Research Update: Telus Corp. Downgraded To 'BBB' From 'BBB+' On Persistent Elevated Leverage; Outlook Stable

We forecast Vancouver, B.C.-based Telus Corp.'s debt leverage will be in the 3.5x area for the next 24 months following the recently announced US$1.23 billion WillowTree Inc. acquisition (expected to close early 2023) and the C$2.9 billion LifeWorks acquisition (closed Sept. 1, 2022). These transactions follow several acquisitions and investments since 2019 that, together with a high dividend payout, have increased leverage to 3.5x for the past two years and we don't expect any material deleveraging through mid-2024. Therefore, we have revised our financial risk profile on Telus to significant from intermediate. As a result, S&P Global Ratings also lowered its issuer credit rating on Telus and issue-level rating on the company's unsecured debt to 'BBB' from 'BBB+'. The short-term

...- We forecast Vancouver, B.C.-based Telus Corp.'s debt leverage will be in the 3.5x area for the next 24 months following the recently announced US$1.23 billion WillowTree Inc. acquisition (expected to close early 2023) and the C$2.9 billion LifeWorks acquisition (closed Sept. 1, 2022). - These transactions follow several acquisitions and investments since 2019 that, together with a high dividend payout, have increased leverage to 3.5x for the past two years and we don't expect any material deleveraging through mid-2024. Therefore, we have revised our financial risk profile on Telus to significant from intermediate. - As a result, S&P Global Ratings also lowered its issuer credit rating on Telus and issue-level rating on the company's unsecured debt to '###' from '###+'. The short-term rating is unchanged at 'A-2'. At the same time, we removed all our ratings on Telus from CreditWatch, where they were placed with negative implications Oct. 27, 2022. - The stable outlook reflects our view...

Research Update