Good morning, ladies and gentlemen. Welcome to the TELUS 2017 Q1 earnings conference call. I would like to introduce your speaker, Mr. Paul Carpino, please go ahead.

Great. Thank you, Cheryl. Good afternoon, everyone, and good morning to those in the West, thank you for joining us today. First quarter news release and detailed supplemental investor information are posted on our website at telus.com/investors. Fresh from our AGM earlier this morning and joining me in Toronto for the call today will be President and CEO, Darren Entwistle, who'll provide opening comments followed by a review of the first quarter operational and financial results by Doug French, our CFO. After our prepared remarks, we will conclude with a question-and-answer session. In consideration of your day, we are going to try and keep this call to under one hour. Let me direct your attention to Slide 2. This presentation, answers to questions and statements about future events including 2017 annual targets and guidance, multi-year dividend growth, and share purchase programs, fibre network and other capital investments and leverage ratios are subject to risks and uncertainties and assumptions. According, 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 sections 9 and 10 of TELUS's annual MD&A, our filings with securities commissions in both Canada and the United States. Let me now turn the call over to Darren Entwistle.

Thanks Paul, and good afternoon to everyone. TELUS is a long standing history of delivering industry best performance. In terms of revenue any EBITDA growth, customer loyalty and lifetime revenue, leading performances in terms of balance contributions from both our wireless and wireline assets, leading the way in terms of successful generational investments in our core broadband assets, and of course leading the way as it relates to unmatched to multi-year and transparent dividend growth programs. TELUS first quarter results are in keeping with its performance tradition. Our Q1 results include industry-leading growth in both consolidated revenue and EBITDA. Moreover, our results continue to be underpinned by strong customer growth and the best client loyalty in our industry. In the first quarter, our consolidated operating revenue was up 2.9% and EBITDA was up 6.4%, both of which are industry best for this quarter. These results reflect higher data revenue and subscriber growth in both our wireless and wireline operations, as well as the benefits of successfully executing on our efficiency and growth initiatives. In wireless, network revenue grew a healthy 6.4% and EBITDA increased a strong 7.4%. Postpaid wireless net additions were 44,000, which is 36,000 higher from the first quarter of 2016. Our leadership and customer loyalty remains unmatched. With wireless postpaid churn at an industry-leading 0.93%, 4 basis points better on a year-over-year. We have enjoyed unprecedented continuity in terms of leadership on a global basis as it relates to customer loyalty and retention. Impressively, excluding higher CDMA churn, TELUS churn for the first quarter was 0.90 on a normalized basis for the CDMA impact. Our leadership in this regard is a result of the TELUS team's dedication over the past 10 years to deliver on a customer service strategy that has truly set a standard of excellence.…

Thank you, Darren, and good afternoon everyone. I am Slide 8. We had a very good first quarter in wireless, building up our strong results delivered throughout 2016. Notably, network revenue growth of 6.4% resulted from strong postpaid subscriber growth, and a 3.9% increase in ARPU. That was driven by a 12% increase in data revenue, reflecting a larger portion of higher rate, smartphone plans, including Premium Plus plans, and a continue data usage growth. Reported EBITDA grew by 8.6%, well excluding restructuring and other costs, adjusted EBITDA was higher by 7.4%driven by our strong network revenue growth and lower operating and marketing costs. Adjusted EBITDA margin as a percentage of total revenue expanded 120 basis points to 45.8%, adding to the 70 basis point improvement we delivered in 2016. Turning to wireline. Revenues grew 0.7% as internet, TV, business process outsourcing, and TELUS health revenues were partially offset by continued declines in legacy voice any equipment revenues. We are seeing continuing levels of competition and the ongoing impacts. Our economic pressure is particularly in the business market. As well as TELUS International had a slower start to the year, as one of its significant corporate customers downsized their services. Our strong focus on efficiency and effectiveness resulted in leading wireline EBITDA growth to 4.7%, and a margin expansion of 110 basis points to 30.2%. On a consolidated basis, TELUS generated 2.9% revenue growth, with a service revenue growth of 3.5%, offsetting an 8% decline in equipment revenue. Excluding restructuring and other costs, adjusted EBITDA rose 6.4%, reflecting strong wireless margin growth and lower costs resulting from our efficiency and effectiveness program in the current and prior years. Adjusted earnings per share excluding restructuring and other costs increased to $0.74. As a result of our higher operating income partially offset…

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

Certainly. Our first question is from Phillip Huang at Barclays. Please go ahead.

Thanks. Good afternoon. The strong international subscriber growth has certainly a positive surprise, first when you have a seasonally light at quarter and Shaw has put some wide open plans and bundling their new BlueSky TV. Darren, I know you are always been very committed with the expansion of your fibre footprint and I know you've given us a bit of color in terms of you know the build-up plans and milestones. But do you believe that it's going to reach the critical mass or inflection point if there is? The acceleration broadband to tell you this quarter is certainly seems to be for encouraging. Do you see some of the new normal with the level of broadband subscribers there going forward? Thanks.

I am not going to give too much of a prospective view on HSIA loading on a go-forward basis, but I think some of the assumptions that you articulated are accurate. Firstly, when you look at the fibre deployment that would drive in from a technology thrust perspective, clearly we're starting to experience greater scale. We are in the throes of a protein, the halfway mark as it relates to our fibre deployment across a 3.4 million home base. That as you heard in my remarks that we are looking to get there by the first half of 2018.

Pardon, the interruption. Can I get your name please? Hello, is anybody there? Please be advised that if you don't answer, I will need to terminate your call as you're not allowed to be in the conference. Please check if your line if muted. Hello. Alright, I am terminating the call. Please try your call again. Thank you.

Because as you know, within both consumer and business constituency, there are people that are valuing the uplink as much as the downlink, and when you have the speed advantage of your competitor on the uplink that's up to 10 times faster, that's very attractive in terms of supporting the internet growth that we're aspire to. It also gives people the opportunity to determine what type of relationship. Do they want to have with the organization? Is it going to be a premium type of relationship across the breadth of our internet, wireless, voice and TV services, or is it going to be more of a premium on internet and mobility, and maybe looking at something like our Pick platform as it relates to the way they consume that content. So I think this is a tremendously important platform for the organization and will be a long-term extremely fruitful investment that we will harvest economically for the benefit of investors. The other thing that we are doing is that, TELUS has always looked at access it's something that we can achieve through a multiplicity of technology. One of the opportunities for us on the HSIA front within non-urban or more rural areas of our overall footprint is to use wireless as the access mechanism. When you've got the type of capabilities that we are deploying on LTE and LTE advanced, it gives you very attractive bandwidth that you can deliver. And to deliver those more economically as they access mechanism in preference over wireline in more challenging real communities, that tends out to be a strong pieces for the TELUS organization. So, offering a services like high speed internet access over LTE is something that we are finding very fruitful to expand economically addressable market in a way that makes…

That's very helpful. Thank you. Maybe a quick follow up on the dividend side, you rated by 7% with some new client.

7.1%

7.1%. Maybe a question for you. Obviously, you guys are investing in prioritizing investment, but what conditions were need to be presence for the dividend growth to come up at the higher end of a 10%? And then I'll pass the line. Thank you.

I think a few things on that front might be helpful. So that you've got a packing order that you can draw infringe upfront. Firstly, it's going to be closer 10 then 7, look for stronger levels of EBITDA growth. We delivered a very strong EBITDA growth in Q1 at 6.4%. And I think anytime you're north of 6% on the EBITDA growth. It gives you some latitude as to whether you want to be more ambitious in respect of the dividend. So for us, that's really the growth.

Pardon, the interruption. Can I get your name please? Hello. You hear me. Please be advised that if you don't answer, I will need to hang up the line as you're not allowed to be in the conference. Please try your call again. Thank you.

The range, given that the dividends is the province of the board in terms of making that adjudication on a quarterly basis. And we rather uniquely in many ways are one of the few that stick to a dividend payout ratio range of net income, which gives you transparency in terms of where we are going to go out with dividend and dividend increases. We like camping out in the 65% to 75% done of net income on a prospective basis. So to the extent, you know to which, we are at the midpoint of the range. You can expect that to be kind of steady Eddie on the dividend increases. If we are at the higher end of the range, then we are going to be at the lower end of the 7% to 10% dividend postulation that we granted for 2017 through 2019. If we are at the lower end of the range, the mechanism of latitude to take a dividend a little bit higher in terms of the growth percentage, and I think that's the sensible way to calibrate your expectations of this organization. And then the third area is what I would call affordability, and that really speaks the free cash flow. So we have postulated in terms of advanced guidance for 2018. We have said that we are going to go free cash flow positive in 2018, and that to remain so, thereafter harvesting the fruits of the investments that we've been making on the CapEx front with the exception of normalization of anything special like a spectrum auction buy case in point. And so, getting back into their free cash flow positive zone, I think buttresses dividend affordability, and I think that correlation makes good sense. And I'll make one final comment, when we…

That's perfect. Thanks very much.

Great.

Thanks, Phil. Our next question, Cheryl.

Our next question is from Greg MacDonald, Macquarie Securities. Please go ahead.

Thanks and good afternoon everyone. I guess, morning if you're on the West Coast. Question Darren, I have on the growth outlook in both the country and in Alberta the MD&A noted the change and assumptions for growth for Canada. Three months ago you are at 1.8%, now 2.2%, and in Alberta three months ago 1% to 2%, not at 2.4%, recognized in the right up there that there is both questions on the U.S. administration with respect to protectionism, but also the Alberta economy. Can you just talk generally about the factors that are affecting the confidence, particularly we are interested in the Alberta economy obviously given your profile there? Thanks.

Okay. Greg, I would say that we are cautiously optimistic about the Alberta economy. We had seen signs of strengthening and you've seen where some of the movement is transpired in terms of oil prices, but we are not betting on the improvement. And that's a really important point to put across. There is too many variables at play here to factor that into the target setting that we've got for 2017 or what we want to get done over the next couple of years. So, we are decidedly cautious in that regard and we are taking a more long term orientation. That yes, there will be a recovery. It's not a question of bps, but the duration of the recovery. And we think it's prudent to be conservative in that and have a longer term orientation and not the factor again any favorable expectations in terms of our 2017 targeting or a 2018 planning. Secondly, and I would like your view on this. I'd be grateful if you could comment on our Q1 results at the financial level and at the operational level given the duress that we are weathering within Alberta. That's got to speak volumes for a quality and diversity of our assets, both digital and human. We generated an excellent Q1, and maybe just let me put this into perspective for a second as it relates to weathering the economic climate in Alberta. We let our industry in 2016 in terms of revenue growth and EBITDA growth. We let our industry holistically in terms of operational performance across wireline and wireless, and we let our industry in terms of customer service excellence in 2016 as well, and I think he recognize that. We also let our immediate peers in terms of total shareholder return in 2017,…

That's a lot of good color. Thanks Darren. One point of clarification, are the economic forecast internal or are they external i.e. from Bank of Canada?

They are external.

They are external.

Bank of Canada.

From the Bank of Canada.

Thanks a lot guys.

Is our treasury team now running the Bank of Canada? Steve Lewis you are the new Mark Carney.

You kind of look alike.

I just wanted to make sure, as to your comment on being cautiously optimistic.

That level of GDP growth that you have seen, the upward revision is not factored into our plans. So, we would be the happiest people that has come to fruition and happy for the people and citizens of Alberta, but we're not factoring into our planting thesis. So that will be upside that should have transpired.

And presumably, you'd see that impact first on pricing power, hence your comments on low single digit ARPU blade on the B2B side right?

Yeah, and you got to remember in addition to that, our consumer HSIA TV offering has done very well despite the economic duress in Alberta. So, you will see improvement or less pressure on B2B that's been weathering the brunt of the storm. You will see an acceleration in terms of the consumer wireless recovery and hopefully you will see continuity in terms of our HSIA and TV growth backed by pure fibre that's not really been diluted as a result of the economic duress in the province. So, that has actually exceeded our expectations in terms of doing well despite the face of the economic climate that we find ourselves in.

Appreciate that. I think a lot of investors do as well. Thanks for the answer.

Thanks Greg.

Thanks Greg. Cheryl, next question please.

Our next question is from Simon Flannery, Morgan Stanley. Please go ahead.

Great. Thanks very much. So, another good wireless quarter for the entire industry and it's certainly is a breath of fresh air sitting in New York and what we've seen down here, but…

Cheryl, is Simon still on the line?

Unfortunately his line has disconnected.

Okay. We'll get him when he comes back. If you can go the next question please.

We will ask Maher Yaghi from Desjardins. Please go ahead.

Thank you for taking my question. Congrats on the results. I wanted to start by talking about the wireline margins we saw nice pick-up year-on-year in margins. I assume a good portion of that is due to the recent restructuring that you did. How much of – how much more upside can we see in EBITDA margins on wireline continuing in the next couple of quarters? And the second question I have is, can you comment on the recent launch of the competitor Shaw I guess of new TV product in Western Canada. And what kind of initial impact you've seen on your internal loading and kind of results on profitability and geometrics from the recent launch. And I have a final question, going back to your initial introductory comments, Darren, you talked about how you deploy capital. Looking back you – I calculate some kind of a $29 average buyback program that you did on the share. Now you know we are in the period where cash flow is scarce and I mean you are deploying it in CapEx. Next cycle will be reducing debt. Is there any plan longer term to get back on the buyback program, because it's done well for you in the past?

So, I'll start off with the margin, it's Doug French. Darren sort of or did highlight earlier, the revenue growth opportunities that we're looking at on wireline and the margin that we hit this quarter was driven through more of the cost initiatives that were also discussed and we're going to continue to drive margins where ever possible and we continue to have a focus on our efficiency and effectiveness within our organization. So, I think it's all going to be dependent on our ability to grow the revenue line, but we will continue to have those cost reductions and those costs, containment initiatives as we look forward. And as we look at those, it's leveraging off of our fibre footprint which is driving operational synergies. It's leveraging our customers first which drive operational synergies. It's leveraging off supply chain and some of the opportunities we can get from our third party suppliers. So, looking at all of those initiatives that would allow us to be more flexible on our internal resource planning, and allow us to keep our cost structure you know to meet the needs as laid out by Darren for growth initiative. So, I would say yes, we're going to continue to strive to get margin higher, but I wouldn't suggest material step functions in the short-term. We'll continue to work to work on it as we go forward on our profitability front.

Maher maybe taking your last question first, you are close with your calculation. In terms of our share buyback, the average cost has been $28 per share, which is close to a 40% discount over our current trading price, and I do think that's speaks to the efficacy of the program that we've pursued. In fact, the IRR on that program was 12.5%. And when you look at the low cost of money environment that we're in today, I would say a 12.5% IRR represents you know a pretty good return overall. We will never remove the NCIB program from our repertoire. It's just you know are the circumstances right for us to deploy it. Let me highlight the priority for you. Our priority is our dividend growth model. Everything as it relates to financial engineering is in servitude to our dividend growth model. The nicest feature that we like about the NCIB program is that it was synergistic with the with the dividend growth model, because if prospectively you are planning to increase your dividend outflows, then buying back and cancelling those shares helps ameliorate those dividend outflow. So, we really did like the combination between the two. But the NCIB program was always in servitude to two questions. Does it support the overall dividend thesis, and can we afford to undertake it, versus other uses that we would have for that cash including the generational investments that I've articulated on the close of this call. If you are wondering, okay, give me another checklist similar to what we did on the dividend, as to when we would use it again, I would say okay. Number one, from a pure play features point of view, it's got to be synergistic in terms of helping our dividend growth model prospectively…

Thank you, Darren.

Thanks Maher. Next question please.

Yes, our next question is from Simon Flannery. Please go ahead. With Morgan Stanley.

Great. Can you hear me now?

Yes. We can.

Yes. Are you working for Verizon?

Or Sprint? So, thanks a lot. Darren, another strong quarter for you and wireless and also frankly for the Canadian industry and it's a nice difference from what we're seeing down here. Can you just talk about the – what you see as the opportunities to continue to drive industry subscriber growth upsizing to larger data bucket, the ability to keep both the volume and the ARPU growing over the next year or two for TELUS and for the Canadian industry? And then perhaps any early updates you can give us on the Manitoba migrations? Thanks.

The Manitoba migration is too early Simon to comment on at this juncture. So, I think why don't you part that question and ask me again when we have our call in August. I think we'll have some better results to draw inference from at that juncture. It's just – it's too early days at this point. The only thing I could say is that, in terms of bringing the dealers onboard, that's gone extremely well and I think they are excited to be part of the TELUS organization. And getting our network positioning in place, both our organic network and what we're going to have on our mocking basis with Bell and Rogers. Those two key development factors are proceeding according to plan, so we're very pleased. But we'll have some better operational results come the end of Q2, when I can share that with you in August when we have the Q2 investor call.

Sure.

As it relates to ARPU growth, we are very pleased with Q1 at 3.9% overall, you know and a very solid postpaid ARPU performance within that 3.9%, which I think really does speak to you know the thesis the TELUS in terms of pursuing quality loading rather than just pure volume. Secondly, what can help us is if we can see a reduction in the ARPU dilution coming out of Alberta. You know I think that would be a nice development factor you know into the future given the ARPU dilution that we've been experiencing on the consumer business front over the past 18 months in that regard. Thirdly, I'm excited by continued deployments on the technology front. You know the more deployment we do at the LTE level, at the LTE advanced level, some of the small cell deployments and having devices that actually leverage those technologies. You know there is a high R-squared in terms of driving up overall data usage and that gets reflected in our ARPU results. Next for us a lot of roaming upside is still to be realized outside of the North American context, both global in-roaming and global out-roaming outside of the North American footprints. So, a lot of that is going to come, but I'm hopeful. We now have international Easy Roam available in about 127 countries and I think there is price elasticity of demand that we can leverage and offer people you know very good services, a fair price for basically exporting with them their domestic plans and features, so that they can control their usage when they are roaming international. It gives them greater confidence in keeping their device turned on. I think there is ARPU upside and still within the Koodo fold, particularly as it relates to higher…

Great. Thanks for the color.

Great. Thank, Simon. Cheryl, we have time for one more question.

Okay. We have Richard Choe from JPMorgan. Please go ahead.

Great. I just wanted one clarification on the wireless side with the CDMA shutdown coming. What should we look for both the negative and then on the positive side? And then in wireline, how much of the benefit in HSIA was DSL being less bad or was it more of a benefit from the IT broadband side? Thank you.

So, on the CDMA side, you would have seen or discussed, the impact in Q1 was about 3 basis points on churn from the elevated churn that we are seeing from a CDMA perspective. So going forward, you'll see a small sub base adjustment for the remaining part as we shut the network down, but it's not that significant. So, all the more high value customers have already even migrated and we have a higher ARPU longer term customer, but you'll see a slight improvement in churn. Based on that churn that we've seen of that side and a higher ARPU from the contract, we have the high value of customers, and then you'll see the small adjustment into Q2 of the residual. Do you want to answer the internet one in terms of maximum? Go ahead.

No. Can you…

Want me to do it. Okay. The results on HSIA came from a nice result as it relates to fibre based loading over – HSIA over LTE, and the reduction at the churn level which was sub 1.3 to give you some additional empirical cover on that. It was a nice contribution from all three parameters. It was not over index. Does it relate to the churn rate? It really was pure fibre in supporting our HSIA expansion improvement in addressable market, leveraging wireless access technologies on LTE for HSIA, modestly buttress by a solid churn rate for us that helps year-over-year performance. And clearly something that's consistent with our customers for strategy that we are going to want to carry on them. Is that okay.

Great. Thank you.

Thanks, Richard. Thanks everyone for joining the call. If you have any questions, please follow-up with Investor Relations' team. Thank you.

Ladies and gentlemen, this concludes the TELUS 2017 Q1 earnings conference call. Thank you for your participation and have a nice day.