Robert McFarlane

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Q2 2011 TELUS investor conference call
Robert McFarlane EVP Chief Financial
Officer Joe Natale EVP Chief Commercial
Officer Darren Entwistle President Chief
Executive Officer
August 5, 2011
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TELUS Forward Looking Statement
Today's presentation and answers to questions
contain statements about expected future events
and financial and operating performance of TELUS
that are forward-looking. By their nature,
forward-looking statements require the Company to
make assumptions and predictions and are subject
to inherent risks and uncertainties. There is
significant risk that the forward-looking
statements will not prove to be accurate. Readers
are cautioned not to place undue reliance on
forward-looking statements as a number of factors
could cause actual future performance and events
to differ materially from that expressed in the
forward-looking statements. Accordingly our
comments are subject to the disclaimer and
qualified by the assumptions (including
assumptions for 2011 annual guidance),
qualifications and risk factors (including the
ability to sustain dividend growth model of circa
10 per annum with semi-annual dividend increases
to 2013) referred to in the Managements
discussion and analysis in the 2010 annual
report, and in the 2011 first and second quarter
reports. Except as required by law, TELUS
disclaims any intention or obligation to update
or revise forward-looking statements, and
reserves the right to change, at any time at its
sole discretion, its current practice of updating
annual targets and guidance.
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Agenda

• Wireless and wireline segment review
• Consolidated financial review
• Updates
• Guidance
• Financing
• Regulatory
• Operations
• Questions and Answers

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Q2 2011 wireless financial results
(M) Q2-10 Q2-11 change
Revenue (external) 1,216 1,333 9.6
EBITDA 520 565 8.7
EBITDA margins1 (total revenue) 42.4 42.1 (0.3) pts
Capex 99 107 8.1
EBITDA less capex 421 458 8.8
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1 Margins on network revenue in Q2/11 and Q2/10
were 45.7 and 45.8, respectively
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Wireless subscriber results
Wireless subscribers
Postpaid net adds
Total net adds
1.2M
124K
prepaid 18
109K
94K
92K
postpaid 82
5.9M
Q2-11
Q2-10
Q2-10
Q2-11
7.1M total
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Wireless data revenue
402M
270M
212M
Q2-10
Q2-11
Q2-09
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Marketing and retention
Q2-10 Q2-11 change
Gross adds (000s) 413 447 8.2
Churn 1.45 1.67 0.22 pts
COA per gross add 342 370 8.2
COA expense 142M 165M 16
Retention expense 114M 149M 31
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Blended ARPU analysis
Data
of ARPU
Voice
58.88
57.47
33
19.25
24
13.80
76
43.67
67
39.63
Q2-11
Q2-10
Q2-11
Q2-10
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2011 wireless annual guidance update
Consolidated 2011 revised guidance y/y growth
Revenue (external) 5.4 to 5.5B (up 200 to 150 million) 8 to 10
EBITDA 2.15 to 2.25B (unchanged) 6 to 11
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See forward looking statement caution
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Q2 2011 wireline financial results
(M) Q2-10 Q2-11 change
Revenue (external) 1,184 1,221 3.1
EBITDA 405 385 (4.9)
EBITDA margins (total revenue) 33.1 30.5 (2.6) pts
Capex 298 349 17
EBITDA less capex 107 36 (66)
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TELUS TV subscribers
TELUS TV net additions
TELUS TV subscribers
403K
46K
228K
29K
Q2-10
Q2-11
Q2-11
Q2-10
Includes both IP TV and TELUS Satellite TV
subscribers
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TELUS high-speed Internet net additions
18K
16K
15K
13K
3K
3K
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
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TELUS network access lines
Business
Residential
7K
Q2-11
Q2-10
Q2-10
Q2-11
-12K
-31K
-51K
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2011 wireline annual guidance update
Consolidated 2011 revised guidance y/y growth
Revenue (external) 4.825 to 4.925B (up 100 to 50 million) 1 to 3
EBITDA 1.525 to 1.625B (unchanged) (6) to flat
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Wireline revenue increase reflects subscriber
growth in Optik services
See forward looking statement caution
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Q2 2011 consolidated financial results
(M, except EPS) Q2-10 Q2-11 change
Revenue (external) 2,400 2,554 6.4
EBITDA 925 950 2.7
EPS (basic) 0.94 0.99 5.3
Capex 397 456 15
EBITDA less capex 528 494 (6.4)
Free cash flow 239 286 20
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Strong revenue growth driven by wireless and
wireline data Free cash flow up 20
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EPS continuity analysis ()
Positive income tax-related adjustments
0.03
0.03
0.03
0.99
0.05
0.94
-0.07
- 0.02
0.96 Excl. Tax Adj.
0.91 Excl. Tax Adj.
Higher Normalized EBITDA1
Lower Pension Restr. costs
Lower Financing costs
Lower Tax rates Other
Higher Dep Amort
Q2-10 reported
Higher O/S shares
Q2-11 reported
1 Normalized EBITDA excludes pension and
restructuring costs
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TELUS successfully refinances U.S. dollar notes

• In May successfully issued 600M senior unsecured
  notes
• 3.65 5-year notes, maturing May 2016
• Proceeds used, in combination with commercial
  paper, to redeem maturing 8 U.S. dollar notes
  and associated cross currency interest rates
  swaps (effective cost 8.5)
• Final of three tranches undertaken since December
  2009

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2011 consolidated annual guidance update
Consolidated 2011 revised guidance y/y growth
Revenue (external) 10.225 to 10.425B (up 300 to 200 million) 4 to 6
EBITDA 3.675 to 3.875B (unchanged) 1 to 6
EPS basic 3.50 to 3.90 (unchanged) 7 to 19
Capex Approx. 1.8B (up 100 million) 5
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Increasing 2011 revenue and capex guidance
See forward looking statement caution
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Industry vertical integration update

• In June TELUS presented its views on Vertical
  Integration to CRTC
• Hearing proceeded as TELUS expected
• Independent distributors, including TELUS,
  presented at request of CRTC, a Code of Conduct,
  which includes
• A prohibition on exclusive distribution of TV
  content on any platform
• Access to content on commercially reasonable
  terms
• Where a dispute arises, complainant must be held
  harmless pending resolution
• Restrictions on sharing confidential info between
  broadcasting and carrier side of Vertically
  Integrated company
• TELUS expects CRTC decision this Fall

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Q2 2011 summary

• Strong consolidated revenue growth driven by both
  wireless and wireline
• Good wireless and Optik subscriber results with
  improved residential NAL losses
• Free cash flow growth of 20
• Dividend declared of 0.55 up 10 consistent with
  dividend growth model
• Increased 2011 revenue and capex guidance

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Strong smartphone adoption driving ARPU growth
Wireless Data ARPU
Postpaid subscribers (millions)
Smartphone of postpaid
19.25
5.9
5.5
13.80
5.1
11.56
42
25
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Q2-09
Q2-10
Q2-11
Q2-09
Q2-10
Q2-11
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Future Friendly Home - continued Optik momentum
High-speed Internet

TELUS TV
59K
Residential NALs
32K
46K
20K
29K
17K
-31K
-43K
-51K
Q2-10
Q2-11
Q2-09
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Evolution of Clear and Simple

• Transformed contracts via device ownership
  agreements
• Simplified and lowered international roaming
  rates
• Offer best customer experience for key
  over-the-top partners
• Clear and Simple philosophy extends across TELUS

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Appendix free cash flow
2010 Q2
2011 Q2
C millions
EBITDA
925
950
Capex
(397)
(456)
Net Employee Defined Benefit Plans Expense
(Recovery)
(3)
(7)
Employer Contributions to Employee Defined
Benefit Plans
(44)
(15)
Interest expense paid
(187)
(145)
Cash Income Taxes and Other
(58)
(50)
Share-based compensation
6
5
Restructuring payments (net of expense)
(3)
4
Free Cash Flow
286
239
2
Common and Non-voting shares issued
2
Dividends
(152)
(170)
-
Dividends reinvested (DRIP)
32
-
Acquisitions
(51)
Working Capital and Other
(241)
(105)
Funds Available for debt redemption
16
(174)
Net Issuance (Repayment) of debt
(21)
172
Decrease in cash
(5)
(2)
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Appendix definitions

• EBITDA Earnings before interest, taxes,
  depreciation and amortization
• Capital intensity capital expenditures divided
  by total revenue
• Cash flow EBITDA less capex
• Free cash flow EBITDA, adding Restructuring
  costs, net employee defined benefit plans
  expense, cash interest received and excess of
  share-based compensation expense over share-based
  compensation payments, subtracting the non-cash
  gain on Transactel, cash interest paid, cash
  taxes, capital expenditures, restructuring
  payments and employer contributions to employee
  defined benefit plans.
• Cost of retention (COR) total costs to retain
  existing subscribers, often presented as a
  percentage of network revenue