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February 12, 2010

Q4 2009 TELUS investor conference call. Darren Entwistle President & CEO Robert McFarlane EVP & Chief Financial Officer. February 12, 2010. TELUS forward looking statements.

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February 12, 2010

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  1. Q4 2009 TELUS investor conference call Darren Entwistle President & CEO Robert McFarlane EVP & Chief Financial Officer February 12, 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 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 targets), qualifications and risk factors (including those associated with the deployment and operation of the new national high-speed packet access network and associated introduction of new products, services and systems) referred to in the Management’s discussion and analysis in the 2008 annual report, and in the 2009 quarterly reports. 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 review • Consolidated financial review • Updates • New TELUS TV developments • Broadband build update • Defined benefit pension assumptions update • 2009 summary • Questions and answers • Appendix 3

  4. Wireless segment – Q4 2009 financial results      As expected EBITDA impacted by higher retention costs to support smartphone adoption 4

  5. Wireless subscriber results Wireless subscribers1 Total net additions Postpaid 1.2M Prepaid 19% 148K 122K 81% 119K 109K 5.3M Q4-08 Q4-09 6.5 million total 1 Opening balances for postpaid and total wireless subscribers for Q4-09 were reduced by 11K to reflect prior period reporting adjustments. High quality postpaid net adds reflected 89% of subscriber mix compared to 80% a year ago 5

  6. Smartphone mix • Smartphone subscribers represent 20% of postpaid base compared to 13% a year ago • Post HSPA network & device launch on November 5: • More than 40% of gross postpaid loading came from smartphones • More than 100% increase in retention subscriber upgrades to smartphones Smartphone subscriber base increased 61% and expected to be a positive factor for future ARPU 6

  7. Wireless ARPU Data % of ARPU Voice $62.16 $57.38 18% 11.17 12.60 22% 82% 50.99 78% 44.78 Q4-08 Q4-09 Q4-08 Q4-09 ARPU lower due to continued voice erosion partially offset by data growth 7

  8. Wireless data revenue $243M $203M $131M BlackBerry Bold Q4-08 Q4-09 Q4-07 Data growth of 20% driven by continued smartphone adoption and to be enhanced with HSPA smartphones 8

  9. Wireless marketing and retention      Note: Measurement of costs of acquisition and retention refined in 2009. Prior year comparisons restated. Increased investments in retention focused on continued smartphone adoption 9

  10. Wireline segment – Q4 2009 financial results      1 Excluding defined benefit pension expenses from both periods, operating expenses down 3.2% EBITDA impacted by higher restructuring and pension costs 10

  11. Wireline segment – EBITDA normalized   Significant restructuring investment impacted Q4 profitability but expected to lower 2010 cost structure 11

  12. Internet subscribers High-speed Internet net additions Internet subscribers 87K 19K 11K 1.1M High-speed 93% 1.2 million total Q4-08 Q4-09 HSIA net adds lower YoY 12

  13. TELUS TV subscribers TELUS TV net additions1 TELUS TV subscribers1 170K 33K 78K 15K Q4-08 Q4-09 Q4-08 Q4-09 1 Includes both TELUS IP TV and TELUS Satellite TV subscribers TTV continues to show strong results with net adds up 120% and total subscriber base up 118% 13

  14. Stabilized residential NAL losses TELUS TV & high-speed Internet Residential NAL’s 44K 34K 34K 31K 20K Q4-09 Q4-08 Q1-09 Q2-09 Q3-09 -41K -41K -41K -41K -42K In Q4/09 TELUS TV and Internet loading exceeded residential NAL losses 14

  15. Building the future of TELUS TV 15 • Microsoft Mediaroom launched Feb. 2 across various B.C. and Alberta communities • PVR Anywhere – record and watch on any connected TV • Multiple TV’s in a home with multiple HD streams • Superior picture quality • Enhanced channel guide with picture in picture display • Instantaneous channel changing • Faster Internet speeds Introducing innovative new features that differentiates against cable-TV 15

  16. Broadband build update 16 • Expanded FTTN coverage to > 75% of households in top 48 communities in Western Canada at YE 2009 • Greater Vancouver coverage increased to >70% in Q4 • Expect coverage of up to 90% of households in top 48 communities in Western Canada by YE 2010 • Cost effective upgrade to VDSL2 technology underway • Provides data download speeds of up to 30 Mbps • Enables expanded IPTV coverage and features • Continuing FTTH to new developments and FTTB to MDU’s Continued ramp-up in broadband coverage 16

  17. Consolidated – Q4 2009 financial results       Consolidated results in-line with most recent guidance 17

  18. Consolidated – EBITDA normalized   Normalized EBITDA impacted by lower legacy voice revenues and increased wireless retention costs 18

  19. Investing in operational efficiency Total restructuring costs ($M) 190 75 59 20 2007 2010E* 2008 2009 Increased restructuring costs reflect an accelerated emphasis on operational efficiency initiatives 19 * See forward looking statement caution

  20. Breakdown of full time equivalent employees     1 Total (domestic) excludes 850 FTE’s from the Black’s Photography acquisition. Improving overall efficiency and cost competitiveness 20

  21. Quarterly domestic FTE reductions 2,150 Approx.1,000 700 550 500 400 2010E* Q3-09 Q4-09 2009 Q2-09 Q1-09 2,150 domestic FTE reduction in 2009 Targeting approx. 1,000 reduction in 2010 21 * See forward looking statement caution

  22. Wireline segment – annual operating expenses     Employee-related expenses down 8% 22 * Excluding defined benefit pension plans

  23. EPS continuity ($) 0.90 Tax Adj. 0.80 Excl. Tax Adj. 0.49 (0.22) 0.25 Tax Adj. (0.18) (0.09) (0.06) 0.24 Excl. Tax Adj. (0.01) Q4/08 reported 2009 debt redemption Normalized EBITDA1 Dep & Amort. and other Q4/09 reported Restr. costs Pension costs 1 Normalized EBITDA excludes restructuring and pension costs. Per guidance, EPS impacted by debt redemption, restructuring and pension costs 23

  24. TELUS refinancing update • In December, successfully issued $1B senior unsecured notes • 5.05% 10 year notes, maturing December 2019 • Proceeds used to fund partial redemption of notes due in June 2011 • Redeemed US$577M (Cdn$607M) of 8% US$1.925B notes • Paid $315M to terminate associated cross-currency interest rate swaps • As expected, recorded pre-tax charge of $99M for early partial redemption and associated swaps • After-tax impact of $69M or 22 cents per share Completed successful $1B debt issue in December 24

  25. Defined Benefit pension assumptions update 99% fully funded 25 * See forward looking statement caution

  26. Summary • Invested strategically in 2009 for enhanced competitiveness and future growth • Launched 3G+ wireless network • Expanded wireline broadband reach • Improved organizational cost efficiency through accelerating OEP initiatives to address J-curve dilution and recessionary impacts • Benefits from strategic investments in 2010* • Leverage 3G+ wireless network to accelerate data and roaming growth • Leverage enhanced broadband network and Mediaroom for TV growth • Lower cost structure with estimated EBITDA savings of $135M • Targeting $400M reduction in capital spending • Estimating 50%+ growth in free cash flow due to decrease in capex, despite peak year of cash taxes Expect significant FCF growth in 2010 26 * See forward looking statement caution

  27. Questions? investor relations 1-800-667-4871 telus.com ir@telus.com

  28. Appendix • Free cash flow – Q4 and 2010E • 2010 targets • 2010 corporate priorities • Definitions

  29. Appendix – Q4 free cash flow C$ millions 2008 Q4 2009 Q4 937 789 EBITDA (631) (514) Capex (27) 8 Net Employee Defined Benefit Plans Expense (Recovery) (26) (45) Employer Contributions to Employee Defined Benefit Plans (296) (192) Interest expense paid (includes income tax interest income)* (2) 4 Cash Income Taxes and Other 14 7 Non-cash portion of share-based compensation 30 51 Restructuring payments (net of expense) (7) (8) Donations and securitization fees included in other expense 95 (3) Free Cash Flow (before share-based compensation payment) (32) (34) Share Based Compensation Paid (35) 61 Free Cash Flow (per current public guidance methodology) - (6) Purchase of shares for cancellation (NCIB) (151) (144) Dividends 46 (7) Working Capital and Other (96) (140) Funds Available for debt redemption 50 100 A/R Securitization 14 47 Net Issuance (Repayment) of debt (32) 7 Increase (Decrease) in cash * Includes debt redemption charge of $99 million. Excluding the impact FCF would increase 4.9% to $64 million.

  30. Appendix – 2010E free cash flow 2010E* 2009 ($M) EBITDA $3,491 $3,500 to 3,700 (2,103) ~(1,700) Capex (513) Net Cash Interest ~(450) (266) (385) to (425) Net cash tax payment 51 ~(80) Other1: 660 865 to 1,065 Free Cash Flow Cash pension contribution (in excess of expense) (160) ~(115) Free Cash Flow (incl. cash pension contribution) 500 750 to 950 1 Includes restructuring expense (net of cash payments), share based compensation (net of cash payments) and cash payments related to charitable donations and securitization fees * See forward looking statement caution / Provided December 15, 2009 30

  31. Appendix - 2010 targets* 1 EPS change excludes 55 cents of positive income-tax related adjustments and 22 cents for a loss on early partial redemption of long-term debt in 2009. * See forward looking statement caution / Provided December 15, 2009 31

  32. Appendix - 2010 TELUS corporate priorities • Capitalize on the full potential of TELUS’ leading wireless and wireline broadband networks • Enhance TELUS’ position in the Small and Medium Business (SMB) market • Deliver on our future friendly brand promise to clients • Continue to improve TELUS’ operational efficiency to effectively compete in the market and fund future growth • Invigorate TELUS Team engagement and continue to drive the philosophy of “Our Customers, Our Business, Our Team, My Responsibility Opportunity to build value from strategic investments made in 2009 32

  33. Appendix – definitions • 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, 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

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