Georges Mahama Portfolio Strategies Analyst

Burke Mishoe US Markets Analyst

Jorge Limon Acevedo Latin American Economist Verizon and Telus Table of Contents

Investment Thesis Revenue Segment

Company Overview Key Competitors

Leadership SWOT analysis Company Strategy Valuation Industry Overview Recommendations Verizon Investment Thesis

5G's faster speeds and lower latency will accelerate the pace of digital innovations

Largest infrastructure overhaul in 10+ years

Providing more services for the expected boom in the gaming industry. Verizon Verizon Overview

Integrated Telecommunications Building Momentum for the 5G network

❏ Provider of communications, information and ❏ Current leader in the 4G LTE platform entertainment products and services to ❏ Future spending in spectrum auctions to obtain consumers, business and government entities. more bands of the 5G ❏ Forward looking strategy that lays foundation for ❏ Partnership with Riot Gaming the future through investments in their Intelligent Edge Network 20 Year VZ Price Verizon Leadership

Hans E Vestberg Matthew C Ellis James J Gerace Diego Scotti CEO CFO CCO CMO ● Became CEO in 2018 ● Became CFO in 2016 ● Became CCO in 2013 ● In charge of the ● Prior to becoming CEO ● Prior to becoming CFO ● Gets credit for largest change from phone to Hans was President of Matthew was merger in year 2000. more tech strategy Ericsson for 6 yrs. treasurer of Verizon. ● World's Most Influential CMOs Verizon Company Strategy

Capital Expenditures & Network Remodeling Strengthening & Investments Preserving Core Assets

❏ Significant capital ❏ Verizon’s next-generation ❏ New training; new tools; investments primarily to multi-use platform, which and new organizational obtain wireless spectrum. we call the Intelligent Edge structures that maximize Network openness and innovation. ❏ Highest bid amount of 1.9B in the last spectrum ❏ Improving 4G evolution ❏ Preserve the advantages auction for 3.5 GHz bands. and speeding up the that have been inherited deployment of 5G. from the past. Verizon Industry Overview

0 U.S. Telecom ● >$185BB market Market ● 505M total subscribers 1

● Wireless and Wireline Services 0 ● Wireless Equipment Verizon T-Mobile Breakdown ● Cable/Satellite TV 2 ● Broadband/Fiberoptic

● 5G user base: 53,221% 0 Projected increase Growth ● Total market: 3% 3 increase AT&T Verizon Competitive Analysis

● Since recent merger with Sprint, ● Struggling trying to find buyers for T-Mobile has seen great tailwinds. DirecTV, Vrio Corp, and ● Layered approach to 5G spectrum CrunchyRoll. deployment ● No future platform for DirecTV ● Expectation of 99% of consumers ● Value Trap with 7% dividend yield on 5G by 2026

MKT CAP: 142.10B ROE: 37.25% MKT CAP: 204.27B ROE: 9.39%

P/E: 30.73 DIV YIELD: - P/E: 12.30 DIV YIELD: 7.22% Verizon Revenue and Customer Analysis

Revenue Segments Subscriber Base

● Consumer Wireless and Wireline ● Industry leading 94 Million total retail ● Business Wireless and Wireline subscribers ● Fios (Fiber Optic Service) ● Wireless Equipment Verizon SWOT Analysis

❏ Largest US carrier ❏ Debt to equity ❏ Strong brand image Strengths Weaknesses ❏ Low diversification ❏ Margins ❏ Non-global

❏ 5G ❏ 5G Competition Opportunities Threats ❏ Fios ❏ Cybersecurity ❏ Customer service ❏ Infrastructure/outages Verizon Valuation Verizon Valuation

Current Price: $59.82 Verizon Valuation Verizon Quant Analysis

Monte Carlo Simulation

Mean = 64.2000 Median = 61.6286 Verizon Quant Analysis Telus Investment Thesis

High speed internet service over wireless promotes cost savings

Diversified offerings that include ICT products for telehealth, patient monitoring

Telus is the gold standard for telecom services in Canada Telus Telus Overview

Canadian Telecommunications Wireless Usage in Canada

❏ TELUS is a telecommunications company providing ❏ Currently $53BB total service revenue a variety of communications and provides voice, ❏ 43 million subscribers, 48 million* by 2023 data, Internet, and wireless services to businesses ❏ Data usage RPU will increase $5.26 by 2022 and consumers in Canada. ❏ Holds a wireless segment of 10 million subscribers and a wireline of 3 million. 20 Year TU Price Telus Leadership

Darren Entwistle Doug French Tony Geheran Navin Arora President & CEO CFO & VP Executive VP President ● Positions held most ● Joined Telus is ● Tony joined the team ● Joined Telus in of the last 20 years 1996 in 2001 1996 ● Longest serving CEO ● Controller of ● Developed the ● Controller of Technology Customer Service strategic in the industry Strategies Excellence Program partnerships Telus Company Strategy

Generate Strong Telehealth Strong Customer Subscriber Growth Service ❏ Home Health Monitoring ❏ Peace of Mind, TELUS ❏ Enhancing their network (HHM) programs across Easy Payment device with LTE advanced Canada financing, and Family technology ❏ TELUS EMR Virtual Visit Discounts ❏ Expanding small-cell – an encrypted, ❏ TELUS IoT Shop, a technology to improve EMR-integrated solution self-serve online portal that coverage and capacity and that enables virtual businesses use to prepare for the evolution to encounters by phone, text purchase and manage 5G or video prepaid IoT connectivity. Telus Revenue and Customer Analysis

Revenue Segment Subscriber Base Telus Competitive Analysis

● Wireline services in Eastern ● Negative impact on revenue in Q3 Canada ● Focusing on media ● Focusing on its media business ● Spent the most money on ● Partnership with Telus to expand acquiring 5G spectrum in 2019 wireless coverage

MKT CAP: 37.84B ROE: 18.27% MKT CAP: 20.48B ROE: 19.27%

P/E: 16.72 DIV YIELD: 5.93% P/E: 15.22 DIV YIELD: 3.74% Telus SWOT Analysis

❏ Partnership with Huawei ❏ Good returns on capital for 5G expenditures Strengths Weaknesses ❏ Low investment in ❏ Fastest mobile network Research and in Canada Development

❏ Possibility of the ban of ❏ Spectrum auctions for 5G Opportunities Threats Huawei in Canada ❏ Healthcare services with ❏ Increasing competitive Telus health pressures Telus Valuation Telus Valuation Telus Valuation

$22.70 $26.18

Base Case Upside Case

• Exit Multiple – 8.0X • Exit Multiple – 8.0X

• Consistent with consensus • Small adjustments to assumptions COGS and SG&A.

• Consistent with historical • Slight increase in revenue average, considering an increase in SG&A. Telus Valuation Telus Quantitative Analysis

Monte Carlo Simulation

Mean = 19.6470 Median = 18.7580 Telus Quantitative Analysis Verizon and Telus Recommendation

Recommendation: BUY Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix Verizon and Telus Appendix