Darren Entwistle President and CEO. TELUS 2010 Annual General Meeting. Wednesday, May 5, 2010

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1 Remarks by Darren Entwistle President and CEO TELUS 2010 Annual General Meeting Wednesday, May 5,

2 Thank you, Brian. Good morning everyone. Bonjour et bienvenue à l'assemblay générale annuelle des-actionnaires de TELUS. In my remarks today, I will explain how our proven strategy, talented team and disciplined focus on investing in TELUS' core business have, over the last decade: Positioned your company at the forefront of technology innovation; Positioned your company at the forefront of our global peers with respect to the ongoing creation of shareholder value; and Positioned your company at the forefront in our dedication to creating healthy communities. I will also report on TELUS' first quarter results, our dividend declaration and 2010 corporate priorities. TELUS' progress can be attributed to our team's relentless focus on the six strategic imperatives that have guided our organisation since our journey took shape 10 years ago. Our execution of this strategy has resulted in a remarkable transformation of our company. Your company has expanded its wireless and data revenues from 28 per cent of total revenue in 2000 to 72 per cent of revenue today. Importantly, total revenue has grown by 60 per cent during this time period. Since 2000, TELUS has doubled our customer base to 11.9 million, raised net income by 39 per cent to $948 million dollars and expanded our enterprise value by 81 per cent to $19 billion dollars. These accomplishments are a testament to the TELUS team s focus on implementing our national growth strategy. The charts before you show TELUS' performance in respect of total shareholder return compared to our incumbent peers around the world. They illustrate how TELUS returns, which include share price appreciation and dividends, have outperformed all of our peers over the last five..six.. seven. eight. nine..and ten year periods. 2

3 Notably, TELUS has generated a 53 per cent total return for shareholders over 10 years. Moreover, your company has a longstanding track record of achieving its publicly stated targets that are demanding, but realistic. Disappointingly, we were successful in meeting only one of four consolidated targets in 2009 due in part to the impact of the recession on our business. Notwithstanding this, since 2001 TELUS has met or exceeded 77 per cent of our 44 consolidated financial targets. TELUS also stands apart from our national and international peers as a result of our strategic investments in These include our wireless and wireline broadband network builds. This effort was a massive undertaking for our company, which was accomplished in the midst of the economic downturn, and during a time when the majority of companies decreased capital expenditures. TELUS however, did the opposite. We knew that in the midst of a recession and with suppliers having excess capacity, the purchasing power of our capital dollars would stretch further. This enabled us to secure wireless network equipment at favourable prices. Moreover, we contracted, not just for our HSPA requirements in 2009, but also for Long Term Evolution network technology that we will need in the years ahead. In 2009, we increased our capital expenditures by 13 per cent to $2.1 billion dollars, recognising the opportunity to strengthen our competitiveness and position TELUS for long-term success. British Columbia is a focal point for many of our customer-focused initiatives and we invested almost $700 million dollars in this province last year. Your company achieved a momentous milestone last fall with the early launch of its national 3G+ network, covering 93 per cent of Canada's population. 3

4 This is Western Canada s fastest and biggest wireless network as clearly illustrated on the map before you. The blanket of green is your company s HSPA+ coverage. This compares favorably to Rogers current HSPA+ coverage highlighted in red. Equally impressive is our coverage advantage across Central and Eastern Canada. The completion of this game-changing network gives our customers the best choice of industry leading devices such as the iconic Apple iphone, BlackBerries, Android and high speed wireless Internet keys. This enhances your company s revenue growth from smartphones and roaming. Furthermore, the introduction last November of simple wireless pricing plans and our expanded distribution through 113 Black s Photo stores demonstrate our brand promise the future is friendly for the benefit of our clients. Let us now turn to the wireline business. TELUS continues to invest heavily in successive technology upgrades, which provide our clients with increased coverage and ever faster broadband network speeds. Through these investments, we are delivering innovative customer solutions that are: Fuelling new revenue growth; Better positioning us against cable TV; and Accelerating the roll out of exciting services, such as TELUS TV. Indeed, your company made a significant leap in TELUS TV earlier this year with the launch of Microsoft Mediaroom, featuring PVR Anywhere. This enhanced platform revolutionises our customers entertainment experience by giving them, for the first time, the ability to record up to three shows at once and view them from any room in their home. Additionally, in 2009, TELUS launched Satellite TV. We now reach more than 90 per cent of homes in Alberta and British Columbia, compared to only a third at the beginning of last year. 4

5 All digital TELUS TV is receiving excellent reviews from technology experts and customers alike, and I am pleased to report that we added 29,000 new customers in the first quarter. Notably, in early April, we passed the two hundred thousand client milestone. Let us now turn to our first quarter 2010 results. I am pleased to report that they indicate an improving trend, and reflect the positive impact of our capital and efficiency investments from last year. At the consolidated level, revenue was unchanged year over year at $2.4 billion dollars, as data revenue growth was offset by the secular decline in voice and long distance revenues. Operating earnings increased by 3.8 per cent to $940 million dollars. This positive result is attributed to lower restructuring costs, savings from operating efficiency initiatives and wireless profit contribution. This is our best quarterly result since the fall of Furthermore, earnings per share came in at 84 cents, which exceeds street expectations. EPS in the same quarter in 2009 was favourably impacted by 20 cents of income tax-related adjustments. Normalising for this, underlying earnings this quarter were up two and a half per cent. Capital expenditures were down significantly by 34 per cent this quarter to $311 million dollars. This reflects a 70 per cent reduction in wireless capex, related to the completion of our 3G+ wireless network last year. As a result, free cash flow this quarter has increased by 97 per cent to $246 million dollars. Turning to the wireless business, revenue was up 4.2 per cent in the first quarter to $1.2 billion dollars. This can be attributed to customer growth, data revenue growth and our acquisition of Black s last fall, which more than offset the continued decline in voice revenues. 5

6 Of most interest to investors is the improving trend in average revenue per unit, commonly called ARPU. Analysts will be pleased to see that the decline this quarter has improved significantly to 4.4 per cent, as compared to a decline of 7.7 per cent in the fourth quarter of We also achieved strong postpaid customer growth of 65,000 in the first quarter, up 48 per cent from a year ago. This reflects our investments in the new HSPA+ network; our focus on higher value clients; and sales of the latest smartphones. Client loyalty as measured by churn also improved in the quarter. As a result, wireless operating earnings rebounded this quarter with your company generating $497 million dollars, up by almost two per cent. Turning now to the wireline part of our business, we continue to be challenged by ongoing declines in legacy voice and long distance revenue. To this end, wireline revenue was down 3.8 per cent to $1.2 billion dollars. Your company continues to focus on growth areas such as TELUS TV whilst simultaneously advancing our operational efficiency initiatives. Indeed, we are achieving significant success in reducing costs as illustrated by the $47 million dollar or 5.6 per cent decline in operating expenses. Impressively, expense control, combined with lower restructuring costs, resulted in wireline operating earnings increasing by six per cent to $443 million dollars this quarter. There is without a doubt a symbiotic relationship between the success of our business and the health of our communities, making our efforts to give back crucial. The TELUS team believes in our hearts and minds that in order to do well in business, we must do good in the communities within which we live, work and serve as citizens. To this end, next week, TELUS is unveiling the newest Pink BlackBerry Curve and Pink BlackBerry Pearl. For every one of these devices purchased, we will make a $25 dollar donation to regional hospitals across the country for the purchase of new digital, mammography equipment. 6

7 Your company s efforts, alongside the support of our valued customers, will advance the early detection of breast cancer. We recognise that the economic downturn has greatly impacted many charities hoping to lend thousands of Canadians a helping hand. I am pleased to say that the culture of giving is alive and well at TELUS. Since 2000, TELUS, our team members, retirees and Community Ambassadors have donated $158 million dollars and volunteered 3.1 million hours in communities across Canada. Let us take a look at the following video, which demonstrates the strength of your company s conviction. What a wonderful demonstration of the TELUS team s commitment to give where we live. We believe in the principle that community support should be owned and executed locally. As a result, we have established nine TELUS Community Boards across Canada. At this time I would like to recognise the TELUS Victoria Community Board Chair Mel Cooper. Mel has done an exceptional job of tapping into the Vancouver Island community to determine how our donations can have the most meaningful impact on people s lives. Thank you Mel. We are also fortunate to have with us today, the chair of the TELUS Vancouver Community Board, Nini Baird. Nini is a tireless community builder who brings an absolute wealth of experience and passion to her leadership role. It is my pleasure to introduce Nini to say a few words. Nini Baird Thank you Darren. I applaud Darren for his personal commitment to corporate social responsibility, which has created a culture of giving that is pervasive across TELUS. For TELUS to be recognized as the most philanthropic corporation in the world, as we just heard, is entirely deserved from my years of experience working closely with the company. 7

8 The community boards are an innovative and groundbreaking effort that has moved decisionmaking down to the community level. These boards provide funding grants to local grassroots organizations that would not normally receive access to corporate dollars. Since their inception in 2005, TELUS Community Boards have allocated $21 million dollars to local charities, supporting more than 1,500 community projects. The boards are part of TELUS strategy to provide local social support to ensure healthy, economically viable communities across Canada. It has been a privilege for me to be involved with the Vancouver Community Board since its launch in 2005, taking the unique vision of an enlightened corporation and turning it into a lasting legacy. We have donated a total of $3.2 million dollars to 264 grassroots initiatives across Greater Vancouver and the Fraser Valley. In 2010, we plan to donate an additional $600,000 dollars. Our Board funds socially innovative programs in education, sport, arts and health, and supports projects using technology. Our key focus has been on assisting youth at risk and their families. We are helping children facing illness, confronting bullying, learning to lead through sports, and exploring social issues through the arts. The impact of our support is measured in the unique stories each group has to share. Like the heart-warming stories of the Children's Hearing & Speech Centre of BC and Gymnastics BC that we just viewed. And Out on Screen, which uses the power of film by and for youth to address homophobia, shatter gender stereotypes and promote safe and inclusive schools for all students. And Green Thumb Theatre that helps school audiences cope with the alarming rise of humiliating cyber bullying. These are just a few examples of the many organizations that we support. 8

9 I am delighted that our Board was recognized in 2008 with the Giving Hearts Award and in 2009 by the City of Vancouver with the 2009 Mayor's Arts Award. I am grateful for the dedication and contributions of my board colleagues whose names and faces you see on the screen and who are here today. These knowledgeable individuals with deep community networks bring a diversity of perspectives and backgrounds to our work. We look forward to continuing to make our communities more caring, compassionate and inclusive places for children, teens and their families. Thank you and back to Darren. Darren Entwistle Nini and Mel, on behalf of the TELUS team, thank you for the amazing difference you make in the lives of those less fortunate. I would also like to extend my gratitude to our 35,000 TELUS team members. Through their efforts, in impactful events such as the TELUS Day of Service, we are demonstrating our commitment to give where we live. Let s turn to 2010, including our corporate priorities.and some more good news for shareholders. TELUS' corporate priorities for 2010 are designed to advance our proven strategy. Firstly, we are again taking a disciplined approach to fully leverage the potential of TELUS' broadband networks. Secondly, we are strengthening our position in the small and medium business market. Thirdly, we are continuing to improve TELUS operational efficiency to more effectively compete in the market and fund future growth. 9

10 Fourthly, we are committed to delivering on our future friendly brand promise to our clients. To help accomplish this priority, we recently moved to integrate our consumer and business organisations into one unit called TELUS Customer Solutions. Under the leadership of Joe Natale, this integration will enable us to improve customer service, share best practices and achieve efficiencies in our go-to-market activities. Finally, we are embedding the philosophy of Our Business, Our Customers, Our Team, and My Responsibility. Importantly, I am pleased to share that TELUS and the Telecommunications Workers Union have agreed to commence our upcoming negotiations earlier than planned, beginning in July of this year. There is no question that both of us will have important items to table, and we are encouraged by our strengthened relationship with the TWU. We look forward to respectful and effective negotiations. Importantly, both TELUS and the TWU aspire to conclude negotiations in a reasonable timeframe. This will enable our team members to move forward with clarity in respect of their employment opportunities. These corporate priorities underpin our efforts to achieve our 2010 guidance. Based on our first quarter performance and current outlook, we are reconfirming all of our consolidated and operating targets for Of note to investors, this guidance reflects a greater than 50 per cent increase in free cash flow for 2010, as compared to last year. This is due to $400 million dollars of lower capital expenditures, improved operating efficiency and a strengthening wireless business. Let us move now to shareholder returns. As a result of generating strong cash flow in the last decade, TELUS has accomplished two goals that at many companies are mutually exclusive. We have consistently invested capital prudently in future growth opportunities whilst simultaneously returning significant amounts of cash to shareholders. 10

11 Over the last six years, TELUS has delivered six successive increases in your dividend of 33, 38, 36, 20, 5.6 and 5.3 per cent. Furthermore, from 2004 to 2008, TELUS enhanced shareholder value still further, by repurchasing nearly 60 million shares for some $2.8 billion dollars. Overall, for the six years ending 2010, TELUS will have returned $6.1 billion dollars to shareholders, or more than $18 dollars per share. We are also announcing today a higher dividend payout ratio guideline of 55 to 65 per cent of our sustainable earnings. This announcement signals management and Board confidence in the outlook of the company into 2011 and beyond. It is a payout ratio appropriate to our prospects for earnings and cash flow growth, and moderating capital investments. Importantly, today s dividend increase and elevated payout target, represent tangible evidence of the commitment to continuing TELUS dividend growth model into the future. Your company s new dividend payout guideline is entirely consistent with our track record of balancing the interests of both debt and equity holders. This includes maintaining our strong balance sheet and financial leverage targets. Our decade long track record of successfully striving to honour our long-term financial targets has paid off for TELUS investors. Your company enjoys strong investment grade credit ratings, which have helped ensure that even during the worst of the recession, we had continuous access to the capital markets. Last year was notable in this regard, as TELUS refinanced $1.7 billion dollars of debt. This included refinancing early $1 billion dollars of high interest debt that was to mature in June The fact that we refinanced this debt at just over 5 percent means that we will generate more than $30 million dollars of annual interest savings in the years to come. Let me conclude and draw inference from what our strategic investment, operational performance and financial guidelines mean for investors. I am personally convinced that, based on our long-term investments and the strength of our team, TELUS has the opportunity to deliver excellent financial performance in the coming years. I am confident that over the next three years, your company has the potential to generate double digit 11

12 annualised growth in earnings per share, and even greater free cash flow growth, excluding any one time items such as spectrum purchases. Achieving this opportunity should serve investors well and support our dividend growth model. I would like to thank our shareholders, debt holders, customers, team members, retirees and our communities for their generous support. I will now turn the meeting back to Brian. Thanks Brian. TELUS' proven national strategy, with a focus on the growth tenets of data and wireless, continues to position your company favourably. We are embracing our opportunities for the long-term benefit of our customers, our investors, our team and our communities. I would now like to hand over to Brian to conclude the meeting. 12

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