Telus 4th Quarter 2005 Results

[telusmod]

TELUS reported for the fourth quarter of 2005 revenues of $2.1 billion that increased 6% from a year ago due to continued strong wireless performance, including record wireless net additions. Operating earnings were down 4% due to the labour disruption between Telus and TWU. Reported earnings per share for the fourth quarter were 22 cents, compared to 38 cents for the same period a year ago, reflecting primarily the labour disruption, higher restructuring costs and a non-recurring six cent financing charge for the early retirement of $1.6 billion of debt. Normalizing for these items and tax related and other adjustments, EPS would have increased 40% over the same
period last year. Free cash flow remained robust at $110 million during the quarter, down $12 million or 10% from a year ago.

TELUS has achieved or exceeded its original 2005 consolidated financial guidance set over a year ago despite the impact of the labour disruption. The 2005 results were also consistent with the latest guidance update made in December 2005. In 2005, TELUS reported revenue and EBITDA growth of 7 per cent, and a 24 per cent increase in net income. TELUS generated strong free cash flow of $1.5 billion, which has been used to repurchase $892 million of TELUS shares in 2005,increase the quarterly dividend level by 38% for the first two payments in 2006 and to reduce outstanding debt.

Overall, the TWU labour stoppage reduced gains for TElus and the company evidently fell below expectations for 2005 4th quarter.

OPERATING HIGHLIGHTS

TELUS wireless
Strong revenue growth and record subscriber net additions
- Revenues increased by $121 million or 16% to $877 million in the
fourth quarter of 2005, when compared with the same period in 2004
- EBITDA increased by $41 million over the fourth quarter of 2004
representing 14% growth, despite higher cost of acquisition expenses
from record gross additions
- ARPU (average revenue per subscriber unit) improved by $2 to $63 over
the fourth quarter of 2004
- Cost of acquisition ("COA") per gross addition increased 10% in the
quarter to $449 due to increased promotional activity
- Record quarterly net subscriber additions of 235,000, 26% higher than
the fourth quarter of 2004, driven by strong prepaid growth, and
stable postpaid additions of 143,200
- Blended monthly churn improved slightly to 1.42% from 1.45% when
compared to the same quarter a year ago
- Cash flow (EBITDA less capital expenditures) increased by $20 million
or 12% to $182 million in the fourth quarter due to higher EBITDA,
partly offset by higher capital expenditures