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TELUS Corporation
Annual Information Form
for the year ended December 31, 2015
March 10, 2016

Table of contents

  • Page 1
    TELUS Corporation Annual Information Form for the year ended December 31, 2015 March 10, 2016

  • Page 2
    ... CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENT ...20 EMPLOYEE RELATIONS ...21 RISK FACTORS ...21 CANADIAN OWNERSHIP REQUIREMENTS ...22 REGULATION ...24 DIVIDENDS DECLARED ...26 CAPITAL STRUCTURE OF TELUS ...26 RATINGS ...29 MARKET FOR SECURITIES ...32 DIRECTORS AND OFFICERS ...34 LEGAL PROCEEDINGS...

  • Page 3
    ... long distance plans for voice, moderating growth in postpaid market penetration and increasing availability of Wi-Fi networks for data; pressures on high-speed Internet and TV ARPU and churn resulting from market conditions, government actions and customer usage patterns; residential network access...

  • Page 4
    ...; increased subsidy requirements for telecommunications facilities in Yukon, Nunavut and the Northwest Territories, and possible changes to the scope and nature of basic service obligations, including higher minimum Internet access speeds; the CRTC's new code of conduct for TV services; vertical...

  • Page 5
    ... for an agreement with the Telecommunications Workers Union (TWU), United Steel Workers Local Union 1944, which expired at the end of 2015; and the level of employee engagement. Process risks including: our reliance on legacy systems and ability to implement and support new products and services and...

  • Page 6
    ...pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act among BCT, BC TELECOM Inc. (BC TELECOM) and the former Alberta-based TELUS Corporation (TC), BCT acquired all of the shares of BC TELECOM and TC in exchange for common shares and non-voting shares of BCT, and...

  • Page 7
    ... products, including wireless and wireline voice and data. Data services include: internet protocol (IP); television; hosting, managed information technology, security and cloud-based services; healthcare solutions; and business process outsourcing. In 2015, we generated $12.5 billion in revenue and...

  • Page 8
    .... 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 focus is on our core telecommunications business in Canada supported by our international contact centres and outsourcing capabilities...

  • Page 9
    ...strategic imperatives guides our actions and contributes to the achievement of our financial goals. See our discussion in Section 2.2 Strategic imperatives in the 2015 annual MD&A. To advance our long-term strategic initiatives and address near-term opportunities and challenges, we set new corporate...

  • Page 10
    ... Internet and enhanced data services, including increases in usage and adoption of higher-speed services, growth in business process outsourcing, the continued but moderating expansion of the TELUS TV subscriber base, growth in TELUS Health solutions and certain rate increases. Under an agreement...

  • Page 11
    ... online refills via the web or mobile devices. Health Benefits and Payment Solutions: The health benefits and payment solutions include health claims management solutions for public and private insurers that transport, process and adjudicate claims directly at the point-of-service. TELUS processed...

  • Page 12
    ... services, allows us to meet the growing storage demands of Canadian businesses that are being driven by mobile, social, Internet of Things (IoT) and big data applications, as well as their growing IT security concerns. Also in 2014, we launched the TELUS IoT Marketplace, an online space offering...

  • Page 13
    ... backup for office Internet access. Business Connect allows users to use a single number across their mobile phone, tablet, desk phone and computers through voice over IP (VoIP) technology. In June 2015, we announced a free public Wi-Fi service available to both TELUS and non-TELUS customers at more...

  • Page 14
    ... expansion and upgrades and network and systems resiliency and reliability in order to provide faster Internet speeds and greater capacity, connect more homes and businesses to high-speed Internet services, extend the reach of Optik TV and enhance our healthcare solutions. We continued our long-term...

  • Page 15
    ...more than doubled our national spectrum holdings in support of our top corporate priority of putting customers first. We have begun to operationalize this spectrum for the benefit of our customers. In June 2015, we announced a $1 billion investment in the city of Edmonton to connect more than 90% of...

  • Page 16
    ... offices in Canada and France. This strategic investment allows TELUS to offer suites of information and communication technology services to our business customers with a focus on managed infrastructure solutions. In March 2015, we partnered with Alcatel-Lucent as a first customer for Enterprise...

  • Page 17
    ...for new and renewing customers (2012); the introduction of Share Plus plans (2013) and Your Choice plans (2014); increased frequency of real-time data usage notifications (2015); increased data allotments in Your Choice plans (2015) and the launch of the US Easy Roam service for customers travelling...

  • Page 18
    ... serve in these capacities on a long-term basis. Annually, we conduct team member Pulsecheck engagement surveys, administered by Aon Hewitt, to gather confidential team member feedback about TELUS as a place to work and measure our progress in establishing a high performance culture. Following each...

  • Page 19
    ... on 2015 corporate priorities in the 2015 annual MD&A. For a discussion of changes in our business expected in 2016, see Section 9 General trends, outlook and assumptions in the 2015 annual MD&A. For a review of the events and conditions that influenced our general development during 2013 and 2014...

  • Page 20
    ... to business, focusing on the social, economic and environmental impact of the communication and health solutions we provide to Canadians. TELUS values are reflected in our commitment to: ï,· Comply with applicable environmental legal requirements and meet voluntary requirements that are endorsed by...

  • Page 21
    ... until a new agreement is reached. In the province of Quebec, in addition to employees covered by the TWU agreement, there are approximately 1,470 employees in the wireline segment covered by two separate collective agreements. The agreement with the Syndicat Québécois des employés de TELUS (SQET...

  • Page 22
    ...Act, but an additional requirement under the Broadcasting Act is that the chief executive officer of a company that is a licensed broadcasting undertaking must be a Canadian citizen or a permanent resident of Canada. TELUS Corporation has filed with the CRTC the requisite documentation affirming TCC...

  • Page 23
    ... reservation number from our transfer agent and registrar, Computershare Trust Company and to declare whether or not the purchaser is a Canadian or non-Canadian. For Common Shares trading on the New York Stock Exchange, non-Canadian ownership is monitored by utilizing the Depository Trust & Clearing...

  • Page 24
    ... services depend on the use of radio frequencies. The use of radio spectrum and radio apparatus is subject to licensing by the Minister of Innovation, Science and Economic Development pursuant to the Radiocommunication Act. The CRTC has jurisdiction over the rates, terms and conditions applicable...

  • Page 25
    ... matters in the 2015 annual MD&A for further details related to regulation generally and specifically in relation to AWS-4 spectrum licensing framework, policy changes in the 3500 MHz band and the 600 MHz spectrum repurposing decision. Broadcasting services TCC holds Class 1 Regional broadcasting...

  • Page 26
    ... future spectrum licence purchases, funding of defined benefit pension plans, increases in corporate income tax rates and actual results differing from expectations. Further, the dividend increase target is not necessarily indicative of dividends beyond 2016. The Board has set a long-term dividend...

  • Page 27
    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 shares became effective February 4, 2013, pursuant to a plan of arrangement under the provision of Division 5 of Part 9 ...

  • Page 28
    ... 2013 annual and special meeting, shareholders approved amendments to the Rights Plan to reflect the elimination of the Non-Voting Share class from TELUS' authorized share structure. Additionally, minor amendments were approved to reflect TELUS' use of the Direct Registration System Advice program...

  • Page 29
    ... in Canada. We expect to be able to continue to access short-term funding from other available sources, including the U.S. commercial paper market. On November 30, 2015, Moody's Investors Service Inc. (Moody's) affirmed the Company's senior unsecured ratings, but changed the outlook to negative...

  • Page 30
    ... Services FitchRatings TELUS Corporation Notes Commercial paper TELUS Communications Inc. Debentures BBB (high) R-2 (high) BBB (high) Baa1 P-2 - BBB+ - BBB+ The following descriptions of the rating categories prepared by the respective rating agencies (obtained from their public websites...

  • Page 31
    ...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 reasonably expect that such payments will...

  • Page 32
    MARKET FOR SECURITIES Trading Price and Volume TELUS' Common Shares are listed on the TSX under the symbol "T" and on the NYSE under the symbol "TU". Monthly share prices and volumes for 2015 are listed below: TSX - Common Shares Month January February March April May June July August September ...

  • Page 33
    Prior Sales On March 24, 2015, under a short form base shelf prospectus filed on November 19, 2014, with securities regulatory authorities in Canada and the United States, TELUS completed three debt offerings: 1) a $250,000,000 debt offering consisting of 1.50% Notes, Series CS, due March 27, 2018, ...

  • Page 34
    ... 2004 Corporate Director 1999(1) Counsel, (law firm) Bryan & Company 2013 Chair, Baytex Energy Corp. (oil and natural gas corporation) Advisor and Consultant 2011 2015 CEO, Ontario Educational Communications Authority (TVO) President and Chief Executive Officer, TELUS Corporation 2000...

  • Page 35
    ...William (Bill) MacKinnon (2 - Chair) Toronto, Ontario John Manley (4 - Chair), (5) Ottawa, Ontario 2014 2000 Corporate Director 2009 Corporate Director 2012 President & Chief Executive Officer, Business Council of Canada (previously the Canadian Council of Chief Executives) Corporate Director...

  • Page 36
    ... with TELUS President and Chief Executive Officer Executive Vice President and Chief Financial Officer Executive Vice President, Operations and Application Development Chief Corporate Officer and Executive Vice President, TELUS Health and TELUS International and President, Business Solutions West...

  • Page 37
    ... 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 legislation for...

  • Page 38
    ... a securities regulatory authority. AUDIT COMMITTEE The Audit Committee of the Company supports the Board in fulfilling its oversight responsibilities regarding the integrity of our accounting and financial reporting, internal controls and disclosure controls, legal and regulatory compliance, ethics...

  • Page 39
    ... TELUS Corporation. He was Lead Director of TELUS from May 2014, to August 2015. He is also currently the lead director of ConocoPhillips, an oil and gas company. Dick was employed by Gulf Canada Resources Limited for 25 years, retiring in 2001 as President and Chief Executive Officer after the sale...

  • Page 40
    ... it is then forwarded to the Chief Financial Officer for further review. Pending the Chief Financial Officer's affirmation, the request is then presented to the Audit Committee for its review, evaluation and pre-approval or denial at its next scheduled quarterly meeting. If the timing of the request...

  • Page 41
    ... directors' and officers' remuneration, 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 5, 2016. Additional financial information is provided in the Company's consolidated financial...

  • Page 42
    ... its oversight responsibilities regarding the integrity of the Company's accounting and financial 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...

  • Page 43
    ... 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 and earnings guidance...

  • Page 44
    ... examinations 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...

  • Page 45
    ...the external auditors and management's response; review reports of the external auditors; and pre-approve the hiring of employees and former employees of current and former auditors in accordance with applicable securities laws and TELUS policies. Notwithstanding section 4.2(d) above, the Committee...

  • Page 46
    ... 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 will speak directly with the Chair of the Committee. The Committee will review: (a) annually and recommend...

  • Page 47
    ... reports from the Chief Compliance Officer on legal and regulatory compliance activities. (b) (c) (d) 4.8 Risk Management The Committee will: (a) (b) consider reports on the annual enterprise business risk assessment and updates thereto; except to the extent that responsibility is reserved to the...

  • Page 48
    ... its mandate, will 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...