Darren Entwistle, Executive Chair
Joe Natale, President and Chief Executive Officer
John Gossling, EVP and Chief Financial Officer
Q3 2014
investor conference call
November 6, 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, second, and third 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
• Increasing customer connections
• Leading wireless lifetime revenue
• Delivering exceptional customer experience
• Investing for future sustainable growth
• Returning significant cash to our shareholders
TELUS consistently delivering strong results
and returning significant cash to shareholders
3
Stronger wireless postpaid net additions
Wireless
subscribers1
Postpaid net adds (000s)
106
100
1.0M
prepaid
113
12%
78
59
7.99M
total
48
88%
Q1-13 Q1-14
Q2-13 Q2-14
Q3-13 Q3-14
6.99M
postpaid
Year over year postpaid net additions up for first time since Q2-12
1 Wireless
operating indicators exclude Public Mobile subscribers, which are all prepaid.
4
Industry-leading wireless churn
Blended1
Postpaid
1.44%
1.10%
1.36%
1.25%
0.99%
0.90%
Q3-12 Q3-13 Q3-14
Q3-12 Q3-13 Q3-14
Industry-leading postpaid churn matches record low.
Fifth consecutive quarter with postpaid churn <1%
1 Wireless
operating indicators exclude Public Mobile subscribers, which are all prepaid.
5
Smartphone & data adoption driving ARPU growth
6.7
6.4
7.0
$61.42
$62.49
$64.51
80%
75%
63%
Q3-12
Q3-13
Q3-14
Postpaid subscribers (millions)
Q3-12
Q3-13
Q3-14
Blended ARPU1
Smartphone % of postpaid
Q3 smartphone penetration up five points to 80% of
postpaid base supporting strong ARPU growth of 3.2%
1 Wireless
operating indicators exclude Public Mobile subscribers, which are all prepaid.
6
Industry-leading lifetime revenue per subscriber1,2
$5,161
$4,265
Q3-12
$4,595
Q3-13
Q3-14
Customers First focus supporting industry-leading lifetime
revenue per subscriber – TELUS record, up 12% YoY
1
2
Lifetime revenue derived by dividing ARPU by blended churn rate.
Wireless operating indicators exclude Public Mobile subscribers, which are all prepaid.
7
Growing wireline subscriber base
RGU1 net adds (000s)
53
High-speed Internet
TELUS TV
Business NALs
48
42
48
Residential NALs
-24
-19
-24
Q3-13
Q1-14
Q2-14
Q3-14
13
24
23
24
-40
Total wireline RGU net adds
Delivering positive wireline subscriber growth
1
Revenue generating units
8
Key third quarter operating highlights
• Industry-leading postpaid wireless subscriber growth
• Lowest postpaid churn in North America
• Strong growth in industry-leading ARPU
• Industry-leading and expanding lifetime revenue per customer
• Most rapidly growing wireline business in Canada
• Strong EBITDA1 performance and revenue growth in both
wireless and wireline
Strong customer-centric operating momentum in wireless and
wireline supporting ongoing value creation for investors
1
For definition, see section 11.1 in Q3 2014 Management’s discussion and analysis.
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Q3 2014 wireless financial results
($ millions, except margin)
Q3 2014
y/y change
Revenue (external)1
1,684
+7.7%
Network revenue
1,538
+6.6%
700
+2.9%
720
+5.1%
41.2%
(2.0) pts
42.4%
(1.0) pts
251
+29%
EBITDA
EBITDA (excl. Public Mobile and restructuring)
EBITDA margin2
EBITDA margin (excl. Public Mobile and restructuring)
Capital expenditures
TELUS delivers another strong quarter of wireless results
1 Includes
2
Public Mobile revenue of $19M, composed of network revenues of $17M and equipment and other revenues of $2M.
EBITDA as a percentage of total revenue.
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Q3 2014 wireline financial results
($ millions, except margin)
Revenue (external)
EBITDA
EBITDA (excl. restructuring)
EBITDA margin1
EBITDA margin (excl. restructuring)
Capital expenditures
Q3 2014
y/y change
1,344
+2.5%
365
+3.1%
377
+3.3%
26.3%
+0.1 pts
27.2%
+0.2 pts
406
+12.5%
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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Q3 2014 consolidated financial results
($ millions, except EPS)
Q3 2014
y/y change
Revenue
3,028
+5.4%
EBITDA
1,065
+2.9%
1,097
+4.5%
0.58
+3.6%
0.64
+10%
Capital expenditures
657
+18%
EBITDA less capital expenditures
408
(15)%
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.
12
EPS continuity analysis
$0.56
$0.02
$0.58
$0.06
EBITDA
Q3-13
(excluding
Restructuring
(as reported)
(adjusted) restructuring
costs
& Public
Mobile)
Q3-13
Q3-13
$0.02
Lower
shares
outstanding
($0.02)
Higher
Depreciation &
Amortization
& Public Mobile
$0.64
($0.06)
Q3-14
Q3-14
items1
(adjusted)
$0.58
Q3-14
(as reported)
EPS growth reflects strong EBITDA growth
and lower shares outstanding from active NCIB program
1 Q3
2013 items include (after income taxes): 1) restructuring and other like costs of $0.04; and 2) long-term debt
pre-payment premium of $0.02.
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TELUS financing update
• Successfully issued $1.2 billion in two tranche debt offering at
attractive interest rates
• Average cost of long-term debt now 4.72%
• Average term to maturity of long-term debt now 11.2 years
Balance sheet strength with significant liquidity, positioning TELUS
to make strategic investments and return capital to shareholders
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Returning significant cash to shareholders
$10.7B
• Executing on multi-year dividend growth
and share purchase programs
$4.3B
Buybacks
$6.4B
Dividends
• 15 dividend increases since 2004 to
current $0.40/share or $1.60 annually
• 13.6M shares purchased YTD through
October for $524M
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 – Q3 2014 free cash flow comparison
EBITDA
Capex (excluding spectrum licenses)
Net employee defined benefit plans expense
Employer contributions to employee defined benefit plans
Interest expense paid, net
Income taxes paid, net of refunds
Share-based compensation
Restructuring (disbursements) net of restructuring costs
Free Cash Flow
Spectrum
Purchase of Common Shares for cancellation
Dividends paid to holders of equity shares
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 / (decrease) in cash
2014
2013
2014
2013
Q3
1,065
(657)
21
(22)
(98)
(119)
20
9
219
(164)
(234)
(6)
(13)
Q3
1,035
(555)
27
(7)
(62)
(88)
21
(6)
365
(67)
(762)
(222)
(3)
(5)
Q3 YTD
3,215
(1,789)
65
(73)
(282)
(465)
59
(10)
720
(1,143)
(500)
(680)
(46)
(37)
Q3 YTD
3,067
(1,533)
81
(173)
(247)
(318)
46
(8)
915
(67)
(1,000)
(639)
(32)
(15)
219
21
148
169
241
(453)
213
(240)
28
(1,658)
1,548
(110)
104
(734)
659
(75)
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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 third
quarter Management’s discussion and analysis (MD&A).
• 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 third
quarter MD&A.
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