TELUS (T) Q4 2025 earnings review
Record Volumes and Cash Flow, but Top-Line Stagnates
TELUS delivered a mixed Q4 2025. While the company achieved industry-leading customer growth (377k net additions) and record Free Cash Flow ($2.2B for FY25), headline metrics were soft. Consolidated revenue fell 2% YoY to $5.3B, driven by a sharp drop in equipment revenue and continued wireless ARPU compression. However, operational efficiency is doing the heavy lifting: TTech Adjusted EBITDA margins expanded 240bps to 40.9%. The 2026 outlook is constructive, forecasting a 10% jump in FCF to $2.45B as CapEx intensity moderates, alongside a major leadership transition with CEO Darren Entwistle set to retire in mid-2026.
🐂 Bull Case
The investment peak is firmly in the rearview mirror. 2026 guidance calls for a 10% reduction in CapEx to ~$2.3B. Combined with 2-4% EBITDA growth, this creates a clear path to the guided $2.45B in Free Cash Flow (+10% YoY).
Despite a revenue decline in the core TTech segment (-4%), Adjusted EBITDA actually grew (+1%) thanks to aggressive cost management and digitization. TTech margins expanded significantly to 40.9% from 38.5% a year ago.
🐻 Bear Case
Mobile Phone ARPU fell 1.6% YoY to $57.10. While management claims the decline is 'decelerating,' it remains a drag on service revenue. Competitive intensity in the Canadian market is neutralizing volume gains.
TELUS Digital (formerly TIXT) is struggling with profitability. While revenue grew 2%, Adjusted EBITDA fell 3.5% ($5M) due to higher salary costs. The expected efficiencies from privatization are not yet visible in the numbers.
⚖️ Verdict: ⚪
Neutral. The volume growth and FCF generation are impressive, but the lack of top-line growth and persistent ARPU erosion are concerning. The thesis relies entirely on cost-cutting and CapEx reduction rather than organic service revenue expansion.
Key Themes
TELUS Health Finally Scaling
Accelerating. After quarters of noise, TELUS Health is delivering clean growth. Revenue increased 13% YoY to $537M, and Adjusted EBITDA grew 10% to $96M. Synergies from LifeWorks are realizing faster than planned ($431M annualized vs target), validating the diversification strategy.
Mobile ARPU Erosion
Decelerating decline. Mobile Phone ARPU dropped 1.6% YoY to $57.10. While an improvement from the >3% drops seen earlier in 2025, the inability to pass through inflation or monetize 5G investments remains a structural headwind for the industry.
Deleveraging in Focus
Stable. Net Debt to Adjusted EBITDA ended 2025 at 3.4x, down from peaks but still above the target of 3.0x. The company reiterated its commitment to hit 3.3x by end of 2026. The 10% FCF growth guide is the primary mechanism for this deleveraging, alongside the completed Terrion tower partnership.
CEO Succession Announced
Darren Entwistle, CEO for 26 years, will retire on June 30, 2026. Victor Dodig has been appointed as the incoming CEO effective July 1, 2026. This marks a massive governance shift for a company that has been synonymous with Entwistle's leadership. The long transition period reduces immediate risk, but signals a new era approaching.
TELUS Digital Margin Compression
Reversing. Despite revenue growth of 2%, TELUS Digital Adjusted EBITDA fell 5% YoY. Margins contracted due to higher salary costs. Management highlights 'AI capabilities' generating $800M revenue, but if the bottom line is shrinking, the quality of this revenue is questionable.
Other KPIs
Accelerating. A standout metric. Up 240 basis points YoY. This confirms that the cost restructuring and digital enablement programs are effectively offsetting the revenue weakness.
Accelerating. Up 49k vs prior year. Driven by connected devices (+287k) and solid mobile phone adds (+50k). This volume growth is critical to defend against ARPU deflation.
Stable/Positive. Beat the guidance of 'approx $2.15B'. Represents 11% YoY growth. High quality result driven by lower device subsidies (financing) and CapEx discipline.
Guidance
Accelerating vs 2025 actuals (~1-2%). Implies management expects ARPU stabilization or significant contribution from Health/Digital segments to offset wireless drag.
Stable. Consistent with the service revenue growth, implying margins will remain roughly flat at these elevated levels rather than expanding further.
Accelerating. Implies 10% YoY growth. This is the key number for the dividend safety and deleveraging thesis.
Decelerating. Down from ~$2.5 billion in 2025. This reduction in capital intensity is the mathematical driver of the FCF growth.
Key Questions
Service Revenue Disconnect
You guided for 2-4% Service Revenue growth in 2026, yet 25Q4 total revenue was down 2% and mobile ARPU is still negative. What is the bridge to positive revenue growth next year?
Digital Segment Margins
TELUS Digital EBITDA margins compressed in Q4 despite the privatization and touted synergies. When will the cost savings from the take-private transaction actually hit the P&L?
CEO Transition Strategy
With Victor Dodig taking over in mid-2026, should investors expect a shift in capital allocation strategy, specifically regarding the dividend growth model vs. accelerated deleveraging?