Telus Corp (TU) 2002 Q1 法說會逐字稿

Welcome the chairman of TELUS Corporation, Brian Canfield.

Well good morning, good morning, ladies and gentlemen. Welcome to the fourth annual shareholders meeting of TELUS Corporation. A special welcome to all of you that are joining us on the web.

Effective this year, we've made several changes to the format of our annual meetings. Rather than hold multi-site meetings, we will rotate the location to major centers across the country each year. Today we're pleased to be in Toronto for our 2002 general annual meeting and the location is notable as it reflects TELUS' successful evolution to a national organization. Next year, we plan to hold our meeting in Calgary. As in the past, our meeting today is being webcast. This means that shareholders and interested parties across Canada and throughout the world can view the meeting live or at their convenience whenever they wish, wherever they wish.

Webcasting is not only in line with our strategy to exploit the power of internet but it's clearly the direction that the world is moving. People are embracing on-line communications as evidenced by TELUS' own explosive growth in [inaudible] drivers. We're web enabling functions throughout the company, and this includes shareholder communication activities. For example, you'll find our annual report and financial statement on the TELUS website.

Also, shareholders who could not be here with us in person were able to vote their proxies by internet, telephone or mail.

We have been gratified by the response and the feedback that we received from shareholders to this increased choice. Of the proxies submitted, more than 30 percent have come in over the internet. We have head sets available for those who wish to take advantage of simultaneous translation of today's proceedings into French. Our webcast participants are also able to select French translation. In addition, realtime captioning for the hearing impaired is available in the room today.

We all know the economy and financial markets have experienced a difficult year and a half and that telecommunications industry has been hit especially hard, as all of us who are teleshareholders are only too painfully aware. Despite this turbulence and despite the failure of the markets to recognize the company's achievements, TELUS has made tremendous strides and met or exceeded its 2001 operating and net income profitability targets.

I believe the success is important to note as TELUS is building on a record of executing against its targets, thereby establishing credit with the capital markets.

In the midst of this difficult operating environment, the TELUS team has remained focus, executing a clearly articulated challenging growth strategy. In a relatively short period, they've made significant progress, transforming TELUS into an innovative, customer-focused national data, IP and wireless company.

These achievements, this ongoing transformation, position the company well for the coming year. You can expect to see continued steady progress, growing market share and, over time, growing shareholder value.

Your board and I believe TELUS has the right strategy and the right people implementing that strategy and ultimately, the right strategy implemented by the right people will deliver results.

Just before we review our agenda for today, I need to make an introduction. Rob Dougherty, our vice president and corporate secretary is on the stage with me. Rob will act as the secretary of this meeting to ensure that the proceedings are properly carried out and recorded.

I've outlined on your program card we will begin with the business items on the agenda, then our chief financial officer Robert MacFarland will report on our past year financial performance as well as our first quarter results which were released today.

Following Robert's report, our president and chief executive officer, Darren Entwistle, will present his report. Once Robert and Darren have completed their presentations, we will conclude the business portion of the meeting and I will turn the floor over to TELUS shareholders for the the question and answer period. We'll be pleased to answer your questions at that time and also during the recession that immediately follows this meeting.

Many of our executive team members as well as mex of our board are here today and I encourage you to speak with them during the reception. You'll be able to identify them by the distinctive name tags that they're wearing.

Shareholders joining up in realtime via the webcast may submit your questions on line by following instructions you'll see on your screen. We will address as many of your questions as possible during our question and answer period. We expect our meeting to finish around 11:30. Now, rob, do we have a quorum?

Yes, Brian, we have a quorum. The scrutineer's report indicates that we have received audited and approved proxies from 5,996 shareholders holding 98,012,805 common shares. This is approximately 54 percent of the total common shares issued and outstanding. In total, 54 percent of the common shares are represented here at the meeting in person or by proxy.

Thank you, rob. Please add the scrutineer's report to the minutes of the meeting.

I have a declaration of mailing from our transfer agent, Computer Share Trust Company. It confirms that all registered holders of common shares and nonvoting shared were mailed the notice of today's meeting and the information circumstance your particular as well as the annual report, which includes the annual financial statements.

Only holders of common shares are entitled to vote on business at this meeting. Holders of nonvoting shares are entitled to attend and be heard at the meeting.

Rob please staple the declaration and add it to the minutes of the meeting.

I an tabling a copy of the declaration of mailing. Anyone who wishes to see it may review the declaration after the meeting.

Thank you, Rob. I declare this to be a properly constituted meeting. I appoint Donna [Shernaka] and Marilyn [Painter] representatives of Computer Share Trust Company as the scrutineers for this meeting.

The deadline for submitting proxies was April 29, 2002. Before we start the voting on the resolutions, I understand the proxies we have received fully support the passage of each of the resolutions before you today.

As for the voting process, we will go to a ballot for the election of the directors to facilitate your cumulative voting privileges.

We'll conduct all other votes initially by a show of hands unless someone who is either a registered holder of common shares or a valid proxy holder wants to go to a ballot on that motion.

When I call for a vote by a show of hands, I ask that holders of common shares and valid proxies raise your blue cards. If you are a holder of common shares or a valid proxy holder, you should have been given one of these cards when you registered. When you make or second a motion, please come to the microphone, that way, everyone will be able to see and hear you. Please begin by stating your name and that you're a shareholder or valid proxy holder, you should also be aware we have asked holders of common shares to make and second certain motions and this is intended to make the business segment of the meeting flow more smoothly allowing us more time at the ends of the meeting for questions,.

I'll table our audited annual financial statement for the year ended December 31, 2001 which are included in the, 2001 annual report. Both were mailed to you with a notice of this meeting and information circular.

In addition to the audited financial statements, the 2001 annual report includes the related management discussion and analysis. There are additional copies of the annual report available at the information desk just outside this room.

Nominations are now in order for the election of directors for the upcoming year. The number of directors to be elected remains unchanged at 15. All members of our board have served you since last year's annual meeting and all are standing for reelection.

John Butler, consult to [Brian] and Company. Peter [Sharmal], partner, Sky Point Capital Corporation. Pierre [Choquette], president and CEO, [Methanex] Corporation. Bill Cooper, chairman and CEO, Sea Coast Communications Group. Darren Entwistle, president and CEO of TELUS. Ian Harris, chairman and CEO, Summitt Holdings. John Lacy, chairman, The [Alderwoods] Group. Brian [McNeil] chairman, Petro Canada. Mike Mason, vice-chairman and president, Verizon Communications. Lawrence [Pentman] vice president and general manager, Americans International, Dell Computer Corporation. Barus Saloom] president, international, the Americas, Verizon Communications. Dr. Jerry Sinclair, president, BC Premiers Technology Council. Ron [Trickle] chairman of Stan Tech. Donald Woodley, president of 5th Line Enterprises. And of course it's my honor to serve as chairman.

There are 15 proposed nominees representing a cross-section of experienced professionals. They've all agreed if elected to direct the future of TELUS for the next year. May we please have the nomination of the individuals listed in the information circular. : My name is [inaudible] French and I am a holder of common shares. I nominate the individuals brought forward by management and described in the information circular for election as directors of company to hold office until the next annual general meeting or until their successors are elected or appointed.

Thank you, Doug. Is there a second here to that motion?

: Good morning, Mr. Chairman. My name is Mary Ann [inaudible] and I'm a holder of common shares. I second the motion.

Are there any nominations for the meeting by holders of common shares or duly appointed proxies? If there are no further nominations I now declare nominations to be closed.

Now we'll vote on the election of the directors who will hold office until the next annual meeting or until their successors are elected or appointed. We will use cumulative voting for the election of the Board of Directors and to facilitate this we will use a ballot. He hadders of common shares hang duly appointed proxies holders should have been given a yellow ballot when you registered this morning. Please note that your ballot includes detailed instructions for voting and examples of various ways to allocate your votes. If you have already completed a proxy form and voted either by internet, telephone or mail, your common shares will be voted as per your instructions.

If you did not receive a yellow ballot when you registered and you are a holder of common shares or of a valid proxy, please go to the scrutineers desk to receive your ballots.

When voting, please Mark an X beside the name of each candidate you wish to vote for. Do not allocate more votes than the total amount of votes specified on your ballot or your ballot may become invalid.

Now, ladies and gentlemen, you're permitted to exercise cumulative voting rights when electing the 15 directors. In other words, you're entitled to 15 votes for each common share that you hold as a registered shareholders or that you are entitled to vote as the holder of a valid proxy. You may choose to cast all of your votes in favor of one candidate if you wish or you can distribute them among the candidates in any manner you see fit.

For example, if you have 100 shares, then you have 1500 votes. You could allocate the 1500 votes to one candidate or you could allocate 100 votes to each of the 15 candidates listed. Or any combination that adds up to 1500. You also have voting instructions on the front of the ballot and representatives of Computer Share Trust Company are available for companies if you're unsure of what to do. Please indicate the number of your votes you wish to allocate to each of the candidates and the in the number of votes column next to the candidates you've marked with an X. If you vote for more than one candidate without specifying the number of votes to be allocated to each of your chosen candidate, your votes will be deemed to be divided equally among those candidates.

Please remember to complete the ballot by signing your name. Now we're going to pause for a few moments while you complete your ballots.

The scrutineers will go through the audience and collect the ballots.

Thank you ladies and gentlemen. Now that the ballots have been collected or almost collected they need to be counted so while we wait for the results, we will continue with the remaining business of the meeting until the results of the votes are available. I will announce the results as soon as they are available. A motion is now in order for the appointment of auditors for the ensuing year.

Before I entertain such a motion, let me make several observations for the benefit of shareholders potentially concerned about the reappointment of Arthur Andersen. Publicity concerning the Enron situation in the United States has not been kind to Arthur Andersen. It's a complex matter and one of considerable controversy. Regardless of the outcome of the situation in the United States, it should be noted that the auditors of TELUS, Arthur Andersen LLP is a Canadian firm owned by partners here in Canada. Our audit is completed by an Andersen team lead out of Vancouver, British Columbia. We have full confidence in their integrity and the value they have demonstrated for TELUS over the years. We believe that the prime responsibility for the integrity of the company's financial statements and disclosures rests with TELUS management as augmented by the oversight of your board through the audit committee. This is a responsibility that TELUS considers paramount and shall not delegate.

I might note that we have a good track record in this regard. Last year's annual report was awarded a gold medal by the Canadian institute of chartered accountants and the financial post based on the quality of its comprehensive disclosures. More recently, a leading investment analyst noted that TELUS' quarterly financial disclosure to be best in class.

Your board through the audit committee has given the matter of reappointing Arthur Andersen serious consideration in recent meetings. We've considered the relative merits of the alternatives currently available to TELUS and we have satisfied ourselves that there are no apparent conflicts of interest regarding the independence of Andersen. In regard to potential conflicts of interest, it should also be noted that we do not retain Andersen for either consulting work or internal audit services. We have also met senior representatives of Arthur Andersen and discussed the situation with them and we're confident in Andersen's continuing ability to fulfill their abilities with respect to TELUS at reasonable cost. We're aware that Arthur Andersen has recently entered into an agreement that may see Arthur Andersen merge its practice with Deloitte Touche and we're being kept apprised of developments in this regard and we will continue to monitor this situation and assess the implications for TELUS.

At this time, we believe Arthur Andersen continues to be the most appropriate auditor for our company. In the event the merger with Deloitte Touche indeed occurs, your board will take appropriate action at that time.

The board's conclusion is that it is in the shareholders' best interests to reappoint Arthur Andersen for 2002. Now, with that as background, may I now have a motion, please?

: Good morning Mr. Chairman. My name is Carol Donahue and I am a holder of common shares. I move that Arthur Andersen LLP chartered accountants be appointed as the auditors of the company until the close of business at the next annual general meeting of members or until their successors are appointsed and that the Board of Directors be authorized to set the auditors' compensation.

Thank you is there a seconder to that motion?

: Mark Langston and I'm a holder of common shares. I second the motion.

Thank you, Mark. Is there discussion?

: I'd like to be recognized here to make a comment.

Yes, state your name, please.

: Mike work, I'm a representative with the carpenters union and we are proxies holders or pension and benefit trust funds. inaudible]. We have approximately $50 billion in funds and pension out there and that represents the retirement income of over half a million workers. Our pension funds own approximately 89,000 shares of stock in TELUS Corporation. The funds are committed to long-term investors in this company and as worker owners, we represent a truly unique perspective. We are share owners, we're workers and we're members of the community and as such, we have one or two questions that I'd like to request you to address and one comment that I would have.

Sure.

: Is that I really appreciate the disclosure that you have developed in your proxy circumstance layer. I think that's one thing that the carpenters union has been requesting appropriations for North America over the last couple of years and I would suggest that yours is -- as you had mentioned truly highly developed and we really appreciate that.

We note that the company disclosed its fees paid to Arthur Andersen in 2001 and the circular reveals that the company paid Andersen $1,196,000 for [inaudible] services and approximately 750,000 for nonaudit work as discretionary financial advisory work and our tax services. I notice here you earlier said that you wanted to have a separation and that you would not -- can you commit to going forward that the board would make a public commitment not to employ the auditors for performing any management consulting work, financial information systems work and other internal audit work not just for 2002 but for years into the future? If you could make that public commitment it would be really appreciated.

Thank you for your question Mr. York and let me say that as I said in my comments that we have not used Arthur Anderson for any consulting work at any time. That certainly has been the policy of the company and I see no reason why it would be changed. If there was anything to be changed in the future it would certainly have to be done with the approval of the Board of Directors.

: A thank you very much.

Mr. Ebert from the telecommunications workers union.

: Thank you, Mr. Canfield and chairperson. I'm Rod Ebert. I'm a common shareholder and proxy holder. I also have concerns with Arthur Andersen and the type of accounting practices. It appears to us that using the EBITDA as a measure. Doesn't really the measure of the health of the company and there are huge incentives to sell off valuable assets and buy revenue streams that may or may not be positive for the company in the long run and we believe it would be prudent to have a review of those accounting practices and a very thorough review of Arthur Andersen as auditors.

Okay, thank you your comments are noted. We are now ready for the question. All those in favor please raise your blue cards that you were provided. Thank you. All those against please raise your blue cards. Thank you. I declare the motion passed.

I will now ask Robert MacFarland, our chief financial officer and following him DarrenEntwistle TELUS president and chief executive officer to present their reports. Bob MacFarland.

Thank you, Mr. Chairman. Good morning and thank you to everyone joining us today, whether in person or by means of the internet broadcast on WWW.TELUS.com.

Before I start, I'd like to express my appreciation in particular to those investors and lenders who have supported TELUS in the past year. Today I'll briefly recap our 2001 financial results then review our first quarter results, which were released earlier this morning.

I will also discuss our financial and operating targets for 2002. Please note that news releases in the first quarter results and dividend declaration are available at the investor information tables outside the meeting room.

On this slide, we have noted for all participants that the information presented today and in the question-and-answer session contain forward-looking statements about expected future results that are subject to risks and uncertainties. We ask you to read this statement and the disclosure statements in the annual report and on the press release. We disclaim any intention or obligation to update or revise any forward-looking statement as a result of new information so let's begin with a brief recap of the financial results for the year ended December 31, 2001. Revenue increased 18 percent to $7.2 billion from its combination of data IP and wireless growth plus acquisitions. TELUS achieved strong double digit revenue growth from wireless and data as well as from other revenues. The other revenue category primarily relates to customer premises equipment or CPE sales for short. Mean wheel in the more mature voice product grouping, local voice increased a modest 3 percent and voice long distance revenues decreased by 6 percent. This slide shows a revenue profile by product as well as by business segment with the wire line communication segment depicted in green and the wireless mobility segment in blue. By comparing the revenue break down for 2001 versus 2000, you can observe the significant transformation underway at TELUS as we focus on the high growth areas of mobility and data.

Mobility and data represented 43 percent of total 2001 revenues up from just 35 percent one year ago. This means that TELUS now has a low reliance on price-sensitive long distance and a large and increasing presence in our focus growth areas of data, IP and wireless. Earnings before interest, taxes, depreciation and amortization and restructuring charges, or EBITDA for short, is an important measure of cash flow generation. EBITDA increased a solid 9 percent driven by our fast-growing national wireless business. In our wire line operations, EBITDA growth was attributable to increased data and IP and increased operational efficiencies partly offset by higher expenses associated with the expansion in our merging central Canadian nonimcumbent operations. The 9 percent consolidated EBITDA growth in 2001 compares favorably with growth rates observed for the first quarter results in recent years which were 5 percent in 2000, 0 percent in 1999 and 4 percent in 1998. Net income was $454 million in 2001. This represents a decrease of 1 and a half percent when compared with 2000. The slight decrease was due to slight restructuring charges as well as higher financing costs and noncash goodwill and intangible asset amortization associated with investing in growth and national expansion through a series of acquisitions.

These higher acquisition and organization-related costs were significantly but not fully offset by recognition of a $550 million gain in the sale of two noncore businesses. In 2001, core EPS, or earnings per share, was defined to help provide a measure of earnings from a core and continuing operations in order to more directly measure recurring operating earnings performance. Core earnings per share decreased by 57 percent when compared with 2000 due to increased financing costs associated with the clear net and Quebec [inaudible] purchases and the impact of diluting earnings per share over a larger average number of shares outstanding. Partly offset by increased EBITDA. I'm pleased to inform that the 86-cent core EPS result exceeded the high end of the annual target range set out at the beginning of 2001. In comparison, earnings per share according to generally accepted accounting principles, or GAAP for short, were down 18 percent. There has been much discussion recently in the press about so-called pro forma earnings measures and they're alleged tendency to place a company in more favorable light. As you can see for TELUS this was not the case. GAAP EPS was actually a much more favorable measure than ourself selected core EPS. This primarily reflect the significant gains realized on our successful $1.2 billion divesture program in 2001 which were backed out of the core EPS calculation. Capital expenditures of 2.6 billion increased 81 percent in 2001, capital expenditures in communications increased due to accelerated spending and high speed internet capacity and data services software purchases from Verizon and nonincumbent national expansion. In addition to the $356 million paid for Wireless Spectrum, capital expenditures of mobility increased primarily for the digitization of the analog cellular network in the west, expansion of digital wireless coverage elsewhere and deployment of a nationwide third-generation or 3G high speed wireless data network.

Now, let's briefly look at several key performance indicators. 2001 was another notable year for the wireless segment at TELUS. In 2001, TELUS mobility continued to execute in line with our strategic focus of creating value through revenue and EBITDA growth rather than simply adding subscribers. The combination of our large subscriber base along with a premium average revenue for subscriber, more than 20 percent higher than that of any of our major competitors led the industry leading wireless EBITDA growth of 105 percent growth for TELUS. 2001 wireless net additions of 418,000 increased our total subscriber base by 19 percent to almost 2.6 million people. While TELUS' mobility captured around 22 percent of net additions in 2001, we estimate that over the same time period we captured around 28 percent of industry revenue growth. Clearly, this represents a result completely in line with our strategic intent. In 2001, TELUS' internet subscriber base grew by 35 percent to end the year with 670,000 subscribers, making TELUS the third largest internet service provider in Canada.

But the important internet story in 2001 was the incredible market demand for high speed internet service. For much of the year, TELUS was trying to catch up to market demand by building out high-speed ADSL coverage. Through a concerted organizational effort, TELUS addressed the situation and began more aggressive marketing late in the third quarter. As a result, we had a tremendous finish to the year with an annual total of 131,000 net additions.

So despite the slow start, TELUS actually exceeded the initial 2001 target of 95,000 net adds by a wide margin. At the end of 2001, TELUS had 215,000 velocity subscribers, an increase of 157 percent.

As indicated by the checkmarks on the far right-hand column of this slide, you can see that in every case, TELUS met or exceeded all of its 2001 financial targets. Revenues of 7.2 billion were up 18 percent. EBITDA of 2 and a half billion was up 9 percent and core earnings were 31 percent higher than originally targeted. This marks the second consecutive year since the inception of our growth strategy that we met or exceeded our public financial guidance.

With respect to subscriber targets, net subscriber additions on our high speed internet service exceeded original target by 38 percent as mentioned while wireless net additions for the year fell short of our original target. However, as mentioned, this was consistent with a strategic focus of our mobility business on Spectrum subscriber growth rather than simply maximizing net additions.

The checkmark for divestures relates to the very successful execution of our noncore asset divesture plan which exceeded expectations by raising proceeds of approximately $1.2 billion. In May and June of 2001, TELUS completed a comprehensive and highly successful financing program which represented a record for a Canadian corporation.

This slide shows a summary of the series of steps taken in 2001 that resulted in a significant strengthening of TELUS' balance sheet and has resulted in stable investment grade ratings. This included a record $9.2 billion refinancing that improved the average term to maturity of our debt from 3 to 7 and a half years with 93 percent of our debt at fixed rate -- on a fixed rate basis at year end. 840 million net cash inflow, that's inflow from acquisitions and divestures, cash tax savings of $331 million through the utilization, a tax loss carry-forward results from the acquisition of ClearNet in 2000.

A reduction in our quarterly dividend in the popular reaction to our enhanced dividend rein investment plan and accordingly given the achievement of almost all targets, we were pleased with our overall 2000 results answer the progress made to improve TELUS' financial position.

Let's now turn to the TELUS first quarter 2001 results that were just released earlier this morning. I'll start with the consolidated results and later also show you the highlights of our two major reporting segments, TELUS communications and TELUS mobility. Overall, operating revenues, EBITDA and net loss were impact by changes to the contribution of revenues received and the contribution expenses paid as a result of CRTC decisions on changes to the contribution regime and on restructured bands.

While Q12002 is the initial quarter for which the decision's negative impacts were effective, TELUS first disclosed this projected impact in April, 2001 shortly after the CRTC decision was publicly announced.

As you may recall, this coincides with a significant decline in the price of teleshares following this news. First quarter revenues were up 1.6 percent when compared to the same period last year. TELUS communication segment, revenues were flat, impacted as expected by the contribution decisions I just mentioned.

Mobility revenues increased by 26 million. Local and data revenues were up while long distance, as usual, was down. TELUS mobility revenues reflect the implementation of new accounting pronouncements concerning certain channel compensation to dealers in regards to equipment revenue. The impact of this is a reduction in equipment revenue and a corresponding or offsetting reduction on operating expenses. As a result of the adoption of these new US GAAP-related provisions, equipment revenues and operating expenses for prior periods have been restated to reflect this change with no impact to profitability. This slide illustrates the significant impact of the regulatory decisions on contribution on first quarter revenue as expected. Normalizing for the negative impact of the regulatory contribution decisions, you can see that TELUS' revenue growth would have been 7.4 percent, significantly higher than the 1.6 percent reported. Next is our operating earnings, EBITDA, which is down 4.6 percent. TELUS communications EBITDA decreased by $68 million due to the regulatory decisions on contribution as well as the one-time property tax recovery in the same period last year. An incumbent negative EBITDA of 36 million was relatively unchanged from the same period last year. TELUS mobility continued to successfully execute its national strategy, focus on strong revenue and EBITDA growth. TELUS mobility EBITDA for the first quarter improved by 46 million, or 60 percent, to $123 million or by 25 million and 33 percent when normalized for the $21 million favorable impact of clarification of Spectrum sales tax legislation in Ontario.

This slide clearly I will statements the magnitude of the impact of the regulatory decisions on contribution. Without the 61 million net decrease in consolidated EBITDA resulting from the change in contribution, rather than showing a year over year decline, TELUS' EBITDA would have been up by 5.2 percent. TELUS narrowed its net loss to 3.3 million this quarter and 98 percent improvement from the same quarter last year. This was due to lower restructuring costs and refinancing charges, reduced amortization costs and improved mobility EBITDA. This was offset by higher financing costs and reduced TELUS communication EBITDA due to the change in contribution as just outlined.

This net loss in the quarter reflected the $37 million negative impact of these contribution decisions. Earnings per share prepared in accordance with GAAP improved a negative 1 cent per share versus negative 50 cents per share one year ago. This represents a 98 percent improvement. The contribution decision negatively impacted this figure by about 12 cents per share. Moving now to look at capital expenditures in the first quarter, we see that 406 million was invested down 50 percent from the first quarter last year. Capital expenditures at TELUS communications decreased by $52 million as expenditures for nonSpectrum expansion decreased due to the substantial completion of the national optical carrier network and IP back bone last year. Excluding the $356 million purchase of wireless spectrum in the first quarter of 2001, TELUS' mobility capital expenditures decreased by 5 million year over year as mobility continued to invest in the expansion of the digital network and implement of the 1X high-speed data network. Effective January 1, 2002 TELUS has adopted changes in accounting policy as required by CICA handbook section 3062, goodwill and other intangible assets.

As a result, the company no longer amortizes goodwill or indefinite life intangible assets. In the three-month period ended March 31, 2001 the pretax amortization expense associated with these items was $63 million. Under section 3062, rather than being systematically amortized, the value of intangible assets with indefinite lives and goodwill must be tested for impairment as of January 1, 2002. The company assessed its intangible assets with indefinite lives which are its wireless spectrum licenses as well as goodwill at the same time at both the communications and mobility business segments.

The purpose of impairment testing methodology is to ascertain fair value. Accordingly, these estimates of value significantly affected by market valuations. On this slide, you can see the substantial decline in the S and P wireless index since October 2000 when TELUS mobility acquired ClearNet and their spectrum assets. The decline in valuation multiples occurred in the North American wireless industry for a variety of reasons, most of little applicable to TELUS mobility. In fact, the performance of TELUS mobility has exceeded expectations as reflected by its strong EBITDA and operational performance as well as the very successful integration of acquired wireless operations.

This helps mitigate the impact of lower comparable valuations in the industry. However, the net impact has resulted in a reduction in the fair value estimated for TELUS' wireless intangible Spectrum and goodwill. As a result, TELUS determined it necessary to record a transitional impairment amount of $595 million as a charge to retained earnings to take into account reduced wireless valuations.

The impairment charges are noncash in nature and will not affect TELUS' credit profile in any way.

Again I would like to emphasize that TELUS is recording this impairment due to a decline in wireless valuation despite continuing very strong operating performance at TELUS mobility. Network revenue of mobility in the first quarter of 2002 increased 8 percent, or $30 million compared to Q1, 2001. EBITDA increased by 46 million, or 60 percent, principally led by the increase in network revenue from a charger cumulative subscriber base and strong cost control. Even after normalizing for a $21 million favorable Spectrum sales tax decision this quarter, EBITDA growth was still 33 percent. TELUS mobility added 91,000 subscribers in the first quarter, while this represents a decline from last year, net post paid additions were 62,000 compared to 44,000 a year ago, representing a significant increase in the more valuable post base subscriber additions component.

Overall, we estimate that we captured approximately 30 percent of industry net additions this quarter to total close to 2.7 million subscribers at quarter end.

Mobility continues to perform well in other operating measures, as well. Cost of acquisitions per gross side or COA declined by over 10 percent this quarter. Churn remained steady at 1.9 percent below TELUS' targeted churn rate of 2 percent and improved from the last three consecutive quarters. TELUS mobility's monthly revenue for subscriber is $52 in the quarter. Despite the sequential decline, TELUS mobility's average revenue per unit remains more than 20 percent higher than that of our next closest competitor.

Turning to communications, as shown on this slide, TELUS continued to maintain resilient market shares in Spectrum territories with 97 percent local market share and 79 percent long distance market share. Any loss in business network access lines in our incumbent territories has been more than fully offset by increased business network access lines in our nonincumbent operations in central Canada.

A key pillar in TELUS' growth strategy, data revenues, increased by 28 percent in the first quarter. Even after adjusting for $13 million of nonrecurring revenues which occurred in the first quarter, year over year data revenue growth was still 23 percent, reflecting progress in our data focused to nonincumbent expansion efforts as well as strong velocity high speed internet growth.

In the fast-growing internet business, we added over 52,000 new velocity ADSL subscribers in the first quarter, 155 percent increase over the first quarter of last year. This strong performance bodes well for us to achieve our target of added 200,000 or more net high speed subadditions additions in 2002.

Moving to our nonincumbent exchange carrier or nonIEC for short for short, operations, nonIEC revenues were 117 million in the three-month period ended March 31, 2002, an increase of 83 million from the same period last year. In comparison to the fourth quarter of 2001, noneye electric revenues decreased by $12 million due to seasonality and timing of CPE sales partly offset by organic growth. The potential for strong nonIEC growth in the future is significant. In fact, today we press released a variety of new contract Spectrum which Darren will comment on in his presentation. Despite the significant revenue ramp-up, negative EBITDA continued to remain stable and we expect to experience improving EBITDA, particularly in the later half of 2002 as we bring more revenues on net and begin a meaningful ramp up towards positive future results.

Now let's turn our attention to the future and review 2002 targets for TELUS.

This slide shows a summary of TELUS' original 2002 targets announced last year in December. TELUS' targeting to achieve revenue growth of 4 to 5 percent, bringing total annual revenues to more than 7.35 billion. This increase is expected to be generated from strong mobility and data growth offset by the expected $390 million negative impact from the CRTC decisions on contribution and rebanding. Excluding the impact of these decisions underlying consolidated revenue growth implied by target range would be up substantially at 10 to 11 percent. We have set a target for EBITDA to remain in the 2.475 to $2.525 billion range, which is essentially flat as compared to our 2001 guidance. If we're -- if we were to exclude the $230 million exogenous impact of the regulatory decisions on contribution, this would represent EBITDA growth of between 7 to 9 percent. I'll return to CAPEX in a moment. For EPS, we are targeting 15 to 20 cents. Our wireless net addition target of 425 to 450,000 is higher than the net adds for 2001 and this target range reflects our continued focus and profitable subscriber growth and the potential for significantly increased market coverage in central and eastern Canada as a result of a new network sharing arrangement effective in the second half of 2002. And our velocity ADSL target of adding 200,000 or more reflects expected continued strong demands for this product. Now returning to CAPEX for a moment, management has updated its 2002 guidance to reflect a reduction in discretionary capital program expenditures. While the original target for CAPEX spending was to total 2.1 to 2.1 billion, TELUS has been tracking at a lower level and we now expect full year CAPEX to be 200 to $300 million lower than the original guidance. This move improves our 2002 cash flow profile and we plan to significantly reduce our debt leverage by the ends of 2003 in addition, TELUS has embarked on an operational efficiency program to improve operational and capital efficiency and effectiveness across the company.

Phase one began in mid 2001 and successfully reduced discretionary expenses and hiring. Phase two now under way began with the identification of efficiency opportunities, 36 initiatives have been established to drive significant future efficiency gains. As I mentioned, the phase -- this phase of the operational efficiency program is well under way with implementation planned for the second half of the year and significant productivity gains expected in 2003 and an wards.

Now, before concluding I'd like to make a few comments about the price performance of TELUS' shares. Given that TELUS met all of its 2001 financial targets set out at the beginning of the year, we remain disappointed in our share price performance. Looking at what is behind us over the past 12 months, there have been several events which have influenced our stock price and many are noted on this slide certain of these have been TELUS-specific events such as a regulatory decision on contribution and the uncertainty around the dividend.

After much consideration, we aligned the dividends to our growth oriented strategy and eliminated uncertainty on this matter in October by announcing a reduction. You can see on this slide how our share price in October increased after announcing the dividend reduction in the back of strong Q3 results.

Other factors being external are more market-related in nature such as the September 11th terrorist attacks on the US and most recently developments at a major competitor and the ensuing drop in that company's share price. Such events have nontheless impacted TELUS' share price. Looking at our share price performance from a more general industry perspective, we can see that North American telecommunication stocks and particularly wireless stocks have seen significant price declines. This next chart clearly indicates as I've already shown that telecom and wireless stocks in US and Canada have significantly declined over the last year. TELUS' valuation is a hybrid of incumbent telecom, wireless and nonincumbent values. As you can see here on a relative basis, TELUS has performed within the range of relevant indices. The market is clearly becoming more discriminating as it avoids business plans that are not fully funded or well rooted in fundamentals, however, given our coherent strategy, our operational progress and our strong financial position, I expect that focus on continued expansion of our strategy should represent a strong foundation for long-term share appreciation.

Now, let's briefly wrap up. 2001 was a solid year performance for TELUS in which despite significant organizational changes and acquisitions, we met or exceeded all the financial targets set out for the company and significantly strengthened our financial position.

Our first quarter 2002 results today -- announced today demonstrate healthy growth in several key hears. We are particularly pleased with the strong revenue growth and data and with continued strong and -- operating and financial performance of TELUS mobility. However, as expected, the results do not reflect -- excuse me, did reflect the negative impact of regulatory decisions. I'm pleased to report that today, the Board of Directors declared a dividend of 15 cents per common and nonvoting share payable July 1, 2002 to shareholders of record on the close of business June 10th 2002.

In summary, we are continuing to execute our national strategy focused on data IP and wireless from a position of financial strength.

Thank you and over to you, Darren.

Good morning and thank you for joining us today. 2001 marked a year of tremendous achievement for TELUS, and excellent progress against our growth strategy. We entered the year driven by challenging targets and guided by clear strategic imperatives. We closed the year having met or exceeded all of our financial targets and having made significant progress against our growth strategy, all this despite a backdrop of general economic weakness, telecom industry difficulties and significant internal changes at TELUS itself. While we are proud of these successes, we have been disappointed that the share price has not yet reflected our accomplishments.

As Brian said, this has been a turbulent year for financial markets and for our industry in particular. As the economy recovers and TELUS continues to execute with excellence and demonstrate continued traction in exploiting our strong market position, I believe the share price will in due course more accurately reflect our achievements and operating results.

I'm confident that we have the right strategy and a talented team to deliver on that strategy.

Our strategy will continue to guide TELUS in 2002 as we execute against our objectives from a position of financial and operating strength with a track record of meeting expectations we set with investors regarding our performance.

This morning, I will outline our progress against the strategy that is guiding our company and set out our priorities for the year ahead.

Our focused growth strategy remains as relevant today as it was when introduced 18 months ago. Our strategic intent is to unleash the power of the internet to deliver the best solutions to Canadians at home, in their workplace or on the move. Our successes over the past year and our plans for 2002 are driven by six strategic imperatives. These imperatives are designed to align and focus our effort on high-growth data, IP and wireless that will create long-term shareholder value.

Our first strategic imperative is to provide integrated solutions that do what? That anticipate and meet the evolving needs of our customers. In 2001, we started the move from products to solutions. Our new customer facing organization structure develops and delivers needs-based solutions driving greater differentiation by targeting lucrative market niches and building enhanced customer intimacy. Our solutions exploit a highly fragged market where we fairs different competitors across products, markets and geographies. We exploit this fragmentation by translating data, IP and wireless technology into integrated solutions that deliver compelling benefits for our customers and differentiate TELUS from the competition. For instance, in June we launched the total bundle, Canada's first integrated solution for the consumer market. Total bundle customers can choose an individually tailored package of basic and enhanced local voice services, a long distance plan, a wireless plan and an internet access plan.

In fact, last year, we introduced numerous new integrated service packages for both the business and consumer markets selling 915,000 bundles up 20 percent over the previous year.

I encourage you to explore our integrated solutions on display in the foyer during the reception following our meeting for example, you will discover what the next generation of high speed wireless services can do for you. TELUS mobility announced today that we will be the first to launch this next-generation 1X service nationally in June. Imagine what you can accomplish with wireless internet access at speeds up to ten times faster than what is available today.

If you stop by the TELUS Geomatics demonstration, you will learn how we are able to graphically display complex information onto easily readable maps for a host of business and government applications. For example, Finnian is using Geomatic tools to track their equipment realtime while The Medicine Shop is able to access demographic analysis to make better business decisions in locating new stores we also have a splay that shows how intelligent internet data centers work. You can see the range of web hosting solutions we offer our business customers right here in Toronto.

I think you will find the exhibits a tangible demonstration of the innovative solutions we are offering our customers setting TELUS apart from our competition. Our second imperative is to build national capability across data IP voice and wireless by leveraging the operating platform and cash generation that we enjoy from our incumbent operations. A year ago, we activated our 8900-kilometer national fiber IP back bone. This network not only provides a new source of wholesale revenue but equally important, it significantly reduces our cost to carry our own data and wireless traffic. Our trance Canada network connects cities from Vancouver to Quebec city, extends into the US by four major points of presence and is fully integrated with our metropolitan networks in BC and Alberta and those that we are building in Ottawa, Toronto, Montreal and Quebec City. TELUS is leveraging its skills, resources and customer relationships we enjoy in western canned an and eastern Quebec to strategic advantage in entering the business market in central Canada. When we include our TELUS Quebec incumbent operations, we have a picture of our fast-growing total wire line business in central Canada.

There are three points for shareholders to take away here. First, with over $600 million of revenue in 2001 and a target of $945 million for 2002, we are already demonstrating, we are already demonstrating significant scale. Second, wire line operations in central Canada came very close to breaking even at the operating profit level in 2001. And finally, we are clearly demonstrating an upward trajectory on data and IP in the business market that is bang on strategy for TELUS. For example, we expect to more than double our nonincumbent revenues in the business market going from $313 million in 2001 to $650 million in 2002. As you can see from this slide which illustrates our quarterly revenue growth, we have made excellent progress in building our business in central Canada in a short 24-month period. Think about it. From generating zero revenue in the first quarter of 2000 we exited the fourth quarter of 2001 with annual revenues of circa $500 million notwithstanding this success, revenue in Ontario and Quebec fell short of our expectations this past quarter. It's important for shareholders to recognize, however, that building a quality business from scratch is not realized in one or two quarters but is a mid to long term under taking for TELUS. Our success depends on our discipline in sticking to our strategy, having that discipline, the excellence of our execution and our stewardship in exacting an economic return from our investment in central Canada. This is exactly the approach TELUS is bringing to bear to realize success in Ontario and in Quebec. The medium to long-term nature of our business model is clearly evident in the announcement today of eight of the larger deals we recently completed.

These contracts with companies you can see on the screen range up to 7 years in term and average over four years. They total over $110 million of revenue and reflect solid progress in growing our business in Ontario and Quebec.

On the wireless side of our business, the breadth of TELUS mobility's national network was dramatically August meanted by our recent network sharing agreements with Bell Mobility and Alliant Wireless. These innovative agreements provide us with continued traction in central and eastern Canada by expanding our digital wireless coverage from 20 million to 27 million people or approximately 90 percent of the Canadian population. We will begin marketing our digital PCS services to the additional 7 million potential clients across central and eastern Canada this summer. Leveraging the operating platform, distribution channels, market awareness and the highly skilled talent we secured through the acquisitions of ClearNet and Quebec [inaudible]. Equally important especially for shareholders, TELUS will benefit from the avoidance of capital expenditures of approximately $800 million over the life of these agreements.

Our third strategic impairative is TELUS partnering, acquiring and divesting to accelerate the implementation of our strategy and to focus our scarce resources on core business. In 2001, we formalized our partnership with Verizon with the signing of a software and related technology and services agreement. The complexion of Verizon's business and indeed the strategy of implementing is very similar to our own, so we have a common foundation for cooperation. Verizon's support of TELUS and our growth strategy has been demonstrated very tangibly with our participation in our enhanced dividends reininvestment plan and their acceptance of shares instead of cash in their sale of Quebec tell to TELUS. As a result, Verizon has invested some $230 million in TELUS in just the last year. In 2001, six relatively small strategic acquisitions brought us closer to our goal of becoming Canada's powerhouse in data and e-business solutions. These acquisitions markedly improved our operational capability in central Canada, complementing our organic investments in national expansion.

Through these acquisitions, we gained a number of important advantages including adding 1100 new employees who bring valuable -- who bring valuable data and IP skills to team TELUS, securing high quality relationships with thousands of new customers in our chosen markets and leveraging these customer relationships to sell the broader set of integrated solutions that TELUS can offer.

You can see on this slide some of the companies with which we now enjoy strong relationships as a result of our acquisitions. For example, prior to these acquisitions, TELUS did not have a material commercial relationship with the head offices of the TD Bank, Xerox, the CBC or Hydro One. Ladies and gentlemen, now, we do.

Importantly, we have an excellent track record for achieving planned synergies from acquisitions. This includes the original BC Telecom and TELUS merger and the three way ClearNet, Quebec [inaudible] and TELUS mobility integration just last year. We promised, we promised $1.6 billion in integration synergies when we acquired ClearNet and we are well along in delivering on that promise to our shareholders. The estimated synergies we have realized in integrating these wireless operations thus far include savings in capital expenditures and operating expenses of some $300 million and cash tax savings of $400 million with a further 5 someone million dollars in tax value to be realized in future years. In addition, our wireless acquisition, particularly the ClearNet acquisition, gave us an immediate national network with a North American leading spectrum position. National brand exposure for TELUS and a talented employee base in Ontario and in Quebec a national distribution network to sell our products and the leverage we needed to negotiate the roaming resale agreements with Bell mobility and Alliant Wireless all this to say that the integration of TELUS mobility, ClearNet and Quebec [inaudible] Has gone exceedingly well and made TELUS the leading Canadian wireless operator.

Our success in achieving integration synergies can be attributed to our excellence in post acquisition integration. This is a formal function at TELUS dedicated to enhancing the value of the assets we just spent shareholder funds acquiring. We do this by realizing planned synergies and immediately engaging new employees in the implementation of our growth strategy. We take a disciplined approach to growth at TELUS. Our targeted acquisition strategy was complemented by the divesture of noncore assets, reducing our debt by $840 million last year.

The acquisition component of our strategy for national expansion is now largely complete. We now have the capabilities we need to compete effectively on a national basis across data, IP, voice and wireless services. What capability caps remain will be addressed by organic investment.

Our fourth strategic imperative is to focus relentlessly on building scale and differentiation in the growth markets of data, IP and wireless. TELUS is in the midst of a significant transformation. 2001 wireless and data represented 43 percent of total revenues, up from 35 percent just one year earlier. This means that TELUS is decreasing its reliance on the price-sensitive long distance business, which now accounts for only 15 percent of our revenue base while augmenting our exposure to the high growth areas of data, IP and wireless. Indeed, our data revenue continued to show strong growth in the first quarter of 2002, up 23 percent. Last year, we opened two world class intelligent internet data centers in Toronto, and Calgary and acquired a third on advantageous terms and conditions through the PSI Net bankruptcy formally positioning TELUS as the leader in data hosting in Canada.

These internet data centers provide a suite of sophisticated internet hosting services, integrated e-business applications and the highest standards available in security and in performance. As you can see, some of Canada's premiere companies have chosen TELUS to host their web-based operations including Air Canada, Petro Canada, Glaxo SmithKline, Future Shop and The Four Seasons hotels.

Our national IP backbone activated just last March has been top ranked by independent network analysts Net Configs. Of the 11,000 networks monitored -- yes, 11,000. Of those 11,000 networks monitored and tested worldwide, we now rank 39th in terms of quality and connectivity up from 72nd position just a year ago.

Not pricingly, high-speed ADSL internet service was also a top priority for TELUS in 2001. Through improved network provisioning matched with strong marketing, we enjoyed a break out fourth quarter. For the full year, we added a remarkable 131,000 new TELUS philosophy ADSL customers exceeding our public target by 38 percent.

We fed an even higher target for 2002 of over 200,000 net additions. As you just heard from Bob, the momentum continued in the first quarter this year. We added 52,000 new TELUS velocity ADSL customers, an increase of 155 percent over the same quarter a year ago, or approximately the same number of customers we added in all of 2000. Our wireless business was equally productive in 2001, leading the Canadian wireless industry an average revenue per subscriber generating 22 percent more than our closest competitor. The reasons for this include our share of the business market due to our coverage advantage and strong distribution in western Canada. Our premium national brand. Our push to Spectrum product that differentiates us with business customers and our prepaid base which generates roughly double the revenue of our major competitors. Thanks to TELUS mobility's successful wireless web focus that targets the youth market. We also led the Canadian industry in earnings growth by generating excellent EBIDTA growth at TELUS mobility. Annual operating earnings more than doubled in 2001 to $356 million over the previous year. This strong EBITDA growth was evident again this past quarter. By focusing on profitable customer growth, TELUS mobility is demonstrating industry leadership and executing on a shareholder value marketing philosophy.

Our fifth strategic imperative is to go to market as one team under a common brand executing a single strategy. We make significant progress in establishing a powerful and integrated national presence in 2001. The TELUS brand was introduced coast to coast with the successful rebranding of ClearNet, to TELUS mobility.

Less than a year after acquiring the remainder of Quebec tell am rebrandser to TELUS Quebec, a pool of Quebec City am Montreal businesses indicated an impressive 64 percent awareness of TELUS. At year ends, marketing magazine named TELUS one of the top 10 marketers that matter for 2001. This national honor recognizes our company's innovation, our executional clout, our leadership and our influence in the market.

In a very short period of time, TELUS has achieved a strong, distinctive, unified brand for our many diverse solutions used a nature based advertising look. Why is this strong brand important to shareholders? When a brand has established instant recognition, more time can be devoted to selling the attributes of the solution to target customers which makes marketing expenditures more efficient and more effective.

Why a nature-based theme? Nature offers a good foil to the complexity of potential anxiety associated with the ever changing technology confronting us today. Drawing upon nature gives us a rich portfolio of material keeping the look of our brand always fresh and always innovative.

You'll notice that the look and feel of our brand is consistent whether we are promoting a wireless solution or high-speed internet connectivity. Here are some examples of what I mean.

Personal growth and development is a fundamental right of every member of team TELUS. We continued to build the performance culture, we are absolutely convinced will deliver competitive advantage and shareholder returns. We acknowledge the significant impact each and every employee continue beauts to our success by providing a minimum of 100 stock options annually to all of our employees.

Additionally, through our employee share plan, TELUS employees collectively constitute our fifth largest shareholder with 9 million shares. Why is this good for shareholders? We believe the people closest to our customers determine our success in the marketplace and ultimately create shareholder value. Share ownership and stock options gives employees added incentive and a vested interest in our success. This means our employees, as shareholders, know the exhilaration of share value appreciation and also feel the pain when the share price does not perform as we would like.

I'm pleased to report that our employees are more committed than ever to our strategy. A fall 2001 employee survey indicated that 82 percent of TELUS employees considered themselves to be fully engaged with our growth strategy and aligned with our performance culture. This is a remarkable 21-point increase over the spring of 2000, a rate of improvement never before witnessed by the conference board of Canada. Our internal investments are also winning external acclaim. In 2001, TELUS was named the 10th best employer in Canada by the Globe and Mails Report on Business. This recognition value dates our progress in building a performance culture. More importantly, it helps retain and attract the caliber of talent essential to success in a complex and highly competitive industry.

At TELUS, we believe what gets measured gets done. We continue to demonstrate this philosophy in action last year by setting and achieving against our public targets. This marks the second consecutive year since the inception of our growth strategy that we met or exceeded our public guidance. As you can see on this chart, we achieved all of our financial targets in 2001 and all but one of our operating targets which Bob just discussed.

We have set equally stretching public targets for 2002 which are clearly outlined in the annual report you received.

As Bob just outlined, we took decisive action to solidify TELUS' financial base last year. We strength ends our balance sheet am credit position by extending our term to maturity in the largest debt financing in Canadian history. We also strengthened our balance sheet by divesting noncore assets and reducing our dividend-related cash outflow.

As a result, our future growth is funded as we [plan. We leave] 2001 with demonstrable progress against a clear agenda and a tight set of priorities. We are establishing a strong national platform demonstrating leadership in data, IP and wireless and building a high performance culture at TELUS. We have a solid financial position and are executing relentlessly against measurable public objectives for 2002 that will build sustainable success and long-term share value creation.

And yet, all these achievements mean nothing if not ultimately reflected for shareholders in TELUS' share price.

: Here, here.

To that end, our 2002 priorities are directed at creating shareholder value by focusing on profitability and cash flow. Indeed, our first priority is to increase operating and capital efficiency to drive margin expansion and improve free cash flow with 36 cost saving initiatives now identified, we expect this program will demonstrate results in the latter half of 2002 and more dramatic improvements in 2003 and beyond. We are already seeing tangible evidence of our operating and capital efficiency and effectiveness measures in the 200 to $300 million reduction of our public guidance for capital expenditures in 2002.

Second, we will continue to accelerate growth in Ontario and in Quebec in the small to midsized business market and selectively target large corporate and government accounts.

This year, we will significantly advance our Metro fiber Spectrum in Toronto, Ottawa, Montreal and Quebec City allowing us to increase profitability by moving traffic on to these networks.

Our third priority is to build on the momentum of the last two quarters and win the lion's share of high speed internet customers in Alberta, BC and eastern Quebec. Currently, in these markets one out of every two new high speed internet customers is now choosing TELUS. This is a big step forward. This represents excellent progress but we must, but we must and can do better. Fourth, we will continue to focus on profitable wireless subscriber growth while exploiting our newly expanded digital markets in central and eastern Canada.

TELUS mobility continues to take an industry leadership role building shareholder value by such actions as moving to permanent billing this coming July.

And finally, we're working hard towards reaching a new collective labor agreement that reflects the competitive dynamics of our industry to the benefit of both employees and the company. TELUS is a compelling investment now more than ever. We are executing on a focused and differentiated growth strategy. We enjoy a stable cash flow from a resilient incumbent business. We operate the leading wireless business in Canada. We are gaining traction and scale on wire line expansion in central Canada. We are focused on improving operational and capital efficiencies. We are building on our track record of delivering against public expectations. And we have a strong and liquid financial position coupled with investment grade credit rating.

TELUS is a pure play telecom operating company adeptly executing a growth strategy from a position of financial strength. We have absolutely the right strategy. This should be more clear now than ever before and the TELUS team will continue to execute against that strategy in a financially responsible manner with precision, with passion and with excellence.

I'd like to close by sincerely thanking our investors for their continued support during these challenging times for the telecoms industry.

Thank you.

Thank you Robert and Darren. I'll ask Darren to remain at platform in preparation for the question period. While Darren was making his presentation, we received the scrutineer's report with the results of the ballot on election of directors. I'd like to say that the ballot has passed as we would expect, that the nominees as set forth in the information circular are elected as directors for the coming year, as well. Thank you. Copies of the scrutineer's report will be available upon request.

Now that we have completed the formal item of business of this meeting, may I please have a motion to terminate the meeting before we move to questions?

: My name is Ross Lamont, I am a common shareholder. I move that the annual and general meeting be terminated.

Thank you. Is there a seconder to that motion?

: Mr. Chairman, my name is Julie Wilson. I am a holder of common shares. I second the motion.

Thank you Julie is there any discussion? Appears not. All those in favor of the motion to terminate the meeting please raise your blue card. Thank you. All those against please raise your blue card. Thank you. The motion is carried.

Thank you everyone that concludes the business portion of the meeting. We'll now move on to the financial item on the agenda, to have your questions asked and hopefully answered. I invite registered arm beneficial holders of common and none voting shares or holders of proxies to ask questions at this time. The invitation of course includes shareholders participating via web capital. We'll rotate between those in the room at the two microphones and those submitting questions over the internet. Now Rob Dougherty will read questions from the webcast. Members of the media will have the opportunity to ask questions at the media conference that will follow this meeting and that's one of the challenges we have because the media conference had been scheduled for 12 o'clock and Darren has this commitment so we'll move through this as quickly as we can to help us with that.

If you have a question, please go to the microphone, identify who you are and please only ask one question and move on so that someone else can have a follow-up question. We'll do our very best to answer your questions. If not here, outside in the reception by the officers and the members of the board who will be available for the questions.

I'd like to then just ask that we're carrying on with this so may I start with the questions? : Ron Williams, a shareholder at TELUS. A couple of points of interest in your presentations, but both Mr.Entwistle and Mr. MacFarland made statements about increases in efficiency and cost savings. My question around that is it said in the second half of 2002 and Mr. Mac for lands report mentioned both staffing and analysis initiatives with productivity gains in 2003 and as an elected representative of approximately 17,000 of your employees, I'd like to know what effect that will have on your employees.

Thank you. Darren?

We're currently working through the final elements of our operating efficiency and effectiveness plan. We will be taking it to the board for approval later on today. Once we gain that approval, we would seek to have the communications plan that would cover all the employees of the organization as well as key stakeholders including the communities within which we serve and in that particular juncture, we'll be at a point to provide greater clarity in terms of the impact of the employees on this organization. It's important to point out as has always been the history with TELUS and the way that we treat our employees, we will do so in an open and honest fashion and be highly respectful of the needs of the individual and make sure whatever actions we take are executed with dignity and with concern.

Thank you is there another question?

: Nancy curly, common shareholder and proxy holder and also elected representative of the 17,000 employees in BC Alberta. I wanted to I guess ask a question around the compensation of our senior officers of this company. I notice in the circular that the top five paid officers are listed in here. I believe that in the past, the company has always provided the top officers across the board so my first question is is the company prepared to release that information for all of the paid officers of the company and secondly, as a shareholder, certainly as an employee, as well, I'm concerned over the plumb iting shareholder price Spectrum, the decrease in the dividends that have been paid. Will the board consider paying a compensation package or more closely tying that to the performance of the shareholders for this share price?

Thank you I understand the question. Let me try to answer them. First off, one of the existing requirements and one of the filing issues with the Toronto stock exchange is that the -- under governance, they ask that you list the compensation of the top five officers and the highest paid officers of the company and that clearly was done and that is practiced in corporate Canada and that was there.

The second issue where you basically ask tying performance to compensation, I want to say that despite the very difficult market conditions and industry conditions, as has been stated and shown, that TELUS met all but one of its strategic operating goals and that achievement was reflected in the variable pay package that was put forward. We do work inform, as Darren has outlined very carefully, strategic initiatives, score card and performance is very closely monitored to the compensation package so I believe that we have done both of the things that you advocate.

Before we go to one more question, is there a question from the web?

: There's a question from Chris Whitney, a shareholder, who asks what are the top three initiatives the executive leadership will focus on to increase shareholder values in the next 6 to 12 months and how will these initiatives be measured for success?

Over to you, Darren.

Okay, actually, for the fear of being Spectrum I'll try to extend that to five in terms of the catalyst for improving the stock price of this organization, which may be of interest today. Continued improvement in economy will help. Secondly, with respect to the capital markets activities inclusion to the shake out that's currently taking place within the telecoms industry and the very negative atmosphere. At the conclusion of that shake out seeing strong companies like TELUS with winning strategies that are differentiated and highly focused go on and prosper. Thirdly, I would say a conclusion to the onslaught of negative regulatory impacts that we have been impacted by over the last 12 months. Fourthly, the execution of our operational efficiency and effectiveness program. Number five, to take those operational efficiency that we realize be itOPEX or CAPEX and to use those in part to fuel our ambitions with respect to wireless where we're looking to extends the leadership position in the wireless market and continue to grow as an industry leading EBITDA growth rate, to use those resources in part to fund our ambitions on ADSL where we seek to within the win on high speed internet access. To use the productivity am efficiency gains to fuel our expansion in Ontario and Quebec with a focus on the business market and data and IP services and to deliver not just revenue growth but profitable revenue growth.

So those are the catalysts that I see for share price improvements of this organization.

Thank you. Darren. There's a question here, Mr. Hubert.

: Thank you, Mr. Chairman. I'm a shareholder and a proxy holder. My question is will the -- will TELUS review the way in which they compensate their chief executive officers? The reason I ask this question is that while it's reported that the CEO's bonuses and compensation have gone up by 91 percent while we've seen share prices slip, slip very, very significantly. Now we see where the company is poised to do some changes that are going to have quite a negative impact on employees. We're very concerned about the EBITDA way of accounting. We've seen real estate sold at the bottom of the market. We've seen purchases of the companies at the top of the market and we believe that that compensation rewards executives on interactions that do not add value to the company and are in fact negative.

Thank you. Let me first explain, one of the things that would have been helpful to have understood the compensation more clearly is that Mr.Entwistle and, in fact, the other four listed executives were know there for a full year period in the year 2000. In fact, Mr. Entwistle began on July 10 if memory serves me of the year 2000 so the comparison from one year to another is not an apple-to-apple comparison. In the second instance, it was very clear going forward there was divestiture as part of the overall plan of the I'll swing to Darren to let him speak to the other issues. In terms of the compensation, I believe the compensation is commensurate with the performance that was set out in the strategic initiatives. Darren?

I guess just to comment on the divestures of our real estate portfolio, they were not sold at the bottom of the market. There was a very healthy market. Why was there a healthy market? Because there was considerable cash that was transitioning out of high-tech looking for a home, a safe investment, so there was considerable demands for real estate assets. Why did we sell them? Because we're not in the real estate management business. We do not provide building maintenance and janitorial services. That's not the vision of this company going forward. Better to release the cash locked up in those buildings, recycle that cash to either pay down near-term debt or to fund our growth ambitions. That's a better use of that particular asset. Insofar as the acquisitions we have taken forward, of the 6 relatively small scale data am IP acquisitions, almost each was bought in a distressed situation reflecting the realities of the tech melt down in the marketplace so we acquired them on various advantageous terms and conditions. Indeed, as I indicated in my presentation this morning, thePSI Net acquisition occurred the morning that they declared Chapter 11 so we were in a very good negotiating position to make sure we got good value for our shareholders in the assets and I think we have been highly opportunistic. As far as ClearNet, I think that's been a first-rate acquisition for this organization. Yes, wireless values have fallen but you don't cut deals in retrospect. At the time that we did, the ClearNet deal, we were not in a particularly enviable position. We were a regional mobility company trying to compete against national mobile operators Rogers, ClearNet and MicroCel when our customers were looking for national solutions. We needed to find a way forward. We had two routes to go, either build out a national wireless network ourselves or effect an acquisition and when we looked at the economics, when we looked at the economics, the shareholder return, it was a no-brainer for this company to go ahead and make the acquisition of ClearNet. I think that's proceeded very, very well for this organization. If you look at it, we bought a company that when combining it with TELUS mobility, we propelled ourselves to the number one position in the Canadian wireless market. A lot of talk about GE and Jack Welch, but I think there is some truth that you want to be number one or two in the market that you serve. We're now number one in the Canadian wireless market.

Additionally, I think it would bear scrutiny to say well how has TELUS mobility performed post the acquisition? And its performance has been absolutely exemplary. The financial performance be it EBITDA, be it free cash flow has been first rate, exceeded not just our expectations but the market's expectations.

Also at the time we did the deal we said we would deliver on 1.6 billion dollars in synergies. We are well on our way to realizing those synergies. As I indicated in my speech, we realized thus far $300 million of synergies insofar as CAPEX and OPEX savings are curved and we realized 350 to 400 million of cash tax savings with more yet to come.

So I think it's been a terrific deal for this organization and at the end of day bang on our strategy. We said years ago we were going to be a national company across both wire lines and wireless. We said we would build it by the wire line route, buy it by the wireless route and I think that's an excellent combination. I think the assets since we acquired it serves our shareholders well.

Do we have another question from the internet?

: Yes.

Well, I guess I'll turn to over to Darren, as well. I'm not aware that there is any movement on that. It's been considered for some years. Darren?

Try to predict regulatory outcomes is a slightly spurious exercise. The most learned view we have is the only thing that's certain is that sometimes foreign ownership restrictions are going to go away. The question remains when and in what form are they removed? I think that's basically anyone's guess. What do we do in the interim? We grow share price. At the end of the day, I think any company that has to rely upon artificial regulations to protect it is a weak company. The best protection to any form of a takeover is a fully valued stock price. We need to get our stock price up to the point where it fully reflects the value and the potential that this company represents, then if someone wants to come in and make a bid will the premium that gets paid goes to our shareholders, not to theirs. And really, that's our philosophy. So what are we looking to do? Well, in the interim, before foreign ownership restrictions are final removed to stick with our strategy, because we got the right strategy. Indeed, I believe we got the best strategy in the telecoms world, continues to execute as we have done in the past, continue to do so in financially responsible manner, deliver success in Ontario and Quebec, deliver success in our home territory, win the war on ADSL and we'll get the share price up to where it needs to be.

Thank you Darren. I want to thank you all for your interest. I apologize for what might seem to be a contraction of time but as I did say, there is the media conference that Darren and Mr. MacFarland have to be at quickly. So may I ask you for some help? We need you to fill out the feedback form that was on your chair when you came in. Your candid comments help us plan future meetings and ensure we give you the information you want. Please leave the complete form on the chair. Thank you for that in advance.

Please join us for a reception that follows immediately. As I said earlier, our board and our executives and many of our executives are here to answer any questions please, as Darren invited you to, be sure to stop by our product and service displays in the foyer to see the kinds of services available to customers. I think you'll enjoy test driving some of our latest data, internet am wireless integrated solutions.

Before you leave your seats, I invite you to enjoy this very brief one-minute closing video. Thank you very much.