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TELUS 
annual report
FAQs
FAQ #5
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FAQ number: 1 2 3 4 5 6 7 8 9 How strong is the financial position of TELUS? TELUS has an investment grade credit rating and significant liquidity. In June 2001, TELUS completed a landmark $9.2 billion financing that included a new $2.5 billion bank credit facility and $6.7 billion of fixed rate 7.5% and 8% Notes with maturities ranging between 5, 6 and 10 years. This new funding refinanced existing floating rate demand bank indebtedness as well as expensive high yield notes assumed as a result of the Clearnet acquisition in late 2000. As a result of this May refinancing, TELUS has significantly improved its average term to maturity and reduced its exposure to interest rate risk. At the end of 2001, the average term to maturity was 7.6 years as compared to only 3.0 years at the end of 2000. This significantly extended average term to maturity and high proportion of fixed rate debt provides TELUS with vastly enhanced financial stability. TELUS believes that a capital structure where net debt to total capitalization is approximately 50% represents the most efficient use of capital. This is a long-term guideline and actual leverage does vary from this in the short term. TELUS’ current 55.4% debt to capital ratio is largely a short-term result of the Clearnet and QuébecTel acquisitions and implementation of the Company’s national expansion program to ensure high rates of long-term growth. TELUS maintains strong liquidity with undrawn bank credit facilities of more than $2.0 billion versus projected cash requirements in 2002 of approximately $500 million, not including the impact of funds from any potential asset sales. Furthermore, TELUS expects to be free cash flow positive (cash from operating less investing activities) by no later than 2004 and is committed to containing debt at levels consistent with our objective of maintaining our existing investment grade ratings and de-leveraging in line with our target capital structure. |
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