LEADING THE WORLD IN SOCIAL CAPITALISM 2019 annual report TELUS is a dynamic, world-leading communications WE ARE THE and information technology company with $14.7 billion in annual revenue and 15.2 million customer connections LEADING SOCIAL spanning wireless, data, IP, voice, television, entertainment, video and security. We leverage our globally leading CAPITALISM technology to enable remarkable human outcomes. COMPANY Our long-standing commitment to putting our customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. TELUS Health is Canada’s largest healthcare IT provider, and TELUS International delivers the most innovative business process solutions to some of the world’s most e st ab lishe d b r a n d s. Driven by our passionate social purpose to connect all Canadians for good, our deeply meaningful and enduring philosophy to give where we live has inspired our team members and retirees to contribute more than $736 million and 1.4 million days of service since 2000. T hi s u n p re c e de nte d g e ne ro s i ty a n d u n p a r a lle le d volunteerism have made TELUS the most giving company in the world. 1–13 14 –19 20 – 21 Corporate overview CEO letter to investors Our social purpose Serving our stakeholders through social By leading the world in social capitalism, How we are leveraging technology to capitalism, results and highlights from we are helping to make the world a enable remarkable human outcomes 2019, and our 2020 targets better place 22–25 26 – 33 34 –192 Operations at a glance Leadership Financial review A brief review of our wireless Our Executive Team, questions and Detailed financial disclosure, including and wireline operations answers, Board of Directors and a letter from our CFO, and other corporate governance investor res ourc es All financial information is reported in Canadian dollars unless otherwise specified. Copyright © 2020 TELUS Corporation. All rights reserved. Certain products and services named in this report are trademarks. The symbols TM and ® indicate those owned by TELUS Corporation or its subsidiaries. All other trademarks are the property of their respective owners. Corporate overview As the leader in social MAKING capitalism, we are committed THE WORLD to delivering value to all our stakeholders. That commitment A BETTER is embedded in everything we do and every decision PLACE we make. FOR OUR CUSTOMERS DELIVERING EXCEPTIONAL EXPERIENCES As the leader in social capitalism, we are committed to putting our customers first. We are exceeding our customers’ growing mobile needs with increasing network speeds, capacity and coverage, and offering innovative broadband services with our home solutions. We are also providing secure and reliable cloud-based data services for businesses and enabling better healthcare outcomes through technology innovation at TELUS Health. In addition, our TELUS International team is delivering next- generation solutions, including digital transformation, IT life cycle, advisory and digital consulting, risk management and back-office support. This page has been intentionally left blank. FOR OUR COMMUNITIES ENABLING REMARKABLE HUMAN OUTCOMES As the leader in social capitalism, we are committed to leveraging our world- leading technology to enable remarkable human outcomes. Guided by our philosophy – we give where we live® – we are helping to build stronger and healthier communities. We are connecting our fellow citizens to the people, opportunities and resources that matter most, ensuring equal access to technology and promoting its responsible use. Since 2000, TELUS, our team members and retirees have contributed $1.3 billion, through philanthropy and volunteerism. This page has been intentionally left blank. FOR OUR INVESTORS GENERATING OUTSTANDING SHAREHOLDER VALUE As the leader in social capitalism, we are helping to improve social, economic and health outcomes for Canadians and simultaneously creating sustainable value for our shareholders. At TELUS, we know that our leadership in social capitalism is symbiotic with our leadership in business. To us, doing well in business and doing good in our communities are mutually inclusive. This is reflected in our world-leading results in team engagement, customer outcomes, financial results and shareholder value creation. This page has been intentionally left blank. FOR OUR TEAM MEMBERS MOST ENGAGED TEAM ON THE PLANET As the leader in social capitalism, our diverse and inclusive team puts customers at the heart of everything we do. This commitment to excellence makes us one of Canada’s top employers. While others can imitate our products and services, our powerful culture is impossible to replicate and our highly engaged team members are our greatest asset. We are also the #MostGivingCompany in the world, with our team members and retirees contributing more than 1.4 million days of service since 2000. This page has been intentionally left blank. 2019 PERFORMANCE AT A GLANCE FUELLING OUR GROWTH WITH STRONG RESULTS OPERATIONS 1 +2.0% +8.4% +180 bps +8.2% + 7. 3 % Operating Adjusted Adjusted Basic Dividends declared revenues EBITDA2 EBITDA margin2 EPS per share 2019: $14.7 billion 2019: $5.7 billion 2019: 38.8% 2019: $2.90 2019: $2.2525 2018: $14.4 billion 2018: $5.3 billion 2018: 37.0% 2018: $2.68 2018: $2.10 FINANCIAL RESOURCES 1 +15% -3.2% +12% -0.3% +30 bps Total Cash from Free cash flow Capital expenditures Return on assets operations before income taxes2 (excluding spectrum common equity3 licences) 2019: $38.0 billion 2019: $3.9 billion 2019: $1.6 billion 2019: $2.9 billion 2019: 16.7% 2018: $33.1 billion 2018: $4.1 billion 2018: $1.4 billion 2018: $2.9 billion 2018: 16.4% CUSTOMER CONNECTIONS 4 +537,000 +123,000 +67,000 -44,000 +536,000 Wireless Internet TV subscribers Residential voice Security subscribers subscribers subscribers subscribers 2019: 10.2 million 2019: 2.0 million 2019: 1.2 million 2019: 1.2 million 2019: 608,000 2018: 9.7 million 2018: 1.9 million 2018: 1.1 million 2018: 1.2 million 2018: 72,000 OPERATING REVENUES ($ billions) ADJUSTED EBITDA2 ($ billions) 2019 14.7 2019 5.7 2018 14.4 2018 5.3 DIVIDENDS DECLARED PER SHARE ($) TOTA L CUSTOMER CONNECTIONS4 (millions) 2019 2.2525 2019 15.2 2018 2.10 2018 13 .9 10 • TELUS 2019 ANNUAL REPORT 2019 FINANCIAL AND OPERATING RESULTS ($ in millions except per share amounts) 20191 2018 % change Operations Operating revenues $ 14,658 $ 14,368 2.0 Earnings before interest, taxes, depreciation and amortization (EBITDA)2 $ 5,554 $ 5,104 8.8 EBITDA – excluding restructuring and other costs2 $ 5,688 $ 5,421 4.9 Adjusted EBITDA2 $ 5,693 $ 5,250 8.4 Adjusted EBITDA margin2 (%) 38.8 37.0 – Operating income $ 2,977 $ 2,837 4.9 Net income attributable to common shares $ 1,746 $ 1,600 9.1 Basic earnings per share (EPS) $ 2.90 $ 2.68 8.2 Adjusted basic EPS2 $ 2.86 $ 2.85 0.4 Dividends declared per share $ 2.2525 $ 2.10 7.3 Dividend payout ratio2 (%) 78 78 – Wireless segment External revenue $ 8,149 $ 8,135 0.2 Adjusted EBITDA2 $ 3,728 $ 3,461 7.7 Adjusted EBITDA margin2 (%) 45.4 42.7 – Wireline segment External revenue $ 6,509 $ 6,233 4.4 Adjusted EBITDA2 $ 1,965 $ 1,789 9.8 Adjusted EBITDA margin2 (%) 29.1 28.2 – Financial position Total assets $ 37,975 $ 33,057 14.9 Net debt2 $ 18,199 $ 13,770 32.2 Return on common equity3 (%) 16.7 16.4 – Liquidity and capital resources Cash from operations $ 3,927 $ 4,058 (3.2) Capital expenditures (excluding spectrum licences) $ 2,906 $ 2,914 (0.3) Free cash flow2 $ 932 $ 1,207 (22.8) Free cash flow before income taxes2 $ 1,576 $ 1,404 12.3 Net debt to EBITDA ratio2,5 3.20 2.54 – Customer connections4 (in thousands) Wireless subscribers 10,213 9,676 5.5 Internet subscribers 1,981 1,858 6.6 TV subscribers 1,160 1,093 6.1 Residential voice subscribers 1,204 1,248 (3.5) Security subscribers 608 72 n/m Total customer connections 15,166 13,947 8.7 n/m – not meaningful 1 Results for 2019 reflect the adoption of IFRS 16, and prior periods have not been retrospectively adjusted. For details, see Note 2 of the Consolidated financial statements. 2 These are non-GAAP measures and do not have standardized meanings under IFRS-IASB. For more information, see Sections 1.3, 5.4, 5.5 and 11 of Management’s discussion and analysis (MD&A). 3 Net income attributed to equity shares for a 12-month trailing period, divided by the average common equity for the 12-month period. 4 Customer connections have been revised in 2019 and 2018 to account for acquisitions and adjustments. For details, see Section 1.3 of the MD&A. 5 Excludes restructuring and other costs. TELUS 2019 ANNUAL REPORT • 11 2019 SCORECARD AND 2020 TARGETS DRIVING OUT STANDING PERFORMANCE 2019 SCORECARD 2019 targets1 2019 results 2019 growth Achieved Growth of REVENUES 2 3 to 5% $14.66 billion 3.2% Growth of ADJUSTED EBITDA 3 8 to 10% $5.69 billion 8.4% Growth of BASIC EPS 2 to 10% $2.90 8.2% Approximately CAPITAL EXPENDITURES (excluding spectrum licences) $2.85 billion $2.91 billion – 1 The 2019 targets reflect the non-cash impacting January 1, 2019 implementation of IFRS 16. Applying the effects of IFRS 16 to 2018, Adjusted EBITDA increased by approximately 4.0 per cent in 2019. 2 The 2019 revenue target and actual results were calculated using operating revenues, excluding the non-recurring third quarter 2018 equity income related to real estate joint ventures arising from the sale of TELUS Garden of $171 million.