MD&A to the same efficiency programs plus “costs associated with the privatization of TELUS Digital”. Across the eight quarters the MD&A prints, it peaked at $315 million in the first quarter of 2026 and has eased since to $189 million and $211 million, roughly double last year’s quarterly rate but past its peak rather than climbing toward one.
Restructuring and other costs against Adjusted EBITDA, both TELUS measures, from the Summary of quarterly results in TELUS’s Q3 2026 MD&A, printed page 15 of 55.
Free cash flow of $396 million is the lowest of the eight quarters that table covers, and the only reading below $488 million, on our arithmetic across those eight quarters. The MD&A gives the reason: free cash flow “decreased by $215 million in the third quarter of 2026, largely driven by lower EBITDA and increased capital expenditures”. Capital expenditures were $701 million, up 8%.
Guidance held while two assumptions beneath it moved
Restructuring and other costs: revised to approximately $900 million from approximately $500 million, “a result of expanded operational effectiveness programs to support EBITDA and cash flow growth”, with total cash restructuring and other disbursements of approximately $650 million from approximately $450 million.
Cash income tax payments: revised downward to approximately $190 million to $290 million from approximately $540 million to $620 million, which TELUS attributes to higher refunds received, Canadian Bill C-15 receiving royal assent on March 26, 2026, and “lower required income tax instalments attributable to lower income before income taxes”. Part of the cash tax relief helping this year’s free cash flow comes from earning less.
On TELUS Digital, while it anticipates continued scaling of AI-enabling services, “albeit at a slower pace and scale, this is not expected to offset demand ramp-downs and more pronounced churn in legacy services provided to certain hyperscale customers as these services are being automated faster than anticipated.” Digital revenue fell $75 million in the quarter and the segment’s EBITDA came in at $1 million against $30 million. Its Adjusted EBITDA was $62 million, the gap being $61 million of restructuring added back.
The dividend at the new rate, and the gap to 3.0 times
On November 5, 2026, the day before the results, the Board declared a fourth-quarter dividend of $0.1875 per share, payable January 4, 2027 to holders of record at the close of business on December 11, 2026. The MD&A sets it against “the quarterly dividend of $0.4184 per share declared one year earlier”, which is 55.2% lower on our arithmetic.
Annualised at $0.75 against the $12.81 close, the new rate is a forward yield of 5.85%, our arithmetic on the declared rate and the Yahoo Finance close of November 6. Where that leaves TELUS beside other Canadian payers is the subject of our high-yield Canadian dividend stocks ranking. Its own trailing payout measure, dividends declared over the most recent four quarters net of reinvestment effects over free cash flow, was 75% at September 30, 2026, against an objective range of 45 to 60%.
Free cash flow and dividends declared per common share by fiscal year, from the Consolidated highlights table in each year’s own TELUS MD&A, Exhibit 99.4 to that year’s Form 40-F.
Capital expenditures fell every year across that span, from $3,498 million to $2,566 million. The 2026 nine months break the run: free cash flow was $1,524 million against $1,634 million, down 7%, with full-year guidance of approximately $1.8 billion against the $2,208 million of 2025.
Net debt to EBITDA excluding restructuring and other costs was 3.6 times at September 30, 2026, against 3.5 times a year earlier and an objective range of 2.5 to 3.0 times, which the MD&A calls “outside of the objective range, primarily due to the current and prior period acquisition of spectrum licences… and businesses.” The commitment is 3.0 times or lower by year-end 2028, through “operational improvements, asset monetization, and disciplined capital allocation”.
Both halves of that ratio are printed. Over the twelve months to September 30, net debt was $25,981 million against $25,663 million, up $318 million or 1.2%, while the denominator, EBITDA excluding restructuring and other costs, fell $140 million to $7,213 million. The drift is as much earnings as borrowing.
TELUS also publishes what sits inside the reading: “As at September 30, 2026, the acquisition of spectrum licences increased the ratio by approximately 0.6, while the junior subordinated notes equity credit decreased the ratio by approximately 0.5 and equity issued by our Terrion subsidiary to a non-controlling interest decreased the ratio by approximately 0.2.” Add the last two back and the 3.6 reads about 0.7 of a turn higher, on our arithmetic over the company’s own approximations.
That is what monetization is for: the near-term priority is TELUS Health and TELUS Agriculture & Consumer Goods, with proceeds directed toward debt reduction. Gopi Chande, Chief Financial Officer: “Together with the dividend reset, and removal of the DRIP discount that we announced in July, coupled with our active asset monetization program, our plan creates a clear path to achieving our net debt to Adjusted EBITDA leverage target of 3.0-times or lower by year-end 2028.”
What the quarter leaves a holder with
Core telecom is the part that improved in the quarter. Mobile phone churn of 1.01% was an improvement of 10 basis points, which the release calls a three-year low, and ARPU was $57.22 against $57.21. Over the nine months both lines run the other way: churn of 1.14% against 1.07%, and ARPU of $56.71 against $56.97, down 0.5%. Mobile phone net additions of 84,000 were up 2,000, which the release attributes to the lower churn, while gross additions of 395,000 were down 24,000 “driven by a greater emphasis on premium and profitable loading”. TTech Adjusted EBITDA fell 5%, or 1% excluding prior-period real estate gains and operating expense reductions.
The 6% rise in connections in the table above is mostly not phones. Mobile phone subscribers were up 1% to 10,419,000 and internet up 2% to 2,838,000, while connected devices rose 22% to 5,072,000 and supplied 914,000 of the 1,115,000 increase. That base is on a revised definition that dropped TV, security and automation and residential voice subscribers from January 1, 2026, applied back to January 1, 2025.
Set against that, the Global Platform Businesses are where the recognised losses sit, and note 18(b) prints what is left to lose. TELUS Health carries $406 million of goodwill at September 30, 2026, against $935 million at December 31, 2025, and TELUS Digital carries nil, against $2,501 million. The same note records one test that produced nothing: TELUS retested TELUS Digital at September 30 on an estimated recoverable amount of $1.8 billion, and it “resulted in neither a further impairment nor a reversal of previously recorded impairment charges in respect of the TELUS digital experience cash-generating unit’s related customer relationships”.
Note 18(c) is direct about what remains in front of Health. If a sale of part of Health or Agriculture & Consumer Goods became highly probable, IFRS would require TELUS to treat the disposal group as its own cash-generating unit, reallocate goodwill to it and retest the newly defined units, and “depending on the disposal group and proceeds of sale, this could result in a further impairment.”
So the holder’s question is not really about the quarter. The dividend is at its reset rate with the payout ratio above the company’s own objective range, the efficiency program is announced and not yet earned, and six tenths of a turn of leverage has to come off by the end of 2028.
What follows is our arithmetic on TELUS’s own figures. The $2.6 billion recoverable amount is a valuation struck for an accounting test, not a price, and not proceeds after tax or transaction costs. Apply every dollar of it to the $25,981 million of net debt, which is the direction the CFO’s quotation points and is still an assumption, and the ratio falls from 3.60 times to about 3.24. But a sale takes the earnings with the debt. TELUS Health’s Adjusted EBITDA was $284 million over the first nine months of 2026 against $279 million restated, which is roughly $380 million a year on our annualisation of those nine months. That figure is on the same basis as the denominator: TELUS prints “EBITDA – excluding restructuring and other costs and Adjusted EBITDA” as a single combined row for these periods, so the segment number and the ratio’s denominator are the same measure. Take it out of the $7,213 million denominator as well and the ratio comes back to about 3.42.
At the company’s own mark, in other words, a Health sale moves leverage by under two tenths of a turn against the six tenths that need finding. That does not make the sale unimportant; it makes the operational half of the commitment the larger half. This quarter established what the write-down was and what the asset behind it is carried at. It did not establish that the asset is the answer to the leverage target.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Company figures are TELUS Corporation’s own for the three and nine months ended September 30, 2026, from its Q3 2026 news release of November 6, 2026, its Q3 2026 Management’s discussion and analysis and its Q3 2026 unaudited interim consolidated financial statements, with the document and page cited at each use. The release carries no page numbers and is cited by its own visible table labels. The five-fiscal-year series is taken from the Consolidated highlights table in each fiscal year’s own annual MD&A, Exhibit 99.4 to that year’s Form 40-F, rather than from a single restated source. TELUS reports in Canadian dollars. Adjusted net income, adjusted basic EPS, EBITDA, Adjusted EBITDA and free cash flow are non-GAAP measures of TELUS’s own. The analyst consensus for the quarter and every share price are Yahoo Finance data, labelled as such. Figures described as our arithmetic are our own calculations on published figures: the size of the dividend reset, the forward yield on the reset rate, the distance from the 52-week high and low, the year-over-year change in restructuring costs and the position of the quarter’s free cash flow within the eight quarters the MD&A prints.
