CFO letter to investors

Committed to prudent policies

We continue to consider the interests of both equity and debt holders by adhering to our long-term financial policies, including our dividend payout ratio guideline and debt leverage policy. Our commitment to these prudent policies continues to provide TELUS ready access to credit markets to refinance longterm debt coming due – a relatively modest $300 million in 2012.

In 2011, we refinanced $1.1 billion by successfully issuing $600 million of five-year Notes at 3.65 per cent and issuing low-cost commercial paper. The Notes were the last of three debt issues commencing in late 2009 totalling $2.6 billion that repaid all our U.S. dollar debt, which carried an effective interest rate of 8.5 per cent. These new issues have a weighted average interest rate of 4.7 per cent, which has resulted in reduced interest costs of approximately $120 million annually. TELUS is expected to continue to benefit from modestly lower financing costs in 2012.

In November, we also entered into a new five-year $2 billion bank credit facility with a syndicate of 15 financial institutions, which provides TELUS with ample liquidity and backstops the Company's low-cost commercial paper program.

Our healthy financial position enabled us to make discretionary contributions of $200 million in January 2011 and $100 million in January 2012 to our defined benefit pension plans. These tax-effective contributions positively impact earnings and help to maintain a strong pension funding position that is among the best in corporate Canada.

A key development in 2011 for shareholders who were experiencing volatility and negative returns in the stock markets due to global economic uncertainty was TELUS' initiative to clarify our dividend growth model. In May 2011, the Company announced plans to continue with two dividend increases per year to 2013, normally declared in May and November, with an expectation that the increase would be in the range of circa 10 per cent annually. Dividend decisions will continue to be subject to the Board's assessment of the Company's financial situation and outlook on a quarterly basis.

In 2011, TELUS shareholders enjoyed a total return, including dividends, of 32 per cent as compared to a negative nine per cent total return for the Toronto Stock Exchange overall composite index.

Discover how TELUS continued to realize the benefits of its strategic investments and generated positive financial performance in 2011.

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