strongertogether 2017 ANNUAL REPORT We hope you draw inspiration from the deeply meaningful creative found within the pages of our annual report, conveying our story of togetherness, connectedness and a friendly future … inspired by the infinite potential of the human spirit. The cover image evokes the iconic double helix, the building block of humanity. These strands are replaced with fibre-optic cable as a tribute to the innovation that is making human connection possible in our digital society. This theme is carried lyrically throughout our report, inextricably bound within our brand’s identification with nature. This connection reinforces our undeniable bond with our natural world, demonstrating that innovation is often inspired by nature. Through our technology innovation, we are creating a stronger and more caring world by enabling remarkable human, social and business outcomes. We believe wholeheartedly that we are all stronger together, and this is foundational to our promise to make the future a little more friendly for everyone. Our values We embrace change and seize opportunity We have a passion for growth We believe in spirited teamwork We have the courage to innovate Who we are 1– 9 TELUS is Canada’s fastest-growing Corporate overview national telecommunications company, What we offer, results and highlights from 2017, and our 2018 targets with $13.3 billion of annual revenue and 13.1 million subscriber connections, including 8.9 million wireless 10 –15 subscribers, 1.7 million high-speed CEO letter to investors Internet subscribers, 1.3 million How we are delivering on our proven growth strategy residential network access lines and and, together, creating remarkable outcomes 1.1 million TELUS TV® customers. TELUS provides a wide range 16 –19 of communications products and Operations at a glance services, including wireless, data, A brief review of our wireless and wireline operations Internet protocol (IP), voice, television, entertainment, video and home automation, including security. 20 – 21 TELUS is also Canada’s leading Our social purpose healthcare IT provider, and TELUS How we are creating a friendlier future International delivers business process solutions around the globe. 22– 29 In support of our philosophy to give Leadership where we live, TELUS, our team Our Executive Leadership Team, questions and members and retirees have contributed answers, Board of Directors and corporate governance more than $525 million to charitable and not-for-profit organizations and 30 –180 volunteered 8.7 million hours of service Financial review to local communities since 2000. Detailed financial disclosure, including a letter from our CFO, and other investor resources All financial information is reported in Canadian dollars unless otherwise specified. Copyright © 2018 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. Together, we have infinite potential Together, our highly engaged team is making the future friendly, by enabling remarkable human, social and business outcomes in all that we do. Together, with the trust of our customers, we are bridging digital divides and redefining what it means to be a technology company in an ever-changing digital world. Together, with our communities, we are championing social change and leveraging technology to help youth reach their full potential. WHAT WE OFFER We are putting customers first Together, we are delivering exceptional experiences and providing our customers with a wide range of innovative products and services powered by leading technologies to meet their evolving needs. Mobile services Keeping our customers happy Canadians’ appetite for ubiquitous connectivity and data continues to grow. The increasing speeds, capacity and coverage of our leading 4G LTE wireless network, coupled with our extensive lineup of devices, are meeting our customers’ ever-growing mobile data needs. Over the past several years, we have introduced hundreds of customer-centric programs and services to improve our customers’ experiences and continue to earn their business, wherever they go. With our customers first focus, TELUS has consistently led the Canadian industry in wireless loyalty and has one of the best wireless churn rates in the world. Future friendly home services Offering innovative broadband solutions In British Columbia, Alberta and Eastern Quebec, TELUS offers a wide range of telecommunications, connectivity and entertainment services to consumers. We are nearly halfway through a multi-year, multi-billion-dollar investment to expand our gigabit-capable TELUS PureFibreTM network directly to homes across our footprint. With TELUS PureFibre, customers can reliably connect to the people and digital technologies that matter most to them, including streaming video, security and other smart home solutions. 2 • TELUSTELUS 2017 ANNUAL REPORTREPORT Business solutions Helping businesses succeed Our focus is on providing data and managed solutions to businesses and governments across Canada. With leading IP networks, we offer secure and reliable cloud-based enhanced data services, with critical applications residing in our Internet data centres. Leveraging our wireless expertise, businesses are transforming their operations through our mobile and Internet of Things solutions to increase their productivity and efficiency. Healthcare technology solutions Changing the delivery of healthcare We know information has the power to transform healthcare for Canadians. At TELUS Health, we are working with healthcare providers and patients across the country to improve information-sharing and harness the power of technology. As a result, we are improving healthcare with digital innovation and helping deliver a better care experience to patients while easing the burden on the healthcare system. We offer digital health solutions for physicians, pharmacies, extended healthcare providers, patients, insurers and health authorities. Business process and information technology solutions Expanding our customers first culture At TELUS International, we enable customer experience innovation through spirited teamwork, agile thinking and a caring culture that puts customers first. Our more than 30,000 TELUS International team members deliver superior customer service and next-generation IT solutions to multinational companies in over 35 languages from locations around the world, including North America, Central America, Asia and Europe. TELUSTELUS 2017 ANNUALANNUAL REPORT • 3 TELUS IN 2017 We are advancing our strategy through key initiatives Together in 2017, our team worked relentlessly to deliver on our long-term growth strategy, focus on putting customers first and drive innovation along the way. Q1 Q2 • Achieved national leadership in network performance, • Expanded our presence in Manitoba by acquiring as noted by OpenSignal’s 2017 State of Mobile Networks: postpaid wireless subscribers, certain network assets Canada report, which showed that TELUS’ 4G LTE and dealer locations in Manitoba, as part of an wireless network offered the fastest overall download agreement with BCE Inc. following its acquisition speeds and best network availability among three of Manitoba Telecom Services Inc. national providers in Canada. Later in the year, TELUS • Launched Pik TVTM, an innovative self-install TV service was also recognized for network performance in for customers who want easy and affordable access three other independent studies to streaming apps and live TV. Pik TV complements • Lowered our weighted average cost of long-term debt our Optik TV ® service in B.C. and Alberta and helps and extended our average term to maturity by issuing us better meet the varied needs of our customers US$500 million of 10-year senior unsecured notes and • Acquired Kroll Computer Systems Inc., a complementary $325 million of 31-year senior unsecured notes pharmacy management software company, to expand • Introduced our future friendly storyTM, enabling us to and enhance TELUS Health’s geographic reach and share how we are leveraging our technology innovation offering as a national service provider to create remarkable outcomes for our customers, • TELUS Health was selected by Canada Health Infoway communities and citizens across Canada and around to be the technical solution provider for PrescribeIT, the world a national e-prescribing service that enables secure • Launched our TELUS Mobility for Good pilot program, electronic transmission of prescriptions, limiting errors, which supports young adults transitioning from foster saving time and increasing convenience care to independent living by providing them with • Held our 12th annual TELUS Days of Giving® with a smartphone and wireless rate plan so they can 32,000 team members, retirees, family, friends and stay connected to the people and information that customers volunteering in Canada and eight other matter most. countries around the world to make a positive difference. 4 • TELUS 2017 ANNUAL REPORT Q3 Q4 • Expanded our cloud-based communications solutions • Introduced a new and integrated Optik TV app that with the launch of TELUS Business Connect® Mobile, enables subscribers to easily watch live TV, access an all-in-one integrated mobile solution designed thousands of On Demand titles, and set and manage to drive productivity and cost savings for businesses recordings,