Telus 2005 Annual Report Download

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TELUS Corporation
annual information form
for the year ended December 31, 2005
March 20, 2006

Table of contents

  • Page 1
    TELUS Corporation annual information form for the year ended December 31, 2005 March 20, 2006

  • Page 2
    ......2 TELUS ...2 OPERATIONS, ORGANIZATION AND CORPORATE DEVELOPMENTS ...5 EMPLOYEE RELATIONS ...14 CAPITAL ASSETS AND GOODWILL ...15 ALLIANCES ...17 LEGAL PROCEEDINGS ...20 FOREIGN OWNERSHIP RESTRICTIONS ...22 REGULATION ...23 COMPETITION ...32 DIVIDENDS DECLARED...35 CAPITAL STRUCTURE OF TELUS...

  • Page 3
    ... name to TELUS Corporation and in February 2005, the Company transitioned under the Business Corporations Act (British Columbia) (the "New BC Act"), successor to the BC Company Act. TELUS maintains its registered office at Floor 21, 3777 Kingsway, Burnaby, British Columbia ("B.C.") and its executive...

  • Page 4
    ... effected by way of a legal entity restructure on March 1, 2006, at which time TELUS combined its wireline and wireless businesses which were formerly located in TCI and TELE-MOBILE respectively (the "2006 legal entity restructure") into a new partnership, TELUS Communications Company ("TCC"). TCC...

  • Page 5
    ...% 1219723 Alberta ULC (Alberta) 1% TELE-MOBILE COMPANY / SOCIETE TELE-MOBILE (Ontario) TELUS Communications Company / Société TELUS Communications (British Columbia) In this annual information form, references to "TELUS" are to TELUS Corporation and all of its subsidiaries and partnerships as...

  • Page 6
    ... carriers, resellers, Internet service providers ("ISPs"), wireless communications companies, competitive local access providers and cable-TV operators. • • These customer facing business units receive essential support from the business capabilities units comprised of Network Operations...

  • Page 7
    ... form for further information. On December 30, 2004, through an internal reorganization, a subsidiary of TELUS, TELUS Solutions Holdings Inc., was wound up into TCI. Upon this wind up, TELUS Services Partnership ceased to exist and its business was transferred by operation of law to TCI. Amendments...

  • Page 8
    ... solutions for business customers across Canada. TELUS is also a national facilities-based wireless provider, with more than 4.5 million subscribers, offering digital personal communications services ("PCS"), enhanced specialized mobile radio ("ESMR") services, wireless Internet and data, paging...

  • Page 9
    ... services and the ability to integrate voice mail, e-mail, data and video through a user-friendly online Web portal. TELUS is exploiting the competitive head-start it has in managed data and IP solutions, utilizing its IP network to secure recurring data revenues in Ontario and Québec. A number...

  • Page 10
    ...See "TELUS' national growth strategy". In addition, a partnership with the Calgary Health Region was established to deliver human resources and end-to-end solutions to healthcare and other organizations. A new call centre business was established in Montréal to in-source Internet help desk services...

  • Page 11
    ... of long distance savings plans, billing options, and call options. The largest component of wireline long distance services is message toll services, which are transmitted through fibre optic cables, microwave radio systems, cable carrier systems and satellite channels. National and international...

  • Page 12
    ... individual customers through software changes to network switches. These services include special number services such as toll free 1-800 and 1-900 and enhanced call routing. TELUS provides businesses with IT services such as IT outsourcing, application development and sustainment, and national IT...

  • Page 13
    ... access ("CDMA") digital technology. In late 2005, a new CDMA-based wireless high speed network (EVDO) was introduced in major centers across Canada offering customers wireless data transfers at speeds at least six times faster than previous TELUS wireless data services. TELUS offers wireless voice...

  • Page 14
    ...coverage in Canada, the U.S. and various other countries through analogue and digital roaming arrangements with other carriers by means of dual-mode or tri-mode, dual-band handsets. TELUS also owns and operates an ESMR digital wireless business communications service under the MikeTM trademark using...

  • Page 15
    ... analogue specialized mobile radio ("SMR") systems in most major urban centres in Canada. TELUS operates paging networks in Alberta, B.C., and eastern Québec. EMPLOYEE RELATIONS As at December 31, 2005, TELUS had a total of approximately 29,819 employees, of which 24,177 were regular full-time or...

  • Page 16
    ... the TWU's national bargaining unit with the applicable negotiated terms and conditions of employment included in the new collective agreement between TELUS and the TWU mentioned above. The unionized groups at TELUS' wireless segment are: • • Approximately 2,794 clerical and technical employees...

  • Page 17
    ... office space; (ii) work centres for field service and materials management personnel; and (iii) space for exchange, toll and mobile radio equipment. A small number of buildings are constructed on leasehold land and the majority of the relay stations for TELUS' public service radio-telephone network...

  • Page 18
    ... Long Term Relationship Agreement was terminated on December 14, 2004 on the completion of the Verizon Sale. Concurrently, the two Verizon executives who sat on the Board of Directors of TELUS resigned. Verizon software and related technology and services Concurrently with the Verizon Sale, Verizon...

  • Page 19
    ... Agreement) in Canada. Telecommunications Services do not include the provision of content for broadcasting, video, cable or Internet services, or the sale, publication or provision of directories. If Verizon proposes to transfer all or a substantial portion of the software and other technology...

  • Page 20
    ... will have a licence to use the then current software and other technology on a non-exclusive basis, allowing TELUS to properly manage the transition to new technology. TELUS has renewed the Verizon Agreement for 2005, and as at December 14, 2004, the term of the agreement was further extended to...

  • Page 21
    ...terminated on June 30, 2005. TELUS had negotiated wholesale agreements with Verizon and Level 3 including agreements to route traffic onto Verizon's and Level 3's U.S. and international network. Directory Business In 2001, TELUS sold its directory advertising services business to Verizon Information...

  • Page 22
    ...funds, and that administration fees and expenses were improperly deducted. TELUS has filed statements of defence to both the original and the amended statements of claims. As a term of settlement of the 2005 collective agreement between TELUS and the TWU, the TWU has agreed to not provide any direct...

  • Page 23
    ... including the Company. The claim alleges that each of the carriers is in breach of contract and has violated competition, trade practices and consumer protection legislation across Canada in connection with the collection of system access fees, and seeks to recover direct and punitive damages in an...

  • Page 24
    ... for certain matters, including network access and interconnection issues. The CRTC has also forborne from regulation of a number of wireline services, including interexchange voice services, wide area network services and retail Internet services. Wireline services are in general subject to a much...

  • Page 25
    ..., enhanced specialized mobile radio and digital personal communications services • Other wireless services, including paging • Sale of customer premises equipment Regulated services Residential wireline services in incumbent local exchange carrier regions Business wireline services in...

  • Page 26
    ... levels until the CRTC reviews payphone service policy issues. For specific details on price cap constraints, see Note 3 to the Annual Consolidated Financial statements, on page 72 of the Financial Review in TELUS' 2005 Annual Report. TELUS Québec became subject to price cap regulation in 2002...

  • Page 27
    ...is awaiting the CRTC's decision on this application. TELUS will also be applying to the CRTC to adjust its quality of service results to take into account a series of floods in southern Alberta during the month of June 2005 that resulted in severe damage to the Company's and customers' facilities as...

  • Page 28
    ... protection of customer privacy, and the provision of information to their customers and the CRTC regarding their billing and payment policies. Contribution and portable subsidies. The cost to local exchange carriers of providing the basic level of residential services in high cost serving areas (as...

  • Page 29
    ...- Risks and risk management - Section 10 Regulatory - Price cap regulation" in TELUS' 2005 Annual Report - Financial Review). The portable subsidy mechanism provides a portable subsidy for every residential local customer in high-cost serving areas served by an ILEC. The portable subsidy amounts for...

  • Page 30
    ...of a promotion and a new promotion involving the same wireline service. Decision 2005-25 strikes a reasonable balance between protecting the interests of competitors and permitting the ILECs to respond to competition. Voice over Internet Protocol ("VoIP"). On May 12, 2005, the CRTC issued Regulatory...

  • Page 31
    ... economic regulation of VoIP services. In addition, Bell Canada, Saskatchewan Telecommunications and TELUS have appealed Decision 2005-28 to the Federal Court to eliminate the application of the winback rule on VoIP services. Regulation of long distance services In 1992, the CRTC issued Decision 92...

  • Page 32
    ...and via roaming arrangements. TELUS currently operates a variety of other two-way radio services across the country in various spectrum bands. TELUS also operates the Autotel mobile telephone service in B.C. in the 150 MHz band and a number of microwave transmission links. Licence terms and renewals...

  • Page 33
    ... service. On December 20, 2005, the CRTC issued Decision 200572 directing Bell Mobility, Rogers Wireless Inc. and the wireless division of TELUS to implement wireless number portability in British Columbia, Alberta, Ontario and Quebec where LEC-to-LEC local number portability is currently in place...

  • Page 34
    ... years a number of new Internet based competitors have entered the market for local and long distance voice services in TELUS' ILEC and non-ILEC regions. These competitors utilize voice over Internet protocol ("VoIP") technology to offer customers phone service over existing Internet connections. In...

  • Page 35
    ... national, regional and local-paging companies for paging customers in Alberta, B.C., and eastern Québec. TELUS offers a number of wireless Internet offerings using the networks noted above as well as wireless LAN services such as WiFi (802.11) in so-called "hotspots" and other areas utilizing...

  • Page 36
    Competition is also intense in other areas as TELUS continues its growth into emerging markets such as Web hosting and application services and human resource (HR) process outsourcing. DIVIDENDS DECLARED The dividends per Common Share and Non-Voting Share declared with respect to each quarter by ...

  • Page 37
    ... of the Non-Voting Shares held into an equivalent number of Common Shares during the applicable conversion period. In certain circumstances (namely, the delivery of certificates, at specified times, by holders of 50 per cent or more of the issued and outstanding Common Shares to the effect that they...

  • Page 38
    ...be issued from time to time in one or more series, each series comprising the number of shares, and having attached thereto the designation, rights, privileges, restrictions and conditions which the board of directors of TELUS determines by resolution and subject to filing an amendment to the Notice...

  • Page 39
    ...7.7 Credit Ratings in TELUS' 2005 Annual Report -Financial Review is hereby incorporated by reference. Management's Discussion and Analysis is available at www.sedar.com. Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or suitability of...

  • Page 40
    ... the likely direction of a rating over the medium term. Where assigned, rating outlooks fall into the following four categories: Positive (POS), Negative (NEG), Stable (STA), and Developing (DEV -contingent upon an event). See also "Material Contracts" on page 46 of this annual information form for...

  • Page 41
    ...(5) Edmonton, Alberta Donald Woodley (3) (5) Orangeville, Ontario (1) (2) (3) (4) (5) Director since (1) Principal occupation 2004 President and Chief Executive Officer, ART Advanced Research Technologies (biomedical company) Counsel, Bryan & Company (law firm) Chair, TELUS Corporation President...

  • Page 42
    ... Executive Officer of Gulf Canada Resources after the sale of the company to Conoco Inc.; Charles Baillie was Chairman and Chief Executive Officer of the Toronto-Dominion Bank from 1998 until 2003; Micheline Bouchard was Corporate Vice-President and General Manager, Enterprise Services Organization...

  • Page 43
    ... Surrey, B.C. Eros Spadotto Toronto, Ontario John Watson Toronto, Ontario Janet S. Yale Ottawa, Ontario Executive Vice President, Human Resources Executive Vice President, Technology Strategy Executive Vice President and President, Consumer Solutions Executive Vice President, Corporate Affairs All...

  • Page 44
    ... the symbol "T.A". TELUS 6.75% unsecured subordinate redeemable convertible debentures traded on the Toronto Stock Exchange under "T.DB" until the Company redeemed them on June 16, 2005. Monthly share prices and volumes for 2005 are listed below: TSX - Common and Non-Voting Month Common High($) Low...

  • Page 45
    ... is set out below: Redemption Price Accrued and unpaid interest: Total Redemption Amount: INTERESTS OF EXPERTS Deloitte & Touche LLP has audited the Consolidated financial statements of the Company for the years ended December 31, 2005 and 2004, and that are included in the Company's Annual Report...

  • Page 46
    ... University. Mr. Ducros was President and CEO of DMR Consulting Group, Inc. (Canada), an information technology services company, which he co-founded in 1973. Mr. Ducros has also held various management positions at IBM Canada Limited and serves on the board of a number of other public companies...

  • Page 47
    ... the External Auditor are routed for review by the VP Risk Management and Chief Internal Auditor to validate that the requested service is a nonprohibited service and to verify that there is a compelling business reason for the request. If the request passes this review, it is then forwarded to the...

  • Page 48
    ... in the Company. See page 6 of this annual information form for further details. TRANSFER AGENTS AND REGISTRARS The Company's transfer agent and registrar is Computershare Trust Company of Canada. Computershare maintains the Company's registers at 600, 530 - 8th Avenue SW, Calgary, Alberta T2P 3S8...

  • Page 49
    ... reporting, the Company's internal controls and disclosure controls, the Company's legal and regulatory compliance, the Company's ethics policy and timeliness of filings with regulatory authorities, the independence and performance of the Company's external and internal auditors, the management...

  • Page 50
    ...; the interim and annual management's discussion and analysis of financial condition and results of operations ("MD&A") of the Company and those of its subsidiaries that are reporting issuers, as defined in accordance with applicable securities laws; earnings press releases and earnings guidance, if...

  • Page 51
    ... the external auditors; pre-approve all audit, audit-related and non-audit services to be provided to the Company or any of its subsidiaries, by the external auditors (and its affiliates), in accordance with applicable securities laws; annually review the qualifications, expertise and resources and...

  • Page 52
    ... such services at the Committee's first scheduled meeting following the pre-approval. 4.3 Internal Auditors The internal auditors will report functionally to the Committee and administratively to the Chief Financial Officer and the Committee will: a) b) c) review and approve management's appointment...

  • Page 53
    ... will consider such reports, on the results of the investigation of whistleblower, ethics and internal controls complaints. 4.5 Accounting and Financial Management The Committee will review: a) with management and the external auditors, the Company's major accounting policies, including the impact...

  • Page 54
    ...Board, the Company's health and safety policies and receive and review regular reports concerning the Company's health and safety programs, policies and results from the Chief Internal Auditor and the Chief Compliance Officer; review and recommend to the Board for approval environmental policies and...

  • Page 55
    ... directly with the Chief Financial Officer, internal and external auditors, Chief Compliance Officer and Chief General Counsel; delegate tasks to Committee members or subcommittees of the Committee; and access appropriate funding as determined by the Committee to carry out its duties. page...