q2 2006 telus investor conference call august 4, 2006

Q2 2006 TELUS investor conference call

August 4, 2006

Forward looking statements

2

This presentation and answers to questions today contain forward-looking statements that require assumptions about expected future events including competition, financing, financial and operating results, and guidance that are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate so do not place undue reliance on them.

There are many factors that could cause actual results to differ materially. For a full listing and description of the potential risk factors and assumptions, please refer to the TELUS 2005 annual report, updates in the 2006 quarterly reports and other filings with securities commissions in Canada and the United States.


Darren Entwistle • member of the TELUS team

August 4, 2006

Improving Canadian wireless industry* Q2 economics

Wireless industry remains vibrant and investing in growth

4

Wireless industry revenue up 17%, subscribers up 11%

ARPU up 5% and churn down to 1.6%

Lifetime revenue up 8%

Average COA trend reverses down from Q1

EBITDA up 22%, margins @ 43.5%, cash flow up 24%

* TELUS, BCE and Rogers

Push to implement the Telecom Policy Report

5

Supporting TPR panel and Industry Canada’s thought leadership

2005 VoIP decision referred by Cabinet back to CRTC

Local forbearance decision – appealed

Mobile TV broadcasting not regulated

Third local price cap proceeding underway for 2007

Other CRTC developments

Opportunity for positive regulatory and policy change

Total subscriber connections

Connections increasing with strong wireless and Internet growth

6

Wireless

High-speed Internet

Dial-up Internet

Res NALs

Bus NALs

(millions)

Q2-06

10.4

Q2-05

9.99.4

Q2-04

2006 – second quarter review

Q2 review - consolidated

7

2006 consolidated guidance updates

Revenue up $25M to $8.625 to $8.725B

EPS range increased 50 cents to range of $2.90 to $3.10

Capital expenditures up 3% to approx. $1.6B

Q2 review - wireline

8

Moderate NAL decline and strong high speed Internet growth

Competition affecting LD revenue and non-ILEC

TELUS resilient relative to North American industry

Operating themes

Stabilize traditional services

Continue Future Friendly Home applications

Continue productivity and efficiency programs

Q2 review – wireline efficiency

Efficiency programs to continue with fourth phase

9

Efficiency programs ongoing since 2001

Facilitated by new collective agreement

Three broad categories

Outsourcing

Consolidations

Process improvements

$30M restructuring charges in Q2 / $81M last 3 quarters

Q2 review - wireless

High speed EVDO deployment catalyst for further data growth

10

Strong revenue growth of 18%

ARPU up for 14th consecutive quarter (yr over yr) due to data

EBITDA up 20% and margin up to 46.4%

EVDO network rolled out to 19 communities across Canada

Amp’d Mobile – CanadaPowered by TELUS

Exclusive arrangement and investment

12

Amp’d Mobile responsible for marketing, freshest and exclusive entertainment content, and optimized handsets

TELUS responsible for managing sales and distribution, billing, client care, network options and pricing

Targeting 18 to 35 age demographic and lifestyle

Exclusive licensing and service agreement – not a traditional MVNO

Amp’d Mobile is a premium brand with high ARPUs focused on mobile media not traditional voice and postpaid focus

TELUS Ventures investing US $7.5M in Amp’d Mobile, Inc.

Peter AddertonFounder & Chief Executive Officer

Amp’d Investors

15

Amp’d Is Mobile Media

16


Darren Entwistle • member of the TELUS team

17


Robert McFarlane • EVP & Chief Financial Officer

August 4, 2006

17%$293M$252MCash flow (EBITDA less capex)

28%$147M$115MCapital expenditures

20%$ 441M$367MEBITDA1

18%$945M$802MRevenue

ChangeQ2-06Q2-05

Wireless segment – financial results


Excellent revenue, EBITDA and cash flow growth

1 Includes $1M in restructuring & workforce reduction costs in Q2-06

19

Total wireless subscribers

Postpaid 81%

Prepaid 19%

Wireless subscriber results

Net additions

Total subscribers up 14% with strong postpaid mix

20

Q2-05 Q2-06

131K 124K

4.7 million

3.8M

897K

103K104K

83%79%

Wireless data ARPU growth

ARPU growth led by 94% increase in wireless data

21

Q2-05 Q2-06

$61

$63Data ARPU

$2.30$4.45

Industry ARPU comparison

$61

$51 $50

$63

$56

$51

TELUS Rogers Wireless BCE Wireless

review of operations – wireless

Increased usage and data driving positive industry trend

22

Q2-05

Q2-06

7 bps1.30%1.37%Blended churn

3.8%$63.18$60.84ARPU

ChangeQ2-06Q2-05

Review of operations - wireless

TELUS subscriber economics best in class

Profitable growth strategy

23

9.5%$4860$4440 Lifetime revenue

15%$394$342 COA

8.1%7.7%COA/lifetime revenue 40 bps

$419 $397$394COA per gross add

1.60% 1.82%11.30%Blended churn

BCE RogersTELUS

$3188 $3074$4860Avg. lifetime revenue per sub

13.1% 12.9%8.1%COA / lifetime revenue

Q2-06

$51 $55.951$63.18ARPU

Wireless industry economics comparison

TELUS subscriber economics compare favourably

24

1Calculated using prepaid and postpaid metrics due to non-disclosure by Rogers

2006 wireless guidance update1

approx. 450MCapex

EBITDA

Revenue

$1.7 to $1.75B

$3.775 to $3.825B

Guidance changes reflect good YTD momentum

25

Previous 2006 guidance 2

Updated 2006 guidance

Wireless net adds > 550K

1 See forward looking statement caution

no change

no change

$3.8 to $3.875B

560 to 590K

2 Originally set December 17, 2005

29%$145M$205MCash flow (EBITDA less capex)

6.0%$311M$294MCapital expenditures

8.5%$456M$499MEBITDA1

2.2%$1.19B$1.22BRevenue

ChangeQ2-06Q2-05

Wireline segment – financial results


26

Results reflect challenging wireline environment and increased restructuring charges

1 Includes $7M and $30M in wireline restructuring costs in Q2-05 and Q2-06 respectively

3.9%$486M$506MEBITDA (excl. restructuring)

12%$58M$65MOther

6.1%$403M$380MData

10%$206M$229MVoice – Long Distance

3.6%$523M$543MVoice – Local

ChangeQ2-06Q2-05

External Revenue $1.22B $1.19B 2.2%

Wireline revenue profile

27

Solid data growth offset by increased erosion in local and LD

1.05 million

Total Internet subscribers

High-speed79%

Dial up21%

High-speed Internet subscriber growth

17K

29K

High-speed Internet net additions

28

Q2-05 Q2-06

831K

217K

Net additions up a strong 71% to 29K

29

Network access line results

NAL results improved as business gains offset increased residential erosion to competitors

% of network access lines lost, YoY

Q2-05

-1.8%

Q3-05

-2.2%

Q4-05

-2.4%

Q1-06

-2.7%

Q2-06

-2.6%

2006 wireline guidance update1

$1.05 to $1.1BCapex

EBITDA

Revenue

$1.8 to $1.85B

$4.825 to $4.875B

Guidance revisions reflect minor adjustments to wireline outlook

30



High speed net adds > 125K

approx. $1.15B

no change

$4.825 to $4.850B

no change

Non-ILEC Revenue $650 to $700M $650 to $675M

Non-ILEC EBITDA $25 to $40M $25 to $30M

1 See forward looking statement caution2 Originally set December 17, 2005. High speed net adds guidance increased May 3, 2006

3.7%$897M$865MEBITDA

5.8%$2.14B$2.02BRevenue

ChangeQ2-06Q2-05

TELUS Consolidated


Strong gains in revenue and EPS

27%$378M$297MEBIT

31

$31M$7MRestructuring costs

6.4%$928M$872MEBITDA (excl. restructuring)

94%$1.03$0.53EPS

Net credit from lower tax rates

94%$1.03EPS reported

% ChangeQ2-06Q2-05

EPS (normalized)1 $0.56 $0.69 23%

EPS normalization

Normalized second quarter EPS increase 23%32

($0.32)

($0.02)


1 Normalized further for $0.01 and $0.06 in restructuring costs in Q2-05 & Q2-06, EPS would have been $0.57 and $0.75, up 32%

-

$0.03

$0.53

Investment tax credits

-BCTel bonds accrual

-

Tax changes, EBITDA growth, lower financing costs drive EPS 33


$0.53

Q2-05

$0.32

Tax rate changes

$0.06$0.05

$0.03$0.03

$0.01

$0.02 $1.03

Lower financing charges

BC TelBondsaccrual (2005)

Lower depr’n

Decr. in avgo/st

shares

Higher Other

expense

EBITDA growth

Q2-06

Common 2.9M 5.3M 12.0M 44%

Non-Voting

2.6M 6.6M 12.0M 55%

Total 5.6M 11.9M 24.0M 50%

Total cost $249M $539M

Share buy back program1 update

Share repurchase run rate consistent with full annual program

Repurchased this quarter

Repurchased since inception

Total Authorized

% of authorized repurchased since

inception(Shares)

34

1 NCIB effective December 20, 2005 for 12 months

1.7x 1.5 to 2.0xNet Debt : EBITDA

Q2-06Long-term financial policy

Target1

Net Debt : Total Cap 45 to 50% 45.5%

Met

Financing update

TELUS taking steps to refinance 2007 maturities

35

Moody’s reiterated “Baa2” rating, changed outlook to “positive” $300M debt offering of 5.00% Notes, with 7 year maturity

Proceeds used for early termination of cross-currency swaps

associated with 2007 U.S. dollar Notes Forward starting interest rate swaps arranged in Q1-06, had effect

of fixing lower rates on further $300M of debt to be refinanced

2006 consolidated guidance update1

$1.5 to $1.55BCapex

$1.55 to $1.65BFree cash flow

$2.40 to $2.60EPS (basic)

EBITDA

Revenue

$3.5 to $3.6B

$8.6 to $8.7B

Revenue and EPS guidance increased, FCF unchanged

36



approx. $1.6B

no change

$2.90 to $3.10

no change

$8.625 to $8.725B

1 See forward looking statement caution2 Originally set December 17, 2005

investor relations1-800-667-4871

[email protected]

($91)

-

(272)

$208

20

(275)

(409)$865

Q2-05

($8)

135

(249)

$199

(1)

(271)

(459)$897

Q2-06

Funds avail. for debt redemption

Accounts Receivable Securitization

Purchase of shares for cancellation (NCIB)

Free Cash Flow

Net Cash Tax Recovery

Net Cash Interest

CapexEBITDA

($M)

(1) 19Cash Restructuring Payments (in excess of expense)

7 13Non-Cash Share Based Compensation

(144) (95)Dividends

56 13Share Issuance (non-public)

($106) ($18)Net change in cash(15) (10)Funds applied to redemption of debt

Free cash flow

Appendix

Working capital & other 61 (10)

38

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

Appendix

Definitions

TELUS definitions for non-GAAP measures

q2 2006 telus investor conference call august 4, 2006

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