Research Update: Telus Corp. Outlook Revised To Negative From Stable On Potential For Elevated Leverage On Pending Acquisition

On Dec. 4, 2019, Telus Corp., through subsidiary Telus International (TI), announced the proposed acquisition of Germany-based Competence Call Center (CCC) for about C$1.3 billion, mostly through debt. Pro forma this acquisition, combined with the recently closed ADT Canada purchase, we now forecast S&P Global Ratings' adjusted debt-to-EBITDA for Telus to be about 3.2x. We believe Telus' leverage will remain at elevated levels, close to our downside threshold of 3.25x over the next two years, reflecting wireless spectrum investments and cash dividends. As a result, on Dec. 6, 2019, S&P Global Ratings revised its outlook on Telus to negative from stable. At the same time, S&P Global Ratings affirmed all of its ratings on Telus, including its 'BBB+' issuer credit

...- On Dec. 4, 2019, Telus Corp., through subsidiary Telus International (TI), announced the proposed acquisition of Germany-based Competence Call Center (###) for about C$1.3 billion, mostly through debt. Pro forma this acquisition, combined with the recently closed ADT Canada purchase, we now forecast S&P Global Ratings' adjusted debt-to-EBITDA for Telus to be about 3.2x. - We believe Telus' leverage will remain at elevated levels, close to our downside threshold of 3.25x over the next two years, reflecting wireless spectrum investments and cash dividends. - As a result, on Dec. 6, 2019, S&P Global Ratings revised its outlook on Telus to negative from stable. At the same time, S&P Global Ratings affirmed all of its ratings on Telus, including its '###+' issuer credit and issue-level ratings. - The negative outlook reflects the potential for a downgrade over the next two years absent measures by the company to improve leverage close to 3x. In our forecasts we expect leverage to remain elevated...

Research Update