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capital structure financial policies (Tables) | 12 Months Ended
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Dec. 31, 2018
capital structure financial policies |
Disclosure of financial objectives that support the entity's long-term strategy |
As at, or for the 12-month periods ended, December 31 ($ in millions) |  | Objective |  | 2018 |  | 2017
Components of debt and coverage ratios |  |  |  |  |  |  |  |
Net debt 1 |  |  |  | $ | 13,770 |  | $ | 13,422
EBITDA – excluding restructuring and other costs 2 |  |  |  | $ | 5,421 |  | $ | 5,027
Net interest cost 3 |  |  |  | $ | 644 |  | $ | 567
Debt ratio |  |  |  |  |  |  |  |
Net debt to EBITDA – excluding restructuring and other costs |  | 2.00 – 2.50 4 |  |  | 2.54 |  |  | 2.67
Coverage ratios |  |  |  |  |  |  |  |
Earnings coverage 5 |  |  |  |  | 4.4 |  |  | 4.8
EBITDA – excluding restructuring and other costs interest coverage 6 |  |  |  |  | 8.4 |  |  | 8.9
| 1 |  | Net debt is calculated as follows:
As at December 31 |  | Note |  | 2018 |  | 2017
Long-term debt |  | 26 |  | $ | 14,101 |  | $ | 13,660
Debt issuance costs netted against long-term debt |  |  |  |  | 93 |  |  | 73
Derivative (assets) liabilities, net |  |  |  |  | (73) |  |  | 93
Accumulated other comprehensive income amounts arising from financial instruments used to manage interest rate and currency risks associated with U.S. dollar-denominated long-term debt – excluding tax effects |  |  |  |  | (37) |  |  | 5
Cash and temporary investments, net |  |  |  |  | (414) |  |  | (509)
Short-term borrowings |  | 22 |  |  | 100 |  |  | 100
Net debt |  |  |  | $ | 13,770 |  | $ | 13,422
* 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 it is also utilized in measuring compliance with certain debt covenants.
| 2 |  | EBITDA – excluding restructuring and other costs is calculated as follows:
Years ended December 31 |  | Note |  | 2018 |  | 2017
|  |  |  |  |  | (adjusted –
|  |  |  |  |  |  | Note 2(c))
EBITDA |  |  | 5 |  | $ | 5,104 |  | $ | 4,910
Restructuring and other costs |  |  | 16 |  |  | 317 |  |  | 117
EBITDA – excluding restructuring and other costs |  |  |  |  | $ | 5,421 |  | $ | 5,027
| 3 |  | Net interest cost is defined as financing costs, excluding employee defined benefit plans net interest, recoveries on long-term debt prepayment premium and repayment of debt, calculated on a 12-month trailing basis (expenses recorded for long-term debt prepayment premium, if any, are included in net interest cost).
| 4 |  | Our long-term objective range for this ratio is 2.00 – 2.50 times. The ratio as at December 31, 2018, is outside the long-term objective range. We may permit, and have permitted, this ratio to go outside the objective range (for long-term investment opportunities), but 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. We are in compliance with the leverage ratio covenant in our credit facilities, which states that we may not permit our net debt to operating cash flow ratio to exceed 4.00:1.00 (see Note 26(d)); the calculation of the debt ratio is substantially similar to the calculation of the leverage ratio covenant in our credit facilities.
| 5 |  | Earnings coverage is defined as net income before borrowing costs and income tax expense, divided by borrowing costs (interest on long-term debt; interest on short-term borrowings and other; long-term debt prepayment premium), and adding back capitalized interest.
| 6 |  | EBITDA – excluding restructuring and other costs interest coverage is defined as EBITDA – excluding restructuring and other costs, divided by net interest cost. This measure is substantially similar to the coverage ratio covenant in our credit facilities.
Disclosure of the dividend payout ratio |
For the 12-month periods ended December 31 ($ in millions) |  | Objective |  | 2018 |  |  | 2017 |
Dividend payout ratio |  | 65%–75% 1 |  | 78 | % |  | 80 | %
Dividend payout ratio of adjusted net earnings |  |  |  | 81 | % |  | 80 | %
| 1 |  | Our objective range for the dividend payout ratio is 65%–75% of sustainable earnings on a prospective basis; we currently expect that we will be within our target guideline on a prospective basis within the medium term. Adjusted net earnings attributable to Common Shares is calculated as follows:
12-month periods ended December 31 |  | 2018 |  | 2017
|  |  |  |  | (adjusted –
|  |  |  |  | Note 2(c))
Net income attributable to Common Shares |  | $ | 1,600 |  | $ | 1,559
Gain and net equity income related to real estate redevelopment project, after income taxes |  |  | (150) |  |  | (1)
Business combination-related provisions, after income taxes |  |  | (17) |  |  | (22)
Income tax-related adjustments |  |  | (7) |  |  | 21
Long-term debt prepayment premium, after income taxes |  |  | 25 |  |  | —
Initial and committed donation to TELUS Future Friendly Foundation, after income taxes |  |  | 90 |  |  | —
Adjusted net earnings attributable to Common Shares |  | $ | 1,541 |  | $ | 1,557

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- Definition The disclosure of the dividend payout ratio, a historical measure calculated as the sum of the last four quarterly dividends declared per Common Share, as recorded in the 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 if the reported amount is in respect of a fiscal year). The dividend payout ratio of adjusted net earnings presented, also a historical measure, differs in that it excludes the gain on exchange of wireless spectrum licences, net gains and equity income from real estate joint ventures, provisions related to business combinations, immediately vesting transformative compensation expense, long-term debt prepayment premium and income tax related adjustments. + References No definition available. + Details
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- Definition The disclosure of financial information that enables users of financial statements to evaluate the entity's objectives, policies and processes for managing capital. + References No definition available. + Details
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