Transcript Document

2004
annual general meeting
Darren Entwistle
member of the TELUS team
leading the way
…consistent strategy
agenda
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4
strategy progress report
corporate citizenship
2003 priorities & highlights
2004 priorities
tracking against strategic imperatives
2000  2004
1.
2.
3.
4.
5.
6.
5
build national capabilities
provide integrated solutions
focus on growth markets of data & wireless
going to market as one team
partner, acquire & divest as necessary
invest in internal capabilities
…to unleash the power of the Internet to deliver the
best solutions to Canadians at home, in the workplace
and on the move
1. build national capabilities
TELUS’ infrastructure - 2000
6
national transformation
Communications
 Ont/Que cities
 Co-locations
 Customer POPs
 Fibre lit (km)
 Platform
 Network
7
Jan 2000
Mar 2004
3
38
2
89
5
223
0
13,600
Stentor
TELUS
Circuit-based
Next Generation (NGN)
NGN delivers enhanced customer data & IP services
and operational cost savings
national wireless transformation
Mobility
 PoPs covered (millions)
 Mike (iDEN) (millions)
 Technology / Generation

Jan 2000
Mar 2004
7
29.9
-
25
1G
3G
Key to driving profitable growth

 Operating earnings have quintupled to $884 million 
 Subscribers have tripled to 3.5 million
 Operating earnings per employee have increased
89% due to scale efficiencies
8

new developments in wireless
9

cross-border roaming partnership with Nextel
enabling Mike Direct Connect walkie-talkie service
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launch of two new Blackberry devices
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operating on Mike (iDEN) network and national
1X wireless data network
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offers a one-stop wireless solution
to stay connected
now offering North American wide roaming
1. build national capabilities
TELUS’ infrastructure - 2000
10
build national capabilities
TELUS’ infrastructure - 2003
11
2. provide integrated solutions

TD Bank Financial Group win Oct. 2003
 $160 million, 7-year contract for managed data
solution – largest network migration in Canada
 NGN with IP Virtual Private Network (VPN) security
& enhanced services cannot be matched by
competitors
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12
please visit our tradeshow following this AGM
3. focus on growth markets of data & wireless
consolidated revenue profile evolution
20042
20001
LD
LD
13%
Wireless
23%
18%
Local Voice
Data
43%
Other
30%
Other
19%
4%
$7.2B
$5.7B
13
Data
10%
12 months ended June 30
34%
Local Voice
6%
1
Wireless
2
12 months ended March 31
data & wireless revenues from 28% to 53% in 3.5 yrs
executing our strategy for profitable growth
2003 wireless industry
subscriber growth
TELUS
Mobility
30%
1.4M
EBITDA growth
TELUS
Mobility
45%
$630M
Source: Company reports.
Sum of reported net adds & wireless EBITDA for BCE, Rogers Wireless, Microcell, TELUS Mobility
14
TELUS achieves profitable subscriber growth
continued industry leadership in wireless average
revenue per subscriber unit (ARPU)
$57
2002
$55
2003
$47
$48
$47
$45
$40
$38
TELUS Mobility BCE Wireless Rogers Wireless Microcell
Source: Company reports
15
industry wide improvement in ARPU
high-speed Internet growth
(000s)
Net additions
~687
Subscriber base
562
410
~125
152
195
215
16
84
58
131
2000
2001
2002
2003
2004E
market share grew from 10% to 39% currently
driving towards leadership in high-speed Internet
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2004 target of 125,000 new subscribers
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on track in Q1 with 44,000
first to market with new services
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Spam Control
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anti-virus
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ad-blocking
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PureradioTM
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PuretracksTM
4. going to market as one team
camera
phones say it
instantly.
18
TELUS advertising ranked top
Awarded by Marketing Magazine
as Canada’s:
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No. 1 “Top-of-Mind” awareness
Top 3 for “Most Liked”
Leger Marketing national poll – December 2003
TELUS values
we have the
we embrace change
courage to innovate
and initiate opportunity
Our values make the future
friendly
20
we believe in
we have a
spirited teamwork
passion for growth
corporate citizenship
21
amateur sports & 2010
22
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Premier founding sponsor for
Canada’s Olympic bid
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TELUS Centre for Sport
& KidSportTM
Video to be played
23
corporate citizenship
24
TELUS investment in the community
25

member of Dow Jones Sustainability Index
 three consecutive years – only North American
telecommunications company listed

named Canada’s most environmentally friendly
company in 2003 by Corporate Knights
Corporate Social Responsibility Report now available
2003 corporate
priorities & highlights
2003 TELUS corporate priorities
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delivering operational efficiency
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reaching a collective agreement
2004
improving Central Canada profitability
strengthening financial position
enhancing wireless performance
improving levels of customer service
improving central Canada profitability
Revenue (mil.)
~$860
EBITDA (mil.)
~$120
$4
Jan. 2000
1
28
2004E
Includes TELUS Quebec & TELUS non-ILEC operations except 2000
TELUS wireline operations in Ontario & Quebec have significant
scale & are generating profitable growth
improving central Canada profitability
 good progress in 2003, non-ILEC EBITDA  $78 million
 focusing on recurring revenue streams
 2004 affected by focus on larger national deals
 higher quality of business deals going forward
 $66 million 6-year contract
 WAN, LAN data services & IP solutions
 over 600 locations across Canada
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strengthening our financial position
generating cash flow
(EBITDA less capex)
($M)
1,136
~1,0751
~6751
746
456
75
2002
2003
2004E
Communications
30
1
Based on midpoint of EBITDA guidance
2002
2003
Mobility
2004E
improving free cash flow
$1.13B to 1.23B
$845M
2001
2002
$(140)M
2003
2004E
$(1.14)B
31
reduced net debt by $872M in 2003 & $298M in Q1 2004
debt rating update
 2003
 DBRS, S&P and Fitch maintained investment
grade ratings while changing outlook to ‘stable’
 Moody’s upgraded outlook to ‘stable’ and then
‘positive’
 2004
 Mar. 2nd Moody’s upgraded to ‘investment grade’
with ‘stable’ outlook
32
rating agencies recognize financial strength
2003 global telecom performance
21
16
14
13
EBITDA1 % growth rates
13
8
3
Telia
FT
DT
2
1
KPN TELUS MTS Telstra Nippon BCE
BT PSSW Sprint Aliant BLS
(0.3) (2)
(2)
VZ
SBC AT&T
(3)
(5)
(6)
As at March 1, 2004
Notes:
1
Excluding restructuring
TELUS data based on 2002 & 2003 results
Other results provided by Bloomberg, company, and analyst reports
(14)
(18)
33
2003 global telecom performance
94
Cash Flow (EBITDA1 - Capex) % growth rates
63
46
29
20
19
17
7
TELUS FT
Telia
DT
MTS Sprint
FON
BCE
KPN
4
4
3
1
Aliant Nippon BLS Telstra PCCW
As at March 1, 2004
Notes:
1
34
1
Excluding restructuring
TELUS data based on 2002 & 2003 results
Other results provided by Bloomberg, company, and analyst reports
BT
(0.1)
VZ
AT&T
SBC
(4)
(16)
(24)
2004 corporate
priorities
2004 priorities
36

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reaching a collective agreement
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revitalizing wireline growth
growing brand value through superior customer
service
embracing continual cost efficiency
driving towards leadership in high-speed Internet
enhancing our leadership in wireless
….leading the way into 2004
wireless customer satisfaction = low disconnects
3.2%
3.2%
2.7%
2.7%
2003 monthly churn rates
2.6%
2.0%
1.8%
1.6%
1.5% 1.4%
Microcell T-Mobile Cingular Sprint AWE Rogers Verizon Nextel TELUS
PCS
37
TELUS Mobility lifetime customer revenue $3,900
BCE
customer service improvements
Service Indicators
Service Provisioning
Repair Service
Local Service
Directory Services
Complaints
Exceeded CRTC standard1
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1
company report on 19 CRTC quality of service indicators and standards for March 2004
38
TELUS setting new historical records in
customer service
revitalizing wireline growth
39
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goal to overcome industry wide challenge of
declining wireline revenue growth
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step change improvements planned
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marketing and sales effectiveness
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excel in delivery
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operationalize lead in IP solutions
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launch new products
embracing operational cost efficiency
efficiency program 2001 to…
2003
Cumulative Goals - Savings
Actual
$450M
$454M
$550M
$477M at Q1
Net staff reductions target
7,300
7,500
NA
NA
Actual
40
2004E
exceeding program targets with $100M expected
incremental savings for 2004
driving towards leadership in high-speed Internet
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41
2004 target of 125,000 new subscribers on track
platform for future services
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Wireless home networking

IP telephony

TELUS TV
see wireless home networking demonstration
enhancing our leadership in wireless
2004E
Q1 on track?
Revenue growth
12 – 14%
19%
EBITDA growth
23 – 29%
39%
$650 - $700M
$198M
Cash Flow

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
(EBITDA less Capex)
42
delivering on strategy of profitable wireless growth
leading the way …
with more of the same
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43
“what gets measured gets done”

19 of 22 consolidated targets achieved
in last 4 years (2000 to 2003)

public targets set for 2004
Net income estimated to increase 27% to ~$420M
consistent performance over time
2004E global telecom performance
projected EBITDA % growth rates
7
7
6
4
TELUS FT
DT
4
3
3
3
MTS Sprint Aliant Telstra BCE
2
BT
1
0.4
Nippon Telia
VZ
PCCW KPN
(0.4) (1)
SBC
BLS
AT&T
(1)
(6)
(8)
As at April 30, 2004
Notes: TELUS data based on 2003 results & mid-point of 2004 targets
Other estimates provided by Bloomberg, company and analyst reports
44
(20)
2004E global telecom performance
projected Cash Flow (EBITDA - Capex) % growth rates
14
11
5
TELUS Aliant Telia
4
FT
3
2
1
BT
MTS
Sprint BCE Telstra DT Nippon (1)
(1)
0.4
0.2
VZ
(3)
PCCW KPN
SBC
BLS
(9)
(10)
AT&T
(3)
(6)
As at April 30, 2004
Notes: TELUS data based on 2003 results & mid-point of 2004 targets
Other estimates provided by Bloomberg, company and analyst reports
(28)
45
leading the way
…consistent strategy
positioned to build value
2004
annual general meeting