1. Fair Market Value Has Been Falling for Years

The SVA chart shows a sustained decline in Fair Market Value. Ten years ago, earnings supported the share price and created visible upside. Today, price and Fair Market Value sit at the same level. When upside disappears, a stock becomes a profitless hold.

Regulatory pressure from the CRTC, combined with a maturing telecom market, continues to erode earnings. Wireless, internet services, and hardware growth are slowing. Smaller competitors are gaining access to infrastructure, compressing returns across the sector.

2. The Balance Sheet is Weakening

Even without knowing the fundamentals, the SVA chart signals deterioration. The balance sheet is slipping year after year. Investors holding Telus are losing value simply by staying in the position.

3. The Dividend Payout is Unsustainable

Telus pays a dividend of 1.67 dollars per share, but expected earnings for the coming year are just 1.06 dollars. Last year, earnings were 0.77 dollars. Telus is paying out significantly more than it earns.

Using an 80 percent payout ratio as a threshold, Telus would need roughly a 50 percent dividend cut to rebalance. If a more conservative target is used, the required cut becomes even larger.

Northland Power faced this same challenge. When it cut to a sustainable level, shares dropped 28 percent and continued to drift lower. The market often anticipates these adjustments well before they happen.

4. Market Behaviour Suggests Concern

Since the Northland Power cut, Telus shares have been easing lower. Whether coincidence or signal, it suggests the market may be preparing for a potential dividend reset.

5. What Investors Should Consider

For SVA-driven investors, Telus currently offers no upside potential. Declining Fair Market Value, an overstretched dividend, and weakening balance sheet strength all point toward caution.

This is not a recommendation to short the stock. It is a warning that risk-to-reward is not in the investor’s favour.

Next week’s Friday Focus will examine BCE and Rogers to determine whether either presents a better opportunity.

Watch the full episode on YouTube:
https://youtu.be/rDxTEehlTGY