Darren Entwistle, Executive Chair
Joe Natale, President and Chief Executive Officer
John Gossling, EVP & Chief Financial Officer
Q2 2014
investor conference call
August 7, 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 and our ability to sustain and
complete multi-year share purchase programs through 2016), qualifications and risk factors
referred to in the first and second 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.
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Executing on our strategy
• Delivering strong second quarter results
• Returning significant capital to shareholders
• Continuing track record of executing in dynamic marketplace
TELUS consistently delivering strong results
and returning significant cash to shareholders
3
Healthy postpaid net additions
Postpaid net adds (000s)
100
Wireless
subscribers1
78
1.0M
prepaid
13%
7.9M
total
87%
Q2-13
Q2-14
6.9M
postpaid
Continued expansion of postpaid subscriber base
and mix shift toward higher value postpaid
1 Wireless
operating indicators exclude Public Mobile subscribers, which are all prepaid.
4
Industry-leading wireless churn
Blended1
1.39%
1.40%
Postpaid
1.26%
1.00% 1.03%
Q2-12 Q2-13 Q2-14
0.90%
Q2-12 Q2-13 Q2-14
Industry-leading postpaid churn matching record low set eight years ago
Fourth consecutive quarter with postpaid churn <1%
1 Wireless
operating indicators exclude Public Mobile subscribers, which are all prepaid.
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Smartphone & data adoption driving ARPU growth
6.3
6.6
6.8
$60.29
$61.12
$62.51
Q2-13
Q2-14
79%
71%
59%
Q2-12
Q2-13
Q2-14
Postpaid subscribers (millions)
Q2-12
Blended ARPU1
Smartphone % of postpaid
Q2 smartphone penetration up eight points to 79% of postpaid base
supporting continued strong ARPU growth of >2%
1 Wireless
operating indicators exclude Public Mobile subscribers, which are all prepaid.
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Industry-leading lifetime revenue per subscriber1,2
$4,961
$4,337
Q2-12
$4,366
Q2-13
Q2-14
Customers First focus supporting industry-leading lifetime
revenue per subscriber - up a strong 14% YoY
1
Lifetime revenue derived by dividing ARPU by blended churn rate.
operating indicators exclude Public Mobile subscribers, which are all prepaid.
2 Wireless
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Future Friendly Home subscriber growth
High-speed Internet
TELUS TV
Residential NALs
Total wireline customer net adds
44K
48K
38K
13K
21K
34K
31K
27K
-32K
-33K
-24K
Q2-13
Q1-14
Q2-14
12K
24K
19K
15K
23K
-19K
Combined TV and High-Speed net additions exceeded
residential NAL losses by 2x for the third straight quarter
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Key second quarter operational highlights
• Lowest postpaid churn in Canada
• Industry-leading ARPU
• Industry-leading lifetime revenue per customer
• Most rapidly growing wireline business in Canada
• Strong EBITDA performance and revenue growth in both wireless
and wireline
Strong operating momentum in wireless and wireline supporting
value creation and return of significant cash to shareholders
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Q2 2014 wireless financial results
($ millions, except margin)
Q2 2014
y/y change
Revenue (external)1
1,604
+6.2%
Network revenue
1,478
+6.1%
708
+6.3%
714
+5.7%
43.8%
+0.1 pts
44.8%
+0.4 pts
228
+33%
EBITDA2
EBITDA (excl. Public Mobile and restructuring)
EBITDA margin3
EBITDA margin (excl. Public Mobile and restructuring)
Capital expenditures
TELUS delivers another strong quarter of wireless results
1 Includes
Public Mobile revenue of $25M, composed of network revenues of $22M and equipment and other revenues of $3M
For definition, see section 11.1 in Q2 2014 Management’s discussion and analysis.
3 EBITDA as a percentage of total revenue.
2
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Q2 2014 wireline financial results
($ millions, except margin)
Revenue (external)
EBITDA
EBITDA (excl. restructuring)
EBITDA margin1
EBITDA margin (excl. restructuring)
Capital expenditures
Q2 2014
y/y change
1,347
+2.4%
365
+9.8%
373
+3.1%
26.2%
+1.7 pts
26.8%
+0.2 pts
408
+20%
Strong EBITDA growth and margin expansion reflecting
continued revenue growth momentum and efficiency flow-through
1
EBITDA as a percentage of total revenue.
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Q2 2014 consolidated financial results
($ millions, except EPS)
Q2 2014
y/y change
Revenue
2,951
+4.4%
EBITDA
1,073
+7.5%
1,087
+4.8%
0.62
+41%
0.63
+17%
Capital expenditures
636
+25%
Simple cash flow (EBITDA less capex)
437
(10)%
EBITDA (excl. Public Mobile and restructuring)
EPS (basic)
Adjusted EPS1
Strength in both wireless and wireline delivering strong
consolidated growth in revenue and profitability
1
Adjusted EPS does not have any standardized meaning prescribed by IFRS-IASB. See appendix for definition.
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EPS continuity analysis
$0.06
$0.03
$0.10
$0.54
Q2 2013
items1
EBITDA
Lower
(excluding
shares
(adjusted)
restructuring) outstanding
$0.63
($0.01)
$0.62
$0.44
Q2-13
(as reported)
Q2-13
Q2-14
(adjusted)
Restructuring Q2-14
costs
(as reported)
EPS growth reflects strong EBITDA growth
and lower shares outstanding from active NCIB program
1 Q2
2013 items include (after income taxes): 1) restructuring and other like costs of $0.04; 2) long-term debt pre-payment
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premium of $0.03; and 3) unfavourable income tax-related adjustments of $0.03. See appendix for definition.
Returning significant cash to shareholders
$10.3B
• Executing on multi-year dividend growth
and share purchase programs
$4.2B
Buybacks
$6.1B
Dividends
• 14 dividend increases since 2004 to
current $0.38/share or $1.52 annually
• 10.7M shares purchased in 2014 for
$410M
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
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Appendix – Q2 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
Spectrum
Dividends
Purchase of Common Shares for cancellation
Cash payments for acquisitions and related investments
Real estate joint ventures
Working Capital and other
Funds available for debt redemption
Net issuance of debt
Increase in cash
2014
Q2
1,073
(636)
22
(22)
(124)
(122)
23
(4)
210
(914)
(224)
(177)
(3)
(10)
49
(1,069)
1,074
5
2013
Q2
998
(511)
28
(130)
(128)
(82)
13
4
192
(209)
(238)
(3)
(6)
(264)
514
250
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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.
• Adjusted EPS does not have any standardized meaning
prescribed by IFRS-IASB. This term is defined in this
presentation as excluding (after income taxes): 1) restructuring
and other like costs; 2) long-term debt pre-payment premium;
and 3) income tax-related adjustments. For further analysis of
the aforementioned items see Section 1.3 in the 2014 second
quarter MD&A.
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