Darren Entwistle, Executive Chair
Joe Natale, President and Chief Executive Officer
John Gossling, EVP & Chief Financial Officer
Q1 2014
investor conference call
May 8, 2014
TELUS forward looking statement
Today's presentation and answers to questions contain statements about financial and
operating performance of TELUS (the Company) and future events, including with respect
to future dividend increases and normal course issuer bids to 2016 and 2014 annual targets
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 2014
annual targets, semi-annual dividend increases through 2016, ability to sustain and
complete multi-year share purchase programs through 2016), qualifications and risk factors
referred to in the first quarter Management’s discussion and analysis, in the 2013 annual
report, and in other TELUS public disclosure documents and filings with securities
commissions in Canada (on SEDAR at sedar.com) and in the United States (on EDGAR at
sec.gov). 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.
2
Executing on our strategy
• Delivering strong first quarter results
• Returning significant capital to shareholders
• Investing for future sustainable growth
• Advancing through world class leadership progression
TELUS delivering strong results
and returning significant cash to shareholders
3
Healthy postpaid net additions
Wireless
subscribers1
Postpaid net adds (000s)
59
48
1.0M
prepaid
13%
7.8M
total
Q1-13
Q1-14
6.8M
postpaid
87%
Continued healthy expansion of postpaid subscriber base
and mix shift toward higher value postpaid
1 Wireless
subscribers excludes Public Mobile prepaid subscribers as at March 31, 2014.
4
Industry-leading wireless churn
Blended
Postpaid
1.55%
1.48%
1.39%
1.14%
Q1-12 Q1-13 Q1-14
1.11%
0.99%
Q1-12 Q1-13 Q1-14
North American industry-leading postpaid churn results
Lowest Q1 in seven years - third consecutive quarter with postpaid churn < 1%
5
Smartphone & data adoption driving ARPU growth
6.2
6.6
6.8
$58.87
$60.04
$61.24
Q1-13
Q1-14
78%
68%
56%
Q1-12
Q1-13
Q1-14
Postpaid subscribers (millions)
Q1-12
Blended ARPU
Smartphone % of postpaid
Q1 smartphone penetration up 10 points to 78% of postpaid base
supporting continued strong ARPU growth of 2%
6
Industry-leading lifetime revenue per subscriber1
$3,798
Q1-12
$4,057
Q1-13
$4,406
Q1-14
Customers First focus generating
industry-leading lifetime revenue per subscriber
1
Lifetime revenue derived by dividing ARPU by blended churn rate
7
Strong Future Friendly Home subscriber growth
High-speed Internet
TELUS TV
Residential NALs
Total wireline customer net adds
59K
53K
50K
21K
48K
16K
44K
13K
19K
34K
34K
31K
34K
38K
27K
-34K
-32K
-33K
-25K
-24K
Q1-13
Q2-13
Q3-13
Q4-13 Q1-14
16K
12K
20K
21K
34K
24K
Combined TV and High-Speed net additions continue to exceed
residential NAL losses by two times
8
Key first quarter operational highlights
• Leading postpaid wireless subscriber growth – 57% share of
net adds generated by major national carriers
• Lowest postpaid churn in Canada & North America
• Industry leading ARPU and fastest growing network revenue
• Industry leading lifetime revenue per customer
• Most rapidly growing wireline business in Canada
• Strong EBITDA performance and revenue growth in both
wireless and wireline
Supporting value creation for investors and return of significant
cash to shareholders
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Q1 2014 wireless financial results
($ millions, except margin)
Q1 2014
y/y change
Revenue (external)1
1,555
+5.6%
Network revenue
1,443
+5.3%
690
+3.6%
700
+5.1%
44.0%
(0.9) pts
45.3%
+0.4 pts
165
+23%
EBITDA2
EBITDA (excl. Public Mobile)
EBITDA margin3
EBITDA margin (excl. Public Mobile)
Capital expenditures
TELUS delivers another strong quarter of wireless results
1 Includes
Public Mobile revenue of $24M, composed of network revenues of $21M and equipment and other revenues of $3M
For definition, see section 11.1 in Q1 2014 Management’s discussion and analysis.
3 EBITDA as a percentage of total revenue.
2
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Q1 2014 wireline financial results
($ millions, except margin)
Revenue (external)
EBITDA
EBITDA margin1
Capital expenditures
Q1 2014
y/y change
1,340
+4.4%
387
+5.0%
28.0%
+0.2 pts
331
(0.6)%
Strong EBITDA growth and margin expansion reflecting
continued revenue growth and focus on efficiency
1
EBITDA as a percentage of total revenue.
11
Q1 2014 consolidated financial results
($ millions, except EPS)
Q1 2014
y/y change
Revenue
2,895
+5.0%
EBITDA
1,077
+4.2%
1,087
+5.1%
EPS (basic)
0.61
+8.9%
Capital expenditures
496
+6.2%
Simple cash flow (EBITDA less capex)
581
+2.5%
EBITDA (excl. Public Mobile)
Strong growth in revenue and profitability
driven by wireless and wireline
12
EPS continuity analysis
$0.56
$0.06
EBITDA
(ex. Public
(as reported)
Mobile)
Q1-13
$0.03
Lower
shares
outstanding
($0.02)
Financing costs
and
Depreciation &
Amortization
($0.01)
Higher
income
tax rates
($0.01)
$0.61
Public
Mobile
Q1-14
(as reported)
EPS growth driven by strong EBITDA growth
and lower shares outstanding
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TELUS financing update
• Successfully issued $1 billion in two tranche debt offering at
attractive interest rates
• Average cost of long-term debt 4.89%
• Average term to maturity of long-term debt 10.3 years
• Extended credit facility to May 2019 and expanded size from
$2.0 billion to $2.25 billion
TELUS balance sheet remains in
strong position with significant liquidity
14
Returning significant cash to shareholders
$10.1B
• Executing on multi-year dividend growth
and share purchase programs
$4.0B
Buybacks
$6.1B
Dividends
• Dividend - $0.38/share or $1.52 annually
up 11.8% over last year
• 5.4M shares purchased in 2014 for
$202M at average price of $37.45
2004 to mid-2014
cumulative
Strong track record of returning capital to shareholders
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Investor Relations
1-800-667-4871
telus.com/investors
ir@telus.com
16
Appendix – Q1 2014 free cash flow comparison
EBITDA
Capital expenditures (excluding spectrum licenses)
Net employee defined benefit plans expense
Employer contributions to employee defined benefit plans
Interest expense paid, net
Income taxes paid, net
Share-based compensation
Restructuring (disbursements) net of restructuring costs
Free Cash Flow
Dividends
Purchase of Common Shares for cancellation
Cash payments for 700 MHz spectrum licences
Cash payments for acquisitions and related investments
Real estate joint ventures
Working Capital and other
Funds available for debt redemption
Net issuance (repayment) of debt
Decrease in cash
2014
Q1
1,077
(496)
22
(29)
(60)
(224)
16
(15)
291
(222)
(159)
(229)
(37)
(14)
(240)
(610)
326
(284)
2013
Q1
1,034
(467)
26
(36)
(57)
(148)
12
(6)
358
(208)
(26)
(4)
(139)
(19)
(66)
(85)
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Appendix - definitions
• EBITDA does not have any standardized meaning prescribed by
IFRS-IASB. We have issued guidance on and report EBITDA
because it is a key measure used to evaluate performance at a
consolidated level and the contribution of our two segments. For
definition and explanation, see Section 11.1 in the 2014 first
quarter Management’s discussion and analysis.
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