Good morning ladies and gentleman and welcome to the TELUS 2016 Q3 Earnings Conference Call. I would like to introducer your speaker Mr. Paul Carpino. Please go ahead.

Great. Thank you, Peter. Good morning everyone and thank you for joining us today. The third quarter 2016 news release and detailed supplemental investor information are posted on our website TELUS.com/investors. On the call today will be President and CEO Darren Entwistle who will provide opening comments followed by a review of the third quarter by Doug French our CFO. After our prepared remarks, we will conclude with a question and answer session. In consideration of our day, we are going to try to keep this call for under an hour. Let me direct your attention to Slide 2. This presentation, answers the question and statements about future events including 2016 annual targets and guidance, intentions for dividend growth and future share purchases are subject to risks and uncertainties and assumptions. Accordingly, actual performance could differ materially from statements made today so do not place undue 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 disclosures in particular in section 10 of TELUS's annual MD&A and filings with securities commission in Canada and the United States. Let me now turn the call over to Darren, starting on Slide 3.

Thanks, Paul and good morning everyone. TELUS delivered strong third quarter results, which continue to highlight the quality of the company’s asset base and the TELUS team’s ability to consistently execute on our multifaceted disciplined growth strategy under pinned by excellence in customer service. TELUS once again maintained industry-leading results in wireless customer loyalty, ARPU growth and lifetime revenue. In additionally expanded margins and delivered very strong consolidated and segmented revenue and EBITDA growth. Importantly, through these consistent results TELUS continues to deliver on an industry best capital return program to our investors. Let me now provide you with some highlights of the quarter. Despite a highly competitive environment and ongoing economic challenges in Alberta TELUS earned strong net additions in both of our wireless and wireline segment with an increase of 115,000 net new customer additions in postpaid wireless, internet and TELUS TV. In wireless network revenue grew 4.9% and EBITDA grew 6.1% a solid increase compared to the same period last year. Moreover, we earned strong postpaid net additions that 87,000 up 26% from the third quarter of 2015. TELUS also continues to earn the best customer loyalty amongst our North American peers achieving a postpaid churn rate of 0.94% in the quarter. TELUS has now delivered a postpaid churn result of less than 1% in 12 of the last 13 quarters, this continues to be an achievement that is unmatched by our global peer group. Importantly, blended ARPU increased by industry leading 3.8% to $66.67. Our teams' commitment to delivering an unparallel of customer expense is the essence of our strong ARPU and industry-leading churn, which in term continues to drive TELUS’s leadership in lifetime revenue for a customer. In this regard at more than $5,600 are current lifetime revenue per subscriber is 18% and 48% higher…

Thank you Darren. Good morning. I'm on Slide 8. Third quarter wireless results showed strong network revenue growth and improving margins, as a result of solid operational execution in a competitive market. Network revenue grew 4.9% reflecting higher ARPU driven by data and continued high value posted subscriber growth. Adjusted EBITDA increased 6.1% from higher network revenue and cost savings through the execution of our operational efficiency and effectiveness initiatives. Adjusted EBITDA margins were up 130 basis points as revenue grows and expenses control offset at $26 million increase in combined COA and COR costs. Capital expenditures increased year-over-year by 41% reflecting the continued LTE enhancements, spectrum deployments and increased investments in support of our small cell technology and 5G strategy. Moving to wireline on Slide 9. In wireline, revenue increased 2.3% year-over-year. Wireline revenue has now increased year-over-year for 23 consecutive quarters. The growth was quarter was driven by an increase in data revenue of 7.9%, reflecting strong growth from TELUS International, continued high-speed Internet and TV subscriber growth higher revenue per Internet TV subscriber. Offsetting this was a decline in voice and in other revenue. Reported wireline EBITDA increased 5%. When excluding restructuring costs a net real estate gain our adjusted wireline EBITDA increased 4.2% with a margin of 27.8% up 50 basis points year-over-year. Included in the results was an accrual for the remaining ownership of TELUS International operations in Europe. Wireline EBITDA growth was 5.8% excluding this item. EBITDA margin growth reflects execution of our cost efficiency programs and improving margins in internet, business process outsourcing services, TV and health services. CapEx increased 19% due to continued generation of investment on broadband network infrastructure. This included connecting more home and businesses directly to our fibre optic network. Our TELUS PureFibre footprint is now approximately one million…

Thank you, Doug. Peter can you please proceed with questions from the queue for Darren and Doug.

Okay, thank you. Our first question comes from Phil Huang [Barclays Capital]. Please go ahead.

Hi thanks good morning. So certainly great to see all the wireless metrics performed so they well at the same time a more impressing to see a compromise in margins, and then want to get such strong subscriber in this industry. Just when you look across the major markets is there any specific region that is a bigger driver of your subscriber growth momentum?

Our performance has been strong pervasively on a national basis. The one thing I would highlight off course is the economic to rest that we have been working through within the province of Alberta. It was encouraging for us in Q3 to see some moderation on the wireless side in this regard. We saw improving stabilization in terms of our wireless results on both the consumer side of our business and on the B2B component and so that was encouraging forward as it relates to wireless. But in terms of the overall results holistically, I think it is a strong performance across the board in terms of all the geographies and the markets that we seek to address.

That’s very helpful, in just looking ahead to Q4; obliviously IPhone 7 is certainly top of mind for many consumers. Has the apply eased a bit now, just given the pre-order supply, our understanding seem like it was pretty tight in the industry and do you expect it to be a good, a bigger driver of subsidies and upgrade into Q4 versus Q3. So overall IPhone. Do you see overall item sales you see that as a bigger driver of upgrade in Q4. And do you seek a strong growth momentum extending into the fourth quarter? Thanks Darren.

Okay, I will try and answer those questions sequentially here. I think you just have to look at our COR on a nominal basis to see the rate impact of the IPhone in terms of the economics of our business. We believe it will continue and increase in terms of being a factor within Q4. Particularly, right now given the competitive juxtaposition of the IPhone versus Samsung within our product line up. So in terms of our forecast that were expecting continued strong growth in wireless through the seasonal loading period of Q4, where we have seminal events including, Black Friday, Cyber Monday and of course the Christmas selling period. So the strength that you saw in Q3 in terms of our overall loading, we would expect that to continue into Q4. And of course there is cost a factor for us there on the IPhone front that’s going to get reflected within our COR and COA results. On the flipside, I guess, one of the things that I would highlight for you is the ARPU result on the IPhone front and the churn result on the IPhone front and the combination of that in term of lifetime revenue on the IPhone front is extremely attractive. So the return that we get on that incremental COR and COA investment remains attractive for this organization, because of the ARPU churn and lifetime revenue characteristics that I just described.

That’s very helpful Darren and maybe I could squeeze in one for Doug on cost savings. I was wondering if you could give us an update on what run rate savings we have been able to achieve at the end of the quarter? Thanks.

I think you would have seen our cost increases being very moderate in quarter-over-quarter and year-over-year and you would have seen also our programs last year where we had active reductions of approximately 1500 FTE. So that run rate is making it’s way through. We continue to implement that with other efficiency opportunities, which would include reliability metrics and other line items beyond just FTE. So I think without actually quoting that number, I think that you will see continued improvement in our cost line, you will see our revenues growing faster than our OpEx on that perspective and you should expect that to continue.

Thanks very much.

Thanks Phil. Next question Peter.

Thank you. Your next question comes from Richard Choe [J.P. Morgan]. Please go ahead.

Hey thank you. Wireline had a very strong revenue quarter especially with the tough comp from last year, I guess in thinking about the three buckets of growth, consumer internet, enterprise and then video, is there a one that's doing better than the others and driving growth or are they all kind of contributing equally?

Choe, I think there is certainly a bias within that particular dichotomy on the wireline front, we are seeing strong growth coming from data services, which is skewed towards internet on the consumer front and video on the consumer front. Holistically for us, the enterprise business has been a little bit soft, because of the Alberta impact. So if you look at wireline in general, the growth is coming from data and consumer. The second area that's buttressing that is that we have been I think quite prescient in driving our cost efficiency programs with the TELUS organization across both wireline and wireless. And the thesis behind these cost efficiency programs that we have been running now for almost a year and a half has been to buttress the overall financial results of the organization and you see that in the 5.8% EBITDA growth rate on the wireline side. Number two it provides us with the resiliency to participate in competitive skirmishes and weather competitive intensity and make the necessary growth and retention investments within a competitive environment on both wireline and wireless. And lastly, the cost efficiency programs are underpinning longer term growth initiatives including our fibre-to-the-premises program, which continues to be extremely successful and is one of the things underpinning the data growth rate that I just articulated that we are experiencing within our consumer business.

And has the competitive environment changed at all on the wireline's side of it or wireless side since the end of the quarter?

The wireline side of the business was more aggressive on a year-over-year basis in Western Canada. And I think you can see that reflected in TELUS's results overall. It was not a significant factor in terms of growth; there was very good capacity positioning there, but it had an impact in terms of churn, because of the intensity that we are seeing in that market overall in terms of TELUS's competitive posture versus our cable competitor. I think the response from TELUS has been excellent; you can see that reflected within our financials where the 5.8% EBITDA that I just articulated compares very favorably with any incumbent wireline company on the planet. If you look at the strength of our holistic RGUs, they are positive and you can't say that for very many of our competitors who have negative RGUs. We led our industry nationally on TV nets and we led the west on HSIA net addition. So I would say we are weathering this particular environment quite well. In terms of the impact of churn that I talked about I think our response in the future to our competitors is going to be one where we are proportionate to the extent to which we experience a competitive aggression and reflected in any facet that including pricing. We will respond on a proportionate basis. I was particularly encouraged in looking at our Q3 results, as to the strength of our performance in September as we exited the third quarter and we deploy our response measures to the competitive intensity with excellent effect in the marketplace. The other thing I think you can look from TELUS, over the near medium and longer term is an organization that’s going to focus on quality and product based differentiation through product based innovation. And…

Great, thank you.

Thanks Richard, next question Peter.

Thank you. Your next question comes from Greg MacDonald [Macquarie Research]. Please go ahead.

Thanks good morning guys. Darren you may comment on some of the growth factors in wireline, which indeed is a pretty good results. A couple of areas that you haven’t commented on but and largely because they are not big in size, but they are big in disproportion of growth or TELUS International and TELUS Health. Wonder you might give us an update on performance there and to the extent that you are comfortable talk about sustainability into 2017 Thanks.

Okay, in terms of TELUS Health, the performance has been modest and satisfactory but I think would be a lot better. So in terms of TELUS going forward Josh Blair and I are looking for heightened performance out of our TELUS Health business, that executes it’s strategy particularly within the primary care health eco system over 2017, 2018 and 2019. So when I look at Q3, it was okay I would say from modest performance might be characterized as satisfactory. For me I’m a bit disappointed to be transparent on the TELUS Health front. There is so much potential and growth opportunity within TELUS Health, in terms of quality top-line revenue growth, great opportunity for a profit expansion significant opportunity in terms of developing new RGU, particularly with our focus on the primary care health eco system, which is people, homes, doc clinic and pharmacies. So I think we can do a heck of a lot better, that’s what the business is going to be cast with achieving in 2017, 2018 and 2019. In terms of materiality in our overall wireline results, I wouldn’t describe it is as consequential. The TELUS International business is performing extremely strongly, just to give you a little bit of empirical prospective, we are not going to get into continues discloser on TI but to give you an empirical prove point to that particular sub-position in terms of the strength of the growth. EBITDA growth on TELUS International was 30% in Q3 on a year-over-year basis. I like the markets that are addressing the opportunity to move from voice-based BPO business process outsourcing to data business process outsourcing to focus on the IT market in terms of out sourcing solutions. Significant growth, I like the quality of the revenue in the EBITDA at TI, in…

A quick follow-on that, if I go back to TELUS Health, to move your opinion from modest to very happy with that opportunity; the remedies there, are they completely in control; in TELUS's control or are there still issues that have to happen in government for you to be able to hit those targets?

I think some of the exogenous factors that you have articulated would be complementary; they would be the icing on the cake. But in terms of improving TELUS Health, I think it's entirely within our control. It's down to us. The soft performance is management's responsibility, it's my responsibility. I have got to take accountability for that; and when I'm talking about in terms of growth is basic blocking and tackling; so that we grow our personal health record business; we grow our home health monitoring business, we grow our electronic medical records business within docs and clinics. We grow our pharmacy management systems; we have got great products and it's down to us to grow those product basis, those client relationships, the revenue that we derive and the margin that we derive from those products; on a future basis, at a level, at a cadence that's over and above what we are delivering right now. And I think the opportunity is there; we have got to go out and seize it. And so I think it's entirely within our own control. We have exogenous factor improve that, absolutely. But the kind of ability is down to this management team.

So, it sounds like 2017 is an execution period, are we going to be able to see possibly results in 2017 or would that be more 2018, 2019?

No, I would be looking for results in 2017; and a lot 16 year has been execution period. But, for us, there is just too much opportunity on the health side; when you look at the percentage that health is of the overall GDP of our country; the amount of money that's been spent there. And the necessity within a digital world for healthcare transformation where we want to deliver better health outcomes for less money spent, from an efficiency perspective; technology can do that, absolutely, it's in fact a key driver to making that happen. So we don't just have an economic responsibility to our shareholders; we have a responsibility to society to help drive this transportation the technology enables. But even more than that in terms of efficiency and better health outcomes, the technology that we have within the TELUS Health business can actually drive a shift from the remediation of illness to the promotion of wellness. So it's down that go out, particularly with that focus in the primary care health pathology and take our solutions to market and grow profitable revenue from that on a very sustainable basis. So I’m looking and expecting great things from TELUS heath in 2017 and well beyond.

Thanks, Craig. Peter next question please.

Sure, our next question comes from Maher Yaghi [Desjardins Securities]. Please go ahead.

I just have a more big picture question. I'll try to be concise. At the end of 2010 TELUS’s leverage was around 1.8 times since then the company has made significant stock re-purchases and broad valuable spectrum but it is also making major investments in FTTH, leverage is now sitting at about 2.6 times and free cash flow distribution is believe 100%. I think the question on this mind is when this FTTH investment cycles comes to pass where we should we expect leverage to weak?

Okay, so Maher and for everyone on the call, with our efficiency mindset on let's see if I can help with this answer to end this recurring dialogue and put this particular conversation to rest. So firstly, in terms of where we were back in 2010 and where we are right now I don’t think 2.6 is a million miles from 1.8 when we have made the generational investment that we have made in fibre-to-the-premise and spectrum. But in terms of giving you a crystal ball where this organization is going, I'll try now to be as precise as I can. So firstly, in terms of what you can expect, we will continue to invest at this step for the next five years. Why? Because it's the right thing to do, and we are going to do this in terms of both magnitude and timeframe because that’s the magnitude and timeframe required to support the rollout of our band infrastructure across the markets that we want to address on both wireline and wireless. Secondly, it's the right environment for the fibre cost of capital has never been more attractive and in terms of current projections within Canada the cost of capital is expected to remain low, and if you look at our recent debt financing in the U.S. I like the characteristics of our ability to raise money at very attractive levels. Secondly, and this is not something that I have been able to say a very frequently over the last 16 years, the regulatory environment is favorable for us in western Canada to make this investments. I mean we have both the cost of capitals into opportunity and a regulatory environment in terms of the window of opportunity I think there is a responsibility the organization to step through…

Thanks Maher. Next question Peter.

Thank you. Our next question comes from Simon Flannery [Morgan Stanley]. Please go ahead.

Darren there is a lot going on in the Teleco M&A market and we have seen companies in the U.S. look to buy content providers we have seen a lot of over the top launchers coming up and certainly obviously running into some problems here. Paid TV ads have been down; what are your thoughts about court cutting over the top skinny bundles, owning content versus being a consumer of content; any changes in our perspective there?

No changes in my perspective as it relates to acquiring content. I think our strategy in that regard has been borne out and proven to be quiet prescient; and excellent for this organization. We think content is important; but we think the value is bundling; distributing the content and having technology like fibre that can differentiate us in that regard or making smart investments in things like LTE advanced in terms of the delivery of content when people are on-the-go. Second comment I would make as it relates to court shading is it's great not be the incumbent. We have recognized a lot of challenges over the years in the telecom's front as the incumbent, as a result of things like competitive intrusion, regulatory intervention or technology evolution. And some of the technology evolution and technology substitution has presented challenges to the organization as it relates to the commoditization of our profit streams; in this particular market on the TV and on the internet front, we are the new entrants. And so I like our growth opportunities going forward in terms of taking future quality share in that regard and we embrace over the top type applications, because we can import them into our optic ecosystem and give the customer what they want on a bundled basis. So, rather than seeing that separate or exogenous or competitive our philosophy here as the new entrant enabled by the fibre technology that we are deploying is to bring new products, new applications, new over the top solutions into the TELUS ecosystem and deliver it with very good effect within the optic framework. The other thing that I think is interesting is that it gives us the opportunity to consider new technologies in segment in the market, so the same way we will…

Thanks, Simon. Peter we have time for two more questions please.

Okay, thank you. Our next question comes from Vince Valentini [TD Securities]. Please go ahead.

Thanks very much. Just a quick clarification that to the question. In terms of that $300 million outflow on the new union agreement. So if I read you correctly, expensive fully in the fourth quarter and then there will be no impact on your operating expense in 2017 or 2018 to reflect what would have been raise increases otherwise.

Yes and no. We are fully expensive in Q4, but we have positive impact on our financials in 2017 and 2018 as you would expect, because part of the lump sum is for salary freezes over 2017 and 2018. So we are not going to have general wage increases at either the union or the management level in that regard and as Doug rightly pointed out in his remarks. That parity is important because we have one culture at TELUS not two. The other component on the lump sums that will support the financial performance of the organization going forward is that we have bought certain contract and sessions within and what is right now a tentative agreement. But if that agreement gets ratified, those concessions we yield both productivity improvements that will support the financial goals for 2017 that I just actually articulated. The other things that those concessions will do, will help us continue to elevate our customers service excellence and that had been the key to our financial success and you don’t have to look any further in our 56,00 and $50 that we generated on wireless pipeline revenue to underscore that particular point. The rational in terms of why we have done the lump sum payments is three fold. Number one is after the hedge, I think the future comparative environment on both wireline and wireless, over 2017 and 2018, I have the smart thing to do. Secondly it buttresses our generation of investments in wideband and both the wireline and the wireless front and that’s important. And third we get buttress TELUS relative to the duration and the duress of the economic environment in Alberta. So from a risk management that point of view, I would consider that to be sang one. I think it also provides Vince the right balance, because here I think we are doing the right thing for our company, the right thing for investors, but we are also to the lump sums doing the right thing for our team members. And lastly, just anticipating the question the program is economically accretive.

That’s great, congratulation on that deal. So hopefully quick question to have it. Your wireless CapEx intensity of 16% it’s quite the hard, is there just a difference in what get allocated you, but some of the fibre-to-the-premise investment in wireless or are you having to catch up on things like data speeds and dual band carriers or something?

So yes, we put a little bit of the fibre investment in the wireless, because we think that’s the right segmentation. Because I think anyone that knows the technology of wireless knows that the speed and the performance of a wireless network is informed by the wireline network that underpins it. The second factor that may help you with the differentiation is that we are doing swap out of our wireless technology within the province of Quebec. So we are moving from what was formally NSN Technology in Quebec and the Ottawa market to Huawei and that’s a swap that the radio access network level. And so there is CapEx associated with that particular undertaking. But we believe it’s a smart thing to do because, formally of course we have both Huawei and NSN deployed within our wireless network and we liked the performance or characteristics on the Huawei front as it relates to drop call rates, access failure throughput speeds, signals attenuation or lack there out on so one and so forth. So we have made the decision to undertake that particular swap out, so that’s a CapEx differentiator versus the above organization. But I would expect to see improvements as it relates to our wireless network in the province of Quebec that will serve our clients well and it’s consistent with our customers first philosophy.

Thanks Vince. Last question Peter.

And your last question comes from Batya Levi [UBS]. Please go ahead.

Great thank you. You mentioned that you expect similar growth in EBITDA over the next few years so wondering if you could tell us about what that assumes in terms of the competitive environment. Obviously, you have the best churn in the industry are you baking in potentially an increase in the competition in the next 12 to 18 months? And how would you approach balancing sub growth versus profitability?

So, in terms of our projections for the years ahead, I think it's smart for us to assume that the competitive intensity that we are experiencing today across both wireless and wireline will be the case in the future. And I think that's the right way to run the business, because the current environment as it relates to the competitive intensity is not entirely within our control obviously. And so if you are an organization and you want to plan for success making fanciful suppositions in a hope that there will be an ameliorating competitive intensity and reflecting that within your projections I think is a fool's errand. I think it's better to prepare, plan and make the investments for continued competitive intensity and then if it doesn't fully materialize, well you will be the beneficiary of the investments that you have made and the preparation that you have undertaken. So I just think it's a smart way to run the business and to hedge the strategy effectively of the organization. So, what we are seeing today in terms of competitive intensity is what is baked into our models in the years ahead. Second question that you are asking in terms of quality versus or loading versus financials is, it’s an important question. Firstly, we are focused on financial growth. I think that's our responsibility; revenue and loading is vanity, EBITDA growth; and come 2018 cash flow growth is sanity; and that's also what drives our ability to return capital to our investors. In terms of loading so that you get the financial results that I have been postulating, I think we have got to focus on quality. And what I can tell you is the 26% growth in our postpaid wireless results at the 87,000 level; it's quality loading,…

Thanks Batya. So that concludes our call. If you have any follow up please feel free to contact to Investor Relations team on behalf of Darren and Doug and everyone at TELUS thank you for taking time out of your busy schedules to join us today.

Ladies and gentlemen this concludes the TELUS 2016 Q3 earnings conference call. Thank you for your participation. And have a nice day.