Robert McFarlane EVP & Chief Financial Officer September 16, 2004 2004 Telecom & Cable Debt...

Robert McFarlaneEVP & Chief Financial Officer

September 16, 2004

2004 Telecom & Cable Debt Conference

2

This presentation and answers to questions contain forward-looking statements about expected future events and financial and operating results that are subject to risks and uncertainties. TELUS’ actual results, performance, or achievement could differ materially from those expressed or implied by such statements. For additional information on potential risk factors including those associated with the potential completion of the Microcell bid, see TELUS’ Annual Information Form, the Offers to Purchase and Circular, and other filings with securities commissions in Canada and the United States.

TELUS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

All dollars in C$ unless otherwise specified.

forward-looking statement

3

Executing national growth strategy focused on data, IP & wireless from position of financial strength

2nd largest Canadian telco

2004E1: Revenues $7.45 to 7.55B

EBITDA2 $2.975 to 3.075B

FCF $1.15 to 1.25B

Enterprise value: $16.5B ($7.2B debt - book value)

Listings: TSX: T, T.A; NYSE: TU

Operating segments: wireline: TELUS Communicationswireless: TELUS Mobility

1 Updated guidance on August 6, 2004 2 Earnings before interest, taxes, depreciation & amortization, after restructuring and workforce reduction costs.

about TELUS

4

ILEC: full service in W. Canada and E. Quebec non-ILEC: data & IP for businesses in Central Canada

Revenue (2004E)1 $4.7 to 4.8B

EBITDA (2004E)1 $1.925 to 1.975B

Network Access Lines 4.8M

Total Internet Subscribers 925K (624K high-speed)

Fibre IP backbone national

1 Updated guidance on August 6, 2004

TELUS Communications segment

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31.8M: Cdn. PopulationLicensed POPs

29.7M (93% of POPs)Network coverage

best in CanadaSpectrum position

only one in Canada (Nextel in US)iDEN Mike network

coast to coast 1X (CDMA)National footprint

$1.05 to 1.1BEBITDA (2004E)1

$2.675 to 2.725BRevenue (2004E)1

3.6MSubscribers

leading Canadian national wireless provider


TELUS Mobility segment

6

65%

$340M

68%$274M$163MNet Income

$0.76$0.46EPS2

4.4%$3.67B$3.51BRevenue

9.1%$1.51B$1.38BEBITDA1

YTD Q2-04 change YTD Q2-03

1 After restructuring & workforce reduction costs of $17M & $ 10M for YTD Q2-04 & YTD Q2-03, respectively.2 Incl. impacts of tax settlements & related interest of $0.17 & $0.15 in YTD Q2-04 & YTD Q2-03, respectively

significant earnings & free cash flow generation

$673M$333MFree Cash Flow3

3 Defined as 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.

2004 YTD review - consolidated

7 Voice focused balanced growth

$5.7B

43%

18%

10%

6%Other

12ME Q2-04

$7.3B

Local Voice

Wireless

Data29%

36%

19%

4%Other

LD

Wireless

12ME Q2-00

Local Voice

23%

Data

13%

LD

TELUSCommunications

TELUSCommunications

TELUSMobility

TELUSMobility

Consolidated revenue profile evolution

8 33% of TELUS EBITDA now coming from Mobility

$2.2B

83%

17%

12ME Q2-04

$2.9B

12ME Q2-00

TELUSCommunications

TELUSCommunications

TELUSMobility

TELUSMobility

Consolidated EBITDA profile evolution

67%

33%

9 significant cash flow generation from Mobility

$1.3B

82%

18%

12ME Q2-04

$1.5B

12ME Q2-00

TELUSCommunications

TELUSCommunications

TELUSMobility

TELUSMobility

Consolidated cash flow1 profile evolution

60%

40%

EBITDA less Capex

1 EBITDA less Capex

10

2004 guidance implies significant improvement in profitability, cash flow & leverage

approx. 1.3B$1.25BCapex

$1.15B to 1.25B

$1.30 to 1.50

$2.975 to 3.075B

$7.45 to 7.55B

current 2004 guidance1

$845M

$0.92

$2.82B

$7.15B

2003 actuals

EPS

Free Cash Flow

EBITDA

Revenue

< 2.3x2.6xNet Debt : EBITDA

change

0.3x

4%

36 to 48%

41 to 63%

6 to 9%

4 to 6%

1 Updated guidance provided on August 6, 2004

2004 financial outlook - consolidated

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strategic imperatives 2000-2004

Provide integrated solutions

Partner, acquire & divest as necessary

Invest in internal capabilities

Build national capabilities

Focus on growth markets

Going to market as one team

consistent strategy

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2004 corporate priorities

Reaching a collective agreement

Growing brand value through superior customer service

Revitalizing wireline growth

Driving towards leadership in high-speed Internet

Enhancing our leadership position in wireless

Embracing continual cost efficiency

Status

ongoing

ongoing

ongoing

ongoing

13

labour relations update

Feb/04 - arbitration reconsideration application to CIRB remains outstanding

May/04 - CIRB TELE-MOBILE decision (common employer, automatic inclusion of TM East employees ) appeal to Federal Court scheduled early October

Labour relations developments within telecom sector reflect industry realities

on-going process - awaiting CIRB reconsideration ruling

reaching a collective agreement

14

customer service update

Wireline:

Service levels substantially improved since Q3-03 challenges

Meeting or exceeding standards for up to 10 consecutive months on key CRTC service indicators

Area of continued focus

Wireless:

Best-in-class service levels as evidenced by low churn

growing brand value through superior customer service

Wireline operating at superior levels of customer service

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Digital home continuing high-speed Internet growth

home networking

new applications (e.g. home security, IPTV, etc.)

Bundling & price increases bundling strategy protects legacy revenues

LD system access fee increased

Geographic expansion high quality, recurring, IP-based revenues in non-ILEC

leverage technological leadership and service differentiation that TELUS Next Generation Network (NGN) provides

revitalizing wireline growth

consumer & business initiatives

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high speed Internet subscriber growth

Total Internet subscribers

67%

High Speed

33%Dial-up

925K

continued market share growth

Driving towards leadership in high-speed Internet

35%

30%

39%

TELUS high-speed market share1

Q2-03Q2-02 Q2-04

1 In ILEC operating areas

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Canadian wireless penetration growth prospects

4 million or more net adds expected over next 3 yrs

enhancing our leadership position in wireless

Source: Industry analysts

2003

42%

2007E

55-59%

2004

~46%

13.4Msubs

18-19Msubs

~15Msubs

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TELUS Mobility ranked #1 operator in North America

#1. TELUS Mobility

2. Verizon Wireless

3. Nextel

4. Alltel

5. Bell Mobility

6. Alamosa PCS

7. Nextel Partners

8. AirGate PCS

9. Sprint PCS

10. T-Mobile (USA)

11. Rogers Wireless

12. Western Wireless

13. US Cellular

14. Cingular

15. US Unwired

16. Ubiquitel

17. MetroPCS

18. AT&T Wireless

19. Leap Wireless

20. Dobson

21. Triton PCS

22. Microcell

Source: N. Moore Capital, Value Metric Rankings, Q2-04


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TELUS Mobility BCE WirelessRogers Wireless

$55

$46$45

Source: Company reports

$58

$48$49

Microcell

$38 $39

continued leadership in ARPU

YTD Q2-03

YTD Q2-04

significant premium with positive industry-wide trend


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leading performance in churn

BCE T-Mobile

2.7%

2.3%

1.4%

1.8%1.6%

1.3% 1.3%

TELUSNextelSprint PCS

Rogers Verizon

3.5%

CingularMicrocell

3.4%2.8%

AT&T

TELUS’ Q2 churn rate is best-in-class


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Profitable subscriber growth strategy

TELUS achieving profitable subscriber growth


$737M1.5M

12ME Q2-04 EBITDA growth

12ME Q2-04subscriber growth

Source: Company reports. Sum of reported net adds & wireless EBITDA for BCE, Rogers Wireless, Microcell, TELUS Mobility

TELUSMobility

40%31%

TELUSMobility

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status of Microcell bid $1.1B offer to purchase all outstanding publicly traded securities of Microcell May 17,

2004

Entered confidentiality agreement & commenced diligence in June

Microcell released poor Q2 results with negative value implications

Industry Canada lifted wireless spectrum cap

Offers extended three times – latest to expire Sept 20

Competition Bureau review of TELUS offer in advanced stages

TELUS offers outstanding for 4 months, yet still no competing offer

TELUS bid fair & reasonable


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Achieved $50M in incremental annual OEP savings YTD 2004

Cumulative annual savings of $504M to June 30, 2004

On track for cumulative annual savings of ~$550M in 2004 & onward

Combining Business & Client Solutions into one business unit to improve efficiency & effectiveness under leadership of Joe Natale

View successful 2001-2004 OEP as platform for

further necessary improvements

operational efficiency program (OEP)

delivering operational efficiency

strengthening financial position credit profile

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Average term to maturity ~5.7 years1

No long-term debt maturities until June, 2006

Consolidated fixed to floating ratio a conservative 93%

Foreign currency debt is fully hedged

TCI A/R securitization program at minimum $150M level

Continued simplification of debt structure

TELUS Communications (Quebec) Inc. amalgamated into TELUS Communications Inc effective July, 2004

85% of total debt at TELUS Corp.

1 As at June 30, 2004

credit profile

debt overview

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1 364-Day (extendible) with a one-year term out. At June 30, 2004, no borrowings exist under the Bank credit facilities. TCI may also borrow on the bank credit facility. Does not include additional $500M Backstop facility available until the earlier of 364 days after closing of Microcell transaction or October 31, 2005.

2 $70M of MTN’s and $30M of mortgage bonds are former TELUS Communications (Quebec) Inc. notes that were transferred to TELUS Communications Inc. in July, 2004.

credit profile

current debt structure

TELUS Corporation

MaturityBank1 - 364 Day $0.8B revolver May 2005 - 4 Year $0.8B revolver May 2008C$ 7.5% Notes $1.6B June 2006US$ 7.5% Notes C$1.8B June 2007US$ 8.0% Notes C$3.0B June 2011

TELUS Communications Inc.

•Mortgage Bonds2 $0.030B•MTN’s2 $0.070B•Debentures $0.799B•Net Sr. Notes to TC $2.3B

100%

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Debt Maturity Schedule

0

1000

2000

3000

4000

H2-04 2005 2006 2007 2008 2009 2010 2011 2012+

C$ millions

Strong free cash flow generation means limited refinancing required in 2006/2007

debt structure - maturities

credit profile

1 TELUS Communications Inc. repaid $210M of maturing debt in August, 2004.

1

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bank credit facility (1 of 2)

Early 2004, TELUS approached banks to renew maturing facilities

Received commitments well in excess of $1.6B of facilities accepted

$800M 364-day facility (extendible) with a one-year term out

$800M 4-year facility

Superior pricing, more flexible reporting & other covenants relative to previous facilities

improved credit facility terms & lengthened maturity

credit profile

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bank credit facility (2 of 2)

No drawn amounts under either facility, at June 30, 2004

4-year facility expires in May 2008, one year after the 2007 US Notes

Additional underwritten commitment for $500M unsecured credit facility for Microcell bid

Available until the earlier of Oct 31, 2005 or 364 days after the offer to purchase Microcell is completed

TELUS’ liquidity position expected to remain strong

credit profile

30

credit rating update – changes in 2004

March 2, 2004 – Moody’s upgrade to Baa3 from Ba1

May 14, 2004 – Following TELUS’ bid for Microcell:

Moody’s – reaffirmed ratings, stable outlook

Fitch – reaffirmed ratings, stable outlook

DBRS – under review, developing

S&P – creditwatch, negative (due to transaction uncertainty)

bid for Microcell not expected to have long-term ratings impact

credit profile

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current credit ratings

TELUS Corporation (TC) DBRS BBB Under Review (Developing) S&P BBB CreditWatch (Negative) Fitch BBB Stable Outlook Moody’s Baa3 Stable Outlook

TELUS Communications Inc. (TCI) DBRS BBB(high) Under Review (Developing) S&P BBB CreditWatch (Negative) Fitch BBB Stable Outlook

100%

credit profile

DBRS rates TCI one notch better than TC

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1,185 379(692)FCF1 ($M)

85%86%85%Parent debt : Total Debt2

2.4x 3.0x3.6xNet Debt : EBITDA

51.9%55.7%59.6%Net Debt : Capital

BBB/Ba1

9,120

June 2003 Actual

BBB/Baa3BBB/Ba1Credit Rating

7,2239,241Net Debt ($M)

June 2004 Actual

June 2002 Actual

demonstrated credit improvement

1 12-month trailing Free Cash Flow2 Percentage of total debt at TELUS Corp. (Parent level) - inclusive of bank facility & hedge liability

significantly enhanced credit metrics

credit profile

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long-term financial policy targets

Deleveraging well ahead of plan

45 to 50% (long term)

51.9%55.7%Net Debt : Capital

Q2-04

Current Guidance2

Q2-03

<2.3X (end of 2004)

<2.2X (long-term)

2.4X3.0XNet Debt : EBITDA

Former Guidance1

50% (long term)

<2.5X (end of 2004)

<2.2X (long-term)

1 As provided on December 18, 20032 As provided on August 6, 2004

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strong free cash flow generation

credit profile

2004E1($M)

$900 to 1,000Cash available for net debt & A/R Sec. reduction

$1,150 to 1,250

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~(70)Working capital/other

Free Cash Flow

155Net cash tax recovery

~(615)Net cash interest

~(1,300)Capex

$2,975 to 3,075EBITDA (incl. rest. & workforce reduction costs)

Stock compensation (non-cash portion)

~(95)Cash restructuring pmts (in excess of 2004 expense)

Cash dividends ~(180)


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improving free cash flow

$1.1B Microcell acquisition funding approximates only one year of consolidated TELUS free cash flow

2001 2002

2003

$(1.14)B

$(140)M

$1.15B to 1.25B

2004E

$845M

credit profile

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impact of Microcell acquisition

credit profile

<2.6x <2.3xNet Debt : EBITDA

$3.075 to 3.185B$2.975 to 3.075BEBITDA2

YE 2004E YE 2004E pro forma1

1 Based on current public Microcell guidance, assuming Microcell acquisition completed at current offer price2 Before restructuring & workforce reduction costs.

TELUS long-term financial policy targets still achievable by YE 2005 even with prospective Microcell acquisition

37

10 year comparable new issue spreads

credit profile

January 3, 2004 - September 7, 2004

50

70

90

110

130

150

170

03-J

an-0

4

22-J

an-0

4

10-F

eb-0

4

29-F

eb-0

4

19-M

ar-0

4

07-A

pr-0

4

26-A

pr-0

4

15-M

ay-0

4

03-J

un-04

22-J

un-04

11-J

ul-04

30-J

ul-04

18-A

ug-0

4

06-S

ep-0

4

Sp

read

s (b

ps)

BCE Inc. Telus Corporation Manitoba Telecom Services Inc.TELUS spreads have narrowed but remain much higher versus Cdn peers

Q4 Earnings Release – strong wireless results (-15 to 20 bps)

MTS announcement of Allstream bid (+30 bps)

TELUS 130bps

BCE 85bps

MTS 109bps

Q2 Results

Receive investment grade rating by Moody’s (Baa3) (-15 bps)

Bid for Microcell (+20 bps)

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As at August 4, 2004

Notes: TELUS data based on 2003 results & mid-point of 2004 guidance Other estimates provided by Bloomberg, company and analyst reports

2004E global telecom performance

projected EBITDA % growth rates

75 4 4

2 2

(4)(6) (7)

(30)

0.10.51

5

(0.2)(2) (2)

TELUS FT DT BCE Sprint Telstra BT VZ Aliant KPN

Nippon PCCW SBC Telia MTS BLS AT&T

39

As at August 4, 2004

Notes: TELUS data based on 2003 results & mid-point of 2004 guidance Other estimates provided by Bloomberg, company and analyst reports

2004E global telecom performance

10 10

65

4

1

(4) (5) (5)

(9)

(17)

(25)

(0.6)(2)

(1)(0.5)

9

TELUS Sprint Aliant BCE VZ FT Telstra

SBC Nippon DT Telia PCCW BT BLS KPN MTS AT&T

projected Cash Flow (EBITDA - Capex) % growth rates

40

TELUS Mobility high proportion of consolidated revenue and cash flow executing materially ahead of plan

TELUS Communications good results relative to peers revenue composite de-emphasizes LD

Strong 2004 cash flow & earnings outlook

Generating significant cash flow of >$1B

Continued material debt & leverage reduction

TELUS demonstrating ability to meet or exceed all leverage targets

strong investment-grade credit profile

why invest in TELUS?

questions?

investor relations

1-800-667-4871telus.com [email protected]

http://www.telus.com/

appendix

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TELUSCorporation

TELUS Communications Inc.

Senior Notes: $3.1B

Subordinated Equity Settled Note: $3.6B

intercompany financing1 (as at June 30, 2004)

Senior Note: $0.8B

Subordinate Note: $3.2B

1 Excludes net advances owed from TC to TCI of $1.6B at June 30, 2004.

TELUS Corporation has a net $2.3B senior claim at TCI thereby mitigating structural subordination concerns

appendix

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TELUS Communications Inc. key metrics

June 30/03 June 30/04(12 months ended)

Net Debt : Total Capitalization 31.6% 30.3%

Net Debt : EBITDA1 2.2x 1.5x

Net Debt ($M) 4,128 4,139

1 after restructuring & workforce reduction costs

appendix

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Comparative credit ratios

appendix

1 Defined as EBITDA less capex, cash taxes, and interest for trailing 12 months.2 As per TDNewcrest analyst estimates (August 2004).3 As per TELUS public guidance mid-points.

BCE Bell Canada MTS TELUS3

($M) Q2-04 Q2-04 Q2-04 Q2-04

Net Debt : Capital 44.0% 48.0% 26.6% 51.9%

Net Debt : EBITDA 1.8x 1.5x 1.2x 2.4x

Free Cash Flow 1,952 2,368 248 1,185

Free Cash Flow Yield1 10.2% 14.1% 12.1% 16.2%

2004E Free Cash Flow Yield2 11.3% 15.5% 14.6% 16.0%

Credit rating A/Baa1 A/A3 BBB+ BBB/Baa3

Robert McFarlane EVP & Chief Financial Officer September 16, 2004 2004 Telecom & Cable Debt...

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