February 10, 2016 - 8:20 PM EST
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TELUS Reports Results for Fourth Quarter 2015 and Announces 2016 Financial Targets

VANCOUVER, BRITISH COLUMBIA
--(Marketwired - Feb. 11, 2016) - (TSX:T)(NYSE:TU) - TELUS Corporation's consolidated operating revenue grew 2.8 per cent to $3.2 billion in the fourth quarter of 2015, from a year earlier, as a result of higher data revenue in both wireless and wireline operations. Wireless data revenue increased 9.9 per cent from a year ago, leading to overall network revenue growth of 3.0 per cent, while wireline data revenue increased 8.8 per cent to generate 4.4 per cent growth in external wireline revenue. Earnings before interest, income taxes, depreciation and amortization (EBITDA) was impacted by significant restructuring and other costs of $99 million. When excluding restructuring and other costs from both periods, EBITDA was higher by 4.9 per cent, increasing to $1.1 billion. EBITDA including restructuring and other costs was lower by 2.2 per cent from a year ago.

"TELUS delivered solid fourth quarter revenue, EBITDA, and subscriber growth in both its wireless and wireline businesses despite economic challenges impacting some of our customers in

Alberta
," said Darren Entwistle, President and CEO. "Our continued strong performance was the result of our unwavering focus on putting customers first and the ongoing execution and success of a winning strategy that focuses on long-term capital investment to drive sustainable growth."

Mr. Entwistle added "We have established 2016 targets that reflect the diversity and strength of TELUS' multiple growth assets in both our wireless and wireline operating segments. These targets continue to support our dividend growth model and share repurchase initiatives while also demonstrating our confidence in our ability to successfully manage our efficiency programmes and growth-focussed investments in a highly competitive industry."

Mr. Entwistle further commented "TELUS has a successful track record for consistent and transparent investing for the long-term benefit of our customers and shareholders despite complicating exogenous factors and short-term economic volatility that will inevitably occur. We embrace the leadership role TELUS plays in

Canada's
domestic economy and will continue to invest prudently in our network technology and bandwidth to ensure Canadians maintains their global digital leadership position."

John Gossling, TELUS Executive Vice-President and CFO said, "I am very pleased with the TELUS team's balanced approach to effectively implementing efficiency investments without compromising our customer focus, strategic investments, or our strong shareholder friendly initiatives. Despite a more challenging environment, both our wireless and wireline results continued to deliver growth and facilitated the return of $1.6 billion to shareholders in dividend growth and share purchases in 2016."

Mr. Gossling added "We remain committed to the critical network investments that are essential to driving customer satisfaction, delivering balanced growth, and supporting our transparent shareholder initiatives. TELUS has effectively navigated this key investment period and maintained a strong financial position to ensure it can continue to make disciplined long-term investments in its core assets during the lowest cost of capital environment we have seen in our lifetime. Throughout this unique investment cycle, we have increased our wireless and wireline customer connections, consistently grown revenue and EBITDA, delivered the strongest lifetime revenue per customer and further enhanced the industry's already best customer loyalty. Importantly, during this elevated period of investing, we have extended our average term to maturity of TELUS' long-term debt to 11.1 years, as compared to 5.5 years in 2012, and reduced TELUS' weighted average cost of long-term debt to 4.32 per cent, as compared to 5.44 per cent at the end of 2012."

Net income and basic earnings per share (EPS) were affected by significant restructuring and other costs, as well as an increase in depreciation and amortization expense reflecting, in part, TELUS' higher asset base from ongoing investments in its fibre optic and 4G LTE networks. Adjusted net income decreased 1.2 per cent to $324 million, while adjusted EPS of $0.54 was up 1.9 per cent from the prior year. On a reported basis, net income decreased 16 per cent to $261 million, while basic earnings per share (EPS) decreased 14 per cent to $0.44 due to higher restructuring and other costs.

CONSOLIDATED FINANCIAL HIGHLIGHTS


----------------------------------------------------------------------------
C$ and in millions, except per share          Three months ended   Per cent
 amounts                                             December 31     change
(unaudited)                                     2015        2014
----------------------------------------------------------------------------
Operating revenues                             3,217       3,128        2.8
Operating expenses before depreciation
 and amortization                              2,239       2,127        5.3
EBITDA(1)                                        978       1,001       (2.2)
EBITDA excluding restructuring and other
 costs(1)(2)                                   1,077       1,027        4.9
Net income                                       261         312      (16.3)
Adjusted net income(3)                           324         328       (1.2)
Basic earnings per share (EPS)                  0.44        0.51      (13.7)
Adjusted EPS(3)                                 0.54        0.53        1.9
Capital expenditures                             655         570       14.9
Free cash flow(4)                                197         337      (41.5)
Total customer connections(5)                 12.495      12.228        2.2

(1)  EBITDA does not have any standardized meaning prescribed by IFRS-IASB.
     TELUS issues guidance on and reports EBITDA because it is a key measure
     used to evaluate performance at a consolidated and segmented level. For
     further definition and explanation, see Section 4.1 in the accompanying
     2015 fourth quarter Management's review of operations.
(2)  For the fourth quarter of 2015 and 2014, restructuring and other costs
     were $99 million and $26 million, respectively.
(3)  Adjusted net income and Adjusted EPS do not have any standardized
     meaning prescribed by IFRS-IASB. These terms are defined in this news
     release as excluding (after income taxes): a) restructuring and other
     costs; and b) favourable income tax-related adjustments. For further
     analysis of the aforementioned items see Section 1.2 in the
     accompanying 2015 fourth quarter Management's review of operations.
(4)  Free cash flow does not have any standardized meaning prescribed by
     IFRS-IASB. For definition and explanation, see Section 4.1 in the
     accompanying 2015 fourth quarter Management's review of operations.
(5)  The sum of active wireless subscribers, residential network access
     lines (NALs), high-speed Internet access subscribers and TELUS TV
     subscribers (Optik TV(TM) and TELUS Satellite TV(R) subscribers)
     measured at the end of the respective periods based on information in
     billing and other systems. Effective January 1, 2014, subscriber
     connections have been restated to exclude 25,000 dial-up Internet
     subscribers and include 222,000 Public Mobile prepaid subscribers in
     the opening subscriber balances. TELUS acquired 100% of Public Mobile,
     a Canadian wireless communications operator focused on the 
Toronto
 and
     
Montreal
 markets, in November 2013. Also, effective December 31, 2015,
     business NALs have been removed from the reported subscriber base due
     to their diminishing relevance as a key performance indicator (for
     example, the impact of migrations from voice lines to IP services has
     led to business NAL losses without a similar decline in revenue).
     Accordingly, December 31, 2014 has been retrospectively adjusted to
     exclude 1,613,000 business NALs in the reported subscriber balances. As
     of December 31, 2015, the business NAL subscriber base was 1,586,000
     and business NAL losses in the fourth quarter and full year of 2015
     were 5,000 and 27,000, respectively. Comparatively, business NAL losses
     in the fourth quarter of 2014 were 5,000 and business NAL gains in the
     full year of 2014 were 2,000.

In wireless, data revenue was driven by subscriber growth, an increased but moderating proportion of higher-rate two-year plans in the revenue mix, a more favourable postpaid subscriber mix, and increased data usage, partially offset by the effects of an economic slowdown, particularly in

Alberta
, and ongoing decline in voice revenue. Wireline data revenue growth was generated by an increase in Internet and enhanced data service revenue from continued high-speed Internet subscriber growth and higher revenue per customer, growth in TELUS International's business process outsourcing services, TELUS TV subscriber growth and higher TELUS Health revenues.

In the quarter, TELUS attracted 109,000 net wireless postpaid, high-speed Internet and TV customers. This included 62,000 wireless postpaid customers, 25,000 TELUS TV customers and 22,000 high-speed Internet subscribers. These gains were partially offset by the ongoing loss of traditional telephone network access lines. TELUS' total wireless subscriber base is up 2.1 per cent from a year ago to 8.5 million, high-speed Internet connections have increased 6.2 per cent to 1.6 million, and TELUS TV subscribers are higher by 9.7 per cent to 1 million.

Free cash flow of $197 million in the fourth quarter was lower by $140 million from a year ago, primarily due to higher share-based compensation, higher capital expenditures and lower EBITDA reflecting significant restructuring and other costs. For 2015, free cash flow of $1.1 billion was higher by $21 million or 2.0 per cent compared to 2014, primarily due to lower income tax payments, lower restructuring disbursements and EBITDA growth, partially offset by higher capital expenditures and share-based compensation.

In the fourth quarter of 2015, TELUS returned $486 million to shareholders including $252 million in dividends paid and $234 million in share purchases under the 2016 normal course issuer bid (NCIB) program. For 2015, TELUS returned more than $1.6 billion to shareholders, including $992 million in dividends paid and the purchase for cancellation of 15.6 million common shares for $635 million under its multi-year share purchase program.

This news release contains statements about financial and operating performance of TELUS (the Company) and future events, including with respect to future dividend increases and normal course issuer bids through 2016 and the 2016 annual targets and guidance that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and predictions and are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from those expressed in the forward-looking statements. Accordingly, this news release is subject to the disclaimer and qualified by the assumptions (including assumptions for the 2016 annual targets and guidance, semi-annual dividend increases through 2016 and our ability to sustain and complete our multi-year share purchase program through 2016), qualifications and risk factors referred to in the accompanying fourth quarter Management's review of operations and in the 2015 annual Management's discussion and analysis, and in other TELUS public disclosure documents and filings with securities commissions in

Canada
(on SEDAR at sedar.com) and in
the United States
(on EDGAR at sec.gov). Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements, and reserves the right to change, at any time at its sole discretion, its current practice of updating annual targets and guidance.

Fourth Quarter 2015 Operating Highlights

TELUS wireless


--  Wireless network revenues increased by $46 million or 3.0 per cent to
    $1.6 billion in the fourth quarter of 2015, when compared to the same
    period a year ago. This growth was driven by a 9.9 per cent increase in
    data revenue, reflecting subscriber growth, an increased but moderating
    proportion of higher-rate two-year plans in the revenue mix, a more
    favourable postpaid subscriber mix, and increased data roaming,
    partially offset by the effects of an economic slowdown, particularly in
    
Alberta
, and ongoing decline in voice revenue.
--  Blended ARPU increased by 0.6 per cent to $63.74, reflecting TELUS'
    twenty-first consecutive quarter of year-over-year growth.
--  Monthly postpaid subscriber churn of 1.01 per cent increased 7 basis
    points year-over-year. The increase reflects increased competitive
    intensity resulting from two-year and three-year customer contracts
    expiring simultaneously starting in June 2015, as well as the effects of
    the economic slowdown, particularly in 
Alberta
. These trends are
    expected to continue in 2016. Blended monthly churn improved 11 basis
    points to 1.32 per cent reflecting TELUS' continued focus on customers
    first initiatives and retention programs.
--  Postpaid net additions of 62,000 were lower year over year by 56,000 due
    to lower gross additions resulting primarily from the economic slowdown,
    particularly in 
Alberta
, higher handset prices, and higher churn. Total
    wireless net additions of 36,000 decreased by 50,000 over the same
    period a year ago due to lower postpaid net additions and prepaid losses
    of 26,000.
--  Wireless EBITDA excluding restructuring and other costs increased by $18
    million or 2.8 per cent over last year to $653 million as network
    revenue growth and operational efficiency initiatives were partially
    offset by higher retention expenses. Retention costs as a percentage of
    network revenue were 17.0 per cent, reflecting a $50 million increase
    over the same period a year ago, arising from a 5.4 per cent increase in
    retention volumes and more expensive smartphone devices in the sales
    mix.
--  Wireless EBITDA excluding restructuring and other costs less capital
    expenditures decreased slightly year over year by $3 million to $444
    million, primarily due to higher capital expenditures.

TELUS wireline


--  External wireline revenues increased by $61 million or 4.4 per cent to
    $1.4 billion in the fourth quarter of 2015, when compared with the same
    period a year ago. This growth was generated by increased data service
    revenue, partially offset by continued declines in legacy voice and
    equipment revenues and lower business activity.
--  Data revenues increased by $80 million or 8.8 per cent, due to higher
    Internet and enhanced data revenues from continued high-speed Internet
    subscriber growth and higher revenue per customer, growth in business
    process outsourcing services, higher TELUS TV revenues from continued
    subscriber growth, and increased TELUS Health revenues.
--  High-speed Internet net additions of 22,000 were unchanged over the same
    quarter a year ago, reflecting the ongoing expansion of TELUS' high-
    speed broadband footprint in urban and rural communities, including
    fibre to the premises, and the pull-through effect of bundling with
    Optik TV.
--  Total TV net additions of 25,000 were lower by 3,000 over the same
    quarter a year ago, as the expansion of TELUS' addressable high-speed
    broadband footprint was offset by slower industry subscriber growth,
    increasing competition from over-the-top services and an increase in the
    customer churn rate.
--  Residential network access lines (NALs) declined by 24,000 in the
    quarter compared to a loss of 20,000 in the same quarter a year ago.
    Residential NAL losses continue to reflect the ongoing trend of wireless
    and Internet substitution, partly offset by the success of TELUS'
    bundling strategy.
--  Wireline EBITDA excluding restructuring and other costs of $424 million
    increased by $32 million or 8.2 per cent year-over-year. The improvement
    reflects improving margins in data services, including Internet, TELUS
    TV, business process outsourcing services, and TELUS Health, as well as
    ongoing operating efficiency initiatives. EBITDA growth also benefitted
    from the gain on sale of certain real estate assets of approximately $13
    million.
--  Wireline EBITDA excluding restructuring and other costs less capital
    expenditures decreased by $32 million to $(22) million as higher EBITDA
    was more than offset by higher capital expenditures that support TELUS'
    long-term growth. Capital expenditures increased over the same period
    last year due to continued strategic investments in broadband network
    infrastructure, including connecting more homes and businesses directly
    to TELUS' fibre optic network and investments in system and network
    resiliency and reliability.

2015 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 by:


--  Paying, collecting and remitting a total of $1.8 billion in taxes during
    2015 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
    2002, the Company has remitted more than $17 billion in these taxes.
--  Purchasing 57 MHz of wireless spectrum nationally in three spectrum
    auctions held by the Department of Innovation, Science and Economic
    Development (formerly Industry Canada) in 2015 for approximately $2
    billion. Since the beginning of 2014, TELUS has purchased 81 MHz of
    wireless spectrum nationally for approximately $3.2 billion. In
    addition, TELUS has paid annual spectrum renewal fees of more than $117
    million to the Canadian federal government since the beginning of 2014.
    Since 2002, TELUS' total tax and spectrum remittances to federal,
    provincial and municipal governments in 
Canada
 have totaled over $22
    billion.
--  Investing more than $2.5 billion in capital expenditures primarily in
    communities across 
Canada
 in 2015 and more than $29 billion since 2000.
--  Spending $7.8 billion in total operating expenses in 2015, including
    goods and service purchased of $5.3 billion. Since 2000, TELUS has spent
    $91 billion and $60 billion respectively in these areas.
--  Generating a total team member payroll of $3.0 billion in 2015,
    including payroll taxes of $826 million. Since 2000, total team member
    payroll totals $37 billion.
--  Paying $992 million in dividends in 2015 to individual shareholders,
    mutual fund owners, pensioners and institutional investors, and
    purchasing 15.6 million shares for $635 million on behalf of
    shareholders under TELUS' multi-year share purchase program.
--  Returning $12.7 billion to shareholders through TELUS' dividend and
    share purchase programs from 2004 to the end of 2015, including $7.6
    billion in dividends and $5.0 billion in share buybacks, representing
    $21 per share.

TELUS sets 2016 financial targets

TELUS today announced its 2016 financial targets that reflect the benefits of the Company's ongoing strategic investments related to advanced broadband infrastructure, a focus on client service excellence and continued focus on cost efficiency. TELUS' long-standing growth strategy has consistently delivered profitable growth as well as strong free cash flow generation enabling TELUS to return significant amounts of capital to shareholders through its dividend growth and share purchase programs.

In 2016, TELUS plans to generate growth through modest subscriber expansion in wireless, high-speed Internet and TELUS TV. Wireless and Internet are expected to benefit from growing data usage and demand for higher speeds. TELUS also expects to benefit from continued growth in business process outsourcing services and increased TELUS Health revenues. This growth is expected to be underpinned by the significant investments TELUS continues to make in wireless and wireline broadband, including building out of fibre connecting directly to more homes and businesses as well as continued investments in cost efficiency.


----------------------------------------------------------------------------
                         2016 Targets      2015 Results         Growth
----------------------------------------------------------------------------

Consolidated
                      $12.750 to $12.875
  Revenues                  billion       $12.502 billion       2 to 3%
  EBITDA excluding
   restructuring and   $4.625 to $4.755
   other costs(1)           billion       $4.488 billion        3 to 6%
  Basic earnings per
   share                $2.40 to $2.56         $2.29           5 to 12%
  Capital                Approximately
   expenditures(2)       $2.65 billion    $2.577 billion   Approximately 3%

Wireless
  Network Revenue      $6.425 to $6.490
   (external)               billion       $6.298 billion        2 to 3%
  EBITDA excluding
   restructuring and   $2.975 to $3.060
   other costs              billion       $2.887 billion        3 to 6%

Wireline
                       $5.680 to $5.735
  Revenue (external)        billion       $5.569 billion        2 to 3%
  EBITDA excluding
   restructuring and   $1.650 to $1.695
   other costs              billion       $1.601 billion        3 to 6%

(1)  In 2016, total restructuring costs are expected to be approximately
     $175 million, as compared to $226 million in 2015.
(2)  Capital expenditure targets and results exclude expenditures for
     spectrum licences and exclude non-monetary transactions.

For 2016, TELUS is targeting consolidated year-over-year revenue growth of between 2 and 3 per cent, while EBITDA excluding restructuring and other costs is targeted to be higher by 3 to 6 per cent. Revenue and EBITDA excluding restructuring and other costs are expected to continue benefitting from ongoing growth in both wireless and wireline data services, and savings from cost efficiency initiatives. Basic earnings per share (EPS) is targeted to be higher by 5 to 12 per cent, due to EBITDA growth combined with lower shares outstanding due to our share purchase program.

Wireless network revenue is targeted to increase between 2 and 3 per cent in 2016 reflecting modest growth in both subscribers and blended ARPU. We also expect growth in data and roaming revenues will offset lower voice revenue. Wireless EBITDA excluding restructuring and other costs is targeted to be higher by between 3 and 6 per cent, as a result of anticipated growth in wireless network revenue, savings from cost efficiency initiatives and stable retention costs.

In wireline, revenue is targeted to increase between 2 and 3 per cent in 2016, as we anticipate continued data revenue growth from high-speed Internet, Optik TV services, business process outsourcing and TELUS Health services, partially offset by continued decreases in legacy voice revenues and continued effects of the economic slowdown. Wireline EBITDA excluding restructuring and other costs is targeted to increase by between 3 and 6 per cent. We anticipate margin improvements from our high-speed Internet and Optik TV services, business outsourcing and TELUS Health services, as well as our ongoing efficiency initiatives, partially offset by the ongoing industry trend of revenue losses from higher-margin legacy voice services.

Consolidated capital expenditures, excluding the purchase of spectrum licences and non-monetary transactions, in 2016 are targeted to be approximately $2.65 billion. TELUS plans to continue broadband infrastructure expansion and upgrades, including bringing fibre-optic cable deeper into the network and connecting more homes and businesses to the fibre-optic network, to support high-speed Internet and Optik TV subscriber growth and faster Internet broadband speeds. We intend to continue investing in our wireless network for 4G LTE expansion and upgrades, including the ongoing deployment of 700 MHz and 2500 MHz spectrum, as well as invest in network and system resiliency and reliability to support our ongoing customers first initiatives and ready the network and systems for future retirement of legacy assets.

TELUS' cash income tax payments are estimated to be between $570 million and $630 million (2015 - $256 million). Cash tax payments are increasing in 2016 primarily as a result of the impact of the use of the Public Mobile losses in 2014 which has the effect of: i) deferring a portion of our 2015 current taxes payable to February 2016 and ii) increasing, relative to 2015, the 2016 instalments payable, which ultimately is expected to reduce the 2017 cash income tax payments by approximately $150 million.

The preceding disclosure respecting TELUS' 2016 financial targets contains forward-looking information and is fully qualified by the 'Caution regarding forward-looking statements' at the beginning of the accompanying Management's review of operations for the fourth quarter of 2015 and in the full year 2015 Management's discussion and analysis filed on the date hereof on SEDAR, especially Section 10 entitled '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 1.7 entitled 'Financial and operating targets for 2016' in the accompanying Management's review of operations for the fourth quarter of 2015.

Dividend Declaration

The TELUS Board of Directors has declared a quarterly dividend of 44 cents ($0.44) Canadian per share on the issued and outstanding Common Shares of the Company payable on April 1, 2016 to holders of record at the close of business on March 11, 2016.

About TELUS

TELUS (TSX:T)(NYSE:TU) is

Canada's
fastest-growing national telecommunications company, with $12.5 billion of annual revenue and 12.5 million customer connections, including 8.5 million wireless subscribers, 1.5 million residential network access lines, 1.6 million high-speed Internet subscribers and 1.0 million TELUS TV customers. TELUS provides a wide range of communications products and services, including wireless, data, Internet protocol (IP), voice, television, entertainment and video, and is
Canada's
largest healthcare IT provider.

In support of our philosophy to give where we live, TELUS, our team members and retirees have contributed $440 million to charitable and not-for-profit organizations and volunteered more than 6.8 million hours of service to local communities since 2000. Created in 2005 by President and CEO Darren Entwistle, TELUS' 11 Canadian community boards and 4 International boards have led the Company's support of grassroots charities and have contributed more than $54 million in support of over 4,900 local charitable projects, enriching the lives of more than 2 million children and youth, annually. TELUS was honoured to be named the most outstanding philanthropic corporation globally for 2010 by the Association of Fundraising Professionals, becoming the first Canadian company to receive this prestigious international recognition.

For more information about TELUS, please visit telus.com.

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, supplementary financial information, the 2015 annual Management's discussion and analysis and financial statements, and our full 2014 annual report at telus.com/investors.

TELUS' fourth quarter 2015 and 2016 targets conference call is scheduled for February 11, 2016 at 11:00am ET (8:00am PT) and will feature a presentation followed by a question and answer period with investment analysts. Interested parties can access the webcast at telus.com/investors. A telephone playback will be available on February 11 until March 15, 2016 at 1-855-201-2300. Please use reference number 1191995# and access code 77377#. An archive of the webcast will also be available at telus.com/investors and a transcript will be posted on the website within a few business days.

TELUS CORPORATION

Management's review of operations

2015 Q4

Caution regarding forward-looking statements

This document contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, we, us and our refer to TELUS Corporation and where the context of the narrative permits or requires, its subsidiaries. Forward-looking statements include statements relating to annual targets, outlook, guidance and updates, our multi-year dividend growth program, our multi-year share purchase program, and trends. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, predict, could, expect, intend, may, plan, seek, should, strive and will. By their nature, forward-looking statements do not refer to historical facts, are subject to inherent risks and require us to make assumptions. There is significant risk that forward-looking statements will not prove to be accurate. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements. Annual targets for 2016 and related assumptions are described in Sections 1.6 and 1.7.

Factors that could cause actual performance to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following:


--  Competition including: continued intense rivalry across all services
    among wireless and wireline telecommunications companies, cable-TV
    providers, other communications companies and over-the-top (OTT)
    services, which, among other things, places pressures on average revenue
    per subscriber unit per month (ARPU) and churn for all services; mergers
    and acquisitions of industry competitors, including the integration of
    cable-TV and wireless companies; the potential entry of new competitors;
    competition from global players for international roaming services; our
    ability to continue to retain customers through an enhanced customer
    service experience; pressures on wireless ARPU and churn from market
    conditions and government actions, customer usage patterns, flat-rate
    pricing trends for voice and data, inclusive long distance plans for
    voice, moderating growth in postpaid market penetration and increasing
    availability of Wi-Fi networks for data; pressures on high-speed
    Internet and TV ARPU and churn resulting from market conditions,
    government actions and customer usage patterns; residential network
    access line (NAL) losses; subscriber additions and retention volumes and
    associated costs for wireless, TV and high-speed Internet services;
    competition for wireless spectrum; and our ability to obtain and offer
    content on a timely basis across multiple devices on wireless and TV
    platforms at a reasonable cost.

--  Technological substitution including: reduced utilization and increased
    commoditization of traditional wireline voice local and long distance
    services from impacts of OTT applications and wireless substitution, and
    overall slower subscriber growth in the wireline segment; the increasing
    number of households that have only wireless and/or Internet-based
    telephone services; continuation of wireless voice ARPU declines as a
    result of, among other factors, substitution to messaging and OTT
    applications; substitution to increasingly available Wi-Fi services from
    wireless services; and OTT Internet protocol (IP) services that may
    displace TV and entertainment services, and impact revenue.

--  Technology including: subscriber demand for data that challenges
    wireless networks and spectrum capacity levels; our reliance on legacy
    systems and information technology; technology options, evolution paths
    and roll-out plans for wireline and wireless networks (including
    broadband initiatives, such as fibre-to-the-premises (FTTP) and wireless
    small-cell deployment); our reliance on wireless network access
    agreements; choice of suppliers and those suppliers' ability to maintain
    and service their product lines; supplier concentration and market power
    for network equipment, TELUS TV(R) and wireless handsets; the
    performance of long-term evolution (LTE) wireless technology; our
    expected long-term need to acquire additional spectrum capacity through
    future spectrum auctions and from third parties to address increasing
    demand for data; deployment and operation of new wireless networks and
    success of new products, new services and supporting systems, including
    the Internet of Things (IoT) services for Internet-connected devices;
    deployment and operation of new wireline broadband networks at a
    reasonable cost and availability, and success of new products and
    services to be rolled out on such networks; availability of resources
    and ability to build out adequate broadband capacity; network
    reliability and change management (including migration risks related to
    technology and customer retention, to new, more efficient Internet data
    centres (IDCs) and realizing the expected benefits); timing of
    decommissioning of certain legacy wireline networks, systems and
    services to reduce operating costs; timing of decommissioning of CDMA
    and iDEN wireless networks to redeploy spectrum and reduce operating
    costs, and the associated subscriber migration costs and customer
    retention risks; and success of upgrades and evolution of TELUS TV
    technology, which depend on third-party suppliers.

--  Regulatory decisions and developments including: potential of government
    intervention to further increase wireless competition; the Canadian
    Radio-television and Telecommunications Commission (CRTC) wireless
    wholesale services review, in which it was determined that the CRTC will
    regulate wholesale GSM-based domestic roaming rates and the setting of
    such rates; future spectrum auctions (including limitations on
    established wireless providers, spectrum set-aside favouring certain
    carriers and other advantages provided to new and foreign participants,
    and the amount and cost of spectrum acquired); restrictions on the
    purchase, sale and transfer of spectrum licences; the undetermined long-
    term impact of the CRTC's wireline wholesale services review, which
    concluded that wholesale competitors shall receive regulated access to
    FTTP facilities owned by incumbent Internet service providers; increased
    subsidy requirements for telecommunications facilities in 
Yukon
, 
Nunavut

    and the 
Northwest Territories
, and possible changes to the scope and
    nature of basic service obligations, including higher minimum Internet
    access speeds; the CRTC's new code of conduct for TV services; vertical
    integration by competitors moving into broadcast content ownership and
    timely and effective enforcement of related regulatory safeguards;
    ongoing monitoring and compliance with restrictions on non-Canadian
    ownership of TELUS Common Shares; modification, interpretation and
    application of tower sharing and roaming rules; and the non-
    harmonization of provincial consumer protection legislation,
    particularly in light of the CRTC's mandatory national Wireless Code
    (the Code) in effect since December 2, 2013, and pressures on retention
    costs and other operational challenges resulting from the retroactive
    application of the Code, which led to two-year and three-year customer
    contracts ending coterminously starting in June 2015.

--  Economic growth and fluctuations including: the state of the economy in
    
Canada
, which may be influenced by economic developments outside of
    
Canada
; future interest rates; inflation; unemployment levels; effects
    of low oil prices; effects of low business spend (reducing investments
    and cost structure); pension investment returns, funding and discount
    rates; and 
Canada
: 
U.S.
 dollar exchange rates.

--  Capital expenditure levels and potential outlays for spectrum licences
    in spectrum auctions or from third parties, due to: our ongoing
    deployment of wireless LTE and future technologies; utilizing newly
    acquired spectrum; our wireline broadband initiatives, including
    connecting more homes and businesses directly to fibre; investments in
    network resiliency and reliability; subscriber demand for data; evolving
    systems and business processes; implementing efficiency initiatives;
    supporting large complex deals; and future wireless spectrum auctions
    held by the Department of Innovation, Science and Economic Development.
    Our capital expenditure levels could be impacted by the achievement of
    our targeted operational and financial results.

--  Ability to successfully implement cost reduction initiatives and realize
    planned savings, net of restructuring and other costs, without losing
    customer service focus or negatively affecting business operations.
    Initiatives include: our earnings enhancement program to drive
    improvements in earnings before interest, income taxes, depreciation and
    amortization (EBITDA), including the initiative announced in November
    2015; business integrations; business process outsourcing; offshoring
    and reorganizations, including any full-time equivalent (FTE) employee
    reduction programs; procurement initiatives; and real estate
    rationalization. Additional cost reduction initiatives may be needed if
    we do not achieve our targeted operational and financial results.

--  Financing and debt requirements including our ability to carry out
    financing activities and our ability to maintain investment grade credit
    ratings in the range of BBB+ or the equivalent.

--  Ability to sustain our dividend growth program of circa 10% per annum
    through 2016 and our ability to sustain and complete our multi-year
    share purchase program through 2016. These programs may be affected by
    factors such as regulatory decisions and developments, our earnings and
    free cash flow, our levels of capital expenditures and spectrum licence
    purchases, the competitive environment and economic performance in
    
Canada
. Quarterly dividend decisions are subject to assessment and
    determination by our Board of Directors (Board), based on the Company's
    financial position and outlook. The share purchase program may be
    affected by a change in our intention to purchase shares, and the
    assessment and determination of our Board from time to time.
    Consequently, there can be no assurance that these programs will be
    maintained through 2016 and/or renewed thereafter.

--  Human resource matters including: recruitment, retention and appropriate
    training in a highly competitive industry; the future outcome of
    collective bargaining for an agreement with the Telecommunications
    Workers Union (TWU), United Steel Workers Local Union 1944, which
    expired at the end of 2015; and the level of employee engagement.

--  Process risks including: our reliance on legacy systems and ability to
    implement and support new products and services and business operations;
    our ability to implement effective change management for system
    replacements and upgrades, process redesigns and business integrations;
    implementation of complex large enterprise deals that may be adversely
    impacted by available resources, system limitations and degree of co-
    operation from other service providers; our ability to successfully
    manage operations in foreign jurisdictions; information security and
    privacy breaches, including data loss or theft of data; intentional
    threats to our infrastructure and business operations; and real estate
    joint venture re-development risks.

--  Tax matters including: complex tax laws that may be subject to
    interpretation by the tax authorities that may differ from our
    interpretations; changes in tax laws, including tax rates; elimination
    of income tax deferrals through the use of different tax year-ends for
    operating partnerships and corporate partners; and international tax
    complexity and compliance.

--  Business continuity events including: our ability to maintain customer
    service and operate our networks in the event of human error or human-
    caused threats, such as electronic attacks and equipment failures that
    could cause various degrees of network outages; supply chain
    disruptions; natural disaster threats; epidemics and pandemics; and the
    completeness and effectiveness of business continuity and disaster
    recovery plans and responses.

--  Litigation and legal matters including: our ability to defend
    successfully against investigations, claims and lawsuits, including
    class actions pending against us and possible class actions based on
    consumer claims, data or security breaches and secondary market
    liability; and the complexity of legal compliance in domestic and
    foreign jurisdictions.

--  Acquisitions or divestitures including: our ability to successfully
    integrate acquisitions or complete divestitures in a timely manner, and
    realize expected strategic benefits.

--  Health, safety and environmental developments and other risk factors
    discussed herein and listed from time to time in our reports and public
    disclosure documents, including our annual report, annual information
    form, and other filings with securities commissions or similar
    regulatory authorities in 
Canada
 (on SEDAR at sedar.com) and in our
    filings with the Securities and Exchange Commission (SEC) in 
the United States
, including Form 40-F (on EDGAR at sec.gov). Section 10: Risks and
    risk management in our annual 2015 Management's discussion and analysis
    (MD&A), which will be filed concurrently, is incorporated by reference
    in this cautionary statement.

Management's review of operations

February 11, 2016


Contents
----------------------------------------------------------------------------
Section                        Description
----------------------------------------------------------------------------
1. Discussion of operations    1.1 Preparation of Management's review of
                               operations
                               1.2 Consolidated operations
                               1.3 Wireless segment
                               1.4 Wireline segment
                               1.5 Summary of consolidated quarterly results
                               and trends
                               1.6 Performance scorecard (key performance
                               measures)
                               1.7 Financial and operating targets for 2016
----------------------------------------------------------------------------
2. Changes in financial
position
----------------------------------------------------------------------------
3. Discussion of cash flow     3.1 Overview of cash flow results
results                        3.2 Cash provided by operating activities
                               3.3 Cash used by investing activities
                               3.4 Cash provided (used) by financing
                               activities
----------------------------------------------------------------------------
4. Definitions and             4.1 Non-GAAP and other financial measures
reconciliations                4.2 Operating indicators
----------------------------------------------------------------------------

1. Discussion of operations

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of the Management's review of operations.

1.1 Preparation of Management's review of operations

The following sections are a discussion of the consolidated financial position and financial performance of TELUS for the three-month period and year ended December 31, 2015, and should be read together with the accompanying summary financial information. Our operating and reportable segments are wireless and wireline. Segmented information is regularly reported to our Chief Executive Officer (the chief operating decision-maker).

The generally accepted accounting principles (GAAP) we use are the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Our use of the term IFRS in this Management's review of operations is a reference to these standards. In our discussion, we also use certain non-GAAP financial measures, such as earnings before interest, income taxes, depreciation and amortization (EBITDA), to evaluate our performance, monitor compliance with debt covenants and manage our capital structure. These measures are defined, qualified and reconciled with their nearest GAAP measures in Section 4.1. All currency amounts are in Canadian dollars, unless otherwise specified.

Our disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management on a timely basis, so that appropriate decisions can be made regarding public disclosure. This document was reviewed by TELUS' Audit Committee and approved by our Board of Directors for issuance on February 11, 2016.

1.2 Consolidated operations

The following is a discussion of our consolidated financial performance. Segmented discussion is provided in Section 1.3 Wireless segment,Section 1.4 Wireline segment and in Section 3.3 Cash used by investing activities - capital expenditures.


Consolidated highlights
----------------------------------------------------------------------------
                      Fourth quarters ended
                                December 31        Years ended December 31
                 -----------------------------------------------------------
($ millions,
 unless noted
 otherwise)          2015     2014   Change        2015      2014   Change
----------------------------------------------------------------------------
Consolidated
 statements of
 income
----------------------------------------------------------------------------
Operating
 revenues           3,217    3,128      2.8%     12,502    12,002      4.2%
Operating
 expenses           2,757    2,595      6.2%     10,149     9,620      5.5%
Operating income      460      533    (13.7)%     2,353     2,382     (1.2)%
Financing costs       114      115     (0.9)%       447       456     (2.0)%
Income before
 income taxes         346      418    (17.2)%     1,906     1,926     (1.0)%
Income taxes           85      106    (19.8)%       524       501      4.6%
Net income            261      312    (16.3)%     1,382     1,425     (3.0)%

Earnings per
 share (EPS) ($)
  Basic EPS          0.44     0.51    (13.7)%      2.29      2.31     (0.9)%
  Adjusted basic
   EPS (1)           0.54     0.53      1.9%       2.58      2.41      6.8%
  Diluted EPS        0.44     0.51    (13.7)%      2.29      2.31     (0.9)%

Basic weighted-
 average Common
 Shares
 outstanding
 (millions)           598      611     (2.1)%       603       616     (2.1)%
----------------------------------------------------------------------------
Other operating
highlights
----------------------------------------------------------------------------
                      Fourth quarters ended
                                December 31        Years ended December 31
                 -----------------------------------------------------------
($ millions,
unless noted
otherwise)           2015     2014   Change        2015      2014   Change
----------------------------------------------------------------------------
Subscriber
 connections (2)
 (thousands)                                     12,495    12,228      2.2%
EBITDA(1)             978    1,001     (2.2)%     4,262     4,216      1.1%
Restructuring and
 other costs
 included in
 EBITDA(1)             99       26      n/m         226        75      n/m
EBITDA -
 excluding
 restructuring
 and other
 costs(1)           1,077    1,027      4.9%      4,488     4,291      4.6%
EBITDA -
 excluding
 restructuring
 and other costs
 margin(1,3) (%)     33.5     32.8 0.7 pts.        35.9      35.8 0.1 pts.
Dividends
 declared per
 Common Share ($)    0.44     0.40     10.0%       1.68      1.52     10.5%
Free cash flow(1)     197      337    (41.5)%     1,078     1,057      2.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notations used in Management's review of operations: n/m - Not meaningful;
pts. - Percentage points.
1    Non-GAAP and other financial measures. See Section 4.1.
2    The sum of active wireless subscribers, residential network access
     lines (NALs), high-speed Internet access subscribers and TELUS TV
     subscribers (Optik TV(TM) and TELUS Satellite TV(R) subscribers)
     measured at the end of the respective periods based on information in
     billing and other systems. Effective January 1, 2014, subscriber
     connections have been restated to exclude 25,000 dial-up Internet
     subscribers and include 222,000 Public Mobile prepaid subscribers in
     the opening subscriber balances. TELUS acquired 100% of Public Mobile,
     a Canadian wireless communications operator focused on the 
Toronto
 and
     
Montreal
 markets, in November 2013. Also, effective December 31, 2015,
     business NALs has been removed from the reported subscriber base due to
     its diminishing relevance as a key performance indicator (for example,
     the impact of migrations from voice lines to IP services has led to
     business NAL losses without a similar decline in revenue). Accordingly,
     December 31, 2014 has been retrospectively adjusted to exclude
     1,613,000 business NALs in the reported subscriber balances. As of
     December 31, 2015, the business NAL subscriber base was 1,586,000 and
     business NAL losses in the fourth quarter and full year of 2015 were
     5,000 and 27,000, respectively. Comparatively, business NAL losses in
     the fourth quarter of 2014 were 5,000 and business NAL gains in the
     full year of 2014 were 2,000. Total subscriber connections, if business
     NALs were included, would have been 14,081,000 in 2015, or an increase
     of 1.7% from 2014.
3    EBITDA - excluding restructuring and other costs, as a percentage of
     operating revenues.
----------------------------------------------------------------------------



Operating revenues
----------------------------------------------------------------------------
                       Fourth quarters ended
                                 December 31       Years ended December 31
                ------------------------------------------------------------
($ millions)          2015      2014  Change        2015      2014  Change
----------------------------------------------------------------------------
Service              2,943     2,856     3.0%     11,590    11,108     4.3%
Equipment              243       259    (6.2)%       840       819     2.6%
----------------------------------------------------------------------------
Revenues arising
 from contracts
 with customers      3,186     3,115     2.3%     12,430    11,927     4.2%
Other operating
 income                 31        13   138.5%         72        75    (4.0)%
----------------------------------------------------------------------------
                     3,217     3,128     2.8%     12,502    12,002     4.2%
----------------------------------------------------------------------------


--  Service revenue increased year over year by $87 million in the fourth
    quarter of 2015 and $482 million in the full year of 2015, reflecting
    growth in the wireless subscriber base and an increased wireless blended
    average revenue per subscriber unit per month (ARPU); higher wireline
    Internet and enhanced data services revenue due to subscriber growth and
    higher revenue per customer; and increased wireline business process
    outsourcing, TELUS TV and TELUS Health services revenues. This growth
    was partly offset by ongoing declines in wireline voice, continued
    competitive pressures, product substitution, the impacts of the economic
    slowdown, particularly in 
Alberta
, and the full year also included a
    decline in other services revenue.

--  Equipment revenue decreased year over year by $16 million in the fourth
    quarter of 2015 as a result of lower wireless equipment revenue from
    lower gross additions and lower Black's Photography revenue from the
    closure of stores in August 2015, partly offset by higher retention
    volumes. For the full year of 2015, Equipment revenue increased year
    over year by $21 million due to higher wireless equipment revenue of $61
    million from greater retention volumes and higher-priced smartphones in
    the sales mix, partly offset by lower gross additions and lower Black's
    Photography revenue from the closure of stores in August 2015, as well
    as lower wireline equipment revenues of $40 million largely due to
    declines in business spending.

--  Other operating income increased year over year by $18 million in the
    fourth quarter of 2015, mainly due to non-recurring gains from the sale
    of certain real estate assets. For the full year of 2015, Other
    operating income declined year over year by $3 million, primarily from a
    decrease in the current period amortization of deferred revenue in
    respect of the regulatory price cap deferral account for provisioning
    broadband Internet services to eligible rural and remote communities, as
    well as lower investment income, partly offset by higher gains from the
    sale of certain real estate assets in 2015.

Operating expenses
----------------------------------------------------------------------------
                          Fourth quarters ended
                                    December 31     Years ended December 31
                     -------------------------------------------------------
($ millions)              2015     2014  Change      2015     2014   Change
----------------------------------------------------------------------------
Goods and services
 purchased               1,482    1,476     0.4%    5,532    5,299      4.4%
Employee benefits
 expense                   757      651    16.3%    2,708    2,487      8.9%
Depreciation               406      366    10.9%    1,475    1,423      3.7%
Amortization of
 intangible assets         112      102     9.8%      434      411      5.6%
----------------------------------------------------------------------------
                         2,757    2,595     6.2%   10,149    9,620      5.5%
----------------------------------------------------------------------------


--  Goods and services purchased increased year over year by $6 million in
    the fourth quarter of 2015 and $233 million in the full year of 2015.
    The increases reflect higher wireless subscriber retention costs, which
    increased to 17.0% of wireless network revenue in the fourth quarter and
    13.9% in the full year of 2015, as compared with 14.3% in the fourth
    quarter and 11.8% in the full year of 2014. The year over year increases
    also reflected higher non-labour restructuring and other costs mainly
    from real estate rationalization and an increase in our wireless
    customer service and distribution channel expenses. These year over year
    increases were partially offset by lower wireline equipment cost of
    sales associated with lower equipment revenues, a decline in advertising
    and promotions expenses, lower wireless network operating costs and, the
    full year period also included, a retroactive assessment of additional
    TV revenue contribution expensed in the third quarter of 2014 for
    approximately $15 million towards our Canadian programming funding
    requirements.

--  Employee benefits expense increased year over year by $106 million in
    the fourth quarter of 2015 and $221 million in the full year of 2015,
    primarily driven by higher labour restructuring expenses largely from
    the reduction of full-time positions announced in November 2015 (see
    Section 4.1), increased wages and salaries mainly from higher full-time
    equivalent (FTE) employees to support growth in business process
    outsourcing revenue, and increased employee defined benefit pension plan
    costs. These increases were partially offset by higher capitalized
    labour costs associated with increased capital expenditures and the
    fourth quarter also included lower share-based compensation expenses.

--  Depreciation increased year over year by $40 million in the fourth
    quarter of 2015 and by $52 million in the full year of 2015 due to
    growth in capital assets (such as the broadband network, the wireless
    LTE network, and TELUS TV-related assets), as well as the impact of our
    continuing program of asset life studies.

--  Amortization of intangible assets increased year over year by $10
    million in the fourth quarter and by $23 million in the full year of
    2015. The increase in the quarter and full year periods reflect growth
    in the intangible asset base, partially offset by software asset life
    adjustments arising from our continuing program of asset life studies.

Operating income
----------------------------------------------------------------------------
                       Fourth quarters ended
                                 December 31       Years ended December 31
                ------------------------------------------------------------
($ millions)          2015      2014  Change        2015      2014  Change
----------------------------------------------------------------------------
Operating income       460       533   (13.7)%     2,353     2,382    (1.2)%
----------------------------------------------------------------------------

Operating income decreased year over year by $73 million in the fourth quarter of 2015, reflecting relatively flat wireless EBITDA for the quarter (see Section 1.3), a decline in wireline EBITDA of $22 million (see Section 1.4) and increases in depreciation and amortization expenses of $50 million discussed above. In the full year of 2015, Operating income decreased year over year by $29 million from a decline in wireline EBITDA of $33 million and increases in total depreciation and amortization expenses of $75 million discussed above, partly offset by growth in wireless EBITDA of $79 million. Year-over-year wireless EBITDA growth for the quarter and full year was restricted primarily due to higher retention spend and restructuring and other costs, when compared to similar periods in 2014 (see Section 1.3).The year over year decline in wireline EBITDA for the quarter and full year was driven by higher restructuring and other costs (see Section 1.4).


Financing costs
----------------------------------------------------------------------------
                     Fourth quarters ended
                               December 31         Years ended December 31
              --------------------------------------------------------------
($ millions)       2015      2014   Change       2015      2014     Change
----------------------------------------------------------------------------
Gross Interest
 expense            133       117     13.7%       515       446       15.5%
Capitalized
 long-term
 debt interest      (18)        -      n/m        (45)        -        n/m
Long-term debt
 prepayment
 premium,
 before income
 taxes                -         -      n/m          -        13     (100.0)%
Employee
 defined
 benefit plans
 net interest         7         1      n/m         27         3        n/m
Interest
 income and
 foreign
 exchange net
 gains               (8)       (3)   166.7%       (50)       (6)       n/m
----------------------------------------------------------------------------
                    114       115     (0.9)%      447       456       (2.0)%
----------------------------------------------------------------------------


--  Gross Interest expense, excluding capitalized long-term debt interest
    and long-term debt prepayment premiums, increased year over year by $16
    million in the fourth quarter of 2015 and $69 million in the full year
    of 2015, primarily due to growth in the average long-term debt balances
    outstanding arising mainly from the purchase of spectrum licences,
    partly offset by a reduction in the effective interest rate. As a result
    of our 2015 financing activities, our weighted-average interest rate on
    long-term debt (excluding commercial paper) was 4.32% at December 31,
    2015, as compared to 4.72% one year earlier. For additional details, see
    Long-term debtissues and repayments in Section 3.4.

--  Capitalized long-term debt interest is in respect of debt incurred for
    the purchase of spectrum licences during spectrum auctions held by the
    Department of Innovation, Science and Economic Development (formerly
    Industry Canada), which we expect to deploy in our existing network in
    future periods. Capitalization of long-term debt interest will continue
    until such spectrum is deployed in our network. (Following the Federal
    election in 
Canada
 in October 2015, the new government announced that
    the responsibilities of the former Industry Canada would fall under the
    new Department of Innovation, Science and Economic Development.)

--  Long-term debt prepayment premium decreased by $13 million in the full
    year of 2015. The 2014 premium of $13 million before income taxes was
    related to the early redemption of $500 million of 5.95% Series CE Notes
    in September 2014.

--  Employee defined benefit plans net interest is calculated for each year
    based on the net defined benefit plan surplus (deficit) at December 31
    of the previous year. Employee defined benefit plans net interest
    expense increased year over year by $6 million in the fourth quarter of
    2015 and $24 million in the full year of 2015, primarily due to the
    increase in the defined benefit plan deficit at December 31, 2014, as
    compared to the defined benefit plan surplus at December 31, 2013.

--  Interest income and foreign exchange net gains fluctuate from period to
    period. Interest income was $4 million in the fourth quarter and $25
    million in the full year of 2015, primarily due to the settlement of
    prior years' income-tax related matters, as compared to $1 million in
    the fourth quarter and $2 million in the full year of 2014. The balances
    of amounts were foreign exchange net gains. For the full year of 2015,
    foreign exchange net gains increased by $21 million, mainly due to the
    positive effects of foreign exchange derivatives contracts.


Income taxes
----------------------------------------------------------------------------
                         Fourth quarters ended
                                   December 31     Years ended December 31
                   ---------------------------------------------------------
($ millions, except
 tax rates)           2015      2014    Change     2015      2014   Change
----------------------------------------------------------------------------
Income tax computed
 at applicable
 statutory rates        93       109     (14.7)%    505       504      0.2%
Revaluation of
 deferred income
 tax liability to
 reflect future
 statutory income
 tax rates               -         -         -       48         -      n/m
Adjustments
 recognized in the
 current period for
 income tax of
 prior periods          (7)       (4)    (75.0)%    (30)       (6)     n/m
Other                   (1)        1       n/m        1         3    (66.7)%
----------------------------------------------------------------------------
Income taxes            85       106     (19.8)%    524       501      4.6%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income taxes
 computed at
 applicable
 statutory rates
 (%)                  26.7      26.0  0.7 pts.     26.5      26.2 0.3 pts.
Effective tax rates
 (%)                  24.6      25.4 (0.8)pts.     27.5      26.0 1.5 pts.
----------------------------------------------------------------------------

The total income tax expense decreased year over year by $21 million in the fourth quarter of 2015, primarily due to a decline in income before income taxes arising from higher restructuring and other costs and higher retention spend. In the full year of 2015, income tax expense increased year over year by $23 million, mainly due to a $48 million non-cash adjustment in the second quarter of 2015 to revalue deferred income tax liabilities for an increase to the

Alberta
provincial corporate tax rate from 10% to 12% effective July 1, 2015, partly offset by higher recoveries from the settlement of prior years' income tax-related matters and lower income before income taxes.

Analysis of Net income
----------------------------------------------------------------------------
                        Fourth quarters ended
                                  December 31       Years ended December 31
                 -----------------------------------------------------------
($ millions)         2015      2014    Change       2015     2014    Change
----------------------------------------------------------------------------
Net income            261       312       (51)     1,382    1,425       (43)
Add back
 (deduct):
  Restructuring
   and other
   costs, after
   income taxes        72        20        52        166       56       110
  Long-term debt
   prepayment
   premium, after
   income taxes         -         -         -          -       10       (10)
  Unfavourable
   (favourable)
   income tax-
   related
   adjustments         (9)       (4)       (5)         1       (6)        7
  Asset
   retirement
   from closure
   of Black's
   Photography,
   after income
   taxes                -         -         -          6        -         6
----------------------------------------------------------------------------
Adjusted net
 income               324       328        (4)     1,555    1,485        70
----------------------------------------------------------------------------

Net income decreased year over year by $51 million or 16% in the fourth quarter of 2015 mainly from increased depreciation and amortization expenses and a decline in EBITDA, partially offset by lower income tax expense. In the full year of 2015, Net income decreased year over year by $43 million or 3.0% as a result of increased depreciation and amortization expenses and higher income tax expenses, partly offset by growth in EBITDA and lower Financing costs. Excluding the effects of restructuring and other costs, long-term debt prepayment premiums, income tax-related adjustments and asset retirement from the closure of Black's Photography stores, Net income decreased year over year by $4 million or 1.2% in the fourth quarter of 2015 and increased by $70 million or 4.7% in the full year of 2015.


Analysis of basic EPS ($)
----------------------------------------------------------------------------
                           Fourth quarters ended
                                     December 31    Years ended December 31
                      ------------------------------------------------------
                          2015     2014   Change      2015    2014   Change
----------------------------------------------------------------------------
Basic EPS                 0.44     0.51    (0.07)     2.29    2.31    (0.02)
Add back (deduct):
  Restructuring and
   other costs after
   income taxes, per
   share                  0.12     0.03     0.09      0.28    0.09     0.19
  Long-term debt
   prepayment premium
   after income taxes,
   per share                 -        -        -         -    0.02    (0.02)
  Unfavourable
   (favourable) income
   tax related
   adjustments, per
   share                 (0.02)   (0.01)   (0.01)        -   (0.01)    0.01
  Asset retirement
   from closure of
   Black's
   Photography, after
   income taxes, per
   share                     -        -        -      0.01       -     0.01
----------------------------------------------------------------------------
Adjusted basic EPS        0.54     0.53     0.01      2.58    2.41     0.17
----------------------------------------------------------------------------

Basic EPS decreased year over year by $0.07 or 14% in the fourth quarter of 2015 and by $0.02 or 0.9% in the full year of 2015. The reduction in the number of shares that resulted from our completed 2015 and advanced 2016 normal course issuer bid (NCIB) programs, net of share option exercises, contributed approximately $0.01 and $0.05 year over year in basic EPS in the fourth quarter and in the full year of 2015, respectively. Excluding the effects of restructuring and other costs, long-term debt prepayment premium, income tax-related adjustments and asset retirement from the closure of Black's Photography stores, basic EPS increased year over year by $0.01 or 1.9% in the fourth quarter of 2015 and by $0.17 or 6.8% in the full year of 2015.


Comprehensive income
----------------------------------------------------------------------------
                          Fourth quarters ended
                                    December 31    Years ended December 31
                      ------------------------------------------------------
($ millions)               2015    2014  Change       2015    2014  Change
----------------------------------------------------------------------------
Net income                  261     312   (16.3)%    1,382   1,425    (3.0)%
Other comprehensive
 income (loss) (net of
 income taxes):
  Items that may be
   subsequently
   reclassified to
   income                     7       9   (22.2)%       21       7     n/m
  Item never
   subsequently
   reclassified to
   income - Employee
   defined benefit
   plans re-
   measurements             486    (652)  174.5%       445    (445)    n/m
----------------------------------------------------------------------------
Comprehensive income        754    (331)    n/m      1,848     987    87.2%
----------------------------------------------------------------------------

Comprehensive income increased by $1.1 billion in the fourth quarter and $861 million in the full year of 2015, when compared to the same periods in 2014. This was primarily due to positive increases in employee defined benefit plan re-measurements from changes to estimates regarding actuarial assumptions, including an increased discount rate and adjustments in the cost of living allowance indexing assumption, partly offset by declines in Net income. Items that may be subsequently reclassified to income are composed of changes in the unrealized fair value of derivatives designated as cash flow hedges, foreign currency translation adjustments arising from translating financial statements of foreign operations, and changes in the unrealized fair value of available-for-sale investments.

Other operating highlights


--  During the year ended December 31, 2015, our subscriber connections
    increased by 267,000 or 2.2 %. This reflects a 2.1% increase in wireless
    subscribers, a 9.7% increase in TELUS TV subscribers and a 6.2% increase
    in high-speed Internet subscribers, partly offset by a 5.7% decline in
    residential NALs.

    Our postpaid wireless subscriber net additions were 62,000 in the fourth
    quarter of 2015 and 244,000 in the full year of 2015, representing
    decreases of 56,000 and 113,000, respectively, from the same periods in
    2014. The decrease reflects the economic slowdown, particularly in
    
Alberta
, increased competitive intensity, higher handset prices causing
    slower demand and an increase in our postpaid churn rate. Our average
    monthly postpaid subscriber churn rates were 1.01% in the fourth quarter
    of 2015 and 0.94% in the full year of 2015, as compared to 0.94% in the
    fourth quarter of 2014 and 0.93% in the full year of 2014. Our blended
    churn was 1.32% in the fourth quarter of 2015 and 1.26% in the full year
    of 2015, as compared to 1.43% in the fourth quarter and 1.41% in the
    full year of 2014. The year-over-year increase in our postpaid
    subscriber churn rate was primarily due to continued competitive
    intensity as two-year and three-year contracts began expiring
    coterminously in June 2015, as well as the effects of the economic
    slowdown, particularly in 
Alberta
, and our focused marketing efforts on
    higher-value loading. The year-over-year improvement in our blended
    subscriber churn rates in the fourth quarter and in the full year was
    due to our continued focus on customers first initiatives, clear and
    simple approach and retention programs, partly offset by the economic
    slowdown, particularly in 
Alberta
, the effects from the Wireless Code,
    and our focused marketing efforts on higher-value loading impacting
    postpaid subscriber churn as noted above.

    Our wireline subscriber net additions were 23,000 in the fourth quarter
    of 2015 and 91,000 in the full year of 2015, representing decreases of
    7,000 and 3,000, respectively, from the same periods in 2014. Net
    additions of high-speed Internet subscribers were 22,000 in the fourth
    quarter of 2015, which was consistent with same period in 2014. For the
    full year, high-speed Internet subscriber net additions were 91,000,
    representing a year-over-year increase of 11,000 driven by the expansion
    of our high-speed broadband footprint and the pull-through impact from
    the continued bundling with Optik TV, partly offset by an increase in
    our customer churn rate. Net additions of TELUS TV subscribers were
    25,000 in the fourth quarter and 89,000 in the full year of 2015,
    representing decreases of 3,000 and 12,000, respectively, from the same
    periods in 2014. The year-over-year decline in the quarter and full year
    is due to slower growth for paid TV services, lower oil sands
    construction camp activity, increasing competition from OTT services and
    technology substitution, as well as an increase in our customer churn
    rate, all of which was partly offset by continued expansion of our high-
    speed broadband footprint. During the fourth quarter, our TELUS TV
    subscriber base surpassed the one-million-subscriber mark. Residential
    NAL losses were 24,000 in the fourth quarter and 89,000 in the full year
    of 2015, as compared to 20,000 in the fourth quarter and 87,000 in the
    full year of 2014. The residential NAL losses continue to reflect the
    ongoing trend of substitution to wireless and Internet-based services,
    including losses to competitors, partially mitigated by the success of
    our bundled service offerings.


--  Consolidated EBITDA decreased year over year by $23 million or 2.2% in
    the fourth quarter of 2015 and increased year over year by $46 million
    or 1.1% in the full year of 2015. EBITDA - excluding restructuring and
    other costs increased year over year by $50 million or 4.9% in the
    fourth quarter of 2015 and by $197 million or 4.6% in the full year of
    2015. These increases reflect growth in wireless network revenues and
    wireline data revenues, improving margins in Internet, TV, business
    process outsourcing and TELUS Health, and executing on our operational
    efficiency initiatives, all partly offset by higher wireless retention
    costs and continued declines in legacy wireline and wireless voice
    revenues.

--  Dividends declared per Common Share were $0.44 in the fourth quarter of
    2015, up 10% from the fourth quarter of 2014, and dividends declared per
    Common Share were $1.68 in the full year of 2015, up 11% from the full
    year of 2014. On February 10, 2016, the Board declared a first quarter
    dividend of $0.44 per share on the issued and outstanding Common Shares,
    payable on April 1, 2016 to shareholders of record at the close of
    business on March 11, 2016. The first quarter dividend increased by
    $0.04 per share or 10% from the $0.40 per share dividend declared one
    year earlier, consistent with our multi-year dividend growth program.

--  Free cash flow was $197 million in the fourth quarter of 2015,
    reflecting a year-over-year decrease of $140 million in the quarter,
    primarily from share-based compensation payments largely due to higher
    year-over-year cash outflows associated with restricted stock units
    (RSUs) arising from a timing difference which results in a cash outflow
    that would have typically arisen in the fourth quarter of 2014 due to a
    delay in issuing the annual allocation of RSUs that ended up occurring
    in the first quarter of 2015, higher capital expenditures (excluding
    spectrum licences) and lower EBITDA, partly offset by lower
    restructuring disbursements net of expenses. In the full year of 2015,
    free cash flow was higher year-over-year by $21 million as lower income
    tax payments, lower restructuring disbursements net of expenses and
    EBITDA growth were partly offset by higher capital expenditures
    (excluding spectrum licences) and higher cash outflows associated with
    share-based compensation.

1.3 Wireless segment


Wireless operating indicators
----------------------------------------------------------------------------
At December 31                                    2015  2014(1)     Change
----------------------------------------------------------------------------
Subscribers
 (000s)
Postpaid                                         7,352    7,108        3.4%
Prepaid                                          1,105    1,173       (5.8)%
----------------------------------------------------------------------------
Total                                            8,457    8,281        2.1%
----------------------------------------------------------------------------
Postpaid
 proportion of
 subscriber base
 (%)                                              86.9     85.8   1.1 pts.
HSPA+ population
 coverage(2)
 (millions)                                       35.7     35.3        1.1%
LTE population
 coverage(2)
 (millions)                                       34.9     31.7       10.1%
----------------------------------------------------------------------------

                       Fourth quarters ended
                                 December 31       Years ended December 31
                ------------------------------------------------------------
                    2015  2014(1)     Change      2015  2014(1)     Change
----------------------------------------------------------------------------
Subscriber gross
 additions
 (000s)
Postpaid             273      308      (11.4)%   1,014    1,075       (5.7)%
Prepaid               98      131      (25.2)%     429      545      (21.3)%
----------------------------------------------------------------------------
Total                371      439      (15.5)%   1,443    1,620      (10.9)%
----------------------------------------------------------------------------
Subscriber net
 additions
 (000s)
Postpaid              62      118      (47.5)%     244      357      (31.7)%
Prepaid              (26)     (32)      18.8%      (68)    (105)      35.2%
----------------------------------------------------------------------------
Total                 36       86      (58.1)%     176      252      (30.2)%
----------------------------------------------------------------------------
Blended ARPU,
 per month(3)($)   63.74    63.34        0.6%    63.45    62.25        1.9%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Churn, per
 month(3)(%)
  Blended           1.32     1.43 (0.11)pts.      1.26     1.41 (0.15)pts.
  Postpaid          1.01     0.94  0.07 pts.      0.94     0.93  0.01 pts.
Cost of
 acquisition
 (COA) per gross
 subscriber
 addition(3) ($)     472      433        9.0%      418      385        8.5%
Retention spend
 to network
 revenue(3) (%)     17.0     14.3   2.7 pts.      13.9     11.8   2.1 pts.
Retention
 volume(3)
 (units)             609      578        5.4%    2,169    1,971       10.1%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    Effective January 1, 2014, prepaid subscribers, total subscribers and
     associated operating statistics (gross additions, net additions,
     blended ARPU, blended churn and COA per gross subscriber addition) have
     been adjusted for the inclusion of 222,000 Public Mobile prepaid
     subscribers in the opening subscriber balances and subsequent Public
     Mobile subscriber changes.
2    Including network access agreements with other Canadian carriers.
3    See Section 4.2 Operating indicators. These are industry measures
     useful in assessing operating performance of a wireless company, but
     are not measures defined under IFRS-IASB.
----------------------------------------------------------------------------



Operating revenues - wireless segment
----------------------------------------------------------------------------
                         Fourth quarters ended
                                   December 31      Years ended December 31
                     -------------------------------------------------------
($ millions, except
 ratios)                  2015     2014 Change       2015     2014   Change
----------------------------------------------------------------------------
Network revenues         1,595    1,549    3.0%     6,298    6,008      4.8%
Equipment and other        177      195   (9.2)%      635      579      9.7%
----------------------------------------------------------------------------
External operating
 revenues                1,772    1,744    1.6%     6,933    6,587      5.3%
Intersegment network
 revenue                    17       15   13.3%        61       54     13.0%
----------------------------------------------------------------------------
Total operating
 revenues                1,789    1,759    1.7%     6,994    6,641      5.3%
----------------------------------------------------------------------------
---------------------------------------------------------------------------
Data revenue to
 network revenues (%)       56       52 4 pts.         55       50   5 pts.
----------------------------------------------------------------------------

Network revenues from external customers increased year over year by $46 million or 3.0% in the fourth quarter of 2015 and $290 million or 4.8% in the full year of 2015. Data network revenue increased year over year by 9.9% in the fourth quarter of 2015 and 15% in the full year of 2015, reflecting growth in the subscriber base, a larger proportion of higher-rate two-year plans in the revenue mix, a favourable postpaid subscriber mix, increased data roaming and the full year period also included higher chargeable data usage, all of which was partly offset by the impacts of the economic slowdown, particularly in

Alberta
. Voice network revenue decreased year over year by 4.6% in the fourth quarter of 2015 and 4.9% in the full year of 2015 due to the increased adoption of unlimited nationwide voice plans, and continued substitution to data services and features.

--  Monthly blended ARPU was $63.74 in the fourth quarter of 2015 and $63.45
    in the full year of 2015, reflecting a $0.40 or 0.6% year-over-year
    increase in the quarter and a $1.20 or 1.9% year-over-year increase for
    the full year. The increase was driven by the effects of higher-rate
    two-year plans, a more favourable postpaid subscriber mix, increased
    data roaming and the full year period also included growth in chargeable
    data usage, all of which were partly offset by declines in voice
    revenue, elimination of charges for paper bills and the impact of the
    economic slowdown, particularly in 
Alberta
. ARPU growth continued to
    slow in the fourth quarter of 2015, primarily due to the declining
    proportion of subscribers on legacy three-year plans renewing to higher-
    rate two-year plans, as well as lower chargeable data usage. Chargeable
    data usage declined year over year in the fourth quarter as a result of
    increased data allotments in Your Choice(TM) plans commencing June 2015,
    customer reactions to increased frequency of real-time data usage
    notifications as part of our customers first initiatives, and the launch
    of our US Easy Roam(TM) service in July 2015 for customers travelling in
    
the United States
. These data usage initiatives are aligned with our
    priority of putting customers first and consequently are expected to
    drive margin accretion through higher customer satisfaction.

--  Gross subscriber additions were 371,000 in the fourth quarter of 2015
    and 1,443,000 for the full year of 2015, reflecting year-over-year
    decreases of 68,000 for the quarter and 177,000 for the full year of
    2015. Postpaid gross additions were 273,000 in the fourth quarter of
    2015 and 1,014,000 in the full year of 2015, reflecting year-over-year
    decreases of 35,000 in the quarter and 61,000 for the full year. These
    declines in subscriber additions were mainly due to the economic
    slowdown, particularly in 
Alberta
, moderating growth in market
    penetration, higher competitive intensity and the effect of higher
    handset prices on customer demand. Prepaid gross additions were 98,000
    in the fourth quarter of 2015 and 429,000 in the full year of 2015,
    reflecting year-over-year decreases of 33,000 in the quarter and 116,000
    for the full year, primarily due to lower Public Mobile gross additions.

--  Net subscriber additions were 36,000 in the fourth quarter and 176,000
    in the full year of 2015, reflecting year-over-year decreases of 50,000
    in the quarter and 76,000 for the full year due to lower gross
    subscriber additions, partially offset by an improvement in our blended
    monthly churn rate. Postpaid net additions were 62,000 in the fourth
    quarter of 2015 and 244,000 in the full year of 2015, reflecting year-
    over-year decreases of 56,000 in the quarter and 113,000 in the full
    year due to factors described in gross subscriber additions, as well as
    increases in our postpaid monthly churn rate. Prepaid subscribers
    decreased by 26,000 in the fourth quarter of 2015 and by 68,000 in the
    full year of 2015, as compared to decreases of 32,000 in the fourth
    quarter of 2014 and 105,000 in the full year of 2014. Prepaid losses
    reflect conversions to postpaid services, our focused marketing efforts
    on higher-value loading and increased competition for prepaid services.

--  Our average monthly postpaid subscriber churn rate was 1.01% in the
    fourth quarter and 0.94% in the full year of 2015, as compared to 0.94%
    in the fourth quarter and 0.93% in the full year of 2014. Our blended
    monthly subscriber churn rate was 1.32% in the fourth quarter of 2015
    and 1.26% for the full year of 2015, as compared to 1.43% in the fourth
    quarter and 1.41% in the full year of 2014. The year-over-year increase
    in our postpaid subscriber churn rate during the fourth quarter and full
    year of 2015 was primarily due to increased competitive intensity as
    two-year and three-year customer contracts began expiring coterminously
    starting in June 2015, as well as the effects of the economic slowdown,
    particularly in 
Alberta
, and our focused marketing efforts on higher-
    value loading. We expect these impacts to continue in 2016. The year-
    over-year improvement in our blended subscriber churn rates in the
    fourth quarter and full year of 2015 was due to our increasing
    proportion of postpaid subscribers in our subscriber base and our
    continued focus on customers first initiatives, our clear and simple
    approach and retention programs, partly offset by the economic slowdown,
    particularly in 
Alberta
, competitive intensity, and our focused
    marketing efforts on higher-value loading impacting postpaid subscriber
    churn noted above.

Equipment and other revenues decreased year over year by $18 million in the fourth quarter of 2015, mainly due to lower gross additions and lower Black's Photography equipment revenues from the closure of stores in August 2015, partly offset by higher retention volumes and non-recurring gains on the sale of certain real estate assets. In the full year of 2015, equipment and other revenues increased year over year by $56 million, mainly due to higher retention volumes in part from the simultaneous expiration of two-year and three-year contracts, as well as higher-priced smartphones in the sales mix, partly offset by lower gross additions and lower Black's Photography revenue from the closure of stores in August 2015.

Intersegment revenue in the wireless segment represents network services provided to the wireline segment. Such revenues are eliminated upon consolidation along with the associated expenses.


Operating expenses - wireless segment
----------------------------------------------------------------------------
                          Fourth quarters ended
                                    December 31    Years ended December 31
                      ------------------------------------------------------
($ millions)               2015     2014 Change       2015     2014 Change
----------------------------------------------------------------------------
Goods and services
 purchased:
  Equipment sales
   expenses                 480      452    6.2%     1,623    1,423   14.1%
  Network operating
   expenses                 190      194   (2.1)%      759      776   (2.2)%
  Marketing expenses        129      138   (6.5)%      436      426    2.3%
  Other(1)                  166      166      -%       653      603    8.3%
Employee benefits
 expense(1)                 196      180    8.9%       717      686    4.5%
----------------------------------------------------------------------------
Wireless operating
 expenses                 1,161    1,130    2.7%     4,188    3,914    7.0%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    Includes restructuring and other costs. See Section 4.1 Non-GAAP and
     other financial measures.
----------------------------------------------------------------------------

Equipment sales expenses increased year over year by $28 million in the fourth quarter of 2015 and by $200 million in the full year of 2015, reflecting increased retention volumes and higher-value smartphones in the sales mix, partly offset by lower gross additions and lower costs of sales from the closure of Black's Photography stores in August 2015.


--  Retention costs as a percentage of network revenue were 17.0% in the
    fourth quarter and 13.9% in the full year of 2015, as compared to 14.3%
    in the fourth quarter and 11.8% in the full year of 2014, representing
    year over year increases of $50 million or 23% in the fourth quarter and
    $165 million or 23% in the full year of 2015. The year-over-year
    increases in the fourth quarter and full year of 2015 were due to
    greater retention volumes and associated commissions, as well as
    increased per-unit subsidy costs due to a continued preference for
    higher-value smartphones, higher subsidies during peak period loading in
    the third and fourth quarters of 2015 and lower device upgrade fees.

--  COA per gross subscriber addition was $472 in the fourth quarter of 2015
    and $418 for the full year of 2015, reflecting year-over-year increases
    of $39 or 9.0% in the quarter and $33 or 8.5% in the full year of 2015.
    The increases were mainly due to higher per-unit subsidy costs
    reflecting a greater proportion of postpaid gross additions, increased
    commissions, higher-value smartphones in the sales mix and increased
    subsidies during peak period loading in the third and fourth quarters of
    2015.

Network operating expenses decreased year over year by $4 million in the fourth quarter of 2015 and by $17 million in the full year of 2015 due to lower network maintenance and support costs, including turning down the Public Mobile CDMA network in the fourth quarter of 2014, partly offset by higher roaming costs driven by volume increases.

Marketing expenses decreased year over year by $9 million in the fourth quarter of 2015 mainly from lower advertising and promotional expenses, partly offset by higher commission expenses associated with higher retention volumes. For the full year of 2015, marketing expenses increased year over year by $10 million, primarily due to higher commission expenses driven by higher retention volumes, partly offset by reduced advertising and promotional expenses in the fourth quarter.

Other goods and services purchased was flat year over year in the fourth quarter as higher bad debt provisions were offset by lower administrative costs. For the full year of 2015, other goods and services purchase increased year over year by $50 million, primarily from higher non-labour restructuring and other costs mainly due to real estate rationalization, higher bad debt provisions to support the growing subscriber base, the expansion of our distribution channels and increases in external labour costs.

Employee benefits expense increased year over year by $16 million in the fourth quarter and by $31 million in the full year of 2015, reflecting higher labour restructuring costs from efficiency initiatives, lower capitalized labour costs and the full year period also included higher share-based compensation expenses.


EBITDA - wireless segment
----------------------------------------------------------------------------
                        Fourth quarters ended
                                  December 31       Years ended December 31
                 -----------------------------------------------------------
($ millions,
 except margins)      2015     2014    Change       2015     2014    Change
----------------------------------------------------------------------------
EBITDA                 628      629      (0.2)%    2,806    2,727       2.9%
Restructuring and
 other costs
 included in
 EBITDA                 25        6       n/m%        81       30     170.0%
----------------------------------------------------------------------------
EBITDA -
 excluding
 restructuring
 and other costs       653      635       2.8%     2,887    2,757       4.7%
----------------------------------------------------------------------------
EBITDA margin (%)     35.1     35.8 (0.7)pts.       40.1     41.1 (1.0)pts.
EBITDA margin -
 excluding
 restructuring
 and other costs
 (%)                  36.5     36.1  0.4 pts.       41.3     41.5 (0.2)pts.
----------------------------------------------------------------------------

Wireless EBITDA was relatively flat year over year in the fourth quarter of 2015 and increased by $79 million or 2.9% in the full year of 2015. Wireless EBITDA - excluding restructuring and other costs increased year over year by $18 million or 2.8% in the fourth quarter and by $130 million or 4.7% in the full year of 2015, reflecting network revenue growth driven by a larger customer base and ARPU growth, partly offset by higher retention spend, higher bad debt provisions, and increased customer service and distribution channel expenses.

1.4 Wireline segment


Wireline operating indicators
----------------------------------------------------------------------------
At December 31
 (000s)                                            2015      2014   Change
----------------------------------------------------------------------------
Subscriber
 connections:
High-speed
 Internet                                         1,566     1,475      6.2%
TELUS TV                                          1,005       916      9.7%
Residential
 network access
 lines (NALs)                                     1,467     1,556     (5.7)%
----------------------------------------------------------------------------
Total wireline
 subscriber
 connections(1)                                   4,038     3,947      2.3%
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                       Fourth quarters ended
                                 December 31       Years ended December 31
----------------------------------------------------------------------------
(000s)               2015      2014   Change       2015      2014   Change
----------------------------------------------------------------------------
Subscriber net
 additions
 (losses):
High-speed
 Internet              22        22        -%        91        80     13.8%
TELUS TV               25        28    (10.7)%       89       101    (11.9)%
Residential NALs      (24)      (20)   (20.0)%      (89)      (87)    (2.3)%
----------------------------------------------------------------------------
Total wireline
 subscriber
 connection net
 additions(1)          23        30    (23.3)%       91        94     (3.2)%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    Effective December 31, 2015, business NALs has been removed from the
     reported subscriber base due to its diminishing relevance as a key
     performance indicator (for example, the impact of migrations from voice
     lines to IP services has led to business NAL losses without a similar
     decline in revenue). Accordingly, December 31, 2014 has been
     retrospectively adjusted to exclude 1,613,000 business NALs in the
     reported subscriber balances. As of December 31, 2015, the business NAL
     subscriber base was 1,586,000 and business NAL losses in the fourth
     quarter and full year of 2015 were 5,000 and 27,000, respectively.
     Comparatively, business NAL losses in the fourth quarter of 2014 were
     5,000 and business NAL gains in the full year of 2014 were 2,000. Total
     wireline subscriber connections, if business NALs were included, would
     have been 5,624,000 in 2015, or an increase of 1.2% from 2014.
----------------------------------------------------------------------------



Operating revenues - wireline segment
----------------------------------------------------------------------------
                     Fourth quarters ended
                               December 31         Years ended December 31
              --------------------------------------------------------------
($ millions)        2015      2014  Change        2015      2014    Change
----------------------------------------------------------------------------
Data service
 and equipment       991       911     8.8%      3,772     3,472       8.6%
Voice service        358       393    (8.9)%     1,496     1,615      (7.4)%
Other services
 and equipment        72        67     7.5%        238       255      (6.7)%
----------------------------------------------------------------------------
Revenues
 arising from
 contracts
 with
 customers         1,421     1,371     3.6%      5,506     5,342       3.1%
Other
 operating
 income               24        13    84.6%         63        73     (13.7)%
----------------------------------------------------------------------------
External
 operating
 revenues          1,445     1,384     4.4%      5,569     5,415       2.8%
Intersegment
 revenue              44        44       -%        174       175      (0.6)%
----------------------------------------------------------------------------
Total
 operating
 revenues          1,489     1,428     4.3%      5,743     5,590       2.7%
----------------------------------------------------------------------------

Total wireline operating revenues increased year over year by $61 million or 4.3% in the fourth quarter of 2015 and by $153 million or 2.7% in the full year of 2015, driven by continued growth in Internet and enhanced data services revenue resulting from a larger subscriber base and higher revenue per customer, increased business process outsourcing services revenue, growth in TELUS TV services revenue from a larger subscriber base, and increased TELUS Health services revenue. These increases were partly offset by ongoing declines in legacy voice services, continued competitive pressures, product substitution, the impacts of the economic slowdown, particularly in

Alberta
, and the full year also included a decline in other services revenue.

Revenues arising from contracts with customers increased year over year by $50 million or 3.6% in the fourth quarter of 2015 and by $164 million or 3.1% in the full year of 2015.


--  Data service and equipment revenues increased year over year by $80
    million or 8.8% in the fourth quarter of 2015 and by $300 million or
    8.6% in the full year of 2015, primarily due to: (i) increased Internet
    and enhanced data service revenues resulting from a 6.2% increase in
    high-speed Internet subscribers over the year, higher revenue per
    customer from upgrades to faster Internet speeds and larger usage rate
    Internet plans, subscribers coming off of promotional offers, the
    introduction of usage-based billing and the full year period also
    included certain rate increases in late 2014; (ii) growth in business
    process outsourcing revenues; (iii) increased TELUS TV revenues
    resulting from a 9.7% subscriber growth over the year and certain rate
    increases in 2015; and (iv) increased TELUS Health revenues. These
    increases were partly offset by declines in managed services, video-
    conferencing revenues and data equipment sales, largely reflecting an
    economic slowdown, particularly in 
Alberta
.

--  Voice service revenues decreased year over year by $35 million or 8.9%
    in the fourth quarter of 2015 and by $119 million or 7.4% in the full
    year of 2015. The decreases reflect the ongoing decline in legacy voice
    revenues from technological substitution, increased competition, greater
    use of inclusive long distance plans and lower long distance minutes of
    use, partially offset by certain rate increases. We experienced a 5.7%
    decline in residential NALs in the year, compared to a 5.3% decline in
    2014.

--  Wireline subscriber connections net additions were 23,000 in the fourth
    quarter of 2015 and 91,000 in the full year of 2015, reflecting year-
    over-year decreases of 7,000 or 23% in the fourth quarter and 3,000 or
    3.2% in the full year of 2015.

    --  Net additions of high-speed Internet subscribers were flat year over
        year in the fourth quarter and increased year over year by 11,000 or
        14% in the full year of 2015. The increase was driven by the
        expansion of our high-speed broadband footprint and the pull-through
        impact from the continued bundling with Optik TV service, partially
        offset by an increase in our customer churn rate. Net additions of
        TELUS TV subscribers declined year over year by 3,000 or 11% in the
        fourth quarter of 2015 and by 12,000 or 12% in the full year of
        2015, as expansion of our addressable high-speed broadband footprint
        was more than offset by the effects of slower subscriber growth for
        paid TV services, lower oil sands construction camp activity,
        increasing competition from over-the-top (OTT) services and
        technology substitution, and an increase in our customer churn rate.
        During the fourth quarter of 2015, our TELUS TV subscriber base
        surpassed the one-million-subscriber mark. Continued focus on
        expanding our addressable high-speed Internet and Optik TV
        footprint, connecting more homes and businesses directly our fibre-
        optic network, and bundling these services together, has resulted in
        a combined Internet and TV subscriber growth of 180,000 or 7.5% over
        the year.

    --  Residential NAL losses of 24,000 in the fourth quarter and 89,000 in
        the full year of 2015, as compared to 20,000 NAL losses in the
        fourth quarter of 2014 and 87,000 NAL losses in the full year of
        2014. The residential NAL losses continue to reflect the ongoing
        trend of substitution to wireless and Internet-based services,
        including losses to competitors, partially mitigated by the success
        of our bundled service offerings and our customers first
        initiatives.

--  Other services and equipment revenues increased year over year by $5
    million in the fourth quarter of 2015, mainly due to non-recurring
    services. In the full year of 2015, other services and equipment
    revenues decreased year over year by $17 million, reflecting declines in
    voice equipment sales and the elimination of charges for paper bills.

Other operating income increased year over year by $11 million in the fourth quarter of 2015, primarily from non-recurring gains on the sale of certain real estate assets. In the full year of 2015, Other operating income decreased year over year by $10 million as a result of a decline in the current period amortization of deferred revenue in respect of the regulatory price cap deferral account for provisioning broadband Internet services to eligible rural and remote communities, as well as lower investment income, partly offset by higher gains from the sale of certain real estate assets.

Intersegment revenue represents services provided to the wireless segment. Such revenue is eliminated upon consolidation together with the associated expenses.


Operating expenses - wireline segment
----------------------------------------------------------------------------
                          Fourth quarters ended
                                    December 31    Years ended December 31
                      ------------------------------------------------------
($ millions)               2015     2014 Change       2015     2014 Change
----------------------------------------------------------------------------
Goods and services
 purchased(1)               578      585   (1.2)%    2,296    2,300   (0.2)%
Employee benefits
 expense(1)                 561      471   19.1%     1,991    1,801   10.5%
----------------------------------------------------------------------------
Total operating
 expenses                 1,139    1,056    7.9%     4,287    4,101    4.5%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    Includes restructuring and other costs. See Section 4.1 Non-GAAP and
     other financial measures.
----------------------------------------------------------------------------

Goods and services purchased decreased by $7 million year over year in the fourth quarter of 2015 and by $4 million in the full year of 2015. The decreases were primarily due to a decline in business equipment cost of sales associated with lower equipment revenues, reduced advertising and promotions costs, and the full year period also included a retroactive assessment of additional TV revenue contribution expensed in the third quarter of 2014 for approximately $15 million towards our Canadian programming funding requirements, all of which were partly offset by higher non-labour restructuring and other costs from real estate rationalization, and increased network operating costs and administrative costs to support our growing subscriber base.

Employee benefits expense increased year over year by $90 million in the fourth quarter and by $190 million in the full year of 2015. The increases were primarily due to higher labour restructuring costs from efficiency initiatives, higher compensation and benefit costs mainly to support increased business process outsourcing revenue, and higher employee defined benefit pension plan expense, partly offset by increases in capitalized labour costs associated with increased capital expenditures and the fourth quarter also included lower share-based compensation.


EBITDA - wireline segment
----------------------------------------------------------------------------
                       Fourth quarters ended
                                 December 31       Years ended December 31
                ------------------------------------------------------------
($ millions,
 except margins)     2015     2014    Change       2015     2014    Change
----------------------------------------------------------------------------
EBITDA                350      372      (5.9)%    1,456    1,489      (2.2)%
Restructuring
 and other costs
 included in
 EBITDA                74       20       n/m%       145       45       n/m%
----------------------------------------------------------------------------
EBITDA -
 excluding
 restructuring
 and other costs      424      392       8.2%     1,601    1,534       4.4%
----------------------------------------------------------------------------
EBITDA margin
 (%)                 23.5     26.0 (2.5)pts.       25.4     26.6 (1.2)pts.
EBITDA -
 excluding
 restructuring
 and other costs
 margin (%)          28.5     27.4  1.1 pts.       27.9     27.4  0.5 pts.
----------------------------------------------------------------------------

Wireline EBITDA decreased year over year by $22 million or 5.9% in the fourth quarter of 2015 and by $33 million or 2.2% in the full year of 2015, primarily from increased restructuring and other costs, higher wages and salaries, and continued declines in legacy voice services, partly offset by growth in data service and equipment revenues and non-recurring gains on the sale of certain real estate assets. EBITDA - excluding restructuring and other costs increased year over year by 8.2% in the fourth quarter of 2015 and 4.4% in the full year of 2015, as compared to year-over-year revenue increases of 4.3% for the quarter and 2.7% for the full year, reflecting improving margins in data services, including Internet, TELUS TV, business process outsourcing and TELUS Health services. The year over year growth in EBITDA - excluding restructuring and other costs also benefited from non-recurring gains on the sale of certain real estate assets.

1.5 Summary of consolidated quarterly results and trends



----------------------------------------------------------------------------
($ millions,
except per share
 amounts)                     2015 Q4      2015 Q3      2015 Q2      2015 Q1
----------------------------------------------------------------------------
Operating revenues              3,217        3,155        3,102        3,028
----------------------------------------------------------------------------
Operating expenses
Goods and services
 purchased(1)                   1,482        1,394        1,372        1,284
Employee benefits
 expense(1)                       757          693          649          609
Depreciation and
 amortization                     518          471          464          456
----------------------------------------------------------------------------
Total operating expenses        2,757        2,558        2,485        2,349
----------------------------------------------------------------------------
Operating income                  460          597          617          679
Financing costs                   114          106          110          117
----------------------------------------------------------------------------
Income before income
 taxes                            346          491          507          562
Income taxes                       85          126          166          147
----------------------------------------------------------------------------
Net income and Net
 income attributable to
 Common Shares                    261          365          341          415
----------------------------------------------------------------------------
Net income per Common
 Share:
Basic (basic EPS)                0.44         0.61         0.56         0.68
Adjusted basic EPS(2)            0.54         0.66         0.66         0.70
Diluted                          0.44         0.61         0.56         0.68
Dividends declared per
 Common Share                    0.44         0.42         0.42         0.40
----------------------------------------------------------------------------
Additional information:
EBITDA(2)                         978        1,068        1,081        1,135
Restructuring and other
 costs included in
 EBITDA(2)                         99           51           59           17
EBITDA - excluding
 restructuring and other
 costs(2)                       1,077        1,119        1,140        1,152
Cash provided by
 operating activities             863        1,018          943          718
Free cash flow(2)                 197          310          300          271
----------------------------------------------------------------------------


----------------------------------------------------------------------------
($ millions,
except per share
 amounts)                     2014 Q4      2014 Q3      2014 Q2      2014 Q1
----------------------------------------------------------------------------
Operating revenues              3,128        3,028        2,951        2,895
----------------------------------------------------------------------------
Operating expenses
Goods and services
 purchased(1)                   1,476        1,333        1,268        1,222
Employee benefits
 expense(1)                       651          630          610          596
Depreciation and
 amortization                     468          459          444          463
----------------------------------------------------------------------------
Total operating expenses        2,595        2,422        2,322        2,281
----------------------------------------------------------------------------
Operating income                  533          606          629          614
Financing costs                   115          124          115          102
----------------------------------------------------------------------------
Income before income
 taxes                            418          482          514          512
Income taxes                      106          127          133          135
----------------------------------------------------------------------------
Net income and Net
 income attributable to
 Common Shares                    312          355          381          377
----------------------------------------------------------------------------
Net income per Common
 Share:
Basic (basic EPS)                0.51         0.58         0.62         0.61
Adjusted basic EPS(2)            0.53         0.64         0.63         0.62
Diluted                          0.51         0.58         0.62         0.60
Dividends declared per
 Common Share                    0.40         0.38         0.38         0.36
----------------------------------------------------------------------------
Additional information:
EBITDA(2)                       1,001        1,065        1,073        1,077
Restructuring and other
 costs included in
 EBITDA(2)                         26           30           11            8
EBITDA - excluding
 restructuring and other
 costs(2)                       1,027        1,095        1,084        1,085
Cash provided by
 operating activities             917        1,037          855          598
Free cash flow(2)                 337          219          210          291
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    Goods and services purchased and Employee benefits expense amounts
     include restructuring and other costs.
2    See Section 4.1 Non-GAAP and other financial measures.
----------------------------------------------------------------------------

Trends

The consolidated revenue trend continues to reflect year-over-year increases in: (i) wireless network revenues generated from a moderating growth in the subscriber base due to the impacts of the economic slowdown, particularly in

Alberta
, slower growth in wireless postpaid market penetration, increased competitive intensity and higher handset prices, as well as a moderating growth in ARPU driven by a larger proportion of higher-rate two-year plans, a more favourable postpaid subscriber mix, and increases in data roaming and chargeable data usage, partly offset by a decline in voice revenue; (ii) wireless equipment revenue that has generally increased due to higher retention volumes, especially in 2015 as two-year and three-year customer contracts began to expire coterminously, and an increase in the sales mix of higher-priced smartphones; and (iii) growth in wireline data revenues, driven by Internet, enhanced data services, business process outsourcing, TELUS TV and TELUS Health services. This growth was partially offset by the continued declines in wireless voice revenues, as well as wireline voice service and other wireline services and equipment revenues.

The wireless data revenue growth trend is moderating as it is impacted by competitive pressures driving larger allotments of data provided in rate plans, including data sharing and international data roaming features and plans, and unlimited messaging rate plans, as well as customer reactions to increased frequency of real-time data usage notifications and offloading of data traffic from our wireless network to increasingly available Wi-Fi hotspots. We introduced two-year wireless rate plans in July 2013, which have impacted acquisition and retention trends, as well as data usage, as subscribers optimize unlimited talk and text and shared data plans, and which we expect will increase the frequency of subscribers updating their devices and services. ARPU is expected to continue to increase over time, though at lower growth rates, as a result of the declining proportion of customers on legacy three-year plans renewing to higher-rate two-year plans, continued but moderating growth in chargeable data usage, and the ongoing shift in our subscriber base towards higher-value postpaid customers. However, the level of ARPU is highly dependent on competition, the economic situation, consumer behaviour, government decisions, device selection and other factors, and, as a consequence, there cannot be any assurance that ARPU growth will continue to materialize. In the third and fourth quarters of 2015, for instance, ARPU growth was tempered by the impact of the economic slowdown, particularly in

Alberta
, and also by the ongoing decline in voice revenue. This factor is expected to continue to impact growth through 2016.

Retention spending as a percentage of network revenue has increased year over year from 11.8% in 2014 to 13.9% in 2015, mainly from the coterminous expiration of two-year and three-year contracts beginning on June 3, 2015 and an increase in the sales mix of higher-subsidy smartphones. We may continue to experience a higher volume of contract renewals than previously experienced prior to June 3, 2015. We may also experience continuing pressure on our postpaid subscriber churn if some of our remaining clients on three-year contracts choose to terminate their contracts early or if increased competitive intensity continues in 2016. Accordingly, our wireless segment historical operating results and trends prior to the coterminous expiration of two-year and three-year contracts may not be reflective of results and trends for future periods.

Historically, there has been significant third and fourth quarter seasonality due to higher wireless subscriber additions, an increase in related acquisition costs and equipment sales, and higher retention costs due to contract renewals. Typically, these impacts can also be more pronounced around popular device launches. Wireless EBITDA usually decreases sequentially from the third to the fourth quarter, due to seasonal loading volumes. Subscriber additions have typically been lowest in the first quarter. Historically, monthly wireless ARPU has experienced seasonal sequential increases in the second and third quarters, reflecting higher levels of usage and roaming in the spring and summer, followed by seasonal sequential declines in the fourth and first quarters. This seasonal effect on ARPU is expected to diminish in the future, as unlimited nationwide voice plans become more prevalent and chargeable usage and long distance spikes become less pronounced.

The trend of increasing wireline data revenue reflects growth in high-speed Internet and enhanced data services, including increases in usage and adoption of higher-speed services, growth in business process outsourcing, the continuing but moderating expansion of our TELUS TV subscriber base (up 9.7% in 2015), growth in TELUS Health solutions and certain rate increases. Higher Internet service revenues are due to a larger high-speed Internet subscriber base (up 6.2% in 2015), bundling of offers with Optik TV service, the introduction of usage-based billing and certain rate increases. A general trend of declining wireline voice revenues is due to competition from voice over IP (VoIP) service providers (including cable-TV competitors), resellers and facilities-based competitors, as well as technological substitution to wireless and IP-based services and applications, increased competition in the small and medium-sized business market, and the impact of the economic slowdown and associated customers' re-sizing of services.

The trend in Goods and services purchased expense reflects increasing wireless equipment expenses associated with higher-value smartphones in the sales mix and higher retention volumes, increasing content costs due to a growing wireline TELUS TV subscriber base, growing wireless customer service and distribution channel expenses, and increasing non-labour restructuring and other costs, partly offset by lower wireless network operating expenses from operational efficiency initiatives.

The trend in Employee benefits expense reflects increases in compensation and employee-related restructuring costs, as well as more FTE employees supporting business process outsourcing revenue growth, partly offset by lower domestic FTE employees in part due to the reduction of full-time positions announced in November 2015 and higher capitalized labour costs associated with increased capital expenditures, as described in Section 3.3.

The general trend in depreciation and amortization reflects increases due to growth in capital assets in support of the expansion of our broadband footprint and enhanced LTE network coverage, as well as adjustments related to our continuing program of asset life studies.

The general trend in Financing costs reflects an increase in long-term debt outstanding associated with significant investments in wireless spectrum licences acquired in the Department of Innovation, Science and Economic Development's auctions in 2014 and 2015. Financing costs also include the Employee defined benefit net interest expense that has increased for 2015, primarily due to the increase in the defined benefit plan deficit at December 31, 2014, as compared to the defined benefit plan surplus at December 31, 2013. Employee defined benefit plans net interest expense is expected to decrease in 2016 as a result of the decrease in net deficit, partially offset by the application of a higher discount rate at December 31, 2015 (see Note 14 of our 2015 Consolidated financial statements). Moreover, Financing costs are net of capitalized interest related to spectrum licences acquired during the spectrum auctions held by the Department of Innovation, Science and Economic Development, which we expect to deploy into our existing network in future periods (capitalized long-term debt interest is $45 million since commencement in the second quarter of 2015). Financing costs for the eight periods shown include varying amounts of foreign exchange gains or losses and varying amounts of interest income, including $20 million of interest income in the second quarter of 2015 resulting from the settlement of prior years' income tax-related matters. In addition, Financing costs in the third quarter of 2014 included long-term debt prepayment premiums of approximately $13 million.

The trend in Net income reflects the items noted above, as well as non-cash adjustments arising from legislated income tax changes and adjustments recognized in the current period for income tax of prior periods, including any related after-tax interest on reassessments. The trend in basic EPS also reflects the impact of share purchases under our NCIB program.

The trend in cash provided by operating activities reflects growth in consolidated EBITDA and lower income tax payments in 2015, net of higher interest expenses related to our financing activities. The trend in free cash flow reflects the factors affecting cash provided by operating activities, as well as increases in capital expenditures (excluding spectrum licences), but excludes the effects of certain changes in working capital, such as trade accounts receivable and trade accounts payable.

1.6 Performance scorecard (key performance measures)

In 2015, we achieved three of four original consolidated targets and all four of our original segmented targets, which were announced on February 12, 2015. We achieved our consolidated revenue targets, primarily due to growth in wireless network revenues and wireline data revenues. Wireless network revenues were close to the high end of our target range, reflecting growth in our subscriber base and higher ARPU. Wireline revenues were near the midpoint of our target range, as growth in wireline data revenues was partly offset by declines in legacy voice services and lower business spending.

We met our target for consolidated EBITDA - excluding restructuring and other costs. Our target for wireless EBITDA - excluding restructuring and other costs was met due to an increase in network revenues partially offset by higher retention spending. Our target for wireline EBITDA - excluding restructuring and other costs was met due to growth in wireline data revenues, as well as improving margins in enhanced data services, TELUS TV services, business process outsourcing services and TELUS Health services.

Our basic EPS excluding restructuring and other costs and income tax-related adjustments met our target range, primarily due to growth in our wireless and wireline EBITDA - excluding restructuring and other costs noted above, as well as a reduction in the number of shares outstanding resulting from our NCIB program.

Our capital expenditures in 2015 exceeded both our original target and revised guidance as we continued to focus on investments in wireless and wireline broadband infrastructure, including the expansion of our LTE and fibre-optic networks and the continued deployment of 700 MHz spectrum, as well as in network and system resiliency and reliability in support of our ongoing customers first initiatives, and readying our network and systems for the future retirement of legacy assets.

We met all but one of our long-term financial objectives, policies and guidelines, including generally maintaining a minimum of $1.0 billion of unutilized liquidity, adhering to our dividend payout ratio guideline of 65 to 75% of sustainable earnings on a prospective basis and maintaining long-term investment grade credit ratings in the range of BBB+ or the equivalent. As at December 31, 2015, our Net debt to EBITDA - excluding restructuring and other costs was outside of the long-term objective range of 2.00 to 2.50 times, primarily due to our purchases of spectrum licences during the atypical concentration of wireless spectrum auctions in 2014 and 2015. We will endeavour to return this ratio to within the objective range in the medium term, as we believe that this range is supportive of our long-term strategy. (For additional details, see Section 7.5 of the 2015 annual MD&A.)

We also completed 10 semi-annual dividend increases from 2011 to 2015, consistent with our intention to target ongoing semi-annual dividend increases, with an annual increase of circa 10% through to the end of 2016, subject to the assessment and determination by our Board of Directors of our financial position and outlook, as well as our long-term dividend payout ratio guideline of 65 to 75% of prospective sustainable earnings. There can be no assurance that we will maintain this dividend growth program. See Caution regarding forward-looking statements - Ability to sustain dividend growth program of circa 10% per annum through 2016

The following scorecard compares TELUS' performance to our original or revised 2015 targets and also presents our 2016 targets. Our 2016 targets, plans and assumptions are fully qualified by the Caution regarding forward-looking statements at the beginning of Management's review of operations. (See also Section 10 - Risks and risk management in the 2015 annual MD&A.)


Scorecard
----------------------------------------------------------------------------
                            2015 performance
                ----------------------------------------
                                   Original or
                 Actual results  revised targets Result 2016 targets
                   and growth      and growth           and growth
----------------------------------------------------------------------------
Consolidated
  Revenues                         $12.350 to           $12.750 to $12.875
                 $12.502 billion $12.550 billion   yes  billion
                      4.2%           3 to 5%            2.0 to 3.0%
  --------------------------------------------------------------------------
  EBITDA -                                              $4.625 to $4.755
   excluding                    $4.400 to $4.575        billion
   restructuring $4.488 billion  billion(2) 3 to   yes  3.0 to 6.0%
   and other          4.6%             7%
   costs(1)
  --------------------------------------------------------------------------
  Basic EPS         $2.48(3)     $2.40 to $2.60         $2.40 to $2.56
                      7.4%          4 to 13%       yes  5.0 to 12.0%(4)
  --------------------------------------------------------------------------
  Capital                                               Approx. $2.65
   expenditures( $2.577 billion   Approx. $2.5     no   billion
   5)                              billion(5)
  --------------------------------------------------------------------------
Wireless segment
  Network                       $6.175 to $6.300        $6.425 to $6.490
   revenue       $6.298 billion      billion       yes  billion
   (external)         4.8%           3 to 5%            2.0 to 3.0%
  --------------------------------------------------------------------------
  EBITDA -                                              $2.975 to $3.060
   excluding                    $2.850 to $2.950        billion
   restructuring $2.887 billion      billion       yes  3.0 to 6.0%
   and other          4.7%           3 to 7%
   costs(1)
  --------------------------------------------------------------------------
Wireline segment
  Revenue                       $5.525 to $5.625        $5.680 to $5.735
   (external)    $5.569 billion      billion       yes  billion
                      2.8%           2 to 4%            2.0 to 3.0%
  --------------------------------------------------------------------------
  EBITDA -                                              $1.650 to $1.695
   excluding                    $1.550 to $1.625        billion
   restructuring $1.601 billion      billion       yes  3.0 to 6.0%
   and other          4.4%           1 to 6%
   costs(1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Met target: yes; Missed target: no.
1    See description in Section 4.1 Non-GAAP and other financial measures.
2    Original 2015 guidance was EBITDA including restructuring and other
     costs of $4.325 billion to $4.500 billion, however due to significant
     increases in restructuring and other costs announced in the second and
     third quarters of 2015, we revised guidance in those respective periods
     to be EBITDA - excluding restructuring and other costs of $4.400
     billion to $4.575 billion, reflecting the exclusion of our original
     assumption for restructuring and other costs of $75 million
3    Target-related basic EPS, reflects basic EPS, as reported, excluding
     the impact of incremental restructuring and other costs in excess of
     our original restructuring and other costs guidance of $75 million, as
     well as income tax-related adjustments
4    2016 targeted growth for basic EPS is in the range of 5.0 to 12.0%,
     compared to 2015 basic EPS, as reported, of $2.29
5    Excludes expenditures for spectrum licences and excludes non-monetary
     transactions. Our capital expenditures guidance was revised in the
     second quarter of 2015; the original target was approximately the same
     as 2014 capital expenditures ($2.359 billion).
----------------------------------------------------------------------------



We made the following key assumptions when we announced the 2015 targets in February 2015.




Assumptions for 2015 targets and result
----------------------------------------------------------------------------

Our original estimate for economic growth in 
Canada
 was 2.1% in 2015. In our
second quarter MD&A, we revised our estimate for 2015 economic growth in
Canada
 to a range of 1.0% to 1.5%. We estimate that growth in 2015 was 1.1%.

No material adverse regulatory rulings or government actions. Regulatory
developments in 2015 are discussed in Section 10.4 Regulatory matters in our
2015 annual MD&A. None of these developments had a material impact on our
operations.

Intense wireless and wireline competition, continuing from 2014, in both
consumer and business markets. See Section 10.2 Competition in our 2015
annual MD&A.

Approximately one percentage point increase in wireless industry penetration
of the Canadian market. In 2015, we estimate that wireless industry
penetration of the Canadian market increased by approximately two percentage
points.

Ongoing subscriber adoption of, and upgrades to, data-intensive smartphones,
as customers want more mobile connectivity to the Internet. In 2015,
retention costs as a percentage of network revenue increased year over year
by 2.1 pts. to 13.9%, driven by greater retention volumes and higher per-
unit subsidy costs that were primarily due to our customers' preference for
higher-value smartphone devices.

Wireless revenue growth resulting from postpaid subscriber loadings
consistent with increased market penetration, as well as a modest increase
in blended ARPU resulting from higher-rate two-year plans, increased data
usage, including increased use of shared data plans, and subscriber mix. In
2015, wireless network revenues grew by 4.8% and blended ARPU grew by 1.9%.

Higher wireless acquisition and retention expenses, dependent on gross
loadings, market pressures and the impact of coterminous renewals of two-
year and three-year contracts. In 2015, retention expenses grew by
approximately 23% and retention volumes increased by 10%, however,
acquisition expenses declined by approximately 3% and gross additions
declined by 11%.


Growth in wireline data revenue, consistent with 2014, resulting from an
increase in high-speed Internet and Optik TV subscribers, speed upgrades and
expanding broadband infrastructure, as well as business outsourcing and
healthcare solutions. In 2015, wireline data revenue increased by 8.6%, as
compared to 8.2% in 2014, while the total of high-speed Internet subscribers
and TV subscribers increased by 7.5% in 2015, as compared to 8.2% in 2014.

Pension plans: Defined benefit pension plan expense of approximately $106
million recorded in Employee benefits expense and approximately $26 million
recorded in employee defined benefit plans net interest in Financing costs;
a 3.90% discount rate for employee defined benefit pension plan accounting
purposes (2014 - 4.75%); and defined benefit pension plan funding of
approximately $88 million. In 2015, the defined benefit pension plan
expenses and defined benefit pension plan funding were approximately as
estimated, except for a higher defined benefit pension plan expense of $118
million recorded in Employee benefits expense driven by increased past
service costs.


Restructuring and other costs of approximately $75 million for continuing
operational efficiency initiatives, with other margin enhancement
initiatives to mitigate pressures from technological substitution and
subscriber growth. We revised our assumption to approximately $125 million
in our second quarter MD&A. Subsequently, in our third quarter MD&A, we
revised the assumption to $250 million (see Investing in internal
capabilities in Section 2.2 in our 2015 annual MD&A). The actual result was
$226 million for 2015.

Income taxes: Income taxes computed at applicable statutory rate of 26.0 to
26.5% and cash income tax payments between $280 million and $340 million.
Cash tax payments were expected to decrease in 2015, primarily due to lower
final payments for the previous tax year. In our second quarter MD&A, we
revised our assumption for cash income tax payments downward to a range of
$200 million to $260 million, due to the deferral of the 2015 instalments to
2016 and higher refunds from the settlement of prior years' income tax-
related matters. The actual income taxes were computed at an applicable
statutory rate of 26.5% in 2015, including the impact of an increase in the
Alberta
 provincial corporate tax rate from 10% to 12% effective July 1,
2015. The actual cash income tax payments were $256 million for 2015.

Continued investments in broadband infrastructure and 4G LTE expansion and
upgrades, as well as in network and systems resiliency and reliability. In
2015, capital expenditures (excluding spectrum licences and non-monetary
transactions) were $2.577 billion, including continued investment in the
expansion of our LTE and fibre-optic networks, as well as in system and
network resiliency and reliability (see Building national capabilities in
Section 2.2 in our 2015 annual MD&A).

Participation in the Department of Innovation, Science and Economic
Development's (formerly Industry Canada) wireless spectrum auctions for AWS-
3 spectrum (1755 - 1780 MHz and 2155 - 2180 MHz), as well as for 2.5 GHz
(2500 - 2690 MHz) bands in March 2015 and April 2015. We participated in
these auctions, as well as a residual auction held in August 2015 (see
Building national capabilities in Section 2.2 in our 2015 annual MD&A).

Further weakening of the Canadian dollar to 
U.S.
 dollar exchange rate from
the U.S. 90.5 cent average exchange rate in 2014, in part due to the impact
of lower oil prices on Canadian exports. Assumption of further weakening in
the exchange rate during 2015 was confirmed, as the average exchange rate
for the Canadian dollar in 2015 was U.S. 78 cents.

----------------------------------------------------------------------------

1.7 Financial and operating targets for 2016

For 2016, we have targeted consolidated revenues in the range of $12.750 to $12.875 billion, or growth of approximately 2.0 to 3.0%. Consolidated EBITDA - excluding restructuring and other costs is targeted in the range of $4.625 to $4.755 billion, or growth of approximately 3.0 to 6.0%. Revenue and EBITDA excluding restructuring and other costs growth is expected to result from increases in wireless and wireline data services, and savings from cost efficiency initiatives. Basic EPS is expected to be in the range of $2.40 to $2.56, or an increase of approximately 5.0% to 12.0% due to EBITDA growth, combined with a reduction in shares outstanding as a result of our NCIB program.

Wireless network revenue is targeted to be in the range of $6.425 to $6.490 billion in 2016, or an increase of approximately 2.0 to 3.0% due to modest growth in both subscribers and blended ARPU. We also expect growth in data and roaming revenues will offset lower voice revenue. Wireless EBITDA - excluding restructuring and other costs is targeted to be $2.975 to $3.060 billion, or an increase of approximately 3.0 to 6.0%, as a result of anticipated growth in wireless network revenue, savings from cost efficiency initiatives and stable retention costs.

Wireline revenue is targeted to be in the range of $5.680 to $5.735 billion in 2016, or an increase of approximately 2.0 to 3.0%, reflecting continued data revenue growth from high-speed Internet and Optik TV services, as well as from business process outsourcing and TELUS Health services, partially offset by continued decreases in legacy voice revenues and continued effects of the economic slowdown. Wireline EBITDA - excluding restructuring and other costs is targeted to be in the range of $1.650 to $1.695 billion in 2016, or an increase of approximately 3.0 to 6.0%. We anticipate margin improvements from our high-speed Internet and Optik TV services, business outsourcing and TELUS Health services, as well as our ongoing efficiency initiatives, partially offset by the continuing industry trend of revenue losses from higher-margin legacy voice services.

Consolidated capital expenditures, excluding the purchase of spectrum licences and non-monetary transactions, in 2016 are targeted to be approximately $2.65 billion. We plan to continue broadband infrastructure expansion and upgrades, including bringing fibre-optic cable deeper into the network and connecting more homes and businesses to the fibre-optic network, to support high-speed Internet and Optik TV subscriber growth and faster Internet broadband speeds. We intend to continue investing in our wireless network for 4G LTE expansion and upgrades, including the ongoing deployment of 700 MHz and 2500 MHz spectrum, as well as invest in network and system resiliency and reliability to support our ongoing customers first initiatives and ready the network and systems for future retirement of legacy assets.


Our long-term financial objectives, policies and guidelines are described in Section 4.3 of our 2015 annual MD&A. Achievement of our 2016 targets is subject to risks and uncertainties, including, but not limited to competition, regulatory matters, financing and debt requirements, taxation matters, economic conditions, litigation and other factors noted in our Caution regarding forward-looking statements and in our 2015 annual MD&A filed on February 11, 2016. The 2016 targets are based on many assumptions including:

Assumptions for 2016 targets



--  Moderately higher economic growth in 
Canada
 in 2016, estimated to be
    1.7%, up from an estimated 1.1% in 2015. For our incumbent local
    exchange carrier (ILEC) provinces in 
Western Canada
, we estimate that
    economic growth in 
British Columbia
 was 2.3% in 2015 and will be in the
    range of 2.0% to 2.5% in 2016, and that economic growth (contraction) in
    
Alberta
 was approximately (1.0)% in 2015 and will be in the range of
    0.5% to 1.0% in 2016, in part due to low oil prices.

--  No material adverse regulatory rulings or government actions.

--  Continued intense wireless and wireline competition in both consumer and
    business markets.

--  An increase in wireless industry penetration of the Canadian market,
    consistent with 2015.

--  Ongoing subscriber adoption of, and upgrades to, data-intensive
    smartphones, as customers want more mobile connectivity to the Internet.

--  Wireless revenue growth resulting from modest growth in both postpaid
    subscriber loadings and blended ARPU.

--  Stable wireless acquisition and retention expenses to 2015, however,
    these will be dependent on gross loadings, market pressures and the
    continued impact of the coterminous expiration of two-year and three-
    year plans, which began in June 2015.

--  Continued growth in wireline data revenue, resulting from an increase in
    high-speed Internet and Optik TV subscribers, speed upgrades and
    expanding broadband infrastructure, as well as business outsourcing and
    healthcare solutions.

--  Continued focus on our customers first initiatives and maintaining our
    customers' likelihood-to-recommend scores.

--  Pension plans: Defined benefit pension plan expense of approximately $89
    million recorded in Employee benefits expense and approximately $5
    million recorded in employee defined benefit plans net interest in
    Financing costs; a 4.00% discount rate for employee defined benefit
    pension plan accounting purposes (2015 - 3.90%); and defined benefit
    pension plan funding of approximately $57 million.

--  Restructuring and other costs of approximately $175 million for
    continuing operational efficiency initiatives, with other margin
    enhancement initiatives to mitigate pressures from slow economic growth,
    technological substitution and modest subscriber growth. The completion
    of our initiative to reduce approximately 1,500 full-time positions
    previously announced in November 2015.

--  Income taxes: Income taxes computed at applicable statutory rate of 26.3
    to 26.8% and cash income tax payments between $570 million and $630
    million (2015 - $256 million). Cash tax payments are increasing in 2016,
    primarily as a result of the impact of the use of the Public Mobile
    losses in 2014, which has the effect of: (i) deferring a portion of our
    2015 current taxes payable to February 2016; and (ii) increasing,
    relative to 2015, the 2016 instalments payable, which ultimately is
    expected to reduce the 2017 cash income tax payments by approximately
    $150 million.

--  Increased investments in broadband infrastructure, including our new
    fibre-optic network, and 4G LTE expansion and upgrades, as well as in
    network and systems resiliency and reliability.

--  A continuing weakness in the average Canadian dollar to 
U.S.
 dollar
    exchange rate from the U.S. 78 cent average exchange rate in 2015, in
    part due to the continued effects of low oil prices and certain 
U.S.

    monetary policy changes.

2. Changes in financial position

Refer to the annual 2015 Management's discussion and analysis (MD&A) for information regarding changes in the financial position.

3. Discussion of cash flow results

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of the Management's review of operations.

For detailed information on the following topics, refer to the 2015 annual Management's discussion and analysis (MD&A): i) liquidity and capital resource measures; ii) credit facilities; iii) sale of trade receivables; iv) credit ratings; v) financial instruments, commitments and contingent liabilities; vi) outstanding share information; and vii) transactions between related parties.

3.1 Overview of cash flow results

In 2015, we paid $1.5 billion for wireless spectrum licences acquired in the first quarter AWS-3 spectrum auction, $479 million for the licences acquired in the second quarter 2500 MHz spectrum auction and $58 million for the licences acquired in the third quarter residual spectrum auction (700 MHz and AWS-3 bands). In March 2015, we publicly issued $1.75 billion of senior unsecured notes in three series with the proceeds mainly used to fund the spectrum licences purchased in the AWS-3 spectrum auction, repay approximately $110 million of indebtedness drawn from the 2014 Credit Facility and repay approximately $135 million of outstanding commercial paper. We utilized existing Short-term borrowings and long-term credit facilities to fund the spectrum licences purchased in the 2500 MHz and residual spectrum licence auctions. In December 2015, we publicly issued $1.0 billion of senior unsecured notes in two series with the proceeds mainly used to repay outstanding commercial paper and to fund the repayment, on maturity, of a portion of the $600 million principal amount outstanding on our Series CI Notes due May 2016.

In 2015, we paid dividends of $992 million to the holders of Common Shares and returned $628 million of cash to shareholders through share purchases under our completed 2015 and advanced 2016 normal course issuer bid (NCIB). During the month ended January 31, 2016, 1.0 million of our Common Shares were purchased by way of the automatic share purchase plan (ASPP) at a cost of $39 million. Subsequent to December 31, 2015, we paid dividends of $263 million to the holders of Common Shares in January 2016. Our capital structure financial policies, financing plan and report on financing and capital structure management plans are described in Section 4.3 of the 2015 annual MD&A.


Cash flows
----------------------------------------------------------------------------
                          Fourth quarters ended
                                    December 31    Years ended December 31
                      ------------------------------------------------------
($ millions)              2015     2014  Change      2015     2014  Change
----------------------------------------------------------------------------
Cash provided by
 operating activities      863      917    (5.9)%   3,542    3,407     4.0%
Cash used by investing
 activities               (625)    (713)   12.3%   (4,477)  (3,668)  (22.1)%
Cash provided (used)
 by financing
 activities               (156)    (370)   57.8%    1,098      (15)    n/m
----------------------------------------------------------------------------
Increase (decrease) in
 Cash and temporary
 investments, net           82     (166)  149.4%      163     (276)  159.1%
Cash and temporary
 investments, net,
 beginning of period       141      226   (37.6)%      60      336   (82.1)%
----------------------------------------------------------------------------
Cash and temporary
 investments, net, end
 of period                 223       60     n/m       223       60     n/m
----------------------------------------------------------------------------

3.2 Cash provided by operating activities

Cash provided by operating activities decreased by $54 million in the fourth quarter of 2015 and increased by $135 million in the full year of 2015, when compared to the same periods in 2014.


Analysis of changes in cash provided by operating activities
----------------------------------------------------------------------------
($ millions)                                             Fourth
                                                        quarter   Full year
----------------------------------------------------------------------------
Cash provided by operating activities, three-month
 period and year ended December 31, 2014                    917       3,407
Year-over-year changes:
  Higher (lower) EBITDA (see Section 1.3 Wireless
   segment and Section 1.4 Wireline segment)                (23)         46
  Higher share-based compensation cash outflows, net
   of expense                                               (93)       (112)
  Lower employer contributions to defined benefits
   plans, net of expense                                      4          25
  Lower restructuring disbursements, net of
   restructuring expenses                                    45          96
  Higher interest paid                                        -         (46)
  Higher interest received                                   20          22
  Lower (higher) income taxes paid, net of
   recoveries received                                       (8)        208
  Other operating working capital changes                     1        (104)
----------------------------------------------------------------------------
Cash provided by operating activities, three-month
 period and year ended December 31, 2015                    863       3,542
----------------------------------------------------------------------------

--  Share-based compensation payments, net of expense, increased year over
    year in the quarter and the full year of 2015 mainly from higher year-
    over-year cash outflows associated with restricted stock units (RSUs)
    arising from a timing difference which resulted in a cash outflow that
    would have typically arisen in the fourth quarter of 2014 but ended up
    occurring in the first quarter of 2015 due to a delay in our 2012 annual
    allocation of RSUs.

--  Restructuring disbursements, net of restructuring expenses, were lower
    year over year in the quarter and the full year of 2015, reflecting
    increased restructuring and other costs mainly from personnel-related
    costs and real estate rationalization, partly offset by higher
    associated disbursements in 2015.

--  Income taxes paid, net of recoveries received, was relatively flat year
    over year in the quarter and decreased year over year in the full year
    of 2015. The decrease for the full year period reflects lower required
    instalments and a lower final income tax payment for the 2014 income tax
    year than was required in the comparable period of 2014 for the 2013
    income tax year.

--  Other operating working capital changes reflected a net $104 million
    decrease in the full year of 2015, compared to 2014. This included a
    decrease in Accounts payable and accrued liabilities and an increase in
    Inventories, partly offset by decreases in Accounts receivable and
    Prepaid expenses.

3.3 Cash used by investing activities

Cash used by investing activities decreased year over year by $88 million in the fourth quarter of 2015 and increased year over year by $809 million in the full year of 2015. The changes included the following:


--  Cash payments for capital assets (excluding spectrum licences) decreased
    year over year by $35 million in the fourth quarter of 2015 and
    increased year over year by $149 million for the full year of 2015.
    These changes were composed of:

    --  Year-over-year increases in capital expenditures of $85 million in
        the fourth quarter and $218 million in the full year of 2015 (see
        table and discussion below).

    --  Comparative decreases in capital expenditure payments reflecting
        payment timing differences as Accounts payable and accrued
        liabilities increased year over year by $117 million in the quarter
        and $66 million in the full year of 2015.

--  Payments for wireless spectrum licences were higher year over year by
    $46 million in the fourth quarter of 2015, reflecting the final payment
    for wireless spectrum licences purchased during the residual spectrum
    licence auction in August 2015. For the full year of 2015, our payments
    for spectrum licences were $2.0 billion, as compared to approximately
    $1.2 billion in 2014. These payments reflect spectrum licences purchased
    primarily through the atypical concentration of wireless spectrum
    auctions in 2014 and 2015, which allowed us to more than double our
    national spectrum holdings.

--  Payments for business acquisitions and related investments to complement
    our existing lines of business, were $NIL in the fourth quarter of 2015
    (fourth quarter of 2014 - $3 million) and $10 million in the full year
    of 2015 (full year of 2014 - $49 million).

--  In the fourth quarter of 2015, our advances and contributions to real
    estate joint ventures, net of receipts, were $11 million, and in the
    full year of 2015, receipts from the real estate joint ventures, net of
    advances and contributions, were $48 million, mainly from a $95 million
    repayment of construction financing by the TELUS Garden real estate
    joint venture pursuant to its bond issuance for the completed, and now
    occupied, office tower in July 2015. For the comparable periods in 2014,
    advances and contributions from real estate joint ventures, net of
    receipts, were $16 million and $53 million, respectively, which
    primarily reflect advances under construction credit facilities
    commensurate with construction progress.

Capital expenditure measures
----------------------------------------------------------------------------
                          Fourth quarters ended
                                    December 31     Years ended December 31
                     -------------------------------------------------------
($ millions, except
 capital intensity)       2015     2014  Change      2015     2014   Change
----------------------------------------------------------------------------
Capital expenditures
 (excluding spectrum
 licences and non-
 monetary
 transactions)(1)
  Wireless segment         209      188    11.2%      893      832      7.3%
  Wireline segment         446      382    16.8%    1,684    1,527     10.3%
----------------------------------------------------------------------------
Consolidated               655      570    14.9%    2,577    2,359      9.2%
----------------------------------------------------------------------------
Wireless segment
 capital intensity
 (%)                        12       11   1 pt.        13       13    - pt.
Wireline segment
 capital intensity
 (%)                        30       27  3 pts.        29       27   2 pts.
Consolidated capital
 intensity(2)(%)            20       18  2 pts.        21       20    1 pt.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    Capital expenditures include assets purchased, but not yet paid for,
     and therefore differ from Cash payments for capital assets, as
     presented on the Consolidated statements of cash flows. See Note 25(b)
     of the Consolidated financial statements.
2    See calculation and description in Section 4.1 Non-GAAP and other
     financial measures.
----------------------------------------------------------------------------

Wireless segment capital expenditures increased year over year by $21 million in the fourth quarter of 2015 and by $61 million in the full year of 2015. The increases were due to the continued investment in wireless broadband infrastructure to enhance our network coverage, speed and capacity, including the deployment of 700 MHz spectrum, as well as the continued investment in system resiliency and reliability in support of our ongoing customers first initiatives, and to ready the network and systems for future retirement of legacy assets.

Wireline segment capital expenditures increased year over year by $64 million in the fourth quarter of 2015 and by $157 million in the full year of 2015. We continued to invest in our wireline broadband infrastructure, including connecting more homes and businesses directly to our fibre-optic network. This investment supports our high-speed Internet and Optik TV subscriber growth, as well as our customers' demand for faster Internet speeds, and extends the reach and functionality of our healthcare solutions. We also continued to make investments in system and network resiliency and reliability.

3.4 Cash provided (used) by financing activities

Net cash used by financing activities decreased year over year by $214 million in the fourth quarter of 2015. Net cash provided by financing activities increased year over year by $1.1 billion in the full year of 2015. Financing activities included the following:

Dividends paid to the holders of Common Shares

Dividends paid to the holders of Common Shares totalled $252 million in the fourth quarter of 2015 and $992 million in the full year of 2015, or year-over-year increases of $19 million in the fourth quarter and $79 million in the full year. This reflected increased dividend rates under our dividend growth program, offset by lower outstanding shares resulting from shares purchased and cancelled under our NCIB program.

Purchase of Common Shares for cancellation

In the fourth quarter of 2015, we purchased approximately six million shares under our 2016 NCIB for $226 million. For the full year of 2015, we purchased approximately 16 million shares under our completed 2015 and advanced 2016 NCIB for $628 million. In 2014, we purchased approximately 2.9 million shares in the fourth quarter and approximately 16 million shares in the full year under our NCIB program, for $112 million in the quarter and $612 million for the year.


Normal course issuer bid in 2015
----------------------------------------------------------------------------
Period             Common                             Increase
                   Shares     Average               (decrease)
                purchased    purchase     Purchase in accounts
                      and   price per     costs ($     payable  Cash outflow
                cancelled   share ($)    millions)($ millions)  ($ millions)
----------------------------------------------------------------------------
First quarter   3,793,200       41.06          156           -           156
Second
 quarter        3,322,600       40.74          135          29           106
Third quarter   2,531,862       43.43          110         (30)          140
Fourth
 quarter        5,962,800       39.15          234           8           226
----------------------------------------------------------------------------
Total          15,610,462       40.64          635           7           628
----------------------------------------------------------------------------

In January 2016, we purchased, by way of the ASPP, 1,043,300 Common Shares for cancellation under our 2016 NCIB.


Normal course issuer bid in 2016
----------------------------------------------------------------------------
Period             Common                              Increase
                   Shares     Average                (decrease)
                purchased    purchase     Purchase  in accounts
                      and   price per     costs ($      payable Cash outflow
                cancelled   share ($)    millions) ($ millions) ($ millions)
----------------------------------------------------------------------------
January 2016    1,043,300       37.34           39          (5)           44
----------------------------------------------------------------------------

Short-term borrowings

Short-term borrowings are composed primarily of amounts advanced to us from an arm's-length securitization trust pursuant to the transfer of receivables securitization transactions (see Section 7.7 Sale of trade receivables in the 2015 annual MD&A). Such proceeds were $100 million throughout the first quarter of 2015, increased to $500 million during the second quarter of 2015, decreased to $100 million during the third quarter of 2015 and remained at $100 million in the fourth quarter of 2015.

Long-term debt issues and repayments

Long-term debt issues, net of repayments, were $329 million in the fourth quarter of 2015 and $2.7 billion in the full year of 2015, which were primarily composed of:


--  A March 24, 2015, public issue of $1.75 billion of senior unsecured
    notes in three series: a $250 million offering at 1.50% due March 27,
    2018, a $1.0 billion offering at 2.35% due March 28, 2022 and a $500
    million offering at 4.40% due January 29, 2046. The net proceeds were
    used to fund a portion of the $1.5 billion purchase price of the
    wireless spectrum licences acquired in the Department of Innovation,
    Science and Economic Development's (formerly Industry Canada) AWS-3
    spectrum auction during the first quarter of 2015, and to repay
    approximately $110 million of indebtedness drawn from the 2014 Credit
    Facility and approximately $135 million of outstanding commercial paper.
    The remainder was used for general corporate purposes.

--  A $400 million draw on our five-year revolving credit facility in the
    second quarter of 2015, which was reduced to $NIL during the third
    quarter of 2015. At December 31, 2015, no amounts were drawn against our
    five-year credit facility and $256 million was required to backstop
    commercial paper. Our commercial paper program provides low cost funds
    and is fully backstopped by this five-year committed credit facility
    (see Section 7.6 Credit facilities in the 2015 annual MD&A).

--  A November 23, 2015, repayment of our $125 million TELUS Communications
    Inc. Series 2 Debentures, upon maturity.

--  A December 8, 2015, public issue of $1.0 billion of senior unsecured
    notes composed of a $600 million offering at 3.75% due March 10, 2026,
    and $400 million of 4.85% Notes through the re-opening of Series CP
    Notes, maturing April 5, 2044. The net proceeds were used to repay
    approximately $956 million in outstanding commercial paper and to fund
    the repayment, on maturity, of a portion of the $600 million principal
    amount outstanding on TELUS' Series CI Notes due May 2016. The balance
    will be used for general corporate purposes.

--  A decrease in commercial paper during the fourth quarter of 2015 from
    $787 million at September 30, 2015 (U.S.$589 million) to $256 million at
    December 31, 2015 (U.S.$185 million). For the full year of 2015,
    commercial paper increased by a net $126 million.

All of our debt transactions contributed to an increase in our average term to maturity of long-term debt (excluding commercial paper) to approximately 11.1 years at December 31, 2015, compared to approximately 10.9 years at the end of 2014. Additionally, our weighted average cost of long-term debt was 4.32% at December 31, 2015, compared to 4.72% at the end of 2014.

In comparison, repayments of long-term debt, net of debt issues, were $25 million in the fourth quarter of 2014, while long-term debt issues, net of repayments, were $1.8 billion in the full year of 2014, which were primarily composed of:


--  An April 4, 2014 public issue of $1.0 billion of senior unsecured notes
    in two series: a $500 million offering at 3.20% due April 5, 2021, and a
    $500 million offering at 4.85% due April 5, 2044. The net proceeds were
    used to repay the approximately $914 million of indebtedness drawn to
    fund a portion of the purchase price of the 700 MHz spectrum licences
    and the remainder was used for general corporate purposes.

--  A September 10, 2014 public issue of $1.2 billion of senior unsecured
    notes in two series: an $800 million offering at 3.75% due January 17,
    2025, and a $400 million offering at 4.75% due January 17, 2045. The net
    proceeds were used to repay indebtedness consisting of: (i) advances on
    the 2014 credit facility and commercial paper issued to fund a
    substantial portion of the early redemption, on September 8, 2014, of
    our $500 million 5.95% Series CE Notes; and (ii) other outstanding
    commercial paper, which had been incurred for general corporate
    purposes.

--  A net increase in commercial paper to $130 million at December 31, 2014,
    from a $NIL balance at December 31, 2013.

4. Definitions and reconciliations

4.1 Non-GAAP and other financial measures

We have issued guidance on and report certain non-GAAP measures that are used to evaluate the performance of TELUS and its segments, as well as to determine compliance with debt covenants and to manage the capital structure. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined, qualified and reconciled with their nearest GAAP measure.

Adjusted basic earnings per share: This measure is used to evaluate performance at a consolidated level and excludes items that may distort the underlying trends in business performance. This measure should not be considered an alternative to basic earnings per share in measuring TELUS' performance. Items that may, in management's view, obfuscate the underlying trends in business performance include significant gains or losses on real estate redevelopment partnerships, restructuring and other costs, long-term debt prepayment premiums, income-tax related adjustments and asset retirements related to restructuring activities (see Section 1.2).

Capital intensity: This measure is calculated as capital expenditures (excluding spectrum licences and non-monetary transactions) divided by total operating revenues. This measure provides a basis for comparing the level of capital expenditures to those of other companies of varying size within the same industry.

Dividend payout ratio: This is a historical measure calculated as the sum of the last four quarterly dividends declared per Common Share, as reported in the Consolidated financial statements, divided by the sum of basic earnings per share for the most recent four quarters for interim reporting periods (divided by annual basic earnings per share for fiscal years). Our policy guideline for the annual dividend payout ratio is on a prospective basis, rather than on a trailing basis, and is 65 to 75% of sustainable earnings on a prospective basis.


Calculation of Dividend payout ratio
----------------------------------------------------------------------------
Years ended December 31 ($)                             2015            2014
----------------------------------------------------------------------------
Numerator - sum of the last four quarterly
 dividends declared per Common Share(1)                 1.68            1.52
Denominator - Net income per Common Share               2.29            2.32
----------------------------------------------------------------------------
  Ratio (%)                                               73              66
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    For the year ended December 31, 2015, the numerator period has been
     aligned with the denominator period; the comparative amounts have been
     restated.
----------------------------------------------------------------------------

Dividend payout ratio of adjusted net earnings: More representative of a sustainable calculation is the historical ratio based on reported earnings per share adjusted to exclude income tax-related adjustments, long-term debt prepayment premiums and items adjusted for in EBITDA. Our policy guideline for the annual dividend payout ratio is on a prospective basis, rather than on a trailing basis, and is 65 to 75% of sustainable earnings on a prospective basis.


Calculation of Dividend payout ratio of adjusted net earnings
----------------------------------------------------------------------------
Years ended December 31 ($)                                 2015       2014
----------------------------------------------------------------------------
Numerator - sum of the last four quarterly dividends
 declared per Common Share(1)                               1.68       1.52
----------------------------------------------------------------------------
Adjusted net earnings ($ millions):
  Net income attributable to Common Shares                 1,382      1,425
  Add back long-term debt prepayment premium after
   income taxes                                                -         10
  Add back net unfavourable (deduct net favourable)
   income tax-related adjustments                              1         (6)
----------------------------------------------------------------------------
                                                           1,383      1,429
----------------------------------------------------------------------------
Denominator - Adjusted net earnings per Common Share        2.29       2.33
----------------------------------------------------------------------------
Adjusted ratio (%)                                            73         66
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1    For the year ended December 31, 2015, the numerator period has been
     aligned with the denominator period; the comparative amounts have been
     restated.
----------------------------------------------------------------------------

EBITDA (earnings before interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used to evaluate performance at a consolidated level and the contribution of our two segments. EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should not be considered an alternative to Net income in measuring TELUS' performance, nor should it be used as an exclusive measure of cash flow. EBITDA as calculated by TELUS is equivalent to Operating revenues less the total of Goods and services purchased expense and Employee benefits expense.

We may also calculate an adjusted EBITDA to exclude items of an unusual nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a valuation metric, or should not be included in an assessment of our ability to service or incur debt. In respect of the TELUS Garden residential real estate partnership, which is included in the wireless and wireline segments, we do not anticipate retaining an ownership interest in the TELUS Garden residential condominium following completion of construction. For the TELUS Garden residential real estate partnership, gains net of equity losses were $NIL in the fourth quarter and full year of both 2015 and 2014.


EBITDA reconciliation
----------------------------------------------------------------------------
                                    Fourth quarters                    Years
                                   ended December 31       ended December 31
                            ------------------------------------------------
($ millions)                        2015        2014        2015        2014
----------------------------------------------------------------------------
Net income                           261         312       1,382       1,425
Financing costs                      114         115         447         456
Income taxes                          85         106         524         501
Depreciation                         406         366       1,475       1,423
Amortization of intangible
 assets                              112         102         434         411
----------------------------------------------------------------------------
EBITDA                               978       1,001       4,262       4,216
----------------------------------------------------------------------------

EBITDA - excluding restructuring and other costs: We report this measure as a supplementary indicator of our operating performance.


Calculation of EBITDA - excluding restructuring and other costs
----------------------------------------------------------------------------
                                     Fourth quarters                   Years
                                   ended December 31       ended December 31
                            ------------------------------------------------
($ millions)                        2015        2014        2015        2014
----------------------------------------------------------------------------
EBITDA                               978       1,001       4,262       4,216
Restructuring and other
 costs included in EBITDA             99          26         226          75
----------------------------------------------------------------------------
EBITDA - excluding
 restructuring and other
 costs                             1,077       1,027       4,488       4,291
----------------------------------------------------------------------------

Free cash flow: We report this measure as a supplementary indicator of our operating performance. It should not be considered an alternative to the measures in the Consolidated statements of cash flows. Free cash flow excludes certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the Consolidated statements of cash flows. It provides an indication of how much cash generated by operations is available after capital expenditures (excluding purchases of spectrum licences) that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. Free cash flow may be supplemented from time to time by proceeds from divested assets or financing activities.


Free cash flow calculation
----------------------------------------------------------------------------
                                    Fourth quarters                   Years
                                  ended December 31       ended December 31
                            ------------------------------------------------
($ millions)                       2015        2014        2015        2014
----------------------------------------------------------------------------
EBITDA                              978       1,001       4,262       4,216
Restructuring costs net of
 disbursements                       56          11          97           1
Items from the Consolidated
 statements of cash flows:
  Share-based compensation
   expense, net of payments         (78)         15         (38)         74
  Net employee defined
   benefit plans expense             37          22         118          87
  Employer contributions to
   employee defined benefit
   plans                            (26)        (15)        (94)        (88)
  Interest paid                    (129)       (129)       (458)       (412)
  Interest received                  21           1          24           2
  Capital expenditures
   (excluding spectrum
   licences)                       (655)       (570)     (2,577)     (2,359)
----------------------------------------------------------------------------
Free cash flow before income
 taxes                              204         336       1,334       1,521
Income taxes paid, net of
 refunds received                    (7)          1        (256)       (464)
----------------------------------------------------------------------------
Free cash flow                      197         337       1,078       1,057
----------------------------------------------------------------------------

The following reconciles our definition of free cash flow with cash provided by operating activities.


Free cash flow reconciliation with cash provided by operating activities
----------------------------------------------------------------------------
                                    Fourth quarters                   Years
                                  ended December 31       ended December 31
                           -------------------------------------------------
($ millions)                       2015        2014       2015         2014
----------------------------------------------------------------------------
Free cash flow                      197         337      1,078        1,057
Add (deduct):
  Capital expenditures
   (excluding spectrum
   licences)                        655         570      2,577        2,359
  Adjustments to reconcile
   to Cash provided by
   operating activities              11          10       (113)          (9)
----------------------------------------------------------------------------
Cash provided by operating
 activities                         863         917      3,542        3,407
----------------------------------------------------------------------------

Net debt: We believe that net debt is a useful measure because it represents the amount of Short-term borrowings and long-term debt obligations that are not covered by available Cash and temporary investments. The nearest IFRS measure to net debt is Long-term debt, including Current maturities of Long-term debt. Net debt is a component of the Net debt to EBITDA - excluding restructuring and other costs ratio.


Calculation of Net debt
----------------------------------------------------------------------------
As at December 31 ($ millions)                             2015        2014
----------------------------------------------------------------------------
Long-term debt including current maturities              12,038       9,310
Debt issuance costs netted against long-term debt            52          43
Derivative assets, net                                      (14)          -
Cash and temporary investments                             (223)        (60)
Short-term borrowings                                       100         100
----------------------------------------------------------------------------
Net debt                                                 11,953       9,393
----------------------------------------------------------------------------

Net debt to EBITDA - excluding restructuring and other costs: This measure is defined as net debt at the end of the period divided by 12-month trailing EBITDA - excluding restructuring and other costs. Our long-term policy guideline for this ratio is from 2.00 to 2.50 times. This measure is similar to the leverage ratio covenant in our credit facilities.

Restructuring and other costs: With the objective of reducing ongoing costs, we incur associated incremental, non-recurring restructuring costs. We may also incur atypical charges when undertaking major or transformational changes to our business or operating models. We include incremental external costs incurred in connection with business acquisition or disposition activity, as well as litigation costs, in the context of significant losses and settlements, in other costs.


Components of restructuring and other costs
----------------------------------------------------------------------------
                                     Fourth quarters                   Years
                                   ended December 31       ended December 31
                            ------------------------------------------------
($ millions)                        2015        2014        2015        2014
----------------------------------------------------------------------------
Goods and services purchased          11           6          70          21
Employee benefits expense             88          20         156          54
----------------------------------------------------------------------------
Restructuring and other
 costs included in EBITDA             99          26         226          75
----------------------------------------------------------------------------

4.2 Operating indicators

The following measures are industry metrics that are useful in assessing the operating performance of a wireless telecommunications entity, but do not have a standardized meaning under IFRS-IASB.

Average revenue per subscriber unit per month (ARPU) is calculated as network revenue divided by the average number of subscriber units on the network during the period and is expressed as a rate per month.

Churn per month is calculated as the number of subscriber units deactivated during a given period divided by the average number of subscriber units on the network during the period, and expressed as a rate per month. A TELUS, Koodo, or Public Mobile brand prepaid subscriber is deactivated when the subscriber has no usage for 90 days following expiry of the prepaid credits.

Cost of acquisition (COA) consists of the total of the device subsidy (the device cost to TELUS less the initial charge to the customer), commissions, and advertising and promotion expenses related to the initial subscriber acquisition during a given period. As defined, COA excludes costs to retain existing subscribers (retention spend).

COA per gross subscriber addition is calculated as cost of acquisition divided by gross subscriber activations during the period.

Retention spend to network revenue represents direct costs associated with marketing and promotional efforts (including device subsidies and commissions) aimed at the retention of the existing subscriber base, divided by network revenue.

Retention volume represents the number of subscriber units retained in the period through marketing and promotional efforts that result in client upgrades or contract renewals.

Wireless subscriber unit (subscriber) is defined as an active recurring revenue-generating unit (e.g. cellular phone, tablet or mobile Internet key) with a unique subscriber identifier (SIM or IMEI number) that has access to the wireless voice and/or data networks for communication. In addition, TELUS has a direct billing or support relationship with the user of each device. Subscriber units exclude machine-to-machine (M2M) devices (a subset of the Internet of Things), such as those used for asset tracking, remote control monitoring and meter readings, vending machines and wireless automated teller machines.

Wireline subscriber connection is defined as an active recurring revenue-generating unit that has access to stand-alone services, including Internet access, TELUS TV and residential network access lines (NALs). In addition, TELUS has a direct billing or support relationship with the user of each service. Reported subscriber units exclude business NALs as the impact of migrating from voice lines to IP services has led to business NAL losses without a similar decline in revenue, thus diminishing its relevance as a key performance indicator.

Condensed consolidated statements of income and other comprehensive income (unaudited)


                                       Three months           Twelve months
Periods ended December 31
 (millions except per share
 amounts)                          2015        2014        2015        2014
----------------------------------------------------------------------------
OPERATING REVENUES
Service                     $     2,943 $     2,856 $    11,590 $    11,108
Equipment                           243         259         840         819
----------------------------------------------------------------------------
Revenues arising from
 contracts with customers         3,186       3,115      12,430      11,927
Other operating income               31          13          72          75
----------------------------------------------------------------------------
                                  3,217       3,128      12,502      12,002
----------------------------------------------------------------------------
OPERATING EXPENSES
Goods and services purchased      1,482       1,476       5,532       5,299
Employee benefits expense           757         651       2,708       2,487
Depreciation                        406         366       1,475       1,423
Amortization of intangible
 assets                             112         102         434         411
----------------------------------------------------------------------------
                                  2,757       2,595      10,149       9,620
----------------------------------------------------------------------------
OPERATING INCOME                    460         533       2,353       2,382
Financing costs                     114         115         447         456
----------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES          346         418       1,906       1,926
Income taxes                         85         106         524         501
----------------------------------------------------------------------------
NET INCOME                          261         312       1,382       1,425
----------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
Items that may subsequently
 be reclassified to income
Change in unrealized fair
 value of derivatives
 designated as cash flow
 hedges                              (3)          5          (4)          1
Foreign currency translation
 adjustment arising from
 translating financial
 statements of foreign
 operations                           8           6          25          10
Change in unrealized fair
 value of available-for-sale
 financial assets                     2          (2)          -          (4)
----------------------------------------------------------------------------
                                      7           9          21           7
----------------------------------------------------------------------------
Item never subsequently
 reclassified to income
Employee defined benefit
 plan re-measurements               486        (652)        445        (445)
----------------------------------------------------------------------------
                                    493        (643)        466        (438)
----------------------------------------------------------------------------
COMPREHENSIVE INCOME        $       754 $      (331)$     1,848 $       987
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
Basic                       $      0.44 $      0.51 $      2.29 $      2.31
Diluted                     $      0.44 $      0.51 $      2.29 $      2.31

TOTAL WEIGHTED AVERAGE
 COMMON SHARES OUTSTANDING
Basic                               598         611         603         616
Diluted                             599         613         604         618



Condensed consolidated statements of financial position (unaudited)


As at December 31 (millions)                             2015           2014
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and temporary investments, net             $         223 $           60
Accounts receivable                                     1,428          1,483
Income and other taxes receivable                           1             97
Inventories                                               360            320
Prepaid expenses                                          213            199
Real estate joint venture advances                         66              -
Current derivative assets                                  40             27
----------------------------------------------------------------------------
                                                        2,331          2,186
----------------------------------------------------------------------------
Non-current assets
Property, plant and equipment, net                      9,736          9,123
Intangible assets, net                                  9,985          7,797
Goodwill, net                                           3,761          3,757
Other long-term assets                                    593            354
----------------------------------------------------------------------------
                                                       24,075         21,031
----------------------------------------------------------------------------
                                                $      26,406 $       23,217
----------------------------------------------------------------------------

LIABILITIES AND OWNERS' EQUITY
Current liabilities
Short-term borrowings                           $         100 $          100
Accounts payable and accrued liabilities                1,990          2,019
Income and other taxes payable                            108              2
Dividends payable                                         263            244
Advance billings and customer deposits                    760            753
Provisions                                                197            126
Current maturities of long-term debt                      856            255
Current derivative liabilities                              2              -
----------------------------------------------------------------------------
                                                        4,276          3,499
----------------------------------------------------------------------------
Non-current liabilities
Provisions                                                433            342
Long-term debt                                         11,182          9,055
Other long-term liabilities                               688            931
Deferred income taxes                                   2,155          1,936
----------------------------------------------------------------------------
                                                       14,458         12,264
----------------------------------------------------------------------------
Liabilities                                            18,734         15,763
----------------------------------------------------------------------------
Owners' equity
Common equity                                           7,672          7,454
----------------------------------------------------------------------------
                                                $      26,406 $       23,217
----------------------------------------------------------------------------

Condensed consolidated statements of cash flows (unaudited)


                                     Three months             Twelve months
Periods ended December
 31 (millions)                  2015         2014         2015         2014
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income               $       261  $       312  $     1,382  $     1,425
Adjustments to reconcile
 net income to cash
 provided by operating
 activities:
  Depreciation and
   amortization                  518          468        1,909        1,834
  Deferred income taxes           (9)         100           68          188
  Share-based
   compensation expense,
   net                           (78)          15          (38)          74
  Net employee defined
   benefit plans expense          37           22          118           87
  Employer contributions
   to employee defined
   benefit plans                 (26)         (15)         (94)         (88)
  Other                          (46)          10          (17)         (49)
  Net change in non-cash
   operating working
   capital                       206            5          214          (64)
----------------------------------------------------------------------------
Cash provided by
 operating activities            863          917        3,542        3,407
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Cash payments for
 capital assets,
 excluding spectrum
 licences                       (619)        (654)      (2,522)      (2,373)
Cash payments for
 spectrum licences               (46)         (28)      (2,048)      (1,171)
Cash payments for
 acquisitions and
 related investments               -           (3)         (10)         (49)
Real estate joint
 ventures advances and
 contributions                   (12)         (18)         (50)         (57)
Real estate joint
 venture receipts                  1            2           98            4
Proceeds on dispositions          47            -           52            7
Other                              4          (12)           3          (29)
----------------------------------------------------------------------------
Cash used by investing
 activities                     (625)        (713)      (4,477)      (3,668)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Dividends paid to
 holders of Common
 Shares                         (252)        (233)        (992)        (913)
Purchase of Common
 Shares for cancellation        (226)        (112)        (628)        (612)
Issuance and repayment
 of short-term
 borrowings                       (1)           -            -         (300)
Long-term debt issued          2,882          659        9,219        7,273
Redemptions and
 repayment of long-term
 debt                         (2,553)        (684)      (6,486)      (5,450)
Other                             (6)           -          (15)         (13)
----------------------------------------------------------------------------
Cash provided (used) by
 financing activities           (156)        (370)       1,098          (15)
----------------------------------------------------------------------------
CASH POSITION
Increase (decrease) in
 cash and temporary
 investments, net                 82         (166)         163         (276)
Cash and temporary
 investments, net,
 beginning of period             141          226           60          336
----------------------------------------------------------------------------
Cash and temporary
 investments, net, end
 of period               $       223  $        60  $       223  $        60
----------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE
 OF OPERATING CASH FLOWS
Interest paid            $      (129) $      (129) $      (458) $      (412)
----------------------------------------------------------------------------
Interest received        $        21  $         1  $        24  $         2
----------------------------------------------------------------------------
Income taxes paid, net   $        (7) $         1  $      (256) $      (464)
----------------------------------------------------------------------------



Segmented information (unaudited)


Three-month periods
 ended December 31
 (millions)                               Wireless                  Wireline

                                 2015         2014         2015         2014
----------------------------------------------------------------------------
Operating revenues
External revenue         $      1,772 $      1,744 $      1,445 $      1,384
Intersegment revenue               17           15           44           44
----------------------------------------------------------------------------
                         $      1,789 $      1,759 $      1,489 $      1,428
----------------------------------------------------------------------------
EBITDA(1)                $        628 $        629 $        350 $        372
----------------------------------------------------------------------------
CAPEX, excluding
 spectrum licences(2)    $        209 $        188 $        446 $        382
----------------------------------------------------------------------------

















Three-month periods
 ended December 31
 (millions)                          Eliminations               Consolidated

                                2015         2014          2015         2014
----------------------------------------------------------------------------
Operating revenues
External revenue         $         -  $         -  $      3,217 $      3,128
Intersegment revenue             (61)         (59)            -            -
----------------------------------------------------------------------------
                         $       (61) $       (59) $      3,217 $      3,128
----------------------------------------------------------------------------
EBITDA(1)                $         -  $         -  $        978 $      1,001
----------------------------------------------------------------------------
CAPEX, excluding
 spectrum licences(2)    $         -  $         -  $        655 $        570
----------------------------------------------------------------------------
                          Operating revenues
                          (above)                  $      3,217 $      3,128
                          Goods and services
                          purchased                       1,482        1,476
                          Employee benefits
                          expense                           757          651
                        ----------------------------------------------------
                          EBITDA (above)                    978        1,001
                          Depreciation                      406          366
                          Amortization                      112          102
                        ----------------------------------------------------
                          Operating income                  460          533
                          Financing costs                   114          115
                        ----------------------------------------------------
                          Income before income
                          taxes                    $        346 $        418
                        ----------------------------------------------------



Years ended December
 31 (millions)                          Wireless                    Wireline

                              2015          2014          2015          2014
----------------------------------------------------------------------------
Operating revenues
External revenue     $       6,933 $       6,587 $       5,569 $       5,415
Intersegment revenue            61            54           174           175
----------------------------------------------------------------------------
                     $       6,994 $       6,641 $       5,743 $       5,590
----------------------------------------------------------------------------
EBITDA(1)            $       2,806 $       2,727 $       1,456 $       1,489
----------------------------------------------------------------------------
CAPEX, excluding
 spectrum
 licences(2)         $         893 $         832 $       1,684 $       1,527
----------------------------------------------------------------------------














Years ended December
 31 (millions)                     Eliminations                 Consolidated

                             2015          2014           2015          2014
----------------------------------------------------------------------------
Operating revenues
External revenue     $          -  $          -  $      12,502 $      12,002
Intersegment revenue         (235)         (229)             -             -
----------------------------------------------------------------------------
                     $       (235) $       (229) $      12,502 $      12,002
----------------------------------------------------------------------------
EBITDA(1)            $          -  $          -  $       4,262 $       4,216
----------------------------------------------------------------------------
CAPEX, excluding
 spectrum
 licences(2)         $          -  $          -  $       2,577 $       2,359
----------------------------------------------------------------------------
                      Operating revenues
                      (above)                    $      12,502 $      12,002
                      Goods and services
                      purchased                          5,532         5,299
                      Employee benefits expense          2,708         2,487
                    --------------------------------------------------------
                      EBITDA (above)                     4,262         4,216
                      Depreciation                       1,475         1,423
                      Amortization                         434           411
                    --------------------------------------------------------
                      Operating income                   2,353         2,382
                      Financing costs                      447           456
                    --------------------------------------------------------
                      Income before income
                      taxes                      $       1,906 $       1,926
                    --------------------------------------------------------
1    Earnings before interest, income taxes, depreciation and amortization
     (EBITDA) does not have any standardized meaning prescribed by IFRS-IASB
     and is therefore unlikely to be comparable to similar measures
     presented by other issuers; we define EBITDA as operating revenues less
     goods and services purchased and employee benefits expense. We have
     issued guidance on, and report, EBITDA because it is a key measure that
     management uses to evaluate the performance of our business and is also
     utilized in measuring compliance with certain debt covenants.
2    Total capital expenditures (CAPEX).



FOR FURTHER INFORMATION PLEASE CONTACT:
Media relations:
Shawn Hall
(604) 619-7913
shawn.hall@telus.com


Investor relations:
Paul Carpino
(647) 837-8100
ir@telus.com




Source: TELUS Corporation

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Source: Equities.com News (February 10, 2016 - 8:20 PM EST)

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