Executives: Paul Carpino – Investor Relations Darren Entwistle – President and Chief Executive Officer Doug French – Chief Financial Officer
Analysts: Phillip Huang – Barclays Greg MacDonald – Macquarie Securities Simon Flannery – Morgan Stanley Maher Yaghi – Desjardins Richard Choe –

JPMorgan
Operator: Good morning, ladies and gentlemen. Welcome to the TELUS 2017 Q1 earnings conference call. I would like to introduce your speaker, Mr. Paul Carpino, please go ahead.

Paul Carpino: Great.

Thank you, Cheryl. Good afternoon, everyone, and good morning to those in the West, thank you for joining us today. First quarter news release and detailed supplemental investor information are posted on our website at telus.com/investors. Fresh from our AGM earlier this morning and joining me in Toronto for the call today will be President and CEO, Darren Entwistle, who'll provide opening comments followed by a review of the first quarter operational and financial results by Doug French, our CFO. After our prepared remarks, we will conclude with a question-and-answer session.

In consideration of your day, we are going to try and keep this call to under one hour. Let me direct your attention to Slide 2. This presentation, answers to questions and statements about future events including 2017 annual targets and guidance, multi-year dividend growth, and share purchase programs, fibre network and other capital investments and leverage ratios are subject to risks and uncertainties and assumptions. According, actual performance could differ materially from statements made today, so do not place undue reliance on them. We also disclaim any obligation to update forward-looking statements except as required by law.

I ask that you read our legal disclaimers and refer you to the risks and assumptions outlined in our public disclosures. In particular, in sections 9 and 10 of TELUS's annual MD&A, our filings with securities commissions in both Canada and the United States. Let me now turn the call over to Darren Entwistle.

Darren Entwistle: Thanks Paul, and good afternoon to everyone. TELUS is a long standing history of delivering industry best performance.

In terms of revenue any EBITDA growth, customer loyalty and lifetime revenue, leading performances in terms of balance contributions from both our wireless and wireline assets, leading the way in terms of successful generational investments in our core broadband assets, and of course leading the way as it relates to unmatched to multi-year and transparent dividend growth programs. TELUS first quarter results are in keeping with its performance tradition. Our Q1 results include industry-leading growth in both consolidated revenue and EBITDA. Moreover, our results continue to be underpinned by strong customer growth and the best client loyalty in our industry. In the first quarter, our consolidated operating revenue was up 2.9% and EBITDA was up 6.4%, both of which are industry best for this quarter.

These results reflect higher data revenue and subscriber growth in both our wireless and wireline operations, as well as the benefits of successfully executing on our efficiency and growth initiatives. In wireless, network revenue grew a healthy 6.4% and EBITDA increased a strong 7.4%. Postpaid wireless net additions were 44,000, which is 36,000 higher from the first quarter of 2016. Our leadership and customer loyalty remains unmatched. With wireless postpaid churn at an industry-leading 0.93%, 4 basis points better on a year-over-year.

We have enjoyed unprecedented continuity in terms of leadership on a global basis as it relates to customer loyalty and retention. Impressively, excluding higher CDMA churn, TELUS churn for the first quarter was 0.90 on a normalized basis for the CDMA impact. Our leadership in this regard is a result of the TELUS team's dedication over the past 10 years to deliver on a customer service strategy that has truly set a standard of excellence. Thanks to the passion and commitment of our team, TELUS has delivered a churn rate of less than 1% and 14% of the last 15 quarters and still counting. Blended ARPU was higher by 3.9% at $65.53 and represents TELUS 26th consecutive quarter of year-over-year growth in this regard.

With strong churn and ARPU results, TELUS current lifetime revenue was more than $5,500 per subscriber. This puts TELUS at a notable 15% and 42% higher than our two national competitors. Moving to our wireline business, external revenues increased slightly just below 1%, walked our world leading EBITDA grew an impressive 4.7%. Net additions of high speed internet subscribers were 24,000 or 12,000 higher than Q1 last year. We also added 7,000 net TELUS TV customers, the largest number versus any competitor in Canada.

We've now lead the country in this regard for five consecutive quarters, and notably 24 of 29 quarters since 2010. Clearly this reflects the quality, value, flexibility and strong feature differentiation offered by our Optik TV platform. We will continue to introduce exciting new enhancements throughout the year that differentiate our TV product for the benefit of our customers. Our leadership in TV innovation was further elevated in May with the launch of Pick TV service offering, which we are now starting to roll out to our TELUS footprint. Pick TV is another example of how TELUS puts customers first and is driving innovation in the video space.

The offering as the video service designed from the ground up with direct input from customers who have slimmed down their TV subscriptions. As we did when we first introduced Optik back in 2010, we've challenge the paradigm by enabling a simple self-installable solution that doesn't require a contract and comes with TELUS content options, as well as the Google Play store embedded for access to a broad app entertainment ecosystem. Overall, we realized strong Q1 results across both wireless and wirelines during a highly competitive environment and we continue to feel confident with respect to our outlook for the full year of 2017. As announced in our press release this morning, we are increasing our 2017 targets to reflect additional opportunities with respect to revenue and EBITDA growth, as well as earnings per share. In addition, we will be increasing our investment in the rapid expansion of our MTS advanced wireless network for our customers in Manitoba, as well as supporting the continued deployment of our successful fibre program.

As noted by our U.S. and Canadian peers who are both organically investing and acquiring fibre at a rapid pace, the near and long-term value of this generational investment is significant. Our goals put the power of a fibre network including 5G wireless capabilities in the hands of Canadian customers, and businesses and the public sector in an expeditious manner. Our products and capabilities have a track record of making a difference to our customers, communities and society in general, and this next wave of technology would match these be benefit even further. The current environment is excellent for completing this now, on both a strategic and a cost of capital basis.

Additionally, with new spectrum auction likely a couple of years away, progressing with its build now any targeted and success based manner further supports our accelerated approach. Already, fibre is available to approximately 30% of our Optik footprint, and by early 2018 we will be halfway completed this generational investment. Importantly, as we approach the halfway point of this build in 2018, we are also targeting to be free cash flow positive next year and chronically so thereafter. Additionally, even as we come through, its elevated investments cycle for the right reasons, we anticipate that are already modest leverage in 2018 will decline from the current 2.7 times back to our targeted range of between 2 to 2.5 times, excluding of course any extra ordinary items. TELUS has return to a free cash flow position and our targeted leverage ranges is a testament to this team's ability to execute on a very successful strategy.

Today, we also announced our 13th dividend increase in our multi-year annual dividend growth programs that we first introduced at the AGM back in 2011. With today's increase, our annualized dividend now stands at $1.97 or 7.1% higher than the same period last year. Notably, our 88% increase in our dividend since the program was first instituted six years ago at our 2011 AGM is double the growth rate of our next closest Telco or cable co-peer. Importantly, we continue to provide the consistency in our results that enables us to complete the shareholder friendly program, while simultaneously making significant growth oriented capital investments to ensure our future for many years to come. At other organization, these initiatives are mutually exclusive, and at TELUS today, I can tell you our initiatives are mutually inclusive.

I like to close by congratulating our team for continually delivering on our commitments, particularly those for both customers and investors, and for building a company that embraces the responsibilities we have to our clients, our shareholders and the communities we serve. I will now turn the call over to Doug, so that he can provide you some additional color in respect of our first quarter results.

Doug French: Thank you, Darren, and good afternoon everyone. I am Slide 8. We had a very good first quarter in wireless, building up our strong results delivered throughout 2016.

Notably, network revenue growth of 6.4% resulted from strong postpaid subscriber growth, and a 3.9% increase in ARPU. That was driven by a 12% increase in data revenue, reflecting a larger portion of higher rate, smartphone plans, including Premium Plus plans, and a continue data usage growth. Reported EBITDA grew by 8.6%, well excluding restructuring and other costs, adjusted EBITDA was higher by 7.4%driven by our strong network revenue growth and lower operating and marketing costs. Adjusted EBITDA margin as a percentage of total revenue expanded 120 basis points to 45.8%, adding to the 70 basis point improvement we delivered in 2016. Turning to wireline.

Revenues grew 0.7% as internet, TV, business process outsourcing, and TELUS health revenues were partially offset by continued declines in legacy voice any equipment revenues. We are seeing continuing levels of competition and the ongoing impacts. Our economic pressure is particularly in the business market. As well as TELUS International had a slower start to the year, as one of its significant corporate customers downsized their services. Our strong focus on efficiency and effectiveness resulted in leading wireline EBITDA growth to 4.7%, and a margin expansion of 110 basis points to 30.2%.

On a consolidated basis, TELUS generated 2.9% revenue growth, with a service revenue growth of 3.5%, offsetting an 8% decline in equipment revenue. Excluding restructuring and other costs, adjusted EBITDA rose 6.4%, reflecting strong wireless margin growth and lower costs resulting from our efficiency and effectiveness program in the current and prior years. Adjusted earnings per share excluding restructuring and other costs increased to $0.74. As a result of our higher operating income partially offset by higher financing and depreciation costs. See the appendix for an EPS breakdown.

We continue to invest in our fibre optic network to connect more Canadians and to support our small cell technology strategy to improve wireless coverage and prepare for a more efficient and timely evolution to 5G. CapEx totaled $724 million in the first quarter. We now have 1.15 million homes and businesses with immediate access to our gigabyte capable TELUS pure fibre network. This was 400,000 over this time last year. Our 4G LTE network continues to be expanded enhance, including in Alberta in Manitoba.

With LTE advanced now available to more than 80% of Canadians. Free cash flow roughly doubled to $217 million year-over-year, as higher EBITDA and lower cash taxes paid more than offset the increase in capital investments for our networks. We're updating our outlook for 2017 to reflect the impact of our acquisition and wireless expansion in Manitoba. We now see revenue growth at 3% to 4%, EBITDA growth of 3.5% to 7% and EPS of 2% to 9%. Aligning with our higher revenue and EBITDA outlook and supported by our strong Q1 results, we have also raised our full CapEx target to approximately $.3 million.

As mentioned by Darren, the higher CapEx reflects increased wireless network in channel investments in Manitoba as we improve coverage, capacity and speeds to enhance the customer experience and maximize the return on our recently acquired subscribers, as well as the continued success of our connected homes and businesses on our fibre network. And as mentioned as well importantly, there is no change to our goal of becoming free cash flow positive in 2018 or to be within the range of our long-term net debt to EBITDA range of 2.0 to 2.5 times by the end of 2018. Paul, back to you for questions.

Paul Carpino: Thank you, Doug. Cheryl, can you please proceed with questions from the queue for Darren and Doug?

Operator: Certainly.

Our first question is from Phillip Huang at Barclays. Please go ahead.

Phillip Huang: Thanks. Good afternoon. The strong international subscriber growth has certainly a positive surprise, first when you have a seasonally light at quarter and Shaw has put some wide open plans and bundling their new BlueSky TV.

Darren, I know you are always been very committed with the expansion of your fibre footprint and I know you've given us a bit of color in terms of you know the build-up plans and milestones. But do you believe that it's going to reach the critical mass or inflection point if there is? The acceleration broadband to tell you this quarter is certainly seems to be for encouraging. Do you see some of the new normal with the level of broadband subscribers there going forward? Thanks.

Darren Entwistle: I am not going to give too much of a prospective view on HSIA loading on a go-forward basis, but I think some of the assumptions that you articulated are accurate. Firstly, when you look at the fibre deployment that would drive in from a technology thrust perspective, clearly we're starting to experience greater scale.

We are in the throes of a protein, the halfway mark as it relates to our fibre deployment across a 3.4 million home base. That as you heard in my remarks that we are looking to get there by the first half of 2018.

Paul Carpino: Pardon, the interruption. Can I get your name please? Hello, is anybody there? Please be advised that if you don't answer, I will need to terminate your call as you're not allowed to be in the conference. Please check if your line if muted.

Hello. Alright, I am terminating the call. Please try your call again. Thank you.

Darren Entwistle: Because as you know, within both consumer and business constituency, there are people that are valuing the uplink as much as the downlink, and when you have the speed advantage of your competitor on the uplink that's up to 10 times faster, that's very attractive in terms of supporting the internet growth that we're aspire to.

It also gives people the opportunity to determine what type of relationship. Do they want to have with the organization? Is it going to be a premium type of relationship across the breadth of our internet, wireless, voice and TV services, or is it going to be more of a premium on internet and mobility, and maybe looking at something like our Pick platform as it relates to the way they consume that content. So I think this is a tremendously important platform for the organization and will be a long-term extremely fruitful investment that we will harvest economically for the benefit of investors. The other thing that we are doing is that, TELUS has always looked at access it's something that we can achieve through a multiplicity of technology. One of the opportunities for us on the HSIA front within non-urban or more rural areas of our overall footprint is to use wireless as the access mechanism.

When you've got the type of capabilities that we are deploying on LTE and LTE advanced, it gives you very attractive bandwidth that you can deliver. And to deliver those more economically as they access mechanism in preference over wireline in more challenging real communities, that tends out to be a strong pieces for the TELUS organization. So, offering a services like high speed internet access over LTE is something that we are finding very fruitful to expand economically addressable market in a way that makes good sense for us. So, some of those customers previously would have been economically challenging to reach from an access mechanism point of view on a wired basis, but using wireless is the access mechanism. In this case, LTE and delivering high speed over LTE within those real areas has opened up an additional addressable for us that we're harvesting to good effect.

In that, really an innovation that came out of our team in Quebec, it's something that we did in the more rural regions in Quebec within the HSPA technology stratification back in 2010. And we've now expanded that to Western Canada, and of course elevated it to LTE technology. So I think those are the things that have helped the loadings. The one other point that I would make is that, the number one priority is TELUS is putting customers first. And our customer loyalty and retention on the HSIA front was at a premium in Q1.

We did very well. And of course, anytime you do very well on the churn front because of the effort that you put into customer service excellence and how that manifests itself in better loyalty and retention. You're going to see your net adds flattered, and that was about you're seeing the overall Q1 outcome.

Phillip Huang: That's very helpful. Thank you.

Maybe a quick follow up on the dividend side, you rated by 7% with some new client.

Darren Entwistle: 7.1%

Phillip Huang: 7.1%. Maybe a question for you. Obviously, you guys are investing in prioritizing investment, but what conditions were need to be presence for the dividend growth to come up at the higher end of a 10%? And then I'll pass the line. Thank you.

Doug French: I think a few things on that front might be helpful. So that you've got a packing order that you can draw infringe upfront. Firstly, it's going to be closer 10 then 7, look for stronger levels of EBITDA growth. We delivered a very strong EBITDA growth in Q1 at 6.4%. And I think anytime you're north of 6% on the EBITDA growth.

It gives you some latitude as to whether you want to be more ambitious in respect of the dividend. So for us, that's really the growth.

Paul Carpino: Pardon, the interruption. Can I get your name please? Hello. You hear me.

Please be advised that if you don't answer, I will need to hang up the line as you're not allowed to be in the conference. Please try your call again. Thank you.

Doug French: The range, given that the dividends is the province of the board in terms of making that adjudication on a quarterly basis. And we rather uniquely in many ways are one of the few that stick to a dividend payout ratio range of net income, which gives you transparency in terms of where we are going to go out with dividend and dividend increases.

We like camping out in the 65% to 75% done of net income on a prospective basis. So to the extent, you know to which, we are at the midpoint of the range. You can expect that to be kind of steady Eddie on the dividend increases. If we are at the higher end of the range, then we are going to be at the lower end of the 7% to 10% dividend postulation that we granted for 2017 through 2019. If we are at the lower end of the range, the mechanism of latitude to take a dividend a little bit higher in terms of the growth percentage, and I think that's the sensible way to calibrate your expectations of this organization.

And then the third area is what I would call affordability, and that really speaks the free cash flow. So we have postulated in terms of advanced guidance for 2018. We have said that we are going to go free cash flow positive in 2018, and that to remain so, thereafter harvesting the fruits of the investments that we've been making on the CapEx front with the exception of normalization of anything special like a spectrum auction buy case in point. And so, getting back into their free cash flow positive zone, I think buttresses dividend affordability, and I think that correlation makes good sense. And I'll make one final comment, when we started to make the generational investments in fibre, and at the same time digesting the CapEx requirements of several spectrum auctions in succession.

We went into a free cash flow negative more to that points, but we thought it was the right thing to do because we thought that fibre and spectrum was truly generational investments that would enshrined a sustainability of dividend growth over the very, very, very, very long term for this organization. So we thought that that was the right thing to do, but we knew that the negative cash flow period would be transient. It would be limited rather than something that would carry on in perpetuity. And so, as a result of that, we saw a no reason to disrupt their dividend growth model. If we thought we were going to be in a chronic negative cash flow environment then we would have made a dividend adjustment.

But we felt that we were in a transient negative free cash flow environment for the right reasons given the generational investments that we are making, which I'd like to point out a number of organizations globally are now ambulating in this low cost of capital environment, recognizing the strategic necessity of fibre, not just to support HSIA in TV, but everything from home automation to 5G wireless with its densified small cell anthropology. So, it is the right thing to do, but it was transient. It was limited. And limited in this case means 2017 at the end and we are going to go free cash flow positive in 2018. So to the extent which we achieve that particular ambition and I think we got a pretty good track record in terms of delivering against the expectations.

I think that supports the affordability of the dividend increases that we would like to deliver through 2019. And then lastly, the 2019 as we get older and older seems to come more quickly in terms of the years going by. You know when we get close to 2019 and people are postulating. What are we going to do for 2020 through 2022? I would say our ability to continue to grow the dividend unabated is going to be down to harvesting the investments that we are making today in fibre, the investments that we are making today in products, the investments that we are making today in cost efficiency which is critical, and the investments that we are making in everything from LTE advanced suited the 5G wireless topology so that we can make it sustainable. So those are really the three checks at the end of the day that you can draw inference from EBITDA growth, dividend payout ratio range and free cash flow continuity.

Phillip Huang: That's perfect. Thanks very much.

Darren Entwistle: Great.

Paul Carpino: Thanks, Phil. Our next question, Cheryl.

Operator: Our next question is from Greg MacDonald, Macquarie Securities. Please go ahead.

Greg MacDonald: Thanks and good afternoon everyone. I guess, morning if you're on the West Coast. Question Darren, I have on the growth outlook in both the country and in Alberta the MD&A noted the change and assumptions for growth for Canada.

Three months ago you are at 1.8%, now 2.2%, and in Alberta three months ago 1% to 2%, not at 2.4%, recognized in the right up there that there is both questions on the U.S. administration with respect to protectionism, but also the Alberta economy. Can you just talk generally about the factors that are affecting the confidence, particularly we are interested in the Alberta economy obviously given your profile there? Thanks.

Darren Entwistle: Okay. Greg, I would say that we are cautiously optimistic about the Alberta economy.

We had seen signs of strengthening and you've seen where some of the movement is transpired in terms of oil prices, but we are not betting on the improvement. And that's a really important point to put across. There is too many variables at play here to factor that into the target setting that we've got for 2017 or what we want to get done over the next couple of years. So, we are decidedly cautious in that regard and we are taking a more long term orientation. That yes, there will be a recovery.

It's not a question of bps, but the duration of the recovery. And we think it's prudent to be conservative in that and have a longer term orientation and not the factor again any favorable expectations in terms of our 2017 targeting or a 2018 planning. Secondly, and I would like your view on this. I'd be grateful if you could comment on our Q1 results at the financial level and at the operational level given the duress that we are weathering within Alberta. That's got to speak volumes for a quality and diversity of our assets, both digital and human.

We generated an excellent Q1, and maybe just let me put this into perspective for a second as it relates to weathering the economic climate in Alberta. We let our industry in 2016 in terms of revenue growth and EBITDA growth. We let our industry holistically in terms of operational performance across wireline and wireless, and we let our industry in terms of customer service excellence in 2016 as well, and I think he recognize that. We also let our immediate peers in terms of total shareholder return in 2017, whether it comes from capital appreciation of the combination with their dividend growth model. So, whether it's financial, whether it's operational, whether its customer service, or total shareholder return.

We lead the industry in 2016 and we did the same again in Q1 of 2017, and I would know that that the path, and we let in 2016 look at the present leading if Q1. And when I look at my targets in juxtapose those versus the peer group for deploy year 2017. If we achieve them, I think will lead once again. So I think that continuity from past to present to future is pretty telling when it comes to our performance from the people delivering it to the assets upon which is predicated. In Q1, I think it's an exemplification of just that.

On the consumer side of things in Alberta, we have seen some encouraging and stability. So to give you additional color, our ARPU is up where previously been impacted. Our churn is down and it's already a very good churn rate in Alberta, so that's positive. But our net adds on a year-over-year basis are still down. They're just modestly less down in Q1 of 2017 versus where they were in Q1 of 2016, where they were down in a more considerable fashion.

So, the net adds on a year-over-year basis are down, but they have moderated to a great extent. On the business side in Alberta, we are weak right now on B2B, and you can see a little bit of that on in our wireline revenue results are slightly less than 1%. Although, you can make comments in terms a year-over-year, it's a bit weak and its challenged by our B2B activities within the Alberta market. So, we are still feeling the pressure there in that regard. As it relates to business, on the wireless side it's a better story overall.

The nets are almost flat, so we've reduced the bleeding in that regard, so we don't have to growth, but on a year-over-year basis, at least we are holding ourselves neutral in that regard. We are still declining on the ARPU front in the B2B wireless market, but it's far less significant than what it was back in Q1 of 2016. We are in a low single-digit ARPU bleed on B2B where we were almost close to double digits on the ARPU bleed this time last year, and the churn is much better. Again thanks to the efforts of our B2B team. So, that gives you some pretty good color in Alberta across consumer and business, and across wireline and wireless.

I'd also point out that the Alberta environment is not in our 2017 target in terms of any expected improvement. We basically modeled out our 2017 targets based on the status quo with the appropriate amount of risk management in that regards. And then lastly, in addition to speaking to the quality of our assets and the team's execution, it's speak to the diversity of our assets. So, we got very attractive growth opportunity to go after in B.C. We've got attractive growth opportunities to go after the multicultural market.

We've got very attractive growth opportunity to go after in Ontario and Quebec. So, we are not a one geo location organization and we've got lots of growth upside to pursue in other geographies in Canada that are experiencing less of drag as it relates to impact on the resource sector there. Then finally, it's imperative that we continue to take cost out of our business and we do it for three reasons. One is the weather economic storms like Alberta, two to fund J-Curve investment like Optik TV and fibre, and three, so we can deliver strong profitability results to the street. And I think that was well demonstrated by the 4.7% EBITDA growth on the wireline side of our business, despite the Alberta impact.

And I would say that 4.7% EBITDA growth, even the modest revenue growth are best-in-class versus our incumbent global peers when looking at their wireline businesses and that speaks to the dual and the growth strategy of the TELUS organization.

Greg MacDonald: That's a lot of good color. Thanks Darren. One point of clarification, are the economic forecast internal or are they external i.e. from Bank of Canada?

Darren Entwistle: They are external.

Greg MacDonald: They are external.

Doug French: Bank of Canada.

Darren Entwistle: From the Bank of Canada.

Greg MacDonald: Thanks a lot guys.

Darren Entwistle: Is our treasury team now running the Bank of Canada? Steve Lewis you are the new Mark Carney.

Doug French: You kind of look alike.

Greg MacDonald: I just wanted to make sure, as to your comment on being cautiously optimistic.

Darren Entwistle: That level of GDP growth that you have seen, the upward revision is not factored into our plans. So, we would be the happiest people that has come to fruition and happy for the people and citizens of Alberta, but we're not factoring into our planting thesis. So that will be upside that should have transpired.

Greg MacDonald: And presumably, you'd see that impact first on pricing power, hence your comments on low single digit ARPU blade on the B2B side right?

Darren Entwistle: Yeah, and you got to remember in addition to that, our consumer HSIA TV offering has done very well despite the economic duress in Alberta. So, you will see improvement or less pressure on B2B that's been weathering the brunt of the storm. You will see an acceleration in terms of the consumer wireless recovery and hopefully you will see continuity in terms of our HSIA and TV growth backed by pure fibre that's not really been diluted as a result of the economic duress in the province. So, that has actually exceeded our expectations in terms of doing well despite the face of the economic climate that we find ourselves in.

Greg MacDonald: Appreciate that.

I think a lot of investors do as well. Thanks for the answer.

Darren Entwistle: Thanks Greg.

Paul Carpino: Thanks Greg. Cheryl, next question please.

Operator: Our next question is from Simon Flannery, Morgan Stanley. Please go ahead.

Simon Flannery: Great. Thanks very much. So, another good wireless quarter for the entire industry and it's certainly is a breath of fresh air sitting in New York and what we've seen down here, but…

Paul Carpino: Cheryl, is Simon still on the line?

Operator: Unfortunately his line has disconnected.

Paul Carpino: Okay. We'll get him when he comes back. If you can go the next question please.

Operator: We will ask Maher Yaghi from Desjardins. Please go ahead.

Maher Yaghi: Thank you for taking my question. Congrats on the results. I wanted to start by talking about the wireline margins we saw nice pick-up year-on-year in margins. I assume a good portion of that is due to the recent restructuring that you did. How much of – how much more upside can we see in EBITDA margins on wireline continuing in the next couple of quarters? And the second question I have is, can you comment on the recent launch of the competitor Shaw I guess of new TV product in Western Canada.

And what kind of initial impact you've seen on your internal loading and kind of results on profitability and geometrics from the recent launch. And I have a final question, going back to your initial introductory comments, Darren, you talked about how you deploy capital. Looking back you – I calculate some kind of a $29 average buyback program that you did on the share. Now you know we are in the period where cash flow is scarce and I mean you are deploying it in CapEx. Next cycle will be reducing debt.

Is there any plan longer term to get back on the buyback program, because it's done well for you in the past?

Doug French: So, I'll start off with the margin, it's Doug French. Darren sort of or did highlight earlier, the revenue growth opportunities that we're looking at on wireline and the margin that we hit this quarter was driven through more of the cost initiatives that were also discussed and we're going to continue to drive margins where ever possible and we continue to have a focus on our efficiency and effectiveness within our organization. So, I think it's all going to be dependent on our ability to grow the revenue line, but we will continue to have those cost reductions and those costs, containment initiatives as we look forward. And as we look at those, it's leveraging off of our fibre footprint which is driving operational synergies. It's leveraging our customers first which drive operational synergies.

It's leveraging off supply chain and some of the opportunities we can get from our third party suppliers. So, looking at all of those initiatives that would allow us to be more flexible on our internal resource planning, and allow us to keep our cost structure you know to meet the needs as laid out by Darren for growth initiative. So, I would say yes, we're going to continue to strive to get margin higher, but I wouldn't suggest material step functions in the short-term. We'll continue to work to work on it as we go forward on our profitability front.

Darren Entwistle: Maher maybe taking your last question first, you are close with your calculation.

In terms of our share buyback, the average cost has been $28 per share, which is close to a 40% discount over our current trading price, and I do think that's speaks to the efficacy of the program that we've pursued. In fact, the IRR on that program was 12.5%. And when you look at the low cost of money environment that we're in today, I would say a 12.5% IRR represents you know a pretty good return overall. We will never remove the NCIB program from our repertoire. It's just you know are the circumstances right for us to deploy it.

Let me highlight the priority for you. Our priority is our dividend growth model. Everything as it relates to financial engineering is in servitude to our dividend growth model. The nicest feature that we like about the NCIB program is that it was synergistic with the with the dividend growth model, because if prospectively you are planning to increase your dividend outflows, then buying back and cancelling those shares helps ameliorate those dividend outflow. So, we really did like the combination between the two.

But the NCIB program was always in servitude to two questions. Does it support the overall dividend thesis, and can we afford to undertake it, versus other uses that we would have for that cash including the generational investments that I've articulated on the close of this call. If you are wondering, okay, give me another checklist similar to what we did on the dividend, as to when we would use it again, I would say okay. Number one, from a pure play features point of view, it's got to be synergistic in terms of helping our dividend growth model prospectively and ameliorating dividend outflows. Secondly, we have to be in a situation where the sources of cash are chronically exceeded the uses of cash, be it either organic or acquisitive in terms of the uses.

So, on a situation like that and we think okay, how are we going to use our surplus cash? The other parameters that you need to look for if we're going to use it prospectively is, are we back in our net debt to EBITDA range, and right now we're at 2.7 times and I've made a commitment to the street that we'd get back to the 2 to 2.5 times range. So, we get back into that particular range and we're in a situation where the sources are chronically exceeding the uses both acquisitive and organic, and it can support the dividend growth model, you know then, you know maybe we'll give it due consideration at that juncture and we'll keep it as a weapon in our repertoire. The one other use of it that I think is important and I think it's truly reflected by the excellence of the TELUS team, we have been opportunistic with that program. So, when you look at the exogenous shocks that impact our industry, equity market related, credit market related, regulatory related, technology related, competitive landscape related, you know when we get hit with those exogenous shocks, we have a high degree of confidence in our long-term strategy. They represent very attractive buying opportunities for us.

And we have stepped into the market and acted upon that. So, when we've taken hits, because there is a view that Verizon is coming to Canada with a sense of immediacy or there is a regulatory event transpiring or certain conditions are being prevalent within spectrum auctions that favor new entrants, we see those as buying conditions that are appropriate for us to use our balance sheet in that regard. And I think the empirical results speak for themselves given where we're trading today versus the average cost, the $28 and the IRR at 12.5%. The one other measure that you know I wouldn't mind people looking at in terms of the TELUS organization, look at our EBITDA growth per share versus our peer group. I think it's an interesting number.

And your last question was related to Shaw. Sure, we feel the competitive intensity. It would be best not to recognize that. If you look at where Shaw has gone on 150 anywhere, what they are doing with the Xfinity BlueSky platform or the acquisition of Wind into Freedom, that's a reality. But I would say to you, give me that dynamic competitive environment any day of the week versus onerous regulation.

We know how to grow value for investors as it relates to a dynamic competitive environment. Regulatory intervention is punitive. It's a bit more difficult to figure out and to the extent to which dynamic competition that's good for consumers at the end of the day, leads to a more benign regulatory approach. That's one heck of a silver lining as it relates to the Western Canadian competitive dynamic. And so, yeah, we feel it.

But you know look at what we're doing. Number one, we're standing behind our 2017 target and we've taken them up modestly reflecting the strength of our Q1 results buttress by the acquisition of the MTS sub. So, I think that's a pretty good think. Look at how we're doing, as it relates to the performance of our business, financially, operationally, client service excellence, shareholder returns. Q1 I think is a great example of that, and if you look at our wireline positioning as it relates to everything from net adds to profitability results, I think we compare extremely favorably and not just to our immediate competitor in Western Canada, but to our competitors on a national basis.

And then look at the investments that we're making. I like the competitive juxtaposition that our pure fibre investment gives us, and we're starting to get scale now with that coverage, and I think there's lots of competitive advantages and a capability set that reflect that in terms of where we can take that technology into the future. I think as it relates to premium bundling, we've got a great wireline and wireless story. So, that's not you know I'm saying anything negative about Freedom, but it will be a long time before it can match the innovation, the feature differentiation, the quality, the reliability of TELUS Mobility and Koodo and all the devices and applications that we have within that ecosystem and the way that we integrate that with our wireline offering. I think if you got your competitor bringing new capacities to market, you know while you are focused on market-based differentiation on investments, you should also have one eye on cost efficiency, so that you can feel your future, recycle those cost efficiencies and to a more, you know a smart competitive dynamic in the future, both product differentiation and making sure that you can project the margins that you've been aspiring to deliver like the 30% margin on the wireline front.

Our wireline margins are up 110 bps and I've been seeing that we'll get to 30% on the wireline front for about two years now. So, it's nice to enjoy it for a couple of seconds in terms of that achievement. I really like the Optik ecosystem versus BlueSky. You know we've got fantastic differentiation in that regard whether it's you know been exclusive on 4K content and 4K delivery capability whether it's our content, that superiority you know 2X the amount of HD content, almost 2X the amount of multicultural content. I like what we've done in terms of inculcating OTT players within the fold of our Optik ecosystem.

I think Netflix is a great example to that effect and Netflix on a 4K basis as well. I like what we're doing in terms of wireless set-top box flexibility which you know allows people to move their viewing mechanisms around their home without being tethered to a wireline connection. You know customers like flexibility and speaking of flexibility, you know I like our packages and they offer good value for money. They offer attractive pricing and they offer a lot of flexibility in terms of customizing the content with what our viewers actually want to pay for in terms of their content preferences. I like what we've got in terms of Optik on the go.

We've got more content in terms of accessibility of contents when our subs are on the move, through our Optik on the go platform. And I like the fact that we offer remote recording, because we all lead busy lives and when there is major sports events happening, and you know we want to be able to record it or something else to that effect for the non-sports crowd having that remote recording is fantastic. We've just launched Restart TV and so that people don't miss a minute of their programing along the way, and we just launched right now Pick a TV which I think is going to be great for value seekers, a very simple package. Yes lower ARPU, but very attractive AMPU, alight. And where did you hear that before, you heard that on Koodo, alright and so we know how to do it.

It is self-install product, beautiful, simplistic streamlined offering overall between linear TV and VOD. And when customers can do self-install in a digital world, you know and get the content that they want, that's an attractive offering for us. And there is two markets for us there that we think are attractive. One, go out there and offer that to the value seeking crowd that would otherwise be a cord shaver. And number two, you know it's a nice combat positioning versus the thrust on the OTT front.

So, I think that's good for us versus you know the Shaw organization and I think it's good for us in terms of technology substitution abating the drive as it relates to singularly OTT and only having an HSIA connection. So, we're excited by that product, nice to bring it to market. Once again it's a fist from TELUS and we're going to focus you know on offering it to our internet-only customers and I think this should get some nice traction because it's a very, very engineered product with attractive features that we can grow into the future. So, I feel pretty good about the things overall as it relates to our competitive juxtaposition with the Shaw organization. Just one last point to make as it relates to risk management, and I don't hear lot of discussion in terms of risk management, but when you look at the diversity of our sources of both revenue and profit, you know it's interesting to note that our business from a TELUS point of view only has a 57% overlap with Shaw, whereas Shaw's business has a 90% overlap with TELUS.

We have an EBITDA growth rate on wireline close to 5. You know that's you know – that's not where they are in terms of their financial performance on the wireline side of the business. So, when it comes to making smart economic decisions, I think we've got a lot more latitude you know within the TELUS organization, because of our financial strength and diversity, also including our balance sheet. You know whereas our competitors, you know I think are going to have to be quite circumspect as to the market based activities going forward.

Maher Yaghi: Thank you, Darren.

Paul Carpino: Thanks Maher. Next question please.

Operator: Yes, our next question is from Simon Flannery. Please go ahead. With Morgan Stanley.

Simon Flannery: Great. Can you hear me now?

Paul Carpino: Yes. We can.

Darren Entwistle: Yes. Are you working for Verizon?

Simon Flannery: Or Sprint? So, thanks a lot.

Darren, another strong quarter for you and wireless and also frankly for the Canadian industry and it's a nice difference from what we're seeing down here. Can you just talk about the – what you see as the opportunities to continue to drive industry subscriber growth upsizing to larger data bucket, the ability to keep both the volume and the ARPU growing over the next year or two for TELUS and for the Canadian industry? And then perhaps any early updates you can give us on the Manitoba migrations? Thanks.

Darren Entwistle: The Manitoba migration is too early Simon to comment on at this juncture. So, I think why don't you part that question and ask me again when we have our call in August. I think we'll have some better results to draw inference from at that juncture.

It's just – it's too early days at this point. The only thing I could say is that, in terms of bringing the dealers onboard, that's gone extremely well and I think they are excited to be part of the TELUS organization. And getting our network positioning in place, both our organic network and what we're going to have on our mocking basis with Bell and Rogers. Those two key development factors are proceeding according to plan, so we're very pleased. But we'll have some better operational results come the end of Q2, when I can share that with you in August when we have the Q2 investor call.

Simon Flannery: Sure.

Darren Entwistle: As it relates to ARPU growth, we are very pleased with Q1 at 3.9% overall, you know and a very solid postpaid ARPU performance within that 3.9%, which I think really does speak to you know the thesis the TELUS in terms of pursuing quality loading rather than just pure volume. Secondly, what can help us is if we can see a reduction in the ARPU dilution coming out of Alberta. You know I think that would be a nice development factor you know into the future given the ARPU dilution that we've been experiencing on the consumer business front over the past 18 months in that regard. Thirdly, I'm excited by continued deployments on the technology front.

You know the more deployment we do at the LTE level, at the LTE advanced level, some of the small cell deployments and having devices that actually leverage those technologies. You know there is a high R-squared in terms of driving up overall data usage and that gets reflected in our ARPU results. Next for us a lot of roaming upside is still to be realized outside of the North American context, both global in-roaming and global out-roaming outside of the North American footprints. So, a lot of that is going to come, but I'm hopeful. We now have international Easy Roam available in about 127 countries and I think there is price elasticity of demand that we can leverage and offer people you know very good services, a fair price for basically exporting with them their domestic plans and features, so that they can control their usage when they are roaming international.

It gives them greater confidence in keeping their device turned on. I think there is ARPU upside and still within the Koodo fold, particularly as it relates to higher tier smartphone devices. On the machine to machine front, there is a lot of way through revenue growth as it relates to IoT within wireless. We don't count that within our loads, but we do count that within our wireless revenue and so that can be a contributor as it relates to ARPU accretion on go forward basis. Our Premium Plus programs have been very successful for TELUS and we're going to carry on with those.

And one of the things that we like about Premium Plus is it engenders a level of customer activity that transpires out of our discrete heavy seasonal periods. And from an operation engineering perspective, that's actually a more cost efficient way to run our business overall and at the same time it's premium plus, we're getting you know a nice ARPU result, and a benefit on the AMPU level as well, because originally when launched Premium Plus, we went through J-Curve like a dilution and we're now getting into the accretion phase and you know I think, you know that's worth looking forward to. As it relates to our data packages, people are buying bigger data packages from a 1 gig to 2 gig to 3 gig, sometimes independently, sometimes within the fold of SharePlus. But whether they are increasing their data packages on a permanent basis through TELUS' step-up offering or whether they are doing it on a non-recurring basis, purely end of month when they are about to go over their data bucket and just topping up within the month. Either way, you know it's nice data accretion that flatters both our revenue as well as our EBITDA profitability within the fold of our wireless business.

So, there is – and I could keep going on in that regard. I like some of the features that I'm seeing within the digital society, more RGUs per human being. If you want some of the demographic sets are transpiring in terms of the age continuum which is supporting device procurement and device usage along the way. We are seeing expansion of our country in terms of immigration and I think that provides nice opportunities for us within the multicultural environment. It's an attractive situation.

When we were generating 7.4% of the profitability level, 6.4% only in terms of the top-line revenue, almost 4% as it relates to ARPU, margins accreting on the wireless front at 120 bps, brought the smart investment in new technologies that will inspire greater data growth prospectively. I don't want to be unduly optimistic, but I think we are doing the right things to support the positive economic growth of our business. And then lastly, as it relates to Doug, he is always the first person to say, all that stuff is great, but let's make sure that we have the same thesis of cost efficiency on wireless, based on what we learned on the wireline front. And I think that's the various do way to manage your business, not just looking at ARPU, but what the heck is going on at the AMPU line? Because revenue is vanity and margin is sanity, and that's the way that we need to engineer the wireless business accordingly.

Simon Flannery: Great.

Thanks for the color.

Paul Carpino: Great. Thank, Simon. Cheryl, we have time for one more question.

Operator: Okay.

We have Richard Choe from JPMorgan. Please go ahead.

Richard Choe: Great. I just wanted one clarification on the wireless side with the CDMA shutdown coming. What should we look for both the negative and then on the positive side? And then in wireline, how much of the benefit in HSIA was DSL being less bad or was it more of a benefit from the IT broadband side? Thank you.

Darren Entwistle: So, on the CDMA side, you would have seen or discussed, the impact in Q1 was about 3 basis points on churn from the elevated churn that we are seeing from a CDMA perspective. So going forward, you'll see a small sub base adjustment for the remaining part as we shut the network down, but it's not that significant. So, all the more high value customers have already even migrated and we have a higher ARPU longer term customer, but you'll see a slight improvement in churn. Based on that churn that we've seen of that side and a higher ARPU from the contract, we have the high value of customers, and then you'll see the small adjustment into Q2 of the residual. Do you want to answer the internet one in terms of maximum? Go ahead.

Doug French: No. Can you…

Darren Entwistle: Want me to do it. Okay. The results on HSIA came from a nice result as it relates to fibre based loading over – HSIA over LTE, and the reduction at the churn level which was sub 1.3 to give you some additional empirical cover on that. It was a nice contribution from all three parameters.

It was not over index. Does it relate to the churn rate? It really was pure fibre in supporting our HSIA expansion improvement in addressable market, leveraging wireless access technologies on LTE for HSIA, modestly buttress by a solid churn rate for us that helps year-over-year performance. And clearly something that's consistent with our customers for strategy that we are going to want to carry on them. Is that okay.

Richard Choe: Great.

Thank you.

Paul Carpino: Thanks, Richard. Thanks everyone for joining the call. If you have any questions, please follow-up with Investor Relations' team. Thank you.

Operator: Ladies and gentlemen, this concludes the TELUS 2017 Q1 earnings conference call. Thank you for your participation and have a nice day.