TELUS Engages Advisors for Health Unit Monetization Amid Leverage and Regulatory Pressures

What happened

TELUS has hired TD Securities and Jefferies to explore monetization options for its TELUS Health business, which boasts a global footprint and reported $1.5 billion in operating revenue as of Q3 2025. This move aligns with the company's deleveraging efforts, as highlighted in the DeepValue report, which identifies a pending minority towers sale as critical for reducing net debt to EBITDA toward 3.0x by 2027. The report maintains a HOLD/NEUTRAL rating due to full valuation at ~34x P/E, regulatory risks from nationwide wholesale FTTP, and softer EBITDA trends. By targeting TELUS Health, management may be diversifying its balance sheet strategies beyond the towers sale, potentially accelerating financial improvement. However, this initiative could also signal underlying stress in core telecom operations, necessitating asset sales to support dividends and ongoing capital needs.

Implication

For investors, this step indicates TELUS is proactively addressing high leverage, with potential proceeds from TELUS Health sales offering a quicker path to debt reduction and dividend sustainability. Success could enhance credit metrics and provide a positive catalyst, slightly improving the risk profile. However, focusing on health unit monetization might distract from core execution priorities like open RAN rollout and 5G SA enterprise traction, adding operational complexity. The full valuation at ~34x P/E remains a headwind, and any delays or unfavorable terms in the monetization process could exacerbate leverage concerns. Overall, while this adds a new deleveraging avenue, it does not resolve fundamental regulatory pressures or valuation issues, reinforcing a neutral stance.

Thesis delta

The engagement for TELUS Health monetization introduces an additional deleveraging option, potentially reducing reliance on the towers sale and offering flexibility in balance sheet management. However, it does not alleviate core regulatory risks from wholesale FTTP or address the elevated P/E valuation, so the overall HOLD/NEUTRAL thesis remains unchanged. Investors should monitor execution details and proceeds allocation to assess impact on net debt/EBITDA targets.