Telus CEO Victor Dodig Pivots to Core Infrastructure, Halts Acquisitions and Cuts Dividend
Telus Corp. is undergoing a strategic simplification under new CEO Victor Dodig, who has halted acquisitions, halved the dividend, and initiated talks to sell parts of Telus Health while focusing on Canadian fibre networks and data centres.
Telus Corp. Chief Executive Officer Victor Dodig announced a significant strategic shift aimed at simplifying the company by divesting non-core assets and halting all new acquisitions. Since taking over as CEO in July, Dodig has moved to unwind side projects developed by his predecessor, Darren Entwistle, while maintaining investments in advanced technology.
A central component of this restructuring involves the potential sale of parts of Telus Health. The company is currently in active discussions, described as being in "later stages," to monetize one of the three components of its health care division. Dodig indicated that he expects two or possibly all three components of Telus Health to eventually be sold to other owners.
Financially, the changes have been immediate. During his first quarterly earnings day in July, Dodig moderated financial guidance, wrote down the goodwill value associated with the Telus Digital brand, and halved the company’s dividend. While Dodig ruled out reintroducing a dividend reinvestment plan, he expressed interest in buying back shares once the company’s finances stabilize. These measures mean shareholders face reduced dividends and no reinvestment plans in the short term.
Strategically, Telus is refocusing on core telecom infrastructure and data centres. The company has identified over a million homes where it could build fibre networks, aiming to own its infrastructure rather than relying solely on rival BCE Inc.’s networks. Additionally, Telus plans to double down on data centres, including purchasing AI compute components such as Nvidia chips. This approach contrasts with rival Bell, which focuses on building shells for data centres.
Dodig defended the spending on AI hardware against concerns regarding obsolescence risk by citing sovereign demand for integrated projects. The company aims to improve profitability through organic growth and cost streamlining rather than aggressive customer acquisition. Further details on this strategy are scheduled to be provided during the next quarterly earnings call in November.