Why a banker is sensible as Telus’s new boss

Newhaven Asset Administration analyst Rebecca Teltscher says the market could also be underestimating the implications of TELUS’s (TELUS Inventory Quote, Chart, Information, Analysts, Financials TSX:T) pending management change.

Talking on BNN Bloomberg’s Market Name on Feb. 17, Teltscher mentioned she was inspired by the corporate’s determination to nominate former CIBC chief govt Victor Dodig as its subsequent CEO, even because the inventory has traded decrease because the announcement.

TELUS mentioned Feb. 12 that longtime President and CEO Darren Entwistle will retire June 30 after 26 years within the function. The board appointed Dodig, who has served as an unbiased director since Could 2022, as President and CEO efficient July 1. He’ll be a part of the management workforce full time Could 1 as CEO designate to make sure a easy transition.

“It was shocking bringing in a banker to run the corporate,” Teltscher acknowledged. “However look what he did at CIBC. He was capable of convey out quite a lot of development there.”

She argued that TELUS’s priorities over the following few years, together with debt discount and potential asset monetizations, align with Dodig’s background.

“They should convey debt down. They should monetize some belongings. A few of it’s going to be perhaps the sale of TELUS Well being. Perhaps it’s going to be the sale of some actual property,” she mentioned. “These are all issues that Dodig has expertise in as a banker. I do suppose that perhaps they do want a banker proper now to have the ability to get the corporate in a monetary place that they have to be in.”

Teltscher famous that TELUS is already a structural chief amongst Canadian telecoms, rising sooner than friends and additional alongside in its fibre-to-the-home buildout, with capital expenditures starting to reasonable.

The inventory’s weak spot, she recommended, might replicate hypothesis across the dividend. TELUS paused dividend development late final 12 months, halting its twice-annual will increase and steadily lowering its DRIP low cost, however didn’t reduce the payout.

“Do they should reduce the dividend? No. Will they reduce the dividend? I don’t know,” she mentioned. “In the event that they do reduce the dividend, I don’t suppose the inventory goes to get hammered.”

Within the meantime, Teltscher mentioned she is snug accumulating the present yield, which sits close to 9 per cent.

TELUS shares are down 15.55% over the previous 12 months and closed Feb. 18 at $18.58. Of the analysts protecting the inventory, eight charge it “Purchase,” eight “Maintain,” and two “Promote,” with a consensus value goal of $21.34.

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