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TELUS Corporation
annual information form
for the year ended December 31, 2006
March 16, 2007

Table of contents

  • Page 1
    TELUS Corporation annual information form for the year ended December 31, 2006 March 16, 2007

  • Page 2
    ... ...26 DIVIDENDS DECLARED ...28 CAPITAL STRUCTURE OF TELUS ...29 RATINGS ...31 DIRECTORS AND OFFICERS ...34 MARKET FOR SECURITIES ...37 INTERESTS OF EXPERTS ...38 AUDIT COMMITTEE ...38 MATERIAL CONTRACTS ...40 TRANSFER AGENTS AND REGISTRARS ...40 ADDITIONAL INFORMATION ...41 Appendix A: Terms of...

  • Page 3
    ... 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 office at Floor 8, 555 Robson, Vancouver, B.C. Subsidiaries of TELUS As...

  • Page 4
    ...restructure, 3817873 Canada Inc., a partner in TELE-MOBILE, was continued into Alberta as 1219723 Alberta ULC. TELUS owns 100 per cent of the voting shares in TCI directly, and 100 per cent of the partnership interests in TELEMOBILE and TCC indirectly. The following organization chart sets forth the...

  • Page 5
    ... Inc. (Federal) 99% 100% 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...

  • 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...

  • Page 7
    ... the following solutions: voice (local, long distance, call management and the sale, rental and maintenance of telephone equipment); Internet (highspeed or dial-up with security features); TELUS TV available in select neighbourhoods with Video on Demand and Pay Per View; data (IP networks, private...

  • Page 8
    ... fibre optic transmission system used by the various incumbent local exchange carriers ("ILECs") across Canada. As part of the national strategy, TELUS also built its own national inter-city fibre optic backbone network that interconnects the network in Alberta and B.C. with major centres in Ontario...

  • Page 9
    ... mobile radio ("SMR") systems in most major urban centres in Canada and paging networks in Alberta, B.C., and eastern Québec. iDEN network TELUS also owns and operates Canada's only national enhanced specialized mobile radio ("ESMR") network. ESMR digital wireless business communications services...

  • Page 10
    ...and business customers a range 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...

  • Page 11
    ..., co-location including shared Web and e-mail hosting services, media streaming, data storage and security services. In addition, TELUS offers managed applications services and software such as online backup Web conferencing, expense management, customer relationship management and sales force...

  • Page 12
    ...the delivery of some of the district's human resources services. TSS also signed a 15-year agreement with Hamilton Health Sciences to deliver the process and information technology components of its human resources services. A number of large national contracts for managed data solutions were signed...

  • Page 13
    ..., TELUS fully or partially contracted out a number of non-core functions including property management, custodial services, building maintenance, mail services, fleet maintenance, and pay phone coin counting. In addition, management rationalized a number of offices into larger centres and completed...

  • Page 14
    ...TWU") located predominantly in B.C., Alberta, Ontario and Québec . The agreement expires on November 19, 2010. TELUS - wireline business segment The TWU represents approximately 9,973 unionized employees in TELUS' wireline operations across Canada. These employees are covered by the new collective...

  • Page 15
    ...the Company's communications plant and equipment are located on land owned or leased, or on rights-of-way obtained, by TELUS. The properties of TELUS include: (i) office space; (ii) work centres for field service and materials management personnel; and (iii) space for exchange, toll and mobile radio...

  • Page 16
    ... a subsidiary, on certain conditions set out in that agreement. Under that agreement, Verizon paid to TELUS U.S. $125 million. The 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...

  • Page 17
    ... in the Verizon 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...

  • Page 18
    ... annual payments in the aggregate of U.S. $82 million for the years 2005 to 2008 were reduced to an aggregate nominal amount of only four U.S. dollars for that time period. Directory Business In 2001, TELUS sold its directory advertising services business to Verizon Information Services - Canada Inc...

  • Page 19
    ... of the 2005 collective agreement between TELUS and the TWU, was a letter of agreement under which the Company has agreed to establish a pay equity fund of $10,000,000 to be paid out to persons covered by the complaint subject to the TWU's withdrawal of the complaint and the CHRC's acceptance...

  • Page 20
    ... a number of past and present wireless service providers 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...

  • Page 21
    ... • Interexchange private line services(1) • Certain data services • Cellular, enhanced specialized mobile radio and digital personal communications services • Other wireless services, including paging • Sale of customer premises equipment (1) Forborne on routes where one or more...

  • Page 22
    ...be passed on to residential customers in non high-cost serving areas through reduced rates. As a result, no new funds will be added to these deferral accounts. On September 1, 2006, TCC filed its proposal for broadband expansion and service enhancement for the disabled with the CRTC. On September 22...

  • Page 23
    ... first quarter of 2006. The CRTC issued a decision for the June 2005 Alberta flooding which resulted in a partial rebate for competitor services. TELUS is awaiting decisions from the CRTC on the remaining applications. Local Forbearance The CRTC and federal government announced many changes to local...

  • Page 24
    ... on its review of Canada's telecommunications policy and regulatory framework, initiated by the federal government in 2005. The panel recommended, first, an end to the presumption that telecommunications services must be regulated and, second, a shift to reliance on market forces. TELUS endorses...

  • Page 25
    ... services in high cost serving areas (as required by the CRTC) is higher than the amounts the CRTC allows the local exchange carriers to charge for the level of service. Accordingly, the CRTC collects contribution payments from all Canadian telecommunication service providers (including voice, data...

  • Page 26
    ...spectrum in Alberta, B.C. and eastern Québec. In addition, TELUS holds various radio spectrum licences for fixed services in the 2.3/3.5 GHz band throughout Canada, paging services, analogue two-way radio services, and legacy mobile-telephone and other miscellaneous wireless services. Licence terms...

  • Page 27
    ... the geographies. Generally TELUS has higher market share in areas where it is the ILEC however that has been changing over time. Within TELUS' ILEC territories a number of competitors offer voice and data service through a combination of their own facilities and unbundled network elements provided...

  • Page 28
    ... customers. TELUS is an ISP in Alberta, B.C., and in parts of Ontario and Québec. In the residential sector and, to a lesser extent, the business sector, cable-TV companies are also providing high-speed Internet access and represent significant competition to the ILECs. Shaw Communications is TELUS...

  • Page 29
    ... 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 unlicenced spectrum...

  • Page 30
    ... par value. The Common Shares and Non-Voting Shares are listed for trading on the Toronto Stock Exchange and the Non-Voting Shares are listed for trading on the New York Stock Exchange. See "Market for Securities". TELUS Common Shares and TELUS Non-Voting Shares Subject to the prior rights of the...

  • Page 31
    ... respect to priority in payment of dividends and in the distribution of assets in the event of liquidation, dissolution or winding up of TELUS. Second Preferred shares The Second Preferred shares may be issued from time to time in one or more series, each series comprising the number of shares, and...

  • Page 32
    ...' planned $800 million Commercial Paper program. On February 26, 2007 Moody's Investor Service ("Moody's") upgraded the rating for TELUS' senior unsecured to Baa1 from Baa2 with a stable outlook. On March 5, 2007, DBRS Limited ("DBRS") upgraded the rating of TELUS Notes to A (low) from BBB (high...

  • Page 33
    ... reduce the strength of the entity and its rated securities. The ratings from "AA" to "C" are denoted by the subcategories "high" and "low". The absence of either a "high" or "low" designation indicates the rating is in the "middle" of the category. DBRS' short-term debt rating scale is meant 32

  • Page 34
    ...an opinion regarding 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 40 of this annual...

  • Page 35
    .... (investment and administration firm) President and Chief Executive Officer, TELUS Corporation Senior Vice President, Raymond James Financial Ltd. (investment firm) Chairman, Advisory Board, Tricap Restructuring Fund (investment fund) Chairman, Petro Canada (oil and gas company) Chairman, Stantec...

  • Page 36
    ... Natale Toronto, Ontario Karen Radford Westmount, Québec Position held with TELUS Chair, TELUS Corporation President and Chief Executive Officer, TELUS Corporation Senior Vice President and Treasurer Executive Vice President, TELUS Network Operations Vice President, Legal Services, General Counsel...

  • Page 37
    ...A. Salvadori Vancouver, B.C. Judy A. Shuttleworth Surrey, B.C. Eros Spadotto Toronto, Ontario John Watson Toronto, Ontario Janet S. Yale Ottawa, Ontario Executive Vice President, Business Transformation and Chief Information Officer Executive Vice President, Human Resources Executive Vice President...

  • Page 38
    ... policy. MARKET FOR SECURITIES TELUS Common Shares and Non-Voting Shares are listed on the Toronto Stock Exchange ("TSX") under "T" and "T.A" respectively and the TELUS Non-Voting Shares are listed on the New York Stock Exchange under "TU". Monthly share prices and volumes for 2006 are listed...

  • Page 39
    ... of the Company's accounting and financial reporting, internal controls and disclosure controls, legal and regulatory compliance, ethics policy and timeliness of filings with regulatory authorities, the independence and performance of the Company's external and internal auditors, the management of...

  • Page 40
    ... be pre-approved by the Audit Committee of TELUS' Board of Directors. To enable this, TELUS has implemented a process by which all requests for services involving the External Auditor are routed for review by the VP Risk Management and Chief Internal Auditor to validate that the requested service is...

  • Page 41
    ... other than reduced pricing and an extension of the term of May 2012. 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. 40

  • Page 42
    ...' and officers' remuneration, indebtedness and options to purchase securities, is contained in the TELUS information circular dated March 9, 2007 for the annual general meeting to be held on May 2, 2007. Additional financial information, including supplementary quarterly financial data and the...

  • Page 43
    ... 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 of the Company's risks, the Company's credit worthiness, treasury plans and financial policy and the...

  • Page 44
    ... are reporting issuers, as defined in accordance with applicable securities laws; earnings press releases and earnings guidance, if any; Management's Statement on Financial Reporting; and all other material financial public disclosure documents of the Company and those of its subsidiaries that are...

  • Page 45
    ... conducted by 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...

  • Page 46
    ... 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 47
    ... 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 of alternative accounting policies and key management estimates and...

  • Page 48
    ...credit worthiness of the Company; the liquidity of the Company; and important treasury matters including financing plans. Legal/Regulatory Matters and Ethics The Committee will review: a) with management, the external auditors and legal counsel, any litigation, claim or other contingency, including...

  • Page 49
    ... for independent counsel and other advisors; communicate 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...