Telus Corp.

Overview Key strengths Key risks One of the three-largest national wireless providers in Canada and the incumbent telecom provider in Western Canada Growing dividends and spectrum auction will continue to limit discretionary cash flow leading to still-elevated leverage of 3.2x-3.3x in 18 months Accelerated capital expenditure (capex) spending in 2021-2022 resulting in 80% of its high-speed internet footprint passed by fiber to the home (FTTH) Weaker track record of deleveraging given company?s desire to pursue growth and revenue diversity Strong revenue and EBITDA growth momentum from bundling telecom services; high-growth non-telecom operations also sustain growth profile Opportunistic acquisitions to expand non-telecom operations could pressure credit metrics higher than our base case S&P Global Ratings expects Telus Corp.?s pro forma net

...Telus Corp.'s leverage metrics remain on the weaker end of what we would expect for the current rating. S&P Global Ratings expects Telus Corp.'s pro forma net debt to EBITDA (S&P Global Ratings-adjusted) will remain elevated through 2022 in the 3.5x-3.6x range. Our 2022 leverage metric is pro forma the C$2.9 billion LifeWorks Inc. acquisition, which the company has funded with 60% cash and debt (including about C$660 million of assumed debt) and 40% equity. While our 2022 leverage sits higher than what we generally believe to be commensurate with the current rating, we expect a significantly lower C$2.5 billion capex plan in 2023 and...

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