Canadian Telecom Giants Shift Focus to Debt Reduction in Slowing Market
Canada’s largest telecom companies are gearing up for another active year of dealmaking, as they prepare to shed non-core assets, pay down debt and fund new areas of growth.
But in a sluggish telecom market, there’s still a long road ahead for BCE Inc. BCE-T , Rogers Communications Inc. RCI-B-T and Telus Corp. T-T as they aim to pay down their combined long-term debt load of nearly $100-billion.
“Regardless of the playbook, what has become clear to us is that the long-standing status quo for Canadian operators no longer cuts it for stakeholders,” said Royal Bank of Canada analyst Drew McReynolds in a December report.
The major players are coping with the reality of the Canadian telecom environment – low growth of earnings before interest, taxes, depreciation, and amortization, said DBRS credit rater Scott Rattee.
And with one telecom’s credit rating just one step above junk and the others two levels up, there’s not much room for error.
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If 2025 was “a staging year” for the telecoms’ plans to rebalance, Mr. Rattee said. “Now we’re going to have to see them execute.”
If anyone expected a quiet few years after Rogers’ $20-billion takeover of Shaw in 2023, they would have been proven wrong with the flurry of sales and acquisitions that punctuated 2024 and 2025.
This year, Rogers is planning to acquire full control of Maple Leaf Sports & Entertainment, while also seeking to monetize its sports assets, which include the Toronto Blue Jays. That could involve spinning out or selling a minority stake in the portfolio, which the company’s executives have said they believe is worth $20-billion.
But buying the remaining stake in MLSE will require more spending. And Rogers already has a heavy debt load after its Shaw takeover, with $35.9-billion in long term debt at the end of 2025. It also has the lowest credit ratings, with Moody’s, S&P and Morningstar DBRS all placing its senior unsecured notes one level above non-investment grade, or junk. While both Moody’s and Morningstar DBRS have a stable or positive outlook for the company‘s debt, S&P revised its outlook to negative in November.
“The risk remains that it might take up to 18 months for material deleveraging,” said S&P analyst Aniki Saha-Yannopoulos in a November memo.
Speaking to analysts in January, Rogers chief financial officer Glenn Brandt said the company was seeing “tremendous interest“ around its sports assets, “so there’s no need to wait.”
“We reduced debt leverage to pre‑Shaw levels well ahead of schedule and remain committed to a strong, investment‑grade balance sheet as we plan for the 2026 MLSE transaction. We continue to keep credit rating agencies informed of our timelines,” said Rogers spokesperson Zac Carreiro.
BCE, for its part, has laid out a growth plan relying in part on expanding its new data centre and enterprise offerings through artificial intelligence services. But those earnings will, at least in the next few years, only make up a small portion of top-line earnings. The company also continues to expand its U.S. fibre footprint through its new division, Ziply Fiber.
As part of its plan to deleverage (BCE had $35-billion in long-term debt as of the end of 2025), the company said it had identified $7-billion in assets that it could sell, and has already completed about $5-billion of that.
Canaccord Genuity’s Aravinda Galappatthige has suggested the company could shed its 20-per-cent stake in the Montreal Canadiens. Forbes Magazine has valued the team overall at $3.4-billion.
Last October, BCE chief executive officer Mirko Bibic told The Globe and Mail the company sees “strategic value” in the stake, but added that across any of its assets, it would seek to surface value while keeping important strategic rights. And in a recent interview with La Presse, he said Bell is “proud to be associated with the Canadiens and that will continue in the long term.”
BCE in 2024 announced a planned $1-billion divestiture of northern provider Northwestel to a coalition of Indigenous communities. But that deal has stalled, and on concerns about its potential, Mr. Galappatthige removed the sale from his estimates last fall. In an interview on Thursday, Mr. Bibic said the discussions are continuing as the coalition seeks loan support from government.
Meanwhile, Telus stands to gain from the long-planned sale of its Telus Health division, for which it recently engaged financial advisers, as well as the divestiture of non-core copper and real estate assets and possible monetization of its agriculture division.
In an e-mail, Telus spokesperson Richard Gilhooley said the company is “actively looking at a number of different strategic options for Telus Agriculture & Consumer Goods, and actively exploring engagements with financial advisors to assist with that strategy and timeline.”
Telus maintains an investment-grade debt rating. However, some analysts have questioned whether Telus’s move to pause dividend increases, enacted in December, will be enough to satisfy the markets and credit analysts.
Last August, after Telus reduced its dividend growth rate target but before it paused the payout growth, Moody’s Ratings credit officer Peter Adu said in a credit opinion issued that he had been “expecting a cut,” and changed the company’s outlook to negative. Moody’s hasn’t changed its Telus rating or outlook since.
In a December note to investors, Veritas Investment Research analyst Liam Gallagher said he believed that concerns over the dividend and balance sheet will continue to weigh on shares. “While pausing dividend growth is a step in the right direction, our concerns remain.”
Mr. Gilhooley said Telus intends to maintain the pause until the company’s share price and yield better reflect its growth prospects.
“All of these actions reflect our unwavering financial discipline and commitment to sustainable and long-term shareholder value creation,” he said.
For its part, Telus forecasts compound annual free cash flow growth of at least 10 per cent from 2025 to 2028. The company has already brought down leverage by issuing a slew of higher-interest hybrid debt, a type of security that blends the characteristics of debt and equity. So much, in fact, that it is actually bumping up against the top limit at which one credit rater, S&P Global Ratings, will give it the favourable 50-50 equity-debt consideration.
Mr. Gilhooley said Telus has “lightly exceeded” the S&P cap on a very small proportion of total hybrids issued, but is receiving the full 50-per-cent equity treatment with other rating agencies.
This article was first reported by The Globe and Mail
