TELUS Reports Third Quarter 2010 Results

Positive trends continue with strong wireless results, record TV additions

and cash flow growth

Five percent quarterly dividend increase to 52.5 cents per share

VANCOUVER, Nov. 5 /PRNewswire-FirstCall/ – TELUS Corporation reported third quarter 2010
revenue of $2.46 billion, an increase of two per cent, as continued
growth in wireless revenues and wireline data revenues more than offset
declines in traditional voice services. Consolidated earnings before
interest, taxes, depreciation and amortization (EBITDA) increased by
1.5 per cent due to revenue growth, lower restructuring costs and
ongoing benefits from efficiency initiatives.

Over the last 12 months, total customer connections increased by 347,000
generated by a 6.8 per cent increase in wireless subscribers and 94 per
cent growth in TELUS TV customers, partially offset by continued
declines in landline connections. 

Reported net income and earnings per share (EPS) for the second quarter
were $247 million and 77 cents, representing year-over-year decreases
of 12 and 13 per cent, respectively. The declines were due to an
after-tax impact of approximately $37 million or 12 cents per share
from the costs of the early partial redemption of 2011 Notes financed
with the proceeds of the successful $1 billion Note issue in July 2010.
This redemption will result in future interest cost savings.

Third quarter net income and EPS also included an after tax regulatory
financing charge of approximately $11 million or three cents per share
and favourable income tax-related adjustments of approximately $9
million or three cents per share (compared to $14 million or four cents
in the same period a year ago). Excluding these three items, normalized
net income and EPS this quarter were $286 million and 89 cents, up 7.5
per cent and 6 per cent, respectively.

Free cash flow of $339 million this quarter increased by 27 per cent
from a year ago as capital expenditures were $109 million lower, which
partially offset by higher interest costs that primarily arose from the
early partial redemption of the 2011 Notes.

FINANCIAL HIGHLIGHTS

“These results once again demonstrate the foresight and effectiveness of
TELUS’ significant investment over recent years in advanced broadband
infrastructure, both wired and wireless,” said Darren Entwistle, TELUS
President and CEO. “The consistent pursuit of our strategy is resulting
in increasing growth in wireless and wireline data revenues, while
capital expenditure levels decrease from last year’s peak investment
phase. That has led to a 27 per cent growth in free cash flow this
quarter.”

Mr. Entwistle noted, “TELUS added 22 per cent more wireless customers
this quarter compared to a year ago and added 53,000 TV and High-speed
Internet subscribers, which was driven by the successful launch of the
Optik TV brand in June.”

“Reflecting our positive financial outlook and aligned with our dividend
growth model, we are pleased to announce a second five per cent
increase this year in the TELUS quarterly dividend,” said Mr.
Entwistle. “This reflects our confidence in the prospect for continued
earnings growth and strong cash flow in 2011 and beyond.”

Robert McFarlane, TELUS Executive Vice-President and CFO, said “during
the quarter we again demonstrated our ability to efficiently access
capital markets by successfully raising $1 billion of 10 year debt with
a 5.05 per cent coupon used to early redeem June 2011 notes with an 8.5
per cent effective cost. This will generate interest expense savings
positively impacting future earnings and cash flow, while extending our
debt maturity profile.”

Mr. McFarlane added, “Reflecting strong wireless profitability growth
despite the dilutive short term effects of strong subscriber loading,
TELUS is updating its 2010 annual guidance to reflect an increase of
the wireless EBITDA range, which positively impacts consolidated EBITDA
and EPS ranges. Reported EPS guidance is now $3.10 to $3.30, compared
to $2.90 to $3.30 previously.”

See section 9 in MD&A for updated details on guidance, status and
assumptions.

OPERATING HIGHLIGHTS 

TELUS wireless

• External wireless revenues increased by $76 million or 6.3% to $1.28
  billion in the third quarter of 2010, compared to the same period a
  year ago, driven by a 5.4% increase in network revenue, as well as a
  19% increase in equipment and other revenue, which included revenue
  from Black’s Photo acquired in September 2009.
• Data revenue increased by $65 million or 29% to $291 million due to
  increased adoption of smartphones and related data plans and
  applications, increased sales of mobile Internet keys, and higher
  in-bound volumes of data roaming, partly offset by lower roaming rates.
• Blended ARPU (average revenue per subscriber unit) per month declined by
  1.2% to $58.75 from the same quarter a year ago reflecting a sequential
  improvement from the 1.9% decline in the second quarter of 2010 and
  from the 4.4% decline experienced in the first quarter of 2010. The
  improving trend is due to a lower rate of decline in voice ARPU and a
  higher rate of increase in data ARPU, which increased by 21% to $14.53.
• Total net subscriber additions of 153,000, including 132,000 postpaid,
  increased by 22% over the same period a year ago. Smartphones
  represented 38% of postpaid gross additions in the third quarter of
  2010, as compared to 22% in same period last year. Higher valued
  smartphone subscribers represent 28% of total postpaid subscribers
  compared to 18% a year ago.
• Cost of acquisition per gross addition increased by 6% year-over-year to
  $339, reflecting a higher per-unit subsidy caused by a higher
  smartphone mix, partly offset by a favourable U.S. dollar exchange rate
  and reduced advertising and promotion expenses per gross addition.
• Cost of retention of $127 million increased by $11 million, reflecting
  higher retention volumes and equipment subsidy costs from increased
  migrations to higher cost smartphones, partly offset by a reduction in
  spend per retained subscriber from commission efficiencies and a
  favourable U.S. dollar exchange rate.
• Blended monthly subscriber churn was stable at 1.54%, reflecting
  improved economic conditions, availability of new HSPA handsets
  including the iPhone, and successful retention efforts despite
  increased competition.
• Wireless EBITDA of $535 million increased by 3.5% despite strong
  subscriber loading and related increase in cost of acquisition and
  retention expenses. This was achieved due to improved data revenue
  growth, lower voice ARPU erosion and lower bad debt expense.
• Simple cash flow (EBITDA less capital expenditures) increased by $98
  million or 30% to $422 million in the quarter due to higher EBITDA and
  a $80 million reduction in capital spending due to the November 2009
  substantial completion of the national HSPA+ wireless network.

TELUS wireline

• External wireline revenues decreased by $32 million or 2.7% to $1.17
  billion in the third quarter of 2010, when compared with the same
  period in 2009, primarily due to continued declines in traditional
  local and long-distance revenues.
• Data revenues increased by $38 million or 7.3%, reflecting strong TELUS
  TV subscriber growth, higher managed workplace revenues and increased
  Internet, enhanced data and hosting services.
• TELUS high-speed Internet net additions of 15,000 increased by 67% from
  a year ago due to the launch of Optik TV and Optik high-speed Internet
  service in June 2010, as well as the continued broadband footprint
  expansion and speed enhancement.
• TELUS TV net additions were a record 38,000, an increase of 73% over the
  same period last year, due to the launch of the Optik TV brand in June,
  as well as improved installation capabilities, enhanced service
  including PVR Anywhere and expanded broadband coverage. The record
  TELUS TV net additions were accomplished despite installation resources
  being used to migrate existing subscribers on legacy TV platforms to
  the new Microsoft Mediaroom platform. The TELUS TV subscriber base
  totals 266,000, up 94% over last year.
• Total network access lines (NALs) declined by 51,000 to 3.79 million,
  down 5.6% from a year ago. Residential NAL losses of 39,000 were 4,000
  less compared to the same period last year and 12,000 less than the
  previous quarter, but continue to be affected by cable-TV competition
  and wireless substitution. Business NALs declined by 12,000 primarily
  from competitive factors and slower growth in data lines from the
  completion of certain large enterprise deals.
• Wireline EBITDA of $402 million decreased by $4 million or 1.0% due to
  continued declines in traditional local and long-distance revenues, and
  start-up costs associated with growth services such as Optik TV and
  large enterprise contracts, partly offset by data revenue growth, lower
  restructuring costs and operational savings from efficiency
  initiatives.
• Simple cash flow (EBITDA less capital expenditures) increased by $25
  million to $66 million largely due to the $29 million reduction in capital spending.

CORPORATE AND BUSINESS DEVELOPMENTS

TELUS expands networks and its Optik TV footprint

TELUS continued to expand its wired and wireless networks to bring new
services to even more Canadians. During the quarter, TELUS added
broadband infrastructure required to introduce its Internet-based Optik
TV and faster Internet service to additional neighborhoods in dozens of
communities across British Columbia and Alberta. In Victoria, B.C., the
infrastructure rollout reached the critical mass required to start
significant mass market advertising and sales.

On the wireless front, TELUS continued to install new cell sites to
bring wireless service to additional rural communities and highway
corridors, while adding the capacity required to meet growing demand
for wireless data services in urban centres. By the end of this year,
TELUS anticipates offering wireless service to 99 per cent of B.C. and
Alberta’s population.

Also in the quarter, the CRTC granted TELUS deregulation of traditional
residential phone services in 60 communities across B.C. and Alberta.
The deregulation allows TELUS to better compete for customers’ business
by offering them compelling bundles of residential services equal or
similar to those available in urban communities deregulated since the
CRTC began loosening regulatory rules in 2007.

TELUS fires up consumers with new BlackBerry Torch

In September, TELUS launched the BlackBerry Torch 9800 smartphone,
designed especially for socially-connected consumers and packed with
the tools to support business consumers. The BlackBerry Torch is the
first device with BlackBerry 6.0, RIM’s newest operating system and the
world’s first smartphone to combine a BlackBerry keyboard with a full
touchscreen experience. Elegantly styled, the BlackBerry Torch offers
top-of-the-line features such as GPS location-based applications,
geo-tagging and a 5 megapixel camera.

TELUS to offer Windows Phone 7 devices

TELUS has announced it will offer two devices operating on the new
Windows Phone 7 platform in November, the HTC Surround 7 and the LG
Optimus 7. Windows Phone 7 offers an operating platform for
increasingly sophisticated and demanding consumers, making every-day
tasks faster by doing more in fewer steps and providing timely
information in an easy to read format. With Windows Phone 7, things
that matter most to people like games, music & video, photos and office
productivity are organized through integrated experiences known as
Windows Phone Hubs.

Go Pink until end of the year

TELUS announced its “Go Pink” campaign in support of breast cancer is
being extended to the end of 2010. Since May, TELUS has donated $25
from the sale of its latest exclusive pink BlackBerry devices to go to
local breast cancer organizations across the country in order to raise
funds to bring leading breast cancer detection equipment to communities
across Canada. TELUS also launched a campaign on Facebook, where fans
were asked to turn their profiles pink in support of the cause. With
over 700,000 fans making the switch, an additional $200,000 was donated
to the campaign. 

Funds will be directed to support organizations including; BC Women’s
Hospital & Health Centre Foundation, Alberta Cancer Foundation,
Saskatchewan Cancer Agency, CancerCare Manitoba, Princess Margaret Hospital Foundation in Toronto, The Ottawa Hospital Foundation, Segal
Cancer Center at the Montreal Jewish General Hospital, Quebec City’s
CHUQ and QEII Health Sciences Centre in Halifax.

TELUS ranked among Canada’s Top 100 Employers

In October, the Globe and Mail ranked TELUS among Canada’s Top 100
Employers. The 11th annual list was compiled by the editors of
Mediacorp Canada Inc., who reviewed more than 2,750 employers and
analyzed each applicant’s operations and Human Resource practices.
There were eight key areas of focus: physical workplace; work
atmosphere and social events; health, financial and family benefits;
vacation and time off; employee communications focused on how employers
capture feedback from their employees; performance management; training
and skills development; and community involvement.

Annual Report on Annual Reports global ranking honours TELUS

TELUS has again received international recognition for its financial
reporting. In the prestigious global Annual Report on Annual Reports,
produced by e.com, TELUS’ 2009 annual report was ranked the sixth best
in the world and given an “A” rating. Since 2004, TELUS has placed in
the top 10 every year. This year, TELUS received the top rating for
financial review and analysis; the information provided on goals,
targets and outlook; and risks and risk management. In developing the
ranking, an independent panel evaluates 500 annual reports shortlisted
from an even wider selection of publicly listed corporations. The
comprehensive survey looks at 10 key evaluation criteria: packaging,
highlights, strategy, business, financials, investors, governance,
accounting, responsibility and communication.

Darren Entwistle named Canadian Business Leader of the Year by University of Alberta

In October, the University of Alberta’s Alberta School of Business
selected TELUS President and CEO Darren Entwistle as its 30th Canadian
Business Leader Award recipient. Recipients are selected by the
school’s international Business Advisory Council. In announcing Mr.
Entwistle as its 2011 honoree, the council highlighted that the TELUS
team has delivered the highest total shareholder returns amongst
incumbent telecom companies globally since 2000 while also contributing
significantly to Canadian communities, culminating in TELUS being
recognized as the most outstanding philanthropic corporation in the
world for 2010 by the U.S.-based Association of Fundraising
Professionals.

Darren Entwistle honoured with fellowship of The Royal Conservatory

In October, TELUS President and CEO Darren Entwistle was named an
Honorary Fellow of The Royal Conservatory. Dr. Peter Simon, President
of The Royal Conservatory, said of Mr. Entwistle: “Darren strongly
believes in the transformative power of the arts. As a respected
business leader, he also understands the long-term economic benefits of
the arts and their critical role in fostering creativity and
encouraging innovation.” TELUS has partnered with the Royal
Conservatory since 2004, helping children to connect with the arts in
new and innovative ways through supporting the Building National Dreams
Campaign, creation of the TELUS Centre for Performance and Learning,
and creation of the TELUS Virtual Learning Centre, the Virtual Music
program, and Learning Through the Arts programs.

TELUS partners with University of Winnipeg

In October, TELUS and the University of Winnipeg announced a new
partnership to help the university take advantage of new communications
technology and support military families. TELUS announced the creation
of a $150,000 TELUS Technology Fund allowing UWinnipeg to invest in
leading technology to support the University’s operation. The fund will
significantly enhance UWinnipeg’s Information and Communications
Technologies (ICT) infrastructure. TELUS also launched the TELUS
Military Families Scholarship Fund to support military members and
their families with a $15,000 donation. Scholarships will be awarded
each May to assist sons and daughters of Canadian Forces personnel to
attend the University of Winnipeg. Canadians can contribute to the fund
by donating at www.uwinnipegfoundation.ca/choose.

TELUS named a Carbon Disclosure Leader in Canada

In October, the Conference Board of Canada and the Carbon Disclosure
Project (CDP) named TELUS a 2010 Carbon Disclosure Leader for
excellence in climate change reporting. TELUS is the only Canadian
telecommunications company to receive the honour and one of only 15
Canadian companies recognized.

TELUS buildings awarded LEED certification

In September, TELUS House Ottawa was awarded the LEED Gold certification
for new construction, while TELUS House in Quebec City was awarded LEED
Silver certification for existing construction. Both honours were
granted by the Canadian Green Building Council.

Adopting the LEED rating system for new and existing buildings is part
of TELUS’ commitment to reducing environmental impact across its
operations.

Gold certification of the Ottawa building that houses over 500 TELUS
team members is a significant upgrade from the silver rating that was
targeted by TELUS when the project began five years ago. The building
is the largest in Ottawa to receive LEED certification to date. To
reach this rating, TELUS reduced energy consumption by 40 per cent from
the national energy code level, reduced water usage by 40 per cent, and
placed the building directly on a public transportation route so that
80 per cent of its occupants come to work by transit, on foot or by
bicycle. The structure makes maximum use of natural lighting, collects
rainwater and during construction more than 75 per cent of debris was
recycled.

TELUS House Quebec recently underwent extensive renovations and is now
home to 300 TELUS team members in the city. To achieve the silver
rating, TELUS House in Quebec City was rebuilt from an existing
building, with 15 per cent of the existing materials being re-used and
more than 40 per cent of its construction materials coming from local
suppliers. Energy and water consumption were reduced by 30 per cent
using cutting-edge technology and practices.

TELUS to change dividend reinvestment program to open market purchases
at full price

Commencing March 1, 2011, TELUS will change its current practice of
issuing shares from treasury at a three per cent discount for
reinvested dividends under the dividend reinvestment and share purchase
program (DRISP) and switch to purchasing shares from the open market
with no discount. Non-voting shares acquired with optional cash
payments at 100 per cent of the average price under the DRISP program
will also change from treasury issuance to market purchase and will
come into effect on March 1, 2011. Shares from the reinvestment of
dividends payable on January 4, 2011 will continue to be issued from
treasury at a three per cent discount from the average market price.
Full details of the plan are available at telus.com/drisp.

Dividend Declaration – 5 per cent increase

The Board of Directors has declared a quarterly dividend of fifty-two
and a half cents ($0.525) Canadian per share on the issued and
outstanding Common shares and fifty-two and a half cents ($0. 525)
Canadian per share on the issued and outstanding Non-Voting shares of
the Company payable on January 4, 2011 to holders of record at the
close of business on December 10, 2010.

This new quarterly dividend represents a two and one half cent or five
per cent increase from the fifty cents paid on July 2 and October 1,
2010, and a 5 cent or 10.5 per cent increase from the forty seven and a
half cents paid on January 4 and April 1, 2010. This is the seventh
increase in the TELUS dividend over the last six years.

Access to Quarterly results information

Interested investors, the media and others may review this quarterly
earnings release, management’s discussion and analysis, quarterly
results slides, supplementary financial information and our full 2009
annual report on our website at telus.com/investors.

Full quarterly earnings release available at: http://www.newswire.ca/en/releases/archive/November2010/05/c8153.html

Quarterly conference call and webcast presentation

TELUS quarterly conference call is scheduled for November 5, 2010 at
11:00 am ET and will feature a presentation about our third quarter
results. It will be followed by a question and answer period with
analysts. Interested parties can access the webcast at: telus.com/investors. A transcript will be posted on the website within several business
days. Also, a recording will be available on November 5 until November
15, 2010 at: telus.com/investors or by telephone (1-403-669-1055 or 1-877-353-9587, reservation no.
388962#).

About TELUS

TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications
company in Canada, with $9.7 billion of annual revenue and 12.1 million
customer connections including 6.9 million wireless subscribers, 3.8
million wireline network access lines and 1.2 million Internet
subscribers and 266,000 TELUS TV customers. Led since 2000 by President
and CEO, Darren Entwistle, TELUS provides a wide range of
communications products and services including data, Internet protocol
(IP), voice, entertainment and video.

In support of our philosophy to give where we live, TELUS, our team
members and retirees have contributed $185 million to charitable and
not-for-profit organizations and volunteered 3.5 million hours of
service to local communities since 2000. Nine TELUS Community Boards
across Canada lead TELUS’ local philanthropic initiatives. TELUS was
honoured to be named the most outstanding philanthropic corporation
globally for 2010 by the Association of Fundraising Professionals,
becoming the first Canadian company to receive this prestigious
international recognition.

For more information about TELUS, please visit telus.com.

SOURCE TELUS Corporation