TELUS Corporation (TU): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at one of Canada's telecom giants, and honestly, the competitive heat is on. As a former BlackRock analyst, I see TELUS Corporation navigating a landscape defined by brutal rivalry with Bell and Rogers, even as they pour about $2.5 billion into capital expenditures this year just to keep up. The good news is that customers, despite the pricing pressure, are sticky-we saw postpaid churn dip to just 0.90 per cent in Q2 2025-but suppliers of specialized 5G gear definitely hold sway. Dive in below to see the full five-force breakdown, including how their focus on profitable growth, targeting 3 to 5 per cent TTech EBITDA growth, shapes their next moves.

TELUS Corporation (TU) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing the supplier side of TELUS Corporation's business, and honestly, the picture points toward significant leverage for a select few vendors. When you look at the sheer scale of network investment required to keep up with 5G and future capacity demands, the suppliers who provide that core gear hold a lot of sway.

The power here stems from the specialized nature of the technology needed for a world-class network. Building out the physical and digital backbone-the radio access network gear, the core switching components-isn't something you source from a generalist. It requires deep, proprietary integration with TELUS Corporation's existing infrastructure.

Here's the quick math on the financial commitment that backs up supplier leverage:

TELUS Corporation reaffirmed its 2025 Financial Targets, which include Consolidated Capital Expenditures, excluding real estate, of approximately $2.5 billion. That's a massive revenue stream concentrated among a very small pool of specialized providers, giving those vendors considerable negotiating power on pricing, terms, and delivery schedules.

The high degree of integration in the network infrastructure means that switching vendors mid-cycle is not a simple plug-and-play operation. The complexity involved in migrating core network functions or even just upgrading major components locks TELUS Corporation into long-term relationships with its primary technology partners. This technical lock-in translates directly into reduced bargaining power for TELUS Corporation when negotiating renewals or maintenance contracts.

Furthermore, the ongoing operational reality is a heavy reliance on these same vendors for the continuous support, software updates, and maintenance required to keep the 5G and fiber networks running optimally. This isn't a one-time purchase; it's a perpetual service relationship.

The key dynamics creating supplier power for TELUS Corporation's network needs can be summarized like this:

• Need for highly specialized, complex network hardware.
• Substantial annual capital outlay by TELUS Corporation.
• Technical complexity creating vendor dependency.
• Essential nature of vendor support for network uptime.

To put the scale of the required spending into context, consider the following financial snapshot related to TELUS Corporation's investment strategy:

This level of sustained, large-scale spending on network assets means that even if TELUS Corporation attempts to diversify its supplier base, the incumbent providers benefit from the sheer volume of the annual $2.5 billion commitment. Any disruption from a key supplier could immediately impact network rollout timelines or service quality, which is a risk TELUS Corporation must manage carefully.

TELUS Corporation (TU) - Porter's Five Forces: Bargaining power of customers

You're analyzing TELUS Corporation (TU) in a market where customers have significant leverage, primarily because of the established, entrenched competition. The power of the customer is definitely high here, driven by the presence of strong national rivals like Bell and Rogers. For mobile services, switching costs remain relatively low, meaning if a customer isn't happy with pricing or service quality, moving to a competitor is a straightforward process. This dynamic forces TELUS to compete aggressively on value.

This intense competitive pricing environment, fueled by the need to counter Bell and Rogers, directly translates into pressure on key financial metrics. Specifically, we see this reflected in the erosion of mobile phone Average Revenue Per User (ARPU), which is the average monthly revenue generated per subscriber. Here's a quick look at the recent ARPU and churn figures from the second quarter of 2025, which shows the direct impact of this pricing pressure:

The Q2 2025 ARPU of $56.58 shows a clear year-over-year drop of 3.3 percent, which the company attributes to the adoption of lower-priced base rate plans due to competitive promotions. This trend of declining ARPU has been consistent, with the Q1 2025 ARPU sitting at $57.13, down 3.7% from the prior year.

To counteract this, customers are leveraging their position to demand more comprehensive service packages. They are actively seeking bundled services that combine Mobility, Internet, and TV to extract greater overall value from their primary providers. This bundling strategy is a direct response to the competitive landscape, where carriers like TELUS use integrated offerings to increase stickiness and defend against rivals who are also offering similar packages.

Still, the bargaining power isn't absolute, as evidenced by TELUS Corporation's success in customer retention. The dedication to customer service excellence, alongside network quality and those very bundled offerings, helps keep customers locked in. Postpaid mobile phone churn remained low at 0.90 per cent in Q2 2025. Honestly, achieving a churn rate below one per cent for the twelfth consecutive year is a significant indicator of strong, albeit hard-won, loyalty in this competitive space.

• Rogers, Bell, and TELUS collectively held roughly 90% of wireless revenue in 2024.
• Intense competition involved steep discounts and device subsidies in recent periods.
• The company is focusing on economic margin-accretive customer growth to manage revenue pressures.
• The Q2 2025 results showed total mobile and fixed customer growth of 198,000.

Finance: review the Q3 2025 ARPU trend against the Q2 2025 figure by next Tuesday.

TELUS Corporation (TU) - Porter's Five Forces: Competitive rivalry

You're looking at a market where the established players fight tooth and nail for every subscriber. Honestly, the competitive rivalry in core Canadian telecom is, and remains, extremely high. Rogers Communications Inc., BCE Inc., and TELUS Corporation collectively held roughly 90% of wireless revenue as of 2024. Even when you look at the top four providers including Quebecor Group, they still accounted for 85.6% of total telecommunications service revenues in 2023.

This intensity shows up directly in your wallet, or rather, the company's average revenue per user (ARPU). For instance, TELUS's mobile phone ARPU in the first quarter of 2025 settled at $57.13. That was a drop of $2.18, or 3.7 per cent, compared to the year prior. The reason? Customers are signing up for base rate plans due to what the CEO called "more intense marketing and promotional price competition."

The CEO, Darren Entwistle, has been quite vocal about this dynamic. He decried a culture of price-matching in the industry, questioning why TELUS must always match prices in a 'race to the bottom.' The aggressive pricing from the fourth national carrier, Quebecor-owned Freedom Mobile, catalyzed an 18.2% national average decline in wireless tariffs during 2023 alone, forcing incumbents to shift focus. Still, TELUS is signaling a strategic pivot away from pure price wars.

Here's the quick math on how TELUS is balancing growth against profitability in this environment. The company is targeting profitable growth over market share at any cost, as evidenced by its guidance.

This focus on margin-accretive growth is key, especially as TELUS Health continues to scale rapidly. The rivalry isn't just about the core connectivity business anymore. TELUS Health is executing its global growth strategy, delivering Operating Revenue growth of 18 per cent and Adjusted EBITDA growth of 24 per cent in the third quarter of 2025. That's a clear example of the rivalry extending into non-traditional, high-growth areas like health services.

The competitive pressures in the core business are being managed through operational discipline and synergy realization. For example, TELUS achieved $355 million in combined annualized synergies following the LifeWorks acquisition, and they remain on track to hit the $427 million goal by the end of 2025. This internal efficiency helps offset external pricing pressure.

Key competitive dynamics you need to watch:

• Wireless tariff pressure is easing slightly, with Q3 2025 Mobility network revenue growth described as stable.
• The push for premium service differentiation over price parity is the stated strategic goal.
• TELUS Health's 24 per cent Adjusted EBITDA growth in Q3 2025 shows success in non-core segments.
• The top three incumbents control about 90% of wireless revenue, showing high barriers to entry.
• The company is committed to its dividend growth program, targeting 3 to 8 per cent annual growth through 2028.

Finance: model the impact of achieving the low end (3%) versus the high end (5%) of the 2025 TTech Adjusted EBITDA target on the Q4 2025 dividend coverage ratio by next Tuesday.

TELUS Corporation (TU) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for TELUS Corporation remains a significant pressure point, primarily driven by Over-The-Top (OTT) services that directly compete with traditional communication and entertainment offerings. This threat is best characterized as moderate and rising, especially in the video and voice segments.

Internet-based communication apps are actively substituting traditional revenue streams like SMS and voice calls. The persistent decline in fixed voice revenue is a clear indicator of this substitution effect. For instance, in the third quarter of 2025, fixed voice services revenues at TELUS Corporation fell by $12 million, representing a 7 per cent decrease year-over-year. This follows a similar trend seen in the fourth quarter of 2024, where fixed voice services revenues decreased by $15 million, or 8.0 per cent.

The television segment faces a similar substitution challenge. Lower TV revenue per customer is directly linked to customers selecting smaller TV combination packages and the broader technological substitution away from traditional cable/satellite. This trend is evident in the broader Canadian market where Canadian cable, satellite and Telco TV subscription revenue declined by five per cent to $6.51 billion in 2024. Conversely, the substitute, Canadian OTT subscription revenue, grew 15 per cent to reach $4.2 billion in 2024 and is forecast to leap another 15 per cent to $4.85 billion in 2025.

You can see the direct impact of this substitution on traditional services here:

TELUS Corporation actively mitigates this threat by bundling services and investing heavily in its own digital segments. The growth in TELUS Digital operating revenues shows this strategic pivot in action. For example, in the third quarter of 2025, TELUS Digital operating revenues increased by $33 million, or 5 per cent. This growth was also seen in the second quarter of 2025, with revenues up $56 million or 8 per cent. Furthermore, the adoption of TELUS Digital's solutions across TTech operations is cited as a factor contributing to competitive benefits and TTech Adjusted EBITDA growth.

The ongoing shift means that the traditional fixed voice business is shrinking, but the company is finding growth in data and digital:

• TELUS Digital operating revenues increased by $27 million or 4 per cent in Q1 2025.
• TELUS Digital operating revenues increased by $56 million or 8 per cent in Q2 2025.
• TELUS Digital operating revenues increased by $33 million or 5 per cent in Q3 2025.
• The company's focus on bundling helps preserve the average revenue per account despite OTT pressures.
• The company is leveraging its PureFibre network and leading portfolio of bundled services to drive internet customer additions.

TELUS Corporation (TU) - Porter's Five Forces: Threat of new entrants

You're assessing the competitive landscape for TELUS Corporation, and the threat of new entrants is definitely low. Honestly, the sheer scale of investment required to even attempt to compete nationally acts as a massive moat around the incumbents.

The barrier to entry is primarily rooted in the massive capital requirements for building out a national, modern telecommunications network. Consider TELUS Corporation's own guidance: their 2025 capital expenditure target is set at approximately $2.5 billion, excluding real estate initiatives. That's the level of annual spending required just for an established player to maintain and upgrade its network; a new entrant would need to match or exceed this just to get to parity, which is a staggering initial hurdle.

This capital intensity is further underscored by the historical spending on necessary radio assets. To be fair, a new entrant doesn't just need to build towers; they need the airwaves to transmit signals. The incumbents have already spent fortunes securing this scarce resource.

Wireless network operators in Canada have invested nearly $29 billion in acquiring spectrum licenses through government-held auctions from 1999 through 2024. This historical investment alone represents sunk costs that a new entrant would have to match or exceed in future auctions, plus the annual license fees.

Also, significant regulatory hurdles create a high barrier. The need to acquire scarce wireless spectrum licenses is a major roadblock. While the cost of acquiring the license is the upfront auction price, the ongoing cost of use is also regulated. Innovation, Science and Economic Development Canada (ISED) announced a new fee structure in March 2025, set to take effect for the 2026-27 fiscal year, which is designed to make national carriers like TELUS Corporation pay a greater share of the total industry fees. This regulatory environment, which prices spectrum based on market value rather than just cost recovery, makes entry expensive and predictable only through government policy changes.

Entrants struggle against the incumbents' fully built-out infrastructure. TELUS Corporation, for example, has been aggressively deploying its network assets. By May 2024, the company had already connected more than 1.9 million homes and businesses in British Columbia with TELUS PureFibre. Furthermore, TELUS Corporation has a total national commitment of $73 billion across Canada through 2028 for network development.

You can see the scale of the incumbent advantage here:

• TELUS Corporation's commitment to deploy $73 billion across Canada through 2028.
• The company's 2025 CapEx target is $2.5 billion.
• The total historical spectrum auction spend by incumbents is nearly $29 billion since 1999.
• TELUS Corporation is continuing to expand its 5G network using advanced technology like ORAN.

A new competitor faces the prospect of building a competing national fibre and 5G network from scratch while simultaneously bidding billions in future spectrum auctions. That's a tough proposition.