Mr. Darren Entwistle reports

TELUS REPORTS RESILIENT OPERATIONAL AND FINANCIAL RESULTS FOR SECOND QUARTER 2023

Telus Corp. has released its unaudited results for the second quarter of 2023. Consolidated operating revenues increased by 13 per cent over the same period a year ago to $4.9-billion. This growth was driven by higher service revenues in the company's two reportable segments: Telus technology solutions (TTech) and digitally led customer experiences -- Telus International (DLCX). TTech service revenue growth was driven by: (i) growth in health services revenues, mainly driven by the company's acquisition of LifeWorks on Sept. 1, 2022; (ii) higher mobile network revenues attributable to subscriber growth and roaming revenue improvements, which principally started in the second quarter of 2022; and (iii) an increase in fixed data service revenues, resulting from subscriber growth, business acquisitions and higher revenue per Internet customer. These factors were partly offset by lower TV and fixed legacy voice services revenues, primarily due to technological substitution. Growth in DLCX operating revenues resulted from expanded services for existing clients and growth from new clients, including new clients from the company's acquisition of WillowTree on Jan. 3, 2023, and favourable foreign exchange impacts, which collectively offset the impact of some DLCX clients reducing their own costs. See second quarter 2023 operating highlights within this news release for a discussion on TTech and DLCX results.

"For the second quarter, our Telus team once again demonstrated execution strength in our TTech business segment, characterized by the potent combination of leading customer growth, complemented by strong operational and financial results," said Darren Entwistle, president and chief executive officer. "Our robust performance in our core telecom business is underpinned by our globally leading broadband networks and customer-centric culture, which enabled our strongest second quarter on record, with total customer net additions of 293,000, up 19 per cent year-over-year, driven by strong demand for our leading portfolio across mobility and fixed services. This included: strong mobile phone net additions of 110,000, our best second quarter result since 2010; record second quarter connected device net additions of 124,000; and robust second quarter total fixed net additions of 59,000, including 35,000 Internet customer additions, powered by leading customer loyalty in combination with Telus' PureFibre network. Our leading customer growth is reflective of our consistent, industry-best client loyalty across our mobile and fixed product lines. In this regard, our team's passion for delivering customer experience excellence contributed to strong loyalty across our key product lines once again this quarter, including blended mobile phone, postpaid mobile phone, PureFibre Internet and residential voice churn all below 1 per cent. Notably, postpaid mobile phone churn is now in the 10th consecutive year of less than 1 per cent, and PureFibre Internet has been below the 1 per cent threshold for 14 consecutive quarters.

"At Telus International, increasing macroeconomic pressure has temporarily impacted service demand from some of our larger tech clients as they aggressively address their own cost structures, slowing the expected rate of revenue and profit growth for 2023. In response, our TI team has actioned significant incremental cost efficiency efforts, including staff reductions, to address lower service volumes, and is driving additional automation and generative AI [artificial intelligence]-enabled solutions to further optimize its cost structure and go-to-market sales opportunities. Despite these near-term challenges, we remain highly confident in TI's strategy and investment thesis. This is amplified by meaningful opportunities in respect of digital transformation -- particularly with generative AI adoption -- and the continuing critical importance of differentiated digital customer experience solutions in the market, which remains a vibrant tailwind for TI's medium- and long-term growth and profitability."

"At our Telus Health business unit, we achieved second quarter revenues of $428-million, alongside 11-per-cent EBITDA [earnings before interest, taxes, depreciation and amortization] growth, normalizing for LifeWorks. These results signify our continued growth and increasing scale of our health operations since our acquisition of LifeWorks in 2022, which is enabling us to make meaningful progress on our goal to be the most trusted well-being company in the world. This includes: our health care services and programs now covering more than 68 million lives around the world, an increase of nearly 46 million year-over-year; supporting health outcomes on nearly 153 million digital health transactions during the second quarter, up more than 5 per cent over the same period a year ago; and increasing our virtual care membership to 5.3 million, up nearly 50 per cent over the prior year. We anticipate Telus Health to continue its sustained growth and expansion over the long-term, underpinned by the integration and innovation of our diverse product suite and care delivery that enables us to support the evolving needs of our customers around the world. Since acquiring LifeWorks, our team has committed to driving $425-million in annualized synergies by the end of 2025, up from $250-million. This includes $325-million expected to be realized through operating cost synergies from continued integration, optimizing our organizational structure, systems and real estate; and $100-million from longer term revenue synergies driven by cross-selling health services products within our Telus Health customer base, and throughout Telus. This will allow us to reinvest in the growth of our business and improve our profitability, while we focus on delivering efficient, secure, and best-in-class health and wellness solutions to our customers. To date, we have achieved $127-million in combined annualized synergies, towards our over all objective.

"At Telus Agriculture & Consumer Goods (TAC), second quarter revenues of $79-million were relatively flat year-over-year, reflecting headwinds in our agribusiness vertical due to softness related to macroeconomic challenges, and one-time professional services revenue from the previous year. We continue to expect progress on our top line in the second half of 2023, resulting in positive annual growth. This, alongside efficiency and effectiveness initiatives, as illustrated by our recent decision to move TAC to our Telus Business Solutions (TBS) team, is reflective of our collective commitment in respect of realizing quantum growth in our compelling TAC business. TAC will be able to leverage the expertise, experience, and high-performance culture and talent of our TBS team, ensuring we are well positioned to accelerate our customers first, sales, marketing, channel and go-to-market efforts, including exciting and plentiful cross-selling opportunities. With these changes in place, we are looking to accelerate and significantly scale our TAC business into a potent asset of consequence, focused on becoming the world's largest global independent provider of digital technologies and data insights connecting customers -- from producers to consumers -- across the agricultural products, food and packaged goods industries.

"Against the backdrop of rapid transformation in our industry and the ways in which our customers want to engage with us, today we are announcing a significant investment in an extensive efficiency and effectiveness initiative across Telus. This is in response to the evolving regulatory, competitive and macroeconomic environment that we currently face. Importantly, the transformational investments we have prudently made over the course of more than a decade in building the best culture, and enabling industry-leading customer experiences over our globally leading wireless and PureFibre broadband networks, are now allowing us to accelerate our well-progressed plans to digitally revolutionize our business and meaningfully further streamline our operating costs. Moreover, they are driving significant economic efficiencies to support our future success for the benefit of the many stakeholders we serve. These investments will ensure we remain market leaders in driving innovation and value for our customers, realizing profitable growth for our shareholders, and supporting our team members and communities. Our winning strategy remains unchanged, and our transformational efforts will be buttressed by our decades-long track record of successfully navigating exogenous factors, from regulatory and competitive, to macroeconomic and, most recently, through the global pandemic. Our resilience and ability to embrace change and continuously evolve the way we operate are cornerstones of our Telus culture, and will continue to fuel our future success. It is therefore with a very heavy heart that we are seeking to reduce 6,000 staff positions across our global footprint, representing approximately 4,000 reductions at Telus and 2,000 at Telus International, including offering early retirement and voluntary departure packages. Given the scale of this program, we now expect incremental restructuring investments of up to $475-million in 2023. The program we are announcing today will yield expected cumulative annual cost savings of more than $325-million. While this will temporarily and modestly dilute our free cash flow in 2023, importantly, it will support strong free cash flow expansion in the years ahead, as well as the progression of our leading, multiyear dividend growth program.

"At Telus, our give where we live philosophy is also a cornerstone of our globally recognized culture and deeply embedded within our company's DNA," continued Mr. Entwistle. "This long-standing commitment is exemplified through our annual Telus Days of Giving. Indeed, thanks to our more than 80,000 team members, retirees, family members and friends who have collectively volunteered in 260 communities across 32 countries thus far for our 18th annual Telus Days of Giving, 2023 is our most giving year yet. Since 2000, our Telus family has contributed 2.2 million days of volunteerism -- more than any other company in the world -- helping to improve the lives of people across the globe."

Doug French, executive vice-president and chief financial officer, said: "For the second quarter, our team navigated through a highly competitive environment and a challenging global macroeconomic climate, delivering healthy operating and financial results in our core telecom operations. While our domestic business continues to demonstrate our execution excellence, our technology-oriented verticals, including TI and TAC, are facing near-term headwinds from pronounced macroeconomic pressures. Despite these headwinds, we continue to target strong operating revenue and adjusted EBITDA growth for 2023, as demonstrated by our recently revised outlook, and we remain highly confident in our growth prospects as we begin to emerge from the current pressurized economic environment. As part of our ongoing focus on efficiency and effectiveness, our team remains laser-focused on driving significant cost reductions, as further evidenced by the implementation of a significant cost-efficiency program, targeting all parts of our organization, in response to the current regulatory, competitive and macroeconomic environment. While these decisions are difficult to undertake, they are a necessity in order to enhance innovation for our customers, and drive profitable growth for our business and investors. These programs will advance sustainable EBITDA margin improvement and lead to greater free cash flow generation in the medium to longer term. We anticipate the full run rate of incremental annualized cost savings of more than $325-million to be largely achieved within the next six months, strengthening our balance sheet position and the sustainability of our multiyear dividend growth program.

"During the second quarter, we continued to execute against our capital expenditure program, advancing our PureFibre footprint and 5G coverage," commented Mr. French. "Consistent with our capital plan, we have accelerated in-year investments where we anticipate approximately 85 per cent of our annual capital expenditure target of $2.6-billion to be allocated through the first three quarters of the year, before tapering off in the fourth quarter. We continue to expand our PureFibre network, which now reaches approximately 3.1 million premises, along with advancing our 5G network coverage to approximately 84 per cent of Canadians, including ongoing investments to operationalize our 3,500 MHz [megahertz] spectrum holdings. These investments significantly advance our leading customer experiences and network leadership position, as well as enhancing our competitive positioning to drive strong profitable customer growth on a consistent basis.

"As we head into the back-half of the year, we remain in a strong operating and financial position, supported by our robust balance sheet and enhanced through our cost-efficiency efforts. Our ability to deliver on our dividend growth program reflects our confidence in executing our growth strategy, on a global basis, and our ability to drive meaningful and sustainable free cash flow growth. Returning capital to shareholders is balanced against our continued focus to invest strategically to unlock transformational benefits for all of our stakeholders, including our planned participation in the upcoming 3,800 MHz spectrum auction, while maintaining a strong balance sheet to support critical investments that will further advance our growth strategy, and support our long-term success today and well into the future," concluded Mr. French.

As compared with the same period a year ago, net income in the quarter of $196-million was down 61 per cent and basic earnings per share (EPS) of 14 cents decreased by 59 per cent. These decreases were driven by the impacts from: (i) higher depreciation and amortization reflecting increases related to capital assets acquired in business acquisitions; growth in capital assets in support of the expansion of the company's broadband footprint, including its generational investment to connect homes and businesses to Telus PureFibre and 5G technology coverage; and growth in Internet, TV and security subscriber loading; (ii) higher financing costs primarily from greater long-term debt outstanding, attributable in part to business acquisitions, in addition to an increase in the effective interest rate; and (iii) higher employee benefits expense to reflect higher restructuring costs related to accelerated cost-efficiency programs. As it relates to EPS, the trends also reflect the effect of a higher number of common shares outstanding. When excluding the effects of restructuring and other costs, income tax-related adjustments, and other adjustments, adjusted net income of $273-million decreased by 35 per cent over the same period last year, while adjusted basic EPS of 19 cents was down 41 per cent over the same period last year. Adjusted net income is a non-GAAP (generally accepted accounting principles) financial measure and adjusted basic EPS is a non-GAAP ratio.

Compared with the same period last year, consolidated EBITDA decreased by 0.3 per cent to approximately $1.6-billion and adjusted EBITDA increased by 5 per cent to $1.7-billion. The growth in adjusted EBITDA reflects: (i) higher mobile network revenues driven by subscriber growth and the company's roaming recovery; (ii) growth in health, inclusive of the EBITDA contribution from its acquisition of LifeWorks; (iii) increased margins for Internet and security, primarily driven by subscriber growth; and (iv) lower organic TTech headcount. These factors were partly offset by: (i) merit-based compensation increases; (ii) higher costs related to the scaling of the company's digital capabilities, inclusive of increased subscription-based licences, contractor and cloud usage costs; (iii) a decline in Telus's DLCX contribution, primarily associated with higher service delivery costs in its AI business due to higher task complexity, as well as certain regions, principally Europe, due to temporary imbalances arising from reductions in service demand from some of the company's larger technology clients, which were only partially offset by cost-efficiency efforts; and (iv) declining TV and fixed legacy voice margins.

In the second quarter, Telus added 293,000 net customer additions, up 46,000 over the same period last year, and inclusive of 110,000 mobile phones and 124,000 connected devices, in addition to 35,000 Internet, 15,000 security and 17,000 TV customer connections. This was partly offset by residential voice losses of 8,000. The company's total TTech subscriber base of 18.5 million is up 7 per cent over the past 12 months, reflecting a 3.9-per-cent increase in the company's mobile phones subscriber base to approximately 9.8 million, and a 22-per-cent increase in Telus's connected devices subscriber base to more than 2.7 million. Additionally, the company's Internet connections grew by 9.3 per cent over the past 12 months to more than 2.5 million customer connections, its security customer base expanded by 9.7 per cent to over one million customers and Telus's TV subscriber base increased by 4.7 per cent to more than 1.3 million customers.

In health services, as of the end of the second quarter of 2023, virtual care members were 5.3 million and health care lives covered surpassed 68 million, up 47 per cent and 45.9 million over the past 12 months, respectively. Digital health transactions in the second quarter of 2023 were 152.9 million, up 5.2 per cent over the second quarter of 2022.

Cash provided by operating activities of $1.1-billion decreased by 11 per cent in the second quarter of 2023, primarily driven by an increase in interest paid. Free cash flow of $279-million increased by 36 per cent compared with the same period a year ago. The increase in free cash flow primarily reflects lower capital expenditures and adjusted EBITDA growth, partly offset by an increase in cash interest paid, and higher restructuring and other disbursements, inclusive of lump-sum amounts from the ratification of the new collective agreement between the TWU and the company, which were accrued in the first quarter of 2023, in addition to continuing cost-efficiency programs. Telus's definition of free cash flow, for which there is no industry alignment, is unaffected by accounting standards that do not impact cash.

Consolidated capital expenditures of $807-million, including $12-million related to real estate development, decreased by 23 per cent in the second quarter of 2023. TTech operations drove $251-million of this decrease, primarily due to a planned slowdown of fibre and wireless network build, which is consistent with 2023 build targets when compared with the company's accelerated investments in the second quarter of 2022. Telus's capital investments have enabled: (i) its Internet, TV and security subscriber growth, as well as more premises connected to its fibre network; (ii) increased coverage of its 5G network; (iii) the expansion of its health product offerings and capabilities, including the company's acquisition of LifeWorks, as well as to support business integration; and (iv) enhancement of the company's product and digital development to increase its system capacity and reliability. TTech real estate development capital expenditures increased by $8-million in the second quarter of 2023, due to increased capital investment to support construction of multiyear development projects, including Telus Ocean. By June 30, 2023, the company's PureFibre network covered approximately 3.1 million premises and its 5G network covered 84 per cent of the Canadian population. Telus has a very small number of legacy lead-sheathed cables, making up less than 0.3 per cent of its entire network. A large percentage of lead-sheathed cables have been removed and will continue to be removed as the company progresses its copper retirement strategy. The majority of the remaining lead-sheathed cables are underground, within a contained conduit structure (vault) and inaccessible to the public.

Second quarter 2023 operating highlights

Telus technology solutions (TTech):

• TTech operating revenues (arising from contracts with customers) increased by $510-million, or 14 per cent, in the second quarter of 2023, primarily reflecting increases in health services revenues, mobile network revenue, fixed data services revenues, mobile equipment and other service revenues, and fixed equipment and other service revenues, as described herein. Decreases in fixed voice services revenues, and Agriculture & Consumer Goods services revenues were partial offsets.
• TTech EBITDA increased by $40-million, or 2.9 per cent, in the second quarter of 2023, while TTech adjusted EBITDA increased by $115-million, or 8.1 per cent, reflecting an increase in direct contribution, in addition to lower organic TTech headcount. These factors were partially offset by: (i) higher costs related to business acquisitions, inclusive of a greater number of team members; (ii) merit-based compensation increases; (iii) increased services provided by DLCX segment; and (iv) higher costs related to the scaling of the company's digital capabilities, inclusive of increased subscription-based licences, contractor and cloud usage costs.

Mobile products and services:

• Mobile network revenue increased by $95-million, or 5.9 per cent, in the second quarter of 2023, largely due to growth in Telus's mobile phone and connected-device subscriber base, roaming revenue recovery attributed to the easing of pandemic-related restrictions, which principally started in the second quarter of 2022, and contributions from higher-base-rate plans.
• Mobile equipment and other service revenues increased by $60-million, or 13 per cent, in the second quarter of 2023, largely attributable to higher contracted volumes, in addition to the impact of higher-value smart phones in the sales mix.
• TTech mobile products and services direct contribution increased by $102-million, or 6.9 per cent, in the second quarter of 2023, largely reflecting mobile subscriber growth, higher roaming margins associated with an increase in international travel volumes and higher equipment margins. These were partly offset by higher commissions attributed to increased levels of retail traffic.
• Mobile phone ARPU (average revenue per user) was $58.80 in the second quarter of 2023, an increase of $1.06, or 1.8 per cent, for the quarter. This increase was largely due to higher roaming revenues as a result of increased international travel, which had notable recoveries beginning in the second quarter of 2022. Domestic ARPU has modestly increased as Telus continues to focus its efforts on driving higher-value loading, partly offset by family discounts and bundling credits offered to its customers, and lower overage revenues as customers continue to adopt larger or unlimited data and voice allotments in their rate plans.
• Mobile phone gross additions were 376,000 in the second quarter of 2023, an increase of 56,000, or 18 per cent, largely driven by growth in postpaid gross additions due to increased levels of retail traffic, increased market-driven promotional activity and growth in the Canadian population.
• Mobile phone net additions were 110,000 in the second quarter of 2023, an increase of 17,000, or 18 per cent, driven by higher mobile phone gross additions, partially offset by higher mobile phone churn, as described herein.
• Telus's mobile phone churn rate was 0.91 per cent in the second quarter of 2023, compared with 0.81 per cent in the second quarter of 2022, largely due to increased customer switching activity corresponding with higher levels of retail traffic and increased market-driven promotional activity, as discussed herein. Additionally, increased travel volumes from prior periods have resulted in higher travel-related prepaid deactivations in the second quarter. These factors have been partly mitigated by Telus's continued focus on customer retention through its industry-leading service and network quality, successful promotions, and bundled offerings.
• Connected device net additions were 124,000 in the second quarter of 2023, an increase of 32,000, or 35 per cent, attributable to increased IoT (Internet of things) connections, as well as sales of other connected devices, such as tablets and mobile Internet.

Fixed products and services:

• Fixed data services revenues increased by $67-million, or 6.2 per cent, in the second quarter of 2023. This increase was driven by: (i) an increase in the company's Internet, security and TV subscribers; (ii) business acquisitions; and (iii) higher revenue per customer as a result of Internet speed upgrades and rate changes. This growth was partially offset by lower TV revenue per customer, reflecting an increased mix of customers selecting smaller TV combination packages and technological substitution.
• Fixed voice services revenues decreased by $11-million, or 5.5 per cent, in the second quarter of 2023, reflecting the continuing decline in legacy voice revenues as a result of technological substitution and price plan changes. The decline was partly mitigated by the success of the company's bundled product offerings, retention efforts and the migration from legacy to IP (Internet protocol) services offerings.
• Fixed equipment and other service revenues increased by $10-million, or 8.3 per cent, in the second quarter of 2023, reflecting higher business and consumer sales volumes, and lower discounts on consumer premise equipment.
• TTech fixed products and services direct contribution increased by $155-million, or 14 per cent, in the second quarter of 2023, reflecting growth in health, inclusive of business acquisitions and organic growth, as well as increased margins for Internet, data and security, primarily driven by subscriber growth. These were partly offset by declining TV and legacy voice margins, principally due to technological substitution.
• Internet net additions were 35,000 in the second quarter of 2023, reflecting an increase of 1,000, or 2.9 per cent, due to strong loading in the business market and the company's success in driving strong gross additions in the consumer market through bundled product offerings. This growth was partly offset by a higher churn rate driven by macroeconomic pressures impacting consumer purchasing decisions.
• TV net additions were 17,000 in the second quarter of 2023, reflecting an increase of 2,000, or 13 per cent, due to Telus's diverse offerings, partly offset by higher churn related to the same factors as Internet.
• Security net additions were 15,000 in the second quarter of 2023, reflecting a decrease of 5,000, or 25 per cent, due to higher churn related to the same factors as Internet and TV, partly offset by increased demand for the company's bundled product offerings, and diverse suite of products and services.
• Residential voice net losses were 8,000 in the second quarter of 2023 as compared with net losses of 7,000 in the same period a year ago. Telus's bundled product and lower-priced offerings have been successful at mitigating losses and minimizing substitution to mobile and Internet-based services.

Health services:

• Through Telus Health, the company is leveraging technology to deliver connected solutions and services, improving access to care, and revolutionizing the flow of information, while facilitating collaboration, efficiency and productivity across the health care ecosystem, progressing the company's vision of transforming health care and empowering people to live healthier lives.
• Health services revenues increased by $291-million in the second quarter of 2023, driven by: (i) Telus's acquisition of LifeWorks; (ii) the continued adoption of the company's virtual care solutions; and (iii) growth in its traditional pharmacy solutions, reflecting more demand for the company's pharmacy management software coupled with increased prices.
• At the end of the second quarter of 2023, Telus's health care programs covered 68.3 million lives, an increase of 45.9 million over the past 12 months, mainly due to the addition of 36.9 million lives covered from its third quarter 2022 acquisition of LifeWorks, as well as healthy postacquisition growth from both new and existing clients across all of the company's regions. Organically, lives covered also increased due to continued demand for virtual solutions and personal health records.
• At the end of the second quarter of 2023, 5.3 million members were enrolled in the company's virtual care services, an increase of 1.7 million over the past 12 months, attributable to the continued adoption of virtual solutions that keep Canadians and others safely connected to health and wellness care.
• Digital health transactions were 152.9 million in the second quarter of 2023, reflecting an increase of 7.5 million for the quarter, largely driven by increased paid exchange of health care data between Telus's health benefits management system and care providers, resulting from higher patient demand for elective health services.

Agriculture & Consumer Goods services:

• Through Telus Agriculture & Consumer Goods, the company provides innovative digital solutions and actionable data insights that better connect the global supply chain, driving more efficient production processes, and improving the safety, quality and sustainability of food and consumer goods. Importantly, these efforts are also enabling better traceability to the end consumer, further supporting improved food outcomes.
• Agriculture & Consumer Goods services revenues decreased by $2-million in the second quarter of 2023, reflecting transient headwinds, including subscription softness in the company's software as-a-service (SaaS)-based revenue management software for consumer goods manufacturers and decreased sales funnel opportunities related to macroeconomic challenges. Telus's Agriculture & Consumer Goods revenues are largely earned in U.S. dollars and, in 2023 compared with 2022, the Canadian dollar weakened against the U.S. dollar, resulting in higher reported revenues in these periods.

Digitally led customer experiences -- Telus International (DLCX):

• DLCX operating revenues (arising from contracts with customers) increased by $51-million, or 7.6 per cent, in the second quarter of 2023, attributable to growth in the company's tech and games, and other industry vertical clients, as discussed herein. In addition, the strengthening of the U.S. dollar against the Canadian dollar resulted in a favourable foreign currency impact on the company's DLCX operating results. Revenues from contracts denominated in U.S. dollars, euros and other currencies will be affected by changes in foreign exchange rates.
• Revenue from Telus's tech and games industry vertical increased by $32-million, or 8.7 per cent, in the second quarter of 2023, due to continued growth experienced with a number of the company's technology clients and the addition of new clients. This growth was partially offset by lower revenue from its second-largest client.
• Revenue from its communications and media industry vertical increased by $28-million, or 15 per cent, in the second quarter of 2023, driven primarily by more services provided to the TTech segment and the addition of new clients from the company's acquisition of WillowTree.
• Revenue from Telus's e-commerce and fintech (financial technology) industry vertical decreased by $9-million, or 9.2 per cent, in the second quarter of 2023, due to a decline in service volumes from fintech clients.
• Revenue from Telus's banking, financial services and insurance industry vertical decreased by $14-million, or 22 per cent, in the second quarter of 2023, due to lower service volumes from a global financial institution client, partially offset by the addition of new clients from the company's acquisition of WillowTree.
• Revenue from the company's health care industry vertical increased by $36-million in the second quarter of 2023, which was primarily due to more services provided to the health care business unit of the TTech segment.
• DLCX EBITDA decreased by $45-million, or 26 per cent, in the second quarter of 2023, while DLCX adjusted EBITDA decreased by $34-million, or 19 per cent, for the same period. These decreases were primarily associated with cost imbalances arising from reductions in service demand, principally in Europe, from some of the company's larger technology clients, as well as higher service delivery costs in its AI business due to higher task complexity. All of these impacts combined were only partially offset by cost-efficiency efforts realized during the second quarter of 2023.

Corporate highlights

Telus makes significant contributions and investments in the communities where team members live, work and serve, and to the Canadian economy on behalf of customers, shareholders and team members. These include:

• Paying, collecting and remitting approximately $1.3-billion in the first six months of 2023 to federal, provincial and municipal governments in Canada, consisting of corporate income taxes, sales taxes, property taxes, employer portion of payroll taxes and various regulatory fees. Since 2000, Telus has remitted over $35-billion in these taxes.
• Investing $1.5-billion in capital expenditures, primarily in communities across Canada in the first six months of 2023, and over $52-billion since 2000.
• Disbursing spectrum renewal fees of approximately $53-million to Innovation, Science and Economic Development Canada in the first six months of 2023. Since 2000, the company's total tax and spectrum remittances to federal, provincial and municipal governments in Canada have totalled approximately $42-billion.
• Spending $4.8-billion in total operating expenses in the first six months of 2023, including goods and services purchased of approximately $3.2-billion. Since 2000, Telus has spent $154-billion and $104-billion, respectively, in these areas.
• Generating a total team member payroll of approximately $2-billion in the first six months of 2023, including wages and other employee benefits, and payroll taxes of $139-million. Since 2000, total team member payroll totals $59-billion.
• Returning more than $1-billion in dividends declared in the first half of 2023 to individual shareholders, mutual fund owners, pensioners and institutional investors. Since 2004, Telus has returned approximately $24-billion to shareholders through its dividend and share purchase programs, including over $18.6-billion in dividends and $5.2-billion in share repurchases, representing more than $16 per share.

Telus updates 2023 consolidated financial targets

Telus's consolidated financial targets for 2023 are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2022 annual management's discussion and analysis (MD&A).

As announced on July 13, 2023, Telus updated its full-year 2023 targets for consolidated operating revenue and adjusted EBITDA growth to reflect Telus International's (TI) updated annual outlook. TI revised lower its annual financial targets as a result of global macroeconomic pressures that has led to a decline in service demand from some of its larger clients, particularly within the technology vertical, as well as delays in converting its sales funnel as clients address their own cost structures, including successive employee downsizing. Notably, implied annual financial growth target for the company's TTech operating segment remains unchanged. Telus is the controlling shareholder of TI and, as a result, consolidates its financial results through Telus's DLCX operating segment.

Free cash flow is being updated today to reflect the significantly higher restructuring costs related to accelerated cost-efficiency programs that have been implemented to support future EBITDA margin and accelerated cash flow expansion. Telus's capital expenditure target for 2023 remains unchanged.

The preceding disclosure respecting Telus's 2023 financial targets is forward-looking information and is fully qualified by the "Caution regarding forward-looking statement" section in the 2022 annual MD&A filed on the date hereof on SEDAR+, especially Section 10 (Risks and Risk Management thereof), which is hereby incorporated by reference, and is based on management's expectations and assumptions as set out in Section 9.3 (Telus assumptions for 2023) in the 2022 annual MD&A, and updated in sections 9 and 10 of the company's Q2 2023 interim MD&A. This disclosure is presented for the purpose of assisting the company's investors and others in understanding certain key elements of Telus's expected 2023 financial results, as well as its objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes.

Dividend declaration

The Telus board of directors declared a quarterly dividend of 36.36 cents per share on the issued and outstanding common shares of the company, payable on Oct. 2, 2023, to holders of record at the close of business on Sept. 8, 2023. This quarterly dividend reflects an increase of 7.4 per cent from the 33.86-cent-per-share dividend declared one year earlier and is consistent with its multiyear dividend growth program.

Access to quarterly results information

Interested investors, the media and others may review this quarterly earnings news release, management's discussion and analysis, quarterly results slides, audio and transcript of the investor webcast call, and supplementary financial information at the company's website.

Telus's second-quarter 2023 conference call is scheduled for Friday, Aug. 4, 2023, at 12 p.m. ET (9 a.m. PT) and will feature a presentation followed by a question-and-answer period with investment analysts. Interested parties can access the webcast at the company's website. An audio recording will be available approximately 60 minutes after the call until midnight Sept. 4, 2023, at 1-855-201-2300. Please quote conference access code: 46308 followed by the pound key, and playback access code: 0113833 followed by the pound key. An archive of the webcast will also be available at the company's website and a transcript will be posted on the website within a few business days.

About Telus Corp.

Telus is a dynamic, world-leading communications technology company with more than $18-billion in annual revenue and over 18 million customer connections spanning wireless, data, Internet protocol, voice, television, entertainment, video and security. Its social purpose is to leverage its global-leading technology and compassion to drive social change and enable remarkable human outcomes. Its long-standing commitment to putting its customers first fuels every aspect of the business, making it a distinct leader in customer service excellence and loyalty. The numerous, sustained accolades Telus has earned over the years from independent, industry-leading network insight firms showcase the strength and speed of Telus's global-leading networks, reinforcing its commitment to provide Canadians with access to superior technology that connects them to the people, resources and information that make their lives better.

Telus International is a leading digital customer experience innovator that designs, builds and delivers next-generation solutions, including artificial intelligence and content moderation, for global and disruptive brands across high-growth industry verticals, including technology and games, communications and media, and e-commerce and fintech, banking, financial services and insurance, health care, and others.

Telus Health is a global health care company, which provides employee and family preventative health care and wellness solutions. The company's Telus team, along with its 100,000 health professionals, is leveraging the combination of Telus's strong digital and data analytics capabilities with the company's unsurpassed client service to dramatically improve remedial, preventative and mental health outcomes covering over 68 million lives, and growing, around the world. As the largest provider of digital solutions and digital insights of its kind, Telus Agriculture & Consumer Goods enables efficient and sustainable production from seed to store, helping improve the safety and quality of food and other goods in a way that is traceable to end consumers.

Driven by its determination and vision to connect all citizens for good, Telus's deeply meaningful and enduring philosophy to give where it lives has inspired Telus and its team to contribute $1.6-billion, including 2.2 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made Telus the most giving company in the world.

We seek Safe Harbor.