AnalysisTD Securities:
Despite solid results in Q3/23 we have decided to lower our 2024E EBITDA/ FCF by getting more conservative in two key areas:
1. We have assumed slower revenue/EBITDA growth in wireline in both Q4/23 and FY2024, just in case either macro headwinds or competitive intensity versus Rogers Cable escalate.
2. We have assumed continued elevated cash restructuring costs into 2024 (including amounts expensed but not paid in 2023), which has lowered our 2024E FCF even more than the reduced EBITDA.
TD Investment Conclusion Lowered estimates, plus a lower target price for TIXT (now US$10.50, versus US $18.00 when we last published on TELUS), have lowered our T target price by $2.00, to $27.00. This still justifies a BUY rating, especially with yet another dividend increase this quarter (yield is now 6.2%), but we now believe it will take until 2025 to get the dividend payout ratio under 100%.