2012 RBC Fixed Income Conference
Robert McFarlane
EVP & Chief Financial Officer
May 15, 2012
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 forwardlooking. 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 2012 annual targets), qualifications and risk
factors (including TELUS proposed share consolidation and foreign ownership
levels, the ability over time to sustain dividend growth of circa 10% per annum with
semi-annual dividend increases to 2013, and CEO three year goals for EPS and
free cash flow growth excluding spectrum costs to 2013) referred to in the
Management’s discussion and analysis in the 2011 annual report, and in the 2012
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
About TELUS
 TELUS is a leading Canadian national telecommunications
company providing services including wireless, data, Internet
protocol (IP), voice, television, entertainment and video
 $10.5 billion of annual revenue
 12.7 million customer connections including:
 7.4 million wireless subscribers
 3.5 million wireline network access lines
 1.3 million Internet subscribers
 553,000 TELUS TV customers
 Enterprise value: $25 billion ($6.9 billion net debt)
 Shares - TSX: T, T.A; NYSE: TU
3
TELUS’ revenue and EBITDA profile
Revenue LTM1
Wireline
47%
Wireless
53%
$10.5 billion
EBITDA LTM1
Wireline
Wireline
Wireline
44%
44%41%
Wireless
Wireless
Wireless
56%
56%59%
$3.8 billion
National growth strategy drives strong wireless asset mix
1 12
months ending March 31, 2012
4
Wireless subscriber results
Total wireless subscribers
6.6M
7.0M
7.4M
1.2M
prepaid
16%
7.4M
total
Q1-10
Q1-11
Q1-12
6.2M
postpaid
84%
Postpaid net adds growth of 21% y/y
Smartphones now 56% of postpaid base, up from 38% in prior year
5
Strong smartphone adoption, ARPU growth continue
Postpaid subscribers (millions)
Wireless Data ARPU
Smartphone % of postpaid
5.4
5.8
$22.83
6.2
$17.71
$13.14
56%
38%
22%
Q1-10
Q1-11
Q1-12
Q1-10
Q1-11
Q1-12
1Q 2012 Smartphone base up 63% to 3.5 million year over year
Data ARPU expansion driven by 36% growth in data revenue
6
Wireless data revenue
$498M
$366M
$254M
Q1-10
Q1-11
Q1-12
Industry leading data revenue growth of 36%
Q1 data increased to 39% of network revenue
7
Blended ARPU analysis
Data
Voice
$55.80
$57.89
13.14
17.71
42.66
40.18
$58.87
22.83
39%
36.04
61%
Q1-10
Q1-11
Q1-12
ARPU increase of 1.7% in Q1-12 led by data
Sixth consecutive quarter of ARPU growth
8
Industry Canada sets spectrum auction
and telecom foreign ownership policies
 Spectrum cap of 10 MHz for prime 700 MHz auction and 40 MHz for
2.5 GHz auction
 700 MHz prime spectrum divided into 4 paired blocks of 10 MHz
 2.5 GHz spectrum cap means TELUS should be eligible to
obtain up to 40 MHz of spectrum
 Auctions delayed to H1 2013 for 700 MHz and H1 2014 for 2.5 GHz
 Foreign ownership restrictions to be lifted for carriers with less than
10% national market share
 TELUS encourages government to continue to work towards full
liberalization to ensure level playing field
Policy announcement on spectrum auctions consistent
with TELUS’ proposed recommendations to Government
9
TELUS TV customer growth
Total TELUS TV subscribers*
553K
358K
199K
Q1-10
Q1-11
Q1-12
Momentum continues with TV net adds of 44K in Q1-12 and 196K in 2011
Total subscribers up 54% surpassing 550,000
10
*
Includes both IP TV and TELUS Satellite TV subscribers
Future Friendly Home - continued Optik momentum
High-speed Internet net adds
TELUS TV net adds
Residential access lines net adds
29K
-51K
Q2-10
Optik Launch
3K
60K
80K
22K
24K
16K
58K
13K
48K
44K
46K
50K
56K
-37K
-31K
-30K
-39K
-33K
Q3-10
Q4-10
Q1-11
53K
15K
32K
66K
18K
72K
38K
Q2-11
-37K
Q3-11
Q4-11
60K
16K
44K
-47K
Q1-12
TV and High-Speed Internet loading exceeding
residential NAL losses for seventh consecutive quarter
11
Q1 2012 consolidated financial results
($M, except EPS)
Q1-11
Q1-12
change
Revenue (external)
2,531
2,631

4.0%
EBITDA1
986
1,009

2.3%
EPS (basic)
1.01
1.07

5.9%
Capex
409
441

7.8%
EBITDA less capex
577
568

(1.6)%
Free cash flow
162
358

121%
1
Q1-12 adjusted EBITDA of $1,010M excludes a $1M equity loss for residential component of TELUS Garden real
estate joint venture and Q1-11 adjusted EBITDA of $970M excludes a $16M non-cash gain on Transactel.
Strong revenue and earnings growth driven by wireless
FCF driven by lower DB pension funding and financing costs
12
Simple cash flow by segment
Wireline
EBITDA less capex ($billions)
Wireless
2.0
2.0
1.8
1.8
1.9
1.9
1.9
2010
2011
2.05
1.6
1.4
1.0
2001
0.3
2002
2003
2004
2005
2006
2007
20081
2009
2012E*
(0.3)
TELUS generating strong cash flows from operations
2008 cash flow incl. $882M for wireless spectrum. Excl. spectrum cost, 2008 cash flow was $1.9B 13
* Using mid-points of 2012 targets. See forward looking disclaimer caution
1
2012 annual targets*
2012 guidance
Revenue (external)
EBITDA
EPS (basic)
Capex
y/y change
$10.7 to 11.0B

3 to 6%
$3.8 to 4.0B

1 to 6%
$3.75 to 4.15

0 to 10%
Approx $1.85B
Expecting revenue and earnings growth driven by wireless and data
14
*
See forward looking disclaimer caution
TELUS’ strong balance sheet & credit policies
Net debt to EBITDA
(excluding restructuring)
Available liquidity
Credit Rating
Long term policies &
guidelines
Q1-12
Met
1.5 to 2.0X
1.8X
√
minimum $1 billion
$1.12 billion
√
BBB+ to A-
BBB+/A-,
stable trend
√
 Dividend payout ratio guideline of 55 to 65% of sustainable net earnings on a
prospective basis
Decade long track record of meeting prudent financial policies
15
Canadian Telco comparison
TELUS Rank
Net debt to EBITDA
#1
Consolidated revenue growth
#1
Wireless external revenue growth
#1
Wireless EBITDA growth
#1
Total wireless subscriber net adds
#1
Wireless postpaid net adds
#1
ARPU
#1
Blended wireless churn
#1
TV subscriber net adds
#1
High-speed Internet net adds
#1
Residential NALs erosion
#1
TELUS is executing in the
marketplace
16
Appendix – long term debt maturities
C$ billions
Accounts receivable securitization
Commercial paper
Notes and debentures
1.6
1.1
1.0
1.0
0.7
0.6
0.4
0.3
2012
2013
0.2
2014
2015
2016
2017
2018
2019
2020
2021 2022+
Average term to maturity of debt is 5.7 years
with staggered maturity profile
As at March 31, 2012
18
Appendix – TELUS free cash flow1 history
FCF after spectrum purchases and before dividends
Wireless spectrum purchased
2012E FCF before dividends 1,167
1,345
1,443
1,200 to
1,400
1,388
1,243
1,336
($ Millions)
997
939
776
485
361
144
2001
2002
2000
2003
(249)
(910)
2004
2005
2006
2007
2008
2009
2010
2011
2012E*
2009 - impacted by increased capex, pension and
restructuring costs, and cash taxes
2010 - reflected reduced capex and restructuring costs,
partially offset by higher cash taxes
2011 - after $200M voluntary pension contribution
(1,266)
2012 - after $100M voluntary pension contribution
see “Appendix – definitions” for Free cash flow definition / 2012E derived from 2012 targets (Dec. 16, 2011)
* See forward looking statement
1
19
Appendix – 2012E free cash flow
($M)
EBITDA
Capex
Net cash interest
Net cash tax payment1
Other2
2012E
$3,800 to 4,000
~(1,850)
~(350)
(150) to (200)
~(45)
Free Cash Flow
(before dividends and spectrum)
1,380 to 1,580
Cash pension contribution
(including DB pension recovery)3
~(180)
Free Cash Flow
(before dividends and spectrum)
1,200 to 1,400
1 Midpoint
used to calculate FCF range
restructuring payments (net of expense), and share based compensation (net of expense)
3 Includes ~$175M cash pension contributions and pension recovery included in reported in EBITDA
* As provided December 2011. See forward looking disclaimer caution
2 Includes
20
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