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Q4 2010 TELUS
investor conference call
Robert McFarlane
EVP & Chief Financial Officer
Joe Natale
EVP & Chief Commercial Officer
Darren Entwistle
President & Chief Executive Officer
February 11, 2011
TELUS forward looking statements
Today's presentation and answers to questions contain statements
about expected future events and financial and operating performance
of TELUS 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 2011 targets), qualifications and risk factors referred to in the
Management’s discussion and analysis in the 2009 annual report and
in the 2010 quarterly reports. 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
Agenda
 2010 scorecard
 Wireless and wireline segment reviews
 Consolidated financial review
 Updates
 Regulatory
 IFRS
 Pension update
 Q4 summary
 2011 corporate priorities
 Question and answers
3
2010 consolidated scorecard
Revenue
(external)
EBITDA
EPS – basic
Capex
4
Original targets
(GAAP)
Actual results
(GAAP)
$9.8 to 10.1B
$9.779B

$3.5 to 3.7B
$3.643B

$2.90 to 3.30
$3.23

Approx. $1.7B
$1.721B

Achieved 3 of 4 original consolidated targets
Result
Q4 2010 wireless financial results
($M)
Q4-09
Q4-10
Revenue (external)
1,225
1,338

9.2%
435
476

9.4%
35.3%
35.3%
no change
Capex
192
192
no change
EBITDA less capex
243
284
EBITDA
EBITDA margins1
(total revenue)
1
5
change

17%
Margins on network revenue in Q4/10 and Q4/09 were 39.7% and 39.4%, respectively.
Strong revenue and EBITDA growth of over 9%
supporting cash flow growth of 17%
Subscriber results
Total
net adds
6
Postpaid
net adds
Wireless
subscribers
1.3M
122K 119K
109K 109K
prepaid
18%
postpaid
82%
5.7M
Q4-09 Q4-10
Q4-09 Q4-10
7M total
Stable net additions in very competitive environment
High value postpaid represented 92% of net adds
Smartphone subscriber mix
 Smartphone subscriber loading hit inflection point
 Smartphones represented over 2/3 of postpaid
retention units compared to 1/3 a year ago
 Smartphones represented 46% of postpaid gross
loading compared to 25% a year ago
 BlackBerries and iPhones continue to dominate
with over 3/4 of smartphone retention loading
 Smartphones now represent 33% of postpaid base
compared to 20% a year ago
Smartphone base increased 74% y/y to 1.9M
7
Data revenue growth
8
$326M
$239M
$203M
BlackBerry Torch
Q4-08
Q4-09
Q4-10
Data revenue growth accelerated to 36% driven by
strong smartphone adoption
Marketing and retention
9
Q4-09
Q4-10
change
431
475 
10%
1.60%
1.72% 
0.12 pts
$380
$388 
2.1%
COA expense
$163M
$184M 
13%
Retention expense
$133M
$170M 
28%
Gross adds (000s)
Churn
COA per gross add
Record gross adds offset by slightly higher churn
COA/COR expense increase reflects record loading
Blended ARPU analysis
10
Data
Voice
% of ARPU
$57.38
$58.48
12.60
16.01
22%
27%
44.78
42.47
78%
73%
Q4-09
Q4-10
Q4-09
Q4-10
ARPU up 1.9% y/y as strong data ARPU growth
more than offset voice ARPU decline
Q4 2010 wireline financial results
11
($M)
Q4-09
Q4-10
Revenue (external)
1,218
1,213
EBITDA margins
(total revenue)
Capex
EBITDA less capex
354
28.2%
322
32

EBITDA
Change
(0.4)%
371 
4.8%
29.6%  1.4 pts
372 
(1)
16%
n.m.
EBITDA growth and margin expansion due to lower
restructuring costs
TELUS TV subscribers
12
TELUS TV
net additions*
TELUS TV
subscribers*
314K
48K
33K
Q4-09 Q4-10
*
170K
Q4-09
Q4-10
Includes both TELUS IP TV and TELUS Satellite TV subscribers
Record quarterly net adds of 48K up 45% y/y, while
total TV subscribers up 85%
TELUS line losses
13
Residential
Business
Q4-09 Q4-10
Q4-09 Q4-10
-8K
-18K
-37K
-45K
Residential line losses improved 18% y/y while business line
losses reflect increased competition and IP upgrades
Improved wireline operating stats
High-speed Internet
TELUS TV
66K
Total NAL losses*
44K
48K
33K
*
Q4-09
Q4-10
-53K
-55K
Historic NALs restated for prior periods starting in 2007 as a result of a periodic
subscriber measurement review and correction.
TV & HSIA loading more than offset total NAL
losses for second consecutive quarter
14
Q4 2010 consolidated financial results
15
($M excl. EPS)
Q4-09
Q4-10
change
Revenue (external)
2,443
2,551 
4.4%
EBITDA
789
847 
7.4%
EPS (basic)
0.49
0.70 
43%
Capex
514
564 
9.7%
EBITDA less capex
275
283 
2.9%
Strong consolidated results inline with recent
guidance
EPS continuity ($)
16
Tax adjustment
0.10
0.49
0.06
0.03
0.70
0.01
- 0.01
0.22
0.67
Excl.
Tax Adj.
0.26
Excl.
Tax Adj.
Q4-09
reported
2009
debt
redemption
Restr.
costs
Normalized Normalized
Financing
EBITDA2
costs1
1 Q4
2
Lower
Pension
tax rates & other
Q4-10
reported
2010 Normalized Financing costs excludes early debt redemption penalty in Q4 2009.
Normalized EBITDA excludes restructuring and pension costs.
Double digit EPS growth of 43%
EPS normalization
17
Q4-09 Q4-10
EPS - basic
$0.49
Change
$0.70 
Early debt redemption
+0.22
Income-tax related adjs
(0.23)
(0.03)
$0.48
$0.67 
EPS normalized
Normalized EPS up 40% to $0.67 per share
43%
40%
TELUS’ efficiency savings ($M)
18
Cumulative efficiency savings
401
In-year savings
134
267
117
150
114
Restr
costs
2008
2009
$59
$190
2010
$74
*See forward looking statement caution
Efficiency initiatives have enabled significant
productivity benefits
TELUS update on Cdn GAAP to IFRS transition
19
 Quantified impacts on key financial statement line items and
other measures in Q4-10 review of operations including
 Pro forma 2010 net income and EPS per IFRS 1% higher
by $14M or $0.04
 Statement of Financial Position includes recognition of
cumulative unamortized gains and losses for employee
defined benefit plans and asset impairment reversal
 Net impact of $220 million or 3% reduction in Owners’
Equity, as of January 1, 2010
 A full description and illustration of expected effects of
transition to IFRS will be updated in TELUS’ annual 2010
MD&A
TELUS conversion to IFRS effective January 1, 2011
Defined Benefit pension assumptions update
2010
(GAAP)
20
2011E*
(IFRS)
Discount rate
5.85%
5.25%
Long-term expected return
7.25%
7.0%
$28M
$(34)
$137M
$298M
Pension Expense / (Recovery)
Pension Funding
 Pension funding includes $200M voluntary
contribution made in January 2011
*See forward looking statement caution
Discount rate and long-term rate of return expectation lowered
slightly from preliminary guidance given in December 2010
Industry vertical integration update
21
 TELUS commends CRTC’s Videotron / TVA & Shaw /
Canwest decisions
 Decisions support pre-existing principle of programming
content being made available non-exclusively on
reasonable commercial terms
 BCE/CTV hearing held early February and decision expected
in March 2011
 Public policy hearing on effects of consolidation and vertical
integration is scheduled for June 2011
 TELUS believes CRTC needs to implement measures to
effectively address and deter any anti-competitive
behaviour from content ownership
CRTC reinforces principle that conferring undue
preferences by carriers who own content not permitted
Usage-based billing
22
 Jan 25 - Following series of decisions from May 2010, CRTC
determined incumbents could assess usage caps on
wholesale Internet providers and apply overage charges at a
15% discount to their own retail UBB rates starting March 1
 Customers of wholesale ISPs would have been subject to
additional charges for going over bandwidth caps
 Industry Minister instructed CRTC to consider a review
 CRTC has suspended implementation of decisions pending
the outcome of its Feb 8 decision to review billing practices
 No short-term implications for TELUS
 TELUS has not billed usage overage for Internet service
CRTC wholesale UBB decision to be reviewed
Foreign ownership update
 In March 2010, government announced its intention to open
Canada’s doors further to foreign investment in telecom
 June 2010 consultation launched asking for comments on three
options for relaxing rules on foreign ownership
 TELUS advocated a fourth option: liberalization for all telcos and
cablecos but retain restrictions for pure broadcasting activities
 The Federal Court recently overturned the Cabinet’s December 2009
Order on Globalive ownership structure
 Decision could be appealed by Globalive and/or Government
 Issue could be cured by new corporate governance structure
 Not an issue of whether Globalive will remain in operation
 The Minister of Industry expects to issue final report on Digital
Economy Strategy in spring of 2011
 We expect government to use this opportunity to provide direction
on foreign ownership
23
Q4 2010 summary
24
 Wireless
 Strong revenue and EBITDA growth driven by 1.9%
increase in ARPU and healthy wireless subscriber
growth
 Smartphone adoption accelerating data revenue
growth to 36%
 Wireline
 EBITDA growth and margin expansion supported by
lower restructuring costs
 Record TELUS TV subscriber growth led by Optik TV
 Improved residential NAL losses and HSIA loading
Strong year-end results set the stage for 2011
earnings and free cash flow growth
TELUS’ 2011 corporate priorities
1. Deliver on our future friendly brand promise to clients
2. Optimize the potential of TELUS’ leading wireless and
wireline broadband networks
3. Drive market leadership position in the Small and Medium
Business (SMB) and healthcare markets
4. Continue to improve TELUS’ operational efficiency to
effectively compete in the market and fund future growth
5. Raise TELUS team engagement to the next level and
continue to drive the philosophy of “Our Business, Our
Customers, Our Community, Our Team, My Responsibility”
Building value from strategic investments in recent years
25
Evolution of clear and simple customer approach
 Launch of Clear Choice wireless plans late 2009
 Introduced Data notifications in 2010
 Clear and Simple Device Upgrade program in 2010
 Unlocking of SIM based postpaid wireless devices in 2011
1.9%
Q4-09 Q1-10 Q2-10 Q3-10
Q4-10
-1.9%
-1.2%
-4.4%
Year over year ARPU change
-7.7%
Simplified rate plans, customer experience
enhancements and data reflected in operating results
26
Evolution of wireless network to Dual Cell HSPA
 Launch of HSPA+ network in late 2009
 Upgrade to Dual Cell HSPA 4G1 technology in Mar 20112
 Manufacturer-rated peak download speeds up to 42 Mbps
 Launch cities: greater Vancouver area, Edmonton, Calgary, Fort
McMurray, Whistler, Camrose, Winnipeg and Toronto
 Consistent with TELUS’ evolution towards LTE
1
2
As defined by International Telecommunications Union (ITU), Dec. 2010
See forward looking statement caution
Strategic investments in network technology and new
devices enhancing customer experience
27
Building TELUS TV momentum
28
28
 Record quarterly TV loading driven by Optik
 Optik TV reaccelerating High-Speed subscriber loading
 Optik footprint now covers 2.1M households
66
High-speed Internet
TV
53
44
32
32
48
33
29
29
38
Q4-09 Q1-10 Q2-10 Q3-10 Q4-10
Investments in broadband have enabled TELUS to offer
differentiated and integrated service and applications
Appendix – free cash flow
EBITDA
2009
Q4
789
2010
Q4
847
Capex
(514)
(564)
8
10
Employer Contributions to Employee Defined Benefit Plans
(45)
Interest expense paid (includes income tax interest income)
(296)
(30)
(141)
Cash Income Taxes and Other
4
28
Non-cash portion of share-based compensation
7
3
Restructuring payments (net of expense)
51
Donations and securitization fees included in other expense
(7)
23
(12)
Free Cash Flow (before share-based compensation payment)
(3)
164
Share Based Compensation Paid
(47)
(43)
Free Cash Flow (per current public guidance methodology)
(50)
121
52
Issuance of common shares
Dividends
Working Capital and Other
(151)
61
(160)
16
Funds Available for debt redemption
(140)
37
100
-
47
(70)
7
(33)
C$ millions
Net Employee Defined Benefit Plans Expense
Issuance of non-voting shares*
A/R Securitization
Net Issuance (Repayment) of debt
Increase (Decrease) in cash
* Non-voting share issuance from treasury primarily for
shareholders in the DRIP
8
Appendix – definitions
 EBITDA: earnings, after restructuring and workforce reduction costs,
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 and workforce
reduction costs, net employee defined benefit plans expense, cash
interest received and excess of share compensation expense over
share compensation payments, subtracting cash interest paid, cash
taxes, capital expenditures, cash restructuring payments, employer
contributions to employee defined benefit plans, and cash related to
Other expenses such as charitable donations and securitization fees
 Cost of retention (COR): total costs to retain existing subscribers,
often presented as a percentage of network revenue
TELUS definitions for non-GAAP measures
2011 annual consolidated targets*
2011 targets
(IFRS)
Revenue
(external)
EBITDA
EPS – basic
Capex
32
y/y growth**
$9.925 to 10.225B
1 to 4%
$3.675 to 3.875B
1 to 6%
$3.50 to 3.90
7 to 19%
Approx. $1.7B
*See forward looking statement caution
** Y/Y growth rates reflect 2011 guidance and 2010 results according to current
understanding of IFRS