The Canadian Investor - Why TELUS International Has Been a Brutal Investment Since its IPO

Episode Date: June 23, 2025

In this episode, we dive deep into MicroStrategy—the largest corporate holder of Bitcoin—and explore how Michael Saylor transformed a declining software business into a leveraged Bitcoin vehicle. We look at the company’s aggressive BTC acquisition strategy, its use of convertible debt, and the growing risks tied to its outsized Bitcoin exposure. Then, we shift to Canada and break down the Telus International fiasco. What started as Canada’s largest tech IPO now risks becoming one of the biggest shareholder disappointments, as Telus attempts to buy it back at a fraction of its IPO value.  Tickers of stocks discussed: TIXT.TO, MSTR, GME, TSLA, SQ, XYZ Get your TSX Meetup tickets here! Get your Calgary Meetup Tickets here! Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Just my reminder to people who own safe Google's, don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian Investor Podcast. I'm back with Dan Kent. We are here for a regular episode of the Canadian investor Before we get started just some housekeeping items reminder again for the two events We have going on coming up in a couple weeks a month Calgary is coming up on July 8th. There's still some tickets available use code TCI for a 20% discount and July 24 in Toronto after for the closing of the Toronto Stock Exchange.

That one I don't think there's many tickets left so it's possible that by the time you hear this it will be sold out but if you're interested there are links in the show notes where you can go register for either of the event or both if you're traveling and happen to be in both cities and want to do both at the same time. Dan, I think we have a fun episode today. We have some different topics, I would say. So one that I've been meaning to talk about for quite some time, looking at companies that are using Bitcoin as a treasury asset.

And I'll be focusing on mostly on micro strategy but there's been some other companies that have adopted that strategy recently. So I'll talk about those as well and you'll be talking about Telus International. Is that it? Yeah, Telus International and just the entire situation that's gone on over the last, well, kind of since its IPO leading up to the buyout offer from TELUS, which was only a couple of weeks ago. It's a pretty interesting story, a bit of mismanagement overall, but it should be an

interesting topic. I don't know much about MicroStrategy, so that'll be interesting as well. Like I know they're, I know kind of what they do, but I don't really know the whole leverage structure and the convertible debt and stuff like that. So that it definitely should be interesting because I mean, it's been one of the, the hottest stocks probably of the year, I would say, or maybe the past year ever since Bitcoin started taking off. Yeah.

And I mean, I know a lot of funds are exists like single stock ETFs, income ETFs for micro strategy, things like that. Yeah. Leveraged ETFs, income ETFs for MicroStrategy, things like that. Yeah, leveraged ETFs on this company. So it's definitely going to be interesting because I mean, I've never really even looked at this too much just because I don't understand just overall the overall strategy, but I'm sure you'll go over it in depth here. Yeah, exactly. Trying to, you know, to go in depth without making it too complicated here, I'll try to simplify it as best as I can. So I'll just give an overview of MicroStrategy for those that are not really familiar with

the company. I mean you see their name thrown around quite a bit. You'll see it on CNBC quite a bit and I mean it's normal they've done very well in terms of using a Bitcoin strategy and I'll go into more detail how they've done it. So the CEO of MicroStrategy is Fung-Kyu Lee, hopefully I'm not butchering the name here, the executive chairman, which is probably the person where most people are the most familiar with, Michael Saylor. The company was founded in 1989 and has a market cap of around $106 billion. The ticker is MSTR. Now MSTR MicroStrategy is the largest corporate holder of Bitcoin in the world. Their total Bitcoin holdings are about 582,000, which is about 2.8% of the total Bitcoin supply.

Of course, that's just a once it will all be mine. So it's not the actual current supply, but the 21 million supply when it'll all be mine in 21, in year 21 something. I don't remember exactly the year. So the business here is more of an afterthought. I mean for investors, people listening to the podcast that want to invest in actual businesses, that's probably not the reason you're investing in MicroStrategy, I'll be very honest. So MicroStrategy has a legacy business,

a legacy software intelligence or intelligence software business that generates about 460 million in revenue per year. The problem is that business has largely been in decline for quite some time now, and I'm showing it here for joint TCI viewers where you'll see that the revenues are just, they're not going in the right direction. So they've been declining.

Yeah, they've been declining for better part of pretty much the last 10 years. They had a little bump in 2021 where they're producing about 500 million in revenues and it's just been slowly declining. If you go back to 2015, they had 530 million in revenue and now it's 549 million in revenue. So yeah, it's been essentially declining ever since. So it's more, like I said, a legacy business which does generate some cash flow. So I think that is one good thing about the business. the In August of 2020, MicroStrategy announced that it had allocated $250 million of its cash to Bitcoin which had resulted in then purchasing a bit more than 21,000 Bitcoin. Clearly, if we're just looking at this purchase, it was a good move for them to do so.

Yeah, because what was Bitcoin in 2020? Like the price of it? It was pretty... At that time, it may have been like 15,000, somewhere like that. Even depending, I mean, it even got as low as 12. Well, I guess that's Canadian. So I mean, it would have been...

Yeah, if I'm thinking USD, yeah, I was thinking USD, so it was probably just kind of ballpark around that time because I know I was buying some around like April of 2020. And I think it was in the single digit thousands so it was probably around like 7-8k when I was buying some. 7,000 yeah so it's gone up around 1,400% since. Yeah it's done pretty well. It's done alright. Yeah their main reason that MicroStrategy was able to do this is

because Michael Saylor owns a majority of the votes for micro strategy, which means he has control. He doesn't own the majority of the shares, but the shares he does own, it's this like two share structure where the share he owns actually have more votes. So he does have the controlling vote for the business. And that's really important because that is my belief that there might have been more companies that would have done a strategy like this in the last like couple years, four or five years or following in MicroStrategy's footsteps, but at the end of the day, they can't get the shareholder support to do so. And because it has the majority of the votes, at the end of the day, if he wants to do it,

they're going to go ahead and do it. And without it, I think it would have been almost impossible for them to do that. And Bitcoin, keep in mind that when he started buying that Bitcoin was a much lesser known asset. I would venture to say that most people would have heard of it back then, but it definitely wasn't a mainstream as it is today. And even though Bitcoin may have known what it was like vaguely back then or just heard the term Bitcoin, I think most people would have said like, oh, it's, you know, it's just internet money that that would have been probably just a reaction and hearing the term if you would have asked him.

Yeah. And I don't think did they have any of the Bitcoin ETFs or anything back in 2020? I don't know if they did. I know they didn't on the US side, obviously, but I don't know did they have any of the Bitcoin ETFs or anything back in 2020? I don't know if they did I know they didn't on the US side obviously, but I don't know if no Canadian ones existed back then either I think they started listing around that time. Yeah. Yeah, so If they I really don't know but I know they started listing around that time I'm not sure if they were in place or not, but there wasn't that many options I know there was the grayscale Bitcoin trust, so GBTC was an option, but again, GBTC was trading for a better part for multiple years. It was trading at a pretty big premium too. So you have to keep that in mind because there

were no other US options. Now, after the first purchase in December of 2020, they started issuing convertible debt to buy Bitcoin. Now convertible debt, if you're not familiar with that, just means that in this case, the holders of the debt can convert it to stock down the line. They continued buying Bitcoin for the next few years as the bull market ramped up. In August of 2022, Sailor stepped down as CEO and became Executive Chairman to focus on their Bitcoin strategy. And let's be honest, he is the face of micro strategy. And I think a lot of people have really no idea who the CEO is, but they

know the chairman. I mean, he's also a very big advocate for Bitcoin. and I think knowing the Bitcoin space decently well, which I think, you know, when you have more hardcore Bitcoiners, they I think have a love-hate relationship with them because sometimes you'll say a lot of stuff that they agree with, but other times you'll say things that kind of annoy or piss off really Bitcoin maxis if you'd like to to use a term so just keep that in mind there's definitely if you think a lot of you know he's just like a hundred of course he's like into Bitcoin but he's also he's very pragmatic if you start listening to him so he's yes he's like he really believes in Bitcoin but then then again, he's not necessarily aligned 100%

with the Bitcoin maximalist. And they bought less Bitcoin in 2022, micro strategy in the face of the bear market, but increased their buying once again in 2023 as the market was picking back up. In 2024, the buying went on another level. They kept buying massive amounts of Bitcoin with new debt. Equity also used equity issuers, so issuing new shares, and some cash generated by its legacy business. Again, the legacy business is there. It's not the reason you'd be investing with them, but it still generates some cash. The aggressive Bitcoin buying has continued in 2025 and MicroStrategy now holds close to a 600,000 Bitcoin like I mentioned at the beginning

of this. So that's kind of an overview of what they do. There are a lot of risks. There are also some potential upside to the strategy that they're doing. Well, I'll go over both. Anything that kind of jumps out for you before I talk about the risk and the upside? Nope. In this kind of market, I like having some cash on the sidelines. It gives me the flexibility to jump on opportunities when the right stock goes on sale. But just because the cash is waiting, it doesn't mean it shouldn't be working for me. That's why I use EQ Bank.

They offer some of the best interest rate among Canadian banks, so my money's still earning while I wait. You can even get a boosted rate by setting up direct deposit for your payroll and depositing $2,000 or more per month into your EQBank account. Your cash stays liquid and ready to go when it's time to invest. And if you're not in a rush to access your funds, EQBank's noticed savings accounts and GICs are great ways to grow your returns even more. It's a smarter way to park your cash. Visit EQBank.ca to learn more and keep your money earning even while you wait.

Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem. Questrade has you covered they're the first broker in Canada to offer real-time Commission free trading for US fractional shares and ETFs. It's simple Powerful and finally available in Canada head to questrade.com to open and fund an account Use code TCI and you get $50 to get you started.

Summer always gets extra busy. Weekends at the lake, trips out to Canada's East Coast, vacations with the family, chasing a bit of sunshine somewhere new. Every time I'm away and probably you as well, your place just sits at home empty. And since I'm already staying at a great Airbnb, why not have my own place and probably you as well, your place just sits at home empty. And since I'm already staying at a great Airbnb, why not have my own place generating a little income on the side while I'm gone? I've always thought it's a great idea, but it made me nervous to think about the work required. It's easier now with Airbnb's co-host network.

I can find a local trusted co-host to handle all of it. Guest check-ins, support, even cleaning, no stress, no extra work. If your place is often empty in the summer, maybe it's time to let it make some income for you. Find a co-host at airbnb.ca forward slash host. Okay, so in terms of risk, using debt is risky on an asset like Bitcoin. It's quite risky. Slightly.

Slightly risky. And a lot of Bitcoiners, I'll be honest, they love this strategy because they believe that fiat, so cash, that's what it's called, like paper money, because they believe fiat will just debase over time. And I don't disagree with them. I agree that fiat, I mean if you look at the history of money that was not backed by anything, it just ends up being essentially endlessly debased. So they're not wrong with that. The problem is it doesn't go in the straight line and that's because and that's why Bitcoin is so volatile at times.

And you have to keep in mind that if there are some repayment issue when the debt comes due, let's say they don't have enough cash to pay the debt, or let's say the price of Bitcoin is down 50, 60, 70, 80%, which has been known to happen multiple times in Bitcoin's history. So they could get into trouble because there might not be enough demand to refinance the debt if Bitcoin is really in the gutter at that point and facing some significant drawdowns. But it is a risk. It is something that they have to take that you have to keep in mind if you're investing in micro strategy because they are using leverage to buy Bitcoin. So you're really dependent on the price of Bitcoin going up. So I have really strong conviction in Bitcoin, don't get me wrong, but a 50% plus drawdown

in the next few years is definitely a possibility. Yeah. And wasn't it they weren't paying any interest on the convertible debt? Yeah, there is some of the debt that is zero interest debt So essentially you would the owners of the debt would only get essentially the debt back, but it's the convertible Yeah, I believe that is yeah the nature of it that does create some upside for whoever is buying that debt and The problem with using that is it could force micro strategy to sell Bitcoin or heavily dilute shareholder with using debt is it could force MicroStrategy to sell Bitcoin or heavily dilute shareholder by issuing shares during a Bitcoin bear market to pay down that debt if they don't have enough cash on the balance sheet and there isn't sufficient interest to refinance the debt.

And that's at the end of the day, that's the risk you're facing whenever you use leverage, right? Because you're using leverage to buy an asset and if that asset starts going down in price leverage goes both way right it can amplify your returns but it can also amplify the losses so it's something to just keep in mind. Micro strategy has always had a high concentration risk because of its bet on Bitcoin I I mean, if you're investing in them, essentially it's a levered Bitcoin play, which makes some of these ETF super risky.

Like these leverage ETFs on micro, exactly, these single stock ETF, levered single stock ETF on micro strategy. It's not for the faint of heart. I mean, I'll just say that, but it's very risky. Yes, you can make it big, but you can also lose a lot of money. And there's also an interest rate risk involved with this strategy. Micro strategy could find takers if they refinance their debt, but it could come at higher yields.

So again, using my example from before, Bitcoin is in a bear market and they just can't get some financing. Well, usually there's no like, if you ask a lot of people in the debt market, there's not really any bad debt. There's just bad prices. Yeah, exactly. There's always a price. Exactly.

Like we've talked about it for companies like GoEasy, for example, like, yeah, sure, they'll loan out money to people that don't have great credit, but they'll only out at 25-30%. Sure, like you can go buy some emerging market sovereign debt from a country that doesn't have a great history of paying back its debt. You're not going to lend it out at 5%, but you might lend it out to 15, 20, 25, whatever it is that number. But you have to keep in mind that sure they may, they would probably find demand for it, but it would likely come at a much higher cost

if the current market conditions aren't good. And another issue is the premium on the stock versus its Bitcoin holding. So depending on how high the investor sentiment is, investor could end up paying a premium for the stock versus its net asset value of Bitcoin holding. That increases the risk of a downturn if that premium goes down. More traditional investors and institutions start going towards other Bitcoin options like Bitcoin ETFs, which in time reduces the demand for MicroStrategy and puts downward pressure on that premium I just talked about.

Or the stock starts trading at a discounted Bitcoin net asset value and never really recovers. So that is another issue because one of the advantages that MicroStrategy had is before the Bitcoin ETFs especially, they were one of the few games in town where institutional investors could get exposure to Bitcoin. So it was a Bitcoin proxy, but it was a stock. So you had companies that were not able to invest in Bitcoin and the actual asset, but were allowed to invest in micro strategy or you had institutions, whether it's pension funds or others, that this was the way they were able to get some Bitcoin exposure. It's going to be very high volatility

because of the Bitcoin exposure. I mean, you don't take my word for it. Just pull up a chart. You'll see it. It's a super volatile stock. And there's also another thing here is a key person risk. A risk that we've talked before on the podcast a while back, but a key person risk is when you have one figure. Oftentimes the CEO or someone very influential in the company could also be like, maybe it's the key person that designs products for the company or whatnot.

And if that person leaves a company, passes away, it can really create some issues for the company. And Michael Saylor, he's not old, but he's not young. He's 60, so I'm sure he's probably have years to live. But then again, if something happens and he's really, let's be honest, he's the face of the company, it could create some issues for the stock performance going forward if anything were to happen to him. Well, and just the overall strategy as well. I mean, I guess if he owns a huge chunk of the voting shares, I mean, so they owned 600,000 Bitcoin you said? Yeah, yeah, just shy of it.

So you're looking at like 63... 582 I think. Yeah. So you're looking at like 63. 582 I think. Yeah so like 60 billion dollars worth of Bitcoin and it trades at 102 billion. So that is quite a hefty, especially their legacy business generates what 500 million dollars in revenue. Yeah. I mean again I don't really know what they're doing like under the surface here or anything. But I mean, that does seem like a large premium to their underlying holdings for sure. Yeah, exactly. I mean, look, let's be honest.

Like I think that the legacy business, I think early on when they started buying Bitcoin, I think there was more of a case to understand what they actually did for the legacy business. But now, especially since they're financing so much of it, I just don't know that it matters all that much. So they are free cash flow negative right now, but I think that the free cash flow negative recently, I'd have to dig in a bit more into the financials, but it could also just be some accounting stuff that happens with them, with potentially I think they have sold a little bit of Bitcoin in the past, not a

lot just for tax harvesting, but just keep that in mind that yes, the business is really an afterthought, especially when they're buying billions of dollars with, with that. Yeah, it's, I mean, I, like I said, I've never really looked to own this because I just I I don't know what they're What they're doing here like all the debt. I mean I would imagine You know if the price of Bitcoin bombed and their stock price bombed you can imagine they would probably have to issue equity and it probably wouldn't be at a very good price either because I Would imagine this thing's gonna be more volatile than Bitcoin itself. I mean, holy it's gone from 50 bucks a share a year and a half ago to

370 what a crazy run. Yeah I mean I was looking at it when the Bitcoin ETFs launched in the US I had done a calculation and it was trading I think a little bit below the value of its Bitcoin back then because trading I think a little bit below the value of its Bitcoin back then because that premium went way way down when the Bitcoin ETFs launched but then they just went on this like buying spree and the stock has just been a darling ever since but there is some upside here just to be fair and you may get the sense it's not really something I'm really interested on at least for the time being I have more than enough Bitcoin exposure and I think for the most part people would be better served to

owning the actual Bitcoin itself. That's just my opinion but then again those who have owned MicroStrategy have done very well over the years but since it's a leveraged play on Bitcoin, if Bitcoin does well in the future investors could be looking at significant returns and so far it's worked out. Over the last five years MicroStrategy is up 3,000% while Nvidia is up close to 1,500% and the S&P 107% and I'm pretty sure MicroStrategy has outperformed Bitcoin as well. So you know the proof is in the pudding, of course, but it's not without its risk like I just mentioned. And the premium could stay high as institutional investors still prefer a stock, a company as a Bitcoin proxy over other companies or Bitcoin ETFs. And there are

other companies that are starting to do a similar strategy here. Microstrategy could continue to be able to get favorable financing terms for future Bitcoin purchases because in part of the prominence of Michael Saylor and just because he's the the poster boy poster child whatever you want to use for that Bitcoin strategy. Should Bitcoin continue to rise long term it could create some major investment opportunities for micro strategy, some opportunities that might be even outside of the traditional business or even their Bitcoin strategy. I mean, if Bitcoin goes up and they just end up having these massive, you know, the value of their Bitcoin, the balance sheet is just massive. Well, at that point, they can even start lending the Bitcoin

and get some income on the balance sheet, whether they want to generate some Fiat income or Bitcoin income, they could potentially sell a little bit of Bitcoin to be able to diversify the business. Like there's different ways where they could definitely leverage that if the price of Bitcoin continues to do well and really their leverage bet on it pays off. And micro strategy becomes even more of a force in the financial world as Bitcoin continues to grow and create even more opportunities for them. So the last two points are a bit redundant,

but you get the idea here. And in terms of other companies that have started using a similar approach, I'll name, there's more than these, but I'll name four, actually four and a half, Tesla. They mostly bought their Bitcoin back in 2021 as a way to diversify, maximize their cash returns. However, there's been some back and forth with Tesla. I think they were, Elon was also getting a lot of grants in the US during the Biden administration. And I think they were Elon was also getting a lot of grants in the US during the Biden administration and I think they were getting a lot of pressure to not accept Bitcoin because of the environmental concerns and so they they haven't done too much with their Bitcoin when it comes to Tesla

there's Block Inc which was formerly Square they bought Bitcoin as a way to diversify their cast but they believe it is a force for economic empowerment. So that's the other reason they are purchasing it. Block has a dollar cost average strategy when it comes to Bitcoin, and continues to add it slowly to its balance sheet. Coinbase, they are revisiting some of their profit, or reinvesting, my apologies,

some of their profits in digital asset, but it's not exclusive to Bitcoin and it's a way to invest its profit in a way that reflects its belief in the future of crypto. The most recent one here that made headline is GameStop. So GameStop, this is very similar to what MicroStrategy is doing. They are doing in a way to reposition the brand and leverage financial products like zero interest convertible debt to buy Bitcoin. In March of this year, the GME board approved of the move and they bought Bitcoin on a few equations since.

And one of the more recent ones, I don't have too much information on that one, unfortunately, but there's also, take this one with a grain of salt, but Trump Media and Technology Group, I'm always a bit, I always have my guard up when it comes to anything Trump because my perception of Trump is he'll do anything to enrich himself and his family. So I guess take this one with a grain of salt. I haven't dug really into that one on how they've been doing it, whatnot, just because it would have been a bit too long of a segment.

But there are some other companies. This is not the only four that are doing that, four or five. There's some Bitcoin miners that have some Bitcoin treasury strategies as well. And I'm sure you'll see more and more companies allocate a small percentage of their cash to it. I would not be surprised to see more of that in the years to come but All that to say to close out the segment look, I think my position is pretty clear I think if you want some exposure to Bitcoin just buy Bitcoin

It's going to be volatile, but it's going to be less volatile to buy Bitcoin without leverage than using a leverage play like this. Sure, your returns may end up being better, but it's going to be a lot more volatile and the down swings will be much greater. And I think Bitcoin should also be an asset that you hold yourself in, whether it's self-custody, there's different option. But that's the way I would see it. And of course, if you're not into Bitcoin whatsoever, that's fine as well. You don't have to do it. There's tons of assets out there. You can pick stocks.

That's fine. But if you are getting into Bitcoin or one of these companies, always do it with a small percentage of your portfolio. And I've been very consistent over the years, like do it with a percentage that if it goes to zero, you're okay with that. Like it will not wreck your plans going forward. So whether that's 0.5%, 1%, 5%, you know what your risk tolerance is and I think that's the best way to approach it because then if you face a 75-80% drawdown, you won't panic

because you allocated an appropriate amount for your risk tolerance to that asset. Yeah, that was pretty much exactly what I did when I bought it. I think I bought it, I can't remember, probably in 2021. And I just, I think it was 4% of my portfolio at that time. And I just kind of thought, you know, like, I don't really know much about Bitcoin, but I just kind of put trust in people who are probably much smarter than me in that area And you know if they were wrong it goes to zero. I mean, it's 4% of my portfolio It's not a not a life changer and if they're right, and I mean I I've already now it's your biggest Yeah, I know it's a location. Well. I went from four four percent to like nine percent

Then I cut it back to five and now it's's back up again so I mean I'm free rolling now so. There you go. I mean I just like this this type of stuff is way too confusing to me like the micro strategy aspect of it for like an asset that I really don't know all that much about so I just buy the ETF and get on with my life. Yeah I mean at the end of the day it's not like it shouldn't be too confusing. Just if you there's one takeaway to take from this from MicroStrategy is they're using debt

to buy Bitcoin. Yeah. That's it. Like if you want to simplify it as best as you can, like they're not just using that, but they're mostly using debt to buy Bitcoin. So they're using that. They're also issuing some shares, but they're betting that Bitcoin will increase more in value than the-

Cost of the debt. Exactly, the cost of the debt or even the stock that they issue, they believe the stock will be worth much more, I guess, in the future. That's why they're doing it that way. But I think that- Yeah, well, I'll just say they had around 93 million shares outstanding back in 2020, That's why they're doing it that way. But I think that... Yeah. Well, I'll just say they had around 93 million shares outstanding back in 2020 and they're

up to around 280 now. So there's been a lot of equity there. But again, you're effectively, they're just betting on the fact that Bitcoin outpaces all that. Yeah, pretty much. That's it. So that's it over here. I'll just show what you were talking about.

You can really see over time the micro strategy shares that have really gone up. In this kind of market, I like having some cash on the sidelines. It gives me the flexibility to jump on opportunities when the right stock goes on sale. But just because the cash is waiting, it doesn't mean it shouldn't be working for me. That's why I use EQBank. They offer some of the best interest rate among Canadian banks, so my money's still earning while I wait. You can even get a boosted rate by setting up direct deposit for your payroll and depositing $2,000 or more per month into your EQBank account. Your cash stays liquid and ready to go when it's time to invest. And if you're not in a rush to access your funds, EQBank's noticed savings accounts and GICs are great ways to grow your returns even more.

It's a smarter way to park your cash. Visit EQBank.ca to learn more and keep your money earning even while you wait. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem.

Questrade has you covered. They're the first broker in Canada to offer real-time commission free trading for US fractional shares in ETFs. It's simple, powerful, and finally available in Canada. Head to questrade.com to open and fund an account. Use code TCI and you get $50 to get you started. Summer always gets extra busy. Weekends at the lake, trips out to Canada's East Coast, vacations with the family, chasing a bit of sunshine somewhere new. Every time I'm away, and probably you as well, your place just sits at home empty. And since I'm already staying at a great Airbnb,

why not have my own place generating a little income on the side while I'm gone? I've always thought it's a great idea, but it made me nervous to think about the work required. It's easier now with Airbnb's co-host network. I can find a local trusted co-host to handle all of it. Guest check-ins, support, even cleaning, no stress, no extra work. If your place is often empty in the summer, maybe it's time to let it make some income for you.

Find a co-host at airbnb.ca forward slash host. Now, before we, uh, before we go before we go on and just keep rambling here, let's switch over to TELUS International. Yeah, so this has been quite the, I mean, I guess you could say story in terms of Canadian IPOs over the last few years here. So, I mean, I think this is one that largely hurts

TELUS International, which I guess they rebranded. They're now called TELUS International. So I apologize if I refer to them as TELUS. They're now called TELUS Digital, but I always just end up just habit calling them international, but I think ultimately it helps TELUS and hurts TELUS International because, I mean, they just, this was an IPO that TELUS did during 2021 during a crazy IPO market.

And I mean, you kind of got to hand it to them here. I think they got away with, I mean, a highway robbery really. And I'll explain why in a bit. Got away with murder. Yeah. So just to go over what TELUS Digital is, they're an IT company, so in a nutshell, they provide things like contact centers, digital solutions,

like they work with a ton of major clients. I believe they're with Amazon, Google, Uber, things like that. It does things like compliance services, content moderation for like, you know, big major corporations that need compliance. They need, you know, content to be moderated to the point where, you know, they're not releasing anything they're not supposed to, data annotations,

things like that. They rebranded because they didn't want to have the focus on the fact that they were like a call center company. So that's why they turned to TELUS digital and the company did very, very well for many years under the TELUS umbrella to the point where TELUS again thought that the company did very, very well for many years under the TELUS umbrella to the point where TELUS again thought that it would do well as its own entity. So again, they certainly timed it right.

They IPO'd in 2021 when IPO valuations were just nonsensical to a certain point. So the company IPO'd at a value of around $10.6 billion. So this worked out to be around 38X, it's free cash flow generation at the time Which is expensive, but I mean considering the environment back then it was really not that outrageous It was the largest Canadian technology IPO in history now again, but who cares who cares about evaluation when the stock is down 80

Yeah, I know it While not even gets it even gets more interesting there from the bio perspective of Telus. But I mean, I don't really think, if they would have done this in any other environment other than 2021, I don't think you'd be looking at the largest tech IPO in Canadian history, but they timed it well.

It was growing at a double digit pace. It was doing very well period. But where things started going downhill quite a bit is, tell us international back at the time, had a pretty strong history of integrating, medium size acquisitions, merging them into the fold. But they made a acquisition of WillowTree, I believe it was in 2023 for 1.2 billion US dollars.

So WillowTree is pretty much a consultancy service. They're a developer. They build apps, websites, digital products, things like that. They got a ton of large clients on the books. However, they've really struggled post pandemic. I mean, a lot of companies have scaled back spending in this regard and Telus International paid around 10x sales for the company. It was pretty much seen as an instant overpayment and the company funded the acquisition pretty

much exclusively on debt. So they added just under a billion dollars to the balance sheet. And at first I was okay with this because when the company acquired Lionbridge AI a few years prior, they did add a ton of debt to the balance sheet, but it was paid off relatively quickly and they did use a lot of proceeds from the IPO to pay it off. But interest expenses kind of ballooned with rising rates in 2023, more than tripling over the course of the year. It's been on a downward slide ever since.

And they came out with some pretty abrupt cuts to guidance at the start of 2023. They weren't expected, and they definitely weren't small either. So they were originally expected to grow at a 12% pace annually and they slashed guidance down to one to 2% growth. I think the company absolutely bombed after this news. I think it was like it might have fallen 30% so it's it's taken a pretty big hit and it's it's kind of fallen quite a bit overall and I think there's think there's an added element here

of artificial intelligence potentially disrupting a lot of the business. I mean, if you think of the call centers, call centers like digital apps, things like that. I mean, a lot of that stuff could potentially be very easily replaced by AI. I mean, I know I seen this on X not too long ago, but they actually have companies who pretty much regulate

call centers using AI call people. Like it's crazy, they can respond back and forth to the questions, things like that. So I think this was one of the main reasons they rebranded. They wanted to get away from that idea that they were this call center company. And I mean, it just hasn't gone well. And now to get

to the main point of this segment actually is the buyout. So Telus owns about 57% of Telus digital so they've always been a majority shareholder with the spin-off accounting for about a high single digit percentage of its EBITDA. A lot of Telus' struggles over the last while and like reduction in free cashflow guidance and things like that has actually been due to the struggles from TELUS International. So because of this large ownership, I did have a sneaking suspicion that TELUS

was gonna look to reintegrate this company back into the fold. And it does look like that is the case, but the only thing here is I figured the company would pay a much larger premium than it has proposed and it's no doubt kind of a kick in the teeth to many of the investors who own Telus International. I mean you're talking about institutional investors, retail investors, a lot of these IPOs they will be you know kind of purchased by institutional investors, people with a lot more money than

retail investors. And the funny thing here is... There are a lot of funds I'm showing here for a joint TCI viewers on, well, fiscal.ai, formerly finchat.io. So you'll see the top holders in terms of corporation and institutions and a, a lot of companies that manage assets. Yeah. So I mean, this isn't, you know, a kick in the teeth to, well, it is to retail investors who bought it, but it's to a lot of institutional investors who, you know, kind of funded this thing. I wouldn't necessarily funded, but added shares on the IPO. So the funny thing

here is if we go back to September of 2024, TELUS was like aggressively purchasing shares of TELUS International. So they purchased 2.6 million shares. And the funny thing here is at the time management stated that this was not a step to privatizing the company, but they just believed in the long-term prospects of TELUS International. So they bought, I mean, it was quite a bit of shares and they said they had no intentions to take it private or kind of merge it back into Telus. And I mean, fast forward six months later and the statement kind of looked to be completely false. And the funny thing here is Telus was acquiring shares at this time at a higher price than their buyout offer right now despite believing in the company's growth. So Telus has pretty much said they'd be willing to pay $3.40 USD a share.

So this is 85% lower than its IPO price and it works out to be around $950 million USD for the company. The funny thing here is that is 2.7x the company's trailing 12 month free cash flow. So it IPO'd at 38x and they're trying to buy the company back at 2.7x. So it just seems crazy to me. I mean, I imagine the free cash flow generation moving forward is not going to be as good because the company is currently going through a lot of slowdown in its overall business. I mean, there's just not as much demand right now,

but it still seems like a very, very cheap price. And initially I kind of had the idea that because Telus was a major shareholder, they could just automatically approve this deal, but that's actually not the way it works. So this is a related party transaction. So because Telus owns the majority of the shares and is also the buyer, their votes don't count.

So they're completely excluded in the deal. This is kind of a regulation that's put in place to protect minority investors, I guess you would say, or else Telus could just. I wasn't aware of that. Yeah. That's a good thing, I would say. I mean, like really, if this wasn't the case,

Telus could just offer whatever it wanted to majority and then vote and then buy it back. So What this means is there will need to be a majority of the minority. So if they can get more than Wednesday Wednesday vote that I'm not sure I'm not sure when they're voting on it But they'll need so they'll need the majority of that remaining 43% to approve the deal and if it does it will go through and I'm pretty sure on this I'm pretty sure this is a rule as well because of the interest Telus has in Telus digital The board of directors of Telus digital also can't have any part in this

I'm pretty sure they have to hire an independent party to come in and evaluate the deal and see if it's a good price. Because I mean, obviously TELUS probably has a large amount of influence on the board as well, being owning nearly 60% of the shares. So that'll be an independent party that comes in and kind of evaluates the deal and lets shareholders kind of know if it's a good deal or not. And it kind of seems like the market believes there could

be some sort of premium attached here because the buyout offer is $3.40 and they're trading at $3.60. So that's about 20 cents higher than the current offering price. I mean, if I'm a current shareholder of the company, I used to be, I did buy in and out of this one a few times. I eventually kind of took my losses. I can't remember when it was probably a year, year and a half ago. This does not seem like a very good deal to me whatsoever. I mean it just seems too cheap. The company's paying down debt at a pretty reasonable level. It should be able to get interest expenses under control and I mean

although it's clearly overpaid for acquisition like Willow Tree, I mean it just paid too much. That's just the harsh reality of it. I mean, although it's clearly overpaid for acquisition, like Willow Tree, I mean, it just paid too much. That's just the harsh reality of it. I mean, it's still turning out pretty solid. Free cash flow, I think it had around $400 million in free cash flow over the last year. I mean, I guess the main bear case here is a lot of the company gets replaced by artificial intelligence

and free cash flows continue to decline. However, for a company pulling in, oh yeah, have it up here, 350 million dollars in cash flow, I mean a 950 million dollar offer seems pretty low to me. Yeah and I mean they could definitely use AI to make their offerings even better, but yeah I mean it could affect that. I mean and we talked about it before we started recording. I think to me it just, it's just that trust element. I've talked about it before we started recording I think to me it just It just that trust element. I've talked about trust a lot on the podcast over the last little while I think Bell a lot BC. I said like look it's very hard to trust this management team and I Would say it's pretty similar here, but yes and no so first of all

I mean they're they're kind of flip-flopping on what they're going to do. And they're saying one thing and now doing a bit of different thing, which would create some doubts for me because if I have trouble trusting the management team, I'm not sure I want to invest in that business. But on the other hand, if you're just a TELUS shareholder and not TELUS International, that's a pretty savvy move to be able to IPO in the 30s and then you're buying it back at close to a 90% discount. It's not a bad economic move, I would say. It makes sense from that perspective

But you're also kind of screwing over people who bought into your IPO. So it's just yeah It's very much a mixed feelings for me. Yeah. Well that was kind of the main point of the segment is actually like is Is there a trust element here because I like I did some very basic numbers I don't know this is by no means like an actual hard number, but I would imagine they made anywhere from 500 million to 600 million, Telus did on the actual IPO of Telus International. They're buying it back for, first off, a fraction of that. Who knows what the actual cost would be to actually you know take it private again but I mean they made some money on this and you know now that it's sitting 90% lower they decide to buy it back and the one thing is like this wouldn't really be something I would bring up with a lot

of other companies however Telus for quite a while has talked about other spinoffs like they have Telus Health they have Telus Agriculture Health, they have TELUS Agriculture. I know for sure, and this has been kind of an issue, well, this has been a topic of discussion for like, I think it's going on four or five years now. They wanted to take TELUS Health public. They wanted to spin that off. And I kind of think like right now,

has that been put on the back burner because they burnt a lot of people with this TELUS International IPO here because the optics of it don't necessarily look good. I mean, like you said, they IPO that I think it was $25 a share and now they're buying the company back at $3.40 US dollars a share and not a long time either. It's been what, three and a half years, four years. So, I mean, in hindsight, like it was this, the company, you know, spinning out an asset at max valuation during a very strong IPO time

to make some money. And I mean, if you think of that from an institutional standpoint, are you now hesitant to kind of fund or, you know, partner with Tellus on any other IPO moving forward? Yeah, I mean, it's easy to say in hindsight, right? In 2021, a lot of people would not have predicted how a lot of growth stocks would end up where they are right now. Clearly things were very richly valued. So I think most people could have seen that at the time. I mean, I saw it, but I still probably should have made more move and trim and sell some companies before I actually did in the face of that valuation.

So I'm gonna give them the benefit of the doubt that they thought it was a good time to IPO and now they're just being opportunistic. Yeah. I think it's more that I don't. Yeah. I don't think it was their plan to begin with. I think I don't just kind of fell on fell into their lap and they're like, okay, well, it's a pretty good deal. Let's do it. Yeah. Yeah. And I mean, as you mentioned for tell us shareholders, this is it's a pretty good situation because they're buying the company back on the cheap. It could get worse for TELUS International or TELUS Digital, but it could also get better.

I mean, they could recover and like at some point this company was generating like almost $500 million in free cash flow. And you just bought the company back at $950 million. Like it's good for Telus, but I mean now from a future IPO perspective, the script is kind of flipped. The IPO activity is still kind of in the tank. And now I mean if they IPO Telus Health, our investors sitting there thinking, you know, remember that time they spun out Tellus International only to

buy it back at pretty much a tenth the price, like four years later. So I think there's going to be, you know, they're going to, investors are probably going to want to know that these spinoffs can thrive independently. And it's not just some effort for, for Tellus to raise capital and offload an asset, you know, at peak prices. So it's an interesting situation. Again, like you said, I don't feel that was their intentions with TELUS International. I mean, the business was growing quite a bit. It certainly made sense to make it its own entity. I mean, again, it was the largest IPO in Canadian history. It was profitable. And back in 2021, a lot of those IPOs were cash burners, but you come out with TELUS International

They're free cash flow positive You know double-digit revenue growth things like that. So it was It was timely but it looks it looks bad, but I don't think there was any ill intentions I just wonder now if they're if they're gonna put you know, the TELUS Health IPO on the back burner first off because The IPO market is not that good, but secondly, just because of the entire situation here with Telus International. I will push back on the IPO market is not that good.

I think it depends on the kind of company and the reason I pulled up here, and for those who wanna look at the name, so Circle Internet Group Inc. So Circle IPO'd not too long ago, maybe a few weeks ago. I never just kind of forgot to talk about it for the news and earnings. So Circle, for those not familiar with it, they're the ones that issue USDC. So USDC is a stablecoin. So it's cryptocurrency. It's a stablecoin that follows the price of the US dollar. There's also USDT, also known as Tether.

The thing with USDC is they've always tried to be working with regulators and do everything above board. Well, they IPO'd on June 5th, 2025, I have $31 a share. So two weeks ago, it's $200 a share. Oh my God. But again, I think this is just, there's a lot of hype around stable coins right now.

I think it's mostly that. So that's why I'm obviously, I'm kinda teasing you a little bit, but yes, IPO. I think mostly it's pretty, it's not the best time. It's clearly not 2021, but depending on the type of IPO, clearly with that as circle as the example, I mean, it's all about hype and investor demand.

This is crazy. You could have bought it around $70 without being an institutional investor at around $70 the day it opened, because obviously the IPO price is what institutional investor, and you'd still be looking at almost 3X returns right now in a few weeks which is completely insane yeah yeah I mean well and I guess yeah you're right that it's all a lot of it is just due to sentiment in the individual area like I would imagine tell us health would have been yeah health is not the sexiest. Well, you got to think like you're talking, you know, virtual, you know, doc, like telehealth effectively,

that would have been gigantic in 2021. I mean, if you look at like Teladoc, well health, I mean, you had cloud M.D. here like this probably would have been a more opportunistic IPO in 2021, 2020,2021 than it would now but now you've seen like a massive reset in the price of all these telehealth companies which so I think they put it off. The thing though with TELUS Health is they do more than just health related right like they also have at my old job they used to be our pension provider because they bought LifeWorks so they

they have this weird mix of stuff, Telus Help. It's also, I think they do scripting for pharmacies. They do medical remote care, medical records. Yeah. But they also have, again, like this kind of legacy pension business that they got from LifeWorks or Morneau-Chapelle back then. It's just, it is, yes, it's mostly health related, but there's just kind of also a slightly weird mix, mismatch of stuff in

TELUS Health. But again, I think I agree with you in terms of, I don't think it's a very sexy space right now to IPO in. And I think like they've gone as far as kind of isolating out TELUS Health in their quarterly reports and they kind of report on that segment individually. Like I think they will eventually spin this off but I think you know with this entire situation the IPO situation the telehealth situation I think it's going to be put off. Like I don't see them doing this anytime soon. think it's gonna be put off like I don't see them doing this anytime soon. Mm-hmm well and also if you remember when we talked about United Health like I think it's I know in United Health is an insurer but at the end of the day

they also I think they're a big name in the health industry and I think it's probably just affecting the sentiment towards that overall industry as well just the struggles that they've been having. Yeah, yeah. I mean they've planned to do this for a while and I think this kind of probably puts them back. It's the whole situation, it's a bad look. Obviously it wasn't intentional, it was opportun, I would say. Well, I have a solution. They should just create a TELUS Health Canadian stablecoin. True. And then IPO. IPO that.

Canadian dollar stablecoin. 10x, two weeks. And boom. Yeah. That's the solution, TELUS Health. So you heard it here first, TELUS Health. Create a Canadian stablecoin and then just IPO and you'll do just fine. Well, I think that's a good point to wrap it up because I think we're

going to start deviating a little too much. Before I go, I think we try not to do too much chitchat at the beginning of the episode because the feedback we got was just like, okay. Get to it. We like when you guys just get to the point but how you feeling Dan about that Dweilers hangover? Oh it didn't hurt as much this year than it than it did last year. Last year they they got goal lead for you know a couple of games and went down to three this year they were just they were terrible. Yeah and at least I think Darren Drager is saying that McDavid will likely resign in Edmonton so I think that

probably alleviates a little bit of stress on your part right? They'll be back. They'll be back next year. I said that I said that last year. I said they'll be back this year. They'll be back next year. You heard it here first Montreal-Edmonton in the finals. Full prediction. Oh man, imagine what the odds are for that. Like Montreal-Edmonton, that's probably like, you're probably getting 500 to one. Well, I don't know. I don't think that because Edmonton. Montreal's a long shot. Edmonton would probably be a five to six to one. Yeah, but the exact combination.

The parlay or whatever, yeah. Yeah, it's more like I think Montreal's not even sure to a lot of people are not sure if they'll even make the playoffs exactly. So let alone get deep in the playoffs. But that's enough of hockey talk. Thank you everyone for listening, for anyone who's still listening for the,

at this point in the last few minutes about us rambling. We do appreciate the support. If you want some more content from us, you can go on join TCI. We've been adding more and more things. You can see our portfolios. We have an update once a month for me, Dan and Brayden. So we'll do an update of our moves that we did. You also get another update usually midway through the month

I actually did it differently this time around so I did a video update for my parents portfolio What the moves I do for them I did a bit more of an explanation of the strategy because it was a pretty quiet month for the moves on their part and Some new stuff we had it recently is you can also have a feed ad free for the podcast. So if you subscribe, you'll be able to get a link and then add it to your favorite podcast player with the exception of Spotify that doesn't support it yet. But it is this episode, just no ads whatsoever. And you also get the full video for the episode.

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