The Canadian telecom sector underwent an entire makeover as every part got here on the similar time. The technological improve to 5G, the transfer to digitization, and the consolidation of the 2 largest telecom operators, Rogers Communications and Shaw Communications. Whereas these had been deliberate and cyclical adjustments, the largest change was the introduction of Cellular Digital Community Operator (MVNO) guidelines by the telecom regulator. It shifted the aggressive panorama. Each telecom firm needed to restructure operations to regulate to the brand new norm. Whereas some resorted to dividend cuts, Telus Company (TSX:T) continued to pay buyers each three months and enhance the quantity by 3.5% each six months with out fail.
Telus recoups from the regulatory change
Even Telus took successful from the regulatory change because the MVNO rule pressured it and BCE (TSX:BCE) to provide MVNOs entry to their community at wholesale charges. So, whereas the 2 telcos spent billions of {dollars} on constructing the 5G infrastructure and shopping for spectrum licenses, MVNOs piggybacked on them to supply wi-fi providers.
This rule benefited Quebecor and Cogeco Communications as they might supply providers at a really aggressive worth. Telus and BCE struggled to match the value and took a margin hit. They lowered their capital expenditure and shifted focus to expertise options that aren’t part of the MVNO rule.
In July 2025, Telus gave Cogeco wholesale entry to its broadband wi-fi community in Ontario and Quebec.
You could assume there is no such thing as a level investing in BCE and Telus. However here’s a catch.
MVNOs which have been piggybacking on the massive telcos should construct their very own community someplace in Canada. It requires vital capital expenditure (capex), and MVNOs usually are not used to it. Since BCE and Telus have already got the widest community infrastructure, they’ll reduce capex whereas Cogeco and Quebecor enhance capex.
That is the purpose the place Telus and BCE will profit from bundled providers, which MVNOs don’t supply.
How Telus continued to pay buyers each three months
Amidst 5G investments and regulatory adjustments, BCE lowered its dividend and shifted its capital expenditure focus to the USA. It did in order it had been paying greater than 100% of its free money move (FCF) as dividends since 2021. With income falling and rates of interest rising, the corporate couldn’t maintain its dividends. Shareholders welcomed the dividend reduce because it addressed the elephant within the room of funding dividends from money reserves.
| Yr | Telus Dividend Payout Ratio | BCE Dividend Payout | BCE Leverage Ratio | Telus Leverage Ratio |
| 2024 | 81% | 125% | 3.8x | 4x |
| 2023 | 77% | 111% | 3.5x | 3.7x |
Among the many two telcos, Telus had manageable debt and dividends. Though it had excessive internet debt to earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA), its FCF stored rising, giving it some flexibility to extend dividends.
Telus is now trying to deleverage its steadiness sheet. The final two years elevated its debt as a result of 2023, 2023, and 2024 spectrum funds. With all of the funds behind it, the telco will cut back capex and gradual its dividend development to three–8% within the 2026–2028 interval to channel its money in direction of debt reimbursement.
The corporate has already introduced the dividend payout ratio according to its long-term vary of 60–75%. The following step is to deliver its leverage to its goal vary of two.2 instances to 2.7 instances from 3.7 instances on June 30, 2025. To this point, it’s aiming for a 3 instances ratio in 2027 and can step by step deliver it to the goal vary.
Telus will proceed paying buyers each three months
The basics are actually recovering, suggesting that the corporate could proceed to pay quarterly dividends and meet its goal of three–8% annual development. This goal displays the telecom business’s worth competitors and regulatory panorama.
