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May 2, 2007

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TELUS Reports First Quarter Results

Strong operational execution continues

Vancouver, B.C. – TELUS Corporation (TSX: T and T.A / NYSE: TU) today reported its financial results for the first quarter of 2007, including a six per cent increase in revenues to $2.21 billion from a year ago due to continued strong wireless and data growth.

Reported earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings per share (EPS) were negatively impacted in the quarter by a previously announced non-recurring and non cash charge of $173.5 million associated with the introduction of a new cash settlement feature for employee share options granted prior to 2005. The benefits of the new feature include reducing share dilution and generating cash tax savings of up to $70 million over three years.

Adjusted for this charge, underlying EBITDA and EPS increased 8.7% and 50%, to $938 million and 90 cents, respectively, when compared to the same period a year ago. EBITDA as adjusted increased due to wireless growth and lower restructuring costs. EPS as adjusted increased due to higher EBITDA, lower depreciation and amortization, less financing costs and reduced income taxes. Free Cash Flow this quarter was lower due to higher capital expenditures and the receipt, in the first quarter of 2006, of a large income tax recovery.

During the first quarter TELUS successfully issued $1 billion of debt in five and 10 year maturities with an average coupon of 4.8%, the net proceeds of which were to be used for general corporate purposes including the redemption of TELUS' approximately $1.5 billion of 7.5% Notes maturing in June 2007. In addition, the company completed $201 million of share buy backs in the quarter, which brings to 42.9 million shares in total that have been repurchased for $2.0 billion since the first of three share repurchase programs began in December 2004.

FINANCIAL HIGHLIGHTS




C$ in Millions, except per share amounts
3 months ended
March 31
(unaudited)
2007
2006
% Change

Operating revenues

2,205.6

2,080.5

6.0
EBITDA(1)
764.3
862.7
(11.4)
EBITDA (as adjusted) (2)
937.8
862.7
8.7
Income before income taxes and non-controlling interest
275.6
328.3
(16.1)
Net income
194.8
210.1
(7.3)
Earnings per share (EPS), basic
0.58
0.60
(3.3)
EPS (as adjusted)(3)

0.90

0.60

50.0
Capital expenditures
381.9
320.5
19.2
Cash provided by operating activities
460.6
673.1
(31.6)
Free Cash Flow (4)
480.8
635.6

(24.4)


(1)Earnings before interest, taxes, depreciation and amortization (EBITDA) is defined as Operating revenues less Operations expense less Restructuring and workforce reduction costs. See Section 11.1 of Management's discussion and analysis.
(2)Excludes a non-cash charge of $173.5 million to Operations expense in 2007 for introducing a net cash settlement feature for share option awards granted prior to 2005.
(3)Excludes approximately $0.32 after tax charge in 2007 for introducing a net cash settlement feature for share option awards granted prior to 2005
(4)See Section 11.2 of Management's discussion and analysis


Darren Entwistle, president and CEO, said “the momentum from our winning strategy since its inception in 2000 has continued in 2007 and we have started the year strongly with good first quarter financial results underpinned by wireless revenue growth of 13% and underlying wireline data revenue growth of almost 11%. The focused execution of our national growth strategy is producing a superior asset mix for TELUS such that 46% of our consolidated revenue is generated by wireless and 19% from wireline data.”

“The continued resilience of TELUS' traditional wireline business is also encouraging,” Mr. Entwistle added. “Particularly important was the recent landmark federal government decision to set reasonable local forbearance rules that will allow TELUS to compete fairly. Accordingly we have made applications for deregulation in six cities that cover almost one million consumers in our incumbent territories.”

Mr. Entwistle added, “TELUS in the quarter continued to build on its track record of investing and returning cash to investors for ongoing share value creation. This three pronged approach includes capital investments in our core businesses, on an annual basis successively higher dividends under our dividend growth model, and substantial normal course share repurchase programs that are followed through upon.”

Robert McFarlane, executive vice president and CFO, noted “TELUS completed a very successful debt issuance in the quarter of $1 billion comprised of $300 million of 4.50% five year Notes and $700 million of 4.95% ten year Notes. By applying the proceeds of this issuance combined with a potential new commercial paper program to our forthcoming June repayment of our 7.5% Notes, we would generate approximately $33 million in reduced annualized financing costs.”

Mr. McFarlane added, “The combination of our strong financial position and excellent operating performance record is translating to an earnings expansion, which provides a position of strength to observe the notable competitive developments in the Canadian telecom industry.”

Download entire news release (PDF, 443 KB)


This news release contains statements about expected future events and financial and operating results of TELUS that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future results and events to differ materially from that expressed in the forward-looking statements. Accordingly this news release is subject to the disclaimer and qualified by the assumptions (including assumptions for 2007 guidance and share purchases), qualifications and risk factors referred to in the Management's discussion and analysis – May 1, 2007.

For more information, please contact:
Media relations:
Allison Vale
(416) 629-6425
allison.vale@telus.com



Investor Relations:
Robert Mitchell
(416) 279-3219
ir@telus.com



Certain products and services named in this release are trade-marks. The symbols ™ and indicate those owned by TELUS Corporation or its subsidiaries. All other trade-marks are the property of their respective owners.


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