2005
Telecom Summit
1
Darren Entwistle
a member of the TELUS team
2
transformation principles
1.
2.
3.
4.
5.
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Key performance indicators
Focus on essentials
Compliance and enforcement
Level playing field
Adapt to disruptive change
principle #1: key performance indicators
raising the bar on performance
 Set clear, consistent strategy
 Know where you want to go
 Have courage to set targets publicly
 Accountability to stakeholders
4
What gets measured, gets done
principle #1: key performance indicators
raising the bar on performance - TELUS
 Over the last 5 years TELUS set 28 targets
 24 of 28 targets met
 Rigorous focus on metrics
 Instill stakeholder confidence
5
What gets measured, gets done
principle #1: key performance indicators
raising the bar on performance - CRTC
 Implementation of performance standards
 10 business days to respond to tariff applications
 Major proceedings decision dates set out upfront
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Setting public targets
principle #1: key performance indicators
raising the bar on performance - CRTC
 Reduced number and frequency of reports
 30% reduction in regulatory burden
 Decision backlog largely cleared
 Deferral account requires attention
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Reducing regulatory burden
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

X
principle #1: key performance indicators
bridging the digital divide in B.C.
 Worthy use of deferral account
 TELUS – B.C. Government partnership
 TELUS investing $400 million
 All 366 communities in B.C.connected by 2006
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Unleashing the power of the Internet
principle #2: focus on essentials
execute forward-looking strategy
 Resist planning through the rear view mirror
 TELUS strategy set in 2000 - future-oriented
 Relentless focus on strategic imperatives
 Many others in 2000 focused on the present
 TELUS outperformed our peers by 124%
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Performance leads to results
principle #2: focus on essentials
strategic focus on data and wireless
2000
LD
23%
Wireless
18%
Voice
49%
$5.7B
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Data
10%
principle #2: focus on essentials
strategic focus on data and wireless
2000
2005
LD
23%
LD
Wireless
12%
Wireless
38%
18%
Voice
49%
$5.7B
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Data
10%
Voice
Data
31%
19%
$7.8B
Significant exposure to data and wireless @ 57%
principle #2: focus on essentials
the marketplace has changed dramatically
 ILECs compete head-to-head
 Cable has entered residential market
 Rogers to acquire Call-Net
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Realistic assessment of market essential
principle #2: focus on essentials
cable companies are large and established
 Multi-billion dollar conglomerates with scale
 Diversified product mix
 Sophisticated sales and marketing - known brands
 Established service delivery model
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Regulatory head start not required
principle #2: focus on essentials
disruptive changes since price cap decision
 VoIP well-established
 Wireless substitution
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Marketplace is fundamentally different
principle #3: compliance and enforcement
light-handed regulation works
 Market forces are regulator of choice
 CRTC process on local forbearance is welcome
 Set ground rules - leave the field - strong referee
 Wireless de-regulatory model has worked
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Reliance on market forces
principle #3: compliance and enforcement
setting rules and enforcing rules
 VoIP decision shows lack of trust in industry players
 Focus on compliance and enforcement
 Set ground rules for all players
 Back up the rules with strong enforcement
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Giving CRTC the confidence to let go
principle #4: level playing field
support facilities-based competition
 Set policy and stay the course
 No fundamental mid-stream changes to policy
 Competitor digital network and price floor
decisions are encouraging
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Consistency is what matters
principle #4: level playing field
undermining facilities-based competition
 Vonage, Primus compete unregulated in Canada
 Canadian telephone companies are price regulated
 Favours those who do not invest in infrastructure
 Disadvantages facilities-based telephone competitors
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VoIP decision favours foreign competitors
principle #5: adapt to disruptive change
CRTC VoIP decision flawed
 Decision did not create level playing field
 Decision disadvantages Canadian Telcos
 Fails to adapt to disruptive technology
 Restricts consumer choice
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Regulate for the future
principle #5: adapt to disruptive change
Internet-based VoIP is different
 Local calling from anywhere
 Voice mail via lap top
 Broadband access without investing in facilities
 Low cost entry for VoIP providers
 Shaw invests less than $100 million
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Not about simple telephony anymore
principle #5: adapt to disruptive change
Telcos to appeal CRTC decision
 Price regulation not required to protect user interests
 Canada is unique in regulating retail rates
 Regulatory head start for competitors unacceptable
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Regulatory paradigm shift is needed
thank you
2005
Telecom Summit
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investing for growth is paying off for shareholders
Cash generation phase
$3.4B cash
 Building high speed data
 Building national platforms
 Building a lower cost structure
2000-02
2003-05E
$1.1B cash
Investment phase
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Executing on strategy and creating significant cash flow
relative equity price performance
$120
TELUS
$111
$100
$80
$60
$45
$40
MSCI World Telecom Index
$20
Assumes $100 invested from May 30, 2000 to May 30, 2005
$0
30-May-00 30-Nov-00 30-May-01 30-Nov-01 30-May-02 30-Nov-02 30-May-03 30-Nov-03 30-May-04 30-Nov-04 30-May-05
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5
TELUS outperforms stock market
principle #5: adapt to disruptive change
Internet-based VoIP is different
 Consumers buy VoIP differently
 Two separate purchasing decisions:
VoIP application selected from multiple competitors
Internet access selected from competing suppliers
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Consumers buy VoIP differently
principle #2: focus on essentials
Shaw + Rogers = Established Competitors
Homes passed
3.3M
Basic service customers
2.8M
2.1M
Shaw Rogers
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2.2M
Shaw Rogers
Cable TV has high market penetration
principle #2: focus on essentials
Shaw + Rogers = Established Competitors
Digital cable customers
High-speed Internet
1.1M
988,000
870,000
712,000
Shaw Rogers
28
Shaw Rogers
Leaders in high-speed penetration
principle #3: compliance and enforcement
wireless success story
 15+ million customers, 47% market penetration
 $1 billion invested annually in infrastructure
 Innovation – push to talk, mobile data access
 Emergency 911 services roll out
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principle #4: level playing field
TELUS capital investments
 2000 – 2004 : $8.3 billion of cash invested
High-speed data infrastructure in the west
National wireline and wireless platforms
Building a lower-cost structure for the future
 2004 capital investment
$1 billion wireline, $750 million high-speed internet
$355 million wireless
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Making the investment in infrastructure
principle #2: focus on essentials
our competitors have changed
 MTS-Allstream merger
 Eastlink transforms into triple-play provider
 Videotron and Shaw now offer telephone service
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Evolving competitive landscape
principle #3: compliance and enforcement
wireless success story
 Reciprocal roaming arrangements
 Inter-carrier support for text messaging
 Multimedia messaging and high speed wi-fi imminent
 Number portability on the way
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Market forces feed innovation