Canadian Telecommunications David Lee Jeremy Ma Raymond Xie

Canadian Telecommunications David Lee Jeremy Ma Raymond Xie Saurabh Suryavanshi

Contents n Canadian Telecommunications Industry n Manitoba Telecom Services (MBT-T) n Rogers Communications (RCI. NV. B-T) n TELUS Corporation (T-T)

Industry Characteristics Telecommunications Industry

Industry Overview n Communications Services Industry • • n Wired telecommunications (5171) Wireless telecommunications (5172) Resellers, Satellite, Other services (5173, 5174, 5179) Cable and other program distribution (5175) Major companies • • • Bell Canada Enterprise (BCE, ) Aliant (AIT, 53% owned by BCE) Bell Nordiq (BNQ, 63% owned by BCE, IT) TELUS (T) Rogers Communications (RCI. NV. B, 86% owned by E. S. Rogers) Manitoba Telecom Services (MBT)

Industry Key Players Wireless & Paging $9. 5 Bilion Wired Line Long Distance Internet / Data $23. 3 Billion 2004 Revenue Communications $40. 0 Billion Resellers & Others $1. 3 Billion Wired Cable DTH/MDS $5. 9 Billion

Market Segment Revenue, 1998 -2004

Market Segment Subscribers, 1998 -2004

Industry Characteristics n Large contribution to economy • • n Highly capital intensive • n Effective cap-ex management and allocation (Long term) Saturated market • • • n $40. 0 billion (2004), $24. 8 billion of revenue (1997 constant $) 2. 4% of total Canadian GDP Increasing unit revenue Service development capability Reducing costs Organizational efficiency Market penetration Marketing as a key factor Blurred Boundaries with Cable industry • • Traditionally tough regulations greatly reduced Cablecos with Vo. IP vs. Telcos with IPTV Strategic position

Industry Characteristics Wireline Communications Services

Wireline Communications Segment Overview n ILECs: Incumbent Local Exchange Carriers • • n CLECs: Competitive Local Exchange Carriers • • • n Allowed in 1997, if registered with CRTC However, hard to compete with ILECs Allstream (acquired by MTS), Call-Net (Sprint), Exa. Tel, East. Link Resellers • • n Used to be regional monopoly with own network BCE, TELUS, MTS, Sask. Tel, Aliant, Northwes. Tel Rent networks from ILECs or CLECs Marketing with competitive rates more actively with Long Distance Competition between BCE & TELUS • • Since 2000, TELUS expanding to eastern Canada to become No. 2 BCE reacting to successfully expand to western Canada

Wireline Communications Telecommunications Carriers • TELUS to East / BCE to West since 2000

Wireline Communications Competitive Landscape n Wireline Local Services • • • ILECs dominating the market 97. 3% CLECs not able to compete with ILECS Gradually declining due to n n n Customer migration to wireless Reduced demand of 2 nd phone line Wireline Long Distance Services • • ILECs monopoly eliminated in 1992 CLECs and resellers effectively competing with over 26% share Rapidly shrinking with revenue $5. 5 B in 2004 Alternative communications replacing the service n n n Wireless and text messaging (SMS) Email, Instance messaging & Voice chatting Internet and cable telephony (Vo. IP)

Wireline Communications Local & Long Distance Revenue, 1993 - 2004

Wireline Communications Wired Access Lines, 1993 - 2004

Industry Characteristics Wireless Communications Services

Wireless Communications Segment Overview n Dominated by Big 3 • • • n Profitability • • • n Rogers & Microcell 35. 3% TELUS Mobility 29. 4% Bell Mobility 27. 2% Extreme competition lead by Microcell until early 2002 With declining ARPU, industry recorded deficit in 2000, 2001 Rogers leading the market after its Microcell acquisition in 2004 Spectrum & Technology • • • Most Spectrum auctioned in 2001 ($1. 5 B) BCE, Rogers, TELUS Most carriers completed 2. 5 G (1 X CDMA or GSM/GPRS) Bell & Rogers leading 3 G transition Important for service development (Increased ARPU, marketing)

Wireless Communications Revenue & ARPU, 1999 - 2004 Industry deficit

Wireless Communications Wireless Technology Base 2. 5 G 3 G (Advanced Data & Voice) (348 kbps – 2 Mbps) Bell Canada CDMA 1 XRTT (CDMA 2000) 30 – 55 kpbs TELUS CDMA 1 XRTT (CDMA 2000) 30 – 55 kpbs Rogers GSM/GPRS 20 -40 kbps Cover 93% population Microcell GSM/GPRS 20 -40 kbps Aliant / MTS / Sasktel CDMA 1 X network 1 X EV-DO (urban area) Up to 700 kbps EDGE (July 2004) Up to 130 kbps

Industry Characteristics Internet & Data Services

Internet & Data Services Segment Overview n Large Telcos & Cablecos • • n CLECs and Resellers • • • n Able to utilize existing telephone and cable line Telephone access line: 20 million Wired cable line: 10. 7 million (76. 5% households) Requires minor modification and modem Usually provide services on rented network basis Compete based on the rate Offer additional services (web hosting, long distance service …) Market Share & Trend • • • Dial-up: 27. 2% Digital Subscriber Line (DSL): 34. 4% Cable line: 39. 4% DSL & Cable line consistently increasing Satellite and Wireless internet services starting to grow

Internet & Data Services Subscribers, 2000 -2004

Internet & Data Services Market Share, 2003 No. 2 No. 3 No. 1 No. 4

Industry Characteristics Margin & Network Investment

Telecommunications Operating Margin, 1997 -2004

Telecommunications Operating Margin, Cap-Ex, 1998 -2004 High speed Internet 2. 5 G

Telecommunications Wired & Wireless Subscribers, 1998 -2004

Industry Characteristics Telcos (IPTV) vs. Cablecos (Vo. IP)

Vo. IP vs. IPTV Technology Overview n Vo. IP: Voice over Internet Protocol • • n IPTV: Internet Protocol Television • • n Stable technology with satisfactory Technology Requires relatively small bandwidth Uses public Internet network In service by major Cable companies (Shaw, Rogers) New technology developed by Microsoft Requires broad bandwidth Technologically advanced compared to traditional digital TV Showing fast penetration (MTS 18% in less than 2 years) Competitive Implication • • • Telcos & Cablecos compete head to head 20 – 25% of each market expected to be lost More impact on Telecoes than Cablecos

Vo. IP vs. IPTV Impact on Competition between Cablecos & Telecos Telcos’ Exposure Cablecos’ Exposure

Manitoba Telecom Jeremy Ma

Table of Contents Company Overview n Company Analysis n Financial Analysis n MTS Extensive fibre optic network: spans more than 24, 300 km.

Company Overview n n Third largest telecommunication provider in Canada Operate through two divisions: national and Manitoba division Manitoba Telecom ALLSTREAM (National) Division National e-business / communication solution provider MTS (Manitoba) Division Provide Voice, Data, Video to residential and business customers in Manitoba.

MTS History n 1997 Manitoba Telecom Service became a public traded company n 1999 Strategic alliance with Bell n 2000 Initiate broadband service in Manitoba n 2004 End strategic alliance with Bell in Western Canada n 2004 Acquired Allstream ($1. 6 billion) and become the 3 rd largest national telecom provider in Canada n 2004 MTS Allstream strategic alliance with BT: broaden its IP based technology service globally n 2005 MTS Allstream acquired Delphi Solutions Corp. n 2005 Pierre Blouin named new Chief Executive Officer of Manitoba Telecom Services Inc. and MTS Allstream Inc.

Company Overview Management Team Pierre Blouin CEO 2005~ n n a seasoned telecommunications executive, who spent 20 years + at BCE Inc. 2003 ~ 2005 Group President, Consumer Markets, Bell Canada 2002 ~ 2003: CEO of BCE Emergis 2000 ~ 2002 President and CEO of Bell Mobility Wayne S. Demkey, CA CFO 2001~ n n Joined MTS since 1996. 11 years as senior managers at KPMG Kelvin A. Shepherd, P. Eng. President, MTS (Manitoba) 2006~ n n CTO of MTS 2000 ~ 2005 20 years with Saskatchewan Telecom John A. Mac. Donald President, MTS (ALLSTREAM) 2002 ~ n n CEO of Leitch Technology Corp. Executive Vice President, CTO, COO, President of Bell Canada 1994 ~ 1999

Compensation

Operation Analysis Revenue Breakdown (2005)

Company Analysis

MTS Manitoba Leading telecom co. in Manitoba: Voice, Data, and Video

Competitive Landscape in Manitoba Home Phone MTS Telus Rogers BCE Shaw O X O O X (Internet Phone) Wireless O O O X X X O Internet O X O O X X X O TV Bundle

MTS Manitoba continues to dominate Manitoba market even though it had faced competition from Rogers, Telus, and Shaw. n How has MTS remained dominant? n

MTS Manitoba Preemption Strategy: MTS Bundles Objectives n Preempt cable triple play n Increase subscriber spending n Cross-selling Strategy n Full service: voice, data, and video n Attractive pricing (Bundle Pricing) n Competitive against cable

Preemption Strategy MTS Strategy Offer triple play 3 years before cable telephony Pricing n$20 Content n 23 Marketing n. Triple ~ $52/month n. Save $10 for two bundles n. Save $20 for 3 bundles basic channels n 140 channels in 26 groups n. Games and VOD (Video On Demand) play: “Three Choices, Three Bucks, Three Charities. ” n. Choice

Results Steadily gaining market share in wireless, TV, and high-speed internet. n Increase its revenues and customer base by cross-selling n Shaw Fight Back! n Introduced its bundle packages in July 2005

MTS Manitoba Operation Performance Shaw launched bundle program

MTS (Manitoba) Phone Service Wireless Internet TV Data and Directory ? Security & Alarms ? Overall

History of Allstream n 1846 Montreal and Toronto Magnetic Telegraph Co. established n 1846~ 1992 merger & acquisition Change name to Unitel n 1992 Enter Long distance market n 1996 Unitel AT&T Canada Long Distance Services n 1999 Enter IT service; first to offer MPLS-IP VPNs in Canada n 1999 Enter local phone service; reached 100, 000 local business lines n 2003 Allstream brand launched n 2004 MTS acquired Allstream n 2005 Acquire Delphi Solution Corp.

Today’s Allstream Core Business n Provide specific or integrated e-Business solution to business clients Target market n midsized to large size enterprise business, as well as the public sector Market Segment (by industry) n Financial n Government n Manufacturing n Healthcare n High-Tech / Telecom n Energy

ALLSTREAM (National) Division Product Portfolio

Allstream Client Base …. and many more Canadian enterprises have chosen Allstream for e-business solution

Allstream E-business solution: What is it? How does it work ?

E-business Solution Network + Application = Solution Customer Solution HEALTHCARE TRANSPORTATION Vertical Applications for Community of Interest Customer Solution Configured for Customer REPEATABLE TECHNOLOGY (Tool Set) • RFID • XML Networking • Grid Computing + Storage • Identity Management • Voice Biometrics • XOIP Issues • Clean IP Transport • Security • Ubiquitous High – Speed Affordable Access • “Write once, run everywhere” Capability • Storage • Quality of Service • Web 2. 0

E-business Solution RFID (Radio frequency identification) Tag

Solution Innovation RFID (Radio frequency identification) Tag

ALLSTREAM (National) Division Retail Application

Allstream positions itself as market leader in terms of its innovated IT technology

Market Leader = Sound Financial Results? NOT Necessary!!!

Allstream Going Down! Recent Development n Revenues from legacy services (such as long distance, local, frame relay, and private line data service) deteriorate as telecom technology continues to evolve. n More and more business prefer much cheaper 2 nd generation network and IP services. n Allstream’s ex-partner/shareholder, Rogers and AT&T, turn against Allstream by pulling business out of Allstream.

Allstream Going Down!

Allstream n No detailed information available to analyze its operation n MTS has claimed that Allstream continues to gain market share in Canada IT service industry implies that Allstream gained market share by sacrificing its margins. n Face competition from incumbent and new market entrants

MTS Allstream Strategies to Stop the Bleeding n Allstream: Focus more on profitable segments and IP data services “which have solid profitability margins and significant growth potential. ” n Transition Phase II, an aggressive program to cut costs, refine market focus and service portfolio n Comprehensive CEO Business Review

Financial Statements

Financial Statement Income Statement

Financial Statement Balanced Sheet

Cash Flow

MTS Pro Forma Financial Performance *pro forma results, i. e. Assume Allstream acqu. took place on Jan 2003

Sustainability of Dividend Payout Adjusted FCF Forecast

Retained Earnings

Fisher’s Valuation Approach Superiority in production, marketing, research and financial skills – less attractive n Well-managed: ? n No cash; RE ↓; quick ratio < 1 n Satisfied production and services n Marketing Strategy: ? The people factor – Less Attractive n Experts in integrated service n strong in leading the technological innovations Investment characteristics of some businesses – Moderate Attractive n License requirements n High entry barrier n High competition The price of investment – Attractive n low price now at $37. 09 n 52 week range: 36. 61 ~ 49. 90 n Dividend Yield: 7. 01% Recommendation: Sell

Stock Performance Current Dividend Yield: 7. 01%

Recommendation Mad Money Sell !!!

ROGERS

AGENDA • Company’s History • Company’s Structure • Rogers Wireless • Rogers Cable • Rogers Media • Rogers Telecom • Management • Financial Statements • Stock performance & company’s strategy • Recommendation

History - The Beginning • 1925 - Mr. Rogers, Sr. invented the world’s first alternating current (AC) radio tube. • 1931 - Mr. Rogers, Sr. was awarded an experimental TV license. • 1939 - Mr. Rogers, Sr. died at the young age of 38. He left a widow, Velma, and a 5 year old son, Edward.

The New Era - The Beginning • 1956 - Ted Rogers earned his Bachelor of Arts from the University of Toronto. • 1961 - Ted Rogers was awarded an LL. B. in 1961 from Osgoode Hall Law School. • 1961 – 62 - Mr. Rogers started Rogers Radio Broadcasting Limited • 1967 - Awarded licenses for Cable business for areas in and around Toronto, Brampton and Leamington.

The Growing ERA…. !!!! • 1974 - the first cable company to expand past 12 channels • 1979 - Mr. Rogers’ company, Rogers Cable TV Limited, acquired control of Canadian Cable systems Limited. • 1980 - Rogers purchased Premier Communications Limited. • 1979 to 1982 - Acquired and built a number of cable television systems in the United States. • 1989 - Rogers Communications completed the sale of its U. S. cable television interests for CDN $1. 581 billion. • 1989 - Rogers Communications Inc. acquired 40% of Unitel Communications, formerly CNCP Telecommunications.

The ERA of Diversification!! • 2000 - Rogers Communications Inc. acquired the Toronto Blue Jays Baseball Club. • 2001 - Rogers Media acquired Sportsnet, and renamed Rogers Sportsnet • 2004 - Acquired Rogers Centre 2004 - Rogers acquired the 34% of Rogers Wireless owned by AT&T Wireless Services Inc. • 2004 - Rogers Wireless acquired Microcell Telecommunications Inc. • 2004 – 05 - Rogers Communications repurchased the shares of Rogers Wireless. • 2005, July – Rogers introduces Rogers Home Phone voice-over-cable local telephony service • 2005, July – Rogers successfully completed the acquisition of Call-Net Enterprises Inc. (now Rogers Telecom Holdings Inc. ), a national provider of voice and data communications services.

ROGERS COMMUNICATIONS INC ROGERS WIRELESS ROGERS CABLE ROGERS MEDIA ROGERS TELECOM • Rogers Wireless. • Rogers Cable Communication Inc. • Blue Jays Hold co Inc. • Formerly Call -Net enterprises. • FIDO Inc. • FIDO Solutions Inc. • Rogers Wireless Alberta Inc. • Wireless payment Services (33. 33%) Subsidiaries • Inukshuk Internet Inc. • Rogers Broadcasting Business • Rogers Telecom. • Rogers Publishing Limited Investments • 16. 5% in Cogeco Cable Inc. • 21% in COGECO Inc.

Revenue & Operating Profit!!

ROGERS WIRELESS • Provides Wireless voice and data communication services. • Largest Canadian Wireless Communications Service provider. • Canada’s only carrier operating on the world standard GSM/GPRS technology platform. • Provides Coverage to approximately 93% of Canada’s population. • Customer base of 6. 138 million wireless voice and data subscribers. • Wireless penetration rates among the lowest in the developed world. • 1. 3 million subscribers added through the acquisition of MICROCELL.

Sources of Revenue • Post paid voice and data • Monthly Fees • Airtime and long distance charges • Optional Services charges • System access fees • Roaming Charges • Prepaid revenues generated principally from charges for airtime, long distance and text messaging. • One way messaging or paging – Monthly fees and usage charges. • Sale of hardware and accessories and equipment activation fees.

Expenses • Cost of equipment sales. • Sales and marketing expenses. • Advertisements • Commissions • Remuneration and benefits to employees. • Operating, general and administrative expenses. • Expense to service existing relationships. • Retention costs. • Inter-carrier payments. • Long distance carrier payments.

Risks • Fierce and Substantial Competition • Price War could affect churn rate and revenue growth. • Since Technology dependent, may not meet the expectations. • Changes in the Wireless Communications Industry. • Risks attached with the acquisition of MICROCELL. • Inability to enhance systems or a system breach in future • Dependent on infrastructure and handset vendors. • High Capital requirements. • Restriction on the use of wireless handsets while driving. • Business subject to government regulations.

ROGERS CABLE • Largest cable television company in Canada. • Services include: • Analog and Digital Cable • Residential and Commercial internet services • Data and Internet products to business customers. • Rogers Video – DVD, Video Cassette, Video Games • Distribution network includes extensive network including wireless independent dealer networks, wireless stores, Rogers video, retail chains like Radio. Shack, Future Shop & Best buy. • Ontario comprises for 90% of the total cable subscribers. • New step into voice over cable telephony.

REVENUES • Core Cable: • Analog Cable Service – Basic Cable Services • Digital Cable Service – Digital Service Channel fees • Internet – Residential and Commercial Internet Services. • Rogers Video – Sale and Rental of DVD, Cassettes. • Agents – Rogers Video acts as an agent for Rogers Wireless.

Expenses • Cost of Rogers Video stores • Sales and Marketing Expense • Operating, general and administrative expenses. • Customer Care Expenses. • Technological Disturbance Expenses

Risks • Acceptance of new products and failures. • Substantial Competition. • The increasing programming costs. • High Government regulation. • High technological dependence. • Increasing royalty rates. • Reliance on Suppliers.

ROGERS MEDIA • Media holds radio and television broadcasting operations, our consumer and trade publishing operations and our televised home shopping service. • Media Broadcasting • 43 Radio Stations • 2 Multicultural television Stations in Ontario. • Specialty Sports television service across Canada(Rogers Sportnet) • The only nationally televised shopping service.

• Rogers Publishing • Well known consumer magazines such as Maclean’s, Chatelaine, Flare, L’actualite, Canadian Business and is the leading publisher of a number of industry, medical and financial publications. • Effective Jan 1, 2005 – All sports entertainment Assets will be a part of Rogers Media. • Sports Entertainment Assets include: • The Toronto Blue Jays baseball team • Rogers Centre, Canadian largest sports and entertainment facility:

Revenue • Advertising Revenues • Circulation and subscription revenues. • Retail product Sales. • Ticket Sales at Rogers Centre • Revenue from home games. • Revenue sharing Agreement with Major league baseball league.

Expenses • Cost of sales. • Cost of retail product at The Shopping Channel. • Sales and marketing expenses • Operating, general and administrative expenses • Programming Costs • Production Costs • Circulation expenses. • Team costs • Players salaries. • Scouting and stadium operations

Risks • Advertisement, a major source of revenue. A decrease in advertisement demand. • Increased Competition. • Increase in the paper prices, printing costs or postage. • Change in regulatory policies. • Media business sensitive to external events and economic conditions. • Introduction of new technology and products.

ROGERS TELECOM • Sprint Canada and Call-Net name changed to Rogers Telecom after the successful acquisition of Call-Net.

MANAGEMENT

• A true pioneer in the communications industry • Man behind the success from the beginning. • Education • Doctorate of Science, Clarkson University of Potsdam, New York, 1989 • Doctorate of Law, University of Victoria, BC, June 1990 Edward S. Rogers, O. C President and CEO • Doctorate of Law, York University, Ont. , June 1994 • Doctorate of Law, University of Western Ontario, Ont. 1996 • Doctor of Sacred Letters, Trinity College, University of Toronto, 1997 • Doctor of Letters, University of New Brunswick, October 2001

H. Garfield Emerson Chairman • Joined RCI as Director, RCI, Nov, 1989 • Chairman of the Board since March 1993. • Honors B. A. (History) • LL. B. , University of Toronto Alan D. Horn, V. P, Finance and C. F. O • Joined Rogers' group in 1990 as President and COO, Rogers Telecommunications Limited. • Tax partner with KPMG from 1984 to 1987 • C. A. • Honors B. Sc. (Mathematics) Philip B. Lind Vice Chairman • Joined RCI as Programming Chief in 1969 • Director of RCI since 1979. • B. Sc. (Political Science & Sociology) • Doctor of Law, UBC.

FINANCIAL STATEMENTS

5 YEAR Stock Chart

2 YEAR Stock Chart

BUSINESS STRATEGY • Diverse set of portfolio across Business Channels. • Bundled product and service offering. • Sharing Infrastructure, corporate services and distribution channels. • Grow bigger and Biggest. • “New technology, I am the first one”. • Strong OLD Management. • Growth through Acquisitions. • Acquisitions………. . MTS SHA W ? ?

FISHER SAYS…. . • People’s Factor : Attractive • Price of Investment: Moderate Attractive • Superiority in Products and Reach: High To Moderate Attractive • Investment characteristics of business: Attractive

Recommendation BUY

Source • Rogers Website • www. sedar. com • FP Infomart. • Financial Statements of Rogers

Company Overview n Company History n Company Management n Products and Services n Business Forecasts n Operating Risks n Financial Analysis n Fisher Valuation Approach n

TELUS Overview 1 n n Leading incumbent Canadian telecommunications provider to Western Canada, and Eastern Quebec A national provider of data, IP and voice solutions focusing on the business market. 3 rd largest ISP in Canada Two major segments: • Wireline, TELUS Communications • Wireless, TELUS Mobility

TELUS Overview 2 Business Units: n Consumer Solutions n Business Solutions n Partner Solutions n Wireless Solutions n TELUS Québec

TELUS Overview 3 Corporate Strategy n Enhancing our leadership position in wireless n Growing brand value through superior customer services n Revitalizing wireline growth through innovation and national expansion n Driving towards leadership in highspeed Internet solutions n Embracing continual cost efficiency

Company History – BC Tel 1998 BC TEL merged with TELUS. 1993 The Company was renamed BC TEL reorganized under a holding company this year. 1923 British Columbia Telephone Company was established under the federal charter. 1904 British Columbia Telephone Company was formed by the Vernon and Nelson Telephone Company by changing name 1880 45 Small phone companies in BC. 1878 BC’s first telephone line on Vancouver Island.

Company History - TELUS history 2004 Verizon Communications, who own 20. 5% minority interest, announced its plan to sell its shares. 2001 TELUS completed several acquisition of several small data and Internet companies, including Williams Communications, PSINet NWD Systems 2000 TELUS Acquired Clearnet and Quebec Tel. 1998 TELUS Corporation and BC TELECOM announce a proposed merger. 1991 The Province of Alberta sold its remaining ownership interest in TELUS for $870 million. 1990 TELUS Corporation established. It went IPO for $896 Million. 1982 Canada's first cellular telephone system introduced to serve Alberta resource industries. 1906 The Province of Alberta commenced operation of the provincial phone system after acquiring the Alberta assets of the Bell Telephone Company. 1885 Alberta's first telephone call, between Fort Edmonton and the St. Albert mission.

TELUS Management 1 • Age: 42. MBA (Finance) Mc. Gill University 1988 • Prior to 2000, President with Cable and Wireless UK • Executive with Mercury Communications UK • Executive with Bell Cablemedia PLC • Shareholding: 22, 000 CS/106, 316 NV • Options: 150, 000 CS/490, 000 NV • Annual Compensation: 1. 5 Million CAD • Honorary Doctorate in Technology, BCIT 1997 • Appointed to Order of British Columbia 1998 • 47 years with BC TEL • Member of the board of directors of Terasen Gas, Suncor Energy and the TSX. • Shareholding: 9, 718 CS/5, 509 NV • Options: 80, 000 CS/74, 000 NV • Compensation mainly based on options plus $200, 000 CAD

Executive Option Granted for 2005 and 2004 2005 2004

Executive retirement benefits As of the end of 2004

TELUS - Products and Services

Products and Services – Communications Segment n n n Voice – local and long distance phone service, personal call management services Data – Web hosting, network management Internet – Dial-up and high speed Internet IP-based – TELUS IP-ONE Innovation provide business solutions with ability to integrate voice mail, email, data and video through a web portal TELUS Future Friendly Home – integrated networking solutions to family. Home monitoring etc…

Wireline Segment n n Consistent growth for the High-speed Internet services (Avg growth: 10%) Decreased in net additions due to the labor strike for 2005 Q 4 Dial-up is decreasing – changing of consumer preference Launched a new wave of marketing campaign

Products and Services – Mobility Segment n n n Digital Voice – PCS CDMA, PTT, Mike. Mobile Internet – Wireless Web, text, picture and video message, ring tone, image and game downloads Data – packet data. Black. Berry Service. Roaming agreement with Verizon Wireless and partnership with Nextel. Around 40% of revenue from this segment

Wireless n n Continued demands for wireless service to boost the revenue from this segment Strong increase in the net additions of wireless subscription. Average 13% annual growth.

Wireless – High ARPU & Low Churn Rate • Average revenue per subscriber unit • An important benchmark to compare wireless customer’s spending • 2005 ARPU is $62, highest in the TELUS history • 20% ARPU premium over Canadian wireless competitors • Reflecting TELUS’s ability to attracting high-value customers and keeping them • Indicating the overall voice and data usage continue to climb • Focus on customer care and having the low monthly churn rate (deactivation) of 1. 4%

Operating Risks n n n Labor Issues Licensing and Regulatory Issues Competitions

Risks - Labor Issues n 2005 Labor strike affect the 2005 Q 4 result significantly n New Collective agreement Ratified 5 yr agreement to 2010 To supports a performance culture Both parties to dismiss all legal proceedings Improve employee engagement -

Risks - Licensing and Regulatory Issues n Price cap regulation • • n Terms of access • • n 2002, CRTC establish new lower prices for some telecom services Increase the competitions Power pole access 1999 & 2003 Will result in higher access costs 2003 - 7 year term on TELUS’ broadcasting distribution and video on demand.

Risks - Competitions n Wireline voice and data • • Vo. IP as alternative Calling card Wireline Internet access n Voice over Internet protocol (Vo. IP) n • • n Shaw, 3 cents a minute for long distance calls Rogers Call-net Wireless • • Rogers acquired Fido, making Telus more difficult Continue to intensify

Business Forecasts & Value Drivers n n n Demonstrated wireless excellence Strong revenue despite of labor strike Strong 2005 financial results: • • • Revenue & EBITDA up 7% Net Income up 24% Free Cash Flow up 13% n New products and contracts • • New wireless high speed network and devices TELUS TV & the Future Friendly Home Plan to offer VOIP Service TELUS signed a $137 million deal with Hamilton Health Sciences

Stock Performance Last Trade(T-TSX): CAD$43. 25 Day's Range: CAD$43. 02 -43. 50 Last Trade(TU-NYSE): Avg Vol (3 m): TSX 829, 664 Trade Time: Feb 24, 2006 Market Cap: 13 billion Prev Close: CAD$43. 34 Open: CAD$43. 25 52 wk Range: CAD$36. 61 -49. 99 P/E (ttm): 22. 6 (Industry PE 17. 6) EPS (ttm): 25. 96 Div & Yield: 0. 875 (2. 02%)

Financial Analysis – Selected Quarterly Data

Financial Analysis - TELUS • Strong operating cash flow • Cash was spent on the stock repurchase and repayment of long-term debt • Net Income, Free Cash Flow, ROE, EPS increasing • CAPEX/Revenue decreasing • High leverage debt structure

Financial Analysis n n High leverage business Debt Structure • Short-term Revolving Facility: 1. 67 billion • Long-term Debt Facility: 4. 6 billion • Repayment of debt will result in reduce in earning and decrease in dividend per share

Financial Analysis n n n High leverage business Strong 2005 financial results: • Revenue & EBITDA up 7% • Net Income up 24% • Free Cash Flow up 13% Conclusion: Strong Financial Position

TELUS Management 2 • MBA, University of Western Ontario 1985 • CFO since 2000 • Reorganize the TELUS finance department • Quarterbacked the completion of the merger with BC TEL. • Annual compensation: CAD 615 K • BS (EE), University of Waterloo 1987 • EVP since 2003 • KPMG Consulting Former country leader for Canada • Strong industry ties • Annual compensation: CAD 690 K

Financial Analysis – Income Statement

Financial Analysis – Balance Sheet

Financial Analysis – Balance Sheet

TELUS - Valuation

Fisher’s Valuation Approach Superiority in production, marketing, research and financial skills – Moderate Attractive n Well managed company n Strong financials but with high leverage n Satisfied production and services n Marketing Strategy – Focus (business solutions and high ARPU customers) The people factor – Less Attractive n Experts in post-merger management n Weak in leading the technological innovations n Possible future union problems Investment characteristics of some businesses – Moderate Attractive n License requirements n Difficult barrier to entry n High competition The price of investment – Less Attractive n High price now at $43 n Near the historic high of $49 n Year end P/E at historic high of 25. 96 Recommendation: Sell

Sources of Information TELUS AR 2004 n TELUS 2005 Information Circular n TELUS 2006 Quarterly Result News Release n www. telus. com n www. sedar. com n Mergent Online. n Fidelity Online. n Yahoo Finance. n