Q2 2005 Presentation Slides - Robert McFarlane

1
2005 second quarter review conference
call August 5, 2005 Robert McFarlane EVP Chief
Financial Officer
2
financial results
Mobility segment
Change
Q2-05
Q2-04
(M)
19
?
802
677
Revenue
28
?
367
286
EBITDA1
46
?
115
78
Capex
21
?
252
208
Cash Flow (EBITDA less capex)
1 Earnings before interest, taxes, depreciation
and amortization
Continued strong revenue, earnings cash flow growth
3
profitable growth
Mobility segment
Change
Q2-05
Q2-04
15
?
131K
114K
Net additions
3.4
?
61
59
ARPU
5 bps
?
1.37
1.32
Blended churn
10
?
342
381
COA per gross add
Outstanding quarter with record net adds on 10 ? in COA
4
subscriber results
Mobility segment
net additions
total wireless subscribers
prepaid
4.1 M
131K
postpaid
114K
0.7 M
prepaid 18
postpaid 82
3.4 M
Q2-04
Q2-05
Net adds total subscribers up 15 with strong postpaid focus
5
wireless net additions
Mobility segment
211
(000s)
190
131
114
Q2-04
Q2-05
YTD Q2-04
YTD Q2-05
Solid YTD results lead to net adds guidance increase to gt 525K
6
revenue profile
Communications segment
Change
Q2-05
Q2-04
(M)
0.2
?
543
544
Voice Local
-
229
229
Voice Long Distance
9.9
?
380
346
Data
7.9
?
65
71
Other
?
Total Revenue
1,189
1,217
2.3
Best LD growth since 1999 merger plus strong data growth led to 4th straight quarter of YoY wireline growth
7
financial results
Communications segment
Change
Q2-05
Q2-04
?
2.3

1.22B
1.19B
Revenue
-
499M
499M
EBITDA1
?
9.8

294M
268M
Capex
11
?
205M
231M
Cash Flow (EBITDA less capex)
1 Earnings before interest, taxes, depreciation
and amortization
EBITDA up 2 when normalized for restructuring, acquisitions, and regulatory decisions
8
non-ILEC revenue EBITDA
Communications segment
EBITDA
revenue
(M)
156
131
3.5
(14)
Q2-04
Q2-05
Q2-05
Q2-04
19 revenue growth and 3rd straight quarter of positive EBITDA
9
high-speed Internet subscriber growth
Communications segment
high-speed Internet net additions
total Internet subscribers
990K
261K
19K
17K
dial-up 26
high-speed 74
729K
Q2-04
Q2-05
High-speed Internet base up 17 YoY in seasonally slow quarter
10
network access line results
Communications segment
of network access lines lost, YoY
Q2-04
Q3-04
Q4-04
Q1-05
Q2-05
-1.5
-1.1
-1.2
-1.3
-1.4
-1.8
NALs impacted by various competitive offerings, large wholesale business account loss ongoing wireless substitution
11
financial results
TELUS consolidated
Change
Q2-05
Q2-04
8.2
?
2.02B
1.87B
Revenue
10
?
865M
785M
EBITDA
10
?
0.53
0.48
EPS1

346M
?
18
409M
Capex
1 Including favourable impacts for tax
settlements on EPS of 0.13 in Q2-04 nil in
Q2-05
Strong increases in revenue and earnings
12
capital intensity
TELUS consolidated
Mobility
Communications
Consolidated
22
20
18
17
11
10
YTD Q2-04
YTD Q2-05
YTD Q2-04
YTD Q2-05
YTD Q2-04
YTD Q2-05
Communication and consolidated capital intensity down YTD
13
convertible debentures shares outstanding

• 132M or 88 of 150M convertible debentures
  converted into 3.3M non-voting shares prior to
  redemption
• Remaining debentures redeemed for 17.9M
• Difference between redemption value book value
  treated as expense, a pre-tax charge of approx
  0.9M
• Options warrant exercises resulted in 2.2M
  share issue
• repurchased 6.5M shares under normal course
  issuer bid (NCIB)

1.0M net reduction to 357.4M shares outstanding
14
share buy back update
No. of Shares Repurchased Q2-05 No. of Shares Repurchased Since Inception Total Authorized Repurchased vs. Auth. Since Inception
Common 3.0M 5.8M 14.0M 42
Non-Voting 3.5M 7.0M 11.5M 61
Total 6.5M 12.8M 25.5M 50
Total cost 272M 508M
TELUS has repurchased 50 of shares permitted under NCIB
15
EPS continuity
TELUS consolidated
Change
Q2-05
Q2-04
10
?
0.53
0.48
EPS reported
0.03
-
Provision for BCTel bond redemption litigation,
convertible deb. redemption expense
-
(0.13)
Income tax settlement
?
0.56
60
EPS normalized
0.35

Normalized EPS increase of 21 cents, up 60
16
free cash flow
TELUS consolidated
Q2-04
Q2-05
(M)
785
865
EBITDA
(346)
(409)
Capex
(286)
(275)
Net Cash Interest
(9)
(1)
Cash Restructuring Payments (in excess of expense)
6
7
Non-Cash Share Based Compensation
81
20
Net Cash Tax Recovery
230
208
Free Cash Flow
17
56
Share Issuance (non-public)
(48)
(144)
Cash Dividends
(86)
61
Working Capital/Other
Cash avail. for debt reduction share redemp.
112
181
Purchase of shares for cancellation (NCIB)
-
(272)
Redemption of Preferred Shares
(36)
-
Funds for redemption of debt
8
(15)
Net change in cash
84
(106)
17
2005 consolidated guidance
previous 2005 guidance1
updated 2005 guidance2
Revenue
7.950 to 8.050B
EBITDA3
3.250 to 3.325B
1.85 to 2.05
EPS4
no change
approx. 1.4B
Capex
1.25 to 1.35B
Free Cash Flow
1 Provided on May 4, 2005 2 Updated August 5,
2005 3 Including 100M in restructuring
workforce reduction costs 4 Including favourable
impacts for tax settlements of 0.15 in Q1-05
Maintaining guidance despite TWU strike
18
questions?
2005 second quarter review
investor relations 1-800-667-4871 TELUS.com ir_at_tel
us.com
19
AppendicesSummaries Chronology of collective
bargaining events Chronology of legal
decisions Definitions
20
Labour Relations summary of events

• Apr 13 - Company tabled Offer to the TWU
• Apr 18 Company declared negotiations to be at
  an impasse and delivered first notice of lockout
  to TWU
• Apr 21 - terms and conditions of the Offer
  communicated to bargaining unit team members
• Apr 25 Company began implementing numerous soft
  lockout measures
• May to July TELUS continued escalating lockout
  measures TWU responded with overtime ban and
  work-to-rule campaign
• Jun 14 TELUS provided addendum to offer, which
  provided additional benefits
• Jun 22 TWU tabled its counter proposal

21
Labour Relations - summary of events (contd)

• Jun 24 TELUS rejected counter proposal
• July TWU began rotating strike activity (study
  sessions) to which Company normally imposed
  short lockouts to participants
• Jul 12 TELUS informed TWU, it would commence
  implementation of its comprehensive offer on July
  22 - TWU further escalated
  rotating strike activity
• Jul 21 TWU initiated full scale strike and
  Company implemented contingency plan
• Jul 22 Phase I of Companys Offer implemented

22
Labour relations - 2005 legal ruling summary

• Feb 2 - CIRB ruled in TELUS favour and overturned
  its year old ruling ordering TELUS into binding
  arbitration.
• Apr 22 - TWU allegations challenging TELUS
  ability to implement lockout measures dismissed
  by Federal Court of Appeal (FCA)
• Apr 24 - TWU application at CIRB seeking to
  prevent TELUS from implementing its lockout
  measures on Apr 25 dismissed
• July 21 CIRB dismissed TWU allegations
  regarding improper lockout and company
  communications
• July 23 BC Court grants sweeping injunction
  against TWU impeding access to Company and
  customer locations
• July 25 TWU loses appeal to FCA to overturn
  Feb. CIRB ruling that returned both sides into
  collective bargaining process
• July 27 AB Court grants TELUS injunction on
  posting website images and TWU impeding access to
  Company and customer locations
• July 29 BC Court grants TELUS injunction on
  posting website images, TWU intimidation, and
  blocking entrances by pickets

23
definitions
appendix

• 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 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

TELUS definitions for non-GAAP measures