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2005
first quarter review & conference call
May 5, 2005
the future is friendly
1
forward-looking statements
This presentation and answers to questions contain forward-
looking statements about expected future events including
competition, labour relations developments and financial
and operating results that are subject to risks and
uncertainties. TELUS’ actual results, performance, or
achievement could differ materially from those expressed or
implied by such statements. For additional information on
potential risk factors, see TELUS’ 2004 Annual Information
Form, and other filings with securities commissions in
Canada and the United States.
TELUS disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
2 all dollars in C$ unless otherwise specified
2005
first quarter review & conference call
May 5, 2005
Robert McFarlane
EVP & Chief Financial Officer
the future is friendly
3
TELUS consolidated
financial results
Q1-04 Q1-05 Change
Revenue $1.80B $1.98B 9.5%
EBITDA1 $721M $856M 19%
EPS2 $0.28 $0.67 139%
Capex $310M $273M 12%
Free Cash Flow3 $443M $567M 28%
1 Earnings before interest, taxes, depreciation and amortization
2 Including favourable impacts for tax settlements on EPS of $0.04 in Q1-04 & $0.15 in Q1-05
3 EBITDA, adding Restructuring and workforce reduction costs, cash interest received and excess of
share compensation expense over share compensation payments, subtracting cash interest paid,
cash taxes, capital expenditures, and cash restructuring payments
4 Strong increases in revenue and profitability
TELUS consolidated
tax normalization
15 cent impact on EPS in Q1-05 versus 4 cents in Q1-04
reflects change in tax estimates for available temporary
differences, other tax adjustments, and related interest
income on settlements
5
TELUS consolidated
regulatory update
CDNS
35% of TELUS ILEC local voice revenue regulated
Feb-05, Competitive digital network services (CDNS) decision
Positive consolidated impact of $25M in 2005
unfavourable ILEC impacts effectively offset by mandated
price reductions accrued in deferral account
expense reductions for non-ILEC & Mobility
Portable Subsidy
TELUS Quebec benefited from decision on portable subsidy
retroactive to 2003 & 2004
positive impact of $10M in 2005
6 positive regulatory impacts
TELUS consolidated
EPS continuity
Q1-04 Q1-05 Change
EPS reported $0.28 $0.67 139%
Income tax settlement ($0.04) ($0.15)
Retroactive impacts of TQ, - ($0.01)
CDNS regulatory decisions
EPS normalized $0.24 $0.51 113%
7 Normalized quarterly EPS increase of $0.27
TELUS consolidated
free cash flow
($M) Q1-04 Q1-05
EBITDA $721 $856
Capex (310) (273)
Cash Restructuring Payments (in excess of expense) (53) (12)
Net Cash Interest (9) (7)
Non-Cash Share Based Compensation 5 4
Net Cash Tax Recovery 88 (1)
Free Cash Flow $443 $567
Share Issuance (non-public) 27 88
Cash Dividends (42) -
Acc. Rec. Securitization Program Reduction (150) -
Working Capital/Other (4) (145)
Cash avail. for debt reduction & share redemp. $274 $510
Net change in LTD & share repurchase (7) (159)
Net change in cash $267 $351
8
Mobility segment
financial results
($M) Q1-04 Q1-05 Change
External Revenue 633 753 19%
EBITDA1 248 337 36%
Capex 50 60 19%
Cash Flow (EBITDA less capex) 198 278 41%
1 Earnings before interest, taxes, depreciation and amortization
9 Continued strong revenue, earnings & cash flow growth
Mobility segment
subscriber results
net additions total wireless subscribers
4.0M
80K 0.7M
76K
prepaid
17%
postpaid
83%
3.3M
Q1-04 Q1-05
10 Continued strong postpaid mix
Mobility segment
ARPU comparison
$58 Q1-04
$57
Q1-05
$48
$47
$46
$44
TELUS Mobility Rogers Wireless1 BCE Wireless
Source: Company reports
1 Pro forma Microcell
11 TELUS maintaining ~20% premium to competitors
Mobility segment
profitable growth strategy
Q1-04 Q1-05 Change
Net additions 76K 80K 5.4%
ARPU $57 $58 1.8%
Blended churn 1.49% 1.45% 4 bps
COA 383 355 7.3%
12 Continued strong operating metrics
Mobility segment
TELUS achieving profitable subscriber growth
Canadian national wireless carriers in Q1-05
net adds EBITDA cash flow1
TELUS TELUS
Mobility
TELUS TELUS TELUS
Mobility
44%
Mobility Mobility Mobility
40%
44% 36% 40%
182K $936M $693M
1 EBITDA - Capex
Source: Company reports.
Sum of reported results for BCE, Rogers Wireless pro forma Microcell, & TELUS Mobility
13 Achieving profitable subscriber growth
Mobility segment
2005 guidance summary
original 2005 updated 2005
targets1 guidance2
Revenue $3.2 to 3.25B no change
EBITDA $1.35 to 1.4B $1.375 to 1.4B
Capex $350 to 400M approx. $400M
Wireless Net Adds 425 to 475K 475 to 525K
1 Provided on December 17, 2004
2 Updated May 4, 2005
14 Positive revisions to guidance
Communications segment
financial results
Q1-04 Q1-05 Change
External Revenue $1.17B $1.22B 4.4%
EBITDA1 $474M $519M 9.6%
Capex $259M $214M 18%
Cash Flow (EBITDA less capex) $214M $305M 43%
1 Earnings before interest, taxes, depreciation and amortization
15 Strong gains in profitability & cash flow
Communications segment
revenue profile
($M) Q1-04 Q1-05 Change
Voice – Local 529 553 4.5%
Voice – Long Distance 230 226 1.4%
Data 340 378 11%
Other 73 65 10%
External Revenue $1,171 $1,222 4.4%
3rd straight quarter of year over year wireline revenue growth
16
driven by data
Communications segment
revenue - normalized
($M) Q1-04 Q1-05 Change
Reported external revenue 1,171 1,222 4.4%
TQ portable subsidy - (7)
External revenue (normalized) 1,171 1,216 3.8%
Acquisitions - (19)
External revenue (organic) 1,171 1,197 2.2%
17 Normalized revenue growth 3.8%, organic revenue growth 2.2%
Communications segment
local and data revenue - normalized
($M) Q1-04 Q1-05 Change
Local revenue (reported) 529 553 4.5%
TQ portable subsidy - (7)
CDNS - def. account - (18)
Local revenue (normalized) 529 528 0.2%
Data revenue (reported) 340 378 11%
Acquisitions - (19)
CDNS impact - data - 18
Data revenue (normalized) 340 377 11%
18 Normalized local revenue flat & data growth of 11%
Communications segment
network access line results
% of network access lines lost, YoY
Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05
-0.8%
-1.3% -1.2% -1.3% -1.1%
-1.4%
19 Strongest NAL result in 5 quarters despite growing competition
Communications segment
EBITDA - normalized
($M) Q1-04 Q1-05 Change
Comm. EBITDA (reported) 474 519 9.6%
Restruc. & w. r. costs 16 9
Comm. EBITDA (bef. restruc.) 490 528 7.8%
Regulatory impacts (retroactive)1 - (7)
Comm. EBITDA (normalized) 490 521 6.3%
Acquisitions - (3)
Comm. EBITDA (organic) $490M $518M 5.7%
1 Retroactive regulatory impacts include TQ portable subsidy and CDNS
20 Normalized Communications EBITDA growth of 5.7%
Communications segment
non-ILEC revenue & EBITDA ($M)
Revenue
EBITDA
156 160
145
128 131
(9) (14) (3) 4 8 ~$3-4M
run rate
Q1-04 Q2-04 Q3-04 Q4-04 Q1-05
Positive trend with record revenue; 2nd quarter of positive
21
EBITDA benefited in part from non-recurring items
Communications segment
high-speed Internet subscriber growth
high-speed Internet total Internet subscribers
net additions
982K
44K 270K
dial-up
22K
28%
high-speed
72%
712K
Q1-04 Q1-05
22 High-speed Internet base up 18% in maturing market
Communications segment
revitalizing wireline growth
Business
Geographic expansion
building high quality, recurring revenues in non-ILEC leveraging
IP network & application leadership
$245M long-term contract with Gov’t of B.C.
Consumer
“Future Friendly” home
continued high-speed Internet growth
launched suite of IP applications
Home Networking, HomeSitterTM launched in 2004
IPTV employee trials continue
Bundling
bundling strategy protects legacy revenues
23
Communications segment
restructuring and workforce reduction costs
Programs Programs prior
($M)
initiated in 2005 to 2005 Total
Beginning period liability - $70.7 $70.7
Restructuring and
workforce reduction 7.9 1.5 9.4
costs
Cash payments (0.6) (21.1) (21.7)
Total liability $7.3 $51.1 $58.4
24 Expected additional restructuring costs of $91M for Q2 to Q4-05
Communications segment
2005 guidance summary
original 2005 updated 2005
targets1 guidance2
Revenue $4.7 to 4.75B $4.75 to 4.8B
Non-ILEC Revenue $600 to 650M $625 to 650M
EBITDA3 $1.85 to 1.9B $1.875 to 1.925B
Non-ILEC EBITDA $0 to 10M $15 to 20M
Capex $950M to 1B approx. $1B
High-Speed Net Adds approx. 100,000 no change
1 Provided on December 17, 2004
2 Updated May 4, 2005
3 Includes ~$100M in restructuring & workforce reduction costs
25 Positive revisions to guidance
labour relations update
collective bargaining with TWU resumed, Feb. 16
tabled comprehensive offer to TWU, Apr. 13
declared impasse and delivered notice of lockout measures,
Apr. 18
presented the comprehensive offer to employees, Apr. 21
cash impact of offer would be up to approx. $200M
Federal Court of Appeal denied TWU application challenging
TELUS, Apr. 21
CIRB dismissed application by TWU for interim relief, Apr. 25
lock-out measures implemented, Apr. 25
business remains as usual
26 Negotiations continue
share buy back update
No. of Shares No. of Shares % of Auth.
Repurchased Repurchased Total Repurchased
This Quarter Since Authorized Since
Inception Inception
Common 2.1M 2.8M 14.0M 20%
Non-Voting 2.0M 3.5M 11.5M 30%
Total 4.1M 6.3M 25.5M 25%
Total cost $158M $236M
27 TELUS has repurchased 25% of shares permitted under NCIB
renewed bank credit facilities
Effective May 4, 2005, TELUS entered into new credit
facilities totaling $1.6 billion
$800M five-year revolving term expiring May 2010
$800M three-year revolving term expiring May 2008
Facilities mature subsequent to 06/07 debt
maturities
Will replace TELUS’ existing $1.6B committed facilities
Favourable changes to pricing & extended terms
reinforce strong liquidity position
28 Renewal of credit facilities reflect strong financial position
2005 consolidated guidance summary
original 2005 updated 2005
targets1 guidance2
Revenue $7.9 to $8.0 B $7.95 to $8.05B
EBITDA3 $3.2 to $3.3B $3.25 to $3.325B
EPS4 $1.65 to $1.85 $1.85 to $2.05
Capex $1.3 to $1.4B approx. $1.4B
Free Cash Flow $1.2 to $1.3B $1.25 to $1.35B
1 Provided on December 17, 2004
2 Updated May 4, 2005
3 Includes ~$100M in restructuring & workforce reduction costs
4 Updated guidance includes $0.15 in 2005 for favourable settlement of tax matters
29 Positive changes reflect Q1 momentum and tax settlement
questions?
2005
first quarter review
30
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