1 the future is friendly 2005 fourth quarter review & conference call February 17, 2006.

1

the future is friendly

2005fourth quarter review & conference call

February 17, 2006

2 all dollars in C$ unless otherwise specified

forward-looking statementsThis presentation and answers to questions contain forward-looking statements that require assumptions about expected future events including competition, financing, labour relations developments, and financial and operating results and 2006 targets that are subject to inherent risks and uncertainties. TELUS’ actual results, conditions, actions or events could differ materially from those expressed or implied by such statements.

Assumptions for 2006 target purposes include: economic growth consistent with recent provincial and national estimates by the Conference Board of Canada that were available in 2005, including gross domestic product growth of 3.1% in Canada; increased wireline competition in both business and consumer markets; a wireless industry market penetration gain similar to the approximately five percentage point gain in 2005; approximately $100 million restructuring and workforce reduction expenses; an effective tax rate of approximately 35%; no prospective significant acquisitions or divestitures; no change in foreign ownership rules; and maintenance or improvement of investment-grade credit ratings.

Factors that could cause actual results to differ materially include but are not limited to: competition; technology; regulatory developments; human resources; business integrations and internal reorganizations; process risks; financing and debt requirements; tax matters; health, safety and environment; litigation; business continuity events; economic growth and fluctuations; and other risk factors discussed herein and listed from time to time in TELUS’ reports and filings.

For additional information on potential risk factors and assumptions, see TELUS’ 2004 Annual Report, updates in 2005 quarterly interim reports and other filings with securities commissions in Canada and the United States.

3


February 17, 2006

Darren Entwistlemember of the TELUS team

the future is friendly

4

2005 highlights

Demonstrated continued wireless excellence Resilience of wireline despite labour disruptionAchieved strong TELUS consolidated 2005 resultsRevenue 7%EBITDA 7%Net income 24%Free cash flow 13%

All 2005 consolidated targets achieved / 88% in last 6 years

5

2005 highlights by segmentWireless industry annual growth accelerated in Canada

Wireless segment continued excellent resultsRevenue up 17% & EBITDA up 26%Cash flow up 32% to $1.0 billion

Wireline segment resilient despite labour disruption Revenue up 1.6%

data up 8% & long distance down 4%EBITDA down 5%, up 2% normalizing for labour Cash flow strong at $938 million

Q4 product launches: EVDO & TELUS TV

6

Leading global telecom performance

Revenue

EBITDA

Cash flow**

EPS

20042003 2005

World Rankings*

TELUS performs well relative to global telecom peers

Growth

top quartile

top quartile

No.1

No.1

No.1

No.1

top quartile

top quartile

No.2

top quartilenmf No.2

2006E

No.1

top quartile

top quartile

top half

* Source: TD Securities data on major global incumbent telecoms** EBITDA less capital expenditures

7

Benefits of new collective agreement Ratified 5 year collective agreement to Nov. 2010

All corporate objectives met without exception

Return to work program – best in class

Excellent employee engagement

Allows management to productively run the business

outsourcing, consolidating, scheduling

Supports a performance culture

Work with TWU to have all legal proceedings dismissed

Enhances TELUS ability to focus on customers and to compete

8

Continued focus in 2005 and 2006December debt redemption $1.6 billionShare repurchases total $970 million to dateSecond share repurchase program underway Second step of dividend growth model

37.5% increase Jan 2006

Focus on sustainable value creation over the long-term

Returning significant capital to investors

9

Advance TELUS’ leadership position in the Consumer market

Advance TELUS position in the Business market

Advance TELUS position in the Wholesale market

Drive improvements in productivity and service excellence

Strengthen the spirit of the TELUS team and brand, and develop the best talent in global communications industry

2006 priorities support national growth strategy

Continued on strategy execution for benefit of investors

10


February 17, 2006

Robert McFarlaneEVP & Chief Financial Officer

11Excellent results despite EBITDA dilution from record gross adds

12%182162Cash Flow (EBITDA less capex)

17%144123Capex

14%326285EBITDA

16%877756Revenue

ChangeQ4-05Q4-04

1 Q4-05 EBITDA normalized to exclude $3M net expense impact of labour disruption

($M)

wireless segment

financial results

15%329285EBITDA (normalized)1

12

subscriber results

Record fourth quarter net additions with stable postpaid and strong prepaid growth

net additions

Q4-04 Q4-05

186K

235K 4.5 M

total wireless subscribers

postpaid81%

prepaid19%

3.7 M

0.9 M

wireless segment

postpaid

prepaid

13

industry subscriber growth

5.1%4.4%Penetration gain

1.8M1.6MNet subscriber additions

32.4MPopulation 32.1M

16.8MCdn wireless market 15.0M

20052004

51.8%46.7%Penetration

Source: Company reports, CWTA

Canadian wireless market growth continues to accelerate

wireless segment

4.1%

1.4M

31.7M

13.4M

2003

42.3%

14

Source: Company reports

TELUS Rogers Wireless1 BCE Wireless

$61

$49 $50

$63

$54$51

Q4-04

Q4-05

1 Pro forma Microcell

Increased usage and data uptake driving ARPU growth

industry ARPU

wireless segment

15TELUS’ wireless marketing efficiency remains best in Canada

$409 $425$449COA per gross add

1.5% 2.04%1.42%Blended churn

BCE RogersTELUS

profitable growth

wireless segment

$3400 $2600$4400Avg. lifetime revenue per sub

12% 16%10%COA / lifetime revenue

Q4-05

$51 $54$63ARPU

16 North American leader in wireless cash flow yield

31%Cash flow1 yield (total rev.)

12%Capex intensity (total rev.)

44%EBITDA margin (total rev.)

TELUS

wireless cash flow yield

2005

1 EBITDA less capex

17Met or exceeded original wireless targets for revenue, EBITDA and net adds

2005 results comparison to original targets

584KWireless Net Adds

$405MCapex

original 2005 targets1

EBITDA

Revenue

2005 actual results

$1.44B

$3.30B

wireless segment

425 to 475K

$350 to 400M

$1.35 to 1.40B

$3.20 to $3.25B

met or exceeded

1 Provided December 17, 2004

18 Achieved updated wireless guidance across the board

2005 results comparison to guidance

584KWireless Net Adds

$405MCapex

most recent guidance1

EBITDA

Revenue

2005 actual results

$1.44B

$3.30B

wireless segment

>550K

approx. $400M

$1.425 to $1.45B

$3.275 to $3.3B

met or exceeded

1 Updated December 16, 2005

19Wireline revenue displays resilience despite labour disruption

15%6172Other

7.2%400373Data

7.7%212230Voice – Long Distance

0.4%537534Voice – Local

changeQ4-05Q4-04

Total Revenue $1,209 $1,210

($M)

wireline segment

revenue profile

- %

20EBITDA decline due to labour disruption and higher restructuring costs

32%$179M$261MCash Flow (EBITDA less capex)

4.3%$230M$221MCapex

15%$409M$482MEBITDA

-$1.21B$1.21BRevenue

changeQ4-05Q4-04financial results

wireline segment

1.6%$494M$502MEBITDA (normalized)1

1 Normalized to exclude $20M & $36M in restructuring charges in Q4-04 and Q4-05, respectively. Q4-05 also normalized to exclude $49M net expense impact of labour disruption

21Continued revenue and profitability growth in Central Canada

non-ILEC revenue & EBITDA

wireline segment

Q4-04 Q4-05

156165

Q4-04 Q4-05

3.77.1

EBITDArevenue($M)

22

high-speed Internet subscriber growth

High-speed net adds slowed by labour disruption TELUS now has 1M Internet subs with 76% on high-speed

high-speed Internet net additions

Q4-04 Q4-05

35K

27K

1.0M

total Internet subscribers

high-speed 76%

dial-up24%

763K

236K

wireline segment

23

Q4-04

-1.3%

NAL results impacted by labour disruption & increased competition from cable telephony

% of network access lines lost, YoY

network access line results

wireline segment

Q2-05

-1.8%

Q1-05

-1.1%

Q3-05

-2.2%

Q4-05

-2.4%

24Exceeded original wireline revenue and Non-ILEC EBITDA targets


1 Provided on December 17, 2004

$21MNon-ILEC EBITDA

$1.85BEBITDA


Non-ILEC Revenue

Revenue

2005 actual results

$632M

$4.85B

wireline segment

Capex

High-Speed Net Adds

$914M

73K

$0 to 10M

$1.85 to 1.90B

$600 to $650M

$4.70 to 4.75B

$950 to 1,000M

approx. 100K

met or exceeded

25 Achieved updated wireline guidance


1 Updated on December 16, 2005

$21MNon-ILEC EBITDA

$1.85BEBITDA


Non-ILEC Revenue

Revenue

2005 actual results

$632M

$4.85B

wireline segment

Capex

High-Speed Net Adds

$914M

73K

$15 to $20M

$1.84 to $1.865B

$625 to $635M

$4.825 to $4.85B

approx. $900M

> 65K

met or exceeded

26Profitability significantly impacted by labour disruption and one-time debt redemption charge

$374M$343MCapex

42%$0.22$0.38EPS

4.2%$734M$767MEBITDA

6.2%$2.09B$1.96BRevenue

changeQ4-05Q4-04

financial results

TELUS Consolidated

8.9%

27 Normalized consolidated EBITDA growth of 4.4%

EBITDA - normalized

Q4-04 Q4-05 changeConsol. EBITDA (reported) 767 734 4.3%

Restruc. & w. r. costs 20 36

Consol. EBITDA (bef. restruc.) 787 770 2.2%

Net labour disruption impacts

- 52

Consol. EBITDA (normalized)

787 822 4.4%

($M)

TELUS Consolidated

28 Strong normalized EPS growth at 40%

EPS continuity

$0.01(0.07) Tax related matters

42%$0.22$0.38EPS reported

changeQ4-05Q4-04

TELUS Consolidated

$0.10 - Labour disruption impact

$0.07$0.04 Restr. & workforce reduction

EPS normalized $0.33 $0.46 40%

Early bond redemption - $0.06

Other (0.02) -

29

$122

(2)

(290)

(343)$767

Q4-04

$110

47

(306)

(374)$734

Q4-05

Free Cash FlowNet Cash Tax Recovery

Net Cash Interest

CapexEBITDA

($M)

(15) 5Cash Restruct. Payments (in excess of expense)

6 3Non-Cash Share Based Compensation

free cash flow

$351

116

(113)

$352

(30)

(97)

Cash avail. for debt reduction & share redemp.

Working Capital/Other

Cash Dividends77 19Share Issuance (non-public)

- 350A/R securitization148 -Payment Received from Verizon

30

Repurchased 5.1M shares for $229M under both NCIB programs in Q4-05

Repurchased 20.8M shares for $892M during 2005 under both NCIB programs

Current 24 million share (7% of outstanding) NCIB effective Dec. 20, 2005 to Dec. 19, 2006

5% completed in 7 trading days in Dec-05

return of capital – share buy back

TELUS committed to share repurchases

TELUS Consolidated

31

Completed $1.6B early debt redemption of 7.5% Series CA Notes on Dec. 1, 2005

Funded by cash on hand, $350M increase in A/R securitization program and $142M in bank facilities

Incurred $33.5M loss on redemption & settlement of interest rate hedges

Interest savings benefit in Dec-05 and 2006

Previously announced a 38% quarterly dividend increase to 27.5 cents per share, for Jan. 1, 2006 payment

Consistent with dividend payout ratio guideline of 45 to 55% of sustainable net earnings

return of capital – continued

TELUS has strong track record for returning capital to investors

TELUS Consolidated

32 All four rating agencies upgraded TELUS in 2005

credit ratings & financial policy targets

TELUS consolidated

Previous Rating Current Rating Date of Change

Moody’s

Baa3 (stable) Baa2 (stable) June 27

S&P BBB (positive) BBB+ (stable) Sept 27

Fitch BBB (positive) BBB+ (stable) Oct 18

DBRS BBB (stable) BBB high (stable) Oct 24

1.7x 1.5 to 2.0xNet Debt : EBITDA

Q4-05Long-term financial policy target

1 Net debt to EBITDA target updated November 10, 2005

target1

Net Debt : Total Cap 45 to 50% 45.7%

Met

33Original targets challenging as compared to analyst estimates

2005 results versus analyst estimates

1 Analyst consensus estimates for TELUS, as at Nov 30/04, preceding 2005 targets provided Dec 17/042 Provided December 17, 2004

Capex

EPS

EBITDA

Revenue

2005 consensus estimates1

TELUS Consolidated

$1.35B

$1.80

$3.25B

$7.84B

Free Cash Flow

$1.20B

2005 original targets2

$1.3 to 1.4B

$1.65 to 1.85

$3.2 to 3.3B

$7.9 to 8.0B

$1.2 to 1.3B

34TELUS achieved original 2005 financial targets on the back of solid wireless results despite labour disruption


1 Provided December 17, 20042 Includes actual restructuring costs of $54M versus original restructuring costs of approx. $100M

$1.47BFree Cash Flow

$1.32BCapex

$1.96EPS


EBITDA2

Revenue

2005 actual results

$3.30B

$8.14B

$1.2 to $1.3B

$1.3 to 1.4B

$1.65 to $1.85

$3.2 to 3.3B

$7.9 to 8.0B

TELUS Consolidated

met or exceeded

35Consolidated results consistent with December 2005 guidance


1 Updated December 16, 20052 Actual 2005 results include restructuring costs of $54M

$1.47BFree Cash Flow

$1.32BCapex

$1.96EPS


EBITDA2

Revenue

2005 actual results

$3.30B

$8.14B

$1.4 to 1.5B

approx. $1.3B

$1.90 to 2.00

$3.275 to 3.325B

$8.10 to 8.15B

TELUS Consolidated

met or exceeded

36

Pension plans – update

Strong investment performance in Q4-05 and lower discount rate for 2006

In aggregate, TELUS pension funds are 98% funded

Approx. $165M in cash contributions expected in 2006 (DB & DC plans)

Discount rate assumption for 2006 lowered to 5.0% (vs. 5.25% guidance on Dec. 16, 2005, and 6.0% in 2005)

TCI defined benefit pension plans ceased accepting new management employees

Lower discount rate offset by strong investment performance

TELUS Consolidated

372006 targets build upon track record of strong operational execution

2006 Consolidated targets summary

1Including restructuring & workforce reduction costs of $54M in 2005 and approx. $100M in 2006

$1.55 to 1.65BFree Cash Flow

$1.50 to 1.55BCapex

$2.40 to 2.60EPS

change

EBITDA1

Revenue

2006 targets

$3.5 to 3.6B

$8.6 to 8.7B

TELUS Consolidated

6 to 13%

14 to 18%

22 to 33%

6 to 9%

6 to 7%

38

Solid quarterly and annual consolidated results despite one-time labour disruption impact and increasingly competitive environment

Continued strong profitable wireless growth Reached 5-year collective agreement allowing for

increased flexibility Generating significant cash flow Strong 2006 revenue, earnings and cash flow growth

outlook

Summary

TELUS Consolidated

Continued execution into a future friendly 2006

39

2005fourth quarter review

questions?

investor relations1-800-667-4871

[email protected]

40

definitions

appendix

TELUS definitions for non-GAAP measures

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

Capital intensity: capex divided by total revenue

Cash flow: EBITDA less capex

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

1 the future is friendly 2005 fourth quarter review & conference call February 17, 2006.

Documents

Transcript of 1 the future is friendly 2005 fourth quarter review & conference call February 17, 2006.