Supplemental Investor Information Second Quarter, 2020 TELUS
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TELUS Corporation Second Quarter, 2020 Supplemental Investor Information (UNAUDITED) Financial information presented according to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) For further information, please contact: Table of Contents TELUS Investor Relations TELUS Corporation 1-800-667-4871 - Selected Consolidated Data 2 [email protected] - Segmented Data 3 www.telus.com - Segmented Data (Historical Trend) 4 TELUS Wireless Ian McMillan - Operations 5 (604) 695-4539 - Operations (Historical Trend) 6 [email protected] - Operating Statistics 7 - Operating Statistics (Historical Trend) 8 Robert Mitchell TELUS Wireline (647) 837-1606 - Operations 9 [email protected] - Operations (Historical Trend) 10 - Operating Statistics 11 - Operating Statistics (Historical Trend) 12 Non-GAAP measures and definitions 13 Supplemental Investor Information (Unaudited) TELUS Corporation Second Quarter, 2020 Page 1 TELUS Corporation Selected Consolidated Data $ millions except shares, per share amounts, ratios and Quarterly June YTD Annual total customer connections Q2/20 Q1/20 Q4/19 Q3/19 Q2/19 Q1/19 2020 2019 Net Income 315 353 379 440 520 437 668 1,776 Adjusted Net Income(A) 316 400 400 458 416 453 716 1,727 Basic earnings per share ($)(B) 0.23 0.28 0.30 0.36 0.43 0.36 0.51 1.45 Adjusted Basic earnings per share ($)(A)(B) 0.25 0.32 0.32 0.39 0.35 0.38 0.57 1.43 Dividends declared per share ($)(B) 0.29125 0.29125 0.29125 0.28125 0.28125 0.27250 0.58250 1.12625 Return on common equity1 12.7% 15.2% 16.7% 16.8% 17.2% 16.3% 12.7% 16.7% EBITDA interest coverage ratio2 7.2 7.3 7.5 7.7 8.0 8.4 7.2 7.5 Free cash flow3 511 545 135 320 324 153 1,056 932 Net debt4 17,664 17,983 18,199 17,029 16,602 15,732 17,664 18,199 Net debt : EBITDA (times)5 3.06 3.13 3.20 3.05 2.94 2.84 3.06 3.20 Outstanding shares at end of period (M)(B) 1,278 1,272 1,209 1,204 1,203 1,202 1,278 1,209 Basic weighted average shares outstanding (M)(B) 1,278 1,248 1,209 1,204 1,203 1,201 1,263 1,204 Total customer connections (000s)(C)(D) 15,411 15,270 15,166 14,500 14,254 14,057 15,411 15,166 (A)Adjusted Net income and Adjusted EPS excludes the effects of restructuring and other costs, income tax-related adjustments, lease-up period and other equity losses related to real estate joint ventures, long-term debt prepayment premium and a gain on a retirement of a provision arising from business acquisition-related written put options within TELUS International (TI). Q2 2019 income tax-related adjustments include $121 million from the revaluation of our deferred income tax liability for the multi-year reduction in the Alberta provincial corporate tax rate that was substantively enacted in the second quarter of 2019. (B)All information pertaining to shares and per-share amounts for periods before March 17, 2020 reflects retrospective treatment of our 2 for 1 share split. Total Customer Connections (000s)(C)(D) 15,166 15,270 15,411 14,500 13,784 13,947 14,057 14,254 13,431 13,503 4,953 4,989 5,036 4,321 4,364 4,417 4,151 4,117 4,227 4,271 Total Wireline Total Wireless 10,281 10,375 9,280 9,386 9,557 9,676 9,736 9,890 10,083 10,213 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 (C)Customer Connections may not balance due to rounding alignment to YTD figures. Effective April 1, 2018 and on a prospective basis, we adjusted Wireline cumulative subscriber connections to remove approximately 68,000 TELUS TV subscribers as we ceased marketing our Satellite TV product. In addition, the fourth quarter of 2018 opening mobile phone subscriber connections have been adjusted to exclude an estimated 23,000 subscribers impacted by the CRTC’s final pro-rating ruling in June 2018, which was effective October 1, 2018. As well, during the first quarter of 2019, we adjusted internet and total wireline cumulative subscriber connections to add approximately 16,000 subscribers from acquisitions undertaken during the quarter. (D)Effective for the third quarter of 2019, with retrospective application to the launch of TELUS branded security services at the beginning of Q3 2018, we have added security subscriber connections to our total subscriber connections. December 31, 2019 security subscriber connections have been increased to include approximately 490,000 subscribers related to our acquisition of ADT Canada (acquired on November 5, 2019). Supplemental Investor Information (Unaudited) TELUS Corporation Second Quarter, 2020 Page 2 TELUS Corporation Segmented Data Quarter 2 June YTD $ millions 2020 2019 Change % Change 2020 2019 Change % Change Revenues TELUS Wireless 1,846 1,997 (151) (7.6%) 3,744 3,934 (190) (4.8%) TELUS Wireline 1,961 1,674 287 17.1% 3,834 3,312 522 15.8% Less: Intersegment revenue (79) (74) (5) 6.8% (156) (143) (13) 9.1% Operating revenues 3,728 3,597 131 3.6% 7,422 7,103 319 4.5% EBITDA TELUS Wireless 870 919 (49) (5.3%) 1,804 1,827 (23) (1.2%) TELUS Wireline 489 454 35 7.7% 964 925 39 4.2% Consolidated 1,359 1,373 (14) (1.0%) 2,768 2,752 16 0.6% EBITDA margin TELUS Wireless 47.1% 46.0% 1.1 pts. 48.2% 46.4% 1.8 pts. TELUS Wireline 25.0% 27.1% (2.1) pts. 25.1% 27.9% (2.8) pts. Consolidated 36.5% 38.2% (1.7) pts. 37.3% 38.7% (1.4) pts. Capital expenditures TELUS Wireless 234 223 11 4.9% 428 400 28 7.0% TELUS Wireline 522 547 (25) (4.6%) 993 1,016 (23) (2.3%) Consolidated 756 770 (14) (1.8%) 1,421 1,416 5 0.4% Capital expenditure intensity6 TELUS Wireless 13% 11% 2 pts. 11% 10% 1 pts. TELUS Wireline 27% 33% (6) pts. 26% 31% (5) pts. Consolidated 20% 21% (1) pts. 19% 20% (1) pts. EBITDA less capex TELUS Wireless 636 696 (60) (8.6%) 1,376 1,427 (51) (3.6%) TELUS Wireline (33) (93) 60 64.5% (29) (91) 62 68.1% Consolidated 603 603 - 0.0% 1,347 1,336 11 0.8% Adjusted EBITDA(A) TELUS Wireless 890 924 (34) (3.7%) 1,830 1,841 (11) (0.6%) TELUS Wireline 471 478 (7) (1.2%) 1,006 976 30 3.1% Consolidated 1,361 1,402 (41) (2.9%) 2,836 2,817 19 0.7% Adjusted EBITDA margin(B) TELUS Wireless 48.2% 46.3% 1.9 pts. 48.8% 46.8% 2.0 pts. TELUS Wireline 24.9% 28.5% (3.6) pts. 26.7% 29.5% (2.8) pts. Consolidated 37.2% 39.0% (1.8) pts. 38.6% 39.7% (1.1) pts. (A)Adjusted EBITDA for all periods excludes restructuring and other costs. Adjusted EBITDA for the second quarter of 2020 and first six months of 2020 excludes a retirement of a provision arising from business acquisition-related written put options within TI, as well as lease-up period and other equity losses related to real estate joint ventures. (B)Adjusted EBITDA margin is Adjusted EBITDA divided by Operating revenues, where the calculation of Operating revenues excludes lease-up period and other equity losses related to real estate joint ventures and retirement of a provision arising from business acquisition-related written put options within TI. (C) Wireline Q2 Segmented EBITDA ($ millions) Wireless 1,373 1,359 1,208 1,251 454 407 489 86 40886 800 844 919 870 Q2-17 Q2-18 Q2-19 Q2-20 (C)Periods prior to 2019 have not been adjusted for adoption of IFRS16, accordingly, they are not comparable to 2019 and 2020 results. Supplemental Investor Information (Unaudited) TELUS Corporation Second Quarter, 2020 Page 3 TELUS Corporation Segmented Data - Historical Trend Quarterly June YTD Annual $ millions Q2/20 Q1/20 Q4/19 Q3/19 Q2/19 Q1/19 2020 2019 Revenues TELUS Wireless 1,846 1,898 2,169 2,099 1,997 1,937 3,744 8,202 TELUS Wireline 1,961 1,873 1,770 1,678 1,674 1,638 3,834 6,760 Less: Intersegment revenue (79) (77) (81) (80) (74) (69) (156) (304) Operating revenues 3,728 3,694 3,858 3,697 3,597 3,506 7,422 14,658 Revenues % change on prior year TELUS Wireless (7.6%) (2.0%) (0.5%) (2.9%) 2.9% 1.9% (4.8%) 0.2% TELUS Wireline 17.1% 14.3% 7.3% 0.1% 6.4% 6.4% 15.8% 5.0% Operating revenues 3.6% 5.4% 2.5% (2.0%) 4.2% 3.8% 4.5% 2.0% EBITDA TELUS Wireless 870 934 896 970 919 908 1,804 3,693 TELUS Wireline 489 475 472 464 454 471 964 1,861 Consolidated 1,359 1,409 1,368 1,434 1,373 1,379 2,768 5,554 EBITDA % change on prior year TELUS Wireless (5.3%) 2.9% 8.0% 5.3% 8.9% 8.6% (1.2%) 7.6% TELUS Wireline 7.7% 0.8% 16.5% 8.4% 11.5% 8.8% 4.2% 11.2% Consolidated (1.0%) 2.2% 10.8% 6.3% 9.8% 8.7% 0.6% 8.8% EBITDA margin TELUS Wireless 47.1% 49.2% 41.3% 46.2% 46.0% 46.9% 48.2% 45.0% TELUS Wireline 25.0% 25.3% 26.7% 27.6% 27.1% 28.7% 25.1% 27.5% Consolidated 36.5% 38.1% 35.5% 38.8% 38.2% 39.3% 37.3% 37.9% Capital expenditures TELUS Wireless 234 194 238 251 223 177 428 889 TELUS Wireline 522 471 504 497 547 469 993 2,017 Consolidated 756 665 742 748 770 646 1,421 2,906 Capital expenditure intensity6 TELUS Wireless 13% 10% 11% 12% 11% 9% 11% 11% TELUS Wireline 27% 25% 28% 30% 33% 29% 26% 30% Consolidated 20% 18% 19% 20% 21% 18% 19% 20% EBITDA less capex TELUS Wireless 636 740 658 719 696 731 1,376 2,804 TELUS Wireline (33) 4 (32) (33) (93) 2 (29) (156) Consolidated 603 744 626 686 603 733 1,347 2,648 Adjusted EBITDA(A) TELUS Wireless 890 940 911 976 924 917 1,830 3,728 TELUS Wireline 471 535 502 487 478 498 1,006 1,965 Consolidated 1,361 1,475 1,413 1,463 1,402 1,415 2,836 5,693 Adjusted EBITDA (A) % change on prior year TELUS Wireless (3.7%) 2.6% 6.9% 7.0% 8.6% 8.4% (0.6%) 7.7% TELUS Wireline (1.2%) 7.2% 9.6% 10.9% 9.9% 9.0% 3.1% 9.8% Consolidated (2.9%) 4.2% 7.9% 8.3% 9.0% 8.6% 0.7% 8.4% Adjusted EBITDA margin(B) TELUS Wireless 48.2% 49.5% 41.9% 46.5% 46.3% 47.4% 48.8% 45.4% TELUS Wireline 24.9% 28.5% 28.4% 29.0% 28.5% 30.4% 26.7% 29.1% Consolidated 37.2% 39.9% 36.6% 39.6% 39.0% 40.4% 38.6% 38.8% (A)Adjusted EBITDA excludes restructuring and other costs, retirement of a provision arising from business acquisition-related written put options within TI, as well as lease-up period and other equity losses related to real estate joint ventures.