TELUS Reports Results for First Quarter 2014

TELUS Reports Results for First Quarter 2014 
Strong revenue and earnings growth driven by strength in both
wireless and wireline 
Continued healthy growth in postpaid wireless, TV and Internet
subscribers  
Industry-leading monthly postpaid wireless churn below one per cent  
Returned $648 million to shareholders through April 
Quarterly dividend increased 11.8 percent to 38 cents per share 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/08/14 --   For the
first quarter of 2014, TELUS Corporation (TSX: T)(NYSE: TU) reported
consolidated operating revenue growth of 5.0 per cent from a year
earlier to $2.9 billion, while earnings before interest, taxes,
depreciation and amortization (EBITDA) increased by 4.2 per cent to
$1.08 billion. Basic earnings per share (EPS) rose by 8.9 per cent to
$0.61 and when excluding the dilutive impact from Public Mobile, EPS
increased by 10.7 per cent to $0.62.  
Consolidated revenue growth was generated by 5.6 per cent growth in
wireless revenue and 4.4 per cent growth in wireline revenue. In
wireless, revenue was primarily driven by subscriber growth and
increased data usage from continued smartphone adoption. Wireline
revenue was primarily driven by data revenue growth of 10 per cent,
generated by ongoing robust TELUS TV and high-speed Internet
subscriber growth, and increasing revenue per customer.  
In the first quarter, TELUS attracted 48,000 net new wireless
postpaid customers, 27,000 TV subscribers and 21,000 high-speed
Internet customers. The total TELUS TV subscriber base is up 18 per
cent from a year ago to 842,000, while high-speed Internet
connections are up 5.5 per cent to 1.4 million. 
TELUS' ongoing focus on delivering outstanding customer service
supported a 12 basis point improvement in monthly postpaid wireless
subscriber churn from the same period last year to 0.99 per cent -
the third consecutive quarter this key metric was below one per cent. 
Free cash flow of $291 million was down $67 million, largely
reflecting higher cash income taxes, as well as increased capital
expenditures due to the Company's continued focus on investments in
advanced broadband network technologies and investments to support
our ongoing customers first initiatives. Free cash flow before cash
income taxes of $515 million was $9 million higher year-over-year,
driven primarily by EBITDA growth, partially offset by higher capital
expenditures. 
In the first quarter of 2014, TELUS returned $381 million to
shareholders including $222 million in dividends paid and $159
million in share purchases under its 2014 normal course issuer bid
(NCIB) program. Through the end of April, TELUS has returned $648
million to shareholders including $446 million in dividends and the
purchase of 5.4 million shares for $202 million under its 2014 NCIB
program. 
FINANCIAL HIGHLIGHTS  


 
 
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C$ and in millions, except per share       Three months ended               
 amounts                                        March 31           Per cent 
(unaudited)                                     2014        2013     change 
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Operating revenues                             2,895       2,756        5.0 
Operating expenses before depreciation         1,818       1,722        5.6 
 and amortization                                                           
EBITDA(1)(2)                                   1,077       1,034        4.2 
EBITDA excluding Public Mobile                 1,087       1,034        5.1 
Net income                                       377         362        4.1 
Basic earnings per share (EPS)                  0.61        0.56        8.9 
Capital expenditures                             496         467        6.2 
Free cash flow(3)                                291         358      (18.7)
Total customer connections(4)                  13.33       13.15        1.4 
(1) EBITDA does not have any standardized meaning prescribed by IFRS-IASB.  
    We have issued guidance on and report EBITDA because it is a key measure
    used to evaluate performance at a consolidated level and the            
    contribution of our two segments. For definition and explanation, see   
    Section 11.1 in the accompanying 2014 first quarter Management's        
    discussion and analysis.                                                
(2) EBITDA for the first quarter of 2014 was negatively impacted for the    
    inclusion of Public Mobile by $10 million.                              
(3) Free cash flow does not have any standardized meaning prescribed by     
    IFRS-IASB. For definition and explanation, see Section 11.1 in the      
    accompanying 2014 first quarter Management's discussion and analysis.   
(4) Sum of active wireless subscribers (excluding Public Mobile             
    subscribers), network access lines, total Internet subscribers and TELUS
    TV subscribers (Optik TV(TM) subscribers and TELUS Satellite TV(R)      
    subscribers). Effective with the second quarter of 2013 and on a        
    prospective basis, wireless machine-to-machine (M2M) subscriptions have 
    been excluded from all subscriber-based measures. Cumulative subscribers
    include an April 1, 2013 opening balance adjustment to remove           
    approximately 76,000 M2M subscriptions. Effective with the fourth       
    quarter of 2013, and on a prospective basis, we have adjusted postpaid  
    wireless subscribers to remove Mike(R) subscriptions, as we have ceased 
    marketing the Mike product and started to turn down the iDEN network.   
    Cumulative subscriber connections include an October 1, 2013 adjustment 
    to remove from the postpaid wireless subscriber base approximately      
    94,000 Mike subscribers representing those who, in our judgment, are    
    unlikely to migrate to our new services.                                

Darren Entwistle, TELUS President and CEO said "TELUS delivered strong
revenue and profitable growth in the first quarter driven once again
by strong results from both our wireless and wireline operations.
This positive start to the year reflects our longstanding strategic
focus on investing in advanced broadband technologies and services,
and our commitment to delivering exceptional customer experiences.
During the quarter, TELUS gained 96,000 new wireless postpaid, TV and
high-speed Internet net additions, while delivering an
industry-leading postpaid wireless churn rate of 0.99 per cent and
the best access line retention results we have experienced in the
past seven years. Importantly, this represents our third consecutive
quarter delivering a postpaid churn rate below one per cent and the
fourteenth sequential quarter of improving ARPU, further exemplifying
the success of our differentiated customers first culture coupled
with attractive new products and services."  
Mr. Entwistle added, "Our strong profitable growth, robust free cash
flow generation and solid balance sheet are enabling TELUS to make
prudent capital investments to sustain our future growth, while
simultaneously returning significant amounts of cash to our
shareholders through our multi-year share purchase and dividend
growth programs. Indeed, in the first four months of 2014 TELUS has
returned $648 million to shareholders, building on the more than
$1.85 billion returned in 2013. Moreover, with our July 2 dividend
payment, we will surpass $10 billion in total cash returned to our
shareholders since 2004. Today, I am pleased to announce that we are
raising our quarterly dividend to 38 cents per share, an 11.8 per
cent increase year-over-year. This is our seventh dividend increase
since announcing our multi-year dividend growth program in May 2011." 
John Gossling, TELUS Executive Vice-President and CFO said, "In the
first quarter, we continued our consistent, value-creating approach
of driving strong financial returns while investing in the future
with capital investments in broadband networks and 700 MHz spectrum.
Capital markets continue to embrace our strategy with the successful
completion of our $1.0 billion debt financing at attractive interest
rates. As a result of this successful financing, TELUS' average cost
of long-term debt has decreased to 4.89 per cent compared to 5.44 per
cent at the end of 2012, and the average term to maturity of TELUS'
long-term debt increased to 10.3 years, compared to 5.5 years at the
end of 2012." 
This news release contains statements about financial and operating
performance of TELUS (the Company) and future events, including with
respect to future dividend increases and normal course issuer bids
through 2016 and the 2014 annual targets 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 performance and events to differ
materially from those expressed in the forward-looking statements.
Accordingly, this news release is subject to the disclaimer and
qualified by the assumptions (including assumptions for 2014 annual
guidance, semi-annual dividend increases through 2016, ability to
sustain and complete our multi-year share purchase programs through
2016), qualifications and risk factors referred to in the attached
first quarter Management's discussion and analysis, in the 2013
annual report, and in other TELUS public disclosure documents and
filings with securities commissions in Canada (on SEDAR at sedar.com)
and in the United States (on EDGAR at sec.gov). 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.  
Operating Highlights  
TELUS wireless 


 
 
--  Wireless network revenues increased by $72 million or 5.3 per cent to
    $1.44 billion in the first quarter of 2014, compared to the same period
    a year ago. This growth was driven by continued subscriber growth and
    higher blended ARPU as a result of a continued increase in smartphone
    adoption and data usage. 
--  Blended ARPU (excluding Public Mobile) increased by 2.0 per cent to
    $61.24, reflecting TELUS' fourteenth consecutive quarter of year-over-
    year growth in blended ARPU. 
--  Monthly postpaid subscriber churn declined 12 basis points to 0.99 per
    cent - the lowest first quarter postpaid churn result in seven years.
    Blended monthly churn (excluding Public Mobile) was down 9 basis points
    to 1.39 per cent. TELUS' industry-low churn reflects the Company's
    successful customers first service approach, investments in customer
    retention and a higher portion of smartphones in the subscriber base,
    which are lower churn in nature. 
--  Postpaid net additions of 48,000 were partially offset by a loss of
    36,000 lower-ARPU prepaid subscribers (excluding Public Mobile) for
    total net additions of 12,000, compared to 33,000 a year ago. The total
    wireless subscriber base (excluding Public Mobile) was up 1.5 per cent
    from a year ago to 7.8 million, while the proportion of high-value
    postpaid subscribers represents 87 per cent of the base. 
--  Smartphone subscribers now represent 78 per cent of TELUS' postpaid
    base, up from 68 per cent a year ago. 
--  Wireless EBITDA increased by $24 million or 3.6 per cent to $690 million
    over last year due to network revenue growth and lower acquisition
    spending. EBITDA excluding the negative $10 million impact from Public
    Mobile was $700 million, an increase of 5.1%, reflecting a margin of
    45.3 per cent, up 40 basis points year-over-year. 
--  Wireless simple cash flow (EBITDA less capital expenditures) decreased
    by $7 million to $525 million in the quarter due to increased broadband
    network investments and a negative EBITDA impact from Public Mobile.

TELUS wireline  


 
 
--  External wireline revenues increased by $56 million or 4.4 per cent to
    $1.34 billion in the first quarter of 2014, when compared with the same
    period a year ago. This growth was generated by increased data revenue,
    partially offset by declines in legacy voice revenues. 
--  Data service and equipment revenues increased by $78 million or 10 per
    cent, due primarily to strong growth in TELUS TV and high-speed Internet
    subscribers, combined with TV and high-speed Internet ARPU growth and
    revenue increases from enhanced data services, and TELUS Health
    services. 
--  Total TV net additions of 27,000 were lower by 7,000 from the same
    quarter last year. The total TV subscriber base of 842,000 increased by
    130,000 or 18 per cent from a year ago. 
--  High-speed Internet net additions of 21,000 increased by 5,000 over the
    same quarter a year ago. The high-speed subscriber base of 1.4 million
    is up 74,000 or 5.5 per cent from a year ago. 
--  Total network access lines (NALs) declined by 24,000 in the quarter
    compared to 43,000 in the same period a year ago. Total NALs of 3.23
    million were lower by 133,000 year-over-year, reflecting an improvement
    of 40,000 compared to the same period a year ago. This improvement
    reflects the success of our customers first initiatives and bundling
    strategy offset by ongoing wireless and Internet substitution and
    competition. 
--  Wireline EBITDA of $387 million increased by $19 million or 5.0 per cent
    year over year, reflecting improving Optik TV and high-speed Internet
    margins helped by subscriber and ARPU growth, as well as ongoing
    operating efficiency initiatives. 
--  Wireline simple cash flow (EBITDA less capital expenditures) increased
    year-over-year by $21 million to $56 million due primarily to higher
    EBITDA. Capital expenditures declined modestly over the same period last
    year due to the completion of Internet Data Centres in 2013 and lower
    capital expenditures on implemented large customer contracts, partially
    offset by increased broadband expenditures.

Mary Jo Haddad and Joe Natale to join TELUS Board of Directors  
TELUS is pleased to announce Mary Jo Haddad and Joe Natale as new
nominees to our Board of Directors, and to be elected at the TELUS
Annual General Meeting held on May 8.  
Mary Jo recently retired as President and CEO of The Hospital for
Sick Children (SickKids) in Toronto, a position she had held since
2004. Recognized for her innovative leadership and commitment to
health through a distinguished career in healthcare in Canada and the
U.S., Mary Jo previously held several leadership positions at Sick
Kids including Executive Vice-President and Chief Operating Officer,
and Chief Nurse Executive. She is an Honours graduate of the Faculty
of Nursing at the University of Windsor, holds a Master's Degree in
Health Science from the University of Toronto and an Honorary
Doctorate of Laws Degree from the University of Windsor. Mary Jo will
be drawing upon her extensive expertise and knowledge of the Canadian
healthcare system to help TELUS advance its leadership position in
healthcare information management. 
Joe Natale is TELUS' incoming President and CEO. Most recently, he
served as Executive Vice-President and Chief Commercial Officer of
TELUS, where he led a team of 25,000 team members responsible for our
consumer, business and wholesale markets across wireless, wireline,
entertainment and information technology solutions. He joined TELUS
in 2003 as Executive Vice-President (EVP) and President, Enterprise
Solutions. Subsequently, he was promoted to EVP and President of
Business Solutions and in 2009 to EVP and President of Consumer
Solutions. He will be promoted to President and Chief Executive
Officer following the Annual General Meeting. Prior to joining TELUS,
Joe held successive senior leadership roles within KPMG Consulting,
including Managing Partner for Canada and one of the Global Industry
Leaders. Joe has a Bachelor of Applied Science (Electrical
Engineering) from the University of Waterloo. 
These appointments, when combined with other recent additions to the
TELUS board, reflect TELUS' ongoing commitment to recruit outstanding
directors who bring diverse, world-class experience to the Board. 
Dividend Declaration - increased to 38 cents per quarter, up 11.8
percent from a year ago  
The TELUS Board of Directors has declared a quarterly dividend of 38
cents ($0.38) Canadian per share on the issued and outstanding Common
Shares of the Company payable on July 2, 2014 to holders of record at
the close of business on June 10, 2014.  
This second quarter dividend represents a four cent or 11.8 per cent
increase from the $0.34 quarterly dividend paid on July 2, 2013. 
About TELUS  
TELUS (TSX: T) (NYSE: TU) is Canada's fastest-growing national
telecommunications company, with $11.5 billion of annual revenue and
13.3 million customer connections, including 7.8 million wireless
subscribers, 3.2 million wireline network access lines, 1.4 million
Internet subscribers and 842,000 TELUS TV customers. TELUS provides a
wide range of communications products and services, including
wireless, data, Internet protocol (IP), voice, television,
entertainment and video, and is Canada's largest healthcare IT
provider. 
In support of our philosophy to give where we live, TELUS, our team
members and retirees have contributed more than $350 million to
charitable and not-for-profit organizations and volunteered 5.4
million hours of service to local communities since 2000. 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. 
Access to Quarterly results information  
Interested investors, the media and others may review this quarterly
earnings news release, management's discussion and analysis,
quarterly results slides, audio and transcript of investor webcast
call, supplementary financial information and our full 2013 annual
report at telus.com/investors.  
TELUS' first quarter 2014 conference call is scheduled for May 8,
2014 at 1:00 p.m. PT (4:00 p.m. ET) and will feature a presentation
followed by a question and answer period with investment analysts.
Interested parties can access the webcast at telus.com/investors. A
telephone playback will be available on May 8 until June 15 at
1-855-201-2300. Please use reference number 1154310# and access code
92105#. An archive of the webcast will also be available at
telus.com/investors and a transcript will be posted on the website
within a few business days.  
2014 Annual meeting of shareholders  
TELUS' annual meeting is scheduled for May 8, 2014 at 10:00 a.m. PT
(1:00 p.m. ET) at the Fairmont Pacific Rim located at 1038 Canada
Place, Vancouver, B.C. An Internet webcast, complete with video and
audio, will be available to shareholders around the world. Interested
parties can access the webcast at telus.com/investors. 
TELUS CORPORATION 
Management's discussion and analysis 
2014 Q1 
Caution regarding forward-looking statements 
This document contains forward-looking statements about expected
future events and financial and operating performance of TELUS
Corporation. The terms TELUS, the Company, we, us or our refer to
TELUS Corporation and where the context of the narrative permits or
requires, its subsidiaries. Forward-looking statements include, but
are not limited to, statements relating to annual targets, outlook,
guidance and updates, our multi-year dividend growth program, our
multi-year share purchase programs, and trends. Forward-looking
statements are typically identified by the words assumption, goal,
guidance, objective, outlook, strategy, target and other similar
expressions or future or conditional verbs such as aim, anticipate,
believe, could, expect, intend, may, plan, seek, should, strive and
will. By their nature, forward-looking statements are subject to
inherent risks and uncertainties, and require us to make assumptions.
There is significant risk that assumptions, predictions and other
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 future performance, conditions,
actions or events to differ materially from the stated targets,
expectations, estimates or intentions. Except as required by law, we
disclaim any intention or obligation to update or revise any
forward-looking statements. An update on our general outlook and
assumptions for 2014 is in Section 9.  
Factors that could cause actual performance to differ materially from
the forward-looking statements made herein and in other TELUS filings
include, but are not limited to: 


 
 
--  Competition including: continued intense rivalry across all services
    among established telecommunications companies, advanced wireless
    services (AWS) entrants, the potential entry of foreign-based
    competitors, cable-TV providers, other communications companies and
    emerging over-the-top (OTT) services; active price and brand
    competition; our ability to continue to retain customers through an
    enhanced customer service experience; network access line (NAL) losses;
    subscriber additions and retention volumes and associated costs for
    wireless, TV and high-speed Internet services; pressures on wireless
    average revenue per subscriber unit per month (ARPU) from promotional
    activity from competitors and market conditions, flat-rate pricing
    trends for voice and data, inclusive long distance plans for voice, and
    increasing availability of Wi-Fi networks for data; ability to obtain
    and offer content across multiple devices on wireless and TV platforms
    at a reasonable cost; and competition for wireless spectrum.
 
--  Regulatory approvals and developments including: the federal
    government's stated intention to further increase wireless competition,
    reduce roaming costs on wireless networks in Canada and require further
    unbundling of TV channels; the Competition Bureau's recommendation to
    the Canadian Radio-television and Telecommunications Commission (CRTC)
    that it should implement remedies to provide more favourable roaming
    access terms to entrant service providers; future spectrum auctions
    (including limitations on incumbent wireless providers, advantages
    provided to new and foreign participants and the amount and cost of
    spectrum acquired); restrictions on the purchase, sale and transfer of
    spectrum licences; the outcome of the CRTC review of mandated wholesale
    services, including consideration of mandated competitor access to
    fibre-to-the-premises facilities; vertical integration by competitors
    into broadcast content ownership and timely and effective enforcement of
    regulatory safeguards; ongoing monitoring and compliance with
    restrictions on non-Canadian ownership of TELUS Common Shares;
    interpretation and application of tower sharing and roaming rules; the
    non-harmonization between provincial consumer protection legislation and
    the new CRTC mandatory national Wireless Code (the Code), which came
    into effect on December 2, 2013; uncertainty around the outcome of the
    legal challenge to the retroactivity of the Code to contracts entered
    into between June 2012 and December 2, 2013; and a possible increase in
    or acceleration of costs of wireless customer acquisition and retention
    resulting from maximum two-year contracts required under the Code. 
 
--  Technological substitution including: reduced utilization and increased
    commoditization of traditional wireline voice local and long distance
    services; increasing numbers of households that have only wireless
    and/or Internet-based telephone services; continuation of wireless voice
    ARPU declines such as through substitution to messaging and OTT
    applications, such as Skype; substitution to Wi-Fi services from
    wireless services; and OTT Internet Protocol (IP) services that may
    displace TV and entertainment services. 
 
--  Technology including: subscriber demand for data that challenges
    wireless network and spectrum capacity levels; reliance on systems and
    information technology; technology options, evolution paths and roll-out
    plans for wireline and wireless networks (including broadband
    initiatives, such as fibre to the home, and wireless small cell
    deployment); reliance on wireless network access agreements; choice of
    suppliers and suppliers' ability to maintain and service their product
    lines; wireless handset supplier concentration and market power; the
    performance of long-term evolution (LTE) wireless technology; our
    ability to address our near-term spectrum deficiency in certain
    geographical areas with recently acquired spectrum (including the
    spectrum in the 700 MHz band) and redeployment of existing spectrum
    holdings; our ability to obtain additional spectrum capacity through
    future spectrum auctions and from third parties to address increasing
    demand for data; deployment and operation of new wireless networks and
    success of new products, new services and supporting systems; network
    reliability and change management (including migration risks to new,
    more efficient Internet data centres (IDCs) and realizing the expected
    benefits); timing of decommissioning of certain legacy wireline networks
    and services to reduce operating costs; timing of decommissioning of
    CDMA and iDEN wireless networks to redeploy spectrum and reduce
    operating costs, and the associated subscriber migration and retention
    risks; availability of resources and ability to build out adequate
    broadband capacity; and success of upgrades and evolution of TELUS TV(R)
    technology, which depend on third-party suppliers. 
 
--  Economic growth and fluctuations including: the strength and persistence
    of economic growth in Canada that may be influenced by economic
    developments outside of Canada; future interest rates; inflation,
    pension investment returns, funding and discount rates; and Canada: U.S.
    dollar exchange rates. 
 
--  Capital expenditure levels, including: potential outlays for spectrum
    licences in spectrum auctions or from third parties, due to our wireless
    deployment strategy for LTE and future technologies, wireline broadband
    initiatives, subscriber demand for data, new IDC initiatives, and the
    Industry Canada wireless spectrum auction for the 2,500-2,690 MHz bands
    currently expected in April 2015. 
 
--  Financing and debt requirements including ability to carry out re-
    financing activities. 
 
--  Ability to sustain dividend growth program of circa 10% per annum
    through 2016 and ability to sustain and complete multi-year share
    purchase programs through 2016. These programs may be affected by
    factors such as regulatory and government decisions, competitive
    environment, reasonable economic performance in Canada, our earnings and
    free cash flow, and levels of capital expenditures and spectrum licence
    purchases. Quarterly dividend decisions are subject to our Board of
    Directors' (Board) assessment and determination based on the Company's
    financial situation and outlook. Share purchase programs may be affected
    by the change in our intention to purchase shares, and the assessment
    and determination of our Board from time to time. Consequently, there
    can be no assurance that these programs will be maintained through 2016.
 
--  Human resource matters including: recruitment, retention and appropriate
    training in a highly competitive industry. 
 
--  Ability to successfully implement cost reduction initiatives and realize
    planned savings, net of restructuring and other like costs, without
    losing customer service focus or negatively impacting business
    operations. Initiatives include: our earnings enhancement program to
    drive improvements in earnings before interest, income taxes,
    depreciation and amortization (EBITDA) of $250 million by the end of
    2015; business integrations; business process outsourcing; internal
    offshoring and reorganizations; procurement initiatives; and
    consolidation of real estate. 
 
--  Process risks including: reliance on legacy systems and ability to
    implement and support new products and services and business operations;
    our ability to implement effective change management for system
    replacements and upgrades, process redesigns and business integrations;
    implementation of large enterprise deals that may be adversely impacted
    by available resources and degree of co-operation from other service
    providers; our ability to successfully manage operations in foreign
    jurisdictions; information security breaches, including data loss or
    theft; and real estate joint venture development risks. 
 
--  Tax matters including: tax law that may be subject to differing
    interpretation and the tax authority's interpretation that may be
    different from ours; changes in tax laws including tax rates;
    elimination of income tax deferrals through the use of different tax
    year-ends for operating partnerships and corporate partners; and
    international tax complexity and compliance. 
 
--  Business continuity events including: our ability to maintain customer
    service and operate our networks in the event of human-caused threats
    such as electronic attacks and human errors; equipment failures that
    could cause various degrees of network outages; supply chain
    disruptions; natural disaster threats, epidemics and pandemics; and
    effectiveness of business continuity and disaster recovery plans and
    responses. 
 
--  Litigation and legal matters including: ability to successfully defend
    class actions pending against us. 
 
--  Acquisitions or divestitures including: ability to successfully
    integrate acquisitions or complete divestitures in a timely manner, and
    realizing expected strategic benefits. 
 
--  Health, safety and environmental developments and other risk factors
    discussed herein and listed from time to time in our reports and public
    disclosure documents including our annual report, annual information
    form, and other filings with securities commissions or similar
    regulatory authorities in Canada (on SEDAR at sedar.com) and in our
    filings with the Securities and Exchange Commission (SEC) in the United
    States, including Form 40-F (on EDGAR at sec.gov). Section 10: Risks and
    risk management in this MD&A is incorporated by reference in this
    cautionary statement.
 
Management's discussion and analysis                                        
May 8, 2014                                                                 

Contents 


 
 
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Section                   Description                                       
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1. Introduction           1.1 Preparation of the MD&A                       
                          1.2 The environment in which we operate           
                          1.3 Consolidated highlights                       
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2. Core business and                                                        
strategy                                                                    
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3. Key performance                                                          
drivers                                                                     
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4. Capabilities           4.1 Principal markets addressed and competition   
                          4.2 Operational resources                         
                          4.3 Liquidity and capital resources               
                          4.4 Changes in internal control over financial    
                          reporting                                         
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5. Discussion of          5.1 General                                       
operations                5.2 Summary of consolidated quarterly results and 
                          trends                                            
                          5.3 Consolidated operations                       
                          5.4 Wireless segment                              
                          5.5 Wireline segment                              
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6. Changes in financial                                                     
position                                                                    
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7. Liquidity and capital  7.1 Overview                                      
resources                 7.2 Cash provided by operating activities         
                          7.3 Cash used by investing activities             
                          7.4 Cash used by financing activities             
                          7.5 Liquidity and capital resource measures       
                          7.6 Credit facilities                             
                          7.7 Sale of trade receivables                     
                          7.8 Credit ratings                                
                          7.9 Financial instruments, commitments and        
                          contingent liabilities                            
                          7.10 Outstanding share information                
                          7.11 Transactions between related parties         
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8. Accounting matters     8.1 Critical accounting estimates                 
                          8.2 Accounting policy developments                
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9. General outlook and                                                      
assumptions                                                                 
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10. Risks and risk        10.1 Regulatory matters                           
management                                                                  
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11. Definitions and       11.1 Non-GAAP financial measures                  
reconciliations           11.2 Wireless operating indicators                
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1. Introduction 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of
Management's discussion and analysis (MD&A).  
1.1 Preparation of the MD&A 
The following sections are a discussion of the consolidated financial
position and financial performance of TELUS for the three-month
period ended March 31, 2014, and should be read together with TELUS'
March 31, 2014 condensed interim consolidated financial statements
(subsequently referred to as the interim consolidated financial
statements). The generally accepted accounting principles (GAAP) we
use are the International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB). Our
interim consolidated financial statements comply with IFRS-IASB and
Canadian GAAP and have been prepared in accordance with International
Accounting Standard 34, Interim Financial Reporting. Our use of the
term IFRS in this MD&A is a reference to these standards. In our
discussion, we also use certain non-GAAP financial measures, such as
EBITDA, to evaluate our performance, monitor compliance with debt
covenants and manage our capital structure. These measures are
defined, qualified and reconciled with their nearest GAAP measures in
Section 11.1. All amounts are in Canadian dollars, unless otherwise
specified.  
Our disclosure controls and procedures are designed to provide
reasonable assurance that all relevant information is gathered and
reported to senior management on a timely basis, so that appropriate
decisions can be made regarding public disclosure. The MD&A and the
interim consolidated financial statements were reviewed by TELUS'
Audit Committee and approved by TELUS' Board of Directors for
issuance on May 8, 2014.  
1.2 The environment in which we operate  
Economy  
We estimate that economic growth in Canada will be 2.3% in 2014 and
2.5% in 2015, based on a composite of estimates from Canadian banks
and other sources. The Bank of Canada's April 2014 Monetary Policy
Report estimated economic growth for Canada at 2.5% in both 2014 and
2015. In respect of the national unemployment rate, Statistics
Canada's Labour Force Survey reported a rate of 6.9% for March 2014
(7.2% reported for December and March 2013).  
Regulation  
Upcoming regulatory reviews  
The CRTC has announced its intention to hold public proceedings to
review, among others, wireless and wireline wholesale services,
including the appropriateness of mandating competitor access to
fibre-to-the premises (FTTP) facilities, satellite and other
transport services, enhanced basic services, the subsidy regime, the
national contribution mechanism, wireless wholesale services and
paper bill charges. For additional information, see Section
10.1Regulatory matters.  
1.3 Consolidated highlights  
Leadership progression  
On March 31, 2014, we announced that Brian Canfield will be retiring
as Chair of the Board of Directors of TELUS and will not be standing
for re-election at TELUS' annual general meeting (AGM) on May 8,
2014. Coincident with Mr. Canfield's retirement, Darren Entwistle
will assume the role of Executive Chair and R.H. (Dick) Auchinleck
will assume the role of independent Lead Director. As well, Joe
Natale will be promoted to President and Chief Executive Officer
(CEO) effective May 8, 2014, reporting to the Executive Chair. The
Board has also nominated Mr. Natale for election as director at the
AGM. The Board has developed new position descriptions for the roles
of Executive Chair, Lead Director and President and CEO, as outlined
in TELUS' 2014 Information Circular. As Executive Chair, Mr.
Entwistle will have both Board and executive functions, while the
independent Lead Director, Mr. Auchinleck, will be responsible for
ensuring that the Board functions independently of management, as and
when required.  
700 MHz spectrum auction  
Industry Canada's 700 MHz spectrum auction occurred during the
three-month period ended March 31, 2014, with Industry Canada raising
proceeds of $5.27 billion ($2.63/MHz/POP, where POP refers to person
of population), and surpassing the $4.3 billion ($1.55/MHz/POP)
raised in the 2008 AWS auction. We successfully acquired 30 spectrum
licences across Canada equating to a national average of 16.6 MHz for
approximately $1.14 billion. In accordance with the auction terms,
20% or $229 million of the acquisition cost was remitted to Industry
Canada on March 5, 2014, with the remaining balance of $914 million
paid on April 2, 2014. The amount of $229 million paid in respect of
the 700 MHz spectrum licences has been presented in the condensed
interim consolidated statements of financial position as 700 MHz
spectrum licence deposits as we did not have the right to
commercially use the licences as at March 31, 2014. Subsequent to
March 31, 2014, we will reclassify the 700 MHz spectrum licences to
intangible assets as Industry Canada has determined, on April 2,
2014, that we qualify as a radio communications carrier, that we
comply with Canadian Ownership and Control rules and may thus
commercially use the licences. 
New $1 billion debt offering  
On April 4, 2014, we announced the closing of a debt offering of $1
billion in senior unsecured notes in two series, a $500 million
offering at 3.20% due April 5, 2021, and a $500 million 4.85%
offering due April 5, 2044. The net proceeds were used to repay the
approximately $914 million of indebtedness drawn on April 2, 2014 to
fund the remaining 80% of the purchase price of the 700 MHz spectrum
licences and the remainder will be used for general corporate
purposes. These debt issues increased our average term to maturity of
long-term debt (excluding commercial paper) to approximately 10.3
years, compared to 5.5 years at the end of 2012, and reduced our
weighted average interest rate on long-term debt (excluding
commercial paper) to approximately 4.89%, as compared to 5.44 per
cent at the end of 2012.  
Share purchase programs  
On December 12, 2013, the Toronto Stock Exchange (TSX) approved our
normal course issuer bid (NCIB) to purchase and cancel up to 16
million of our Common Shares for up to $500 million in 2014. Such
purchases may be made through the facilities of the TSX, the New York
Stock Exchange (NYSE) and alternative trading platforms or otherwise
as may be permitted by applicable securities laws and regulations
during the period of January 2, 2014 to December 31, 2014. This
represents approximately 2.6% of outstanding TELUS Common Shares at
the date of the NCIB notice to the TSX, and shares will be purchased
only when and if we consider it advisable. As of April 30, 2014,
pursuant to our 2014 NCIB, we had purchased approximately 5.4 million
Common Shares for cancellation for $202 million, at an average price
of $37.45 per share.  
For additional information on our multi-year share purchase program,
see Section 4.3. Also see Caution regarding forward-looking
statements - Ability to sustain and complete multi-year share
purchase programs through 2016. 


 
 
Consolidated highlights                                                     
----------------------------------------------------------------------------
Three-month periods ended March 31 ($                                       
 millions, unless noted otherwise)              2014     2013   Change      
----------------------------------------------------------------------------
Consolidated statements of income                                           
----------------------------------------------------------------------------
Operating revenues                             2,895    2,756      5.0 %    
Operating income                                 614      583      5.3 %    
Income before income taxes                       512      487      5.1 %    
Net income                                       377      362      4.1 %    
 
Net income per equity share (1)                                             
  Basic (basic EPS) ($)                         0.61     0.56      8.9 %    
  Diluted ($)                                   0.60     0.55      9.1 %    
Dividends declared per equity share (1) ($)     0.36     0.32     12.5 %    
 
Basic weighted-average equity shares                                        
 outstanding (1) (millions)                      622      653     (4.7)%    
----------------------------------------------------------------------------
Consolidated statements of cash flows                                       
----------------------------------------------------------------------------
Cash provided by operating activities            598      729    (18.0)%    
 
Cash used by investing activities               (827)    (536)   (54.3)%    
  Capital expenditures (excluding spectrum                                  
   licences) (2)                                (496)    (467)    (6.2)%    
 
Cash used by financing activities                (55)    (278)    80.2 %    
----------------------------------------------------------------------------
Other highlights                                                            
----------------------------------------------------------------------------
Subscriber connections (3) (thousands)        13,329   13,150      1.4 %    
EBITDA (4)                                     1,077    1,034      4.2 %    
Restructuring and other like costs included                                 
 in EBITDA (4)                                     8
       11    (27.3)%    
EBITDA - excluding restructuring and other                                  
 like costs (4)                                1,085    1,045      3.8 %    
EBITDA - excluding restructuring and other                                  
 like costs margin (5) (%)                      37.5     37.9     (0.4) pts.
Free cash flow (4)                               291      358    (18.7)%    
Net debt to EBITDA - excluding restructuring                                
 and other like costs (4) (times)               1.97     1.67      0.3 pts. 
----------------------------------------------------------------------------
Notations used in MD&A: n/m - Not meaningful; pts. - Percentage points.     
 
(1) Equity shares: Common Shares since February 4, 2013; Common Shares and  
    Non-Voting Shares prior to February 4, 2013.                            
 
(2) Capital expenditures (excluding spectrum licences) include assets       
    purchased, but not yet paid for, and consequently differ from cash      
    payments for capital assets, excluding spectrum licences, on the        
    condensed interim consolidated statements of cash flows.                
 
(3) The sum of active wireless subscribers (excluding Public Mobile         
    subscribers, which are all prepaid), NALs, Internet access subscribers  
    and TELUS TV subscribers (Optik TV(TM) and TELUS Satellite TV(R)        
    subscribers), measured at the end of the respective periods based on    
    information in billing and other systems. Effective with the second     
    quarter of 2013 and on a prospective basis, wireless machine-to-machine 
    (M2M) subscriptions have been excluded from all subscriber-based        
    measures to align with emerging industry practice. Cumulative subscriber
    connections include an April 1, 2013 opening balance adjustment to      
    remove approximately 76,000 M2M subscriptions. Effective with the fourth
    quarter of 2013, and on a prospective basis, we have adjusted postpaid  
    wireless subscribers to remove Mike(R) subscriptions, as we have ceased 
    marketing the Mike product and started to turn down the iDEN network.   
    Cumulative subscriber connections include an October 1, 2013 adjustment 
    to remove from the postpaid wireless subscriber base approximately      
    94,000 Mike subscribers, representing those who, in our judgment, are   
    unlikely to migrate to our new services.                                
 
(4) Non-GAAP financial measures. See Section 11.1.                          
 
(5) EBITDA - excluding restructuring and other like costs, as a percentage  
    of operating revenues.                                                  

Operating highlights 
- Consolidated operating revenues increased year over year by $139
million or 5.0% in the first quarter of 2014. Wireless network
revenue increased by $72 million or 5.3% in the first quarter of
2014, as a result of subscriber additions, growth in data usage,
higher data roaming volumes, as well as revenues from Public Mobile.
Wireline data revenues increased year over year by $78 million or 10%
in the first quarter of 2014 due to revenue growth in Internet and
enhanced data services, TELUS TV services and TELUS Health services.
This increase in wireline data revenue was partly offset by ongoing
declines in legacy wireline voice revenues. Consolidated operating
revenues, excluding Public Mobile, were $2,871 million, or an
increase of 4.2% from the first quarter of 2013.  
Excluding Public Mobile, wireless blended average revenue per
subscriber unit per month (ARPU) was $61.24 in the first quarter of
2014, up $1.20 or 2.0% from the first quarter of 2013, driven by
growth in data usage and roaming, and a higher overall postpaid mix,
partly offset by a decline in voice revenue. Postpaid subscribers
represent 87% of the total subscriber base, at March 31, 2014,
compared to 85.7% in the first quarter of 2013. 
- During the 12-month period ended March 31, 2014, our subscriber
connections increased by 179,000, inclusive of wireless adjustments
made for M2M subscriptions on April 1, 2013 and Mike subscriptions on
October 1, 2013. This growth includes a 1.5% increase in wireless
subscribers (excluding Public Mobile), 18% growth in TELUS TV
subscribers and a 5.5% increase in high-speed Internet subscribers,
partly offset by a 4.0% decline in total NALs.  
Our postpaid wireless subscriber net additions were 48,000 in the
first quarter of 2014, as compared to 59,000 in the first quarter of
2013. The decrease reflected slower industry growth and intense
competitive activity, partly offset by lower churn due to our
customers first initiatives and retention efforts. Our postpaid
subscriber churn rate decreased to 0.99% compared to 1.11% in the
first quarter of 2013.  
- EBITDA increased year over year by $43 million or 4.2% in the first
quarter of 2014. EBITDA excluding restructuring and other like costs
increased year over year by $40 million or 3.8% in the first quarter
of 2014, reflecting growth in wireless network revenue and wireline
data revenue. Consolidated EBITDA, excluding Public Mobile, was
$1,087 million, or an increase of 5.1% from the first quarter of
2013.   
- Operating income increased year over year by $31 million or 5.3% in
the first quarter of 2014 as a result of the increase in EBITDA,
partly offset by an increase in total depreciation and amortization
expenses.   
- Income before income taxes increased year over year by $25 million
or 5.1% in the first quarter of 2014. Higher operating income was
partly offset by an increase in financing costs. The higher financing
costs resulted from an increase in long-term debt outstanding and
lower interest income, partly offset by lower employee defined
benefit plan net interest.   
- Income taxes increased year over year by $10 million or 8.0% in the
first quarter of 2014, primarily reflecting higher pre-tax income and
an increase in the weighted average statutory income tax rate.   
- Net income increased year over year by $15 million or 4.1% in the
first quarter of 2014. Excluding Public Mobile, net income increased
by $24 million or 6.6%.  
- Basic earnings per share (EPS) increased year over year by five
cents or 8.9% in the first quarter of 2014. Excluding Public Mobile,
basic EPS increased by six cents or 10.7%. The reduction in the
number of shares from our NCIB programs contributed approximately
three cents to the year-over-year increase in basic EPS, while the
balance was driven by higher EBITDA.   
- Dividends declared per equity share were 36 cents in the first
quarter of 2014, up 12.5% from the first quarter of 2013. On May 7,
2014, the Board declared a quarterly dividend of 38 cents per share
on the issued and outstanding Common Shares of the Company, payable
on July 2, 2014, to shareholders of record at the close of business
on June 10, 2014. The 38 cents per share dividend declared for the
second quarter of 2014 reflects an increase of four cents or 12% 
from
the second quarter dividend in 2013, consistent with our dividend
growth program described in Section 4.3.   
- Effects of the acquisition of Public Mobile Holdings Inc. 
On November 29, 2013, we acquired 100% of Public Mobile, a Canadian
wireless communications operator focused on the Toronto and Montreal
markets. The investment was made with the objective of growing our
wireless segment operations, including acquiring additional spectrum
licences. The migration of Public Mobile customers to our 4G network
is planned to begin in May and to be completed in August 2014.  
The contribution of Public Mobile to our financial results in the
three-month period ended March 31, 2014 increased wireless revenues
by $24 million, decreased wireless EBITDA by $10 million and reduced
net income by $9 million or approximately one cent per share.  
Liquidity and capital resource highlights 
- Net debt to EBITDA - excluding restructuring and other like costs
was 1.97 times at March 31, 2014, up from 1.84 times at December 31,
2013, as the increase in net debt was only partly offset by growth in
EBITDA excluding restructuring and other like costs. The ratio
remains within our long-term policy guideline of 1.50 to 2.00 times.
At the end of the second quarter of 2014, we anticipate this ratio to
be slightly outside of the long-term policy guideline range due to
the funding of the purchase of the 700 MHz spectrum licences, but we
expect to return to the policy guideline range in the medium term, as
we believe that the policy guideline range is supportive of
maintaining our investment grade credit ratings. While the ratio may
temporarily exceed our long-term policy guideline, we expect to be
well within our revolving credit facility covenants, which include a
requirement that we not permit TELUS' consolidated Leverage Ratio to
exceed 4 to 1.   
- Cash provided by operating activities decreased year over year by
$131 million in the first quarter of 2014. The decrease resulted
mainly from higher income tax payments and working capital changes,
which more than offset growth in EBITDA.   
- Cash used by investing activities increased year over year by $291
million in the first quarter of 2014, mainly due to an increase in
capital expenditures and the deposit for the purchase of the 700 MHz
spectrum licences. Capital expenditures (excluding spectrum licences)
increased year over year by $29 million in the first quarter of 2014,
mainly due to our continued focus on investment in wireline and
wireless broadband infrastructure, network and system resiliency and
reliability to support our ongoing customers first initiatives, and
readying the network and systems for future retirement of legacy
assets. 
- Cash used by financing activities was $55 million in the first
quarter of 2014, reflecting purchases of Common Shares under our 2014
NCIB, dividend payments and a reduction in short-term borrowings,
partly offset by an increase in commercial paper (see Section 7.4).
In comparison, cash used by financing activities in the first quarter
of 2013 was $278 million, composed of dividend payments and a net
reduction in commercial paper.  
During the first quarter of 2014, we returned $381 million to
shareholders, consisting of $222 million in dividends paid and $159
million in share purchases. For additional details on our multi-year
dividend growth program and multi-year share purchase program, see
Section 4.3 and Section 7.4.  
- Free cash flow was $291 million in the first quarter of 2014,
reflecting a year-over-year decrease of $67 million. The decrease
resulted mainly from higher income tax payments and capital
expenditures (excluding spectrum licences), partially offset by
EBITDA growth.  
2. Core business and strategy 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of the
MD&A.  
Our core business was described in our annual 2013 MD&A.  
Strategic imperatives  
Since 2000, we have maintained a consistent strategic intent to
unleash the power of the Internet to deliver the best solutions to
Canadians at home, in the workplace and on the move. Our focus is on
our core telecommunications business in Canada, supported by our
international contact centre and outsourcing capabilities.  
We developed six strategic imperatives in 2000 that remain relevant
for future growth, despite changing regulatory, technological and
competitive environments. These six strategic imperatives continue to
guide our actions and continue to contribute to the achievement of
our financial goals. To advance these long-term strategic initiatives
and address near-term opportunities and challenges, we set new
corporate priorities each year, as further described in Section 3.  
Focusing relentlessly on growth markets of data, IP and wireless  
External wireless revenues and wireline data revenues totalled $2.4
billion in the first quarter of 2014, up by $161 million or 7.2% from
the first quarter of 2013, while wireline voice and other revenues
and other operating income decreased $22 million or 4.2% from the
first quarter of 2013. Wireless revenues and wireline data revenues
combined represented 83% of TELUS' consolidated revenues in the first
quarter of 2014, as compared to 81% in the first quarter of 2013.  
Providing integrated solutions that differentiate TELUS from our
competitors  
In February 2014, we announced the launch of the CIBC Mobile Payment
App for TELUS mobile devices, allowing more Canadians to have access
to mobile payments. This announcement builds on our commitment to put
our customers first by offering a convenient and secure form of
payment using mobile technology.  
Building national capabilities across data, IP, voice and wireless  
In 2014, we plan to continue investing in broadband infrastructure
and 4G LTE expansion and upgrades, as well as in network and systems
resiliency and reliability.  
In January and February 2014, we participated in Industry Canada's
auction of 700 MHz spectrum licences and acquired spectrum licences
equivalent to a national average of 16.6 MHz (see Regulation in
Section 1.2). Spectrum in the 700 MHz range has superior propagation
capabilities that make it effective and efficient in covering
Canada's expansive rural geography, as well as improving the quality
of in-building coverage in urban areas. In addition to acquiring 10
MHz of prime paired spectrum nationally, we also acquired 10 MHz of
unpaired spectrum in key markets and an additional 10 MHz of paired
spectrum in Saskatchewan and Alberta. The unpaired spectrum will
enable us to better address capacity constraints in urban areas while
the additional 10 MHz of paired spectrum in Saskatchewan and Alberta
will enable us to better address our customers' requirements in these
markets. 
TELUS' national average of 16.6 MHz of spectrum in the 700 MHz band
is comprised of the following licences:  


 
 
-----------------------------------------------------------------------
-----
                                                      Frequency     Spectrum
Region                                                   blocks  acquisition
----------------------------------------------------------------------------
Southern Ontario, Northern Ontario, Northern Quebec,                        
 New Brunswick, Nova Scotia & PEI, Newfoundland &                           
 Labrador                                                    C2       10 MHz
----------------------------------------------------------------------------
Yukon, Northwest Territories & Nunavut                        C       10 MHz
----------------------------------------------------------------------------
British Columbia, Alberta, Eastern Ontario, Southern                        
 Quebec, Eastern Quebec                                 C, D, E       20 MHz
----------------------------------------------------------------------------
Saskatchewan, Manitoba                               A, B, D, E       30 MHz
---
-------------------------------------------------------------------------

We also plan to participate in Industry Canada's auction of spectrum in
the 2,500-2,690 MHz bands currently expected to commence in April
2015.  
Other first quarter highlights include: 
- As at the end of the first quarter of 2014, our 4G LTE network
covered more than 81% of Canada's population, up from more than 70%
of the population at March 31, 2013. Outside of LTE coverage areas,
LTE devices we offer also operate on our HSPA+ network, which covered
99% of the population at March 31, 2014.  
- As at the end of the first quarter of 2014, our broadband HD TV
coverage reached approximately 2.8 million households in B.C.,
Alberta and Eastern Quebec, as compared to approximately 2.5 million
households at March 31, 2013.  
Partnering, acquiring and divesting to accelerate the implementation
of our strategy and focus our resources on core business 
Consistent with our corporate priority to advance TELUS' leadership
position in healthcare information management, in March 2014, we
acquired 100% of the shares of Med Access Inc., a leading
Kelowna-based company providing electronic medical records (EMR)
services to 2,000 specialty and general practice physicians in B.C.,
Alberta, Saskatchewan, Manitoba and Ontario. This acquisition and
previous acquisitions of EMR providers, coupled with organic growth,
have positioned TELUS Health as the largest EMR provider in Canada.
TELUS Health provides solutions to all major stakeholders in the
healthcare system, including hospitals, pharmacies and extended
healthcare providers, such as physiotherapists and chiropractors.  
On April 1, 2014, we acquired Enode, a Quebec City-based security IT
firm specializing in providing businesses and government agencies
with technologies and services for security and risk management. This
acquisition will enhance our security solutions for businesses in
Quebec and across Canada.  
In April 2014, Data & Audio-Visual Enterprises 
Holdings Inc.
(Mobilicity) announced a proposed going-concern transaction in which
TELUS would acquire Mobilicity for $350 million. The proposed
transaction would be implemented pursuant to a plan of compromise or
arrangement under the Companies' Creditors Arrangement Act (CCAA).
Mobilicity has been operating under CCAA since late September of
2013, and any sale will be subject to supervision by the
Court-appointed monitor (Ernst & Young Inc.). The proposed
transaction is also subject to various conditions, including approval
by the Ontario Superior Court of Justice, the Competition Bureau,
Industry Canada and Mobilicity's debtholders. There is a risk that
conditions may not be satisfied or waived and that a going concern
transaction with Mobilicity will not be completed. 
Going to market as one team under a common brand, executing a single
strategy  
Our top corporate priority since 2010 and for the foreseeable future
is to put our customers first as we strive to consistently deliver
exceptional client experiences and win the hearts and minds of
Canadians on our journey to become the most recommended company in
the markets we serve.  
Our four customer commitments that underpin our internal goals and
corporate priorities and help us deliver an elevated experience to
our customers are: 


 
 
--  We take ownership of every customer experience 
--  We work as a team to deliver on our promises 
--  We learn from customer feedback and take action to get better, every day
--  We are friendly, helpful and thoughtful. 

3. Key performance drivers 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of the
MD&A. 
We confirm or set new corporate priorities each year to both advance
TELUS' long-term strategic priorities and address near-term
opportunities and challenges. 


 
 
Corporate priorities for 2014                                               
----------------------------------------------------------------------------
Delivering on TELUS' future friendly(R) brand promise by putting customers  
first and pursuing global leadership in the likelihood of our clients to    
recommend our products, services and people                                 
 
Elevating our winning culture for a sustained competitive advantage,        
including giving compassionately in our communities                         
 
Strengthening our operational reliability, efficiency and effectiveness     
 
Increasing our competitive advantage through reliable and client-centric    
technology leadership                                                       
 
Driving TELUS' leadership position in its chosen business and public sector 
markets                                                                     
 
Advancing TELUS' leadership position in healthcare information management.  
----------------------------------------------------------------------------

4. Capabilities 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of the
MD&A.  
4.1 Principal markets addressed and competition  
Our principal markets and an overview of competition were described
in Section 4.1 of our annual 2013 MD&A.  
4.2 Operational resources  
Our operational resources were described in Section 4.2 of our annual
2013 MD&A.  
4.3 Liquidity and capital resources  
Capital structure financial policies  
Our objective when managing capital is to maintain a flexible capital
structure that optimizes the cost and availability of capital at
acceptable risk.  
In the management of capital and in its definition, we include Common
Share equity (excluding accumulated other comprehensive income),
long-term debt (including any associated hedging assets or
liabilities, net of amounts recognized in accumulated other
comprehensive income), cash and temporary investments and securitized
trade receivables.  
We manage our capital structure and make adjustments to it in light
of changes in economic conditions and the risk characteristics of our
telecommunications infrastructure. In order to maintain or adjust our
capital structure, we may adjust the amount of dividends paid to
holders of TELUS Common Shares, purchase shares for cancellation
pursuant to normal course issuer bids, issue new shares, issue new
debt, issue new debt to replace existing debt with different
characteristics and/or increase or decrease the amount of trade
receivables sold to an arm's-length securitization trust.  
We monitor capital utilizing a number of measures, including the net
debt to EBITDA - excluding restructuring and other like costs ratio
and the dividend payout ratio. See descriptions in Section 11.1.  
Financing and capital structure management plans 


 
 
Report on financing and capital structure management plans                  
----------------------------------------------------------------------------
Pay dividends to the holders of TELUS Common Shares under our multi-year    
dividend growth program                                                     
 
- On May 7, 2014, a second quarter dividend of 38 cents per share was       
  declared on our issued and outstanding common shares, payable on July 2,  
  2014, to shareholders of record at the close of business on June 10, 2014.
  The second quarter dividend for 2014 reflects an increase of 12% from the 
  34 cent per share dividend paid in July 2013.                             
 
----------------------------------------------------------------------------
Purchase TELUS Common Shares under our multi-year share purchase programs   
 
- On December 12, 2013, the TSX approved our NCIB to purchase and cancel up 
  to 16 million of our Common Shares for up to $500 million in 2014. Such   
  purchases will be made through the facilities of the TSX, the NYSE and    
  alternative trading platforms or otherwise as may be permitted by         
  applicable securities laws and regulations during the period of January 2,
  2014 to December 31, 2014. This represents approximately 2.6% of          
  outstanding TELUS Common Shares at the date of the NCIB notice to the TSX,
  and shares will be purchased only when and if we consider it advisable.   
  Pursuant to TSX rules, the maximum number of Common Shares that we may    
  purchase during the same trading day on the TSX is 421,589 (being 25% of  
  the average daily trading volume of TELUS Common Shares for the six-month 
  period preceding the date of the NCIB notice to the TSX), subject to      
  certain exceptions for block purchases. As of April 30, 2014, we have     
  purchased approximately 5.4 million Common Shares for cancellation for    
  $202 million, at an average price of $37.45 per share under this NCIB.    
 
- We have also entered into an automatic share purchase plan (ASPP) with a  
  broker for the purpose of permitting us to purchase shares under our NCIB 
  during internal blackout periods when 
we would not be permitted to trade  
  in our shares, including regularly scheduled quarterly blackout periods.  
  Such purchases will be at the sole discretion of the broker based on      
  parameters established by TELUS prior to any blackout period, in          
  accordance with TSX rules, applicable securities laws and the terms of the
  agreement between the broker and TELUS. The ASPP has been approved by the 
  TSX, was implemented on January 2, 2014, and may be implemented from time 
  to time thereafter. All other purchases under the NCIB will be at the     
  discretion of the Company.                                                
 
- There can be no assurance that we will complete our 2014 NCIB or renew the
  NCIB program for 2015 and 2016. See Caution regarding forward-looking     
  statements - Ability to sustain and complete multi-year share purchase    
  programs through 2016.                                                    
 
----------------------------------------------------------------------------
Use proceeds from securitized trade receivables (Short-term borrowings),    
bank facilities, commercial paper and dividend reinvestment, as needed, to  
supplement free cash flow and meet other cash requirements                  
 
- Proceeds from securitized trade receivables were $100 million in the first
  quarter of 2014 compared to $400 million in the fourth quarter of 2013.   
 
- We increased outstanding commercial paper from $Nil at December 31, 2013  
  to $626 million at March 31, 2014 to fund the deposit for 700 MHz spectrum
  and to reduce short-term borrowings.                                      
 
----------------------------------------------------------------------------
Maintain compliance with financial objectives, policies and guidelines      
 
- Maintain investment grade credit ratings in the range of BBB+ to A-, or   
  the equivalent - On May 8, 2014, investment grade credit ratings from the 
  four rating agencies that cover TELUS were in the desired range.          
 
- Net debt to EBITDA excluding restructuring and other like costs ratio of  
  1.50 to 2.00 times - See Section 7.5 Liquidity and capital resource       
  measures.                                                                 
 
- Dividend payout ratio guideline of 65 to 75% of sustainable net earnings  
  on a prospective basis - See Section 7.5 Liquidity and capital resource   
  measures.                                                                 
 
- Generally maintain a minimum $1 billion in unutilized liquidity - See     
  Section 7.6 Credit facilities.                                            
----------------------------------------------------------------------------

4.4 Changes in internal control over financial reporting 
There were no changes in internal control over financial reporting
that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting. 
5. Discussion of operations 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of the
MD&A. 
5.1 General 
Our operating segments and reportable segments are wireless and
wireline. Segmented information in Note 5 of the interim consolidated
financial statements is regularly reported to our Chief Executive
Officer (the chief operating decision-maker).  
5.2 Summary of consolidated quarterly results and trends 


 
 
Summary of quarterly results                                                
----------------------------------------------------------------------------
($ millions, except per share                                               
 amounts)                        2014 Q1  2013 Q4  2013 Q3  2013 Q2  2013 Q1
----------------------------------------------------------------------------
Operating revenues                 2,895    2,948    2,874    2,826    2,756
----------------------------------------------------------------------------
Operating expenses                                                          
Goods and services purchased       1,222    1,349    1,237    1,222    1,154
Employee benefits expense            596      648      602      606      568
Depreciation and amortization        463      461      445      446      451
----------------------------------------------------------------------------
Total operating expenses           2,281    2,458    2,284    2,274    2,173
----------------------------------------------------------------------------
Operating income                     614      490      590      552      583
Financing costs                      102      110      109      132       96
----------------------------------------------------------------------------
Income before income taxes           512      380      481      420      487
Income taxes                         135       90      125      134      125
----------------------------------------------------------------------------
Net income and Net income                                                   
 attributable to equity shares       377      290      356      286      362
----------------------------------------------------------------------------
Net income per equity share:                                                
  Basic                             0.61     0.47     0.56     0.44     0.56
  Diluted                           0.60     0.46     0.56     0.44     0.55
Dividends declared per equity                                               
 share(1)                           0.36     0.36     0.34     0.34     0.32
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                          598      726    1,084      707      729
----------------------------------------------------------------------------
Additional information:                                                     
EBITDA(2)                          1,077      951    1,035      998    1,034
Restructuring and other like                                                
 costs included in EBITDA(2)           8       33       15       39       11
EBITDA excluding restructuring                                              
 and other like costs(2)           1,085      984    1,050    1,037    1,045
Free cash flow(2)                    291      136      365      192      358
----------------------------------------------------------------------------
 
Summary of quarterly results                              
----------------------------------------------------------
($ millions, except per share                             
 amounts)                        2012 Q4  2012 Q3  2012 Q2
----------------------------------------------------------
Operating revenues                 2,851    2,774    2,665
----------------------------------------------------------
Operating expenses                                        
Goods and services purchased       1,330    1,222    1,152
Employee benefits expense            603      562      543
Depreciation and amortization        478      461      456
----------------------------------------------------------
Total operating expenses           2,411    2,245    2,151
----------------------------------------------------------
Operating income                     440      529      514
Financing costs                       96       96       96
----------------------------------------------------------
Income before income taxes           344      433      418
Income taxes                          81      110      119
----------------------------------------------------------
Net income and Net income                                 
 attributable to equity shares       263      323      299
----------------------------------------------------------
Net income per equity share:                              
  Basic                             0.40     0.49     0.46
  Diluted                           0.40     0.49     0.46
Dividends declared per equity                             
 share(1)                           0.32    0.305        -
----------------------------------------------------------
Cash provided by operating                                
 activities                          703      965      788
----------------------------------------------------------
Additional information:                                   
EBITDA(2)                            918      990      970
Restructuring and other like                              
 costs included in EBITDA(2)          19        3       13
EBITDA excluding restructuring                            
 and other like costs(2)             937      993      983
Free cash flow(2)                    263      426      284
----------------------------------------------------------
----------------------------------------------------------------------------
(1) The second quarter 2012 dividend of 30.5 cents per 
share was declared in
    February 2012.                                                          
(2) See Section 11.1 Non-GAAP financial measures.                           
----------------------------------------------------------------------------

Trends 
The consolidated revenue trend continues to reflect: year-over-year
growth in wireless network revenues generated from a growing
subscriber base and a higher ARPU, increased data usage from
continued smartphone adoption and the expansion of our LTE network
coverage; and year-over-year growth in wireline data revenues driven
by TV and high-speed Internet.  
Increasing wireless network revenue reflects growth in data revenue,
partly offset by declines in voice revenue. Data revenue growth
reflects increased data consumption driven by the proliferation of
smartphones, tablets and other wireless devices, expansion of
networks, as well as greater use of applications and other wireless
data, partly offset by increased use of data sharing plans. Data
revenue growth also reflects increased roaming volumes. Consequently,
monthly blended ARPU has increased year over year for 14 consecutive
quarters. The data revenue growth trend is affected by competitive
pressures driving bigger allotments of data included in rate plans,
including data sharing, and an increasing number of
unlimited-messaging rate plans, as well as off-loading of data
traffic to increasingly available Wi-Fi hotspots. In July 2013, we
introduced new two-year wireless rate plans, which may impact future
revenue trends and costs of acquisition and retention, including
subscribers optimizing unlimited talk and text and shared data plans,
and potentially increase the frequency with which subscribers update
their devices and services. As contracts signed before July 2013
expire and subscribers can only renew on the maximum two-year
contracts, blended ARPU is expected to increase over time. However,
the outcome is highly dependent on competitor and consumer behaviour,
device selection and other factors.  
Historically, there has been third and fourth quarter seasonality
with respect to higher levels of wireless subscriber additions,
related acquisition costs and equipment sales, and higher retention
costs due to contract renewals. These impacts can also be more
pronounced around iconic device launches. Wireless EBITDA typically
decreases in the fourth quarter due to increased competitive
intensity and seasonal loading. Subscriber additions have usually
been lowest in the first quarter. Historically, monthly wireless ARPU
has risen sequentially in the second and third quarters due to
increased vacation season usage and roaming, and declined
sequentially in the fourth and first quarters. The launch of the
unlimited nationwide voice plans in 2013 may reduce the amount of
future long distance and voice overage charges, reducing the ARPU
seasonality in the second and third quarters but the outcome will
depend on consumer behaviour.  
The trend of increasing wireline data revenue reflects the continuing
expansion of our TELUS TV subscriber base (up 18% in the last 12
months) and growth in revenue per customer, as well as growth in
enhanced data, Internet and business process outsourcing services.
Growth in Internet revenues reflects expansion of our high-speed
Internet subscriber base (up 5.5% in the last 12 months) as a result
of bundling offers with Optik TV, as well as growth in revenue per
customer. A general trend of declining wireline voice revenues and
NALs is due to continued but moderating substitution to wireless and
IP-based services and applications, as well as competition from VoIP
service providers (including cable-TV competitors), resellers and
facilities-based competitors. The general trend for business NALs is
a decline due to increased competition in the small and medium
business market, as well as conversion of voice lines to IP and
wireless services.  
The trend in the goods and services purchased expense reflects
increasing content costs for the growing TELUS TV subscriber base and
higher network and support costs for the growing wireless subscriber
base, as well as third and fourth quarter wireless expense
seasonality described above.  
The trend in employee benefits expense includes higher compensation
costs, offset by a slight decrease in restructuring costs for
employee-related initiatives, as compared to the 2013 levels.  
The sequential decrease in depreciation resulted from minor
adjustments related to our continuing program of asset life studies,
partly offset by growth in capital assets from acquisitions and the
expansion of our broadband footprint and the LTE network coverage.
The increase in amortization of intangible assets from 2013 reflects
higher software asset base, partly offset by adjustments resulting
from our continuing program of asset life studies.  
Financing costs in the second quarter of 2013 include a $23 million
long-term debt prepayment premium. In addition, financing costs for
the eight periods shown include varying amounts of foreign exchange
gains or losses and varying amounts of interest income.  
The trend in net income reflects the items noted above, as well as
adjustments arising from legislated income tax changes, settlements
and tax reassessments for prior years, including any related
after-tax interest on reassessments. The trend in basic EPS also
reflects the impact of share purchases under our NCIB programs. 


 
 
Income tax-related adjustments                                              
----------------------------------------------------------------------------
                                 2014 Q1  2013 Q4  2013 Q3  2013 Q2  2013 Q1
----------------------------------------------------------------------------
Net income impact ($ millions)         -       12        2      (22)       5
Basic EPS impact ($)                   -     0.02        -    (0.03)    0.01
----------------------------------------------------------------------------
 
Income tax-related adjustments                             
-----------------------------------------------------------
                                 2012 Q4  2012 Q3  2012 Q2 
-----------------------------------------------------------
Net income impact ($ millions)        10        3      (11)
Basic EPS impact ($)                0.02        -    (0.02)
-----------------------------------------------------------

The trend in cash provided by operating activities reflects growth in
EBITDA, net of higher interest and income tax payments. The trend in
free cash flow also reflects the factors in cash provided by
operating activities, as well as increasing capital expenditures, but
excludes the effects of certain working capital changes, such as
trade accounts receivable and trade accounts payable. 
5.3 Consolidated operations  
The following is a discussion of our consolidated financial
performance. Segmented information in Note 5 of the interim
consolidated financial statements is regularly reported to our Chief
Executive Officer (the chief operating decision-maker). We discuss
the performance of our segments in Section 5.4 Wireless
segment,Section 5.5 Wireline segment and capital expenditures in
Section 7.3 Cash used by investing activities. 


 
 
Operating revenues                                                          
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013   Change  
----------------------------------------------------------------------------
Service                                            2,702    2,582      4.6 %
Equipment                                            172      161      6.8 %
----------------------------------------------------------------------------
Service and equipment revenues                     2,874    2,743      4.8 %
Other operating income                                21       13     61.5 %
------------------------------------------------------------
----------------
                                                   2,895    2,756      5.0 %
----------------------------------------------------------------------------

Consolidated Operating revenues increased by $139 million in the first
quarter of 2014 as compared to the first quarter of 2013, as follows: 
- Service revenue increased year over year by $120 million in the
first quarter of 2014, driven by wireless, higher TV and Internet
revenues from subscriber growth and increased TELUS Health service
revenues, partly offset by declines in legacy wireline voice
revenues.  
- Equipment revenue increased year over year by $11 million in the
first quarter of 2014. Wireless equipment sales were up modestly,
reflecting higher retention volumes and a higher proportion of
smartphones in the sales mix. Wireline equipment sales in the first
quarter of 2014 were relatively flat compared to the first quarter of
2013.  
- Other operating income increased year over year by $8 million in
the first quarter of 2014 due to gains on investments and an increase
in government assistance.  


 
 
Operating expenses                                                          
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013   Change  
----------------------------------------------------------------------------
Goods and services purchased                       1,222    1,154      5.9 %
Employee benefits expense                            596      568      4.9 %
Depreciation                                         346      347     (0.3)%
Amortization of intangible assets                    117      104     12.5 %
----------------------------------------------------------------------------
                                                   2,281    2,173      5.0 %
----------------------------------------------------------------------------

Consolidated Operating expenses increased by $108 million in the first
quarter of 2014 as compared to the first quarter of 2013, as follows: 
- Goods and services purchased increased year over year by $68
million in the first quarter of 2014. The increase reflects higher
programming costs for TELUS TV services, an increase in network and
support costs for the growing wireless subscriber base, and higher
cost of sales within TELUS Health associated with higher revenue,
partly offset by lower wireline external labour requirements.   
- Employee benefits expense increased year over year by $28 million
in the first quarter of 2014, mainly due to higher compensation and
benefit costs, partly offset by a decrease in restructuring costs for
employee-related initiatives.   
- Depreciation expense remained flat in the first quarter of 2014, as
adjustments in 2013 resulting from our continuing program of asset
life studies were partly offset by growth in capital assets (such as
broadband- and TV-related assets, the wireless LTE network and IDCs). 
- Amortization of intangible assets increased year over year by $13
million in the first quarter of 2014. The increase was due to new
administrative and network software assets and acquisitions, partly
offset by adjustments resulting from our continuing program of asset
life studies.  


 
 
Operating income                                                            
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013   Change  
----------------------------------------------------------------------------
                                                     614      583      5.3 %
----------------------------------------------------------------------------

Operating income increased year over year by $31 million in the first
quarter of 2014, composed of a $24 million increase in wireless
EBITDA, a $19 million increase in wireline EBITDA being offset by a
$12 million increase in total depreciation and amortization
expenses. 


 
 
Financing costs                                                             
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013   Change  
----------------------------------------------------------------------------
Interest expense                                     102       89     14.6 %
Employee defined benefit plans net interest            1       13    (92.3)%
Interest (income) and foreign exchange (gains)        (1)      (6)    83.3 %
----------------------------------------------------------------------------
                                                     102       96      6.3 %
----------------------------------------------------------------------------

Financing costs increased year over year by $6 million in the first
quarter of 2014, mainly due to our re-financing activities in the
second and fourth quarters of 2013, net debt issues in the first
quarter of 2014 and lower interest income, partly offset by a
decrease in employee defined benefit plans net interest. Re-financing
in 2013 increased our long-term debt outstanding and reduced
near-term long-term debt re-financing risk by extending our average
term to maturity of long-term debt (excluding commercial paper) to
approximately 9.2 years at March 31, 2014, from 5.3 years one year
earlier. Our weighted-average interest rate on long-term debt
(excluding commercial paper) was 5.0% at March 31, 2014, as compared
to 5.44% one year earlier. In addition, our debt issues in early
April 2014 increased our average term to maturity of long-term debt
(excluding commercial paper) to approximately 10.3 years and reduced
our weighted-average interest rate on long-term debt (excluding
commercial paper) to approximately 4.89%. TELUS' short-term
commercial paper issuance is back-stopped by a committed term credit
facility which, subsequent to March 31, 2014, was extended to May 31,
2019. For additional details, see Long-term debt issues and
repayments in Section 7.4. 
- Interest expense increased year over year by $13 million in the
first quarter of 2014, mainly due to the increase in long-term debt.  
- Employee defined benefit plans net interest expense is calculated
for the periods in 2014 and 2013 based on the respective net defined
benefit surplus (deficit) at December 31, 2013 and 2012. The decrease
in 2014 reflects the net employee defined benefit pension plan
deficit moving to a nominal surplus due to strong returns and
application of a higher discount rate at December 31, 2013, net of an
increase in life expectancy assumptions.   
- Interest income and foreign exchange gains fluctuate from period to
period. Interest income was $1 million in the first quarter of 2014
as compared to interest income of $4 million in the first quarter of
2013. The balance in the first quarter of 2013 was a net foreign
exchange gain.  


 
 
Income taxes                                                                
----------------------------------------------------------------------------
Three-month periods ended March 31 ($                                       
 millions, except tax rates)                     2014     2013   Change     
----------------------------------------------------------------------------
Basic blended income tax expense at                                         
 weighted-average statutory income tax rates      134      125      7.2 %   
Tax rate differential on, and consequential                                 
 adjustments from, reassessments of prior                                   
 years' tax issues                                  -       (1)   100.0 %   
Other                                               1        1        - %   
----------------------------------------------------------------------------
                                                  135      125      8.0 %   
----------------------------------------------------------------------------
Weighted-average statutory income tax rates                                 
 (%)                                             26.2     25.7      0.5 pts.
Effective tax rates (%)                          26.3     25.7      0.6 pts.
----------------------------------------------------------------------------

Basic blended income tax at weighted-average statutory income tax rates
increased year over year by $9 million in the first quarter of 2014
due to growth in pre-tax income and an increase in the
weighted-average statutory income tax rate, primarily from higher tax
rates in British Columbia. 


 
 
Comprehensive income                                                        
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013   Change  
----------------------------------------------------------------------------
Net income                                           377      362      4.1 %
Oth
er comprehensive income:                                                 
  Items that may be subsequently reclassified                               
   to income                                           6        3    100.0 %
  Item never subsequently reclassified to                                   
   income - Employee defined benefit plans re-                              
   measurements                                      162      168     (3.6)%
----------------------------------------------------------------------------
Comprehensive income                                 545      533      2.3 %
----------------------------------------------------------------------------

Comprehensive income increased year over year by $12 million in the
first quarter of 2014, primarily due to a $15 million increase in net
income. Items that may be subsequently reclassified to income are
composed of changes in the unrealized fair value of derivatives
designated as cash flow hedges, foreign currency translation
adjustments arising from translating financial statements of foreign
operations, and changes in the unrealized fair value of
available-for-sale investments.  
5.4 Wireless segment 


 
 
Wireless operating indicators (excluding Public Mobile)(1)                  
----------------------------------------------------------------------------
At March 31                                     2014     2013   Change      
----------------------------------------------------------------------------
Subscribers(1) (000s):                                                      
  Postpaid                                     6,799    6,603      3.0 %    
  Prepaid                                      1,019    1,100     (7.4)%    
----------------------------------------------------------------------------
  Total                                        7,818    7,703      1.5 %    
----------------------------------------------------------------------------
Postpaid proportion of subscriber base                                      
 (1)(2) (%)                                     87.0     85.7      1.3 pts. 
HSPA+ population coverage (3) (millions)        34.9     34.3      1.7 %    
LTE population coverage (3) (millions)          28.8     24.7     16.6 %    
----------------------------------------------------------------------------
Three-month periods ended March 31              2014     2013   Change      
----------------------------------------------------------------------------
Subscriber gross additions(1) (000s):                                       
  Postpaid                                       234      260    (10.0)%    
  Prepaid                                        104      114     (8.8)%    
----------------------------------------------------------------------------
  Total                                          338      374     (9.6)%    
----------------------------------------------------------------------------
Subscriber net additions(1) (000s):                                         
  Postpaid                                        48       59    (18.6)%    
  Prepaid                                        (36)     (26)   (38.5)%    
----------------------------------------------------------------------------
  Total                                           12       33    (63.6)%    
----------------------------------------------------------------------------
BlendedARPU, per month(1)(4)($)                61.24    60.04      2.0 %    
----------------------------------------------------------------------------
Churn, per month(1)(4)(%)                                                   
  Blended                                       1.39     1.48    (0.09) pts.
  Postpaid                                      0.99     1.11    (0.12) pts.
COA(5) per gross subscriber addition (1)(4)                                 
 ($)                                             375      369      1.6 %    
Retention spend to network revenue (1)(4)                                   
 (%)                                            10.7     10.9     (0.2) pts.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Where noted, wireless operating indicators exclude Public Mobile        
    subscribers, which are all prepaid (acquired on November 29, 2013).     
 
(2) Effective with the second quarter of 2013 and on a prospective basis,   
    M2M subscriptions have been excluded from all subscriber-based measures 
    to align with emerging industry practice. Cumulative subscribers include
    an April 1, 2013, opening balance adjustment to remove approximately    
    76,000 M2M subscriptions. Effective with the fourth quarter of 2013, and
    on a prospective basis, we have adjusted postpaid wireless subscribers  
    to remove Mike subscriptions, as we have ceased marketing the Mike      
    product and started to turn down the iDEN network. Cumulative subscriber
    connections include an October 1, 2013 adjustment to remove from the    
    postpaid wireless subscriber base approximately 94,000 Mike subscribers,
    representing those who, in our judgment, are unlikely to migrate to our 
    new services.                                                           
 
(3) Including network access agreements with other Canadian carriers.       
 
(4) See Section 11.2 Wireless operating indicators. These are industry      
    measures useful in assessing operating performance of a wireless        
    company, but are not measures defined under IFRS-IASB.                  
 
(5) Cost of acquisition.                                                    
----------------------------------------------------------------------------
 
Operating revenues - Wireless segment                                       
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ in                          
          
 millions, except ratios)                         2014     2013  Change     
----------------------------------------------------------------------------
Network revenues                                 1,443    1,371     5.3%    
Equipment and other                                112      101    10.9%    
----------------------------------------------------------------------------
External operating revenues                      1,555    1,472     5.6%    
Intersegment network revenue                        13       12     8.3%    
----------------------------------------------------------------------------
Total operating revenues(1)                      1,568    1,484     5.7%    
----------------------------------------------------------------------------
Data revenue to network revenues (%)                48       43       5 pts.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Includes Public Mobile revenues of $24, composed of network revenues of 
    $21 and equipment and other revenues of $3.                             
----------------------------------------------------------------------------

Wireless segment revenues increased year over year by $84 million or
5.7% in the first quarter of 2014 driven by growth in data network
revenue. Included in the total are Public Mobile's network, equipment
and other revenues of $24 million.  
Network revenues from external customers increased year over year by
$72 million in the first quarter of 2014. Wireless network revenue,
excluding Public Mobile, was $1,422 million in the first quarter of
2014, an increase of $51 million or 3.7% from the first quarter of
2013. 
- Data network revenue, excluding Public Mobile, increased year over
year by 18% in the first quarter of 2014 compared to the same period
in 2013. The increase reflects subscriber growth, increased data
usage from continued smartphone adoption, h
igher data roaming volumes
and the expansion of our LTE network coverage, partly offset by
increased adoption of unlimited-messaging rate plans, lower roaming
rates from more competitive U.S. roaming packages.   
- Voice network revenue, excluding Public Mobile, decreased year over
year by 7% in the first quarter of 2014 compared to the same period
in 2013. The decline in voice revenue is due to the increased
adoption of unlimited nationwide voice plans, continued but
moderating substitution to data services and features and an
increasing volume of data-only mobile Internet connection devices and
tablet subscriptions.   
- Monthly blended ARPU, excluding Public Mobile, was $61.24 in the
first quarter of 2014, reflecting a $1.20 or 2.0% increase from the
first quarter of 2013. The increase was due to growth in data usage
and roaming and a higher overall postpaid subscriber mix, partly
offset by a decline in voice revenue and an increased penetration by
the Koodo brand.   
- Gross subscriber additions, excluding Public Mobile, were 338,000
in the first quarter of 2014, a decrease of 36,000 from the first
quarter of 2013. Postpaid gross additions were 234,000 in the first
quarter of 2014, reflecting a year-over-year decrease of 26,000 from
the first quarter of 2013, due to slower market growth and continued
competitive intensity, offset by higher tablet loading. Prepaid gross
additions were 104,000 in the first quarter of 2014, reflecting a
year-over-year decrease of 10,000.   
- Net subscriber additions, excluding Public Mobile, were 12,000 in
the first quarter of 2014, a decrease of 21,000 from the first
quarter of 2013. Postpaid net additions were 48,000 in the first
quarter of 2014, reflecting a decrease of 11,000 from the first
quarter of 2013 due to factors described in gross subscriber
additions, partly offset by lower subscriber churn. Prepaid
subscribers declined by 36,000 in the first quarter of 2014, as
compared to a decline of 26,000 in the first quarter of 2013. Prepaid
losses reflect conversions to postpaid services, as well as continued
competitive intensity related to the lower entry cost of prepaid
plans.   
- Our average monthly postpaid churn rate remained low at 0.99% in
the first quarter of 2014, down from 1.11% in first quarter of 2013,
primarily as a result of our customers first initiatives. Our blended
monthly wireless subscriber churn rate, excluding Public Mobile, was
1.39% in the first quarter of 2014 compared to 1.48% in the first
quarter of 2013. The improvement in the blended churn rate resulted
from our continuing customers first initiatives and Clear and Simple
approach, which differentiate TELUS in an intensely competitive
market, as well as a greater proportion of postpaid clients in our
subscriber base.  
Equipment and other revenues increased year over year by $11 million
in the first quarter of 2014. Equipment and other revenues, excluding
Public Mobile, increased by $8 million mainly due to higher retention
volumes and a higher proportion of smartphones in the sales mix and,
to a lesser extent, a gain on sale of an investment, partly offset by
lower gross additions. 
- The smartphone adoption rate remained strong at 75% of postpaid
gross additions in the first quarter of 2014, as compared to 70% in
the first quarter of 2013. Smartphone subscribers represented 78% of
the postpaid subscriber base at March 31, 2014, an increase from 68%
in the same period last year. TELUS is a leader among North American
carriers in the level of smartphone adoption, and studies have shown
that Canada has the third highest level of smartphone adoption
globally, among reported companies. Smartphone subscribers generate
significantly higher ARPU and have lower churn than those with
messaging and voice-only devices, but have higher costs of
acquisition and retention resulting from the large device subsidies
related to multiple-year contract sales or renewals. A greater
proportion of smartphones in the sales mix is expected to continue to
positively impact future data revenue growth, ARPU and churn rates,
which increase expected lifetime revenue per customer. 
Intersegment network revenue represents services provided to the
wireline segment. These revenues are eliminated upon consolidation
along with the associated expenses in the wireline segment. 


 
 
Operating expenses - Wireless segment                                       
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ in                                    
 millions)                                          2014     2013   Change  
----------------------------------------------------------------------------
Goods and services purchased:                                               
  Equipment sales expenses                           294      282      4.3 %
  Network operating expenses                         193      173     11.6 %
  Marketing expenses                                  83       90     (7.8)%
  Other (1)                                          139      116     19.8 %
Employee benefits expense (1)                        169      157      7.6 %
----------------------------------------------------------------------------
Wireless operating expenses(2)                       878      818      7.3 %
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Includes restructuring and other like costs. See Section 11.1Non-GAAP   
    financial measures.                                                     
(2) Includes Public Mobile-related operating expenses totalling $34.        
----------------------------------------------------------------------------

Wireless segment expenses increased year over year by $60 million in
the first quarter of 2014 when compared to the same period in 2013.
This includes Public Mobile operating expenses of $34 million.
Wireless expenses, excluding Public Mobile, increased year over year
by $26 million or 3.2%.  
Equipment sales expenses increased year over year by $12 million in
the first quarter of 2014. Excluding Public Mobile, the increase was
$11 million, reflecting higher retention volumes, as well as a high
proportion of smartphones sold to new and existing customers. 
- Retention costs as a percentage of network revenue, excluding
Public Mobile, were 10.7% in the first quarter of 2014, down from
10.9% in the same period in 2013, as growth in network revenues more
than offset higher retention volumes and costs.  
- COA per gross subscriber addition, excluding Public Mobile, was
$375 in the first quarter of 2014, reflecting an increase of $6 from
the first quarter of 2013. The increase was mainly due to higher
per-unit subsidy costs, in part due to an appreciation of the U.S.
dollar, and an increase in commissions due to a greater proportion of
smartphones in the sales mix.  
Network operating expenses increased year over year by $20 million in
the first quarter of 2014. Excluding Public Mobile, the increase was
$9 million, as higher costs associated with LTE network expansion and
higher data roaming usage and expenses were partly offset by lower
supplier licensing costs.  
Marketing expenses decreased year over year by $7 million in the
first quarter of 2014. Excluding Public Mobile, the decrease was $10
million, as advertising declined due to our ability to maintain
promotional discipline as a result of the improvement in churn
levels. 
Other goods and services purchased increased year over year by $23
million in the first quarter of 2014. Excluding Public Mobile, the
increase was $10 million, resulting from higher external labour costs
and greater administrative costs to support the growing subscriber
base.  
Employee benefits expense increased year over year by $12 million in
the first quarter of 2014. Excluding Public Mobile, the increase was
$5 million due to higher compensation and benefit costs, including
share-based compensation, as well as an increase in the number of
full-time equivalent employees to provide customer service and
technical support for a growing subscriber base and greater
smartphone adoption. 


 
 
EBITDA - Wireless segment                                                   
----------------------------------------------------------------------------
Three-month periods ended March 31 ($                                       
 millions, except margins)                      2014     2013   Change      
----------------------------------------------------------------------------
EBITDA(1)                                        690      666      3.6 %    
Restructuring and other like costs included                                 
 in EBITDA(2)                                      3        4    (25.0)%    
----------------------------------------------------------------------------
EBITDA - excluding restructuring and other                                  
 like costs      
                                693      670      3.4 %    
----------------------------------------------------------------------------
EBITDA margin (%)                               44.0     44.9     (0.9) pts.
EBITDA - excluding restructuring and other                                  
 like costs margin (%)                          44.2     45.1     (0.9) pts.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Includes negative $10 EBITDA impact of Public Mobile in the first       
    quarter of 2014.                                                        
(2) Includes $Nil related to Public Mobile.                                 
----------------------------------------------------------------------------

In the first quarter of 2014, wireless EBITDA increased year over year
by $24 million or 3.6%. Wireless EBITDA, excluding Public Mobile, was
$700 million in the first quarter of 2014, an increase of 5.1% from
the same period in 2013. Wireless EBITDA - excluding restructuring
and other like costs increased year over year by $23 million or 3.4%
in the first quarter of 2014. The increases in EBITDA reflect network
revenue growth, despite higher data roaming costs and an increase in
labour costs to support a larger subscriber base, partly offset by
lower total acquisition costs.  
5.5 Wireline segment 


 
 
Wireline operating indicators                                               
----------------------------------------------------------------------------
As at, or for the three-month periods ended                                 
 March 31 (000s)                                    2014     2013   Change  
----------------------------------------------------------------------------
High-speed Internet subscribers                    1,416    1,342      5.5 %
TELUS TV subscribers                                 842      712     18.3 %
Network access lines (NALs):                                                
  Residential                                      1,619    1,733     (6.6)%
  Business                                         1,611    1,630     (1.2)%
----------------------------------------------------------------------------
  Total NALs                                       3,230    3,363     (4.0)%
----------------------------------------------------------------------------
High-speed Internet subscriber net additions          21       16     31.3 %
TELUS TV subscriber net additions                     27       34    (20.6)%
  Net NAL losses:                                                           
  Residential                                        (24)     (34)    29.4 %
  Business                                             -       (9)   100.0 %
----------------------------------------------------------------------------
  Total NAL losses                                   (24)     (43)    44.2 %
----------------------------------------------------------------------------
 
Operating revenues - Wireline segment                                       
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ in                                    
 millions)                                          2014     2013   Change  
----------------------------------------------------------------------------
Data service and equipment                           842      764     10.2 %
Voice local service                                  321      340     (5.6)%
Voice long distance service                           92      101     (8.9)%
Other services and equipment                          67       66      1.5 %
----------------------------------------------------------------------------
Service and equipment revenues                     1,322    1,271      4.0 %
Other operating income                                18       13     38.5 %
----------------------------------------------------------------------------
External operating revenues                        1,340    1,284      4.4 %
Intersegment revenue                                  41       41        - %
----------------------------------------------------------------------------
Total operating revenues                           1,381    1,325      4.2 %
----------------------------------------------------------------------------

Total wireline segment revenues increased year over year by $56 million
or 4.2% in the first quarter of 2014, driven by continued growth in
data revenue, partly offset by ongoing declines in legacy voice
revenues.  
Service and equipment revenues increased year over year by $51
million in the first quarter of 2014. 
- Data service and equipment revenues increased year over year by $78
million in the first quarter of 2014 primarily due to: (i) increased
Internet and enhanced data service revenues due to a 5.5% increase in
high-speed Internet subscribers over 12 months, higher revenue per
customer in part from certain rate increases and subscriptions coming
off of introductory promotional offers, and business service growth;
(ii) increased TELUS TV revenues resulting from 18% subscriber growth
over 12 months and higher revenue per customer; (iii) growth in TELUS
Health revenues.   
- Net additions of high-speed Internet subscribers increased in the
first quarter of 2014 when compared to the first quarter of 2013
resulting from success in consumer and business markets, expansion of
our high-speed broadband footprint, a pull-through impact due to the
continued adoption of Optik TV and increasing broadband speeds, along
with improvements in our customer churn rate. Net additions of TELUS
TV subscribers declined in the first quarter of 2014 when compared to
the first quarter of 2013, as expansion of our addressable high-speed
broadband footprint, increasing broadband speeds, the addition of a
large business customer and improvements in our customer churn rate
were offset by the impact of slower market growth. Continued focus on
expanding our addressable Optik TV and high-speed Internet footprint,
combined with bundling these services together, have resulted in a
combined subscriber growth of approximately 10% over the last 12
months. 
- Voice local service revenue decreased year over year by $19 million
in the first quarter of 2014 due to the ongoing decline in legacy
revenues, reflecting a 4.0% decline in NALs in the last 12 months.  
- Residential NAL losses of 24,000 in the first quarter of 2014, the
lowest since the fourth quarter of 2005, improved from the 34,000
line losses a year ago due to our continuing customers first
initiatives and service bundle offers. The decline in the quarter
reflects the ongoing but moderating trend of substitution to wireless
and Internet-based services, including losses to competitors,
partially mitigated by the success of Optik TV and bundled service
offerings.  
- Business NAL subscribers in the first quarter of 2014 were
unchanged from December 31, 2013, representing a significant
improvement from the 9,000 business NAL losses in the first quarter
of 2013. This improvement was supported by our continuing efforts to
enhance customer experience.  
- Voice long distance service revenue decreased year over year $9
million in the first quarter of 2014 as a result of technological
substitution to wireless and Internet-based services, loss of NALs
and the trend of lower long distance minutes of use.  
Other operating income increased year over year by $5 million in the
first quarter of 2014, due to gains on investments and an increase in
government assistance.  
Intersegment revenue represents services provided to the wireless
segment. These revenues are eliminated upon consolidation together
with the associated expenses in the wireless segment. 


 
 
Operating expenses - Wireline segment                                       
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013  Changes  
----------------------------------------------------------------------------
Goods and services purchased (1)                     567      546      3.8 %
Employee benefits expense (1)                        427      411      3.9 %
----------------------------------------------------------------------------
Wireline operating expenses                          994      957      3.9 %
----------------------------------------------------------------------------
 

 
 
----------------------------------------------------------------------------
(1) Includes restructuring and other like costs. See Section 11.1 Non-GAAP  
    financial measures.                                                     
----------------------------------------------------------------------------

Total operating expenses increased year over year by $37 million in the
first quarter of 2014. 
- Goods and services expenses increased year over year by $21 million
in the first quarter of 2014, mainly reflecting increases in
programming costs for TELUS TV services due to an increase in the
subscriber base and higher TV content rates, and cost of sales
associated with higher TELUS Health services revenue, partly offset
by lower external labour requirements.  
- Employee benefits expense increased year over year by $16 million
in the first quarter of 2014, due to higher compensation and benefit
costs, including higher share-based compensation expenses, partly
offset by a decrease in domestic and international full-time
equivalent staff over the past year, resulting from our ongoing
efficiency initiatives.  


 
 
EBITDA - Wireline segment                                                   
----------------------------------------------------------------------------
Three-month periods ended March 31 ($                                       
 millions, except margins)                       2014     2013  Changes     
----------------------------------------------------------------------------
EBITDA                                            387      368      5.0 %   
Restructuring and other costs included in                                   
 EBITDA                                             5        7    (28.6)%   
----------------------------------------------------------------------------
EBITDA - excluding restructuring and other                                  
 like costs                                       392      375      4.3 %   
----------------------------------------------------------------------------
EBITDA margin (%)                                28.0     27.8      0.2 pts.
EBITDA - excluding restructuring and other                                  
 like costs margin (%)                           28.3     28.3        - pts.
----------------------------------------------------------------------------

In the first quarter of 2014, wireline EBITDA increased year over year
by $19 million or 5.0%, while wireline EBITDA - excluding
restructuring and other like costs increased by $17 million or 4.3%.
This resulted mainly from improvements in high-speed Internet,
enhanced data and TELUS TV revenues due to subscriptions coming off
of introductory rates, certain rate increases and subscriber growth,
as well as savings from our operational efficiency initiatives, net
of higher TV programming costs. 
6. Changes in financial position 


 
 
-----------------------------------------------------------------------
-----
Financial position                                 Changes include:         
 at:                Mar. 31  Dec. 31    Changes                             
                   ------------------                                       
($ millions)           2014     2013                                        
----------------------------------------------------------------------------
Current assets                                                              
Cash and temporary       52      336  (284) (85)%  See Section 7 Liquidity  
 investments, net                                  and capital resources    
Accounts receivable   1,426    1,461   (35)  (2)%  A decrease in days       
                                                   outstanding in wireless  
                                                   and wireline receivables 
Income and other         41       32     9   28%   Reflects income tax      
 taxes receivable                                  instalments paid, in     
                                                   excess of income taxes   
                                                   accrued                  
Inventories             300      326   (26)  (8)%  Primarily a seasonal     
                                                   decrease in wireless     
                                                   handsets, parts and      
                                                   accessories, due to a    
                                                   decrease in units on     
                                                   hand, partly offset by an
                                                   increase in the average  
                                                   wireless handset cost    
Prepaid expenses        269      168   101   60%   Includes prepayment of   
                                                   statutory employee       
                                                   benefits, wireless       
                                                   licence fees and         
                                                   maintenance contracts    
Derivative assets        16        6    10  167%   Fair value adjustments   
                                                   related to operational   
                                                   hedges and hedges of     
                                                   restricted share units.  
----------------------------------------------------------------------------
Current liabilities                                                         
Short-term              100      400  (300) (75)%  See Section 7.7 Sale of  
 borrowings                                        trade receivables        
Accounts payable      1,634    1,735  (101)  (6)%  Accrued liabilities      
 and accrued                                       related to costs for     
 liabilities                                       broadband expansion, as  
                                                   well as increases in TV  
                                                   content costs payable and
                                                   interest payable, offset 
                                                   by a decrease in payroll 
                                                   and other employee-      
                                                   related liabilities and  
                                                   in inventory-related     
                                                   trade payables           
Income and other          3      102   (99) (97)%  Current income tax       
 taxes payable                                     expense in the quarter,  
                                                   offset by last instalment
                                                   payment of 2013 income   
                                                   taxes                    
Dividends payable       224      222     2    1%   -                        
Advance billings        745      729    16    2%   Customer deposits and    
 and customer                                      advance billings to      
 deposits                                          wireless and wireline    
                                                   dealers                  
Provisions               85      110   (25) (23)%  Reflects a decrease in   
                                                   employee-related         
                                                   restructuring accruals,  
                                                   combined with a decrease 
                                                   in asset retirement      
                                                   obligations              
Current maturities      626        -   626  n/m    An increase in commercial
 of long-term debt                                 paper used to pay a 20%  
                                                   deposit on 700 MHz       
                                                   spectrum licences, to    
                                                   reduce short-term        
                                                   borrowings and for other 
                                                   corporate purposes.      
Current derivative        1        1     -    -    -                        
 liabilities                                                                
----------------------------------------------------------------------------
Working              (1,314)    (970) (344) (35)%  A decrease in cash and   
 capital(Current                                   temporary investments    
 assets subtracting                                combined with an increase
 Current                                           in current maturities of 
 liabilities)                                      long-term debt due to 700
                                                   MHz spectrum acquisition,
                                                   as well as payment of tax
                                                   instalments, partly      
                                                   offset by increases in   
                                                   income and other taxes   
                                                   receivable, prepaid      
                                                   expenses and reduction in
                                                   provisions.              
----------------------------------------------------------------------------
Non-current assets                                                          
Property, plant and   8,496    8,428    68    1%   See Capital expenditures 
 equipment, net                                    in Section 7.3 Cash used 
                                                   by investing activities  
                                                   and Depreciation in      
                                                   Section 5.3              
Intangible assets,    6,546    6,531    15    -%   See Capital expenditures 
 net                                               in Section 7.3 Cash used 
                                                   by investing activities  
                                                   and Amortization of      
                                                   intangible assets in     
                                                   Section 5.3.             
700 MHz spectrum        229        -   229  n/m    See Section 1.2          
 licence deposits                                                           
Goodwill, net         3,750    3,737    13    -%   An increase due to an    
                                                   acquisition of an EMR    
                                                   provider, offset by      
                                                   adjustments made to      
                                                   Public Mobile-related    
                                                   goodwill                 
Real estate joint        12       11     1    9%   See Transactions between 
 ventures                                          related parties in       
                                                   Section 7.11             
Other long-term         763      530   233   44%   Primarily an increase in 
 assets                                            pension and post-        
                                                   retirement assets        
                                                   resulting from returns on
                                                   plan assets, and         
                                                   construction advances to 
                                                   the TELUS Garden real    
                                                   estate joint venture, net
                                                   of fair value adjustments
                                                   for monetization of      
                                                   available-for-sale       
                                                   financial assets.        
----------------------------------------------------------------------------
Non-current                                                                 
 liabilities                                                                
Provisions              223      219     4    2%   Public Mobile and        
                                                   environmental provisions,
                                                   partly offset by a       
                                                   decrease in asset        
                                                   retirement obligations   
Long-term debt        7,494    7,493     1    -%   See Section 7.4 for our  
                                                   April 2014 financing     
                                                   activities               
Other long-term         616      649   (33)  (5)%  Primarily a decrease in  
 liabilities                                       pension and post-        
                                                   retirement liabilities   
                                                   resulting from returns on
                                                   plan assets.             
Deferred income       1,973    1,891    82    4%   Deferred income tax      
 taxes                                             expense, including       
                                                   amounts related to       
                                                   unrealized gains and     
                                                   losses on derivatives and
                                                   returns on pension plan  
                                                   assets.                  
----------------------------------------------------------------------------
Owners' equity                                                              
Common equity         8,176    8,015   161    2%   Net income of $377       
                                                   million and other        
                                                   comprehensive income of  
                                                   $168 million
, net of     
                                                   dividend declarations of 
                                                   $224 million and 2014    
                                                   NCIB purchases of $159   
                                                   million.                 
----------------------------------------------------------------------------

7. Liquidity and capital resources 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of the
MD&A.  
7.1 Overview  
In the first quarter of 2014, we paid a $229 million deposit for the
spectrum licences acquired in the 700 MHz spectrum auction that
concluded in February 2014, representing 20% of the total purchase
price. We also paid dividends of $222 million to the holders of TELUS
shares and returned $159 million of cash to shareholders through
share purchases under our 2014 NCIB. Subsequent to March 31, 2014, we
paid dividends of $224 million to the holders of TELUS shares and the
$914 million balance for the 700 MHz spectrum licences, and issued $1
billion of long-term debt. Our capital structure financial policies,
financing plan, and our report on financing and capital structure
management plans are described in Section 4.3. 


 
 
Cash flows                                                                  
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013   Change  
----------------------------------------------------------------------------
Cash provided by operating activities                598      729    (18.0)%
Cash used by investing activities                   (827)    (536)   (54.3)%
Cash used by financing activities                    (55)    (278)   (80.2)%
----------------------------------------------------------------------------
Decrease in cash and temporary investments, net     (284)     (85)     n/m  
Cash and temporary investments, net, beginning                              
 of period                                           336      107      n/m  
----------------------------------------------------------------------------
Cash and temporary investments, net, end of                                 
 period                                               52       22    136.4 %
----------------------------------------------------------------------------

7.2 Cash provided by operating activities 
Cash provided by operating activities decreased by $131 million in
the first quarter of 2014.  


 
 
Analysis of changes in cash provided by operating activities                
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)     2014     2013    Change 
----------------------------------------------------------------------------
EBITDA (see Section 5.4 and Section 5.5)           1,077    1,034        43 
Restructuring disbursements, net of                                         
 restructuring costs                                 (15)      (6)       (9)
Employee defined benefit plans expense                22       26        (4)
Employer contributions to employee defined                                  
 benefit plans                                       (29)     (36)        7 
Interest paid                                        (61)     (58)       (3)
Interest received                                      1        1         - 
Income taxes paid, net of refunds received          (224)    (148)      (76)
Other operating working capital changes             (173)     (84)      (89)
----------------------------------------------------------------------------
Cash provided by operating activities                598      729      (131)
----------------------------------------------------------------------------

-Income taxes paid net of refunds received increased in the first
quarter of 2014, mainly reflecting higher instalment payments
resulting from increasing income taxes payable in prior years.   
- Other operating working capital changes in the first quarter of
2014 include an increase in prepaid expenses and a decrease in
accounts payable and accrued liabilities (see Section 6 Changes in
financial position).  
7.3 Cash used by investing activities 
Cash used by investing activities increased year over year by $291
million in the first quarter of 2014, and included the following:  
- A deposit for the 700MHz spectrum licences totalling $229 million  
- Business acquisitions and related investments totaling $37 million
to complement our existing lines of business (first quarter of 2013 -
$26 million)  
- Advances and contributions to the real estate joint ventures in the
amount of $14 million (first quarter of 2013 - $4 million).  
- Cash payments for capital assets (excluding spectrum licenses) were
$548 million in the first quarter of 2014, an increase of $46 million
from the first quarter of 2013, composed of:  


 
 
--  A $29 million increase in capital assets expenditures (see table and
    discussion below). 
--  Comparative changes of $17 million in working capital to reflect payment
    timing differences in respect of capital expenditures. 
 
Capital expenditure measures                                                
----------------------------------------------------------------------------
Three-month periods ended March 31 ($                                       
 millions, except capital intensity)             2014     2013   Change     
----------------------------------------------------------------------------
Capital expenditures (excluding spectrum                                    
 licences) (1)                                                              
  Wireless segment                                165      134     23.1 %   
  Wireline segment                                331      333     (0.6)%   
----------------------------------------------------------------------------
                                                  496      467      6.2 %   
----------------------------------------------------------------------------
EBITDA less capital expenditures (excluding                                 
 spectrum licences) (2)                           581      567      2.5 %   
Wireless segment capital intensity (%)             11        9        2 pts.
Wireline segment capital intensity (%)             24       25       (1) pt.
Consolidated capital intensity(2) (%)              17       17        - pts.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Capital expenditures include assets purchased, but not yet paid for, and
    therefore differ from cash payments for capital assets, as presented on 
    the condensed interim consolidated statements of cash flows. See Note   
    25(b) of the interim consolidated financial statements.                 
(2) See calculation and description in Section 11.1 Non-GAAP financial      
    measures.                                                               
----------------------------------------------------------------------------

-Wireless segment capital expenditures increased year over year by $31
million in the first quarter of 2014 due to continued investment in
wireless broadband infrastructure and system resiliency and
reliability in support of our ongoing customers first initiatives.
Wireless segment capital intensity was 11% in the first quarter of
2014 compared to 9% in the first quarter of 2013.  
The wireless cash flow proxy (EBITDA less capital expenditures) was
$525 million in the first quarter of 2014, as compared to $532
million in the first quarter of 2013, representing a decrease of $7
million or 1.3%. The decrease resulted from higher capital
expenditures and a negative $10 million EBITDA impact from Public
Mobile, offsetting the EBITDA increase from other operations. 
- Wireline segment capital expenditures decreased year over year by
$2 million in the first quarter of 2014 due to completion of IDCs in
2013, as well as lower expenditures for business growth, partly
offset by increased broadband expenditures and readying the network
and systems for future retirement of legacy assets. Wireline segment
capital intensity was 24% in the first quarter of 2014, down from 25%
in the first quarter of 2013.  
The wireline cash flow proxy (EBITDA less capital expenditures) was
$56 million in the first quarter of 2014, up from $35 million in the
first quarter of 2013, reflecting an increase of $21 million or 60%.
The increase resulted primarily from higher EBITDA.  
7.4 Cash used by financing activities 
Net cash used by financing activities was $55 million in the first
quarter of 2014 and $278 million in the first quarter of 2013.
Financing activities included the following:  
Dividends paid to the holders of equity shares 
Dividends paid to the holders of TELUS shares were $222 million in
the first quarter of 2014, an increase of $14 million from the first
quarter of 2013. The increase primarily reflects higher dividend
rates under our dividend growth program, partly offset by a reduction
in the number of outstanding shares reflecting shares purchased and
cancelled under our NCIB programs. 
Purchase of Common Shares for cancellation 
We purchased approximately 5.4 million shares under our 2014 NCIB
program through April 30, 2014. The shares purchased represented
approximately 0.9% of the outstanding Common Shares prior to
commencement of the NCIB in January 2014. See Section 4.3 for details
of our planned multi-year share purchase programs through 2016. 


 
 
Normal course issuer bid in 2014                                            
----------------------------------------------------------------------------
                    Common                                                  
                    Shares    Average                    Change             
                 purchased   purchase     Purchase   in accrued         Cash
                       and  price per        costs    liability      outflow
Period           cancelled  share ($) ($ millions) ($ millions) ($ millions)
----------------------------------------------------------------------------
First quarter    4,312,200      37.22          161          (2)          159
April            1,071,500      38.38           41          (4)           37
----------------------------------------------------------------------------
Total            5,383,700      37.45          202          (6)          196
----------------------------------------------------------------------------

Short-term borrowings 
Short-term borrowings are composed primarily of amounts advanced to
us from an arm's-length securitization trust pursuant to transfer of
receivables securitization transactions (see Section 7.7 Sale of
trade receivables). T
hese proceeds were reduced by $300 million in
the first quarter of 2014 to $100 million at March 31, 2014. Such
proceeds were $400 million throughout 2013. 
Long-term debt issues and repayments  
Net long-term debt issues in the first quarter of 2014 were composed
of a net increase in commercial paper to $626 million at March 31,
2014. Our weighted average interest rate on long-term debt was 5.0%
at March 31, 2014, as compared to 5.44% one year earlier. In
comparison, net repayments of $71 million in the first quarter of
2013 were a reduction in commercial paper to a balance of $174
million at March 31, 2013.  
Subsequent to the first quarter ended March 31, 2014, on April 4,
2014, we issued $1 billion in senior unsecured notes (Notes) in two
series, a $500 million offering at 3.20% due April 5, 2021, and a
$500 million offering at 4.85% due April 5, 2044. These Notes may be
redeemed in whole at any time, or in part from time to time, and
contain certain change of control provisions. The net proceeds were
used to repay the approximately $914 million of indebtedness drawn to
fund a portion of the purchase price of the 700 MHz spectrum licences
and the remainder will be used for general corporate purposes. These
debt issues increased our average term to maturity of long-term debt
(excluding commercial paper) to approximately 10.3 years, compared to
5.5 years at the end of 2012, and reduced our weighted average
interest rate on long-term debt (excluding commercial paper) to
approximately 4.89%, as compared to 5.44 per cent at the end of 2012. 
No amounts were drawn against our revolving credit facility in the
first quarter of 2014 or 2013. Subsequent to March 31, 2014, we drew
$914 million against the revolving credit facility to pay the balance
due in respect of our acquired 700 MHz spectrum licences; the $914
million was repaid with the proceeds from our long-term debt issues
on April 4, 2014. This credit facility also fully backstops our
commercial paper program, which provides low cost funding (see
Section 7.6 Credit facilities). 
7.5 Liquidity and capital resource measures 
Net debt was $8,202 million at March 31, 2014, an increase of $1,607
million when compared to one year earlier, resulting from our
re-financing activities in 2013 and commercial paper issues in the
first three months of 2014, net of increased cash and temporary
investments and a reduction in short-term borrowings, as discussed
above.  
Fixed-rate debt as a proportion of total indebtedness was unchanged
at 91% at March 31, 2014 when compared to March 31, 2013.  
Total capitalization - book value was $16,341 million at March 31,
2014, an increase of $1,794 million from one year earlier due to the
increase in net debt and retained earnings, partly offset by a
reduction in share capital resulting from share purchases under our
NCIB programs. Net debt to total capitalization increased to about
50% at March 31, 2014, from 45% one year earlier.  
The Net debt to EBITDA - excluding restructuring and other like costs
ratio was 1.97 times at March 31, 2014, up from 1.67 times one year
earlier, as the increase in net debt (see above) was partly offset by
growth in EBITDA - excluding restructuring and other like costs. Our
long-term policy guideline for this ratio is from 1.50 to 2.00 times.
At the end of the second quarter of 2014, we anticipate this ratio to
be slightly outside of the long-term policy guideline range as a
result of funding the purchase of 700 MHz spectrum licences, but we
expect to return to the policy guideline range in the medium term, as
we believe that the policy guideline range is supportive of
maintaining our investment grade credit ratings. While the ratio will
temporarily exceed our long-term policy guideline, we expect to be
well within our revolving credit facility covenants, which include a
requirement that we not permit TELUS' consolidated Leverage Ratio to
exceed 4 to 1. See Section 7.6 Credit facilities. 


 
 
Liquidity and capital resource measures                                     
----------------------------------------------------------------------------
As at, or 12-month periods ended, March 31       2014     2013   Change     
----------------------------------------------------------------------------
Components of debt and coverage ratios (1)                                  
 ($ millions)                                                               
----------------------------------------------------------------------------
Net debt                                        8,202    6,595    1,607     
Total capitalization - book value              16,341   14,547    1,794     
EBITDA - excluding restructuring and other                                  
 like costs                                     4,156    3,958      198     
Net interest cost                                 388      340       48     
----------------------------------------------------------------------------
Debt ratios                                                                 
----------------------------------------------------------------------------
Fixed-rate debt as a proportion of total                                    
 indebtedness (%)                                  91       91        - pts.
Average term to maturity of long-term debt                                  
 (excluding commercial paper) (years)             9.2      5.3      3.9     
Net debt to total capitalization (1) (%)         50.2     45.3      4.9 pts.
Net debt to EBITDA - excluding restructuring                                
 and other like costs (1)(times)                 1.97     1.67      0.3     
----------------------------------------------------------------------------
Coverage ratios (1)(times)                                                  
----------------------------------------------------------------------------
Earnings coverage                                 5.4      5.8     (0.4)    
EBITDA - excluding restructuring and other                                  
 like costs interest coverage                    10.7     11.6     (0.9)    
----------------------------------------------------------------------------
Other measures (%)                                                          
----------------------------------------------------------------------------
Dividend payout ratio of adjusted net                                       
 earnings (1)                                      68       68        - pts.
Dividend payout ratio (1)                          69       67        2 pts.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) See Section 11.1 Non-GAAP financial measures.                           
----------------------------------------------------------------------------

The Earnings coverage ratio for the first quarter of 2014 was 5.4
times, down from 5.8 times one year earlier due to higher borrowing
costs (including the May 2013 long-term debt prepayment premium).  
The EBITDA - excluding restructuring and other like costs interest
coverage ratio for the first quarter of 2014 was 10.7 times, down
from 11.6 times one year earlier. An increase in net interest costs
(including the May 2013 long-term debt prepayment premium) reduced
the ratio by 1.4, while growth in EBITDA - excluding restructuring
and other like costs increased the ratio by 0.5. See Section 7.6
Credit facilities. 
Dividend payout ratios: Our target guideline is 65 to 75% of
sustainable earnings on a prospective basis. The basic and adjusted
dividend payout ratios for 2014 and 2013 were consistent with the
target range. 
7.6 Credit facilities 
As at March 31, 2014, we had $52 million of cash and temporary
investments, more than $1.4 billion of unutilized credit facilities
and $400 million available under our trade receivables securitization
program (see Section 7.7). This is consistent with our objective of
generally maintaining at least $1 billion of available liquidity. 
TELUS credit and other bank credit facilities at March 31, 2014 


 
 
-----------------------------------------------------------------------
-----
                                                         Backstop           
                                          Outstanding         for           
                                              undrawn  commercial           
($ in                                         letters       paper  Available
 millions)          Expiry    Size   Drawn  of credit     program  liquidity
----------------------------------------------------------------------------
Five-year                                                                   
 revolving     November 3,                                                  
 facility(1)          2016   2,000       -          -        (626)     1,374
Other bank                                                                  
 facilities              -      75       -        (13)          -         62
----------------------------------------------------------------------------
Total                        2,075       -        (13)       (626)     1,436
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Canadian dollars or U.S. dollar equivalent. Subsequent to March 31,     
    2014, the credit facility was renewed at $2,250 with an expiry date of  
    May 31, 2019.                                                           
----------------------------------------------------------------------------

Revolving credit facility 
We have a $2.0 billion (or U.S. dollar equivalent) revolving credit
facility with a syndicate of 14 financial institutions that expires
on November 3, 2016. Subsequent to March 31, 2014, the credit
facility was renewed at $2.25 billion with an expiry date of May 31,
2019. The revolving credit facility is used for general corporate
purposes, including the backstop of commercial paper, as required.  
On April 2, 2014, we paid the remaining balance of $914 million for
the 700 MHz spectrum licences through indebtedness drawn against this
credit facility and repaid the credit facility with the proceeds of
our April 4, 2014 Series CO and Series CP long-term debt issues, as
described in Section 7.4.  
Our revolving credit facility contains customary covenants, including
a requirement that we not permit TELUS' consolidated Leverage Ratio
to exceed 4 to 1 (our ratio was approximately 1.97 to 1 at March 31,
2014) and not permit TELUS' consolidated Coverage Ratio (EBITDA to
interest expense on a trailing 12-month basis) to be less than 2 to 1
(approximately 10.7 to 1 at March 31, 2014, and expected to remain
well above the covenant) at the end of any financial quarter. There
are certain minor differences in the calculation of the Leverage
Ratio and Coverage Ratio under the credit agreements as compared with
the calculation of Net debt to EBITDA - excluding restructuring and
other like costs and EBITDA - excluding restructuring and other like
costs interest coverage. Historically, the calculations have not been
materially different. The covenants are not impacted by revaluation
of property, plant and equipment, intangible assets or goodwill for
accounting purposes. Continued access to our credit facilities is not
contingent on maintaining a specific TELUS credit rating. 
Other bank and letter of credit facilities 
As at March 31, 2014, we also have other bank credit facilities
available to us, including $584 million letter of credit facilities,
expiring in the second and third quarters of 2014, of which $520
million was utilized. Subsequent to March 31, 2014, concurrent with
funding the purchase of the 700 MHz spectrum licences on April 2,
2014, $404 million of letters of credit were extinguished.  
7.7 Sale of trade receivables 
TELUS Communications Inc. (TCI), a wholly owned subsidiary of TELUS,
is a party to an agreement with an arm's-length securitization trust
associated with a major Schedule I Canadian bank, under which TCI is
able to sell an interest in certain of its trade receivables, for an
amount up to a maximum of $500 million. We renewed the agreement in
the first quarter of 2014, and the agreement is in effect until
December 31, 2016. Available liquidity under this agreement was $400
million at March 31, 2014. (See Note 19 of the interim consolidated
financial statements.) Sales of trade receivables in securitization
transactions are recognized as collateralized short-term borrowings
and thus do not result in our de-recognition of the trade receivables
sold.  
TCI is required to maintain at least a BB credit rating by DBRS Ltd.
or the securitization trust may require the sale program to be wound
down prior to the end of the term. The necessary credit rating was
exceeded as at May 8, 2014. 
7.8 Credit ratings 
There were no changes to our investment grade credit ratings during
the first quarter of 2014 or as at May 8, 2014.  
7.9 Financial instruments, commitments and contingent liabilities 
Financial instruments 
Our financial instruments and the nature of certain risks that they
may be subject to were described in Section 7.9 of our 2013 MD&A. 
Liquidity risk 
We have access to a shelf prospectus, renewed in November 2013 for
$3.0 billion and in effect until December 2015. Following our net
debt issues in April 2014, we can offer $1.2 billion of debt or
equity securities under this shelf prospectus as of the date of this
MD&A.  
At March 31, 2014, we had credit facilities available, including a
$2.0 billion facility expiring in November 2016 (see Section 7.6
Credit facilities). Subsequent to March 31, 2014, the credit facility
was renewed at $2.25 billion with an expiry date of May 31, 2019. We
also had $52 million in cash and temporary investments at March 31,
2014. We believe that our investment grade credit ratings contribute
to reasonable access to capital markets.  
Commitments and contingent liabilities 
Purchase obligations 
As at March 31, 2014, our contractual commitments related to the
acquisition of property, plant and equipment were $344 million
through to 2015 as compared to $197 million through to 2014 at
December 31, 2013, primarily driven by the increase in commitments
related to broadband expansion. 
Indemnification obligations  
At March 31, 2014, we had no liability recorded in respect of
indemnification obligations. 
Claims and lawsuits 
A number of claims and lawsuits (including class actions) seeking
damages and other relief are pending against us. As well, we have
received or are aware of certain possible claims (including
intellectual property infringement claims) against us and, in some
cases, numerous other wireless carriers and telecommunications
service providers.  
Management is of the opinion, based upon legal assessment and
information presently available, that it is unlikely that any
liability, to the extent not provided for through insurance or
otherwise, would have a material effect in relation to our financial
position and the results of our operations, excepting items disclosed
in Note 23(b) of the interim consolidated financial statements. 
7.10 Outstanding share information 


 
 
                                                       March 31,   April 30,
Outstanding shares (millions)                               2014        2014
----------------------------------------------------------------------------
Common Shares                                                620         619
Common Share options                                           6           6
Exercisable Common Share options                               4           4
----------------------------------------------------------------------------

7.11 Transactions between related parties 
Investments in significant controlled entities 
As at March 31, 2014, TELUS Corporation controlled 100% of the equity
of TELUS Communications Inc., which in turn controlled 100% of the
equity of TELUS Communications Company and TELE-MOBILE COMPANY. This
was unchanged from December 31, 2013. 
Transactions with key management personnel 
Our key management personnel have authority and responsibility for
overseeing, planning, directing and controlling our activities, and
consist of our Board of Directors and our Executive Leadership Team.
Total compensation expense amounts for key management personnel were
$10 million in the first quarter of 2014 and $10 million in the first
quarter of 2013. See Note 24(b) of the interim consolidated financial
statements for additional detail. 
Transactions with defined benefit pension plans 
We made employer contributions to defined benefit plans as shown in
the table in Section 7.2. We also provided management and
administrative services to our defined benefit pension plans. Charges
for these services were on a cost recovery basis and were immaterial. 
Transactions with real estate joint ventures 
In the first quarter of 2014, we had transactions with the real
estate joint ventures, which are related parties, as set out in Note
18 of the interim consolidated financial statements. Commitments and
contingent liabilities for the real estate joint ventures include
construction-related contractual commitments through to 2015
(approximately $134 million at March 31, 2014), a 20-year operating
lease commitment commencing in 2015 and construction credit
facilities ($388 million with two Canadian financial institutions as
50% lender and TELUS as 50% lender). The TELUS Garden residential
tower has sales contracts in place for substantially all units, while
at March 31, 2014, the proportion of space leased in the TELUS Garden
office tower was approximately 93%. 
8. Accounting matters 
8.1 Critical accounting estimates 
Our significant accounting policies are described in Note 1 of the
Consolidated financial statements dated December 31, 2013. The
preparation of financial statements in conformity with generally
accepted accounting principles requires us to make estimates,
assumptions and judgments that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. Our critical accounting estimates
and significant judgments are generally discussed with the Audit
Committee each quarter. 
8.2 Accounting policy developments 
Revenue from contracts with customers: The International Accounting
Standards Board and the Financial Accounting Standards Board of the
United States have been working on a joint project to clarify the
principles for the recognition of revenue and to develop a common
revenue standard. In June 2010, an exposure draft was issued and in
November 2011, a revised exposure draft was issued. We are currently
assessing the impacts of the draft proposals. 
If the finalized standard, the promulgation of which is currently
awaited, were to largely reflect the draft proposals, its effects and
the materiality of those effects would vary by industry and entity.
We, like many other telecommunications companies, currently expect to
be materially affected by its application, primarily in respect of
the timing of revenue recognition and in respect of capitalization of
costs of acquisition and contract fulfillment costs. The prohibition
of the use of the limitation cap methodology would accelerate the
recognition of revenue, relative to both the associated cash inflows
from customers and our current practice, primarily in the wireless
sector. Although the underlying transaction economics would not
differ, during periods of increases in the number of wireless
subscriber connections, assuming comparable contract-lifetime per
unit cash inflows, revenue growth would appear greater than under
current practice (using the limitation cap methodology). Wireline
segment results arising from transactions, which include the initial
provision of subsidized hardware, would be similarly affected. 
Similarly, the measurement, over the life of a contract, of total
costs of contract acquisition and contract fulfillment costs would be
unaffected by the draft proposals. The draft proposals, which would
affect both our wireless and wireline segments, would result in such
costs of acquisition being capitalized and subsequently recognized as
an expense over the life of a contract on a rational, systematic
basis consistent with the pattern of the transfer of goods or
services to which the asset relates. Although the underlying
transaction economics would not differ, during periods of increases
in the number of subscriber connections, assuming comparable per unit
costs of acquisition and contract fulfillment, profitability measures
would appear greater than under the current practice of immediate
expensing of such costs. 
Other issued standards: Other issued standards required to be applied
for periods beginning on or after January 1, 2014, have no
significant effect on our financial performance. 
9. General outlook and assumptions for 2014 
Our discussion in this section is qualified in its entirety by the
Caution regarding forward-looking statements at the beginning of the
MD&A. 
Assumptions for 2014 


 
 
--  Our revised estimate for economic growth in Canada in 2014 is 2.3%
    (previously 2.4%). 
 
--  No material adverse regulatory rulings or government actions. 
 
--  Wireless and wireline intense competition continues from 2013 in both
    consumer and business markets. 
 
--  Approximately one to two percentage point increase in wireless industry
    penetration of the Canadian market, similar to 2013. 
 
--  Ongoing subscriber adoption and upgrades of data-intensive smartphones
    at a rate consistent with 2013 levels (70 to 80% of postpaid gross
    additions), as customers want more mobile connectivity to the Internet. 
 
--  Wireless revenue growth from net positive postpaid subscriber loadings,
    consistent with increased industry market penetration, as well as modest
    increase in blended ARPU resulting from increased data usage, including
    from increased use of shared data plans, and subscriber mix. 
 
--  Flat to higher wireless acquisition and retention expenses, dependent on
    gross loadings and market pressures. 
 
--  Growth in wireline data revenues from an increase in Optik TV and high-
    speed Internet subscribers, consistent with 2013, and a modest increase
    in average revenue per customer, as well as from growth in business
    services. 
 
--  Pension plans: Defined benefit pension plan expense of approximately $85
    million recorded in employee benefits expense and approximately $2
    million recorded in employee defined benefit plans net interest in
    financing costs; a 4.75% discount rate for employee defined benefit
    pension accounting purposes; and defined benefit pension plan funding of
    approximately $105 million. 
 
--  Restructuring and other like costs of approximately $75 million for
    continuing operational efficiency initiatives, with other margin
    enhancement initiatives to mitigate pressures from technological
    substitution and subscriber growth. 
 
--  Income taxes: Weighted average statutory income tax rate of 26.0 to
    26.5% and cash income tax payments between $540 million and $600
    million. Cash tax payments are increasing due to higher instalment
    payments based on 2013 income, the effect of Canadian federal
    government's enacted policy change that eliminates the ability to defer
    income taxes through the use of different tax year-ends for operating
    partnerships and corporate partners, as well as lower recoveries. 
 
--  Continued investments in broadband infrastructure and for 4G LTE
    expansion and upgrades, and network and systems resiliency and
    reliability. 
 
--  Moderate weakening of the Canadian dollar to U.S. dollar exchange rate
    versus the average exchange rate in 2013. 

Except as noted above, the assumptions for our 2014 outlook described
in Section 9General outlook and assumptions of our annual 2013 MD&A
remain the same. 
10. Risks and risk management 
Our principal risks and uncertainties that could affect our future
business results and our associated risk mitigation activities were
described in our annual 2013 MD&A. 
10.1 Regulatory matters 
The following are updates to Section 10.4 Regulatory matters in our
2013 MD&A. 
Upcoming regulatory reviews 
The CRTC has announced its intention to hold public proceedings to
review, among others, wireline wholesale services including the
appropriateness of mandating competitor access to FTTP facilities,
satellite and other transport services, enhanced basic services, the
subsidy regime, the national contribution mechanism, wireless
wholesale services and paper bill charges. 
Wireline wholesale services review 
On October 15, 2013, the CRTC initiated a broad review of the
existing regulatory framework for wireline wholesale services in
Telecom Notice of Consultation CRTC 2013-551, Review of wholesale
services and associated policies. This wide-ranging policy proceeding
will include an oral hearing in the fourth quarter of 2014 with a
decision expected in the first quarter of 2015. The outcome of this
review may change aspects of the current regulatory framework for
wholesale services. Among other matters, it will address the question
of whether competitors that choose not to build their own FTTP
facilities should enjoy regulated access to the FTTP facilities owned
by TELUS and other large telephone and cable companies. These changes
could negatively impact our future business strategies. 
Satellite and other transport services 
On February 6, 2014, the CRTC initiated a review of satellite and
other transport services provided by satellite operators to other
telecommunications service providers in Canada. The CRTC ide
ntified
the high cost of satellite transport as an impediment to meeting its
broadband target speed at affordable prices for 5 megabits per second
(Mbps) to download and 1 Mbps to upload in Yukon, Nunavut and the
Northwest Territories.  
For 2014, the CRTC also announced a review of the transport
infrastructure in these geographical areas, including an assessment
of whether a mechanism should be established to fund infrastructure
investments in transport facilities. 
Wireless wholesale services review 
On October 16, 2013, as part of the Governor General's speech from
the throne, the federal government indicated that it would take steps
to reduce roaming costs on networks within Canada. On December 12,
2013, the CRTC initiated a review of wireless wholesale roaming
rates. The proceeding examined whether wireless carriers are charging
other Canadian wireless service providers domestic roaming rates that
are discriminatory. The record of this proceeding is now closed with
a decision expected in the second quarter of 2014.  
On February 20, 2014, the CRTC initiated a review of the current
level of competition in the retail and wholesale wireless
marketplaces to determine whether any further regulatory requirements
are necessary, such as regulated rates for roaming or tower/site
sharing, or any other mandated wholesale services. The proceeding
will take place during 2014, with an oral hearing scheduled to begin
on September 29, 2014, and a decision expected in the first quarter
of 2015. It is too early to determine whether the outcome of the
proceeding will have a material adverse effect on the Company. 
In the federal budget released on February 11, 2014, the federal
government announced a proposal to amend the Telecommunications Act
to cap wholesale wireless roaming rates to prevent wireless providers
from charging other companies more than they charge their own
customers for mobile voice, data and text services. On March 31,
2014, the federal government introduced Bill C-31, Economic Action
Plan 2014 Act, No. 1, which included specific provisions that would
cap wholesale wireless roaming rates charged to Canadian carriers for
voice, data and text roaming services. If passed by Parliament, it is
expected that this measure will be in place until the CRTC concludes
its investigation on whether the wholesale mobile wireless market is
sufficiently competitive and makes a decision on roaming rates. The
CRTC review will also examine tower and network sharing arrangements.
The review will include an oral hearing at the end of September 2014
with a decision expected in the first quarter of 2015. 
Application to the CRTC to review paper bill charges 
On October 22, 2013, the Public Interest Advocacy Centre filed an
application to the CRTC seeking a prohibition on telecommunications
service providers charging their residential customers for receipt of
paper bills, and for the issuance of refunds to regulated telephone
company customers for any past paper bill charges. As part of this
proceeding, we acknowledged that we charge residential customers for
receipt of paper bills, but that these charges are designed in a
reasonable manner such that all customers to whom the charge is
levied have access to electronic billing, but choose to receive a
paper bill. We do not charge any wireline telephone customers for
receipt of paper bills. The record of this proceeding is now closed
and a decision is expected from the CRTC in the second quarter of
2014. 
Risk mitigation: We will continue to press the CRTC to reduce the
scope of network facilities subject to mandatory competitor access.
If access to FTTP infrastructure is mandated by the CRTC as a result
of the wireline wholesale services review proceeding, potential
future FTTP investments by carriers of all kinds would be
discouraged. We will emphasize that enhancements to the basic service
objective would require associated changes to the current subsidy
regime to fully fund any new service requirements. 
We will participate in both transport-related proceedings and will
argue, as a net payer, against additional industry-funded subsidy
mechanism flowing to Yukon, Nunavut and the Northwest Territories. 
We will participate in the wireless wholesale services review
proceeding to demonstrate that the domestic roaming and other rates
we charge to Canadian wireless service providers are not
discriminatory.  
We have responded to the application on paper bill charges by
demonstrating that the charges are fair in that they are only levied
to customers who have direct access to electronic billing but still
choose to receive a paper bill. We have also demonstrated that our
paper bill charges are levied based on billing for forborne services,
meaning that the CRTC has forborne from regulating these rates. 
Broadcasting distribution undertakings 
We have applied for a licence to operate a national pay-per-view
service. A public hearing was held in April 2014, however, no
decision has been announced. 
11. Definitions and reconciliations 
11.1 Non-GAAP financial measures 
We have issued guidance on and report certain non-GAAP measures that
are used to evaluate the performance of TELUS and its segments, as
well as to determine compliance with debt covenants and to manage the
capital structure. As non-GAAP measures generally do not have a
standardized meaning, they may not be comparable to similar measures
presented by other issuers. Securities regulations require such
measures to be clearly defined, qualified and reconciled with their
nearest GAAP measure. 
Capital intensity: This measure is calculated as capital expenditures
(excluding spectrum licences) divided by total operating revenues.
This measure provides a basis for comparing the level of capital
expenditures to those of other companies of varying size within the
same industry. 
Dividend payout ratio: This basic measure is defined as the quarterly
dividend declared per share for the most recently completed quarter,
as reported in the consolidated financial statements, multiplied by
four and divided by the sum of basic earnings per share for the most
recent four quarters for interim reporting periods (divided by annual
basic earnings per share for fiscal years).  


 
 
Calculation of Dividend payout ratio                                        
----------------------------------------------------------------------------
Twelve-month periods ended March 31 ($)                         2014    2013
----------------------------------------------------------------------------
Numerator - Annualized fourth quarter dividend declared per                 
 equity share                                                   1.44    1.28
Denominator - Net income per equity share                       2.08    1.91
----------------------------------------------------------------------------
Ratio (%)                                                         69      67
----------------------------------------------------------------------------

Dividend payout ratio of adjusted net earnings: More representative of
a sustainable calculation is the historical ratio based on reported
earnings per share adjusted to exclude income tax-related
adjustments, long-term debt prepayment premiums and items adjusted
for in EBITDA. Our policy guideline for the annual dividend payout
ratio is on a prospective basis, rather than on a trailing basis, and
is 65 to 75% of sustainable earnings on a prospective basis (see
Section 4.3). 


 
 
Calculation of Dividend payout ratio of adjusted net earnings               
----------------------------------------------------------------------------
Twelve-month periods ended March 31 ($)                         2014   2013 
----------------------------------------------------------------------------
Numerator - Annualized fourth quarter dividend declared per                 
 equity share                                                   1.44   1.28 
----------------------------------------------------------------------------
Adjusted net earnings ($ millions):                                         
Net income attributable to equity shares                       1,309  1,247 
Add back long-term debt prepayment premium after income                     
 taxes                                                            17      - 
Add back unfavourable (deduct favourable) income tax-related                
 adjustments                                                       8     (7)
Deduct after-tax gain net of equity losses related to the                   
 TELUS Garden residential real estate partnership                  -     (7)
Net-cash settlement feature                                        -     (2)
----------------------------------------------------------------------------
                                                               1,334  1,231 
----------------------------------------------------------------------------
Denominator - Adjusted net earnings per share                   2.12   1.89 
----------------------------------------------------------------------------
Adjusted ratio (%)                                                68     68 
----------------------------------------------------------------------------

Earnings coverage: This measure is defined in the Canadian Securities
Administrators' National Instrument 41-101 and related instruments,
and is calculated as follows: 


 
 
Calculation of Earnings coverage                                            
----------------------------------------------------------------------------
Twelve-month periods ended March 31 ($ millions, except                     
 ratio)                                                         2014    2013
----------------------------------------------------------------------------
Net income attributable to equity shares                       1,309   1,247
Income taxes                                                     484     435
Borrowing costs (Interest on long-term debt + Interest on                   
 short-term borrowings and other + Long-term debt prepayment                
 premium)                                                        408     349
----------------------------------------------------------------------------
Numerator                                                      2,201   2,031
Denominator - Borrowing costs                                    408     349
----------------------------------------------------------------------------
Ratio (times)                                                    5.4     5.8
----------------------------------------------------------------------------

EBITDA (earnings before interest, income taxes, depreciation and
amortization): We have issued guidance on and report EBITDA because
it is a key measure used to evaluate performance at a consolidated
level and the contribution of our two segments. EBITDA is commonly
reported and widely used by investors and lending institutions as an
indicator of a company's operating performance and ability to incur
and service debt, and as a valuation metric. EBITDA should not be
considered an alternative to net income in measuring TELUS'
performance, nor should it be used as an exclusive measure of cash
flow. EBITDA as calculated by TELUS is equivalent to operating
revenues less the total of goods and services purchased expense and
employee benefits expense.  
We may also calculate an adjusted EBITDA to exclude items of an
unusual nature that do not reflect our ongoing operations, that
should not be considered in a valuation metric or that should not be
included in an assessment of our ability to service or incur debt. In
respect of the TELUS Garden residential real estate partnership,
which is included in the wireline segment, we do not anticipate
retaining an ownership interest in the TELUS Garden residential
condominium following completion of construction. For the TELUS
Garden residential real estate partnership, in the first quarters of
2014 and 2013, we recorded equity losses of $Nil. 


 
 
EBITDA reconciliation                                                       
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)                 2014    2013
----------------------------------------------------------------------------
Net income                                                       377     362
Financing costs                                                  102      96
Income taxes                                                     135     125
Depreciation                                                     346     347
Amortization of intangible assets                                117     104
----------------------------------------------------------------------------
EBITDA                                                         1,077   1,034
----------------------------------------------------------------------------

EBITDA - excluding restructuring and other like costs: We report this
measure as a supplementary indicator of our operating performance. It
is also utilized in the calculation of Net debt to EBITDA - excluding
restructuring and other like costs and EBITDA - excluding
restructuring and other like costs interest coverage. 


 
 
Calculation of EBITDA - excluding restructuring and other like costs        
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)                 2014    2013
----------------------------------------------------------------------------
EBITDA                                                         1,077   1,034
Restructuring and other like costs included in EBITDA              8      11
----------------------------------------------------------------------------
EBITDA - excluding restructuring and other like costs          1,085   1,045
----------------------------------------------------------------------------

EBITDA - excluding restructuring and other like costs interest
coverage: This measure is defined as EBITDA excluding restructuring
and other like costs, divided by net interest cost, calculated on a
12-month trailing basis. This measure is similar to the Coverage
Ratio covenant in our credit facilities (see Section 7.6).  
EBITDA less capital expenditures (excluding spectrum licences): We
report this measure as a supplementary indicator of our operating
performance. We calculate this measure as a simple proxy for cash
flow at a consolidated level and for our two segments. EBITDA less
capital expenditures may be used for comparison to the reported
results for other telecommunications companies over time and is
subject to the potential comparability issues of EBITDA described
above. 


 
 
Calculation of EBITDA less capital expenditures (excluding spectrum         
 licences)                                                                  
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)                2014    2013 
----------------------------------------------------------------------------
EBITDA                                                        1,077   1,034 
Capital expenditures (excluding spectrum licences)             (496)   (467)
----------------------------------------------------------------------------
EBITDA less capital expenditures (excluding spectrum                        
 licences)                                                      581     567 
----------------------------------------------------------------------------

Free cash flow: We report this measure as a supplementary indicator of
our operating performance. It should not be considered an alternative
to the measures in the consolidated statements of cash flows. Free
cash flow excludes certain working capital changes (such as trade
receivables and trade payables), proceeds from divested assets and
other sources and uses of cash, as found in the consolidated
statements of cash flows. It provides an indication of how much cash
generated by operations is available after capital expenditures
(excluding spectrum licences) that may be used to, among other
things, pay dividends, repay debt, purchase shares under an NCIB
program, or make other investments. Free cash flow may be
supplemented from time to time by proceeds from divested assets or
financing activities. 


 
 
Free cash flow calculation                                                  
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)                2014    2013 
----------------------------------------------------------------------------
EBITDA                                                        1,077   1,034 
Restructuring (disbursements) net of restructuring costs        (15)     (6)
Items from the consolidated statements of cash flows:                       
  Share-based compensation                                       16      12 
  Net employee defined benefit plans expense                     22      26 
  Employer contributions to employee defined benefit plans      (29)    (36)
  Interest paid                                                 (61)    (58)
  Interest received                                               1       1 
Capital expenditures (excluding spectrum licences)             (496)   (467)
----------------------------------------------------------------------------
Free cash flow before income taxes                              515     506 
Income taxes paid, net of refunds received                     (224)   (148)
----------------------------------------------------------------------------
Free cash flow                                                  291     358 
----------------------------------------------------------------------------

The following reconciles our definition of free cash flow with cash
provided by operating activities. 


 
 
Free cash flow reconciliation with cash provided by operating activities    
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)                2014    2013 
----------------------------------------------------------------------------
Free cash flow                                                  291     358 
Add back capital expenditures (excluding spectrum licences)     496     467 
Adjustments to reconcile to cash provided by operating                      
 activities                                                    (189)    (96)
----------------------------------------------------------------------------
Cash provided by operating activities                           598     729 
----------------------------------------------------------------------------

Net debt: We believe that net debt is a useful measure because it
represents the amount of short-term borrowings and long-term debt
obligations that are not covered by available cash and temporary
investments. The nearest IFRS measure to net debt is long-term debt,
including current maturities of long-term debt. Net debt is a
component of the Net debt to EBITDA - excluding restructuring and
other like costs ratio. 


 
 
Calculation of net debt                                                     
----------------------------------------------------------------------------
As at March 31 ($ millions)                                    2014    2013 
----------------------------------------------------------------------------
Long-term debt including current maturities                   8,120   6,187 
Debt issuance costs netted against long-term debt                34      25 
Cash and temporary investments                                  (52)    (22)
Short-term borrowings                                           100     405 
----------------------------------------------------------------------------
Net debt                                                      8,202   6,595 
----------------------------------------------------------------------------

Net debt to EBITDA - excluding restructuring and other like costs: This
measure is defined as net debt at the end of the period divided by
12-month trailing EBITDA - excluding restructuring and other like
costs. Our long-term policy guideline for this ratio is from 1.50 to
2.00 times, which is similar to the Leverage Ratio covenant in our
credit facilities (see Section 7.6). 
Net debt to total capitalization: This is a measure of the proportion
of debt used in the capital structure of TELUS.  
Net interest cost: This measure is the denominator in the calculation
of EBITDA - excluding restructuring and other like costs interest
coverage. Net interest cost is defined as financing costs, excluding
employee defined benefit plans net interest and recoveries on
redemption and repayment of debt, calculated on a 12-month trailing
basis. No recoveries on redemption and repayment of debt were
recorded in twelve-month periods ended March 31, 2014 and 2013.
Expenses recorded for the long-term debt prepayment premium, if any,
are included in net interest cost. Net interest cost was $388 million
in the twelve-month period ended March 31, 2014 and $340 million in
the twelve-month period ended March 31, 2013. 
Restructuring and other like costs: With the objective of reducing
ongoing costs, we incur associated incremental, non-recurring
restructuring costs. We may also incur atypical charges when
undertaking major or transformational changes to our business or
operating models. In addition to items such as internal and external
labour, such atypical charges may include depreciation and
amortization of intangible asset expenses, when property, plant,
equipment and intangible assets are retired significantly prior to
the end of their estimated useful lives so that other continuing
formerly associated resources, such as spectrum, may be redeployed
elsewhere in our business. We also include incremental external costs
incurred in connection with business acquisition activity in other
like costs. 


 
 
Components of restructuring and other like costs                            
----------------------------------------------------------------------------
Three-month periods ended March 31 ($ millions)                 2014    2013
----------------------------------------------------------------------------
Goods and services purchased                                       -       1
Employee benefits expense                                          8      10
----------------------------------------------------------------------------
Restructuring and other like costs included in EBITDA              8      11
----------------------------------------------------------------------------

Total capitalization - book value is defined and calculated as
follows. 


 
 
Calculation of total capitalization - book value                            
----------------------------------------------------------------------------
As at March 31 ($ millions)                                    2014    2013 
----------------------------------------------------------------------------
Net debt                                                      8,202   6,595 
Owners' equityDeduct accumulated other comprehensive income   8,176   7,995 
 
                                                                (37)    (43)
----------------------------------------------------------------------------
Total capitalization - book value                            16,341  14,547 
----------------------------------------------------------------------------

11.2 Wireless operating indicators 
The following measures are industry metrics that are useful in
assessing the operating performance of a wireless telecommunications
entity, but do not have a standardized meaning under IFRS-IASB. 
Average revenue per subscriber unit per month (ARPU) is calculated as
network revenue divided by the average number of subscriber units on
the network during the period and expressed as a rate per month.  
Churn per month is calculated as the number of subscriber units
deactivated during a given period divided by the average number of
subscriber units on the network during the period, and expressed as a
rate per month. A TELUS or Koodo brand prepaid subscriber is
deactivated when the subscriber has no usage for 90 days following
expiry of the prepaid credits. 
Cost of acquisition (COA) consists of the total of the device subsidy
(the device cost to TELUS less initial charge to customer),
commissions, and advertising and promotion expenses related to the
initial subscriber acquisition during a given period. As defined, COA
excludes costs to retain existing subscribers (retention spend). 
COA per gross subscriber addition is calculated as cost of
acquisition divided by gross subscriber activations during the
period. 
Retention spend to network revenue represents direct costs associated
with marketing and promotional efforts (including device subsidies
and commissions) aimed at the retention of the existing subscriber
base, divided by network revenue. 
Subscriber unit (wireless) is defined as an active recurring
revenue-generating unit (e.g. cellular phone, tablet or mobile
Internet key) with a unique subscriber identifier (SIM or IMEI
number) that has access to the wireless voice and/or data networks
for communication. In addition, TELUS has a direct billing or support
relationship with the user of each device. Subscriber units exclude
M2M devices, such as those for asset tracking, remote control
monitoring and meter readings, vending machines and wireless
automated teller machines. 


 
 
condensed interim consolidated statements of income and other    (unaudited)
comprehensive income                                                        
 
                                                               Three months 
Periods ended March 31 (millions except per share                           
 amounts)                                                 2014         2013 
----------------------------------------------------------------------------
OPERATING REVENUES                                                          
Service                                              $   2,702    $   2,582 
Equipment                                                  172          161 
----------------------------------------------------------------------------
                                                         2,874        2,743 
Other operating income                                      21           13 
----------------------------------------------------------------------------
                                                         2,895        2,756 
----------------------------------------------------------------------------
OPERATING EXPENSES                                                          
Goods and services purchased                             1,222        1,154 
Employee benefits expense                                  596          568 
Depreciation                                               346          347 
Amortization of intangible assets                          117          104 
----------------------------------------------------------------------------
                                                         2,281        2,173 
----------------------------------------------------------------------------
OPERATING INCOME                                           614          583 
Financing costs                                            102           96 
----------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                                 512          487 
Income taxes                                               135          125 
----------------------------------------------------------------------------
NET INCOME                                                 377          362 
----------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME                                                  
Items that may subsequently be reclassified to income                       
Change in unrealized fair value of derivatives                              
 designated as cash flow hedges                              3            2 
Foreign currency translation adjustment arising from                        
 translating financial statements of foreign                                
 operations                                                  7            2 
Change in unrealized fair value of available-for-sale                       
 financial assets                                           (4)          (1)
----------------------------------------------------------------------------
                                                             6            3 
----------------------------------------------------------------------------
Item never subsequently reclassified to income                              
Employee defined benefit plans re-measurements             162          168 
----------------------------------------------------------------------------
                                                           168          171 
----------------------------------------------------------------------------
COMPREHENSIVE INCOME                                 $     545    $     533 
----------------------------------------------------------------------------
NET INCOME PER EQUITY SHARE                                                 
Basic                                                $    0.61    $    0.56 
Diluted                                              $    0.60    $    0.55 
DIVIDENDS DECLARED PER EQUITY SHARE                  $    0.36    $    0.32 
TOTAL WEIGHTED AVERAGE EQUITY SHARES OUTSTANDING                            
Basic                                                      622          653 
Diluted                                                    624          656 
 
condensed interim consolidated statements of financial position  (unaudited)
 
                                                      March 31, December 31,
As at (millions)                                           2014         2013
----------------------------------------------------------------------------
ASSETS                                                                      
Current assets                                                              
Cash and temporary investments, net                 $        52    $     336
Accounts receivable                                       1,426        1,461
Income and other taxes receivable                            41           32
Inventories                                                 300          326
Prepaid expenses                                            269          168
Current derivative assets                                    16            6
----------------------------------------------------------------------------
                                                          2,104        2,329
----------------------------------------------------------------------------
Non-current assets                                                          
Property, plant and equipment, net                        8,496        8,428
Intangible assets, net                                    6,546        6,531
700 MHz spectrum licences deposits                          229            -
Goodwill, net                                             3,750        3,737
Real estate joint ventures                                   12           11
Other long-term assets                                      763          530
----------------------------------------------------------------------------
                                                         19,796       19,237
----------------------------------------------------------------------------
                                                    $    21,900    $  21,566
----------------------------------------------------------------------------
 
LIABILITIES AND OWNERS' EQUITY                                              
Current liabilities                                                         
Short-term borrowings                               $       100    $     400
Accounts payable and accrued liabilities                  1,634        1,735
Income and other taxes payable                                3          102
Dividends payable                                           224          222
Advance billings and customer deposits                      745          729
Provisions                                                   85          110
Current maturities of long-term debt                        626            -
Current derivative liabilities                                1            1
----------------------------------------------------------------------------
                                                          3,418        3,299
----------------------------------------------------------------------------
Non-current liabilities                                                     
Provisions                                                  223          219
Long-term debt                                            7,494        7,493
Other long-term liabilities                                 616          649
Deferred income taxes                                     1,973        1,891
----------------------------------------------------------------------------
                                                         10,306       10,252
----------------------------------------------------------------------------
Liabilities                                              13,724       13,551
----------------------------------------------------------------------------
Owners' equity                                                              
Common equity                                             8,176        8,015
----------------------------------------------------------------------------
                                                    $    21,900    $  21,566
----------------------------------------------------------------------------
 
condensed interim consolidated statements of cash flows          (unaudited)
 
                                                               Three months 
Periods ended March 31 (millions)                         2014         2013 
----------------------------------------------------------------------------
OPERATING ACTIVITIES                                                        
Net income                                           $     377    $     362 
Adjustments to reconcile net income to cash provided                        
 by operating activities:                                                   
  Depreciation and amortization                            463          451 
  Deferred income taxes                                     19          (20)
  Share-based compensation expense                          16           12 
  Net employee defined benefit plans expense                22           26 
  Employer contributions to employee defined benefit                        
   plans                                                   (29)         (36)
  Other                                                    (22)          (4)
  Net change in non-cash operating working capital        (248)         (62)
----------------------------------------------------------------------------
Cash provided by operating activities                      598          729 
----------------------------------------------------------------------------
INVESTING ACTIVITIES                                                        
Cash payments for capital assets, excluding spectrum                        
 licences                                                 (548)        (502)
Cash payments for 700 MHz spectrum licences deposits      (229)           - 
Cash payments for acquisitions and related                                  
 investments                                               (37)         (26)
Real estate joint ventures advances and contributions      (14)          (4)
Proceeds on dispositions                                     5            - 
Other                                                       (4)          (4)
----------------------------------------------------------------------------
Cash used by investing activities                         (827)        (536)
----------------------------------------------------------------------------
FINANCING ACTIVITIES                                                        
Dividends paid to holders of equity shares                (222)        (208)
Purchase of Common Shares for cancellation                (159)           - 
Issuance and repayment of short-term borrowings           (300)           3 
Long-term debt issued                                      761          580 
Redemptions and repayment of long-term debt               (135)        (651)
Other                                                        -           (2)
----------------------------------------------------------------------------
Cash used by financing activities                          (55)        (278)
----------------------------------------------------------------------------
CASH POSITION                                                               
Decrease in cash and temporary investments, net           (284)         (85)
Cash and temporary investments, net, beginning of                           
 period                                                    336          107 
----------------------------------------------------------------------------
Cash and temporary investments, net, end of period   $      52    $      22 
----------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS                             
Interest paid                                        $     (61)   $     (58)
----------------------------------------------------------------------------
Interest received                                    $       1    $       1 
----------------------------------------------------------------------------
Income taxes paid, net                               $    (224)   $    (148)
----------------------------------------------------------------------------
 
segmented information                                            (unaudited)
 
Three-month periods ended March 31                                        
 (millions)                                     Wireless          Wireline
 
                                           2014     2013     2014     2013
--------------------------------------------------------------------------
Operating revenues                                                        
External revenue                        $ 1,555  $ 1,472  $ 1,340  $ 1,284
Intersegment revenue                         13       12       41       41
--------------------------------------------------------------------------
                                        $ 1,568  $ 1,484  $ 1,381  $ 1,325
--------------------------------------------------------------------------
EBITDA(1)                               $   690  $   666  $   387  $   368
--------------------------------------------------------------------------
CAPEX, excluding spectrum licences(2)   $   165  $   134  $   331  $   333
--------------------------------------------------------------------------
EBITDA less CAPEX, excluding spectrum                                     
 licences                               $   525  $   532  $    56  $    35
--------------------------------------------------------------------------
 
Three-month periods ended March 31                                          
 (millions)                                  Eliminations       Consolidated
 
                                           2014      2013      2014     2013
----------------------------------------------------------------------------
Operating revenues                                                          
External revenue                        $     -   $     -   $ 2,895  $ 2,756
Intersegment revenue                        (54)      (53)        -        -
----------------------------------------------------------------------------
                                        $   (54)  $   (53)  $ 2,895  $ 2,756
----------------------------------------------------------------------------
EBITDA(1)                               $     -   $     -   $ 1,077  $ 1,034
----------------------------------------------------------------------------
CAPEX, excluding spectrum licences(2)   $     -   $     -   $   496  $   467
----------------------------------------------------------------------------
EBITDA less CAPEX, excluding spectrum                                       
 licences                               $     -   $     -   $   581  $   567
----------------------------------------------------------------------------
                                         Operating                          
                                         revenues (above)   $ 2,895  $ 2,756
                                         Goods and                          
                                         services                           
                                         purchased            1,222    1,154
                                         Employee                           
                                         benefits expense       596      568
                                      --------------------------------------
                                         EBITDA (above)       1,077    1,034
                                         Depreciation           346      347
                                         Amortization           117      104
                                      --------------------------------------
                                         Operating income       614      583
                                         Financing costs        102       96
                                      --------------------------------------
                                         Income before                      
                                         income taxes       $   512  $   487
                                      --------------------------------------
(1) Earnings before interest, income taxes, depreciation and amortization   
    (EBITDA) does not have any standardized meaning prescribed by IFRS-IASB 
    and is therefore unlikely to be comparable to similar measures presented
    by other issuers; we define EBITDA as operating revenues less goods and 
    services purchased and employee benefits expense. We have issued        
    guidance on, and report, EBITDA because it is a key measure that        
    management uses to evaluate the performance of our business and is also 
    utilized in measuring compliance with certain debt covenants.           
(2) Total capital expenditures (CAPEX).                                     

  
Contacts:
Media relations:
Shawn Hall
(604) 619-7913
shawn.hall@telus.com 
Investor relations:
Paul Carpino
(647) 837-8100
ir@telus.com
 
 
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