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TELUS Corporation
Annual Information Form
for the year ended December 31, 2007
March 14, 2008

Table of contents

  • Page 1
    TELUS Corporation Annual Information Form for the year ended December 31, 2007 March 14, 2008

  • Page 2
    ... FORWARD-LOOKING STATEMENTS ...3 TELUS ...4 OPERATIONS, ORGANIZATION AND CORPORATE DEVELOPMENTS ...6 DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENTS ...7 EMPLOYEE RELATIONS...16 CAPITAL ASSETS AND GOODWILL ...17 RISK FACTORS ...18 ALLIANCES ...19 LEGAL PROCEEDINGS AND REGULATORY ACTIONS...

  • Page 3
    ... system integrations); health, safety and environmental developments; litigation and legal matters; business continuity events (including manmade and natural threats); any prospective acquisitions or divestitures; and other risk factors discussed herein and listed from time to time in TELUS' reports...

  • Page 4
    ... businesses into TELUS Communications Company ("TCC"). TCC is a partnership organized under the laws of B.C. whose partners are TCI and TELE-MOBILE. Immediately prior to the 2006 legal entity restructure, 3817873 Canada Inc., a partner in TELE-MOBILE, was continued into Alberta as 1219723 Alberta...

  • 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
    ... 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, Business...

  • Page 7
    ...been de-listed from the Toronto Stock Exchange and Emergis is no longer a reporting issuer. Emergis develops and manages solutions that automate transactions and the secure exchange of information. Emergis has expertise in electronic health-related claims processing, health records systems, pharmacy...

  • Page 8
    ... long distance, call management and the sale, rental and maintenance of telephone equipment); Internet (highspeed or dial-up with security features); TELUS TV fully digital entertainment service available in select neighbourhoods with Video on Demand and Pay Per View; data (IP networks, private line...

  • Page 9
    ... 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 10
    ... 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 are offered under the Mike trademark using iDEN...

  • 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
    ... special number services such as toll free 1800 and 1-900 and enhanced call routing. Through growth, investment and strategic acquisitions in prior years, TELUS also became a leading managed data-hosting provider in Canada with a national network of intelligent Internet data centres. TELUS provides...

  • Page 13
    ... resources, and should position TELUS to lead the development of solutions in electronic health claims, electronic health records, pharmacy management systems, consulting, security and financial business process outsourcing in Canada. A number of large national contracts for managed data solutions...

  • Page 14
    ...Canada, and an agreement with a large manufacturer to provide and manage Internetbased voice and data services. In 2006, in addition to several other multi-million dollar contracts, TELUS secured a five-year $140 million contract with the Government of Ontario to provide fully managed network access...

  • Page 15
    ... voice, data and Internet services, including Push To Talk (PTT) services with Mike, Canada's only iDEN network, and a nationwide digital PCS (CDMA) network, including 1X and high-speed (EVDO and EVDO Rev A) data capabilities TELUS is a leading wireless communications service provider in Canada...

  • Page 16
    ...benefits. Notably, TELUS launched the BlackBerry 8830 World Edition which works on both CDMA and GSM (global system for mobile communications) networks keeping international travelers connected to e-mail and voice services. In 2006, TELUS signed an agreement with AMP'D Mobile, a specialized provider...

  • Page 17
    ... employs approximately 115 unionized employees in the payroll and human resources services business, is signatory to three separate collective agreements in the provinces of Alberta and BC. Wireless segment TELUS' wireless operations employed approximately 3,800 unionized employees in two separate...

  • Page 18
    ... 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 19
    ... are licenced to TELUS, and the two companies will use each other's cross-border services where capabilities and customer requirements permit. The Verizon Agreement also contained certain joint marketing and non-competition provisions, which do not apply to Verizon Wireless or TELUS Mobility. As at...

  • Page 20
    ... of the TELUS Corporation Pension Plan ("TCPP"), and in the other action, the two plaintiffs allege to be suing on behalf of all current or future beneficiaries of the TELUS Edmonton Pension Plan ("TEPP"). The statement of claim in the TCPP-related action named TELUS, certain of its affiliates and...

  • Page 21
    ... 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 22
    ... been incorporated into TELUS' Articles permitting the directors to make determinations to effect any of the foregoing actions. REGULATION General The provision of telecommunications services and broadcasting services in Canada is regulated by the Canadian Radio-television and Telecommunications...

  • Page 23
    ... companies. Since the Order in Council was issued, TELUS has obtained forbearance for local residential service in 63 exchanges in B.C., Alberta and Québec (about three quarters of residential lines in non-high-cost serving areas). TELUS has also obtained forbearance for local business service...

  • Page 24
    ...moved residential optional local services and service bundles containing residential local exchange service to the Uncapped Services basket (no upward pricing constraints). The CRTC capped residential service rates in urban areas at existing levels and limited annual rate increases in rural areas to...

  • Page 25
    ... that any funds remaining in TELUS' deferral account, other than those required to implement the broadband expansion and accessibility initiative, should be rebated to the Company's residential local customers in non-high cost serving areas. On February 11, 2008, Bell Canada applied to the Federal...

  • Page 26
    ... TELUS' 2007 Annual Report - Financial Review). Wireless Number Portability. Wireless number portability ("WNP") enables consumers to retain their telephone number when switching between service providers or between wireline and wireless service. In Decision 2005-72, the CRTC directed Bell Mobility...

  • Page 27
    ... in migration of network access lines to wireless services, increased wireless subscriber churn and/or additional customer retention costs for the Company, as well as present opportunities to TELUS to market more effectively in the business/enterprise market in Central Canada where TELUS has a lower...

  • Page 28
    ...MHz of cellular 800 MHz 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...

  • Page 29
    ... planning to realign the band so that Public Safety systems would be relocated to the bottom of the 800 MHz band and Sprint Nextel's ESMR system would operate in the upper part of the band. In Canada, the TELUS Mike (ESMR) network also uses this same frequency spectrum. Because of the way licensing...

  • Page 30
    ... pay television services: The CRTC has undertaken to re-examine the policy framework in which the broadcast distribution and discretionary television services operate. This proceeding will affect the three regional distribution licences held by TELUS, as well as the national video-on-demand service...

  • Page 31
    ... in order to provide both discounted and more extensive service offerings to 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...

  • Page 32
    ... going forward. Wireless segment TELUS offers wireless voice and data services to consumers and businesses nationally on both the ESMR (branded Mike) and the PCS/cellular networks and competes in both the prepaid and postpaid markets. The primary competitors with TELUS are Bell Mobility and...

  • Page 33
    ... Web hosting and application services and human resource process outsourcing. TELUS took a significant step forward in the advancement of its growth strategy in 2007 with the decision to acquire Emergis, a transaction completed on January 17, 2008. (See "Corporate Developments".) Emergis specializes...

  • Page 34
    ... election to convert such shares into an equivalent number of Common Shares. TELUS will provide notice to each holder of Common Shares before a general meeting of members at which holders of Non-Voting Shares will be entitled to vote as a class. In such event, holders of Common Shares will have the...

  • Page 35
    ... Shares with respect to priority in payment of dividends and in the distribution of assets in the event of liquidation, dissolution or winding up of TELUS. TELUS Rights Plan TELUS adopted a shareholder rights plan (the "Rights Plan") in March 2000 and issued one right (a "Series A Right") in respect...

  • Page 36
    ..." requirements of the Rights Plan) to purchase from TELUS $320 worth of Non-Voting Shares for $160 (i.e. at a 50 per cent discount). RATINGS Ratings information contained in Management's Discussion and Analysis -- Section 7.7 Credit Ratings in TELUS' 2007 Annual Report - Financial Review is hereby...

  • Page 37
    ... of the entity and its rated securities. The ratings from "AA" to "CCC" 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 to give an indication...

  • Page 38
    ...'s also provides a rating outlook which is 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. Ratings Under...

  • Page 39
    ..., Petro Canada (oil and gas company) Chairman, Stantec Inc. (engineering company) President, The Fifth Line Enterprise (strategic advisory services company) TELUS or its predecessors Member of Audit Committee Member of Human Resources and Compensation Committee Member of Corporate Governance...

  • Page 40
    ... Eros Spadotto Toronto, Ontario John Watson Toronto, Ontario Janet S. Yale Ottawa, Ontario Position held with TELUS Executive Vice President, Human Resources Chair, TELUS Corporation President and Chief Executive Officer, TELUS Corporation Executive Vice President, TELUS Network Operations Executive...

  • Page 41
    ... an order issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and resulted from an event that occurred while that person was acting in that capacity, or any order which denied such company access to any exemption under securities...

  • Page 42
    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 2007 are listed below: TSX - ...

  • Page 43
    ... 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. Ruston E.T. Goepel...

  • Page 44
    ... its affiliates to TELUS are required to 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...

  • Page 45
    ... officers' remuneration, indebtedness and options to purchase securities, is contained in the TELUS information circular dated March 10, 2008 for the annual and special general meeting to be held on May 8, 2008. Additional financial information, including supplementary quarterly financial data and...

  • Page 46
    ... 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 47
    ...of its subsidiaries that 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...

  • Page 48
    ... 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 the...

  • Page 49
    ... Financial Officer and the Committee will: a) b) c) review and approve management's appointment, termination or replacement of the Chief Internal Auditor; oversee the work of the internal auditors including reviewing and approving the annual internal audit plan and updates thereto; review the report...

  • Page 50
    ... reports, on any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls. Where the CEO, CFO and/or the Chief Internal Auditor are named in a complaint, the Director of Ethics and Internal Controls will speak directly...

  • Page 51
    ..., the ethics policy, management's approach to business ethics and corporate conduct and the program used by management to monitor compliance with the policy. b) c) 4.8 Risk Management The Committee will: a) b) c) d) e) consider reports on the annual enterprise business risk assessment and updates...

  • Page 52
    ...compensation 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...