Q1 review

1
Q1 review conference call Robert McFarlane
EVP Chief Financial Officer
May 4, 2006
2
wireless segment financial results
2006 first quarter review
Change
Q1-06
Q1-05
17
?
882M
753M
Revenue
17
?
396M
337M
EBITDA1
3.2
?
62M
60M
Capital expenditures
20
?
334M
278M
Cash flow (EBITDA less capex)
1 Includes 2M in restructuring workforce
reduction costs in Q1-06
Excellent results with strong revenue and EBITDA
growth
4
3
subscriber results
review of operations wireless
total wireless subscribers
net additions
93K
876K
Prepaid 19
80K
Postpaid 81
3.7M
4.6 million
Q1-05
Q1-06
Wireless net adds up 15 over first quarter of
2005
5
4
industry ARPU comparison
review of operations wireless
review of operations wireless
Q1-05
60
58
Q1-06
52
48
48
46
Rogers Wireless
BCE Wireless
TELUS
Increased usage and data driving positive
industry trend
6
5
review of operations - wireless
profitable growth strategy
Change
Q1-06
Q1-05
15
?
93K
Net additions
80K
3.4
?
60
58
ARPU
12 bps
?
1.33
1.45
Blended churn
?
13
4500
4000
Avg. lifetime revenue per sub
Strong wireless subscriber operating metrics
7
6
review of operations - wireless
profitable growth strategy
Q1-06
BCE
Rogers
TELUS
48
52
60
ARPU
1.6
2.01
1.33
Blended churn
3000
2600
4500
Avg. lifetime revenue per sub
394
410
429
COA per gross add
13.1
15.8
9.5
COA / lifetime revenue
1Calculated using prepaid and postpaid churn
TELUS subscriber economics remain very attractive
8
7
wireline segment financial results
2006 first quarter review
1 Includes 9M and 15M in wireline restructuring
costs in Q1-05 and Q1-06 respectively
Wireline results reflect increased
competition and investments for growth
9
8
2006 first quarter review
wireline revenue profile
Change
Q1-06
Q1-05
3.1
536M
553M
Voice Local
?
8.2
?
208M
226M
Voice Long Distance
4.2
?
394M
378M
Data
5.8
?
62M
65M
Other
External Revenue
1.22B
1.20B
1.9
?
Total revenue affected by lower regulatory
recoveries this quarter and continued competitive
activity
10
9
2006 first quarter review
local and data revenue - normalized
(M)
Normalized local revenue only down 0.6
11
10
high-speed Internet subscriber growth
review of operations wireline
Total Internet subscribers
High-speed Internet net additions
228K
Dial up 22
39K
22K
High-speed 78
802K
1.03 million
Q1-05
Q1-06
Net additions up 74 to 39K leading to 25
increase in guidance to more than 125K
12
11
TELUS Consolidated
2006 first quarter review
Change
Q1-06
Q1-05
5.4
?
2.08B
1.97B
Revenue
0.8
?
863M
856M
EBITDA1
10
0.60
0.67
EPS2
?
20
?
0.60
0.50
EPS (excl. non-recurring items)
17
?
321M
273M
Capital expenditures
?
13
640M
567M
Free Cash Flow
1 Includes restructuring costs of 9 million and
17 million in Q1-05 and Q1-06 respectively
2 Q1-05 includes favourable impacts for tax
related adjustments of 0.15 per share, and
regulatory decisions of 0.02 per share
Strong gains in EBITDA, normalized EPS and free
cash flow
13
12
2006 first quarter review
EPS continuity
Change
Q1-06
Q1-05
10
0.60
0.67
EPS reported
?
(0.15)
Tax-related adjustments
-
Regulatory decisions
(0.02)
-

?
20
EPS (normalized)1
0.50
0.60
1 Normalized for 0.02 and 0.03 in restructuring
costs in Q1-05 Q1-06, EPS would have been 0.52
and 0.63, up 21
Normalized quarterly EPS increase of 20
14
13
review of operations - consolidated
share buy back update second NCIB
of authorized repurchased since inception
Repurchased this quarter
Total Authorized
Repurchased since inception
(Shares)
TELUS repurchased 232M of shares
15
14
review of operations - consolidated
financial update
Q1-06
Long-term financial policy target
Target1
Met
ü
1.7x
1.5 to 2.0x
Net Debt EBITDA
ü
45.7
Net Debt Total Cap
45 to 50
1 Net debt to EBITDA target updated November 10,
2005
Strong balance sheet consistent with policy
targets
16
15
regulatory update
review of operations - consolidated

• Deferral account
• 95 of funds in account used to expand broadband
  facilities
• No further amounts to be added
• Telecom Policy Review (TPR) recommendations
• Rely on market forces over regulation
• No obligation on incumbents to subsidize
  broadband expansion
• Foreign ownership restrictions should be
  liberalized

17
16
regulatory update (cont)
review of operations - consolidated

• Forbearance decision
• Demonstrates need for TPR
• Winback restrictions reduced to 90 days from 1
  yr.
• TELUS evaluating options
• Mobile television broadcasting
• Unregulated, to fall under existing new media
  exemption order

18
17
Q1 strategic operational update
review of operations - consolidated

• Customer service
• Backlogs cleared
• Improved customer care service levels
• Exceeded virtually all CRTC service indicators in
  March

Good levels of customer service being provided
19
18
Q1 strategic operational update (cont)
review of operations - consolidated

• Competitive efficiency update
• 500 positions reduced by outsourcing office
  consolidations
• Wireless/wireline integration on-going
• Legal entities merged, March 1
• Acquired Assurent Secure Technologies
• Cdn leader in IT security technology

20
19
Q1 strategic operational update (cont)
review of operations - consolidated

• EVDO network expansion continues
• Now in Whistler, Fort McMurray, Hamilton, Golden
  Horseshoe, Ottawa, Quebec City, Mont-Tremblant
  and Saint-Jovite
• TELUS TV progressing
• Large library of first run movies, plus new
  channels
• Now more external subscribers than employees
• BC head-end construction underway
• Employee trials to begin in BC

21
20
2006 outlook1 consolidated
2006 outlook
Original 2006 targets
Updated 2006 guidance
YoY Growth
Revenue
8.6 to 8.7B
6 to 7
?
?
EBITDA
3.5 to 3.6B
6 to 9
?
22 to 33
2.40 to 2.60
EPS (basic)
reiterated
?
14 to 17
1.5 to 1.55B
Capex
?
1.55 to 1.65B
Free cash flow
5 to 12
Wireless net adds
gt 550K
gt 125K
High-speed net adds
gt 100K
1 see forward looking statement caution
High-speed net add guidance raised for more than
70 growth
22
21
investor relations 1-800-667-4871 telus.com ir_at_tel
us.com
22
appendix
free cash flow
Q1-05
Q1-06
(M)
856
863
EBITDA
(273)
(321)
Capex
(12)
(16)
Cash Restructuring Payments (in excess of expense)
(7)
9
Net Cash Interest
4
8
Non-Cash Share Based Compensation
(1)
96
Net Cash Tax Recovery
567
640
Free Cash Flow
88
33
Share Issuance (non-public)
(158)
(232)
Purchase of shares for cancellation (NCIB)
-
(96)
Dividends
-
(100)
Accounts Receivable Securitization
(144)
(183)
Working capital other
352
63
Funds avail. for pref. share debt redemp.
(1)
(72)
Funds for redemption of debt
Net change in cash
351
(10)
24
23
appendix
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 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