TU
TELUS Corporation
$8.86
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Mild
·
Conviction
Fair Value
Trading 8.1% below fair value
You pay
$8.86
Bear
$6.38
Fair
$9.64
Bull
$12.90
Bear
$6.38
-28.0%
EBITDA $5B × 6.3x − $21B debt
Fair
$9.64
+8.8%
EBITDA $5B × 7.4x − $21B debt
Bull
$12.90
+45.6%
EBITDA $5B × 8.4x − $21B debt
Adjust Assumptions
7.4x
Key Value Driver
EV/EBITDA multiple (7.4x) vs. 4.3× leverage
Implied Market Multiple
7.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$11.00
Divergence from AlphaVal
12%
Summary
At 7.4x EV/EBITDA on $5B EBITDA, enterprise value is $36B. After subtracting $21B net debt, equity value is $9.64 per share.
Warnings
Debt is 4.3x annual operating profit. Because the company carries so much debt, even small shifts in business value cause big swings in the stock price.
We value this business based on total operating profit relative to total enterprise value (debt + equity). Profit-per-share metrics are unreliable when debt makes up most of the company's value.
Financial statements were converted from CAD into USD using USDCAD at 0.7140 USD per CAD.
Key Risks
- Debt refinancing at higher rates compresses equity value quickly
- EBITDA flatters — capex, interest, and taxes eat the cash flow
- Cord-cutting and wireless substitution are structural headwinds for cable