Valued at a market capitalization of nearly $29 billion, TELUS (TSX:T) is one of the most popular stocks in Canada. In recent years, the Canada-based telecom giant has significantly underperformed the broader markets.
Debt concerns, a competitive wireless market in Canada and a general rotation away from high-yield names have weighed on the stock. But when you remove the noise, the numbers tell a more interesting story.
TELUS is more than just a telephone company
Most people think of TELUS as a Canadian mobile carrier. But the company has quietly built two fast-growing businesses alongside its core telecoms business.
TELUS Health is now one of the largest employee wellness platforms in the world. It covers more than 161 million lives in 200 countries. Customers include more than 50% of the Fortune 500. The platform offers mental health support, employee assistance programs, primary care software and more. It’s an AI-driven, subscription-based company, and it’s growing quickly.
TELUS CEO Darren Entwistle said the Health division achieved double-digit growth in revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of 2025. He confirmed that the company expects double-digit EBITDA growth again in 2026 for both TELUS Health and TELUS Digital, the company’s AI and customer experience business.
“We have double-digit growth from TELUS Digital. We have double-digit growth from TELUS Health,” Entwistle said on the earnings call. “I think this makes for a robust story.”
The case of free cash flow is compelling
This is where things get interesting for investors.
TELUS generated $2.2 billion in free cash flow in 2025, up 11% from 2024. That follows 12% growth in free cash flow in 2024 and 38% growth in 2023. Management expects about $2.45 billion in free cash flow for 2026, up roughly another 10%.
Analyst estimates for the TIKR project FCF are about $2.70 billion in 2027 and $3.4 billion in 2030. That’s a compound annual growth rate (CAGR) of about 8% through 2030.
Now look at the rating. The NTM (next 12 months) market cap/FCF multiple is currently around 11.8 times, close to a 10-year low. The 10-year average for this ratio is 21.1 times, with a maximum of 42 times during the pandemic boom.
Even a modest reversion to the mean, for example back to 15 times NTM FCF, would imply a meaningful increase from current levels. If you apply a 15 times multiple to $3.4 billion in estimated 2030 free cash flow, you get a market cap of about $51 billion.
That’s 80% higher than where TSX dividend stocks are today. Taking into account the reinvestment of dividends, the cumulative return could exceed 100% over the next three years.
That’s no guarantee. It’s a screenplay. But it shows how much compression is already baked into the current price.
Debt is the real risk investors need to pay attention to
TELUS is not without challenges. The company has a significant debt load, with a net debt-to-EBITDA leverage ratio of 3.4x at the end of 2025. Management targets 3.3 times or less by the end of 2026 and three times by the end of 2027.
They are actively working to achieve this goal, including selling assets, monetizing real estate and copper infrastructure, and seeking strategic investors for both TELUS Health and TELUS Agriculture. Notably, TELUS has set a target of $7 billion for asset generation.
In the meantime, the dividend is kept stable. Management has made it clear that it will only resume dividend growth once debt reduction is on track and the dividend reinvestment plan cut is removed.
The Silly takeaway
TELUS is a transformation story on top of a stable telecom company. If management sticks to its FCF targets and valuation metrics simply normalize, the next three years could look very different from the last three.
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