To increase transparency and respond more effectively to stakeholder feedback,
we have identified issues and opportunities that need particular attention. We believe that, if addressed now, these challenges to our current business model can become opportunities for success in the future.

for our economy — meeting the challenge of intense competition to support continued sustainable growth

Sustainable economic growth benefits our shareholders, customers, team members, suppliers and the communities where we live, work and serve. Our innovative communications products and services have the potential to enhance the lives of Canadians, enable the success of our customers and contribute to the development of sustainable communities - all while delivering long-term, positive results for our shareholders and investors.

TELUS faces the challenge of intensifying competition in the wireless market and from cable -TV companies entering our traditional telephony markets.

In 2007, the federal government announced it would allow telecommunications companies to apply to the Canadian Radio-television and Telecommunications Commission (CRTC) for deregulation in communities where significant competition exists. TELUS successfully applied to have key markets covering approximately three-quarters of its residential lines and two-thirds of its business lines forborne from regulation. This gives the company enhanced flexibility in pricing, promotions and bundling and enables us to compete on a more level playing field. In 2008, TELUS intends to continue introducing innovative, value-added offers to leverage this opportunity. In addition, the continued roll-out of our consolidated customer care and billing system in British Columbia is aimed at realizing this opportunity and enhancing the customer experience and TELUS’ strong brand.

In wireless, competition from existing operators and brands remains intense. In addition, the May 2008 wireless spectrum auction is likely to result in new competitors, at least on a regional basis. However, the wireless market in Canada is expected to continue to generate growth, as penetration rates increase to levels seen in other countries and data services remain a key growth driver in wireless. The spectrum auction would allow TELUS the opportunity to acquire new spectrum for future subscriber growth and advanced data services as wireless technology evolves. The introduction of wireless number portability (which allows customers to take their phone number when they move to a different provider) in Canada in 2007 resulted in higher customer churn in the industry. It has also opened up new business markets in Central Canada traditionally dominated by our two national competitors.