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RISKS AND UNCERTAINTIES
The following sections summarize the major risks and uncertainties that could affect TELUS business results going forward.

Competition
Increased competition may adversely affect market shares, volumes and pricing in certain of TELUS' business segments
Over the next several years, it is expected that competition will remain intense. Competitors will primarily focus on the local access, data and e-business services in the business market and high-speed Internet and wireless services across both consumer and business markets. This is due to the higher growth and attractive margin potential in these areas. Long distance is experiencing flat to negative revenue growth and voice local access has low growth. However, competitors are intent on winning market share in the slower-growth large business local voice market, as they see incumbent carriers such as TELUS as having unsustainably high regional market shares.

Voice and Data
TELUS expects local access competition activity to increase in 2001 with the main focus on the business market. All competitors offer a varying array of long distance, local and advanced data/IP services. TELUS' major business market competitors are increasingly bundling long distance with price discounted local access and advanced data/IP centric Web and e-commerce type services. Many TELUS competitors have built extensive local fibre-optic facilities throughout Western Canada over the last several years and in some cases have consolidated to become stronger. These competitors are increasingly focusing on marketing and revenue generation in the small and medium business market due to its more attractive margins. Some of these competitors are subsidiaries or affiliates of companies with extensive financial strength and resources.

Competition is also likely to intensify in the large business market. TELUS was formerly a member of Stentor, an alliance of the major regional Canadian telecommunications companies established to facilitate the provision of long distance and data services which cross provincial and national boundaries, and to facilitate planning and coordination of the provision of national services. In 1998, the former Stentor members agreed to unwind existing arrangements and replace them with a new set of commercial agreements. These agreements contemplate an orderly wind down to the former Stentor services as the members develop their own systems and replacement products and services. It is expected that most of the former Stentor systems will be replaced by 2002. As the evolution to independent systems proceed, competition is likely to intensify for large business clients between TELUS and the former Stentor members.

A second tier of new competitors has recently entered the business market. Most do not yet own any extensive local or long haul fibre-optic facilities and their operations are still largely based in Eastern Canada. However, they are expanding in varying degrees to Alberta and British Columbia. In addition, many are well capitalized and expanding their operations and marketing infrastructures, lowering prices and slowly gaining market share.

TELUS has been actively building local and cross-Canada fibre-optic facilities into Eastern Canada. However, there can be no assurance that TELUS will be successful in its efforts to expand its market share in Eastern Canada or that pricing will remain at reasonable levels.

Wireless
Cellular competition is likely to intensify in 2001. TELUS and certain of its competitors provisionally won additional digital wireless spectrum in February 2001 in Industry Canada's spectrum auction. One of TELUS' major competitors in Eastern Canada is expected to become a facilities based digital wireless competitor in Western Canada by building its own network and operational capability using spectrum acquired through the auction.

With four major players including TELUS in the Canadian wireless marketplace, new pricing, aggressive advertising and innovative marketing approaches are the norm. Certain competitors have lowered prices in the past and may continue to do so, which could lower average revenue received per customer.

Wireless competition is also coming from new digital wireless technologies that deliver higher-speed data/ Internet services over current and next generation wireless devices. Such availability may also lead to increased re-subsidization costs related to the migration of existing subscribers to newer Web browser capable handsets. There can be no assurance that new services offered by TELUS will be available on time, be as versatile or as popular as those of its competitors, and that TELUS will be able to charge incrementally for the services. (See "Technological Change.")

Wireline Internet Access
While residential dial-up Internet access competition and growth is moderate, the battle for residential high-speed wireline Internet access remains intense. Cable-TV companies continued to aggressively gain high-speed customers in 2000, but encountered serious system problems in the second half of the year and early in 2001. Telecommunications companies began to close the market share gap by extending their high-speed coverage and accelerated subscriber sign ups, which is likely to continue in 2001. However, TELUS has been constrained in its provisioning ability to satisfy demand for high-speed Internet service. Also, telecommunications companies cannot offer high-speed service to all of their service territory due to the distance and condition of the lines extending from central offices out to customer locations. As a result, TELUS risks losing market share to cable-TV companies.

Voice over Internet Protocol (VoIP)
A new developing service that may start to negatively impact TELUS' local and long distance business over the next few years is Internet telephony, called VoIP. Although, VoIP has been a technology in progress for several years, in December 2000 it became available nationwide for the first time through a provider offering unlimited North American long distance and 56 kbps Internet access starting at a monthly rate of $19.95. In addition, new cable-TV modems are expected to allow cable-TV companies to begin offering VoIP over their networks in the next few years. Although TELUS is working on similar technology there can be no assurance that it will be developed successfully or that the adoption of VoIP services in the market will not erode the existing market share of TELUS or adversely affect future revenue and profitability.

Economic Fluctuations
Economic Fluctuations may adversely impact TELUS
In recent months there have been increasing indications that North American economic growth is slowing. For example, there have been employee layoffs in certain sectors of the Canadian economy such as the auto sector and supply of telecommunication infrastructure. Monetary authorities have moved to lower interest rates in early 2001 to stimulate the economy and federal and provincial tax rates are expected to be reduced in 2001, but the effect of these moves, if successful, can take several quarters to stimulate the economy. As a result, residential and business telecommunications customers may delay new service purchases, reduce volumes of use and/or discontinue use of services.

Financing and Debt Requirements
The large increase in short-term debt in 2000 at TELUS increases the risk that business plans, growth and dividends could be negatively affected, if new financing is not obtained or sales are not completed
The purchase of Clearnet and QuébecTel in 2000 caused an almost four-fold increase in net debt at TELUS to $8.0 billion. This was accomplished with a $6.25 billion bank syndication based on obtaining investment grade debt ratings in both Canada and the U.S. The debt outstanding at the 2000 year-end included $5.1 billion due within one year and $545 million denominated in U.S. dollars, which is fully hedged against foreign exchange fluctuations. TELUS requires a major refinancing in 2001 to lengthen and vary the maturity of its debt, if possible, to reduce exposure to short-term interest rate movements and maintain a fully hedged position against foreign exchange fluctuation risk. This "Financing Plan" is detailed here.

TELUS has announced its intention to sell approximately $1 billion of non-core or mature assets to help fund growth and reduce debt levels. In late 2000 and early 2001, TELUS sold three office towers and other real estate for total proceeds of $205 million, announced an intention to divest the directory advertising business and is exploring the sale of its leasing subsidiary.

There can be no assurance that financial market conditions and debt ratings will remain stable or that TELUS will be successful in executing its financing plan, or that it will be able to do so at rates, terms and conditions that are reasonable. There can be no assurance that it will be able to sell additional assets or do so at reasonable prices. Accordingly, there can be no assurance that TELUS can fully complete its $2.0 to $2.2 billion capital program in 2001, make additional acquisitions, or maintain current dividend levels.