Mr. Darren Entwistle reports

TELUS REPORTS STRONG RESULTS FOR SECOND QUARTER 2015

Telus Corp.'s consolidated operating revenue grew 5.1 per cent to $3.1-billion in the second quarter of 2015, from a year earlier, while earnings before interest, income taxes, depreciation and amortization increased 0.7 per cent. Significant restructuring and other like costs of $59-million, reflecting in part non-core retail real estate rationalization, impacted EBITDA and earnings this quarter. EBITDA excluding restructuring and other like costs increased by 5.1 per cent to $1.1-billion.

"Our strong second quarter results demonstrate the significant benefits of the Telus team's unwavering focus of putting customers first, each and every day," said Darren Entwistle, executive chair. "Through our long-term and consistent approach to investing in core broadband technology, and meaningful customer service and employee engagement initiatives, our team has delivered strong financial performance and unmatched customer loyalty, as illustrated by two consecutive years of wireless postpaid customer churn below 1 per cent.

"In addition to an ongoing focus of doing what is right for customers, the Telus team's track record of executing on a winning strategy has anchored our ability to return significant amounts of cash to shareholders through our ongoing multiyear dividend growth model and share purchase programs. In this regard, Telus has returned $1.1-billion to investors in the first seven months of 2015, $3.4-billion over the past two years and $12.9-billion or more than $21 per share since 2000, reflecting our strong commitment to shareholder value creation."

Telus president and chief executive officer Joe Natale said: "The Telus team's relentless focus on putting customers first has translated into industry-leading loyalty and retention that continues to underpin our solid financial performance. Through years of a company-wide commitment to genuinely earn customer loyalty, we continue to gain the trust of our customers as exemplified by this quarter's North American-leading customer loyalty measure of a 0.86-per-cent monthly postpaid wireless churn rate.

"Over the past two years, this focus has allowed Telus to gain nearly 50 per cent of all net new wireless postpaid, high-speed Internet and TV customers versus its five major Canadian peers, including an additional 115,000 in the second quarter. In this very dynamic and competitive Canadian marketplace, Telus's consistent performance demonstrates how expecting more from ourselves translates into strong results for our customers and shareholders."

John Gossling, Telus executive vice-president and chief financial officer, said: "Our strong operational and financial results have allowed us to effectively manage through the peak spectrum investment cycle the telecom industry has absorbed in 2015. In the second quarter, this included acquiring 40 megahertz of 2,500 mhz spectrum nationally in Industry Canada's 2,500 mhz spectrum auction, which are core investments needed to support future growth in our business. Moving forward, we will remain focused on the appropriate balanced approach to capital allocation including shareholder friendly initiatives, measured investments in our core businesses and maintaining investment grade credit ratings."

Net income of $341-million was down 10.5 per cent, while basic earnings per share declined by 9.7 per cent to 56 cents. Both net income and EPS were negatively impacted by significantly higher restructuring and other like costs, unfavourable income tax-related adjustments resulting primarily from higher enacted corporate income tax rates in Alberta, and an asset retirement charge for the planned retail real estate rationalization. Excluding these three items, net income increased by 4.9 per cent to $406-million and EPS was higher by 4.8 per cent to 66 cents.

              CONSOLIDATED FINANCIAL HIGHLIGHTS
               (In millions, except per share)

                                    Three months ended June 30,
                                            2015          2014

Operating revenues                        $3,102        $2,951
Operating expenses before
depreciation and amortization              2,021         1,878
EBITDA                                     1,081         1,073
EBITDA excluding restructuring and
other like costs                           1,140         1,084
Net income                                   341           381
Adjusted net income                          406           387
Basic earnings per share (EPS)              0.56          0.62
Adjusted EPS                                0.66          0.63
Capital expenditures                         664           636
Free cash flow                               300           210
Total customer connections                13.941        13.599

Telus continued to generate consolidated revenue growth as a result of higher data revenue in both wireless and wireline operations. Wireless data revenue increased 18 per cent, leading to overall network revenue growth of 6.1 per cent, while wireline data revenue increased 7.8 per cent from a year ago leading to 2.4-per-cent growth in external wireline revenue. In wireless, data revenue was driven by subscriber growth, an increased proportion of higher-rate two-year rate plans in the subscriber mix, higher data usage from the continued adoption of smart phones and other data-centric devices, increased data roaming, and the expansion of Telus's LTE network coverage across Canada. Wireline data revenue growth was generated by an increase in Internet and enhanced data service revenue from continued high-speed Internet subscriber growth and higher revenue per customer, growth in business process outsourcing services, Telus TV subscriber growth, and higher Telus health revenues.

In the quarter, Telus attracted 115,000 net wireless postpaid, high-speed Internet and TV customers. This included 76,000 wireless postpaid customers, 22,000 high-speed Internet subscribers and 17,000 Telus TV customers. These gains were partially offset by the loss of wireless prepaid customers and traditional telephone network access lines. Telus's total wireless subscriber base is up 3.3 per cent from a year ago to 8.35-million, high-speed Internet connections are up 6.2 per cent to 1.5-million and Telus TV subscribers are up 10 per cent to 954,000.

Telus's continued focus on putting customers first delivered an industry-leading postpaid wireless subscriber monthly churn of 0.86 per cent, a year-over-year improvement of four basis points. This is the eighth consecutive quarter, or two consecutive years, that this important metric was below 1 per cent.

Free cash flow of $300-million was higher by $90-million, or 43 per cent, from a year ago as higher EBITDA excluding restructuring and other like costs, and lower income tax payments offset higher capital expenditures related to Telus's continuing strategic investments in wireless and wireline broadband infrastructure to support Telus's long-term growth.

In the second quarter of 2015, Telus returned $378-million to shareholders including $243-million in dividends paid and $135-million in share purchases under its 2015 normal course issuer bid (NCIB) program. Through the end of July, Telus has returned $1,064-million to shareholders, including $740-million in dividends paid and the purchase of approximately 7.9-million shares for $324-million under its 2015 NCIB program.

Telus is updating its 2015 consolidated capital expenditures guidance, as described in Telus's fourth quarter 2014 results and 2015 financial target news release issued on Feb. 12, 2015. Telus now anticipates full year consolidated capital expenditures of approximately $2.5-billion compared with its previously estimated 2015 target of similar to 2014 ($2.359-billion). The additional capital investments reflect continued investments in broadband infrastructure to support the increasing demand for data services and higher network speeds. EPS for 2015 will be negatively impacted by net unfavourable income tax-related adjustments, including the revaluation of deferred income tax liabilities from the recent increase in corporate income tax rates in Alberta, as well as a $50-million increase to original restructuring and other like cost assumption. However, excluding these items, Telus still expects full year EPS to be within its original range of $2.40 to $2.60.

In addition, the assumptions for Telus's 2015 annual targets, as described in Telus's 2015 annual management's discussion and analysis, remain the same, except as updated below:

• Economic growth in Canada in 2015 revised to a range of 1.0 to 1.5 per cent from the original assumption of 2.1 per cent;
• Restructuring and other like costs revised to approximately $125-million, from the original assumption of approximately $75-million, to support continuing operational efficiency initiatives, with other margin enhancement initiatives to mitigate pressures from technological substitution and subscriber growth;
• Cash income tax payments assumption revised down to a range of $200-million to $260-million, from the original assumption of $280-million to $340-million, due to the deferral of the 2015 instalments to 2016 and higher refunds from the settlement of prior years' income tax-related matters.

Second quarter 2015 operating highlights

Telus wireless:

• Wireless network revenues increased by $90-million, or 6.1 per cent, to $1.57-billion in the second quarter of 2015, when compared with the same period a year ago. This growth was driven by an 18-per-cent increase in data revenue, reflecting subscriber growth, increased proportion of higher-rate two-year plans in the subscriber mix, higher data usage from a continued adoption of smart phones and other data-centric devices, increased data roaming, and the expansion of Telus's LTE network coverage.
• Blended ARPU increased by 2.9 per cent to $63.48, reflecting Telus's 19th consecutive quarter of year-over-year growth.
• Monthly postpaid subscriber churn declined four basis points year over year to an industry-leading 0.86 per cent and blended monthly churn was down 20 basis points to reach a low 1.17 per cent. Telus's low blended churn rate reflects the company's successful customers first culture, and clear and simple approach, investments in customer retention as well as a greater proportion of postpaid clients in Telus's subscriber base.
• Total wireless net additions of 63,000 increased by 14,000 over the same period a year ago. Postpaid net additions of 76,000 decreased by 2,000, while prepaid net losses of 13,000 improved by 16,000 year over year. The total wireless subscriber base was up 3.3 per cent, or 264,000, from a year ago to 8.35 million. Higher-value postpaid subscribers represent approximately 86.5 per cent of Telus's total subscriber base.
• Wireless EBITDA excluding restructuring and other like costs increased by $44-million, or 6.3 per cent, over last year to $755-million due primarily to network revenue growth and operational efficiency initiatives, including the integration of Public Mobile, partially offset by a 13-per-cent increase in retention volume resulting in higher retention costs, and higher customer service and distribution channel expenses.
• Wireless EBITDA was impacted by significant restructuring and other like costs of $36-million, which primarily related to the planned closure of Black's Photography retail stores. Wireless EBITDA less capital expenditures increased by $12-million to $492-million in the quarter due to higher EBITDA.

Telus wireline:

• External wireline revenues increased by $33-million, or 2.4 per cent, to $1.38-billion in the second quarter of 2015, when compared with the same period a year ago. This growth was generated by increased data service revenue, partially offset by continued declines in legacy voice and equipment revenues, and lower business activity.
• Data revenues increased by $67-million, or 7.8 per cent, due to higher Internet and enhanced data revenues from continued high-speed Internet subscriber growth and higher revenue per customer, growth in business process outsourcing services, higher Telus TV revenues from continued subscriber growth, and increased Telus health revenues.
• Total TV net additions of 17,000 were lower by 6,000 from the same quarter last year, as expansion of Telus's addressable high-speed broadband footprint, increasing broadband speeds and improvements in customer churn rate were offset by lower business additions, the effects of slower subscriber growth for paid TV services and increasing competition from over-the-top services.
• High-speed Internet net additions of 22,000 increased by 7,000 over the same quarter a year ago. The high-speed subscriber base of 1.5 million is up 89,000, or 6.2 per cent, from a year ago, reflecting expansion of the company's broadband coverage, including fibre to the premises and the pull-through effect of Optik TV.
• Total network access lines (NALs) declined by 29,000 in the quarter compared with a loss of 15,000 a year ago. Residential NAL losses of 20,000 compared with a loss of 19,000 in the same period a year ago, while business NAL losses of 9,000 compared with a net gain of 4,000 a year ago. Stable residential NAL losses reflects the continuing success of Telus's customers first initiatives and bundling strategy, offset by continuing but moderating wireless and Internet substitution and competition. Business losses reflect increased competition in the business sector as well as a slowdown in the business market associated with the national and regional economies.
• Wireline EBITDA excluding restructuring and other like costs of $385-million increased by $12-million, or 2.9 per cent, year over year. The improvement reflects improving margins in data services, including Internet, Telus health, Telus TV and business process outsourcing services, as well as continuing operating efficiency initiatives. Wireline EBITDA excluding restructuring and other like costs margin improved 0.2 point to 27.0 per cent.
• Wireline EBITDA less capital expenditures decreased by $32-million to negative $75-million as higher EBITDA was more than offset by higher capital expenditures that are supporting Telus's long-term growth. Capital expenditures increased over the same period last year due to continued strategic investments in broadband network infrastructure, including connecting more homes and businesses directly to the fibre optic network, and investments in system and network resiliency and reliability.

Dividend declaration

The Telus board of directors has declared a quarterly dividend of 42 cents per share on the issued and outstanding common shares of the company, payable on Oct. 1, 2015, to holders of record at the close of business on Sept. 10, 2015.

This third quarter dividend represents a four-cent, or 10.5 per cent, increase from the 38-cent quarterly dividend paid on Oct. 1, 2014.

      CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME 
                       (In millions, except per share)

                                       Three months              Six months
                                      ended June 30,          ended June 30,
                                   2015        2014        2015        2014

Operating revenues
Service                        $  2,884    $  2,749    $  5,713    $  5,451
Equipment                           208         189         390         361
Revenues arising from
contracts with customers          3,092       2,938       6,103       5,812
Other operating income               10          13          27          34
                                  3,102       2,951       6,130       5,846
Operating expenses
Goods and services purchased      1,372       1,268       2,656       2,490
Employee benefits expense           649         610       1,258       1,206
Depreciation                        361         348         708         694
Amortization of intangible
assets                              103          96         212         213
                                  2,485       2,322       4,834       4,603
Operating income                    617         629       1,296       1,243
Financing costs                     110         115         227         217
Income before income taxes          507         514       1,069       1,026
Income taxes                        166         133         313         268
Net income                          341         381         756         758
Other comprehensive income
Items that may subsequently
be reclassified to income
Change in unrealized fair
value of derivatives
designated as cash flow
hedges                                2          (3)         (2)          -
Foreign currency translation
adjustment arising from
translating financial
statements of foreign
operations                           (5)         (6)          5           1
Change in unrealized fair
value of available-for-sale
financial assets                      -           -          (3)         (4)
                                     (3)         (9)          -          (3)
Item never subsequently
reclassified to income
Employee defined benefit
plan remeasurements                (122)         59         115         221
                                   (125)         50         115         218
Comprehensive income           $    216    $    431    $    871    $    976
Net income per common share
Basic                          $   0.56    $   0.62    $   1.25    $   1.22
Diluted                        $   0.56    $   0.62    $   1.24    $   1.22

We seek Safe Harbor.