Q4 2006 TELUS investor conference call February 16, 2007

Q4 2006 TELUS investor conference call

February 16, 2007

TELUS forward looking statements

This session and answers to questions contain forward-looking statements that require assumptions about expected future events including 2007 targets, competition, financing, financial and operating results, and regulation that are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward looking statements will not prove to be accurate so do not place undue reliance on them.

Factors that could cause actual results to differ materially include but are not limited to: competition; capital expenditure levels (including possible spectrum purchases); financing and debt requirements (including share repurchases, debt redemptions and refinancing plans); tax matters (including deferral of payment of significant cash taxes); regulatory developments (including local forbearance, local price cap regulation and wireless number portability); process risks (including conversion of legacy systems and billing system integrations); and other risk factors discussed herein and listed from time to time in TELUS’ reports.

There are many factors that could cause actual results to differ materially. For a full listing and description of the potential risk factors and assumptions, please refer to the TELUS 2005 annual report and updates in the 2006 quarterly reports (see Section 10 Risks and Risk Management in Management’s discussion and analysis), 2007 targets news release issued on Dec. 14, 2006 and other filings with securities commissions in Canada (sedar.com) and the United States (sec.gov).

All dollars referenced are in C$ unless otherwise specified.


Darren Entwistle • member of the TELUS team

February 16, 2007

2006 annual highlights

Uses of cash flow

Regulatory developments

Q4 2006 review

4

Agenda

2006 highlights - annual

5

Consolidated

Strong revenue growth of 7% led by wireless and data

EBITDA up 9% to $3.6 billion

Net income up $422 million to $1.1 billion

Free cash flow up 9% to $1.6 billion

Achieved 4 of 5 original consolidated targets

87% in last 7 years

Continued on strategy performance

EBITDA

Revenue

20052004Growth in

EPS

2003

Source: Bloomberg and TD Securities, for major global incumbent telecoms

6

Leading global telecom performance

#1

#1top 25%

top 25%

- top 25%

top 25%

top 25%

top 25%

2006

top 25%

top 25%

top 25%

TELUS performing well relative to global telecom peers


7

Wireline

Strong data revenue growth of 7% (9% in Q4)

154,000 net adds in high-speed Internet

Best performance in 4 years

High-speed Internet sub base up 20%

Total NALs down 3%

Residential down 5% and business up 0.6%

Revenue and EBITDA down < 1%

Comparative resiliency in wireline


8

Wireless

Strong revenue growth of 17%

Wireless sub base up 12% and ARPU up 3%

Data revenue up 114% to $280 million

Record lifetime revenue $4,850 EBITDA up 21%

Cash flow up $285 million to $1.3 billion

High cash flow yield 34%

Continued leading performance

9

2006 wireless cash flow yield1 comparison (%)

TELUS*

1 EBITDA less capital expenditures divided by revenue

Source: Merrill Lynch, UBS. TELUS actual results. Other wireless carriers estimated.

3432

25

3032

36

28

171919

Cash yield helps drive valuation

population penetration

76%76%56% 56% 56%104%82%102%135% 88%

TELUS track record of wireless subscriber additions

10

924 9851,017 987

1,121

1,279 1,293

474418 418 431

512584 535

2000 2001 2002 2003 2004 2005 2006

Gross additions (000s)

Net additions (000s)

550+

2007E

2006: Record gross additions / net 2nd best in 7 years Net additions > 500K for third consecutive year

Canadian industry subscriber growth

5.1pts4.4ptsPenetration gain

1.8M1.6MNet subscriber adds

20052004

51.8%46.7%Population penetration

Source: Company reports, CWTA

* Does not include wholesale figures

4.1pts

2003

42.3%

4.6pts

1.7M

2006*

56.4%

1.5M

11

Expect growth of 4.5 - 5 points per year for foreseeable future

TELUS share of adds 28% 33% 32% 32%

On strategy use of cash flow

12

Debt repayment

$1.6 billion paid out early in Dec. 2005

Dividend growth model

3 sizeable annual increases – 33%, 38%, 36%

Annualized $500 million in 2007

Ongoing share repurchases

3 successive programs since Dec. 2004

39.4M shares for $1.77 billion

On strategy capital expenditures

Investing for long term growth

Balancing interests of shareholders and debt holders

Wireless capex increase of $125 million to approx. $550 million

Within 11-13% intensity range

Wireline capex unchanged at approx. $1.2 billion

Strong housing formation in West

Broadband network enhancement program

Implementing IT customer system consolidation

Success based capex for contracts such as Govt. of Ontario

Investing capital in 2007 for long-term growth

13

Investing to create future value

Regulatory developments

14

Deregulation by federal government

Local forbearance decision effective April 2007

Based on competitive choice

Directive to CRTC now in force

Rely on market forces to maximum extent

Ensure competitive and technological neutrality

Wireless local number portability effective Spring 2007

Opportunity in business market in Central Canada

Regulation based on competitive realities


Robert McFarlane • EVP & Chief Financial Officer

February 16, 2006

26%

106M144MCapital expenditures

33% 432M326MEBITDA1

16%$1.02B$877MRevenue

ChangeQ4-06Q4-05

Wireless segment – financial results

2006 – fourth quarter wireless review

Record fourth quarter EBITDA

1 Q4-06 includes $3M in restructuring & workforce reduction costs

16

Total wireless subscribers

Postpaid 81%

Prepaid 19%

Net additions

Total subscribers up 12% and strong postpaid mix

17

5.1 million total

4.1M

977K

Wireless subscriber results

Q4-05 Q4-06

130K143K

235K

182K

61%71%

92K

52K

Wireless ARPU growth

ARPU growth driven by 94% increase in data

18

Data ARPU

Q4-05 Q4-06

$62.54$64.50

$3.17$6.16

59.37 58.34

9 bps1.33%1.42%Blended churn

3.1%$64.50$62.54ARPU

ChangeQ4-06Q4-05

TELUS subscriber economics improving & remain best in class

Profitable growth strategy

19

$4850$4404Lifetime revenue

3.0%$436$449

COA

9.0%10.2%COA/lifetime revenue 120 bps

10%

2006 wireless results compared to original targets

approx. $450MCapex

EBITDA

Revenue

$1.75B

$3.86B

Met or exceeded three of four targets

20

2006 actual results

2006 originaltargets1

Wireless net adds > 550K

1 Provided on December 16, 2005

$1.7 to $1.75B

$3.775 to $3.825B

535K

$427M

met or exceeded

21%74M61MOther

8.8%435M400MData

6.7%198M212MVoice – Long Distance

1.7%$528M$537MVoice – Local

ChangeQ4-06Q4-05

External Revenue $1.21B $1.23B 2.0%

Wireline revenue profile

21

Solid data growth offsets erosion in local and LD

2006 – fourth quarter wireline review

1.1 million total

Total Internet subscribers

High-speed83%

Dial-up17%

High-speed Internet subscriber growth

27K

44K

High-speed Internet net additions

22

Q4-05 Q4-06

917K

194K

Continued strong net addition growth

34%309M230MCapital expenditures

9.2%447M409MEBITDA1

2.0%$1.23B$1.21BRevenue

ChangeQ4-06Q4-05

Wireline segment – financial results

23

1 Includes $36M and $5M in wireline restructuring costs in Q4-05 and Q4-06 respectively;

Q4-05 EBITDA includes $50M net expense impact of labour disruption.

34%309M230MCapital expenditures

Labour disruption impact

9.2%$447MEBITDA (reported)

% ChangeQ4-06Q4-05

Wireline EBITDA normalization

24

-

5M36M

$409M

Restructuring costs

50M

Adjusted EBITDA down 4.3%

EBITDA (adjusted for cost of sales related to FFH)

4.3%

EBITDA (subtotal)1 $494M $452M

Non-ILEC revenue and EBITDA

25

Central Canada Non-ILEC profitability continues to improve

Q4-05 Q4-06

165 172

Q4-05 Q4-06

7.111

EBITDARevenue($M)

26

Network access line results

Increased residential losses due to increased competition, partially offset by business line growth

% of network access lines lost, YoY

Q4-05

-2.4%

Q1-06

-2.7%

Q2-06

-2.6%

Q3-06

-2.8%

Q4-06

-3.0%

TELUS total subscriber connections

Connections increasing with strong wireless and Internet growth

27

Wireless

High-speed Internet

Dial-up Internet

Res NALs

Bus NALs

(millions)10.710.2

9.7

Q4-06Q4-05Q4-04

2006 wireline results compared to original targets

$25 to $40M

Capex

EBITDA

Revenue

$1.84B

$4.82B

Met original EBITDA and non-ILEC targets with significant outperformance in high speed Internet additions

28

2006 actual results


High-speed net adds

$1.05 to $1.1B


$1.8 to $1.85B

$4.825 to $4.875B

154K

$1.19B

met or exceeded

Non-ILEC Revenue $657M $650 to $700M

Non-ILEC EBITDA $32M

> 100K

20%$878M$734MEBITDA1

8.0%$2.25B$2.09BRevenue

ChangeQ4-06Q4-05

TELUS Consolidated

2006 – fourth quarter consolidated review

Strong growth in revenue driven by data and wireless

29

218% $0.70$0.22EPS

1 Q4-05 EBITDA includes $52M net expenses, excluding any revenue or indirect impacts, from labourdisruption

11% $415M$374MCapex


20%$878MEBITDA (reported)

% ChangeQ4-06Q4-05

Consolidated EBITDA normalization

30

-

8M36M

$734M

Restructuring costs

52M

Adjusted for acquisition costs, EBITDA up 6.1%

EBITDA (adjusted for (wireless/FFH) cost of sales) 6.1%

EBITDA (subtotal) 822M 886M


218%$0.70EPS (reported)

% ChangeQ4-06Q4-05

EPS (Adjusted)1 $0.39 $0.64 64%

EPS normalization

31

-

(0.06)

1 Adjusted further for restructuring costs, EPS would have been $0.46 and $0.66 for Q4-05 and Q4-06, respectively, up 43%

0.01

$0.22

Tax related adjustments

0.10

Adjusted EPS up 64%

-0.06Early bond redemption

Tremendous growth evident in underlying EPS, led by EBITDA32

$0.22

Q4-05

$0.17

2005 lab. dis. costs

$0.10

$0.01

$0.08

$0.07

$0.02$0.03

$0.70

Lower depr’n & amortiz’n

Lowerfinancing

costs

Tax- related

adjustments

Decr. in avgo/s

shares

OtherEBITDA growth

Q4-06

EPS continuity

2006 consolidated results compared to original targets

$2.40 to $2.60

Capex

EBITDA2

Revenue

$3.59B

$8.68B

TELUS achieved 4 out of 5 original targets driven by wireless

33

2006 actual results


Free cash flow

$1.5 to $1.55B


$3.5 to $3.6B

$8.6 to $8.7B

$1.60B

$1.62B

met or exceeded

EPS3 $3.27

$1.55 to $1.65B

2 Original targets included restructuring & workforce reduction costs of approx. $100M, vs. actual

3 2006 EPS includes $0.48 of positive tax-related adjustments 2006 results of $68M

Share repurchase programs

Total cost ($M) $78

Track record of share repurchases leading to 6% reduction in shares outstanding

34

2004

$1,770

1 Twelve month 25.5 million share repurchase program to Dec. 19, 2005

2 Twelve month 24 million share repurchase program to Dec. 19, 2006

Total shares (M) 2.2 39.4

% of total program

2005

2006

Total

$892 $800

20.8 16.4

85%1 73%2 79%

Total end of period shares outstanding (M) 358.5 20.6350.1 337.9

35

1

2

3

4

2003 2004 2005 2006 2007E1,2

0.60

3.30 3.43

Dividends

Share repurchases

$ per share

1 Annualized dividend, plus share repurchases in 2006 as estimate for 2007. Assumes lower average shares outstanding of 330 million to 335 million in 2007.

0.82

Strong record of returning capital

0.801.10

1.50

3.90

2 See forward looking statement caution. Assumes continuation of share repurchase program

0.60

2.33

0.22

2.50

2.40

Cash settled options program update

36

Introducing cash settlement for vested options Mitigates share dilution by avoiding treasury issuance

Expect non-recurring, non-cash pre-tax operating expense of $150M to $200M in Q1-07 $120M to $150M in wireline, $30M to $50M in

wirelessReported EPS impact of $0.30 to $0.40Cash payments deductible for tax purposes when options exercised and cash paid out

Cash tax savings of up to $70M over 3 years

Shareholder friendly initiative

Strong investment performance in 2006 In aggregate, TELUS pension funds are now in going

concern surplus Expect to make $112M in cash contributions in 2007

(DB plans) Major pension assumptions unchanged

Discount rate of 5.0% Long term rate of return of 7.25%

TELUS pension plans fully funded in aggregate

37

Pension update

TELUS has commitments from 18 financial institutions for new $2 billion credit facility

More favourable terms and extends maturity to 2012 Can be utilized to back up CP issuance Replaces $1.6 billion of existing credit facilities

$800 million facility expiring May 2008$800 million facility expiring May 2010

Accounts receivable securitization agreement extended by one year to July 18, 2008

Current plan for $1.5B 2007 note refinancing is through combination of L-T debt issuance and new CP program

TELUS liquidity position remains very strong

38

Financing update

Corporate governance update

39

Stock option issuance practices, backdating Voluntary internal audit of stock option and long

term incentive practices resulted in a “well controlled” rating

Sarbanes-Oxley Have completed all work required for SOX 404

compliance90 processes and 740 key controls addressed

Ready to certify compliance with SOX 404 on internal control over financial reporting for Dec. 31, 2006 audited financial statements

Leading the way in corporate governance

2007 Consolidated targets summary

approx. $1.75BCapex

Revenue $9.175 to 9.275B

2007 targets reflect healthy performance expected in wireless

40

2007 targets change

8%

6 to 7%

Normalized EBITDA1 $3.725 to 3.825B 4 to 7%

Normalized EPS1,2 $3.25 to 3.45 16 to 24%

1 Excluding $150M to $200M of non-recurring, non-cash expenses associated with cash settlement of options, EPS impact of $0.30 to $0.40

2 Year over year growth rate normalized for $0.48 of positive tax-related adjustments in 2006

investor relations1-800-667-4871

[email protected]

$124

350

$110

47

(306)

(374)$734

Q4-05

$20

150

$233

5

(218)

(415)$878

Q4-06

Funds avail. for debt redemption

Accounts Receivable Securitization

Free cash flow

Net Cash Tax Recovery

Net Cash Interest

CapexEBITDA

($M)

5 (6)Cash Restructuring Payments (in excess of expense)

3 (10)Non-Cash Share Based Compensation

(97) (127)Dividends

19 22Share Issuance (non-public)

($1,313) $14Net change in cash(1,437) (6)Funds applied to redemption of debt

Free cash flow

Appendix

Working capital & other (30) (58)

42

(229) (200)Purchase of shares for cancellation (NCIB)

EBITDA: Earnings, after restructuring and workforce reduction costs, before interest, taxes, depreciation and amortization

Capital intensity: capex divided by total revenue

Cash flow: EBITDA less capex

Free cash flow: EBITDA, adding Restructuring and workforce reduction costs, cash interest received and excess of share compensation expense over share compensation payments, subtracting cash interest paid, cash taxes, capital expenditures, and cash restructuring payments

Appendix

Definitions

TELUS definitions for non-GAAP measures

Documents

Q4 2006 TELUS investor conference call February 16, 2007