1. investor conference call
Q TELUS
investor conference call
Robert McFarlane
EVP & Chief Financial Officer
Joe Natale
EVP & Chief Commercial Officer
May 5, 2010

2. TELUS forward looking statements
Today's presentation and 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 predictions 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 2010 guidance), qualifications and risk factors referred to in the Management’s discussion and analysis in the 2009 annual report and in the 2010 first quarter report. 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.

3. agenda Wireless and wireline segment review3
Wireless and wireline segment review
Consolidated financial review
Updates
Operating efficiency program
Cash and accounting for taxes
Dividend policy and payout
IFRS
Question and answers

4. Q1 2010 wireless financial results
($M)
Q1-09
Q1-10
change
Revenue (external)
1,130
1,177
4.2%
Operational expenses
647
685
5.9%
Restructuring costs 2 -
EBITDA
488
497
1.8%
EBITDA margins
(total revenue)
42.9%
42.0%
(0.9) pts
Capex
196 59
(70)%
EBITDA less capex
292
438
50%      
Wireless cash flow up significantly on back of lower capex and EBITDA increase

5. subscriber results Total net adds Postpaid net adds Wireless
subscribers
1.2M
65K
prepaid
19%
51K
48K
44K
postpaid
81%
5.4M
Q1-09
Q1-10
Q1-09
Q1-10
6.6 million total
High quality postpaid net adds increased 48% y/y and represented >100% of net adds

6. smartphone mix
Smartphone subscribers represent 22% of postpaid base compared to 15% a year ago
One third of all smartphone loading new to TELUS
iPhone and Blackberries dominate retention loading
26% of iPhone subscribers new to TELUS
Smartphone subscriber base increased 64% y/y

7. blended ARPU breakdown
Data
Voice
% of ARPU
$58.39
$55.80
11.26
19%
13.14
24%
47.13
81%
42.66
76%
Q1-09
Q1-10
Q1-09
Q1-10
Strong data growth with improving trend in overall ARPU down 4.4% y/y compared to 7.7% decline in Q4/09

8. data revenue Q1-08 Q1-09 Q1-10 $258M $208M $147M BlackBerry Bold
Data growth of 24% driven by continued smartphone adoption and expected to be enhanced with HSPA

9. marketing and retention
Q1-09
Q1-10
change
Gross adds (000s)
346
356
2.9%
Churn
1.62%
1.55%
(7) pts
COA per gross add
$336
$322
(4.2)%
COA expense
$116M
$114M
(1.7)%
Retention expense
$113M
$123M
8.8%     
Improving trend in wireless operating metrics.
Increased retention spending driven by smartphone adoption

10. Q1 2010 wireline financial results
($M)
Q1-09
Q1-10
Change
Revenue (external)
1,245
1,198
(3.8)%
Operational expenses
834
787
(5.6)%
Restructuring costs 26 4
n.m.
EBITDA
418
443
6.0%
EBITDA margins
(total revenue)
32.7%
35.9%
3.2 pts
Capex
278
252
(9.4)%
EBITDA less capex
140
191
36%      
EBITDA growth of 6% driven by decline in expenses and lower restructuring costs

11. operating expenses     ($M) Q1-09 Q1-10 Change
Salaries, benefits* & employee-related expenses
452
425
(6.0)%
Other operations expenses
382
362
(5.2)%
Operations expenses
834
787
(5.6)%
Restructuring costs 26 4
n.m.
Total operating expenses
860
791
(8.0)%    
* Includes DB pension expenses of $4M and $7M in Q1/09 and Q1/10, respectively
Lower expenses and reduced restructuring costs driving 8% decline in total operating expenses

12. business and residential NALs
NAL losses
Residential* NAL losses
Q1-09
Q1-10
Q1-09
Q1-10
-9K
-8K
-44K
-50K
* Historic NALs restated for prior periods starting in 2007 as a result of a periodic subscriber measurement review and correction.
Stable business NAL losses. Residential NAL decline reflects aggressive price competition from cable-TV competitor

13. Internet subscribers High-speed Internet net additions 14K 3K Q1-09
Lower HSIA also reflects aggressive price competition from cable-TV competitor

14. TELUS TV net additions*
TELUS TV subscribers
TELUS TV net additions*
TELUS TV
subscribers*
199K
29K
98K
20K
Q1-09
Q1-10
Q1-09
Q1-10
* Includes both TELUS IP TV and TELUS Satellite TV subscribers
TV continues to show strong results with 101K net adds in one year and doubling subscriber base

15. Q1 2010 consolidated financial results
($M excl. EPS)
Q1-09
Q1-10
change
Revenue (external)
2,375 -
Operating expenses
1,441
1,429
(0.8)%
Restructuring costs 28 6
n.m.
EBITDA
906
940
3.8%
EPS
1.01
0.84
(17)%
Capex
474
311
(34)%
Free cash flow
125
246
97%     
Growth in earnings and free cash flow resulting from expense control and reduced capital expenditures

16. Pension & Normalized Financing
EPS continuity ($)
1.01
+ 0.02
+ 0.03
0.84
+ 0.05
Tax Adj.
- 0.06
- 0.02
0.83
Excl. Tax
Adj.
0.81
Excl. Tax
Adj.
Q1-09 reported
Restr.
costs
Normalized EBITDA1
Lower
tax rates
Dep & Amort
Pension & Normalized Financing
costs2
Q1-10 reported
1 Normalized EBITDA excludes restructuring and pension costs.
2 Normalized financing costs excludes interest income for Q1/09.
EPS excluding income-tax related adjustments up 2.5%

17. breakdown of full time equivalent employees
YE 2009
Q1-10
Change
Domestic - telecom
25,750
25,150
(600)
Domestic - Black’s
850
700
(150)
International
8,700
8,250
(450)
Total
35,300
34,100
(1,200)
International and Black’s FTE decline largely represents Q4 and Q1 seasonality
Significant domestic FTE reduction primarily reflects 2009 restructuring initiatives as well as seasonal reduction

18. consolidated operating expenses breakdown
($M)
Q1-09
Q1-10
change
Salaries, benefits* & employee-related expenses
591
570
(3.6)%
Other operating expenses
850
859
1.1%
Total operational expenses
1,441
1,429
(0.8)%   
* Includes DB pension expenses of $4M and $7M in Q1/09 and Q1/10, respectively
Consolidated employee-related expenses down 3.6%

19. cash and accounting for taxes
Cash taxes
Cash income tax payments of $251M paid in Q1-10
Consists of final 2009 tax payments and commencement of 2010 instalments
Q1/10 expected to be peak quarter*
2010 expected to be peak year*
Accounting tax
Effective tax rate of 27% due to revaluations of future income tax liabilities and reassessments of prior years tax issues
* See forward looking statement caution
2010E net cash tax payment guideline unchanged at
approx. $385 million to $425 million

20. strong balance sheet and credit policies
Net debt to EBITDA within long-term policy target range of 1.5 to 2.0x
Continued strong investment grade credit ratings BBB+/A-
Reduced future interest expenses by refinancing $1.7 billion in debt at lower rates of ~5% in 2009
$2.1 billion in debt and foreign exchange hedges (effective interest rate of 8.6%) to be refinanced in 2010/2011
Effective January 2010, dividend reinvestment plan participants receive TELUS non-voting shares issued from treasury at a 3% discount
Long-standing commitment to balancing interests of debt and equity holders

21. dividend policy and payout
Based on management confidence in mid-term outlook:
Dividend payout guideline revised upward to % of prospective sustainable earnings (from %)
Quarterly dividend increased 5.3% to $0.50 per share for July 2, 2010 (from $0.475 cents)
TELUS is committed to sustainable dividend growth model

22. cash flow outlook Dividend is supported by outlook for sustainable FCF
Capex intensity moderating
June 2011 notes are refinanced at lower rates (albeit with one-time redemption cost)
Cash taxes expected to decrease from peak year levels
Restructuring expenses decrease
J-curve dilution (e.g. smartphones, large non-ILEC contract implementations) expected to moderate in 2011
Possible spectrum auctions in 2011/2012
New dividend payout ratio consistent with maintaining strong balance sheet and debt policies

23. 2010 annual guidance* 2010 ($B, excl. EPS) guidance $9.8 to $10.1
Revenue
$9.8 to $10.1
EBITDA
$3.5 to $3.7
EPS
$2.90 to $3.30
Capex
Approx $1.7
* See forward looking statement caution
2010 consolidated and segmented guidance confirmed

24. IFRS changeover update
Beginning Q1/10, TELUS began preparing Canadian GAAP to IFRS for internal use
Starting January 1, 2011 TELUS will prepare and report interim and annual 2011 financial statements
The company has completed its initial identification, evaluation and selection of accounting policies necessary to change over to IFRS
Fulsome changeover plans and status in section 8.2 in MD&A

25. Q1/10 summary Positive trends for wireless and wireline results
ARPU decline trend improving
Strong postpaid subscriber growth
Improved cost structure helping EBITDA expansion
TELUS TV subscriber growth remains strong
Free cash flow growth of 97%
Dividend policy and payout increased
2010 guidance confirmed
Investments made in wireless and wireline broadband positioning TELUS well for future growth

27. appendix – free cash flow
2009 Q1
2010 Q1
C$ millions
EBITDA
906
940
Capex
(474)
(311)
Net Employee Defined Benefit Plans Expense (Recovery) 4 7
Employer Contributions to Employee Defined Benefit Plans
(53)
(45)
Interest expense paid (includes income tax interest income)
(49)
(36)
Cash Income Taxes and Other
(214)
(251)
Non-cash portion of share-based compensation 13 8
Restructuring payments (net of expense)
(1)
(49)
Donations and securitization fees included in other expense
(3)
(10)
Free Cash Flow (before share-based compensation payment)
129
253
Share Based Compensation Paid
(4)
(7)
Free Cash Flow (per current public guidance methodology)
125
246
Issuance of non-voting shares* 21
Dividends
(151)
(151)
Proceeds from sale of property and other assets (Acquisitions) - 3
Working Capital and Other 12
(42)
Funds Available for debt redemption
(14) 77
A/R Securitization -
(100)
Net Issuance (Repayment) of debt 75 28
Increase (Decrease) in cash 61 5
* Non-voting share issuance from treasury for shareholders in the DRIP

28. appendix – definitions
EBITDA: earnings, after restructuring and workforce reduction costs, before interest, taxes, depreciation and amortization
Capital intensity: capital expenditures divided by total revenue
Cash flow: EBITDA less capex
Free cash flow: EBITDA, adding Restructuring and workforce reduction costs, net employee defined benefit plans expense, cash interest received and excess of share compensation expense over share compensation payments, subtracting cash interest paid, cash taxes, capital expenditures, cash restructuring payments, employer contributions to employee defined benefit plans, and cash related to Other expenses such as charitable donations and securitization fees
Cost of retention (COR): total costs to retain existing subscribers, often presented as a percentage of network revenue
TELUS definitions for non-GAAP measures