Transcript Slide 1

Investor Tour
March 2007
Darren Entwistle
President & Chief Executive Officer
Forward looking statements
This session and answers to questions contain forward-looking statements that
require assumptions about expected future events including 2007 targets,
competition, financing, financial and operating results, and regulation that are
subject to inherent risks and uncertainties. There is significant risk that predictions
and other forward looking statements will not prove to be accurate so do not place
undue reliance on them.
Factors that could cause actual results to differ materially include but are not limited
to: competition; capital expenditure levels (including possible spectrum purchases);
financing and debt requirements (including share repurchases, debt redemptions
and refinancing plans); tax matters (including deferral of payment of significant cash
taxes); regulatory developments (including local forbearance, local price cap
regulation, spectrum auction, and wireless number portability); process risks
(including conversion of legacy systems and billing system integrations); and other
risk factors discussed herein and listed from time to time in TELUS’ reports.
There are many factors that could cause actual results to differ materially. For a
fuller listing and description of the potential risk factors and assumptions, please
refer to the TELUS 2006 annual management’s discussion and analysis, 2007
targets news release issued on Dec. 14, 2006 and other filings with securities
commissions in Canada (sedar.com) and the United States (sec.gov).
All dollars in C$ unless otherwise specified
2
Table of contents
slides starting
 Strategy
6
 Operational update
11
 Financial update
39
 Investor considerations
46
 Appendix
58
3
About TELUS
 Executing national growth strategy focused on data, IP & wireless
 2006 consolidated results:
 Revenues
$8.7B
 EBITDA
 EPS1
 Capex
$3.6B
$3.27
$1.6B
 Free cash flow
$1.6B





7%
9%
67%
23%
9%
 Enterprise value: $26B (equity $19B)
 Avg. daily trading: ~2.2M (recent 90 day avg.)
 Listings: Common: TSX T; non-voting: TSX T.A; NYSE TU
 Reporting segments: wireless and wireline
1
2006 EPS includes $0.48 of positive tax-related adjustments
Top performing Canadian telecommunications company
4
Going to market as one team
How we are organized
Consumer
Solutions
Business
Solutions
Partner Solutions
& TELUS Québec
customer facing
business units
Technology
Strategy
Network
Operations
Business
Transformation
enabling
business units
Human
Resources
Finance
& Strategy
Corporate &
Government
Affairs
supporting
business units
Office of CEO
Customer facing structure since 2001
5
Leading the way with a proven strategy
Strategic imperatives






Focusing on growth markets of data and wireless
Building national capabilities
Providing integrated solutions
Investing in internal capabilities
Partnering, acquiring and divesting as necessary
Going to market as one team
strategic intent… to unleash the power of the Internet
to deliver the best solutions to Canadians at home,
in the workplace and on the move.
Consistent strategy and execution 2000  2007
6
Strategic journey highlights
 purchase of Quebec Tel ($0.7B) and Clearnet ($6.6B) - 2000
2000
 divestiture of non-core assets - $1.1B (real estate and directories)
 completion of national IP backbone & fibre network
 first in N.A. to launch Next Generation Network, enabling IP based
solutions for customers - 2003
 awarded national managed data solutions contract for TD Bank valued
at $160M over 7 years - 2003
 Verizon divested 20.5% ($2.2B) equity interest – Dec 2004
 five year (2010) progressive collective agreement ratified – Oct 2005
 staged launch of TELUS TV® in certain western markets – 2005-07
 wireless merger into customer facing business units – Dec 2005-06
 won landmark Government of Ontario managed network contract
valued at $140 million over 5 years – Sept 2006
2007
7
National transformation
Jan 2000
today1
• PoPs covered (millions)
7
31
• Mike (iDEN) (millions)
-
26
1G
3G
• Ont/Que cities
3
46
• Co-locations
2
96
• Customer POPs
5
1067
• Fibre lit (km)
0
15,600
• Platform
Stentor
TELUS
• Network
Circuit-based
Next Generation (NGN)
Wireless
• Generation
Wireline
1 as
of December 31, 2006
8
TELUS infrastructure today
BC
Alberta
Wireline
87%
Wireline
13%
Wireless
Quebec
Ontario
Wireless coverage
49%
51%
Backbone optical and IP network
9
TELUS’ strategic focus on data and wireless
Revenue
$8.7B
$5.7B
LD
LD
23%
10%
Wireless
41%
18%
Wireline
local
Wireless
Voice
Voice
Data
10%
27%
49%
Wireline
Data
19%
2000¹
2006²
¹12 mos ending June
²12 mos ending December
Wireless
Data
3%
Data and wireless now represent 63% of TELUS revenue
10
Operational update
2007 corporate priorities
1. Advancing TELUS’ leadership position in consumer market

Combining our suite of data applications with deregulated
heritage services

Attaining best-in-class customer loyalty and growth through
unparalleled customer experiences

Achieving customer addition targets by expanding our
distribution channels and addressing key market segments with
new service offerings
Unleashing the power of the Internet
12
2007 corporate priorities
2. Advancing TELUS’ leadership position in business market

Progressing further in key industry verticals with specific
applications that provide non-price-based differentiation

Leveraging wireless number portability to expand our business
market share in Central Canada

Focusing on small business customer loyalty and growth with
innovative solutions
Business . . . backed by TELUS
13
2007 corporate priorities
3. Advancing TELUS’ leadership position in wholesale market

Growing in domestic and international markets through
recognition that TELUS is Canada’s IP leader

Achieving excellence in customer service to support local
forbearance in key incumbent markets

Expanding our markets, channels and products by focusing on
strategic relationships with our partners
Enhancing our IP leadership and partnerships
14
2007 corporate priorities
4. Driving TELUS’ technology evolution and improvements in
productivity and service excellence

Implementing technology roadmaps for Future Friendly Home
and wireless service offerings that simplify our product portfolio
and improve service development and execution

Rolling out consolidated customer care systems to replace
multiple legacy systems in Alberta and B.C.

Accelerating customer service delivery dates
Striving for customer service excellence
15
2007 corporate priorities
5. Strengthening the spirit of the TELUS team and brand, and
developing the best talent in the global communications industry

Growing our business ownership culture with a team philosophy
of “our business, our customers, our team, my responsibility”
thereby attracting, developing and retaining great talent

Leading the way in corporate social responsibility as we strive to
be Canada’s premier corporate citizen
Our business, our customers, our team, my responsibility
16
Framework for long term growth
growth opportunities
Non-ILEC
Growth
+
Future
Friendly
Home
+
wireline
Price Cap
Regulatory
Framework
Organization
Effectiveness
challenges
Technological
Substitution
+
Competitive
Intensity
Short-term dilutive
Strive to hold wireline EBITDA (before restructuring) flat
over medium term

Growth in revenues and EBITDA from wireless business
=
Continued improvements in consolidated results
17
TELUS total subscriber connections
9.7
10.7
10.2
(millions)
Res NALs
7.2
Bus NALs
Dial-up Internet
High-speed Internet
Wireless
Q2-00
Q4-04
Q4-05
Q4-06
1 million new connections due to wireless and Internet growth
18
TELUS track record of wireless subscriber additions
Gross additions (000s)
Net additions (000s)
1,279
1,293
1,121
1,017
985
924
474
2000
987
418
418
431
2001
2002
2003
512
2004
584
2005
535
2006
2006: Record gross additions / net 2nd best in 7 years
Net additions > 500K for third consecutive year
19
550+
2007E
Wireless subscriber growth
Total wireless subscribers (M)
Wireless subscribers mix
5.1
977K
4.5
Prepaid
Prepaid
Prepaid
19%
19%
19%
3.9
3.4
Postpaid
81%
4.1M
2003
2004
2005
2006
5.1 million
Continued wireless growth with strong postpaid mix
20
review of operations – wireless
Industry ARPU comparison
2005
$62
$63
2006
$56
$52
TELUS
$49
Rogers Wireless
BCE Wireless
Data driving positive industry trend
21
$51
review of operations – wireless
Wireless data growth opportunity
Q4-05
Q4-06
$6.54
$6.16
$5.05
$3.17
Rogers Wireless
TELUS
TELUS Q4 data ARPU up 94%
22
Wireless data growth opportunity
Rolling out wireless high speed (EVDO)
 More than 50 regions
 Now covers 2/3 of Cdn population
 Cool applications
 Music downloads and video games
 Watch 15 channels on Mobile TV
 Five times faster
Fostering continued data growth
23
Exclusive arrangement and investment
 Amp’d is high-speed EVDO driven service – Spring 2007
 Amp’d Mobile responsible for marketing, freshest and
exclusive entertainment content, and optimized handsets
 TELUS manages sales, distribution, billing, client care,
network options and pricing
 Targeting 18 to 35 age demographic and lifestyle
 Exclusive licensing and service agreement – not an MVNO
 Amp’d Mobile is a premium brand with high ARPUs focused
on mobile media (not traditional voice) and postpaid
 TELUS Ventures invested US $7.5M in Amp’d Mobile, Inc.
24
Amp’d Is Mobile Media
2006 wireless churn (%)1
3.1
2.6
2.4
2.3
1.9
1.6
1.5
1.33
Source: Company reports; Merrill Lynch
1
Q3 churn where annual not available
Low churn relative to global peers
26
1.2
1.2
TELUS wireless EBITDA & cash flow growth
1,751
1,443
EBITDA ($M)
EBITDA less Capex ($M)
1,142
815
1,324
1,975
1,427
1,038
788
535
455
356
173
75
2000¹
2001²
2002
2003
2004
2005
2006
(288)
(360)
¹ Pro forma acquisition of Clearnet
² EBITDA (excluding restructuring) for 2001 & 2002
3
Midpoint of 2007 targets normalized for pre-tax option expense of $30 to $50 million.
27
2007E3
Wireless profitability comparison
2006
TELUS
Other
Cdn avg.
US avg.
EBITDA margin (total rev.)
45%
43%
32%
Capex intensity (total rev.)
11%
12%
18%
Cash flow1 yield (total rev.)
34%
31%
14%
1
EBITDA less capex
Source: Company reports
North American leader in wireless profitablity
28
2006 wireless cash flow yield1 comparison (%)
36
34
32
32
30
28
25
19
19
76%
76%
17
TELUS*
135%
56%
56%
102%
82%
104%
56%
88%
population penetration
1
EBITDA less capital expenditures divided by revenue
Source: Merrill Lynch, UBS. TELUS actual results. Other wireless carriers estimated.
High cash flow yield, with attractive penetration opportunity
29
Canadian industry subscriber growth
2003
2004
2005
2006*
Net subscriber adds
1.5M
1.6M
1.8M
1.7M
TELUS share of adds
28%
33%
32%
32%
Population penetration
42.3%
46.7%
51.8%
56.4%
Penetration gain
4.1pts
4.4pts
5.1pts
4.6pts
Source: Company reports, CWTA
* Does not include wholesale figures
Growth of 4 - 5 points per year for past 4 years
30
review of operations
Increasing Canadian industry wireless penetration
2003
2006
2009E*
Penetration:
42%
56%
~70%
Subscribers:
13.4M
18.5M
~23M
Source: Industry analysts
* See forward looking statement caution
4 to 5 million net additions expected in Canada over 3 years
31
financial review
Wireline update
 Data growth largely offsetting declining local and LD
 Strong high-speed Internet net additions
 TELUS TV provides long-term opportunity riding on
broadband platform
 Making inroads in Central Canadian business market
 e.g. Government of Ontario $140 million 5 year contract
 Improving regulatory situation
Comparative resiliency in wireline
32
High-speed Internet subscriber growth
High-speed Internet
subscribers (000s)
917
690
Total Internet subscribers
763
Dial-up
17%
562
917K
2003
2004
2005
High-speed
83%
1.1 million
2006
Continued strong net addition growth
33
194K
financial review
Staged roll out TELUS TV
 Offering customers differentiated entertainment
 Choice of 200+ digital stations
 Customized channel packaging
 Interactive programming guide
 Video on demand
 myTELUS channel
 Call display
 Operating on ADSL2+ platform
Launched in Edmonton, Calgary and Vancouver
34
TELUS TV
35
Incoming call from Kim Smith (604) 555-1234
Close
Year-over-year NAL declines
Trailing six quarters ended Q4-06 (%)
TELUS
BCE
AT&T (SBC)
Verizon
BellSouth
-2.2
-2.0
-2.4
-2.5
-2.7 -2.6
-2.8 -3.0
-3.2
-3.3
-3.7
-4.2
-5.0
-5.1
Q3 Q4 Q1 Q2 Q3 Q4
2005
-5.6
-6.0 -6.1-6.2
-6.3
2006
Source: Merrill Lynch, Company reports
37
-6.2
-6.7
-6.9
-7.4 -7.5
-7.6
-5.8
-6.1
-6.4
-7.0 -6.9
Non-ILEC (Ontario and Quebec) revenue & EBITDA
Revenue ($M)
EBITDA ($M)
657
555
561
632
2003
2003
2004
2005
2006
(29)
2004
(22)
21
2005
32
2006
Continued focus on profitable, long-term growth in Central Canada
38
Financial update
TELUS Consolidated
2005
2006
Change
Revenue
$8.14B
$8.68B
 6.6%
EBITDA1
$3.30B
$3.59B
 9.0%
$1.96
$3.27
 67%
$2.07
$2.79
 35%
Capex
$1.32B
$1.62B
 23%
Free cash flow
$1.47B
$1.60B
 9.2%
EPS2
EPS (excl. non-recurring items)
1
2005 EBITDA includes $133M net expenses, excluding any revenue or indirect impacts, from labour
disruption. EBITDA includes restructuring and workforce reduction costs of $54M and $68M, for
2005 and 2006, respectively
2
2005 EPS includes negative impact of $0.25 from labour disruption and $0.06 from early bond
redemption. EPS includes favourable tax related adjustments of $0.20 and $0.48, for 2005 and 2006, respectively.
Strong growth in revenue driven by data and wireless
40
2007 Consolidated targets summary
2007 targets
change
Revenue
$9.175 to 9.275B

6 to 7%
Normalized EBITDA1,2
$3.725 to 3.825B

4 to 7%
$3.25 to 3.45

17 to 24%
approx. $1.75B

8%
Normalized EPS2,3
Capex
EBITDA includes rrestructuring and workforce reduction costs, estimated to be approx. $50M in 2007.
2 EBITDA excludes $150 to $200M of non-recurring, non-cash expenses associated with cash settlement of options.
EPS impact of $0.30 to $0.40.
3 EPS year over year growth rate normalized for $0.48 of positive tax-related adjustments in 2006.
1
2007 targets reflect healthy performance expected in wireless
41
2007 Wireline targets
2007 targets
Capex
High-speed net adds

1 to 2%
$1.775 to 1.825B
(3) to (1)%

Normalized EBITDA1
$4.85 to 4.9B

Revenue
change
(12)% or better
approx. $1.2B
> 135,000
Con’t strong growth
1
EBITDA excludes $120 to $150 million of non-recurring, non-cash expenses associated with
cash settlement of options.
42
2007 Wireless targets summary
2007 targets
Revenue
Normalized EBITDA1
Capex
Wireless sub. net adds
1
change
$4.325 to 4.375B

12 to 13%
$1.95 to 2.0B

11 to 14%
approx. $550M

29%
> 550,000

>3%
EBITDA excludes $30 to $50 million of non-recurring, non-cash expenses associated with
cash settlement of options.
43
2007 EPS continuity
10 to
35 to  9¢
$3.27
$3.25 to
3.45
15¢
55 ¢
 11¢
$2.79
 48¢
2006
1
Taxrelated
adjust.
2006 EBITDA
normal. growth
Lower
fin.
costs
Decr. in
avg o/s
shares
Higher
dep.
2007E1
normal.
EPS excludes $0.30 to $0.40 of non-recurring, non-cash expenses associated with move to cash settlement of
options.
Strong normalized EPS growth of 16 to 24%
44
Consolidated free cash flow1 trend
($ billions)
1.29
2004
1.57 1.525 to 1.625
1.45
2005
2006
2007E2
1 2007
definition. Calculated as EBITDA adding Restructuring and workforce reduction costs, cash interest received
and excess of share compensation expense over share compensation payments, less cash interest paid, cash taxes,
capital expenditures and cash restructuring payments, subtracting cash payments related to Other expenses such as
charitable donations and A/R securitization expense
2 Normalized for expected cash impact due to option cash settlement of approximately $100M midpoint
.
Increased EBITDA and lower financing costs
lead to FCF growth
45
Investor
considerations
Return of capital summary
 Renewed 24M share repurchase program in Dec. 2006
 Authorized to repurchase up to 12M common and 12M
non-voting (up to 7% of total shares outstanding)
 Introducing cash settlement for vested options - mitigates
shareholder dilution
 Dividend increased by 36% to 37.5 cents per quarter for
Jan 1, 2007, consistent with dividend growth approach
 Annualized dividend in line with targeted payout ratio
guideline of 45 to 55% of sustainable net earnings
Annualized dividend now at all time high of $1.50
47
$ per share
Strong record of returning capital
Share repurchases
4
3.90
Dividends
3.30
3.43
3
2.40
2.50
2
2.33
1.50
0.82
1
0.60
2003
1.10
0.22
0.60
0.80
2004
2005
2006
2007E1,2
1
Annualized dividend, plus share repurchases in 2006 as estimate for 2007. Assumes lower average shares
outstanding of 330 million to 335 million in 2007.
2
See forward looking statement caution. Assumes continuation of share repurchase program
48
Cash settled options program update
 Introduced cash settlement for vested options
 Mitigates share dilution by avoiding treasury issuance
 Expect  non-recurring, non-cash pre-tax operating
expense of $150M to $200M in Q1-07
 $120M to $150M in wireline, $30M to $50M in wireless
 Reported EPS impact of $0.30 to $0.40
 Cash payments deductible for tax purposes when
options exercised and cash paid out
 Cash tax savings of up to $70M over 3 years
Limits dilution and creates cash tax savings
49
Financial update – March 2007
 Closed $2B credit facility to 2012
 Can be utilized for commercial paper issuance
 Announced and priced issue of $1B 5 and 10 year Notes
 $300M at 4.5% to 2012
 $700M at 4.96% to 2017
 Part of refinancing 7.5% $1.5B due in June 2007
TELUS liquidity position very strong
50
Credit profile
Pro forma debt structure - maturities
C$ millions
3500
3000
2500
2000
1500
1000
500
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018+
Existing debt
New issuance
Deferred FX hedge liability
Pro forma maturity structure post-2007 note refinancing
51
Investing capital in 2007 for long-term growth
 Wireless capex increase of $125 million to approx. $550 million
Within 11-13% intensity range
 Wireline capex unchanged at approx. $1.2 billion
Strong housing formation in West
Broadband network enhancement program
Implementing IT customer system consolidation
Success based capex for contracts such as Govt. of Ontario
Investing to create future value
52
Regulatory developments
 Wireless local number portability effective Spring 2007
 Opportunity in business market in Central Canada
 Deregulation by federal government
 Local forbearance decision likely effective April 2007
Based on competitive choice
 Directive to CRTC now in force
Rely on market forces to maximum extent feasible
Ensure competitive and technological neutrality
 Wireless spectrum auction likely by early 2008
Regulation increasingly based on competitive realities
53
Leading global telecom performance
Growth in
2003
2004
2005
2006
Revenue
top 25%
#1
top 25%
top 25%
EBITDA
top 25%
#1
top 25%
top 25%
-
top 25%
top 25%
top 25%
EPS
Source: Bloomberg and TD Securities, for major global incumbent telecoms
TELUS performing well relative to global telecom peers
54
Excellence in disclosure and governance
e.Com
Annual Report on Annual Reports
Report
 TELUS 2005 AR ranked 1st in world
Watch
Canadian Institute of Chartered Accountants (CICA)
 Best Corporate Governance Disclosure in Canada for second year
 2005 Annual Report received Award of Excellence
 Corporate Reporting - Communications & Media sector
 12 consecutive years of recognition
IR Magazine (Canada) awards
• 2007: Best Communications with retail market
 2006: Best annual report & disclosure policy
 2005: Best Sr. mgmt. communications & web site
Dow Jones Sustainability Index
 Only North American telco in global index
55
Investor considerations
 Consistent and proven strategy
 Strong revenue and earnings growth, high exposure to
wireless
 Continued strong wireless and Internet subscriber growth
 Focus on investment in growth areas
 Robust free cash flow generation
 Track record of returning capital to investors
 Excellence in reporting, transparency and governance
Creating value with on strategy performance
56
Investor Relations
1-800-667-4871
telus.com
[email protected]
Appendix
Share repurchase programs
2004
2005
2006
Total
Total cost ($M)
$78
$892
$800
$1,770
Total shares (M)
2.2
20.8
16.4
39.4
85%1
73%2
79%
350.1
337.9
 20.6
% of total program
Total end of period
shares outstanding (M)
358.5
1 Twelve month 25.5 million share repurchase program to Dec. 19, 2005
2 Twelve month 24 million share repurchase program to Dec. 19, 2006
Track record of share repurchases leading to 6% reduction in
shares outstanding
59
2007 free cash flow detail ($B)
normalized
Free cash flow
(2007 definition1)
1.6 1.525 to 1.625
2006
1
2
2007E2
2007 definition of FCF subtracts cash payments related to Other expenses
Expected cash impact due to option cash settlement of approximately $100M midpoint
2007 Free Cash Flow expected to remain high
60
2007E free cash flow detail
2007E
($M)
EBITDA
$3,525 to 3,625
Add back: cash settled option expense
EBITDA normalized
Capex
~200
$3,725 to 3,825
~(1,750)
Net Cash Interest
~(430)
~(20)
Other1:
Free Cash Flow (before cash settled option pmt.) $1,525 to 1,625
Cash settled options paid2
(75) to (125)
Free Cash Flow
$1,425 to 1,525
1 Includes restructuring expense (net of cash payments), net cash taxes, other share
based compensation (net of cash payments) and cash payments related to Other
expenses
2 Cash settled option payments are tax deductible and reduce treasury share issuance
61
Definitions
 EBITDA: Earnings, after restructuring and workforce
reduction costs, before interest, taxes, depreciation and
amortization
 Capital intensity: capex divided by total revenue
 Cash flow: EBITDA less capex
 Free Cash Flow (2006): EBITDA, adding Restructuring and
workforce reduction costs, cash interest received and excess
of share compensation expense over share compensation
payments, subtracting cash interest paid, cash taxes, capital
expenditures, and cash restructuring payments
 Free Cash Flow (2007): Consistent with FCF above and
subtracting cash payments related to Other expenses such
as charitable donations and A/R securitization expense
TELUS definitions for non-GAAP measures
62
Credit rating overview
TELUS Corporation
Agency
Rating
Outlook
DBRS
A (low)
Stable trend
S&P
BBB+
Stable outlook
Fitch
BBB+
Stable outlook
Moody’s
Baa1
Stable Outlook
TELUS at targeted credit rating with all 4 rating agencies
63
Darren Entwistle
President & Chief Executive Officer
 Darren Entwistle was appointed President and CEO in July 2000
 Before joining TELUS, Darren held a number of leadership positions in the
UK at Cable & Wireless from 1995 to 2000, culminating in being appointed
President of the European business market in 1999. Prior to that he served
in a number of leadership positions at Mercury Communications (UK),
including Strategy Director and General Manager of Corporate Finance.
 Board of Governors of the International Institute of Telecommunications.
Board of Directors of TD Bank Financial Group, and McGill University; and
Chair of the Conservatory of Music's Capital Campaign.
 Bachelor of Economics (Honours) degree in Economics from Concordia
University, an MBA in finance from McGill University and a diploma in
Network Engineering from the University of Toronto
64