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TELUS Corporation
Annual Information Form
for the year ended December 31, 2008
March 13, 2009

Table of contents

  • Page 1
    TELUS Corporation Annual Information Form for the year ended December 31, 2008 March 13, 2009

  • Page 2
    ... REGARDING FORWARD-LOOKING STATEMENTS ...3 CORPORATE STRUCTURE ...4 EXCHANGE RATE INFORMATION ...5 GENERAL DEVELOPMENT OF THE BUSINESS ...6 DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENTS ...6 EMPLOYEE RELATIONS...17 CAPITAL ASSETS AND GOODWILL ...18 RISK FACTORS ...19 ALLIANCES ...19 LEGAL...

  • Page 3
    ... 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 or listed from time to time in TELUS' reports and public disclosure...

  • Page 4
    ...31, 2008. TELUS' wireline and wireless businesses were formerly located in TCI and TELEMOBILE Company (TELE-MOBILE), respectively. In 2005, TELUS announced the merger of those segments into a single operating structure (the wireline-wireless merger). This was partly effected by way of a legal entity...

  • Page 5
    ...% Emergis Inc. (Federal) 1219723 Alberta ULC (Alberta) 10% TELE-MOBILE COMPANY / SOCIETE TELE-MOBILE (Ontario) < 1% TELUS Communications Company / Société TELUS Communications (British Columbia) In this Annual Information Form, references to TELUS or the Company are to TELUS Corporation and...

  • Page 6
    ..., 2008...1.2246 GENERAL DEVELOPMENT OF THE BUSINESS TELUS is a leading national telecommunications company in Canada, offering a wide range of wireline and wireless communications products and services including data, voice and entertainment. In 2008, TELUS generated $9.65 billion in annual revenue...

  • Page 7
    ... and wireless. In the wireline segment, TELUS offers the following solutions: voice - phone service with long distance and call management services such as voice mail, call display and call waiting, and the sale, rental and maintenance of telephone equipment; Internet - secure high-speed or dial-up...

  • Page 8
    ... Mike (Direct Connect®) and PCS (Instant Talk®); Internet and data services including TELUS Mobile TV®, TELUS Mobile Radio®, TELUS Mobile Music®, web browsing, Windows Live Messenger, social networking, text and picture messaging, and downloadable games, videos, ringtones and images; and data...

  • Page 9
    ... with Bell Canada and certain of its affiliates. These agreements expanded TELUS' digital PCS coverage areas outside of major urban markets in Ontario, Québec and Atlantic Canada and were subsequently amended to include 1X and the EVDO high-speed network. At the end of 2008, TELUS' national...

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

  • Page 11
    ... residential 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, cable carrier systems and satellite channels. National...

  • Page 12
    ... as toll free 1-800 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 businesses with IT services...

  • Page 13
    ..." in TELUS' 2008 Annual Report - Financial Review.) The Company continued its transformational billing initiative to re-engineer processes in the wireline segment for order entry, pre-qualification, service fulfillment and assurance, customer care, billing, collections/credit, customer contract and...

  • Page 14
    ..., mobile applications and converged wireless and wireline solutions. In 2008, TELUS expanded its international holding by purchasing the remaining interests in TELUS International Philippines, in which TELUS first acquired a controlling interest in 2005. This international call centre capability...

  • Page 15
    ... business subscribers, and extensive coverage to 32.6 million people or 98 per cent of Canada's population, when Roaming/Resale Agreements are considered. TELUS provides integrated digital wireless voice, data and Internet services on a digital PCS (CDMA) network, including 1X and high-speed (EVDO...

  • Page 16
    ... TELUS' 2008 Annual Report - Financial Review.) A key development was the March 2008 launch of TELUS' wireless postpaid Koodo Mobile® brand and service to better address segments of the wireless market and complement the fully featured TELUS brand service. The expected benefits of this basic brand...

  • Page 17
    ... Workers Union (TWU) located predominantly in B.C., Alberta, Ontario and Québec. Wireline segment The TWU represents approximately 8,960 unionized employees in TELUS' wireline operations across Canada. These employees are covered by the TWU Collective Agreement. Approximately 1,060 office...

  • Page 18
    ... are located on land owned or leased, or on rights-of-way obtained, by TELUS. The real properties of TELUS include: (i) office space and related parking facilities; (ii) work centres for field service and materials management personnel; and (iii) space for exchange, toll and mobile radio equipment...

  • Page 19
    .... The 2008 Annual Report and Management's Discussion and Analysis are available at sedar.com. ALLIANCES Verizon software and related technology and services Concurrently with the 2004 sale by Verizon Inc. of its equity interest in TELUS (the Verizon Sale), Verizon and TELUS adjusted their business...

  • Page 20
    ... either members or business agents of the TWU, and suing allegedly on behalf of all current or future beneficiaries of the TELUS Corporation Pension Plan and the TELUS Edmonton Pension Plan, respectively. The TELUS Corporation Pension Plan related action named the Company, certain of its affiliates...

  • Page 21
    ...has not been informed of any change in this regard. Certified class action A class action was brought in 2004 under class action legislation in Saskatchewan against a number of past and present wireless service providers including the Company. The claim alleges that each of the carrier defendants is...

  • Page 22
    ... a user of technology, TELUS and its affiliates receive from time to time communications, ranging from solicitations to demands and legal actions, from third parties claiming ownership rights over intellectual property used by TELUS and its affiliates and asking them to pay a settlement or licensing...

  • Page 23
    ... 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 24
    ...incumbent telephone companies to set up an ombudsman service to resolve complaints between consumer and small business customers and providers of forborne retail telecommunications services, including local and long distance telephone service, Internet access service, and wireless service. TELUS and...

  • Page 25
    .... TELUS is subject to price cap regulation as an ILEC in Alberta, B.C. and eastern Québec. On April 30, 2007, the CRTC issued Decision 2007-27 and established an open-ended price cap regime. The CRTC removed the productivity adjustment from the Residential Services in non-high-cost serving areas...

  • Page 26
    ... groups, Bell Canada and the Company are currently scheduled to be heard by the Supreme Court of Canada in March 2009. The Company anticipates a decision on this matter in the latter half of 2009. There is no guarantee that the ILECs will be able to proceed with their proposals for the use of...

  • Page 27
    ... 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 and wireless...

  • Page 28
    ... in TELUS' 2008 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 29
    ...- 10.3 Regulatory" in TELUS' 2008 Annual Report - Financial Review). Spectrum auction. On February 16, 2007, Industry Canada released a discussion paper for the then-upcoming auction for AWS spectrum in various spectrum bands. On November 28, 2007, the Minister released a policy framework on how the...

  • Page 30
    ... commercial off-air radio and television broadcasting, the operation of other programming services such as specialty and pay television, as well as the distribution of television services through cable or satellite undertakings. The Broadcasting Act and its regulations give the CRTC the authority...

  • Page 31
    ... of Canada. In mid-2007 the CRTC forbore from price regulating the provision of residential local telephone service in Fort McMurray, Alberta. Since that time, the CRTC has forborne from regulating approximately 80 per cent of TELUS' residential customer market and 70 per cent of its business market...

  • Page 32
    ... extensive service offerings to customers. In addition to providing telephony services, TELUS is an ISP in Alberta, B.C., and in parts of Ontario and Québec. In the residential sector and, to some extent, the business sector, cable-TV companies are also providing high-speed Internet services and...

  • Page 33
    ... for price-sensitive clients, Bell and Rogers are promoting their respective basic brand offerings through strategies such as per second billing and extended hours on free nights and weekend calling. In March 2008, TELUS successfully launched its basic postpaid Koodo Mobile brand and service to...

  • Page 34
    ...home broadcast satellite companies, such as Bell TV and Star Choice. Competition is also intense in other emerging markets such as multimedia conferencing, Web hosting, information security services, contact centre setup, application management, and human resource business process outsourcing. TELUS...

  • Page 35
    ... without par value. The Common Shares and Non-Voting Shares are listed for trading on the Toronto Stock Exchange and the NonVoting 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...

  • Page 36
    ... do not make such an 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...

  • Page 37
    ..." in TELUS' 2008 Annual Report - Financial Review is hereby incorporated by reference. TELUS' 2008 Annual Report and Management's Discussion and Analysis are available at sedar.com. Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or...

  • Page 38
    ...to ratings "AA" to "CCC" to denote relative status within major rating categories. Outlook outlooks are 'stable' could be upgraded or downgraded before an outlook moves to positive or negative if circumstances warrant such an action. DBRS Long-term debt rated "A" is of satisfactory credit quality...

  • Page 39
    .... Rating outlooks assess the potential direction of a long term credit rating over the intermediate term (typically six months to two years). An outlook is not necessarily a precursor to a rating change or CreditWatch placement. Outlooks may be positive, negative, stable, or developing and they...

  • Page 40
    ...at TELUS' annual and special meeting on May 8, 2008 for a one year term. Directors of TELUS (Name and municipality of residence) R.H. (Dick) Auchinleck (4 - Chair) (5) Calgary, Alberta A. Charles Baillie (3 - Chair) (5) Toronto, Ontario Director since (1) 2003 Principal occupation Presiding Director...

  • Page 41
    ... Vancouver, B.C. Eros Spadotto Toronto, Ontario John Watson Toronto, Ontario Position held with TELUS Executive Vice President, Human Resources Chair President and Chief Executive Officer Executive Vice President and Chief Financial Officer Executive Vice President and President, Business Solutions...

  • Page 42
    ... order on August 3, 2006 after the SEC concluded that it did not object to Cognos' revenue recognition policy. Mr. Ducros ceased to be a director of Cognos in February 2008 after its takeover by IBM. MARKET FOR SECURITIES TELUS' Common Shares and Non-Voting Shares are listed on the Toronto Stock...

  • Page 43
    ...39.50 NYSE - Non-Voting Shares Month January February March April May June July August September October November December High ($U.S.) 48.87 47.44 ... & Touche LLP, Chartered Accountants, are the auditors of the Company and are independent within the meaning of the Rules of Professional Conduct...

  • Page 44
    ...was President and Chief Executive Officer 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...

  • Page 45
    ...and a director of Stantec Inc., an engineering and international professional services company where he served in various executive management positions for more than 25 years. He is the Chairman of the Alberta Ingenuity Fund and the past Chairman of ATB Financial. Audit, audit-related and non-audit...

  • Page 46
    ... securities, is contained in the TELUS information circular dated March 13, 2009 for the annual general meeting to be held on May 7, 2009. Additional financial information, including supplementary quarterly financial data and the audited consolidated financial statements of TELUS for the year ended...

  • Page 47
    ...of the Committee will be Independent Directors. All members of the Committee will be financially literate, as defined in accordance with applicable securities laws and standards of the stock exchanges on which the Company's securities are listed. At least one member of the Committee will be an audit...

  • Page 48
    ... applicable securities laws; 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...

  • Page 49
    ... 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 50
    ...preapproval of 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...

  • Page 51
    ... will review such 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...

  • Page 52
    ...will: a) b) c) d) e) consider reports on the annual enterprise business risk assessment and updates thereto; consider reports on the business continuity disaster recovery plan(s) for the Company; consider reports on the insurance coverage of the Company; consider reports on financial risk management...

  • Page 53
    ... have the authority to: a) b) c) d) engage and set 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...