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TELUS National Evolution A perspective on 10 years of fundamental change

TELUS National Evolution A perspective on 10 years of fundamental change. November 2009. TELUS evolution agenda. Slide. Strategic imperatives progress Focusing on growth markets of data and wireless 5

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TELUS National Evolution A perspective on 10 years of fundamental change

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  1. TELUS National EvolutionA perspective on 10 years of fundamental change November 2009

  2. TELUS evolution agenda • Slide Strategic imperativesprogress • Focusing on growth markets of data and wireless 5 • Building national capabilities 15 • Providing integrated solutions 26 • Partnering, acquiring and divesting as necessary 31 • Going to market as one team 33 • Investing in internal capabilities 36 Financial and Valuation Review 46 Consistent and proven strategy 2000 →2009 2

  3. TELUS evolution 2000 → 2009 20001 20092 % change Revenue $6.0B $9.6B • 60%  EBITDA $2.4B $3.6B • 50%  Net income $681M $1.1B • 62%  Net income / employee3 $29K $42K • 45%  Earnings per share $2.86 $3.56 • 24%  Total connections 6.0M 11.9M • 98%  Wireless subscribers 1.1M 6.4M • 482%   Network Access Lines 4.5M 4.1M • 9% High Speed Internet subscribers 26K 1.1M • 4131%  Enterprise value $10.5B $17.9B • 70%  Cash returned to shareholders4 $336M $602M • 79%  1Revenue, EBITDA, net income and EPS are 12-months trailing from June 30, 2000.  Subscribers and enterprise value as at Jan. 1, 2000 2Revenue, EBITDA, net income and EPS are 12-months trailing from Sept. 30, 2009.  Subscribers and enterprise value as at Sept. 30, 2009 3Excluding TELUS International 4Using dividends declared and normal course issuer bid share purchases 3

  4. Focusing on growth markets of data and wireless

  5. strategic focus on data and wireless $9.6B Revenue $6.0B Wireless Wireline LD 40% Wireline LD 23% 7% Wireless 28% 18% 71% Wireless Wireline Data Data 9% Wireline Local Local 10% Wireline 22% 49% Data 22% 20001 20091 1 12 months ending June 30, 2000 and Sept 30, 2009, respectively TELUS revenues increased 61% since 2000 5

  6. TELUS total customer connections 11.9 (millions) Voice - Network Access Lines Data - Internet and TV 6.0 Wireless 65% Internet, TV and wireless 24% Q3 2009 2000 98% increase in client connections since 2000 6

  7. investing in our growth strategy Return phase $6.9B • Building high speed data infrastructure • Building national fixed and mobile platforms • Building lower cost structure Cumulative consolidated free cash flow 2001 - 2002 2003 - 2009 (to Sept 30, 2009) $(1.5)B Investment phase Long-term strategy generating significant cash 7

  8. driving high-speed internet growth review of operations – wireless High Speed Internet customers 1.1M • Supporting Future Friendly Home services by ongoing wireline broadband capital investments • Market share has increased from 11% to 39% 26K 2000 Q3 2009 Fuelling growth and supporting exciting TELUS services 8

  9. TELUS TV evolution TELUS TV subscribers 137K 0 2000 Q3 2009 Offering TELUS TV – IPTV and Satellite TV 9

  10. TELUS TV evolution Top 48 Communities • Abbotsford • Airdrie • Beaumont • Belcarra • Burnaby • Calgary • Campbell River • Chilliwack • Cochrane • Coquitlam • Delta • Devon • Edmonton • Fort Langley • Fort McMurray • Ft Saskatchewan • Grande Prairie • Kamloops • Kelowna • Langley • Leduc • Lethbridge • Maple Ridge • Medicine Hat • Mission • Morinville • Nanaimo • New Westminster • North Vancouver • Okotoks • Penticton • Pitt Meadows • Port Coquitlam • Port Moody • Prince George • Red Deer • Richmond • Sherwood Park • Spruce Grove • St Albert • Stony Plain • Strathmore • Surrey • Vancouver • Vernon • Victoria • West Vancouver • Whistler STV Coverage Tier 1 IPTV Markets Bedroom Communities Tier 2 IPTV Markets * Nov/Dec TTV Launches • Moving to provide IPTV coverage in 48 top communities TV coverage footprint in BC and Alberta has increased from 0 in 2000 to > 90% today 10

  11. continuing wireless growth Wireless subscribers 6.4M 1.1M 2000 Q3 2009 Apple iPhone 3GS Generating stellar growth through successful acquisition and execution 11

  12. building TELUS’ wireless distribution Newfoundland 13 British Columbia Québec 0 Alberta Manitoba 230 201 3 243 11 17 Ontario P.E.I. 0 265 0 Nova Scotia 368 20 245 0 0 30 0 30 New Brunswick Saskatchewan 0 2009 exclusive points of distribution 2000 exclusive points of distribution • Wireless distribution augmented by Koodo launch and acquisition of Black’s National exclusive distribution outlets doubled to 1,136 12

  13. strengthening wireless distribution • 2008 launch expanding mall distribution • 100 Koodo kiosks and growing • Realising 60% awareness nationally • 80% in core demographic • Earning industry recognition from J.D. Power and Associates: “Highest in customer satisfaction with postpaid wireless service” • In 2009, acquired 113 retail stores across Canada • Most in premium mall locations • 72% are Ontario based Providing flexibility to serve various customer needs 13

  14. Building national capabilities

  15. TELUS wireless coverage in 2000 15

  16. TELUS wireless coverage today 16

  17. TELUS vs Rogers - HSPA eastcoverage TELUS HSPA+ coverage TELUS HSPA coverage *Completing rollout of HSPA+ in 2010 * Based on Rogers’ Sept. 14, 2009 public announcement of HSPA+ coverage within the cities indicated (using associated census metropolitan areas). ** Based on coverage maps made publicly available by Rogers on Oct. 23, 2009. Coverage areas are approximate as of October 2009. Actual coverage and network service can vary and are subject to change. 17

  18. TELUS vs Rogers - HSPA westcoverage TELUS HSPA+ coverage * Based on Rogers’ Sept. 14, 2009 public announcement of HSPA+ coverage within the cities indicated (using associated census metropolitan areas). ** Based on coverage maps made publicly available by Rogers on Oct. 23, 2009. Coverage areas are approximate as of October 2009. Actual coverage and network service can vary and are subject to change 18

  19. TELUS backbone optical and IP network in 2000 19

  20. TELUS backbone optical and IP network today Doing business in 87 cities on IP networks outside Alberta and B.C. 20

  21. TELUS – national infrastructure evolution Executing national growth strategy focused on data and wireless 21

  22. transitioning to non-regulated revenue base Revenue $9.6B $5.8B regulated 10% regulated non-regulated 47% 53% non-regulated 90% Pre-1999 2009 Since 2000 TELUS’ non-regulated revenues have significantly increased to 90% 22

  23. building economies of scale in Central Canada $1,200M Revenue Operating profit Cash flow $260M $4M $0 ($50M) ($200M) 20001 2008 1 12 months ending Jan 1, 2000 Focused on managed data network services 23

  24. TELUS’ growth in Central Canada 24

  25. Providing integrated solutions

  26. TELUS’ growth in enterprise segment Virtually unknown in large corporate market outside Western Canada 2000 2009 Leverage investment in nationalNext Generation Network Excellent reputation for innovation, transition and operations of large client deals Opportunity Challenge Outcome 26

  27. building on large enterprise deals National Defence • Investing in and focusing on key industry verticals • Public sector • Financial services • Energy • Healthcare • Wholesale Implementation track record leading to contract wins 27

  28. major contract wins across Canada • Québec Government – $900 million over 10 years • Department of National Defence – $200 million over 5 years • TD Bank – $180 million contract over 5 years • Government of Ontario – $140 million contract over 5 years • Yellow Pages Group – $90 million over long term • Ville de Montréal – $87 million over 10 years • Government of B.C. - $245 million over 4 years Excellent progress in Central Canadian business market 28

  29. enhancing our leadership position in healthcare • TELUS #1 Healthcare IT Company in Canada by Branham Group • 2008 Canadian Health IT Company of the Year (ITAC Health) • Emergis purchased January 2008 • Electronic Health Records for 5 million Canadians • 4.1M Emergis Assure drug cards covering 8.5 million Canadians • 3,000+ pharmacies using our pharmacy management software • Exclusive partner to host and operate Microsoft HealthVault in Canada Leading the evolution of healthcare delivery in Canada 29

  30. Partnering, acquiring and divesting as necessary

  31. strategic journey 2000 →2009 Acquisition of Black’s ($28M) Acquired Clearnet ($6.6B) & QuébecTel ($700M) Divestiture of non-core real estate, directory and equipment leasing ($1.2B) Verizon divested 20.5% ($2.2B) equity interest Acquisition of Ambergris Solutions (international call centers) Discussions to acquire BCE / not pursued HSPA network build - partnership with Bell Canada 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Purchase of PSINet’s Canadian operations plus 6 other acquisitions Roaming / resale agreements with Bell Mobility Launched unsuccessful bid for Microcell Acquisition of Emergis ($743M) Satellite TV launch - agreement with Bell Canada Accenture partnership Agreement to carry Apple iPhone Acquisitions and partnerships furthering TELUS’ strategy 31

  32. Going to market as one team

  33. transformation to a single strong brand Nature based brand helps make technology simple 33

  34. brand recognition • One of Canada’s top brands • Canadian Best Brands - 2009 • One of Canada’s Most Valuable Brands – 2009 • Valued at $1.5 billion • 10 years of Brand Excellence • Gold Award for Sustained Success • #1 brand in advertising and brand awareness – 2003 “One of most recognizable and best loved brands in Canada” 34

  35. Investing in internal capabilities

  36. investing in operational efficiency Restructuring costs $M Cumulative annual EBITDA savings Cumulative Restructuring costs 2002 570 $1.1B 2003 28 $1.0B 2004 53 2005 54 2006 68 2007 20 2008 59 2009E* 160 Total 1,012 2002-2009E* 2002-2009E* * See forward looking statement caution Efficiency initiatives result in ~11K position net reductions EBITDA savings help offset near term dilution of strategic initiatives 36

  37. TELUS – transforming our culture 2000 2009 2009 2000 Seniority-based wage leader limited pay for performance COMPENSATION Performance-based, competitive with universal variable pay BENEFITS Multiple plans Harmonized plans HOURS OF WORK / PAID TIME OFF Non-competitive Competitive/service driven Most restrictive in North America CONTRACTING OUT Restrictions eliminated EASTERN OPERATIONS / MOBILITY Flexibility threatened Flexibility preserved Overtime voluntary, union scheduling & seniority job posting OPERATIONAL ISSUES Management schedules work & overtime, best qualified job posting Harmonized procedures, practices & systems. Contract terms promote business-focused problem solving Administrative processes not aligned, contract terms foster adversarialism ADMINISTRATION & UNION-MGMT RELATIONS

  38. TELUS – transforming our culture 2000 Recent Workplace culture • Traditional cultures • Global leadership in learning 2008 SkillSoft industry achievement award • Global leadership in recognition 2009 RPI best practice award for Bravo program • Global leadership in communication 2009 Stevie awards for teamVision program • National leadership in HR 2009 Best Diversity Employers 2008 Canada’s Human Capital Leaders 38

  39. TELUS – transforming our culture 2000 Recent Training and development • Web enabled • 2009, 2007, 2005, 2004, 2003 ASTD BEST awards • Rankings #7, #6, #3 worldwide • Named one of Canada’s 10 Most Admired Corporate Cultures for 2009 • Traditional • No benchmarking Practises • Multiple systems, practices and cultures • More unified systems, practices and cultures • e.g. Amdocs billing systems consolidations (wireline and wireless) • Consistent 4 team values drive decisions and actions 39

  40. TELUS approach to Corporate Social Responsibility CSR Corporate Governance Strong corporate governance provides necessary foundation for CSR leadership 40

  41. becoming a leading corporate citizen For our environment For our economy For our society • Sustainable revenue generation and ROI • Robust internal financial controls and disclosure mechanisms • Investment in technology research and development • Contribution to corporate tax base • Contribution to sustainable National economic growth • Communities and customers • Investment through TELUS Community Boards • Strategic partnerships • Philanthropy & volunteerism • Social impacts of our products and services • Customer satisfaction • Team members • Recruitment, retention, and development • Engagement and diversity • Labour relations • Health and safety • Impact of TELUS operations • Product life-cycle responsibility • Influence in supply chain • Help customers minimize their impacts • Complete climate change strategy TELUS must incorporate CSR into key business decisions 41

  42. TELUS and Corporate Social Responsibility (CSR) 2009 • TELUS an internationally recognized leader in CSR 2000 • Basic reporting • Limited disclosure • Only North American telco on DJSI World Index for 9 consecutive years • Only 1 of 11 Canadian companies listed Transforming TELUS’ CSR strategy 42

  43. investment in our communities 2000 2009 Community Investment & Engagement • Year-round team volunteerism and giving programs • $7.8M donated • Nine Community Boards across Canada • Local and TELUS Community Leaders • $4.1M to be donated in 2009 • Year-round team volunteerism and giving plus • 2009 TELUS Day of Service: over 9000 participants in over 150 activities • $7.1M being donated in 2009 through team donations and TELUS matches • Corporate philanthropic endeavours • $43M committed to science centres • Upopolis social networking for children’s hospitals • TELUS Walk to Cure Diabetes Since 2000 TELUS and team members contributed $137M to charitable organizations & 2.6 million volunteer hours 43

  44. TELUS – disclosure and governance excellence 44

  45. Financial and valuation review

  46. TELUS forward looking statements This slide deck and our answers to questions contain statements about expected future events and financial and operating results of TELUS that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions 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 results 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 2009 guidance and a preliminary assessment of expected 2010 capital expenditure levels), qualifications and risk factors (including those associated with the deployment and operation of the new national high-speed packet access network and associated introduction of new products, services and systems) referred to in the Management’s discussion and analysis in the 2008 annual report, and in the 2009 first, second and third quarter 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.

  47. EBITDA evolution Wireless Wireless Wireline Wireline 83% 17% 45% 55% $3.6B $2.3B 2009 2000 12 mo. Sept 12 mo. June Executing strategy drives wireless growth, now 55% of operating profit 47

  48. strategic focus yields strong results Wireless earnings and cash flow growth EBITDA ($M) 2,005 1,925 1,906 EBITDA less capex ($M) 1,753 1,457 1,445 1,355 1,326 1,150 1,144 1,040 817 790 530 457 357 70 2009E* 2001 2007 2008 2002 2003 2004 2005 2006 * See forward looking statement caution (288) Continued focus on profitable customer growth 48

  49. managing through challenging times • Macroeconomic factors 2000 → 2009 • 2000 -Tech bubble burst destroyed over $100B in North American telecom value • 2001 - Corp governance crisis – increased cost of financing and regulatory e.g. Sarbanes-Oxley (SOX) • 2007 - Income Trust conversion decision destroyed over $3B in Canadian telecom shareholder value • 2008/2009 – Credit crisis and global recession impacted ability and cost to finance operations • Systemic industry trends 2000 → 2009 • Long Distance erosion • Reduced $480M of high margin revenue since 2001 at TELUS • Local line erosion due to technology substitution and competition • Reduced $550M of revenue since 2000 at TELUS Achieving financial success despite adversity 49

  50. managing through challenging times • Adverse regulatory decisions 2000 → 2009 • Contribution payments & price caps ~$350M negative EBITDA impact to TELUS • AWS auction proceeds: $4.25 billion • 3 times original expectations for three major wireless companies • Incumbents paid 40% premium to new entrants • TELUS paid $882M in 2008 • TELUS Specific factor 2000 → 2009 • Labour unrest and work disruptions 2004 to 2005 Achieving financial success despite adversity 50

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