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TELUS (TU) Concludes $900M Sustainability-Linked Bond Offering

·5 min read

TELUS TU recently announced the closure of its previously announced offering of $900 million 3.4% senior unsecured Sustainability-Linked notes having a 10-year maturity.

The Canada-based telecommunications and information technology company intends to use the net proceeds from this inaugural offering for repayment of outstanding indebtedness, including the repayment of commercial paper.

In June 2021, TELUS announced its Sustainability-Linked Bond Framework and had committed to reducing absolute Scope 1 and Scope 2 greenhouse gas emissions by 46% from the 2019 levels by 2030. It had also announced plans to decrease absolute Scope 3 greenhouse gas emissions from business travel and employee commuting by 46%, and to diminish Scope 3 carbon emissions from purchased goods and services, capital goods and use of sold products by 75% per million dollar revenues within the same time frame.

The latest offering of Sustainability-Linked Bonds has been issued in line with the Framework and marks the company’s second bond offering under the Framework. For the purposes of these bonds, TELUS has selected the reduction of absolute Scope 1 and Scope 2 greenhouse gas emissions as its key performance indicator. The offering is also subject to a possible interest rate step-up. In case the company fails to meet its Scope 1 and Scope 2 carbon footprint reduction goal by 2030, interest payable on the notes will increase by 1.00% per annum. The interest payable on the notes may also rise if TELUS fails to meet additional sustainability and/or environmental, social or governance (ESG) targets. Nonetheless, the interest rate on the notes cannot surpass the initial rate of 3.40% by more than 1.50% per annum in the aggregate.

The latest bond offering demonstrates TELUS’ commitment to sustainable practices by aligning financing to the accomplishment of ambitious environmental targets. With the successful completion of the latest offering, the company has set forth a leadership example by leveraging financing to push ahead it environmental goals. The conclusion of the offering reiterates the company’s dedication to building a better future for the next generation through sustainable business practices.

TELUS is one of the prominent Canadian telecom service providers based in Burnaby, British Columbia. The company provides wireless, wireline and Internet communications services for voice and data to businesses and consumers. The company is well-poised to benefit from solid operating momentum, positive cash flow and augmented fiber footprint, backed by strong customer additions. Its accelerated broadband expansion program is expected to extend its PureFibre and 5G coverage.

In January, the company launched affordable Internet plans for low-income senior citizens across British Columbia and Alberta in Canada. The new Internet for Good plans is aimed at helping seniors connect with their family and friends as well as access healthcare and other critical resources to maintain overall well-being amid pandemic-induced on/off shelter in place guidelines, added the company.

Prior to that, the company expanded its 5G network to Lloydminster as part of its C$14.5-billion investment in Alberta through 2024. Since 2000, the company has invested nearly C$240 billion in network infrastructure, operations and spectrum across Canada, including more than C$51 billion in Alberta. Other locations where TELUS rolled out its 5G service are Salmo and Golden in British Columbia.

Shares of TU have gained 22.9% compared with the industry’s rise of 8.7% in the past year.

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Zacks Rank & Stocks to Consider

At present, TELUS carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology space include Progress Software PRGS, Badger Meter BMI and Iridium Communications IRDM. While Progress Software and Badger Meter sport a Zacks Rank #1 (Strong Buy), Iridium carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Progress Software has a projected earnings growth rate of 3.62% for fiscal 2022. The Zacks Consensus Estimate for Progress Software’s fiscal 2022 earnings has been revised upward by 6 cents in the past 60 days. The long-term earnings growth rate of the company is pegged at 2%.

Progress Software’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 26.8%. Shares of PRGS have gained 1.1% in the past year.

Badger Meter has a projected earnings growth rate of 5.77% for 2022. The Zacks Consensus Estimate for Badger Meter’s 2022 earnings has been revised upward by 19 cents in the past 60 days.

Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the last four quarters and met estimates once, the average surprise being 14%. Shares of BMI have dropped 5.9% in the past year.

Iridium has a projected earnings growth rate of 271.43% for 2022. The Zacks Consensus Estimate for Iridium’s 2022 earnings has been revised upward by a penny in the past 90 days.

Iridium’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and met estimates twice, the average surprise being 39.4%. Shares of IRDM have dropped 5.6% in the past year.


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