TELUS Reports Second Quarter Results

VANCOUVER, Aug. 7 /PRNewswire-FirstCall/ - TELUS Corporation reported second quarter 2009 revenue of $2.38 billion, a decrease of $22 million from last year. The one per cent decrease reflects continued declines in voice revenues that more than offset growth in data revenues. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by five per cent due primarily to a $49 million increase in restructuring costs from ongoing operating efficiency initiatives. Underlying EBITDA increased $34 million, or nearly four per cent, excluding higher restructuring costs and defined benefit pension plan expenses. The increase in underlying EBITDA reflects strong cost containment as operations expense decreased two per cent.

Net income in the second quarter was $244 million and earnings per share (EPS) were $0.77, a decrease of nine and seven per cent respectively. Net income and EPS this quarter included favourable income tax-related adjustments of approximately $19 million or six cents per share, respectively. Excluding the income tax-related adjustments, net income and EPS were down 16 and 14 per cent, respectively.

TELUS increased capital expenditures by $122 million to fund its ongoing wireless and wireline broadband build-out initiatives. As a result, free cash flow was down 43 per cent to $144 million this quarter, which was also lower due to increased restructuring costs and pension contributions.

"The second quarter results continue to reflect the impacts of the recession on our western and nationally based businesses," said Darren Entwistle, TELUS president and CEO. "In light of moderating revenues, our solid progress on operational efficiency initiatives has helped mitigate the effect of current economic conditions and better position the organization for accelerated performance when the economy recovers."

Mr. Entwistle added, "We continue to improve our competitive offering for our customers and enjoyed continued strong subscriptions to TELUS TV this quarter. This IP delivered service is now being complemented by the commercial launch in July of TELUS Satellite TV service across B.C. and Alberta, allowing TELUS to offer bundled entertainment services to more than 90 per cent of households."

Robert McFarlane, TELUS executive vice-president and CFO added, "The Company closed a $700 million debt offering at an attractive coupon rate and with a wide distribution of buyers during the quarter. This successful debt placement demonstrated TELUS' ongoing advantage of having access to the capital markets aided by consistent and long-standing financial policies."

Mr. McFarlane added, "TELUS' strong financial position enables the company to continue making prudent strategic investments to improve its future competitive position. Notable initiatives include significant investments to enhance our broadband networks and implement large enterprise contracts."

The Company has updated its 2009 full year guidance to reflect ongoing impacts of increased operating efficiency initiatives on restructuring costs, the ongoing Canadian recession, weaker than expected wireless ARPU at TELUS and in the Canadian industry and our most recent outlook. The 2009 Wireless revenue range is down between $50 and $100 million while EBITDA has been lowered and narrowed to bottom end of the previous range. The wireline revenue range is unchanged and EBITDA range is narrowed and lowered primarily due to the $25 million increase in the estimated annual restructuring costs. The 2009 Basic EPS range has been narrowed at the top end to $3.35 to $3.55, while Basic EPS excluding income tax-related adjustments is now $3.10 to $3.30. See section 9 of the Management's discussion and analysis for full details including updated assumptions.

TELUS' increased focus on its operating efficiency program continued in the second quarter with an array of initiatives focused on reducing staffing levels, rationalizing external supplier spending, simplifying processes and decommissioning uneconomic products, leveraging business process outsourcing and reducing expenses operation-wide.

During the second quarter of 2009, full time equivalent employees decreased by approximately 300 bringing total reductions to approximately 1,500 from December 31, 2008. Domestic reductions for the second quarter were approximately 400 from efficiency initiatives, bringing the total reduction in domestic team members to 900 for the first six months of 2009. Seasonal changes in TELUS International business process outsourcing services were reflected in an increase of 100 employees during the second quarter, and a reduction of 600 for the first half of 2009.

As a result of the efficiency initiatives, restructuring costs increased $49 million to $53 million in the second quarter. During the first six months of 2009, restructuring costs were $81 million compared to $11 million in the same period in 2008. The annual costs are now expected to be approximately $150 million for the year ($59 million in 2008), an increase of $25 million from TELUS' previous estimate for 2009 of approximately $125 million.

TELUS successfully issues $700 million in long-term debt

In May, TELUS issued five-year Canadian dollar notes raising approximately $700 million. The net proceeds of the 4.95% Series CF Notes due May 15, 2014 were used for general corporate purposes, including repaying amounts outstanding under the 2007 Credit Facility and outstanding commercial paper. This transaction followed a presentation and meetings with debt investors at a major fixed income conference in Toronto. The 4.95% coupon was one per cent lower than last year's April debt issuance. The offering met with strong demand, achieved wide distribution by both existing and new investors and was purchased by more than 70 institutions.

TELUS launches satellite TV in Western Canada

TELUS Satellite TV service was launched commercially at the end of June in B.C. and Alberta, adding to TELUS' growing entertainment portfolio that includes the innovative and differentiated digital television service provided over TELUS' wireline broadband network, TELUS mobile TV on wireless phones, TELUS mobile radio, and TELUS mobile music. This satellite delivered service complements TELUS' ongoing expansion of IP-based TV service and strengthens our competitive offerings in B.C. and Alberta as we now reach more than 90 per cent of homes.

Bundling TELUS TV with Internet, home phone or long distance services helps customers simplify their lives and save money at the same time, while positively impacting the sale of other products, churn and retention. TELUS Satellite TV is an all digital service which includes features such as onscreen Call Display and more than 500 digital channels including over 80 in HD. Much like they can with TELUS' existing all digital TV service, TELUS Satellite TV clients can customize their TV experience with theme packs for added flexibility (e.g. news, sports, family), international channels, premium sports packages, and premium movie packages that include the latest blockbuster films.

At the end of May, TELUS announced a $31.5 million expansion of its contract with the Montreal Region Health Authority to accelerate and expand the implementation of TELUS' Oacis Electronic Health Record solution to healthcare facilities across the region. Oacis is an electronic clinical information system combined with a documentation imaging solution that converts paper records and integrates them into a unified electronic patient record. Montreal is one of the first regions in Canada to implement standardized electronic health records across all points of service including 89 hospitals, health and social services centres, long-term care centres and other public healthcare institutions, as well as family practices, network clinics and integrated network clinics.

Beginning in September, about 500 patients at the Centre de Sante des Services Sociaux de Pointe-de-l'Ile of Montreal will be provided with TELUS' Remote Patient Monitoring solution, allowing them to take more control over management of their condition from their own homes. The goal of the five-year project is to improve services to patients, while reducing emergency room visits and in-patient hospitalizations. Each patient will receive a touch-sensitive terminal and medical devices to collect and transmit routine monitoring data between their home and their healthcare team. The team of clinicians - comprised of multidisciplinary professionals from various sites - will monitor, interpret and analyze the data received from each patient and coordinate appropriate action using Remote Patient Monitoring's workflow and clinical notes capabilities.

Helping sick kids in Eastern Ontario and Western Quebec stay connected

TELUS and Kids' Health Links Foundation launched Upopolis.com at the Children's Hospital of Eastern Ontario (CHEO). Upopolis is a unique online social network for young patients in hospital to stay connected to their family and friends while in care. CHEO is the first hospital to launch the social networking site in English and French to support the bilingual needs of their patients. Upopolis is now available at four hospitals across the country.

TELUS launches three new smartphones

In July, TELUS launched three new smartphones to keep travelers connected, productive and entertained on-the-go, where ever they are. The BlackBerry Tour 9630, with the robust and reliable email platform many BlackBerry users find irresistible, provides access to the BlackBerry App World, which offers access to boosting applications that help users stay entertained and well informed. The HTC Touch Pro2 and Snap, with the Windows Mobile 6.1 platform, enables users to synchronize their email, contacts and calendar with TELUS mobile email, plus HTML web browsing on TELUS' 3G network and almost anywhere they travel around the world with TELUS international roaming. TELUS also launched the Mike Motorola Clutch i465 this quarter, a full QWERTY keyboard device, making it an attractive productivity tool for small and medium-sized businesses.

TELUS and Universal Music Canada offer "TELUS Summer of Music"

TELUS and Universal Music Canada joined forces to offer a "TELUS Summer of Music". Music fans downloading mobile music from AKON, Lady GaGa or The Tragically Hip get a chance to win one of three thrill-of-a-lifetime experiences that could have them hanging-out with AKON, dancing with one of Lady GaGa's dancers or blogging on a road trip with The Tragically Hip. TELUS also introduced new music download pricing from $0.69, $0.99 to $1.29 per song with most albums at $9.99.

AWARDS AND RECOGNITION

TELUS Executive VP Human Resources named one of Canada's Top 40 under 40

Josh Blair, TELUS executive vice-president of Human Resources, has been named one of Canada's Top 40 Under 40 for 2008. Mr. Blair is one of 40 Canadians honoured from the private, public and not-for-profit sectors who have achieved a significant level of success while less than 40 years of age. Mr. Blair and the other winners were chosen from more than 1,100 nominees by an independent Advisory Board of 25 leaders from across Canada. Mr. Blair is responsible for driving TELUS' strategy to attract, develop and retain the best talent in the global communications industry; creating one of the best workplaces in Canada; and supporting the 34,000 members of the TELUS team. As a result of his leadership, earlier this year TELUS was named one of Canada's Best Diversity Employers, recognizing TELUS as one of the nation's leaders in creating diverse and inclusive workplaces. In 2008, SkillSoft, an international leader in eLearning, honoured TELUS with an Industry Achievement award for our commitment and global leadership in supporting team member growth and professional development.

TELUS is a business for the arts

In June, TELUS was recognized with a Globe and Mail Business for the Arts award for most Effective Corporate Program. TELUS was nominated for this award by Luminato, Toronto's Festival of Arts and Creativity. The nomination highlighted our support of Luminato and other arts organizations across the community including the Royal Conservatory of Music, Soulpepper Theatre, the National Ballet School of Canada and ongoing support of arts organizations across Canada supported by TELUS Community Boards. The award will be officially presented this October at the Art Gallery of Ontario.

McGill/CHUM and TELUS win distinguished Concours des OCTAS award

In May, the McGill University Health Centre and Centre hospitalier de l'Universite de Montreal (CHUM) and TELUS jointly won a Concours des OCTAS award for the Oacis Project, recognizing the implementation of a multilingual electronic medical record at McGill/CHUM. The Oacis Project is a first in North America. The award heralded the project for its creativity, vitality and exceptional contribution to the growth of the industry. Awarded by Le Reseau Action TI, OCTAS awards are the highest distinction for IT projects in the province.

TELUS recognized as one of Canada's most mom-friendly workplaces

TELUS is among 30 Canadian organizations to make the inaugural 2009 Progressive Employers of Canada list. The list recognizes diverse companies that offer flexibility, supportive leadership and progressive programs for working parents and their families. TELUS was recognized for offering programs enabling many team members to work at home or anywhere they are most effective, flexible benefits, maternity benefits, child care options, leave of absence and Thirsty Muse, a service company that provides personal assistance for busy managers.

TELUS wins four awards for social responsibility

The Jantzi-Maclean's Corporate Social Responsibility Report 2009 named TELUS among Canada's 50 Most Socially Responsible Corporations. In British Columbia, TELUS received the award for social responsibility from the British Columbia Technology Industry Association, and an appreciation award from Computers for Schools, an organization that provides increased access to computer technology for students of all ages, for contributing more than 2,000 computers during 2008. TELUS was also recognized for leadership in corporate social responsibility. TELUS jumped to the eighth position in the Corporate Knights' annual list of Canada's best corporate citizens. Criteria for inclusion in the list included pension fund quality, board and executive diversity, CEO-pay fairness, tax-dollar generation and environmental practices.

COMMUNITY INVESTMENT AND SUPPORT

TELUS keeps services online, supports community during Kelowna fires

When forest fires forced the evacuation of more than 17,000 Okanagan residents starting Saturday July 18, TELUS quickly responded by significantly increasing wireless capacity in the area and protecting communications infrastructure from the spreading fires. These efforts, combined with public service announcements to ask the public to limit calls into the area, helped ensure firefighters, police and emergency personnel had the critical communications needed to respond to this crisis situation. TELUS also established a donation system to gather needed toiletries and money from team members and the general public. The company flew and trucked relief supplies to evacuation centres in the company's plane and community vans. TELUS kicked off the campaign with the donation of 2,500 comfort kits created by the TELUS Community Ambassadors. In the week that followed partners such as the Vancouver Canucks, London Drugs, SkyTrain and Prospera Credit Union also helped donate toiletries or money to this worthwhile cause.

TELUS Day of Service

On May 30, more than 9,000 TELUS employees, retirees, relatives and friends answered the call of the community and took part in the fourth annual TELUS Day of Service. On this one special day the TELUS team came together as one to make a difference by volunteering their time and energy to help make connections within their various communities across Canada. They did this by participating in about 175 volunteer events. Results from the volunteer activities included collecting 1000 garbage bags of waste from river valleys, parks and fields, preparing 10,000 meals for the homeless, sorting 184,000 pounds of food at food banks, planting 8,700 trees, painting using over 300 litres of paint and assembling 12,000 Kits for Kids - school supplies for inner city schools.

TELUS Ottawa Community Board announces three new members

In May, the TELUS Ottawa Community Board announced the addition of three new members to the Board to assist in making funding decisions in support of local charities. Michael Allen, president and CEO of United Way / Centraide; Dr. Robert Cushman, president of the Champlain Local Health Integrated Network; and Vern White, Chief of Police - Ottawa Police Services, bring valuable knowledge as the TELUS Ottawa Community Board funding continues to make grants to assist worthy local charities.

In May and June, Juvenile Diabetes Research Foundation's (JDRF) biggest fundraiser, the TELUS Walk to Cure Diabetes, took place in more than 75 communities across Canada. This year, the 2009 Walk brought together more than 3,700 TELUS team members and their families who raised approximately $400,000 for the cause. More than 45,000 Canadians joined in and raised an estimated $7 million dollars. The TELUS Walk helps make a difference in the lives of 240,000 Canadians living with Type 1 diabetes by raising both funds and awareness of the disease to help continue research towards a cure. JDRF is the leading charitable advocate and source of funding of Type 1 diabetes research worldwide.

TELUS celebrates military families

In June, approximately 1,500 people from the TELUS family and Edmonton area military families took part in a Support Our Troops rally in support of Canadians serving in the Armed Forces at home and abroad. The Edmonton event was hosted by Former Chief of Defence Staff General Rick Hillier, chair of the TELUS Atlantic Canada Community Board, and the TELUS team. The rally showcased Canadian heroes and the vital role they play around the world, while celebrating the tireless work done by the Edmonton Garrison Military Family Resource Centre in supporting and connecting Canadian Forces families.

TELUS World Skins Game coming to Victoria

Victoria, B.C. will welcome golfers and visitors from around the globe when it hosts the TELUS World Skins Game at Bear Mountain Resort on June 21 and 22, 2010. The event will feature five top names in international golf, each representing a different country. It will showcase great golf in Victoria and the TELUS brand to millions of TV viewers across Canada and around the world. As part of TELUS' ongoing commitment to 'give where we live' and the event's long-standing tradition of benefiting local charities, TELUS and the organizers selected The Queen Alexandra Foundation for Children in support of Jeneece Place as the benefiting charity, which hopes to improve the quality of life for Vancouver Island's sick kids and their families. For more information about Jeneece Place please visit jeneeceplace.org.

DIVIDEND DECLARATION

The Board of Directors has declared a quarterly dividend of forty-seven and one half cents ($0.475) Canadian per share on the issued and outstanding Common shares and forty-seven and one half cents ($0.475) Canadian per share on the issued and outstanding Non-Voting shares of the Company payable on October 1, 2009 to holders of record at the close of business on September 10, 2009.

This quarterly dividend represents a two and one half cent (ten cents annualized) or 5.6 per cent increase from the $0.45 quarterly dividend paid on October 1, 2008.

Access to Quarterly results information

Interested investors, the media and others may review this quarterly earnings release, quarterly results slides, supplementary financial information and our full first quarter 2009 report on our website at telus.com/investors.

Full quarterly earnings release available at:

http://www.newswire.ca/en/releases/archive/August2009/07/c2590.html

Quarterly conference call and webcast presentation

TELUS quarterly conference call is scheduled for Friday, August 7, 2009 at 11:00 am ET and will feature a presentation about our second quarter results. It will be followed by a question and answer period with analysts. Interested parties can access the call live on a listen-only basis at: telus.com/investors. A transcript will be posted on the website within several business days. Also, a recording will be available on August 7 until August 17, 2009 at: telus.com/investors or by telephone (1-403-205-4531 or 1-877-245-4531, reservation no. 895352 followed by the number sign).

About TELUS

TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications company in Canada, with $9.7 billion of annual revenue and 11.8 million customer connections including 6.3 million wireless subscribers, 4.1 million wireline network access lines, 1.2 million Internet subscribers and more than 100,000 TELUS TV customers. Led since 2000 by President and CEO, Darren Entwistle, TELUS provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. In support of our philosophy to give where we live, TELUS, our team members and retirees have contributed $137 million to charitable and not-for-profit organizations and volunteered more than 2.6 million hours of service to local communities since 2000. Nine TELUS Community Boards across Canada lead our local philanthropic initiatives. For more information about TELUS, please visit telus.com.

SOURCE TELUS Corporation