Canadian telecom stocks have been very out of favor amid a challenging environment prompted largely by Quebecor’s entrance as a national mobile competitor. Against this backdrop, Telus T had a good fourth quarter, with flat services revenue and 1 percentage point of adjusted EBITDA margin expansion.
Why it matters: Telus’ results have been decent, and we don’t think the current mobile environment represents a new long-term norm. Quebecor has been severely undercutting competitors on price, and Canada’s immigration policy has diminished the number of new mobile phone customers entering the market.
Over the longer term, we expect the mobile market to be much more attractive for the Big 3 providers—like Telus—that have narrow moats. Quebecor is currently restricted by the government from raising prices, and it will eventually have to operate its own network, which is more expensive.Telus still added 50,000 mobile phone users in the fourth quarter and 207,000 in 2025, comparable with its two big peers. Mobile services revenue was roughly flat in the fourth quarter and for the full year, while average revenue per user declined 2% for the quarter and 3% for the year.
The bottom line: We maintain our C$30 fair value estimate and believe shares are undervalued. Although we expect modest growth to eventually return, we don’t expect a material near-term reversal of recent stagnation.
Between the lines: Fixed-line data services revenue (23% of total sales, versus 34% for mobile services) declined 1% in the fourth quarter but rose 1% over the full year. The firm added 123,000 internet customers in 2025, including 35,000 in the fourth quarter, both comparable with the prior year.
We had long viewed the opportunity with internet customers to be an attractive source of growth due to its network overhaul with fiber. However, it is largely finished with the buildout, so the tailwind has passed. Recent levels of subscriber additions been good, but we don’t expect them to improve.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
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