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2005Telecom Summit

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Darren Entwistlea member of the TELUS team

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transformation principles

1. Key performance indicators2. Focus on essentials3. Compliance and enforcement4. Level playing field5. Adapt to disruptive change

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principle #1: key performance indicators

raising the bar on performance

Set clear, consistent strategy Know where you want to go Have courage to set targets publicly Accountability to stakeholders

What gets measured, gets done

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raising the bar on performance - TELUS

Over the last 5 years TELUS set 28 targets 24 of 28 targets met Rigorous focus on metrics Instill stakeholder confidence

What gets measured, gets done

principle #1: key performance indicators

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raising the bar on performance - CRTC

Implementation of performance standards 10 business days to respond to tariff applications Major proceedings decision dates set out upfront

Setting public targets

principle #1: key performance indicators

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raising the bar on performance - CRTC

Reduced number and frequency of reports 30% reduction in regulatory burden Decision backlog largely cleared Deferral account requires attention

Reducing regulatory burden

X

principle #1: key performance indicators

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bridging the digital divide in B.C.

Worthy use of deferral account

TELUS – B.C. Government partnership

TELUS investing $400 million

All 366 communities in B.C.connected by 2006

Unleashing the power of the Internet

principle #1: key performance indicators

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execute forward-looking strategy

Resist planning through the rear view mirror

TELUS strategy set in 2000 - future-oriented

Relentless focus on strategic imperatives

Many others in 2000 focused on the present

TELUS outperformed our peers by 124%

principle #2: focus on essentials

Performance leads to results

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$5.7B

strategic focus on data and wireless

2000

principle #2: focus on essentials

49%

18%

10%

LD

Wireless

Voice

23%

Data

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$5.7B

strategic focus on data and wireless

2005

$7.8B

Voice

Wireless

Data31%

38%

19%

2000

12%LD

Significant exposure to data and wireless @ 57%

49%

18%

10%

LD

Wireless

Voice

23%

Data

principle #2: focus on essentials

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the marketplace has changed dramatically

ILECs compete head-to-head Cable has entered residential market

Rogers to acquire Call-Net

Realistic assessment of market essential

principle #2: focus on essentials

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cable companies are large and established

Multi-billion dollar conglomerates with scale

Diversified product mix

Sophisticated sales and marketing - known brands

Established service delivery model

Regulatory head start not required

principle #2: focus on essentials

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disruptive changes since price cap decision

VoIP well-established

Wireless substitution

Marketplace is fundamentally different

principle #2: focus on essentials

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light-handed regulation works

Market forces are regulator of choice CRTC process on local forbearance is welcome Set ground rules - leave the field - strong referee Wireless de-regulatory model has worked

principle #3: compliance and enforcement

Reliance on market forces

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setting rules and enforcing rules

VoIP decision shows lack of trust in industry players Focus on compliance and enforcement Set ground rules for all players Back up the rules with strong enforcement

Giving CRTC the confidence to let go

principle #3: compliance and enforcement

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support facilities-based competition

Set policy and stay the course

No fundamental mid-stream changes to policy

Competitor digital network and price floor decisions are encouraging

principle #4: level playing field

Consistency is what matters

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undermining facilities-based competition

Vonage, Primus compete unregulated in Canada Canadian telephone companies are price regulated Favours those who do not invest in infrastructure Disadvantages facilities-based telephone competitors

VoIP decision favours foreign competitors

principle #4: level playing field

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CRTC VoIP decision flawed

Decision did not create level playing field

Decision disadvantages Canadian Telcos

Fails to adapt to disruptive technology

Restricts consumer choice

principle #5: adapt to disruptive change

Regulate for the future

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Internet-based VoIP is different

Local calling from anywhere Voice mail via lap top Broadband access without investing in facilities Low cost entry for VoIP providers Shaw invests less than $100 million

Not about simple telephony anymore

principle #5: adapt to disruptive change

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Telcos to appeal CRTC decision

Price regulation not required to protect user interests

Canada is unique in regulating retail rates

Regulatory head start for competitors unacceptable

Regulatory paradigm shift is needed

principle #5: adapt to disruptive change

thank you

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2005Telecom Summit

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investing for growth is paying off for shareholders

Building high speed data Building national platforms Building a lower cost structure

Executing on strategy and creating significant cash flow

$1.1B cash

2000-02

Investment phase

2003-05E

$3.4B cashCash generation phase

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$0

$20

$40

$60

$80

$100

$120

30-May-00 30-Nov-00 30-May-01 30-Nov-01 30-May-02 30-Nov-02 30-May-03 30-Nov-03 30-May-04 30-Nov-04 30-May-05

relative equity price performance

TELUS outperforms stock market5

Assumes $100 invested from May 30, 2000 to May 30, 2005

TELUS$111

MSCI World Telecom Index

$45

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Internet-based VoIP is different

Consumers buy VoIP differently Two separate purchasing decisions:

VoIP application selected from multiple competitorsInternet access selected from competing suppliers

Consumers buy VoIP differently

principle #5: adapt to disruptive change

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Shaw + Rogers = Established Competitors

Shaw Rogers

Cable TV has high market penetration

Shaw Rogers

Homes passed Basic service customers

2.8M

3.3M

2.1M 2.2M

principle #2: focus on essentials

28 Leaders in high-speed penetration

Shaw + Rogers = Established Competitors

Shaw Rogers Shaw Rogers

870,000

712,000

1.1M988,000

Digital cable customers High-speed Internet

principle #2: focus on essentials

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wireless success story

15+ million customers, 47% market penetration

$1 billion invested annually in infrastructure

Innovation – push to talk, mobile data access

Emergency 911 services roll out

principle #3: compliance and enforcement

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TELUS capital investments

2000 – 2004 : $8.3 billion of cash investedHigh-speed data infrastructure in the westNational wireline and wireless platformsBuilding a lower-cost structure for the future

2004 capital investment$1 billion wireline, $750 million high-speed internet$355 million wireless

Making the investment in infrastructure

principle #4: level playing field

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our competitors have changed

MTS-Allstream merger

Eastlink transforms into triple-play provider

Videotron and Shaw now offer telephone service

Evolving competitive landscape

principle #2: focus on essentials

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wireless success story

Reciprocal roaming arrangements

Inter-carrier support for text messaging

Multimedia messaging and high speed wi-fi imminent

Number portability on the way

Market forces feed innovation

principle #3: compliance and enforcement