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CALGARY, Alberta, April 22, 2024 (GLOBE NEWSWIRE) — XORTX Therapeutics Inc. (“XORTX” or the “Company”) (NASDAQ: XRTX | TSXV: XRTX | Frankfurt: ANUA WKN: A3UNZ), a late-stage clinical pharmaceutical company focused on developing innovative therapies to treat progressive kidney disease, is pleased to announce a research paper titled “Raising serum uric acid with a uricase inhibitor worsens PKD in rat and mouse models” has been accepted for publication in the peer-reviewed American Journal of Physiology-Renal Physiology and published online April 19, 2024.
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This study reports health consequences associated with increasing serum uric acid (“SUA”) in mice or rat models of Autosomal Dominant Polycystic Kidney Disease (“ADPKD”), specifically the effects of increasing SUA on cyst growth and kidney size. Cyst genesis and cyst growth (together “cyst index”) and their rates of change are important indicators of disease progression and are correlated with declining filtering capacity and end stage renal disease (“ESRD”). This study shows, for the first time, that chronically increased SUA can significantly increase cyst index and increase kidney size in ADPKD.
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According to the study’s findings, saturating concentrations of SUA contributing to “crystal injury” were not necessary to negatively alter both structure and function of the ADPKD kidney. Moderately high SUA concentrations were also found to be associated with an increased inflammatory state (cytokine profile) in both serum and kidney tissue. Independent of the modifying effects of chronically increased SUA, a fundamental new discovery from this study was that over expression of xanthine oxidase (“XO”) in kidney tissue was present, suggesting aberrant purine metabolism may be present in ADPKD and suggesting a possible role of XO in disease progression.
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When considered together, SUA above the normal range and overexpression of XO, especially in the location of cysts, in an ADPKD kidney represents a strong impetus for the use of XO inhibition to attenuate this newly described mechanism of injury. Inhibition of XO using XORLO™, XORTX’s proprietary formulation of oxypurinol, substantially lowered uric acid concentrations, attenuated the effects of chronically increased SUA on cyst index and kidney size in the RC/RC mouse model of ADPKD in this study.
Dr. Allen Davidoff, CEO of XORTX, stated, “We are pleased to have supported this pioneering research in polycystic kidney disease by Dr. Charles Edelstein of the University of Colorado. Identifying for the first time that increased serum uric acid and possibly overexpression of xanthine oxidase in the ADPKD kidney can accelerate disease progression has substantial implications. This study provides important novel insight into one modifying factor that has the potential to accelerate ADPKD progression. In human ADPKD, kidney size and declining kidney filtering capacity are correlated and are key indicators of disease progression and prognosis. Identifying any modifiable factor that explains variable outcomes in individuals with ADPKD is a seminal step forward in our understanding of this disease. XORLOTM was shown to attenuate this effect. In concept, XORLOTM should be capable of attenuating both of these modifiable factors. These mechanistic studies are important for the planning of future clinical studies of xanthine oxidase inhibition in patients with ADPKD.”
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About ADPKD
ADPKD is a rare disease that affects more that 10 million individuals worldwide.1,2 ADPKD is typically diagnosed based upon expansion of fluid-filled cysts in the kidneys. Over time, the increasing number and size of cysts can contribute to structural and functional changes to kidneys and is frequently accompanied by chronic pain which is a common problem for patients with ADPKD.3 Expansion of cysts is thought to compress healthy functioning tissue surrounding the cysts and contribute to further loss of kidney function, fibrosis, impaired nutrient exchange and impaired kidney function, accompanied later by end-stage renal disease.1 For individuals with progressing ADPKD, treatment recommendations include anti-hypertensive treatment, dietary restrictions, and, for a limited percentage of suitable patients, pharmacotherapy.4 New, more broadly applicable therapies to effectively slow decline of kidney function in ADPKD are needed.
References:
Wiley C., Kamat S., Stelhorn R., Blais J., Analysis of nationwide date to determine the incidence and diagnosis of autosomal dominant polycystic kidney disease in the USA, Kidney Disease, 5(2): 107-117, 2019
Gimpel C., Bermann C., Bockenhauer D., et al., International consensus statement of the diagnosis and management of autosomal dominant polycystic kidney disease in children and young people, Nat Rev Nephrol 15(11):713-726, 2019
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Communications and Social Media Engagements
Further to the Company’s press release of April 8, 2024, XORTX continues its participation in important healthcare and investor conferences, including most recently the Noble Capital Markets Emerging Growth Virtual Healthcare Equity Conference and the CEM Scottsdale Capital Event. Additional information on how to listen to webcast presentations, where available, will be provided at a later date. The Company is also augmenting investor awareness through the engagement of marketing and communication consultants, including:
LFG Equities has been engaged to provide marketing consulting and market communications services, for a fee of US$50,000 for a one-month period. The LFG Equities engagement can be extended by mutual consent and can be terminated by XORTX upon 10 days’ notice.
IRPUB has been engaged to provide a XORTX awareness campaign for a fee of US$40,000 for a term of four months. The IRPUB engagement can be extended by mutual consent and can be terminated by XORTX at that time.
FeMax Publishing and Consulting Ltd. has been engaged to analyze and assess European communications and investor contact outreach in Europe. The term of the contract is for 12 months with the assessment services at a monthly fee of €3,500 and the European Awareness campaign at a monthly fee of €8,500. The FeMax Publishing and Consulting engagement can be extended by mutual consent.
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About XORTX Therapeutics Inc.
XORTX is a pharmaceutical company with two clinically advanced products in development: 1) our lead, XRx-008 program for ADPKD is in preparation to conduct a single registration trial – XRX-OXY-201, that is eligible for accelerated approval; and 2) our secondary program in XRx-101 for acute kidney and other acute organ injury associated with Coronavirus / COVID-19 infection. In addition, XRx-225 is a pre-clinical stage program for Type 2 Diabetic Nephropathy. XORTX is working to advance its clinical development stage products that target aberrant purine metabolism and xanthine oxidase to decrease or inhibit production of uric acid. At XORTX, we are dedicated to developing medications to improve the quality of life and future health of patients. Additional information on XORTX is available at www.xortx.com.
For more information, please contact:
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Neither the TSX Venture Exchange nor Nasdaq has approved or disapproved the contents of this news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Forward Looking Statements
This press release contains express or implied forward-looking statements pursuant to applicable securities laws. These forward-looking statements and their implications are based on the current expectations of the management of XORTX only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Except as otherwise required by applicable law and stock exchange rules, XORTX undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. More detailed information about the risks and uncertainties affecting XORTX is contained under the heading “Risk Factors” in XORTX’s Annual Report on Form 20-F filed with the SEC, which is available on the SEC’s website, www.sec.gov (including any documents forming a part thereof or incorporated by reference therein), as well as in our reports, public disclosure documents and other filings with the securities commissions and other regulatory bodies in Canada, which are available on www.sedarplus.ca.
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London, 22 April 2024 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour” or the “Company”) is pleased to announce that the Board has nominated John Munro as an Independent Non-Executive Director of the Company. His appointment will be voted on by shareholders at the Annual General Meeting (“AGM”) to be held on 30 May 2024. If elected at the AGM, John Munro will chair the Technical, Health and Safety Committee of the Board and join the Remuneration Committee.
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Srinivasan Venkatakrishnan, Chair of the Board, said: “I am delighted to welcome John Munro to the Endeavour Board. He brings considerable mining, operational and project development experience in Africa, as well as strategy and mining finance expertise globally. We look forward to welcoming him as a valuable addition to the Board, where he will continue to help Endeavour reinforce its operational excellence, as the business continues to grow.”
Tertius Zongo, an Independent Non-Executive Director has notified the Board that he will not seek re-election as a Director of the Company at the forthcoming AGM, in order to focus on his personal interests. He has been an important member of the Semafo and Endeavour Boards for the past 12 years. He will continue to assist the Company as a consultant on West African matters.
Srinivasan Venkatakrishnan, Chair of the Board, said: “On behalf of the Board, I would like to thank Tertius for his significant contribution to the business over the years and we wish him well and every success for the future. I am pleased that we can continue to benefit from his wisdom and experience in his new role.”
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John Munro brings over 30 years of experience in mining, having held a number of senior executive roles in the industry, leading mining operations and businesses in Africa and around the world, in a range of commodities. He holds a BSc Chemical Engineering from the University of Cape Town and a postgraduate Advanced Management Programme qualification from Harvard Business School.
There is no additional information requiring disclosure under LR 9.6.13 of the Listing Rules of the Financial Conduct Authority in relation to the appointment of John Munro.
CONTACT INFORMATION
Jack Garman Vice President, Investor Relations +442030112723 jackgarman@endeavourmining.com
Brunswick Group LLP in London Carole Cable, Partner +442074045959 ccable@brunswickgroup.com
ABOUT ENDEAVOUR MINING PLC
Endeavour Mining is one of the world’s senior gold producers and the largest in West Africa, with operating assets across Senegal, Cote d’Ivoire and Burkina Faso and a strong portfolio of advanced development projects and exploration assets in the highly prospective Birimian Greenstone Belt across West Africa.
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A member of the World Gold Council, Endeavour is committed to the principles of responsible mining and delivering sustainable value to its employees, stakeholders and the communities where it operates. Endeavour is admitted to listing and to trading on the London Stock Exchange and the Toronto Stock Exchange, under the symbol EDV.
John Munro has over 30 years’ experience in the international mining industry, with the last 20 years in senior executive roles, leading mining operations and businesses in Africa and around the world, in a range of commodities. In the early 2000s John was an executive of Gold Fields Limited, variously leading that company’s international operations, project development and strategy. In 2008 he was appointed CEO of Rand Uranium, a uranium and gold start up. Thereafter, John moved to London working initially in First Reserve Corporation’s mining acquisitions team before joining Cupric Canyon Capital in 2014. John held various executive roles at Cupric, including 2 years as CEO, leading the financing and development of that company, culminating in the sale to MMG Limited in 2024.
John was previously a non-executive director of Nordgold SE and is currently a non-executive director of Manuli Hydraulics, a private company.
Kurmuk Gold Mining Plc says its operations in the gold-rich Benishangul-Gumuz Regional State are being hindered by regional authorities, whom it accuses of refusing the company access to mining sites.
“[The company] will be forced to close its exploration camp and send all its employees home until a solution to these problems is achieved,” reads a letter from Kurmuk Gold Mining (KGM) to the Ministry of Mines on February 27, 2024.
The firm holds three gold exploration licenses in Benishangul, located near the border with Sudan.
Kurmuk was formerly under ASCOM, an Egyptian mining company, before it was re-established as KGM following the political changes of 2018. It was awarded a license to look for gold in Dul Ashashire that year, while the Mestefinfine and Abestelo exploration licenses were issued in 2021.
“Local authorities have denied access to the Dul Ashashire exploration area. KGM has repeatedly requested a support letter from Kurmuk Woreda to access the Dul exploration target for core drilling but the requests have not been accepted,” reads the letter to the Ministry. “KGM is not currently conducting any exploration under this license.”
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The firm goes on to accuse the Benishangul-Gumuz Water, Mine, and Energy Resource Development Bureau of refusing to endorse the exploration licenses granted to it by the Ministry
“KGM could not get access to the exploration license areas,” reads the letter signed by Brox Work, general manager at the firm. “Due to the problems created by regional authorities, it is impossible to implement the approved work program under the three exploration licenses as planned.”
Brox responded to inquiries from The Reporter by saying the problems are “currently being resolved” but declined to comment further. Officials from Benishangul-Gumuz declined requests for comment.
“The problem is KGM license areas are occupied by artisanal miners,” Awoke Tesfaye, communications director at the Ministry of Mines, told The Reporter. “The problem is directly linked to the regional government. We are trying to solve it together.”
KGM secured its licenses during Takele Uma’s tenure as minister of Mines.
Sources at the Benishangul Mine Resource Development Bureau told The Reporter there are two major concerns surrounding KGM’s projects.
“The regional government has questions about the legitimacy of the licensing process. The federal authority did not consult the regional government before taking the license from Ascom and awarding it to Kurmuk,” said the source, who spoke anonymously. “The second major issue is that the federal government reserved 100 hectares of gold-rich land for KGM. This land is the livelihood for a large number of people. Because the population of Benishangul has no culture of farming and livestock, their livelihood depends on artisanal mining. It’s difficult for the regional government to displace the artisanal miners from the land earmarked for the investment.”
KGM is a subsidiary of Allied Gold Corp, a mining company based in Canada, according to its website.
Kurmuk’s license to explore for gold in what is thought to be the area holding largest gold reserves in the country previously belonged to ASCOM Mining Ethiopia Plc, which acquired the license during the EPRDF regime.
ASCOM, a leading Egyptian state-owned mining firm, transferred its shares in Kurmuk to Allied Gold following the political transition of 2018. KGM holds a 20-year concession for gold mining in a 100 square kilometer plot covering the Dish Mountain and Ashashire deposits, with gold exploration licenses covering an additional 1,450 square kilometers in Benishangul, according to a prospectus presented to investors in September 2023.
Experts in the field say Ethiopian officials overestimated the company’s capacity when they awarded a concession covering 100 square kilometers of land in September 2021. The Ethiopian government holds a seven percent stake in the Kurmuk project, according to the document from September 2023.
KGM initially planned to start early works in the final quarter of 2023, with its eye on commercial production in 2026, according to company documents. It was looking to produce close to seven tons of gold annually over the first years of production with a total investment capital requirement of half a billion USD, according to the document.
However, Allied Gold’s financial statements reveal that Kurmuk’s total assets stood at less than USD 200,000 as of September 30, 2023.
The disagreements with regional authorities and security issues mean that it will take a longer time before any gold is pulled out of the ground at Kurmuk, according to sources close to the issue.
However, these sources also claim that KGM is intentionally delaying its operations using various issues as pretext because the company lacks the financing to start its work. According to these sources, the company is using the licenses to boost Allied Gold (AAUC) share value on the Toronto Stock Exchange.
Some insiders claim illicit gold mining is already underway in Kurmuk with the full knowledge of KPM management.
Work, the general manager, denied the allegations.
He told The Reporter that the company has been unable to import mining machinery and equipment because federal authorities failed to approve its requests.
However, officials at the Ministry of Mines told The Reporter they have no records of such requests or denials.
Lithium Americas has announced an underwritten public offering to raise $275m, earmarked for the construction and development of the Thacker Pass lithium project in Humboldt County, Nevada.
The company is looking to sell 55 million shares at $5 each.
This public offering is being facilitated by a syndicate of underwriters, with Evercore ISI, Goldman Sachs & Co and BMO Capital Markets acting as the co-lead book-running managers.
In addition to the initial offering, Lithium Americas has granted the underwriters an option to buy up to another 8.25 million common shares at the issue price, which can be exercised within 30 days post-closing.
The closing of the offering is anticipated on 22 April 2024, subject to the satisfaction of customary closing conditions, including approval from the Toronto Stock Exchange and the New York Stock Exchange.
Last month, Lithium Americas secured a conditional commitment for a $2.26bn loan from the US Department of Energy to construct processing facilities at the Thacker Pass mine.
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This loan, part of the Advanced Technology Vehicles Manufacturing Loan Programme, is intended to support the initial annual production of 40,000 tonnes (t) of battery-grade lithium carbonate.
The Thacker Pass project is expected to generate approximately 1,800 direct jobs during its three-year construction period and 360 jobs after becoming operational, over its projected 40-year lifespan.
The mine will be developed in two phases, with a total anticipated production capacity of 80,000t of battery-quality lithium carbonate per year.
The commencement of Phase 1 production is targeted by 2027, with the lithium produced expected to qualify electric vehicles for consumer incentives under the US clean energy tax credits programme.
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TORONTO, April 19, 2024 /PRNewswire/ – Paul Raymond, Alithya Group Inc. (TSX: ALYA) (“Alithya”), shares his Company’s story in an interview with TMX Group.
The View From The C-Suite video interview series highlights the unique perspectives of listed companies on Toronto Stock Exchange and TSX Venture Exchange. Videos provide insight into how company executives think in the current business environment. To see the latest View From The C-Suite visit https://www.tsx.com/c-suite.
About Alithya Group Inc. (TSX: ALYA)
Empowered by the passion and enthusiasm of a talented global workforce, Alithya is an advisor in strategy and digital technology services. Transforming the world one digital step at a time, Alithya leverages collective intelligence and expertise to develop practical IT solutions tailored to complex business challenges.
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Emboldened by higher interest rates, high capex expenses, and weak share prices, many critics say Canada’s telecom stocks – and their generous dividends – are at risk. I examine TELUS Corporation (TSX:T:CA) (NYSE:TU) and its succulent 6.9% dividend to see if the payout can weather today’s storm.
Introduction
TELUS Corporation can trace its history way back to 1906. Its predecessor company, Alberta Government Telephones (AGT) was formed after the Alberta government acquired various telephone assets in the province. AGT grew to eventually serve virtually all citizens of Alberta outside of the Edmonton area, where telephone service was provided by an arm of the municipal government.
AGT continued to provide telephone service to Albertans until 1990, when the ruling Progressive Conservative government decided to privatize the government entity. It formed TELUS Corporation as a vehicle to facilitate the transfer. By 1991, the province sold its remaining stake to TELUS, and it was officially a standalone company without any government backing.
TELUS then acquired Edmonton’s telephone operations in 1995, paying $467M for Edmonton Telephones (ED TEL). With this acquisition, TELUS now had a virtual monopoly in telephone operations in the province.
TELUS continued to grow in 1999. Dubbed as a “merger of equals”, TELUS merged with BC Tel in 1999, a privately-held telecom which held a virtual monopoly on the British Columbia market. TELUS moved its headquarters from Edmonton to Burnaby, and BC Tel’s operations were quickly rebranded under the TELUS name.
After a series of smaller acquisitions and billions invested in building a wireless network across Canada, today TELUS is firmly entrenched as one of Canada’s top telecoms. As of December 31st, 2023, it boasted more than 10M mobile phone subscribers, 2.6M internet subscribers, 1.39M television subscribers, as well as robust security, agricultural, health, and technology subsidiaries. Its wireline assets are still clustered in Canada’s two westernmost provinces, but its wireless network spans all the way across Canada.
Unlike its competitors, BCE (BCE) and Rogers Communications (RCI) – which own substantial stakes in media assets like television channels and professional sports franchises – TELUS diversified into other areas that leverage its existing networks.
For instance, TELUS Health is a global health and wellbeing provider dedicated to solving pressing issues facing citizens, healthcare professionals, employers, and employees, around the world. It provides various technological solutions to healthcare providers, including virtual care platforms. TELUS Health generated $1.7B in revenue in 2023.
TELUS also has a robust Agriculture and Consumer Goods division, which is focused on improving food management solutions and outcomes. Products from this division include tools to make farms both more efficient and safer, as well as inventory management software for both food producers and retailers. This part of the company generated $347M in revenue in 2023, which was slightly lower than 2022.
The company also owns a majority stake of TELUS International (TIXT) (TIXT:CA), which was partially spun off in 2021. TELUS International provides digitally-led customer experiences like AI services and content moderation. It has struggled since its IPO and the stock has fallen nearly 80% since its peak in 2022 as growth expectations have slowed.
Put it all together, and TELUS generated $20B in revenues in 2023, an increase of 9.4% compared to 2022. Adjusted EBITDA came in at $7.1B, a 7.6% improvement versus 2022. Higher interest costs hurt the bottom line in 2023, with adjusted earnings falling 20% from $1.18 to $0.95 per share. Free cash flow increased from $1.3B in 2022 to $1.8B in 2023, mostly due to lower capital expenditures.
Latest Developments
After years of solid returns and steadily increasing dividends, TELUS shares have stumbled over the last 52 weeks. The stock is down more than 23% on the Toronto Stock Exchange, falling from a high of more than $28 per share to today’s level of $21.72.
That’s close to a 52-week and a five-year low. The stock hasn’t traded below $20 since the market chaos of March 2020. It traded as high as $34 per share in 2022.
There are a few reasons the stock is struggling so much. The big one is the state of the Canadian wireless industry today. After years of enjoying a comfortable oligarchy, TELUS and its two main competitors BCE and Rogers are facing more serious competition.
It started when Rogers acquired Shaw Communications, which was first announced in 2021. The Canadian government took a hard look at the proposed transaction and approved it – with one important caveat. Shaw owned Freedom Mobile, an upstart wireless provider with some 2M subscribers. Rogers would need to sell Freedom before it could go ahead and acquire the rest of Shaw.
There was really only one serious potential buyer, and that was Quebecor (OTCPK:QBCRF), a regional telecom with assets in Quebec. Quebecor paid $2.85B for Freedom and quickly got to work expanding its new asset the same way it gained market share against the incumbents in its home province – it undercut the competition. This created a price war across Canada as TELUS and its peers largely matched these aggressive prices to minimize the damage.
To demonstrate the impact of this price war, let’s take a closer look at Canadian inflation data. According to a Statistics Canada analysis, the price of wireless service fell by 26.5% year-over-year in February, although some of that decline can be attributed to faster service for the same price as telecoms roll out recently upgraded 5G networks.
Still, that’s not pretty.
Like any telecom, TELUS has to borrow aggressively to fund expensive investments in both its wireless and wireline networks. This leaves it vulnerable to higher interest rates, like we saw in 2023. TELUS spent $1.27B in net interest costs last year, up some 50% compared to the $847M it spent in 2022.
TELUS shares rallied earlier this year as investors expected aggressive rate cuts in 2024. Heavily indebted telecoms like TELUS would especially welcome any help on this front. Unfortunately, sticky inflation data has tempered any rate-cut expectations. According to CME’s FedWatch Tool, the chances of a June rate cut are now just 18.9% in the United States.
Chances are higher in Canada, with the market predicting an 80% chance of a 25 basis point rate cut in June and a 58% chance of an additional 25 basis point rate cut in September. So relief might be coming, but judging by the price action, investors seem skeptical.
Combine higher interest rates and the overall weak telecom market, and it’s not surprising TELUS shares have been weak. In fact, some investors have even taken this a step further and predicted that TELUS will soon be forced to cut its dividend.
Let’s take a closer look at the viability of that dividend, starting with why it could be in danger.
Why TELUS’ dividend could be in danger
TELUS has been aggressively hiking its dividend for years now, maintaining its original target of 7-10% annual dividend growth first announced in 2011. It extended that guidance in 2013, 2016, 2019, and 2022.
Dig a little further, and there’s a problem. TELUS has a history of not earning enough free cash flow to cover that dividend.
For example, in 2021, TELUS earned $777M in free cash flow. That same year it paid just over $1B in dividends.
The story got a little better in 2022, but it still wasn’t great. Free cash flow improved to $1.27B while the company paid $1.18B in dividends. It covered the dividend, but the payout ratio was 95% of free cash flow once we factor in the impact of dividend reinvestment effects. That’s well above the company’s target payout ratio of 60-75% of free cash flow.
Unfortunately, from 2019 to 2022 the company’s payout ratio was only in the desired range once, with a payout ratio in 2020 of 67% of free cash flow.
It’s easy to argue TELUS’ outlook has gotten worse since 2022, too. Interest rates are far higher, which has had a significant impact on profitability. Combine that with a price war in the wireless sector in Canada, and it’s little wonder why investors are bearish.
In addition, TELUS currently has a debt-to-EBITDA ratio of greater than 4x. That’s a lot of debt, especially considering the uncertainty of future rate cuts.
Why TELUS’ dividend not only survive, it’ll grow
Despite what you read above, this analyst isn’t nearly as bearish as the rest of the market. I believe that TELUS has a sustainable dividend that it can grow in 2024 and beyond.
First, 2023 saw the company make substantial progress on its dividend payout ratio. It earned $1.759B in free cash flow, a 38% improvement versus 2022. This improvement was largely driven by an 18.7% decline in capital expenditures.
Most importantly, this improved the payout ratio to 77% of free cash flow. That’s a little above the company’s desired payout range, but not hugely so.
Free cash flow is expected to improve in 2024 as well. TELUS released 2024’s guidance in February, when it reported 2023’s full-year earnings. It told investors to expect $2.3B in free cash flow in 2024, a 30% improvement compared to 2023.
Seeking Alpha doesn’t track analyst estimates for 2025’s free cash flow. However, analysts do expect earnings per share to grow by 16% in 2025 and an additional 15% in 2026. Based on the earnings increase, expected lower interest rates, and continued discipline on the capital expenditure side, and it isn’t hard to envision even higher free cash flow in 2025.
There are a couple of other bullish factors working for TELUS going forward. Firstly, there’s still robust immigration into Canada. The country’s population increased by 1.27M people in 2023, a pretty large number for a nation with just over 40M people. Most of these people will end up getting wireless packages, with many of them choosing TELUS.
I’ll also argue the price war isn’t quite as bad as it appears at first glance. Many wireless customers are happy to pay the same amount each month in exchange for more data or faster download speeds. Since the incumbent telecoms have already invested in their networks, this extra service costs them virtually zero in continued operating costs while keeping a customer away from the competition.
This phenomenon is further proven by TELUS’ average revenue per user (ARPU), which stayed largely unchanged in 2023 despite the price war. APRU was $58.50 in the fourth quarter of 2023, down ever so slightly from $58.69 in the same quarter of 2022.
The bottom line on TELUS’ dividend
I can understand why investors are worried about Canada’s telecoms. There are some significant headwinds impacting the sector.
I recently wrote about BCE’s dividend safety, and it’s much murkier than TELUS’ I ultimately believe BCE will make it through this rough patch with the dividend intact; however, I’m the first to admit naysayers who say the dividend might not survive have a point.
TELUS’ dividend, meanwhile, is in much better shape. Free cash flow is expected to grow by 30% in 2024, hitting $2.3B. Even if we assume a 10% dividend raise, TELUS would still see its payout ratio fall to the 65% range. That’s comfortably in line with the company’s targets.
As I write this, TELUS has a generous 6.9% dividend yield. Combine that with its strong predicted earnings growth, a reasonable valuation of under 14x forward free cash flow, and its position as part of Canada’s dominant telecom oligarchy, and it combines to make an interesting investment opportunity. This analyst is long.
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