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TELUS Corporation
Annual Information Form
for the year ended December 31, 2013
March 14, 2014

Table of contents

  • Page 1
    TELUS Corporation Annual Information Form for the year ended December 31, 2013 March 14, 2014

  • Page 2
    ... OF THE BUSINESS AND GENERAL DEVELOPMENTS ...7 EMPLOYEE RELATIONS ...17 RISK FACTORS ...18 FOREIGN OWNERSHIP RESTRICTIONS ...18 REGULATION ...19 COMPETITION ...22 DIVIDENDS DECLARED ...22 CAPITAL STRUCTURE OF TELUS ...23 RATINGS ...25 MARKET FOR SECURITIES ...28 DIRECTORS AND OFFICERS ...30 LEGAL...

  • Page 3
    ...TV and high-speed Internet services; pressures on wireless average revenue per subscriber unit per month (ARPU) from promotional activity from competitors and market conditions, flat-rate pricing trends for voice and data, inclusive long distance plans for voice, and increasing availability of Wi-Fi...

  • Page 4
    ... in the 700 MHz band in a cost efficient manner; deployment and operation of new wireless networks and success of new products, new services and supporting systems; network reliability and change management (including migration risks to new, more efficient Internet data centres (IDCs) and realizing...

  • Page 5
    ... and ability to implement and support new products and services and business operations; our ability to implement effective change management for system replacements and upgrades, process redesigns and business integrations; implementation of large enterprise deals that may be adversely impacted...

  • Page 6
    ...Burnaby, British Columbia (B.C.) and its executive office at Floor 8, 555 Robson Street, Vancouver, B.C. Intercorporate relationships and TELUS subsidiaries TELUS' wireless and wireline businesses are primarily operated through TELUS Communications Company (TCC). TCC is a partnership organized under...

  • Page 7
    ... Who we are TELUS is one of Canada's largest telecommunications companies, providing a wide range of telecommunications services and products, including wireless and wireline voice and data. Data services include: internet protocol (IP); TV; hosting, managed information technology and cloud-based...

  • Page 8
    ... products and services. Our strategy Our strategic intent is to unleash the power of the Internet to deliver the best solutions to Canadians at home, in the workplace and on the move. Our growth strategy is to focus on our core telecommunications business in Canada supported by our international...

  • Page 9
    ... Section 2.2 Strategic imperatives. To advance our long-term strategic initiatives and address near-term opportunities and challenges, we set new corporate priorities each year. See MD&A Section 3: Key performance drivers for our 2013 corporate priorities and progress, as well as our 2014 corporate...

  • Page 10
    ... and Dollars for Doers and fundraising grants. Details about our community investment program can be found in our 2013 Annual Report available at telus.com/annualreport. Three-year history During the three-year period ending on December 31, 2013, we continued to advance our national growth strategy...

  • Page 11
    ...expansion and upgrades, including connecting more businesses, homes and multi-dwelling units directly to fibre optic cable, and expanding rural broadband connections. These investments increase Internet speeds and the capacity to support TV, Internet and data service growth, as well as extending the...

  • Page 12
    ... that include anytime device upgrades and changes to services, as well as 24/7 technical support and one bill. Business Anywhereâ„¢ is a solution for businesses with mobile employees who need to communicate outside the office. Business Selectâ„¢ is a solution for businesses that primarily operate in...

  • Page 13
    ... Wi-Fi. When our customers travel outside of our 4G LTE network coverage area, the service moves seamlessly onto our existing 4G HSPA+ network. In 2012, we also introduced a number of applications (apps), including: the free Optik Smart Remote app that Optik TV customers can download to their mobile...

  • Page 14
    ... digital box for Optik TV subscribers, which allows customers to move their TV within the home, or yard, without the need to plug it into a digital box. • • • Partnering, acquiring and divesting to accelerate the implementation of TELUS' strategy and focus TELUS' resources on core business...

  • Page 15
    ... position in healthcare information and to expand the reach of TELUS Health in the first line of care, providing EMR solutions to physicians across Canada, we completed the acquisition of PS Suite EMR, the EMR business operated by MD Practice Software LP, a member of the MD Physician Services Group...

  • Page 16
    ... anytime upgrades, removing cancellation fees in favour of a simple device balance (2010); notifications for data usage in Canada and while roaming abroad to increase awareness of costs (2010); easy and inexpensive device unlocking after 90 days (2011); clear, simple and plain language service terms...

  • Page 17
    ... agreements. The largest agreement is with the Telecommunications Workers Union (TWU), covering approximately 10,925 clerical, operator services and technical employees in the wireless and wireline segments across Canada. The current collective agreement with the TWU came into effect on June 9, 2011...

  • Page 18
    Our subsidiary, TELUS Sourcing Solutions Inc., is a signatory to a collective agreement with the B.C. Government and Services Employees' Union (BCGEU) which covers approximately 60 employees. That agreement came into effect on May 1, 2013 and expires on April 30, 2016. RISK FACTORS The risk factors ...

  • Page 19
    ... resulting from insufficient Canadian ownership of voting shares. Under the Ownership and Control Regulations, such companies may restrict the issue, transfer, ownership and voting of shares, if necessary, to ensure that they and their subsidiaries remain qualified under such legislation. For...

  • Page 20
    ... Act and the Radiocommunication Act to provide the CRTC and Industry Canada with the power to impose administrative monetary penalties on companies that violate established rules such as the Code and rules related to the deployment of spectrum, services to rural areas and tower sharing. 20

  • Page 21
    .... In addition, TELUS holds various radio spectrum licences in the 2.3 GHz, 3.5 GHz and 24/38 GHz bands throughout Canada, as well as other spectrum licences used for the provision of paging and other miscellaneous wireless services. On March 14, 2011, Industry Canada released its decision concerning...

  • Page 22
    ... our dividend growth program in May 2011. In May 2013, we announced plans to extend our dividend growth program for another three years through 2016. Subject to the Board of Directors' assessment and determination based on the Company's financial situation and outlook, TELUS plans to continue with...

  • Page 23
    .... The Common Shares are listed for trading on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). The replacement of our dual share class structure with a single class of issued and outstanding voting securities became effective February 4, 2013 pursuant to a plan of Arrangement...

  • Page 24
    ... share classes at the May 2010 annual and special meeting and reconfirmed at the May 2013 annual and special meeting. Under the current Rights Plan, TELUS issued one right (Right) in respect of each Common Share outstanding as at the Effective Date. The Rights Plan has a term of just over nine years...

  • Page 25
    ... our control, including conditions affecting the telecommunications industry generally, and the wider state of the economy. The Company's credit ratings are outlined in the chart below. Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or...

  • Page 26
    ...'s Investor Services FitchRatings TELUS Corporation Notes Commercial paper TELUS Communications Inc. Debentures A (low) R-1 (low) A (low) Baa1 - - BBB+ - BBB+ The following descriptions of the rating categories prepared by the respective rating agencies (obtained from their public websites...

  • Page 27
    ... last two years, each of the above-noted credit rating agencies charged TELUS for their rating services which include annual surveillance fees covering our outstanding long-term and short-term debt securities, in addition to onetime rating fees for certain agencies when debt is initially issued. We...

  • Page 28
    MARKET FOR SECURITIES Trading Price and Volume TELUS' Common Shares are listed on the TSX under the symbol "T" and the Non-Voting Shares were listed under the symbol "T.A" (until the TSX delisting on February 11, 2013). TELUS Non-Voting Shares were listed on the NYSE under the symbol "TU" (until the...

  • Page 29
    ... $995 The net proceeds used to fund the acquisition of 100% of Public Mobile Inc. (a Canadian mobile carrier), to repay outstanding commercial paper and the balance used for other general corporate purposes. Please refer to TELUS Corporation 2013 year-end audited consolidated financial statements...

  • Page 30
    ...and natural gas corporation) Advisor and Consultant Brian A. Canfield Point Roberts, Washington Raymond T. Chan (2), (3) Calgary, Alberta 1999(1) 2013 Stockwell Day (3), (5) Vancouver, B.C. Darren Entwistle Vancouver, B.C. 2011 2000 President and Chief Executive Officer, TELUS Corporation 30

  • Page 31
    ... fund) Corporate Director John S. Lacey (2), (4) Thornhill, Ontario 2000 William (Bill) MacKinnon (2 - Chair), (4) Toronto, Ontario John Manley (2), (4) Ottawa, Ontario 2009 2012 President & Chief Executive Officer, Canadian Council of Chief Executives Corporate Director Donald (Don) Woodley...

  • Page 32
    ... Executive Vice President, Human Resources & Chief Corporate Officer Executive Vice President and Vice Chair, TELUS Québec, TELUS Health and TELUS Ventures Executive Vice President and Chief Commercial Officer Executive Vice President, Technology Strategy and Operations Executive Vice President...

  • Page 33
    ... disclosed below, for the 10 years ended March 12, 2014, we are not aware that any current director or executive officer of TELUS had been a director, chief executive officer or chief financial officer of any issuer which was the subject of a cease trade or similar order while that person was acting...

  • Page 34
    ... accounting or related financial management expertise. The following lists the relevant education and experience of the members of TELUS' Audit Committee that is relevant to his role on the committee. Bill MacKinnon chairs the Audit Committee. He is the former Chief Executive Officer of KPMG Canada...

  • Page 35
    ... bringing about operational improvements and profitable change in the organizations that he has led. Mr. Lacey has completed the Program for Management Development at Harvard Business School. John Manley is President and Chief Executive Officer of the Canadian Council of Chief Executives, a position...

  • Page 36
    ... financial statements, that were not part of audit fees. (3) Tax fees relate to tax compliance, tax advice and tax planning. MATERIAL CONTRACTS As at December 31, 2013, TCI continues to be a party to a three-year agreement (expiry August 1, 2014) with an arm's-length securitization trust associated...

  • Page 37
    ..., and securities authorized for issuance under equity compensation plans, will be contained in TELUS' information circular for the annual meeting to be held on May 8, 2014. Additional financial information is provided in the Company's consolidated financial statements and MD&A for the year ended...

  • Page 38
    ... 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 identification and management...

  • Page 39
    ...; 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 40
    ... by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with such issues; and all relationships between the external auditors and the Company; annually assess and confirm the...

  • Page 41
    ...Officer and the Committee will: a) b) c) d) review and approve management's appointment, replacement of the Chief Internal Auditor; termination or review and consider the annual performance objectives, performance evaluation and compensation treatment of the Chief Internal Auditor; oversee the work...

  • Page 42
    ...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 with the Chair of the Committee...

  • Page 43
    ... Human Resources and Compensation Committee, the ethics policy and material changes thereto; quarterly reports on ethics breaches pertaining to internal controls over financial reporting, including fraud involving management or other employees who have a role in the Company's internal controls over...

  • Page 44
    ... 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 of the Committee; and access appropriate...