growing together through economic performance

Unleashing the power of the Internet - TELUS is the second largest Internet service provider in Western Canada and, combined with Eastern Quebec, serves 1.1 million Internet customers. In 2006, we increased our high-speed Internet subscriber base by 20 per cent, to end the year with 917,000 subscribers. The company invested approximately $190 million in this high-tech broadband infrastructure in 2006. In September, TELUS announced an additional $600 million commitment to further enhance our broadband infrastructure in communities across British Columbia, Alberta and Eastern Quebec by the end of 2009. This build complements a rural capital investment program to bring high-speed Internet services to more than 450 additional remote communities in the same provinces by 2010.

Serving 5.1 million Canadians with wireless - Our wireless subscriber base grew by 535,000 subscribers in 2006 and we now serve 5.1 million subscribers from coast to coast. Our total network coverage of 31 million people brings digital wireless service to 95 per cent of the Canadian population.

Vendor payments - TELUS' total vendor payments in 2006 were approximately $5.5 billion (including goods and services tax and provincial sales tax). Eighty-seven per cent of these vendor payments were made to Canadian companies or multi-national companies with locations in Canada.

Comparative performance - TELUS' financial performance – growth in revenue, EBITDA and cash flow – demonstrates that TELUS consistently performs at world-class levels, when compared to incumbent global telecom companies for the past three years.

Stock price performance - TELUS' common and non-voting shares have outperformed the Canadian Standard & Poor's/ Toronto Stock Exchange (S&P/TSX) Composite Index and the Morgan Stanley World Telecom Index over the past three years, based on a $100 investment made on December 31, 2003.

TELUS taxes - TELUS pays taxes to three levels of government and these taxes support services for all Canadians.

TELUS income tax recoveries, net of instalments - In 2006, TELUS recorded a net recovery of $103.0 million (compared to $69.5 million in 2005) in federal and provincial corporation income taxes. Of this amount, $102.8 million in 2006, versus $69.5 million in 2005, was due to the application of losses net of instalment payments and $0.2 million (nil in 2005) was federal investment tax credits earned on projects qualifying as scientific research and experimental development. Based on the assumption of the continuation of the rate of TELUS earnings, the existing legal entity structure, and no substantive changes to tax regulations, the company expects to be able to substantially utilize its non-capital losses before the end of 2007. Under the existing legal entity structure, TELUS currently expects cash income tax payments to be minimal in 2007, increasing in 2008, with substantial cash tax payments in 2009.

In addition, TELUS collected taxes from customers and remitted them to governments.

For detailed information on TELUS' financial results, visit telus.com/annualreport.

Investment in research

TELUS' wireline operations are supported by research and development activities to test and trial emerging new technologies. TELUS also funds collaborative research and development activities with communications research organizations such as TRLabs (Telecommunications Research Laboratories). TRLabs is the largest not-for-profit applied telecommunications research consortium in Canada with annual revenues of $10.5 million. As an industrial partner, TELUS contributes $563,000 per year of sponsorship and in-kind funding to TRLabs.

A research and development program in TELUS' wireless operation invests in wireless communication technologies such as third generation, or 3G, wireless communications. As part of PCS (personal communications services) licence conditions, we are required to spend at least two per cent of certain PCS and cellular revenues on research and development. In 2006, this was estimated at $35.9 million.