Q1 2005 Presentation Slides - Robert McFarlane

1
2005 fourth quarter review conference
call February 17, 2006
the future is friendly
2
forward-looking statements
This presentation and answers to questions
contain forward-looking statements that require
assumptions about expected future events
including competition, financing, labour
relations developments, and financial and
operating results and 2006 targets that are
subject to inherent risks and uncertainties.
TELUS actual results, conditions, actions or
events could differ materially from those
expressed or implied by such statements.
Assumptions for 2006 target purposes include
economic growth consistent with recent provincial
and national estimates by the Conference Board of
Canada that were available in 2005, including
gross domestic product growth of 3.1 in Canada
increased wireline competition in both business
and consumer markets a wireless industry market
penetration gain similar to the approximately
five percentage point gain in 2005 approximately
100 million restructuring and workforce
reduction expenses an effective tax rate of
approximately 35 no prospective significant
acquisitions or divestitures no change in
foreign ownership rules and maintenance or
improvement of investment-grade credit
ratings. Factors that could cause actual results
to differ materially include but are not limited
to competition technology regulatory
developments human resources business
integrations and internal reorganizations
process risks financing and debt requirements
tax matters health, safety and environment
litigation business continuity events economic
growth and fluctuations and other risk factors
discussed herein and listed from time to time in
TELUS reports and filings. For additional
information on potential risk factors and
assumptions, see TELUS 2004 Annual Report,
updates in 2005 quarterly interim reports and
other filings with securities commissions in
Canada and the United States.
all dollars in C unless otherwise specified
3
2005 fourth quarter review conference
call February 17, 2006 Darren Entwistle member
of the TELUS team
the future is friendly
4
2005 highlights

• Demonstrated continued wireless excellence
• Resilience of wireline despite labour disruption
• Achieved strong TELUS consolidated 2005 results
• Revenue 7
• EBITDA 7
• Net income 24
• Free cash flow 13

?
?
?
?
All 2005 consolidated targets achieved / 88 in last 6 years
5
2005 highlights by segment

• Wireless industry annual growth accelerated in
  Canada
• Wireless segment continued excellent results
• Revenue up 17 EBITDA up 26
• Cash flow up 32 to 1.0 billion
• Wireline segment resilient despite labour
  disruption
• Revenue up 1.6
• data up 8 long distance down 4
• EBITDA down 5, up 2 normalizing for labour
• Cash flow strong at 938 million

Q4 product launches EVDO TELUS TV
6
Leading global telecom performance
World Rankings

Revenue
EBITDA
Cash flow EPS
2004
2003
2005
Growth
2006E
No.1
top quartile
top quartile
top quartile
top quartile
No.1
top quartile
top quartile
No.1
No.1
No.2
top half
top quartile
nmf
No.2
No.1
Source TD Securities data on major global
incumbent telecoms EBITDA less capital
expenditures
TELUS performs well relative to global telecom peers
7
Benefits of new collective agreement

• Ratified 5 year collective agreement to Nov.
  2010
• All corporate objectives met without exception
• Return to work program best in class
• Excellent employee engagement
• Allows management to productively run the
  business
• outsourcing, consolidating, scheduling
• Supports a performance culture
• Work with TWU to have all legal proceedings
  dismissed

Enhances TELUS ability to focus on customers and
to compete
8
Returning significant capital to investors

• Continued focus in 2005 and 2006
• December debt redemption 1.6 billion
• Share repurchases total 970 million to date
• Second share repurchase program underway
• Second step of dividend growth model
• 37.5 increase Jan 2006

Focus on sustainable value creation over the long-term
9
2006 priorities support national growth strategy

• Advance TELUS leadership position in the
  Consumer market
• Advance TELUS position in the Business market
• Advance TELUS position in the Wholesale market
• Drive improvements in productivity and service
  excellence
• Strengthen the spirit of the TELUS team and
  brand, and develop the best talent in global
  communications industry

Continued on strategy execution for benefit of investors
10
2005 fourth quarter review conference
call February 17, 2006 Robert McFarlane EVP
Chief Financial Officer
11
financial results
wireless segment
Change
Q4-05
Q4-04
(M)
16
?
877
756
Revenue
14
?
326
285
EBITDA
15
?
329
285
EBITDA (normalized)1
17
144
123
Capex
?
12
?
182
162
Cash Flow (EBITDA less capex)
1 Q4-05 EBITDA normalized to exclude 3M net
expense impact of labour disruption
Excellent results despite EBITDA dilution from record gross adds
12
subscriber results
wireless segment
net additions
total wireless subscribers
prepaid
4.5 M
235K
postpaid
186K
0.9 M
prepaid 19
postpaid 81
3.7 M
Q4-04
Q4-05
Record fourth quarter net additions with stable postpaid and strong prepaid growth
13
industry subscriber growth
wireless segment
2005
2004
2003
32.4M
Population
32.1M
31.7M
1.8M
1.6M
Net subscriber additions
1.4M
16.8M
Cdn wireless market
15.0M
13.4M
51.8
46.7
Penetration
42.3
5.1
4.4
Penetration gain
4.1
Source Company reports, CWTA
Canadian wireless market growth continues to accelerate
14
industry ARPU
wireless segment
Q4-04
63
Q4-05
61
54
51
50
49
TELUS
Rogers Wireless1
BCE Wireless

• Source Company reports

1 Pro forma Microcell
Increased usage and data uptake driving ARPU growth
15
profitable growth
wireless segment
Q4-05
BCE
Rogers
TELUS
51
54
63
ARPU
1.5
2.04
1.42
Blended churn
3400
2600
4400
Avg. lifetime revenue per sub
409
425
449
COA per gross add
12
16
10
COA / lifetime revenue
TELUS wireless marketing efficiency remains best in Canada
16
wireless cash flow yield
TELUS
2005
44
EBITDA margin (total rev.)
12
Capex intensity (total rev.)
31
Cash flow1 yield (total rev.)
1 EBITDA less capex
North American leader in wireless cash flow yield
17
2005 results comparison to original targets
wireless segment
original 2005 targets1
met or exceeded
2005 actual results
ü
Revenue
3.30B
3.20 to 3.25B
ü
EBITDA
1.44B
1.35 to 1.40B
?
405M
Capex
350 to 400M
ü
584K
Wireless Net Adds
425 to 475K
1 Provided December 17, 2004
Met or exceeded original wireless targets for revenue, EBITDA and net adds
18
2005 results comparison to guidance
wireless segment
met or exceeded
most recent guidance1
2005 actual results
ü
Revenue
3.30B
3.275 to 3.3B
ü
EBITDA
1.44B
1.425 to 1.45B
ü
405M
Capex
approx. 400M
ü
584K
Wireless Net Adds
gt550K
1 Updated December 16, 2005
Achieved updated wireless guidance across the board
19
revenue profile
wireline segment
change
Q4-05
Q4-04
(M)
0.4
?
537
534
Voice Local
7.7
212
230
Voice Long Distance
?
7.2
?
400
373
Data
15
?
61
72
Other
Total Revenue
1,209
1,210
-
Wireline revenue displays resilience despite labour disruption
20
financial results
wireline segment
change
Q4-05
Q4-04
-

1.21B
1.21B
Revenue
15
409M
482M
EBITDA

?
1.6
494M
502M
EBITDA (normalized)1
?
?
4.3
230M
221M
Capex
32
?
179M
261M
Cash Flow (EBITDA less capex)
1 Normalized to exclude 20M 36M in
restructuring charges in Q4-04 and Q4-05,
respectively. Q4-05 also normalized to exclude
49M net expense impact of labour disruption
EBITDA decline due to labour disruption and higher restructuring costs
21
non-ILEC revenue EBITDA
wireline segment
EBITDA
revenue
(M)
165
156
7.1
3.7
Q4-04
Q4-05
Q4-04
Q4-05
Continued revenue and profitability growth in Central Canada
22
high-speed Internet subscriber growth
wireline segment
high-speed Internet net additions
total Internet subscribers
1.0M
236K
dial-up 24
35K
27K
high-speed 76
763K
Q4-04
Q4-05
High-speed net adds slowed by labour disruption TELUS now has 1M Internet subs with 76 on high-speed
23
network access line results
wireline segment
of network access lines lost, YoY
Q4-04
Q2-05
Q1-05
Q3-05
Q4-05
-1.1
-1.3
-1.8
-2.2
-2.4
NAL results impacted by labour disruption increased competition from cable telephony
24
2005 results comparison to original targets
wireline segment
original 2005 targets1
2005 actual results
met or exceeded
ü
Revenue
4.85B
4.70 to 4.75B
ü
Non-ILEC Revenue
632M
600 to 650M
ü
1.85B
EBITDA
1.85 to 1.90B
ü
21M
Non-ILEC EBITDA
0 to 10M
ü
Capex
914M
950 to 1,000M
û
High-Speed Net Adds
73K
approx. 100K
1 Provided on December 17, 2004
Exceeded original wireline revenue and Non-ILEC EBITDA targets
25
2005 results comparison to guidance
wireline segment
most recent guidance1
2005 actual results
met or exceeded
ü
Revenue
4.85B
4.825 to 4.85B
ü
Non-ILEC Revenue
632M
625 to 635M
ü
1.85B
EBITDA
1.84 to 1.865B
ü
21M
Non-ILEC EBITDA
15 to 20M
ü
Capex
914M
approx. 900M
ü
High-Speed Net Adds
73K
gt 65K
1 Updated on December 16, 2005
Achieved updated wireline guidance
26
financial results
TELUS Consolidated
change
Q4-05
Q4-04
Revenue
6.2
?
2.09B
1.96B
EBITDA
4.2
?
734M
767M
EPS
42
?
0.22
0.38

?
Capex
343M
8.9
374M
Profitability significantly impacted by labour disruption and one-time debt redemption charge
27
EBITDA - normalized
TELUS Consolidated
Q4-04 Q4-05 change
Consol. EBITDA (reported) 767 734 ? 4.3
Restruc. w. r. costs 20 36
Consol. EBITDA (bef. restruc.) 787 770 ? 2.2
Net labour disruption impacts - 52
Consol. EBITDA (normalized) 787 822 ? 4.4
(M)
Normalized consolidated EBITDA growth of 4.4
28
EPS continuity
TELUS Consolidated
change
Q4-05
Q4-04
?
42

0.22
0.38
EPS reported
0.07
0.04
Restr. workforce reduction
0.10
-
Labour disruption impact
-
Early bond redemption
0.06
-
Other
(0.02)
0.01
(0.07)
Tax related matters

?
0.46
40
EPS normalized
0.33
Strong normalized EPS growth at 40
29
free cash flow
Q4-04
Q4-05
(M)
767
734
EBITDA
(343)
(374)
Capex
(290)
(306)
Net Cash Interest
(15)
5
Cash Restruct. Payments (in excess of expense)
6
3
Non-Cash Share Based Compensation
(2)
47
Net Cash Tax Recovery
Free Cash Flow
122
110
77
19
Share Issuance (non-public)
(97)
(113)
Cash Dividends
-
350
A/R securitization
-
148
Payment Received from Verizon
116
(30)
Working Capital/Other
Cash avail. for debt reduction share redemp.
351
352
30
return of capital share buy back
TELUS Consolidated

• Repurchased 5.1M shares for 229M under both NCIB
  programs in Q4-05
• Repurchased 20.8M shares for 892M during 2005
  under both NCIB programs
• Current 24 million share (7 of outstanding) NCIB
  effective Dec. 20, 2005 to Dec. 19, 2006
• 5 completed in 7 trading days in Dec-05

TELUS committed to share repurchases
31
return of capital continued
TELUS Consolidated

• Completed 1.6B early debt redemption of 7.5
  Series CA Notes on Dec. 1, 2005
• Funded by cash on hand, 350M increase in A/R
  securitization program and 142M in bank
  facilities
• Incurred 33.5M loss on redemption settlement
  of interest rate hedges
• Interest savings benefit in Dec-05 and 2006
• Previously announced a 38 quarterly dividend
  increase to 27.5 cents per share, for Jan. 1,
  2006 payment
• Consistent with dividend payout ratio guideline
  of 45 to 55 of sustainable net earnings

TELUS has strong track record for returning capital to investors
32
credit ratings financial policy targets
TELUS consolidated
Previous Rating Current Rating Date of Change
Moodys Baa3 (stable) ? Baa2 (stable) June 27
SP BBB (positive) ? BBB (stable) Sept 27
Fitch BBB (positive) ? BBB (stable) Oct 18
DBRS BBB (stable) ? BBB high (stable) Oct 24
Q4-05
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
All four rating agencies upgraded TELUS in 2005
33
2005 results versus analyst estimates
TELUS Consolidated
2005 consensus estimates1
2005 original targets2
Revenue
7.84B
7.9 to 8.0B
EBITDA
3.25B
3.2 to 3.3B
EPS
1.80
1.65 to 1.85
Capex
1.35B
1.3 to 1.4B
Free Cash Flow
1.20B
1.2 to 1.3B
1 Analyst consensus estimates for TELUS, as at
Nov 30/04, preceding 2005 targets provided Dec
17/04 2 Provided December 17, 2004
Original targets challenging as compared to analyst estimates
34
2005 results comparison to original targets
TELUS Consolidated
met or exceeded
2005 actual results
original 2005 targets1
?
Revenue
8.14B
7.9 to 8.0B
?
EBITDA2
3.30B
3.2 to 3.3B
?
1.96
EPS
1.65 to 1.85
?
1.32B
Capex
1.3 to 1.4B
1.47B
Free Cash Flow
?
1.2 to 1.3B
1 Provided December 17, 2004 2 Includes actual
restructuring costs of 54M versus original
restructuring costs of approx. 100M
TELUS achieved original 2005 financial targets on the back of solid wireless results despite labour disruption
35
2005 results comparison to guidance
TELUS Consolidated
met or exceeded
2005 actual results
most recent guidance1
?
Revenue
8.14B
8.10 to 8.15B
?
EBITDA2
3.30B
3.275 to 3.325B
?
1.96
EPS
1.90 to 2.00
?
1.32B
Capex
approx. 1.3B
1.47B
Free Cash Flow
?
1.4 to 1.5B
1 Updated December 16, 2005 2 Actual 2005 results
include restructuring costs of 54M
Consolidated results consistent with December 2005 guidance
36
Pension plans update
TELUS Consolidated

• Strong investment performance in Q4-05 and lower
  discount rate for 2006
• In aggregate, TELUS pension funds are 98 funded
• Approx. 165M in cash contributions expected in
  2006 (DB DC plans)
• Discount rate assumption for 2006 lowered to 5.0
  (vs. 5.25 guidance on Dec. 16, 2005, and 6.0 in
  2005)
• TCI defined benefit pension plans ceased
  accepting new management employees

Lower discount rate offset by strong investment performance
37
2006 Consolidated targets summary
TELUS Consolidated
change
2006 targets
Revenue
8.6 to 8.7B
? 6 to 7
EBITDA1
3.5 to 3.6B
? 6 to 9
2.40 to 2.60
EPS
? 22 to 33
1.50 to 1.55B
Capex
? 14 to 18
1.55 to 1.65B
Free Cash Flow
? 6 to 13
1Including restructuring workforce reduction
costs of 54M in 2005 and approx. 100M in 2006
2006 targets build upon track record of strong operational execution
38
Summary
TELUS Consolidated

• Solid quarterly and annual consolidated results
  despite one-time labour disruption impact and
  increasingly competitive environment
• Continued strong profitable wireless growth
• Reached 5-year collective agreement allowing for
  increased flexibility
• Generating significant cash flow
• Strong 2006 revenue, earnings and cash flow
  growth outlook

Continued execution into a future friendly 2006
39
questions?
2005 fourth quarter review
investor relations 1-800-667-4871 TELUS.com ir_at_tel
us.com
40
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