This analyst just cut his price target on Telus

Desjardins Securities analyst Jerome Dubreuil lowered his target on Telus (Telus Stock Quote, Chart, News, Analysts, Financials TSX:T) to $13.00 from $13.50 ahead of the company’s third-quarter results.

As reported by the Globe and Mail, in an Oct. 7 preview, Dubreuil maintained his “Hold” rating on Telus.

Dubreuil expects third-quarter results from Canadian telecom companies to reflect continued pressure from slower population growth, strong competition and modest activation-fee pressure tied to a CRTC decision.

“We anticipate another eventful update on November 6, with (Telus) expected to provide further details on cost reduction initiatives, its AI/data centre strategy, and healthcare monetization,” Dubreuil said.

The analyst said investors questioned whether Telus reset expectations conservatively after its sharp guidance cut last quarter, but his Q3 estimates assume that was not the case.

Telus cut its full-year guidance with its Q2 results on July 31, saying consolidated service revenue is now expected to range from flat to down 2%, while consolidated Adjusted EBITDA is expected to decline 2% to 4%.

The company also reset its quarterly dividend by 55% to 18.75 cents per share, or 75 cents annualized, which it said should generate about $2.7-billion of cumulative cash savings through 2028 for debt reduction.

Telus ended Q2 with net debt to Adjusted EBITDA of 3.5 times and is targeting about 3.0 times or lower by the end of 2028.

In Q2, Telus reported mobile phone net additions of 17,000 and internet net additions of 20,000. Mobile network revenue was $1.7-billion, up 1% year-over-year, while mobile phone ARPU fell 0.4% to $56.36.

Consolidated service revenue declined 1% to $4.4-billion and Adjusted EBITDA fell 2% to $1.8-billion.

The company also reported a net loss of $1.8-billion, reflecting a pre-tax, non-cash impairment of $2.1-billion tied to Telus Digital.

Telus recently announced it had completed its first satellite-to-smartphone integration test with AST SpaceMobile on the Telus network.

The companies said the technology is expected to be available to Telus customers within the next year, allowing eligible smartphones to connect beyond the reach of traditional cell towers.

Telus said the service could help improve connectivity in remote areas, expand access to emergency services and support workers in northern and remote communities.