Research Update: Telus Corp. ?BBB+? Ratings Put On CreditWatch Negative On Delayed Deleveraging On Agreement To Purchase WillowTree Inc.

Vancouver, B.C.-based Telus Corp. announced today that its subsidiary Telus International has agreed to acquire U.S.--based technology company WillowTree Inc. for about US$1.23 billion. As a result, S&P Global Ratings placed its 'BBB+' issuer credit rating on Telus Corp. (and subsidiary Telus Communications Inc.) and its 'BBB+' issue-level rating on the company's senior unsecured debt on CreditWatch with negative implications. The transaction follows several acquisitions and investments since 2019 that, together with a high dividend payout, have persistently increased debt and have perpetuated Telus' leverage metrics above our expectation into 2023. Following WillowTree and the C$2.9 billion LifeWorks acquisition (closed Sept. 1, 2022), we anticipate Telus' pro forma adjusted debt-to-EBITDA ratio will remain in the mid-3x area in 2023, and

...- Vancouver, B.C.-based Telus Corp. announced today that its subsidiary Telus International has agreed to acquire U.S.--based technology company WillowTree Inc. for about US$1.23 billion. - As a result, S&P Global Ratings placed its '###+' issuer credit rating on Telus Corp. (and subsidiary Telus Communications Inc.) and its '###+' issue-level rating on the company's senior unsecured debt on CreditWatch with negative implications. - The transaction follows several acquisitions and investments since 2019 that, together with a high dividend payout, have persistently increased debt and have perpetuated Telus' leverage metrics above our expectation into 2023. - Following WillowTree and the C$2.9 billion LifeWorks acquisition (closed Sept. 1, 2022), we anticipate Telus' pro forma adjusted debt-to-EBITDA ratio will remain in the mid-3x area in 2023, and likely remain above our downgrade threshold of 3.25x even in the subsequent year. - The CreditWatch placement reflects the potential for a one-notch...

Research Update