Q1 2012 TELUS investor conference call May 9, 2012

Robert McFarlane

EVP & Chief Financial Officer

Joe Natale

EVP & Chief Commercial Officer

Darren Entwistle

President & Chief Executive Officer

TELUS Forward Looking Statement

Today's presentation and answers to questions contain statements about expected future events and financial and operating performance of TELUS that are forward looking. By their nature, forward-looking statements require the Company to make assumptions and predictions and are subject to inherent risks and uncertainties.

There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from that expressed in the forward-looking statements.

Accordingly our comments are subject to the disclaimer and qualified by the assumptions (including assumptions for 2012 annual targets), qualifications and risk factors (including TELUS proposed share consolidation and foreign ownership levels, the ability over time to sustain dividend growth of circa 10% per annum with semi-annual dividend increases to 2013, and CEO three year goals for EPS and free cash flow growth excluding spectrum costs to 2013) referred to in the Management’s discussion and analysis in the 2011 annual report, and in the 2012 first quarter report. Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements, and reserves the right to change, at any time at its sole discretion, its current practice of updating annual targets and guidance.

2

Agenda

 Share conversion proposal update  Wireless and wireline segment review  Consolidated financial review  Updates  Spectrum auction and foreign direct investment policies  Operational highlights  Questions and Answers 3

Mason Capital

  Despite Mason having one twentieth of the economic interest of our employees, they hold four times the voting power Executive Director of CCGG condemns ‘empty voting’ and fully supports one share – one vote  Leading independent proxy advisors, ISS and Glass Lewis supported the proposal four times 4

Share consolidation benefits

 Enhances TELUS’ leading good corporate governance practices    Enhances marketability of TELUS shares Enhances liquidity of common shares Listing on New York Stock Exchange One share – one vote 5

Significant share value appreciation since announcement

 

Feb. 21 – May 8

 Common Shares:  Non-Voting: Toronto Stock Exchange Index: MSCI Global Telecom Index: 4.0% 5.9% (7.3)% (0.7)% Since announcement, TELUS’ market value has increased circa $1 billion 6

Our commitment to our shareholders

 TELUS Board and Management fundamentally agree this is the right proposal and in the best interest of our company and long-term shareholders  We will pursue other actions to convert our share structure to a single class  Conversion on one-to-one basis is the right model TELUS continues to build upon our company’s operational and financial momentum 7

Q1 2012 wireless financial results

($M) Revenue (external) EBITDA 1 EBITDA margins 2 (total revenue) Capex EBITDA less capex Q1-11 1,308 551 41.8% 76 475

Q1-12 1,383 622

 

44.7% 151 471

   1 EBITDA before restructuring costs in Q1-12 and Q1-11 were $626 and $551 million, respectively.

2 Margins on network revenue in Q1-12 and Q1-11 were 48.3% and 45.8%, respectively.

change 5.7% 13% 2.9 pts 99% (0.8)% Record EBITDA with growth of 13% and margin improvement Cash flow strong while continuing LTE investments 8

Total net adds 32K 22K

Wireless subscriber results

Postpaid net adds 63K 52K Q1-11 Q1-12 Q1-11 Q1-12 Wireless subscribers 16% 1.2

M prepaid 7.4M

total 6.2

M postpaid 84% Postpaid net adds growth of 21% y/y Smartphones now 56% of postpaid base, up from 38% in prior year 9

Marketing and retention

Gross adds (000s) Churn 1 COA per gross add COA expense Retention expense Lifetime revenue Q1-11 388 1.70% $348 $135M $148M $3,405 Q1-12

363 1.55% $362 $131M $139M $3,798

change       (6.4)% (0.15) pts 4.0% (3.0)% (5.8)% 12% 1 Q1-12 and Q1-11 churn of 1.52% and 1.62% when normalized for loss of Government of Canada contract.

Industry leading churn combined with lower acquisition and retention expenses 10

Blended ARPU analysis

Data Voice $57.89

17.71

40.18

$58.87

22.83

36.04

% of ARPU 31% 69% 39% 61% Q1-11 Q1-12 Q1-11 ARPU increase of 1.7% led by data Sixth consecutive quarter of ARPU growth Q1-12 11

Wireless data revenue

$254M $366M $498M Q1-10 Q1-11 Q1-12 Industry leading data revenue growth of 36% Q1 data increased to 39% of network revenue 12

Q1 2012 wireline financial results

($M) Q1-11

Q1-12

change Revenue (external) 1,223

1,248

  2.0% EBITDA 1 435

387

(11)% EBITDA margins (total revenue) 34.4%

30.0%

 (4.4) pts  Capex 333

290

(13)%  EBITDA less capex 102

97

(4.9)% 1 Q1-12 adjusted EBITDA of $388M excludes a $1M equity loss for residential component of TELUS Garden real estate joint venture and Q1-11 adjusted EBITDA of $419M excludes a $16M non-cash gain on Transactel.

Wireline revenue growth reflects strong TV and HSIA subscriber growth Cash flow stable as lower EBITDA offset by reduced capex 13

Adjusted wireline EBITDA

($M) Q1-11

Q1-12

change 435 (16)  EBITDA Gain on Transactel acquisition

387

(11)% Equity loss for residential component real estate J.V.

1

 Adjusted EBITDA 1 419

388

(7.4)%  Adjusted EBITDA margin 33.6%

30.1%

(3.5) pts Adjusted EBITDA less capex 86

98

 14% 1 Adjusted EBITDA before restructuring costs in Q1-12 and Q1-11 were $397 and $423 million, respectively, down 6.5%.

Adjusted wireline EBITDA lower by 7.4% 14

TELUS TV customer growth

TELUS TV net additions * TELUS TV subscribers* 553K 358K 44K 44K Q1-11 Q1-12 Q1-11 Q1-12 Momentum continues with TV net adds of 44K Total subscribers up 54% surpassing 550,000 * Includes both IP TV and TELUS Satellite TV subscribers 15

TELUS high-speed Internet customer growth

High-speed net additions 16K 16K High-speed subscribers 1.18M

1.26M

Q1-11 Q1-12 Q1-11 Q1-12 Stable growth in HSIA despite competitive environment Total subscriber base up 6.3% 16

TELUS network access line losses

Residential Q1-11 Q1-12 Business 2K Q1-12 Q1-11 -10K -33K -47K Residential line losses impacted from price-based competition Business line losses reflects competition, and wholesale adds in Q1/11 17

Q1 2012 consolidated financial results

($M, except EPS) Q1-11 Q1-12 change Revenue (external) 2,531

2,631

 4.0% EBITDA 1 986

1,009

 2.3% EPS (basic) Capex 1.01

409

1.07

441

   5.9% 7.8% EBITDA less capex 577

568

(1.6)% Free cash flow 162

358

 121% 1 Q1-12 adjusted EBITDA of $1,010M excludes a $1M equity loss for residential component of TELUS Garden real estate joint venture and Q1-11 adjusted EBITDA of $970M excludes a $16M non-cash gain on Transactel.

FCF growth driven by lower discretionary defined benefit pension contributions, increased EBITDA and lower financing costs 18

EPS continuity analysis ($)

1.01

0.97

Excl. Trans. gain 0.13

0.04

-0.06

- 0.02

Q1-11 reported

Higher Normalized EBITDA 1 Lower Financing costs 2 Higher Dep & Amort - 0.02

1.07

1.04

Excl.

Tax Adj.

Higher Pension Higher Restructure & other

Q1-12 reported

EPS growth reflects EBITDA growth and lower financing costs partly offset by higher D&A, pension and restructuring costs 1 Normalized EBITDA excludes $0.04 combined for restructuring and pension costs.

2 Financing costs excludes $0.02 of interest on income tax refunds in Q1/12. 19

Industry Canada sets spectrum auction and telecom foreign ownership policies

 Spectrum cap of 10 MHz for prime 700 MHz auction and 40 MHz for 2.5 GHz auction   700 MHz prime spectrum divided into 4 paired blocks of 10 MHz 2.5 GHz spectrum cap means TELUS should be eligible to obtain up to 40 MHz of spectrum   Auctions delayed to H1 2013 for 700 MHz and H1 2014 for 2.5 GHz Foreign ownership restrictions to be lifted for carriers with less than 10% national market share  TELUS encourages government to continue to work towards full liberalization to ensure level playing field Policy announcement on spectrum auctions consistent with TELUS’ proposed recommendations to Government 20

Revenue (external) EBITDA EPS (basic) Capex

2012 guidance confirmed

2012 guidance $10.7 to 11.0B

$3.8 to 4.0B

$3.75 to 4.15

Approx $1.85B

   y/y change 3 to 6% 1 to 6% 0 to 10% 2012 consolidated and segmented guidance confirmed 21

Q1 2012 summary

 Strong consolidated revenue growth driven by data  Record consolidated EBITDA  Great wireless metrics across the board (e.g. EBITDA, ARPU, churn, lifetime revenue, postpaid net adds, COA/COR)  Continued Optik TV and high-speed Internet subscriber growth  Strong FCF growth aided by lower discretionary defined benefit pension contributions, higher EBITDA, and lower financing costs Better than expected beginning to 2012 with strong free cash flow generation supporting an even stronger balance sheet 22

Strong smartphone adoption, ARPU growth continue

Postpaid subscribers (millions) Smartphone % of postpaid 6.2

5.8

5.4

56% 38% 22% Wireless Data ARPU $13.14

$17.71

$22.83

Q1-10 Q1-11 Q1-12 Q1-10 Q1-11 Q1-12 1Q 2012 Smartphone base up 63% to 3.5 million year over year Data ARPU expansion driven by 36% growth in data revenue 23

Future friendly home – continued strength in Optik

High-speed Internet TELUS TV Residential NALs 60K 16K 32K 3K 29K 60K 16K 50K 44K -50K -43K Q1-10 -33K -39K Q1-11 -47K -30K Q1-12 TV and High-Speed Internet loading exceeding residential NAL losses for seventh consecutive quarter 24

Continued new innovations for Optik TV

Twitter app for Optik TV

 Tweet what watching Optik TV, follow what others saying about favourite shows through ‘TV Tweets’

Optik TV for Xbox 360

 TELUS Optik TV first in world to offer customers gesture & voice control ability with Kinect

Optik on the go

 View select TV On Demand content on your mobile device, anywhere in Canada 25

Appendix – free cash flow

C$ millions

Adjusted EBITDA 1 Capex Net Employee Defined Benefit Plans Expense (Recovery) Employer Contributions to Employee Defined Benefit Plans Interest expense paid, net Income taxes received (paid), net Share-based compensation Restructuring payments (net of expense)

Free Cash Flow

Common and Non-voting shares issued Dividends reinvested (DRIP) Dividends Acquisitions Real estate joint venture Working Capital and Other

Funds Available for debt redemption

Net Issuance (Repayment) of debt

Increase in cash 2011 Q1

970 (409) (9) (235) (61) (66) (5) (23) 162 17 54 (169) (60) (168)

(164)

170 6

2012 Q1

1,010 (441) (1) (116) (55) (48) 7 2 358 (188) (32) (15) (62)

61

(39) 22 1 Q1-12 and Q1-11 adjusted EBITDA excludes a $1 million equity loss for residential component of TELUS Garden real estate joint venture and a $16 million non-cash gain on Transactel, respectively.

Appendix – definitions



EBITDA:

Earnings before interest, taxes, depreciation and amortization 

Capital intensity:

capital expenditures divided by total revenue 

Cash flow:

EBITDA less capex 

Free cash flow:

EBITDA, adding Restructuring costs, net employee defined benefit plans expense, cash interest received and excess of share-based compensation expense over share-based compensation payments, subtracting the non-cash gain on Transactel, cash interest paid, cash taxes, capital expenditures, restructuring payments and employer contributions to employee defined benefit plans.



Cost of retention (COR):

total costs to retain existing subscribers, often presented as a percentage of network revenue