Q1 2011 TELUS
investor conference call
Robert McFarlane
EVP & Chief Financial Officer
Joe Natale
EVP & Chief Commercial Officer
Darren Entwistle
President & Chief Executive Officer
May 5, 2011
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 those for semi-annual dividend increases to 2013) referred to in the
Management’s discussion and analysis in the 2010 annual report and in the
2011 first quarter report. 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
Agenda
 Wireless and wireline segment review
 Consolidated financial review
 Updates
 Regulatory
 Operations
 Dividend
 Questions and Answers
3
Q1 2011 wireless financial results
($M)
Q1-10
Q1-11
Revenue (external)
1,177
1,308 
11%
495
551 
11%
EBITDA
EBITDA margins1
(total revenue)
Capex
EBITDA less capex
41.8%
41.8%
change
no change
59
76 
29%
436
475 
8.9%
Strong revenue and EBITDA growth of over 11%
driving strong cash flow growth of 9%
4
1
Margins on network revenue in Q1/11 and Q1/10 were 45.8% and 45.5%, respectively
Wireless subscriber results
Total
net adds
Postpaid
net adds
Wireless
subscribers
1.2M
65K
prepaid
18%
52K
51K
32K
postpaid
82%
5.8M
Q1-10 Q1-11
Q1-10 Q1-11
7M total
Net additions impacted by loss of
Federal Government subscribers
5
Wireless data revenue
$366M
$254M
$204M
Q1-09
Q1-10
Q1-11
Data revenue growth accelerated to 44%
driven by strong smartphone adoption
6
Marketing and retention
Q1-10
Q1-11
356
388

9.0%
1.55%
1.70%

0.15 pts
$322
$348

8.1%
COA expense
$114M
$135M

18%
Retention expense
$123M
$147M

20%
Gross adds (000s)
Churn
COA per gross add
change
Record gross adds
Higher churn and COA/COR expense reflect increased
competition and increased smartphone loading
7
Blended ARPU analysis
Data
Voice
% of ARPU
$55.80
$57.89
13.14
17.71
24%
31%
42.66
40.18
76%
69%
Q1-10
Q1-11
Q1-10
Q1-11
ARPU up 3.7% y/y as strong data
growth more than offsets voice decline
8
Q1 2011 wireline financial results
($M)
Q1-10
Q1-11
Revenue (external)
1,200
1,223 
1.9%
EBITDA margins
(total revenue)
448
435

EBITDA1
change
(2.9)%
36.2%
34.4%

(1.8) pts
Capex
252
333 
32%
EBITDA less capex
196
102

(48)%
Wireline results reflect Transactel transaction, continued erosion of
legacy services and strong growth in Optik TV
1
9
Q1-11 Adjusted EBITDA of $419M excludes $16M non-cash gain from TELUS’ acquisition of Transactel
TELUS’ acquisition of Transactel
 TELUS increased its economic interest from approx 30 to 51% of Transactel, a
business process outsourcing and call centre company with facilities in Central
America
 Enhances TELUS International’s business process outsourcing capacity,
particularly Spanish / English-language capabilities
 Allows for multi-site redundancy
 Clients include variety of third party MNOs in various industries
 Financial results included in wireline segment effective Feb. 1
 Recognized a gain of $16 million on pre-existing minority interest in Q1-11 in
“Other operating income”
 Economic interest to be increased to 95% in Q2-11
Acquisition complements and
diversifies contact centre capabilities
10
Normalized wireline EBITDA
448
435
-
(16)
448
419
One-time benefits
(10)
-
Normalized EBITDA
438
419
EBITDA
Gain on Transactel acquisition
Adjusted EBITDA
change
(2.9)%
(6.5)%

Q1-11

Q1-10

($M)
(4.3)%
Normalized wireline EBITDA down 4%
11
TELUS TV subscribers
TELUS TV
net additions*
TELUS TV
subscribers*
358K
44K
199K
29K
Q1-10 Q1-11
Q1-10
Q1-11
Strong momentum continues with TV net adds up 52% y/y
and total subscribers up 80%
12
*
Includes both IP TV and TELUS Satellite TV subscribers
TELUS high-speed Internet results
18K
15K
3K
3K
Q1-10
Q2-10
Q3-10
Q4-10
16K
Q1-11
Strong growth in HSIA net adds reflects success of enhanced
Optik service bundle since launch in June 2010
13
TELUS network access lines
Residential
Q1-10 Q1-11
Business
Q1-10
-8K
2K
Q1-11
-33K
-50K
Residential line losses improved 34% y/y
Business line increase reflects gain in wholesale customers
14
Q1 2011 consolidated financial results
($M)
Q1-10
Q1-11
change
Revenue (external)
2,377
2,531 
6.5%
EBITDA1
943
986 
4.6%
EPS (basic) 2
0.85
1.01 
19%
Capex
311
409

32%
EBITDA less capex
632
577

(8.7)%
Strong revenue and earnings growth driven by wireless
1
2
Q1-11 Adjusted EBITDA of $970M, up 2.9% excl. $16M non-cash gain from acquisition of Transactel 15
Q1-11 Adjusted EPS of $0.97 for Q1-11 excludes after-tax Transactel gain of $0.04 per share
EPS continuity analysis ($)
Transactel gain
0.85
Q1-10
reported
0.04
0.03
Normalized Lower
EBITDA1 tax rates
0.03
0.02
1.01
0.02
- 0.02
Financing
costs
Pension
& Restr.
costs
Dep &
Amort
Higher
O/S
shares
0.97
Excl.
Trans.
gain
Q1-11
reported
Excluding one-time Transactel gain, underlying EPS up 14%
1
Normalized EBITDA excludes pension and restructuring costs, and Transactel gain
16
Tentative collective agreement reached with TWU
 TELUS and TWU agreed to terms of a tentative collective
agreement on April 11
 TWU recommending ratification to their membership and will be
holding ratification meetings across country until early June
 Tentative agreement includes compensation increases of 1.5% in year
one, 2% in years two through four and 2.5% in year five
 A ratified agreement will enable our team to focus on continued
execution of our strategy and corporate priorities for 2011
Tentative agreement is a progressive contract that reflects
competitive marketplace and balances needs of team
members, customers and shareholders
17
TELUS to deploy 4G+ wireless LTE
 Consistent with our strategy on technology evolution, TELUS
announced the planned launch of its wireless 4G+ long-term evolution
(LTE) network in 2012
 Construction on TELUS‘ 4G+ LTE network will begin in latter half of
2011 in major urban markets across Canada
 TELUS' LTE deployment will use AWS spectrum purchased for $882
million in Industry Canada's auction in 2008 for this purpose
 Potential rollout into rural Canada will be dependent on Industry
Canada auction of frequencies in 700 MHz spectrum band
Investment in LTE urban build is consistent with TELUS'
consolidated capital expenditure targets for 2011
18
700 MHz spectrum auction
 700 MHz spectrum consultation process ongoing – TELUS and other
parties filed reply comments on April 6
 Access to 700 MHz for TELUS would support truly innovative
broadband applications throughout Canada & bridge digital divide
 TELUS most spectrally efficient major carrier in North America on a MHz
per pop basis and has need for more capacity to support data growth
 Cable companies and regional carriers have financial resources to bid
and be successful in an open auction and should not be advantaged by
access to any set aside spectrum
To ensure that 700 MHz is utilized outside of urban areas
there must be a “use it or lose it” build out requirement
19
2500/2600 MHz spectrum auction
 First round comments filed by TELUS and other parties on April 19
 Industry Canada to auction 60 MHz of clawed back spectrum plus additional
spectrum in regions (Alberta, Atlantic Canada) where Rogers and Bell,
through Inukshuk partnership, did not obtain 2600 MHz spectrum
 2500/2600 MHz spectrum aligns with 3GPP standards for LTE
 Rogers and Bell
 Currently have a de facto Canadian monopoly and head start in launching
mobile services in this band
 Should be restricted from bidding on clawed back spectrum to allow entry
 Should be capped individually and/or together due to co-owned Inukshuk
holdings
Access to 2500/2600 MHz spectrum would allow TELUS to
meet anticipated data demand in urban locations
20
Industry vertical integration update
 Recent CRTC decisions support pre-existing principle of programming
content non-exclusivity on reasonable commercial terms
 Regulatory measures taken in U.S. for Comcast acquisition of NBC
Universal set a good precedent
 June 2011 public policy hearing on effects of consolidation and vertical
integration in Canadian broadcasting industry
 TELUS and the public believe CRTC needs to implement measures to
effectively address and deter any anti-competitive behaviour by carriers from
content ownership in a timely manner
 Safeguards prohibiting carriage exclusivity and ensuring access to
content on fair terms (price and packaging conditions) are essential to
ensure sustainable competition
CRTC’s recent decisions reinforce pre-existing principle
that consumers need protection from undue preference
by carriers who own content
21
Q1 2011 summary
Wireless
 Double digit revenue and EBITDA growth reflecting outstanding ARPU
growth of 3.7%
 Accelerating smartphone adoption driving data revenue growth of 44%
Wireline
 Revenue growth driven by strong data growth of 11%
 Continued strong TV and HSIA adds and improving residential NAL
losses reflecting success of Optik services and marketing
Revenue and earnings growth of 6.5% and 19% driven by wireless.
Annualized dividend raised 4.8% to $2.20 per share
22
Strong smartphone adoption driving data growth
Smartphone gross sales
(as % of postpaid gross sales)
46%
54%
33%
 Smartphone adoption continues to accelerate
 Now represents 54% of postpaid gross loads
 Represents over 70% of postpaid retention
units compared to less than 1/2 a year ago
1Q11
1Q10 4Q10
Smartphone penetration
(% of postpaid cumulative base)
33%
38%
22%
1Q10 4Q10 1Q11
Smartphone base increased 76% y/y to 2.2M
Data revenue growth increased by 44% y/y
23
Continued Optik momentum, Future Friendly Home
High-speed Internet
TELUS TV
Residential NALs
32K
3K
29K
32K
53K
15K
29K
38K
66K
18K
48K
-50K
-51K
-39K
-37K
Q1-10
Q2-10
Q3-10
Q4-10
60K
16K
44K
-33K
Q1-11
TV & HSIA loading more than offset
residential NAL losses for third consecutive quarter
24
Providing shareholder clarity on dividend growth model*
 Over last eight years, TELUS has delivered eight increases in
the dividend and paid out $4 billion
 4.8% dividend increase to 55 cents quarterly – July 4, 2011
 Consistent dividend payout guideline of 55-65% of sustainable
earnings
 Announce intention to continue semi-annual declarations to
2013 – May and November
 Expectation of circa 10% annual increase in dividend through
2013
Subject to board decisions taking
into account financial outlook
* See
forward looking statement caution.
25
Appendix – free cash flow
2010
Q1
943
(311)
2011
Q1
970
(409)
(3)
(9)
Employer Contributions to Employee Defined Benefit Plans
(45)
(235)
Interest expense paid
(38)
(61)
(251)
(66)
8
3
Restructuring payments (net of expense)
(49)
(23)
Free Cash Flow (before share-based compensation payment)
254
170
(7)
(8)
247
-
162
C$ millions
Adjusted EBITDA (excludes Transactel gain)
Capex
Net Employee Defined Benefit Plans Expense (Recovery)
Cash Income Taxes and Other
Non-cash portion of share-based compensation
Share Based Compensation Paid
Free Cash Flow (per current public guidance methodology)
Non-voting shares issued
Dividends
Dividends reinvested (DRIP)
Acquisitions and other
Working Capital and Other
Funds Available for debt redemption
Net Issuance (Repayment) of debt
Increase (Decrease) in cash
(150)
21
-
17
(169)
54
(41)
(50)
(178)
77
(164)
(72)
170
5
6
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