Welcome to the TELUS Q4 2008 earnings conference call. I would like to introduce your speaker, Mr. John Wheeler. Please go ahead.

Welcome and thank you for joining us today for our fourth quarter 2008 investor call. The call is scheduled for one hour or less. The news release on fourth quarter financial and operating results and detailed supplemental investor information are posted on our website. In addition for those with the internet access, the presentation slides are posted for viewing at telus.com/investors. You’ll be in listen only mode during the opening comments. Let me now direct your attention to slide two. The forward-looking nature of the presentation answers the questions and statements about future events are subject to risk and uncertainties and assumptions. Accordingly, actual results could differ materially from statements made today, so do not place undo reliance on them. We also disclaim any obligation to update forward-looking statements, except as required by law. I ask that you read our legal disclaimers and refer you to the risks and assumptions outlined in our public disclosure and filings with Securities Commissions in Canada and the United States. Turning to slide three for an outline of today’s agenda, we will start with introductory comments by Bob McFarlane, Executive Vice President and CFO. Bob will review both segmented and consolidated results, give updates on the issues outlined and end with TELUS’s 2009 corporate priorities. This will be followed by a question and answer session. Darren Entwistle, President and CEO will be participating in this part of the call. Let me turn the presentation over to Bob starting on slide four.

Let’s begin with a summary of the wireless highlights on slide four. Wireless revenues were up 7% based on 10% growth in the wireless customer base, partially offset by lower revenue per subscriber. EBITDA is adjusted and, excluding $6 million in restructuring costs, increased by 1.4% squeezing wireless margins due to the impact of record fourth quarter gross loading, higher COA expense, as well as retention efforts focused on upgrades to smart phones. We also saw increases in certain network operating expenses due to a very strong growth in data usage in roaming, as well as higher content in licensing cost from the excellent 55% increase in data revenues. CapEx investments increased by $101 million reflecting the new HSPA network build out. Turning to slide five, net ads for the quarter were 148,000. Importantly, while loading was lower than expected, postpaid net ads remained strong and increased 11% year-over-year and represented 80% of total new subscribers. After strong loading gains for the first nine months, we were impacted by new competitor pricing in response to the continued success of our Koodo postpaid basic service brand. Also impacting subscriber loading was the late delivery of the BlackBerry Storm, which missed much of the holiday shopping season. Overall, our accumulative subscriber base up 10% totals more than $6.1 million with the more valuable postpaid customers representing a strong 80% of the total. The next slide shows that 2008 was a tremendous year for wireless subscriber growth on a gross and net ads basis, particularly when looking back over the last seven years. TELUS has consistently produced more than 500,000 net ads in each of the last five years. We achieved record subscriber loading this year as gross ads increased by 15% and digital net ads, shown in purple, reached 588,000 up 14%…

I’d draw attention to two slides in the appendix on certain financial definitions and a reconciliation of our free cash flow schedule. The free cash flow definition has been amended to now include employer contributions to employee defined benefit plans. Before we start the Q&A, I would ask for your cooperation in asking one question at a time, please.

(Operator Instructions) Your first question is from Greg MacDonald – National Bank Financial. Greg MacDonald – National Bank Financial: Questions on dividend policy, this has been, or the end of 2008 at least, a pretty tough year for pension solvency trends prospect of a rough economy is out there arguably companies looking at higher than normalized CapEx because of the HSPA spending. I would argue, and some might also, that this is as bad as it gets for the free cash flow outlook of this company, yet you’re still putting up a pretty nice buffer between what the free cash is and what the dividend is. So, I guess the question I would have on the dividend policy is what really is the company looking for before it’s comfortable increasing the payout on the dividend, particularly given the Delta of, I would say, roughly 20% difference between what you’re target payout ratio is and what most of the other Telco’s out there a paying out in terms of a percentage of earrings or a percentage of free cash flow.

Well, I think the first thing is usually dividend policies are also set reflecting, not only the profitability of the company at its current state, but what it’s growth prospects are. So we have higher growth prospects then almost all the Telco’s that I’m familiar with, and consequently our dividend policy reflects the future for free cash flow expectations, which in our case, involve some investment and future growth, as well. So our policy, which we’ve been compliant with, is very transparent. It’s led to five consecutive dividend increases over the past five years, which certainly is not being replicated in the Telecom industry in Canada or by others. So we got a very strong record of building dividend growth. We’ve repurchased significant amount of shares over the last four years. We’ve led the industry in terms of returning capital in combination with growth. That’s a pretty good track record and we’re going to continue that going forward. So from that standpoint, we are comfortable with our ratio. We’ve been very clear in terms of our leverage policies as well. And so here we’re at a position and right on the back of a significant outlay for spectrum and buying a strategic investment last year, which is being integrated very successfully, and positioning ourselves extremely well in what’s turning out to be one of the highest growth sectors in the Canadian economy. And we have the room to invest in a significant wireless network build and is our path to 4G and, at the same time, raise our dividend in the midst of a recession. So from that standpoint, I think our financial policies are serving us well and has served our shareholders well so we’re going to continue to do that going forward.

Your next question comes from Scott Malat – Goldman Sachs. Scott Malat – Goldman Sachs: My question is on wireless flanker brand strategy. I just wanted to understand a little bit more in the differentiation strategy for Koodo versus TELUS. And then as you think about the flanker brands from some of your competitors, some of them are offering some smart phones. I know the Moto Q and then the Pearl on Fido. I just want to understand if this dilutes a little bit of the differentiation on the flanker brands and what other differentiation you look at between the two.

I think the philosophy that [inaudible] in terms of bringing out micro brand to market this past year was one of making sure that it was structurally distinct from the core brand, and I think that particular strategy has been somewhat unique to TELUS and not always apparent across our industry. And so if you look at the Koodo brand, we’ll call it basic brand, you can call it a no frills brand if you want, essentially the attribute we wanted to embody within our value proposition was one of simplicity and affordability as it relates to two parameters, which is effectively talking and texting. And that’s the value prop that we instilled within the Koodo offering and that is significantly different than the full feature rich content and iconic form factors that typically we push out through our main TELUS brand. The other things that I think are worth noting, is that we chose not to intermingle our channel strategy as it relates to the direct TELUS brand. We very purposely ensured that, as it relates to TELUS stores, that TELUS stores were focused on moving forward the TELUS brand from feature rich handsets right through to TeleSmart phones. Whereas we built a distinct distribution channel to support Koodo and invested in that accordingly, at the same time as leveraging other retail relationships that have been traditionally strong for the TELUS organization. Scott Malat – Goldman Sachs: Are there geographical differences on where you're focusing your efforts for Koodo versus TELUS?

No. It’s national in its orientation. I think there is some geographic difference in the sense that the distribution for Koodo is not as pervasive as the TELUS distribution, but no it's national in its orientation. I know typical geographic constraint, although I would say for the market that Koodo really attracts it's more of an urban market, so to speak, but that's not a purposeful limitation as it relates to the service. The other thing that we chose to do with Koodo is to try and focus on ARPU with the sale rate. We're bringing a brand in the marketplace that's core in its orientation from a no frills perspective. Let's make sure there's no frills in the cost perspective as well. And if we're going to think about a flanker brand of that out, let's think about the ARPU as something that takes predominance over the RPU so that we get a meaningful margin contribution from the service. And I would say that mentality has extended into our selection of handsets to make sure that the economics on the COA are as attractive as possible, in addition to the Koodo support infrastructure where we've leveraged business process, outsourcing from a contact center perspective and various other mechanisms to ensure that we have the lowest cost base possible in respect of Koodo. You've also not seen us, as of yet and I'm going to say never is this going to be the case, but effectively we focused on simple talk and text and have not extended that yet into the Smartphone market in respect of Koodo. That's currently still our strategy. How the future evolves will be somewhat contingent upon how we respond to competition in the marketplace. It would be fair to say that the competition that we have experienced this far, I think, has been overtly responsive to the attractive attributes of the Koodo product itself as it went through its nascent stage this year.

(Operator instructions) Your next question comes from David Lambert – Canaccord Adams.

I'm trying to get at maintenance CapEx. I was wondering if you could break down your CapEx for the quarter. How much was dedicated to the DT initiative and the /PTT hand? How much was dedicated to HSPA and how much was dedicated to the numerous Enterprise contracts that you guys have won in the last two quarters?

We don't provide breakdown on a detailed basis of our CapEx. I think maintenance CapEx [inaudible] given the status of our firm and so I don't think that's a particularly relevant thing to go and answer. Obviously, we’re doing significant expenditures. One can look at the historic CapEx pattern of the firm, can look at the depreciation, amortization rate where our CapEx is in excess of that rate at the current juncture, given the significant build ours we've got going on. So I think that's probably a most relevant thing I can guide you to.

(Operator instructions) Your next question comes from Dvai Ghose – Genuity Capital Markets. Dvai Ghose – Genuity Capital Markets: Now that Bell is staying public, obviously our clients have to make a choice in a large part between Bell and TELUS. And clearly the two things, which seem to be favoring sentiment towards Bell today, are number one, cost cutting and number two, capital intensity. I'm wondering, therefore, on the cost cutting side, you have given us a bunch of restructuring charges. You've never really told us what sort of benefits these are expected to bring in '09 and onward and what sort of headcount reductions and so on. I think that would give a lot of comfort to your investors. And the other issue, of course, is capital intensity. Your capital intensity is 20% as to 16% the key difference is a C-like strategy. You've given us some big picture numbers about contracts and costs. But can you give us an idea as to the sort of profitability and outlook is, and whether it's generating cash at the moment, what sort of margins we're looking at, because really you've given us all of the bad news and not any of the good news, in my opinion.

Well, Dvai, I wouldn't characterize it that way. I'm pretty sure we gave you guidance for 2009 that reflected growth for TELUS in terms of our revenue and operating profitability that is reflective of everything from our growth initiatives through to the efficiency measures that we have talked about previously. I don't think cost cutting is an area where TELUS historically has been deficient by any stretch of the imagination if I look back over the last nine years. We have given you, I think, some considerable detail in terms of what has effectively been a 195% increase in our restructuring costs in 2008 versus the previous year, which is, I think, indicative of the efficiency focus that we have going on within the organization and we've earmarked up to another $75 million in 2009. I think we've been reasonably explicit in terms of what we are doing as it relates to the efficiency activities themselves in terms of spans and layers being maximized within the organization, which means we are looking to reduce our staffing levels. And we have been doing that within our organization, not on a broad based expensive fashion from a bio perspective, but something more strategic and prudent. We continue to pursue off shoring BPO activities to further compliment the reduction in our cost base. We talked about the rationalization of products and, as well, procurement arrangements within the TELUS organization. And we of course, as Bob indicated in his comments, implemented a management compensation freeze proactively in Q4 2008 for the 2009 financial year. I also think we've exhibited a reasonably positive payback on our activities in this area. And our activities in this area now I think importantly are not just relegated to the wireline side of the business, but we're also equally…

Your next question comes from Simon Flannery – Morgan Stanley. Simon Flannery – Morgan Stanley: I wonder if you could talk a little bit about the macroenvironment. You talked a little bit about the impact on Mike, but are you seeing impact on things like bad debts, long distance minutes of use and any sort of difference between the consumer and the business patterns and any regional differences you're seeing? Thank you.

Well I guess since we talked in December the economy has worsened in Canada and so generally economists are expecting negative growth overall. We have a greater than normal concentration of activity in western Canada which has been more buoyant and I think of all regions B.C. is the most buoyant. The Alberta economy which was on hyper growth six months ago is now just on a normal growth as a result of the oil [pact], so on the enterprise level it is somewhat specific to industries but if you look at the four verticals that we tend to focus on, energy and financial services, you're seeing some more deferrals of projects than formerly was the case. In the case of our healthcare focus and public service focus I would say those opportunities are expanding so sectors such as manufacturing have not been and are not a significant focus or exposure to our organization on the wireline side. I did reference Mike in respect to wireless because Mike is a relative small component of our overall subscriber base, but nevertheless contributed and was the reason why our ARPU declined year-over-year. And there was a noticeable change in some demand in the fourth quarter in the Mike area and I think that reflects the fact that of all our products Mike is most exposed to the manufacturing sector in the central Canadian economy which we otherwise really do not focus on. So that's probably why it showed up more there. Our days outstanding alike have really not changed whatsoever in terms of bad debt experience. One has to segregate what may be say economy-driven bad debt versus a certain credit policy strategies. In that regard certainly on the large corporate side we really have not seen any defaults that I can think of of any materiality whereas we are seeing some softening in the small business and medium sized business sector, although again, overall we have not had any noticeable increase in bad debts on the business side. On the consumer side it is somewhat reflective of the product line. Certainly if you go to wireless prepaid is a different category than postpaid. We are, as you know, 80% or more postpaid focused in our subscriber base. We are seeing some increased bad debts, etc. but we're managing those with certain deposit requirement programs. But we're going to continue to monitor that area to make sure that the return on all segments we're focusing on after taking into account possible adverse developments and bad debt, still justify the returns that we're looking for.

Your next question is from John Henderson – Scotia Capital. John Henderson – Scotia Capital: I'm trying to understand your branch into the call center outsourcing business in Central America and the U.S. Can you just spend a bit of time on that please?

Sure. Over to you, Darren.

A few things I think are worth highlighting on that, one is the vertical focus that's been the hallmark of our national expansion on business wireline services is once again evident here. One of the verticals that we've elected to focus on through our partner solutions wholesale business is the U.S. telecom and IT industry. And in particular IT companies in Tier II U.S. telecom companies that are interested in business process outsourcing opportunities, which is quite a vibrant market right now as the telecom industry has been under duress and telcos, particularly Tier II telcos that don't always have access to economies of scale go in pursuit of efficiency initiatives, particularly as it relates to contact center activity. And so if you're going to address that market effectively really what you have to have is an onshore capability to complement your offshore contact centers that provide the bulk of the efficiency gains. It's that two site topology, the onshore component which can be politically expedient particularly for U.S. telco and IT companies which can act as a gateway for increased off shoring activities where they can avail themselves of lower cost markets. And that for us effectively is the primary strategy behind it. Secondarily, clearly if you're going to address the U.S. market in an effective fashion, then you need Spanish language capabilities without a doubt. And that's what has driven our minority investment in a BPO operation in Latin America, three cities within Latin America for the purposes of geographic and political diversity so that when we go to serve those U.S. telcos as they serve their clients we have both English and Spanish language capabilities. And of course a selection of Las Vegas helps support that because of the Spanish language market that we can access there…

So the question is what is the FX impact on our wireless inventory? John Henderson – Scotia Capital: Well, you mentioned your COA was up in part because of the FX swings on handset inventory.

I think I was referring to the COA was up because of a valuation adjustment so that would be ob-related, obsolescence as opposed to FX. John Henderson – Scotia Capital: Okay. Got it.

Your next question comes from Glenn Campbell – Merrill Lynch. Glenn Campbell – Merrill Lynch: Darren, you sounded enthusiastic about the progress at TELUS TV and I was just wondering if you could give us a bit of an update there as to the sort of product, geographic scope, any sort of metrics on how it's progressing? Thanks.

I guess, Glenn, it's a difficult area for us to discuss in the type of detail that I think you're desirous of having given that we don't provide disclosure as it relates to the direct metrics attributable to TELUS TV. We are positive about the progress that we're making on the TELUS TV front and if I think about the product itself I think it's a very competitive product that delivers a very positive client experience. We worked hard to bring both HD and personal video recorders to the marketplace which is a very meaningful development for the service that transpired over the course of 2008 and we've enjoyed strong resonance with our addressable footprint in that regard. Clearly in our view we don't see ourselves as having demand issue, but we do have supply side challenges as it relates to the addressable footprint that I just articulated. So for us as we've expanded our coverage from key urban markets like Edmonton and Calgary and we're now investing to expand our footprint into the lower mainland, that takes time to come to fruition and it's not a question of money per se but rather the resources to effectively deploy that money in a competitive fashion to give the clients the type of experience that we think makes good sense. We're also judicious about how quickly we go. This is not a new market in the same way that HSIA was a new market where effectively speed counts because it's a foot race for virgin customers. It matters effectively who gets to the customer's door first. This is a well established marketplace and so I don't think we need to rush and there are decisions that we have to make that bridle our speed. For example if you rush too quickly…

Your next question is from Jeffrey Fan – USB Securities. Jeffrey Fan – USB Securities: Just want to follow-up on the previous question regarding the expansion into the U.S. with the call centers. Darren, you eloquently described the strategy of your BPO, but I'm more curious about why you feel the need to address the U.S.-based clients with every telco trying to – reverting back to their core and focus on where they think they have a competitive advantage. And just wondering what is the opportunity here in terms of servicing U.S.-based clients with this type of service?

We're already servicing U.S.-based clients with this service so I'm not sure from a confidentiality perspective whether I have the right to disclose the client's identity, but in Manila IT companies that would be very well known to you we serve. Gaming companies that would be very well known to you we serve. Utility companies that would be very well known to you we serve, so we already serve significant brand name U.S.-based clients out of Manila. What our U.S.-base clients have told us is that if you guys can't complement your low cost English speaking service with a low cost Spanish speaking service your growth prospects with us are going to become significantly truncated and not only will we not grow with you but we may not keep the business with you that's already in place. So for us to keep the clients that we've got, grow our relationship with them and secure new clients we have to have a Spanish language capability, which was the primary thesis behind our investment, our minority investment in Latin America. The secondary consideration was as I've indicated, geopolitical diversity is quite key given the number of people that we have in a single geographic location in Manila. The other area of our business that has been exceedingly successful for TELUS, so we were just ranked number one in North America as it relates to operator services, we call that our global contact solutions business, but we have done very well as it relates to wholesale operator services. And although that's a mature business as people exit the mature business we've developed quite a cottage industry taking their business onboard and leveraging our rather significant economies of scale and the superior performance and cost infrastructure that we have been able to secure from…

Your last question comes from Randal Rudniski – Credit Suisse. Randal Rudniski – Credit Suisse: You've outlined in terms of capital strategy CapEx and dividends pretty well, but I was hoping you could update us on how you view share buybacks in the current environment?

We of course have an NCIB, I think it's our fourth edition of the NCIB renewed back in mid-December so we have that capability. We've published very clear leverage guidelines that remain unchanged and you've got the payout ratio. We've got forecasts for 2009 out there so essentially we're in a really good position from the standpoint of having a strong balance sheet, being able to fund the increase in the CapEx, the minor increase in the pension outlays. And in terms of NCIBs I think we'll monitor the market. You can see we're in the market in a small way in the fourth quarter. As to what we might do going forward I think we'll be prudent but I can't say exactly what the level of activity will be. It will be a function of the lower the share price the more activity; the higher the share price the less the activity. Those are some of the frameworks but it's not something that I can pre-commit to.

Thank you very much everybody online with us today for joining Bob and Darren and our team and we'll look forward to working with you in the coming quarter. Thank you.