Good morning ladies and gentlemen. Welcome to the TELUS Third Quarter 2007 Earnings Conference Call. I would like to introduce your Chairperson, Mr. John Wheeler, Vice President of TELUS Investor Relations. Go ahead please.

[audio gap] materially from statements made today. So do not place undue reliance on them. I ask that you read our legal disclaimers and refer you to the risks and assumptions outlined in our public disclosures and filings with Securities Commission in Canada and United States. Now over to Darren, on slide 3.

Thanks John. Good morning and thank you for joining us today. I am pleased to report that TELUS's third quarter 2007 was a marked improvement compared to the second quarter, although still not to the standard that I expect from our organization. Our improved performance this quarter is due to a more deliberate operating focus that I promised investors three months ago and I am encouraged that TELUS is making significant progress in returning operations to normal. Let me begin with TELUS's wireline results on slide 4. TELUS's revenue performance continues to demonstrate resilience in the competitive wireline market. Notably, data revenue continued to be strong up 9% this quarter across an array of services. Once again TELUS experienced only moderate network access line losses at 3%. I'm also pleased to note that TELUS made good progress in the third quarter with the continued implementation of our major IT investment in Alberta that consolidates multiple order entry and billing systems down to one customer care platform. As you may recall from last quarter certainly I do, the full scale transition of more than 1 million residential customers to this new system resulted in difficulties that seriously reduced our ability to process new orders. Not withstanding this, TELUS has remained successful in the critical function of processing and issuing client's bills. In the third quarter, we made significant strides in overcoming TELUS's temporary challenges on the IT front. As evident by the 50% sequential reduction in our extra billing system cost to $8 million this quarter. Moreover the remediation of our order fulfillment difficulties allowed us to renew our marketing efforts in the province of Alberta. As a result we doubled the number of net customer additions for high speed internet services in the third quarter as compared to the second.…

Great. Thank you, Darren and excuse me, good morning everyone. Let me begin the financial results review with our wireless segment beginning on slide 12. As Darren mentioned third quarter results were a marked recovery from the second quarter, wireless revenues were up 9.4% as growth in subscribers was partially offset by slightly lower revenue for customer, reported EBITDA increased by 8% due to higher network revenue growth partially offset by increased network operating expenses resulting in part from higher revenue sharing with third party data content providers. Improved trends were experienced with cost of acquisition and cost of retention, as they were sequentially lower, which led to a rebound in EBITDA margins to 47% of total revenue. The increase in CapEx this quarter was mostly due to network enhancements in capacity and coverage. Our EVDO Rev A high speed network now covers roughly two thirds of Canada's population. Turning to slide 13, wireless net additions were stable year-over-year, TELUS added a 135,000 total subscribers in the quarter generated by 9% growth in gross additions despite reporting as just mentioned, sequential and year-over-year reductions in marketing and retention cost. Prepaid net additions increased 27% to 36,000 from a year ago while postpaid net addition of 98,000 were down 10% year-over-year. Postpaid additions represented 73% of TELUS's total net ads in the third quarter and the overall subscriber mix remains at 80% postpaid and 20% prepaid. Slide 14 shows the change in wireless ARPU year-over-year. Overall ARPU decreased by $0.87, or 1.3% year-over-year to $64.80, due to a decline in voice ARPU, which I'll elaborate on in a moment. TELUS's wireless data ARPU increased by more than $2 to $7.20 now representing 11% of total ARPU. The potential for continued strong wireless data growth remains very positive given the increasing penetration…

Thanks Bob. Just before I turn the call over to Ron to conduct the Q&A session, can I ask your cooperation once again for one question at a time please so we can get through the people in the queue. Ron, please proceed. Question And Answer

[Operator Instructions]. And the first question is from Peter MacDonald at GMP Securities. Go ahead please.

Thanks. I am looking for some more clarity on the ARPU. You pointed to greater pre-paid mix, lower iDEN, and greater mix of included minutes and pricing. So, I guess what I am looking for is some sort of waiting between those lines and also the prepaid, postpaid mix, is that a pricing mix, because when you look at the year-over-year total number of prepaid versus postpaid, that number stays pretty consistent? And then last, is there a way that we can quantify the iDEN, contribution, what's happening on the sub-voting, and is there a way that we can look at the impact over the next couple of years from now? Thanks.

Thanks Peter. In terms of weighted type of comp set, clearly I think from competitive reasons, it wouldn't be prudent for us to provide that. In respect to the prepaid and post paid. I think the point there goes to prepaid subscribers, everyone knows carry a lower ARPU, and in our case roughly $25, which is quite good going in respect of prepaid subscribers. And so there is value added in adding of subscribers. But clearly they generate a lower ARPU. They also generate a lower data ARPU. It's part of why it's a lower total ARPU, and the data ARPU in terms of increases, increasing less than it is for postpaid. I think that probably makes intuitive sense but, so in a quarter such as in the third quarter where the proportion of prepaid that we added 27% total of net adds was greater than the 20% in a cumulative base. I think there was an impact, as well in terms of overall ARPU. In terms of iDEN, we don't give the specific numbers on that, I would say that it continues to be a positive product and service for our company. Certainly, we are significantly... in a significantly different situation than the Sprint Nextel organization in United States and that we never really marketed the Mike branded item service in Canada towards the consumer segment quite in contrast to what has been done in some strategies down. So, we really don't have that same dynamic occurring here. We certainly don't have the spectrum capacity issues and other issues that are confronting the Sprint organization in that respect. Having said that, there certainly isn't a growth segment for our organization and because of the data upgrade path not being similar to that of EVDO or EVDO Rev A, the more data centric subscribers are more in a post paid systems. So given that data is the real growth element in the market for overall ARPU and data is a less relevant growth area for iDEN therefore that maturing aspect is a... is a factor in terms of influencing overall ARPU. Particularly as analysts like to express wireless data, as a percent of overall consolidated ARPU hours is 11%, certainly it's been increasing, but one of the reasons would be lower than certain other competitor would be the fact that we do have a Mike subscriber base that doesn't generate a similar data ARPU as PCS postpaid would. Having said that of course they do generate significant push-to-talk revenues, which postpaid don't provide either, so before you look at the glass being half empty, it's also half-full.

Okay, next question please

Thank you, the next question is from Greg MacDonald from National Bank Financial. Go ahead please.

Okay, thanks. I think I will try and add on to that. I wonder Bob, if I can just drill into this issue on ARPU, out of the Mike product a little bit more. Can you say whether you are actually experiencing ARPU decreases in that segment, and give us a sense of what that is, I am getting the sense that the Mike issue relative to total ARPU is the issue and I can appreciate that you don't want share too much with your competitors but we are all trying to get a better sense of what the real ARPU risk is here, i.e. what the recurring nature of the negative 1.2% was on a year-over-year basis, so is there anything more that you can give us on what's actually happening with Mike ARPU?

Greg, what I can say is. And we showed on the slide, I have forgotten the exact number, but the ARPU slide with the split between the voice, and the data component. So you can see in the disclosure the voice ARPU going down. So I think, if you look at it from a service perspective, component perspective, voice going down is the reason our overall ARPU went down, because the voice exceeded the data. The voice is down regardless of platform, whether it's Mike or whether it's PCS. So that I can tell you. The data is up much more on PCS than it is on Mike, so from that perspective, the tradeoff is more generous in terms of PCS, but that's about as far as I will go on that. Okay, next question please.

Thank you. The next question is from Peter Rhamey from BMO Capital Markets. Go ahead please.

I just want to change tact here. It is a good job of reducing retention spend below my expectations of a higher spend in Q2 and COA is down, and I am wondering whether this represents the new running rate for the company on a go-forward basis, or should we be expecting that or it could be quite more volatile here depending on what's going on in the market place, thank you?

Well Peter, I think lets go back just to this Q2. And at the time in Q2, you may recall when we are having similar conversations on our results at that time, people noted that the retention in COA were up and churn was up as a matter of fact as well. ARPU was up, so no one talked about ARPU as I recollect, so its funny how things change in three months. First two questions are ARPU not on COA, and retentions, so thank you for turning it to that topic but back in the second quarter we said, look WNP has just been implemented and it was a dramatic change in the industry and people didn't want to be caught flatfooted, and so we were aggressive in terms of retention, and acquisition activities, and unfortunately that did impinge on the margins in that quarter. I recollect Darren saying that we felt we could do better and in that regard, be more productive or more efficient if you will on a go-forward basis. Lo and behold the third quarter has come in and not only did we improve on the second quarter, we improved on the prior year in that regard. And the subscriber ads were consistent overall with last year despite the lower stem. So from that standpoint, you have to conclude that, yes it is pretty good going. I mean if we lower the COA, and our sub-ads fell through the floor that would be a different situation. That's not the case here. So, I think that worked well, and we delivered upon an objective of improving our margins. On a go-forward basis in respect of the fourth quarter, clearly the fourth quarter is generally 40% net adds of the year for the industry, so it's the big selling season. And to signal to our competitors, what we are going to do in the last two months of the year when a fact about 35% of the annualized are done in the final two months. I don't think it would be prudent, but suffice to say this organization has always prioritized profitable growth, but at a reasonable market share. And so we will be... we will be looking to see how the splits turn out and I think there is certain implications for the industry and we will see what our competitors actions are as to how greedy, or responsible they are in the fourth quarter.

Okay, thanks Bob. Next question please Ron.

Okay, thank you. The next question is from Vince Valentini from TD Newcrest. Go ahead please.

Yes, thank you very much. Surely you will come back to ARPU, but one thing that really stands out for me, I am hoping you can shed some light on it, is the minutes of use. I mean, even though you have bigger buckets, the overall minutes of use as you said were just flat. Roger's reported yesterday an 8% increase in minutes of use. It seems to be a bit night and day. Can you comment on what you see happening in terms of your subscriber base to drive the lower usage, and just a clarification on the data ARPU, if you do back out the Mike and back out the prepaid you guys report your data a little differently than some of your peers and if you look at just postpaid data ARPU, do you think your ARPU would be more comparable to peers in sort of $10 range versus the $7 figure you reported?

Boy, I thought we disclosed a lot, but it only goes to show you can never satisfy everyone all the time when it comes to disclosure. What I can't say on the data ARPU is directionally you are correct. It is significantly higher than our average that is the data ARPU on the postpaid PCS is clearly significantly higher and would be comparable with some other firms. Although having said that, I do believe that there is still a great opportunity for improvement whether it's PCS pre-post, or Mike. I think we certainly have opportunities to raise the bar, and I think we have a good outlook in that regard. In terms of MOU's, it's hard for me to comment about competitors. What I can say is that in terms of MOU's driving ARPU, there is really couple of considerations to keep in mind. It's not just your total MOU, it's your billable MOU, and so the extent to what's been included in a bucket if you will doesn't drive incrementally the variable. It usually it comes depends upon the ratio relative to the fixed fee you are charging for that bucket. Secondly, we are experiencing industry wide some substitution from data for ARPU as messaging obviously substituting to an extent for local and LD calls actually. So it is hard for me to comment about the competitors, but clearly in our case the real driver in terms of the voice ARPU being down is re-price due to competitive actions in the marketplace and the increased number of minutes that are included in bundles.

Thanks Bob.

Next question please.

The next question is from Glen Campbell from Merrill Lynch. Go ahead please.

Yes. Thanks very much. A question for Darren you got a trial going on fibre-to-the-home overbuild in 8 communities on a very small scale. Could you talk a little bit about what you are hoping to learn there and whether you think there is a possibility that the economics might look better for that project and say what we are hearing from Verizon with their fibre-to-the-home? Thanks.

I think it's incumbent upon us to always try new technologies and new accessed network topologies. And so in terms of our GPON trial, it is a learning exercise for us to determine can we deployed fibre efficiently and effectively to a new neighborhood, and can we do the same as it relates to apartment buildings. We also need to become proficient at the deployment of equipment, as it relates to light-to-electrical conversion. It's also important to deploy from a trial perspective, and from a learning perspective new technologies where standards are not yet established. And you should be aware that on the GPON front our standards are not yet established. So for us to get ahead of the curve from a learning perspective, I think it's something worth doing for this organization. And it's no different than our approach on the wireless front. Just it is increment upon this organization to remain on top of new technologies, the manner in which they are deployed, what they can deliver, in terms of a functionality and product set to customers and whether we can do that in a way that allows us to realize a decent payback and economic grant in that particular overall solutions. So nothing surprising here, it is a learning exercise for this organization. It is a technology which is not yet matured, and we are anxious to see standards developed in this area, so that manufacturers can get behind fibre-to-the-home, and as a result of manufacturers getting behind these standards hopefully in the fullness of time improved the economies of scale associated with this type of access network technology, and topology. But we have been curiously watching what Verizon has been doing in the U.S. Something I think are very relevant from a learning experience for TELUS,…

Okay Ron. Thank you, next question.

Thank you. The next question is from Dvai Ghose of Geniuity Capital Investments. Go ahead please.

Yes. Thanks very much. Clearly you have some structural issues when competing against Rogers. Their wireless average lifetime revenue was up 24% year-over-year, in this quarter, yours was down 6%. The good news is that you have a very strong balance sheet and perhaps some of your structural issues are fixable. So, that being said what are your balance sheet priorities for '08 in terms of issues such as GSM mobily [ph], Flanker [ph] brand, migration of iDEN, fibre-to-the-home as mentioned by Glen, versus returning cash to shareholders and acquisitions?

Okay Dvai, I really appreciate that particular fulsome question. Our priorities for 2008, I think will be very similar to the priorities that we demonstrated in 2007, 2006, and 2005 going back where we have effectively balanced our appropriate desire to invest in the future and invest in growth areas like wireless and data services and at the same time simultaneously returning cash to shareholders through two well established mechanisms and as I indicated in my remarks today, when we announced our dividend growth model four years ago, people were wondering whether it would be a recurring or non-recurring event and here we are four years later with our fourth double digit increase in a dividend, three of those increases, the percent increase on a year-over- year basis was in the 30% zone and the most recent one in the 20% zone, and of course we bought back and cancelled some 50 million shares for $2.5 billion. So in terms of what you can expect from us on a go-forward basis into the future is the continued balance of returning cash to shareholders from successful investment program that we have been able to leverage effectively, and at a same time, use our cash to appropriately invest in the continuation of the growth pieces around data and around wireless. As it relates to your specific question on things like a Flanker brand for example, obviously it's not appropriate for us to discuss any development of that sort on a marketing front within an open forum such as this. It's clearly and doing so to the benefit of our competitor rather than our shareholders. We have not been a organization that has come out said unequivocally no, we not doing things that potentially could add value in the future, but I think,…

Okay Ron, next please.

Thank you. The next question is from Robert Goff from Haywood Securities. Go ahead please.

Thank you very much. Can we turn to a wireline for a moment and look at the pressure on the voice local revenues, where it was $22 million on the quarter, $33 million down on year-to-date. You mentioned both lines and optional features, could you give us a view on the pressure you are seeing there on the optional features?

One of the things, we referred to Rob was we had reduced revenue from those ads and changes so this relates to. As you may recall, we had an application with the CRTC wherein we would, we filed to reduce the charge for people being hooked up in return for being able to increase service charge to the whole base. The service charge increase was denied by CRTC, but we did process with the reduced or avoiding of the charge to hook up a new subscriber. If you think about it to charge someone to hook up to you is a bit counter in the face to competition. So while it did reduce revenues in this line, I think from a competitive standpoint it is right move to make.

Okay, thank you. Ron.

Okay, thank you. The next question is from John Henderson from Scotia Capital. Go ahead please.

Yes thank you. I was just wondering, if you could give an update on your TV services in terms of kind of service description what your evolution is looking like there. I just wanted to make a bit of a comment about how Verizon and AT&T are disclosing a fair bit of information on their TV services and seem to have benefited handsomely in the last year with share price increases, while the cables have suffered in terms of the board. I just wondered when we might expect to see some metrics from TELUS on subscriber's footprint, earnings, EBITDA, that sort of thing?

Well John that's an interesting question at this point in the Public Canadian Telecom Market from the standpoint that of course one of our competitors, the largest telecom in Canada, Bell has been privatized. I noticed they are not even holding an Investor Call. I guess their disclosure is pretty forthright on IPTV. They were not doing it from what I just read, but in any event, I find that hard press to expect that the Bell Organization is going to start disclosing all sorts of detailed metrics on a go forward basis, as they are being privatized and therefore I think we need to be reflective of what is appropriate for our shareholders in order to value and measure performance of this organization relative to competitive disclosure. And so at this juncture we are going fine in the marketplace, but one of the advantages of the tact that we have taken is we have freed our operation from the quarterly type of microscope where one month is ARPU, last month is COA, and on a year-to-date basis we are on track. So I think that that would be my main point that the lack of disclosure is not reflective of any lack of performance, rather it has to do with a gauging of what is appropriate to disclose in the marketplace given what our competitors do. They have competitive sensitivity of that information and I think in this case given it's a nascent business the healthy aspect of avoiding near term quarter-to-quarter focus that the unfortunately the public markets often impose upon organizations?

In terms of your question John in terms of how TELUS TV is doing. TELUS TV looking up in the full to the expectations of this organization, as it relates to the product, the functionality of the product, the performance of the product, the content that we have been able to secure on the quality of the picture, and of course right now we are going through the trials on high definition, which hopefully if things continue to go well, we will be launching commercially into the marketplace over the course of 2008. The infrastructure is performing well from a technology perspective and we are very pleased. And I think it's always a good situation when demand exceeds our ability to supply. And I could tell you right now that chronically we are in a situation, where the demand for the service exceeds our ability to supply. And the key governing TELUS TV and this is an answer that is going to remain true for several quarters to come to say the very least in the years ahead. The key governing factor right now is just the ability to expand our footprint. It takes time to expand our footprint. Deploying new technologies on the wireless front can be done much more expeditiously than deploying new technology, where you got legacy wireline technology in the access network. And so for us we just have to work our way through it. We want to do it in a judicious way and as I said previously it is really important for people to appreciate the hybrid approach that we are taking on the technology front, because I think that should resonate well with investors. So we are not saying from a homogenous perspective, we are going to go fibre-to-the-home everywhere and do a…

Thanks Darren. Ron, given where we are in the call and having gone through, we are going to take one more question please.

Great. Thank you. The last question is from Jeffrey Fan from UBS securities. Go ahead please.

Thanks very much. This is a question for Darren. And Darren I understand you don't want to discuss too much about some of your tactical moves especially in the near term but conceptually if you can just entertain us by... given the spectrum option and the spectrum option rules coming up in the very near term, conceptually as you look out to next year and even beyond, how important are these rules in terms of how TELUS behaves or acts in the market and the strategy that you want to employ?

I think Jeff if we had a weak strategy we would always be adjusting it for exogenous events as they transpire within the marketplace. I think we have got a very robust strategy. The strategy that we set out back in 2000, one that was quite revolutionary at the time, it seems quite obvious today in retrospect, well the strategy that said, we are going to focus on two growth areas, one was wireless and the other was data, data as it relates to both wireline and wireless services. We are going to expand from regional to go national and we are going to bring cost efficiencies that are inherent services of our business, the pure growth and that's exactly what we continue to do today. I think we are pretty resilient to exogenous developments in the marketplace. If you work at the hits that we have taken over the last 7 years, whether its equity market implosions or credit market downturns, or adverse of regulatory decisions, or work stoppages, I could go on and on and on. We have been able to absorb those particular developments and drive on, execute our strategy, and grow value. The other thing I think is important is that if you look on average over the last seven years, the market in the Canadian wireless industry has been characterized by four players at the network level rather than three. So it's not like a four player industry is unfamiliar territory to us. It is familiar territory to us and we have generated very good results within a four player market and I'll highlight the fact that the ARPU leadership that we established was within a four player market. It's also interesting to note that in that era people thought there was going to be…

Okay, Thank you very much Darren and on that note, I think we will just thank you very much for taking the time to join us today. We know it's a very busy reporting season for you and we appreciate your interest and continued support of TELUS and we look forward to working with you in the coming weeks and months.

Thank you.

This now concludes the TELUS third quarter 2007 earnings conference call. On behalf of myself and the rest of the conferencing team, thank you from TELUS.