Q4 2015 earnings and 2016 targets investor conference call February 11, 2016

Darren Entwistle, President & CEO John Gossling, EVP & CFO

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CORPORATE PARTICIPANTS Paul Carpino, VP, Investor Relations Darren Entwistle, President and CEO John Gossling, EVP and CFO

CONFERENCE CALL PARTICIPANTS Vince Valentini, TD Securities Philip Huang, Barclays Simon Flannery, Morgan Stanley Maher Yaghi, Desjardins Securities Jeff Fan, Scotiabank

PRESENTATION Check against delivery

Operator Good morning, ladies and gentlemen, welcome to the TELUS 2015 Q4 earnings conference call. I would like to introduce your speaker, Mr. Paul Carpino. Please go ahead. Paul Carpino Great. Thank you, Peter. Good morning, everyone, and thank you for joining us today. The fourth quarter 2015 and 2016 targets news release and detailed supplemental investor information are posted on our website at TELUS.com. On the call today will be President and CEO, Darren Entwistle who will provide opening comments followed by a review of the fourth quarter operational and financial highlights as well as the presentation of our 2016 targets by John Gossling, our CFO. After our prepared remarks, we will conclude with a question-and-answer session. In consideration of your day, we're going to try and keep this call to under an hour. Let me direct your attention to slide two. This presentation, answers to questions and statements about future events such as 2016 annual targets and guidance, intentions for dividend growth and future share purchases are subject to risk and uncertainties and assumptions. Accordingly, actual performance could differ materially from statements made today so do not place undo-reliance on them. We also disclaim any obligation to update forward-looking statements expect as required by law. I ask that you read our legal disclaimers and refer you to the risk and assumptions outlined in our public disclosures. In particular, in section 10 of TELUS' annual MD&A and filings with securities commissions in Canada and the United States. Let me now turn the call over to Darren to start. Darren Entwistle Thanks, Paul, and good morning, everyone. Despite a period of heightened customer activity and a tempered economy in key markets, TELUS posted solid results across numerous financial, operating and growth metrics in the fourth quarter, including the most overall net RGUs, the most wireline net RGUs and the highest wireless lifetime revenue supported by our leading positions in client loyalty and ARPU. Reflective of the consistency and the quality of wireless and wireline assets, TELUS also led these metrics for the full year, despite the noted pressures. Cumulatively our strong asset mix delivered solid net additions in both wireline and wireless in the fourth quarter with net RGUs increasing 53,000 outperforming all our competitors. Full the full year, we recorded net RGUs of 267,000, which represented nine times more RGUs than our next closest competitor. Impressively for 2015, TELUS returned more than $1.6 billion to shareholders and completed its fifth consecutive year of delivering a dividend growth rate of 10% or higher under our multi-year dividend growth programs. This track record

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clearly distinguishes us from our peers and will be further enhanced by our commitment to an additional 10% dividend increase in 2016. Let me now take you through some additional Q4 highlights and provide an overview as well of our 2016 targets. In wireless, TELUS reported postpaid wireless net additions of 62,000 in the fourth quarter. Our results in Q4 also reflect the resiliency of our business in the face of continuing economic and operational pressures. This is of course most notable in the Alberta market where we experience just 4,400 net adds in the second half of 2015, compared to 50,000 in the second half of 2014. We continue to earn the best customer loyalty amongst our national peers in the fourth quarter achieving a churn rate of 1.01%, despite facing the most competitive December in recent memory. For the full year, our postpaid churn was 0.94%. Our second straight year recording a churn rate below the 1% level. Customer retention in the quarter was 17% of network revenue and reflective of the higher activity associated with the double cohort environment and the seasonally busy fourth quarter. The significant $50 million year-over-year increase in COR in Q4 is a strategic investment aligned with maintaining our leadership in lifetime revenue per client. In this regard at $4,820, our current lifetime revenue per subscriber is 19% and 34% higher than our peers. Blended ARPU in Q4 was $63.74, the best amongst the national telcos. We achieved this ARPU level by year-end despite pressures associated with the declining proportion of subscribers moving from three year to two-year contracts. The implementation of TELUS' customer friendly initiative to provide clients with frequent, real-time notifications as they reach the upper echelon of their monthly data plan allowance and as well the challenging economic environment in Alberta where ARPU declined more than 4.5% in the second half of 2015, compared to the second half of 2014. Whilst these factors moderated ARPU growth in 2015, the Alberta economy will ultimately improve and customers who continually bump up against the data plan limits will move to more appropriate data plan sizes, particularly with the increasing proportion of our customers using LTE devices. Turning to wireline, TELUS delivered a strong performance on both revenue and as well EBITDA growth. TELUS continues to be one of the only major telecommunications company globally to consistently report ongoing growth and wireline revenue, wireline EBITDA and wireline customer connections. External wireline revenues increased an impressive 4.4% in the fourth quarter. Data revenue grew 8.8% with high-speed Internet net additions increasing by 22,000 and total TV net additions growing by 25,000. This growth reflects the ongoing enhancement of TELUS' high-speed broadband footprint in urban and rural communities, including fibre to the premise and the strong pull-through effect of Optik TV bundling. Residential NAL losses of 24,000 continue to reflect the trend of wireless and Internet substitution and of course the pressures coming from competition. However, indicative of the quality of our asset mix, our combined TV and high-speed net additions exceeded our residential network access line losses by a factor of two times. Wireline EBITDA, excluding restructuring and other items, increased 4.9% on a year-over-year basis. The margin increase also benefited from improvements and data services including high speed Internet, TELUS TV, business process outsourcing services, TELUS Health, ongoing process improvements and of course importantly operating efficiency initiatives. Today we announced our 2016 targets that reflect the diversity and strength of TELUS' multiple growth assets in both wireless and our wireline operating segments. We met three of our four public objectives in 2015 and have achieved 76% of our total consolidated financial targets since 2000. Our 2016 targets are indicative of the benefits of the Company's ongoing strategic investments related to advanced broadband infrastructure and technology and as well as unwavering focus on client service excellence and cost-efficiency. Indeed, we are targeting balanced growth in 2016 with revenue up to 3% higher and EBITDA up to 6% higher in both our wireless and wireline operations. We anticipate wireless network revenue to reflect continued growth in both subscribers and blended ARPU, driven by strong demand for data services. Additionally, wireless EBITDA is expected to benefit from growth and wireless network revenue as well as savings from cost-efficiency initiatives and moderating retention costs.

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In wireline, TELUS anticipates continued data revenue growth from high-speed Internet, Optik TV services and business process outsourcing and increasingly TELUS Health Services. Wireline EBITDA, excluding restructuring should also benefit from margin improvements from these growth opportunities as well as important traction from our ongoing efficiency initiatives. Our growth in revenue and EBITDA has been consistently underpinned by the significant and targeted generational investments TELUS continues to make in its core wireline and wireless broadband networks. This includes building out fibre directly to more homes, businesses, small cell sites and the like and this investment will continue in 2016 and beyond. Consolidated capital expenditures, excluding the purchase of spectrum licenses and non-monetary transactions, are targeted to be approximately $2.65 billion in 2016. These are generational investments. And the technological and service advancements for customers as well as the future long-term cash flow for investors will be meaningful. We will continue our highly successful broadband infrastructure expansion and upgrades. This includes bringing fibre optic cables deeper into the access network and connecting more homes, businesses and health care facilities to TELUS Fibre to support the evolving demands of our customers and our country. We will also continue investing in the expansion of 4G LTE wireless network technology including the ongoing deployment of 700 MHz and 2.5 GHz spectrum. Importantly, the value of these investments drives share economies of scope in supporting all of our businesses. From the business market, to consumer, to government clients, and they reach across the full breadth of our wireless and wireline products and services. Shareholders will see the benefits of these investments through the long-term fueling of topline growth and EBITDA expansion from ARPU and AMPU enhancement opportunities and then eventually through to free cash flow. Importantly, these investments will drive efficiency improvements and processes, lower maintenance costs and benefit the client experience in a typical TELUS fashion. Furthermore, these generational investments are synergistic with our long-term dividend growth model. Importantly, over the past 16 years, we maintained the industry's most consistent and transparent approach to capital allocation, investing in our core business while simultaneously returning significant capital to our shareholders. Indeed, we established an enviable track record with our penchant for investing for the long-term notwithstanding the inevitable and exogenous factors and short-term economic volatility that frequently occur along the way. Similar to the circumstances of 2000 and 2009 when we made game-changing strategic investments despite economic uncertainty, our current investments reflect the continuation of our consistent approach to managing TELUS for today and for the future. Clearly the investments made during those periods and the significant performance of those assets thereafter have driven meaningful long-term benefits for customers, shareholders, and widely, the Canadian economy. Our 2016 targets also continue to buttress our dividend growth model and share repurchase initiatives. As I've already noted, we are targeting our sixth consecutive year of a 10% dividend increase in 2016. As a result, our shareholder friendly initiatives, our capital investments and our balance sheet structure are prudently aligned with our long-term decision making and they're not based on quarterly short-term results. I am exceptionally proud and sincerely appreciative of our team's unwavering commitment to our customers and to delivering on our strategy regardless of the challenges that we face and answer along the way. Indeed, I'm consistently impressed with what we achieve as a team and importantly how this translates into strong results for our customers, our investors, our team members and the communities we serve. This is the strength put into practice of our world-leading team engagement. Now let me turn the call over to John. John Gossling Thanks very much, Darren. Good morning, everyone, I'm on slide 11, the Q4 wireless results. Fourth quarter wireless results continued to reflect strong operational execution in a competitive double cohort and a slower economic environment.

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Network revenue growth of 3% was driven by data revenue growth of 10%, reflecting subscriber growth, increased adoption of higher-rate two-year plans, a favourable postpaid mix, and increased data roaming. This was partly offset by the impact in the economic slowdown, particularly in Alberta as we have mentioned, which affected both subscriber growth and usage behavior, as well as the ongoing decline in voice revenue. When excluding restructuring and other costs, EBITDA increased by 2.8% based on higher network revenue, partly offset by the $50 million higher retention spend, some higher bad debt provisions, as well as increased customer service and distribution channel expenses. Retention volumes were up 5% to 609,000 units in the quarter, driving higher associated commissions, while per unit subsidy costs increased due to continued preference for higher value smartphones and lower device upgrade fees. The resulting cost of retention represented 17% of network revenues in the quarter, up from 14.3% a year ago. Capital expenditures increased year-over-year by 11%, representing capital intensity of 12%. This reflects ongoing investments in wireless broadband infrastructure to enhance our network coverage, speed and capacity, and includes the ongoing deployment of 700 MHz spectrum. Moving over to slide 12. In wireline, revenues increased year-over-year by $50 million or 3.6%, excluding the one-time recurring, sorry, non-recurring real estate gain of approximately $13 million and other operating income. This solid increase was driven by data revenue growth of 9%, reflecting high speed Internet subscriber growth and higher revenue per customer; growth in business process resourcing services from TELUS International; a higher TELUS TV subscriber base; and increased TELUS Health revenues. This was partially offset by continued legacy voice and equipment revenue declines. Reported wireline EBITDA decreased by 5.9%, primarily due to a $54 million increase in restructuring and other costs. When we exclude these costs from both periods, wireline EBITDA increased by 8.2% with a margin of 25.8%. That's up 110 basis points year-over-year. Underlying EBITDA growth was 4.9% when you exclude both restructuring as well as the non-recurring gain on the sale of certain real estate assets. This EBITDA growth reflected improving margins in data services, including Internet, TELUS TV, business process outsourcing as well as ongoing operational efficiency initiatives and was offset by high margin legacy revenue declines. Capital expenditures increased 17% over the same period last year due to continued investments in our broadband network infrastructure. This included connecting more homes and businesses directly to our fibre optic broadband network. As noted on slide 13, on a consolidated basis, revenue was up 2.8% while EBITDA excluding restructuring and other costs, increased by 4.9%. Basic earnings per share of $0.44 decreased by 14% reflecting significantly higher restructuring and other costs, as well as higher depreciation and amortization expense from ongoing investments in our fibre optic and 4G LTE networks. EPS drivers can be found in the appendix. Free cash flow of $197 million decreased by 42%, primarily due to higher share-based compensation, higher CapEx and lower reported EBITDA reflecting the significant restructuring and other costs. Let's move to guidance now. I am on slide 15. 2016 targets reflect revenue growth of up to 3% and EBITDA growth of up to 6% in both wireless and wireline. TELUS wireless network revenue should benefit from modest growth in both subscribers and blended ARPU. ARPU is expected to benefit from increasing data usage as our 4G LTE and LTE-advanced network investments enhance coverage resulting in continued growth in data and roaming revenues. This should help offset lower voice revenues and the impacts from the economic slowdown in certain parts of the country, especially in Alberta. Wireless EBITDA is targeted to be higher as result of the anticipated growth in wireless revenue, savings from cost efficiency initiatives and stable retention costs. Reflecting the diversity and strength of our asset mix, wireline should see continued data revenue growth from high speed Internet, Optik TV, TELUS Health as well as growth in our business process outsourcing through TELUS International. This growth is expected to be partially offset by continued decreases in legacy voice revenues and the impact of the economic slowdown.

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Wireline EBITDA growth is supported by revenue increases, continued margin improvements in our growth products, as well as our ongoing efficiency initiatives, partially offset by the ongoing industry trends of losses from higher margin legacy voice services. Combining our operating segments, I am now on slide 16, basic earnings per share is expected to be higher year-over-year by 5% to 12% reflecting EBITDA growth combined with a reduction in shares outstanding from our ongoing share purchase program. As Darren referenced earlier, consolidated capital expenditures in 2016, excluding spectrum licenses and non-monetary transactions, are targeted to be approximately to be $2.65 billion. This equates to capital intensity as a percentage of consolidated revenue of approximately 20%. On slide 17, we have outlined our notable assumptions for 2016. Total defined benefit pension expense for 2016 is estimated to be approximately $94 million, of which approximately $89 million will be recorded employee benefits expense and $5 million in financing costs. Defined benefit pension plan cash funding is planned to be approximately $57 million. Restructuring and other costs are expected to be approximately $175 million as we continue to invest in operational efficiency. Cash income tax payments are estimated to be between $570 and $630 million. This significant increase over 2015 is primarily a result of the impact of the use of the Public Mobile losses in 2014 which has had the effect of: one, deferring a portion of our 2015 current taxes payable to early 2016; and two, increasing relative to 2015, the 2016 installment base which ultimately is expected to reduce the 2017 cash income tax payments by approximately $150 million. Other key assumptions are listed in section 1.7 in our fourth quarter management's review of operations. Before I conclude I'd like to highlight some balance sheet considerations as we head into 2016. Now, on slide 18. At the end of 2015, our net debt to EBITDA ratio was 2.66 times. The year-over-year increase reflects, in part, the three wireless spectrum auctions that occurred during 2015, where TELUS successfully acquired 57 MHz of spectrum for $2 billion. Since 2014, TELUS has made total spectrum investments of $3.6 billion. We are in a period of elevated investment as we execute our long term strategy focused on data and wireless growth consistent with our investments over the past 16 years. However, we remain committed to our long-term objective for net debt to EBITDA to be in the range of 2.0 to 2.5 times and we'll work towards returning to our objective range in the medium term as we believe this range is supportive of our long-term strategy. Throughout this unique investment cycle, we have increased our wireless and wireline customer connections, consistently grown revenue and EBITDA, delivered the strongest wireless lifetime revenue per customer and further enhanced the industry-leading customer loyalty. Importantly over this period, we have extended our average term to maturity of TELUS’ long-term debt to 11.1 years, as compared to 5.5 years at the end of 2012, and reduced our weighted average cost of long-term debt to 4.32% as compared to 5.44% at the end of 2012. Reflective of our excellent debt maturity schedule, we only have $600 million, of long-term debt maturing in May of this year. With over $2 billion of available liquidity, combined with our investment grade credit ratings, TELUS has ready access to capital markets to finance any future needs of our operations. Separately and notably, TELUS defined benefit pension plans remain well-funded on an absolute basis and compared to our peers. Our DB plans were 99% funded on an accounting basis and were over a 100% funded on a solvency basis at the end of 2015, reinforcing our strong balance sheet position. With that I will now pass the call back to Paul to take your questions.

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QUESTIONS and ANSWER Vince Valentini Yes, thanks very much. So, let me ask about your wireline segment free cash flow. So, I understand you're making investments at a time when capital is cheap, but this hasn't been a one-year phenomenon. We have now seen five years in a row when your free cash flow margin has been 6% or less. So, I'm just wondering if you can give us any sense of how long you think this investment cycle is going to last and when you'll start generating some - some better free cash flow from the segment. Or if free cash flow isn't the right metric to look at if there's some other return metrics you see that are more favorable you can point us to, I'd be happy to hear your views on that. Darren Entwistle Okay. Thanks, Vince, and let me hit this one on the head. The ramp up in terms of our strategy manifesting itself in terms of free cash flow and cash flow yield on the wireline side of the business is going to take some time. And that's multiple years that I am referring to Vince. The metric that I would draw your attention to would be total shareholder return. It is a pretty simple thesis that I think is worth articulating that if you look at TELUS, the goal for us is to take what is superior wireline revenue growth and superior wireline EBITDA growth and in the fullness of time over those multiple periods, having the patience for the ramp up, drive that through to superior cash flow and cash flow yield and I am confident that particular sequence is going to come to fruition. And, you mentioned the last five years -- well when I look back on the last five years at TELUS I see excellent financial growth from the TELUS organization. I see excellent performance in terms of the dividend growth model and NCIBs. If you look over the last five years or since 2011, we returned roughly $6.6 billion to shareholders or $11 per share. If I look back over the last five years our return on equity as a company has gone from sub 13% to greater than 18% and if I look back at the last five years and look back at the last ten years and look back at the last 16 years over each of those 5, 10 and 16-year periods TELUS has led our peer group on a global basis in terms of total shareholder return. So, I think we are earning the right for patience during the ramp up period as we seek to translate our superior world leading wireline revenue growth, wireline EBITDA growth into superior world leading cash flow and cash flow yield from our wireline operations. This is atypical which is why I consistently use the word generational investment. And, yes, it is a protracted payback period, but what I can also say is that the symmetry of the elongated payback period is that when that payback period does come to fruition, the returns are also going to be protracted. If you look at the wireline copper investment that we made historically, yes, it was a generational investment at the time. Yes, it had a very long payback period in terms of going to free cash flow positive. But, once it got to that particular point, the return could be measured in decades in terms of making a contribution to the cash position of the organization and I think that particular analogy is pertinent to what we are talking about in terms of the fibre investment. Also if you just look back over the last 16 years at TELUS and say what were the big bets that really paid off for TELUS? And, I would say almost exclusively the big bets that paid off at TELUS were contrarian in their nature. When we went national on wireless back in 2000 with the acquisition of Clearnet it wasn't exactly the most popular move or popular investment strategy in the market at the time or even in the couple of years that followed. In retrospect, it has been hugely lucrative for this organization. When we made the move from CDMA 2000 to wideband CDMA going HSPA+ back in 2009 during what was at that time the worst economic downturn in modern economic history it was not a popular move for this organization to make. And then, you look at how the wireless business performed thereafter. The returns measured in cash were extremely lucrative. When we went back down the path of TV as a telco, I didn't see a lot of people cheering for us in that particular strategy. And yet that particular product line is now going nascent cash positive in terms of its contribution and growing. And we

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have just now ticked over a million TV subs within our portfolio. So, I think we have a track record of making these generational investments, these big bets if you will, pay off. I would argue that there are certain factors that are contemporary right now that are worth contemplating. One, is of course, the symbiotic relationship between wireless and wireline. The investment that we are making in fibre isn't just for the wireline business. It’s also for the wireless business whether it’s cell towers or backhauling data traffic from small cell sites deployed within urban conurbations it is absolutely critical and synergistic and we want to harvest that particular economy and scope. I would also argue that there is a symbiotic relationship in that the wireless business grew in TELUS because the wireline cash flow funded it. And, now we are in a position where the wireless cash flow is funding the rebirth of the wireline business, and you can see that in the growth trajectory of our wireline disclosure. Also, I think it is important to highlight that when it comes to CapEx, and I have worked in just about every telecommunications jurisdiction on a global basis, I don't know a single telco in the entire world that has never wasted a penny of shareholder money in terms of pursuing what turned out to be off strategy acquisitions or organic investments. At TELUS, okay? We have been an organization that has always put your money to work on strategy. We have done it in a way that has been particularly fruitful and we have never strayed from the investment thesis of this organization on the wireless and wireline front with a particular pertinent focus on broadband. Also just one point that I think is interesting, I continue to be confused why acquisition capital seems to get a free ride, but organic capital seems to get an extraordinary amount of scrutiny. If we were making a $2 billion disclosure on CapEx for 2016 with a $650 million purchase of a fibre company, no one would say boo to a goose. But, the fact that we are doing it organically seems to get a quizzical look on something that I think is ultimately tremendously strategic. And if you look back at the empirical evidence within the telecoms industry, smart, on strategy, concentrated, organic investments have materially outperformed acquisition capital that frequently was off strategy and frequently led to write-offs at certain points in the future. If you look at our RGU story it’s completely compelling. And it’s an RGU story that’s terrific despite absorbing the softness within Alberta in what was my opinion a rather mediocre year for the TELUS organization. We are unique in the fact that we're generating RGUs. I like to call them RGAs because they are revenue generating assets in terms of the outcomes that we're getting from our capital investments, and when I frequently look at who is positive on RGU's and who is negative on RGU's on the positive side of the ledger frequently it is just TELUS and TELUS alone when you compare us to our peer group. So, it says in terms of the CapEx that we are putting to work on the wireline side of the business, we are getting the results by building revenue generating assets on a positive basis. And again, it is down to us to drive that flow through in terms of great operational RGU results through to strong financial results which we are doing at the revenue and at the EBITDA level and finally the strong economic results at the cash flow level. And then you look at the TELUS organization in our balance sheet and we can afford to make these investments. We've got a strong balance sheet. And I think it is a smart use of our ability to absorb leverage. And then in terms of being opportunistic in my view, when I look at the regulatory environment for wireline in western Canada, I think it is decidedly favourable and that is not something I could have said too frequently over the past 16 years, but it is decidedly favorable to making wireline investments. We do have, as you already point out Vince, an opportunity as it relates to the low cost at capital. And the economies of scope on wireline fibre have never been as rich. I talked about wireless, but it is equally true for our health strategy, our IoT strategy in terms of the Internet of Things or machine-to-machine and beyond. And shame on us if we don't have the discipline and the patience to put that money to work at this particular juncture for the longer term greater good of the company and our strategy. And then I look at our 2016 guidance and I say, okay, are we earning the right to make these investments? And, I would say yes, we are earning the right to make these wireline investments. When you look at the magnitude of our guidance that up to 6% growth rate and then you look at the diversity of our guidance where we've got 6% EBITDA growth

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postulated not just for the wireless side of the business, but for wireline as well. And that level of both diversity and magnitude is unique amongst global telcos when you look at the strength of our asset mix. And then, lastly I am not asking investors to take a holiday on returns while we make these strategic investments. Quite the opposite of that. In fact, I would argue that these strategic investments over the near to medium term support the sustainability of the dividend growth model over the longer term and I think our track record in the past, currently in 2016, and prospectively in terms of what's going to happen in 2017 and beyond is extremely strong and you can draw inference from that in terms of wondering what the future holds in that regard. When we put our 10% dividend growth commitment in 2016 in the headline of our press release I think you can take that to the bank. And you can see since 2011, we have delivered pretty well against those expectations and I look forward to the AGM in 2016 to talk about what we're going to do in 2017 and beyond as it relates to dividend growth and NCIB activity. Thanks, Vince and I appreciate the thoughtful question. Vince Valentini Thank you very much. Paul Carpino Next question, Peter. Philip Huang Thanks, good morning. I just wanted to sort of expand on the capital returns question and want to get your thoughts on that. A lot of the pressures that TELUS has been facing are hopefully transient, such as the double cohort at which obviously is impactful to the entire industry. But also hopefully, the weaker macro environment is also transient, to the extent that your capital returns program are multi-years and thus based on multi-year assumptions, is it fair to assume that TELUS would notch I guess, would not be shy to temporarily deviate from target payout ratios in the near term, should that be the case? And then, I'll have a quick follow up on the wireline side. Darren Entwistle I don't think that we're going to deviate from our capital return policies, I don't see the need to do that. I think we've shown that we could absorb exogenous shocks and make strategic investments and stick with our capital return policy. So I can't be more unequivocal than that. In terms of our CapEx investment, what you've seen in 2016 is indicative of what you can expect in 2017 and 2018 as we build out our broadband infrastructure. As it relates to the Alberta market, I think it is an excellent point that you are making. I was at pains to point out that these solid results that we have generated both operationally and financially were in the face of a weaker Alberta economy. And, amongst the major players in Canada we have a disproportionate exposure to that particular economy, but nevertheless, we not only delivered solid financial results, but we are delivering against our commitments in terms of shareholder returns. And then, lastly and importantly, to me I think there is a silver lining here which is if we can deliver these results and carry on the way that we have and meet the expectations of capital returns to shareholders within a soft Alberta economy, what it does that portend in terms of when that particular economy recovers and it will. And, I think that speaks to the strength of the TELUS organization. It speaks to the quality of our asset mix and the strength of our execution. And I think the silver lining should not be lost on anyone because if we can generate results of this ilk within the context of what we face now, economically within Alberta, then I would say we have a very bright future ahead of us. And then, lastly I think, the other point that is well taken is, yes the double cohort impact is going to get normalized in terms of year-over-year results through the second half of 2016.

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We've been making COR investments that represent a nominal augmentation of circa $50 million on a quarterly basis. We're going to see as we proceed through the second half of 2016 the impact of that get normalized on a year-over-year basis. But we are going to have a modestly elevated cost implication associated with two-year contracts from a limitation point of view, but we should see improved strength within the wireless business as we get through the second quarter and into the third and fourth quarters of 2016 and 2017 and beyond. And, I think that will also support what we want to do in terms of hitting revenue and EBITDA targets in 2016 and beyond and also the continuity of our shareholder return program. Philip Huang That's very helpful. I just want to expand a little bit on the Alberta impact and as it relates to the wireline business. Your Q4 numbers are actually quite strong and your outlook for the wireline business is also very strong. Given that the wireline segment should arguably have bigger exposure to the Alberta impact, how come we are not seeing more of it in the wireline business? Is it a reflection of what you’re seeing, I guess an acceleration on the payoff from your investment in fibre and I guess, as a result of that giving you -- affording you greater pricing power, et cetera? I was just a little bit surprised to see that the impact was more evident or more of a note on the wireless business as opposed to the fixed line business even though the geography suggests a bigger exposure to the wireline business. Thanks. Darren Entwistle So, that's a very good question and I think would be very helpful for people not necessarily living in western Canada. So, let me give you some insights into Alberta that you might find helpful. Number one, and you would have seen in my opening comments some increased disclosures. So, we broke out for you what the implications of Alberta were in the second half of 2015 by showing the contrast versus the second half of 2014. And what we illustrated is that we had a net loading decline on postpaid of circa 45,000 postpaid net loads in the second half of 2015 versus the second half of 2014. And we had an ARPU diminution of circa 4.5%. And, I thought that clarity was important for people to appreciate. If I normalized out the Alberta impact on wireless, our postpaid ARPU would have been up 1.7%. So, I thought that that increased disclosure would be helpful to you and that was the ideology behind it. Let me give you some additional color as well. Whilst we are seeing continued weakness, if I give you the Q4 number, the second half number at 4.5% ARPU decline, it was just a tick over that at 4.7 in terms of the ARPU decline in Q4 on a postpaid basis. And we saw as well within wireless churn tick up. What's interesting is it’s the Alberta version of churn ticking up. Yes it went higher on a year-over-year basis but it's still markedly lower than the national average. The other thing in terms of scratching at the point that you are getting, the impact in Alberta is most pronounced on business although there is a consumer impact. The impact is most biased toward business and on the wireless front. So, if you look at the ARPU comments that I have been making which are holistic measures, on the business front, business ARPU in Alberta was down 7.6% in the fourth quarter. So, it's more pronounced on business and it is more pronounced on the wireless side. Next if you think about our strategy over the last 16 years, how many times have you heard me say it’s critical to have the diversity of multiple growth tenets? I kept banging on and on and on during the halcyon days of the wireless performance that we have to also support wireline so that we are not a one-trick pony with a single growth tenet on wireless. We have to nurture the development of our wireline business so we can have a more robust portfolio and through diversification, getting economic contribution not from a single wireless asset, but both wireless and wireline. And, in this particular case, the wireline business particularly TELUS driving as a new entrant in areas like TV, high speed Internet and the like has been deeply fruitful for us. So, the economic pressures that have been hitting business wireless and to a lesser extent but still observable on consumer wireless are not impacting consumer wireline anywhere near the same degree. And we have seen healthy growth transpiring in terms of high speed Internet access. We've seen healthy growth on TV which is reasons why our TV plus HSIA loading was a two-to-one ratio over our network access line losses and why our consumer RGU's were plus 23,000 which I think compares pretty favourably to our peers, particularly even when you factor in the business NAL impact at the same time.

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Now that's not saying that wireline is impervious. So, what we have seen is modest tick-ups as it relates to HSIA churn, TV churn and the like. We’ve seen people being more discriminating with their bills that impacted TV ARPU in term of things like VOD selections and the like. So, it is not impervious, but it’s nice to have that second growth tenet. It’s nice to be the new entrant and it’s nice to be driving HSIA and TV growth. Much of it supported by the fibre investments we are making in Alberta at a time when there’s not a lot of investments going on in that particular province. And I think that juxtaposition speaks well for TELUS. And, of course, the last time we made investments during an economic downturn was the HSPA build on wireless and we all know how that paid off. So, that's been particularly important for us. The next thing I think people need to appreciate and you see this being discussed in the U.S. a lot, but I don't hear a lot of it discussed in Canada, is the fact that our industry and many of our products are counter cyclical to the impacts of an economic downturn as it relates to TV entertainment; as it relates to HSIA and connection to the outside world from worldwide webs to social media considerations and the like; as it relates to your smartphone to manage your life, the one device you can't leave home without. Those things are very resilient within the throes of an economic downturn and can be quite counter cyclical and investment safe haven during the time of economic duress within a particular geography. And the next thing you can see is that it’s not just a backward looking view in terms of what I am telling you now to answer your question. We've put our money where our mouth is in terms of the diversity of our wireless, wireline business and you could see that in the EBITDA growth that we are postulating for wireless and wireline in the 2016 guidance. And then lastly for us, let's not let a good crisis go to waste. As it relates to the business wireline environment, we have a hell of a lot of technology solutions from what we are doing on the cloud front from public, private and hybrid, what we are doing on collaborative services such as video conferencing, what we can do on managed I.T. and offshoring activity, we can leverage technology-driven solutions that take cost out of the P&L for a number of our business customers within Alberta at a time when efficiency solutions are at a premium. I think that's equally true on terms of what we can do on IoT. I think we got to keep expanding our LTE footprint in the province because there is a counter cyclical aspect that I think we need to get down to leverage and I think we can do a lot more as it relates to LTE expansion and LTE penetration. We're only at 60% of our base penetrated with LTE at this point and we know that every time we drive that penetration, up goes data ARPU. We are going keep ongoing with the fibre expansion within the province. And I think it’s a great time to be investing when a lot of the province right now is retrenching and, of course, we're going to drive our health strategy in Alberta very fervently, leveraging a great strategic partnership that we have with Alberta Health Services. And then lastly we have a second layer of diversity which is geographic diversity. And, Western Canada isn't one province, it’s two. And the B.C. economy has been very strong for us at TELUS. And its ameliorated some of the pressures we have seen in Alberta and it is nice to have that growth in B.C. and that geographic diversification whilst we work our way through the eventual Alberta recovery and all of the benefits that are going to come from that ultimate recovery coming to fruition. Philip Huang All right, thanks very much. Darren Entwistle That's some colour on Alberta. Paul Carpino Thanks. Thanks, Phil. Peter, next question please. Darren Entwistle Thank you very much. Just a clarification, John, perhaps, I think you said a 10% dividend increase for 2016. Are you implying you will increase around 5% in May, and then not make any commitment about November and will go to a rolling

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one-year decision versus the three-year plans? And then, Darren, can you talk a little about -- you talked about the benefits of having wireless and wireline and one of your competitors made a play to move into the wireless space. How do you think about your ability to compete versus a quad play offering in Western Canada, and how that might change the marketplace? Thanks. Darren Entwistle Thanks, Simon. Let me be very clear in answering your question about the dividend growth. The 10% dividend growth is for 2016 in totality. So, we would intend to make an announcement to that affect in both May at our AGM and in November as it relates to our Q3 results. And the rough rule of thumb would just be 5% at each instance. So, yes, we are actually making a commitment for November that is prospective. So, it's not just a commitment for May, but also a commitment for November and the 5% magnitude on the twice yearly increase is a good rule of thumb and holistically, it is going to be at circa 10% over 2016. So, I just wanted to clarify that. The other thing that I think is worth maybe reiterating is at the AGM in May of 2016, I will postulate where we are going with the dividend growth model in 2017 and beyond at that juncture. Does that answer that part of your question? Simon Flannery Yes, that's very helpful. Thank you. Darren Entwistle As it relates to Shaw, a couple of things to know without getting into it too deeply. We have a new blend of competition or a new complexion of competition. We do not have any new competitors. And, that rather important point frequently gets lost along the way. The complexion of the competition is changed, but we don't have any new competitors that we're facing in Western Canada. Secondly and I think history has borne this out repetitiously, frequently very painfully. I would much prefer smart, rigorous, sustainable competition over onerous, regulatory intervention any day of the week. We know how to respond to smart, rigorous and sustainable competition dealing with onerous regulatory intervention is quite something else. And so I am pretty comfortable with this overall development. Particularly with a new government in Ottawa. Next clearly I remain highly confident in TELUS' strategy. I remain highly confident in our asset strength, diversity, the mix if you will. I remain confident in our culture of execution and I think we will be well served in the years ahead by our customers' first priority that knows no bounds. It doesn't actually discriminate between wireless and wireline. It is a mentality we bring to bear for clients across all of our technologies and all the markets we seek to serve. We are going to drive service-based differentiation and product-based differentiation and compete over the long-term smartly on value. And that's just the mentality for us. And maybe to back that up; when my family steps forward on the back of the Shaw/Wind announcement and we make a $10 million investment in TELUS stock I think it speaks to my confidence in the attributes of our organization and our ability to execute on our strategy and support sustainable returns to our shareholders on a deeply protracted basis. And so the only thing I will say to conclude is at the end of the day time will tell. And, we'll see how the competitive model bears out. There's lots of bumping and grinding within this industry. But I think we will do very, very well over the longer term. And I think healthy competition is a good thing. It’s a good thing for industry. It’s a good thing for consumers. And I would hope that it can be sustainable in that regard. And I would hope that the regulatory model on a go forward basis reflects a level playing field for all protagonists participating within our industry. Simon Flannery Great, thank you. Paul Carpino

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Thanks, Simon. Next question, Peter? Maher Yaghi Yes, thank you for taking my question. I want to approach this question maybe differently and in terms of the organization has significantly returned money to shareholders in terms of dividends, dividends and share buyback. But, since you were talking about the long-term, Darren when I look at 2011 you had approximately $7 billion of net debt. At the end of 2015, we are sitting at $12 billion, but free cash flow went from $1 billion in 2011 to about $1 billion in 2015 if I normalize for the cost of debt that is lower right now. Either, return on invested capital has declined quite a bit and it's not just for TELUS, I mean, it's for all of the industry players in Canada. If this is the case, how do you allocate capital and how much do you think you can stretch the balance sheet with the share buybacks before your credit metrics underperform peers in Canada and your cost of debt becomes too high? Darren Entwistle So Maher, let's, I guess, break this down. One, our 2011 to 2016 comparison has to reflect the fact that our capacity for debt has grown from 2000 to 05 to 2010 to 2016. So, when you look at the net debt to EBITDA at TELUS it compares quite fabourably with our peers on a broad basis. Number two, the quality of the earnings at our organization are extremely strong. And the metric that seems to be forgotten about in the net debt to EBITDA world is EBITDA to interest coverage and the interest that we’re paying now when we are in a situation where our cost of debt on an interest basis is 50% lower than what it was a decade ago I think are points that are not deeply appreciated. Indeed, when you look at where we have taken both our average interest cost and our debt maturity looking at our average interest cost at sub 4.5% and an average term to maturity at 11 years, we are in a pretty robust position to say the least. We have no major financings that we're going to have to undertake until we get into the 2018 period, the financing that we have prospectively over the next 12 to 18 months are more moderate in nature and easily achieved by this organization. So I feel pretty strong about that. Whether we're at Baa1 or Baa2 the first priority for this organization is to drive our strategy and the debt cost differential between Baa1 and Baa2 is not consequential to this organization looking forward to 2016 all the way to 2020. So, I am confident in the sustainability of both our investment thesis as well as our shareholder return thesis. Next if you look at what pressurized our balance sheet it is the fact that we had an atypical level of concentration in spectrum auctions over the last three years. TELUS acquired more spectrum in the last three years than we have done previously over the 13 years before it. I say that to highlight just how atypical it was. When you acquire more spectrum in 36 months than you did in the previous 13 years I think it is illustrative of what was a fairly atypical event for this organization and to absorb that and make the generational investment that we are making in fibre we are putting our balance sheet to work. But that's what the balance sheet is there for. It is not there to be abused. We're going to be judicious about it. We're going to respect our credit policies and metrics along the way. You can bet that after we're harvesting these investments and we're going to drive our net debt to EBITDA below 2.5 times as we have done previously on many instances within this organization. We're as committed to our credit goals on the longer term as we are on the equity front. But right now this is a smart move for this organization to make this particular investment and that is that's exactly what we're going to do and we can afford to bring it to fruition. Maher Yaghi And one could say that instead of looking at the spectrum acquisition as the share repurchases added about $5 billion since 2004 to that that debt level. I am trying to understand when I look back to 2017 and beyond, given the structure of the company and the debt that it has. Without getting into more specifics, than what you'd like but could we continue to see the company allocate money to share buybacks in addition to supporting the fundamentally more important, I think, for many shareholders which is the dividend growth model that is industry-leading.

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Darren Entwistle So, a dividend growth model is our first priority. Number two, the NCIB and the dividend growth model have been tremendously synergistic particularly with TELUS in a cash tax paying environment. So looking at debt from a cash tax perspective, and the tax affected cost of debt is not lost on me, but when you calculate what we've spent on NCIB, the second calculation that you should do is how many dividend outflows have we avoided indefinitely as a result of that particular NCIB set of investments. And this organization has avoided hundreds and hundreds of millions of dollars of dividend outflows through our NCIB purchases such as the synergistic nature between the two. Next if you look at our NCIB program, calculate the IRR. The IRR on our NCIB program is roughly 11%. Compare that to current cost of capital environment, I would say that's not a bad outcome and that's empirically, you can go and do that calculation it's 11%, then I would say that's a pretty good outcome. Next aspect of the NCIB is what is one thing you consistently seen within the telecoms industry? Exogenous shocks. Okay? Economic, exogenous shocks, credit crunches, equity market issues, government and regulatory intervention, changes in the competitive dynamic so on and so forth. To have an NCIB program that is maybe not routinized, that's statutory, but more discretionary and opportunistic. I think is a good vehicle or weapon to have in our repertoire that when we get hit by an exogenous shock, be it a change in the competitive dynamic, regulatory decision and the like so on and so forth, to be able to step into the market and buyback stock judiciously on weakness is a smart thing for us to do. Particularly given the complexion of investors these days from longer term to near-term to what goes on, on the hedging side as well. I think it is a smart weapon for us to bring to bear. Now, whether that is going to run in perpetuity at $500 million a year, as we go through the generational investments on wireline that's something to be contemplated. But, I think having zero as the NCIB program is not a smart solution. But maybe a smaller NCIB program over the next few years that we can use on a thoughtful, discretionary basis is quite a useful tool. The other thing that we have gotten moving from a more opportunistic and discretionary is that we can do block buys at fairly deep discounts in the 5%, 6%, 7% zone. So, not only are we get opportunistic and buying at weakness but we buy a block and get a further discount that's in the 5% zone. Again, I think those are smart investments. But, go and calculate the IRR. I think you'll find it at 11%. And go calculate how many dividends we've avoided in perpetuity as a result of a contraction of our share base. And those dividends by the way are growing at 10% per year. So cancelling shares and avoiding dividends is truly a synergistic undertaking. So to me it is just a smart balancing effect, but overall at the sub $500 million level it's not a big player as it relates to our overall credit profile. Maher Yaghi Thank you. John Gossling Can I point you back to our May conference call? We can get you the transcript if you don't have it. Darren made a lot of comments there when we changed the leverage guideline from 2.0 to 2.5 times just in terms of weighted average cost of capital optimization and part of your question is you have gone from 1.6 times to 2.66. There is actually quite a bit of work we did behind that that we discussed on that call. That would be a good thing to refer back to and we can certainly get it for you. Maher Yaghi Thank you. Paul Carpino

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Peter we have time for one more question. Jeff Fan Thanks for squeezing me in. I guess this is a question for Darren. A lot of your capital spending projects is related to broadband and I want to go back to the wireline fibre deployment. Because so much is going towards this particular area I was wondering if you can give us a little bit of clarity or transparency into the number of homes that currently has fibre and how much did you grow that base over the last few years? Just to give us some sense as to this capital is going toward expanding your base and to help us understand perhaps put some numbers on how long this may last. Darren Entwistle Okay. Let's take the last part of the question first, Jeff. The capital expenditure for 2016 is going to be indicative of the capital profile for 2017 and 2018. So, I don't know a lot of companies giving multiple year CapEx guidance. We are quite distinguished in that we give multiple year dividend growth guidance, but I think it is important that you get a flavour of where we are going with this particular strategy. So, I think knowing that 17 and 18 will not be dissimilar to 16 is probably helpful in a prudent level of incremental disclosure. Next in terms of where we are at on the fibre front, at thus far, we are at about 60 communities in Western Canada and Eastern Quebec. So it’s good progress, a good start. And we have good momentum. To maybe give you some additional context with which to process that. If you think that our Optik footprint covers approximately just under three million homes then I think it is important for you to know that the fibre component of that from a coverage perspective is currently at the 25% mark of those three million homes. In terms of additional insights and disclosure if you are looking at our 2016 CapEx I think it is helpful to know that circa 20% of our 2016 CapEx is going to be dedicated to our fibre program. And, I have asked Paul and the team to give guys a stratified view of our CapEx uses so that you can understand where the dollars are going. What you will discover is that the dollars are going decidedly to broadband, at both wireless and wireline. You will also see a lot of it is success based in nature and I'll encourage you with the investor relations team to have a conversation as to what is fixed within our capital expenditure portfolio and what’s discretionary or variable within our capital expenditure portfolio, reflecting the fact that we are making these investments, only predicated upon the fact that we are generating a good operational return and prospectively a good financial and economic return. And I think that profile is being better understood, would be a good communications vehicle between ourselves and the street. Next in terms of the question that you might ask is how is it going? You're affecting this expenditure how are things going against the expectations or certainly the business case that you would have for this particular program. And that as part of your question and goes back to the question that Vince was asking as well. And what I can tell you in terms of the expectations that we have within the fibre business case, we have beat our internal expectations in terms of penetration gain; we are surpassing our expectations in terms of revenue per client or revenue per home or ARPU if you want in terms of wireline; churn in terms of client loyalty and stickiness is better than what we anticipated; we're achieving cost reductions that are quite remarkable. In terms of things like customer minutes of degradation, they are one-fifteenth on fibre what they are on copper as one point of illustration in terms of the longer term lowering our cost base in terms of the OpEx implications from this particular investment. And the likelihood to recommend, the client experience feedback that we've have been getting which has been measured empirical on and scientific is that the L2R result that we're generating from fibre based optic clients is superior to traditional technology and significantly so in that regard. When you look at the 23,000 net wireline RGUs that we did within the consumer area, in Q4 our fibre program made a substantive contribution to that result. So, it's not inconsequential within the overall results of the TELUS organization despite the fact that it is a program that is still building momentum. And then lastly, yes, we are driving hard synergies between fibre that was originally to support TV and HSIA with our wireless small cell strategy within the urban markets that we are talking about. We are driving fibre to support our health strategy within the primary care ecosystem connecting homes with home health monitoring devices, connecting homes

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with doctors, bringing fibre into doctors' offices to facilitate what they are doing with their electronic medical records and then providing fibre connectivity between docs, clinicians and pharmacies. Wiring the primary care ecosystem with fibre allows us to more securely, effectively and efficiently deliver better health information for significantly better health outcomes for Canadians. And, of course fibre is key as it relates to supporting what we're doing within the IoT/M2M world that we're now in a world where there are more devices connected to broadband technology than there are people. Having that fibre capability I think is a nice differentiating factor. And lastly this is a path that if you really think about strategically is a necessity, not a nice to do. And I think this challenge is going to confront everyone, cable and telco alike that wants to be a long-term viable competitor within this industry. So, does that additional color help you in terms of where we are spending, how much we are spending, so on and so forth, where we are at in the program and how we are doing in terms of the performance parameters? Jeff Fan Yes, that's great, thanks, Darren. Paul Carpino Thanks, Jeff. And thanks, everyone for joining us on the call today. If any follow-up please reach out to the investor relations department. Thank you. Operator Ladies and gentlemen, this concludes the TELUS 2015 Q4 earnings conference call. Thank you for your participation. Have a nice day.

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