2006 Guidance Update

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2006 guidance update 2007 targets Robert
McFarlane EVP Chief Financial Officer
December 14, 2006
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Forward looking statements
This presentation 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. Factors that
could cause actual results to differ materially
include but are not limited to competition
economic growth and fluctuations (including
pension performance) capital expenditure levels
(including possible spectrum purchases)
financing and debt requirements (including share
repurchases and debt redemptions) tax matters
(including deferral of payment of significant
cash taxes) human resources business
integrations technology (including reliance on
systems and information technology) regulatory
approvals (including share purchase program and
cash settlement of options) regulatory
developments (including local forbearance, local
price cap regulation and wireless number
portability) process risks (including conversion
of legacy systems and billing system
integrations) health and safety litigation
business continuity events (including man-made
and natural threats) 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 full listing and description of the
potential risk factors and assumptions, please
refer to the TELUS 2005 annual report and updates
in the 2006 quarterly reports (see Section 10
Risks and Risk Management in Managements
discussion and analysis), and other filings with
securities commissions in Canada (sedar.com) and
the United States (sec.gov).
See Key Assumptions and Forward Looking
Statements in TELUS Dec. 14, 2006 Targets news
release
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Agenda

• 2006 guidance update
• Recent regulatory development
• 2007 targets
• Summary
• Questions and answers

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2006 guidance changes
Previous 2006 guidance 1
Updated 2006 guidance 2
Consolidated
approx. 1.6B
Capex
approx. 1.625
?
Wireline
25 to 30M
Non-ILEC EBITDA
approx. 30M
?
approx. 1.175B
Capex
approx. 1.2B
?
Wireless
560 to 590K
Wireless net adds
approx. 550K
?
1 Provided on November 3, 2006 2 Provided on
December 14, 2006
Guidance largely re-affirmed with minor changes
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2006 wireless guidance summary
Original 2006 guidance 1
Updated 2006 guidance 2
On track
? ?
Revenue
3.775 to 3.825B
3.85 to 3.875B
?
EBITDA
1.7 to 1.75B
1.725 to 1.75B
approx. 450M
Capex
approx. 425M
?
?
Wireless net adds
gt 550K
approx. 550K
1 Provided on December 16, 2005 2 Provided or
re-affirmed on December 14, 2006
Another strong year of execution by TELUS in
dynamic wireless market
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2006 wireline guidance summary
Original 2006 guidance 1
Updated 2006 guidance 2
On track
Revenue
4.825 to 4.875B
4.8 to 4.825B

Non-ILEC Revenue
650 to 700M
650 to 675M
?
EBITDA
1.8 to 1.85B
1.825 to 1.85B
?
Non-ILEC EBITDA
25 to 40M
approx. 30M
?
1.05 to 1.1B
Capex
approx. 1.2B
?
?
High speed net adds
gt 100K
gt 135K
1 Provided on December 16, 2005 2 Provided or
re-affirmed on December 14, 2006
3 Original targets included restructuring
workforce reduction costs of approx. 100M, vs.
up to
80M for updated guidance
Continue to expect good wireline results
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2006 Consolidated guidance summary
Original 2006 guidance 1
Updated 2006 guidance 2
On track
Revenue
8.6 to 8.7B
8.65 to 8.70B
?
EBITDA3
3.5 to 3.6B
3.55 to 3.6B
?
2.40 to 2.60
EPS (basic)4
3.15 to 3.25
? ?
1.5 to 1.55B
Capex
approx. 1.625B
?
?
1.55 to 1.65B
Free cash flow
1.6 to 1.65B
1 Provided on December 16, 2005 2 Provided or
re-affirmed on December 14, 2006
3 Original targets included restructuring
workforce reduction costs of approx. 100M, vs.
up to
80M for re-affirmed guidance
4 EPS includes 0.42 YTD Q3-06 of unbudgeted
positive tax-related adjustments
Overall positive revisions to original guidance
throughout year
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Recent regulatory development

• Forbearance policy announcement by Minister of
  Industry
• ILEC deregulation test
• Residential ILEC, independent wireless, and
  cableco
• Business ILEC plus unaffiliated facilities
  based competitor
• Winback restrictions to be eliminated
• Geographic forbearance areas reduced (e.g. local
  exchanges)
• Quality of Service indicator adjusted
• 14 to 9 with more reasonable methodology
• Expect to obtain forbearance in major urban ILEC
  markets in second half of 2007

Positive step toward reliance on competitive
market forces
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2007 targets
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2007 target assumptions

• 3.0 GDP growth consistent with Conf. Board of
  Canada
• Increased competitive activity from cable-TV /
  VoIP players
• Wireless industry penetration growth similar to
  2006 of 4.5 to 5 points
• Assume no further price cap mandated consumer
  price reductions
• Assume forbearance for local retail services in
  major urban ILEC markets in second half of 2007
• 50M restructuring workforce reduction costs
  (up to 80M in 2006)
• Discount rate of 5.0 and expected return of
  7.25 for pension accounting, unchanged from 2006

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2007 target assumptions (contd)

• Average shares outstanding of 330 to 335M shares
• Statutory tax rate of 34 expected in 2007
• Based on an updated review of tax loss position,
  now expect minimal cash tax payments in 2007, a
  preliminary estimate of approx. 100M in 2008,
  with the payment of significant cash taxes
  largely deferred to 2009

Now expect only modest cash taxes until 2009
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2007 target assumptions (contd)

• Option expense
• Introducing cash settlement for vested options
• Mitigates share dilution by avoiding treasury
  issuance
• Results in ? non-recurring, non-cash pre-tax
  operating expense of 200M in 2007
• 150M in wireline
• 50M in wireless
• Lowers EPS by approximately 0.40
• Cash payments deductible for tax purposes when
  options exercised and cash paid out
• Potential cash tax savings of approx. 70M over 3
  years

Shareholder friendly initiative
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Leverage policy and metrics update

• Net debt definition
• Revised to include 100 of accounts receivable
  securitization to be consistent with rating
  agency treatment (formerly 0)
• Impact on leverage ratios as at Sept 30, 2006
• Net debt to EBITDA from 1.6 to 1.7x
• Net debt to total capitalization from 45.3 to
  48.0

Maintaining long-term leverage policy targets of
net debt to EBITDA of 1.5 to 2.0 times and net
debt to capital of 45 to 50
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2007 wireless revenue target (B)
4.325 to 4.375
3.863
2006E1
2007E
1 Midpoint of updated 2006 guidance
Wireless revenue growth of 12 to 13 driven by
subscriber and data ARPU growth
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2007 wireless subscribers
gt5.62M
5.07M
gt550K net adds
550K net adds
2006E
2007E
Wireless net adds expected to remain strong
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2007 wireless EBITDA target (B)
normalized wireless EBITDA target
reported wireless EBITDA
1.95 to 2.00
1.90 to 1.95
1.74
1.74
2006E1
2007E
2006E1
2007E2
1 Midpoint of updated 2006 guidance
2 2007 EBITDA target normalized for cash
settlement option expense of 50M
Normalized EBITDA growth of 12 to 15
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2007 wireless EBITDA margin
normalized wireless EBITDA margin (total
revenue)
wireless EBITDA margin (total revenue)
45 to 46
45
44 to 45
45
2006E1
2007E
2006E1
2007E2
1 Midpoint of updated 2006 guidance
2 2007 EBITDA target normalized for cash
settlement option expense of 50M
Expect slightly higher normalized EBITDA margin
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2007 wireless capex target (M)
550
425
2006E
2007E
2007E wireless capex intensity of 12.6
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Wireless cash flow yield N.A. peer comparison
2007E wireless EBITDA less capex / total revenue
32 to 33
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20
16
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TELUS1
Verizon Wireless
T-Mobile USA
Sprint Nextel
Rogers
BCE
Cingular
Source Merrill Lynch estimates as at Nov/06,
adjusted to reflect total revenue
1 2007 TELUS EBITDA target normalized for cash
settlement option expense of 50M
Premium wireless cash flow yield in North America
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2007 wireline revenue target (B)
4.85 to 4.90
4.81
2006E1
2007E
1 Midpoint of updated 2006 guidance
Wireline revenue growth of 1 to 2 as data growth
more than offsets increasing competitive intensity
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2007 wireline EBITDA target (B)
normalized wireline EBITDA target
reported wireline EBITDA
1.838
1.838
1.775 to 1.825
1.625 to 1.675
2006E1
2007E
2006E1
2007E2
1 Midpoint of updated 2006 guidance
2 2007 EBITDA target normalized for cash
settlement option expense of 150M
Wireline EBITDA target reflects competitive
environment
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2007 high-speed Internet subscribers
gt1.03M
gt898K
gt135K net adds
gt135K net adds
2006E
2007E
Net addition target reflects majority share in
maturing market
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2007 wireline capex target (B)
1.2
1.2
2006E
2007E
Wireline capex expected to be flat year over year
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2007 Consolidated revenue target (B)
9.175 to 9.275
8.675
8.143
7.581
2006E1
2007E
2005
2004
1 Midpoint of updated 2006 guidance
Revenue growth of 6 to 7 driven by wireless and
modest wireline growth
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2007 Consolidated EBITDA target (B)
3.725 to 3.825
3.575
3.525 to 3.625
3.295
3.091
2006E1
2007E reported
2005
2004
2007E2 normalized target
1 Midpoint of updated 2006 guidance
2 2007 EBITDA target normalized for cash
settlement option expense of 200M
Target represents normalized EBITDA growth of 4
to 7
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2007 EPS ()
3.20
2.85 to 3.05
1.96
1.58
2006E1
2007E
2005
2004
1 Midpoint of updated 2006 guidance
Reported 2007 EPS down 5 to 11
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2007 EPS continuity
?
10 to 15
?
35 to 55
?
2.85 to 3.05
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3.20
?
40
2.78
?
11
?
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Higher dep.
Lower fin. costs
Tax- related adjust.
Cash settlement for options
Decr. in avg o/s shares
2006E1
EBITDA growth
2006E normal.
2007E
1 Midpoint of updated 2006 guidance
Strong normalized EPS growth
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2007 normalized EPS target ()
3.25 to 3.45
2.78
2006E1 normalized
2007E2 normalized target
1 Midpoint of updated 2006 guidance excluding
0.42 of positive tax-related adjustments Q3-06
YTD
2 2007 EPS target normalized for cash settlement
option expense of 0.40
Normalized 2007 EPS growth of 17 to 24
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2007 free cash flow detail (B)
normalized Free cash flow (2007 definition1)
Free cash flow (2006 definition)
1.625
1.6
1.525 to 1.625
1.45 to 1.55
2006E2
2007E
2006E
2007E3
1 2007 definition of FCF subtracts cash payments
related to Other expenses
2 Midpoint of updated 2006 guidance
3 Expected cash impact due to option cash
settlement of approximately 100M midpoint
2007 Free Cash Flow expected to remain high
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2007 Consolidated targets summary
2007 targets
change
Revenue
9.175 to 9.275B
6 to 7
?
?
4 to 7
Normalized EBITDA1
3.725 to 3.825B
?
17 to 24
Normalized EPS1,2
3.25 to 3.45
?
approx. 1.75B
Capex
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1 Net of 200M of non-recurring, non-cash
expenses associated with cash settlement of
options, EPS impact of 0.40 2 2006 EPS
normalized for 0.42 of positive tax-related
adjustments Q3-06 YTD
2007 targets reflect healthy performance expected
in wireless
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Share buy back program1 update

Common 50K 6.1M 12.0M 51
Non-Voting 3.1M 11.0M 12.0M 92
Total 3.1M 17.1M 24.0M 71
Total cost 174M 832M
Repurchased this quarter to Dec 11/06
Repurchased since inception to Dec 11/06
of authorized repurchased since inception
Total Authorized
(Shares)
1 NCIB effective December 20, 2005 for 12 months
Cumulative share repurchases total 832M
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Return of capital summary

• New 24 million share NCIB effective Dec 20, 20061
• Authorized to repurchase up to 12M common and 12M
  non-voting (up to 7 of total shares outstanding)
• Introducing cash settlement for vested options1
  -mitigates shareholder dilution
• Quarterly dividend previously increased by 36 to
  37.5 cents per share per quarter for Jan 1, 2007
  payment, consistent with dividend growth approach
• Annualized dividend in line with targeted payout
  ratio guideline of 45 to 55 of sustainable net
  earnings

1 Subject to acceptance by TSX
Annualized dividend now at all time high of 1.50
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per share
Strong record of returning capital
3.92
Share repurchases
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Dividends
3.52
3.30
3
2.42
2.42
2.50
2
1.50
0.82
1
0.60
1.10
0.22
0.80
0.60
2003
2004
2005
2006E1,3
2007E2,3
1 Actual dividend, plus YTD NCIB as at Dec
11/06 annualized
2 Annualized dividend, plus YTD NCIB as at Dec
11, 2006 annualized
3 See forward looking statement caution.
Assumes continuation of share repurchase program.
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Staying ahead 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

Consistent strategy and execution 2000 ? 2007
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Summary

• 2006 guidance mostly re-affirmed with minor
  changes
• Implementing new cash settlement program for
  vested options
• Now expect only modest cash taxes until 2009

• 2007 targets reflect
• Strong revenue growth
• Solid normalized EBITDA and EPS growth
• Continued strong subscriber growth
• Focus on investment in growth areas

2007 targets consistent with TELUS growth model
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us.com
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appendix
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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
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2007E free cash flow detail
2007E
(M)
EBITDA
3,525 to 3,625
Add back cash settled option expense
200
EBITDA normalized
3,725 to 3,825
Capex
(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
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