Good morning ladies and gentleman. Welcome to the TELUS 2019 Q4 Earnings Conference Call. I would like to introduce your speaker, Mr. Robert Mitchell. Please go ahead.

Hello everyone. Thank you for joining the call today. The TELUS fourth quarter 2019 results and 2020 targets news release, annual MD&A, financial statements and detailed supplemental investor information are posted on our website at TELUS.com/investors. On a call today, we have Darren Entwistle, President and CEO; Jeff Puritt, Executive Vice President and President CEO of TELUS International; Doug French, Executive Vice President and CFO; Francois Gratton, Group President and Chair of TELUS Quebec. With that, let me direct your attention to Slide 2 this presentation and answers-to-questions can be Forward-Looking Statements that are subject to risks and uncertainties and made based on certain assumptions. Accordingly, actual performance should differ from the statements made today, so we ask that you do not place undue reliance upon them. We also disclaim any obligation to update forward-looking statements except as required by law. We are free to the description of risks and uncertainties in our annual 2019 and MD&A filed today. Now, let me turn the call over to you, Darren. Starting on Slide 3.

Thanks, Roberto. And good morning, everyone. In 2019, TELUS continued its track record of delivering strong and consistent financial and operating results in both wireless and our wireline business lines. And the trend that the TELUS team has just demonstrated over a longer term continues in terms of the consistency, the excellence and the diversity of our results, across both our wireless and wireline business tenants. Both 2019 and indeed the fourth quarter were characterized by profitable growth with a thoughtful balance between continuing to meaningfully expand our customer base and enhancing profitability quarter-in, quarter-out, year-in, year-out. The fourth quarter, concluded another year of robust client growth where we added a leading 713,000 net customer additions whilst achieving our annual revenue and EBITDA growth targets for now, the ninth consecutive year. We have realized that can achieve performance thanks to the TELUS team unwavering dedication to executing effectively on our longstanding growth strategy. Indeed, our team’s commitment to providing an industry best customer experience over a globally leading network enable TELUS to continue our leadership in respect of customer loyalty and retention. In the fourth quarter consolidated revenue was up and industry leading 3.3%. Moreover EBITDA increase in industry best 5.2%, our team delivered leading fourth quarter customer growth, about 176,000 net additions reflecting the superiority of our broadband networks and customer service as well as our unmatched portfolio of products and services that are clearly resonating with clients, both existing and new. Turning now to take a look at our wireless business. Four quarter network revenue expanded by 2% and was flat versus Q3 adjusting for the impact of lower wholesale roaming revenue and it was driven by our consistent focus on profitable high-quality, Smartphone centric subscriber growth. In respect of wireless EBITDA, TELUS achieved year-over-year growth of almost…

Thanks very much Darren. Good morning everyone. At the end of January we were very pleased to close the acquisition of TCC, a leading provider of higher value added business services with a focus on customer relationship management and content moderation. The expanded capabilities of our combined companies will further elevate the globally admired customer experience and innovative digital solutions that are synonymous with the TELUS International brand. With this acquisition, TELUS International’s size, scope and reach have now grown to encompass almost 50,000 of the most inspired team members, providing customer experience, digital transformation, content moderation, IT lifecycle, advisory and digital consulting, risk management and back office support in over 50 languages from more than 50 delivery centers in 20 countries across North and Central America, Europe and Asia. This significant increase in TELUS International scale and important and differentiated growth driver for TELUS will support TELUS’ consolidated financial and operating results, including revenue, EBITDA and free cash flow growth. The merger will also support our global leadership in customer service excellence over our world leading broadband network in Canada. Notably, this transaction substantially increased TELUS International estimated enterprise value to approximately $5 billion up from 1.2 billion just over three years ago. On a pro forma basis, TELUS International’s 2019 combined annualized revenue surpassed $1.75 billion with EBITDA of over $400 million. The acquisition of CCC will be immediately revenue and EBITDA accretive to TELUS and to TELUS International as well as EBITDA margin accretive to TELUS International. Additionally, given the moderate capital intensity of the combined business at circa mid single-digits, the transaction will support immediate free cash flow expansion. Moreover, the acquisition of CCC further bolsters the continued advancement of TELUS International to successful growth strategy by positioning us well for a potential future initial public offering targeted in the next 12 months to 24 months, thereby providing us with a transaction currency to support accelerated continued growth in the years to come. Looking ahead, we expect TELUS International EBITDA margins to trend on a higher end of the 20% to 25% range and we anticipate another year of double-digit year-over-year organic EBITDA growth for 2020. We are very excited about the bright prospects ahead for our organization in terms of the opportunities to both grow our customer base and expand services to our current customers, as well as those directly stemming from the acquisition of CCC, all of which will propel TELUS International toward our next growth phase. Let me now turn the call over to Doug to provide some additional details on the fourth quarter and on our targets for 2020. Doug.

Thank you, Jeff and hello everyone. Let’s begin with reviewing our fourth quarter results starting with wireless on Slide 10. Wireless revenue declined 0.5% and was impacted by certain non-operational items including an a typical decline in wholesale roaming revenue in the quarter, as well as the lacking of gain on sale of assets in the prior year. After normalizing these wireless revenue increased 0.2%. This underlying growth was driven by an increase in network revenue of 1.5% or 2%, excluding the wholesale impact, due to a higher subscriber base, primarily offset by a 4% decline in equipment revenue, due to more bring your own device loading, increased device financing transactions and intense competition around device promotions, gift cards and subsidies during the holiday season. Excluding the wholesale roaming revenue impact mobile phone ARPU grew growth would have been 0.3% versus the reported decliner 0.1% ARPU would have shown a decline of 1.2% versus the recorded decline of 1.7%. These trends are being driven in prior by our new service offerings including peace of mind, easy payment, family discounts, partially offsetting their direction and an overage revenue and promotional activity. Despite an intense competitive quarter, wireless adjusted EBITDA increased by 6.9% or 8.8% excluding the previously mentioned items. This reflects higher network revenue growth, lower operating expenses and the implementation of IFRS 16. On a pro forma basis for IFRS 16 adjusted EBITDA increased healthy 3.1% to 4.9%, excluding the above mentioned items. On a pre IFRS 15 basis which reflects more of a cash contribution. adjusted EBITDA was higher by almost 8% for the quarter, reflecting our consistent approach and focusing on smart, profitable subscriber growth. We saw a strong adoption of our easy pay plans and started to recover more subsidies than previously. Let’s turn on Slide 11.…

Thank you Doug. Mike, can you please proceed with questions from queue.

Of course. So first question comes from Simon Flannery from Morgan Stanley. Please go ahead.

Hi, this is Diego Barajas on for Simon. Firstly how is the competitive intensity trended in the early part of the year and how do you expect that to trend over the back half of the year? Are you also expecting a handset Supercycle driven by 5G handsets? And then second on the EIP do you expect this to materially drive down subsidy this year or when should we expect that benefit? Thank you.

Yes. So I will start off with the second half and then Darren can talk to the competitive nature as we have currently experienced. We do expect to be recovering more hands at a subsidy as we progress throughout 2020. We have seen a good traction on the device financing or the Easy Pay plans and our unlimited plans as Darren mentioned in his item and we are looking warehouse through our product base, we will continue to roll that out in 2020. So we saw a very good traction on recoverability as compared to the first part of 2019. And we expect that trend to continue and as it moves further into the Flanker brands. On the competitive front it continues to be competitive and I would say we expect to be normal course. And I think as the offerings are out there and offering more to our customers at reasonable rates. I think you will just see that as a continuation from 2019.

We expect for Doug’s comment that we will have robust growth in 2020 in the face of a highly competitive environment. I think it would be positive to see a delineation between subsidization and as it relates to our deployment of unlimited data plans and device financing, and to see that delineation fold fast during promotional selling seasons over the course of the year. I think that is the right set of economics for our industry prospectively. But we are expecting within the context of robust competition to deliver in 2020 significant and profitable customer growth building on the strategy that we have had, and in fact in terms of profitable customer expansion for the last few years. Without a doubt we are looking at to deliver improvements in network revenue growth over 2020 with growing momentum that takes place throughout the year seeing ARPU and ABPU stabilize. And then as we work through the rerate as we get into the second half of the year of 2020 in terms of the locking and break the back of the migration to see continued expansion in network revenue growth as it relates to profitable client expansion.

Great. Thank you. And as a quick follow-up on the EiP, how much of EiP working capital drag is within the positive free cash flow guidance?

If you saw in our disclosure, you would have seen that our device financing or EiP plans increased in the period by over 300 million. And so part of it was definitely the financing on that and you will see a little bit of that into 2020 as well. But at the end of the day, economically it will drive better outcomes for the long run. As we see more recoverability of the subsidy and programs such as bringing back as well are definitely economically accretive on how we manage through that.

Great. Thank you.

Mike next question please.

Next question comes from Maher Yaghi from Desjardins. Please go ahead.

Thank you for taking my question. My first question is on the trends in ARPU degradation that you saw in the quarter. I mean it is an industry wide phenomenon. It is not surprising. You can maybe talk a little bit about the trends that you see going forward, how we reach to maybe a trough in terms of the pressure or there is still some to be seen in terms of the year-on-year degradation in ARPU. The second question I had is in the forward-looking segment is reporting changes that you are planning. It is interesting to see that you are looking to remove some of the EBITDA segmentation on a fixed and mobile. Can you talk about why this decision at this point? I recognize the conversions of the networks and going forward, but there is still some really high level operating costs that can be split. So, maybe just talk about your view your view and vision on this phenomenon of integration of wireless and wireline, what it will mean to your product sales operations and market.

Hey Maher, I will kick it off and then hand it over to Doug to talk about the segmentation component. Firstly, as it relates to ARPU and ABPU. As Doug indicated in his remarks, network revenue was impacted in Q4 by atypical non recurring decline in our wholesale roaming revenue. When you normalize for that roaming impact. The trend is completely consistent with the result that we the posted in Q3, to be specific about that ABPU on a normalized basis would be a 0.3% present and network revenue growth would be a 0.2%. And I think we are in a pretty stable position right now, the underlying economics from our peace of mind device financing and family discounts are all moving decidedly in the right direction for TELUS, and I think that is going to yield ARPU - AMPU stabilization and growth through 2020 that will be reflected at the network revenue line. I gave you some color during my remarks, but just to give you a little bit more insight into that, we are looking at 50% of total migrations being either step ups or flat to our business plan and that original business plan, as I remarked upon, had anticipated, 70% step down. So, we are doing better than what we anticipated and clearly, there is an appetite for larger data buckets, which I think is only going to get amplified as we progress into the 5G environment. Encouragingly, as it relates to the AMPU economics of our business to go with our ARPU and ABPU stability we are seeing a 40% improvement in the unrecoverable subsidy spend as compared to our older plans and I think that is going to pay economic dividends prospectively for our organization, and bodes particularly well for 2020 and beyond. Encouragingly…

Yes. And on the segmentation front, we have been disclosing for multiple years now, the convergence that was occurring within wireline and wireless. And that is not just networks, so network is probably the more obvious one and especially as we get into 5G delivering high speed broadband at speeds that are not far off each other, if not identical, allow you to deliver the service in whatever medium you feel fit for in that region. But as you looked as well, and we have been talking for years as well on how do we continue to integrate our multiproduct within homes. And we start marketing and looking at even our new enhanced, I guess security offerings with the ADT acquisition, wireless and security have definitely synergies that go hand-in-hand. Wireless and Health have definitely synergies that go hand-in-hand. And so as we look forward, we will absolutely be marketing and changing or enhancing the multi-product opportunity that we have through both wire line and wireless that it becomes in essence one product set as we look forward. As mentioned though, we will still be reporting some of those items that you referred to. So, top line revenue on a product reporting basis for internet versus wireless will still be an opportunity and still be disclosed. So we will still show net ads, we will show data versus wireless revenue on the wireline side, down to probably more of a margin or gross margin level versus rate right to EBITDA. And so you will still have a leading indicators of where our growth is coming from and the type of margins to expect because of that. And then we will definitely drive synergies between the G&A levels, which are substantially shared today.

Thank you

Next question please Mike.

Yes. The next question comes from Drew McReynolds from RBC. Please go ahead.

Thanks very much. Two questions from me. First, maybe for you Doug, on the 2020 guidance, we are all getting some questions on what is organic versus acquisition related. Are you able to unpack that at whatever level you are comfortable with on that? And just a point of clarification on the ADT Canada margin, what kind of margin would be considered a normal margin just for modeling purposes. And lastly, perhaps for you, Francoise we have got pretty good detail here on TELUS International would love to hear what the outlook is here for TELUS Health looking into 2020? Thank you.

So on your first one, we haven’t broken out the organic versus not. I think highlighting the pension and regulatory impact is showing that differential, I think you can take the trajectory of all of our assets are continuing to grow and all of our assets are very strong on that front as we have talked about in the past. I think, when you get to the ADT margin, I think you would assume it would be margins in the wireline zone, so in and that zone is being a normal, but it will be definitely substantially lower than that in 2020.

Thank you Drew, Francois here. On the health side of things, I have offered a following three points. So first I would say that we continue to expect Health to be a very exciting area of growth for TELUS. This is on the back of an increasing emphasis on chronic disease management. The enhanced focus that we are seeing on marketplace from both consumers and employers alike analyzing wellness and the benefits of our leaning network and innovative technology can deliver in terms of efficiency and effectiveness within the healthcare sector. Second, I would say as the leader in the Canadian market, we are really in a unique position when you look at the breadth of assets that we have from electronic, medical and health records, pharmacy management systems, employer health offerings, consumer health offering, benefits management for insurers and extended healthcare providers and platforms like Canada’s electronic prescription service. In addition, we have now increased our reach to include business-to-business virtual care enabled by Medisys and Adera. These two acquisitions with the launch of Babylon by TELUS Health in March of last year are giving us and consumers and employees access to convenient professional care that is alleviating the burden on walking clinics and emergency rooms and helping over five million Canadians without a doctor today. Our fast growing consumer health business is also enabling us to have more touch point, productions tumors in terms of expanding our bundled services for mobility, internet, TV, home phone, smart security and home automation to now include virtual care and personal medical alert services. And finally, in terms of financial we have seen in 2019 our revenue from our health verticals witnessed strong growth, we are reaching now almost $800 million and as a reminder, this is on the back of our health solutions which make up the majority of this portfolio and the remainder being the broadband services we offer to our B2B health lines. Within health solutions our EBITDA achieved double-digit growth in 2019 with improving margins that continues to support our broader long-term goal to deliver 35% and more our wireline business in terms of margin. And finally when you look at 2019, I think we are going to continue on the same trend of double-digit both on the revenue side and EBITDA in terms of growth for 2019 as we scale our business through organic growth partnerships and acquisitions, TELUS Health is well positioned and will be a meaningful contributor to our consolidated financial and operational performance.

That is great. And as well I appreciate the color. Thank you.

Alright. Next question comes from Vince Valentini from TD Securities. Please go ahead.

Thanks very much. So, first the new segmentation, I assume you are going to give us restated numbers for 2019 and hopefully 2018 even on the new basis. So we can build a model and compare. Do you know when we will get those?

We are planning to do it 2019 for sure. I’m not sure about 2018, but we will take that away. And it will be before we launch. So you will have adequate time to read in your models.

But not actually day or two, you are two you are talking closer to Q1 release.

Yes. It is not in the next day or two. It will be months.

And when you say the TELUS International segment, is that just tells TELUS International, the 62% owned entity or is there any other 100% owned TELUS operations that get included in there?

It is just TI.

So healthcare is still within fixed revenue for now.

That is correct.

Okay. And bigger venture questions. just on ARPU in service revenue trends, correct me if I’m wrong. Maybe probably for you Darren, on the Q3 call, thought I heard you guys talking about being gradual with the movement to unlimited plans and easing off of the overage revenue at a more moderated base than one of your competitors. Your commentary today seems as adjusted by Q3 of this year, you will have lapped most of the migration cycle and start to get back to favorable year-over-year comparisons on total ARPU and an implied overage revenue impacts, is that the case? Is the average revenue going away a bit faster than what you may have - thinking on the Q3 call?

No. I think that would be an erroneous conclusion Vince. I think it is not going away faster. The key takeaway on overage is that our exposure on overage is de minimis. And we are basically in the position now where we have broken the back of that particular challenge. The comments that we are making related to the 2020 really just has two components. One is we will get a year-over-year obvious lapping benefit as we get into the Q3 period of 2019, I have given the launch of peace of mind at the start of Q3 in 2018 or 2019 rather. And then of course, we will have broken the back of the migration challenge over the course of 2020, which will expose us to greater and greater economic accretion that you will see in terms of expansion at the network revenue level and stability and accretion as it relates to our ABPU and AMPU economics and an increased improvement in overall profitability as a result of that particularly with the amplification of data growth within the 5G construct. I felt it was important to talk about the fact that we are seeing fewer step downs, talk about what progress we have made as it relates to the unrecoverable subsidy component, which is going to be an increasing economic contributor for us. And as well, the significant data growth that we are seeing, averaging out now, over the five gig level. And in particular cost efficiency, cost efficiency and cost efficiency as we have been significantly simplified our wireless business model in this regard in a way that fits very well with customer expectations that are out there from quality service through to affordability constructs. The other thing I think it is important is that we are not…

Okay. thanks for that. And last one, Doug for you. It looks like EPS guidance is not on your list this year. But can you give any color on that metric, last year EBITDA growth was good but G&A expense went up by almost as much, so EPS only went up a penny, do some of this better EBITDA and free cash flow growth in 2020 translate into better EPS growth as well?

We didn’t have that in our projection at the moment. We did disclose depreciation and amortization though in our assumption and so maybe we will just take that off and get back to you on the exact or rough measure.

The alignment there Vince was just really relying with the industry in terms of expectations that they are setting with the street, having drifted from EPS to cash flow. And so we thought that was appropriate. And then secondly, given the dividend growth model is such a big component of the TELUS story. The fact that we are doing the dividend payout ratio range as a percentage of cash flow at the 60% to 75% zone, and talking about the type of dividend accretion that we want to deliver over the next three years. We thought that was a better metric construct to guide the street towards.

Thanks Vince. Next question please Mike.

Alright. Next question comes from Aravinda Galappatthige from Canaccord Genuity. Please go ahead.

Thanks for taking my questions. Two from me. The first Darren on 5G. I was wondering, if you can kind of generally provide a roadmap from here on. Obviously you have talked a lot about the significance of fiber there and we have a sense of the spectrum options. But when you think about radio equipment, when you think about the transformation of the core network and the upgrades that are required there. Can you give us a sense of what is the sort of the milestones are from here on and the timeline? And then secondly, with respect to TELUS International, I was wondering if you can talk to sort of the revenue mix there thinking about the mix of digital or call IT type services, arguably the high growth segments within that. Are you satisfied with that - so do that you think that needs to progress a little bit more before sort of moving ahead to sort of an IPO stage call it. Thanks very much.

Progressing that particular digital metric for TI is the essence of the TI story and I will hand over to Jeff to talk about that in a minute. I’m not going to preannounce our 5G launch plans for competitive reasons. I think it is important to kind of convey the mentality of TELUS, which has consistently been a etiology that says to us “let’s focus on getting the execution right from day one, and then let’s couple that with the announcement” and it really is the way that we operate. So when we launch 5G from a network readiness to device availability to see accretion, then the press release will go out that morning. So clearly this is something that we are going to do in 2020. I’m just not going to step beyond that from a specificity point of view. But when we do it, we want to make sure that we can offer an experience where the network speeds are distinctly better than our globally leading industry speeds on LTE advanced pro, leveraging the advent of the first foray on the network technology up front and you can look for greater specificity and definition in that regard, in the months to come from this organization. As it relates to what is really an excellent question that you are asking. I think it is important to guide this street that the progression on 5G is not a sprint, but rather a marathon. And some of the most meaningful capabilities that relate the 5G are going to emerge gradually and sequentially as larger channels of key 5G eco-systems spectrum comes available most obviously 3.5 gigahertz and millimeter wave spectrum. Also as that spectrum ability takes place within large channels swab we are going to be of course, building on our…

So on the mix of revenue in TI, there is no doubt that we want to continue to evolve and increase the native digital nature of our service revenue. But I think as more visibility is provided in connection with our business, anticipate some pleasant surprises in terms of how much progress we have already made on that front. Already sub 30% of our revenues derived from legacy voice-based customer care services, we are already well evolved to North of 50% of our business being digital centric, whether it is proprietary AI platform, building bots both transactional and informational for our customers and for ourselves, providing big data analytic solutions, helping move our customers from legacy premise-based applications to the cloud. We have got literally hundreds of bots and RPA solutions that we have been deploying for our customers and for ourselves and are continuing to evolve our business mix, so that we can take advantage of these macro transformational dynamics that are taking place in terms of digital adoption really end-to-end. Unlike some of our peers though that we don’t anticipate legacy human assisted care disappearing. But rather we take a more a bifurcated approach where we see digital bias as a copilot to our highly trained, highly skilled human population being capable of real time interacting with technology and NextGen solutions to provide the best possible experience for end user community. And the relationship with TELUS has really been sort of the Genesis of our thinking in this regard and we get a test drive if you will, and pilot these solutions on behalf of our parent company and then take those solutions to market when they have been hardened with a pretty exciting reference able customer to endorse the success that we are having.

Thank you.

Darren, I will hand it over to you for any final remarks before we wrap up the call.

Thanks Robert. Just some color in terms of guidance for 2020. And I think what the investment community should look forward from us. On the strategy front more of the same with amplified execution that is going to deliver amplified results in 2020, over 2019. I think you can expect to see a strong performance from all three of our assets, wireless, wireline and TI and some very interesting developments within the emerging areas for us at Health and AgTech. It is going to be a continued focus on profitable subscriber growth. And I would look for TELUS to deliver robust and profitable and significant customer expansion in 2020. Doing that by leveraging both our network assets and our customer service excellence, but also leveraging what become a growing portfolio of new services at TELUS that is yielding that profitable subscriber growth. We have got new services on the health front, we have got exciting new services on the security front, we have got great new services as it relates to IoT that will be at a premium if 5G comes to fruition. And we will also see new services on the B2B front as we leverage solutions like software defined out wide area networks. I think you can look for us to deliver improving network revenue growth throughout 2020, AMPU, ARPU stabilizations to an accretion base that we go through as we digest the are-rate as we laugh at the launch of unlimited, as we break the back of the migration and we move from strong transition based results to very accretive forward looking results in that regard and see it reflected in our key KPIs on the network revenue level and the AMPU, ARPU level. I think you can look from very strong organic performance coming out of…

Thank you, Darren. And thank you everyone for taking the time to join us today. Please free reach out to the IR team for any follow-up questions. Mike back over to you.

Ladies and gentlemen, this concludes the TELUS 2019 Q4 earnings conference call. Thank you for your participation and have a nice day.