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  5. BCE: Hi Peter and 5i Team, An article in the Globe & Mail (May 27) was titled [BCE Inc.]
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Investment Q&A

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Q: Hi Peter and 5i Team,

An article in the Globe & Mail (May 27) was titled:

“Telus to invest more than $70-billion in Canada over next five years to expand infrastructure”

Given that its payout ratio is now approximately 100%, and if interest rates should rise while there’s a slowdown in the economy, is this a prudent decision for Telus to take? Having recently sold BCE at a loss, and still owning T, are my concerns justified?

In the Communications Services Sector, we also have a small position in QBR.B, which is doing reasonably well so far. Its debt leverage is the lowest among its peers, which I believe to be an important metric at this time.

Thanks in advance for your insight.
Asked by Jerry on May 29, 2025
5i Research Answer:

Telus did $4.8 bln in operating cash flow in 2024 and $4.5 billion in 2023. Dividends are in the $1.5 bln range but after accounting for traditional cap-ex, things do get tighter for cash flows. We think some concerns are justified but some of the investments can come from equity or debt issuances as well. Having this stretched out over five years also helps. Telus might be leaning into a slowdown and also when some of their competitors are likely pulling back on cap-ex, they might be seeing an opportunity here but it is certainly something to keep an eye on.