Exhibit 99.1

LEADING THE WORLD INSOCIAL CAPITALISM 2019 annual report

WE ARE THE LEADING SOCIAL CAPITALISM COMPANY TELUS is a dynamic, world-leading communications and information technology company with $14.7 billion in annual revenue and 15.2 million customer connections spanning wireless, data, IP, voice, television, entertainment, video and security. We leverage our globally leading technology to enable remarkable human outcomes. Our long-standing commitment to putting our customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. TELUS Health is Canada’s largest healthcare IT provider, and TELUS International delivers the most innovative business process solutions to some of the world’s most established brands. Driven by our passionate social purpose to connect all Canadians for good, our deeply meaningful and enduring philosophy to give where we live has inspired our team members and retirees to contribute more than $736 million and 1.4 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world. 1–13 Corporate over view Serving our stakeholders through social capitalism, results and highlights from 2019, and our 2020 targets 14 –19 CEO letter to investors By leading the world in social capitalism, we are helping to make the world a better place 20 – 21 Our social purpose How we are leveraging technology to enable remarkable human outcomes 22– 25 Operations at a glance A brief review of our wireless and wireline operations 26 – 33 Leadership Our Executive Team, questions and answers, Board of Directors and corporate governance 34 –192 Financial review Detailed financial disclosure, including a letter from our CFO, and other investor resources All financial information is reported in Canadian dollars unless otherwise specified. Copyright © 2020 TELUS Corporation. All rights reserved. Certain products and services named in this report are trademarks. The symbols TM and ® indicate those owned by TELUS Corporation or its subsidiaries. All other trademarks are the property of their respective owners.

capitalism, we are committed stakeholders. That commitment we do and every decision MAKINGAs the leader in social THE WORLDto delivering value to all our A BETTER is embedded in everything PLACE we make.

FOR OUR CUSTOMERS DELIVERING EXCEPTIONAL EXPERIENCES As the leader in social capitalism, we are committed to putting our customers first. We are exceeding our customers’ growing mobile needs with increasing network speeds, capacity and coverage, and offering innovative broadband services with our home solutions. We are also providing secure and reliable cloud-based data services for businesses and enabling better healthcare outcomes through technology innovation at TELUS Health. In addition, our TELUS International team is delivering next-generation solutions, including digital transformation, IT life cycle, advisory and digital consulting, risk management and back-office support.

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FOR OUR COMMUNITIES ENABLING REMARKABLE HUMAN OUTCOMES As the leader in social capitalism, we are committed to leveraging our world-leading technology to enable remarkable human outcomes. Guided by our philosophy – we give where we live® – we are helping to build stronger and healthier communities. We are connecting our fellow citizens to the people, opportunities and resources that matter most, ensuring equal access to technology and promoting its responsible use. Since 2000, TELUS, our team members and retirees have contributed $1.3 billion, through philanthropy and volunteerism.

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FOR OUR INVESTORS GENERATING OUTSTANDING SHAREHOLDER VALUE As the leader in social capitalism, we are helping to improve social, economic and health outcomes for Canadians and simultaneously creating sustainable value for our shareholders. At TELUS, we know that our leadership in social capitalism is symbiotic with our leadership in business. To us, doing well in business and doing good in our communities are mutually inclusive. This is reflected in our world-leading results in team engagement, customer outcomes, financial results and shareholder value creation.

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FOR OUR TEAM MEMBERS MOST ENGAGED TEAM ON THE PLANET As the leader in social capitalism, our diverse and inclusive team puts customers at the heart of everything we do. This commitment to excellence makes us one of Canada’s top employers. While others can imitate our products and services, our powerful culture is impossible to replicate and our highly engaged team members are our greatest asset. We are also the #MostGivingCompany in the world, with our team members and retirees contributing more than 1.4 million days of service since 2000.

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2019 PERFORMANCE AT A GLANCE FUELLING OUR WITH STRONG GROWTH RESULTS OPERATIONS1 +2.0% Operating revenues 2019: $14.7 billion 2018: $14.4 billion +8.4% Adjusted EBITDA2 2019: $5.7 billion 2018: $5.3 billion +180 bps Adjusted EBITDA margin2 2019: 38.8% 2018: 37.0% +8.2% Basic EPS 2019: $2.90 2018: $2.68 +7.3% Dividends declared per share 2019: $2.2525 2018: $2.10 FINANCIAL RESOURCES1 +15% Total assets -3.2% Cash from operations +12% Free cash flow before income taxes2 -0.3% Capital expenditures (excluding spectrum licences) 2019: $2.9 billion 2018: $2.9 billion +30 bps Return on common equity3 2019: $38.0 billion 2018: $33.1 billion 2019: $3.9 billion 2018: $4.1 billion 2019: $1.6 billion 2018: $1.4 billion 2019: 16.7% 2018: 16.4% CUSTOMER CONNECTIONS4 +537,000 Wireless subscribers 2019: 10.2 million 2018: 9.7 million +123,000 Internet subscribers 2019: 2.0 million 2018: 1.9 million +67,000 TV subscribers -44,000 Residential voice subscribers 2019: 1.2 million 2018: 1.2 million +536,000 Security subscribers 2019: 608,000 2018: 72,000 2019: 1.2 million 2018: 1.1 million OPERATING REVENUES ADJUSTED EBITDA2 ($ billions) ($ billions) 2019 2019 2018 2018 DIVIDENDS DECLARED PER SHARE TOTAL CUSTOMER CONNECTIONS4 ($) (millions) 2019 2019 2018 2018 10 • TELUS 2019 ANNUAL REPORT 15.2 13.9 2.2525 2.10 5.7 5.3 14.7 14.4

2019 FINANCIAL AND OPERATING RESULTS ($ in millions except per share amounts) 20191 2018 % change Operations Operating revenues Earnings before interest, taxes, depreciation and amortization (EBITDA)2 EBITDA – excluding restructuring and other costs2 Adjusted EBITDA2 Adjusted EBITDA margin2 (%) Operating income Net income attributable to common shares Basic earnings per share (EPS) Adjusted basic EPS2 Dividends declared per share Dividend payout ratio2 (%) $ 14,658 $ 14,368 2.0 8.8 4.9 8.4 – 4.9 9.1 8.2 0.4 7.3 – $ $ $ 5,554 5,688 5,693 38.8 2,977 1,746 2.90 2.86 $ $ $ 5,104 5,421 5,250 37.0 2,837 1,600 2.68 2.85 2.10 78 $ $ $ $ $ $ $ $ $ $ 2.2525 78 Wireless segment External revenue Adjusted EBITDA2 Adjusted EBITDA margin2 (%) $ $ 8,149 3,728 45.4 $ $ 8,135 3,461 42.7 0.2 7.7 – Wireline segment External revenue Adjusted EBITDA2 Adjusted EBITDA margin2 (%) $ $ 6,509 1,965 29.1 $ $ 6,233 1,789 28.2 4.4 9.8 – Financial position Total assets Net debt2 Return on common equity3 (%) $ 37,975 $ 18,199 16.7 $ 33,057 $ 13,770 16.4 14.9 32.2 – Liquidity and capital resources Cash from operations Capital expenditures (excluding spectrum licences) Free cash flow2 Free cash flow before income taxes2 Net debt to EBITDA ratio2,5 $ $ $ $ 3,927 2,906 932 1,576 3.20 $ $ $ $ 4,058 2,914 1,207 1,404 2.54 (3.2) (0.3) (22.8) 12.3 – Customer connections4 (in thousands) Wireless subscribers Internet subscribers TV subscribers Residential voice subscribers Security subscribers 10,213 1,981 1,160 1,204 608 9,676 1,858 1,093 1,248 72 5.5 6.6 6.1 (3.5) n/m Total customer connections 15,166 13,947 8.7 n/m – not meaningful 1 Results for 2019 reflect the adoption of IFRS 16, and prior periods have not been retrospectively adjusted. For details, see Note 2 of the Consolidated financial statements. These are non-GAAP measures and do not have standardized meanings under IFRS-IASB. For more information, see Sections 1.3, 5.4, 5.5 and 11 of Management’s discussion and analysis (MD&A). Net income attributed to equity shares for a 12-month trailing period, divided by the average common equity for the 12-month period. Customer connections have been revised in 2019 and 2018 to account for acquisitions and adjustments. For details, see Section 1.3 of the MD&A. Excludes restructuring and other costs. 2 3 4 5 TELUS 2019 ANNUAL REPORT • 11

2019 SCORECARD AND 2020 TARGETS DRIVING OUTSTANDING PERFORMANCE 2019 SCORECARD 1 The 2019 targets reflect the non-cash impacting January 1, 2019 implementation of IFRS 16. Applying the effects of IFRS 16 to 2018, Adjusted EBITDA increased by approximately 4.0 per cent in 2019. The 2019 revenue target and actual results were calculated using operating revenues, excluding the non-recurring third quarter 2018 equity income related to real estate joint ventures arising from the sale of TELUS Garden of $171 million. Adjusted EBITDA is a non-GAAP measure and does not have a standardized meaning under IFRS-IASB. See Section 11 of Management’s discussion and analysis (MD&A). 2 3 At TELUS, we believe in setting annual financial targets to provide clarity for investors and to help drive our performance. As the scorecard shows, in 2019, we achieved three of our four consolidated financial targets. • Capital expenditures exceeded our target as we continued our focus on investments in broadband infrastructure, including connecting more homes and businesses directly to TELUS PureFibre®, in addition to incremental capital expenditures related to various business acquisitions. • Our revenue growth reflected an increase in wireless network revenue resulting from growth in our subscriber base, as well as an increase in wireline data services revenues from organic growth and acquisitions. Adjusted EBITDA growth was due to higher wireless network revenue, in addition to higher TELUS International and TELUS Health margins. Basic earnings per share (EPS) growth was driven by higher operating income and lower income taxes, partly offset by an increase in financing costs. Notably, by consistently achieving our financial targets, we have supported the return of capital to shareholders through our shareholder-friendly initiatives, including our multi-year dividend growth program. For more information, see Section 1.4 of the MD&A. • • 12 • TELUS 2019 ANNUAL REPORT 2019 targets1 2019 results 2019 growth Achieved REVENUES2 Growth of 3 to 5% $14.66 billion 3.2% ADJUSTED EBITDA3 Growth of 8 to 10% $5.69 billion 8.4% BASIC EPS Growth of 2 to 10% $2.90 8.2% CAPITAL EXPENDITURES (excluding spectrum licences) Approximately $2.85 billion $2.91 billion –

2020 TARGETS 1 These are non-GAAP measures and do not have standardized meanings under IFRS-IASB. Therefore, they are unlikely to be comparable to similar measures presented by other companies. See Section 11 of the MD&A. We are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the MD&A. With these policies in mind, our consolidated financial targets for 2020 reflect continued growth in data services across wireless and wireline, supported by our strategic investments in advanced broadband technologies, recently closed acquisitions, including ADT Canada and Competence Call Center, a team member culture of delivering customer service excellence and our ongoing focus on operational effectiveness. TELUS’ 2020 financial targets are supportive of our multi-year dividend growth program first announced in May 2011, under which we have since delivered 18 dividend increases. In 2020, we plan to continue generating positive subscriber growth in our key growth segments, including wireless, internet and TV, as well as home automation and security. Increasing customer demand for reliable access and fast data services is expected to support continued customer growth. TELUS Health and TELUS International are also expected to continue contributing to TELUS’ growth profile. For more information and a complete set of 2020 financial targets and the assumptions on which they are based, see our fourth quarter 2019 results and 2020 targets news release issued February 13, 2020. Caution regarding forward-looking statements summary This annual report contains forward-looking statements including statements relating to our 2020 targets, expected performance and plans for strengthening our leadership position in 2020, and multi-year dividend growth program. By their nature, forward-looking statements do not refer to historical facts and require the Company to make assumptions and predictions, and are subject to inherent risks. There is significant risk that the forward-looking statements will not prove to be accurate and there can be no assurance that TELUS will achieve its targets or performance goals or maintain its multi-year dividend growth program. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors (such as regulatory developments and government decisions, the competitive environment, technological substitution, supply chain disruption and dependence on a limited number of suppliers, economic performance in Canada, our earnings and free cash flow, and our capital expenditures) could cause actual future performance and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified by the assumptions (including assumptions on which our 2020 annual targets and guidance are based and regarding semi-annual dividend increases through 2022), qualifications and risk factors as set out in Management’s discussion and analysis in this report, especially Sections 9 and 10, 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. Statements regarding our 2020 targets are presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2020 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes. TELUS 2019 ANNUAL REPORT • 13 2020 targets REVENUES Growth of 6 to 8% ADJUSTED EBITDA1 Growth of 5 to 7% FREE CASH FLOW1 $1.4 billion to $1.7 billion CAPITAL EXPENDITURES (excluding spectrum licences) Approximately $2.75 billion

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CEO LETTER TO INVESTORS LEADINGTHEWORLDIN SOCIAL CAPITALISM Our leadership in social capitalism begins by leveraging our technology to put our customers first AtTELUS,ourgloballeadershipinsocialcapitalisminvolvesleveragingourtechnology,cultureandtalenttoenablemeaningfuloutcomesforallofourstakeholders–ourcustomers,communities,teammembersandinvestors.Inthisregard,ourongoingjourneytoputourcustomersfirstisahallmarkofouraward-winningculture.WeareconnectingCanadiansfromcoasttocoasttothevitalopportunitiesthatunderpinoursocial,educationalandeconomicsuccess,anddifferentiatingourselvesfromourglobalpeergroupalongtheway. WeknowthatCanadianswanttodobusinesswithorganizationsthatsharetheirvaluesandputthemfirst.Inthisvein,ourteam’sdedicationtoourcustomerswas,onceagain,reflectedinoureffortstofurtheraugmentthespeed,reliabilityandcoverageofourworld-leadingbroadbandnetworks.Since2000,wehaveinvestedmorethan$181billioninnetworktechnology,infrastructureandoperations,andwearepoisedtoinvestprudentlyanother $40billionintoourcountryoverthenextthreeyears. Theseinvestmentshavecontributedtoourcountrybeingrepeatedlyrecognizedashavingthefastestwirelessnetworksintheworld.AsconfirmedbyU.S.-basedOoklainits2019Speedtest Global Index,theyaretwiceasfastasthewirelessnetworksenjoyedintheUnitedStates.Furthermore,inits2019Fastest Mobile Networks Canadareport,PCMagvalidatedthatCanada’smajorcitiesprovideaverageLTEspeedsthatexceedthoserecordedonthe5GnetworkofU.S.-basedcarrierSprint.Moreover,accordingtomobileuserresultscollectedbyU.K.-basedOpensignal,networksinCanada arejustplainfasterthanourpeersinEurope.Considering thepopulationdensitiesoftheU.S.andEuropearenineand 30timesgreaterthanCanada,respectively,itisremarkablethatCanadianshaveaccesstosuperiortechnologythatconnectsustothepeople,resourcesandinformationthatmakeourlivesbetter.OpensignalfurtherconfirmedthatCanada,withits10millionsquarekilometres,hasthesecondfastestwirelessnetworkintheworld,behindonlySouthKorea–acountrythatis1/100ththesizeofCanadaandhasalreadydeployedwidely5Gtechnology.Inthenationalreport,TELUSrankednumberoneinCanada,achievingrecord-breaking4Gdownloadspeedsof75Mbps,beatingSouthKorea’s5Gnetworkat58.7Mbps. Importantly,itisnotjustourcitiesthatarebenefitingfromournetworkleadership.Inits2019report,titledThe state of rural Canada’s Mobile Network Experience,OpensignalindicatedthatifruralCanadawereacountry,itwouldrankanextraordinary12thintheworld.Surprisingly,theU.S.ranked30th,globally,whileruralCanadawasfasterthaneveryurbanmarketinAmerica. AtTELUSspecifically,wehavecontinuedtoreceiverecognitioneveryyearoverthelastthreeyears,ormore,inrespectofnetworkexcellence.Indeed,in2019,TELUSearnedthetopspotacrossallfivemajorwirelessnetworkreports,includingaccoladesfromOpensignal,J.D.Power,PCMag,OoklaandTutela.Theserecognitionsreinforcethesuperiorityofournetworksandthevalueofourongoingcapitalinvestmentsinbroadbandtechnologies. Ouraward-winningwirelessnetworksarestrengthenedbygloballyunmatchedfibreinfrastructurethatnotonlyprovidesworld-leadingperformanceforCanadiansathome, butalsocreatesthebackbonefora5G-enabledwireless TELUS2019 ANNUAL REPORT • 15

theequivalentof152,000daysinourlocalcommunities, withmorethan40,000membersofourTELUSfamilyaroundtheworldparticipatinginourannualTELUSDaysofGiving.Importantly,weextendedourgloballeadershipasthepre-eminentsocialcapitalismcompanythroughtheprogressionoftheTELUSFriendlyFutureFoundation.Initsinauguralyear,theFoundationprovided$8milliontocreateabrighterfutureforvulnerableyoungpeopleinCanada.TheFoundationamplifiestheincredibleyouth-focusedworkofour18TELUSCommunityBoards,whichhavecollectivelycontributed $78millionto6,689grassrootsprogramssince2005,helping morethantwomillionyoungpeopleeachyear. Ourteam’sdeeplyembeddeddesiretocreatepositivesocialoutcomesunderscoresourcommitmenttoleveragingourtechnologytobridgedigitaldividesandkeepourcitizenssafe,healthyandconnected.Bywayofexample,byyear-end2019,yourCompanyhadsupported65,000CanadiansthroughourTELUSConnectingforGoodinitiatives.Weprovided39,000Canadiansfromlow-incomefamiliesaccesstolow-cost,subsidized,high-speedinternet;3,900youthagingoutoffostercarewithafreesmartphoneandfreedataplan;22,000Canadianslivingonthestreetsaccesstomobilehealthcare;and–newin2019–weequippedCanadianswithphysicallimitationswithcustomizedassistivetechnologiesthatenablethemtousetheirwirelessdevicesindependently. YourCompanyalsobelievesthataddressingsocialandeconomicinequitiesthroughprogramslikeConnectingforGoodcanonlybeconsideredsuccessfulifthattechnologyisalsobeingusedresponsibly.Inthisregard,throughTELUSWise,weareprovidingresourcesandtoolstosafeguardonlinesecurityandprivacy,andhelpyouthriseabovecyberbullying.Sincetheprogram’sinceptionin2013,wehavegeneratednearlyeightmillionengagementswithCanadians,includinghosting250,000CanadiansinTELUSWiseworkshops,thankstoour 400highlycommitted,volunteer,TELUSWiseambassadors.In2019,weexpandedourTELUSWiseworkshopstotheregionswhereweoperateglobally,includingthePhilippines,Bulgaria,Romania,ElSalvadorandGuatemala.Asaresultofourteam’spassionforgivingback,in2019,wemetallsixofourannualsocialtargets. Fuelledbyasenseofpurposegeneratedthroughthegoodthatwedoinourcommunities,in2019,theTELUSteam,onceagain,achievedanengagementlevelthatplacedusinthetop10percentofalllargeorganizationsworldwide.Thisresultisreflectiveoftheinimitableculturewehavebuilttogether,honouringourbrandpromiseandfurtherdifferentiatingyourCompanyinthehearts andmindsofCanadians. worldbyleveragingtheincrediblecapacityoffibrein concertwiththespeedandreliabilityofCanada’ssuperiorLTEnetworks.Insupportofourdata-richworld,in2019,TELUSincreasedourfibresubscriptionsby36percent,exceedingtheOECDaveragebynearlythreefold.Moreover,bytheendof2019,TELUShad50percentoftotalfixedbroadbandonfibre,approximatelytwicetheaverageofOECDcountries.Additionally,in2019,ourwirelinenetworkwasrecognizedasprovidingCanada’snumberoneNetflixstreamingandbestWi-Fiexperienceinthecountry,andTELUSwasnamedthebestgaminginternetserviceproviderfor2020,amongallmajorISPsinCanada,byPCMag. Our leadership in social capitalism is expressed through our commitment to our communities Ourteam’sdedicationtoputtingourcustomersfirstinspiresconsumerstochooseTELUS,which,inturn,enablesustocontinuegivingbacktothecausesthatresonatewiththem.Since2000,ourTELUSfamilyhasprovided$1.3billionintotalcontributions,including1.4milliondaysofvolunteerism,tocreatestrongerandhealthiercommunities,globally.In 2019alone,ourteamcontributed$55millionandvolunteered 16 • TELUS2019 ANNUAL REPORT Bridging geographic divides TELUS’commitmenttodeliveringaworld-leadingnetworkexperienceincommunitiesfromcoasttocoastwasexemplifiedbyourInstaller,Martin,whoservesremotevillagesoftenaccessibleonlybybushplaneorsnowmobile.Whenonesuchcommunitywasafflictedbyanearlyspringicestormthatknockedoutthelandlineservice,andMartin’susualroutetowork–afive-hoursnowmobiletrip–wasrenderedinaccessible,Martintookathree-hourflightandthenboardedahelicoptertothecommunity.Hearrivedtofindtheschool,allthreeretailstoresandmostofthetown’sresidentswithoutservice.Martindidnotleavethecommunityuntileverycustomerwasreconnected,demonstratingthatnomatterhowremoteanofficeorhome,TELUSoffersanexperiencethatissecondtonone.

Finally,inaworldwheretaxmoralityisparamount,your Companyhaspaidmorethan$43billionintotaltaxandspectrumremittances,since2000,toourfederal,provincialandmunicipalgovernments.Thesefundssupportourroadsandbridges,publiceducation,healthcare,culturalpursuitsandnationaldefence. teammembersmoderatecontentforglobalcompanies byidentifyinginappropriatematerialthatshouldberemovedfromtheinternet,includingspamandfakeaccounts,empoweringcustomerstostaysafeinarapidlyexpandingdigitalworld. In2019,TELUSHealthcontinuedtodrivegrowthwhileenablingbetterhealthoutcomesthroughtheprovisionofinnovativeclinical,pharmacy,workplacebenefitsandconsumersolutions.Forexample,welaunchedBabylonbyTELUSHealth,offeringCanadiansanexpansive,chat-stylesymptomcheckerpoweredbyartificialintelligence,and one-on-onevirtualconsultationswithalicensedphysicianinBritishColumbia.Inunderayear,BabylonbyTELUSHealthhasbecomeCanada’sfastest-growingconsumervirtualcareservice,amassingtensofthousandsofusers,whileachievinga4.9outof5ratingfromourcustomers.TogetherwithouracquisitionofAkira–avirtualcareplatformtargetinginsurersandemployers–whichcoversmorethan500,000lives,wearewellpositionedastheleadingproviderofvirtualcaretechnologyinCanada,trulymakingameaningfuldifferenceinthelivesofCanadians.Inaddition,TELUSbecamethelargestCanadian-ownedproviderofpersonalemergencyresponseservices,makingindependentlivingmorecomfortableandsecureforseniorsthrough24/7access tohelpwithLivingWellCompanion. Our leadership in social capitalism is creating safer and healthier societies Ourdiverseandinclusiveteamisequallypassionateaboutleveragingourcorebusinesstomakethefuturefriendlyforcitizensaroundtheworld.Forexample,in2019,weexpandedourTELUSSmartHomeSecuritysolutionswiththeacquisitionofADTCanada.AddingADTCanadatoourTELUSfamilybuildsonourcommitmenttoleveragingourgloballyrecognizednetworkstoimprovethelivesofCanadiansandstrengthenourcommunitiesbyenhancingthesafetyandsecurityofourcustomers’homesandbusinesses. Similarly,TELUSInternationalcontinuedtoelevateoursocialpurposegloballythroughtheacquisitionofCompetenceCallCenter,aleadingproviderofvalue-addedbusinessservices,withafocusoncontentmoderation.Supportedbyourcaringculture,andusinginnovativetools andautomation,ourhighlyengagedTELUSInternational TELUS2019 ANNUAL REPORT • 17

Reflectingourteam’sunparalleleddedicationtodelivering agloballyrecognizedcustomerexperience,wecontinuedourleadershipincustomerloyalty,achievingoursixthconsecutiveyearofindustry-leadingpostpaidwirelesschurnbelowonepercent.Indeed,ourunsurpassedcustomerloyaltyistheresultofahighlyengagedteam,motivatedbyapassionforputtingourcommunitiesandcustomersfirst.WhencustomerschoosetodobusinesswithTELUS,theyunderstandtheirloyaltyisreciprocatedthroughthepositivesocialoutcomeswesupportinourcommunities.Drivenbyourrelentlesscommitmenttoputcustomersfirst,aswellasourconsistentfocusonprofitable,high-qualitysubscribergrowth,weledthewirelessindustryinlifetimerevenuepersubscriber,whiledeliveringhealthywirelessexternalnetworkrevenueandEBITDAgrowthof1.6percentand7.7percent,respectively. OurcommitmenttoearningthetrustandloyaltyofourcustomerswasamplifiedbythesuccessfullaunchofourPeaceofMindendlessdatarateplans,alongsideourattractiveTELUSfamilydiscountofferingsandTELUSEasyPaymentdevicefinancing.Thesethreeinnovativeprogramsprovidegreatervalue,simplicityandtransparencytoCanadiansthaneverbefore.Importantly,astudyonwirelessaffordabilitypublishedbyPricewaterhouseCoopersinJanuary2020rankedCanadianunlimiteddataplansasbestintheG7intermsofvalue,onaverage.Similarly,areportissuedby U.S.-basedCTIAalsorankedCanadahighestinrespectofoverallvaluepropositionofwirelessservicesascomparedtotherestoftheG7andAustralia.Furthermore,theEconomistrecognizedCanadaasbeingnumberoneinaffordabilityoutof100countriesacrosstheglobe.Inadditiontoimprovingaffordabilityandfacilitatinganenhancedcustomerexperienceonthepathto5G,yourCompany’srangeofserviceofferingssupportongoingprofitableclientgrowth,expandedbundlingoptionsandlong-termfinancialperformance,includingsignificantcostefficiencies. Inwireline,TELUSonceagaindeliveredindustry-leadingrevenue,EBITDAandsubscribergrowth,backedbyourprovenanddiversifiedproductportfolio.Notably,externalrevenueincreasedby5.9percent,whileEBITDAwasup9.8percent.ThisrepresentsourseventhyearofEBITDAgrowth,aperformanceunrivalledamongourglobalpeers.Moreover,in2019,weweretheonlyCanadiancarriertodeliverpositivewirelinecustomergrowthwithastrong 176,000netclientadditions.Ourleadingwirelineresultsclearlyhighlighttheimportanceofourdedicatedfocusondeliveringcustomerserviceexcellenceoveraworld-leadingfibrenetwork.Inthisregard,bytheendof2019,ourteamexpandedourPureFibrecoveragetoapproximately70percentofourhigh-speedbroadbandfootprint,onourway to80percentcoveragebytheendof2020. Our leadership in social capitalism reflects the symbiotic nature of doing well in business by doing good in our communities Ourleadershipinsocialcapitalismisdrivenbyourteam’sabilitytoputourcustomersandcommunitiesfirst,earningunparalleledclientloyaltyandfuellingourindustry-leadingresults.YourCompanyrealizedstrongoperationalandfinancialperformancein2019,includinghealthyrevenueandEBITDAexpansioninbothourwirelessandwirelineproductportfolios,inconcertwithrobustcustomergrowthacrossthebusiness.Ourindustry-leadingconsolidatedoperatingrevenueandEBITDAwereup3.2and8.4percent,respectively.Notably,weachievedourannualrevenueandEBITDAgrowthtargetsfortheninthconsecutiveyear.Inaddition,wedeliveredhealthycashflowexpansion,asreflectedby12percentgrowthinourfreecashflowbeforeincometaxes.Ourconsistentlystrongperformancewasdrivenbyhigh-qualityclientloadingasweadded 537,000wirelesscustomers,alongwithindustry-leadingsubscribergrowthacrosshigh-speedinternet,TVandsecurity,includingtheacquisitionofADTCanada,of123,000, 67,000and536,000,respectively.Combined,ourtotal subscriberbaseincreasedbymorethanonemillionnew clientsin2019. 18 • TELUS2019 ANNUAL REPORT Connecting underser ved families OurConnectingforGoodinitiativesareimprovinglivesacrossourcommunities–somethingtowhichourServiceTechnician,Matt,canattest.AshewasinstallingOptikTVforacustomer,Mattlearnedthathersonhadexperiencedhealthchallenges,andgamingwasoneofthefewpursuitshewasabletoenjoywithothers.Ourcustomeradmittedthatitwasdifficulttoaffordinternetservice,butitwascriticalforthemtostayconnected.Determinedtoassistthisfamily,MattcontactedacolleaguetoseeiftheyqualifiedforourInternetforGoodprogram,andwhentheydid,hehelpedgetthemconnected...forgood.

dramaticallyovershadowingtheMSCIWorldTelecomServices Indexreturnof19percentoverthesameperiod. Our leadership in social capitalism: creating remarkable outcomes in 2020 and beyond Inspiredbyoursuccessesin2019,weareembracingthenewdecadewithanunrelentingdesiretomaketheworldbetterthroughsocialcapitalism,asreflectedinthecommunitygiving,socialimpactandfinancialtargetswehaveestablishedfortheyear. Socially,our2020targetsincludeinspiring42,000membersofourTELUSfamilytovolunteerforTELUSDaysofGivingandcontributing1.2millionvolunteerhoursfortheyear–increasesoffiveandninepercent,respectively.Wewillalsosupport125,000Canadians,byyear-end,throughourConnectingforGoodprograms,andempower 70,000CanadianswithTELUSWisedigitalliteracyworkshops.Collectively,theTELUSfamilywillcontribute$55milliontocharitableorganizationsandfundraise$3millionfortheTELUSFriendlyFutureFoundation.Inaddition,havingsurpassedour2020goalsinenergyandgreenhousegasreductionin2019,wewillfocusonprocuring100percentofourelectricityrequirementsfromrenewablesourcesby2025,enablingouroperationstobenetcarbonneutralby2030andattaininga50percentimprovementinenergyefficiencyover2020levelsby2030. Financially,ourtargetsfor2020includegrowthinrevenueofuptoeightpercentandEBITDAofuptosevenpercent,whilewealsoexpectrobustgrowthinfreecashflow,beforetaxes,ofupto33percent. Ourmorethan100,000TELUSteammembersandretirees,worldwide,arededicatedtoleveragingourtechnologicalandsocialinnovationtoimproveoutcomesforallofourstakeholders.Throughthisunwaveringcommitment,weintendtocontinueearningtherighttomakethecapitalinvestmentsnecessarytosupportourwirelinebroadbandambitionsandourpathto5G,whilemakingthesocialinvestmentsnecessarytodeliver onourpromiseofafriendlyfutureforall. Our leadership in social capitalism fuels value creation for all our stakeholders Ourstrategyhasenabledustoconsistentlyreturnsignificantcapitaltoourshareholdersoverthelongterm,whilemaintainingarobustbalancesheetandsimultaneouslymakinggenerationalcapitalinvestmentsinadvancedbroadbandtechnologiesthatwillensuresustainablegrowthforyearstocome. Wecontinuedtobuildonourlegacyofprovidinginvestorswiththeindustry’sbestmulti-yeardividendgrowthprogram,announcingtwodividendincreasesthroughouttheyear–the17thand18thsinceweestablishedourfirstthree-yearprogramin2011.Sincethen,ourcashdividendtoshareholdershasmorethandoubled.Importantly,theseincreasesin2019alsoreflectthecontinuationofourdividendgrowthprogram,whichistargetingannualgrowthofbetweensevenand 10percentthrough2022. Ourtrackrecordofdeliveringonourshareholder-friendlyinitiativesisgeneratingongoingvalueforourinvestors.Notably,yourCompanyhasreturnednearly$18billiontoshareholderssince2004,includingmorethan$12billionindividends,representingover$29pershare.Thisisthemostattractive,long-standingandconsistentdividendgrowthprogramintheglobaltelecomsector. TELUScontinuestobealeaderinshareholderreturns.Sincethebeginningof2000throughtheendofJanuary2020,TELUSgeneratedatotalshareholderreturnof549percent, 308pointshigherthanthereturnfortheTorontoStock Exchange’sS&P/TSXCompositeIndexof241percentand Thankyouforyourcontinuedsupport. DarrenEntwistle MemberoftheTELUSteamsince2000 February21,2020 @darren_entwistle TELUS2019 ANNUAL REPORT • 19 Keeping kids safe in our digital world AsourHelpDeskSpecialist,Robert,wasassistingacustomerwithatechnicalissue,hediscoveredshewasateacherwhounderstoodhowdamagingbullyingcanbe,ontheplaygroundandonline.WhenRobertmentionedthegreatworkbeingundertakenbyourTELUSWiseambassadors,ourcustomerimmediatelydecidedtosharetheprogramwithherstudents.Robert’sabilitytodowellbyourcustomer,whilealsopromotinggoodinourcommunitiesthroughTELUSWise,exemplifiesourteam’scommitmenttoputtingourcustomersandcommunitiesfirst.

OUR SOCIAL PURPOSE AT A GLANCE CREATING STRONGER, HEALTHIER COMMUNITIES At TELUS, we believe that doing well in business and doing good in our communities go hand-in-hand. Our commitment to building stronger, more compassionate communities is reflected in our Connecting for Good programs and other innovative social purpose initiatives, which focus on helping those who are the most vulnerable. Empowering Canadians through connectivity Guided by our social purpose, we are ensuring Canadians are connected to the people, information and opportunities that matter most to them and their families. where it was introduced in 2019. Currently, about 3,900 youth participate in the program. Internet for GoodTM offers low-income families access to low-cost, high-speed internet and a computer. Working with the federal government’s Connecting Families initiative, the program was expanded in 2019 to cover 200,000 eligible families within our broadband footprint in B.C., Alberta and Quebec. Currently, 39,000 qualifying citizens are participating in this program with TELUS. Helping people with physical limitations live more connected, independent lives is the focus of our Tech for GoodTM program. Launched in 2019 in partnership with the Neil Squire Society, the program equips people living with disabilities with customized assistive technology solutions, enabling them to independently access their TELUS smartphone or tablet. Creating digital equality Our Mobility for GoodTM program provides youth transitioning from foster care with a free smartphone and data plan, so they can stay connected to vital support, including educational and employment resources. The program is available to more than 20,000 qualifying youth in B.C., Alberta, Ontario and some parts of Quebec, as well as Manitoba and New Brunswick, Helping citizens stay safe in our digital world TELUS Wise, our digital literacy education program, provides tools, resources and workshops to help youth and adults protect their online security, privacy and reputation, rise above cyberbullying, and use technology responsibly. In 2019, we launched our newest workshop – TELUS Wise happiness – contributed $55 million to charitable and 20 • TELUS 2019 ANNUAL REPORT MOST GIVING COMPANY Every day, our social purpose is brought to life by TELUS team members, who have a strong passion for doing good in our communities. In 2019, TELUS, our team members and retirees community organizations and volunteered 1.1 million hours. 65,00064,000 Canadians positivelycitizens reached impacted by ourthrough TELUS Wise® Connecting for GoodTMworkshops programs 40,000$55 million volunteerscontributed to charitable participated inand community TELUS Days of Giving®organizations

to equip teens with the necessary skills and best practices for ensuring mental resilience and well-being in our digital society. Approximately 64,000 citizens participated in TELUS Wise workshops in 2019. Additionally, we continued to take a stand against cyberbullying and partnered with WE again for the 12th year to empower youth to drive social change and #EndBullying. In 2019, more than 70,000 youth attended eight WE Day events across Canada and 7,000 schools had access to our WE Rise Above curriculum. to seven more Canadian cities in 2019, we now have nine mobile clinics serving homeless citizens across the country. Since its inception in 2014, the program has generated 22,000 patient visits. In addition, innovative TELUS Health solutions such as Babylon by TELUS Health, our virtual healthcare solution launched in 2019, are helping to drive better healthcare access and improve patient outcomes. Caring for our planet Our investments in clean technology are helping to address many environmental concerns and build a more sustainable world for future generations. For example, our latest internet data centres (IDCs) are 80 per cent more energy efficient than traditional IDCs. In fact, 50 per cent of our total IDC power requirements come from renewable sources, such as solar and wind. As well, our investments in renewable energy in Alberta now provide 10 per cent of TELUS’ electricity requirements in that province. We continue to reduce our impact on our environment through many initiatives, such as our paper and packaging reduction program, which in 2019 resulted in a 21 per cent reduction, saving 349 trees and nearly $180,000 in operational costs. Transforming healthcare in Canada Our social purpose includes a focus on improving access to quality healthcare and delivering better health outcomes through technology for all, including our most vulnerable. Through our Health for GoodTM program, we are bringing primary healthcare and mental health support to patients living on the streets through specially equipped mobile health clinics. Powered by TELUS Health solutions that enable an electronic medical record for each patient, the clinics build a comprehensive health history for future care and improved access to shared information between healthcare professionals. With expansion TELUS 2019 ANNUAL REPORT • 21 Visit telus.com/community to learn how we are all connected for good and telus.com/sustainability to see how we are helping to build a more sustainable world

WIRELESS OPERATIONS AT A GLANCE PUTTING OUR CUSTOMERS FIRST Fulfilling the wireless needs of Canadians The Canadian wireless industry experienced another year of strong growth in 2019 with approximately 1.9 million new subscribers. Demand was driven by the continued adoption of more advanced and multiple devices by a growing Canadian population, the introduction of unlimited wireless data plans in combination with device financing, and ongoing rate plan and handset promotions throughout the year. Canadian carriers continued making significant capital investments to enhance their 4G LTE advanced networks, acquiring new spectrum – including low-band 600 MHz – to prepare for next-generation 5G wireless services and building new cell sites to accommodate the significant growth in data usage. 2019 results – wireless +1.2% Revenue (external) 2019: $8.15 billion 20181: $8.05 billion +7.7% Adjusted EBITDA 2019: $3.73 billion 2018: $3.46 billion 1 Excludes $85 million of equity income related to real estate joint ventures arising from the sale of TELUS Garden. for our significant investments in 4G LTE and LTE advanced technologies, including the integration of small-cell technology, once again earning the top spot in five major third-party network awards. Our wireless network revenue grew 1.6 per cent, reflecting 537,000 wireless subscriber net additions, including 274,000 high-value mobile phone subscriber net additions, along with modest growth in average billing per mobile phone subscriber (ABPU). Extending our leadership position in a growing market We achieved a North American industry-leading average mobile phone churn rate of 1.08 per cent and robust mobile phone subscriber growth, reflecting the effectiveness of our continued focus on putting customers first. In addition, we were recognized 2019: 10.213 million 2019: 537,000 22 • TELUS 2019 ANNUAL REPORT +5.5% +18% Total wirelessWireless subscriber subscribersnet additions 2018: 9.676 million 2018: 457,000 +0.2% +1.6% ABPUNetwork revenue 2019: $73.37(external) 2018: $73.192019: $6.1 billion 2018: $6.0 billion WE OFFER • World-leading 4G LTE network covering 99 per cent of Canadians • The latest smartphones, tablets, mobile internet devices, and smart home and Internet of Things (IoT) solutions for consumers and businesses • Lightning-fast wireless internet access for video, social networking, messaging and mobile applications, including our Optik TV®, Pik TV® and Babylon by TELUS Health apps • International roaming to more than 225 destinations.

In 2019, we delivered positive outcomes by: In 2020, we are powering our success by: • Elevating the customer experience by launching Peace of MindTM endless data rate plans, TELUS Easy Payment® device financing and Family Discounts – the first national carrier to launch three innovative programs in combination, providing more value, simplicity and transparency to Canadians Securing low-band 600 MHz spectrum in key markets, further enabling us to connect Canadians to Canada’s fastest and most reliable network, while advancing our 5G strategy Enhancing the transparency of our wireless subscriber reporting with the strategic decision to begin disclosing smartphones, inclusive of postpaid and prepaid, and mobile connected devices, such as tablets and IoT, as separate subscriber bases and net additions Opening our TELUS IoT Shop, a self-serve online portal that enables businesses to easily purchase and manage prepaid IoT connectivity. Ideal for businesses such as start-ups and developer labs, the TELUS IoT Shop makes it easy for them to connect their IoT devices to our network. • Continuing to elevate our customers’ experience by leveraging our world-leading network, simple and transparent wireless service offerings and growing digital adoption Enhancing our world-leading network with the continued build-out of LTE advanced technology and expanding small-cell technology to improve coverage and capacity and prepare for the evolution to 5G Focusing on profitable smartphone subscriber growth while also driving growth in IoT connectivity to help consumers enhance their daily lives and to help businesses improve efficiency and productivity Offering greater device affordability for Canadians through our Bring-It-BackTM and certified pre-owned programs, where phones are refurbished to look and function like new and backed by a one-year warranty from TELUS Leveraging our leading technology and innovation to drive positive social outcomes and enable the success of Canada’s digital economy. • • • • • • • TELUS 2019 ANNUAL REPORT • 23 Visit telus.com/learn and find out how to get the most from your device

WIRELINE OPERATIONS AT A GLANCE BUILDING NEW CONNECTIONS Providing value in a changing environment The wireline market continued to be defined by evolving technology, changing customer trends and intense competitive dynamics. Across Canada, telecom companies expanded their leading fibre-optic networks to support the growing demand for faster broadband connectivity and the adoption of third-wave data services. Meanwhile, cable companies shifted toward bundling multiple wireline products and pushed further into business markets. Technological and product substitution was a key theme as Canadians continued to adopt over-the-top offerings, requiring carriers to invest in their video delivery platforms to keep pace. Emerging services and products, such as home and business security and automation, continue to gain traction. 2019 results – wireline +5.9% Revenue (external) 2019: $6.51 billion 20181: $6.15 billion +9.8% Adjusted EBITDA 2019: $1.97 billion 2018: $1.79 billion 1 Excludes $86 million of equity income related to real estate joint ventures arising from the sale of TELUS Garden. solutions, helping our customers maximize their IT investments and achieve greater business agility. TELUS International delivered strong organic growth, driven by an expanding global customer base. TELUS Health generated robust results through expanded services for existing customers, strategic partnerships and business acquisitions. By focusing on these growth markets, alongside our focus on efficiency and effectiveness, we achieved leading financial and operational results. Investing for growth With our world-class TELUS PureFibre network, customer service excellence and attractive portfolio of home, business and IT solutions, TELUS remains one of the only telecoms in the world to consistently generate positive wireline revenue, EBITDA and customer growth. We continued to target high-value business segments with our comprehensive integrated cloud-based 2019: $5.08 billion 2019: 1.98 million connections connections 24 • TELUS 2019 ANNUAL REPORT +11% +6.6% Data Internet subscriber revenueconnections 2018: $4.59 billion 2018: 1.86 million +6.1% +16% TV subscriberWireline customer 2019: 1.16 million 2019: 4.95 million 2018: 1.09 million 2018: 4.27 million WE OFFER • Comprehensive high-speed internet access with a growing fibre-optic network • Differentiated TELUS Optik TV and Pik TV services • Reliable home phone service • Home and business security and automation • Leading IP networks and applications for businesses • Hosting, managed IT, security and cloud-based services • Innovative healthcare technology solutions through TELUS Health • Business process and IT solutions through TELUS International.

In 2019, we delivered positive outcomes by: In 2020, we are powering our success by: • Expanding and enhancing our TELUS PureFibre network, covering 2.22 million premises in B.C., Alberta and Eastern Quebec at year-end, representing approximately 70 per cent of our high-speed broadband footprint Providing Optik TV customers with TELUS Home Assistant, a platform that gives them the ability to control their entertainment experience hands-free using voice commands Launching Babylon by TELUS Health, a free healthcare mobile app that provides Canadians with access to doctors and healthcare information where and when they need it Welcoming new customers and team members with the acquisition of ADT Canada, building on our commitment to leverage the power of technology to deliver greater convenience, control and safety in the homes and businesses of more Canadians. • Delivering exceptional customer experiences by simplifying product and service offerings, while also enhancing our operational efficiency and effectiveness Enhancing the capabilities, speed and reliability of our TELUS PureFibre network and expanding to additional communities in B.C., Alberta and Eastern Quebec Growing our TV and internet subscriber bases by promoting additional innovative services, including home automation and security Driving sales and efficiency in the enterprise and business markets through enhanced connectivity, simple and targeted offers, tailored solutions and high-quality customer service Expanding TELUS International by building on existing capabilities and diversifying our operations and client base through the acquisition of Competence Call Center Increasing the reach and adoption of our innovative TELUS Health solutions to support greater collaboration across the healthcare ecosystem to deliver better patient outcomes. • • • • • • • • TELUS 2019 ANNUAL REPORT • 25 Visit telus.com/smarthomesecurity and learn how to keep your home and business secure

EXECUTIVE TEAM LENDING A HAND IN OUR COMMUNITIES Throughout the year, we look for opportunities to make a positive impact and contribute to strong, healthy and sustainable communities. Here are some of the ways members of our Executive Team give back to local communities. Navin Arora sorting donated items at the food bank in Calgary, Alberta with his daughter Ambika. Navin Arora President, TELUS Business Solutions Location: Calgary, Alberta Joined TELUS: 1999 TELUS shareholdings: 69,718 Doug French participating in the 2019 Toronto Pride Parade with (from left) his niece Victoria Scott, daughter Rachel and wife Ann. Doug French Executive Vice-President (EVP) and Chief Financial Officer Location: Vancouver, British Columbia Joined TELUS: 2000 (Clearnet: 1996) TELUS shareholdings: 136,862 Tony Geheran, with TELUS retiree Bobby Farr, volunteering at the 2019 TELUS Retiree Holiday Dinner in Burnaby, B.C. Tony Geheran EVP and Chief Customer Officer Location: Vancouver, British Columbia Joined TELUS: 2001 TELUS shareholdings: 164,354 François Gratton, with team members Pierre Turcot (left) and François Houde (right), providing emergency assistance to residents of flood-ravaged Sainte-Marie, Quebec. François Gratton EVP, Group President and Chair, TELUS Québec Location: Montreal, Quebec Joined TELUS: 2008 (Emergis: 2002) TELUS shareholdings: 128,158 26 • TELUS 2019 ANNUAL REPORT For further information, visit telus.com/executive

Zainul Mawji and her son Aariz planting trees at Fort Edmonton in Alberta. Zainul Mawji President, Home Solutions Location: Edmonton, Alberta Joined TELUS: 2001 TELUS shareholdings: 55,715 Sandy McIntosh (left) and team member Paula Switzer #ShareLove and proudly march in the 2019 Toronto Pride Parade. Sandy McIntosh EVP, People and Culture, and Chief Human Resources Officer Location: Toronto, Ontario Joined TELUS: 2007 TELUS shareholdings: 124,128 Jeffrey Puritt helping to build a kindergarten and cultural centre at TELUS Days of Giving in Guatemala, along with 1,700 TELUS International volunteers. Jeffrey Puritt TELUS EVP and TELUS International President and Chief Executive Officer Location: Las Vegas, Nevada Joined TELUS: 2001 Jim Senko, with TELUS team members Suzanne Trusdale (left) and Jennifer Anquetil, at the OneWalk to Conquer Cancer in Toronto, Ontario. Jim Senko President, Mobility Solutions Location: Toronto, Ontario Joined TELUS: 2001 TELUS shareholdings: 68,730 Eros Spadotto participating in the Duke of Edinburgh’s International Award event in Toronto, Ontario in support of young people. Eros Spadotto EVP, Technology Strategy and Business Transformation Location: Toronto, Ontario Joined TELUS: 2000 (Clearnet: 1995) TELUS shareholdings: 175,952 Andrea Wood (right), executive sponsor of Connections, TELUS’ women’s network, presenting the Community Champion award to team member Mel Slobodzian. Andrea Wood Chief Legal and Governance Officer Location: Toronto, Ontario Joined TELUS: 2013 TELUS shareholdings: 36,982 TELUS shareholdings represent the total common shares and restricted share units held as at December 31, 2019 (pre-share split, see Section 1.3 of Management’s discussion and analysis). Jeffrey Puritt’s shareholdings are not listed as he primarily holds shares in TELUS International. Darren Entwistle President and Chief Executive Officer More information can be found on page 31 TELUS 2019 ANNUAL REPORT • 27

QUESTIONS AND ANSWERS DELIVERING POSITIVE OUTCOMES THROUGH TECHNOLOGY We asked some of our senior leaders for their thoughts on a range of topics, from how Canadians will benefit from our investments in TELUS PureFibre, TELUS Health and the evolution to 5G, to how our social purpose and business objectives go hand-in-hand. How is TELUS PureFibre benefiting Canadians? Tony Geheran Executive Vice-President (EVP) and Chief Customer Officer TELUS has made great strides in executing on our deployment plans, connecting more than two million premises to our revolutionary PureFibre network, and we are proud of what we continue to accomplish. How is TELUS Health improving health outcomes in Canada? François Gratton EVP, Group President and Chair, TELUS Québec The benefits of our world-leading TELUS PureFibre network are not only plentiful, but also incredibly meaningful. First, we are connecting Canadians quickly and reliably to what matters most, like keeping in touch with friends, family and loved ones, while opening up a world of entertainment options, such as movies, TV, internet and gaming. Importantly, TELUS PureFibre is helping drive positive health and social outcomes by connecting more Canadians to the digital healthcare ecosystem and providing educational institutions with access to online resources and tools. TELUS Health exemplifies our social purpose by addressing one of Canada’s most pressing challenges – healthcare effectiveness and efficiency. Through a well-developed strategy, we deliver improved health experiences for Canadians. Supported by our powerful network and innovative technology, we are building our reach to enable interconnectivity, developing a collaborative healthcare ecosystem and delivering quantifiably better health outcomes. Furthermore, we are powering our increasingly digital economy, improving productivity and efficiency for consumers and businesses, and fuelling job creation. For example, small businesses can now thrive in rural communities and compete globally through a powerful online presence. In addition, we are delivering environmental benefits through sustainable technology. Fibre-optic systems require significantly less energy for the transmission of data, have a longer lifespan and enable mobile workforces, resulting in benefits like decreased commuting time and reduced CO2 emissions. Our partnerships with government bring enhanced care options to Canadians through home health monitoring, improving the quality of life for patients with chronic disease, particularly in rural areas. We are digitizing healthcare and improving access to information with clinicians using our electronic medical records to optimize their day so they can spend more time with patients, 28 • TELUS 2019 ANNUAL REPORT “We are building our reach to enable interconnectivity, developing a collaborative healthcare ecosystem and delivering quantifiably better health outcomes.” François Gratton “We are powering our increasingly digital economy, improving productivity and efficiency for consumers and businesses, and fuelling job creation.” Tony Geheran

and with pharmacists using our management solutions to better serve their customers. And, we are providing health claims services to insurance companies, covering more than 12 million Canadians. With our virtual care solutions, including Akira, Medisys On-Demand and Babylon by TELUS Health, consumers and employees have access to convenient, professional care, alleviating the burden on walk-in clinics and emergency rooms and helping over five million Canadians without a doctor. Through LivingWell CompanionTM, we are giving freedom to Canadians who want to live at home longer, while offering peace of mind to their families and loved ones with the assurance of safety. to bridge geographic and socio-economic divides. From our Connecting for Good programs, and our TELUS Wise and #EndBullying platforms, to making healthcare and agricultural technology more efficient and effective, we are committed to making a difference in our communities and improving the lives of Canadians. Our ability to deliver remarkable social outcomes drives value for our stakeholders by diversifying and differentiating our business and brand. For example, for the fourth consecutive year, TELUS earned recognition as one of only nine telecommunications or cable companies globally named to the Dow Jones Sustainability World Index. This achievement aligns with our leadership in social capitalism, and the shareholder value is clear and measurable. In fact, the positive financial impact of sustainable and responsible investing continues to grow. What does social purpose have to do with business objectives? Sandy McIntosh EVP, People and Culture and Chief Human Resources Officer We believe that social purpose has everything to do with achieving strategic business objectives and driving remarkable outcomes. Our people – at every level across our Company – are proud of our social purpose because it is central to what we do, why we do it and what we stand for as a culture. Together, we are changing the paradigm on health, education, the environment and social inequities by investing in technology TELUS 2019 ANNUAL REPORT • 29 “Together, we are changing the paradigm on health, education, the environment and social inequities by investing in technology to bridge geographic and socio-economic divides.” Sandy McIntosh

What will 5G enable for Canadians? Eros Spadotto EVP, Technology Strategy and Business Transformation 5G will bring Canadians the fastest, most robust communications technology in the world. As the foundation for smart cities and industry 4.0, this revolutionized technology is forecasted to connect 30 billion life-changing devices, expand and improve rural connectivity, create 250,000 permanent jobs and contribute $40 billion annually to Canada’s economy by 2026. TELUS is delivering this game-changing technology on Canada’s largest, most reliable, award-winning network. The timely launch of 5G in Canada is critical to the health and competitiveness of our economy and is the driving force behind revolutionizing industries, business models and the lives of Canadians. By enabling virtual healthcare and telesurgery, autonomous vehicles, agricultural technology, next-level gaming, immersive education and more, 5G will empower Canadians to realize their potential. Helping to define the Canada of the future, 5G will have a profound impact, improving not only how we connect but what we connect. Canadians and industries will see faster, more prolific wireless connectivity with 5G technology. Countries deploying 5G recognize the crucial connection between government policy and transformational 5G outcomes. As a result, these nations are releasing large quantities of 5G spectrum, in a timely and cost-efficient manner, while taking steps to promote the deployment of passive infrastructure and establish clear standards for the use of equipment in 5G networks. The overall policy thrust is to provide a regulatory climate that is hospitable to network investment and construction, while acknowledging the large and high-risk investments necessary to advance 5G. Bringing 5G to Canada is a nation-building exercise that requires cohesive government policy and support. With sound policy-making that prioritizes and fosters investment, removes barriers to spectrum and protects facilities-based competition, Canadians will have access to the social, environmental and economic benefits that 5G will unlock. 30 • TELUS 2019 ANNUAL REPORT “The timely launch of 5G in Canada is critical to the health and competitiveness of our economy and is the driving force behind revolutionizing industries, business models and the lives of Canadians.” Eros Spadotto

BOARD OF DIRECTORS 1 2 4 5 6 7 8 10 11 12 1 5 9 R.H. (Dick) Auchinleck, TELUS Chair Residence: Victoria, British Columbia Director since: 2003 TELUS shareholdings: 229,526 Darren Entwistle Residence: Vancouver, British Columbia Director since: 2000 TELUS shareholdings: 590,709 John Manley Residence: Ottawa, Ontario Director since: 2012 TELUS Committees: Pension; and Chair, Corporate Governance TELUS shareholdings: 49,203 2 6 Raymond T. Chan Residence: Vancouver, British Columbia Director since: 2013 TELUS Committees: Pension, and Human Resources and Compensation TELUS shareholdings: 44,623 Mary Jo Haddad Residence: Oakville, Ontario Director since: 2014 TELUS Committee: Chair, Human Resources and Compensation TELUS shareholdings: 32,099 10 David Mowat Residence: Edmonton, Alberta Director since: 2016 TELUS Committee: Chair, Audit TELUS shareholdings: 23,911 3 7 Stockwell Day Residence: Vancouver, British Columbia Director since: 2011 TELUS Committees: Corporate Governance; and Chair, Pension TELUS shareholdings: 46,280 Kathy Kinloch Residence: Vancouver, British Columbia Director since: 2017 TELUS Committees: Corporate Governance, and Human Resources and Compensation TELUS shareholdings: 14,913 11 Marc Parent Residence: Montreal, Quebec Director since: 2017 TELUS Committees: Audit, and Human Resources and Compensation TELUS shareholdings: 12,045 4 Lisa de Wilde Residence: Toronto, Ontario Director since: 2015 TELUS Committees: Corporate Governance and Pension TELUS shareholdings: 21,893 8 12 Denise Pickett Residence: Toronto, Ontario Director since: 2018 TELUS Committee: Audit TELUS shareholdings: 6,883 Christine Magee Residence: Toronto, Ontario Director since: 2018 TELUS Committee: Audit TELUS shareholdings: 8,204 TELUS shareholdings represent the total common shares and deferred share units (restricted share units for Darren Entwistle) held as at December 31, 2019 (pre-share split, see Section 1.3 of Management’s discussion and analysis). TELUS 2019 ANNUAL REPORT • 31 For further information, visit telus.com/board 9 3

CORPORATE GOVERNANCE DEMONSTRATING GOOD GOVERNANCE AND INTEGRITY We are strongly committed to sound and effective practices in corporate governance, and to full and fair disclosure. We continually review and enhance our practices to achieve higher standards, pursue greater transparency and ensure integrity in our actions. Fostering Board diversity We recognize that cultivating diversity provides a significant competitive advantage, as it enables our Board to benefit from a broader range of perspectives and relevant experience that more accurately reflects our customers and the communities we serve. With this in mind, our Board’s diversity objectives continue to include having diversity represented by a minimum of 30 per cent of our independent directors, and a minimum of 30 per cent of each gender. In 2019, we continued to exceed these objectives – 55 per cent (six members) of our independent directors represent diversity and 45 per cent (five members) are women. aligned with best practices. We continued to enhance the code with changes that included the addition of work styles management, updated guidelines on social media use and further enhancements on ethical sales practices. In 2019, we created a new version of our online Integrity course, which brings to life the policies and standards that guide the way we work and helps team members make the right decisions. Mandatory for all team members and the majority of our contractors, the course is available in six languages and covers topics related to our code of ethics and conduct, respectful workplace, security and privacy policies. We continue to provide an EthicsLine for anonymous and confidential questions or complaints on internal controls and other issues related to integrity. Calls are handled by an independent agency, offering multi-language services to internal and external callers 24 hours a day. For the 17th consecutive year, none of the calls reported to the Ethics Office in 2019 involved officers or team members with a significant role in internal controls over financial reporting. Ensuring integrity in our actions We have an ethical responsibility as corporate citizens to make every decision with the highest degree of integrity. Developing and sustaining a strong ethical culture is a shared commitment and responsibility of all team members. It highlights our values as an organization and ensures our decisions are made with fairness and respect for each other, our customers and our business. Each year, we review our code of ethics and conduct to reflect trends in our business and maintain best-in-class guidance. In 2019, we conducted an extensive third-party review and benchmarking, which confirmed that our code was closely Earning the trust of our stakeholders We have a long-standing policy of protecting the privacy of customers in all of our business operations and are committed to earning and maintaining their trust. We regularly review our privacy practices to ensure they are relevant and consistent with changing technologies and laws, and continue to meet our customers’ evolving expectations and needs. We refreshed our online privacy centre in 2019 to enhance transparency and provide customers with a greater understanding of our privacy practices. We added information about how we deploy artificial intelligence responsibly, following ethical principles to ensure the data is used with integrity and in a way that protects privacy. As well, we added detail on the TELUS Trust Model that was established to guide our overall data handling practices. 32 • TELUS 2019 ANNUAL REPORT For a full statement of TELUS’ corporate governance practices, including our Board policy manual and disclosure regarding our governance practices compared to those required by the New York Stock Exchange, refer to the TELUS 2020 information circular or visit telus.com/governance

During the year, we implemented a new data governance framework and structure, which incorporate a variety of controls and practices to ensure data is managed responsibly. The framework and structure reflect our commitment to respectfully treat data in a manner that fosters innovation, while also mitigating privacy, security and ethical risks associated with the use of data. For more details on privacy, visit telus.com/privacy. Actively communicating with our investors We place great importance on communicating with our stakeholders, and recognize that timely and regular communication helps investors make sound, informed investment decisions. In 2019, we hosted four conference calls with simultaneous webcasts for all investors to discuss our quarterly results and outlook. We also participated in a number of industry-specific investor conferences and met with many institutional investors in Canada, the United States and Europe. To view past and upcoming events, visit telus.com/investors. TELUS 2019 ANNUAL REPORT • 33 To provide shareholder feedback or comments to our Board, email board@telus.com BEST PRACTICES IN CORPORATE GOVERNANCE We take a proactive approach to pursuing excellence in corporate governance, and continue to maintain a number of long-standing best practices. • Say-on-pay vote • Majority voting policy • Clawback policy • Board diversity policy • Shareholder engagement policy • Code of ethics and conduct and EthicsLine • Privacy management program framework • Enterprise risk governance and oversight • Board recruitment process and orientation programs • Mandatory education sessions for the Board • Board and committee succession planning • CEO succession planning • Board, committee and director evaluations • Director term limits • Share ownership guidelines for directors and executives.

CFO LETTER TO INVESTORS DRIVING SUSTAINABLE VALUE FOR ALL OUR STAKEHOLDERS TELUS once again achieved strong financial and operational results in 2019, driven by the consistent execution of our growth strategy and our commitment to leveraging our business to serve all our stakeholders. Social capitalism is embedded in everything we do and is at the centre of every decision we make. Championing sustainability Driven by our leadership in social capitalism, TELUS is helping to improve social, economic and health outcomes for Canadians, while continuing to create sustainable value for our investors. Championing sustainability is an essential part of our culture and is embedded in the processes and behaviours across our business operations. Our commitment to social capitalism supports the future of connectivity in Canada, while positively impacting our financial performance. Advancing our business We continue to focus on making the right strategic investments to advance our business, while also balancing the interests of our stakeholders. In 2019, we progressed our business and enhanced the services we offer to our customers through a number of important milestones, such as surpassing two million premises that are now enabled with TELUS PureFibre. At the end of the year, TELUS PureFibre had reached approximately 70 per cent of our high-speed broadband footprint and we are well on the way to completing our generational fibre build. During 2019, we also acquired ADT Canada and, in early 2020, we completed our acquisition of CCC – our largest acquisition since we acquired Clearnet Communications in 2000. These transactions align with our proven growth strategy and provide the scale needed to support our diversified and growing assets. Our customer loyalty continues to lead the industry, despite heightened competitive intensity. We earn this loyalty through the efforts of our dedicated team members, who continue to deliver exceptional customer experiences on our award-winning network. We added 757,000 new wireless, high-speed internet, TV and security customers in 2019, ending the year with 15.2 million total customer connections. Delivering on our strategy Our team members continue to deliver on our strategy through their dedication to our top priority of putting our customers and communities first. In 2019, revenue grew to $14.7 billion, an increase of 3.2 per cent when excluding the 2018 sale of TELUS Garden. Adjusted EBITDA increased by 8.4 per cent, or approximately 4.0 per cent excluding the impact of IFRS 16, to $5.7 billion. Ensuring we sustain a strong balance sheet and responsible stewardship of capital over the long term, we achieved robust free cash flow in 2019, driven by growth in EBITDA and stable capital expenditures. We increased our dividend twice – our 17th and 18th dividend increases since 2011 – and returned more than $1.3 billion to shareholders in 2019 through our dividend growth program. Driving positive results Our continued commitment to social capitalism is driving our consistent financial and operational success, and enabling the positive impact we are making across the communities we serve. This commitment, supported by our incredible TELUS team, has allowed us to continue delivering growth and to once again set robust targets for 2020, including 34 • TELUS 2019 ANNUAL REPORT “Our continued commitment to social capitalism is driving our consistent financial and operational success, and enabling the positive impact we are making across the communities we serve.”

revenue and Adjusted EBITDA growth of up to eight and seven per cent, respectively. In 2020, we expect free cash flow of up to $1.7 billion, reflecting EBITDA growth, lower cash taxes and moderating capital expenditures of approximately $2.75 billion. I remain confident that the continued dedication of the TELUS team will drive our delivery of exceptional customer experiences. Through our ongoing focus on achieving strong financial and operational performance, as well as sustainable value creation, 2020 will be an equally successful year for our customers, communities, investors and team members. Best regards, Doug French Executive Vice-President and Chief Financial Officer February 21, 2020 TELUS 2019 ANNUAL REPORT • 35 FINANCIAL REVIEW 36 – 41120 –186 Financial and operating statistics Consolidated financial statements Annual and quarterly financial and operating2019 Consolidated financial statements and information accompanying notes 42–119187– Back cover Management’s discussion and analysisAdditional investor resources A discussion of our financial position andGlossary, investor information and reasons performanceto invest in TELUS

ANNUAL CONSOLIDATED FINANCIAL INFORMATION Applying IFRS 16 Excluding IFRS 16 Consolidated Applying IFRS 9 and IFRS 15 Excluding IFRS 9 and IFRS 15 Statement of income (millions) 2019 2018 2017 2016 2015 2014 Operating revenues1 Operating expenses before restructuring and other costs, depreciation and amortization2 $ 14,658 $ 14,368 $ 13,408 $ 12,799 $ 12,502 $ 12,002 8,970 8,947 8,381 8,091 8,014 7,711 EBITDA – excluding restructuring and other costs2 Restructuring and other costs3 5,688 134 5,421 317 5,027 117 4,708 479 4,488 226 4,291 75 EBITDA2 Depreciation and amortization 5,554 2,577 5,104 2,267 4,910 2,169 4,229 2,047 4,262 1,909 4,216 1,834 Operating income Financing costs before long-term debt prepayment premium Long-term debt prepayment premium 2,977 2,837 2,741 2,182 2,353 2,382 705 28 627 34 573 – 520 – 447 – 443 13 Income before income taxes Income taxes 2,244 468 2,176 552 2,168 590 1,662 426 1,906 524 1,926 501 Net income $ 1,776 $ 1,624 $ 1,578 $ 1,236 $ 1,382 $ 1,425 Net income attributable to common shares $ 1,746 $ 1,600 $ 1,559 $ 1,223 $ 1,382 $ 1,425 Share information 2019 2018 2017 2016 2015 2014 Basic total weighted average shares outstanding (millions) Year-end shares outstanding (millions) 602 605 597 599 593 595 592 590 603 594 616 609 Basic earnings per share (EPS) Dividends declared per common share $ 2.90 2.2525 $ 2.68 2.10 $ 2.63 1.97 $ 2.06 1.84 $ 2.29 1.68 $ 2.31 1.52 Financial position (millions) 2019 2018 2017 2016 2015 2014 Total assets Net debt4 Total capitalization5 Long-term debt Owners’ equity $ 37,975 18,199 28,739 17,142 10,659 $ 33,057 13,770 24,099 13,265 10,341 $ 31,053 13,422 22,833 12,256 9,458 $ 27,729 12,652 20,546 11,604 7,936 $ 26,406 11,953 19,566 11,182 7,672 $ 23,217 9,393 16,809 9,055 7,454 36 • TELUS 2019 ANNUAL REPORT DIVIDENDS DECLARED PER SHARE AND BASIC EPS ($) 2019 2.90 201868 20172.63 2016 20152.29 20142.31 Dividends declared per shareBasic EPS 2.2525 2.10 2. 1.97 1.84 2.06 1.68 1.52 EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS2 AND OPERATING REVENUES1 ($ billions) 2019 14.7 201814.4 2017.4 201612.8 201512.5 201412.0 EBITDA – excluding restructuring and other costsOperating revenues 5.7 5.4 5.0 13 4.7 4.5 4.3

QUARTERLY CONSOLIDATED FINANCIAL INFORMATION Applying IFRS 16 Excluding IFRS 16 Consolidated Applying IFRS 9 and IFRS 15 Statement of income (millions) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Operating revenues1 Operating expenses before restructuring and other costs, depreciation and amortization2 $ 3,858 $ 3,697 $ 3,597 $ 3,506 $ 3,764 $ 3,774 $ 3,453 $ 3,377 2,450 2,234 2,195 2,091 2,454 2,252 2,167 2,074 EBITDA – excluding restructuring and other costs2 Restructuring and other costs3 1,408 40 1,463 29 1,402 29 1,415 36 1,310 75 1,522 173 1,286 35 1,303 34 EBITDA2 Depreciation and amortization 1,368 678 1,434 649 1,373 633 1,379 617 1,235 586 1,349 572 1,251 559 1,269 550 Operating income Financing costs before long-term debt prepayment premium Long-term debt prepayment premium 690 785 740 762 649 777 692 719 175 – 173 28 189 – 168 – 159 – 162 34 150 – 156 – Income before income taxes Income taxes 515 136 584 144 551 31 594 157 490 122 581 134 542 145 563 151 Net income $379 $440 $520 $437 $368 $447 $397 $412 Net income attributable to common shares $368 $433 $517 $428 $357 $443 $390 $410 Share information Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Basic total weighted average shares outstanding (millions) Period-end shares outstanding (millions) 604 605 602 602 601 601 600 601 599 599 597 598 596 596 595 595 Basic EPS Dividends declared per common share $ 0.61 0.5825 $ 0.72 0.5625 $ 0.86 0.5625 $ 0.71 0.5450 $ 0.60 0.5450 $ 0.74 0.5250 $ 0.66 0.5250 $ 0.69 0.5050 1 In the third quarter of 2018, as part of Operating revenues, we recorded equity income related to real estate joint ventures of $171 million arising from the sale of TELUS Garden. These are non-GAAP measures and do not have standardized meanings under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Therefore, they are unlikely to be comparable to similar measures presented by other companies. For definitions or more information, see Section 11 of the MD&A. In the third quarter of 2018, we recorded a donation to the TELUS Friendly Future Foundation of $118 million as part of other costs. In 2016, we recorded a $305 million compensation expense as part of other costs. For a definition of Net debt, see Section 11 of the MD&A. Net debt plus Owners’ equity excluding Accumulated other comprehensive income (loss). 2 3 4 5 Note: Certain comparative information has been restated to conform with the 2019 presentation. TELUS 2019 ANNUAL REPORT • 37 EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS2 ($ millions) Q4 19 1,408 Q3 19 1,463 Q2 19 402 Q1 19 ,415 Q4 18310 Q3 181,522 Q2 18 Q1 18 1, 1 1, 1,286 1,303 OPERATING REVENUES1 ($ millions) Q4 19 3,858 Q3 19 3,697 Q2 19 3,597 Q1 19 3,506 Q4 183,764 Q3 183,774 Q2 183 Q1 183,377 3,45

ANNUAL OPERATING STATISTICS Applying IFRS 16 Excluding IFRS 16 Applying IFRS 9 and IFRS 15 Excluding IFRS 9 and IFRS 15 Consolidated 2019 2018 2017 2016 2015 2014 Cash flow statement information Cash provided by operating activities (millions) Cash used by investing activities (millions) Cash provided (used) by financing activities (millions) $ 3,927 (5,044) 1,238 $ 4,058 (2,977) (1,176) $ 3,947 (3,643) (227) $ 3,219 (2,923) (87) $ 3,556 (4,477) 1,084 $ 3,407 (3,668) (15) Profitability ratios Dividend payout1 Return on common equity2 78% 16.7% 78% 16.4% 80% 17.1% 89% 15.4% 73% 18.3% 66% 17.8% Debt and coverage ratios EBITDA interest coverage ratio3 Net debt to EBITDA ratio4 7.5 3.20 8.4 2.54 8.9 2.67 8.3 2.69 9.7 2.66 9.5 2.19 Other metrics Free cash flow6 (millions) Free cash flow before income taxes6 (millions) EBITDA5 less capital expenditures (millions) Capital expenditures (excluding spectrum licences) (millions) Capital intensity7 Cash payments for spectrum licences (millions) Total customer connections8 (000s) $ $ $ 932 1,576 2,782 $ $ $ 1,207 1,404 2,507 $ $ $ 966 1,157 1,933 $ $ $ 141 741 1,740 $ $ $ 1,078 1,334 1,911 $ $ $ 1,057 1,521 1,932 $ 2,906 20% 942 15,166 $ 2,914 20% 1 13,947 $ 3,094 23% – 13,050 $ 2,968 23% 145 12,673 $ 2,577 21% 2,048 12,495 $ 2,359 20% 1,171 12,228 $ $ $ $ $ Employee-related information Total salaries and benefits5 (millions) Total active employees9 Full-time equivalent (FTE) employees $ 3,493 65,600 64,600 $ 3,254 58,000 56,900 $ 3,036 53,600 52,900 $ 2,985 51,300 50,500 $ 3,007 47,700 46,600 $ 2,851 43,700 42,700 38 • TELUS 2019 ANNUAL REPORT CAPITAL EXPENDITURES (EXCLUDING SPECTRUM LICENCES) ($ millions) 2019 2,906 20182,914 20173,094 2016968 2015 2014359 2, 2,577 2, CASH PROVIDED BY OPERATING ACTIVITIES ($ millions) 2019 3,927 20184,058 20173,947 2016 20153,556 20143,407 3,219

QUARTERLY OPERATING STATISTICS Applying IFRS 16 Excluding IFRS 16 Applying IFRS 9 and IFRS 15 Consolidated Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Cash flow statement information Cash provided by operating activities (millions) Cash used by investing activities (millions) Cash provided (used) by financing activities (millions) $ 829 (1,611) 947 $ 1,148 (871) (124) $ 1,160 (1,600) 69 $ 790 (962) 346 $ 948 (629) (338) $ 1,066 (621) (695) $ 1,206 (795) (143) $ 838 (932) – Profitability ratios Dividend payout1 Return on common equity2 78% 16.7% 77% 16.8% 75% 17.2% 79% 16.3% 78% 16.4% 77% 16.6% 77% 16.3% 76% 16.5% Debt and coverage ratios EBITDA interest coverage ratio3 Net debt to EBITDA ratio4 7.5 3.20 7.7 3.05 8.0 2.94 8.4 2.84 8.4 2.54 8.5 2.54 8.8 2.66 8.8 2.71 Other metrics Free cash flow6 (millions) Free cash flow before income taxes6 (millions) EBITDA5 less capital expenditures (millions) Capital expenditures (excluding spectrum licences) (millions) Capital intensity7 Cash payments for spectrum licences (millions) Total customer connections8 (000s) $ $ $ 135 209 666 $ $ $ 320 417 715 $ $ $ 324 446 632 $ $ $ 153 504 769 $ $ $ 132 172 599 $ $ $ 303 352 760 $ $ $ 329 381 495 $ $ $ 443 499 653 $ 742 19% – 15,166 $ 748 20% 11 14,500 $ 770 21% 931 14,254 $ 646 18% – 14,057 $ 711 19% – 13,947 $ 762 20% 1 13,784 $ 791 23% – 13,503 $ 650 19% – 13,431 $ $ $ Employee-related information Total salaries and benefits5 (millions) $ 925 $ 881 $ 871 $ 816 $ 816 $ 831 $ 813 $794 1 Sum of the last quarterly dividends declared per share, divided by the sum of Basic earnings per share reported in the most recent four quarters. See Section 7.5 of the MD&A. Net income attributed to equity shares for a 12-month trailing period, divided by the average common equity for the 12-month period. EBITDA – excluding restructuring and other costs, divided by 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. Net debt at the end of the period, divided by 12-month trailing EBITDA – excluding restructuring and other costs. Excludes restructuring and other costs. For a definition of free cash flow, see Section 11 of the MD&A. Capital expenditures (excluding spectrum licences), divided by Operating revenues. The sum of mobile phone subscribers, mobile connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers and security subscribers. Customer connections have been adjusted in certain years. For details on adjustments, see Section 1.3 of the MD&A. Excluding employees in TELUS International, total active employees were 27,600 in 2019, 25,700 in 2018, 25,700 in 2017, 25,500 in 2016, 27,000 in 2015, and 27,900 in 2014. 2 3 4 5 6 7 8 9 Note: Certain comparative information has been restated to conform with the 2019 presentation. TELUS 2019 ANNUAL REPORT • 39 TOTAL CUSTOMER CONNECTIONS8 (000s) Q4 19 15,166 Q3 19 14,500 Q2 19 14,254 Q1 19 14,057 Q4 1813,947 Q3 1813,784 Q2 1813,503 Q1 1813,431 WirelessWireline CAPITAL INTENSITY7 (%) Q4 19 19 Q3 19 20 Q2 19 21 Q1 19 Q4 18 Q3 18 Q2 1823 Q1 18 18 19 20 19

ANNUAL SEGMENT STATISTICS Applying IFRS 16 Excluding IFRS 16 Applying IFRS 9 and IFRS 15 Excluding IFRS 9 and IFRS 15 2019 2018 2017 2016 2015 2014 Wireless segment Network revenues (millions) $ 6,124 $ 6,025 $ 5,867 $ 6,541 $ 6,298 $ 6,008 Operating revenues1 (millions) Operating expenses before restructuring and other costs, depreciation and amortization (millions) $ 8,202 $ 8,182 $ 7,714 $ 7,173 $ 6,994 $ 6,641 4,477 4,636 4,407 4,146 4,107 3,884 EBITDA – excluding restructuring and other costs (millions) Restructuring and other costs2 (millions) 3,725 32 3,546 115 3,307 57 3,027 121 2,887 81 2,757 30 EBITDA (millions) $ 3,693 $ 3,431 $ 3,250 $ 2,906 $ 2,806 $ 2,727 EBITDA margin3 Capital expenditures (excluding spectrum licences) (millions) 45.4% 43.3% 42.9% 42.2% 41.3% 41.5% $889 $ 896 $ 978 $ 982 $ 893 $ 832 Subscriber gross additions4 (000s) Total subscriber net additions4 (000s) Total subscribers4,5,6,7 (000s) Wireless market share, subscriber-based 1,375 537 10,213 29% 1,289 457 9,676 28% 1,460 296 8,911 29% 1,399 173 8,585 29% 1,443 176 8,457 29% 1,620 252 8,281 28% Blended monthly average billing per unit (ABPU)4 Monthly blended churn rate4 $ 73 $ 73 $ 67 $ 65 $ 63 $ 62 1.08% 1.06% 1.11% 1.21% 1.26% 1.41% Wireline segment Operating revenues1 (millions) Operating expenses before restructuring and other costs, depreciation and amortization (millions) $ 6,760 $ 6,440 $ 5,943 $ 5,878 $ 5,743 $ 5,590 4,797 4,565 4,223 4,197 4,142 4,056 EBITDA – excluding restructuring and other costs (millions) Restructuring and other costs2 (millions) 1,963 102 1,875 202 1,720 60 1,681 358 1,601 145 1,534 45 EBITDA (millions) $ 1,861 $ 1,673 $ 1,660 $ 1,323 $ 1,456 $ 1,489 EBITDA margin3 Capital expenditures (millions) 29.0% $ 2,017 29.1% $ 2,018 28.9% $ 2,116 28.6% $ 1,986 27.9% $ 1,684 27.4% $ 1,527 Internet subscribers5,8 (000s) TV subscribers8,9 (000s) Residential voice8 (000s) Security subscribers10 (000s) 1,981 1,160 1,204 608 1,858 1,093 1,248 72 1,743 1,098 1,298 n/a 1,655 1,059 1,374 n/a 1,566 1,005 1,467 n/a 1,475 916 1,556 n/a 40 • TELUS 2019 ANNUAL REPORT WIRELINE EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS ($ millions) 2019 1,963 2018875 20170 20161,681 2015601 2014534 1, 1,72 1, 1, WIRELESS EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS ($ millions) 2019 3,725 2018546 201707 20163,027 2015887 20142,757 3, 3,3 2,

QUARTERLY SEGMENT STATISTICS Applying IFRS 16 Excluding IFRS 16 Applying IFRS 9 and IFRS 15 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Wireless segment Network revenues (millions) $ 1,531 $ 1,578 $ 1,523 $ 1,492 $ 1,509 $ 1,547 $ 1,497 $ 1,472 Operating revenues1 (millions) Operating expenses before restructuring and other costs, depreciation and amortization (millions) $ 2,169 $ 2,099 $ 1,997 $ 1,937 $ 2,179 $ 2,161 $ 1,941 $ 1,901 1,261 1,123 1,073 1,020 1,327 1,164 1,090 1,055 EBITDA – excluding restructuring and other costs (millions) Restructuring and other costs2 (millions) 908 12 976 6 924 5 917 9 852 22 997 76 851 7 846 10 EBITDA (millions) $ 896 $ 970 $ 919 $ 908 $ 830 $ 921 $ 844 $ 836 EBITDA margin3 Capital expenditures (excluding spectrum licences) (millions) 41.9% 46.5% 46.3% 47.4% 39.1% 46.1% 43.8% 44.5% $ 238 $ 251 $ 223 $ 177 $ 253 $ 218 $ 243 $ 182 Subscriber gross additions4 (000s) Total subscriber net additions4 (000s) Total subscribers4,7 (000s) Wireless market share, subscriber-based 382 130 10,213 29% 388 193 10,083 28% 336 154 9,890 28% 269 60 9,736 28% 350 142 9,676 28% 366 171 9,557 28% 310 106 9,386 29% 263 38 9,280 29% Blended monthly ABPU4 Monthly blended churn rate4 $ 73 1.20% $ 75 1.09% $ 73 $ 72 $ 73 $ 75 $ 73 $ 72 1.01% 1.02% 1.11% 1.03% 0.99% 1.10% Wireline segment Operating revenues1 (millions) Operating expenses before restructuring and other costs, depreciation and amortization (millions) $ 1,770 $ 1,678 $ 1,674 $ 1,638 $ 1,650 $ 1,677 $ 1,574 $ 1,539 1,270 1,191 1,196 1,140 1,192 1,152 1,139 1,082 EBITDA – excluding restructuring and other costs (millions) Restructuring and other costs2 (millions) 500 28 487 23 478 24 498 27 458 53 525 97 435 28 457 24 EBITDA (millions) $ 472 $ 464 $ 454 $ 471 $ 405 $ 428 $ 407 $ 433 EBITDA margin3 Capital expenditures (millions) 28.2% 504 29.0% 497 28.5% $ 547 30.4% $ 469 27.8% $ 458 31.3% $ 544 27.6% $ 548 29.7% $ 468 $ $ Internet subscribers (000s) TV subscribers9 (000s) Residential voice (000s) Security subscribers10 (000s) 1,981 1,160 1,204 608 1,953 1,145 1,216 103 1,921 1,126 1,228 89 1,896 1,110 1,237 78 1,858 1,093 1,248 72 1,830 1,069 1,260 68 1,794 1,051 1,272 n/a 1,765 1,104 1,282 n/a n/a – not applicable 1 Includes intersegment revenue for all years; in the third quarter of 2018, as part of Operating revenues, we recorded equity income related to real estate joint ventures of $171 million arising from the sale of TELUS Garden, where 50% was allocated to each of our segments. In the third quarter of 2018, we recorded a donation to the TELUS Friendly Future Foundation of $118 million as part of other costs, where 50% was allocated to each of our segments. In 2016, we recorded a $305 million compensation expense as part of other costs ($70 million in wireless and $235 million in wireline). Excludes restructuring and other costs. Effective for the first quarter of 2019, with retrospective application to January 1, 2018, we revised our definition of a wireless subscriber and now report mobile phones and mobile connected devices as separate subscriber bases. For 2019 and 2018, subscriber gross additions, blended monthly ABPU and monthly blended churn rate reflect mobile phones only. For details, see Section 5.4 of the MD&A. Due to a review of our subscriber base in 2016, our opening wireless postpaid subscribers decreased by 45,000 and our opening internet subscribers increased by 21,000. Our subscriber base in 2017 was adjusted to include a migration of 74,000 subscribers upon the acquisition of certain assets of Manitoba Telecom Services Inc. and to remove 44,000 subscribers primarily due to our CDMA network shutdown. In the fourth quarter of 2018, our opening mobile phone subscribers were adjusted to exclude 23,000 subscribers impacted by the CRTC’s final pro-rating ruling in June 2018, which was effective October 1, 2018. Our 2017 opening residential voice, internet and TV subscriber balances were increased by a net 1,000, 6,000 and 5,000, respectively, due to an acquisition and a divestiture. Effective April 1, 2018, we removed approximately 68,000 TV subscribers, as we ceased marketing our Satellite TV product. December 31, 2019 security subscriber connections have been increased to include approximately 490,000 subscribers related to our acquisition of ADT Canada on November 5, 2019. 2 3 4 5 6 7 8 9 10 Note: Certain comparative information has been restated to conform with the 2019 presentation. TELUS 2019 ANNUAL REPORT • 41

MANAGEMENT’S DISCUSSION AND ANALYSIS Caution regarding forward-looking statements ThetermsTELUS,the Company,we,usandourrefertoTELUSCorporationand, wherethecontextofthenarrativepermitsorrequires,itssubsidiaries. Thisdocumentcontainsforward-lookingstatementsaboutexpectedeventsandourfinancialandoperatingperformance.Forward-lookingstatementsincludeanystatementsthatdonotrefertohistoricalfacts.Theyinclude,butarenotlimitedto,statementsrelatingtoourobjectivesandourstrategiestoachievethoseobjectives,ourtargets,outlook,updates,andourmulti-yeardividendgrowthprogram.Forward-lookingstatementsaretypicallyidentifiedbythewordsassumption,goal,guidance,objective,outlook,strategy,targetandothersimilarexpressions,orfutureorcondi-tionalverbssuchasaim,anticipate,believe,could,expect,intend,may,plan,predict,seek,should,striveandwill.Thesestatementsaremadepursuanttothe“safeharbour”provisionsofapplicablesecuritieslawsinCanadaandtheUnitedStatesPrivate Securities Litigation Reform Act of 1995. Bytheirnature,forward-lookingstatementsaresubjecttoinherentrisksanduncertaintiesandarebasedonassumptions,includingassumptionsaboutfutureeconomicconditionsandcoursesofaction.Theseassumptionsmayultimatelyprovetohavebeeninaccurateand,asaresult,ouractualresultsoreventsmaydiffermateriallyfromexpectationsexpressedinorimpliedbytheforward-lookingstate-ments.Ourgeneraloutlookandassumptionsfor2020arepresentedinSection 9 General trends, outlook and assumptions, and regulatory developments and proceedingsinthisManagement’sdiscussionandanalysis(MD&A). Risksanduncertaintiesthatcouldcauseactualperformanceoreventstodiffer materiallyfromtheforward-lookingstatementsmadehereinandinotherTELUS filingsinclude,butarenotlimitedto,thefollowing: servicesandsupportingsystems,suchashomeautomationsecurityandInternetofThings(IoT)servicesforinternet-connecteddevices;wirelinevoiceanddatacompetition,includingcontinuedintenserivalryacrossallservicesamongwirelessandwirelinetelecommunicationscompanies,cablecompanies,othercommunicationscompaniesandover-the-top(OTT)services,which,amongotherthings,placespressuresoncurrentandfuturemobilephoneaver-agebillingpersubscriberpermonth(ABPU),mobilephoneaveragerevenuepersubscriberpermonth(ARPU),costofacquisition,costofretentionandchurnrateforallservices,asdocustomerusagepatterns,increaseddatabucketsizesorflat-ratepricingtrendsforvoiceanddata,suchasourPeaceofMindplansandcomparableplansrecentlylaunched,inclusiverateplansforvoiceanddataandavailabilityofWi-Finetworksfordata;mergersandacquisitionsofindustrycompetitors;pressuresoninternetandTVARPUandchurnrateresultingfrommarketconditions,governmentactionsandcustomerusagepatterns;residentialvoiceandbusinessnetworkaccesslinelosses;subscriberadditionsandretentionvolumes,andassociatedcostsforwireless,TVandinternetservices;ourabilitytoobtainandoffercontentonatimelybasisacrossmultipledevicesonwirelessandTVplatformsatareasonablecostascontentcostsperunitcontinuetogrow;verticalintegrationinthebroadcastingindustryresultingincompetitorsowningbroadcastcontentservices,andtimelyandeffectiveenforcementofrelatedregulatorysafeguards;ourabilitytocompetesuccessfullyincustomercareandbusinessservices(CCBS)givenourcompetitors’brandrecognition,consolidationandstrategicalliances,aswellastechnologydevelopment;inourTELUSHealthbusiness,ourabilitytocompetewithotherprovidersofelectronicmedicalrecordsandpharmacymanagementproducts,systemsintegratorsandhealthserviceprovidersincludingthosethatownaverticallyintegratedmixofhealthservicesdelivery,ITsolutions,andrelatedservices,andglobalprovidersthatcouldachieveexpandedCanadianfootprints;andourabilitytosuccessfullydevelopoursmartdatasolutionsbusiness. Technological substitutionincluding:reducedutilizationandincreasedcommoditizationoftraditionalwirelinevoiceservices(localandlongdistance)resultingfromimpactsofOTTapplicationsandwirelesssubstitution;adecliningoverallmarketforpaidTVservices,includingasaresultofcontentpiracyandsignaltheft,ariseinOTTdirect-to-consumervideoofferingsandvirtualmulti-channelvideoprogrammingdistributionplatforms;theincreasingnumberofhouseholdsthathaveonlywirelessand/orinternet-basedtelephoneservices;potentialdeclinesinmobilephoneABPUandARPUasaresultof,amongotherfactors,substitutionbymessagingandOTTapplications;substitutionbyincreasinglyavailableWi-Fiservices;anddisruptivetechnologies,suchasOTTIPservices,includingsoftware-definednetworksinthebusinessmarket,thatmaydisplaceorcauseustorepriceourexistingdataservices. Challenges to our ability to deploy technologyincluding:highsubscriberdemandfordatathatchallengeswirelessnetworksandspectrumcapacitylevelsandmaybeaccompaniedbyincreasesindeliverycost;ourrelianceoninformationtechnologyandourabilitytostreamlineourlegacysystems;the roll-outandevolutionofwirelessbroadbandtechnologiesandsystems,includingvideodistributionplatformsandtelecommunicationsnetworktechnologies(broadbandinitiatives,suchasfibretothepremises(FTTP),wirelesssmall-celldeployment,5Gwirelessandavailabilityofresourcesandourabilitytobuildoutadequatebroadbandcapacity);ourrelianceonwirelessnetworkaccessagreements,whichhavefacilitatedourdeploymentofwirelesstechnologies;ourchoiceofsuppliersandthosesuppliers’abilitytomaintainandservicetheirproductlines,whichcouldaffectthesuccessofupgradesto,andevolutionof,technologythatweoffer;supplierlimitationsandconcentrationandmarketpowerforproductssuchasnetworkequipment,TELUSTV®andwirelesshandsets;ourexpectedlong-termneedtoacquireadditionalspectrumcapacitythroughfuturespectrumauctionsandfromthirdpartiestoaddressincreasing demandfordataandourabilitytoutilizespectrumweacquire;deployment • Regulatory decisions and developmentsincludingchangestoourregulatoryregime(thetimingofannouncementorimplementationofwhichareuncertain)ortheoutcomesofproceedings,casesorinquiriesrelatingtoitsapplication,includingbutnotlimitedtothosesetoutinSection 9.4 Communications industry regulatory developments and proceedingsinthisMD&A,suchasthe potentialforgovernmentinterventiontofurtherincreasecompetition,forexample,throughmandatedwholesaleaccess;thepotentialforadditionalgovernmentinterventiononpricingascommittedinthe2019federalelection;federalandprovincialconsumerprotectionlegislationandregulation;amendmentstoexist-ingfederallegislation;potentialthreatstounitaryfederalregulatoryauthorityovertelecommunications;regulatoryactionbytheCompetitionBureauorotherregulatoryagencies;spectrumandcompliancewithlicences,includingourcompliancewithlicenceconditions,changestospectrumlicencefees,spectrumpolicydeterminationssuchasrestrictionsonthepurchase,sale,subordinationandtransferofspectrumlicences,thecostandavailabilityofspectrum,andongoingandfutureconsultationsanddecisionsonspectrumallocation;theimpactonusandotherCanadiantelecommunicationscarriersofgovernmentorregulatoryactionswithrespecttocertaincountriesorsuppliers,includingtheexecutiveordersignedbyU.S.PresidentDonaldTrumppermittingtheSecretaryofCommercetoblockcertaintechnologytransactionsdeemedtoconstitutenationalsecurityrisksandtheimpositionofadditionallicencerequirementsontheexport,re-exportandtransferofgoods,servicesandtech-nologytoHuaweiTechnologiesCo.Ltd.anditsnon-U.S.affiliates;restrictionsonnon-CanadianownershipandcontrolofTELUSCommonSharesandtheongoingmonitoringofandcompliancewithsuchrestrictions;unanticipatedchangestothecurrentcopyrightregime;andourabilitytocomplywithcomplexandchangingregulationofthehealthcareandmedicaldevicesindustryinthejurisdictionsinwhichweoperate,includingasanoperatorofhealthclinics. Competitive environmentincluding:ourabilitytocontinuetoretaincustomersthroughanenhancedcustomerserviceexperience,includingthroughthedeploymentandoperationofevolvingwirelessandwirelineinfrastructure;intensewirelesscompetition,includingtheabilityofindustrycompetitorstosuccessfullycombineamixofinternetservicesand,insomecases,wirelessservicesunderonebundledand/ordiscountedmonthlyrate,alongwiththeir existingbroadcastorsatellite-basedTVservices;thesuccessofnewproducts, • • • 42 • TELUS2019 ANNUAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD& A) andoperationofnewwirelinebroadbandnetworktechnologiesatareasonablecostandtheavailabilityandsuccessofnewproductsandservicestoberolledoutusingsuchnetworktechnologies;networkreliabilityandchangemanagement;andourdeploymentofself-learningtoolsandautomationthatmaychangethewayweinteractwithcustomers. Capital expenditure levels and potential outlays for spectrum licences in auctions or purchases from third parties,affectandareaffectedby:ourbroad-bandinitiatives,includingconnectingmorehomesandbusinessesdirectlytofibre;ourongoingdeploymentofnewerwirelesstechnologies,includingwirelesssmallcellstoimprovecoverageandcapacityandprepareforamoreefficientandtimelyevolutionto5Gwirelessservices;investmentsinnetworkresiliencyandreliability;theallocationofresourcestoacquisitionsandfuturewirelessspectrumauctionsheldbyInnovation,ScienceandEconomicDevelopmentCanada(ISED),includingthe3500MHzandmillimetrewavespectrumauctionsexpectedtotakeplacein2020and2021,respectively,andtheannouncementofaformalconsultationontheauctioningof3800MHzspectrum,expectedtotakeplacein2022.Ourcapitalexpenditurelevelscouldbeimpactedifwedonotachieveourtargetedoperationalandfinancialresultsorbychangestoourregulatoryenvironment. Operational performance and business combination risksincluding:ourrelianceonlegacysystemsandabilitytoimplementandsupportnewproductsandservicesandbusinessoperationsinatimelymanner;ourabilitytomanagetherequirementsoflargeenterprisedeals;ourabilitytoimplementeffectivechangemanagementforsystemreplacementsandupgrades,processredesignsandbusinessintegrations(suchasourabilitytosuccessfullyintegrateacqui-sitions,completedivestituresorestablishpartnershipsinatimelymannerandrealizeexpectedstrategicbenefits,includingthosefollowingcompliancewithanyregulatoryorders);ourabilitytoidentifyandmanagenewrisksinherentinnewserviceofferingsthatwemayprovide,includingasaresultofacquisitions,whichcouldresultindamagetoourbrand,ourbusinessintherelevantareaorasawhole,andadditionalexposuretolitigationorregulatoryproceedings. Data protectionincludingrisksthatmalfunctionsorunlawfulactscouldresultinunauthorizedaccessto,change,loss,ordistributionofdata,whichmaycompromisetheprivacyofindividualsandcouldresultinfinanciallossandharmtoourreputationandbrand. Security threatsincludingintentionaldamageorunauthorizedaccesstoourphysicalassetsorourITsystemsandnetworks,whichcouldpreventusfromprovidingreliableserviceorresultinunauthorizedaccesstoourinformationorthatofourcustomers. Ability to successfully implement cost reduction initiatives and realize planned savings, net of restructuring and other costs, without losing cus-tomer service focus or negatively affecting business operations.Examplesoftheseinitiativesare:ouroperatingefficiencyandeffectivenessprogramtodriveimprovementsinfinancialresults;businessintegrations;businessproductsimplification;businessprocessautomationandoutsourcing;offshoringandreorganizations;procurementinitiatives;andrealestaterationalization. Foreign operationsandourabilitytosuccessfullymanageoperationsinforeign jurisdictions,includingmanagingriskssuchascurrencyfluctuations. Business continuity eventsincluding:ourabilitytomaintaincustomerserviceandoperateournetworkintheeventofhumanerrororhuman-causedthreats,suchascyberattacksandequipmentfailuresthatcouldcausevariousdegreesofnetworkoutages;supplychaindisruptions,delaysandeconomics,includingasaresultofgovernmentrestrictionsortradeactions;naturaldisasterthreats;epidemics;pandemics;politicalinstabilityincertaininternationallocations;informationsecurityandprivacybreaches,includingdatalossortheftofdata;andthecompletenessandeffectivenessofbusinesscontinuityanddisasterrecoveryplansandresponses. Human resource mattersincluding:recruitment,retentionandappropriatetrain-inginahighlycompetitiveindustry,andthelevelofouremployeeengagement. Financing and debt requirementsincluding:ourabilitytocarryoutfinancingactivities,refinanceourmaturingdebtand/ormaintaininvestmentgradecreditratingsintherangeofBBB+ortheequivalent.Ourbusinessplansandgrowthcouldbenegativelyaffectedifexistingfinancingisnotsufficienttocoverourfundingrequirements. Lower than planned free cash flow could constrain our ability to invest in operations, reduce leverage or return capital to shareholders, and could affect our ability to sustain our dividend growth program through 2022. Thisprogrammaybeaffectedbyfactorssuchasthecompetitiveenvironment,economicperformanceinCanada,ourearningsandfreecashflow,ourlevelsofcapitalexpendituresandspectrumlicencepurchases,acquisitions,themanagementofourcapitalstructure,andregulatorydecisionsanddevelopments.QuarterlydividenddecisionsaresubjecttoassessmentanddeterminationbyourBoardofDirectorsbasedonourfinancialpositionandoutlook.Sharesmaybepurchasedunderournormalcourseissuerbid(NCIB)whenandifweconsideritopportunistic,basedonourfinancialpositionandoutlook,andthemarketpriceofTELUSCommonShares.TherecanbenoassurancethatourdividendgrowthprogramoranyNCIBwillbemaintained,notchangedand/orcompleted. Taxation mattersincluding:interpretationofcomplexdomesticandforeigntaxlawsbytherelevanttaxauthoritiesthatmaydifferfromourinterpretations;thetimingandcharacterofincomeanddeductions,suchastaxdepreciationandoperatingexpenses;taxcreditsorotherattributes;changesintaxlaws,includingtaxrates;taxexpensesbeingmateriallydifferentthananticipated,includingthetaxabilityofincomeanddeductibilityoftaxattributes;eliminationofincometaxdeferralsthroughtheuseofdifferenttaxyear-endsforoperatingpartnershipsandcorporatepartners;andchangestotheinterpretationoftaxlaws,includingthoseresultingfromchangestoapplicableaccountingstandardsortheadoptionofmoreaggressiveauditingpracticesbytaxauthorities,taxreassessmentsoradversecourtdecisionsimpactingthetaxpayablebyus. Litigation and legal mattersincluding:ourabilitytosuccessfullyrespondtoinvestigationsandregulatoryproceedings;ourabilitytodefendagainstexistingandpotentialclaimsandlawsuits(includingintellectualpropertyinfringementclaimsandclassactionsbasedonconsumerclaims,data,privacyorsecuritybreachesandsecondarymarketliability),ortonegotiateandexecuteuponindemnityrightsorotherprotectionsinrespectofsuchclaimsandlawsuits;andthecomplexityoflegalcomplianceindomesticandforeignjurisdictions,includingcompliancewithcompetition,anti-briberyandforeigncorruptpracticeslaws. Health, safety and the environmentincluding:lostemployeeworktimeresultingfromillnessorinjury,publicconcernsrelatedtoradiofrequencyemissions,environmentalissuesaffectingourbusiness,includingclimatechange,wasteandwasterecycling,risksrelatingtofuelsystemsonourproperties,andchanginggovernmentandpublicexpectationsregardingenvironmentalmattersandourresponses. Economic growth and fluctuationsincluding:thestateoftheeconomyinCanada,whichmaybeinfluencedbyeconomicandotherdevelopmentsoutsideofCanada,includingpotentialoutcomesofyetunknownpoliciesandactionsofforeigngovernments;expectationsoffutureinterestrates;inflation;unemploymentlevels;effectsoffluctuatingoilprices;effectsoflowbusinessspending(suchasreducinginvestmentsandcoststructure);pensioninvestmentreturns,fundinganddiscountrates;fluctuationsinforeignexchangeratesofthecurrenciesintheregionsinwhichweoperate;theimpactoftariffsontradebetweenCanadaandtheU.S.,andglobalimplicationsofthetradedynamic betweenmajorworldeconomies. • • • • • • • • • • TheserisksaredescribedinadditionaldetailinSection 9 General trends, outlook and assumptions, and regulatory developments and proceedingsandSection 10 Risks and risk managementinthisMD&A.ThosedescriptionsareincorporatedbyreferenceinthiscautionarystatementbutarenotintendedtobeacompletelistoftherisksthatcouldaffecttheCompany. Manyofthesefactorsarebeyondourcontrolorourcurrentexpectationsorknowledge.Additionalrisksanduncertaintiesnotcurrentlyknowntousorthatwecurrentlydeemtobeimmaterialmayalsohaveamaterialadverseeffectonourfinancialposition,financialperformance,cashflows,businessorreputation.Exceptasotherwiseindicatedinthisdocument,theforward-lookingstatementsmadehereindonotreflectthepotentialimpactofanynon-recurringorspecialitemsoranymergers,acquisitions,dispositionsorotherbusinesscombinationsortransactionsthatmaybeannouncedorthatmayoccurafterthedateofthisdocument. Readersarecautionednottoplaceunduerelianceonforward-lookingstate-ments.Forward-lookingstatementsinthisdocumentdescribeourexpectations,andarebasedonourassumptions,asatthedateofthisdocumentandaresubjecttochangeafterthisdate.Exceptasrequiredbylaw,wedisclaimanyintentionorobligationtoupdateorreviseanyforward-lookingstatements. Thiscautionarystatementqualifiesalloftheforward-lookingstatementsin thisMD&A. • • • • TELUS2019 ANNUAL REPORT • 43

February 13, 2020 44 • TELUS2019 ANNUAL REPORT Accounting matters 91 assumptions, and regulatory 2.1Corebusiness 53 4.1Principalmarketsaddressed Risks and risk management102 10.2 Principalrisksanduncertainties 103 5.1General 66 Definitions and reconciliations 117 11.1 Non-GAAPand 7.1Overview82 SectionPage SectionPage 1.1PreparationoftheMD&A45 1.2Theenvironmentinwhichweoperate 45 1.3Highlightsof201946 1.4Performancescorecard(keyperformancemeasures)51 88.1Criticalaccountingestimates andjudgments91 8.2Accountingpolicydevelopments94 9General trends, outlook and developments and proceedings 95 9.1Telecommunicationsindustryin2019 95 9.2Telecommunicationsindustry generaloutlookandtrends 96 9.3TELUSassumptionsfor202099 9.4Communicationsindustryregulatory developmentsandproceedings 99 2Core business and strategy 53 2.2Strategicimperatives 53 3Corporate priorities 54 4Capabilities 58 andcompetition58 4.2Operationalresources 60 4.3Liquidityandcapitalresources 63 4.4Disclosurecontrolsandproceduresandchangesininternalcontroloverfinancialreporting65 10 10.1 Overview102 10.3 Regulatorymatters 105 10.4 Competitiveenvironment 106 10.5 Technology107 10.6 Suppliers109 10.7 Organizationalchange 109 10.8 Customerservicedelivery 110 10.9 Oursystemsandprocesses111 10.10 Securityanddataprotection111 10.11 Ourteam112 10.12 Ourenvironment 113 10.13Financing,debtanddividends 113 10.14 Taxmatters114 10.15 Theeconomy115 10.16 Litigationandlegalmatters 116 5Discussion of operations 66 5.2Summaryofconsolidated quarterlyresults,trendsand fourthquarterrecap67 5.3Consolidatedoperations70 5.4Wirelesssegment 73 5.5Wirelinesegment 76 6Changes in financial position 80 11 otherfinancialmeasures 117 11.2 Operatingindicators 119 7Liquidity and capital resources 82 7.2Cashprovidedbyoperatingactivities82 7.3Cashusedbyinvestingactivities 83 7.4Cashprovided(used)byfinancingactivities 84 7.5Liquidityandcapitalresourcemeasures 85 7.6Creditfacilities 87 7.7Saleoftradereceivables88 7.8Creditratings88 7.9Financialinstruments,commitments andcontingentliabilities 88 7.10 Outstandingshareinformation 90 7.11 Transactionsbetweenrelatedparties 90

MD& A: INTRODUCTION Theforward-lookingstatementsinthissection,includingestimatesregardingeconomicgrowth,unemploymentratesandhousingstarts,arequalified bytheCaution regarding forward-looking statementsatthebeginningofthisManagement’sdiscussionandanalysis(MD&A). 1.1 Preparation of the MD&A Thefollowingsectionsareadiscussionofourconsolidatedfinancial positionandfinancialperformancefortheyearendedDecember31, 2019,andshouldbereadtogetherwithourDecember31,2019,auditedconsolidatedstatementsofincomeandothercomprehensiveincome,statementsoffinancialposition,statementsofchangesinowners’equityandstatementsofcashflows,andtherelatednotes(collectivelyreferredtoastheConsolidatedfinancialstatements).Thegenerallyacceptedaccountingprinciples(GAAP)thatweuseareInternationalFinancialReportingStandards(IFRS)asissuedbytheInternationalAccountingStandardsBoard(IASB)andCanadianGAAP.InthisMD&A,thetermIFRSreferstothesestandards.WeadoptedIFRS16,Leases,onJanuary1,2019,withretrospectiveapplication,andthecumulativeeffectoftheinitialapplicationofthenewstandardwasrecognizedatthedateofinitialapplication,January1,2019.Thismethodofapplicationdoesnotresultintheretrospectiveadjustmentofamountsreportedforperiodspriortofiscal2019.Themostsignificanteffectofthenewstan-dardisthelessee’srecognitionoftheinitialpresentvalueofunavoidablefutureleasepaymentsasright-of-useleaseassetsandleaseliabilities,includingthoseformostleasesthatwouldpreviouslyhavebeenaccountedforasoperatingleases.Thisresultsindepreciationofright-of-useleaseassetsandfinancingcostsarisingfromleaseliabilities,ratherthanaspartofGoodsandservicespurchased.Theadoptionofthenewstan-dardhasresultedinanincreaseofapproximately$1.0billioninProperty,plantandequipmentandanincreaseofapproximately$1.4billionin long-termdebtasatJanuary1,2019.However,theimplementationofIFRS16doesnothaveanyimpactoneconomicsorcashflows.Inourdiscussion,wealsousecertainnon-GAAPfinancialmeasurestoevaluateourperformance,monitorcompliancewithdebtcovenantsandmanageourcapitalstructure.Thesemeasuresaredefined,qualifiedandreconciledwiththeirnearestGAAPmeasuresinSection 11.1.AllcurrencyamountsareinCanadiandollars,unlessotherwisespecified. AdditionalinformationrelatingtotheCompany,includingourannualinformationformandotherfilingswithsecuritiescommissionsorsimilarregulatoryauthoritiesinCanada,isavailableonSEDAR(sedar.com).OurfilingswiththeSecuritiesandExchangeCommissionintheUnitedStates,includingForm40-F,areavailableonEDGAR(sec.gov). Ourdisclosurecontrolsandproceduresaredesignedtoprovide reasonableassurancethatallrelevantinformationisgatheredandreported toseniormanagementonatimelybasis,sothatappropriatedecisions canbemaderegardingpublicdisclosure.ThisMD&AandtheConsolidatedfinancialstatementswerereviewedbyourAuditCommitteeandauthorizedbyourBoardofDirectors(Board)forissuanceonFebruary13,2020. InthisMD&A,unlessotherwiseindicated,resultsfortheyearendedDecember31,2019,arecomparedwithresultsfortheyearended December31,2018. 1.2 The environment in which we operate Thesuccessofourbusinessandthechallengeswefacecanbestbeunderstoodwithreferencetotheenvironmentinwhichweoperate,includingbroadereconomicfactorsthataffectourcustomersandus,andthecompetitivenatureofouroperations.Ourestimatesregardingourenvironment,includingeconomicgrowth,unemploymentratesandhousingstarts,alsoformanimportantpartoftheassumptionsonwhichourtargetsarebased.TheextenttowhichtheseestimatesaffectusandthetimingoftheirimpactwilldependupontheactualexperienceofspecificsectorsoftheCanadianeconomy. TELUS2019 ANNUAL REPORT • 45 TELUS 2019 dividends declared and growth $1.4billion 8.4% TELUS subscriber connections 15.2million TELUS 2019 revenues $14.7billion 2019 Canadian telecom industry growth Est.2% 1 INTRODUCTION

Economic growth (Percentagepoints) Unemployment(Percentagepoints) Housing starts (000sofunits) Ourestimatedannualrateofhousingstartsonanunadjusted basis1 Ourestimatedannualunemployment rates1 OurestimatedGDPgrowth rates1 Estimatedgrossdomestic product(GDP)growthrates Seasonallyadjustedannual rateofhousingstarts2 Unemploymentrates Forthemonthof Forthemonthof December 20193 December 20183 December 2019 December 2018 2020 2019 2020 2020 2020 Canada B.C. Alberta Ontario Quebec 1.64 1.95 2.75 1.65 1.55 1.54 1.75 0.65 1.45 1.85 1.6 2.3 1.9 1.6 1.6 5.6 4.8 7.0 5.3 5.3 5.6 4.4 6.4 5.4 5.5 5.9 4.7 6.9 5.7 5.0 197 43 40 57 37 214 51 19 70 53 201 39 27 73 46 1 2 AssumptionsareasofOctober25,2019andarebasedonacompositeofestimatesfromCanadianbanksandothersources. Source:StatisticsCanada.Table34-10-0158-01CanadaMortgageandHousingCorporation,housingstarts,allareas,Canadaandprovinces,seasonallyadjustedatannualrates, monthly(x1,000). Source:StatisticsCanadaLabourForceSurvey,December2019andDecember2018,respectively. Source:BankofCanadaMonetaryPolicyReport,January2020. Source:BritishColumbiaMinistryofFinance,2019/20FirstQuarterlyReport,September2019;AlbertaMinistryofTreasuryBoardandFinance,2019–23FiscalPlan,October2019;OntarioMinistryofFinance,2019OntarioBudget,April2019;andMinistèredesFinancesduQuébec,Budget2019–2020,March2019,respectively. 3 4 5 Canadian telecommunications industry growth WeestimatethatCanadiantelecommunicationsindustryrevenues(includingTVrevenueandexcludingmediarevenue)grewbyapproxi-mately2%in2019(4%in2018).WeestimatethattheCanadianwirelessindustryaddedapproximately1.9millionsubscribersin2019andexperiencednetworkrevenuegrowthofapproximately1.6%.Wirelessrevenuescontinuedtoaccountforthelargestportionoftelecommunica-tionssectorrevenues.Keydriversofsubscribergrowthincludedtheincreaseddemandfordataservices;immigrationandpopulationgrowth;thetrendtowardmultipledevices,includingtabletsandInternetofThings(IoT)offerings;theexpandingfunctionalityofdataandrelatedapplications;andmobileadoptionbybothyoungerandoldergenerations.Withrespecttothewirelineindustry,theWesternCanadianconsumer high-speedinternetpenetrationrategrewbyapproximately1%to87%in2019andsubscribergrowthisexpectedtocontinue.MoreCanadiansaresubscribingtointernetservices,astheycontinuedtousemoredata,subscribetofasterandlargerpackages,andallocatemoremoneytointernetservices.Competitivepressurescontinuedinboththewirelineconsumerandbusinessmarkets,whiledeclinesinhigher-marginlegacyvoiceserviceswereongoing,partiallyattributabletotechnologicalsubstitution.(SeeSection 9 General trends, outlook and assumptions, and regulatory developments and proceedings,Section10.4 Competitive environmentandSection 10.15 The economy.) averageof11.3MHzandwillenableustodeliverenhancedmobilebroadbandconnectivityastheindustrytransitionsfrom4GLTEto5G.Thedesignofthecombinatorialclockauction(CCA),coupledwitha30MHzset-asideforregionalcarriers(representing43%ofthespectrumatauction),ledtonationalcarrierspayinga134%premiumoverregionaloperators,andaccordingtoouranalysis,thehighestpricesfor600MHzspectrumintheworld.OutsideofCanada,set-asidesareveryrare,andinthefewinstancesofCCAswithset-asides,the set-asideshaverepresentedonlyapproximately5%ofthespectrum atauction. Duringthethirdquarterof2019,weobtainedtheuseofcertainAWS-4spectrumlicencesfromtheoriginallicensee(forapproximately $1.16perMHz-pop)andhaveaccountedforthemasintangibleassetswithindefinitelives;suchsubordinationoflicenceshasbeenapprovedbyISED.Additionally,weobtainedAWS-1andAWS-3spectrum licencesinNorthernOntario. Telecommunications business acquisition OnJanuary14,2019,weacquiredatelecommunicationsbusinessthatiscomplementarytoourexistinglinesofbusiness,forconsiderationconsistingofcashandaccountspayableandaccruedliabilitiesof $75millionandTELUSCorporationCommonSharesof$38million.Theinvestmentwasmadewithaviewtogrowingourmanagednetwork, cloud,securityandunifiedcommunicationsservices. Smart data solutions business acquisition OnAugust12,2019,weacquiredabusinessthatiscomplementaryto,andwithaviewtogrowing,ourexistingsmartdatasolutionsbusiness,forconsiderationconsistingofcashandaccountspayable andaccruedliabilitiesof$135million. 1.3 Highlights of 2019 Spectrum OnApril10,2019,weannouncedthatwewerethesuccessfulbidderon 12wirelessspectrumlicencesinB.C.,Alberta,Saskatchewan,OntarioandQuebecintheInnovation,ScienceandEconomicDevelopmentCanada(ISED)600MHzwirelessspectrumauction.The600MHzbandisimportantforitsabilitytotravellongdistancesinruralareasandinfiltratebarrierstobetterreachin-buildinglocations,suchaselevatorsandparkinggarages,makingithighlyconduciveto5Gdeployment.Thelicences,acquiredfor$931million($2.35perMHz-pop,wherepopreferstothepopulationinalicencearea),equatetoanational ADT Security Services Canada, Inc. OnNovember5,2019,weacquiredthecustomers,assetsandoperationsofADTSecurityServicesCanada,Inc.(ADTCanada)forapproximately $700million.Thisacquisitionfurthersourcommitmenttoleverage thepoweroftechnologytoenhanceconvenience,controlandsafety inthelives,homesandbusinessesofmoreCanadians. 46 • TELUS2019 ANNUAL REPORT

MD& A: INTRODUCTION Business acquisition – subsequent to 2019 OnDecember4,2019,weannouncedthatwehadenteredintoanagreementtoacquire100%ofGerman-headquarteredCompetenceCallCenter(CCC)forapproximately$1.3billion(€915million),lessdebtassumedandsubjecttocustomaryclosingconditions,includingregulatoryapprovals.Subsequently,therequisiteregulatoryapprovalswereobtainedandthetransactionclosedonJanuary31,2020.CCCisaproviderofhigher-value-addedbusinessserviceswithafocusoncustomerrelationshipmanagementandcontentmoderation.CCCoffersitsservicesacross11Europeancountriesandpartnerswithindustry-leadingglobalbrandsprimarilyfromfast-growingtechnology,mediaandtelecommunications,retail,andtravelandhospitalitysectors. OnJuly23,2019,weearlyredeemed$650millionofour5.05%Notes,SeriesCH.OnAugust7,2019,weearlyredeemedtheremaining $350millionthatwasnotredeemedonJuly23,2019.Thelong-termdebtprepaymentpremiumfortheentire$1.0billionSeriesCHnotesredemptionwas$28millionbeforeincometaxes($0.03pershareafterincometaxes)(pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3below).Subsequenttothisearlyredemption,wenolongerhaveanyTELUSCorporationnotesmaturingin2020. Collectively,thesetransactionslengthenedtheaveragetermtomaturityofourlong-termdebt(excludingcommercialpaper,therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt)fromapproximately12.2yearsatDecember31,2018,toapproximately12.8yearsatDecember31,2019,andloweredtheweightedaveragecostofourlong-termdebt(excludingcommercialpaper,therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt)from 4.18%atDecember31,2018to3.94%atDecember31,2019. Endless data, device financing and family discounts Aspartofourcommitmenttoputtingcustomersfirst,onJuly3,2019,weintroducedmobilephoneendlessdataincombinationwithdevicefinancingandfamilydiscounts.OurPeaceofMindrateplansgivecustomersaccesstoendlessdatastartingat$75permonthfor10GBofhigh-speeddata.Ifacustomerreachestheirhigh-speeddatathresh-oldwithinthemonthlybillingcycle,dataspeedswillbereducedto 512Kbpswithoutthecustomerbeingchargedforanyoverages.TELUSEasyPayment,ourdevicefinancingprogram,givescustomersaccesstoanysmartphoneforaslittleas$0upfront,withfinancingoptionsover24months.TELUSFamilyDiscountsprovideincrementalsavings,rangingfrom$5to$15,offthemonthlyrateplanwitheverynewfamily memberwhosignsup(uptoamaximumofninelines). Multi-year dividend growth program OnMay9,2019,weannouncedourintentiontotargetongoing semi-annualdividendincreases,withtheannualincreaseintherangeof7to10%from2020throughtotheendof2022.Thisannouncementfurtherextendsourdividendprogram,whichwasoriginallyannouncedinMay2011andextendedforthreeadditionalyearsineachofMay2013andMay2016.Soastobeconsistentwiththewaywemanageourbusiness,wehaverevisedourtargetguideline,effectiveJanuary1,2020,tobecalculatedas60to75%offreecashflowonaprospectivebasis(freecashflowisanon-GAAPmeasure,seeSection 11.1).Notwithstandingthistarget,dividenddecisionswillcontinuetobesubjecttoourBoard’sassessmentandthedeterminationofourfinancialsituationandoutlookonaquarterlybasis.Therecanbenoassurancethatwewillmaintainadividendgrowthprogramthrough2022.SeeSection 4.3 Liquidity and capital resources. Long-term debt issue and early redemption of 2020 Notes, lengthening our average term to maturity and lowering our weighted average cost OnApril3,2019,weissued$1.0billionofseniorunsecured3.30%Notes,SeriesCY,whichwillmatureonMay2,2029.Thenetproceedswereusedtorepayoutstandingindebtedness,includingoutstandingcommercialpaper,forthereductionofcashamountsoutstandingunderanarm’s-lengthsecuritizationtrustandforgeneralcorporatepurposes. OnMay28,2019,weissuedUS$500millionofseniorunsecured 4.30%Notes,whichwillmatureonJune15,2049.Thenetproceedswereusedtorepayoutstandingindebtedness,includingoutstandingcommercialpaper,toredeem$650millionofthe$1.0billionaggregateprincipalamountofour5.05%Notes,SeriesCH,dueJuly23,2020,andforgeneralcorporatepurposes.Wehavefullyhedgedtheprincipalandinterestobligationsofthenotesbyenteringintoaforeignexchangederivative(acrosscurrencyinterestrateexchangeagreement),whicheffectivelyconvertedtheprincipalpaymentsandinterestobligationstoCanadiandollarobligationswithafixedinterestrateof4.27%andanissuedandoutstandingamountof$672million(reflectingafixedexchangerateof$1.3435). OnJuly2,2019,weissued$800millionofseniorunsecured2.75%Notes,SeriesCZ,whichwillmatureonJuly8,2026.Thenetproceedswereusedtoredeemtheremaining$350millionofour5.05%Notes,SeriesCH,torepayoutstandingindebtedness,includingoutstandingcommercialpaper,andforgeneralcorporatepurposes. OnDecember16,2019,weissued$600millionofseniorunsecured 3.15%Notes,SeriesCAA,whichwillmatureonFebruary19,2030,and$400millionofseniorunsecured3.95%Notes,SeriesCAB,whichwillmatureonFebruary16,2050.Thenetproceedswereusedtorepayoutstandingindebtedness,tofinancetheacquisitionofADTCanada,tofundcapitalexpendituresandforgeneralcorporatepurposes. Changes to the Board of Directors BillMacKinnonretiredfromourBoardinMay2019.Billhadbeenadirectorsince2009,andservedasthechairoftheAuditCommitteefrom2011toMay2018andasamemberoftheCorporateGovernanceCommitteefrom2013to2015. SabiMarwahalsoretiredfromourBoardinMay2019.SabijoinedtheBoardin2015andservedonboththeAuditandCorporateGovernanceCommittees. Duringthethirdquarterof2019,ClaudeMongeausteppeddownfromourBoard.ClaudejoinedtheBoardin2017andservedonboththeAuditandCorporateGovernanceCommittees. WethankBill,SabiandClaudefortheiroutstandingcontributions andservicetoTELUS. Share split – subsequent to 2019 SubsequenttoDecember31,2019,weannouncedasubdivisionofourCommonSharesonatwo-for-onebasistobeeffectedMarch17,2020.Inallinstances,unlessotherwiseindicated,thenumberofsharesauthorized,thenumberofsharesoutstanding,thenumberofsharesreserved,pershareamountsandshare-basedcompensationinfor-mationintheMD&Ahavenotbeenretrospectivelyrestatedtoreflecttheimpactofthesubdivision;suchrestatementwouldtakeplacesubsequenttothesubdivision. TELUS2019 ANNUAL REPORT • 47

Consolidated highlights YearsendedDecember31($millions,exceptfootnotesandunlessnotedotherwise) 2019 2018 Change Consolidated statements of income Revenuesarisingfromcontractswithcustomers Otheroperatingincome1 Operatingrevenues1 Operatingincome2 Incomebeforeincometaxes2 Netincome2 NetincomeattributabletoCommonShares2 AdjustedNetincome3 14,589 69 14,658 2,977 2,244 1,776 1,746 1,727 14,095 273 14,368 2,837 2,176 1,624 1,600 1,703 3.5% (74.7)% 2.0% 4.9% 3.1% 9.4% 9.1% 1.4% Earningspershare(EPS)4($)BasicEPS2 AdjustedbasicEPS3 DilutedEPS DividendsdeclaredperCommonShare4($) 2.90 2.86 2.90 2.2525 2.68 2.85 2.68 2.1000 8.2% 0.4% 8.2% 7.3% Basicweighted-averageCommonSharesoutstanding(millions) 602 597 0.8% Consolidated statements of cash flows Cashprovidedbyoperatingactivities 3,927 4,058 (3.2)% Cashusedbyinvestingactivities Acquisitions Capitalexpenditures5 (2,977) (280) (2,914) 69.4% n/m (0.3)% (5,044) (1,105) (2,906) Cashprovided(used)byfinancingactivities 1,238 (1,176) n/m Other highlights Subscriberconnections6,7(thousands) Earningsbeforeinterest,incometaxes,depreciationandamortization2,3(EBITDA) Restructuringandothercosts3,8 AdjustedEBITDA3,9 AdjustedEBITDAmargin3,10(%) 15,166 5,554 134 5,693 38.8 13,947 5,104 317 5,250 37.0 8.7% 8.8% (57.7)% 8.4% 1.8 pts. Freecashflow3 NetdebttoEBITDA–excludingrestructuringandothercosts3(times) 932 3.20 1,207 2.54 (22.8)% 0.66 NotationsusedinMD&A:n/m–notmeaningful;pts.–percentagepoints. 1 Inthethirdquarterof2018,werecordedequityincomerelatedtorealestatejointventuresof$171millionarisingfromthesaleofTELUSGarden.Excludingtheeffectofthisthirdquarter 2018equityincome,Otheroperatingincomedecreasedby32.4%in2019,andOperatingrevenuesincreasedby3.2%in2019. Excludingthethirdquarter2018equityincomedescribedinfootnote1andthethirdquarter2018donationdescribedinfootnote8,in2019,Operatingincomeincreasedby6.9%,Incomebeforeincometaxesincreasedby5.7%,Netincomeincreasedby13.6%,NetincomeattributabletoCommonSharesincreasedby13.4%,basicEPSincreasedby12.4%(pre-sharesplit)andEBITDAincreasedby10.0%. Thesearenon-GAAPandotherfinancialmeasures.SeeSection 11.1 Non-GAAP and other financial measures. Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. Capitalexpendituresincludeassetspurchased,excludingright-of-useleaseassets,butnotyetpaidfor,andconsequentlydifferfromCashpaymentsforcapitalassets,excludingspectrumlicences,asreportedintheConsolidatedfinancialstatements.RefertoNote 31oftheConsolidatedfinancialstatementsforfurtherinformation. Thesumofactivemobilephonesubscribers,mobileconnecteddevicesubscribers,internetsubscribers,residentialvoicesubscribers,TVsubscribersandsecuritysubscribers,measuredattheendoftherespectiveperiodsbasedoninformationinbillingandothersourcesystems.Duringthefirstquarterof2019,weadjustedcumulativeinternetsubscriberconnectionstoaddapproximately16,000subscribersfromacquisitionsundertakenduringthequarter.Effectiveforthethirdquarterof2019,withretrospectiveapplicationtothelaunchofTELUS-brandedsecurityservicesatthebeginningofthethirdquarterof2018,wehaveaddedsecuritysubscriberconnectionstoourtotalsubscriberconnections.December31,2019securitysubscriberconnectionshavebeenincreasedtoincludeapproximately490,000subscribersrelatedtoouracquisitionofADTCanada(acquiredonNovember5,2019). Effectiveforthefirstquarterof2019,withretrospectiveapplication,werevisedourdefinitionofawirelesssubscriberandnowreportmobilephonesandmobileconnecteddevicesasseparatesubscriberbases,soastobeconsistentwiththewaywemanageourbusinessandtoalignwithglobalpeers.Asaresultofthechange,totalsubscribersandassociatedoperatingstatistics(grossadditions,netadditions,churn,averagebillingpersubscriberpermonthorABPU,andaveragerevenuepersubscriberpermonthorARPU)wereadjustedtoreflect(i)themovementofcertainsubscribersfromthemobilephonessubscriberbasetothenewlycreatedmobileconnecteddevicessubscriberbase,and(ii)theinclusionofpreviouslyundisclosedIoTandmobilehealthsubscribersinourmobileconnecteddevicessubscriberbase.Foradditionalinformationonoursubscriberdefinitions,seeSection 11.2 Operating indicators. Inthethirdquarterof2018,werecordedadonationtotheTELUSFriendlyFutureFoundationTMof$118millionaspartofothercosts. AdjustedEBITDAforallperiodsexcludesrestructuringandothercosts(seeSection 11.1forrestructuringandothercostsamounts).AdjustedEBITDAforallperiodsexcludesnon-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures. 2 3 4 5 6 7 8 9 10 AdjustedEBITDAmarginisAdjustedEBITDAdividedbyOperatingrevenues,wherethecalculationofOperatingrevenuesexcludesnon-recurringgainsandequityincomerelated torealestatejointventures. 48 • TELUS2019 ANNUAL REPORT

MD& A: INTRODUCTION Operating highlights Residentialvoicenetlossesimprovedby13.7%in2019duetoourexpandingfibrefootprintandbundledproductofferingsandthesuc-cessofourstrongerretentionefforts,includinglower-pricedofferings.ExcludingtheeffectsofADTCanada,securitynetadditionswere 46,000,reflectingstrongorganicgrowth.(SeeSection 5.5 Wireline segmentforadditionaldetails.) Operating incomeincreasedby$140millionin2019.Excludingtheeffectsofthethirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millionandthenon-recurringthirdquarter2018donationtotheTELUSFriendlyFutureFoundationof$118million,Operatingincomeincreasedby$193millionin2019,reflectinghigherwirelessnetworkgrowthdrivenbyagrowingsubscriberbase,inadditiontogrowthinwirelinedataservicemarginsandahigherEBITDAcontributionfromourcustomercareandbusinessservices(CCBS)andhealthbusinesses,andtheeffectsofimplementingIFRS16describedinSection 1.1.Allofthesefactorswerepartlyoffsetbydeclinesinwirelinelegacyvoiceandlegacydataservices,aswellaslowergainsonsalesofcertainassets. EBITDA,whichincludesrestructuringandothercostsand non-recurringlossesandequitylosses(orgainsandequityincome) relatedtorealestatejointventures,increasedby$450millionor 8.8%in2019.Excludingtheeffectsofthethirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millionandthethirdquarter2018donationtotheTELUSFriendlyFutureFoundationof$118million,EBITDAincreasedby$503millionor10.0%in2019.TheimpactofIFRS16onEBITDAwasanincreaseof$301millionin2019. AdjustedEBITDA,whichexcludesrestructuringandothercostsandnon-recurringlossesandequitylosses(orgainsandequityincome)relatedtorealestatejointventures,increasedby$443millionor8.4%in2019,reflectinghigherwirelessnetworkrevenuedrivenbyagrowingsubscriberbase,growthinwirelinedataservicemarginsandahigherEBITDAcontributionfromourCCBSandhealthbusinesses.Additionally,upontheapplicationofIFRS16,Goodsandservicespurchaseddecreasedand,correspondingly,AdjustedEBITDAincreased.ThesefactorswerepartlyoffsetbydeclinesinwirelinelegacyvoiceandlegacydataservicesandadeclineintheEBITDAcontributionfromourlegacybusinessservices.ApplyingaretrospectiveIFRS16simulationtofiscal2018results,whicharecash-basedproxyadjustments,allasusedbyourChiefExecutiveOfficer(ourchiefoperatingdecision-maker)toassessperformance,proformaconsolidatedAdjustedEBITDAgrowthwasapproximately4.0%in2019.(SeeSection 5.3 Consolidated operationsforadditionaldetails.) Income before income taxesincreasedby$68millionin2019.Excludingtheeffectsofthethirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millionandthethirdquarter2018donationtotheTELUSFriendlyFutureFoundationof$118million,Incomebeforeincometaxesincreasedby$121millionin2019.HigherOperatingincome,asnotedabove,waspartlyoffsetbyanincreaseinFinancingcosts.TheincreaseinFinancingcostsresultedprimarilyfromthefinancingcostsrecordedthatarosefromleaseliabilitiesupontheapplicationofIFRS16describedinSection 1.1andfromhigheraveragelong-term debtoutstanding.(SeeFinancing costsinSection 5.3.) • Consolidated operating revenuesincreasedby$290millionin2019.Excludingtheeffectofthenon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171million,consolidatedoperatingrevenuesincreasedby$461millionin2019: Servicerevenuesincreasedby$518millionin2019,duetogrowthinwirelessnetworkrevenueandwirelinedataservicesrevenue.Thisgrowthwaspartlyoffsetbytheongoingdeclinesinwirelinelegacyvoiceandlegacydataservicerevenues. Equipmentrevenuesdecreasedby$24millionin2019,reflectinglowerwirelesscontractedvolumesandlowerwirelinedataandvoiceequipmentsales. Otheroperatingincomedecreasedby$204millionin2019,primarilyduetothenon-recurrenceofthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171million,inadditiontothenon-recurrenceofgainsonsaleofcertainassetsinthefourthquarterof2018. Foradditionaldetailsonoperatingrevenues,seeSection 5.4 Wireless segmentandSection 5.5 Wireline segment. During2019,ourtotalsubscriber connectionsincreasedby 1,219,000,reflectinga3.2%increaseinmobilephonesubscribers,a21.6%increaseinmobileconnecteddevicesubscribers,a6.6%increaseininternetsubscribers,a6.1%increaseinTVsubscribersandanincreaseof536,000securitysubscribers,partlyoffsetbya3.5%declineinresidentialvoicesubscribers. Effectiveforthefirstquarterof2019,withretrospectiveapplication,wehaverevisedourdefinitionofamobilephonesubscriber.(SeeSection 11.2 Operating indicatorsfordefinitions.)Ourmobilephonenetadditionswere274,000in2019,up10,000drivenbygrowthinhigh-valuecustomeradditions,growthintheCanadianpopulation,successfulpromotionsandexpandedchannels,partlyoffsetbyhighermobilephonechurn.Mobileconnecteddevicenetadditionswere263,000in2019,up70,000duetogrowthinourIoTofferings,includingtheconnecteddevicegrowtharisingfromoursubscribersexpandingtheirIoTservicestotheirgrowingcustomerbases,partiallyoffsetbyreducedloadingoflowornegative-margintablets.Ourmobilephonechurnratewas1.08%in2019,upslightlyfrom1.06%in2018,reflectingheightenedcompetitiveintensity.(SeeSection 5.4 Wireless segmentforadditionaldetails.) Internetnetadditionswere107,000in2019,down8,000,ascontinuednetnewdemandfromconsumersandbusinesseswasoffsetbyincreaseddeactivationsresultingfromheightenedcom-petitiveintensity.TVnetadditionswere67,000in2019,up4,000,incontrastwithmarket-reporteddeclinesintraditionaltelevisionviewinghabits,reflectinghighergrossadditionsasaresultofourdiverseproductofferings,partlyoffsetbyheightenedcompetitiveintensity.Ourcontinuedfocusonexpandingouraddressablehigh-speedinternetandOptikTVfootprint,connectingmorehomesandbusinessesdirectlytofibre,diversifyingourproductofferings,andbundlingtheseproductsandservicestogether,aswellasourongoingfocusonourcustomerserviceandreliability,contributedtocombinedinternetandTVsubscribergrowthof190,000or6.4%overthelast12months.WehadmadeTELUSPureFibreavailable toapproximately70%ofourbroadbandfootprintbytheendof2019. • • • TELUS2019 ANNUAL REPORT • 49

• Income taxesdecreasedby$84millionin2019.Theeffectivetaxratedecreasedfrom25.4%to20.8%predominantlyattributabletotherevaluationofthedeferredincometaxliabilityforthemulti-yearreductionintheAlbertaprovincialcorporatetaxratethatwassubstantivelyenactedinthesecondquarterof2019. Net income attributable to Common Sharesincreasedby$146millionin2019.Excludingtheeffectsofthethirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millionandthethirdquarter2018donationtotheTELUSFriendlyFutureFoundationof$118million,Netincomeattrib-utabletoCommonSharesincreasedby$206million,drivenbyhigherOperatingincomeandlowerIncometaxes,partlyoffsetbyincreasedFinancingcosts. AdjustedNetincome,whichexcludestheeffectsofrestructuringandothercosts,incometax-relatedadjustments,non-recurringlossesandequitylosses(orgainsandequityincome)relatedtorealestatejointventures,andlong-termdebtprepaymentpremiums, increasedby$24millionor1.4%in2019. • Basic EPSincreasedby$0.22or8.2%(pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3)in2019.Excludingtheeffectsofthethirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millionandthethirdquarter2018donationtotheTELUSFriendlyFutureFoundationof$118million,basicEPSincreasedby$0.32or12.4%(pre-sharesplit),drivenbyhigherOperatingincomeandlowerIncometaxes,partlyoffsetbyincreasedFinancingcostsandtheeffectofahighernumberofCommonSharesoutstanding. AdjustedbasicEPS,whichexcludestheeffectsofrestructuringandothercosts,incometax-relatedadjustments,non-recurringgainsandequityincomerelatedtorealestatejointventures,andlong-termdebtprepaymentpremiums,increasedby$0.01or0.4%(pre-share split)in2019. • Reconciliation of adjusted basic EPS1 YearsendedDecember31($) 2019 2018 Change BasicEPS Add(deduct): Restructuringandothercosts, afterincometaxes,pershare2Favourableincome-taxrelated adjustments,pershare Non-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures,afterincometaxes3 Long-termdebtprepaymentpremium,afterincometaxes,pershare 2.90 2.68 0.22 Reconciliation of adjusted Net income YearsendedDecember31($millions) 2019 2018 Change 0.16 0.39 (0.23) Netincomeattributable toCommonShares Add(deduct): Restructuringandothercosts, afterincometaxes1 Favourableincometax-related adjustments Non-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures,afterincometaxes2 Long-termdebtprepayment premium,afterincometaxes 1,746 1,600 146 (0.24) (0.01) (0.23) 98 235 (137) 0.01 (0.25) 0.26 (142) (7) (135) 0.04 (0.01) 0.03 AdjustedbasicEPS 2.86 2.85 0.01 5 (150) 155 1 2 Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. Includesourthirdquarter2018committeddonationtotheTELUSFriendlyFutureFoundationof$0.15pershareafterincometaxes(pre-sharesplit). Includesequityincomearisingfromthethirdquarter2018saleofTELUSGardenof$0.25pershareafterincometaxes(pre-sharesplit). 25 (5) 20 3 AdjustedNetincome 1,727 1,703 24 1 Includesourthirdquarter2018committeddonationtotheTELUSFriendlyFutureFoundationof$90millionafterincometaxes. Includesequityincomearisingfromthethirdquarter2018saleofTELUSGardenof$150millionafterincometaxes. • Dividends declared per Common Sharewere$2.2525(pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3)in2019,up7.3%from2018.Consistentwithourtargetofincreasingdividendsbetween7to10%inthenearterm,theBoarddeclaredafirstquarterdividendof$0.5825pershare(pre-sharesplit)onourissuedandout-standingCommonShares,payableonApril1,2020,toshareholdersofrecordatthecloseofbusinessonMarch11,2020.Thefirstquarterdividendincreasedby$0.0375pershare(pre-sharesplit)or6.9%fromthe$0.5450(pre-sharesplit)persharedividenddeclaredoneyearearlier,consistentwithourmulti-yeardividendgrowthprogram describedinSection 4.3 Liquidity and capital resources. 2 50 • TELUS2019 ANNUAL REPORT

MD& A: INTRODUCTION 1.4 Performance scorecard (key performance measures) In2019,weachievedthreeoffourconsolidatedtargets,whichwere announcedonFebruary14,2019. Weachievedourconsolidatedrevenuetarget,primarilyduetogrowthinwirelessnetworkrevenueresultingfromgrowthinourwirelesssub-scriberbase.Additionally,weexperiencedincreasedwirelinedataservicerevenuesresultingfromgrowthinCCBSbusinessvolumes,increasedinternetandthird-wavedataservices,increasedhealthrevenuesinclusiveofacquisitions,increasedhomeandbusinesssmarttechnology(includingsecurity)revenues,andincreasedTVrevenues,partlyoffsetbytheongoingdeclineinlegacywirelinevoicerevenue. WemetourAdjustedEBITDAtargetlargelyfromhigherwirelessnetworkrevenuegrowthdrivenbyagrowingcustomerbase,inadditiontogrowthinEBITDAcontributionfromourCCBSandhealthbusiness.ThesefactorswerepartlyoffsetbydeclinesinwirelinelegacyvoiceandlegacydataservicesandadeclineinEBITDAcontributionfromourlegacybusinessservices.AlthoughweexperiencedanincreaseinAdjustedEBITDAduetotheadoptionofIFRS16onJanuary1,2019,our2019AdjustedEBITDAtargetincorporatedtheeffectsofthenewaccountingstandard. OurbasicEPSfellwithinourtargetrange,drivenbyhigherOperatingincomeandlowerincometaxes,partlyoffsetbyincreasedFinancingcosts. Ourcapitalexpendituresin2019exceededourconsolidatedtargetby2.0%,asweadvancedthetimingofcertaininvestmentsinourbroad-bandinfrastructureandmadeincrementalcapitalexpendituresrelatedtoourvariousbusinessacquisitionsin2019.Ourinvestmentsinbroadbandinfrastructure,includingconnectingmorehomesandbusinessesdirectlytoourfibre-opticinfrastructure,resultedinTELUSPureFibrereachingapproximately70%ofourbroadbandfootprintatyear-end.Theseinvest-mentsalsosupportoursystemsreliabilityandoperationalefficiencyandeffectivenessefforts,aswellasoursmall-celltechnologystrategytoimprovecoverageandprepareforamoreefficientandtimelyevolutionto5G. Ourcapitalstructurefinancialpoliciesandreportonfinancingand capitalstructuremanagementplansareincludedinSection 4.3. Liquidity and capital resource highlights • Net debt to EBITDA – excluding restructuring and other costs ratiowas3.20timesatDecember31,2019,upfrom2.54timesatDecember31,2018,astheincreaseinnetdebt,partlyattributedtotheacquisitionofspectrumlicences,andwhichincludesthe $1.7billionrecognitionofleaseliabilitiesupontheapplicationofIFRS16,exceededtheeffectoftheincreaseinEBITDA–excludingrestructuringandothercosts.AsatDecember31,2019,theacqui-sitionofspectrumlicencesincreasedtheratiobyapproximately0.22;businessacquisitionsoverthelast12monthsincreasedtheratiobyapproximately0.18;andtheimplementationofIFRS16hadtheeffectofincreasingtheratiobyapproximately0.14.(SeeSection 4.3 Liquidity and capital resourcesandSection 7.5 Liquidity and capital resource measures.) Cash provided by operating activitiesdecreasedby$131millionin2019,largelyattributabletoincreasedincometaxpayments,whichmainlyreflectedahigherfinalincometaxpaymentof$270millioninthefirstquarterof2019forthe2018incometaxyear;otheroper-atingworkingcapitalchanges;higherrestructuringandothercostsdisbursements,netofexpenseandSharessettledfromTreasury;andincreasedinterestpaid.AllofthesewerepartiallyoffsetbygrowthinEBITDA.Additionally,repaymentsofleaseliabilitiesunderIFRS16increasedCashprovidedbyoperatingactivitiesby$236millionin2019,asdescribedinSection 7.2 Cash provided by operating activities. Cash used by investing activitiesincreasedby$2,067millionin 2019,largelyattributabletoacquisitionsandthecashpaymentforthe600MHzspectrumacquisitionof$931million.Acquisitionsincreasedby$825millionin2019aswemadelargercashpaymentsforbusinessacquisitionsincludingADTCanadaonNovember5,2019.Capitalexpendituresdecreasedby$8millionin2019,primarilyduetothetimingofourfibrebuildactivities,partiallyoffsetbyincreased 5Ginvestments,whichbeganinthefourthquarterof2018.WehadmadeTELUSPureFibreavailabletoapproximately70%ofourbroad-bandfootprintbyDecember31,2019.(SeeSection 7.3 Cash used by investing activities.) Cash provided by financing activitiesincreasedby$2,414millionin2019,primarilyreflectingincreasedissuesoflong-termdebt,netofredemptionsandrepayment.(SeeSection 7.4 Cash provided (used) by financing activities.) Free cash flowdecreasedby$275millionin2019,resultingprimarilyfromincreasedincometaxpayments,whichmainlyreflectedahigherfinalincometaxpaymentof$270millioninthefirstquarterof2019forthe2018incometaxyear,asdescribedinCash provided by operating activities,andincreasedinterestpaid.Thefreecashflowdecreasein 2019waspartlyoffsetbyhigherAdjustedEBITDA,thetimingrelatedtodevicesubsidyrepaymentsandassociatedrevenuerecognitionandourTELUSEasyPaymentdevicefinancingprogram,andlowercapitalexpenditures.Ourdefinitionoffreecashflow,forwhichthereisnoindustryalignment,isunaffectedbyaccountingchangesthatdonotimpactcash,suchasIFRS15andIFRS16.(Seecalculation inSection 11.1 Non-GAAP and other financial measures.) • • • • TELUS2019 ANNUAL REPORT • 51

ThefollowingscorecardcomparesTELUS’performancetoourconsolidated2019targets.Forinformationrelatedtoour2019targets,seeSection 9 General trends, outlook and assumptions, and regulatory developments and proceedings. Wemadethefollowingkeyassumptionswhenweannouncedthe2019targetsinFebruary2019. 52 • TELUS2019 ANNUAL REPORT ASSUMPTIONS FOR 2019 TARGETS AND RESULTS • OureconomicassumptionsarebasedonacompositeofestimatesfromCanadianbanksandothersources.Ouroriginalassumptionsfor2019were:(i)slightlyslowerrateofeconomicgrowthinCanadaof2.0%;(ii)forourincumbentlocalexchangecarrier(ILEC)provincesinWesternCanada,economicgrowthinB.C.of2.3%,andeconomicgrowthinAlbertaof2.1%. Inourfirstquarter2019MD&A,werevisedour2019economicgrowthassumptionsto1.5%inCanadaand1.2%inAlberta.Inourthirdquarter2019MD&A,wefurtherrevisedour2019economicgrowthassumptionsto1.6%inCanada,1.9%inB.C.and0.7%inAlberta. Weestimatethateconomicgrowthin2019was1.6%inCanada,1.9%inB.C.and0.7%inAlberta. • Withrespecttounemploymentrates,ouroriginalassumptionsfor2019were5.8%inCanada,4.9%inB.C.and6.2%inAlberta. Inourfirstquarter2019MD&A,werevisedour2019unemploymentrateassumptionsto4.5%inB.C.and6.8%inAlberta.Inourthirdquarter2019MD&A,wefurtherrevisedour2019unemploymentrateassumptionsto5.7%inCanadaand4.6%inB.C. Weestimatethatunemploymentratesin2019were5.7%inCanada,4.6%inB.C.and6.8%inAlberta. • Withrespecttothepaceofhousingstarts,onanunadjustedbasis,ouroriginalassumptionfor2019was196,000unitsinCanada. Inourthirdquarter2019MD&A,onanunadjustedbasis,werevisedour2019assumptionforthepaceofhousingstartsto207,000inCanada. Weestimatethattheannualrateofhousingstartsonanunadjustedbasisfor2019was207,000units. • Ourassumptionfor2019restructuringandothercostswasapproximately$100million.Ouractual2019restructuringandothercostswas$134million,asweincurredcostsforcontinuingoperationaleffectivenessinitiatives,withmarginenhancementinitiativestomitigatepressuresrelatedtointensecompetition,technologicalsubstitution,repricingofourservices,increasingsubscribergrowthandretentioncosts,andintegrationcostsassociatedwithbusinessacquisitions. • OurassumptionwasforstabilizationintheaverageCanadiandollar:U.S.dollarexchangerate,whichwas$1.30in2018.TheaverageCanadiandollar:U.S.dollarexchangeratewas$1.33in2019andclosedat$1.30onDecember31,2019,comparedto$1.36onDecember31,2018. SCORECARD2019 PERFORMANCE ConsolidatedConsolidatedtargetsandgrowthActual results and growth Result Revenues1Anincreaseof $14.66 billion 3to5% 3.2% AdjustedEBITDA2Anincreaseof $5.69 billion 8to10%3 8.4% BasicEPS4Anincreaseof $2.90 2to10% 8.2% Capitalexpenditures Approx.$2.85billion $2.91 billion (excludingspectrumlicences) 1 The2019revenuetargetandactualresultswerecalculatedusingoperatingrevenues,excludingthenon-recurringthirdquarter2018equityincome Mettarget relatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171million. Missedtarget 2 SeedescriptioninSection 11.1 Non-GAAP and other financial measures. 3 The2019AdjustedEBITDAtargetreflectedthenon-cashimpactingimplementationofIFRS16,LeasesonJanuary1,2019. 4 Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3.

MD& A: CORE BUSINESS AND STR ATEGY 2.1 Core business Weprovideawiderangeoftelecommunicationsproductsandservices.Wirelessproductsandservicesincludenetworkrevenue(dataandvoice)andequipmentsalesarisingfrommobiletechnologies.Wirelineproductsandservicesincludedatarevenues(whichincluderevenuesfrominternetprotocol;television;hosting,managedinformationtech-nologyandcloud-basedservices;customercareandbusinessservices(CCBS)(formerlybusinessprocessoutsourcing);homeandbusinesssmarttechnology(includingsecurity);andcertainhealthcaresolutions),voicerevenues,andothertelecommunicationsservicesandequip-mentrevenues.Wecurrentlyearnthemajorityofourrevenuefromaccessto,andusageof,ourtelecommunicationsinfrastructure,andfromprovidingservicesandproductsthatfacilitateaccessto,andusageof,ourinfrastructure. 2.2 Strategic imperatives Since2000,wehavemaintainedaprovennationalgrowthstrategy.OurstrategicintentistounleashthepoweroftheinternettodeliverthebestsolutionstoCanadiansathome,intheworkplaceandonthemove. Wealsodevelopedsixstrategicimperativesin2000thatremainrelevantforfuturegrowth,despitechangingregulatory,technologicalandcompetitiveenvironments.Webelievethataconsistentfocusontheseimperativesguidesouractionsandcontributestotheachievementofourfinancialgoals.Toadvancetheselong-termstrategicimperativesandaddressnear-termopportunitiesandchallenges,weconfirmorsetnewcorporateprioritieseachyear,asfurtherdescribedinSection 3. Oursixstrategicimperativesarelistedbelow. • • Focusingrelentlesslyongrowthmarketsofdata,IPandwireless ProvidingintegratedsolutionsthatdifferentiateTELUSfromourcompetitors Buildingnationalcapabilitiesacrossdata,IP,voiceandwireless Partnering,acquiringanddivestingtoacceleratetheimplementationofourstrategyandfocusourresourcesoncorebusiness Goingtomarketasoneteamunderacommonbrand,executingasinglestrategy Investingininternalcapabilitiestobuildahigh-performanceculture andefficientoperation. • • • • TELUS2019 ANNUAL REPORT • 53 2 CORE BUSINESS AND STRATEGY ASSUMPTIONS FOR 2019 TARGETS AND RESULTS Confirmed: • Nomaterialadverseregulatoryrulingsorgovernmentactions.SeeSection 9.4forfurtherinformation. • Continuedintensewirelessandwirelinecompetitioninbothconsumerandbusinessmarkets. • ContinuedincreaseinwirelessindustrypenetrationoftheCanadianmarket. • Ongoingsubscriberadoptionof,andupgradesto,data-intensivesmartphones,ascustomersseekmoremobileconnectivitytotheinternet. • Wirelessrevenuegrowthresultingfromimprovementsinsubscriberloading,withcontinuedcompetitivepressureonblendedARPU. • Continuedpressureonwirelessacquisitionandretentionexpenses,dependentongrossloadingandcustomerrenewalvolumes,competitiveintensity andcustomerpreferences. • Continuedgrowthinwirelinedatarevenue,reflectinganincreaseininternetandTVsubscribers,speedupgrades,rateplanswithlargerdatausage andexpansionofourbroadbandinfrastructure,aswellasgrowthinCCBS,healthcaresolutionsandhomeandbusinesssecurityofferings. • Continuederosionofwirelinevoicerevenues,resultingfromtechnologicalsubstitutionandgreateruseofinclusivelongdistance. • Continuedfocusonourcustomersfirstinitiativesandmaintainingourcustomers’likelihood-to-recommend. • Pensionplansassumptionsfor2019:definedbenefitpensionplanexpenseofapproximately$79millionrecordedinEmployeebenefitsexpense;arateof3.90%fordiscountingtheobligation(2018–3.90%)andarateof4.00%forcurrentservicecostsforemployeedefinedbenefitpensionplanaccountingpurposes(2018–3.50%);anddefinedbenefitpensionplanfundingofapproximately$52million.Actualresultswere:$78millionrecordedinEmployeebenefitsexpense,arateof3.90%fordiscountingtheobligation,arateof3.90%forcurrentservicecostsforemployeedefinedbenefitpensionplanaccountingpurposes,anddefinedbenefitpensionplanfundingof$41million. • Ourassumptionfor2019incometaxeswascomputedatastatutoryrateof26.7to27.3%,andcashincometaxpaymentsofapproximately$600millionto$680million.Ouractualresultswereatastatutoryincometaxrateof26.9%andcashincometaxpaymentsinrespectofcomprehensiveincomewere$629million. • Furtherinvestmentsinbroadbandinfrastructure,aswehavereachedapproximately70%ofourbroadbandfootprintatDecember31,2019,including fibre-opticnetworkexpansionand4GLTEcapacityandupgrades,aswellasinvestmentsinnetworkandsystemsresiliencyandreliability. • ParticipationinISED’s600MHzwirelessspectrumauctioninMarchtoApril2019.Weacquired12wirelessspectrumlicencesinB.C.,Alberta,Saskatchewan,OntarioandQuebecwhichequatetoanationalaverageof11.3MHz. • Continueddeploymentofaccess-agnostictechnologyinournetwork.

Weconfirmorsetnewcorporateprioritieseachyearinordertoadvanceourlong-termstrategicimperatives(seeSection 2.2)andaddressnear-term opportunitiesandchallenges.Thefollowingtableprovidesadiscussionofactivitiesandinitiativesthatrelatetoour2019corporatepriorities. 54 • TELUS2019 ANNUAL REPORT Honouring our customers, communities and social purpose by our team delivering on our brand promise • Eachyear,weconductteammemberPulsecheckengagementsurveystogatherconfidentialteammemberfeedbackaboutTELUSasaplacetoworkinordertomeasureourprogressincreatingahigh-performanceculture.Followingeachsurvey,leadersshareresultswithteammembersandusefairprocesstobuildandrefineactionplansfocusedonhigh-priorityareaswhereimprovementisrequiredbasedonPulsecheckresults.In2019,ouremployeeengagementscorewas84%,whichisanencouragingaccomplishmentagainstabackdropofchangeacrossourorganizationoverthecourseofthepastyear.ThisresultcontinuestoplaceourCompanywithinthetop10%ofallemployerssurveyedonaglobalbasis. • InNovember2019,theCommissionforComplaintsforTelecom-televisionServices(CCTS)issueditsannualreportforthe12-monthperiodendedJuly31,2019,andTELUSagainwasthesubjectofthefewestcustomercomplaintsamongnationalcarriers,whileKoodo®againwasthesubjectofthefewestcomplaintsamongthenationalflankerbrands.TELUS,KoodoandPublicMobilewerenamedin8.3%,3.9%and1.0%ofthetotalcustomercomplaintsacceptedbytheCCTS,respectively,or13.2%oftotalcustomercomplaints,inaggregate.Additionally,TELUShadthehighestrateofcomplaintresolutionofanynationalcarrierat91.5%. • WewerenamedoneofCanada’sTop100Employers(2020)byMediacorpCanadaInc. • Throughout2019,wecontinuedtoexpandourConnectingforGoodprogramportfoliotobuildstronger,moreresilientcommunities. • WeexpandedourMobilityforGoodprogramtosupport10,000moreyouthinB.C.,Alberta,ManitobaandNewBrunswick.MobilityforGood providesyouthtransitioningoutoffostercarewithfullysubsidizedsmartphonesanddataplanstostayconnectedtotheirvitalsupportnetworks. • ThroughourInternetforGoodprogramandinsupportofthefederalgovernment’sConnectingFamiliesprogram,anadditional198,000InternetforGoodoffersweremailedtoeligiblehouseholdsinB.C.,AlbertaandQuebec.InternetforGoodofferslow-incomefamiliesaccesstolow-costhigh-speedinternetandacomputer. • WepilotedourWelcometoCanadainitiative,whichoffersourInternetandMobilityforGoodprogramstogovernment-assistedrefugeesarrivinginB.C.TELUSprovidesrefurbishedphones,wirelessplansandinternetservicetoenablerefugeestostayintouchwithfamilyabroadandaccesssupportnetworksandemploymentopportunitiesinCanada.Theprogramaimstoensureawarmerwelcomeandsmoothertransition,enablingbetteroutcomesfornewcomerstoCanada. • WeexpandedourHealthforGoodprogrambyestablishingsevennewstrategicpartnershipstodeploynewmobilehealthclinics.OurHealthforGoodprogramfundsTELUSMobileHealthClinics,poweredbyTELUSHealthtechnology,toimprovethewayhealthpractitionersdelivercaretothemostvulnerableamongus. • WeintroducedourTechforGoodprogramtohelpCanadianswithdisabilitiesusesmartphonesandwirelessdevicessotheycanlivemoreindependent,connectedlives.CurrentlyavailableinB.C.andAlberta,thisprogramisdesignedtohelppeoplewithdisabilitieswhorequireacustomizedsolutioninvolvingassistivetechnologytoindependentlyaccesstheirTELUSsmartphoneortablet. • Attheendof2019,closeto65,000CanadianshadparticipatedinourConnectingforGoodprograms. • WecontinuedtoevolveourTELUSWiseprogramduring2019tobuilddigitalliteracyandsafetyinourconnectedworld. • Closeto64,000CanadiansparticipatedinTELUSWiseworkshops,upfrom52,000in2018.Theseworkshopsarefreeofchargeandhelpfosterthesafeandresponsibleuseoftechnologyinourdigitalworld.Approximately88%ofparticipantsfeltmoreempoweredtostaysafeonlineasaresultofattendingtheworkshop. • Welaunchedonlineversionsofouryouthworkshops,enablingeducatorsandstudents,especiallythoseinruralcommunities,tomoreeasily accessprograminformation. • WealsocontinuedtoworkwithourpeersinTELUSInternational,extendingTELUSWisemessagingandresourcestoyoutharoundtheworld, anddelivering15workshopsinothercountries,includingthePhilippines,Bulgaria,Romania,ElSalvadorandGuatemala. • Welaunchedanewworkshopforteens,TELUSWisehappiness,inFebruary2019.InAugust2019,theworkshopbecameavailableonline,coincidingwiththestartofthenewschoolyear.Theworkshopengagesteensingrades9through12inaconversationaboutbuildingandmaintainingahealthyrelationshipwithtechnologyandofferstipsonensuringresiliencyandwell-being. • Throughout2019,weinspiredCanadiansfromcoasttocoasttojoinTeam#EndBullying. • Wepartneredwith2019WorldJuniorsTeamCanadacaptainMaximeComtois,whowascyberbulliedafterthehockeytournament. • AtWEDayeventsacrossCanada,wesharedMaxime’sstory,thedevastatingimpactsofonlinenegativityandhowMaximewasabletorise abovewithpositivesupportfromhisnetwork.Weralliedover70,000youthtotakeastandandtohelperadicatebullying. • WeintegratedMaxime’sstoryintoour2020WorldJuniorscampaign,includingacommercialTVspot.WeencouragedCanadianstojoinour#EndBullyingplightandsharemessagesofsupportforTeamCanadaonline.WealsoshowcasedTheCode–aprogramdevelopedinpartnershipbetweenTELUSandHockeyCanada–designedspecificallyforthehockeycommunity.TheCodeisanextensionoftheTELUSWiseprogram,offeringcustomizededucationtools,resourcesandworkshopstohelphockeyfans,playersandfamiliessafelyandrespectfullynavigatedigitalspaces. • Inthesecondhalfof2019,welaunched#EndBullyingAll-StarswithourfiveCanadianFootballLeague(CFL)partnerteams.#EndBullyingAll-Starsisanumbrellaprogramthatpromotestheimportanceofgoodsportsmanshipbothonthefieldandonline,whilebringingTELUSWiseworkshopstolocalschools. 3 CORPORATE PRIORITIES

MD& A: CORPOR ATE PRIORITIES TELUS2019 ANNUAL REPORT • 55 Honouring our customers, communities and social purpose by our team delivering on our brand promise (continued) • During2019,over40,000globalvolunteersparticipatedinourTELUSDaysofGivingandcollectivelycontributed1.1millionvolunteerhours.Bothresultsrepresentyear-over-yearincreasesof10%. • Inthethirdquarterof2019,welaunchedourintegratedPridecampaignunderourTELUS#ShareLoveplatform,promotingandcelebratingour long-standingcommitmenttofosteringadiverseandinclusiveculture.Closeto43,000teammembers,familyandfriendscelebrateddiversityinnearly 20Prideeventsincommunitiesfromcoasttocoast.Lastyearmarkedour13thyearofbeinganactivesponsorandparticipantinPrideeventsand activitiesacrossCanada. • InSeptember2019,wewererecognizedforcorporatesocialresponsibilitybybeingnamedtotheDowJonesSustainabilityNorthAmericanIndexforthe19thconsecutiveyear.Additionally,wewerenamedtotheDowJonesSustainabilityWorldIndexforthefourthyearinarow,oneofonlyninetelecommunicationscompaniesgloballyandtheonlyNorthAmericantelecommunicationscompanyincludedintheWorldIndexthisyear. • WereceivedtheBESTAwardforexcellenceinemployeelearninganddevelopmentfromtheAssociationforTalentDevelopmentforthe14th consecutiveyear. • TheTELUSQuebecteamearnedthe2019HighestCustomerServicebyIndustryAwardinthetelecommunications/TVsector,aNorthAmerican distinctionawardedbySQMGroup. • AsnotedinSection 1.3,welaunchedPeaceofMindrateplansandourTELUSEasyPaymentdevicefinancingprogram,togetherwithTELUSFamilyDiscounts,offeringCanadiansendlessdatawithnooveragecharges. • Duringthethirdquarterof2019,welaunchedunlimitedhomeinternetdataacrossallspeedtiersavailabletonewandrenewingcustomers.WesternCanadianscanenjoythefreedomofunlimitedhomeinternetdata,bringingthempeaceofmindwithoutworryingaboutdataoverages. • In2019,wesuccessfullycelebratedthefirstyearoftheTELUSFriendlyFutureFoundation.Togetherwiththe13CanadianTELUSCommunityBoards, thefoundationprovidednearly$8millioninsupportofmorethan500projectsforvulnerableyouthinCanada. • InDecember2019,welaunchedTELUS’DonatetheChangeTMprogram.DonatetheChangeisaunique,self-serveprogramthatallowscustomerstoautomaticallyrounduptheirmonthlyTELUSbillanddonate100%ofthedifferencetotheTELUSFriendlyFutureFoundation.Thisprogramisavailableforbothmobilityandhomesolutionscustomers. • Weendedtheyearbyleadingournationalpeersinlikelihood-to-recommendwithineachwirelesstier(premium,flankerandvalue),aswellasin thesmallbusinessspaceforbothwirelessandwireline. • InJanuary2020,wewerenamedtotheCorporateKnights2020Global100MostSustainableCorporationsintheWorldfortheeighthtimesince inceptionoftherecognitionin2005. Leveraging our broadband networks to drive TELUS’ growth • Wecontinuedtoinvestinourleading-edgebroadbandtechnology,whichhasenabledthesuccessofourinternet,OptikTVandPikTVofferings andbusinessservices,aswellasourMobilitysolutions,andhelpsreadyournetworkfor5Gdeploymentinthefuture. • Our4GLTEinfrastructurecovered99%ofCanada’spopulationatDecember31,2019. • Ourhigh-speedbroadbandfootprintcoveredapproximately3.2millionhouseholdsandbusinessesinB.C.,AlbertaandEasternQuebecatDecember31,2019,including2.22millionhouseholdsandbusinessescoveredwithfibre-opticcable(representingapproximately70%ofourtotalhigh-speedbroadbandfootprint),whichprovidesthesepremiseswithimmediateaccesstoourfibre-opticinfrastructure.Thisisupfrom 1.89millionhouseholdsandbusinessesatDecember31,2018. • InOpensignal’sMobile Network Experience CanadareportreleasedinFebruary2019,wewererecognizedasbeingnumberoneforLTEdownloadspeeds,latencyandnetworkavailability,andwetiedfornumberoneforLTEuploadspeedsandvideoexperience.InOpensignal’sMobile Network Experience: Canada Report(August2019),wewonthetopspotinfourawards(4GAvailability,VideoExperience,DownloadSpeedExperienceandLatencyExperience)andtiedfornumberoneinthefifthaward(UploadSpeedExperience).WewerealsothefirstCanadianoperatortosurpassthe90%milestonein4GAvailability. • InthereportCanada: State of Mobile Networks March 2019,publishedbyTutela,aCanadianindependentmobilenetworkdatacompany,TELUSwasrankedasnumberoneforlatencyandtiedforfirstplaceforconsistentquality. • IntheJ.D.Power2019 Canada Wireless Network Quality Study,TELUSwasrecognizedfortheHighestWirelessNetworkQualityPerformance inCanada. • WewontwoSpeedtestAwardsfromOoklaforCanada’sFastestMobileNetworkandCanada’sBestMobileCoverage. • AccordingtoPCMag’sFastest Mobile Network Canada 2019reportreleasedinSeptember2019,wewererecognizedashavingthefastestmobilenetworknationally,forthethirdconsecutiveyear.WewerealsorecognizedashavingthefastestnetworkinVictoria,Calgary,Edmonton,Regina,Winnipeg,Toronto,Ottawa,Montreal,QuebecCity,SaintJohn,HalifaxandPrinceEdwardIsland.Additionally,TELUSwasrecognizedashavingthebestwirelessplaninCanada. • InMarch2019,wecompletedconstructiononanewwirelesscommunicationssiteintheVillageofPortClementsonHaidaGwaii.Thisprovided residents,visitorsandlocalbusinesseswithaccesstohigh-speedwirelessvoiceandinternetservicesover4GLTEforthefirsttime. • Wewerethesuccessfulauctionparticipanton12wirelessspectrumlicencesacrossB.C.,Alberta,Saskatchewan,OntarioandQuebecintheInnovation,ScienceandEconomicDevelopmentCanada600MHzwirelessspectrumauction.Theacquisitionof600MHzspectrumwillenableustodeliverenhancedurbanandruralconnectivityandadvanceournational5Ggrowthstrategy. • WelaunchedTELUSHomeAssistant,aplatformthatenablesOptikTVcustomerstheabilitytocontroltheirentertainmentexperiencehands-free usingvoicecommands,atnoadditionalcost.

56 • TELUS2019 ANNUAL REPORT Leveraging our broadband networks to drive TELUS’ growth (continued) • UpontheopeningoftheO-TrainConfederationlineinOttawainSeptember2019,wecommencedprovidingfreeWi-Fiserviceinthreedowntown,undergroundLine1stations’platformsanddoor-to-doorcellularservice,includingthroughthedowntowntunnel.Thiscontinuouscellularconnectionbetweenstationsandinthetunnelensuresthatcustomerswillnotmisscallsorbedisconnectedduringtheirtimeunderground. • InSeptember2019,weenteredintoalong-termarrangementwithZú,aMontreal-basedorganizationwiththemissiontodevelopleading-edge innovativeprojectsintheentertainmentsector,tolaunchanexperimental5Glaboratoryentirelydedicatedtothecreativeandentertainmentindustry. • InSeptember2019,welaunchedourTELUSIoTShop,aself-serveonlineportalthatenablesbusinessestoeasilypurchaseandmanageprepaidInternetofThings(IoT)connectivity.Idealforbusinessessuchasstart-upsanddeveloperlabs,theTELUSIoTShopmakesiteasyforthemtoconnecttheirIoTdevicestoournetwork. • WereachedareciprocalroamingagreementwithAT&TinSeptember2019.Forcustomersonaqualifyingrateplan,thisagreementwillallowtheirIoTdevicestoroamintheUnitedStates. • WelaunchedournewManagedDetectionandResponseservice,whichprovidesmid-sizedCanadianorganizationswithtechnologythatdelivers rapiddetectionandtargetedresponsestocybersecuritythreats. • WebuiltanewcellsiteinAhousaht,aremotecommunityoffTofinoonthewestcoastofVancouverIsland,andwerethefirstprovidertobringhigh-speed wirelessvoice,textandinternetservicetothecommunity. • InNovember2019,weannouncedthat,thankstoaninnovationbasedonLTEadvancedtechnology,weprovidedfamiliesandbusinessesfromthecommunitiesofBrador,MiddleBay,PakuaShipu,Saint-AugustinandOldFortinQuebec’sLowerNorthShorewithaccesstohigh-speedinternetandwirelessphoneservices. • TogetherwithMobiledgeX,inNovember2019,weannouncedtheMobiledgeXEarlyAccessProgram,whichallowsdeveloperstobuild,experiment andtestapplicationsandexperiencesusingnext-generation,low-latencyedgecomputingpoweredbyMobiledgeX. • Throughouttheyear,wemadeaseriesofannouncementsregardingtheconnectionofmorehomesandbusinessestoourTELUSPureFibre infrastructure,including: • ThecityofNanaimoanddistrictofLantzville,B.C.,includingtheSnuneymuxwandSnaw-Naw-AsNations,toconnectbythespringof2021 • ThecityofAirdrie,Albertatoconnectbytheendof2020 • ThecityofNelson,B.C. • Afurtherinvestmentinourwirelessandfibre-opticinfrastructureacrossruralcommunitiesintheGreaterQuebecCityandEasternQuebecregions.Thisinvestmentwasmadewithsupportfromthefederalgovernment’sConnecttoInnovateprogramandtheprovincialgovernment’sQuébecbranchéprogram.Withthissupport,wewillconnect34,000newfamiliesandbusinessesin80remotecommunities • ThecityofSt.Albert,Alberta,includingneighbouringcommunitiesinSturgeonCounty,toconnectbytheendof2020 • ThecityofPrinceGeorge,B.C.,includingtheNorthSideofLheidliT’ennehFirstNation’sFortGeorge2reserve,toconnectbythebeginningof2022 • ThecityofPittMeadows,B.C.,includingKatzieFirstNation’sIR#1reserve,toconnectbytheendofthesummerof2020. • InJanuary2020,weacquireda28%basicequityinterestinMiovisionTechnologiesIncorporated(Miovision),withaviewtoadvancingourIoTand smartcitiesstrategy.Miovisionisadeveloperofintelligentmobilitysystemsandtrafficmanagementsolutionsformunicipalitiesworldwide. Fuelling our future through recurring efficiency gains • Wearecontinuingtofocusonexpandingcustomerself-serveadoption,whichenhancesbothcustomersatisfactionandcompanyproductivitythrough virtualassistantsanddigitalplatforms,whileimprovingteammemberproductivitybyutilizingroboticprocessautomation. • Wehaveestablishedanongoingprogramthatintegratesouracquisitions,advancesstakeholderrelationshipsandsimplifiesourbusiness.Thisprogram improvesouroverallorganizationalefficiencywhiledrivingcostsavingsandworkingcapitalbenefitstobereinvestedinourcustomersfirststrategy. • In2019,weundertookfourdebtofferingsof$1.0billion,US$500million,$800million,and$1.0billion.Theseofferingsloweredtheweightedaveragecostofourlong-termdebtfrom4.18%to3.94%andlengtheneditsaveragetermtomaturityfrom12.2yearsto12.8years,providinguswithadditionalflexibilitytomanageandgrowourbusiness. • WithourPeaceofMindrateplansandTELUSEasyPaymentdevicefinancingoptions,inadditiontoourTELUSFamilyDiscounts,wehavestreamlinedoursuiteofofferings.Now,insteadofhavingtochoosebetweenvoluminousmarket-wideofferings,thissimplificationhasmadeiteasierforourcustomerstoselectwhattheywant,whilealsoenablingourteammemberstobetterassistthem,savingtimeandeffort.Thissimplificationisalsosupportinggrowthindigitaltransactions,whilePeaceofMindisprovidingcustomerswithbillingcertainty,reducingthenumberofcallstoourcallcentresandloweringcreditsandrefunds. Driving emerging opportunities to build scale in TELUS Health and TELUS International • InMarch2019,welaunchedBabylonbyTELUSHealth,avirtualhealthcaresolutionthatprovidesaccesstodoctorsandhealthcareinformationwhereandwhentheyneeditthroughanewsmartphoneapp.B.C.residentshavebeenthefirsttohaveaccesstotheapp’sone-on-onevideoconsultationfeature,allowingthemtospeakdirectlyandprivatelywithaB.C.-licensedfamilydoctor.Canadiansacrossthecountrycanalsocreateapersonalhealthrecordandusetheapp’sartificialintelligencechatbotSymptomChecker,whichdrawsonmorethan500millionstreamsofmedicalknowledgeandaskspatientsquestionsabouttheirsymptomsandprovidesinformationonpossiblecausesorcoursesofaction. • WecontinuetobuildscaleinTELUSHealththroughexpandedservicesforexistingcustomers,aswellasbusinessacquisitionsandstrategicpartnershipsthatcansupportourdemonstratedspeed-to-market,andourcomplementaryecosystemsaredeliveringefficienciesandsynergiesinanexcitinggrowthmarket.

MD& A: CORPOR ATE PRIORITIES Our2020corporateprioritiesareprovidedinthetablebelow. TELUS2019 ANNUAL REPORT • 57 2020 CORPORATE PRIORITIES • Honouringourcustomers,communitiesandsocialpurposebyourteamdeliveringonourbrandpromise • LeveragingourbroadbandnetworkstodriveTELUS’growth • Fuellingourfuturethroughrecurringefficiencygains • DrivingemergingopportunitiestobuildscaleinTELUSHealthandTELUSAgriculture • DrivinggrowthinTELUSInternationaltofuelfurtherscalingopportunities. Driving emerging opportunities to build scale in TELUS Health and TELUS International (continued) • InNovember2019,WalmartCanadaannouncedthatithadselectedTELUSHealth’spharmacymanagementsolution,Ubik®,forallofits68Accès pharmafranchisedlocationsacrosstheprovinceofQuebec. • InDecember2019,TELUSHealthannouncedplansforthenationalexpansionofitsLivingWellCompanionpersonalemergencyresponseservice(PERS)tosupportmoreagingCanadiansacrossthecountrythroughtheacquisitionoftheQuebec-basedbilingualPERScompanyDirectAlert,whichiscurrentlyoperatingasDirectAlertbyTELUSHealth,andeventuallywillbebackedbytheLivingWellCompanionbrandnationallyandsupportedbyincreasedservicecapabilities,includingmulti-lingualsupportandproactivealerting. • ByleveragingXavientDigital,TELUSInternationalcontinuestoenhanceitsnext-generationdigitalsolutions,includingartificialintelligence,roboticprocessautomation,bigdataandanalytics,inordertomeetthedigitaltransformationneedsoffast-growingtech,fintechandfinancialservices,games,travelandhospitality,telecomandhealthcareindustries. • WiththeopeningofasixthsiteinManila,Philippines,theexpansionofcustomercarelocationsinNoida,IndiaandGuatemalaCity,Guatemala,andtheopeningofanewdeliverycentreinChengdu,China,TELUSInternationalcontinuestoexpanditsglobalcustomerexperienceanddigitalIToperationstomeetthegeographical,digitalandlanguagesupportneedsofitsgrowingglobalcustomerbase. • AsnotedinSection 1.3,weannouncedthatwehadenteredintoanagreementtoacquire100%ofCompetenceCallCenter,whichwilladdsignificant scaletoTELUSInternationalandresultinasizeablediversificationofitsoperationsandclientbaseinEurope.

Theforward-lookingstatementsinthissection,includingstatementsregardingourdividendgrowthprogramandourfinancialobjectivesinSection 4.3, arequalifiedbytheCaution regarding forward-looking statementsatthebeginningofthisMD&A. 4.1 Principal markets addressed and competition 58 • TELUS2019 ANNUAL REPORT WIRELESS PRODUCTS AND SERVICES FOR CONSUMERS AND BUSINESSES ACROSS CANADA Our products and services • Dataandvoice–Fastinternetaccessforvideo,socialnetworking,messagingandnewmobileapplicationssuchasTELUSSmartHome,BabylonbyTELUSHealth,PharmaConnectTM,PikTVandTELUSDrive+®;InternetofThings(IoT)solutions,includingmachine-to-machine(M2M)connectivity;clearandreliablevoiceservices;push-to-talksolutions,includingTELUSBusinessConnect®;andinternationalroaming. • Devices–Thelatestsmartphones,tablets,mobileinternetkeys,mobileWi-Fidevices,M2Mmodems,digitallifedevicesandwearabletechnology, suchassmartwatchesandourLivingWellCompanion. • SuiteofIoTsolutionstosupportCanadianbusinesseslocallyandinternationally,includingassettracking,fleetmanagement,remotemonitoring, digitalsignageandsecurity. Our capabilities • Licensedgrossnationalwirelessspectrumholdingsaveraging172MHz. • During2019,weacquired12wirelessspectrumlicencesintheInnovation,ScienceandEconomicDevelopmentCanada(ISED)600MHzwirelessspectrumauction,aswellastwowirelessspectrumlicences(AWS-1andAWS-3)inasecondarymarkettransaction.Weexpecttobegindeploymentofthe600MHzspectrumintoourexistingnetworkoverthenextseveralyearsasover-the-airtelevisionstationstransitiontonewfrequenciestocompletetheband’srepurposingformobileuse. • Coast-to-coastdigital4GLTEaccesstechnology: • Overallcoverageof99%ofCanada’spopulation,withLTEadvanced(LTE-A)technologycoveringmorethan93%ofCanada’spopulation atDecember31,2019.Coverageincludesdomesticroamingagreements. • Coverageandcapacitywereenhancedwiththedeploymentofthe700MHzwirelessspectrumlicencesacquiredin2014andthedeploymentofthe2500MHzwirelessspectrumlicencesacquiredin2015.Weplantoutilizeotherspectrumlicencespurchasedinrecentyears,incombinationwithunlicensedsupplementaryspectrum,asnetworkanddeviceecosystemsevolve. • Manufacturer’srateddownloadspeeds:LTE-A,upto1.35Gbps;LTE,upto150Mbps;HSPA+,upto42Mbps.Averageexpectedspeeds:LTE-A,12-250Mbps;LTE,12-45Mbps;HSPA+,4-14Mbps.1 • RevertstoHSPA+technologyandspeedswhencustomersareoutsideLTEcoverageareas. • Internationalvoiceanddataroamingcapabilitiesinmorethan225destinations,includingvoiceoverLTE(VoLTE)roamingnowavailable withthreemajorU.S.carriersandoneinternationalcarrier. • IoTtechnology: • LTE-machine(LTE-M)technologyacrossCanada,whichsupportslargenumbersofdevicesthattransmitinfrequentshortburstsofdata. • Multi-servicemulti-billingcapabilitiesprovidestheabilitytoseparatelyclassify,rateandbilldatatrafficacrossIoTdevices. • SpecializedautomatedvehiclelocationIoTsolutionsthatsupportmunicipalities,construction,utilitiesandspecialitytransport. Competition overview • Facilities-basednationalcompetitorsRogersWirelessandBellMobility,aswellasprovincialorregionallyfocusedtelecommunicationscompaniesShaw,Quebecor,SaskTel,Eastlink,TbaytelandXplornet. • Fixedwirelessservices. • Resellersofcompetitors’wirelessnetworks. • ServicesofferedbycableandwirelesscompetitorsoverwirelessandmetropolitanWi-Finetworks. • CompetitionforourIoTsolutionsincludeotherprovidersofLTE-Mlow-powerwideareanetworkcapabilities,IoTconnectivitytoolsandplatforms, andautomatedvehiclelocationandtransportationsolutions. 1 Networkspeedsvarywithlocation,signalandcustomerdevice.Compatibledevicerequired. 4 CAPABILITIES

MD& A: CAPABILITIES TELUS2019 ANNUAL REPORT • 59 WIRELINE PRODUCTS AND SERVICES: RESIDENTIAL SERVICES IN BRITISH COLUMBIA, ALBERTA AND EASTERN QUEBEC; HEALTHCARE SOLUTIONS; AUTOMATION AND SECURITY SOLUTIONS; BUSINESS SERVICES ACROSS CANADA; AND CUSTOMER CARE AND BUSINESS SERVICES (CCBS) SOLUTIONS OFFERED INTERNATIONALLY Our products and services • Internet–Comprehensivehigh-speedinternetaccesswithTELUSPureFibre,whichcoversapproximately70%ofourbroadbandfootprintatDecember31,2019;fixedhigh-speedinternetaccess(HSIA)service,withemailandacomprehensivesuiteofsecuritysolutions;andwirelessHSIA,withreliableWi-Fiandcloudstorage.TELUSoffersmultipleplans,including940Mbpssymmetricaldownloadanduploadspeeds. • Television–High-definitionentertainmentservicewithOptikTVandPikTV.OptikTVoffersextensivecontentoptions,including4Kand4KHDRliveTV,OnDemandcontentandstreamingservicessuchasNetflix,YouTubeandhayu.OptikTValsodeliversinnovativefeatures,includingvoiceassistantthatallowsyoutocontrolyourTV,awirelessdigitalbox,largePVRcapacityandtheabilitytorestartliveTVinprogressorfromthepast30hours.Inaddition,ourOptikTVappallowscustomerstowatchliveTV,setrecordingsandaccessOnDemandcontentfromasmartphone,tabletorcomputer.PikTVdeliversastreamlinedofferforcustomersthroughourPikTVmediaboxorAppleTV,andisalsoaccessiblethroughaninternetbrowserorourAndroidoriOSmobileapplications.PikTVembracesthechangingenvironment,wherecontentisincreasinglyavailablefromover-the-top(OTT)services. • Voice–ReliablefixedphoneservicewithlongdistanceandcallingfeaturessuchasCallControl,whichhelpssubscribersavoidnuisancecalls; voiceoverIP(VoIP)supportingvoiceservicesintothefuture. • Securitytechnologytosupportcentralmonitoringandguardresponseservice(whereavailable),integratedwithautomatedsmartdevices.Fieldservicescapabilitiestoinstall,upgradeandrepairsecuritytechnologyatcustomers’premises. • IPconnectivityforbusinesses–Convergedvoice,videoanddataservicesandinternetaccess,offeredonahigh-performingnetwork.Alsoincludessoftware-definedwideareanetwork(SD-WAN)offerings. • Cloudandmanagedinformationtechnology(IT)services–SuiteofhybridITsolutionsprovidestraditionalandcloudtechnologies,networkconnectivity, security,managedITandcloudadvisoryservices. • Securityconsultingandmanagedservices–Cloudandon-premisessolutionsensuringsecurityfordata,email,websites,networksandapplications. • UnifiedCommunicationsconferencingandcollaboration–Fullrangeofequipmentandapplicationsolutions,includingUnifiedCommunicationsasaService(UCaaS),tosupportmeetingsandwebcastsbymeansofphone,videoandinternet.Recentacquisitionsarebolsteringourcapabilitiesinthesmallandmid-marketbusinesssegments. • WiththeJanuary31,2020closingoftheacquisitionofCompetenceCallCenter(CCC),TELUSInternational,acustomerexperienceproviderthatdesigns,buildsanddeliversnext-generationdigitalsolutionsforsomeoftheworld’smostestablishedanddisruptivebrands,willhavealmost50,000teammembers,providingservicesinover50languagesfrom50deliverycentresacross20countriesinNorthandCentralAmerica,EuropeandAsia.Nowaleaderintheglobalbusinessservicesspace,TELUSInternational’ssolutionsincludecustomerexperience,digitaltransformation,ITlifecycle,advisoryanddigitalconsulting,riskmanagement,andback-officesupport,servingglobalcustomersfromfast-growingtech,fintechandfinancialservices,games,e-commerce,travelandhospitality,communicationsandutilitiesandhealthcareindustries. • Healthcare–TELUSHealth’sservices,includingpharmacymanagement,electronicmedicalrecords(EMR)andmobileEMR,electronichealthrecords,druginformationsystems,regionalclinicalinformationsystems,personalhealthrecordsystems,remotepatientmonitoring,onlinesettlementclaimsmanagementsolutions,e-prescribingservices,TELUSHealthExchangePlatformandMedDialog®,aswellasemployeewellness,comprehensiveprimarycare,andworkplacehealthandwell-beingservices. • Fixedwirelessservices–WirelessHSIAandwirelesshomephone. • Homeandbusinesssecurityandautomation–Real-time24/7centralmonitoringstation,guardresponseservice(whereavailable),andwirelessandhard-wiredsecurityaccessibility,integratedwithsmartinternet-connecteddevices,includingcamerasandsensors.Theseservicesareenablingsmarthomesandsmartbusinessesbyallowingcustomerstoremotelymonitorandmanageappliancesandsystemsforenhancedsecurity,comfort,convenienceandenergyefficiency. Our capabilities • High-speedbroadbandfootprintcoveredapproximately3.2millionhouseholdsandbusinessesinB.C.,AlbertaandEasternQuebecatDecember31,2019. • Ongoingconnectionofhouseholdsandbusinessesdirectlytofibre-opticcable;2.22millionhouseholdsandbusinessescoveredwithTELUSPureFibreinB.C.,AlbertaandEasternQuebecatDecember31,2019,andwehavereachedapproximately70%ofourtotalhigh-speedbroadbandfootprint. • Broadcastingdistributionlicencesallowingustoofferdigitaltelevisionservicesinincumbentterritories,aswellasalicencetooffercommercial video-on-demandservices. • Securitytechnologytosupportcentralmonitoringandguardresponseservice(whereavailable),integratedwithautomatedsmartdevices.Fieldservicescapabilitiestoinstall,upgradeandrepairsecuritytechnologyatcustomers’premises. • AnIP-basednationalnetworkoverlayinganextensiveswitchednetworkinB.C.,AlbertaandEasternQuebec,aswellasglobalinterconnection arrangements. • SevendatacentresinsixcommunitiesdirectlyconnectedtothenationalTELUSIPnetwork,creatinganadvancedandregionallydiversecomputing infrastructureinCanada. • ProvideaccessforbusinessesacrossCanadathroughourextensivenetwork,andproductcapabilitiesbolsteredbyournationaldeliveryteams. • CCBSsolutions,next-generationITanddigitalbusinessserviceswithglobaldeliverycapabilitiesthroughourmultinational,multi-languageprograms, supportedbymorethan38,000employeesacrossNorthandCentralAmerica,EuropeandAsia,asatDecember31,2019. • Technologysolutionstoassisthealthregions,hospitals,insurers,consumersandemployers;alsotoimproveconnectivityandcollaborationamong healthcareproviders,includingphysicians,nurses,pharmacistsandphysiotherapists.

4.2 Operational resources 60 • TELUS2019 ANNUAL REPORT RESOURCES Our team • Approximately65,600employeesatDecember31,2019,with27,600employeeslocatedinCanadaand38,000employeeslocatedinternationally.Wealsouseexternalcontractorsandconsultants. • Approximately8,970ofouremployeesarecoveredbycollectiveagreements.TheagreementwiththeTelecommunicationsWorkersUnion(TWU),UnitedSteelWorkersLocalUnion1944,whichcoversapproximately7,560employees,expiresonDecember31,2021.TheagreementwiththeSyndicatquébécoisdesemployésdeTELUS(SQET),whichcoversapproximately750employees,expiresonDecember31,2022.TheagreementwiththeSyndicatdesagentsdemaîtrisedeTELUS(SAMT),whichcoversapproximately605employeesintheTELUSQuebecregion,expiresonMarch31,2022.OurTELUSEmployerSolutionsInc.subsidiaryissignatorytoacollectiveagreementwiththeB.C.GovernmentandServicesEmployees’Union,whichcoverslessthan100employeesandexpiresonJuly31,2023. • AsaresultofouracquisitionofADTSecurityServicesCanada,Inc.(ADTCanada)onNovember5,2019,approximately250employeesarecoveredbycollectiveagreementsbetweenADTCanadaandanumberofunions,includingmultiplecollectiveagreementswiththeInternationalBrotherhoodofElectricalWorkers(IBEW)inB.C.,Alberta,Saskatchewan,ManitobaandOntario,acollectiveagreementwithSyndicatdessalariésdesservicesd’alarme(CSD)inQuebec,andacollectiveagreementwithUniforinOntario.Thisgroupof250unionizedemployeesalsoincludesanumberofQuebec-basedemployeescoveredbysectoralcollectiveagreementsspecifictotheQuebecconstructionindustry(CommissiondelaConstructionduQuébec).Theexpirydatesofthesecollectiveagreementsvary.ADTCanadaiscurrentlyintheprocessofnegotiatingrenewalagreementsfortwocollectiveagreementsthathaveexpired. • OperationsatCanadianandinternationallocationstosupportCCBSsolutionsanddigitalbusinessservicesforexternalcustomers,aswellasforcertaininternalfunctions.Additionally,forourCCBSsolutions,wehavereadyaccesstolabourintheUnitedStatesformanagementandsupportpositions,andinvariousinternationallocationsforcontactcentres. • Employeecompensationprogramsthatsupportahigh-performancecultureandcontainmarket-drivenandperformance-basedcomponents(bonusandshare-basedcompensation)toattractandretainkeyemployees. • Successionmanagementandtalentreviewsforourteam,whichcontinuetocoverattritionandongoingsourcingstrategiesforreadyaccesstolabourinCanada,withcompetitionfortalentinspecializedoremergingskillareaspresentingachallenge.Toaddressthischallenge,wecontinuetoproactivelyattractandengagecandidateswithaninnovativesourcingstrategy. • Learninganddevelopmentprogramstoimproveemployeeengagementlevelsandenhanceourcustomers’experiences. WIRELINE PRODUCTS AND SERVICES: RESIDENTIAL SERVICES IN BRITISH COLUMBIA, ALBERTA AND EASTERN QUEBEC; HEALTHCARE SOLUTIONS; AUTOMATION AND SECURITY SOLUTIONS; BUSINESS SERVICES ACROSS CANADA; AND CUSTOMER CARE AND BUSINESS SERVICES (CCBS) SOLUTIONS OFFERED INTERNATIONALLY Competition overview • Cablecompetitorsforinternet,telephoneandentertainmentservices,suchasShawCommunications(inB.C.andAlberta)andCogecoCableandVideotron(inEasternQuebec). • Substitutionofwirelessservices,includingourownwirelessofferings,forresidentiallocalandlongdistanceservices.Thepercentageofhouseholdswithwireless-onlytelephoneservices(amongallproviders,includingTELUS)isestimatedtobe52%inB.C.andAlberta,and20%inEasternQuebecin2019,comparedto48%and19%,respectively,in2018. • OurnationaltelecommunicationscompetitorsRogersCommunicationsInc.andBCEInc.alsooffertelecommunicationsservicesforbusinessand enterprisecustomers,asdovarioussuppliersthatareincreasinglysellingdirectlytocustomers. • Variousothersmall,non-traditionalcompaniesofferingOTTbusinesssolutions,includingSD-WANandUCaaSsolutions.Thesecompetitorsaremore prevalentinthesmallandmedium-sizedbusinesssegments. • VariousothersofferingVoIP-basedlocalandlongdistance,aswellasinternetanddataservices,orresellingthoseservices. • OTTanddirect-to-consumervoiceand/orentertainmentservices,suchasSkype,Netflix,AmazonPrimeVideo,Disney+,CBSAllAccessandYouTube. • Satellite-basedentertainmentandinternetservicesofferedbyBellCanada,ShawCommunicationsandXplornet. • CompetitorsforourCCBSbusinessincludecustomizedmanagedoutsourcingsolutionscompetitors,suchassystemintegratorsCGIGroupInc.,IBMandtheEDSdivisionofHPEnterpriseServices.CompetitorsforcontactcentreandITdigitalservicesincludecompaniessuchasConvergys,Teleperformance,Sykes,Atento,GenpactandSitel. • CompetitorsforTELUSHealthincludeprovidersofEMRandpharmacymanagementproducts,suchasOmnimed,Familiprix,Medfar,Fillware,ARIandLogipharm.Competitorsalsoincludesystemsintegrators;healthserviceproviders,suchasLoblaws,McKessonandtheJeanCoutuGroup,thathavealsobecomeverticallyintegratedandownamixofhealthservicesdelivery,ITsolutionsandrelatedservices;andpotentially,globalproviders,suchasEPICandCerner,thatcouldachieveexpandedCanadianfootprints.CompetitorsforTELUSHealth’scorporateandpreventativehealthserviceofferingsincludeMedcan,ClevelandClinic,DialogueandWellpoint. • Competitorsforhomeandbusinesssecurityrangefromlocaltonationalcompanies,suchasBCEInc.,RogersCommunicationsInc.,Chubb-Edwards,StanleySecurity,FluentHomeandBrinksHomeSecurity.

MD& A: CAPABILITIES TELUS2019 ANNUAL REPORT • 61 RESOURCES Our brands and distribution channels • TELUS–Anationalcommunicationsandinformationtechnologycompanyservingcustomersacrosswireless,data,IP,voice,television,entertainment, videoandsecurity,drivenbyasocialpurposetoconnectallCanadiansforgood. • KoodoMobile®–Anationalproviderofpostpaidandprepaidwirelessvoiceanddataserviceswithabroaddistributionnetwork,includingTELUS-owned stores,dealersandthird-partyelectronicsretailers. • PublicMobile–Aprepaidwirelessserviceproviderwithweb-basedandphysicaldistribution,providingcustomerswithaSIM-onlyservice. • OptikTV,launchedinmid-2010.PikTV,launchedinmid-2017. • TELUSPureFibre,ournext-generationfibre-opticnetwork. • TELUSInternational–Acustomerexperienceproviderthatdesigns,buildsanddeliversdigitalsolutionsforglobalanddisruptivebrands. • TELUSHealth(enterprise),anationalproviderofelectronicmedicalandhealthrecords,benefitsmanagement,pharmacymanagementandpreventive healthcareservices,furtherexpandedthroughacquisitionsincludingMedisysHealthGroupInc.(Medisys). • TELUSHealth(consumer)hasgrowntoofferpersonalhomehealthmonitoring(e.g.LivingWellCompanion)andbettersupportforruralandindigenous communitiesthroughBabylonbyTELUSHealthandHealthforGoodmobilehealthclinics. • TELUSSmartHomeSecurityandTELUSSecureBusiness–Full-servicesecurityofferingsforresidentialandbusinesscustomers;furtherexpanded withthe2019acquisitionofADTCanada,currentlyoperatingasADTbyTELUS. • TELUSVentures–Acorporateventurecapitalfundthathasinvestedinmorethan70market-transformingcompaniessince2001. • Oursalesandsupportdistributionchannels: • WirelessservicesaresupportedthroughabroadnetworkofTELUS-ownedandbrandedstores,includingour50%ownershipofthekioskchannelWOW!Mobile,andanextensivedistributionnetworkofexclusivedealersandlargethird-partynationalretailpartners(e.g.BestBuy,WalmartandLondonDrugs),aswellasonlineself-serveapplications,intuitivevirtual-assistantchatbots,massmarketingcampaignsandcustomercaretelephoneagents. • WirelineresidentialservicesaresupportedthroughTELUS-ownedandbrandedstores,customercaretelephoneagents,digitalhometechnicians andpartnersandonlineandTV-basedself-serveapplications. • Throughtelus.com,wesellwireless,wireline,SmartHomeSecurity,healthandbusinessproductsandservices.Wealsoprovideonlineaccount managementtools(e.g.MyTELUS),enablingwirelessandwirelinecustomerstomanagetheiraccountsthroughourwebsiteormobileapplications. • TELUSHealthprovidessomeofitsconsumerservices–personalhealthrecordsandhomehealthmonitoring(e.g.BabylonbyTELUSHealth andLivingWellCompanion)–inpartnershipwithprovincialgovernments. • Businessservices,includinghealthcare,acrosswirelessandwirelinearesupportedthroughcertaindedicatedstoresforbusiness,TELUSsales representatives,productspecialists,independentdealersandonlineself-serveapplicationsforsmallandmedium-sizedbusinesses. • CCBSsolutionsanddigitalbusinessservicesaresupportedthroughsalesrepresentativesandclientrelationshipmanagementteams. • Dedicateddirect-to-consumerchannelwithapproximately500fieldsalesagents. Our technology, systems and properties • Weareatechnology-enabledcompanywithamultitudeofITsystemsandprocesses.Wearefocusedondrivinginnovationandmakinggenerational investmentstodeliverstate-of-the-artbroadbandsolutionsinanincreasinglydigitalsociety. • Broadbandconsumerandbusinessnetworks • In2012,welaunchedour4GLTEwirelesstechnologycapableofspeedsofupto110Mbps,andtoday,ourwirelesstechnologycovers99%ofCanada’spopulation.OurLTEtechnologyallowscustomerstotakeadvantageofthenewestmobiledevicesandenjoyaseamlessexperienceacrossmultipledevices.In2015,welaunchedthenewestLTEadvanced(LTE-A)networktechnology,andwehavebeenworkingtoexpandourLTEcapabilitieswiththistechnologysincethen.InApril2016,weenhancedourLTE-Atechnologywiththefirstglobalimplementationoffrequencydivisionduplex(FDD)4x4multiple-input-multiple-output(MIMO)technology.WeimplementedanotherkeyenhancementtoourLTE-AinfrastructureinJune2017byintroducingquad-bandLTE-Acarrieraggregationtechnology–thistechnologycovers93%ofCanada’spopulationandenablestheoreticalpeakspeedsof1.35Gbps.OurLTECAT-M1IoTnetworknowcovers97.9%ofCanada’spopulation.SeeLeveraging our broadband networks to drive TELUS’ growthinSection 3 Corporate prioritiesforadditionalinformation. • In2014,wedeployedacentralizedradioaccesstechnology(C-RAN)inVancouver,andin2016,launchedVoLTEserviceinB.C.andAlbertacommunities.Bothdeploymentswerekeytransformationsinourwirelesscapabilities.Wewerealsothefirstnationaloperatortoprovidehigh-speedinternetserviceoverourLTEinfrastructureforruralcustomersinB.C.,AlbertaandQuebecthroughourSmartHubwirelessinternetsolution.Today,weservenearly60,000householdsinruralCanadathatdonothavethesamelevelofaccesstobroadbandservicethaturbanCanadianshave,continuingtomakeprogresstowardourobjectiveofprovidingbroadbandinternetaccesstoallCanadians. • Wehavemadesignificantinvestmentsinheterogeneousnetwork(HetNet)technology,oneofthekeybuildingblocksfor5G.HetNetcombinesmultipletypesofcells,suchasoutdoormacrocellsandmicrocells,aswellasindoorpicocells,toenhancecoverageandcapacityincrowdedurbanareasandinsidebuildings.Bytakingcontinuousstridestoevolveoursmall-celltechnologyconcurrentwiththeevolutionofnetworktechnologiestoLTEApro(i.e.4.5G),in2017,webecamethefirstoperatorinCanadatointroducelicensedassistedaccess(LAA)smallcellsforbothoutdoorandindoorenvironments,capableofspeedsofupto970Mbps.In2019,wecontinuedadvancingLAAtechnologywithspeedsofupto1.2Gbps. • In2018,webecamethefirstoperatorgloballytointroduceLTEFDDMassiveMIMO32TRxtechnologyontheB7bandaspartoftheLTE-Apro technologyevolution.Thistechnologywillfurtherenhancethecapacityofourwirelessinfrastructureandenableastrongercustomerexperience. • In2019,weprogressedthevirtualizationofourcorenetworkinfrastructurewiththevoicecore,providingasteppingstoneinto5Gservice readiness.Thenetworkvirtualizationimprovesournetworkscalability,resiliencyandcostefficiency.

62 • TELUS2019 ANNUAL REPORT RESOURCES Our technology, systems and properties (continued) • Ourinvestmentstodeployourgigabit-enabledTELUSPureFibretechnologyhavebroughtfibre-opticconnectivityfurtherintoourinfrastructureanddirectlytohomesandbusinesses.Attheendof2019,2.22millionhomesandbusinessesincommunitiesacrossB.C.,AlbertaandQuebechadaccesstoultra-fast,symmetrical150/150and750/750internetdownloadanduploadspeedswithTELUSPureFibre.Recognizingtheneedforhighlyreliable,high-capacityconnectivitywithlowlatencytosupportemergingservicessuchasvirtualizednetworksandIoTapplications,wehavealsobegunrollingoutanext-generationnationwideopticalbackbonenetwork. • WestartedthenextevolutionofourwirelineIPandopticalcore/edgetechnology,collapsedmetroarchitecture.Thisarchitectureenables significantper-portcostimprovementtosupportnetworkgrowthandevolution. • Wecontinuetoroll-outourthird-generationnationaldensewavelengthdivisionmultiplexing(DWDM)transportbackbone(packettransport3.0)CDC(colourless,directionlessandcontentionless)networkoverlaythatwillconnectfromB.C.toQuebecandintotheU.S.Thisarchitecturewillallownetworkgrowthwithouttheneedforcostlyre-generation,enableoptimalopticalreroutingduringafibrecutandimprovenetworkgrowthcosts. • Weareevolvingourworld-classemergencyservicestoharnessthepowerofIPthroughourimplementationofNext-gen9-1-1. • AsCanada’sprimaryprovider,wedeliveredonourregulatorycommitmenttoupgradeourMessageRelayandIPRelayservice,enhancing customerexperienceforthedeafandhardofhearingcommunitywithimprovedsmartphone-friendlyoperatorservices. • WehavecontinuedtoinnovateforourcustomersthroughourOptikTVandPikTVplatforms.In2018,weintroducedHDR(highdynamicrange)colourcapabilitytoour4KOptikTVcustomers,makingusthefirstoperatorinCanadatodeliver4KHDRvideoacrossliveTV,video-on-demandandNetflixservices.WealsolaunchedanAppleTVapplicationforPikTVandgavecustomerstheoptiontopurchasePikTVusingonlyawebbrowser.Byinvestinginthecloudificationofvideoinfrastructureandinnovativeapplications,wewillcontinuetoadvanceourpriorityofenabling“anytime,everywhere”accesstocontentandentertainment,therebycontinuingtodeliveranexceptionalcustomerexperience. • In2018,wealsolaunchedTELUSBoostWi-Fi,anetworkofboostersthatextendsthereachofstrongandreliablein-homeWi-Fisignals. • Realestate–Ournetworkfacilitiesareconstructedunderoralongstreetsandhighways,pursuanttorights-of-waygrantedbytheownersofland, includingmunicipalitiesandtheCrown,oronfreeholdlandweown. • Ourrealestateproperties(ownedorleased)alsoincludeadministrativeofficespaces,workcentresandspacefortelecommunicationsequipment.Somebuildingsareconstructedonleaseholdlandandthemajorityofwirelessradioantennaeareontowersthataresituatedonlandsorareonbuildingsheldunderleasesorlicenceswithvaryingterms.Wealsoparticipateintworealestatejointventures.(SeeSection 7.11.) • Intangibleassets–OurintangibleassetsincludewirelessspectrumlicencesfromInnovation,ScienceandEconomicDevelopmentCanada(ISED), whichareessentialtoprovidingwirelessservices.Wehaveassetsaveraging172MHznationally.Wehavedeployed700MHz,2300MHz,2500MHz, 1900MHz,AWS-1,AWS-3and850MHzspectrumtoevolveourwirelessinfrastructure,andwearelookingtotheintroductionofnewbandsthatwillenabletherealizationof5Gtechnology,includingthe600MHzspectrumacquiredinthe2019auction.WeintendtocontinueacquiringspectrumwithintherulessetoutbyISEDtomeetourfuturecapacityrequirements. • Intellectualproperty,whichweownorwhichwehavebeengrantedtherighttouse,isanessentialassetforus.Intellectualpropertyenablesustobeknownandrecognizedinthemarketplacethroughourbrandstyle,tradedress,domainnamesandtrademarks.Itprotectsourknow-howandsoftware,systems,processesandmethodofdoingbusinessthroughcopyrights,patentsandinformationtreatedasconfidential.Italsohelpsustoimproveourcompetitivenessbyfosteringaninnovativeworkenvironment.Eachformofintellectualpropertyisimportanttooursuccess.Forinstance,theTELUSbrandplaysakeyroleinproductpositioningandourCompany’sreputation.Weaimtomaximizethevalueofourintangibleassetsintheareasofinnovationandinventionbyensuringthattheyareappropriatelyused,protectedandvalued.Toprotectourintellectualpropertyassets,werelyonacombinationoflegalprotectionsaffordedundercopyright,trademark,patentandotherintellectualpropertylaws,aswellascontractualprovisionsunderlicensingarrangements.FurtherinformationonrecognizedtangibleandintangibleassetscanbefoundinSection 8.1 Critical accounting estimates and judgments. • Ourbroadcastingdistributionlicencesenableustoprovideentertainmentservices.SeeBroadcasting-related issuesinSection 9.4,whichdiscusses developmentsrelatingtotheselicences. • Futuretechnologies–Inadditiontoevolvingourexistingwirelessandwirelineinfrastructure,weareinvestinginthetechnologiesofthefuturethatwillserveasthefoundationtoprovidenext-generationservicestoCanadians.Bywayofexample,wearebuildingthenextgenerationof5Gwirelesstechnologiesandcapitalizingonthepromiseofconvergentwirelessandwirelinenetworktechnologies.Asmobileoperatorsgloballyworktodevelop 5G,wehaveachievedgroundbreakingwirelessspeedsofnearly30Gbps–200timesfasterthantoday’sLTEstandard–inourLivingLab.In2017,webrokenewgroundbypiloting5Gwireless-to-the-premises(WTTx)technologyandachieveddownloadspeedsof2Gbpsinalive-environmenttestusing3.5GHzspectrum. • In2018,weachievedthefirst3GPP-based5Gnon-standalone(NSA)technologyfieldtrialinHetNetarchitectureinCanada,whichincludedbothoutdoormacrocellson3.5GHzspectrumand28GHzspectrummicrocells.Wealsodemonstratedanumberof5Gexperienceusecasesincludinglivevideodistribution,facialidentification,andhomesecurityduringtheseventhnext-generationmobilenetworks(NGMN)IndustryConference&ExhibitionheldinVancouverinNovember2018.Thesearekeymilestonesinourongoingefforttounleashthebenefitsof5GforCanadians. • WecontinuetoinvestinenablingsystemssuchasourJasperconnecteddeviceplatform(CDP)andourdedicatedmachine-to-machinevirtualevolvedpacketcore(M2MvEPC)tosupportIoTapplications,wheretheeaseofonboardingpartnersiscrucialforemergingservicessuchasconnectedvehicles,fleetmanagementandmore. • In2017,welaunchedourNetworkasaService(NaaS)solution,thefirstCanadiannetworkfunctionvirtualization(NFV)infrastructurethatwillpowerthevirtualizednetworksofthefutureandenableCanadianbusinessestobetterservetheircustomerswithimprovedtotalcostofownership.Lookingahead,wewillcontinueonourjourneyofnetworkvirtualizationinsupportofbringingservicestocustomersfaster. • In2018,wedeployedourLTE-machine(LTE-M)technologyacrossCanada.LTE-Misalow-powerwideareanetwork(LPWAN)technology,whichisidealforIoTbecauseitsupportslargenumbersofdevicesthattransmitinfrequentshortburstsofdata,likeIoTsensors.ItwillenableaplethoraofIoTapplicationsthroughlong-rangeconnectivity,extendedbatterylifeandcarrier-gradesecurityandqualityofservice.

MD& A: CAPABILITIES 4.3 Liquidity and capital resources Capital structure financial policies Ourobjectivewhenmanagingcapitalistomaintainaflexiblecapitalstruc-turethatoptimizesthecostandavailabilityofcapitalatacceptablerisk. Inthemanagementofcapitalandinitsdefinition,weincludeCommonShareequity(excludingAccumulatedothercomprehensiveincome), Long-termdebt(includinglong-termcreditfacilities,commercialpaperbackstoppedbylong-termcreditfacilitiesandanyhedgingassetsorliabilitiesassociatedwithLong-termdebtitems,netofamountsrecog-nizedinAccumulatedothercomprehensiveincome),Cashandtemporaryinvestments,andshort-termborrowingsarisingfromsecuritized tradereceivables. Wemanageourcapitalstructureandmakeadjustmentstoitinlightofchangesineconomicconditionsandtheriskcharacteristicsofourbusiness.Inordertomaintainoradjustourcapitalstructure,wemayadjusttheamountofdividendspaidtoholdersofCommonShares,purchaseCommonSharesforcancellationpursuanttonormalcourseissuerbid(NCIB)programs,issuenewshares,issuenewdebt,issuenewdebttoreplaceexistingdebtwithdifferentcharacteristics,and/orincreaseordecreasetheamountoftradereceivablessoldtoan arm’s-lengthsecuritizationtrust. Wemonitorcapitalutilizinganumberofmeasures,includingournetdebttoEBITDA–excludingrestructuringandothercostsratio,coverageratiosanddividendpayoutratios.(SeedefinitionsinSection 11.1 Non-GAAP and other financial measures.) Financing and capital structure management plans TELUS2019 ANNUAL REPORT • 63 REPORT ON FINANCING AND CAPITAL STRUCTURE MANAGEMENT PLANS Pay dividends to the holders of Common Shares under our multi-year dividend growth program • InMay2019,weannouncedourintentiontotargetongoingsemi-annualdividendincreases,withtheannualincreaseintherangeof7to10%from 2020throughtotheendof2022,therebyextendingthepolicyfirstannouncedinMay2011.Notwithstandingthistarget,dividenddecisionswillcontinuetobesubjecttoourBoard’sassessmentandthedeterminationofourfinancialpositionandoutlookonaquarterlybasis.(SeeSection 7.5 Liquidity and capital resource measures.)Therecanbenoassurancethatwewillmaintainadividendgrowthprogramorthatitwillbeunchangedthrough2022.(SeeCaution regarding forward-looking statements – Ability to sustain our dividend growth program through 2022andSection 10.13 Financing, debt and dividends.) • Dividendsdeclaredin2019totalled$2.2525pershare(pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3),anincreaseof$0.1525pershareor7.3%(pre-sharesplit)comparedtothedividendsdeclaredin2018.OnFebruary12,2020,theBoarddeclaredafirstquarterdividendof$0.5825pershare(pre-sharesplit),payableonApril1,2020,toshareholdersofrecordatthecloseofbusinessonMarch11,2020.Thefirstquarterdividendfor2020reflectsacumulativeincreaseof$0.0375pershare(pre-sharesplit)or6.9%fromthe$0.5450pershare(pre-sharesplit)dividenddeclaredoneyearearlier. • Ourdividendreinvestmentandsharepurchase(DRISP)plantrusteeacquiredsharesfromTreasuryfortheDRISPplan,ratherthanacquiringCommonSharesinthestockmarket.Wemay,atourdiscretion,offerCommonSharesatadiscountofupto5%fromthemarketpriceundertheplan.EffectivewiththedividendspaidonOctober1,2019,weofferedCommonSharesfromTreasuryatadiscountof2%.During2019,ourDRISPplantrusteeacquiredfromTreasury3.9milliondividendreinvestmentCommonSharesfor$183million.ForthedividendspaidonJanuary2,2020,theDRISPparticipationrate,calculatedastheDRISPinvestmentof$131million(includingtheemployeesharepurchaseplan)asapercentageofgrossdividends,wasapproximately37%.TheDRISPhasbeenfiledwiththeU.S.SecuritiesandExchangeCommissionasanexhibittoourregistrationstatementonFormF-3DregisteringtheCommonSharesissuablethereunder(CommissionFileNo.333-232967). RESOURCES Our technology, systems and properties (continued) • ThroughTELUSHealth’sservices–suchaspharmacymanagement,electronicmedicalrecords(EMRs)(includingmobileEMRs),electronichealthrecords,personalhealthrecords,clinicalinformationsystems,remotepatientmonitoring,virtualcareandonlineclaimssettlementmanagementsoftwaresolutions,includingtheonlinerenewalofprescriptions,e-prescribingservicesandMedDialog–TELUSHealthfacilitatestheintegrationofelectronichealthrecordsfromthehometothedoctor’sofficetothehospital,makingcriticalhealthinformationavailabletohealthcareprovidersoverourwirelessandwirelinebroadbandnetwork. • ThroughitsMedisysclinics,TELUSHealthalsoprovidesexecutivebenefits,occupationalhealth,employeehealthandwellnessservices,andindividualpreventivehealthservices.Withitspreventivehealthassessments,24/7virtualcaresupportandhealthspecialists,Medisysprovidesproactivehealthservicestoindividualsandtheirfamilies. • ThroughTELUSInternational,wecontinuetoprovideawidearrayofcustomerexperienceanddigitaltransformationproductsandservices, asdescribedinSection 4.1.TheseservicesareprovidedfromfacilitieslocatedinNorthandCentralAmerica,EuropeandAsia.

64 • TELUS2019 ANNUAL REPORT REPORT ON FINANCING AND CAPITAL STRUCTURE MANAGEMENT PLANS Purchase Common Shares • InDecember2019,wereceivedapprovalfromtheTorontoStockExchange(TSX)foranew2020NCIBtopurchaseandcancelupto8millionCommonSharesforanaggregatepurchasepriceofupto$250millionovera12-monthperiod,fromJanuary2,2020toJanuary1,2021,throughthefacilitiesoftheTSX,theNewYorkStockExchangeandalternativetradingplatforms,orasotherwisepermittedbyapplicablesecuritieslaws.TELUSwillpurchaseCommonSharesonlywhenandifweconsideritopportunistic,subjecttoanypurchasesthatmaybemadeunderanautomaticsharepurchaseplan(ASPP).AsofFebruary13,2020,wehavenotcompletedanytransactionspursuanttoour2020NCIB. • Our2019NCIB,forwhichwehadreceivedapprovaltopurchaseupto8millionCommonSharesforanaggregatepurchasepriceofupto$250million, concludedonJanuary1,2020,andwedidnotpurchaseanysharespursuanttothe2019NCIB. • WemayalsoenterintoanASPPwithabrokerforthepurposeofpermittingustopurchaseourCommonSharesunderourNCIBattimeswhenwewouldnotbepermittedtotradeinourshares,includingregularlyscheduledquarterlyblackoutperiods.Suchpurchaseswillbedeterminedbythebrokerinitssolediscretionbasedonparametersthatwehaveestablishedpriortoanyblackoutperiod,inaccordancewithTSXrulesandapplicablesecuritieslaws.TheASPPhasbeenapprovedbytheTSXandmaybeimplementedfromtimetotimeinthefuture. Use proceeds from securitized trade receivables (Short-term borrowings), bank facilities and commercial paper as needed, to supplement free cash flow and meet other cash requirements • Ourissuedandoutstandingcommercialpaperwas$1,015millionatDecember31,2019,allofwhichwasdenominatedinU.S.dollars(US$781million), comparedto$774million(US$569million)atDecember31,2018. • OurnetdrawsontheTELUSInternational(Cda)Inc.creditfacilitywereUS$336millionatDecember31,2019,comparedtoUS$313millionatDecember31,2018.Thecreditfacilityisnon-recoursetoTELUSCorporation. • Proceedsfromsecuritizedtradereceivableswere$100millionatDecember31,2019,unchangedfromDecember31,2018. Maintain compliance with financial objectives • Maintain investment grade credit ratings in the range of BBB+ or the equivalent–OnFebruary13,2020,investmentgradecreditratingsfrom thefourratingagenciesthatcoverTELUSwereinthedesiredrange.(SeeSection 7.8 Credit ratings.) • Net debt to EBITDA – excluding restructuring and other costs ratio of 2.20 to 2.70 times–AsmeasuredatDecember31,2019,thisratiowas 3.20times,outsideoftheobjectiverange(whichreflecteda0.20shiftintherangesubsequenttoDecember31,2019toreflectanaccommodationfortheeffectsofimplementingIFRS16),primarilyduetotheacquisitionofspectrumlicences,theapplicationofIFRS16effectiveJanuary1,2019,andbusinessacquisitions.Giventhecashdemandsofthe2019andupcomingspectrumauctions,theassessmentoftheguidelineandreturntotheobjectiverangeremainstobedetermined;however,itisourintenttoreturntoaratiobelow2.70timesinthemediumterm(followingupcomingspectrumauctions),consistentwithourlong-termstrategy.(SeeSection 7.5 Liquidity and capital resource measures.) • Dividend payout ratio of 65 to 75% of net earnings per share for 2019 on a prospective basis–ThedividendpayoutratiowepresentinthisMD&Aisahistoricalmeasureutilizingthelastfourquartersofdividendsdeclaredandearningspershare,andisdisclosedforillustrativepurposesinevaluatingourtargetguideline.AsatDecember31,2019,thehistoricalratioof78%andtheadjustedhistoricalratioof84%exceededtheobjectiverange.Soastobeconsistentwiththewaywemanageourbusiness,wehaverevisedourtargetguideline,effectiveJanuary1,2020,tobecalculatedas60to75%offreecashflowonaprospectivebasis.(SeeSection 7.5 Liquidity and capital resource measures.) • Generally maintain a minimum of $1 billion in unutilized liquidity–AsatDecember31,2019,ourunutilizedliquidityonaconsolidatedbasis wasapproximately$1.8billion.(SeeSection 7.6 Credit facilities.)

MD& A: CAPABILITIES 4.4 Disclosure controls and procedures and changes in internal control over financial reporting Disclosure controls and procedures Disclosurecontrolsandproceduresaredesignedtoprovidereasonableassurancethatallrelevantinformationisgatheredandreportedtoseniormanagement,includingthePresidentandChiefExecutiveOfficer(CEO)andtheExecutiveVice-PresidentandChiefFinancialOfficer(CFO),onatimelybasissothatappropriatedecisionscanbemaderegardingpublicdisclosure. TheCEOandtheCFOhaveassessedtheeffectivenessofourdisclosurecontrolsandproceduresrelatedtothepreparationofthisMD&AandtheDecember31,2019,Consolidatedfinancialstatements.Theyhaveconcludedthatourdisclosurecontrolsandprocedureswereeffective,atareasonableassurancelevel,inensuringthatmaterialinformationrelatingtoTELUSanditsconsolidatedsubsidiarieswouldbemadeknowntothembyotherswithinthoseentities,particularlyduringtheperiodinwhichtheMD&AandtheConsolidatedfinancial statementswerebeingprepared. Financing and capital structure management plans for 2020 Attheendof2019,ourseniorunsecureddebt(excludingunamortizeddiscount)was$16.2billion.Forourlong-termdebt,theweightedaveragetermtomaturitywasapproximately12.8years(excludingcommercialpaper,therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt).Ourweightedaverageinterestrateonlong-termdebt(excludingcommercialpaper,therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt)was3.94%atDecember31, 2019,downfrom4.18%oneyearago.AsidefromShort-termborrowingsof$100million,commercialpaperof$1,015million(US$781million),theutilizedrevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacilityof$297million(US$229million)andleaseliabilitiesof $1,661million,allofourdebtwasonafixed-ratebasis. During2020wemayissuenotestofundspectrumpurchases,toacceleratefuturedebtbyprepayingcertainnotes,torefinancematuringdebtortouseforgeneralcorporatepurposes.Anticipatedfreecashflowandsourcesofcapitalareexpectedtobemorethansufficienttomeetrequirements.Fortherelatedriskdiscussion,seeSection 10.13 Financing, debt and dividends. Internal control over financial reporting InternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsinaccordancewithIFRS-IASBandtherequirementsoftheSecuritiesandExchangeCommissionintheUnitedStates,asapplicable.TELUS’CEOandCFOhaveassessedtheeffectivenessofourinternalcontroloverfinancialreportingasofDecember31,2019,inaccordancewiththecriteriaestablishedinInternal Control – Integrated Framework (2013),issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).Basedonthisassessment,TELUS’CEOandCFOhaveconcludedthatourinternalcontroloverfinancialreportingiseffectiveasofDecember31, 2019,andhavecertifiedTELUS’annualfilingswithinourannualreport onForm40-F,asrequiredbytheUnitedStates’Sarbanes-Oxley Act of 2002,andTELUS’AnnualInformationForm,asrequiredbyNationalInstrument52-109Certification of Disclosure in Issuers’ Annual and Interim Filings. DeloitteLLP,ourauditor,hasauditedourinternalcontroloverfinancial reportingasofDecember31,2019. Changes in internal control over financial reporting Therewerenochangesininternalcontroloverfinancialreportingthathavemateriallyaffected,orarereasonablylikelytomateriallyaffect, ourinternalcontroloverfinancialreportingin2019. TELUS2019 ANNUAL REPORT • 65 SENIOR UNSECURED DEBT PRINCIPAL MATURITIES AS AT DECEMBER 31, 2019 ($ millions) 2050400 2049649 20481,449 2046500 2045 2044900 20431,000 2030600 20291,000 2028 20271,428 20261,400 2025 20241,100 2023 20221,249 2021 2020015 ¢ Other senior unsecured debt ¢ Commercial paper 600 1,000 500 1,075 1, 400

Thissectioncontainsforward-lookingstatements,includingthosewithrespecttomobilephoneaveragebillingpersubscriberpermonth(ABPU)andmobilephoneaveragerevenuepersubscriberpermonth(ARPU)growth,wirelesstrendsregardingloadingandretentionspending,equipmentmargins,internetsubscribergrowthandvariousfuturetrends.Therecanbenoassurancethatwehaveaccuratelyidentifiedthesetrendsbasedonpastresults orthatthesetrendswillcontinue.SeeCaution regarding forward-looking statementsatthebeginningofthisMD&A. 5.1 General Asignificantjudgmentwemakeisinrespectofdistinguishingbetweenourwirelessandwirelineoperationsandcashflows(andthisextendstoallocationsofbothdirectandindirectexpensesandcapitalexpenditures).Theclarityofthisdistinctionhasbeenincreasinglyaffectedbytheconvergenceandintegrationofourwirelessandwirelinetelecommuni-cationsinfrastructuretechnologyandoperations.Recently,ourjudgmentwasthatourwirelessandwirelinetelecommunicationsinfrastructuretechnologyandoperationshadnotexperiencedsufficientconvergencetoobjectivelymaketheirrespectiveoperationsandcashflowspracticallyindistinguishable.Thecontinuedbuild-outofourtechnology-agnosticfibre-opticinfrastructure,incombinationwithconvergededgenetworktechnology,hassignificantlyaffectedthisjudgment,ashavethecommer-cializationoffixed-wirelesstelecommunicationssolutionsforcustomersandtheconsolidationofournon-customerfacingoperations.Asaresult,ithasbecomeincreasinglydifficultandimpracticaltoobjectivelyandclearlydistinguishbetweenourwirelessandwirelineoperationsandcashflows,andtheassetsfromwhichthosecashflowsarise.Ourjudgmentastowhethertheseoperationscancontinuetobejudgedtobeindividualcomponentsofthebusinessanddiscreteoperatingsegmentshaschanged;effectiveJanuary1,2020,weembarkeduponmodifyingourinternalandexternalreportingprocesses,systemsandinternalcontrolstoaccommodatethetechnologyconvergence-drivencessationofthehistoricaldistinctionbetweenourwirelessandwirelineoperationsatthe levelofregularlyreporteddiscreteperformancemeasuresthatareprovidedtoourChiefExecutiveOfficer(CEO)(ourchiefoperatingdecision-maker).Weanticipatetransitioningtoanewsegmentreportingstructureduring 2020butdonotanticipateasubstantivechangetoourproductsandservicesrevenueandrelatedperformanceindicatorreportingfromsuchtransition;wewillcontinuetoreportwirelessandwirelineoperationsuntilsuchtransitionissubstantiallycompleted.Aswedonotcurrentlyaggre-gateoperatingsegments,ourreportablesegmentsasatDecember31, 2019,arealsowirelessandwireline.SegmentedinformationinNote 5of theConsolidatedfinancialstatementsisregularlyreportedtoourCEO. WeadoptedIFRS16,Leases,onJanuary1,2019,withretrospectiveapplication,withthecumulativeeffectoftheinitialapplicationofthenewstandardrecognizedatthedateofinitialapplication,January1,2019.Thismethodofapplicationdoesnotresultintheretrospectiveadjustmentofamountsreportedforperiodspriortofiscal2019.Themostsignificanteffectofthenewstandardisthelessee’srecognitionoftheinitialpresentvalueofunavoidablefutureleasepaymentsasright-of-useleaseassetsandleaseliabilities,includingthoseformostleasesthatwouldhaveprevi-ouslybeenaccountedforasoperatingleases.Thisresultsindepreciationofright-of-useleaseassetsandfinancingcostsarisingfromleaseliabilities,ratherthanaspartofGoodsandservicespurchased.TheadoptionofthenewstandardhasresultedinincreasestoProperty,plantandequip-mentofapproximately$1.0billionandlong-termdebtofapproximately $1.4billionasatJanuary1,2019. Selected annual information YearsendedDecember31($inmillions,exceptpershareamounts) 2019 2018 2017 Operatingrevenues Netincome NetincomeattributabletoCommonShares NetincomeperCommonShare1 Basicearningspershare Dilutedearningspershare CashdividendsdeclaredperCommonShare1 14,658 1,776 1,746 14,368 1,624 1,600 13,408 1,578 1,559 2.90 2.90 2.2525 2.68 2.68 2.1000 2.63 2.63 1.9700 AtDecember31($millions) 2019 2018 2017 Totalassets Currentmaturitiesoflong-termdebt Non-currentfinancialliabilities2 Provisions Long-termdebt Otherlong-termfinancialliabilities 37,975 1,332 33,057 836 31,053 1,404 43 17,142 113 395 13,265 162 152 12,256 224 Totalnon-currentliabilities 17,298 13,822 12,632 Deferredincometaxes Commonequity 3,204 10,548 3,148 10,259 2,941 9,416 1 Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. 2 Inourspecificcurrentinstance,financialliabilitiesdonotincludeliabilitiesthatareexcludedbydefinition(e.g.employeebenefitsandshare-basedcompensationliabilities)orliabilities thatdonotinvolveafutureoutlayofeconomicresources(e.g.deferredrecognitionofcustomeractivationandconnectionfees;deferredgainsonsale-leasebackofbuildings). 66 • TELUS2019 ANNUAL REPORT 5 DISCUSSION OF OPERATIONS

MD& A: DISCUSSION OF OPER ATIONS Operating revenues:Combinedwirelessrevenueandwirelinedatarevenuerepresentedapproximately 91%ofconsolidatedrevenuesin2019,approximately90%in2018andapproximately89%in2017. Total assets:GrowthinTotalassetsincludesincreasesinProperty,plantandequipmentandIntangibleassets,whichincreasedbyacombined$4,019millionin2019and$999millionin2018.Theseincreasesresultedprimarilyfromourongoinginvestmentsinbroadbandinfrastructure,connectingadditionalhomesandbusinessesdirectlytoourfibre-optictechnology,acquisitionofspectrumlicencesandbusinessacquisitions.SeeSection 7.3 Cash used by investing activities. ForchangesinLong-term debt,seeSection 6 Changes in financial positionandSection 7.4 Cash provided (used) by financing activities. 5.2 Summary of consolidated quarterly results, trends and fourth quarter recap Summary of quarterly results ($millions,exceptpershareamounts) 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2018Q4 2018Q3 2018Q2 2018Q1 Operatingrevenues1 3,858 3,697 3,597 3,506 3,764 3,774 3,453 3,377 Operatingexpenses Goodsandservicespurchased2,3 Employeebenefitsexpense2 Depreciationandamortization 1,681 809 678 1,502 761 649 1,466 758 633 1,421 706 617 1,784 745 586 1,685 740 572 1,491 711 559 1,408 700 550 Totaloperatingexpenses 3,115 2,997 2,761 2,658 3,168 2,912 2,857 2,744 Operatingincome Financingcostsbeforelong-term debtprepaymentpremium Long-termdebtprepaymentpremium 690 785 740 762 649 777 692 719 175 – 173 28 189 – 168 – 159 – 162 34 150 – 156 – Incomebeforeincometaxes Incometaxes 515 136 584 144 551 31 594 157 490 122 581 134 542 145 563 151 Netincome 368 447 397 412 379 440 520 437 Netincomeattributable toCommonShares 368 433 517 428 357 443 390 410 NetincomeperCommonShare4: Basicearningspershare(EPS) AdjustedbasicEPS5 DilutedEPS DividendsdeclaredperCommonShare4 0.61 0.67 0.61 0.5825 0.72 0.76 0.72 0.5625 0.86 0.69 0.86 0.5625 0.71 0.75 0.71 0.5450 0.60 0.69 0.60 0.5450 0.74 0.74 0.74 0.5250 0.66 0.70 0.66 0.5250 0.69 0.73 0.69 0.5050 Additionalinformation:EBITDA5 Restructuringandothercosts3,5 Non-recurring(lossesandequitylosses)gainsandequityincomerelatedtorealestatejointventures AdjustedEBITDA5 Cashprovidedbyoperatingactivities Freecashflow5 1,368 40 1,434 29 1,373 29 1,379 36 1,235 75 1,349 173 1,251 35 1,269 34 (5) 1,413 829 135 – 1,463 1,148 320 – 1,402 1,160 324 – 1,415 790 153 – 1,310 948 132 171 1,351 1,066 303 – 1,286 1,206 329 – 1,303 838 443 1 2 3 4 5 Inthethirdquarterof2018,werecordedequityincomerelatedtorealestatejointventuresof$171millionarisingfromthesaleofTELUSGarden. GoodsandservicespurchasedandEmployeebenefitsexpenseamountsincluderestructuringandothercosts. Inthethirdquarterof2018,werecordedadonationtotheTELUSFriendlyFutureFoundationof$118millionaspartofothercosts. Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. SeeSection 11.1 Non-GAAP and other financial measures. TELUS2019 ANNUAL REPORT • 67 2019 REVENUE MIX – 91% WIRELESS AND DATA 9% 36% 55% ¢ Wireless ¢ Wireline data ¢ Wireline voice and other

Trends Thetrendofyear-over-yearincreasesinconsolidatedrevenuereflects:(i)wirelessnetworkrevenuegeneratedfromgrowthinoursubscriberbase;(ii)growthinwirelineservicerevenue;thissegmentincludescustomercareandbusinessservices(CCBS)revenues,internetandthirdwavedataservicesrevenues,healthrevenues,TVrevenues,homeandbusinesssmarttechnology(includingsecurity)revenues,andotheradvancedapplicationofferings;and(iii)ageneralincreaseinequipmentrevenues.Increasedwirelinedataservicesrevenuesalsoincluderevenuesfrombusinessacquisitions,includingourrecentacquisitionofADTSecurityServicesCanada,Inc.(ADTCanada)onNovember5,2019.Therewillbesignificantintegrationandcustomerretentioncoststhroughout2019, 2020andearly2021,thefullexpectedoperationsrateisexpectedafterthattime.Subsequenttoyear-end,weacquiredCompetenceCallCenter(CCC)onJanuary31,2020,whichwillalsoincreasefuturewire-linedataservicesrevenues.IncreasedinternetandTVservicerevenuesarebeinggeneratedbysubscribergrowthandhigherinternetrevenuepercustomer,andtherehasbeenincreasedcustomeradoptionofourhomeandbusinesssmarttechnology(includingsecurity).Foradditionalinformationonwirelessandwirelinerevenueandsubscribertrends, seeSection 5.4 Wireless segmentandSection 5.5 Wireline segment. Inthethirdquarterof2018,Operatingrevenuesincludedequityincomerelatedtorealestatejointventuresof$171millionarisingfromthesaleofTELUSGarden.Additionally,inthethirdquarterof2018,Goodsandservicespurchasedincludedanon-recurring$118milliondonationtotheTELUSFriendlyFutureFoundation.Therehavealsobeen,andwillcontinuetobe,lesssignificantassetdispositions. Thetrendofyear-over-yearincreasesinnetEmployeebenefitsexpensereflectsincreasesinthenumberofemployeesrelatedtobusinessacquisitionsandthosesupportingCCBSrevenuegrowth,theexpansionofourhealthofferingsandgrowthinourothercomple-mentarybusinesses.Thiswaspartlyoffsetbymoderatingsalariesexpenseresultingfromreductionsinthenumberoffull-timeequivalent(FTE)domesticemployees,excludingbusinessacquisitions,relatedtocostefficiencyandeffectivenessprograms.Weexperiencedyear-over-yearincreasesinnetEmployeebenefitsexpensein2019relatedto 2019compensationincreases. Thetrendofyear-over-yearincreasesinDepreciationandamortizationreflectsincreasesduetogrowthincapitalassets,whichissupportingtheexpansionofourbroadbandfootprint,includingourgenerationalinvestmenttoconnecthomesandbusinessestoTELUSPureFibreandenhancedLTEtechnologycoverage,andgrowthinbusinessacquisitions.Theinvestmentsinourfibre-optictechnologyalsosupportoursmall-celltechnologystrategytoimprovecoverageandcapacitywhilepreparingforamoreefficientandtimelyevolutionto5G.DepreciationandamortizationundertheapplicationofIFRS16arehigherthanwouldhavebeenthecasepriortoIFRS16(seeNote 2oftheConsolidatedfinancialstatementsforfurtherinformation.) Thetrendofyear-over-yearincreasesinFinancingcostsreflectsanincreaseinlong-termdebtoutstanding,mainlyassociatedwithourinvestmentsinspectrum,fibreandwirelesstechnology,andourbusinessacquisitions.Financingcostsincludealong-termdebtprepaymentpremiumof$28millioninthethirdquarterof2019and$34millioninthethirdquarterof2018.Moreover,Financingcostsarenetofcapitalizedinterestrelatedtospectrumlicencesacquiredduringthe600MHzwirelessspectrumauction,whichweexpecttodeployintoourexistingnetworkinfutureperiods.FinancingcostsalsoincludesInterestaccretiononprovisions(assetretirementobligationsandwrittenputoptions)andEmployeedefinedbenefitplansnetinterest.Additionally,fortheeightperiodsshown,Financingcostsincludevaryingamountsofforeignexchangegainsorlossesandvaryingamountsofinterestincome.UndertheapplicationofIFRS16,commencingin2019,FinancingcostsarehigherthanwouldhavebeenthecasepriortoIFRS16,drivenbyinterestonleaseliabilities. ThetrendinNetincomereflectstheitemsnotedabove,aswellasnon-cashadjustmentsarisingfromsubstantivelyenactedincometaxchangesandadjustmentsrecognizedinthecurrentperiodsforincometaxesofpriorperiods.Historically,thetrendinbasicEPShasreflectedtrendsinNetincome. Thegeneraltrendofyear-over-yeardecreasesinCashprovidedbyoperatingactivitiesreflectshigheryear-over-yearincometaxespaid,includingahigherfinalincometaxpaymentof$270millioninthefirstquarterof2019forthe2018incometaxyear,andhigherinterestpaymentsarisingfromincreasesindebtoutstandingandyear-over-yearvariationsinfixed-terminterestrates.CashprovidedbyoperatingactivitieswasimpactedbyIFRS16,whichprospectivelyresultsintheprincipalcompon-entofleasepaymentsbeingreflectedasafinancingactivityuseofcash. Thetrendofyear-over-yearincreasesinGoodsandservicespurchased,exceptingtheeffectsoftheapplicationofIFRS16firstevidencedinthefirstquarterof2019,reflectshigherwirelessequipmentexpensesassociatedwithhigher-valuesmartphonesinthesalesmixandageneralincreaseinnewcontracts;increasesinexternallabour,administrativeandotherexpensestosupportgrowthinourCCBSbusiness,oursubscriberbaseandbusinessacquisitions;andincreasedwirelineTV costsofsalesassociatedwithagrowingsubscriberbase. 68 • TELUS2019 ANNUAL REPORT ADJUSTED EBITDA ($ millions) Q4 19 1,413 Q3 19 1,463 Q2 19 402 Q1 19 ,415 Q4 18310 Q3 181,351 Q2 18286 Q1 181,303 Adjusted EBITDA is a non-GAAP measure. 1, 1 1, 1, OPERATING REVENUES ($ millions) Q4 19 3,858 Q3 19 3,697 Q2 19 3,597 Q1 19 3,506 Q4 183,764 Q3 183,774 Q2 183 Q1 183,377 3,45

MD& A: DISCUSSION OF OPER ATIONS Thegeneraltrendofyear-over-yearincreasesinfreecashflowreflectsthefactorsaffectingCashprovidedbyoperatingactivities,exceptthattheimplementationofIFRS16(andtheimplementationofIFRS15onJanuary1,2018)doesnotaffectthedeterminationoffreecashflow.Forfurtherdiscussiononthesetrends,seeSection 5.4 Wireless segment andSection 5.5 Wireline segment. ofdomesticFTEs,excludingbusinessacquisitions.ThisEmployeebenefitsexpenseincreasewaspartlyoffsetbyhighercapitalizedlabourcostsandlowerlabour-relatedrestructuringandothercosts. Depreciationinthefourthquarterof2019was$500million,anincreaseof$72million,primarilyduetotheapplicationofIFRS16.Underthenewaccountingstandard,werecognizethedeprecia-tionofright-of-useleaseassets,largelyrelatedtoourrealestateleases(includingcellsiteleasesandretailstoreleases),andwedidnotretrospectivelyadjustamountsreportedforperiodspriortofiscal2019.Asaresult,theimpactofIFRS16onDepreciationwasanincreaseof$51millioninthefourthquarterof2019.TotalDepreciationalsoincreasedduetogrowthincapitalassetsoverthelast12months,includingourexpandedfibrefootprintandbusinessacquisitions. Amortizationofintangibleassetsinthefourthquarterof2019was $178million,anincreaseof$20million,reflectinghigherexpendi-turesassociatedwiththeintangibleassetbaseoverthelast 12months,includingthosearisingfrombusinessacquisitions. • Fourth quarter recap Resultsforthefourthquarterof2019(three-monthperiodendedDecember31,2019)arediscussedinourFebruary13,2020,newsreleaseandarecomparedwithresultsfromthefourthquarterof2018(three-monthperiodendedDecember31,2018). • Consolidatedoperatingrevenuesinthefourthquarterof2019were $3,858million,anincreaseof$94million. • Servicerevenuesinthefourthquarterof2019were$3,156million,anincreaseof$142million,reflectinggrowthinwirelessnetworkrevenueandwirelinedataservicesrevenues,partlyoffsetbythecontinuingdeclinesinwirelinelegacyvoiceandlegacydataservicerevenues.Thewirelessnetworkrevenueincreasereflectsagrowingwirelesssubscriberbase,partlyoffsetbylowerwirelesswholesaleroamingrevenue.TheincreaseinwirelinedataservicesrevenuesreflectsincreasedCCBSrevenuegrowth,aswellasincreasesininternetandthirdwavedataservicesfromsubscribergrowthandhigherinternetrevenuepercustomer,revenuesfromourhomeandbusinesssmarttechnology(includingsecurity)linesofbusiness,healthrevenues,andTVrevenueresultingfromsubscribergrowth,partlyoffsetbydecreasedlegacydataservicerevenues. Equipmentrevenuesinthefourthquarterof2019were$670million,adecreaseof$29million,reflectinglowerwirelesscontractedvolumes,duetomarketoffersincludingtheindustryintroductionofdevicefinancingprograms,whichprovidetransparencyoffulldevicecostsresultingincustomersdeferringdeviceupgradepurchases,aswellaslowerpricesoncertainhandsets. Otheroperatingincomeinthefourthquarterof2019was$32mil-lion,adecreaseof$19million,largelyduetothenon-recurrence of2018gainsonsaleofcertainassets. • • EBITDA,whichincludesrestructuringandothercostsandnon-recur-ringlossesandequitylosses(orgainsandequityincome)relatedtorealestatejointventures,was$1,368millioninthefourthquarterof 2019,anincreaseof$133millionor10.8%.TheimpactofIFRS16onEBITDAwasanincreaseof$86millioninthefourthquarterof2019. AdjustedEBITDA,whichexcludesrestructuringandothercostsandnon-recurringlossesandequitylosses(orgainsandequityincome)relatedtorealestatejointventures,was$1,413million,anincreaseof$103millionor7.9%,reflectinghigherwirelessnetworkrevenuedrivenbyagrowingsubscriberbase,growthinwirelinedataservicemargins,ahigherEBITDAcontributionfromourCCBSandhealthbusinesses,andtheeffectsofimplementingIFRS16.ThesefactorswerepartlyoffsetbydeclinesinwirelinelegacyvoiceandlegacydataservicesandadeclineintheEBITDAcontributionfromour legacybusinessservices. • • • • ForpurposesofourCEO’sassessmentofperformanceduringthe2019fiscalyearrelativetothefiscal2018year,wehavesimu-latedIFRS16adjustmentstothefiscal2018resultsincalculatingproformaresults.ThisIFRS16simulationtofiscal2018results,whicharecash-basedproxyadjustmentsandusedbyourCEOtoassessperformance,resultedinproformaconsolidatedAdjustedEBITDAgrowthofapproximately3.0%inthefourth quarterof2019. • Consolidatedoperatingexpensesinthefourthquarterof2019were $3,168million,anincreaseof$53million. • Goodsandservicespurchasedinthefourthquarterof2019were $1,681million,adecreaseof$103million,drivenbytheapplicationofIFRS16,loweradvertisingcosts,andlowerequipmentsalesexpenserelatedtolowerwirelesscontractedvolumes.Inthefourthquarterof2019,thedecreaseinGoodsandservicespur-chasedwaspartiallyoffsetbyhigheradministrativeandothercostssupportingCCBSrevenuegrowthandbusinessacquisitions,andhigherTVcontentcosts.UnderthenewIFRS16accountingstandard,depreciationofright-of-useleaseassetsandfinancingcostsarisingfromleaseliabilitiesarenotpartofGoodsandservicespurchasedandwedidnotretrospectivelyadjustamountsreportedforperiodspriortofiscal2019.Asaresult,theimpactofIFRS16onGoodsandservicespurchasedwasadecreaseof$86millioninthefourthquarterof2019. Employeebenefitsexpenseinthefourthquarterof2019was $809million,anincreaseof$64million,primarilyduetohighercompensationandbenefitcostsresultingfromanincreaseinthenumberofemployeessupportingCCBSrevenuegrowth,businessacquisitions,highershare-basedcompensation,andanetincreaseindomesticinternallabourcostsarisingfromcom-pensationincreases,partlyoffsetbyadecreaseinthenumber • NetincomeattributabletoCommonSharesinthefourthquarterof2019was$368million,anincreaseof$11million,drivenbyhigherOperatingincome,partlyoffsetbyincreasedFinancingcostsandincreasedIncometaxes.AdjustedNetincomeexcludestheeffectsofrestructuringandothercosts,incometax-relatedadjustmentsandnon-recurringlossesandequitylossesrelatedtorealestatejointventures.AdjustedNetincomeinthefourthquarterof2019was $400million,adecreaseof$9millionor2.2%. BasicEPSwas$0.61(pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3)inthefourthquarterof2019,anincreaseof$0.01(pre-sharesplit)or1.7%,drivenbyhigherOperatingincome,partlyoffsetbyincreasedFinancingcostsandincreasedIncometaxes.AdjustedbasicEPSexcludestheeffectsofrestructuringandothercosts,incometax-relatedadjustments,andnon-recurringlossesandequitylossesrelatedtorealestatejointventures.AdjustedbasicEPSinthefourthquarterof2019was$0.67(pre-sharesplit), adecreaseof$0.02(pre-sharesplit)or2.9%. • • TELUS2019 ANNUAL REPORT • 69

• Cashprovidedbyoperatingactivitieswas$829millioninthefourthquarterof2019,adecreaseof$119million,primarilyduetootheroperatingworkingcapitalchanges,increasedinterestpaid,higherrestructuringandothercostsdisbursements,netofexpenseandincreasedincometaxespaid,partlyoffsetbygrowthinEBITDA. Cashusedbyinvestingactivitieswas$1,611millioninthefourthquarterof2019,anincreaseof$982million,mainlyduetohighercashpaymentsforbusinessacquisitionsandhighercashpaymentsforcapitalassets.Capitalexpenditureswere$742million,anincreaseof$31million,duetoincreasedinvestmentsinournetworkandsupportITinfrastructuretoimproveitsreliabilityandcapability,andincreasedinvestmentsrelatedto5G,whichrampedupthroughout2019,inadditiontoexpendituresrelatedtobusinessacquisitions,includingADTCanada. Cashprovidedbyfinancingactivitieswas$947millioninthefourthquarterof2019,anincreaseof$1,285million,primarilyreflectingincreasedissuancesoflong-termdebt,netofredemptionsandrepayment. Inthefourthquarterof2019,wehadnetadditionsof130,000 wirelesssubscribers. • Securitynetadditionswere15,000inthefourthquarterof2019,anincreaseof11,000resultingfromstrongorganicgrowth.WiththelaunchofourSmartHomeSecurityandSecureBusinesslinesofbusinessinJuly2018,wewereabletocombinesecurityproductsandserviceswithenhancedbundlingopportunities,whichpositivelyimpactedsecuritynetadditionsinthefourthquarterof2019.ADTCanadanetadditionsarenotincluded inthesenumbers,butwillbeincludedin2020. • • Freecashflowwas$135millioninthefourthquarterof2019,anincreaseof$3million,reflectinghigherAdjustedEBITDAthatwaspartlyoffsetbyincreasesininterestpaid,incometaxespaid andcapitalexpenditures. • 5.3 Consolidated operations Thefollowingisadiscussionofourconsolidatedfinancialperformance.SegmentinformationinNote 5oftheConsolidatedfinancialstatementsisregularlyreportedtoourCEO.Wediscusstheperformanceofourseg-mentsinSection 5.4 WirelesssegmentandSection 5.5 Wireline segment. • • Mobilephonegrossadditionswere382,000inthefourthquarterof2019,anincreaseof32,000,drivenbygrowthinhigh-valuecustomeradditions,growthintheCanadianpopulation,successfulpromotionsandexpandedchannels. Ourmobilephonechurnratewas1.20%inthefourthquarterof2019,comparedto1.11%inthefourthquarterof2018,reflectingheightenedcompetitiveintensityduringtheseasonalpromotionalperiod.TheincreaseinthemobilephonechurnratewaspartiallymitigatedbytheutilizationofourinnovativeTELUSEasyPaymentdevicefinancingprogram,PeaceofMindendlessdataplans,Bring-It-BackandTELUSFamilyDiscountofferings,ourfocusonexecutingcustomersfirstinitiativesandretentionprograms,andourleadingnetworkquality. Ourmobilephonenetadditionswere70,000inthefourthquarterof2019,down7,000,ashighermobilephonegrossadditionswereoffsetbyhighermobilephonechurn,asdescribedabove.Wecon-tinuetofocusonprofitablegrowthandawayfromlowereconomicloadinginthemobilephonemarket.Mobileconnecteddevicenetadditionswere60,000inthefourthquarterof2019anddecreasedby5,000,drivenbylesslowornegative-margintabletloading,partlyoffsetbygrowthinourInternetofThings(IoT)offerings,includingtheconnecteddevicegrowtharisingfromoursubscribers expandingtheirIoTservicestotheirgrowingcustomerbases. • Operating revenues YearsendedDecember31($inmillions) 2019 2018 Change Service Equipment 12,400 2,189 11,882 2,213 4.4% (1.1)% • Revenuesarisingfromcontracts withcustomers Otheroperatingincome1 14,589 69 14,095 273 3.5% (74.7)% Operatingrevenues1 14,658 14,368 2.0% 1 Includesequityincomerelatedtorealestatejointventuresof$171millionarisingfromthesaleofTELUSGardenrecordedinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter2018equityincome,operatingrevenuesincreasedby3.2%in2019. Consolidatedoperatingrevenuesincreasedby$290millionin2019.Excludingtheeffectofthenon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171million,consolidatedoperatingrevenuesincreasedby $461millionin2019. • Inthefourthquarterof2019,wehadnetadditionsof46,000wireline subscribers. • Internetnetadditionswere28,000inthefourthquarterof2019,flatcomparedtotheprioryear,ascontinuednetnewdemandfromconsumersandbusinesseswasoffsetbyincreaseddeacti-vationsresultingfromheightenedcompetitiveintensity. TVnetadditionswere15,000inthefourthquarterof2019,adecreaseof9,000,mainlyduetoheightenedcompetitiveintensityandthechanginglandscapeofincreasedstreamingservices. Residentialvoicenetlosseswerelimitedto12,000inthefourthquarterof2019,comparedtonetlossesof13,000inthefourthquarterof2018.Theresidentialvoicesubscriberlossescontinuetoreflectthetrendofsubstitutionbywirelessandinternet-basedservices,partiallymitigatedbyourexpandingfibrefootprintandbundledproductofferings,andthesuccessofourstronger retentionefforts,includinglower-pricedofferings. • Service revenuesincreasedby$518millionin2019,reflectinggrowthinwirelessnetworkrevenueandwirelinedataservicesrevenues,partlyoffsetbythecontinuingdeclinesinwirelinelegacyvoiceandlegacydataservicerevenues.Thewirelessnetworkrevenueincreasereflectsagrowingwirelesssubscriberbase.TheincreaseinwirelinedataservicesrevenuesreflectsincreasedCCBSrevenuegrowth,aswellasincreasesininternetandthirdwavedataservicesrevenuesresultingfromsubscribergrowthandhigherinternetrevenuepercustomer,healthrevenues,revenuesfromourhomeandbusinesssmarttech-nology(includingsecurity,whichhasincludedADTCanadasinceNovember5,2019),andTVrevenueresultingfromsubscribergrowth, partlyoffsetbydecreasedlegacydataservicerevenues. • • 70 • TELUS2019 ANNUAL REPORT OPERATING REVENUES ($ millions) 2019 14,658 201814,368 2017,408 13

MD& A: DISCUSSION OF OPER ATIONS • Equipment revenuesdecreasedby$24millionin2019,reflectinglowerwirelesscontractedvolumesandlowerwirelinedataandvoiceequipmentsales. • Other operating incomedecreasedby$204millionin2019,primarilyduetothenon-recurrenceofequityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millioninthethirdquarterof2018,inadditiontothenon-recurrenceof 2018gainsonsaleofcertainassetsinthefourthquarter. • Amortization of intangible assetsincreasedby$50millionin 2019,reflectinghigherexpendituresassociatedwiththeintangibleassetbaseoverthelast12months,includingthosearisingfrombusinessacquisitions. Operating income YearsendedDecember31($inmillions) 2019 2018 Change WirelessEBITDA1,4(seeSection 5.4) WirelineEBITDA2,4(seeSection 5.5) 3,693 3,431 7.6% Operating expenses YearsendedDecember31($inmillions) 2019 2018 Change 1,861 1,673 11.2% Goodsandservicespurchased1 Employeebenefitsexpense Depreciation Amortizationofintangibleassets 6,070 3,034 1,929 648 6,368 2,896 1,669 598 (4.7)% 4.8% 15.6% 8.4% EBITDA3,4 Depreciationandamortization(discussedabove) 5,554 5,104 8.8% (2,577) (2,267) 13.7% Operatingincome3 2,977 2,837 4.9% Operatingexpenses1 11,681 11,531 1.3% 1 Includesequityincomerelatedtorealestatejointventuresallocatedtothewirelesssegmentof$85million(50%ofthetotalof$171million)arisingfromthesaleofTELUSGardenrecordedinthethirdquarterof2018.AlsoincludesadonationtotheTELUSFriendlyFutureFoundationallocatedtothewirelesssegmentof$59million(50%ofthetotalof$118million)recordedinothercostsinthethirdquarterof2018.Excludingtheeffectsofthisthirdquarter2018equityincomeanddonation,wirelessEBITDAincreasedby8.5%in2019. Includesequityincomeallocatedtothewirelinesegmentof$86million(50%ofthetotalof$171million)describedinfootnote1.Alsoincludesadonationallocatedtothewirelinesegmentof$59million(50%ofthetotalof$118million)describedinfootnote1.Excludingtheeffectsofthisthirdquarter2018equityincomeanddonation,wirelineEBITDAincreasedby13.1%in2019. Includesequityincomerelatedtorealestatejointventuresof$171milliondescribedinfootnote1.Alsoincludesadonationof$118milliondescribedinfootnote1.Excludingtheeffectsofthisthirdquarter2018equityincomeanddonation,consolidatedEBITDAincreasedby10.0%in2019,andOperatingincomeincreasedby6.9%in2019. SeeSection 11.1 Non-GAAP and other financial measures. 1 IncludesadonationtotheTELUSFriendlyFutureFoundationof$118millionrecorded inothercostsinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter 2018donation,operatingexpensesincreasedby2.3%in2019. Consolidatedoperatingexpensesincreasedby$150millionin2019.Excludingtheeffectofthenon-recurringthirdquarter2018donationtotheTELUSFriendlyFutureFoundationof$118million,consolidated operatingexpensesincreasedby$268millionin2019. 2 • Goods and services purchased decreased by $298 million, primarilyarisingfromthenon-recurrenceofa$118milliondonationtotheTELUSFriendlyFutureFoundationinthethirdquarterof2018.Excludingtheeffectofthedonation,Goodsandservicespurchaseddecreasedby$180millionin2019,drivenbytheapplicationofIFRS16.In2019,thedecreaseinGoodsandservicespurchasedwaspartiallyoffsetbyhigherwirelineproductcostsassociatedwithhealthservices,higheradministrativeandothercostssupportingCCBSrevenuegrowthandbusinessacquisitions,andhigherTVcontentcosts.UnderthenewIFRS16accountingstandard,depreci-ationofright-of-useleaseassetsandfinancingcostsarisingfromleaseliabilitiesarenotpartofGoodsandservicespurchasedandwedidnotretrospectivelyadjustamountsreportedforperiodspriortofiscal2019.Asaresult,theimpactofIFRS16onGoodsandservicespurchasedwasadecreaseof$299millionin2019. Employee benefits expenseincreasedby$138millionin2019,primarilyduetohighercompensationandbenefitcostsresultingfromanincreaseinthenumberofemployeessupportingCCBSrevenuegrowth,businessacquisitions,andanetincreaseindomesticinternallabourcostsarisingfromcompensationincreases,partiallyoffsetbyadecreaseinthenumberofdomesticFTEs,excludingbusinessacquisitions.ThisEmployeebenefitsexpenseincreasewaspartlyoffsetbyhighercapitalizedlabourcostsandlowerlabour-relatedrestructuringandothercosts. Depreciationincreasedby$260million2019,primarilyduetotheapplicationofIFRS16.Underthenewaccountingstandard,werecog-nizethedepreciationofright-of-useleaseassets,largelyrelatedtoourrealestateleases(includingcellsiteleasesandretailstoreleases),andwedidnotretrospectivelyadjustamountsreportedforperiodspriortofiscal2019.Asaresult,theimpactofIFRS16onDepreciationwasanincreaseof$187millionin2019.TotalDepreciationalsoincreasedduetogrowthincapitalassetsoverthelast12months, includingourexpandedfibrefootprintandbusinessacquisitions. 3 4 Operatingincomeincreasedby$140millionin2019,whileEBITDAincreasedby$450millionin2019.Excludingtheeffectsofnon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenof$171millionandthethirdquarter 2018donationtotheTELUSFriendlyFutureFoundationof$118million,Operatingincomeincreasedby$193millionin2019,whileEBITDAincreasedby$503millionin2019.Theseincreasesreflecthigherwirelessnetworkrevenuegrowthdrivenbyagrowingsubscriberbase,inadditiontogrowthinwirelinedataservicemarginsandanincreasedEBITDAcontributionfromourCCBSandhealthbusinesses,aswellastheeffectsofimplementingIFRS16.Thesefactorswerepartlyoffsetbydeclines inwirelinelegacyvoiceandlegacydataservices. • Adjusted EBITDA1 YearsendedDecember31($inmillions) 2019 2018 Change WirelessAdjustedEBITDA1(seeSection 5.4) WirelineAdjustedEBITDA1 (seeSection 5.5) 3,461 7.7% 3,728 1,965 1,789 9.8% AdjustedEBITDA1 5,693 5,250 8.4% • 1 SeeSection 11.1 Non-GAAP and other financial measures. AdjustedEBITDAincreasedby$443millionor8.4%in2019,reflectinghigherwirelessnetworkrevenuedrivenbyagrowingsubscriberbase,growthinwirelinedataservicemargins,anincreasedEBITDAcontributionfromourCCBSandhealthbusinesses,andtheeffectsofimplementingIFRS16.ThesefactorswerepartlyoffsetbydeclinesinwirelinelegacyvoiceandlegacydataservicesandadeclineintheEBITDAcontribution fromourlegacybusinessservices. TELUS2019 ANNUAL REPORT • 71

ForpurposesofourCEO’s(ourchiefoperatingdecision-maker)assessmentofperformanceduringthe2019fiscalyearrelativetothefiscal2018year,wehavesimulatedIFRS16adjustmentstothefiscal 2018resultsincalculatingproformaresults.ThisIFRS16simulationtofiscal2018results,whicharecash-basedproxyadjustmentsandusedbyourCEOtoassessperformance,resultedinproformaconsolidated AdjustedEBITDAgrowthofapproximately4.0%in2019. • • Interestaccretiononprovisionswasrelativelyflatin2019. Inthethirdquarterof2019,werecordedalong-term debt pre-payment premiumof$28millionrelatedtotheearlyredemptionofallour$1.0billionofseniorunsecured5.05%Notes,SeriesCHdueJuly23,2020.Inthethirdquarterof2018,werecordeda long-termdebtprepaymentpremiumof$34millionbeforeincome taxesrelatedtotheearlyredemptionofallour$1.0billionofsenior unsecured5.05%Notes,SeriesCG. Financing costs • Employee defined benefit plans net interestdecreasedby$16millionin2019,primarilyduetothechangeinthedefinedbenefitplansurplusasatDecember31,2018,to$57million(netoftheplanassetceilinglimitof$263million),comparedtoadefinedbenefitplandeficitof $334million(netoftheplanassetceilinglimitof$110million)oneyear earlier,partlyoffsetbyanincreaseinthediscountrate. Foreign exchange losses (gains)havefluctuated,primarilyreflectingchangesinthevalueoftheCanadiandollarrelativetotheU.S.dollar. Interest incomewasrelativelyflatin2019. YearsendedDecember31($inmillions) 2019 2018 Change Grossinterestonlong-termdebt, excludingleaseliabilities Capitalizedlong-termdebtinterest, excludingleaseliabilities Interestonleaseliabilities Interestonshort-termborrowings andother Interestaccretiononprovisions Long-termdebtprepaymentpremium 634 598 6.0% (23) 67 – – n/m n/m • • 8 22 28 6 21 34 33.3% 4.8% (17.6)% Interestexpense Employeedefinedbenefitplans netinterest Foreignexchangelosses(gains) Interestincome 736 659 11.7% 1 3 (7) 17 (6) (9) (94.1)% n/m (22.2)% Financingcosts 733 661 10.9% Income taxes Financingcostsincreasedby$72millionin2019,mainlyduetothe followingfactors: YearsendedDecember31($inmillions,excepttaxrates) 2019 2018 Change • Interest expenseincreasedby$77millionin2019,resultingfrom: Incometaxcomputedat applicablestatutoryrates Revaluationofdeferredincometaxliabilitytoreflectfutureincometaxrates Adjustmentsrecognizedinthecurrentperiodforincometaxesofpriorperiods Other • Grossinterestonlong-termdebt,excludingleaseliabilities,increasedby$36million2019,drivenbyanincreaseinaveragelong-termdebtbalancesoutstandinginpartattributabletotheacquisitionofspectrumlicences,partiallyoffsetbyadecreaseintheeffectiveinterestrate.Ourweightedaverageinterestrateonlong-termdebt(excludingcommercialpaper,therevolvingcom-ponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt)was3.94%atDecember31, 2019,ascomparedto4.18%oneyearearlier.(SeeLong-term debt issues and repaymentsinSection 7.4.) Capitalizedlong-termdebtinterestisinrespectofdebtincurredforthepurchaseofspectrumlicencesduringthe600MHzwire-lessspectrumauctionheldbyInnovation,ScienceandEconomicDevelopmentCanada(ISED),whichweexpecttodeployinourexistingnetworkinfutureperiods.Capitalizationoflong-termdebtinterestwillcontinueuntilsubstantiallyalloftheactivitiesnecessarytopreparethespectrumforitsintendedusearecomplete. Interestonleaseliabilitiesof$67millionin2019representsthefinancingcostsincreasearisingfromleaseliabilitiesupontheappli-cationofIFRS16aswedidnotretrospectivelyadjustamountsreportedforperiodspriortofiscal2019.Thisinterestonleaseliabilitieswaslargelyrelatedtoourrealestateleases(includingcellsiteleasesandretailstoreleases),whereaspriortotheapplicationofIFRS16,thesecostswouldhavebeenaccountedforinGoodsandservicespurchased. Interestonshort-termborrowingsandotherwasrelativelyflatin 2019.(SeeLong-term debt issues and repaymentsinSection 7.4.) 604 586 3.1% (124) – n/m (17) 5 (6) (28) n/m n/m Incometaxes 468 552 (15.2)% • Incometaxescomputedat applicablestatutoryrates(%) Revaluationofdeferredincometaxliabilitytoreflectfutureincometaxrates(%) Adjustmentsrecognizedinthecurrentperiodforincometaxesofpriorperiods(%) Other(%) 27.0 (0.1) pts. 26.9 (5.5) – (5.5) pts. (0.8) 0.2 (0.3) (1.3) (0.5) pts. 1.5 pts. • Effectivetaxrate(%) 20.8 25.4 (4.6) pts. Totalincometaxexpensedecreasedby$84millionin2019.Theeffectivetaxratedecreasedfrom25.4%to20.8%in2019,predominantlyattributabletotherevaluationofthedeferredincometaxliabilityforthemulti-yearreductionintheAlbertaprovincialcorporatetaxratethatwas substantivelyenactedinthesecondquarterof2019. • 72 • TELUS2019 ANNUAL REPORT INTEREST EXPENSE ($ millions) 2019 736 2018 2017 659 579

MD& A: DISCUSSION OF OPER ATIONS 5.4 Wireless segment Comprehensive income YearsendedDecember31($inmillions) 2019 2018 Change Netincome Othercomprehensiveincome(netofincometaxes): Itemsthatmaybesubsequently reclassifiedtoincome Itemsneversubsequently reclassifiedtoincome 1,776 1,624 9.4% 104 (48) n/m (326) 332 n/m Comprehensiveincome 1,554 1,908 (18.6)% Comprehensiveincomedecreasedby$354millionin2019,primarilyasaresultofchangesinemployeedefinedbenefitplanre-measurementamountsarisingfromdecreasesinthediscountrate,whichwerepartlyoffsetbythereturnonplanassets.ThiswaspartiallyoffsetbyincreasesinNetincome,changesintheunrealizedfairvalueofderivativesdesig-natedascashflowhedgesandforeigncurrencytranslationadjustmentsarisingfromtranslatingfinancialstatementsofforeignoperations.Itemsthatmaysubsequentlybereclassifiedtoincomearecomposedofchangesintheunrealizedfairvalueofderivativesdesignatedascashflowhedgesandforeigncurrencytranslationadjustmentsarisingfromtranslatingfinancialstatementsofforeignoperations.Itemsneversubse-quentlyreclassifiedtoincomearecomposedofemployeedefinedbenefitplansre-measurementamountsandchangesinthemeasurement ofinvestmentfinancialassets. Wireless trends and seasonality Thehistoricaltrendoverthelasteightquartersinwirelessnetworkrevenuereflectsgrowthinoursubscriberbase,aswellashigher-valuesmartphonesinthesalesmixofgrossadditionsandretentionunits.Therehasbeenageneralyear-over-yearincreaseinequipmentrevenuesresultingfromhigher-valuesmartphonesinthesalesmixandahighervolumeofnewcontracts;however,thistrendismoderating,withheightenedmarketaggression,theimprovingqualityandincreasingcostoficonicdevicesthatresultincustomersdeferringupgradesinadditiontotheindustryintroductionofdevicefinancingprogramswhichprovidetransparencyoffulldevicecostsandresultincustomersalsodeferringdeviceupgrades.Thegeneraltrendofyear-over-yearincreasesinmobilephonesubscribernetadditionsresultedfrom:thesuccessofourpromotions;theeffectsofmarketgrowtharisingfromagrowingpopulation,changingpopulationdemographicsandanincreasingnumberofcustomerswithmultipledevices;andcontinuousimprovementsinthespeedandqualityofournetwork,combinedwithourlowchurnrate,whichreflectourfocusoncustomersfirstinitiatives.Ourcapitalexpendituresonnetworkimprovementsincreasecapacityandcoverage,allowingustogrowrevenuethroughnetadditionsofwirelesssubscribers.Althoughtherehavehistoricallybeensignificantthirdandfourthquarterseasonaleffectsthatresultinincreasedloading,competitiveintensityinboththeconsumerandbusinessmarkets,launchesofnewdevices,rateplans,devicefinancingprograms,andthestrategicdecisiontofocusonprofitableloadingratherthanlowornegative-margintabletloadingandnon-accretiveprepaid-to-postpaidmigrations,mayimpactsubscriberaddition resultsandtrendsforfutureperiods. TELUS2019 ANNUAL REPORT • 73 Mobile connected device subscribers 2019: 1,480,000 2018:1,217,000 +21.6% Mobile phone blended churn 2019:1.08 2018:1.06 +0.02pts. Mobile phone ABPU 2019:$73.37 2018:$73.19 +0.2% Mobile phone subscribers 2019:8,733,000 2018:8,459,000 +3.2% COMPREHENSIVE INCOME ($ millions) 2019 1,554 20181,908 2017 1,418

Mobile phone ABPU growth has been moderating, primarily due to: (i) carriers offering larger allotments of data, as well as rateplansthatincludeplanswithbonusdataandunlimiteddataplans,datasharingandinternationalroamingfeatures,and(ii)consumerbehaviouralresponsetomorefrequentcustomerdatausagenotificationsandoffloadingofdatatraffictoincreasinglyavailableWi-Fi|hotspots;partlyoffsetby(iii)anincreasedmixofhigher-valuerateplans,inadditiontoanincreaseinhigher-valuesmartphonesinthesalesmix,includingtheeffectsofcustomersfinancingmoreofthecostofthesedevicesthroughourTELUSEasyPaymentprogram,whichwelaunchedinthethirdquarterof2019,andanincreasedproportionofhigher-valuecustomersinthesubscribermix.Asaresultofchangingindustrydynamics,customershavebeenabletogainaccesstohighernetworkspeedsandlargerallotmentsofdataincludedforagivenpricepoint,furtherlimitingmobilephoneABPUexpansion,ascustomersarecontinuingtoobtainlowercostpermegabyteplans.Theeconomicenvironment,consumerbehaviour,theregulatoryenvironment,deviceselectionandotherfactorsalsoimpactmobilephoneABPU,andasaconsequence,therecanbenoassurancethatmobilephoneABPUwillreturntogrowthinthecomingquarters. Thetrendofourcomparativelylowmobilephoneblendedchurnratereflectsourcustomersfirstefforts,retentionprogramsandfocusonbuilding,maintainingandenhancingourhigh-qualitynetwork.Wemayexperiencepressureonourmobilephoneblendedchurnrateifthelevelofcompetitiveintensityincreases(inpartduetoincreasedpromotionalactivity),ifthereisanincreaseincustomersonexpiredornocontracts(comparedtocurrentexperience),orasaresultofregulatorychanges.Accordingly,ourwirelesssegmenthistoricaloperatingresultsandtrendsmaynotbereflectiveofresultsandtrendsforfutureperiods. OurconnecteddevicesubscriberbasehasbeengrowingprimarilythroughourexpandedIoTofferings,partlyoffsetbyourstrategicdecisiontoreduceloadingoflowornegative-margintablets.IoTtechnologiesareexpectedtocontinuetogrowandIoTcustomers,alongwithotherconnecteddevicesubscribers,willbeabletorealizegreaterbenefitsthataredependentupon5Gdeployment. ThetrendsinwirelessEBITDA-basedoperatingmetricshavebeen impactedbyouradoptionofIFRS16effectiveJanuary1,2019,as discussedfurtherinNote 2oftheConsolidatedfinancialstatements. Wireless operating indicators AsatDecember31 2019 2018 Change Subscribers1(000s): Mobilephones Mobileconnecteddevices 8,733 1,480 8,459 1,217 3.2% 21.6% Total 10,213 9,676 5.5% HSPA+populationcoverage2(millions) LTEpopulationcoverage2(millions) 37.0 36.9 37.0 36.9 –% –% YearsendedDecember31 2019 2018 Change Mobilephonesgrossadditions1(000s): 1,375 1,289 6.7% Subscriber net additions1(000s): Mobilephones Mobileconnecteddevices 274 263 264 193 3.8% 36.3% Total 537 457 17.5% MobilephonesABPU,permonth1,3($) MobilephonesARPU,permonth1,3($) 73.37 60.14 73.19 60.98 0.2% (1.4)% Mobilephoneschurn,permonth1,3(%) 1.08 1.06 0.02 pts. 1 Effectiveforthefirstquarterof2019,withretrospectiveapplication,werevisedourdefinitionofawirelesssubscriberandnowreportmobilephonesandmobileconnecteddevices(e.g.tablets,internetkeys,IoT,wearables,connectedautomobilesystems)asseparatesubscriberbases,soastobeconsistentwiththewaywemanageourbusi-nessandtoalignwithglobalpeers.Asaresultofthechange,totalsubscribersandassociatedoperatingstatistics(grossadditions,netadditions,churn,ABPUandARPU)wereadjustedtoreflect(i)themovementofcertainsubscribersfromthemobilephonessubscriberbasetothenewlycreatedmobileconnecteddevicessubscriberbase,and(ii)theinclusionofpreviouslyundisclosedIoTandmobilehealthsubscribersinourmobileconnecteddevicessubscriberbase.Foradditionalinformationonoursubscriberdefinitions,seeSection 11.2 Operating indicators. IncludingnetworkaccessagreementswithotherCanadiancarriers. SeeSection 11.2 Operating indicators.Theseareindustrymeasuresusefulinassessingoperatingperformanceofawirelesscompany,butarenotmeasuresdefinedunderIFRS-IASB. 2 3 Operating revenues – Wireless segment YearsendedDecember31($inmillions) 2019 2018 Change Networkrevenue Equipmentand otherservicerevenues 6,124 6,025 1.6% 2,005 1,992 0.7% Revenuesarisingfrom contractswithcustomers Otheroperatingincome1 8,129 20 8,017 118 1.4% (83.1)% Externaloperatingrevenues1 Intersegmentrevenues 8,149 53 8,135 47 0.2% 12.8% Wirelessoperatingrevenues1 8,202 8,182 0.2% 1 Includesequityincomerelatedtorealestatejointventuresallocatedtothewirelesssegmentof$85million(50%ofthetotalof$171million)arisingfromthesaleofTELUSGardenrecordedinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter2018equityincome,wirelessoperatingrevenuesincreasedby1.3%in2019. Excludingtheeffectofthenon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenallocatedtothewirelesssegmentof$85million(50%ofthetotalof$171million),wirelessoperatingrevenuesincreasedby$105millionin2019.Asreported,wirelessoperatingrevenuesincreasedby$20million in2019. 74 • TELUS2019 ANNUAL REPORT

MD& A: DISCUSSION OF OPER ATIONS Other operating incomedecreasedby$98millionin2019,largelyresultingfromthenon-recurrenceofequityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardeninthethirdquarterof2018,ofwhich50%ofthetotalof$171millionwasallocatedtoeachofthewirelessandwirelinesegments.Excludingtheeffectofthisthirdquar-ter2018equityincome,Otheroperatingincomedecreasedby$13millionin2019,mainlyduetothenon-recurrenceof2018gainsfromthesaleofcertainassetsandadecreaseintheprovisionrelatedtowrittenput optionsinrespectofnon-controllinginterests. Network revenueincreasedby$99millionor1.6%in2019,reflectinggrowthof5.5%inthesubscriberbaseoverthelast12months,partlyoffsetbydecliningmobilephoneARPU,asdiscussedbelow.Mobile phone ABPUwas$73.37in2019,anincreaseof$0.18or0.2%for2019.TheincreasereflectsgrowthresultingfromourcombinedTELUSEasyPaymentdevicefinancing,PeaceofMindendlessdataplansandTELUSFamilyDiscountofferings,whichweintroducedinthethirdquarterof 2019,withcustomersselectingplanswithendlessdataorlargerdatabucketsandhigher-valuesmartphonesinthesalesmix;thisgrowthwaspartlyoffsetbydeclinesinchargeableusageandtheimpactofthecompetitiveenvironmentputtingpressureonbaserateplanpricesinthecurrentandpriorperiods.Mobile phone ARPUwas$60.14in2019,adecreaseof$0.84or1.4%for2019,asdeclinesinchargeableusageandcompetitivepressuresonbaserateplanpricesmorethanoffsettheincreasednumberofcustomersselectingplanswithendlessdata orlargerdatabuckets. Intersegment revenuesrepresentnetworkservicesthatareeliminated uponconsolidation,alongwiththeassociatedwirelineexpenses. Operating expenses – Wireless segment YearsendedDecember31($inmillions) 2019 2018 Change Goodsandservicespurchased: Equipmentsalesexpenses Networkoperatingexpenses Marketingexpenses Other1,2 Employeebenefitsexpense1 1,959 789 394 702 665 1,960 841 393 867 690 (0.1)% (6.2)% 0.3% (19.0)% (3.6)% Wirelessoperatingexpenses2 4,509 4,751 (5.1)% 1 Includesrestructuringandothercosts.SeeSection 11.1 Non-GAAP and other financial measures. IncludesadonationtotheTELUSFriendlyFutureFoundationallocatedtothewirelesssegmentof$59million(50%ofthetotalof$118million)recordedinothercostsinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter2018donation,wirelessoperatingexpensesdecreasedby3.9%in2019. 2 • Mobile phone gross additionswere1,375,000in2019,anincreaseof86,000,drivenbygrowthinhigh-valuecustomeradditions,growthintheCanadianpopulation,successfulpromotionsandexpandedchannels. Ourmobile phone churn ratewas1.08%in2019,comparedto 1.06%in2018,reflectingheightenedcompetitiveintensityduringtheseasonalpromotionalperiodwhileTELUSremaineddisciplined.TheincreaseinthemobilephonechurnratewaspartiallymitigatedbytheutilizationofourinnovativeTELUSEasyPaymentdevicefinancingprogram,PeaceofMindendlessdataplans,Bring-It-BackandTELUSFamilyDiscountofferings,ourfocusonexecutingcustomersfirstinitiativesandretentionprograms,andourleadingnetworkquality. Net subscriber additionswere537,000in2019,comparedto 457,000in2018.Mobilephonenetadditionsincreasedby10,000in 2019,drivenbyhighermobilephonegrossadditions,partlyoffsetbyhighermobilephonechurn,asdescribedabove.Wecontinuetofocusonprofitablegrowthandawayfromlowereconomicloadinginthemobilephonemarket.Mobileconnecteddevicenetadditionsimprovedby70,000in2019,drivenbygrowthinourIoTofferings,includingtheconnecteddevicegrowtharisingfromoursubscribersexpandingtheirIoTservicestotheirgrowingcustomerbases,partlyoffsetbylesslowornegative-margintabletloading. Wirelessoperatingexpensesdecreasedby$242millionin2019.Excludingtheeffectofthenon-recurringthirdquarter2018donationtotheTELUSFriendlyFutureFoundationallocatedtothewirelesssegmentof$59million(50%ofthetotalof$118million),wirelessoperatingexpensesdecreased by$183millionin2019. • Equipment sales expensesdecreasedby$1million,aslowervolumes werelargelyoffsetbyhigher-valuesmartphonesinthesalesmix. Network operating expensesdecreasedby$52millionin2019,mainly duetotheapplicationofIFRS16. Marketing expensesincreasedby$1million,ashighercommissions expensewaslargelyoffsetbyloweradvertisingcosts. • Other goods and services purchaseddecreasedby$165millionin2019,mainlyduetothenon-recurrenceofadonationtotheTELUSFriendlyFutureFoundationinthethirdquarterof2018,ofwhich50%ofthetotalof$118millionwasallocatedtoeachofthewirelessandwire-linesegments.Excludingtheeffectofthisthirdquarter2018donation,Othergoodsandservicespurchaseddecreasedby$106millionin2019,primarilydrivenbytheapplicationofIFRS16,lowernon-labour-relatedrestructuringandothercostsrelatedtoefficiencyinitiatives,andsavings fromcostefficiencyprograms,partlyoffsetbyhigherexternallabourcosts. Equipment and other service revenuesincreasedby$13millionin2019, duetogreatervolumesofhigher-valuesmartphonesinthesalesmix. Employee benefits expensedecreasedby$25millionin2019,primarilyduetohighercapitalizedlabourcostsandlowerlabour-relatedrestruc-turingandothercosts,partlyoffsetbyhigherinternallabourcostsresulting fromcompensationincreases. TELUS2019 ANNUAL REPORT • 75 WIRELESS NETWORK REVENUE ($ millions) 2019 6,124 20186,025 20175,867

5.5 Wireline segment EBITDA – Wireless segment YearsendedDecember31($inmillions,exceptmargins) 2019 2018 Change EBITDA1,4 Addrestructuringandother costsincludedinEBITDA2 Add(deduct)non-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures3 3,693 3,431 7.6% 32 115 n/m 3 (85) n/m AdjustedEBITDA4 3,728 3,461 7.7% EBITDAmargin4(%) AdjustedEBITDAmargin4,5(%) 45.0 45.4 41.9 42.7 3.1 pts. 2.7 pts. 1 Excludingthethirdquarter2018equityincomedescribedinfootnote3andthethirdquarter2018donationdescribedinfootnote2,EBITDAincreasedby8.5%in2019. IncludesadonationtotheTELUSFriendlyFutureFoundationallocatedtothewirelesssegmentof$59million(50%ofthetotalof$118million)recordedinothercostsinthethirdquarterof2018. Includesequityincomerelatedtorealestatejointventuresallocatedtothewirelesssegmentof$85million(50%ofthetotalof$171million)arisingfromthesaleofTELUSGardenrecordedinthethirdquarterof2018. SeedescriptionunderEBITDAinSection 11.1 Non-GAAP and other financial measures. AdjustedEBITDAmarginisAdjustedEBITDAdividedbyOperatingrevenues,wherethecalculationofOperatingrevenuesexcludesnon-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures. 2 3 4 5 WirelessEBITDAincreasedby$262millionor7.6%in2019.Excludingtheeffectsofthenon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenallocatedtothewirelesssegmentof$85million(50%ofthetotalof$171million)andthethirdquarter2018donationtotheTELUSFriendlyFutureFoundationallocatedtothewirelesssegmentof$59million(50%ofthetotalof $118million),wirelessEBITDAincreasedby$288millionor8.5%in2019.WirelessAdjustedEBITDAincreasedby$267millionor7.7%in2019,reflectinghighernetworkrevenuegrowth,drivenbyalargersubscriberbase,loweremployeebenefitsexpense,savingsfromcostefficiencyprogramsandtheimplementationofIFRS16. ApplyingaretrospectiveIFRS16simulationtofiscal2018results(seeSection 5.3),proformawirelessAdjustedEBITDAgrowthwas approximately4.3%in2019. Wireline trends Thetrendoverthelasteightquartersofincreasesinwirelineservicerevenuereflectsgrowthininternetandthirdwavedataservices,CCBSrevenues,TVrevenues,healthrevenues,andhomeandbusinesssmarttechnology(includingsecurity)revenues,andispartlyoffsetbydecliningwirelinelegacyvoiceandlegacydatarevenues.Aswell,increasedwirelinedataservicesrevenuesalsoincluderevenuesfrombusinessacquisitions,includingourrecentacquisitionofADTCanadaonNovember5,2019.Therewillbesignificantintegrationandcustomerretentioncoststhroughout2019,2020andearly2021,thefullexpectedoperationsrateisexpectedafterthattime.Subsequenttoyear-end,weacquiredCCConJanuary31,2020,whichwillalsoincreasefuturewirelinedataservicesrevenues.TheincreasesininternetandTVservicerevenuesarebeinggeneratedbysubscribergrowthandhigherinternetrevenuepercustomerresultingfromupgradestofasterspeeds,largerdatausagerateplansandtheexpansionofourfibrefootprint.Weexpectcontinuedinternetsubscriberbasegrowthastheeconomygrowsandaswecontinueourinvestmentsinexpandingourfibre-opticinfrastructure,includingourpre-positioningfor5G.ThetotalnumberofTVsubscribershasincreasedasaresultofhighernetadditionsinresponsetodiverseproductofferings,fibreexpansionandbundledproductofferings,com-binedwithourlowcustomerchurnrate.Securitysubscriberbasegrowthisincreasingasaresultofbusinessacquisitionsandorganicgrowth.Residentialvoicesubscriberlossescontinuetoreflecttheongoingtrendofsubstitutionbywirelessandinternet-basedservices,buthavebeenpartlymitigatedbythesuccessofourbundledserviceofferingsandlower-pricedofferings.Thetrendofdeclininglegacywirelinevoicerevenuesisduetotechnologicalsubstitution,greateruseofinclusivelongdistancecoupledwithlowerlongdistanceminutesused,andintensificationofcompetitioninthesmallandmedium-sizedbusinessmarket;however,ourrateofdeclinehasbeenmoderatingwithour utilizationofbundledproductofferingsandsuccessfulretentionefforts. 76 • TELUS2019 ANNUAL REPORT WIRELESS ADJUSTED EBITDA ($ millions) 2019 3,728 2018461 2017286 3, 3, WIRELESS EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS ($ millions) 2019 3,725 2018,546 201707 3 3,3 Total wireline subscriber net additions 2019:176,000 2018:133,000 +32.3% Security net additions 2019:46,000 2018:6,000 n/m TV subscriber net additions 2019:67,000 2018:63,000 +6.3% Internet subscriber net additions 2019:107,000 2018:115,000 (7.0)%

MD& A: DISCUSSION OF OPER ATIONS ThemigrationofbusinessproductsandservicesofferingstoIPservicesandtheintroductionofnewcompetitorsyieldinherentlylowermarginscomparedtosomelegacybusinessproductsandserviceofferings. ThetrendsinwirelineEBITDA-basedoperatingmetricshavebeen impactedbyouradoptionofIFRS16effectiveJanuary1,2019,as discussedfurtherinNote 2oftheConsolidatedfinancialstatements. Excludingtheeffectofthenon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenallocatedtothewirelinesegmentof$86million(50%ofthetotalof$171million),wirelineoperatingrevenuesincreasedby$406millionin 2019.Asreported,wirelineoperatingrevenuesincreasedby$320million in2019. Wireline operating indicators AtDecember31(000s) 2019 2018 Change Subscriber connections: Internet1 TV Residentialvoice Security2,3 1,981 1,160 1,204 608 1,858 1,093 1,248 72 6.6% 6.1% (3.5)% n/m Totalwirelinesubscriber connections1,2,3 • Data servicesrevenuesincreasedby$492millionin2019.Theincreasewasdrivenby:(i)growthinCCBSrevenuesprimarilyduetogrowthinbusinessvolumesresultingfromexpandedservicesforexistingcustomers,aswellascustomergrowth;(ii)increasedinternetandthirdwavedataservicerevenues,reflectinga6.6%increaseinourinternetsubscribersoverthelast 12monthsandhigherrevenuepercustomerfromfasterinternetspeedupgrades,largerdatausageinternetrateplans,andratechanges;(iii)increasedhealthrevenues,drivenbyexpandedservicesforexistingcustomersandgrowthinbusinessvolumes;(iv)increasedrevenuesfromhomeandbusinesssmarttechnology(includingsecurity),drivenbybusinessacquisitions(includingADTCanadasinceNovember5,2019)andexpandedservices;and(v)increasedTVrevenues,reflectingsubscribergrowthof 6.1%overthelast12months.Thisgrowthwaspartlyoffsetbythe ongoingdeclineinlegacydataservicerevenues. Voice servicesrevenuesdecreasedby$98millionin2019,reflectingtheongoingdeclineinlegacyvoicerevenuesresultingfromtechno-logicalsubstitution,greateruseofinclusivelongdistanceplansandpriceplanchanges.Weexperienceda3.5%declineinresidentialvoicesubscribersoverthelast12months,comparedtoa3.9%declineinresidentialvoicesubscribersforthe12-monthperiodendedDecember31,2018. Other services and equipmentrevenuesdecreasedby$12millionin2019,mainlyduetolowerdataandvoiceequipmentsales,partlyoffsetbygrowthfromourgrowingsecuritybusiness. Wireline subscriber connection net additionswere176,000in2019, anincreaseof43,000. 4,953 4,271 16.0% YearsendedDecember31(000s) 2019 2018 Change Subscriber connection net additions (losses): Internet TV Residentialvoice Security2 107 67 (44) 46 115 63 (51) 6 (7.0)% 6.3% 13.7% n/m Totalwirelinesubscriber connectionnetadditions3 176 133 32.3% 1 Duringthefirstquarterof2019,weadjustedcumulativesubscriberconnectionstoaddapproximately16,000subscribersfromacquisitionsundertakenduringthequarter. Effectiveforthethirdquarterof2019,withretrospectiveapplicationtothelaunchofTELUS-brandedsecurityservicesatthebeginningofthethirdquarterof2018,wehaveaddedsecuritysubscriberconnectionstoourtotalwirelinesubscriberconnections. December31,2019securitysubscriberconnectionshavebeenincreasedtoincludeapproximately490,000subscribersrelatedtoouracquisitionofADTCanada(acquiredonNovember5,2019). 2 3 • Operating revenues – Wireline segment YearsendedDecember31($inmillions) 2019 2018 Change Dataservices Voiceservices Otherservicesandequipment 5,080 986 394 4,588 1,084 406 10.7% (9.0)% (3.0)% • Revenuesarisingfrom contractswithcustomers Otheroperatingincome1 6,460 49 6,078 155 6.3% n/m • Externaloperatingrevenues1 Intersegmentrevenues 6,509 251 6,233 207 4.4% 21.3% • Internet net additionswere107,000in2019,adecreaseof8,000,ascontinuednetnewdemandfromconsumersandbusinesseswasoffsetbyincreaseddeactivationsresultingfromheightenedcompetitiveintensity.Ourcontinuedfocusoncon-nectingmorehomesandbusinessesdirectlytofibre(withTELUSPureFibreavailabletoapproximately70%ofourbroadbandfootprintattheendofthethirdquarterof2019),expandingandenhancingouraddressablehigh-speedinternetandOptikTVfootprint,andbundlingtheseservicestogethercontributedtocombinedinternetandTVsubscribergrowthof190,000over thelast12months. Wirelineoperatingrevenues1 6,760 6,440 5.0% 1 Includesequityincomerelatedtorealestatejointventuresallocatedtothewirelinesegmentof$86million(50%ofthetotalof$171million)arisingfromthesaleofTELUSGardenrecordedinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter 2018equityincome,wirelineoperatingrevenuesincreasedby6.4%in2019. TELUS2019 ANNUAL REPORT • 77 WIRELINE EXTERNAL REVENUE ($ millions) 2019 6,509 2018233 20177 6, 5,73

• TV net additionswere67,000in2019,anincreaseof4,000incontrasttomarket-reporteddeclinesintraditionaltelevisionviewinghabits,mainlyduetohighergrossadditionsasaresultofourdiverseproductofferings,partlyoffsetbyheightenedcompetitiveintensity. Residential voice net losseswerelimitedto44,000in2019,ascomparedtoresidentialvoicenetlossesof51,000in2018.Theresidentialvoicesubscriberlossescontinuetoreflectthetrendofsubstitutionbywirelessandinternet-basedservices,partiallymitigatedbyourexpandingfibrefootprintandbundledproductofferings,andthesuccessofourstrongerretentionefforts,includinglower-pricedofferings. Security net additionswere46,000in2019resultingfromstrongorganicgrowth.WiththelaunchofourSmartHomeSecurityandSecureBusinesslinesofbusinessinJuly2018,wewereabletocombinesecurityproductsandserviceswithenhancedbundlingopportunities,andanycomparisonpriortoJuly2018wouldnotbeconsistent.ADTCanadanetadditionsarenotincludedinthese numbers,butwillbeincludedin2020. Wirelineoperatingexpensesincreasedby$132millionin2019.Excludingtheeffectofthenon-recurringthirdquarter2018donationtotheTELUSFriendlyFutureFoundationallocatedtothewirelinesegmentof$59million(50%ofthetotalof$118million),wirelineoperatingexpensesincreased by$191millionin2019. • Goods and services purchaseddecreasedby$31millionin2019,mainlyduetothenon-recurrenceofadonationtotheTELUSFriendlyFutureFoundationinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter2018donation,Goodsandservicespurchasedincreasedby $28million,duetohigherproductcostsassociatedwithgrowthinhealthservices,higherexternallabourandotheradministrativecostssupportingCCBSrevenuegrowthandbusinessacquisitions,andhighermarketingcosts.TheincreaseinGoodsandservicespurchasedwaspartlyoffset bytheapplicationofIFRS16. • Employee benefits expenseincreasedby$163millionin2019,primarilyduetoincreasesincompensationandbenefitscostsresultingfromanincreaseinthenumberofemployeessupportingCCBSrevenuegrowthandbusinessacquisitions,andhigherinternallabourcostsresultingfromcompensationincreases.Thesefactorswerepartlyoffsetbylowerlabour-relatedrestructuringandothercostsandadecreaseinthe numberofdomesticFTEs,excludingbusinessacquisitions. Other operating incomedecreasedby$106millionin2019,mainlyduetothenon-recurrenceofthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGarden.Excludingtheeffectofthisthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGarden,Otheroperatingincomedecreasedby$20millionin2019,duetothenon-recurrenceof2018gainsonsaleofcertainassetsandlower gainsonsaleofinvestments. EBITDA – Wireline segment YearsendedDecember31($inmillions,exceptmargins) 2019 2018 Change EBITDA1,4Addrestructuringandother costsincludedinEBITDA2 Add(deduct)non-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures3 1,861 1,673 11.2% 102 202 n/m Intersegment revenuesrepresentservicesprovidedtothewireless segment,includingthosefromCCBS.Suchrevenueiseliminatedupon consolidation,togetherwiththeassociatedexpensesinwireless. Operating expenses – Wireline segment 2 (86) n/m AdjustedEBITDA4 1,965 1,789 9.8% YearsendedDecember31($inmillions) 2019 2018 Change EBITDAmargin4(%) AdjustedEBITDAmargin4,5(%) 27.5 29.1 26.0 28.2 1.5 pts. 0.9 pts. Goodsandservicespurchased1,2 Employeebenefitsexpense1 2,530 2,369 2,561 2,206 (1.2)% 7.4% Wirelineoperatingexpenses2 4,899 4,767 2.8% 1 Excludingthethirdquarter2018equityincomedescribedinfootnote3andthethirdquarter2018donationdescribedinfootnote2,EBITDAincreasedby13.1%in2019. IncludesadonationtotheTELUSFriendlyFutureFoundationallocatedtothewirelinesegmentof$59million(50%ofthetotalof$118million)recordedinothercostsinthethirdquarterof2018. Includesequityincomerelatedtorealestatejointventuresallocatedtothewirelinesegmentof$86million(50%ofthetotalof$171million)arisingfromthesaleofTELUSGardenrecordedinthethirdquarterof2018. SeedescriptionunderEBITDAinSection 11.1 Non-GAAP and other financial measures. AdjustedEBITDAmarginisAdjustedEBITDAdividedbyOperatingrevenues,wherethecalculationofOperatingrevenuesexcludesnon-recurringlossesandequitylosses(gainsandequityincome)relatedtorealestatejointventures. 1 Includesrestructuringandothercosts.SeeSection 11.1 Non-GAAP and other financial measures. IncludesadonationtotheTELUSFriendlyFutureFoundationallocatedtothewirelinesegmentof$59million(50%ofthetotalof$118million)recordedinothercostsinthethirdquarterof2018.Excludingtheeffectofthisthirdquarter2018donation,wirelineoperatingexpensesincreasedby4.1%in2019. 2 2 3 4 5 78 • TELUS2019 ANNUAL REPORT

MD& A: DISCUSSION OF OPER ATIONS WirelineEBITDAincreasedby$188millionor11.2%in2019,andthisincludesourestimatedimpactoftheCRTC’sdecisiononwholesaleinternetserviceratesrecordedinthethirdquarterof2019.Excludingtheeffectsofthenon-recurringthirdquarter2018equityincomerelatedtorealestatejointventuresarisingfromthesaleofTELUSGardenallocatedtothewirelinesegmentof$86million(50%ofthetotalof$171million)andthedonationtotheTELUSFriendlyFutureFoundationallocatedtothewirelinesegmentof$59million(50%ofthetotalof$118million),wire-lineEBITDAincreasedby$215millionor13.1%in2019.WirelineAdjustedEBITDAincreasedby$176millionor9.8%in2019.Theseincreasesreflect:anincreasedcontributionresultingfromourCCBSbusinessfromexpandedservicesforexistingcustomersandcustomergrowth;higherinternetmargins;higherhealthmargins,mainlyresultingfromexpandedservicesforexistingcustomers,operationalefficienciesandbusinessacquisitions;growthfromourhomeandbusinesssmarttechnology(includingsecurity);andtheimplementationofIFRS16.Thesefactorswerepartlyoffsetbythecontinueddeclinesinlegacyvoiceandlegacydataservices,higheremployeebenefitsexpenseandothercostsrelatedtobusinessacquisitions,andadeclineintheEBITDAcontributionfromourlegacybusinessservices,aswellaslowergainsonsales ofcertainassets. ApplyingaretrospectiveIFRS16simulationtofiscal2018results(seeSection 5.3),proformawirelineAdjustedEBITDAgrowthwas approximately3.4%in2019. TELUS2019 ANNUAL REPORT • 79 WIRELINE ADJUSTED EBITDA ($ millions) 2019 1,965 2018 2017719 1,789 1, WIRELINE EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS ($ millions) 2019 1,963 2018875 20170 1, 1,72

80 • TELUS2019 ANNUAL REPORT 6 CHANGES IN FINANCIAL POSITION FinancialpositionatDecember31($millions) 20192018ChangeChangeincludes: Current assets Cashandtemporaryinvestments,net 535414121SeeSection 7 Liquidity and capital resources Accountsreceivable1,9621,600362IncreasesduetounbilledcustomerfinancereceivablesfromtheBring-It-BackprogramandTELUSEasyPaymentdevicefinancingprogram,aswellasanincreaseduetothetimingofwirelesswholesalecustomerreceipts,partlyoffsetbyadecreaseinpostpaidreceivables Incomeandothertaxesreceivable1273124Instalmentstodatearegreaterthantheexpense Inventories43737661Anincreaseinthevolumeofhandsets,partlyoffset byadecreaseinaveragehandsetcost Contractassets737860(123)Refertodescriptioninnon-currentcontractassets Prepaidexpenses5475398Anincreaseinprepaymentofmaintenancecontracts netofamortization Currentderivativeassets849(41)AndecreaseinthenotionalamountofU.S.currency hedgingitems. Current liabilities Short-termborrowings 100100–SeeSection 7.7 Sale of trade receivables Accountspayableandaccruedliabilities 2,7492,570179Increaseinpayablesduetopaymenttimingandanincreaseincommoditytaxes,partlyoffsetbyadecreaseinaccruedliabilities.SeeNote 23oftheConsolidatedfinancialstatements Incomeandothertaxespayable55218(163)Decreaseduetofinalinstalmentpaymentsforthepreviousyear,partiallyoffsetbycurrentincometaxexpenseinexcessofinstalmentsforthecurrentyear Dividendspayable35232626Effectsofincreasesinthedividendrateaswellas thenumberofsharesoutstanding Advancebillingsandcustomerdeposits 67565619Anincreaseinadvancebillingsreflectingincreasedwirelesssubscribergrowthduringtheyear.SeeNote 24oftheConsolidatedfinancialstatements Provisions288129159Anincreaseduetoawrittenputprovisionreclassifiedfromnon-currentliabilities,partlyoffsetbyrestructuringdisbursementsexceedingnewrestructuringprovisions.SeeNote 25oftheConsolidatedfinancialstatements Currentmaturitiesoflong-termdebt1,332836496Anincreaseinoutstandingcommercialpaper,aswellastheinitialrecognitionofleaseliabilitiesresultingfromtheimplementationofIFRS16 Currentderivativeliabilities 23914AnincreaseinthenotionalamountofU.S.currency hedgingitems. Working capital (1,221)(1,003)(218)TELUSnormallyhasanegativeworkingcapitalposition.(Currentassetssubtracting SeeFinancing and capital structure management plansCurrentliabilities)inSection 4.3andNote 4(c)oftheConsolidatedfinancial statements.

MD& A: CHANGES IN FINANCIAL POSITION TELUS2019 ANNUAL REPORT • 81 FinancialpositionatDecember31($millions) 20192018ChangeChangeincludes: Non-current assets Property,plantandequipment,net 14,23212,0912,141SeeCapital expendituresinSection 7.3 Cash used by investing activitiesandDepreciationinSection 5.3 Consolidated operations Intangibleassets,net12,81210,9341,878SeeCapital expendituresinSection 7.3 Cash used by investing activitiesandAmortization of intangible assetsinSection 5.3 Consolidated operations Goodwill,net5,3314,747584AcquisitionsincludingADTSecurityServicesCanada,Inc.SeeNote 18oftheConsolidatedfinancialstatements. Contractassets328458(130)AdecreaseprimarilydrivenbytheintroductionofourTELUSEasyPaymentdevicefinancingprogram Otherlong-termassets919986(67)Adecreaseinpensionandpost-retirementassetsresultingfromactuariallossesinpensionplans,partlyoffsetbyanincreaseinunbilledcustomerfinancereceivablesandanincreaseinportfolioinvestments.SeeNote 20oftheConsolidatedfinancialstatements. Non-current liabilities Provisions590728(138)Adecreaseduetoawrittenputprovisionreclassifiedtocurrentliabilities,partlyoffsetbyanincreaseinassetretirementobligationsarisingfromadecreaseindiscountratesandfromtheimplementationofIFRS16 Long-termdebt17,14213,2653,877SeeSection7.4 Cash provided (used) by financing activities Otherlong-termliabilities 80673175Anincreaseinpensionandpost-retirementliabilitiesresultingfromactuariallossesarisingfromadecreaseinthediscountratepartlyoffsetbyactualreturnsbeinginexcessofthediscountrate.Adecreaseasaresultofachangeinbalancesheetpresentationofnon-executorytenantinducementallowancesduetoIFRS16implementationaswellasadecreaseintheaccrualforshare-basedcompensation.SeeNote 27oftheConsolidatedfinancialstatements Deferredincometaxes 3,2043,14856Anoverallincreaseintemporarydifferencesbetweentheaccountingandtaxbasisofassetsandliabilities,partiallyoffsetbytherevaluationforthelowerAlbertacorporateincometaxrate. Owners’ equity Commonequity10,54810,259289SeeConsolidated statements of changes in owners’ equity intheConsolidatedfinancialstatements Non-controllinginterests 1118229SeeConsolidated statements of changes in owners’ equity intheConsolidatedfinancialstatements.

Thissectioncontainsforward-lookingstatements,includingthosewithrespecttoourdividendpayoutratioandnetdebttoEBITDA–excluding restructuringandothercostsratio.SeeCaution regarding forward-looking statementsatthebeginningofthisMD&A. 7.1 Overview Ourcapitalstructurefinancialpoliciesandfinancingandcapitalstructure managementplansaredescribedinSection 4.3. • Restructuringandothercosts,netofdisbursements,representedanetchangeof$214millionin2019.Thiswaslargelyattributabletothenon-recurringdonationtotheTELUSFriendlyFutureFoundationinthethirdquarterof2018,inadditiontohigherrestructuringandothercostsdisbursementsnetofexpenseandSharessettledfromTreasury,relatedtoimprovingouroverallcoststructureandoperationaleffectiveness. Interestpaid,netofinterestreceived,increasedby$108millionin 2019,largelyduetointerestpaidonleaseliabilities,andanincreaseintheaveragelong-termdebtbalance,whichwaspartlyoffsetbyalowerweighted-averageinterestrateonlong-termdebt. Incometaxespaid,netofrecoveriesreceived,increasedby $447millionin2019,primarilyduetoahigherfinalincometax paymentof$270millioninthefirstquarterof2019forthe 2018incometaxyear,andhigherrequiredinstalmentpayments. ForadiscussionofOtheroperatingworkingcapitalchanges,seeSection 6 Changes in financial positionandNote 31(a)oftheConsolidatedfinancialstatements. CashprovidedbyoperatingactivitieswasimpactedbytheimplementationofIFRS16,astherepaymentsofleaseliabilities,wheretheprincipalcomponentofleasesthatwerepreviouslyaccountedforasoperatingleases,andpreviouslyclassifiedwithinCashprovidedbyoperatingactivities,isreflectedasCashusedbyfinancingactivitiesunderthenewaccountingstandard.Theserepaymentswere$236millionin2019. Cash flows YearsendedDecember31($millions) 2019 2018 Change Cashprovidedbyoperatingactivities Cashusedbyinvestingactivities Cashprovided(used) byfinancingactivities 3,927 (5,044) 4,058 (2,977) (131) (2,067) • 1,238 (1,176) 2,414 • Increase(decrease)inCashand temporaryinvestments,net Cashandtemporaryinvestments, net,beginningofperiod 121 (95) 216 414 509 (95) • Cashandtemporaryinvestments, net,endofperiod 535 414 121 • 7.2 Cash provided by operating activities Analysis of changes in cash provided by operating activities YearsendedDecember31($millions) 2019 2018 Change EBITDA1(seeSection 5.4 andSection 5.5) Restructuringandothercosts, netofdisbursements2 Employeedefinedbenefitplansexpense,netofemployercontributions Share-basedcompensation expense,netofpayments Interestpaid,netof interestreceived Incometaxespaid,netof recoveriesreceived Otheroperatingworking capitalchanges 5,554 5,104 450 (36) 178 (214) 37 42 (5) (2) 16 (18) (707) (599) (108) (644) (197) (447) (275) (486) (211) Cashprovidedby operatingactivities 3,927 4,058 (131) 1 SeedescriptionunderEBITDAinSection 11.1 Non-GAAP and other financial measures. 2 IncludesSharessettledfromTreasuryof$100millionin2018relatedtothenon-recurringdonationtotheTELUSFriendlyFutureFoundationinthethirdquarterof2018. 82 • TELUS2019 ANNUAL REPORT CASH USED BY INVESTING ACTIVITIES ($ millions) 2019 5,044 2018 20173,643 2,977 CASH PROVIDED BY OPERATING ACTIVITIES ($ millions) 2019 3,927 20184,058 20173,947 7 LIQUIDITY AND CAPITAL RESOURCES

MD& A: LIQUIDIT Y AND CAPITAL RESOURCES 7.3 Cash used by investing activities Analysis of changes in cash used by investing activities YearsendedDecember31($millions) 2019 2018 Change Cashpaymentsforcapitalassets, excludingspectrumlicences Cashpaymentsforspectrumlicences Cashpaymentsforacquisitions,net Realestatejointventures (advances,netofreceipts) receipts,netofadvances P roceedsondispositionsandOther (2,952) (942) (1,105) (2,874) (1) (280) (78) (941) (825) Capital expenditure measures (28) (17) 162 16 (190) (33) YearsendedDecember31($millions,exceptcapitalintensity) 2019 2018 Change C ashusedbyinvestingactivities (5,044) (2,977) (2,067) Capitalexpenditures1 Wirelesssegment Wirelinesegment 889 2,017 896 2,018 (0.8)% –% • TheincreaseinCashpaymentsforcapitalassets,excluding spectrumlicencesfor2019wasprimarilycomposedof: • Adecreaseincapitalexpendituresof$8millionin2019(seeCapital expenditure measurestableanddiscussionbelow). • Highercapitalexpenditurepaymentswithrespecttopaymenttimingdifferences,asthechangeinassociatedAccountspayableandaccruedliabilitiesdecreasedby$78millionin2019. Cashpaymentsforspectrumlicencesin2019includes$931millionforthe600MHzspectrumpurchasedinthe2019wirelessspectrumauction,asnotedinSection 1.3. In2019,wemadecashpaymentsforbusinessacquisitionsthatincludeatelecommunicationsbusiness,asmartdatasolutionsbusiness,ADTSecurityServicesCanada,Inc.(ADTCanada)andotherindividuallyimmaterialacquisitionscomplementarytoourexistinglinesofbusiness.Thisiscomparedtobusinessacquisitionactivityin2018thatincludedMedisysHealthGroupInc.,certainassetsofAlarmForceIndustriesInc.,XavientInformationSystemsandotherindividuallyimmaterialacquisitionscomplementarytoourexistinglinesofbusiness. Realestatejointventuresreceipts,netofadvancesdecreasedby$190millionin2019,primarilyattributabletothe2018earningsdistributedfromtheTELUSGardenrealestatejointventurearising fromthesaleofTELUSGarden. Consolidated 2,906 2,914 (0.3)% Wirelesssegmentcapitalintensity(%) Wirelinesegmentcapitalintensity(%) Consolidatedcapitalintensity2(%) 11 30 20 11 31 20 – pts. (1) pt. – pts. 1 Capitalexpendituresincludeassetspurchased,excludingright-of-useleaseassets,butnotyetpaidfor,andthereforedifferfromCashpaymentsforcapitalassets,excludingspectrumlicences,asreportedintheConsolidatedstatementsofcashflows.RefertoNote 31oftheConsolidatedfinancialstatementsforfurtherinformation. SeeSection 11.1 Non-GAAP and other financial measures. • 2 • Consolidated capital expendituresdecreasedby$8millionin2019primarilyduetothetimingofourfibrebuildactivities,partiallyoffsetbyincreasedinvestmentsrelatedto5Gthatbeganinthefourthquarterof2018andexpendituresrelatedtobusinessacquisitions.In2019,wereducedourincrementalinvestmentsin4Gtechnology,asour5Ginvestmentswereexpanding.Additionally,wemadeinvestmentsinsystemsdevelopmenttosupportourTELUSEasyPaymentandPeaceofMindrateplanofferings.Withourongoinginvestments,weareadvancingwirelessspeedsandcoverage,includingpre-positioningfor5G,continuingtoconnectadditionalhomesandbusinessesdirectlytoourfibre-optictechnology,andsupportingsystemsreliabilityandoperationalefficiencyandeffectivenessefforts.TheseinvestmentsalsosupportourinternetandTVsubscribergrowth,addressourcustomers’demandforfasterinternetspeeds,andextendthereachandfunction-alityofourbusinessandhealthcaresolutions.ByDecember31,2019,wehadmadeTELUSPureFibreavailabletoapproximately70%of ourbroadbandfootprint. • TELUS2019 ANNUAL REPORT • 83 CAPITAL EXPENDITURES (EXCLUDING SPECTRUM LICENCES) ($ millions) 2019 2,906 20182,914 20173,094

7.4 Cash provided (used) by financing activities Analysis of changes in cash provided (used) by financing activities Long-term debt issues and repayments In2019,long-termdebtissues,netofrepayments,were$2,444million,achangeof$2,321million,comparedtolong-termdebtissues,netofrepayments,of$123millionin2018,primarilycomposedof: • Anetincreaseincommercialpaperoutstanding,includingforeignexchangeeffects,of$241milliontoabalanceof$1,015million(US$781million)atDecember31,2019,fromabalanceof$774million(US$569million)atDecember31,2018.Ourcommercialpaperprogram,whenutilized,provideslow-costfundsandisfullyback-stoppedbythefive-yearcommittedcreditfacility(seeSection 7.6 Credit facilities). AnincreaseinnetdrawsontheTELUSInternational(Cda)Inc.creditfacility,includingforeignexchangeeffects,of$12million.AsatDecember31,2019,netdrawswereUS$336million,whereasasatDecember31,2018,netdrawswereUS$313million.Thecreditfacilityisnon-recoursetoTELUSCorporation.InconnectionwiththeacquisitionofCompetenceCallCenter(CCC)subsequenttoDecember31,2019,asdescribedinSection 1.3,incrementalamountsof$1,036million(US$798million)weredrawn,inU.S.dollars,onthefacility. TheApril3,2019,issueof$1.0billionofseniorunsecured3.30%Notes,SeriesCY,dueMay2,2029.Thenetproceedsfromthisofferingwereusedtorepayoutstandingindebtedness,includingoutstandingcommercialpaper,forthereductionofcashamountsoutstandingunderanarm’s-lengthsecuritizationtrust,andforgeneralcorporatepurposes. TheMay28,2019,issueofUS$500millionofseniorunsecured 4.30%Notes,dueJune15,2049.Thenetproceedsfromthisofferingwereusedtorepayoutstandingindebtedness,includingoutstandingcommercialpaper,toredeem$650millionofthe$1.0billionaggregateprincipalamountonour5.05%Notes,SeriesCH,dueJuly23,2020,andforgeneralcorporatepurposes.Wehavefullyhedgedtheprincipalandinterestobligationsofthenotesbyenteringintoaforeignexchangederivative(acrosscurrencyinterestrateexchangeagreement),whicheffectivelyconvertedtheprincipalpaymentsandinterestobligationstoCanadiandollarobligationswithafixedinterestrateof4.27%andanissuedandoutstandingamountof$672million(reflectingafixedexchangerateof$1.3435). TheJuly2,2019,issueof$800millionofseniorunsecured2.75%Notes,SeriesCZ,dueJuly8,2026.Thenetproceedsfromthisofferingwereusedtoredeemtheremaining$350millionofour5.05%Notes,SeriesCH,torepayoutstandingindebtedness,includingoutstandingcommercialpaper,andforgeneralcorporatepurposes. TheDecember16,2019,issuesof$600millionofseniorunsecured 3.15%Notes,SeriesCAA,dueFebruary19,2030,and$400millionofseniorunsecured3.95%Notes,SeriesCAB,dueFebruary16,2050.Thenetproceedsofthisofferingwereusedtorepayoutstandingindebtedness,tofinancetheacquisitionofADTCanada,tofundcapitalexpenditures,andforgeneralcorporatepurposes. Theearlyfullredemptionof$1billionof5.05%Notes,SeriesCH,dueJuly23,2020.Thelong-termdebtprepaymentpremiumwas $28millionbeforeincometaxes. YearsendedDecember31($millions) 2019 2018 Change Dividendspaidtoholders ofCommonShares Treasurysharesacquired Issue(repayment)ofshort-term borrowings,net Long-termdebtissued,netof redemptionsandrepayment Sharesofsubsidiary(purchasedfrom) issuedtonon-controllinginterests Other (1,149) – (1,141) (100) (8) 100 (1) (67) 66 • 2,444 123 2,321 (9) (47) 24 (15) (33) (32) Cashprovided(used) byfinancingactivities 1,238 (1,176) 2,414 • • Dividends paid to holders of Common Shares CashdividendspaidtotheholdersofCommonSharesincreasedby $8millionin2019,whichreflectshigherdividendratesunderourdividendgrowthprogram(seeSection 4.3)andanincreaseinthenumberofsharesoutstanding.Ourdividendreinvestmentandsharepurchase(DRISP)plantrusteeacquiredsharesfromTreasuryfortheDRISPplan,ratherthanacquiringCommonSharesinthestockmarket.EffectivewiththedividendspaidonOctober1,2019,weofferedCommonSharesfromTreasuryatadiscountof2%.During2019,ourDRISPplantrusteeacquiredCommonSharesfor$183million. InJanuary2020,wepaiddividendsof$221milliontotheholders ofCommonSharesandthetrusteeacquireddividendreinvestmentCommonSharesfromTreasuryfor$131million,totalling$352million. • Treasury shares acquired In2018,ourinitialdonationof$100milliontotheTELUSFriendlyFutureFoundationwasmadeinTELUSCommonSharesacquiredinthemarket. • Issue (repayment) of short-term borrowings, net Inconnectionwithourthirdquarter2018acquisitionofMedisysHealthGroupInc.,werepaidshort-termborrowingsof$62million. • 84 • TELUS2019 ANNUAL REPORT DIVIDENDS PAID TO HOLDERS OF COMMON SHARES ($ millions) 2019 1,149 20181,141 2017082 1,

MD& A: LIQUIDIT Y AND CAPITAL RESOURCES 7.5 Liquidity and capital resource measures Net debtwas$18.2billionatDecember31,2019,anincreaseof$4.4billioncomparedtooneyearearlier,resultingmainlyfromtherecognitionofleaseliabilitiesof$1.7billionupontheapplicationofIFRS16,theissuancesofthe$1.0billionofSeriesCYnotes,US$500millionofseniorunsecured 4.30%Notes,$800millionofSeriesCZnotes,$600millionofSeriesCAAnotesand$400millionofSeriesCABnotes,asdescribedinSection 7.4,andanincreaseincommercialpaper.ThesefactorswerepartiallyoffsetbytheearlyredemptionofSeriesCHnotes,asdescribedinSection 7.4, andhigherCashandtemporaryinvestments. Incomparison,in2018,long-termdebtissuesnetofrepayments were$123millionandwereprimarilycomposedof: • Anetdecreaseincommercialpaperoutstanding,includingforeignexchangeeffects,of$366millionfromabalanceof$1,140million(US$908million)atDecember31,2017. AnincreaseinnetdrawsontheTELUSInternational(Cda)Inc.creditfacility,includingforeignexchangeeffects,of$80million.AsatDecember31,2018,netdrawswereUS$313million,whereasasatDecember31,2017,netdrawswereUS$276million. TheMarch1,2018,issuesof$600millionofseniorunsecured3.625%Notes,SeriesCX,dueMarch1,2028,and$150millionthroughthe re-openingof4.70%Notes,SeriesCW,dueMarch6,2048. TheJune2018issueofUS$750millionofseniorunsecured4.60%Notes,dueNovember16,2048. TheMarch2018repaymentof$250millionofSeriesCSnotes. TheAugust1,2018,earlyfullredemptionof$1billionof5.05%Notes,SeriesCG,dueDecember4,2019.Thelong-termdebtprepayment premiumwas$34millionbeforeincometaxes. • • Fixed-rate debt as a proportion of total indebtednessexcludesleaseliabilitiesandwas92%asatDecember31,2019,upfrom91%oneyearearlier,mainlyduetotheissuancesofSeriesCYnotes,US$500millionnotes,SeriesCZnotes,SeriesCAAnotesandSeriesCABnotes,partlyoffsetbytheearlyredemptionofSeriesCHnotes,allasdescribedinSection 7.4.Inaddition,therewasanincreaseintheamountsdrawnontheTELUSInternational(Cda)Inc.creditfacility,whichisnon-recoursetoTELUSCorporation,andanetincreaseincommercialpaperoutstanding, whichemulatesfloating-ratedebt. • • • Theaveragetermtomaturityofourlong-termdebt(excludingcommercialpaper,therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt)wasapproximately 12.8yearsasatDecember31,2019,increasingfromapproximately 12.2yearsasatDecember31,2018.Additionally,theweightedaveragecostofourlong-termdebt(excludingcommercialpaper,therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility,leaseliabilitiesandotherlong-termdebt)was3.94%asatDecember31,2019,adecreasefrom4.18%asatDecember31,2018. Net debt to EBITDA – excluding restructuring and other costsratiowas3.20times,asmeasuredatDecember31,2019,upfrom2.54timesoneyearearlier,largelyattributabletotherecognitionofleaseliabilitiesof$1.7billionupontheapplicationofIFRS16,aswedidnotretro-spectivelyadjustamountsreportedforperiodspriortofiscal2019(seeNote 2(a)oftheConsolidatedfinancialstatements).Ourlong-termobjectiveforthismeasureiswithinarangeof2.20to2.70times,reflectinga0.20shiftintherangesubsequenttoDecember31,2019,toreflectanaccommodationfortheeffectsofimplementingIFRS16,whichwebelieveisconsistentwithmaintaininginvestmentgradecreditratingsintherangeofBBB+,ortheequivalent,andprovidingreasonableaccesstocapital.AsatDecember31,2019,thisratioremainsoutsideofthelong-termobjectiverangeduetopriorissuancesofincrementaldebt,primarilyduetotheacquisitionofspectrumlicencesandbusinessacquisitions,partiallyoffsetbygrowthinEBITDA–excludingrestructuringandothercosts.AsatDecember31,2019,theacquisitionofspectrumlicencesincreasedtheratiobyapproxi-mately0.22;businessacquisitionsoverthelast12monthsincreasedtheratiobyapproximately0.18;andtheimplementationofIFRS16hadtheeffectofincreasingtheratiobyapproximately0.14.Ouracquiredspectrumlicenceshavemorethandoubledournationalspectrumholdingsandrepresentaninvestmenttoextendournetworkcapacitytosupportcontinuingdataconsumptiongrowth,aswellasgrowthinourwirelesssubscriberbase.Giventhecashdemandsofthe2019andupcomingspectrumauctions,theassessmentoftheguidelineandreturntotheobjectiverangeremainstobedetermined;however,itisourintenttoreturntoaratiobelow2.70timesinthemediumterm(followingupcomingspectrumauctions),consistentwithourlong-termstrategy.Whilethisratioexceedsourlong-termobjectiverange,wearewellincompliancewiththeleverageratiocovenantinourcreditfacilities,whichstatesthatwemaynotpermitournetdebttooperatingcashflowratiotoexceed4.00to1.00(seeSection 7.6 Credit facilities). Shares of subsidiary (purchased from) issued to non-controlling interests In2019,ourTELUSInternational(Cda)Inc.subsidiarypurchasedsharesfromanon-controllinginterestrelatedtotheacquisitionoftheremaining45%interestofVoxproLimited.Inthecomparativeperiod,inconnectionwithourfirstquarter2018acquisitionof65%ofXavient,ourTELUSInternational(Cda)Inc.subsidiaryissuedshares tonon-controllinginterests. TELUS2019 ANNUAL REPORT • 85 AVERAGE TERM TO MATURITY OF LONG-TERM DEBT (years) 2019 12.8 2018.2 2017 12 10.7 NET INCREASE IN LONG-TERM DEBT ($ millions) 2019 2,444 2018 2017865 123

Liquidity and capital resource measures Asat,oryearsended,December31 2019 2018 Change Components of debt and coverage ratios1($millions) Netdebt EBITDA–excludingrestructuringandothercosts Netinterestcost 18,199 5,688 755 13,770 5,421 644 4,429 267 111 Debt ratios Fixed-ratedebtasaproportionoftotalindebtedness(excludingleaseliabilities)(%) Averagetermtomaturityoflong-termdebt(excludingcommercialpaper, therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility, leaseliabilitiesandotherlong-termdebt)(years)Weightedaverageinterestrateonlong-termdebt(excludingcommercialpaper, therevolvingcomponentoftheTELUSInternational(Cda)Inc.creditfacility, leaseliabilitiesandotherlong-termdebt)(%) NetdebttoEBITDA–excludingrestructuringandothercosts1(times) 91 1 pt. 92 12.8 12.2 0.6 3.94 3.20 4.18 2.54 (0.24) pts. 0.66 Coverage ratios1(times) Earningscoverage EBITDA–excludingrestructuringandothercostsinterestcoverage 4.0 7.5 4.4 8.4 (0.4) (0.9) Other measures1(%) Dividendpayoutratio Dividendpayoutratioofadjustednetearnings 78 84 78 81 – pts. 3 pts. 1 SeeSection 11.1 Non-GAAP and other financial measures. Earnings coverageratiofor2019was4.0times,downfrom4.4timesoneyearearlier.Anincreaseinincomebeforeborrowingcostsandincometaxesincreasedtheratioby0.2,whileanincreaseinborrowingcosts,includingtherecognitionofinterestonleaseliabilitiesuponthe applicationofIFRS16,reducedtheratioby0.6. Dividend payout ratios:ActualdividendpayoutdecisionswillcontinuetobesubjecttoourBoard’sassessmentandthedeterminationofourfinancialpositionandoutlook,aswellasourdividendpayoutobjectiverangeof65to75%ofprospectivenetearningspersharefor2019.Thedisclosedbasicandadjusteddividendpayoutratiosarehistoricalmeasuresutilizingthelastfourquartersofdividendsdeclaredandearningspershare.Soastobeconsistentwiththewaywemanageourbusiness,wehaverevisedourtargetguideline,effectiveJanuary1,2020,tobecalculatedas60to75%offreecashflowonaprospectivebasis.Thehistoricalmeasuresforthe12-monthperiodendedDecember31,2019,arepresentedforillustrativepurposesinevaluating ourtargetguideline,andbothexceededtheobjectiverange. EBITDA – excluding restructuring and other costs interest coverageratiofor2019was7.5times,downfrom8.4timesoneyearearlier.GrowthinEBITDA–excludingrestructuringandothercostsincreasedtheratioby0.4,whileanincreaseinnetinterestcosts,includingtherecognitionofinterestonleaseliabilitiesupontheapplicationofIFRS16, reducedtheratioby1.3. 86 • TELUS2019 ANNUAL REPORT EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS ($ millions) 2019 5,688 2018421 2017027 EBITDA is a non-GAAP measure. 5, 5, EBITDA – EXCLUDING RESTRUCTURING AND OTHER COSTS INTEREST COVERAGE (times) 2019 7.5 20188.4 20178.9

MD& A: LIQUIDIT Y AND CAPITAL RESOURCES 7.6 Credit facilities AtDecember31,2019,wehadapproximately$1.2billionofavailableliquidityfromtheTELUSrevolvingcreditfacilityandapproximately$157millionofavailableliquidityfromtheTELUSInternational(Cda)Inc.creditfacility.Inaddition,wehad$400millionavailableunderourtradereceivablessecuritizationprogram(seeSection 7.7 Sale of trade receivables).Wearewellwithinourobjectiveofgenerallymaintainingatleast$1.0billionofavailableliquidity. TELUS revolving credit facility Wehavea$2.25billion(orU.S.dollarequivalent)unsecuredrevolvingcreditfacilitywithasyndicateoffinancialinstitutions,expiringMay31,2023.Therevolvingcreditfacilityisusedforgeneralcorporatepurposes,includingthebackstopofcommercialpaper,asrequired. TELUS revolving credit facility at December 31, 2019 Outstandingundrawnlettersofcredit Backstopforcommercialpaperprogram Available liquidity ($millions) Expiry Size Drawn Revolvingcreditfacility1 May31,2023 2,250 – – (1,015) 1,235 1 CanadiandollarsorU.S.dollarequivalent. Ourrevolvingcreditfacilitycontainscustomarycovenants,includingarequirementthatwenotpermitourconsolidatedleverageratiotoexceed4.00to1.00andthatwenotpermitourconsolidatedcoverageratiotobelessthan2.00to1.00attheendofanyfinancialquarter.AsatDecember31,2019,ourconsolidatedleverageratiowasapproximately 3.20to1.00andourconsolidatedcoverageratiowasapproximately7.53to1.00.Theseratiosareexpectedtoremainwellwithinthecovenants.Therearecertainminordifferencesinthecalculationoftheleverageratioandcoverageratioundertherevolvingcreditfacility,ascomparedwiththecalculationofNetdebttoEBITDA–excludingrestructuringandothercostsandEBITDA–excludingrestructuringandothercostsinterestcoverage.Historically,thecalculationshavenotbeenmateriallydifferent.Thecovenantsarenotimpactedbyrevaluation,ifany,ofProperty,plantandequipment,IntangibleassetsorGoodwillforaccountingpurposes.Continuedaccesstoourcreditfacilitiesisnotcontingentonmaintaining aspecificcreditrating. SubsequenttoDecember31,2019,thebankcreditfacilitywasamended,withanexpirydateofJanuary28,2025,therevolvingandamortizingtermloancomponentswereeachincreasedtoUS$600million andTELUSCorporation(as12.5%lender)joinedthelendingsyndicate. Other letter of credit facilities AtDecember31,2019,wehad$184millionoflettersofcreditoutstanding,issuedundervariousuncommittedfacilities;suchletterofcreditfacilitiesareinadditiontotheabilitytoprovidelettersofcreditpursuanttoourcom-mittedbankcreditfacility.Availableliquidityundervariousuncommittedlettersofcreditfacilitieswas$131millionatDecember31,2019.Wehadarranged$880millionofincrementallettersofcredittoallowustopartici-pateintheInnovation,ScienceandEconomicDevelopmentCanada 600MHzwirelessspectrumauctionthatwasheldfromMarchtoApril 2019,asdiscussedfurtherinNote 18(a)oftheConsolidatedfinancialstatements.Concurrentwithfundingthepurchaseofthespectrumlicences,theseincrementallettersofcreditwereextinguished. Commercial paper TELUSCorporationhasanunsecuredcommercialpaperprogram,whichisbackstoppedbyourrevolvingcreditfacility,enablingustoissuecommercialpaperuptoamaximumaggregateamountatanyonetimeof$1.4billionasatDecember31,2019.Foreigncurrencyforwardcon-tractsareusedtomanagecurrencyriskarisingfromissuingcommercialpaperdenominatedinU.S.dollars.Thecommercialpaperprogramistobeusedforgeneralcorporatepurposes,including,butnotlimitedto,capitalexpendituresandinvestments.OurabilitytoreasonablyaccessthecommercialpapermarketintheU.S.isdependentonourcredit ratings(seeSection 7.8 Credit ratings). Other long-term debt Otherlong-termdebtliabilitiesbearinterestat3.29%,aresecuredbytheassociatedAWS-4spectrumlicences,andaresubjecttoanamortiz-ationschedulethatresultsintheprincipalbeingrepaidovertheperiodtomaturity,March31,2035. Other short-term borrowings AtDecember31,2019,TELUSCorporationhasreceivedacommitmentletterfora$750millionunsecured,single-drawdown,non-revolvingcreditfacility,maturingoneyearfromthecompletionofdocumentation,whichistobeusedforgeneralcorporatepurposes.Thefacilitywillbeavailableuponcompletionofdocumentationandsatisfactionofcondi-tionsprecedent;onceavailable,wewillhave30daystodrawuponthefacility,afterwhichtimetheundrawncommittedamountwillbecancelled.AsatFebruary13,2020,documentationhadnotbeencompleted.Thecreditfacilitywillbearinterestatprimerateorbankers’acceptancerate(assuchtermsareusedordefinedinthecreditfacility),plusapplic-ablemargins;representations,warrantiesandcovenantsgenerally willnotdifferfromthoseoftheexistingTELUSrevolvingcreditfacility. TELUS International (Cda) Inc. credit facility AsatDecember31,2019,TELUSInternational(Cda)Inc.hadabankcreditfacility,securedbyitsassets,expiringonDecember20,2022,withasyndicateoffinancialinstitutions.ThecreditfacilityiscomposedofaUS$350millionrevolvingcomponentandanamortizingUS$120milliontermloancomponent.Thecreditfacilityisnon-recoursetoTELUSCorporation.Theoutstandingrevolvingcomponenthadaweighted averageinterestrateof3.25%asatDecember31,2019. TELUS2019 ANNUAL REPORT • 87

7.7 Sale of trade receivables TELUSCommunicationsInc.,awhollyownedsubsidiaryofTELUS,isapartytoanagreementwithanarm’s-lengthsecuritizationtrustassociatedwithamajorScheduleICanadianbank,underwhichitisabletosellaninterestincertaintradereceivablesforanamountuptoamaximumof $500million.TheagreementisineffectuntilDecember31,2021,andavail-ableliquiditywas$400millionasatDecember31,2019.(SeeNote 22oftheConsolidatedfinancialstatements.)Salesoftradereceivablesinsecuri-tizationtransactionsarerecognizedascollateralizedShort-termborrowingsandthusdonotresultinourde-recognitionofthetradereceivablessold. TELUSCommunicationsInc.isrequiredtomaintainacreditratingof atleastBBbyDBRSLtd.orthesecuritizationtrustmayrequirethesale programtobewounddownpriortotheendoftheterm.Theminimum creditratingwasexceededasofFebruary13,2020. 7.8 Credit ratings Therewerenochangestoourinvestmentgradecreditratingsduring 2019,orasofFebruary13,2020.Webelieveadherencetomostofourstatedfinancialpolicies(seeSection 4.3),coupledwithoureffortstomaintainaconstructiverelationshipwithbanks,investorsandcreditratingagencies,continuetoprovidereasonableaccesstocapitalmarkets.(SeediscussionofrisksinSection 10.13 Financing, debt and dividends.) 7.9 Financial instruments, commitments and contingent liabilities Financial instruments Ourfinancialinstruments,theiraccountingclassificationandthenatureofcertainrisksthattheymaybesubjecttoaredescribedinNote 4oftheConsolidatedfinancialstatements.OurpoliciesinrespectoftherecognitionandmeasurementoffinancialinstrumentsaredescribedinNote 1(c)oftheConsolidatedfinancialstatements. Risks Marketrisks Financialinstrument Accountingclassification Credit Liquidity Currency Interestrate Otherprice Measured at amortized cost Accountsreceivable Contractassets Constructioncreditfacilitiesadvances torealestatejointventure Short-termborrowings Accountspayable Provisions(includingrestructuring accountspayable) Long-termdebt AC1 AC1 X X X AC1 AC1 AC1 X X X X X X AC1 AC1 X X X X X X Measured at fair value Cashandtemporaryinvestments Long-terminvestments (notsubjecttosignificantinfluence)3 Foreignexchangederivatives4 Share-basedcompensationderivatives4 FVTPL2 X X X FVTPL/FVOCI3 FVTPL2 FVTPL2 X X X X X X X X 1 2 Foraccountingrecognitionandmeasurementpurposes,classifiedasamortizedcost(AC). Foraccountingrecognitionandmeasurementpurposes,classifiedasfairvaluethroughnetincome(FVTPL).Unrealizedchangesinthefairvaluesoffinancialinstrumentsareincludedinnetincomeunlesspartofacashflowhedgingrelationship.Theeffectiveportionsofunrealizedchangesinthefairvaluesoffinancialinstrumentsheldforhedgingareincludedinothercomprehensiveincome. Long-terminvestmentsoverwhichwedonothavesignificantinfluencearemeasuredatfairvalueifthosefairvaluescanbereliablymeasured.Foraccountingrecognitionandmeasurementpurposes,onaninvestment-by-investmentbasis,long-terminvestmentsareclassifiedaseitherfairvaluethroughnetincomeorfairvaluethroughothercomprehensiveincome(FVOCI). Useofderivativefinancialinstrumentsissubjecttoapolicywhichrequiresthatnoderivativetransactionistobeenteredintoforthepurposeofestablishingaspeculativeorleveragedposition(thecorollarybeingthatallderivativetransactionsaretobeenteredintoforriskmanagementpurposesonly)andsetscriteriaforthecreditworthinessofthetransactioncounterparties. Derivativesthatarepartofanestablishedanddocumentedcashflowhedgingrelationshipareaccountedforasheldforhedging.Webelievethatclassificationasheldforhedging resultsinabettermatchingofthechangeinthefairvalueofthederivativefinancialinstrumentwiththeriskexposurebeinghedged. Inrespectofhedgesofanticipatedtransactions,hedgegains/lossesareincludedwiththeexpenditureandareexpensedwhenthetransactionisrecognizedinourresults ofoperations.Wehaveselectedthismethodaswebelievethatitresultsinabettermatchingofthehedgegains/losseswiththeriskexposurebeinghedged. Derivativesthatarenotpartofadocumentedcashflowhedgingrelationshipareaccountedforasheldfortradingandthusaremeasuredatfairvaluethroughnetincome. 3 4 RefertoNote 4oftheConsolidatedfinancialstatementsforfurtherinformationregardingourfinancialinstruments. 88 • TELUS2019 ANNUAL REPORT

MD& A: LIQUIDIT Y AND CAPITAL RESOURCES Commitments and contingent liabilities Contractual obligations as at December 31, 2019 ($millions) 2020 2021 2022 2023 2024 2025–2029 Thereafter Total Short-termborrowings Interestobligations Principalobligations1 3 – 3 100 – – – – – – – – – – 6 100 3 103 – – – – – 106 Long-termdebt Interestobligations Principalmaturities 622 1,035 602 1,096 552 1,683 507 514 480 1,115 1,796 5,515 4,090 6,012 8,649 16,970 1,657 1,698 2,235 1,021 1,595 7,311 10,102 25,619 Leases Interestobligations Principalmaturities 69 304 55 283 45 162 39 150 32 125 107 322 102 286 449 1,632 373 338 207 189 157 429 388 2,081 Constructioncreditfacilitiescommitment2 10 – – – – – – 10 Occupancycosts2 127 119 105 103 90 226 105 875 Purchaseobligations3 Operatingexpenditures Property,plantandequipment, andIntangibleassets 1,232 1,218 357 82 83 186 193 3,351 157 10 5 4 5 – – 181 1,389 1,228 362 86 88 186 193 3,532 Non-interestbearingfinancialliabilities 2,639 43 7 5 5 4 – 2,703 Otherobligations 31 (1) 7 (1) (1) 25 1 61 Total 6,229 3,528 2,923 1,403 1,934 8,181 10,789 34,987 1 2 SeeSection 7.7 Sale of trade receivables. Constructioncreditfacilitiesreflectloanamountsforarealestatejointventure,arelatedparty,andoccupancycostsincludetransactionswithrealestatejointventures.SeeSection 7.11 Transactions between related parties. Whereapplicable,purchaseobligationsreflectforeignexchangeratesatDecember31,2019.Purchaseobligationsincludefutureoperatingandcapitalexpendituresthathavebeencontractedforatthecurrentyear-endandincludethemostlikelyestimatesofpricesandvolumes,wherenecessary.Aspurchaseobligationsreflectmarketconditionsatthetimetheobligationwasincurredfortheitemsbeingpurchased,theymaynotberepresentativeoffutureyears.Obligationsfrompersonnelsupplycontractsandothersuchlabouragreementshavebeenexcluded. 3 Claims and lawsuits Anumberofclaimsandlawsuits(includingclassactionsandintellectualpropertyinfringementclaims)seekingdamagesandotherreliefarependingagainstusand,insomecases,otherwirelesscarriersandtele-communicationsserviceproviders.Aswell,wehavereceivednoticeof,orareawareof,certainpossibleclaims(includingintellectualpropertyinfringementclaims)againstusand,insomecases,otherwirelesscarriersandtelecommunicationsserviceproviders.(Seetherelatedriskdiscus-sioninSection 10.16 Litigation and legal matters.) Itisnotcurrentlypossibleforustopredicttheoutcomeofsuch claims,possibleclaimsandlawsuitsduetovariousfactors,including: thepreliminarynatureofsomeclaims;uncertaindamagetheoriesand demands;anincompletefactualrecord;uncertaintyconcerninglegaltheoriesandproceduresandtheirresolutionbythecourts,atboththetrialandtheappeallevels;andtheunpredictablenatureofopposingpartiesandtheirdemands. However,subjecttotheforegoinglimitations,managementisoftheopinion,baseduponlegalassessmentsandinformationpresentlyavailable,thatitisunlikelythatanyliability,totheextentnotprovidedforthroughinsuranceorotherwise,wouldhaveamaterialeffectonourfinancialpositionandtheresultsofouroperations,includingcashflows,withtheexceptionoftheitemsdisclosedinNote 29(a)oftheConsolidatedfinancialstatements.Thisisasignificantjudgmentforus (seeSection 8.1 Critical accounting estimates and judgments). TELUS2019 ANNUAL REPORT • 89

7.11 Transactions between related parties Transactions with key management personnel Ourkeymanagementpersonnelhaveauthorityandresponsibilityforoverseeing,planning,directingandcontrollingouractivitiesandconsistofourBoardofDirectorsandourExecutiveLeadershipTeam.Totalcompensationexpenseforkeymanagementpersonnelwas$53millionin2019,comparedto$64millionin2018.Thedecreaseincompensationexpenseforkeymanagementpersonnelwasduetogreatershare-basedcompensationin2018primarilyarisingfrommetricsaffectingperformancecondition-basedrestrictedstockunits.See Note 30(a)oftheConsolidatedfinancialstatementsforadditionaldetails. Indemnification obligations Inthenormalcourseofoperations,weprovideindemnificationinconjunctionwithcertaintransactions.Thetermsoftheseindemnificationobligationsrangeinduration.Theseindemnificationswouldrequireustocompensatetheindemnifiedpartiesforcostsincurredasaresultoffailuretocomplywithcontractualobligations,orlitigationclaimsorstatutorysanctions,ordamagesthatmaybesufferedbyanindemnifiedparty.Insomecases,thereisnomaximumlimitontheseindemnificationobligations.Theoverallmaximumamountofanindemnificationobligationwilldependonfutureeventsandconditionsandthereforecannotbereasonablyestimated.Whereappropriate,anindemnificationobligationisrecordedasaliability.Otherthanobligationsrecordedasliabilitiesatthetimeoftherelatedtransactions,historicallywehavenotmadesignificantpaymentsundertheseindemnifications. AsatDecember31,2019,wehadnoliabilityrecordedinrespect ofourindemnificationobligations. Transactions with defined benefit pension plans Weprovidedmanagementandadministrativeservicestoourdefinedbenefitpensionplans.Chargesfortheseserviceswereonacost recoverybasisandwereimmaterial. Transactions with real estate joint ventures In2019,wehadtransactionswithrealestatejointventures,whicharerelatedpartiestous,assetoutinNote 21oftheConsolidatedfinancialstatements. FortheTELUSSkyrealestatejointventure,commitmentsandcontingentliabilitiesincludeconstruction-relatedcontractualcommit-mentsthroughto2020(approximately$37millionatDecember31,2019)andconstructionfinancing($342million,withthreeCanadianfinancialinstitutionsas66 23%lenderandTELUSas3313%lender)underacreditagreementmaturingAugust31,2021.Wehaveenteredintoaleaseagree-mentwiththeTELUSSkyrealestatejointventure;forleaseaccountingpurposes,theleasecommencedduringthethree-monthperiodended March31,2019. 7.10 Outstanding share information December31, January31, 2020 O utstanding shares(millions)1 2019 C ommonShares 605 607 1 Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. 90 • TELUS2019 ANNUAL REPORT

MD& A: ACCOUNTING MATTERS 8.1 Critical accounting estimates and judgments OursignificantaccountingpoliciesaredescribedinNote 1oftheConsolidatedfinancialstatementsfortheyearendedDecember31,2019.Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciples(GAAP)requiresmanagementtomakeestimates,assumptionsandjudgmentsthataffect:thereportedamountsofassetsandliabilitiesatthedateofthefinancialstatements;thedisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements;andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.OurcriticalaccountingestimatesandsignificantjudgmentsaregenerallydiscussedwiththeAuditCommitteeeachquarter. RefertoNote 1oftheConsolidatedfinancialstatementsforfurtherinformationonourcriticalaccountingestimates,includingexamplesofthesignificantestimatesandjudgmentsthatwemake,andtheirrelative significanceanddegreeofdifficulty,asillustratedinthegraphic. General • Indeterminingourcriticalaccountingestimates,weconsidertrends,commitments,eventsoruncertaintiesthatwereasonablyexpecttomateriallyaffectourmethodologyorassumptions.OurstatementsinthisMD&AregardingsuchconsiderationaremadesubjecttotheCaution regarding forward-looking statements. Inthenormalcourse,wemakechangestoassumptionsunderlyingallcriticalaccountingestimatessothattheyreflectcurrenteconomicconditions,updatedhistoricalinformationusedtodeveloptheassump-tions,andchangesinourcreditratings,whereapplicable.Unlessindicatedotherwiseinthediscussionbelow,weexpectthatnomaterialchangesinoverallfinancialperformanceandfinancialstatementlineitemswouldariseeitherfromreasonablylikelychangesinmaterialassumptionsunderlyingtheestimateorfromselectionofadifferentestimatefromwithinarangeofvalidestimates. OurcriticalaccountingestimatesaffecttheConsolidatedstatementsofincomeandothercomprehensiveincome,andtheConsolidated statementsoffinancialposition,asfollows: • • Consolidated statements of income and other comprehensive income Operatingexpenses Employeedefinedbenefitplans Goodsandservicespurchased Employeebenefitsexpense Amortizationofintangibleassets Operating revenues Financing costs re-measurements1 Consolidated statements of financial position Depreciation Intangibleassets,net,andGoodwill,net Employeedefinedbenefitpensionplans Property,plantandequipment,net Provisionsforassetretirementobligations Provisionsrelatedtobusinesscombinations Investments Accountsreceivable Contractassets Inventories X2 X3 X X3 X X X X X X X X X X X X X 1 2 3 Othercomprehensiveincome–Itemneversubsequentlyreclassifiedtoincome. Accountingestimate,asapplicabletoIntangibleassetswithindefinitelivesandGoodwill,primarilyrelatestospectrumholdingsandaccordinglyaffectsourwirelesscash-generatingunit. Accountingestimateimpactduetointernallabourcapitalizationrates. • AllcriticalaccountingestimatesareuncertainatthetimeanestimateismadeandaffectthefollowingConsolidatedstatementsofincomeandothercomprehensiveincomelineitems:Incometaxes(exceptforestimatesaboutGoodwill)andNetincome.Similarly,allcriticalaccountingestimatesaffectthefollowingConsolidatedstate-mentsoffinancialpositionlineitems:Currentassets(Incomeand othertaxesreceivable),Currentliabilities(Incomeandothertaxespayable),DeferredincometaxesandCommonequity(retainedearnings)andNon-controllinginterests.Thediscussionofeachcriticalaccountingestimatedoesnotdifferbetweenourtwo segments,wirelessandwireline,unlessexplicitlynoted. TELUS2019 ANNUAL REPORT • 91 8 ACCOUNTING MATTERS

Intangible assets, net; Goodwill, net; and Property, plant and equipment, net Employee defined benefit pension plans Certain actuarial and economic assumptions used in determining defined benefit pension costs, accrued pension benefit obligations and pension plan assets General • TheIntangibleassets,net,lineitemrepresentsapproximately34%ofTotalassetsasatDecember31,2019(33%asatDecember31,2018).IncludedinIntangibleassetsarespectrumlicences,whichrepresentapproximately26%ofTotalassetsasatDecember31,2019and2018. TheGoodwill,net,lineitemrepresentsapproximately14%ofTotalassetsasatDecember31,2019andapproximately14%ofTotalassetsasatDecember31,2018. TheProperty,plantandequipment,net,lineitemonourConsolidatedstatementsoffinancialpositionrepresentsapproximately37%ofTotalassetsasatDecember31,2019and2018. Ifourestimatesoftheusefullivesofassetswereincorrect,wecouldexperienceincreasedordecreasedchargesforamortizationordepreciationinthefuture.Ifthefutureweretodifferadverselyfromourbestestimateofkeyeconomicassumptionsandassociatedcashflowsweretomateriallydecrease,wecouldpotentiallyexperiencefuturematerialimpairmentchargesinrespectofourProperty,plantandequipmentassets,IntangibleassetsorGoodwill.IfIntangibleassetswithindefinitelivesweredeterminedtohavefinitelivesatsomepointinthefuture,wecouldexperienceincreasedchargesforamortizationofIntangibleassets.Suchchargesinandofthem-selvesdonotresultinacashoutflowandwouldnotimmediately affectourliquidity. • Wereviewindustrypractices,trends,economicconditionsanddataprovidedbyactuarieswhendevelopingassumptionsusedinthedeterminationofdefinedbenefitpensioncostsandaccruedpensionbenefitobligations.Pensionplanassetsaregenerallyvaluedusingmarketprices;however,someassetsarevaluedusingmarketestimateswhenmarketpricesarenotreadilyavailable.Actuarialsupportisobtainedforinterpolationsofexperiencegainsandlossesthataffecttheemployeedefinedbenefitplanactuarialgainsandlossesandaccruedpensionbenefitobligations.Thediscountrateusedtodeterminetheaccruedbenefitobliga-tionisbasedupontheyieldonlong-term,high-quality,fixed-terminvestments.Thediscountrateissetannuallyattheendofeachcalendaryear,baseduponyieldsonlong-termcorporatebondindicesinconsultationwithactuaries.Futureincreasesincompen-sationarebaseduponthecurrentbenefitspoliciesandeconomicforecasts.Wehaveexaminedourrespectivepensionobligationandcurrentservicecostdurationsandobservedanapproximate 10-yeardifferenceinduration.Asindividualdiscountratesmoreaccuratelyreflecttheobligationandcurrentservicecost,com-mencingin2016,weappliedadualdiscountratemethodology. Onanannualbasis,ataminimum,thedefinedbenefitpensionplanassumptionsareassessedandrevisedasappropriate.Assumptionsusedindeterminingdefinedbenefitpensioncosts,accruedpensionbenefitobligationsandpensionplanassetsincludelifeexpectancy,discountrates,marketestimatesandratesoffuturecompensationincreases.Materialchangesinoverallfinancialperformanceandfinancialstatementlineitemswouldarisefromreasonablylikelychangesinthematerialassumptionsunderlyingthisestimate,sincecertainassumptionsmayhavebeenrevisedtoreflectupdatedhistoricalinformationandupdatedeconomicconditions.SeeNote 15oftheConsolidatedfinancialstatementsforfurtheranalysis. ThisaccountingestimaterelatedtoemployeedefinedbenefitpensionplansisinrespectofcomponentsoftheOperatingexpenseslineitem,FinancingcostslineitemandOthercompre-hensiveincomelineitemonourConsolidatedstatementsofincomeandothercomprehensiveincome.Ifthefutureweretoadverselydifferfromourbestestimateofassumptionsusedindeterminingdefinedbenefitpensioncosts,accruedbenefitobligationsandpensionplanassets,wecouldexperiencefutureincreased(ordecreased)definedbenefitpensionexpense, financingcostsandchargestoOthercomprehensiveincome. • • • • The recoverability of Intangible assets with indefinite lives; the recoverability of Goodwill • ThecarryingvaluesofIntangibleassetswithindefinitelivesandGoodwillareperiodicallytestedforimpairment,andthistestrepresentsasignificantestimateforus. Therecoverableamountsofthecash-generatingunits’assetshavebeendeterminedbasedonafairvaluelesscostsofdisposalcalculation.Thereisamaterialdegreeofuncertaintywithrespecttotheestimatesoftherecoverableamountsofthecash-generatingunits’assets,giventhenecessityofmakingkeyeconomicassump-tionsaboutthefuture.Thefairvaluelesscostsofdisposalandvalue-in-usecalculationsbothusefuturecashflowsandgrowth projections(includingjudgmentsabouttheallocationoffuturecapitalexpenditurestosupportbothwirelessandwirelineoperations);associatedeconomicriskassumptionsandestimatesofthelikelihoodofachievingkeyoperatingmetricsanddrivers;estimatesoffuturegenerationalinfrastructurecapitalexpenditures;andthefutureweightedaveragecostofcapital. SeeNote 18(f)oftheConsolidatedfinancialstatementsforfurther discussionofmethodologyandsensitivitytesting. • • • The estimated useful lives of assets; the recoverability of tangible assets • Theestimatedusefullivesofassetsaredeterminedbyacontinuingprogramofassetlifestudies.Therecoverabilityofassetswithfinitelivesissignificantlyimpactedbytheestimatedusefullivesofassets. • Assumptionsunderlyingtheestimatedusefullivesofassetsinclude thetimingoftechnologicalobsolescence,competitivepressures andfutureinfrastructureutilizationplans. Income tax assets and liabilities The amount and composition of income tax assets and income tax liabilities, including the amount of unrecognized tax benefits • Assumptionsunderlyingthecompositionofincometaxassetsandliabilitiesarebaseduponanassessmentofthetechnicalmeritsoftaxpositions.Incometaxbenefitsonuncertaintaxpositions arerecognizedonlywhenitismorelikelythannotthattheultimate 92 • TELUS2019 ANNUAL REPORT

MD& A: ACCOUNTING MATTERS determinationofthetaxtreatmentofapositionwillresultintherelatedbenefitbeingrealizable;however,thisdoesnotmeanthattaxauthoritiescannotchallengethesepositions.Incometaxassetsandliabilitiesaremeasuredattheamountthatisexpectedtoberealizedorincurreduponultimatesettlementwithtaxationauthorities.Suchassessmentsarebasedupontheapplicableincometaxlegis-lation,regulations,interpretationsandjurisprudence,allofwhichinturnaresubjecttochangeandinterpretation. Currentincometaxassetsandliabilitiesareestimatedbasedupontheamountofincometaxthatiscalculatedasbeingowedtotaxationauthorities,netofperiodicinstalmentpayments.Deferredincometaxliabilitiesarecomposedofthetaxeffectoftemporarydifferencesbetweenthecarryingamountandtaxbasisofassetsandliabilities,aswellastheincometaxeffectofundeductedincometaxlosses.Thetimingofthereversaloftemporarydifferencesisestimatedandtheincometaxratesubstantivelyenactedfortheper-iodsofreversalisappliedtothetemporarydifferences.Thecarryingamountsofassetsandliabilitiesarebasedupontheamountsrecordedinthefinancialstatementsandare,therefore,subjecttoaccountingestimatesthatareinherentinthosebalances.Thetaxbasisofassetsandliabilities,aswellastheamountofundeductedincometaxlosses,arebasedupontheassessmentandmeasurementoftaxpositions,asnotedabove.Assumptionsastothetimingofreversaloftemporarydifferencesincludeexpectationsaboutthefutureresultsofoperationsandfuturecashflows.Thecompositionofincometaxliabilitiesisreasonablylikelytochangefromperiodtoperiodbecauseofchangesintheestimationofthesesignificantuncertainties. ThisaccountingestimateisinrespectofmaterialassetandliabilitylineitemsonourConsolidatedstatementsoffinancialpositioncomprisinglessthan1%ofTotalassetsasatDecember31,2019and2018,andapproximately9%ofTotalliabilitiesandowners’equityasatDecember31,2019(2018–approximately10%).Ifthefutureweretoadverselydifferfromourbestestimateofthelikelihoodoftaxpositionsbeingsustained,theamountoftaxexpectedtobeincurred,thefutureresultsofoperations,thetimingofreversalofdeductibletemporarydifferencesandtaxabletemporarydifferences,andthetaxratesapplicabletofutureyears,wecouldexperiencematerialcurrentincometaxadjustmentsanddeferredincometaxadjustments.Suchcurrentanddeferredincometaxadjustmentscouldresultinanincreaseoraccelerationofcashoutflowsatanearliertimethanmight otherwisebeexpected. • Onanannualbasis,ataminimum,assumptionsunderlyingtheprovisionsforassetretirementobligationsincludeexpectationsaboutinflation,discountratesandanychangesintheamountortimingoftheunderlyingfuturecashflows,whichmayspannumerousdecades.Materialchangesinfinancialpositionwouldarisefromreasonablylikelychangesinthematerialassumptionsunderlyingthisestimate,sincecertainassumptionsmayhavebeenrevisedtoreflectupdatedhistoricalinformationandupdatedeconomicconditions.Thecapitalizedassetretirementcostisdepreciatedonthesamebasisastherelatedasset,andthediscountaccretionisincludedintheConsolidatedstatementsofincomeandothercomprehensiveincomeasacomponentofFinancingcosts. Thisaccountingestimateisinrespectoftheassetretirementobli-gationscomponentoftheProvisionslineitemonourConsolidatedstatementsoffinancialposition,andthiscomponentcomprisesapproximately 1% of Total liabilities and owners’ equity as atDecember31,2019and2018.Iftheprovisionsforassetretirementobligationsweretobeinadequate,wecouldexperienceachargetoGoodsandservicespurchasedinthefuture.Achargeforaninadequateassetretirementobligationprovisionwouldresultinacashoutflowproximatetothetimethattheassetretirement obligationissatisfied. • • Provisions related to business combinations Provisions for written put options • Inconnectionwithcertainbusinessacquisitions,wehaveestab-lishedprovisionsforwrittenputoptionsinrespectofnon-controllinginterests.Weprovidewrittenputoptionstotheremainingsellingshareholdersunderwhichtheycouldputtheremainingnon-controllinginterestsat,orafter,aspecifieddate.Theacquisition-datefairvaluesoftheputtablesharesheldbythenon-controllingshareholdersarerecordedasprovisions. Onanannualbasis,ataminimum,theprovisionsforwrittenputoptionsareassessedandrevisedasappropriate.Theprovi-sionsforwrittenputoptionshavebeendeterminedbasedonthenetpresentvaluesofestimatedfutureearningsresults;thereisamaterialdegreeofuncertaintywithrespecttotheestimatesoffutureearningsresults,giventhenecessityofmakingsignificanteconomicassumptionsaboutthefuture.Theamountsofprovisionsforwrittenputoptionsarereasonablylikelytochangefromperiodtoperiodbecauseofchangesintheestimationoffutureearningsandforeignexchangeratemovements. Thisaccountingestimateisinrespectoftheprovisionsforwrittenputoptionsrelatedtothenon-controllinginterestscomponentoftheProvisionslineitemonourConsolidatedstatementsoffinancialposition,andthiscomponentcomprisesapproximately1%ofTotalliabilitiesandowners’equityasatDecember31,2019and2018.Iftheprovisionsforwrittenputoptionsweretobeinadequate,wecouldexperienceachargetoOperatingrevenuesinthefuture.Achargeforaninadequatewrittenputoptionprovisionwouldresultinacashoutflowproximatetothetimethatthewrittenput optionisexercised. • • Provisions for asset retirement obligations • Certain economic assumptions used in provisioning for asset retirement obligations • Assetretirementobligationprovisionsarerecognizedforstatutory,contractualorlegalobligations,normallywhenincurred,associatedwiththeretirementofProperty,plantandequipment(primarilycertainitemsofoutsideplantandwirelesssiteequipment)whenthoseobli-gationsresultfromtheacquisition,construction,developmentand/ornormaloperationoftheassets.Theobligationsaremeasuredinitiallyatfairvalue,determinedusingpresentvaluemethodology,andtheresultingcostsarecapitalizedasapartofthecarryingvalue oftherelatedasset. TELUS2019 ANNUAL REPORT • 93

Investments Contract assets The recoverability of long-term investments General • Weassesstherecoverabilityofourlong-terminvestmentsonaregular,recurringbasis.Therecoverabilityofinvestmentsisassessedonaspecific-identificationbasis,takingintoconsiderationexpectationsaboutfutureperformanceoftheinvestmentsandcomparisonofhistoricalresultstopastexpectations. Themostsignificantassumptionsunderlyingtherecoverabilityof long-terminvestmentsarerelatedtotheachievementoffuturecashflowandoperatingexpectations.Ourestimateoftherecoverabilityoflong-terminvestmentscouldchangefromperiodtoperiodduetotherecurringnatureoftherecoverabilityassessmentandduetothenatureoflong-terminvestments(wedonotcontroltheinvestees). InvestmentsareincludedintheOtherlong-termassetslineitemonourConsolidatedstatementsoffinancialposition,whichitselfcomprisesapproximately2%ofTotalassetsasatDecember31,2019(2018–3%).Iftheallowanceforrecoverabilityoflong-terminvestmentsweretobeinadequate,wecouldexperienceanincreasedchargetoOtheroperatingincomeinthefuture.Suchaprovisionforrecover-abilityoflong-terminvestmentsdoesnotresultinacashoutflow.Whenthereisclearandobjectiveevidenceofanincreaseinthefairvalueofaninvestment,whichmaybeindicatedbyeitherarecentsaleofsharesbyanothercurrentinvestorortheinjectionofnewcashintotheentitybyaneworcurrentinvestor,werecognizetheafter-tax increaseinvalueinOthercomprehensiveincome. • Wemaintainallowancesforlifetimeexpectedcreditlossesrelatedtocontractassets.Currenteconomicconditions,historicalinformation(includingcreditagencyreports,ifavailable),andthelineofbusinessfromwhichthecontractassetaroseareallconsideredwhendeter-miningimpairmentallowances.Thesamefactorsareconsideredwhendeterminingwhethertowriteoffamountschargedtotheimpairment allowanceforcontractassetsagainstcontractassets. • The impairment allowance • TheseaccountingestimatesareinrespectoftheContractassetslineitemsonourConsolidatedstatementsoffinancialposition,whichcompriseapproximately3%ofTotalassetsasatDecember31,2019(2018–4%).Ifthefutureweretodifferadverselyfromourbestesti-matesofthefairvalueoftheresidualcashflowsandtheimpairmentallowanceforcontractassets,wecouldexperienceanincreaseintheimpairmentallowanceforcontractassetsagainstcontractassetsinthefuture.Suchimpairmentallowanceinandofitselfdoesnotresult inacashoutflow. • Inventories The allowance for inventory obsolescence • Wedetermineourallowanceforinventoryobsolescencebaseduponexpectedinventoryturnover,inventoryaging,andcurrentandfutureexpectationswithrespecttoproductofferings. Assumptionsunderlyingtheallowanceforinventoryobsolescenceincludefuturesalestrendsandofferingsandtheexpectedinventoryrequirementsandinventorycompositionnecessarytosupportthesefutureofferings.Ourestimateoftheallowanceforinventoryobsolescencecouldchangemateriallyfromperiodtoperiodduetochangesinproductofferingsandthelevelofconsumeracceptanceofthoseproducts. ThisaccountingestimateisinrespectoftheInventorieslineitemonourConsolidatedstatementsoffinancialposition,whichcomprisesapproximately1%ofTotalassetsasatDecember31,2019and2018.Iftheallowanceforinventoryobsolescenceweretobeinadequate,wecouldexperienceachargetoGoodsandservicespurchasedinthefuture.Suchaninventoryobsolescencechargedoesnotresult inacashoutflow. Accounts receivable • General • Whendeterminingourallowancefordoubtfulaccounts,weconsiderthebusinessareathatgaverisetotheAccountsreceivable,conductastatisticalanalysisofportfoliodelinquencytrendsandperformspecificaccountidentification. • TheseaccountingestimatesareinrespectoftheAccountsreceivablelineitemonourConsolidatedstatementsoffinancialposition,whichcomprisesapproximately5%ofTotalassetsasatDecember31,2019and2018.Ifthefutureweretodifferadverselyfromourbestestimatesofthefairvalueoftheresidualcashflowsandtheallowancefordoubt-fulaccounts,wecouldexperienceanincreaseindoubtfulaccountsexpenseinthefuture.Suchdoubtfulaccountsexpenseinandofitself doesnotresultinacashoutflow. • The allowance for doubtful accounts • TheestimateofourallowancefordoubtfulaccountscouldmateriallychangefromperiodtoperiodbecausetheallowanceisafunctionofthebalanceandcompositionofAccountsreceivable,whichcanvaryonamonth-to-monthbasis.ThevariabilityofthebalanceofAccountsreceivablearisesfromthevariabilityoftheamountandcompositionofOperatingrevenuesandfromthevariabilityofAccountsreceivablecollectionperformance. 8.2 Accounting policy developments RefertoNote 2oftheConsolidatedfinancialstatementsforadescription ofcurrentandfuturechangesinaccountingpolicies,including: • Initialapplicationofstandards,interpretationsandamendments tostandardsandinterpretationsinthereportingperiod. Standards,interpretationsandamendmentstostandardsnotyeteffectiveandnotyetapplied. Impactsofapplicationofnewstandardinfiscal2019. • • 94 • TELUS2019 ANNUAL REPORT

MD& A: GENER AL TRENDS, OUTLOOK AND ASSUMPTIONS, AND REGULATORY DEVELOPMENTS AND PROCEEDINGS GENERAL TRENDS, OUTLOOK AND ASSUMPTIONS, Thissectioncontainsforward-lookingstatements,whichshouldbe readtogetherwiththeCaution regarding forward-looking statements atthebeginningofthisMD&A. smartphones,andalargerproportionofpostpaidcustomersinthe subscribermix. WhilethegeneraltrendtowardsmoderationinABPUgrowthcomparedtopastyearswasanticipated,wecontinuetoworkdiligentlytobettermonetizerobustgrowthindataservices,whilesimultaneouslydeliveringastrongvalueformoneypropositiontoourcustomers.Tothisend,wearefocusingintenselyonprofitablecustomergrowthandstrongABPUperformancethroughourconsistentstrategicexecutionofpremiumsmartphoneloading,whichincludesdrivinghigher-valuedataandshareplanadoption.Moreover,wearealsofocusingontheotherleversavail-abletousinanenvironmentofmoderatingABPUgrowthtoensurewecontinuetodeliveronourwirelessEBITDAgrowthobjectives,including: 9.1 Telecommunications industry in 2019 WeestimatethatCanadiantelecommunicationsindustryrevenues(includingTVandexcludingmedia)grewbyapproximately2%in2019.Wirelessanddataservicescontinuetodriveongoingindustrygrowth.Consumercommunicationsanddataconsumptionbehaviourscontinuetodemonstrateastrongpreferencefordata-richapplicationsand data-intensivedevicesincludingsmartphonesandtablets. TELUSreportedrevenuesof$14.7billion,withwirelessproductsandservicesrepresenting56%ofourtotalrevenues.Inourwirelinebusiness,growthinhigh-speedinternetaccess,enhanceddata,TV,healthcare,customercareandbusinessservices(CCBS)solutions,andhomeandbusinesssecuritymorethanoffsetthedeclineindemandforlegacyvoiceanddataservices. • Evolvingourapproachtowirelessplansanddevicesales,throughthesimultaneouslaunchofourPeaceofMindendlessdatarateplans,TELUSEasyPaymentdevicefinancingandTELUSFamilyDiscountofferings,whichhaveresultedinsimplificationforbothcustomersandteammembers,whilesupportinggrowthindigitaltransactions Continuingtodrivevolumegrowththroughhigh-qualityloadingonthebackofstrongongoingindustrygrowth Seekingnewsourcesofwirelessrevenue,suchasInternetofThings(IoT)orInternetofEverything,machine-to-machine(M2M)andsecurityapplications Exploringandsecuringnewchannelstrategiesassociatedwithattractiveeconomiccharacteristics Pursuingsmartbundlingopportunitiesacrosswirelessandwirelinetoachievebettereconomiesofscopeandenhancelifetimerevenuepercustomer DrivingroaminggrowthbycontinuingtoencouragecustomerstravellingabroadtoadoptanduseourEasyRoam®offering,whichnowcoversmorethan125countries,aswellassecuringin-roamingopportunitiesforthosetravellingtoCanada WorkingpersistentlytoenhancetheefficiencyoftheflowfromrevenuetoEBITDA,ortheflowfromABPUtoaveragemarginpersubscriberunitpermonth(AMPU),inordertobuttressandenhanceouroperating margins,includingongoingefficiencyandeffectivenessinitiatives. • Wireless Basedonpubliclyreportedresultsandestimates,in2019,theCanadianwirelessindustryexperiencednetworkrevenuegrowthofapproximately 1.6%andadjustedEBITDAgrowthofapproximately7.7%.TELUSwirelessnetworkrevenuegrowthwas1.6%,andTELUSwirelessAdjustedEBITDAgrewby7.7%. WeestimatethattheCanadianwirelessindustryaddedapproximately 1.9millionnewsubscriberunitsin2019,inclusiveofTELUS’mobilephonenetadditions,comparedtoapproximately1.5millionin2018.Thiswassupportedbyimmigrationandpopulationgrowth;thetrendtowardmultipledevices,includingtablets;theexpandingfunctionalityofdataandrelatedapplications;andtheadoptionofmobiledevicesandservicesbybothyoungerandoldergenerations.Effectiveforthefirstquarterof2019,withretrospectiveapplication,wehaverevisedourdefinitionofamobilephonesubscriber(seeSection 11.2 Operating indicatorsfordefinitions).Thewirelesspenetrationrateincreasedtoapproximately92%inCanadain2019,withfurtherincreasesinpene-trationexpectedin2020.Bycomparison,thewirelesspenetrationrateintheU.S.iswellover100%,whileinEuropeandAsiaitisevenhigher,suggestinganopportunityforcontinuedgrowthinCanada. TheCanadianwirelessmarketcontinuestobecharacterizedbyhighlevelsofacquisitionandretentionactivitiesandtheassociatedhighcostsofdevicesubsidiesontwo-yearcontracts,heightenedcom-petitiveintensity,andthecontinuedadoptionofhigher-value,data-centricsmartphones.Growthinblendedaveragebillingpersubscriberunitpermonth(ABPU)hasmoderated,duetodeclinesinchargeableusageandlargerallotmentsofdatadrivenbycompetitivepressures,inadditiontoothermoderatingfactors,suchas:thelaunchofunlimitedwirelessdataplansandthepopularityofdatasharingplans;morefrequentcustomer-friendlydatausagenotifications;andanevolvingshiftinthecustomermixtowardsnon-traditionalwirelessdevices.Thesefactorsarebeingoffsetbycontinuingrobustcustomergrowthandgrowingoveralldatausage, includingcustomersselectingplanswithlargerdatabucketsonhigh-value • • • • • TheCanadianwirelessindustrycontinuestobehighlycompetitiveand capital-intensive,withcarrierscontinuingtoexpandandenhancetheir broadbandwirelessnetworks,includingmaterialinvestmentsinspectrum. Wireline Althoughtheconsumerhigh-speedinternetmarketismaturing,withapenetrationrateofapproximately87%inWesternCanadaand87%acrossCanada,subscribergrowthisexpectedtocontinueoverthecom-ingyears.Thefourmajorcable-TVcompanieshadanestimated7.0millioninternetsubscribersattheendof2019(49%marketshare),up3%fromapproximately6.9millionattheendof2018.Telecommunicationscompanieshadapproximately7.0millioninternetsubscribers(49%marketshare),up4%fromapproximately6.7millionattheendof2018.Wecontinuetomakemoderategainsinmarketshareasaresultoftheexpansionofourfibre-opticinfrastructureandthepull-throughofsub-scribersfromourIP-basedTELUSTVservice,aswellassignificantgrowthinhomesecurityandautomation. TELUS2019 ANNUAL REPORT • 95 9 AND REGULATORY DEVELOPMENTS AND PROCEEDINGS

WhileCanadiansstillwatchconventionalTV,digitalplatformsareplayinganincreasinglyimportantroleinthebroadcastingindustryandinrespectofcontent.PopularonlinevideoservicesareprovidingCanadianswithmorechoiceaboutwhere,whenandhowtoaccesstheirvideocontent.In2019,CanadianIPTVprovidersincreasedtheirsubscriberbasebyanestimated5%to3.0millionasaresultofexpandednetworkcoverage,enhanceddifferentiatedserviceofferings,andmar-ketingandpromotionsfocusedonIPTV.DespitethisIPTVgrowth,thecombinedcable-TVandsatellite-TVsubscriberpenetrationratedeclined.Weestimatethatthefourmajorcable-TVcompanieshaveapproximately 5.3millionTVsubscribersora49%marketshare,adecreasefrom 51%attheendof2018.Thebalanceofindustrysubscriberswereserved bysatellite-TVandregionalproviders. Inrecentyears,includingin2019,threeofthelargestCanadiancable-TVcompanieshavelaunchednewTVservicesbasedontheComcastX1TVplatform,includingShaw,RogersandmostrecentlyQuebecor’sVideotronbrand.OurIP-basedOptikTVplatformcontinuestooffernumerousserviceadvantagesoverthiscableplatform,including:flexiblepricingplansandpackagingavailabletoallcustomers;pictureclarityandquality;contentdepthandbreadth;andthenumberofwayscustomerscanaccesscontent,includingwirelessset-topboxes,RestartTV,higher-capacityPVRandtheOptikTVapp,whichoffersmorethantwiceasmanyliveTVchannelsathomeoronthegocomparedtoourcablecompetitor.Notably,wearetheonlyCanadianTVserviceproviderofferinglive4KHDRchannelsand4KHDRon-demandmoviesincludingthelatestHollywoodblockbustersandthelatestmoviesandseriesfromNetflix,whichhasnamedTELUS’PureFibrenetworkthenumberonenetworkforstreamingNetflixthroughout2019(basedontheNetflixISPSpeedIndexrankingsforCanadianProvidersreleasedmonthly),aswellas4Ksportscontent,moreHDcontent,moreon-demandcontentandmoreover-the-top(OTT)contentwithNetflix,YouTube,TEDTalksandtheNationalFilmBoardofCanada,andwearethemulticulturalcontentleaderinWesternCanada. ThenationalCanadiantelecomproviderscontinuetoacquireandotherwisedevelopcapabilitiesinhomesecurityandautomation.Inthefourthquarterof2019,weacquiredADTSecurityServicesCanada,Inc.,oneofCanada’sleadingprovidersofsecurityandautomationsolutionsforresidentialandbusinesscustomers.In2018,weacquiredallofthecustomers,assetsandoperationsofAlarmForceIndustriesInc.inB.C.,AlbertaandSaskatchewan,aswellasothersmallerhomeandbusinesssecuritycompanies.Theseacquisitionsfurtherourcom-mitmenttoleveragethepoweroftechnologytobringstate-of-the-artconvenience,controlandsafetyintothelives,homesandbusinessesofmoreCanadians,whilealsoprovidingopportunitiestoofferattractivebundledsolutionsandadvanceourconnectedhomestrategywhileacceleratingourentryintosmarthomesolutions.OurSmartHomeSecurityandTELUSSecureBusinessserviceofferingscomplementourindustry-leadingcustomerserviceandbuildonourstrategyandcommitmenttoleverageourworld-leadingwirelessandPureFibrenetwork,tocontinuetoenhanceconnectedhome,business,security,IoT,cybersecurity,smartbuildings,smartcitiesandhealthservicesforcustomersinCanada. Canada’sfourmajorcable-TVcompanieshadanestimatedbase ofapproximately3.6milliontelephonysubscribersattheendof2019.Thisrepresentsanationalconsumermarketshareofapproximately43%, upfromapproximately42%in2018.Othernon-facilities-basedcom-petitorsalsoofferlocalandlongdistancevoiceoverIP(VoIP)servicesandresellhigh-speedinternetsolutions.Thiscompetition,alongwithtechnologicalsubstitutionbywirelessservices,iscontinuingtoerodethenumberofresidentialvoicesubscribersandassociatedlocal andlongdistancerevenues,asexpected. 9.2 Telecommunications industry general outlook and trends Wireless Wirelessgrowthcontinuestobedrivenbyincreasingdatausageandadoption,including:higher-valuesmartphones,unlimiteddataofferings,sharedfamilydataplansandtablets,andgrowthinIoTandM2Mdevices.Inaddition,consumerscontinuetoreplacewirelineaccesswithwirelessaccessandrelateddataservices.Thesetrendsareexpectedtocontinuetodriveagrowingdemandforwirelessdataservicesfortheforeseeablefuture.IndustryABPUisexpectedtocontinuegrowingatamoremoderateratethaninrecentyears. WhileLTEandLTEadvanced(LTE-A)technologiesincreasedownloadspeeds,encouragedatausageandimprovethecustomerexperience,growthindatatrafficposeschallengestowirelessaccesstechnology.Tobettermanagethisdatatraffic,Canadianproviderscontinuetoevolvetheirnetworks.Innovation,Science,andEconomicDevelopmentCanada(ISED)heldits600MHzspectrumauctioninMarchtoApril2019viaacombinatorialclockauction(CCA)format.ThedesignoftheCCA,coupledwitha30MHzset-asideforregionalcarriers(representing43%ofthespectrumatauction),ledtonationalcarrierspayinga134%premiumoverregionaloperators,andaccordingtoouranalysis,thehighestpricesfor600MHzintheworld.Furtherauctionsfor3500MHzspectrumandmillimetrewavespectrumareexpectedin2020and2021,respectively. M2MandIoTtechnologiesconnectcommunications-enabledremotedevicesviawirelesstechnologies,allowingthemtoexchangekeyinformationandshareprocesses.Advancedplatformsandnetworksarealreadyinplaceinindustriessuchashealthcare,utilities,agricultureandfleetmanagement,withdeploymentongoinginotherindustries,includingvehicleinsurance,retail,foodservicesandconsumerutilities.TheseandotherindustriesarelookingtoIoT,combinedwithotherapplications,togeneratevaluefromtheirconnections.IoTrepresentsameaningfulopportunityforgrowthinmobilityproductsandservices,withsecureconnectivity,customervalueandefficiency.WhileM2Mapplicationsgenerallyhaveloweraveragerevenuepersubscriberunitpermonth(ARPU),theytendtogeneratehighservicevolumeswithlowornosubsidycosts,therebysupportingbothrevenuegrowthandmargins.In2019,weadded263,000mobileconnecteddevices,bringingourconnecteddevicesubscriberbasetoapproximately1.5million,up22%from2018. 5Ghasbeguntoplayamainstreamroleintechnologyevolutionandinnovationglobally,andisanimportantcomponentofmeetingCanada’sandTELUS’effortstofurtherbridgethedigitaldivideandconnectruralCanadians.Investingin5Gwilldrivecapitalexpendituresavingsbyallowingustoprovidehigh-speedinternetservicesoverwirelessinlessurbanareas,aswellasimprovedcostsavingsandinnovative servicesinindustrialautomation,transportationandtelehealth. 96 • TELUS2019 ANNUAL REPORT

MD& A: GENER AL TRENDS, OUTLOOK AND ASSUMPTIONS, AND REGULATORY DEVELOPMENTS AND PROCEEDINGS Drivenbysignificantlyfasterspeeds,lowerlatencies,improvedreliabilityandattractiveeconomics,5Gwillenableahostofnewapplications:forindustries,5Gwillenableremoteoperations,industrialcontrolandmanufacturingautomation;forconsumers,homeautomation,autono-mousvehicles,andwireless-to-the-homeconnectivitywithspeedscomparabletowiredaccesstechnologies;andforhealthcare,convergedsolutionsforhospitals,clinicsandremotepatientmonitoring.5GisessentialtoCanada’sdigitalfutureandisexpectedtogeneratesignificantinnovation,growthandproductivity.Mobile5Gwirelesstechnologyisupto100timesfasterthan4Gtechnology. Enablingarobustandreliable5GexperienceforCanadianswillrequirecomplementarywirelessspectrumbandstosupporttheneedsofadiversesubscriberbaseandconsistofaportfoliooflow,midandhigh-bandspectrum.Low-bandspectrum,suchas600MHz,coverswideareasandpenetrateswellintobuildings,thusimprovingcoverageinurbanandsuburbanareas.Thislow-bandspectrumwillplayavitalroleinbringing5GtoCanadiansandassuch,itisanimportantresourceforCanadaaswirelessoperatorsbuildout5Ginruralareas.High-bandspectrumsuchasmillimetrewave(mmWave)canenablespeedsupto100timesfasterthan600MHzspectrum;however,itdoesnothavethesamecoveragecharacteristicstopenetratewellintobuildings.Thishigh-bandwidthspectrumandtheassociatedfasterconnectionspeedswillhelpunlocknewtechnologiessuchasvirtualandaugmentedreality.CurrenttrialsshowthatmmWavedeliverstherichest5Gexperi-ence,albeitinalocalizedfashion.Mid-bandspectrum,suchas3.5GHz,isimportanttothe5Gecosystemasitisabletosupportboththecover-agecharacteristicsoflow-bandspectrumwiththespeedcharacteristicsofmmWavespectrum,albeitatslightlylowerspeeds.Thisspectrumwillbeintegraltolow-latencycommunicationsservices,includingautonomousmonitoringandvehicle-to-everythingcommunication.Currenttrialsshow 3.5GHziskeyforbroader5Gcoverageandisincreasinglybeingused globallyfor5Gcoverage.Webelievethatthemeaningfuldeploymentof 5GtechnologyshouldprogressfromwherethebestLTE-Aistoday.SeeSection 9.4 Communications industry regulatory developments and proceedingsforfurtherdetailsonupcomingspectrumauctions. ThelaunchofstreamingTVservicesisexpectedtocontinueinCanada,withthemostrecentandnotablelaunchbeingDisneyPlusinthefourthquarterof2019. ConventionalTVcontentprovidersaremonitoringOTTdevelopmentsandevolvingtheircontentandmarketstrategytocompetewiththesenon-traditionalofferings.BellMediaoffersacontentstreamingservicethroughitsexpandedCraveTVoffering.WeviewOTTasanopportunitytoaddfurthercapabilitiestoourlinearandon-demandassets,providingcustomerswithflexibleoptionstochoosethecontenttheywantandencouragegreatercustomeruseofTELUShigh-speedinternetandwire-lessservices.WecontinuetoenhanceourOptikTVservicebyaddingcontentandcapabilities,includingultra-high-definition4Kcontent,andbyenteringintomulticulturalcontentanddistributiondealswithOTT contentproviderssuchasNetflixandCraveTV.TELUScontinuestoofferPikTV,anattractiveOTT-friendlybasicTVofferingthatallowscustomerstoaccessliveTVandstreamingserviceslikeNetflixandYouTubeconvenientlyandaffordablythroughaself-installmediabox,AppleTV,internetbrowserorourAndroidandiOSmobileapplications. Consistentwithfacilities-basedcompetition,telecommunicationscompaniescontinuetomakesignificantcapitalinvestmentsinbroadbandnetworks,withafocusonfibretothepremisesorhome(FTTP/FTTH)tomaintainandenhancetheirabilitytosupportenhancedIP-basedservicesandhigherbroadbandspeeds.Cable-TVcompaniescontinuetoevolvetheircablenetworkswiththegradualroll-outoftheDOCSIS3.1platform.Althoughthisplatformincreasesspeedintheneartermandiscost-efficient,itdoesnotofferthesameadvancedcapabilitiesasFTTPoverthelongerterm,suchasfastsymmetricaluploadanddownloadspeeds.Attheendof2019,ourfibre-opticinfrastructurewasavailableto2.22mil-lionhomesandbusinesses,reachingapproximately70%ofourbroadbandfootprint.AdvancesinLTEwirelesstechnologyandourextensiveLTEinfrastructurealsoallowustotargetotherwiseunderservedareaswithafixedwirelesssolution,and5Giswidelyexpectedtooffervastlyexpandedopportunitiesinthisregard. Combiningwirelinelocalandlongdistancevoiceserviceswithwirelessandhigh-speedinternetaccessandentertainmentservices,telecommunicationscompaniescanfocusonofferingbundledproductstoachievecompetitivedifferentiationandprovidecustomerswithmoreflexibilityandchoiceonnetworksthatcanreliablysupporttheseservices.Ourbroadbandinvestments,includingthebuild-outofourFTTPbroad-bandnetworkandourpremiumdifferentiatedIP-basedOptikTVservice,aswellaslower-costPikTVservice,homesecurityandautomationandintegratedbundledserviceofferings,continuetoenhanceourcompetitivepositionandcustomerloyaltyrelativetoourmaincable-TVcompetitor. Astheindustrymovesto5Gwirelessinthecomingyears,weexpecttobeoperatingon,andprovidingservicesover,amoreconvergednet-work.Thelinesbetweenwirelineaccessandwirelessaccesswillcontinuetoblur,asthewaywedeliverservicestocustomers–andthewayourcustomersusethoseservices–continuestoevolve.Asourbroadbandnetworkcontinuestoexpandand5Gbeginstobecommercializedinthecomingyears,weexpecttobenefitfromtheflexibilityofbeingabletoselectthemostefficientwaytodeliverservicesacrossourfootprint.Wedonotexpecttohavetobuildfibretoeveryhome;instead,webelievethattherewillbeopportunitiestodeliverservicestosomeareas withinourbroadbandfootprintwirelesslywith5G. Wireline Thetraditionalwirelinetelecommunicationsmarketisexpectedtoremainverycompetitivein2020,astechnologysubstitution–suchasthebroaddeploymentofhigher-speedinternet;theuseofemail,messagingandsocialmediaasalternativestovoiceservices;andthegrowthofwirelessandVoIPservices–continuestoreplacehigher-marginlegacyvoicerevenues.InourincumbentoperatingareasofB.C.andAlberta,itisestimatedthat,in2019,52%ofhouseholdsnolongerhaveafixedlineand32%ofhouseholdsnolongerhaveabroadcastTVservice.Whileweareakeyproviderofthesesubstitutionservices,thedeclineinthislegacybusinessiscontinuingasexpected,althoughresidentialvoicelossesslowedconsiderablyin2019.Ourlong-standinggrowthstrategyremainsfocusedonwireless,dataandIP-centricwirelinecapabilities. ThepopularityofviewingTVandon-demandcontentanywhere,particularlyonhandhelddevices,isexpectedtocontinuetogrowascustomersadoptservicesthatenablethemtoviewcontentonmultiplescreens.StreamingmediaproviderscontinuetoenhanceOTTstream-ingservicesinordertocompeteforashareofviewership,asviewinghabitsandconsumerdemandevolve.Studiessuggestthat46%of CanadianhouseholdshadasubscriptiontoNetflixattheendof2019. TELUS2019 ANNUAL REPORT • 97

Additional wireline capabilities Inthebusinessmarket(enterpriseandsmallandmedium-sizedbusinesses,orSMB),theconvergenceofITandtelecommunications,facilitatedbytheubiquityofIP,continuestoshapethecompetitiveenvironment,withnon-traditionalprovidersincreasinglyblurringthelinesofcompetitionandbusinessmodels.Cable-TVcompaniescontinuetomakeinvestmentstobettercompeteinthehighlycontestedSMBspace.TelecommunicationscompanieslikeTELUSareprovidingnetwork-centricmanagedapplicationsthatleveragetheirsignificantFTTPinvestments,whileITserviceprovidersarebundlingnetworkconnectivitywiththeirproprietarysoftwareasserviceofferings.In2018,whileourbusiness-to-business(B2B)lineofbusinesswasdilutivetoourEBITDA,in2019weaggressivelypursuedopportunitiestostabilizethisbusiness,andweexpecttoreturntogrowthandenhancemarginsinfutureyears. ThedevelopmentofIP-basedplatformsprovidingcombinedIPvoice,dataandvideosolutionscreatespotentialcostefficienciesthatcompensate,inpart,forthelossofmarginsresultingfromthemigrationfromlegacytoIP-basedservices.Newopportunitiesexistforintegratedsolutions,aswellasbusinessprocessandIToutsourcing,thatcouldhaveagreaterbusinessimpactthantraditionaltelecommunicationsservices.DatasecurityrepresentsbothachallengeandanopportunityforTELUStoprovidecustomerswithourdatasecuritysolutions.Increasingly,busi-nessesarelookingtopartnerwiththeircommunicationsserviceprovidertoaddresstheirbusinessgoalsandchallenges,andtotailorcloud-basedsolutionsfortheirneedsthatleveragetelecommunicationsinwaysnotimaginedadecadeago.Cloudcomputingischangingservicedeliverytoalways-onandeverything-as-a-service,andstronggrowthisexpectedinthisarea.TELUSoffersNetworkasaServicecapabilitiesforbusinesseswiththeoptionofanITnetworkasaserviceovertheinternet,mirroredacrossmultiplelocations,basedonaself-serveplatformthatreducesdeploymentcyclesandrelianceonITspecialists.OurhomeandbusinesssecurityofferingsinWesternCanadaarepoweredbyourbroadbandnetworkandintegratethelatestsmartdevicestoimprovethelivesofCanadians. Healthcareisexpectedtobeacontinuedgrowthareainfutureyears,basedonanagingpopulationinCanada,anincreasingemphasisonchronicdiseasemanagement,andthepotentialbenefitsthattechnologycandeliverintermsofefficiencyandeffectivenesswithinthesector.Weareleveragingourexpandingbroadbandnetworktoincreaseaccess,integrationandeffectivenessofinnovativehealthcaretoolsandapplica-tionsacrosstheprimarycareecosysteminordertopositionourselvestocompeteforthisanticipatedgrowth.Thesetoolsspanpersonalhealthrecordstoempowerself-managementofhealthcaredata,electronicdrugprescriptionswithonlineinsurancevalidationbythephysician,andhomehealthmonitoringdevicesanddatacapturewithcaregiveroversight.Thedigitizationofeverydayfunctionswithinthehealthcareecosystem,combinedwithincreasedbroadbandnetworkconnectivity,providesanopportunitytosupportthedevelopmentanddeliveryofevenmore advancedhealthapplicationstobenefitCanadiansandimprovehealth outcomes.Followingthe2018acquisitionofMedisysHealthGroupInc.,wewereabletoprovidevirtualcareservicesthroughMedisysonDemand,andwefurtherexpandedthosevirtualcarecapabilitieswiththe2019acquisitionofAkira,allowingpatientsaccesstothecaretheyneedviaanursepractitioner.Inthefirstquarterof2019,TELUSHealthandBabylonlaunchedafuture-forwardvirtualhealthcareservicecalledBabylonbyTELUSHealth,tofurtherexpandandrevolutionizeaccesstohealthcare.WithaninnovativeAI-poweredSymptomChecker,userscangetinforma-tionabouttheirconditionand,ifrequired,speakdirectlywithalicensedphysicianfromtheconvenienceofasmartphone.Together,thesevirtualcaresolutionsandcapabilitiesareempoweringCanadianstobettermanagetheirhealthandgetthecareandinformationtheyneedwhenit’sconvenientforthem–ahugestepforwardintheevolutionofCanada’shealthcaresystemandthecurrentstatusquo.In2020andbeyond,TELUSHealthwillleveragetheseandotherdigitalhealthtoolstoexpandaccesstocareforCanadiansacrossthecountry. TELUSInternational(TI),ourglobalbusinessservicesanddigitalservicesprovider,continuesitsexpansionthroughorganicgrowthandstrategicacquisitions(seeSection 1.3 Highlights of 2019forfurtherdetails).TIisaglobalcustomerexperienceinnovatorthatdesigns,buildsanddeliversnext-generationdigitalservicesforsomeoftheworld’smostdemanding,discerninganddisruptivebrands.TELUSCorporationremainsTI’slargestcustomer.FromTI’ssuccessfulinception15yearsagointhePhilippines,establishedtosupportTELUS’growingcustomerserviceneeds,TIhasgrownexponentiallyinsize,scopeandgeographicdiversitytodeliverexceptionalcustomerexperiencesforclientsfromsitesinNorthandCentralAmerica,EuropeandAsia.In2020,TIaddedsignifi-cantscalethroughtheacquisitiononJanuary31,2020ofCompetenceCallCenter(CCC),aleadingproviderofhigher-value-addedbusinessserviceswithafocusoncustomerrelationshipmanagementandcontentmoderation,forapproximately€915million(approximatelyC$1.3billion),lessdebtassumed.Thisacquisition,whichhasclosed,addssignificantscaleanddiversitytoTI.Post-merger,TI’ssize,scopeandreachwillgrowtoencompassalmost50,000teammembersglobally,providingcus-tomerexperience,digitaltransformation,contentmoderation,ITlifecycle,advisoryanddigitalconsulting,riskmanagement,andback-officesupportinover50languagesfrommorethan50deliverycentresacross20coun-tries.TheacquisitionfurtherbolstersthecontinuedadvancementofTI’ssuccessfulgrowthstrategybypositioningitwellforapotentialfutureinitialpublicofferingtargetedinthenext12to24months,positioningtheorganizationforcontinuedgrowthintheyearstocome. Astechnologycontinuestochangeourindustryrapidly,customerdemandcontinuestoevolveandgrow,andCanadashiftstoamoredigitaleconomy,wearecommittedtoevolvingourbusinessandofferinginnov-ativeandreliableservicesandthoughtleadershipincorefuturegrowthareasthatarecomplementarytoourcurrentoperations.This,alongwithourconstantfocusonleadershipindeliveringanenhancedcustomer experience,positionsusforcontinueddifferentiationandgrowth. 98 • TELUS2019 ANNUAL REPORT

MD& A: GENER AL TRENDS, OUTLOOK AND ASSUMPTIONS, AND REGULATORY DEVELOPMENTS AND PROCEEDINGS 9.3 TELUS assumptions for 2020 In2020,weexpectgrowthinEBITDA,drivenbytheincreasingdemandfordatainourmobileandfixedproductsandservices,ascustomerswantaccesstofasterspeeds;ourconsistentstrategicfocusonourcoremobileandfixedcapabilities(seeSection 2.2 Strategic imperatives,Section 3 Corporate prioritiesandSection 4 Capabilities);significantongoinginvestmentsinourleadingbroadbandnetworkasweevolveto5G;continuedeffortstoenhanceoperationalsimplicityandefficiency;andourconstantfocusonanenhancedcustomerexperienceacrossallareasofouroperations,withtheobjectiveofsimplifyingourcustomers’interactionwithuswhilereducingouroverallcoststructure. Ourassumptionsinsupportofour2020outlookaregenerallybasedonindustryanalysis,includingourestimatesregardingeconomicandtelecomindustrygrowth(seeSection 1.2 The environment in which we operate),aswellasour2019resultsandtrendsdiscussedinSection5. Ourkeyassumptionsincludethefollowing: • Employeedefinedbenefitpensionplans:Pensionplanexpenseofapproximately$101millionrecordedinEmployeebenefitsexpense;arateof3.10%fordiscountingtheobligationandarateof3.20%forcurrentservicecostsforemployeedefinedbenefitpensionplanaccountingpurposes;anddefinedbenefitpensionplanfundingofapproximately$46million. Restructuringandothercostsofapproximately$150millionforcontinuingoperationaleffectivenessinitiatives,withmarginenhance-mentinitiativestomitigatepressuresrelatedtointensecompetition,technologicalsubstitution,repricingofourservices,increasingsubscribergrowthandretentioncosts,andintegrationcostsassociatedwithbusinessacquisitions. DepreciationandAmortizationofintangibleassetsofapproximately $2.85billionto$2.95billion. Incometaxes:Incometaxescomputedatapplicablestatutoryrateof26.2to26.8%andcashincometaxpaymentsofapproximately $390millionto$470million(2019–$629million). Furtherinvestmentsinbroadbandinfrastructureaswehavereachedapproximately70%ofourbroadbandfootprintatDecember31,2019,includingfibre-opticnetworkexpansionand4GLTEcapacityandupgrades,aswellasinvestmentsinnetworkandsystemsresiliencyandreliability. ParticipationintheISEDwirelessspectrumauctionfor3500MHzspectrumband,currentlyexpectedinlate2020(specificdateunknownasofFebruary13,2020). ContinuedstabilizationintheaverageCanadiandollar:U.S.dollarexchangerate($1.33in2019). Continueddeploymentofaccess-agnostictechnologyinournetwork. • • • • • EstimatedeconomicgrowthratesinCanada,B.C.,Alberta,OntarioandQuebecof1.6%,2.3%,1.9%,1.6%and1.6%,respectively. EstimatedannualunemploymentratesinCanada,B.C.,Alberta,OntarioandQuebecof5.9%,4.7%,6.9%,5.7%and5.0%,respectively. EstimatedannualratesofhousingstartsonanunadjustedbasisinCanada,B.C.,Alberta,OntarioandQuebecof201,000units, 39,000units,27,000units,73,000unitsand46,000units,respectively. Nomaterialadverseregulatoryrulingsorgovernmentactions.Continuedintensemobileproductsandservicescompetitionandfixedproductsandservicescompetitioninbothconsumerandbusinessmarkets. ContinuedincreaseinmobilephoneindustrypenetrationoftheCanadianmarket. Ongoingsubscriberadoptionof,andupgradesto,data-intensivesmartphones,ascustomersseekmoremobileconnectivitytotheinternetatfasterspeeds. Wirelessrevenuegrowthresultingfromimprovementsinsubscriberloading,withcontinuedcompetitivepressureonblendedARPU. Continuedpressureonmobileproductsandservicesacquisitionandretentionexpenses,arisingfromgrossloadingandcustomerrenewalvolumes,competitiveintensityandcustomerpreferences.Continuedmobileconnecteddevicesgrowth,asourIoTofferingsdiversifyandexpand. Continuedgrowthinfixedproductsandservicesdatarevenue,reflectinganincreaseininternet,TVandsecuritysubscribers,speedupgrades,rateplanswithlargerdatabucketsorendlessdatausage,andexpansionofourbroadbandinfrastructure,healthcaresolutions,andhomeandbusinesssecurityofferings. Continuederosionofresidentialvoicerevenue,resultingfromtechnologicalsubstitutionandgreateruseofinclusivelongdistance. ContinuedgrowthofTELUSInternationalrevenueandEBITDAgeneratedbyexpandedservicesforexistingcustomersandbusinessacquisitions. Continuedfocusonourcustomersfirstinitiativesandmaintaining ourcustomers’likelihood-to-recommend. • • • • • • • • 9.4 Communications industry regulatory developments and proceedings Ourtelecommunications,broadcastingandradiocommunicationservicesareregulatedunderfederallawsbyvariousauthorities,includingtheCanadianRadio-televisionandTelecommunicationsCommission(CRTC),ISED,CanadianHeritageandtheCompetitionBureau. Thefollowingisasummaryofcertainsignificantregulatorydevel-opmentsandproceedingsrelevanttoourbusinessandourindustry.Thissummaryisnotintendedtobeacomprehensivelegalanalysisordescriptionofallofthespecificissuesdescribed.Althoughwehaveindicatedthoseissuesforwhichwedonotcurrentlyexpecttheoutcomeofadevelopmentorproceedingtobematerialtous,therecanbenoassurancethattheexpectedoutcomewilloccurorthatourcurrentassessmentofitslikelyimpactonuswillbeaccurate.SeeSection 10.3 Regulatory matters. • • • • Radiocommunication licences and spectrum-related matters ISEDregulates,amongothermatters,theallocationanduseofradiospectruminCanadaandlicensesradioapparatus,frequencybandsand/orradiochannelswithinvariousfrequencybandstoserviceprovidersandprivateusers.Thedepartmentalsoestablishesthetermsandconditionsattachedtosuchradioauthorizations,includingrestrictionsonlicencetransfers,coverageobligations,researchanddevelopmentobligations,annualreporting,andobligationsconcerningmandatedroamingand antennasitesharingwithcompetitors. • • • TELUS2019 ANNUAL REPORT • 99

3500 MHz spectrum auction to support 5G OnJune5,2019,ISEDreleaseditsDecision on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary Decisions on Changes to the 3800 MHz BandanditsConsultation on a Policy and Licensing Framework for Spectrum in the 3500 MHz Bandtodefinealicensingframe-work(i.e.auctionrulesandconditionsoflicence)forthe3500MHzband.TheMinisterofInnovation,ScienceandIndustryindicatedthatthe3500MHzspectrumauctionwilltakeplaceinlate2020(specificdateunknownasofFebruary13,2020)andthe3800MHzspectrumauctioniscurrentlyenvisionedtotakeplacein2022.Althoughthetransitiondecision,bywayofaclawback,ensuresaportiononthebandisavailableforauctioninallmarkets,thereisariskthattheauctionruleswillfavourcertaincarriers overusandimpactourabilitytoacquire3500MHzbandspectrum. ThetimingoftheimplementationofdisaggregatedwholesaleservicesmayalsobeaffectedbyanapplicationtotheCRTCfiledbytheCanadianNetworkOperatorsConsortiumInc.(CNOC)toreviewandvaryTRP2015-326andtoseek,amongotherthings,interimreliefthatwouldremoveaspeedcappursuanttowhichtheexistingaggregatedwholesaleaccessregimewillnotapplytospeedsinexcessof100Mbpspendingtheintroductionofdisaggregatedservice;andpermanentreliefgrantingwholesaleaccesstoFTTPfacilitiesonanaggregatedbasis.OnMarch20,2019,theCRTCgrantedCNOC’sapplicationforinterimrelief.WehavebeengrantedleavetoappealthatdecisiontotheFederalCourtofAppeal,withadecisionexpectedin2020.TheCRTC’sdecisionwithrespecttothepermanentreliefsoughtbyCNOCremainsunderreserve.WeanticipatenomaterialadverseimpactintheshorttermwithrespecttoCNOC’sapplicationforinterimrelief.Giventhephasedimple-mentationofthemandatedprovisionofwholesaleaccesstoourFTTPnetwork,itistooearlytodeterminetheimpactTRP2015-326willhave onusinthelongerterm. Repurposing mmWave spectrum to support 5G OnJune5,2019,ISEDreleaseditsDecision on Releasing Millimetre Wave Spectrum to Support 5G,repurposingseveraltranchesofmmWavespectrumformobileuse.ISEDwillconsultonalicensingframework(i.e.auctionrulesandconditionsoflicence)forthesemmWavebandsinthefutureandistargetinganauctionforthisspectrumin2021.ThereisariskthattheauctionruleswillfavourcertaincarriersoverusandimpactourabilitytoacquireanadequatequantityofmmWavebandspectrum. Final rates for aggregated wholesale internet access services OnAugust15,2019,theCRTCreleasedTelecomOrderCRTC 2019-288,whichfinalizedratesfortheaggregatedwholesaleinternetservicesoftheincumbentlocalexchangecarriers(ILEC)andincumbentcablecompanies.Thefinalrateswereconsiderablylowerthantheinterimrates,andtheCRTCorderedtheratestoapplyretroactivelytoOctober6,2016.Thefinancialimpactofthisdecisionwasnotmaterialtous,giventhevolumeofwholesaleinternetcustomerswecurrentlyserve. OnSeptember13,2019,BellCanadaandaffiliatedcompaniesandacollectionofcablecompaniesfiledseparateapplicationswiththeFederalCourtofAppealtoseekleavetoappealTelecomOrderCRTC2019-288.BellCanadaandthecablecompaniesalsosoughtastayoftheorder.OnNovember22,2019,theFederalCourtofAppealallowedbothleaveapplicationsandgrantedastaypendingthedispositionoftheappeal.Weanticipatethattheappealwillbeheardin2020. Separately,onNovember13,2019,wefiledapetitiontotheGovernorinCouncilseekingtoreferbacktoTelecomOrderCRTC2019-288forredeterminationoftheratesandseekingtovaryTelecomOrderCRTC 2019-288toremoveitsretroactiveeffect,allonthebasisthattheratesandretroactivecomponentoftheorderwillthreatenfutureinvestment.BellCanadaandacoalitionofcablecompaniesfiledsimilarpetitionsonthesameday.Also,onNovember13,2019,wefiledanapplicationtotheCRTCtoreviewandvaryTelecomOrderCRTC2019-288,primarilyonthebasisthattheCRTCmadeerrorsincalculatingthecarriers’costs.Finally,onDecember13,2019,BellCanadaandacollectionofcablecompaniesalsobroughtapplicationstotheCRTCtoreviewandvary TelecomOrderCRTC2019-288. Regulatory and federal government reviews TheCRTCandthefederalgovernmenthaveinitiatedpublicproceedings toreviewvariousmatters.Theyarediscussedbelow. Review of mobile wireless services OnFebruary28,2019,theCRTCreleaseditsanticipatedconsultationtoreviewtheregulatoryframeworkformobilewirelessservices.Thereviewwillexaminethreemajorissues–thelevelofcompetitionintheretailmar-ket,thecurrentwholesalemobilewirelessserviceregulatoryframework,withafocusonwholesalemobilevirtualnetworkoperator(MVNO)access,andthefutureofmobilewirelessservicesinCanada,withafocusonreducingbarrierstoinfrastructuredeployment.TheCRTCalsoprovidedapreliminaryviewthatthereshouldbemoreopportunityforMVNOs.WehaveintervenedinthisproceedingandfiledevidencetodemonstratethehighperformanceofCanadianwirelessservicesondimensionsinclud-ingnetworkcoverage,networkquality,availabilityofserviceandpricing.Wewillparticipateinallstagesofthisproceeding,whichisscheduledtoproceedtoanoralhearingbeginningonFebruary18,2020.Theimpactofthisproceedingonuswillnotbeknownuntiladecisionisissuedby theCRTC.Thatdecisionisnotexpecteduntilmid-2020,attheearliest. Wireline wholesale services follow-up OnJuly22,2015,theCRTCreleasedReview of wholesale wireline services and associated policies,TelecomRegulatoryPolicyCRTC2015-326(TRP2015-326).ThemajorcomponentofthisdecisionwasthattheCRTCorderedtheintroductionofadisaggregatedwholesalehigh-speedinternetaccessserviceforinternetserviceprovider(ISP)competitors.ThisincludesaccesstoFTTPfacilities.ThisrequirementisbeingphasedingeographicallybeginninginthelargestmarketsinOntarioandQuebec(i.e.intheservingterritoriesofBell,Cogeco,RogersandVideotron).TheCRTCinitiatedafollow-upproceedingtodeterminethetechnicalconfigurations,appropriatecostsandwholesalecost-basedratesinthoseregions.TheFTTPfollow-upactivitiesdirectedinTRP2015-326remainongoing.Forthesecondphase,whichinvolvesFTTPwholesaleservicesfortherestofCanada(includingourservingterritories),aproceedingontechnicalconfigurationsfordisaggregatedwholesaleservicescom-mencedin2017,andtheassociatedcoststudyandtariffreviewwillfollow. Follow-up proceedings further to the CRTC report on sales practices of large telecommunications carriers OnFebruary20,2019,theCRTCreleaseditsReport on Aggressive or Misleading Communications Retail Sales Practices.TheCRTCpublishedthisreportfurthertoaproceedingitcommenced,atthedirectionoftheGovernorinCouncil,toexamineclaimsofaggressiveormisleadingsalespracticesconcerningtelecommunicationsservices,theprevalenceandimpactonconsumers,andpotentialsolutions.Whilethereportitselfisnotalegallybindingdirectionororder,itdoesnotethattheCRTCmaycommencecertainfollow-upproceedingsandactivities,including,butnotlimitedto,anewsecretshopperprogram,enhancedconsumerinformation toolsandcomplaintsdisclosure,andaproceedingtodeterminewhether 100 • TELUS2019 ANNUAL REPORT

MD& A: GENER AL TRENDS, OUTLOOK AND ASSUMPTIONS, AND REGULATORY DEVELOPMENTS AND PROCEEDINGS mandatorycompliancemeasuresandenhancedpublicreportingmeasuresshouldbeimposedonprovidersthatfallbelowathresholdofacceptablebehaviour.UntiltheCRTCreleasesfurtherdetailsonitsfollow-upactivities, weareunabletodetermineanynewpotentialimpactsonus. rulecreatinga90-daytemporarygenerallicence(TGL)partiallyrestoringtheBIS’formerlicensingrequirementsforexports,re-exportsandtransfertoHuaweiinconnectionwithcertaintransactions,includinginconnectionwiththecontinuedoperationofexistingnetworksandequipmentandtheprovisionofsupporttoexistinghandsets.OnAugust19,2019,afinalruleextendedtheTGL’svalidityforanadditional90daystoNovember18, 2019,andonNovember18,2019,afurtherfinalruleextendedtheTGL’svalidityforafurther90daystoFebruary16,2020.GiventherangeofpotentialgovernmentorregulatoryactionsbytheU.S.governmentwithrespecttoHuawei,theimpactonourselves,andonCanadianwirelessserviceprovidersgenerally,cannotcurrentlybepredicted. CRTC proceeding regarding device financing OnAugust30,2019,theCRTCcommencedaproceedingtoinquireintodevicefinancingplansforwirelesshandsetsandaskedcertainparties,includingourselves,toshowcausewhytheirdevicefinancingplansarepermittedundertheWirelessCode.Thisproceedingfollowstheintroductionofdevicefinancingplansbyourselves,RogersandBellinJuly2019,including,forRogersandourselves,planswithtermslongerthan24months.Undertheseplans,customerswhocancelwirelessservicescontractsarerequiredtorepayimmediatelytheout-standingfinancingbalanceinfull.OnAugust2,2019,theCRTCissuedaletterstatingthatwirelessserviceprovidersweretostopofferingdevicefinancingplansbeyond24monthssoitcouldreviewthepractice.Intheproceeding,theCRTCsoughtcommentontheeffectsoncon-sumersoffinancingplansbeyond24monthsandhowtheprovisionsoftheWirelessCodeapplytodevicefinancing.WeintervenedtoinformtheCRTCthat:devicefinancingisdesiredbycustomers;customersbenefitfromlongerfinancingperiodsbecauseupfrontdevicecostsarelowerandthecostofdevicescanbespreadoveralongerperiod,therebyreducingthemonthlycost;theobjectiveoftheWirelessCodeshouldbetobenefitcustomers;andlongerdevicefinancingperiodsfurtherthefederalgovernment’saffordabilityagendaforwirelessservices.UntiltheCRTCissuesadecisiononitsintendedtreatmentoffinancingplans,itistooearlytodeterminetheimpactofthisproceedingonus. Phase-out of the local service subsidy regime OnJune26,2018,theCRTCissuedPhase-out of the local service sub-sidy regime,TelecomRegulatoryPolicyCRTC2018-213.Inthisdecision,theCRTCdeterminedthatitwouldphaseouttheexistinglocalservicesubsidyoverthreeyears,fromJanuary1,2019,toDecember31,2021.InSeptember2018,theIndependentTelecommunicationsProvidersAssociation(ITPA),whichrepresentssmallILECs,broughtanapplicationtotheCRTCtoreviewandvarythisdecision.Initsapplication,theITPAseekstokeeptheexistinglocalservicesubsidyregimeinplace.OnFebruary4,2020,theCRTCissuedIndependent Telecommunications Providers Association – Application to review and vary Telecom Regulatory Policy 2018-213,TelecomDecisionCRTC2020-41,inwhichitdenied theITPA’sapplication.Theimpactofthisdecisionisnotmaterial. Review of the price cap and local forbearance regimes SimultaneouslywiththereleaseofthePhase-out of the local service sub-sidy regimedecisionnotedabove,theCRTCissuedReview of the price cap and local forbearance regimes,TelecomNoticeofConsultationCRTC 2018-214.Inthisproceeding,theCRTCisreviewing,amongotherthings:pricingconstraintsforresidentiallocalexchangeservices;whethercom-pensationtoILECsisrequiredgiventhatthelocalservicesubsidyisbeingeliminatedfurthertothePhase-out of the local service subsidy regimedecision;whetherthereisstillaneedforanexogenousfactormechanisminthepricecapregimes;andwhetherchangesarenecessarytotestforlocalforbearance.OnFebruary4,2020,theCRTCreleasedReview of the price cap and local forbearance regimes,TelecomRegulatoryPolicyCRTC 2020-40,inwhichitaffirmedits2018determinationtophaseoutthelocalservicesubsidyregimeby2021,anddeclinedtoprovidecompensationintheformofadditionalpricingflexibilityforregulatedprimaryexchangeservicesinhigh-costservingareas,includingmakingnochangestothe localforbearanceregime.Theimpactofthisdecisionisnotmaterial. CRTC proceeding regarding potential barriers to the deployment of broadband-capable networks in underserved areas in Canada OnDecember10,2019,theCRTCissuedCall for comments regarding potential barriers to the deployment of broadband-capable networks in underserved areas in Canada,TelecomNoticeofConsultationCRTC 2019-406.Inthisproceeding,theCRTCisseekingcommentonbarriersthatserviceprovidersandcommunitiesfaceinbuildingnewfacilities,orinterconnectingtooraccessingexistingfacilities,toextendnetworksintounderservedareasinordertoofferuniversalserviceobjective-levelservices.TheCRTChasspecificallyidentifiedaccesstoaffordabletransportservicesandefficientuseofsupportstructuresaspotentialbarriers.WearereviewingtheNoticeofConsultationandintendtoparticipatefullyintheproceeding.Itistooearlytodeterminetheimpactoftheproceedingonus. Government affordability election commitment AffordabilityofwirelesswasacampaigntopicduringtheOctober2019federalelection.ThenewlyelectedLiberalgovernmentcommittedtoreducingcellphoneplanpricesby25%overthenexttwoyearsthroughcollaborationwithwirelessserviceproviders.Weareunabletodeterminetheimpactofthiscommitmentonusuntilthegovern-mentreleasesmoreinformationonwhatmeasures,ifany,itwilltake.WecontinuetoworkwithISEDtoadvanceourunderstandingoftheirprioritiesandtodeterminetheimpactthiswillhaveonourbusiness. 5G security review – Public Safety Canada InSeptember2018,thefederalgovernmentannouncedareviewofnationalcybersecurityrequirementsforCanada’s5Gnetworks.Whencomplete,thereviewisexpectedtoprovidepolicyclarityonwhatsecuritycontrolsorrestrictionsthegovernmentintendstoimposeon5GnetworksinCanada.Thetimelinesfortheconclusionofthisreviewhavenotbeenreleasedbythefederalgovernment,andthegovernmenthasnotindi-cateditsintentionsregarding5Gcybersecurityrequirements.Giventherangeofpotentialgovernmentorregulatoryactionthatmayresultfromthisreview,theimpactonourselves,andonCanadianwirelessservice providersgenerally,cannotcurrentlybepredicted. U.S. security developments OnMay16,2019,U.S.PresidentDonaldTrumpsignedanexecutiveorderpermittingtheSecretaryofCommercetoblockcertaintechnologytransactionsdeemedtoconstitutenationalsecurityrisks.Additionally,theBureauofIndustryandSecurityoftheUnitedStatesDepartmentofCommerce(BIS)amendedtheU.S.ExportAdministrationRegulationstoaddHuaweiTechnologiesCo.Ltd.anditsnon-U.S.affiliates(collectively,Huawei)totheBIS’EntityList,whichresultedintheimpositionofaddi-tionallicencerequirements(theRestrictions)ontheexport,re-exportandtransferofgoods,servicesandtechnologytoHuaweibypersonssubject totheRestrictions.Subsequently,onMay20,2019,theBISadoptedafinal TELUS2019 ANNUAL REPORT • 101

Theannouncementorimplementationofspecificregulationsorotheractionsintendedtoreducecellphoneplanpricescouldprecipitateamaterialreductionincapitalexpendituresandoperatingexpenditures intheformofstaffinglevelstoamelioratethisimpact. andradiocommunicationfortheGovernmentofCanadatoconsider,andwhichmay,ormaynot,beimplemented.Althoughnoimmediatechangesorlegalconsequencesflowfromthereleaseofthereport,theMinistersofCanadianHeritageandInnovation,ScienceandIndustryhavesignaledtheirintentiontoactquicklytomodernizethecommunicationslegislativeframework.Itistooearlytodetermineifthereportwillhaveamaterial impactonus. Broadcasting-related issues Broadcasting licences held by TELUS OurregionallicencestooperatebroadcastingdistributionundertakingsinB.C.andAlbertaweregrantedrenewalsinBroadcastingDecisionCRTC2018-267,whichextendsthelicencetermstoAugust31,2023.OurlicencetooperatearegionalbroadcastingdistributionundertakinginareasofQuebecwasrenewedonJune28,2019inBroadcastingDecisionCRTC2019-230,extendingthelicencetermtoAugust31, 2024.Ourlicencetooperateanationalvideo-on-demandservice wasrenewedtoAugust31,2023,aspartofBroadcastingDecisionCRTC2018-20. Review of the Copyright Act and Copyright Board reforms TheCopyright Act’sstatutorilymandatedfive-yearreviewwasduein2017,andaprocessforconductingthereviewviaparliamentarycommitteewasannouncedinDecember2017.TheStandingCommitteeonIndustry,ScienceandTechnology(INDUCommittee),withtheassistanceoftheStandingCommitteeonCanadianHeritage,completedthereviewearlyin 2019,andbothcommitteespresentedreportstotheHouseofCommonsinMay/Juneof2019.AlthoughtheINDUCommitteehadrequestedthatacomprehensivegovernmentresponsebetabledbySeptember1,2019,thegovernmentdidnotrespond.FollowingtheOctober2019federalelec-tion,thetimelineforpotentialchangestotheCopyright Actisthereforeuncertain.Thepolicyapproachforcopyrighthastraditionallybeenbasedonabalanceofinterestsofcreatorsandconsumers,andasaresult,anychangestotheCopyright Actarenotexpectedtohaveanegative materialimpactonus. Review of the Telecommunications Act, the Radiocommunication Act and the Broadcasting Act OnJanuary29,2020,theBroadcastingandTelecommunicationsLegislativeReviewpanelreleaseditsfinalreportentitledCanada’s Communications Future: Time to Act.Thereportcontains97recommen-dationstoupdatelegislationgoverningbroadcasting,telecommunications 10.1 Overview Riskistheuncertaintythatarisesduetoevents,actionsandourbusinessactivitiesthatmayhaveanegativeimpactorcreatepositiveopportunities.Riskoversightandmanagementprocessesareintegralelementsofourriskgovernanceandstrategicplanningpractices. Risk governance, oversight and culture Wemaintainstrongriskgovernanceandoversightpractices,withriskoversightresponsibilitiesoutlinedintheBoardpolicymanual.OurBoardisresponsibleforensuringthatmaterialriskstoourbusinessareidentifiedandoverseeingtheimplementationofsystemsandprocessestoeffectivelyidentify,monitorandmanagematerialrisks. Ourriskgovernanceculturestartswithclearriskmanagementleadershipandtransparentcommunications,supportedbyourBoardandExecutiveTeam.Inourapproachtoriskgovernance,accountabilityforthemanagementofrisksandreportingofriskinformationisclearlydefined.Trainingandawarenessprograms,appropriateresourcesandriskchampionshelptoensurethatwehavetheriskmanagementcom-petenciesnecessarytosupporteffectivedecision-makingacrosstheorganization.Ethicsareintegraltoourriskgovernanceculture,andourcodeofethicsandconductdirectsteammemberstomeetthehighest standardsofintegrityinallbusinessdecisionsandactions. Responsibilities for risk management Wetakeamulti-stepapproachtomanagingrisks,sharingresponsibilityacrosstheorganizationandrecognizingthateffectiveriskmanagementisdynamicandintegraltotheachievementofourstrategicandoper-ationalobjectives.Thefirstlineofassuranceisexecutiveandoperating 102 • TELUS2019 ANNUAL REPORT CEO committee-CFO risk and assessme control nt process BUSINESS OPERATIONS AND ACTIVITIES TELUS ENTERPRISE RISK GOVERNANCE AND MANAGEMENT BOARD OF DIRECTORS Risk governance and oversight COMMITTEES Boar specific Exec ri brief utive sk ings d and oversight EXECUTIVE TEAM Executive risk ownership accoun tabilities and reporting ENTERPRISE VP Risk Management and Chief Internal Auditor Multi-level enterprise KEY R ISK PROFILE 10 RISKS AND RISK MANAGEMENT

MD& A: RISKS AND RISK MANAGEMENT management,andtheseteammembersareexpectedtointegrateriskmanagementintocoredecision-makingprocesses(includingstrategicplanningprocesses)andday-to-dayoperations.Wehaveriskmanagementandcompliancefunctionsacrosstheorganization,inareasthatincludeFinance,Legal,DataandTrust(whichincludesPrivacy),Securityandotherbusinessoperationalareas,andtheseformthesecondlineofassurance.Theseteamsestablishpolicies,provideguidanceandexpertise,andworkcollaborativelywithmanagementtomonitorthedesignandoperationofcontrols.InternalAuditisthethirdlineofassurance,providingindependentassuranceregardingtheeffectivenessandefficiencyofriskmanagement andcontrolsacrossallareasofourbusiness. ourBoardofDirectorsandtheAuditCommittee,andinformthedevelop-mentofourrisk-focusedinternalauditprogram.Theriskinformationisincorporatedintoourstrategicplanning,operationalriskmanagementandperformancemanagementprocesses.Inaddition,keyenterpriserisksarereviewedonaquarterlybasisinordertocaptureandcom-municateanychangesanddetailedriskassessmentsareconductedforvariousriskmanagement,strategicandoperationalinitiatives throughouttheyear. 10.2 Principal risks and uncertainties Thissectiondescribesourprincipalrisksanduncertainties.Thesig-nificanceoftheserisksissuchthattheyaloneorincombinationmayhavematerialimpactsonourbusinessoperations,results,reputationandbrand,aswellastheapproachestakenbyinvestmentanalystswhenevaluatingorvaluingTELUS.Theserisksandtheassociatedriskmitigationactivitiesareaddressedfurtherinthefollowingsections. Althoughwebelievethemeasureswetaketoidentifyandmitigaterisksarereasonable,therecanbenoexpectationorassurancethattheywilleffectivelymitigateorfullyaddresstherisksdescribedorthatnewdevelopmentsandriskswillnotmateriallyaffectouroperationsorfinancialresults.Despiteoureffortstoimplementcontrolsinourdomesticandinternationaloperations,therecanbenoassurancethatthesecontrolswillprovetobeeffectiveinallinstances.Forward-lookingstatementsinthissectionandelsewhereinthisMD&Aarebasedontheassumptionthatourriskmitigationmeasuresandcontrolswillbeeffective. SeeCaution regarding forward-looking statements. Risk and control assessment process EventswithinandoutsideofTELUSpresentuswithbothrisksandopportunities.Westrivetoavoidtakingonundueriskandweworktoensurealignmentofriskswithbusinessstrategies,objectives,valuesandrisktolerances;inturn,wealsoseektotakeadvantageofopportun-itiesthatmayemerge.Westrivetoproactivelymitigateourriskexposuresthroughperformanceplanning,businessoperationalmanagementandriskresponsestrategies,whichcanincludemitigating,transferring,retainingand/oravoidingrisks. Wehaveinplacemulti-levelenterpriseriskandcontrolassessmentprocessesthatsolicitandincorporateinsightsfromleadersacrossallareasofTELUSandenableustotrackmulti-yeartrendsinkeyrisksandthecontrolenvironment.AcomprehensiveannualriskandcontrolassessmentisconductedwithleadersandanannualassessmentiscompletedbyBoardmemberstoprovideperspectiveonkeyenterprise risks.Resultsoftheassessmentsaresharedwithseniormanagement, Strategic risks Thesestrategicrisksarisefromuncertaintiesthatmayshapethenatureandfocusofourstrategicdirectionasanorganizationandourability tosustainprofitablerevenuegrowth. TELUS2019 ANNUAL REPORT • 103 RiskPotential impact Mitigations Regulatory matters(see10.3) Constrainingofdomestictelecompracticesbyelectedofficialsandregulatorydecisions,reviewsandgovernmentactivity,domesticallyandinternationally,mayhavestrategic,financialoroperationalimpacts. • Advocacy • Spectrumacquisitionstrategies • Non-regulated,diversifiedrevenuestreams • Prudentinvestmentandcostefficiencyplanningdecisionscommensuratewithourregulatoryenvironment. Competitive environment(see10.4) Competitorexpansion,activityandintensity(pricing,bundling),aswellasnon-traditionalcompetitors,disruptivetechnologyanddisintermediation,mayalterthenatureofthemarketandimpactourmarketshare. • Customersfirststrategy • Bundlingofservices • Competitivemonitoring • Productportfolioinnovationandacquisition • Productlifecyclemanagement Technology(see10.5) Consumeradoptionofalternativetechnologies(suchasover-the-top(OTT)offerings,software-definednetworksandmobilevirtualnetworkoperators)andchangingcustomerexpectations(suchasexpectationsforbroadpubliclyavailableWi-Fi)havethepotentialtoimpactourrevenuestreamsandcustomerchurn. • Technologyroadmap • Fibredeployment • Spectrumacquisitionstrategies Suppliers(see10.6) Wemaybeimpactedbysupplychainpractices,disruptionsandlackofresiliencyinrelationtoglobalorlocalizedevents.Dependenceonasinglesupplierforproducts,components,servicedeliveryorsupportmayimpactourabilitytomeetconstantlychangingandrisingcustomerexpectationswhilemaintainingourqualityofservice. • Supplierriskprofiling • Vendorpartnerships,contractsand agreements • Suppliercodeofconduct • Businesscontinuitymanagementplans Organizational change(see10.7) Momentumofbothinternalandexternalintegrationactivitiesmayimpactcustomerexperience,theachievementofourstrategicobjectivesandsynergiesassociatedwithourchangeinitiatives. • Investmentandacquisitionstrategy • Preandpost-acquisitionduediligence • TELUSVenturesinvestments • Innovationpartnerships

Operational risks and uncertainties Operationalrisksarisefromuncertaintieswefaceinourday-to-dayoperations.Ourapproachisguidedbyourcodeofethicsandconduct, whileouroperationsaresupportedbypolicies,proceduresandinternalcontrols. Financial risks and uncertainties Financialrisksarisefromuncertaintiesinvolvedinmaintainingappropriatelevelsofliquidity,financinganddebttosustainoperationsandsupport futuregrowth. 104 • TELUS2019 ANNUAL REPORT RiskPotential impact Mitigations Financing, debt and dividends (see10.13) OuraccesstocapitalmarketsmaybeimpactedbygeneralmarketconditionsandassessmentsbyinvestorsofTELUScashgenerationcapability.Ourcurrentintentiontoreturncapitaltoshareholderscouldconstrainourabilitytoinvestinouroperationstosupportfuturegrowth. • ShelfprospectusineffectuntilAugust2022 • Investmentgradecreditratings • Creditfacilityandcommercialpaperprogram • Foreigncurrencyforwardcontracts Tax matters (see10.14) Complexityofdomesticandforeigntaxlaws,regulationsandreportingrequirementsrelatedtoTELUSandourinternationaloperatingsubsidiariesmayourimpactfinancialresults,effectivegovernanceoftaxconsiderationsandcompliance. • Taxstrategy • Internaltaxationprofessionals • Externaladvisors The economy (see10.15) Changingglobaleconomicconditions,aswellasoureffectivenessinmonitoringandrevisinggrowthassumptionsandcontingencyplans,mayimpacttheachievementofourcorporateobjectives. • Pensioninvestmentgovernanceand monitoring • Foreigncurrencyforwardcontracts • Diverseproductsets • Efficientbusinessoperations RiskPotential impact Mitigations Customer service delivery (see10.8) Customerinteractionsandourservicedeliverydirectlyimpactcustomerexperience,customerchurn,andlikelihoodtorecommendoutcomes. • Processsimplificationanddigitization • Customerexperiencemanagement Our systems and processes (see10.9) Systemsandtechnologyinnovation,maintenanceandmanagementmayimpactourITsystemsandnetworkreliability,aswellasouroperatingcosts. • Lifecyclemanagementand adoptionofemergingsolutions • Projectmanagement • Changemanagement • Continuousmonitoringandresponse programs • Disasterrecoveryprogramandplans Security and data protection (see10.10) Ourawarenessofsecurityissuesandtheeffectivenessofoursecuritycontrolsinfluenceourabilitytoidentifypotentialthreatsandvulnerabilities,protectourenvironment,detectbreaches,respondtoattacksandrestorenormaloperations.Asuccessfuldisruptionmayimpacttheoperationsofournetworkorallowtheunauthorizedinterception,destruction,useordisseminationofcustomer,teammemberorbusinessinformation. • Securitypolicies,standardsand methodologies • Privacyandsecurityimpactassessments • Vulnerabilityassessments • Continuousmonitoringandresponse programs Our team (see10.11) Therapidlyevolvingandhighlycompetitivenatureofourbusinessandchangingworkforcedemographics,aswellasthesufficiencyofinternaltraining,developmentandsuccessionprograms,mayimpactourabilitytoattract,developandretainteammemberswiththeskillsrequiredtomeetthechangingneedsofourcustomersandourbusiness. • Performancedevelopmentprogram • Healthandwell-beingstrategy • Compensationandbenefitsprogram • Retentionandsuccessionplanning • WorkStyles®program Our environment (see10.12) Naturaldisasters,climatechangeimpactsanddisruptiveeventsmayimpactouroperations,customersatisfactionandteammemberexperience. • Businesscontinuityanddisasterrecovery programandplans SeeSection 5.1(e)ofour2019AnnualInformationFormforadescriptionofTaskForceonClimate-relatedFinancialDisclosures.Additionally,adetailedreportofourenvironmentalriskmitigationactivitiescanbefoundinoursustainabilityreportattelus.com/sustainability.

MD& A: RISKS AND RISK MANAGEMENT Compliance risks and uncertainties Compliancerisksarisefromuncertaintiesrelatedtocompliancewithlawsandregulationsspanningthemanyjurisdictionsinwhichweoperate.Wehavepolicies,controls,processesandcontractualarrangementsinplace,aswellasinsurancecoverage,thataredesignedtoenablecompliance andlimitourexposuretocompliancerisks. 10.3 Regulatory matters Risk category: Strategic Theregulatoryregimeunderwhichweoperate,includingthelaws,regulations,anddecisionsinregulatoryproceedingsandcourtcases,reviews,appeals,policyannouncementsandotherdevelopments,suchasthosedescribedinSection 9.4 Communications industry regulatory developments and proceedings,imposesconditionsontheproductsandservicesthatweprovideandthewaysinwhichweprovidethem.Theregulatoryregimesetsforth,amongothermatters,rates,termsandconditionsfortheprovisionoftelecommunicationsservices,licensingofbroadcastservices,licensingofspectrumandradioappar-atus,andrestrictionsonownershipandcontrolbynon-Canadians. TheallocationanduseofspectruminCanadaaregovernedbyInnovation,ScienceandEconomicDevelopmentCanada(ISED),whichestablishesspectrumpolicies,determinesspectrumauctionframeworks,issueslicencesandsetsradioauthorizationconditions. Canadianownershipandcontrolrestrictions,includingrestrictionsontheownershipofourCommonSharesbynon-Canadians,areimposedbytheCanadian Telecommunications Common Carrier Ownership and Control RegulationsundertheTelecommunications Act(collectively,theTelecommunicationsRegulations)andtheDirection to the CRTC (Ineligibility of Non-Canadians),asorderedbytheGovernorinCouncilpursuanttotheBroadcasting Act(theBroadcastingDirection). WithourInternetofThings(IoT),health,businessandinternationalfootprintspanningNorthAmericaandCentralAmerica,EuropeandAsia,ouroperationsmustalsocomplywiththelaws,regulationsanddecisions ineffectinthesejurisdictions. licencesatareasonablecostastheyaremadeavailable.Therevocationof,oramateriallimitationonobtaining,spectrumlicencescouldhaveamaterialadverseeffectonourbusinessandouroperations,includingthequalityandreliabilityofournetworkandserviceofferings,aswellasourfinancialcondition. Governmentorregulatoryactionswithrespecttocertaincountriesorsuppliersmayalsoimpactus,andotherCanadiantelecommunicationscarriersgenerally,andmayhavematerial,non-recurring,incremental costconsequencesforTELUS. Changes over the past 12 months TheGovernmentofCanadaiscurrentlyconductingacybersecurityreviewofinternationalsuppliersofnext-generationnetworkequipmentandtechnologies,focusedonHuaweiTechnologies,toevaluatepotentialrisksinvolvedinthedevelopmentof5GnetworksinCanada.Overthepastdecade,ourpartnershipwithHuaweihasallowedustoutilizethemostadvancedtechnologyinacost-effectivemannerinouradvanced 3Gand4Gnetworks,withoutanysecurity-relatedincidents.Inbuildingour3Gand4Gnationalnetworks,wehavecollaboratedcloselywiththeGovernmentofCanadaformanyyearstoensurerobustprotectionsacrossallequipmentused. TheCRTCiscurrentlyreviewingtheregulatoryframeworkforwirelessservices.Thereviewwillexaminethreemajorissues:thelevelofcompe-titionintheretailmarket;thecurrentwholesalemobilewirelessserviceregulatoryframework,withafocusonwholesalemobilevirtualnetworkoperator(MVNO)access;andthefutureofmobilewirelessservicesinCanada,withafocusonremovingbarrierstoinfrastructuredeployment.TheCRTChasprovidedapreliminaryopinionthatthereshouldbemoreopportunitiesforMVNOs.Wehaveintervenedin,andwillparticipateinallstagesof,thisproceeding,andhavefiledevidencetodemonstratethehighperformanceofCanadianwirelessservicesonmetricsthatincludenetworkcoverage,networkquality,availabilityofserviceandpricing.Adecisionforthisproceedingisnotexpecteduntilmid-2020,attheearliest.ThepublichearingcommencesonFebruary18,2020. InAugust2019,theCRTCissuedadecisionthatsignificantlyreducedwholesaleinternetrateschargedbyincumbentlocalexchangecarriersforwholesaledigitalsubscriberlineandcablecompanies’third-partyinternetaccessservicestocompetitorinternetserviceproviders.Inresponse,webroughtapetitiontotheGovernorinCounciltoreferthedecisionbacktotheCRTCforreconsiderationinlightofthenegativeramificationsthatitwillhaveoninvestmentandrelatedsocialoutcomes,suchashealth,environmentalpolicyandruraldevelopment.WealsofiledanapplicationfortheCRTCtoreviewandvarycertaincostingerrorsthattheCRTCmadeinthedecision.BCEandacoalitionofcablecom-panieshaveseparatelybeengrantedleavetoappealthedecisiontotheFederalCourtofAppeal.TheCRTCdecisionhasbeenstayedpending thedispositionoftheappeal. Potential impact Changestotheregulatoryregimeunderwhichweoperate,includingchangestolawsandregulationsandownershiprulesortheenactmentoflawsorregulationsbyprovincesormunicipalitiesthatthreatenunitaryfederalregulatoryauthorityovertelecommunications,couldmateriallyandadverselyaffectourbusiness.Thesechangesmayincreaseourcosts,restrictorimpedethewayweprovideourservices,limittherangeofservicesweprovide,andotherwisecauseustoreduceourcapitalandoperationalexpenditures,includinginvestmentinournetwork,andaltercustomerperceptionsofouroperations.Thefurtherregulationofourbroadband,wirelessandotheractivitiesandanyrelatedregulatorydeci-sionscouldalsorestrictourabilitytocompeteinthemarketplaceandlimitthereturnwecanexpecttoachieveonpastandfutureinvestmentsinournetwork.Suchchangesmaynotbeanticipatedor,whentheyareanticipated,ourassessmentoftheirimpactonusandourbusinessmaynotbeaccurate. Ourabilitytoprovidecompetitiveservices,includingourabilityto enhanceourcurrentservicesandoffernewservicesonatimelybasis, isalsodependentonourabilitytoobtainaccesstonewspectrum TELUS2019 ANNUAL REPORT • 105 RiskPotential impact Mitigations Litigation and legal matters (see10.16) Complexityof,andcompliancewith,laws,regulationsand commitmentsmayhaveafinancialandreputationalimpact. • Customercontractsandagreements • Suppliercontractsandagreements • Insurancepolicies

InOctober2019,afederalLiberalgovernmentwasre-elected.ThenewlyelectedLiberalgovernmentcommittedtoreducingcellphoneplanpricesby25%overthenexttwoyearsthroughcollaborationwithwirelessserviceproviders.WecontinuetoworktodemonstratethatCanadianwirelesspricesremainlowtomoderateinthecontextofCanada’slowpopulationdensity,challenginggeographyandveryhighspectrumcosts.Theannouncementorimplementationofspecificregu-lationsorotheractionsintendedtoreducecellphoneplanpricescouldprecipitateamaterialreductionincapitalexpendituresandoperating expendituresintheformofstaffinglevelstoamelioratethisimpact. onebundledand/ordiscountedmonthlyrate,alongwiththeirexistingbroadcastorsatellite-basedTVservices.Someofourcompetitorsownandcontinuetoacquirebroadcastcontentassets,whichcouldresultincontentbeingwithheldfromusorbeingmadeavailabletousatinflatedpricesoronunattractiveterms. Inthebusinessmarket,traditionalfacilities-basedcompetitorscontinuetocompetebasedonnetworkfootprintandreliability,whileOTTserviceprovidersemphasizeprice,flexibilityandconvenience.OTTserviceprovidersdonotinvestin,orown,networksorotherinfra-structurebutcompetedirectlywithpay-TV,video,voiceandmessagingservicesacrossboththeconsumerandbusinessmarketsegments. TELUSHealthcompeteswithotherprovidersofelectronicmedicalrecordsandpharmacymanagementproducts,claimsadjudicators,systemsintegratorsandhealthserviceproviders,includingthosethatownaverticallyintegratedmixofhealthservicesdelivery,ITsolutionsandrelatedservices,andglobalproviders.Withconsumer-facinghealthproducts,wecompeteintheprovisionofvirtualhealthcareservices(withaccesstogeneralpractitioners,nursepractitioners,mentalhealththerapistsanddieticiansprovidedthroughvirtualconsultations),pre-ventativehealthservices,andpersonalemergencyresponseservices. TELUSInternationalisaCCBSproviderwithafocusoncustomerexperienceandtransformationinnovationthatdesigns,buildsanddeliversnext-generationdigitalsolutionsandcontentmoderation.Wecompetewithothercustomizedmanagedoutsourcingsolutionscompanies,aswell asotherprovidersofcontactcentreandITdigitalservices. Mitigation Weadvocateatalllevelsofgovernment,including:ourparticipationinCRTCandfederalgovernmentproceedings,studies,reviewsandotherconsultations;representationsbeforeprovincialandmunicipalgovernmentspertainingtotelecommunicationsissues;legalproceedingsimpactingouroperationsatalllevelsofthecourts;andotherrelevantinquiries(suchasthoserelatingtotheexclusivefederaljurisdictionovertelecommunications),asdescribedinSection 9.4 Communications industry regulatory developments and proceedings. Wewillcontinuetomonitorregulatorydevelopmentsandmayneedtoreconsiderourinvestmentdecisionswithaviewtogeneratinganecessaryreturnoncapital.Ourriskmitigatingstrategiesforinvestmentdecisionsmayinclude,butarenotlimitedto,reducingcapitalandoperationalexpendituresandreducingemployment. Wecontinuetostrivetocomplywithallradioauthorizationandspectrumlicenceandrenewalconditionsandplantoparticipateinfuturespectrumauctions.Wecontinuetoadvocatewiththefederalgovernmentforfairspectrumauctionrules,sothatcompanieslikeTELUScanbidonanequalfootingwithothercompetitorsforspectrumblocksavailableatauctionandcanpurchasespectrumlicencesavailableforsalefromcompetitors.Wealsocontinuetostronglyadvocatethatpreferentialtreat-mentisnotrequiredforregionalcarriers,includingfor5Gservices,mostnotablyforentrantsthatarecurrentlypartofestablished,sophisticatedandwell-financedcablecompanies. AsaholdingcorporationofCanadiancarriers,theTelecommunicationsRegulationsgiveuscertainpowerstomonitorandcontrolthelevelof non-CanadianownershipofourCommonShares.ThesepowershavebeenincorporatedintoourArticlesandextendedtoensurecomplianceunderboththeBroadcasting ActandtheRadiocommunication Act(underwhichtherequirementsforCanadianownershipandcontrolare cross-referencedtotheTelecommunications Act). Potential impact Ourcustomers’loyaltyandtheirlikelihoodtorecommendTELUSarebothdependentuponourabilitytoprovideaserviceexperiencethatmeetsorexceedstheirexpectations. Intensecompetitionfromwirelesscompetitors,traditionaltelephony,data,IPandITserviceprovidersandVoIP-focusedcompetitorsinboththeconsumerandbusinessmarkets,alongwiththeuseofvariouspromotionaloffersandinclusivebundles/rateplans,placespressuresonaveragerevenuepersubscriberpermonth(ARPU),churnandcosts ofacquisitionandretention. Changes over the past 12 months Continuedwirelesspromotionalactivity,devicefinancing,unlimiteddataplansandsubstitutionbyincreasinglyavailableWi-Finetworksareimpactingchargeableusage,ARPUandcustomerchurn(seeWireless trends and seasonalityinSection 5.4),whiletheuseofunlicensedspec-trumandhigh-throughputsatellitestodeliverhigher-speeddataservicesisintensifyingcompetition(seeCommunications industry regulatory developments and proceedingsinSection 9.4). Wefacetechnologicalsubstitutionacrossallkeybusinesslinesandmarketsegments,includingtheconsumer,smallandmedium-sizedbusinessandlargeenterprisemarkets,TELUSHealthandTELUSInternational,andtechnologicaladvanceshaveblurredtheboundariesbetweenbroadcasting,internetandtelecommunicationssectors(seeSection 10.5 Technology). Canadiancablecompetitorsareinvestinginnext-generationTVplatformswhilecontinuingtoincreasethespeedoftheirinternetofferingsandtheirroll-outofWi-Fiservicesinmetropolitanareas.OTTservices,suchasNetflix,AmazonPrimeVideo,Disney+andYouTube,arealsocompetingforshareofviewership,whichmayacceleratethedisconnectionofTVservicesoraffectsubscriberandrevenuegrowthinourTVand entertainmentservices. 10.4 Competitive environment Risk category: Strategic Asthetelecommunicationsindustrycontinuestoevolve,wehaveexpandedonthedeliveryoftraditionalvoiceanddataservicesforconsumerandbusinesscustomerstofocusonsecurity,healthcareandcustomercareandbusinessservices(CCBS)(seeCompetition overviewinSection 4.1). Wirelessmarketsarecharacterizedbyaggressivecompetitionfromestablishedplayersandregionalentrants,withcompetitorsusingvariouspromotionalofferstoattractandretaincustomers. Intheconsumermarket,cablecompaniesandothercompetitors continuetoofferamixofresidentiallocalvoiceoverIP(VoIP),long distance,internetaccessand,insomecases,wirelessservicesunder 106 • TELUS2019 ANNUAL REPORT

MD& A: RISKS AND RISK MANAGEMENT Erosionofourresidentialvoicelinesandthedeclineoflegacyvoicerevenuesareexpectedtocontinue,duetocompetitionandongoingtechnologicalsubstitutionbywirelessandVoIP.Legacydatarevenuesandmarginsalsocontinuetodecline.Thishasbeenonlypartiallyoffsetbygrowthindemandand/ormigrationofcustomerstoIP-basedplat-forms,asIP-basedsolutionsarealsoexperiencingdownwardpricingpressure,lowermarginsandtechnologicalevolution. Non-traditionalcompetitorssuchasAmazonandMicrosoftareenteringthebusinessmarketandareabletoleveragetheirglobalscaletoofferlow-costdatastorageandcloudcomputingservices.Inaddition,rapidlyadvancingtechnologies,suchassoftware-definednetworksandvirtualizednetworkfunctions,enablethelayeringofnewservices incloud-centricsolutions. ofprime-timeNetflixperformanceonparticularinternetserviceprovidersaroundtheglobe,andwasrankedfirstinnetworkcoverage,speed,reliabil-ityorexperiencebyOpensignal,J.D.Power,PCMag,OoklaandTutela. OurSmartHomeSecurityandSecureBusinesssolutionsofferings,expandedthroughtherecentacquisitionofADTSecurityServicesCanada,Inc.(seeTelecommunications industry in 2019inSection 9.1andOrganizational changeinSection 10.7),furtherleverageourinfra-structureinvestmentsandourstrongcustomerexperiencecapabilitiestoenhancethesuiteofservicesweofferwithvideosurveillanceandanalytics,homeandbusinessautomationandrelatedsafetyandsecuritymonitoring.TheseservicesareprovidedoversmartphoneapplicationsandleverageourleadingPureFibreandwirelessnetworks,whileprovidingmulti-servicebundlingandretentionprofiles. ThroughTELUSHealth,wehaveleveragedoursystems,proprietarysolutionsandthird-partysolutionstoextendourfootprintinhealthcareandbenefitfromtheinvestmentsineHealthbeingmadebygovernmentsandemployers.WiththeintroductionofhealthproductsandservicesforCanadians,weareseeingevidenceofapositiveshiftinperception,drivingoverallinterestandsalesofTELUSservices,anddifferentiatingTELUSfromourtraditionalcompetitors. Additionally,throughourTELUSInternationalcustomerexperience,digitaltransformationandbusinessservicesandourmulti-sitecustomerservicecentres,weenableexperiencesthatrealizeefficiencies,costsavingsandbusinessgrowthforourcustomers.WearefurtherdiversifyingourinternationaloperationswiththeacquisitionofCompetenceCallCenter(seeTelecommunications industry general outlook and trendsinSection 9.2andOrganizational changeinSection 10.7). Wecontinuetoaddtoourcapabilitiesinthebusinessmarketthroughproductdevelopment,acquisitionsandpartnershipsandinvestmentsinsoftware-definednetworks,unifiedcommunicationsandIoT. Wearecontinuingourdisciplinedlong-termstrategyofinvestinginourgrowthareasanddeliveringonourcustomersfirstpriority.Weintendtocontinuetomarketanddistributeinnovativeanddifferentiatedservices;offerbundledservicesacrossourproductportfolio;investinourextensivenetworkandsystemstosupportcustomerservice;evolvetechnologies;investinourdistributionchannels;andacquiretheuseofspectrumtofacilitateservicedevelopmentandtheexpansionofoursubscriberbase, aswellastoaddresstheacceleratinggrowthindemandfordatausage. Mitigation Ourtopcorporatepriorityisputtingcustomersfirstandearningindustryleadershipinthelikelihoodtorecommend.Infact,60%ofourinternalcorporatescorecardisweightedtoteammemberengagementandcustomerexperience.Toenhancecustomerexperience,wecontinuetoinvestinourproductsandservices,systemandnetworkreliability,teammembers,andsystemandprocessimprovements.Additionally,withourproductlifecyclemanagementprocesses,weendeavourtointroduceinnovativeproductsandservicesthroughbothresearchanddevelopmentandacquisition,enhanceourcurrentserviceswithinte-gratedbundledoffersandinvestincustomer-focusedinitiativestobringgreatertransparencyandsimplicitytoourcustomers,alltohelpdifferentiateourselvesfromourcompetition. Our4Gtechnologycoversapproximately99%ofCanada’spopulation,enablingustoestablishandmaintainastrongpositioninsmartphoneanddatadeviceselectionandexpandroamingcapabilitytomorethan 225destinations.Tocompeteeffectivelyacrosscustomersegments,weofferawiderangeofservicesacrossourTELUS,KoodoandPublicMobilebrands.Eachbrandhasauniquevaluepropositionandweb-basedchannel(seeOur capabilitiesinSection 4.1andOur brand and distribution channelsinSection 4.2). Wearemakingsignificantinvestmentsinourbroadbandinfra-structure,includingconnectingmorehomesandbusinessesdirectlytoourfibre-opticnetwork.OurbroadbandinvestmentsextendthereachandfunctionalityofourIPTVservicesandbusinessandhealthcaresolutions,andarealsoenablingamoreefficientandtimelyevolutiontoaconverged5Gnetwork(seeOur technology, systems and propertiesinSection 4.2). OurIPTVandOTTmultimediainitiativessupportthenextgenerationofIPTVand,importantly,tieourOTTenvironmenttooneplatform,whichallowsustobeagileinthedeliveryofOTTservices,suchasNetflixandYouTube,whilealsostrengtheningourleadershippositioninWesternCanadaintheprovisionofhigh-definitionlinearchannels,video-on-demandservicesandultra-highdefinition4KHDRcontent.Ourstrategyistoaggregate,integrateandmakecontentandapplicationsaccessibleforourcustomers’enjoyment,onatimelybasisacrossmultipledevices.Wehavedemonstratedthatitisnotnecessarytoowncontentinordertomakeitaccessibletocustomersonaneconomicallyattractivebasis,providedthereistimelyandstrictenforcementoftheCRTC’sregulatorysafeguardstopreventabusivepracticesbyverticallyintegratedcompeti-tors.Inaddition,asmoreOTTserviceproviderslaunchservicesandofferhigher-resolutionvideoovertheinternet,wecontinuetomakeinvestmentsinournetwork.Throughout2019,TELUSPureFibrewastheleaderin CanadaintheNetflixInternetServiceProviderSpeedIndex,ameasure 10.5 Technology Risk category: Strategic Weareatechnology-enabledcompanyandwemaintainshort-termandlong-termstrategiestooptimizeourselection,costsanduseoftech-nology,minimizerisksanduncertaintiesanddiversifyourproductandserviceofferings.Our4GLTEnetwork,LTEadvanced(LTE-A)andTELUSPureFibretechnologyarefoundationaltoourfuturegrowth(seeOur technology, systems and propertiesinSection 4.2). Aparadigmshiftinvolvingconsumeradoptionofalternativetechnol-ogies,suchasvideoandvoiceOTTofferings(e.g.NetflixandFaceTime)andincreasinglyavailableWi-Finetworks,couldnegativelyaffectourrevenuestreams.Forexample,Wi-Finetworksarebeingusedtodeliverentertainment services to customers outside the home, while OTTcontentprovidersarecompetingforashareofentertainmentviewership.OTTtechnologymayalsoimpactbusinesssegmentservicesbyenablingcapabilitiesthatinthepastwereassociatedwithtelecommunications serviceproviders(e.g.Skype,cloud-basedservicesandroaming). TELUS2019 ANNUAL REPORT • 107

Ontheotherhand,theproliferationoflow-powerwide-area(LPWA)IoTnetworkspresentsnewrevenueopportunities,alongwiththechallengesofverylowbandwidthusage.Thesefactors,includingthegrowingcustomerdemandforaccesstoWi-FioutsidethehomeandaccesstoOTTservicesondemandonanydevice,maydriveincreasedchurnratesforourwireless,TVandhigh-speedinternetservices,andaddfurtherpressureonourrevenuestreams(seeSection 10.4 Competitive environ-ment).Advancedself-learningtechnologiesandautomation(e.g.artificialintelligenceandroboticprocessautomation)willchangethewaywemanageouroperationsandwillsupportcustomerexperienceinnovation.Inaddition,weareconstantlyfocusedonadvancesincybersecurity, sothatwecanidentifyanyopportunitiestheymayoffer. Mitigation Our4GLTEaccesstechnologycovers99.4%ofCanada’spopulation,whileourLTE-Aaccesstechnologycovers93.4%.Ourongoinginvest-mentsin4GLTEtechnology,includingLTE-Atechnologyandearly5Gcapabilities,allowustomanagedatacapacitydemandsbymoreeffect-ivelyutilizingourspectrumholdings.TheevolutiontoLTE-AtechnologiesissupportedbyourinvestmentsinourIPnetwork,IP/fibreback-haultocellsites,includingoursmall-cellinfrastructure,andasoftware-upgradeableradioinfrastructure.TheLTE-Aexpansionisexpectedtofurtherincreasenetworkcapacityandspeed,reducedeliverycostspermegabyte,enablerichermultimediaapplicationsandservices,anddeliverasuperiorsubscriberexperience. Mobilenetworkinfrastructureinvestmentswillincreasinglybedirectedtosystemsbasedonnetworkfunctionvirtualization(NFV),whichoffergreatercapacityforcomputingandstorage,higherlevelsofresiliencyandmoreflexiblesoftwaredesign.Ourlarge-scalemovetonational,geographicallydistributeddatacentresthatusecommercialoff-the-shelfcomputingandstoragesolutionsenablestheutilizationofbroad-scaleNFVandsoftware-definednetworktechnologies,whichwillallowustovirtualizemuchofourinfrastructureandwillalsofacilitateacommoncontrolplaneforcoordinationofourvirtualizedandnon-virtualizednetworkassets.Thearchitectureofourintelligenceandcontentcapabil-itiesislocatedattheedgeofournetwork,closetoourcustomers.Thedistributedsmaller-scalecomputingpowerandstoragedeliverservicesfasterwhilemanagingtheongoingneedtocontinuallyscaletheIP/fibrecorenetworkinfrastructure. Rapidgrowthofdatavolumesrequiresefficientutilizationofourspectrumholdingsof700MHz,AWS-3and2500MHzspectrumlicences.Wearenowdeployingthoselicencesasrequiredtoprovideadditionalcapacityinordertomitigaterisksfromgrowingdatatraffic.Wealsoplantocombineourlicensedspectrumwithunlicensedsupplementaryspectrum,asnetworkanddeviceecosystemsevolvetosupportlicensedassistedaccess(LAA)technology.ThespectrumlicencespreviouslyusedforourCDMAaccesstechnologyhavebeenrepurposedforusewithLTEtechnology.OurpublicWi-Fiserviceincreasinglyintegratesseamlesslywithour4Gaccesstechnology,automaticallyshiftingoursmartphonecustomerstoWi-Fi,offloadingdatatrafficfromourspectrumandextendingserviceandchannelopportunities.Ourdeploymentofsmall-celltechnology,coupledwithbothlicensedandlicence-exemptspectrumtechnologies,ishelpingusachieveamoreefficientutilizationofourspectrumholdings. Inordertoinfluencethetiming,rulesandpoliciesregarding 3.5GHzspectrum,wehaveemphasizedtoISEDtheneedforearly,fairandtimelyaccessto3.5GHzspectrumforalloperatorsinordertoensurethatCanadacontinuestoleadallG7countriesintermsofdataspeedsandcapabilities.WeareadvocatingforafairtreatmentofthisspectrumbandandforitsacceleratedreleasebyISEDtoallindustryplayersformobileuse(refertoSection 10.3 Regulatory matters).ISEDiscurrentlyexpectedtoauctionthespectruminlate2020,andassumingoursuccessfulparticipationintheauction,wewillbeginoperationalizingthespectrumin2021. InordertoprepareforthefuturedeploymentofmmWavespectrum,wecontinuetoconduct5GtrialsinthemmWavespectrumbands.Ourtrialshaveestablishedaplatformthatwillformthebasisforevaluatingourfuture5Gusecasesandhelp uspreparefornetworkplanninginthemmWavebands. Potential impact Ourbusinessdependsonthedeploymentoftechnologyandmaintainingsufficientaccesstospectrumtodeliverservices.Risingdatatrafficlevelsandthefastpaceofdatadeviceinnovationpresentchallengestoprovidingadequatecapacityandmaintaininghighservicelevelsatcompetitivecoststructures. Ongoinginvestmentsinfibre-to-the-premisesshouldenablefurtherevolutionofIP-basedtelephony,andasthoseservicesevolve,wewillcontinuetoassessopportunitiestofurtherconsolidateseparatetechnol-ogieswithinasinglevoiceserviceenvironment.TheoverallconvergenceofwirelessandwirelineservicesinacommonIP-basednetworkprovidesopportunitiesforcostsavingsandfortherapiddevelopmentand deploymentofnewandadvancedservices. Changes over the past 12 months Thedemandforwirelessdataservicescontinuestogrowrapidly.AccordingtotheCRTCCommunicationsMonitoringReport2019,theaveragedatausagepersubscriberincreasedby26.3%in2018overthe2017result,whilewirelessdatarevenuedecreasedforthefirsttimeby8.2%overthesameperiod. 5Gtechnologyisevolvingrapidlyandtheworld’sfirststandards-basedcommerciallaunchesoccurredin2019.Mostearly5Gecosystemsoperateonthreedistinctspectrumbands:3.5GHz,millimetrewave(mmWave)spectrum(28GHzand37to40GHz)and600MHz.Globally, 3.5GHzspectrumisbecomingtheprimarybandfor5Gmobilecoverage.InCanada,3.5GHzspectrumwasauctionedforfixedwirelessaccessbetween2004and2009;itiscurrentlynotlicensedformobileapplicationsandislargelyheldbyInukshuk(ajointventureownedbyBellandRogers)inmosturbanmarkets.In2019,ISEDissuedadecisiontoclawbackaportionofInukshuk’s3.5GHzspectrumholdingsandre-auctionitforflexibleuse(permittingitsdeploymentformobileapplications,suchas5G).In2019,ISEDinitiatedpublicconsultationonthelicensingframeworkforthe3.5GHzspectrumauction,whichisexpectedtotakeplaceinlate2020.Dependingontheauctionrules,thereisariskthatwecouldendupwithless3.5GHzspectrumthancertainothercarriersandnotbeabletocompeteequallyintheprovisionofhighernetworkspeedsand5Gcapacity. SpectruminthemmWavebandisexpectedtobeusedforveryhighdatademandlocationsinwhichcustomersareveryclosetotheantennaandhaveanunobstructedviewofthetransmittingsite.Servicesusingthisparticularspectrumareexpectedtobeanalternativetofibre-to-the-homedeployments. 108 • TELUS2019 ANNUAL REPORT

MD& A: RISKS AND RISK MANAGEMENT Additionally,wecontinuetocollaboratewithISED,sharingtrialresultsindiscussionstohelpguideourregulatorasitfinalizesitsdecisionsonestablishingthepolicyandtimingforthereleaseofmmWavespectrumfor5G.TheauctionformmWavespectrumisexpectedtooccurin2021.Furthermore,ourinvestmentinsmall-celltechnologywillhelpusdensifyournetworkandmitigateanypotentialspeedandcapacitydisadvantagescreatedby3.5GHzavailability,aswellasimprovefuturemmWavedeploymentfeasibility,costandtimetomarket. Sinceearly2014,wehaveworkedwithnumerousbusinessesandmanymajorsportsandentertainmentvenuesaswecontinuetoexpandourpublicWi-Fiinfrastructure.ThispublicWi-Fiserviceisapartofournetworkstrategyofdeployingsmallcellsthatintegrateseamlesslywithour4Gwirelessaccesstechnology,automaticallyshiftingoursmart-phonecustomerstoWi-Fiandoffloadingdatatrafficfromourwirelessspectrum.IntegratedpublicWi-Fiinfrastructurebuild-outactivityalsoextendsserviceandchannelopportunitieswithsmallandmedium-sizedenterprisesandimprovescustomers’likelihoodtorecommend.IntegrationofhomeWi-Fiincreasesthepropensityforhigherdatausageonsmartphoneswithinandoutsidethehome,helpingtodrivetheuptakeofourinternetservice.InadditiontotheavailabilityofourWi-Fiservice,ourIoTportfolioisalsogrowing,withtheadditionofservicessuchasGEOTrac,TELUSAlertandAssist,andawidevarietyoffeaturedIoTsolutions.Ourcustomerservicedeliverysitesareexperimentingwithdifferentautomationandself-learningtoolstoassesstheimpactsuchtechnologymayhaveoncustomerexperiencesandoperatingefficiencies.Wearealsomaintainingaconstantfocusoncybersecuritysolutions,becauseweviewcybersecurityasanecosystemoftechnol-ogiesandprocessesworkingtogethertoprovidegreatervisibilityandguidebettersecuritydecisionsfororganizationsacrossCanada. TosupportconvergenceinacommonIP-basedapplicationenvironment,weareleveragingmodulararchitectures,labinvestmentsandemployeetrials.Wearepartneringwithsystemintegratorswhereappropriate,purchasinghardwarethatiscommontomostotherNorthAmericanIP-basedtechnologydeploymentsandintroducingvirtualizationtechnologies,wherefeasible.Wearealsoactiveinanumberofstandardsbodies,suchastheMetroEthernetForumandIPSphere,inordertoinfluenceanewIPinfrastructurestrategythatleveragesstandards-based functionality,whichcouldfurthersimplifyournetwork. Potential impact Ouragilityinthedeliveryofproductsandservicesisdirectlylinkedtoourabilitytoengageorreplaceasupplierorvendoronatimelybasisandwithoutincurringadditionalcost.Relianceoncertainmanu-facturersmayincreasetheirmarketpowerandadverselyaffectourabilitytopurchasecertainproductsatanaffordablecost.Ultimately,thesuccessofupgradesandtheevolutionoftechnologythatweofferourcustomers,includingourIPTVsolutionsandtheroll-outandevolutionofourbroadbandtechnologiesandsystems,maybeimpacted,aswellasthecostofacquisitionorthetimerequiredtodeploytech-nologyandsystems. Thereisnoguaranteethatourvendorstrategiesandagreementswillnotbeimpactedbyvendoroperationaldifficultiesorgovernment/regulatorypressures,orthatwewillnotincuradditionalcostsordelaysincontinuingtoprovideservicesorindeployingourtechnologies andsystems. Changes over the past 12 months Overthecourseof2019,Huawei,aleadingglobaltelecomsupplierandphonemanufacturer,continuedtocomeunderscrutiny.Withcontinuedinternationalfocusontelecomsuppliers,additionalbusinesscontinuityplanshavebeenformalizedtoensureavailabilityofsupplyincompliancewithU.S.BureauofIndustryandSecurity(BIS)Entity Listrestrictions. Mitigation Asaleadingnetworkaggregator,wepartnerwithseveralnetworkequipmentsuppliersandworkwithnumerousinternationalanddomesticvendorstodeliverthebestpossibleexperienceforourcustomers.Weconsiderpossiblevendorstrategiesand/orrestructuringoutcomeswhenplanningforourfuturegrowth,aswellasthemaintenanceandsupportofexistingequipmentandservices.Wehavereasonablecontingencyplansfordifferentscenarios,includingworkingwithmultiplevendors,maintainingongoingstrongvendorrelationshipswithperiodicreviewsofvendorperformance,andworkingcloselywithotherproductandserviceuserstoinfluencevendors’productorservicedevelopmentplans. Inaddition,weregularlymonitortheriskprofileofourkeyvendorsandreviewtheapplicabletermsandconditionsofouragreementstodeterminewhetheradditionalcontractualsafeguardsarerequired,andwepromoteourSupplierCodeofConduct,whichisbasedongenerallyacceptedstandardsofethicalbusinessconduct. Inrespectofsuppliermarketpower,weofferandpromotealternative devicestoprovidegreaterchoiceforconsumersandtohelplimitour relianceonafewkeysuppliers. 10.6 Suppliers Risk category: Strategic Wehaverelationshipswithmultiplevendors,includinglargesupplierssuchasAmazon,Apple,Google,MicrosoftandSamsung,whichareimportantinsupportingnetworkandserviceevolutionplansandourdeliveryofservicestoourcustomers.Oursuppliersandvendorsmayexperiencebusinessdifficulties,privacyand/orsecurityincidents,externaleventssuchasepidemicsorpandemics,aswellasgovernmentorregulatorypressures.Theymayrestructuretheiroperations,becon-solidatedwithothersuppliers,discontinuecertainproductsorselltheiroperationsorproductstoothervendors.Inaddition,varioussuppliersmaysellproductsorservicesdirectlytoourcustomers. Incertaincases,thenumberofsuppliersofaproduct,serviceortechnologythatweuseislimited.Inaddition,governmentorregulatoryactionswithrespecttocertaincountriesorsuppliersmayaffectourrelationshipwithcertainvendorsandourfutureuseoftheirproducts andservices. 10.7 Organizational change Risk category: Strategic Wewillpartner,acquireanddivestasnecessarytoacceleratetheimplementationofourstrategy. Potential impact Businesscombinationtransactionsaddcomplexitytoourorganization’sstructure,productandserviceofferingsandoperationalsystemsandprocesses.Ifpre-acquisitionduediligenceisinsufficientorineffective,ourinvestmentmaynotrealizepotentialsynergiesorgenerate strategicgrowth. TELUS2019 ANNUAL REPORT • 109

Giventherapidrateoftechnologicalchange,wemayalsolooktopartnerandinvestinemergingopportunitiesthatmaynotyetbefullyviableandestablished.Theseinvestmentsmayrequirehighlevelsofinitialfundingandexperiencelowlevelsofinitialadoption,growthandreturns,allofwhichcouldimpactourfinancialpositioninthe shortterm. Potential impact Sub-optimalexperienceswhenourcustomersengagewithusforservicesorsupportmaynegativelyimpactcustomersatisfaction,theTELUSbrandandournetcustomerbasegrowth.Inadequateorinefficientcustomerinteractions(e.g.ordertaking,supportcontact,servicedeliveryandbillingaccuracy)mayincreasecustomerdissatisfactionandchurn.Failuretocontinuetoexecuteeffectivelyonorganizationalinitiatives,suchascus-tomersfirst,solutionsadvisorsupport,digitizationandsimplification,mayimpactthecustomerexperienceweprovide.Aswell,anysignificantorprolongedsystemsandservicedisruptionsoroutagesmaynegativelyimpactcustomersatisfactionandtheTELUSbrand.Regulatorydecisionsmayalsoimpactourabilitytoinvestinourcustomerexperience. Changes over the past 12 months Overthecourseof2019,wemadeanumberofacquisitions,buildingonourstrategyandcommitmenttoleverageourworld-leadingnetworkbyextendingourindustry-leadingcustomerserviceaswecontinuetoenhanceourconnectedhome,business,security,IoT,cybersecurity,smartbuildings,smartcities,agricultureandhealthserviceofferingsforourcustomers.Notably,inNovember2019,wecompletedtheacquisitionofADTSecurityServicesCanada,Inc.,oneofCanada’sleadingpro-vidersofsecurityandautomationsolutionsforresidentialandbusinesscustomers,expandingoursecurityserviceofferingsandcustomerbase.Inaddition,inDecember2019,weannouncedanagreementtoacquireCompetenceCallCenter,aleadingproviderofhigher-value-addedbusinessserviceswithafocusoncustomerrelationshipmanagement andcontentmoderation. Changes over the past 12 months InDecember2018,areorganizationofthecallcentre,fielddeliveryanddigitalsupportteamswasundertakentocreateamorealignedend-to-endcustomerserviceexperienceteamtodrivebetterservicelevelsinourcallcentres,onlineandonsiteinourcustomer’shomesandpremises.Inaddition,theamalgamationofourBusinessTransformationofficeandTechnologyStrategyteamhassupportedanintegratedapproachtodevelopinganddeployingservicesasweevolvetowardasoftware-definednetworkingandservicesparadigm.During2019,theteamhasbeendefining,standardizinganddeployingmergedandcommonnetworking,computingandstorageinfrastructureatbothourinternetdatacentresandcentraloffices.Thesechangesarepartofavitaltransformationintendedtocapitalizeonthepromiseofnewtechnol-ogieswhileenhancingserviceandspeedtomarketforourcustomers inanincreasinglycompetitivelandscape. Mitigation Tosupportongoinginvestmentinleading-edgeandinnovativetechnology,wehavediversifiedourapproachtoallowforvariedlevelsofcommitment,whichwedeterminebasedontherelativematurityofthattechnologyinitslifecycle,itsalignmentwithourstrategyanditslinkagewithourvalueproposition.OurTELUSVenturesinvestmentsincludemorethan20activecompanies,andwecontinuetobuildonourcommitmenttohelpdevelopexcitingnewtechnologieswiththepotentialtodeliverbenefitsforourcustomers,stakeholdersandshareholders.Inaddition,wecontinuetoengageinpartnershipsinordertoresearchanddevelopleading-edgeinnovativetechnologyinsectorssuchasentertainment,agricultureandhealthcareservices. Overthecourseoftime,wehavebuiltadisciplinedcorporatedevelopmentandventuresexpertise,includingduediligenceandpost-acquisitionintegrationplanningrigour,reinforcedbyawell-definedprocessandgovernanceapproachtoevaluatinginvestmentsandacqui-sitions.Wherealarger-scalebusinesscombinationiscontemplated,ourteamsfollowawell-establishedandcollaborativedue-diligencereviewprocess,withoversightbyourseniorleadershipandBoard.Inaddition,formalpost-acquisitionprocessesareinplacetosupporton-boarding,engagementandoperationalintegrationwithourriskmonitoring andmanagementpractices. Mitigation Puttingcustomersfirstremainsourtoppriority.Bywayofsimplificationanddigitization,includingourongoingworkonconversationalinteractivevoiceresponseandenhancedcall-backcapabilities,wehaveimprovedfirst-timeinteractionexperiencesbyreducingthenumberofcalltransfersandshorteningcustomerwaittimes.Wecontinuetoenhancethereliabilityandfunctionalityofourwebsitesandapplications,whilepromotingdigitalengagementtominimizeeffortforourcustomersandreducethevolumeofcallsrelatedtobasictransactionsandactivities. Truckrollreductioneffortsaredrivinganimprovedcustomerexperi-enceandoperationalefficienciesthatallowustoredirectresources,inordertokeepacceleratingourcustomerfirstimprovements.Inaddition,theexpansionofourfibrefootprinthasincreasednetworkreliabilityandperformance,resultinginfewerrepairsandtruckrolls. Developmentofaformalcostofoutagemodeltoquantifytheimpactofoutagesandhelpinformandprioritizeinvestmentsandinitiatives,alongwithatighterfocusondefectreduction,isdrivingyear-over-yearimprovementsinoursystemoutagerates. Wecontinuetoberankedfavourablyinthird-partyreportsbasedoncustomerandnetworkexperience.In2019,wewererankedfirstinnetworkcoverage,speed,reliabilityorexperiencebyOpensignal,J.D.Power,PCMag,OoklaandTutela.ThissuccessfulperformancewastheresultofcontinuingtoevolveourcoverageacrossCanada,increasingaccess-ibilitytoournetwork,andworkingtobetterunderstandtheemergingnetworkmethodologiesthatcanenhancecoverageandLTEavailability,allofwhichwonusrecognitionforprovidingthebestnetworkcoverage amongourcompetitors. 10.8 Customer service delivery Risk category: Operational Ourtoppriorityisputtingourcustomersfirst,withourservicedeliveryteamfocusedondrivingexcellenceinoperationsandoperationalefficiency,implementingradicalsimplificationandbecomingbestinclasssolutionadvisors,withthegoalofminimizingtheeffortinvolvedwhenourcustomersinteractwithus. 110 • TELUS2019 ANNUAL REPORT

MD& A: RISKS AND RISK MANAGEMENT 10.9 Our systems and processes Risk category: Operational WeareakeyproviderofessentialtelecommunicationservicesinCanada.Oursuccessdependsonourabilitytoofferreliableandcontinuousservicestoourcustomers. Wehavealargenumberofinterconnectedoperationalandbusinesssupportsystems.Acquisitions,businesscombinationsandthedevelop-mentandlaunchofnewservicestypicallyrequiresignificantsystemsdevelopmentandintegrationefforts.Asnext-generationservicesareintroduced,theymustworkwithnext-generationsystems,frameworksandITinfrastructures,whilealsobeingcompatiblewithlegacyservicesandsupportsystems.Inaddition,largeenterprisedealsmayinvolvecomplexandmulti-facetedcustomer-specificenterpriserequirements,includingcustomizedsystemsandreportingrequirementsinsupport ofservicedelivery. vendorknowledgeandindustrypracticesacquiredthroughtheinstallationofthoseplatformsatnumerousglobaltelecommunicationscompanies.Wehaveestablishedanext-generationBSS/OSSframeworktoensurethat,asnewservicesandtechnologiesaredeveloped,theyarepartofthenext-generationframeworkthatwilleasetheretirementoflegacysystemsinaccordancewithTeleManagementForum’snext-generationoperationssystemsandsoftwareprogram.Aspartofourongoingfibreroll-out,wehaveinvestedinnewoperationalsupportsystemsthatareconsolidatingourlegacysystemsandsimplifyingourcurrentenvironment.Thiswillimproveourabilitytosupportandmaintainoursystemswithnewer,moreresilienttechnology.Wealsocontinuetomakesignificantinvestmentsinsystemresiliencyandreliabilityinsupportofourongoingcustomerfirstinitiatives. Foreachnewlargeenterprisedeal,welooktoleveragesystemsandprocessesdevelopedinpreviouscontractwinswhileincorporatingothersasrequired,usingacontrolledmethodologytodraftanewcustomsolu-tionandfollowingstandardindustrypracticesforprojectmanagement. Wehavechangemanagementpolicies,processesandcontrolsinplacethatarebaseduponindustrybestpractices.Ingeneral,westrivetoensurethatsystemdevelopmentandprocesschangesareprioritized,andweapplyaprojectmanagementapproachtosuchinitiativesthatincludesreasonableriskidentificationandcontingencyplanning,scopeandchangecontrol,andresourceandqualitymanagement.Wegenerallyalsocompletereasonablefunctional,performanceandrevenueassurancetesting,aswellascapturingandapplyinganylessonslearned.Whereachangeinvolvesmajorsystemandprocessconversions,weoftenmoveourbusinesscontinuityplanningandemergencymanagementoperationscentretoaheightenedstateofreadinessinadvanceofthechange. Weconductongoingmonitoringofournetworks,systemsandcriticalapplications.Risk-baseddisasterrecoverycapabilitiesareleveragedtohelppreventoutagesandlimitimpactsoncustomersandouroperations.Inaddition,enterprise-widebusinesscontinuityprogramsareinplacetosupportmonitoring,preparedness,mitigation,responseandrecovery.However,therecanbenoassurancethatspecificevents,oracombination ofevents,willnotdisruptouroperations. Potential impact Ournetwork,technology,infrastructure,supplychain,teammembersandoperationsmaybemateriallyimpactedbynaturalhazards(seeSection 10.12 Our environment),disruptionsofcriticalinfrastructureduetointentionalthreats(seeSection 10.10 Security and data protection),healththreats(suchasepidemicsorpandemics)orlabourdisruptions(seeSection 10.11 Our team)orunintentionalthreats. Asthecomplexityofoursystemsincreases,systemstabilityandavailabilitymaybeaffected.TherecanbenoassurancethatanyofourproposedITsystemsorprocesschangeinitiativeswillbeimplementedsuccessfully,thattheywillbeimplementedinaccordancewithanticipatedtimelines,orthatsufficientlyskilledpersonnelwillbeavailabletocompletesuchinitiatives.IfwefailtoimplementandmaintainappropriateITsys-temsonatimelybasis,failtocreateandmaintainaneffectivegovernanceandoperatingframeworktosupportthemanagementofstaff,orfailtounderstandandstreamlineoursignificantnumberoflegacysystemsandproactivelymeetconstantlyevolvingbusinessrequirements,wecould experienceanadverseeffectonourbusinessandfinancialperformance. Changes over the past 12 months Increasingly,ITservicesarebeingdeliveredbycloud-basedvendorsaseitherSoftwareasaService(SaaS)orInfrastructureasaService(IaaS).Whilethiscanresultinbenefitsintermsofspeedtomarket,reliability,performanceandagility,itrequiresadjustmentstoouroperations.Operationalsupportprocessesandvendornegotiationsmustnowtakeintoaccountthatthedeliveryofhardwareandsoftwareservicesisoccurringoutsideofourowninfrastructure,andthereforecontrolsneedtobeincorporatedintoouroperationalsupportprocessesandtools. Inaddition,weroutinelyhavenumerousintegrationactivities,complex systemandprocesschangeinitiativesanddevelopmentprojectsunderway. 10.10 Security and data protection Risk category: Operational Asanationalproviderofinformationandcommunicationsservices,wehavevisibilitybeyondthatofindividualorganizations.Weleveragethisvisibilityandunderstandingtomonitorandidentifysecuritytrendsastheyevolveinthewiderthreatlandscape.Therisksoutlinedbelowreflectbothourexperienceandthetrendsobservedinthewiderecosystem. Wehaveanumberofassetsthataresubjecttointentionalthreats.Theseincludephysicalassetsthataresubjecttosecurityriskssuchasvandalismand/ortheft,including(butnotlimitedto)distributivecoppercable,corporatestores,networkandtelephoneswitchcentres,andelementsofcorporateinfrastructure. Additionally,weoperatedatacentresandcollectandmanagedatainourbusinessandonbehalfofourcustomers(including,inthecaseofTELUSHealth,sensitivehealthinformation)thatmaymoveacrossourinterconnectedoperationalandbusinesssupportsystemsandnetworks.Dependingonthenatureofthedata,itmayberestrictedforusewithinCanadaorleveragedbyourteamsoroutsourcingpartnersinCanada orabroad. Mitigation Inlinewithindustrybestpractice,ourapproachistoseparatebusinesssupportsystems(BSS)fromoperationalsupportsystems(OSS)andunderlyingnetworktechnology.Ouraimistodecoupletheintroductionofnewnetworktechnologiesfromtheservicesweselltocustomerssothatbothcanevolveindependently.Thisallowsustooptimizenetworkinvestmentswhilelimitingtheimpactoncustomerservices,andalsofacilitatestheintroductionofnewservices.Inaddition,duetothematuringnatureoftelecommunicationsvendorsoftware,weadoptindustry-standardsoftwareforBSS/OSSfunctions,leverageSaaSandIaaS,and avoidcustomdevelopmentwherepossible.Thisenablesustoleverage TELUS2019 ANNUAL REPORT • 111

10.11 Our team Risk category: Operational Oursuccessdependsontheabilities,experience,well-beingandengagementofourteammembers.Eachyear,wecarryoutanumberofuniqueinitiativesthatareintendedtoimproveourproductivityandcompetitiveness.Theseincludeacquisitions,operationalbusinessintegrations,efficiencyprograms,businessprocessautomationand/oroutsourcing,offshoringandreorganizations. Potential impact Physicalsecuritythreatscanplacebothourteammembersandourinfrastructure,systemsandnetworksatriskofincurringsignificantharm,includingpersonalinjury,destructionofproperty,lossofserviceand/ordata.Oursystemsandnetworksarealsosubjecttocyberattacks.Theriskandconsequencesofcyberattacksonourassetscouldsurpassphysicalsecurityrisksandconsequencesduetotherapidlyevolvingnatureandsophisticationofthesethreats. We,andourpartners,mayalsobesubjecttosoftware,equipmentorothersystemmalfunctionsthatcouldresultinunauthorizedaccessto,orchange,lossordestructionof,ourdata.Thesemalfunctionscouldcompromisetheprivacyofindividuals,includingourcustomers,teammembersandsuppliers,andcouldexposeothersensitiveinformation. Asuccessfuldisruptionofoursystems,networkandinfrastructure,orthoseofourthirdparties,suppliers,vendorsandpartners,maypreventusfromprovidingreliableservice,impacttheoperationsofournetworkorallowfortheunauthorizedinterception,destruction,useordissemin-ationofourinformationorourcustomers’information.Suchdisruption,physicalorlogical,orunauthorizedaccesstoourdatacouldcauseustolosecustomersorrevenue,incurexpensesorexperiencereputationalandgoodwilldamages.Additionally,suchdamagescouldresultinTELUSincurringcostsassociatedwithinvestigationefforts,replacementorrestor-ationofassetsandpotentialcivillawsuitsorfinesfromregulatorybodies. Potential impact Lostworktimeresultingfromteammemberillnessorinjurycannegativelyaffectorganizationalproductivityandemployeebenefitcosts.Thelossofkeyteammembersthroughattritionandretirement,theinabilitytoattractandretainteammemberswithessentialorevolvingskills,includingfamili-aritywithlegacysystems,oranydeteriorationinoverallteammembermoraleandengagementresultingfromorganizationalchanges,unresolvedcollectiveagreementsorongoingcostreductioninitiatives,couldhaveanadverseimpactonourgrowth,businessandprofitabilityandoureffortstoenhancethecustomerexperience.Inaddition,changesintechnologyareshiftingthesetofskillsneededbyourteamanddrivingcompetition forresourcesamongglobalplayers. Changes over the past 12 months Everyweek,halfamillionCanadiansareunabletoworkduetomentalhealthchallenges,asdepression,burnoutandlackofsocialconnection intheworkplacebecomemorecommon. Changes over the past 12 months Withourvisibilityandmonitoringcapabilities,wehaveobservedthatthefrequencyandsophisticationofcyberattackscontinuetoincrease.Theseattacksmayuseavarietyoftechniquesthatincludethetargetingofindividualsandtheuseofsophisticatedmalicioussoftwareandhard-ware,oracombinationofboth,toevadethetechnicalandadministrativesafeguardsthatareinplace(includingfirewalls,intrusionprevention systems,activemonitoring,etc.). Mitigation Tosupportteammembers’overallwell-beingandtoachieveapositiveeffectonabsenteeismintheworkplace,wetakeaholisticandproactiveapproachtoteammembers’healththatinvolvesriskprevention,earlyintervention,teammemberandfamilyassistance,assessmentandsup-portservices,disabilitymanagement,andaccommodationandreturntoworkservices.Ourhealthandwell-beingstrategyencouragesourteammemberstodevelopoptimalpersonalhealththroughfivedimensionsofwell-being:physical,psychological,financial,socialandenvironmental.Topromotesafeworkpractices,weoffertrainingandorientationprogramsforteammembersandcontractorswhoaccessourfacilities. Weaimtoattractandretainkeyteammembersthroughbothmon-etaryandnon-monetaryapproaches.Ourcompensationandbenefitsprogramisdesignedtosupportourhigh-performancecultureandisbothmarket-drivenandperformance-based.Whererequired,weimplementtargetedretentionsolutionsforemployeeswithcriticalskillsortalentsthatarescarceinthemarketplace,andwehaveasuccessionplanningprocesstoidentifytoptalentforsenior-levelpositions. Wefocusonandmanageorganizationalchangethroughaformalizedbusinesstransformationfunctionbyleveragingtheexpertise,keylearningsandeffectivepracticesdevelopedinrecentyearsduringtheimplementationofmergers,businessintegrationsandefficiency-relatedreorganizations. Wehaveapost-mergerintegrationteamthatworkswithourbusinessunitsandtheoperationstheyacquire,applyinganintegrationmodelbasedonlearningsfrompreviousintegrations,whilealsofocusingontheuniqueattributesandemployeeculturesoftheacquiredcompanies,whichenhancesthestandardizationofourbusinessprocessesandisintendedtopreservetheuniquequalitiesofeach acquiredoperation. Mitigation Oursecurityprogramaddressesriskthroughanumberofmechanisms, including: • Controlsbasedonpolicies,standardsandmethodologiesthatarealignedwithrecognizedindustryframeworksandpractices Monitoringofexternalactivitiesbypotentialattackers RegularsecurityevaluationsofourmostimportantassetsTheidentificationandregularre-evaluationofourknownsecurityrisks Regularreviewsofourstandardsandpoliciestoensuretheyaddresscurrentneedsandthreats Regularreviewofourbusinesscontinuityandrecoveryplanningprocessesthatwouldbeinvokedintheeventofadisruption Aprivacyandsecurityimpactassessmentprocess Asecure-by-designprocessthatincorporatessecurityprovisions intonewinitiativesacrossTELUS. • • • • • • • Ourtechnicalcapabilitieshelpusidentifysecurity-relatedevents,respondtopossiblethreatsandadjustoursecuritypostureappropriately.Additionally,ourapproachtocyber-hygieneincludesregularvulnerabilityassessmentsandtheprioritizationandremediationofanyidentifiedexposurethroughpatchingorothermechanisms.Oursecurityofficealsoworkswithlawenforcementandotheragenciestoaddress ongoingthreatsanddisruptions. 112 • TELUS2019 ANNUAL REPORT

MD& A: RISKS AND RISK MANAGEMENT Additionally,wecontinuouslystrivetoraisethelevelofourteammemberengagement.Webelievethatourstrongteammemberengage-mentcontinuestobesupportedbyourfocusonthecustomerandteammemberexperience,oursuccessinthemarketplaceandoursocialpurpose.Weplantocontinueourfocusonothernon-monetaryfactorsthatareclearlyalignedwithourteammemberengagement,includingperformancedevelopment,careeropportunities,learninganddevelop-ment,recognition,diversityandinclusiveness,healthandwellnessprograms,ourWorkStylesprogram(e.g.enablingteammemberstoworkwhereandhowtheywillbemosteffectiveandequippingthemwithrobustdigitalcollaborationtoolstostayconnected),andourcommunityvolunteerism,includingTELUSDaysofGiving.Thelevelofourteammemberengagementcontinuestoplaceourorganizationwithinthetop 10%ofallemployerssurveyed. Asasocialcapitalismcompany,wearecommittedtofollowingsustainableandresponsiblebusinesspracticesandmakingdecisionsthatbalanceeconomicgrowthwithsocialandenvironmentalbenefits.SeeSection 5.1(e)ofour2019AnnualInformationFormforadescriptionofTaskForceonClimate-RelatedFinancialDisclosures.Additionally, detailedreportofourenvironmentalriskmitigationactivitiescanbe foundinoursustainabilityreportattelus.com/sustainability. Disclosureinoursustainabilityreportandotherfinancialfilingsincludesinformationpertainingtothegovernanceofclimate-relatedrisksandopportunities,aswellasstrategiesforaddressingimpactsoftheserisks,riskmanagementpracticespertainingtotheserisks,andthemetricsandtargetsusedtomanagethem.Ourcorporatetargetsincludehaving100%ofourelectricityrequirementscomingfromrenewablesourcesby2025andbecomingnetcarbonneutralby2030.Wehavesignedpowerpurchaseagreementsforrenewableenergytohelpusreachthesetargets. AnISO14001:2015certifiedenvironmentalmanagementsystemisinplacetoidentifyandcontrolenvironmentalimpactsassociatedwithouroperationsandsupportcompliancewithregulatoryrequirements.Wecontinuetoidentifynewwaystoreduceourenvironmentalimpactandwehaveacorporatetargetofdiverting90%ofwastefromlandfillsbytheendof2025. Businesscontinuityanddisasterrecoveryprogramsarealsoinplacethatencompassprovisionsformonitoringandpreparedness,mitigation,responseandrecovery.Theseprogramsenhancethesafetyofourteammembers,minimizethepotentialimpactofthreatstoourfacilities,infrastructureandbusinessoperations,supportthemaintenanceofservicetoourcustomersandhelpkeepour communitiesconnected. 10.12 Our environment Risk category: Operational Ouroperations,infrastructureandteammembersmaybeexposedtoclimate-relatedphysicalriskssuchasextremeweathereventsandnaturalhazards.Wemayalsobeexposedtotransitionrisksrelatedtoclimatechange,suchastheimpactofchangesinpolicyorthedeploymentoflower-emissiontechnology. Certainareasofouroperationsaresubjecttoenvironmentalcon-siderations,suchashandlinganddisposingofwaste,electronicwasteorotherresidualmaterials,managingourwateruse,andrespondingtospillsandreleases.Someareasofouroperationsarealsosubjecttoevolvingandincreasinglystringentfederal,provincialandlocalenvironmentalandhealthandsafetylawsandregulations.Suchlawsandregulationsimposerequirementswithrespecttomatterssuchasthereleaseofcertainsubstancesintotheenvironment,correctiveandremedialactionconcerningsuchreleases,andtheproperhandlingandmanagement ofcertainsubstances,includingwastes. 10.13 Financing, debt and dividends Risk category: Financial Riskfactors,suchasfluctuationsincapitalmarkets,theeconomicenvironmentorregulatoryrequirementspertainingtobankcapitalization,lendingactivityorchangesinthenumberofCanadiancharteredbanks,mayimpacttheavailabilityofcapitalandthecostofsuchcapitalforinvestmentgradecorporateissuers,includingus. Ourfinancialinstruments,andthenatureofthecreditrisks,liquidity risksandmarketriskstowhichtheymaybesubject,aredescribedin Section 7.9 Financial instruments, commitments and contingent liabilities. Potential impact Evolvingpublicexpectationsandincreasinglystringentlawsandregulationscouldresultinincreasedcostsofcompliance,whilefailuretorecognizeandadequatelyrespondtothesamecouldresultinpenalties, regulatoryscrutinyordamagetoourreputationandbrand. Changes over the past 12 months Potentialimpactsassociatedwithlowlevelsofnon-ionizingradiofrequency(RF)emissionsfrommobilephonesandcelltowerscontinuetobeamatterofpublicconcern,andwillremainapublicconcernaswemovetowarda5Genvironment,inwhichthenumberofsmallcellsisexpectedtoincreaseasweupgradeournetwork. Alongwiththecontinuedandwidelysharedconcernsaboutclimate-relatedchangesandtheenvironmentalimpactsofbusinessoperations,thereisanincreasingfocusonthedisclosureofenvironmentalandsus-tainabilitygovernancestrategies,targetsandriskmanagementpractices. Potential impact Ourbusinessplansandgrowthcouldbenegativelyaffectedifexistingfinancingisnotsufficienttocoverfundingrequirements.Externalcapitalmarketconditionscouldpotentiallyaffectourabilitytomakestrategicinvestmentsormeetongoingcapitalfundingrequirements,andmayprohibittheroll-overofcommercialpaperatlowrates. Therecanbenoassurancethatwewillmaintainorimproveourcurrentcreditratings.OurcostofcapitalcouldincreaseandouraccesstocapitalcouldbeaffectedbyareductioninthecreditratingsofTELUSand/orTELUSCommunicationsInc.(TCI).AreductioninourratingsfromthecurrentBBB+orequivalentcouldresultinanincreaseinourcostofcapital. Whilefuturefreecashflowandsourcesofcapitalareexpectedtobesufficienttomeetcurrentrequirements,ourcurrentintentiontoreturncapitaltoshareholderscouldconstrainourabilitytoinvestinouroper-ationsforfuturegrowth. Mitigation Canada’sfederalgovernmentisresponsibleforestablishingsafelimitsforsignallevelsofradiodevices.Weareconfidentthatthemobilehandsetsanddeviceswesell,andourcelltowersandotherassociateddevices,comply,inallmaterialrespects,withallapplicableCanadianandU.S.governmentsafetystandards.Wecontinuetomonitornewpublishedstudies,governmentregulationsandpublicconcernsaboutthehealth impactsofRFexposure. TELUS2019 ANNUAL REPORT • 113

Changes over the past 12 months AtDecember31,2019,ourseniorunsecureddebtwasapproximately $16.2billion(seetheSenior unsecured debt principal maturitieschartinSection 4.3).Weoperateacommercialpaperprogram(max-imumof$1.4billion)thatcurrentlyprovidesaccesstolow-costfunding.AtDecember31,2019,wehad$1,015millionofcommercialpaperout-standing,allofwhichwasdenominatedinU.S.dollars(US$781million).Whenweissuecommercialpaper,itmustberefinancedonanongoingbasisinordertorealizethecostsavingsrelativetoborrowingonthe$2.25billioncreditfacility. itadvantageous,basedonourfinancialpositionandoutlook,andthemarketpriceofourCommonShares.Noshareswerepurchasedin2019undertheNCIBprogram.Forfurtherdetailsonourmulti-yeardividendgrowthprogramandNCIBprogram,seeSection 4.3 Liquidity and capital resources. OurBoardofDirectorsreviewsandapprovesthedeclarationofadividendeachquarter,andtheamountofthedividend,basedonanumberoffactors,includingourfinancialpositionandoutlook.Thisassessmentissubjecttovariousassumptionsandtheimpactofvariousrisksanduncertainties,includingthosedescribedhereinSection 10. Mitigation Wemayfinancefuturecapitalfundingrequirementswithinternallygen-eratedfunds,borrowingsundertheunutilizedportionofourbankcreditfacilities,useofsecuritizedtradereceivables,useofcommercialpaperand/ortheissuanceofdebtorequitysecurities.Wehaveashelfprospec-tusineffectuntilAugust2022,underwhichwecanofferupto$2.0billionofdebtorequitysecuritiesasofthedateofthisMD&A.Webelievethatourinvestmentgradecreditratings,coupledwithoureffortstomaintainaconstructiverelationshipwithbanks,investorsandcreditratingagencies,continuetoprovidereasonableaccesstocapitalmarkets. Toenableustomeetourfinancialobjectiveofgenerallymaintaining $1.0billionofavailableliquidity,wehavea$2.25billioncreditfacilitythatexpiresonMay31,2023($1.2billionavailableatDecember31,2019),aswellasavailabilityunderotherbankcreditfacilities(seeSection 7.6 Credit facilities).Inaddition,ourTCIsubsidiaryhasanagreementwithanarm’s-lengthsecuritizationtrustuntilDecember31,2021,underwhichitisabletosellaninterestincertainofitstradereceivablesuptoamaximumof$500million,ofwhich$400millionwasavailableatDecember31,2019(seeSection 7.7 Sale of trade receivables). Wesuccessfullycompletedanumberofdebttransactionsin2018and2019(seeSection 7.4).Asaresult,theaveragetermtomaturityofourlong-termdebt(excludingcommercialpaper,therevolvingcompon-entoftheTELUSInternationalcreditfacility,leaseliabilitiesandotherlong-termdebt)was12.8yearsatDecember31,2019(ascomparedto 12.2yearsatDecember31,2018)andouraveragecostoflong-termdebtwas3.94percent.Foreigncurrencyforwardcontractsareusedtomanagecurrencyriskarisingfromissuingcommercialpaperandlong-termdebtdenominatedinU.S.dollars(excludingtheTELUSInternationalcreditfacility).Ourcommercialpaperprogramisfullybackstoppedbyour$2.25billioncreditfacility. Wemanageourcapitalstructureandadjustitinlightofchangesineconomicconditionsandtheriskcharacteristicsofourbusinessandtelecommunicationsinfrastructure.WehavefinancialpoliciesinplacethatarereviewedannuallyandareintendedtohelpmaintainourexistinginvestmentgradecreditratingsintherangeofBBB+ortheequivalent.Fourcreditratingagenciescurrentlyhaveratingsthatareinlinewiththistarget.Accesstoour$2.25billioncreditfacilitywouldbemaintained,evenifourratingswerereducedtobelowBBB+. Fundingoffuturespectrumlicencepurchases,definedbenefitpensionplansandanyincreasesincorporateincometaxrateswillreducetheafter-taxcashflowotherwiseavailabletoreturntoourshareholdersascapital.Shouldactualresultsdifferfromourexpectations,therecanbenoassurancethatwewillnotchangeourfinancingplans,includingourintentiontopaydividendsaccordingtoourpayoutpolicyguidelinesandtomaintainourmulti-yeardividendgrowthprogram.Wemayrepurchase sharesunderournormalcourseissuerbid(NCIB)whenandifweconsider 10.14 Tax matters Risk category: Financial Wecollectandpaysignificantamountsofindirecttaxes,suchasgoodsandservicestaxes,harmonizedsalestaxes,provincialsalestaxes,salesandusetaxesandvalue-addedtaxes,tovarioustaxauthorities.Asouroperationsarecomplexandtherelatedtaxinterpretations,regulations,legislationandjurisprudencethatpertaintoouractivitiesaresubjecttocontinualchangeandevolvinginterpretation,thefinaldeterminationofthetaxationofmanytransactionsisuncertain.Moreover,theimplementationofnewlegislationinitselfhasitsowncomplexities,includingthoseofexecutionwheremultiplesystemsareinvolvedandtheinterpretationofnewrulesastheyapplytospecifictransactions,productsandservices. TELUSInternationaloperatesinanumberofforeignjurisdictions,includingAustria,Barbados,BosniaandHerzegovina,Bulgaria,China,ElSalvador,Germany,Guatemala,France,India,Ireland,Latvia,Philippines,Poland,Romania,Slovakia,Spain,Switzerland,Turkey,theUnitedKingdomandtheUnitedStates,whichincreasesourexposuretomultipleformsoftaxation.Generally,eachjurisdictionhastaxationpeculiaritiesintheformsoftaxationimposed(e.g.value-addedtax,grossreceiptstax,stampandtransfertax,andincometax),anddifferencesintheapplicabletaxbaseandtaxrates,legislationandtaxtreaties,whereapplicable,aswellascurrencyandlanguagedifferences.Inaddition,thetelecommunicationsindustryfacesuniqueissuesthatleadtouncertaintyintheapplicationoftaxlawsandthedivisionoftax betweendomesticandforeignjurisdictions. Potential impact Wearesubjecttotheriskthatincomeandindirecttaxamounts,includingtaxexpense,maybemateriallydifferentthananticipated,andthatagen-eraltendencybydomesticandforeigntaxcollectionauthoritiestoadoptmoreinterpretationsandaggressiveauditingpracticescouldadverselyaffectourfinancialconditionandoperatingresults. Wehavesignificantcurrentanddeferredincometaxassetsandliabil-ities,incometaxexpensesandcashtaxpayments.Incometaxamountsarebasedonourestimates,applyingaccountingprinciplesthatrecognizethebenefitofincometaxpositionsonlywhenitismorelikelythannotthattheultimatedeterminationofthetaxtreatmentofapositionwillresultintherelatedbenefitbeingrealized.Theassessmentofthelikelihoodandamountofincometaxbenefits,aswellasthetimingofrealizationofsuchamounts,canmateriallyaffectthedeterminationofNetincomeorcashflows.Weexpecttheincometaxescalculatedatapplicablestatutoryratestorangebetween26.2%and26.8%in2020.Theseexpectationscanchangeasa resultofchangesininterpretations,regulations,legislationorjurisprudence. 114 • TELUS2019 ANNUAL REPORT

MD& A: RISKS AND RISK MANAGEMENT 10.15 The economy Risk category: Financial RiskstotheCanadianeconomyincludefluctuatingoilprices,interestratesandlevelsofconsumerandmortgagedebt,fluctuationsinthehousingmarketanduncertaintyrelatedtotradeissues,includingtheongoingimpositionoftariffs.Meanwhile,tradeconflictsbetweencountries,aswellasothereconomicandpoliticaluncertaintiesanddevelopmentsoutsideofCanada,mayhaveglobalimplications,assupplychainsbecomeincreasinglyintegrated. Thetimingofthemonetizationofdeferredincometaxaccountsisuncertain,asitisdependentonourfutureearningsandotherevents.Theamountsofdeferredincometaxliabilitiesarealsouncertain,astheamountsarebaseduponsubstantivelyenactedfutureincometaxratesthatwereineffectatthetimeofdeferral,whichcanbechangedbytaxauthorities.Aswell,theamountsofcashtaxpaymentsandcurrentanddeferredincometaxliabilitiesarealsobaseduponouranticipatedmixofrevenuesamongthejurisdictionsinwhichweoperate,whichisalsosubjecttochange. Theauditandreviewactivitiesoftaxauthoritiesaffecttheultimatedeterminationoftheactualamountsofindirecttaxespayableorreceivable,incometaxespayableorreceivable,deferredincometaxliabilities,taxesoncertainitemsincludedwithincapitalandincometaxexpense.Therefore,therecanbenoassurancethattaxeswillbepayableasanticipatedand/orthattheamountandtimingofreceipt oruseofthetax-relatedassetswillbeascurrentlyexpected. Potential impact Economicuncertaintymaycauseconsumersandbusinesscustomerstoreducediscretionaryspending,impactingnewservicepurchases,volumesofuseandsubstitutionbylower-pricedalternatives. FluctuationsintheCanadianeconomycouldadverselyimpactourcustomergrowth,revenue,profitabilityandfreecashflow,andcouldpotentiallyrequireustorecordimpairmentsinthecarryingvaluesofourassets,including,butnotlimitedto,ourintangibleassetswithindefinitelives(spectrumlicencesandgoodwill).Impairmentsinthecarryingvaluesofourassetswouldresultinachargetoearningsandareductioninowners’equity,butwouldnotaffectcashflow. Withcertainrevenues,capitalacquisitionsandoperatingcostsdenominatedinU.S.dollars,fluctuationsintheCanadiandollarexchangeratemayimpactourfinancialandoperatingresults. Economicandcapitalmarketfluctuationscouldalsoadverselyaffecttheinvestmentperformance,fundingandexpenseassociatedwithourdefinedbenefitpensionplans,asobligationsarebasedoncertainactuarialassumptionsrelatingtoexpectedplanassetreturns,salaryescalation,retirementages,lifeexpectancy,theperformanceofthefinancialmarkets andfutureinterestrates. Changes over the past 12 months Therecontinuestobeanintensefocusbythemediaandbypoliticalandtaxauthoritiesontaxation,bothdomesticallyandinternationally,withanintenttoenhancetaxtransparencyandtoaddressperceivedtaxabuses.Accordingly,ouractivitiesmayincreaseourexposureto taxrisks,frombothafinancialandreputationalperspective. Mitigation WefollowacomprehensivetaxstrategythathasbeenadoptedbyourBoard.Thisstrategyoutlinestheprinciplesunderlyingandguidingtherolesofteammembers,theirresponsibilitiesandpersonalconduct,themethodofconductingbusinessinrelationtotaxlawandtheapproachestoworkingrelationshipswithexternaltaxauthoritiesandexternaladvisors.Thisstrategyrecognizestherequirementtocomplywithallrelevanttaxlaws.Thecomponentsnecessarytomanagetaxriskareoutlinedinthestrategy. Ingivingeffecttothisstrategy,wemaintainaninternalTaxationdepartmentcomposedofprofessionalswhostaycurrentondomesticandforeigntaxobligations,supplementedwhereappropriatewithexternaladvisors.Thisteamreviewssystemsandprocesschangesforcompliancewithapplicabledomesticandinternationaltaxationlawsandregulations.Itsmembersarealsoresponsibleforthespecializedaccountingrequiredforincometaxes. MaterialtransactionsarereviewedbyourTaxationdepartmentsothattransactionsofanunusualornon-recurringnatureareassessedfrommultiplerisk-basedperspectives.Asamatterofregularpractice,largetransactionsarereviewedbyexternaltaxadvisors,whileotherthird-partyadvisorsmayalsobeengagedtoexpresstheirviewsastothepotentialfortaxliability.Wecontinuetoreviewandmonitorouractivities,sothatwecantakeactiontocomplywithanyrelatedregulatory,legalandtaxobli-gations.Insomecases,wealsoengageexternaladvisorstoreviewoursystemsandprocessesfortax-relatedcompliance.Theadviceprovidedandtaxreturnspreparedbysuchadvisorsandcounselarereviewed forreasonablenessbyourinternalTaxationdepartment. Changes over the past 12 months SeeSection 1.2 The environment in which we operateforacomparison ofgrowthrates. In2019,theCanadiandollarexchangeratewiththeU.S.dollarwasvolatile,withtheCanadiandollargenerallystrengtheningovertheyear,from$1.36attheendof2018to$1.30attheendof2019. Theemployeedefinedbenefitpensionplans,inaggregatewiththeapplicationoftheassetceiling,wereina$425milliondeficitpositionatDecember31,2019(comparedtoa$57millionsurpluspositionattheendof2018).Oursolvencyposition,asdeterminedunderthePension Benefits Standards Act, 1985,wasestimatedtobeasurplusof$568million(comparedtoa$401millionsurpluspositionatthe endof2018). Mitigation Whileeconomicriskscannotbecompletelymitigated,ourtoppriorityofputtingcustomersfirstandpursuinggloballeadershipinthelikelihoodofourclientstorecommendourproducts,servicesandpeoplealsosup-portsoureffortstoacquireandretaincustomersthroughtheeconomicfluctuationsthataffectthemandus.Wealsocontinuetopursuecostreductionandefficiencyinitiativesinourownbusiness(seediscussioninSection 3 Corporate priorities).SeeSection 4.3 Liquidity and capital resourcesforourcapitalstructurefinancialpoliciesandplans. TELUS2019 ANNUAL REPORT • 115

Foreigncurrencyforwardcontractsandcurrencyoptionsarelever-agedtofixtheexchangeratesonU.S.dollar-denominatedtransactions,commitments,commercialpaperandU.S.DollarNotesinordertohelpmitigateexchangeratefluctuationsandweseektomitigatepensionriskthroughtheapplicationofpoliciesandproceduresdesignedtocontrolinvestmentriskandthroughongoingmonitoringofourfundingposition.Ourbestestimateofcashcontributionstoourdefinedbenefitpension plansin2020is$30million($41millionin2019.) Changes over the past 12 months AsourTELUSHealthteamandrecentlyacquiredmedicalclinicsoffernewservices(suchasvirtualcareandelectronicprescription),includinginsomecasestoconsumersandinothercasesthroughthird-partypartnerships,newrisksariseacrossparameterssuchasdependenceonthird-partysuppliersforlegalcomplianceand/orcompliancewithmedicalprofessionalstandards,aswellasaheightenedpossibilityofpoliticalintervention. Withthegrowthanddevelopmentoftechnology-basedindustries,thevalueofintellectualpropertyandproprietaryrightshasincreased.Duetotrendsinawardingofdamages,coststodefendandthelikelinessofsettlements,propertyrightsholdersmaybeencouragedtoaggressivelypursueinfringementclaims.Giventhevastarrayoftechnologiesandsystemsthatweusetodeliverproductsandservices,andtherapidchangeandcomplexityofsuchtechnologies,thenumberofdisputesoverintellectualpropertyandproprietaryrightscanreasonablybeexpectedtoincrease. Wehavecontinuedtoobserveawillingnessonthepartofclaimantstolaunchclassactionswherebyarepresentativeplaintiffseekstopursuealegalclaimonbehalfofalargegroupofpersons.Thenumberofclassactionsfiledagainstusvariesfromyeartoyear,withclaimantscontinuallylookingtoexpandthemattersinrespectofwhichthey fileclassactions. 10.16 Litigation and legal matters Risk category: Compliance Giventhesizeofourorganization,investigations,claimsandlawsuitsseekingdamagesandotherreliefareregularlythreatenedorpendingagainstus.Theexpansionofourproductandserviceofferingsintoareassuchashealthcare,securityandmanagedserviceshasalsoaddedtoourcompliancerequirements,theriskoflitigationandthepossibilityofdamages,sanctionsandfines.Wemayalsobethetargetofclassactionsduetoourmillionsofconsumercustomerrelationships.Inaddition,likeotherpubliccompanies,wemaybesubjecttocivilliabilityformis-representationsinwrittendisclosureandoralstatements,andliabilityforfraudandmarketmanipulation. Theintellectualpropertyandproprietaryrightsofownersanddevelopersofhardware,software,businessprocessesandothertech-nologiesmaybeprotectedunderstatute,suchaspatent,copyrightandindustrialdesignlegislation,orundercommonlaw,suchastradesecrets.Significantdamagesmaybeawardedinintellectualpropertyinfringementclaimsanddefendantsmayincursignificantcoststodefendorsettlesuchclaims. Potentiallymaterialcertifiedanduncertifiedclassactions,intellectualpropertylitigationandotherclaimsagainstusaredetailedinNote 29(a)oftheConsolidatedfinancialstatements. Withoperationsinforeignjurisdictions,wearerequiredtocomplynotjustwithCanadianlawsandregulations,butalsowithlocallawsandregulations,whichmaydiffersubstantiallyfromCanadianlawsandaddtoourregulatory,legalandtaxexposures.Incertaincases,foreignlawswithextra-territorialapplicationmayalsoimpose obligationsonus. Mitigation Webelievethatwehaveinplacereasonablepolicies,controls,processesandcontractualarrangements,aswellasinsurancecoverage,designedtoenablecomplianceandreduceourexposure.WehaveadesignatedChiefDataandTrustOfficer,whoseroleistoworkacrosstheenterprisetoensurethatthebusinesshasappropriateprocessesandcontrolsinplaceinordertofacilitatelegalcomplianceandtoreportoncompliancetotheAuditCommittee. Ourteamoflegalprofessionalsadviseonandmanagerisksrelatedtoclaimsandpossibleclaims,vigorouslydefendclassactions,pursuesettlementsinappropriatecases,regularlyassessourbusinesspracticesandmonitorclassactiondevelopments.Theyseekandobtaincontractualprotectionsconsistentwithstandardindustrypracticestohelpmitigatetherisksofintellectualpropertyinfringementsandworktoprotectourintellectualpropertyrightsthroughlitigationandothermeans. WehaveacorporatedisclosurepolicythatrestrictstheroleofCompanyspokesperson,providesaprotocolforcommunicatingwithinvestmentanalysts,investorsandothersandoutlinesourcommuni-cationapproach. Werelyonourteammembers,officers,BoardofDirectors,keysuppli-ersandotherbusinesspartnerstodemonstratebehaviourconsistentwithapplicablelegalandethicalstandardsinalljurisdictionswithinwhichweoperate.Wehaveananti-briberyandcorruptionpolicy,acomprehensivecodeofethicsandconductforourteammembers,includingTELUSInternational,andBoardofDirectors,andmandatoryannualintegritytrainingforallteammembersandidentifiedcontractors. Subjecttotheforegoinglimitations,managementisoftheopinion,baseduponlegalassessmentsandtheinformationpresentlyavailable,thatitisunlikelythatanyliabilityrelatingtoexistinginvestigations,claimsandlawsuits,totheextentnotprovidedforthroughinsuranceorotherwise,wouldhaveamaterialeffectonourfinancialpositionandtheresultsofouroperations,exceptingtheitemsdisclosedhereinandin Note 29(a)oftheConsolidatedfinancialstatements. Potential impact Itisnotcurrentlypossibletopredicttheoutcomeofsuchlegalmattersduetovariousfactors,including:thepreliminarynatureofsomeclaims;uncertaindamagetheoriesanddemands;incompletefactualrecords;theuncertainnatureoflegaltheoriesandproceduresandtheirresolutionbythecourts,atboththetrialandappellatelevels;andtheunpredictablenatureofopposingpartiesandtheirdemands. Theadoptionbygovernmentsofincreasinglystringentconsumerprotectionandprivacylegislationmayincreasethenumberofclassactionsbycreatingnewcausesofaction,ormaydecreasethenumberofclassactionsbyimprovingclarityintheareasofconsumermarketingandcontractingandtheprotectionofprivacy.Asuccessfulclassactionlawsuit,byitsnature,couldresultinasizabledamageawardthatcouldnegativelyaffectadefendant’sfinancialoroperatingresults. Therecanbenoassurancethatourfinancialoroperatingresultswill notbenegativelyimpactedbyanyofthesefactors. 116 • TELUS2019 ANNUAL REPORT

MD& A: DEFINITIONS AND RECONCILIATIONS 11.1 Non-GAAP and other financial measures Wehaveissuedguidanceonandreportcertainnon-GAAPmeasuresthatareusedtoevaluatetheperformanceofTELUS,aswellastodeterminecompliancewithdebtcovenantsandtomanageourcapitalstructure.Asnon-GAAPmeasuresgenerallydonothaveastandardizedmeaning,theymaynotbecomparabletosimilarmeasurespresentedbyotherissuers.Securitiesregulationsrequiresuchmeasurestobeclearlydefined,qualifiedandreconciledwiththeirnearestGAAPmeasure.Certainofthemetricsdonothavegenerallyacceptedindustrydefinitions. licences,gainsandequityincomerelatedtorealestatejointventures, provisionsrelatedtobusinesscombinations,long-termdebtprepayment premium(whenapplicable)andincometax-relatedadjustments. Calculation of Dividend payout ratio of adjusted net earnings1 YearsendedDecember31($) 2019 2018 Numerator–Sumofthelastfourquarterly dividendsdeclaredperCommonShare Adjustednetearnings($millions): NetincomeattributabletoCommonShares Addnon-recurringlossesandequitylosses (deductnon-recurringgainsandequity income)relatedtorealestatejointventures, afterincometaxes Provisionsrelatedtobusinesscombinations, afterincometaxes Deductnetfavourableincometax-related adjustments Addlong-termdebtprepaymentpremium, afterincometaxes AddinitialandcommitteddonationtoTELUSFriendlyFutureFoundation,afterincometaxes 2.2525 2.10 1,746 1,600 Adjusted Net income and adjusted basic earnings per share:Thesemeasuresareusedtoevaluateperformanceataconsolidatedlevelandexcludeitemsthatmayobscuretheunderlyingtrendsinbusinessperformance.ThesemeasuresshouldnotbeconsideredalternativestoNetincomeandbasicearningspershareinmeasuringTELUS’perfor-mance.Itemsthatmay,inmanagement’sview,obscuretheunderlyingtrendsinbusinessperformanceincludesignificantgainsorlossesasso-ciatedwithrealestatedevelopmentpartnerships,gainsonexchangeofwirelessspectrumlicences,restructuringandothercosts,long-termdebtprepaymentpremiums(whenapplicable),incometax-relatedadjustments,assetretirementsrelatedtorestructuringactivitiesandgainsarisingfrombusinesscombinations.(SeeReconciliation of adjusted Net income andReconciliation of adjusted basic EPSinSection 1.3.) 5 (150) (13) (17) (7) (142) 20 25 – 90 1,616 1,541 Capital intensity:Thismeasureiscalculatedascapitalexpenditures(excludingspectrumlicences)dividedbytotaloperatingrevenues.Thismeasureprovidesabasisforcomparingthelevelofcapitalexpendi-turestothoseofothercompaniesofvaryingsizewithinthesameindustry. Denominator–Adjustednetearningsper CommonShare 2.68 2.58 Adjusted ratio(%) 84 81 1 Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. Dividend payout ratio:ThisisahistoricalmeasurecalculatedasthesumofthelastfourquarterlydividendsdeclaredperCommonShare,asreportedinthefinancialstatements,dividedbythesumofbasicearningspershareforthemostrecentfourquartersforinterimreportingperiods.Forfiscalyears,thedenominatorisannualbasicearningspershare.Ourobjectiverangefortheannualdividendpayoutratioisonaprospectivebasis,ratherthanonatrailingbasis.(SeeSection 7.5 Liquidity and capital resource measures.) Earnings coverage:ThismeasureisdefinedintheCanadianSecuritiesAdministrators’NationalInstrument41-101andrelatedinstruments,and iscalculatedasfollows: Calculation of Earnings coverage YearsendedDecember31($millions,exceptratio) 2019 2018 NetincomeattributabletoCommonShares Incometaxes(attributabletoCommonShares) Borrowingcosts(attributabletoCommonShares)1 1,746 455 724 1,600 542 630 Calculation of Dividend payout ratio1 Y earsendedDecember31($) 2019 2018 Numerator Denominator–Borrowingcosts 2,925 724 2,772 630 Numerator–Sumofthelastfourquarterly dividendsdeclaredperCommonShare Denominator–NetincomeperCommonShare 2.2525 2.90 2.10 2.68 Ratio(times) 4.0 4.4 1 InterestonLong-termdebtplusInterestonshort-termborrowingsandotherpluslong-termdebtprepaymentpremium,addingcapitalizedinterestanddeductingborrowingcostsattributabletonon-controllinginterests. Ratio(%) 78 78 1 Pre-sharesplit–seeShare split – subsequent to 2019inSection 1.3. EBITDA (earnings before interest, income taxes, depreciation and amortization):WehaveissuedguidanceonandreportEBITDAbecauseitisakeymeasureusedtoevaluateperformanceataconsoli-datedlevel.EBITDAiscommonlyreportedandwidelyusedbyinvestorsandlendinginstitutionsasanindicatorofacompany’soperatingper-formanceandabilitytoincurandservicedebt,andasavaluationmetric. Dividend payout ratio of adjusted net earnings:Thisratioisahis-toricalmeasurecalculatedasthesumofthelastfourquarterlydividendsdeclaredperCommonShare,asreportedinthefinancialstatements,dividedbyadjustednetearningspershare.Adjustednetearningspershareisbasicearningspershare,asusedintheDividend payout ratio, adjustedtoexcludethegainontheexchangeofwirelessspectrum TELUS2019 ANNUAL REPORT • 117 11 DEFINITIONS AND RECONCILIATIONS

EBITDAshouldnotbeconsideredanalternativetoNetincomeinmeasuringTELUS’performance,norshoulditbeusedasameasureofcashflow.EBITDAascalculatedbyTELUSisequivalenttoOperatingrevenueslessthetotalofGoodsandservicespurchasedexpenseandEmployeebenefitsexpense. WecalculateEBITDA–excludingrestructuringandothercosts,asitisacomponentoftheEBITDA – excluding restructuring and other costs interest coverageratioandtheNet debt to EBITDA – excluding restructuring and other costsratio. WealsocalculateAdjusted EBITDAtoexcludeitemsofanunusualnaturethatdonotreflectourongoingoperationsandshouldnot,inouropinion,beconsideredinalong-termvaluationmetricorshouldnotbe includedinanassessmentofourabilitytoserviceorincurdebt. Free cash flow calculation YearsendedDecember31($millions) 2019 2018 EBITDA Deductnon-cashgainsfromthesale ofproperty,plantandequipment Restructuringandothercosts, netofdisbursements Effectsofcontractasset,acquisitionandfulfilment(IFRS15impact)andTELUSEasyPaymentdevicefinancing Effectsofleaseprincipal(IFRS16impact) Leasesformerlyaccountedfor asfinanceleases(IFRS16impact) Deductnon-recurringgainsandequityincomerelatedtorealestatejointventures DonationtoTELUSFriendlyFutureFoundationinTELUSCommonShares ItemsfromtheConsolidatedstatements ofcashflows: Share-basedcompensation,net Netemployeedefinedbenefitplansexpense Employercontributionstoemployee definedbenefitplans Interestpaid1 Interestreceived Capitalexpenditures(excluding spectrumlicences)2 5,554 5,104 (21) (49) (36) 78 (118) (333) (203) – – 108 EBITDA reconciliation YearsendedDecember31($millions) 2019 2018 – (171) Net income Financingcosts Incometaxes Depreciation Amortizationofintangibleassets 1,776 733 468 1,929 648 1,624 661 552 1,669 598 – 100 (2) 78 16 95 5,104 EBITDA Addrestructuringand othercostsincludedinEBITDA 5,554 134 317 (41) (714) 7 (53) (608) 9 EBITDA – excluding restructuring and other costs Addnon-recurringlossesandequitylosses(deductnon-recurringgainsandequityincome)relatedtorealestatejointventures 5,688 5,421 (2,906) (2,914) 5 (171) Freecashflowbeforeincometaxes Incometaxespaid,netofrefunds 1,576 (644) 1,404 (197) djusted EBITDA A 5,693 5,250 Free cash flow 932 1,207 EBITDA – excluding restructuring and other costs interest coverage:ThismeasureisdefinedasEBITDA–excludingrestructuringandothercosts,dividedbyNetinterestcost,calculatedona12-monthtrailingbasis.Thismeasureissimilartothecoverageratiocovenantin ourcreditfacilities,asdescribedinSection 7.6 Credit facilities. 1 Includes$64millioninterestpaidonleaseliabilitiesin2019. 2 RefertoNote 31oftheConsolidatedfinancialstatementsforfurtherinformation. Thefollowingreconcilesourdefinitionoffreecashflowwithcash providedbyoperatingactivities. Free cash flow:Wereportthismeasureasasupplementaryindicatorofouroperatingperformance,andthereisnogenerallyacceptedindustrydefinitionoffreecashflow.ItshouldnotbeconsideredanalternativetothemeasuresintheConsolidatedstatementsofcashflows.Freecashflowexcludescertainworkingcapitalchanges(suchastradereceivablesandtradepayables),proceedsfromdivestedassetsandothersourcesandusesofcash,asfoundintheConsolidatedstatementsofcashflows.Itprovidesanindicationofhowmuchcashgeneratedbyoperationsisavailableaftercapitalexpenditures(excludingpurchasesofspectrumlicences)thatmaybeusedto,amongotherthings,paydividends,repaydebt,purchasesharesormakeotherinvestments.Weexcludeimpactsofaccountingchangesthatdonotimpactcash,suchasIFRS15andIFRS16.Freecashflowmaybesupplementedfromtimetotime byproceedsfromdivestedassetsorfinancingactivities. Free cash flow reconciliation with Cash provided by operating activities YearsendedDecember31($millions) 2019 2018 Free cash flow Add(deduct): Capitalexpenditures(excluding spectrumlicences) AdjustmentstoreconciletoCash providedbyoperatingactivities 932 1,207 2,906 2,914 89 (63) Cash provided by operating activities 3,927 4,058 Net debt:Webelievethatnetdebtisausefulmeasurebecauseitrepre-sentstheamountofShort-termborrowingsandlong-termdebtobligationsthatarenotcoveredbyavailableCashandtemporaryinvestments.ThenearestIFRSmeasuretonetdebtisLong-termdebt,includingCurrentmaturitiesofLong-termdebt.NetdebtisacomponentoftheNet debt to EBITDA – excluding restructuring and other costsratio. 118 • TELUS2019 ANNUAL REPORT

MD& A: DEFINITIONS AND RECONCILIATIONS 11.2 Operating indicators Asaresultofoursubscriberdefinitionchangeseffectivethefirstquarter 2019,certainsubscribersweremovedfromthemobilephonessubscriberbasetothenewlycreatedmobileconnecteddevicessubscriberbase.Specifically,data-centricdevicesintendedforlimitedornocellularvoicecapabilities(suchastablets,internetkeys,connectedcarsandwearables)weremovedtothemobileconnecteddevicessubscriberbaseinalign-mentwiththereviseddefinitions.Ournewlycreatedmobileconnecteddevicessubscriberbasecombinesthesedata-centricdevicesmovedfrommobilephonesubscriberswithpreviouslyundisclosedInternetofThingsandmobilehealthsubscribers. Thefollowingmeasuresareindustrymetricsthatareusefulinassessing theoperatingperformanceofawirelessandwirelinetelecommunications entity,butdonothaveastandardizedmeaningunderIFRS-IASB. Calculation of Net debt AsatDecember31($millions) 2019 2018 Long-termdebtincludingcurrentmaturities Debtissuancecostsnettedagainst long-termdebt Derivative(assets)liabilities,net Accumulatedothercomprehensive incomeamountsarisingfromfinancial instrumentsusedtomanageinterestrateandcurrencyrisksassociatedwithU.S.dollar-denominatedlong-termdebt(excludingtaxeffects) Cashandtemporaryinvestments,net Short-termborrowings 18,474 14,101 87 (37) 93 (73) 110 (535) 100 (37) (414) 100 Net debt 18,199 13,770 Mobile phone average billing per subscriber per month (ABPU)iscalculatedasnetworkrevenuederivedfrommonthlyserviceplan,roamingandusagecharges,aswellasmonthlyre-paymentsoftheoutstandingdevicebalanceowingfromcustomersoncontract;dividedbytheaveragenumberofmobilephonesubscribersonthenetwork duringtheperiod,andisexpressedasaratepermonth. Net debt to EBITDA – excluding restructuring and other costs:Thismeasureisdefinedasnetdebtattheendoftheperioddividedby 12-monthtrailingEBITDA–excludingrestructuringandothercosts.(SeediscussioninSection 7.5 Liquidity and capital resource measures.)Thismeasureissimilartotheleverageratiocovenantinourcredit facilities,asdescribedinSection 7.6 Credit facilities. Mobile phone average revenue per subscriber per month (ARPU)iscalculatedasnetworkrevenuederivedfrommonthlyserviceplan,roamingandusagecharges;dividedbytheaveragenumberofmobilephonesubscribersonthenetworkduringtheperiod,andisexpressed asaratepermonth. Net interest cost:ThismeasureisthedenominatorinthecalculationofEBITDA – excluding restructuring and other costs interest coverage.Netinterestcostisdefinedasfinancingcosts,excludingcapitalizedlong-termdebtinterest,employeedefinedbenefitplansnetinterestandrecoveriesonredemptionandrepaymentofdebt,calculatedona12-monthtrailingbasis.Expensesrecordedforthelong-termdebtprepaymentpremium,ifany,areincludedinnetinterestcost.Netinterest costwas$755millionin2019and$644millionin2018. Churniscalculatedasthenumberofsubscribersdeactivatedduringagivenperioddividedbytheaveragenumberofsubscribersonthenetworkduringtheperiod,andisexpressedasaratepermonth.Mobilephonechurnreferstotheaggregateaverageofbothprepaidandpostpaidmobilephonechurn.ATELUS,KoodoorPublicMobilebrandprepaidmobilephonesubscriberisdeactivatedwhenthesubscriberhasnousagefor 90daysfollowingexpiryoftheprepaidcredits. Restructuring and other costs:Withtheobjectiveofreducingongoingcosts,weincurassociatedincremental,non-recurringrestructuringcosts.Wemayalsoincuratypicalcharges,whichareincludedinothercosts,whenundertakingmajorortransformationalchangestoourbusinessoroperatingmodelsorpost-acquisitionbusinessintegration.Inothercosts,weincludeincrementalatypicalexternalcostsincurredinconnectionwithbusinessacquisitionordispositionactivity,aswellassignificantlitigationcostsinrespectoflossesorsettlements,and adverseretrospectiveregulatorydecisions. Mobile connected device subscribermeansaTELUSsubscriberonanactiveserviceplanwitharecurringrevenue-generatingportableunit(e.g.tablets,internetkeys,InternetofThings,wearablesandconnectedcars)thatisconnectedtotheTELUSnetworkandisintendedforlimited ornocellularvoicecapability. Mobile phone subscribermeansaTELUSsubscriberonanactiveserviceplanwitharecurringrevenue-generatingportableunit(e.g.featurephonesandsmartphones)thatisconnectedtotheTELUSnetworkand providesvoice,textand/ordataconnectivity. Components of restructuring and other costs YearsendedDecember31($millions) 2019 2018 Goodsandservicespurchased Employeebenefitsexpense 65 69 181 136 Internet subscribermeansaTELUSsubscriberonanactiveinternet planwitharecurringrevenue-generatingfixedunitthatisconnected totheTELUSnetworkandprovidesinternetconnectivity. Restructuring and other costs included in EBITDA 134 317 Residential voice subscribermeansaTELUSsubscriberonan activephoneplanwitharecurringrevenue-generatingfixedunitthat isconnectedtotheTELUSnetworkandprovidesvoiceservice. Security subscribermeansaTELUSsubscriberonanactivesecurity planwitharecurringrevenue-generatingfixedunitthatisconnected totheTELUSsecurityandautomationplatform. TV subscribermeansaTELUSsubscriberonanactiveTVplanwith arecurringrevenue-generatingfixedunitsubscriptionforvideoservices fromaTELUSTVplatform(e.g.OptikTVandPikTV). TELUS2019 ANNUAL REPORT • 119

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING ManagementofTELUSCorporation(TELUS,ortheCompany)isresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting. TELUS’PresidentandChiefExecutiveOfficerandExecutive Vice-PresidentandChiefFinancialOfficerhaveassessedtheeffective-nessoftheCompany’sinternalcontroloverfinancialreportingasofDecember31,2019,inaccordancewiththecriteriaestablishedinInternal Control – Integrated Framework (2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Internalcontroloverfinancialreportingisaprocessdesignedby,orunderthesuper-visionof,thePresidentandChiefExecutiveOfficerandtheExecutiveVice-PresidentandChiefFinancialOfficerandeffectedbytheBoardofDirectors,managementandotherpersonneltoprovidereasonable assuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples. Duetoitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatementsonatimelybasis.Also,projec-tionsofanyevaluationoftheeffectivenessofinternalcontroloverfinancialreportingtofutureperiodsaresubjecttotheriskthatthecontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthe degreeofcompliancewiththepoliciesorproceduresmaydeteriorate. Basedontheassessmentreferencedintheprecedingparagraph,managementhasdeterminedthattheCompany’sinternalcontroloverfinancialreportingiseffectiveasofDecember31,2019.Inconnectionwiththisassessment,nomaterialweaknessesintheCompany’sinternalcontroloverfinancialreportingwereidentifiedbymanagementasofDecember31,2019. DeloitteLLP,anIndependentRegisteredPublicAccountingFirm,auditedtheCompany’sConsolidatedfinancialstatementsfortheyearendedDecember31,2019,andasstatedintheReportofIndependentRegisteredPublicAccountingFirm,theyhaveexpressedanunqualifiedopinionontheeffectivenessoftheCompany’sinternalcontrolover financialreportingasofDecember31,2019. DougFrenchExecutiveVice-PresidentandChiefFinancialOfficer February13,2020 DarrenEntwistle President andChiefExecutiveOfficer February13,2020 120 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of TELUS Corporation Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatouraudits provideareasonablebasisforouropinion. Opinion on the Financial Statements WehaveauditedtheaccompanyingconsolidatedstatementsoffinancialpositionofTELUSCorporationandsubsidiaries(theCompany)asatDecember31,2019and2018,therelatedconsolidatedstatementsofincomeandothercomprehensiveincome,changesinowners’equityandcashflows,foreachofthetwoyearsintheperiodendedDecember31,2019,andtherelatednotes(collectivelyreferredtoasthe“financialstatements”).Inouropinion,thefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyasatDecember31,2019and2018,anditsfinancialperformanceanditscashflowsforeachofthetwoyearsintheperiodendedDecember31, 2019,inaccordancewithInternationalFinancialReportingStandards asissuedbytheInternationalAccountingStandardsBoard. Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theCompany’sinternalcontroloverfinancialreportingasofDecember31, 2019,basedoncriteriaestablishedinInternal Control – Integrated Framework (2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionandourreportdatedFebruary13,2020,expressedanunqualifiedopinionontheCompany’sinternalcontrol overfinancialreporting. Critical Audit Matters Thecriticalauditmatterscommunicatedbelowaremattersarisingfromthecurrent-periodauditofthefinancialstatementsthatwerecommuni-catedorrequiredtobecommunicatedtotheauditcommitteeandthat(1)relatetoaccountsordisclosuresthatarematerialtothefinancialstatementsand(2)involvedourespeciallychallenging,subjective,orcomplexjudgments.Thecommunicationofcriticalauditmattersdoesnotalterinanywayouropiniononthefinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmattersbelow,providingseparateopinionsonthecriticalauditmattersor ontheaccountsordisclosurestowhichtheyrelate. Goodwill Impairment Analysis – Refer to Notes 1(f) and 18 to the financial statements Critical Audit Matter Description TheCompanyassessesgoodwillimpairmentbycomparingtherecoverableamountsofitscash-generatingunitstotheircarryingvalues.TheCompanydeterminedtherecoverableamountsofthecash-generatingunitsbasedonafairvaluelesscostsofdisposalcalculation.Thefairvaluelesscostsofdisposalcalculationusesdiscountedcashflowprojectionsthatemploythefollowingkey assumptions: Change in Accounting Principle AsdiscussedinNote2tothefinancialstatements,effectiveJanuary1, 2019,theCompanyhaschangeditsmethodofaccountingforleasesdue totheadoptionofIFRS16,Leases. Basis for Opinion ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopinionontheCompany’sfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB. WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementofthefinancialstatements,whetherdueto errororfraud,andperformingproceduresthatrespondtothoserisks. • Futurecashflowsandgrowthprojections(includingjudgmentsabouttheallocationoffuturecapitalexpenditurestosupportbothwirelessandwirelineoperations). Associatedeconomicriskassumptionsandestimatesofthelikelihoodofachievingkeyoperatingmetricsanddriversandestimatesoffuturegenerationalinfrastructurecapitalexpenditures. Weightedaveragecostofcapital. • • Changesintheseassumptionscouldhaveasignificantimpactoneitherthefairvaluelesscostsofdisposal,theamountofanygoodwillimpairmentcharge,orboth.Giventhesignificantjudgmentsmadebymanagement,auditingthekeyassumptionsrequiredahighdegreeofauditorjudgmentandanincreasedextentofeffort,includingtheneed toinvolveafairvaluespecialist. TELUS2019 ANNUAL REPORT • 121

How the Critical Audit Matter Was Addressed in the Audit Ourauditproceduresrelatedtothekeyassumptionsincludedthe following,amongothers: Theamountsfornetidentifiableassets,includingintangibleassets,acquiredinbusinesscombinationsrequiredmanagementtomakesignificantestimatesandassumptions. Whiletherearemanyestimatesthatmanagementmakestodeterminethefairvalueofintangibleassetsatthetimeofacquisition,theestimateswiththehighestdegreeofsubjectivityaretheforecastsoffuturecashflowsanddiscountrates.Ourauditprocedurestoevaluatetheseestimatesrequiredahighdegreeofauditorjudgmentandanincreasedextentofeffort,includingtheneedtoinvolveafair valuespecialist. • Evaluatedtheeffectivenessofcontrolsoverthekeyassumptionsusedbymanagement. Comparedmanagement’shistoricalcashflowforecaststoactualhistoricalresults. Evaluatedthereasonablenessofmanagement’sforecastsoffuturecashflowsandgrowthprojections(includingjudgmentsabouttheallocationoffuturecapitalexpenditurestosupportbothwirelessandwirelineoperations);associatedeconomicriskassumptionsandestimatesofthelikelihoodofachievingkeyoperatingmetricsanddriversandestimatesoffuturegenerationalinfrastructure capitalexpendituresbycomparingtheforecaststo: • • How the Critical Audit Matter Was Addressed in the Audit Ourauditproceduresrelatedtotheforecastsoffuturecashflowsanddiscountratesusedtoestimatethefairvaluesoftheintangibleassetsacquiredinthetelecommunicationsbusiness,thesmartdatasolutionsbusinessandADTSecurityServicesCanada,Inc.includedthefollowing, amongothers: • • Historicalrevenues,operatingmarginsandcapitalexpenditures, AnalystandindustryreportsfortheCompanyandcertainofitspeercompanies, KnownchangesintheCompany’soperationsand/ortele-communicationindustry,whichareexpectedtoimpactfutureoperatingperformance,and InternalcommunicationstomanagementandtheBoard ofDirectors. • Evaluatedtheeffectivenessofcontrolsoverthevaluationofintangibleassetsattheacquisitiondate,includingmanagement’scontrolsoverforecastsoffuturecashflowsanddiscountrates. Assessedthereasonablenessofmanagement’sforecastsoffuturecashflowsbycomparingtheprojectionstohistoricalresults. Withtheassistanceofafairvaluespecialist,weevaluatedthe reasonablenessofthediscountratesusedby: • • • • • Withtheassistanceofafairvaluespecialist,evaluatedthereasonablenessoftheweightedaveragecostofcapitalandgrowthprojectionsby: • Testingthesourceinformationunderlyingthedetermination oftheweightedaveragecostofcapital. • Developingarangeofindependentestimatesfortheweightedaveragecostofcapitalandgrowthprojectionsandcomparingthosetotheratesselectedbymanagement. • Testingthesourceinformationunderlyingthedeterminationofthediscountratesandtestingthemathematicalaccuracyofthecalculation. Developingarangeofindependentratesandcomparingthose tothediscountratesusedbymanagement. • Valuation of Intangible Assets Acquired in Business Combinations – Refer to Note 1(b) and Note 18(b) to the financial statements Critical Audit Matter Description TheCompanyacquiredatelecommunicationsbusiness,asmartdatasolutionsbusinessandADTSecurityServicesCanada,Inc.andrecognizedtheassetsacquiredandliabilitiesassumedat theiracquisition-datefairvalues,includingintangibleassets. CharteredProfessionalAccountants February13,2020 Vancouver,Canada WehaveservedastheCompany’sauditorsince2002. 122 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of TELUS Corporation Definition and Limitations of Internal Control over Financial Reporting Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements. Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesor proceduresmaydeteriorate. Opinion on Internal Control over Financial Reporting WehaveauditedtheinternalcontroloverfinancialreportingofTELUSCorporationandsubsidiaries(theCompany)asofDecember31,2019,basedoncriteriaestablishedinInternal Control – Integrated Framework (2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).Inouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2019,basedoncriteriaestablishedinInternal Control – Integrated Framework (2013)issuedbyCOSO. Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theconsolidatedfinancialstatementsasofandfortheyearendedDecember31,2019,oftheCompanyandourreportdatedFebruary13, 2020,expressedanunqualifiedopiniononthosefinancialstatementsand includedanexplanatoryparagraphregardingtheCompany’schangein methodofaccountingforleasesduetotheadoptionofIFRS16,Leases. Basis for Opinion TheCompany’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingReportofManagementonInternalControloverFinancialReporting.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudit.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB. WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatour auditprovidesareasonablebasisforouropinion. CharteredProfessionalAccountants February13,2020 Vancouver,Canada TELUS2019 ANNUAL REPORT • 123

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE YearsendedDecember31(millionsexceptpershareamounts) INCOME Note 2019 2018 Operating Revenues Service Equipment $ 12,400 2,189 $11,882 2,213 Revenuesarisingfromcontractswithcustomers Otheroperatingincome 6 7 14,589 69 14,095 273 14,658 14,368 Operating Expenses Goodsandservicespurchased EmployeebenefitsexpenseDepreciation Amortizationofintangibleassets 6,070 3,034 1,929 648 6,368 2,896 1,669 598 8 17 18 11,681 11,531 Operating Income Financingcosts 2,977 733 2,837 661 9 Income Before Income Taxes Incometaxes 2,244 468 2,176 552 10 Net Income 1,776 1,624 Other Comprehensive Income Itemsthatmaysubsequentlybereclassifiedtoincome Changeinunrealizedfairvalueofderivativesdesignatedascashflowhedges Foreigncurrencytranslationadjustmentarisingfromtranslatingfinancialstatementsofforeignoperations 11 84 20 (18) (30) 104 (48) Itemsneversubsequentlyreclassifiedtoincome Changeinmeasurementofinvestmentfinancialassets Employeedefinedbenefitplanre-measurements 12 (338) (1) 333 (326) 332 (222) 284 Comprehensive Income $ 1,554 $1,908 Net Income Attributable to: CommonShares Non-controllinginterests $ 1,746 30 $1,600 24 $ 1,776 $1,624 Comprehensive Income Attributable to: CommonShares Non-controllinginterests $ 1,516 38 $1,898 10 $ 1,554 $1,908 Net Income Per Common Share BasicDiluted Total Weighted Average Common Shares Outstanding Basic Diluted 12, 28(b) $ $ 2.90 2.90 $ 2.68 $ 2.68 602 602 597 597 The accompanying notes are an integral part of these consolidated financial statements. 124 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AsatDecember31(millions) Note 2019 2018 Assets Currentassets Cashandtemporaryinvestments,net AccountsreceivableIncomeandothertaxesreceivableInventories Contractassets Prepaidexpenses Currentderivativeassets $ 535 1,962 127 437 737 547 8 $ 414 1,600 3 376 860 539 49 6(b) 1(l) 6(c) 20 4(h) 4,353 3,841 Non-currentassets Property,plantandequipment,netIntangibleassets,netGoodwill,net Contractassets Otherlong-termassets 17 18 18 6(c) 20 14,232 12,812 5,331 328 919 12,091 10,934 4,747 458 986 33,622 29,216 $ 37,975 $33,057 Liabilities and Owners’ Equity Currentliabilities Short-termborrowingsAccountspayableandaccruedliabilitiesIncomeandothertaxespayable Dividendspayable AdvancebillingsandcustomerdepositsProvisions Currentmaturitiesoflong-termdebt Currentderivativeliabilities 22 23 $ 100 2,749 55 352 675 288 1,332 23 $ 100 2,570 218 326 656 129 836 9 13 24 25 26 4(h) 5,574 4,844 Non-currentliabilities Provisions Long-termdebtOtherlong-termliabilitiesDeferredincometaxes 25 26 27 10 590 17,142 806 3,204 728 13,265 731 3,148 21,742 17,872 Liabilities 27,316 22,716 Owners’equityCommonequity Non-controllinginterests 28 10,548 111 10,259 82 10,659 10,341 $ 37,975 $33,057 Contingentliabilities The accompanying notes are an integral part of these consolidated financial statements. 29 ApprovedbytheDirectors: DavidL.MowatDirector R.H.Auchinleck Director TELUS2019 ANNUAL REPORT • 125

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY Commonequity Equitycontributed Accumulatedothercomprehensiveincome CommonShares(Note 28) Non-controllinginterests Numberof shares Share capital Contributed surplus Retained earnings (millions) Note Total Total BalanceasatJanuary1,2018 Netincome Othercomprehensiveincome Dividends Dividendsreinvestedand optionalcashpayments Treasurysharesacquired SharessettledfromTreasury Shareoptionawardnet-equity settlementfeature Issueofsharesinbusiness combination Changeinownershipinterests ofsubsidiary 595 – – – $5,205 – – – $370 – – – $3,794 1,600 333 (1,253) $ 47 – (35) – $ 9,416 1,600 298 (1,253) $ 42 24 (14) – $ 9,458 1,624 284 (1,253) 2(c) 11 13 13(b), 14(c) 16(c), 28(c) 16(c), 28(c) 2 (2) 2 86 (100) 100 – – – – – – – – – 86 (100) 100 – – – 86 (100) 100 14(d) – 1 (1) – – – – – 2 98 – – – 98 – 98 31(a) – – 14 – – 14 30 44 BalanceasatDecember31,2018 599 $5,390 $383 $4,474 $ 12 $10,259 $ 82 $10,341 BalanceasatJanuary1,2019 Aspreviouslyreported IFRS16,Leasestransitional amount 599 $ 5,390 $ 383 $ 4,474 $ 12 $ 10,259 $ 82 $ 10,341 2(c) – – – (153) (1) (154) (8) (162) Asadjusted Netincome Othercomprehensiveincome Dividends Dividendsreinvestedand optionalcashpayments Equityaccountedshare-based compensation Shareoptionawardnet-equity settlementfeature Issueofsharesinbusiness combination Changeinownershipinterests ofsubsidiary 599 – – – 5,390 – – – 383 – – – 4,321 1,746 (338) (1,358) 11 – 108 – 10,105 1,746 (230) (1,358) 74 30 8 – 10,179 1,776 (222) (1,358) 11 13 13(b), 14(c) 4 184 – – – 184 – 184 14(b) – 13 20 – – 33 – 33 14(d) – 1 (1) – – – – – 18(b) 2 72 – – – 72 – 72 – – (4) – – (4) (1) (5) BalanceasatDecember31,2019 605 $ 5,660 $ 398 $ 4,371 $ 119 $ 10,548 $ 111 $ 10,659 The accompanying notes are an integral part of these consolidated financial statements. 126 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CASH FLOWS YearsendedDecember31(millions) Note 2019 2018 Operating Activities NetincomeAdjustmentstoreconcilenetincometocashprovidedbyoperatingactivities: Depreciationandamortization Deferredincometaxes Share-basedcompensationexpense,netNetemployeedefinedbenefitplansexpenseEmployercontributionstoemployeedefinedbenefitplans Non-currentcontractassets Non-currentunbilledcustomerfinancereceivables Loss(income)fromequityaccountedinvestments SharessettledfromTreasury Other Netchangeinnon-cashoperatingworkingcapital $ 1,776 $ 1,624 2,577 115 (2) 78 (41) 130 (178) (4) – (192) (332) 2,267 74 16 95 (53) (62) (8) (170) 100 (81) 256 10 14(a) 15(b) 20 7, 21 16(c) 31(a) Cashprovidedbyoperatingactivities 3,927 4,058 Investing Activities Cashpaymentsforcapitalassets,excludingspectrumlicencesCashpaymentsforspectrumlicencesCashpaymentsforacquisitions,netAdvancestorealestatejointventuresRealestatejointventurereceipts Proceedsondispositions Other 31(a) 18(a) 18(b) 21 21 (2,952) (942) (1,105) (35) 7 16 (33) (2,874) (1) (280) (22) 184 38 (22) Cashusedbyinvestingactivities (5,044) (2,977) Financing Activities DividendspaidtoholdersofCommonSharesTreasurysharesacquired Issue(repayment)ofshort-termborrowings,net Long-termdebtissuedRedemptionsandrepaymentoflong-termdebt Sharesofsubsidiary(purchasedfrom)issuedtonon-controllinginterests Other 31(b) 13(a) (1,149) – (1) 7,705 (5,261) (9) (47) (1,141) (100) (67) 5,500 (5,377) 24 (15) 26 26 31(a) Cashprovided(used)byfinancingactivities 1,238 (1,176) Cash Position Increase(decrease)incashandtemporaryinvestments,net Cashandtemporaryinvestments,net,beginningofperiod 121 414 (95) 509 Cashandtemporaryinvestments,net,endofperiod $ 535 $ 414 Supplemental Disclosure of Operating Cash Flows Interestpaid $ (714) $ (608) Interestreceived $ 7 $ 9 Incometaxespaid,net Inrespectofcomprehensiveincome Inrespectofbusinessacquisitions $ (629) (15) $ (197) – $ (644) $ (197) The accompanying notes are an integral part of these consolidated financial statements. TELUS2019 ANNUAL REPORT • 127

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December31,2019 TELUSCorporationisoneofCanada’slargesttelecommunicationscompanies,providingawiderangeoftelecommunicationsservicesandproducts,includingwirelessandwirelinevoiceanddata.Dataservicesinclude:internetprotocol;television;hosting,managedinfor-mationtechnologyandcloud-basedservices;healthcaresolutions;customercareandbusinessservices;andhomeandbusinesssmarttechnology(includingsecurity). TELUSCorporationwasincorporatedundertheCompany Act(BritishColumbia)onOctober26,1998,underthenameBCT.TELUSCommunicationsInc.(BCT).OnJanuary31,1999,pursuanttoacourt-approvedplanofarrangementundertheCanada Business Corporations ActamongBCT,BCTELECOMInc.andtheformer Alberta-basedTELUSCorporation(TC),BCTacquiredallofthesharesofBCTELECOMInc.andTCinexchangeforCommonSharesandNon-VotingSharesofBCT,andBCTELECOMInc.wasdissolved.OnMay3,2000,BCTchangeditsnametoTELUSCorporationandinFebruary2005,TELUSCorporationtransitionedundertheBusiness Corporations Act(BritishColumbia),successortotheCompany Act(BritishColumbia).TELUSCorporationmaintainsitsregisteredofficeatFloor7,510WestGeorgiaStreet,Vancouver,BritishColumbia,V6B0M3. Theterms“TELUS”,“we”,“us”,“our”or“ourselves”refertoTELUSCorporationand,wherethecontextofthenarrativepermitsorrequires, itssubsidiaries. 128 • TELUS2019 ANNUAL REPORT Notestoconsolidatedfinancialstatements Page GENERAL APPLICATION 1. Summaryofsignificantaccountingpolicies129 2. Accountingpolicydevelopments136 3. Capitalstructurefinancialpolicies 139 4. Financialinstruments 141 CONSOLIDATED RESULTS OF OPERATIONS FOCUSED 5. Segmentinformation 148 6. Revenuefromcontractswithcustomers150 7. Otheroperatingincome 151 8. Employeebenefitsexpense151 9. Financingcosts 152 10. Incometaxes152 11. Othercomprehensiveincome 154 12.Pershareamounts155 13.Dividendspershare155 14. Share-basedcompensation156 15.Employeefuturebenefits159 16.Restructuringandothercosts 165 CONSOLIDATED FINANCIAL POSITION FOCUSED 17. Propertyplantandequipment 166 18.Intangibleassetsandgoodwill 167 19. Leases171 20.Otherlong-termassets172 21. Realestatejointventuresandinvestmentinassociate 173 22.Short-termborrowings 175 23.Accountspayableandaccruedliabilities 175 24.Advancebillingsandcustomerdeposits 175 25.Provisions176 26.Long-termdebt177 27. Otherlong-termliabilities 181 28.CommonSharecapital 181 29.Contingentliabilities 182 OTHER 30.Relatedpartytransactions 184 31. Additionalstatementofcashflowinformation 185

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 1 OurconsolidatedfinancialstatementsareexpressedinCanadiandollars.ThegenerallyacceptedaccountingprinciplesthatweuseareInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard(IFRS-IASB)andCanadiangenerallyacceptedaccountingprinciples. Generallyacceptedaccountingprinciplesrequirethatwedisclosetheaccountingpolicieswehaveselectedinthoseinstancesinwhichwehavebeenobligatedtochoosefromamongvariousaccountingpoliciesthatcomplywithgenerallyacceptedaccountingprinciples.Incertainotherinstances,includingthoseinwhichnoselectionamongpoliciesisallowed,wearealsorequiredtodisclosehowwehaveappliedcertainaccountingpolicies.Intheselectionandapplicationofaccountingpolicies,weconsider,amongotherfactors,thefundamentalqualitativecharacteristicsofusefulfinancialinformation,namelyrelevanceandfaithfulrepresentation.Inourassessment,theaccountingpolicydisclo-sureswearerequiredtomakearenotallequallysignificantforus,assetoutintheaccompanyingtable;theirrelativesignificanceforuswillevolveovertime,aswedo. Theseconsolidatedfinancialstatementsforeachoftheyears endedDecember31,2019and2018,wereauthorizedbyourBoard ofDirectorsforissueonFebruary13,2020. (a) Consolidation Ourconsolidatedfinancialstatementsincludeouraccountsandtheaccountsofallofoursubsidiaries,theprincipaloneofwhich,asatDecember31,2019,isTELUSCommunicationsInc.,inwhichwehavea 100%equityinterest.TELUSCommunicationsInc.includessubstantially allofourwirelessandwirelineoperations. Ourfinancingarrangementsandthoseofourwhollyowned subsidiariesdonotimposerestrictionsoninter-corporatedividends. Onacontinuingbasis,wereviewourcorporateorganizationandeffectchangesasappropriatesoastoenhancethevalueofTELUSCorporation.Thisprocesscan,anddoes,affectwhichofoursubsidiariesareconsideredprincipalsubsidiariesatanyparticularpointintime. Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. TELUS2019 ANNUAL REPORT • 129 (b) Use of estimates and judgments Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresmanagementtomakeestimates,assumptionsandjudgmentsthataffect:thereportedamountsofassetsandliabilitiesatthedateofthefinancialstatements;thedisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements;andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates. Accountingpolicyrequiringamoresignificantchoiceamongpoliciesand/oramoresignificantapplicationofjudgment Accountingpolicy Yes No GENERAL APPLICATION (a) Consolidation X (b) Useofestimatesandjudgments X (c) Financialinstruments– recognitionandmeasurement X (d) Hedgeaccounting X RESULTS OF OPERATIONS FOCUSED (e) Revenuerecognition X (f) Depreciation,amortizationandimpairment X (g) Translationofforeigncurrencies X (h) Incomeandothertaxes X (i) Share-basedcompensation X (j) Employeefuturebenefitplans X FINANCIAL POSITION FOCUSED (k) Cashandtemporaryinvestments,net X (l) Inventories X (m)Property,plantandequipment; intangibleassets X (n) Leases X (o) Investments X 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEGREE OF DIFFICULTY Higher Lower Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. 130 • TELUS2019 ANNUAL REPORT SIGNIFICANCE Lower Higher obligortotheend-usercustomers.Theeffectofthisjudgmentisthatnoequipmentrevenueisrecognizeduponthetransferofinventorytothird-partyre-sellers. • Wecompensatethird-partyre-sellersandouremployeesforgeneratingrevenues,andwemustexercisejudgmentastowhethersuchsales-basedcompensationamountsarecostsincurredtoobtaincontractswithcustomersthatshouldbecapitalized(seeNote 20).Webelievethatcompensationamountstangentiallyattributabletoobtainingacontractwithacustomer,becausetheamountofsuchcompensationcouldbeaffectedinwaysotherthanbysimplyobtainingthatcontract,shouldbeexpensedasincurred;compensationamountsdirectlyattributabletoobtainingacontractwithacustomershouldbecapitalizedandsubsequentlyamortizedonasystematicbasis,consistentwiththesatisfactionofourassociatedperformanceobligations. Judgmentmustalsobeexercisedinthecapitalizationofcostsincurredtofulfillrevenue-generatingcontractswithcustomers.Suchfulfilmentcostsarethoseincurredtosetup,activateorotherwiseimplementservicesinvolvingaccessto,orusageof,ourtelecommunicationsinfrastructurethatwouldnototherwisebecapitalizedasproperty,plant,equipmentand/orintangibleassets(seeNote 20). • Thedecisiontodepreciateandamortizeanyproperty,plant,equipment(includingright-of-useleaseassets)andintangibleassetsthataresubjecttoamortizationonastraight-linebasis,aswebelievethatthismethodreflectstheconsumptionofresourcesrelatedtotheeconomiclifespanofthoseassetsbetterthananacceleratedmethodandismorerepresentativeoftheeconomicsubstanceoftheunderlyinguseofthoseassets. • Thepreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesrequiresmanagementtomakejudgmentsthataffectthefinancialstatementdisclosureofinformationregularlyreviewedbyourchiefoperatingdecision-makerused Judgments Examplesofoursignificantjudgments,apartfromthoseinvolvingestimation,includethefollowing: • Assessmentsaboutwhetherlineitemsaresufficientlymaterialtowarrantseparatepresentationintheprimaryfinancialstatementsand,ifnot,whethertheyaresufficientlymaterialtowarrantseparatepresentationinthenotestothefinancialstatements.Inthenormalcourse,wemakechangestoourassessmentsregardingmaterialityforpresentationsothattheyreflectcurrenteconomicconditions.Dueconsiderationisgiventotheviewthatitisreasonabletoexpectdifferingopinionsofwhatis,andisnot,material. • Inrespectofrevenue-generatingtransactions,wemustmakejudgmentsthataffectthetimingoftherecognitionofrevenue,assetoutfollowing: • Wehavemillionsofmulti-yearcontractswithourcustomersandwemustmakejudgmentsaboutwhenwehavesatisfiedourperformanceobligationstoourcustomers,eitheroveraperiodoftimeoratapointintime.Servicerevenuesarerecognizedbaseduponcustomers’accessto,orusageof,ourtelecommunicationsinfrastructure;webelievethatthismethodfaithfullydepictsthetransferoftheservices,andthustherevenuesarerecognizedastheservicesaremadeavailableand/orrendered.Weconsiderourperformanceobligationsarisingfromthesaleofequipmenttohavebeensatisfiedwhentheequipmenthasbeendeliveredto,andacceptedby,theend-usercustomers(see(e)following). • Principallyinthecontextofrevenue-generatingtransactionsinvolvingwirelesshandsets,wemustmakejudgmentsaboutwhetherthird-partyre-sellersthatdeliverequipmenttoourcus-tomersareactinginthetransactionsasprincipalsorasouragents.Upondueconsiderationoftherelevantindicators,webelievethatthedecisiontoconsiderthere-sellerstobeacting,solelyforaccountingpurposes,asouragentsismorerepresentativeoftheeconomicsubstanceofthetransactions,aswearetheprimary • Therecoverabilityofintangibleassetswithindefinitelives(seeNote 18(f)fordiscussionofkeyassumptions) • Therecoverabilityofgoodwill(seeNote 18(f) fordiscussionofkeyassumptions) • Certainactuarialandeconomicassumptionsusedindeterminingdefinedbenefitpensioncostsandaccruedpensionbenefitobligations(seeNote 15(e)fordiscussionofkeyassumptions) • Determinationoftheamountsandcompositionofincomeandothertaxassetsandliabilities,includingtheamountsofunrecognizedtaxbenefits • Theestimatedusefullivesofassets(see(f)following) • Certaineconomicassumptionsusedinprovisioningforassetretirementobligations(see(m)following) • Amountsfornetidentifiableassetsacquiredinbusinesscombinationsandprovisionsrelatedtobusinesscombinations • Therecoverabilityoflong-terminvestments • Therecoverabilityoftangibleandintangible assetssubjecttoamortization • Determinationoftheallowancefordoubtfulaccountsandtheimpairmentallowanceforcontractassets • Determinationoftheallowanceforinventory obsolescence Estimates Examplesofthesignificantestimatesandassumptionsthatwemake,andtheirrelativesignificanceanddegreeofdifficulty,aresetoutinthegraphicbelow.

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 1 (c) Financial instruments – recognition and measurement Inrespectoftherecognitionandmeasurementoffinancialinstruments, wehaveadoptedthefollowingpolicies: • Regular-waypurchasesorsalesoffinancialassetsorfinancialliabilities(purchasesorsalesthatrequireactualdeliveryoffinancialassetsorfinancialliabilities)arerecognizedonthesettlementdate.Wehaveselectedthismethodasthebenefitsofusingthetradedatemethodwerenotexpectedtoexceedthecostsofselectingandimplementingthatmethod. • Transactioncosts,otherthaninrespectofitemsheldfortrading,areaddedtotheinitialfairvalueoftheacquiredfinancialassetorfinancialliability.Wehaveselectedthismethodaswebelievethatitresultsinabettermatchingofthetransactioncostswiththe periodsinwhichwebenefitfromthetransactioncosts. (d) Hedge accounting General Weapplyhedgeaccountingtothefinancialinstrumentsusedto:establishdesignatedcurrencyhedgingrelationshipsforcertainU.S.dollar-denominatedfuturepurchasecommitmentsanddebtrepayments,assetoutinNote 4(a)and(d);andfixthecompensationcostarisingfromspecificgrantsofrestrictedshareunits,assetoutinNote 4(f)and discussedfurtherinNote 14(b). Hedge accounting Thepurposeofhedgeaccounting,inrespectofourdesignatedhedgingrelationships,istoensurethatcounterbalancinggainsandlossesarerecognizedinthesameperiods.Wehavechosentoapplyhedgeaccountingaswebelievethatitismorerepresentativeoftheeconomicsubstanceoftheunderlyingtransactions. Inordertoapplyhedgeaccounting,ahighcorrelation(whichindicateseffectiveness)isrequiredintheoffsettingchangesintherisk-associatedvaluesofthefinancialinstruments(thehedgingitems)usedtoestablishthedesignatedhedgingrelationshipsandall,orapart,oftheasset,liabilityortransactionhavinganidentifiedriskexposurethatwehavetakenstepstomodify(thehedgeditems).Weassesstheanticipatedeffectivenessofdesignatedhedgingrelationshipsatinceptionandtheiractualeffectivenessforeachreportingperiodthereafter.Weconsideradesignatedhedgingrelationshiptobeeffectiveifthefollowingcriticaltermsmatchbetweenthehedgingitemandthehedgeditem:thenotionalamountofthehedgingitemandtheprincipalamountofthe hedgeditem;maturitydates;paymentdates;andinterestrateindex Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. TELUS2019 ANNUAL REPORT • 131 tomakeresourceallocationdecisionsandtoassessperformance(segmentinformation,Note 5).Asignificantjudgmentwemakeisinrespectofdistinguishingbetweenourwirelessandwirelineoperationsandcashflows(andthisextendstoallocationsofbothdirectandindirectexpensesandcapitalexpenditures).Theclarityofthisdistinctionhasbeenincreasinglyaffectedbytheconvergenceandintegrationofourwirelessandwirelinetelecommunicationsinfrastructuretechnologyandoperations.Lessthanone-halfoftheoperatingexpensesincludedinthesegmentperformancemeasurereportedtoourchiefoperatingdecision-makerduringtheyearsendedDecember31,2019and2018,weredirectcosts;judgment,largelybaseduponhistoricalexperience,isappliedinapportioningindirectexpensesthatarenotobjectivelydistinguishablebetweenourwirelessandwirelineoperations. Recently,ourjudgmentwasthatourwirelessandwirelinetelecommunicationsinfrastructuretechnologyandoperationshadnotexperiencedsufficientconvergencetoobjectivelymaketheirrespectiveoperationsandcashflowspracticallyindistinguishable.Thecontinuedbuild-outofourtechnology-agnosticfibre-opticinfra-structure,incombinationwithconvergededgenetworktechnology,hassignificantlyaffectedthisjudgment,ashavethecommercializationoffixed-wirelesstelecommunicationssolutionsforcustomersandtheconsolidationofournon-customerfacingoperations. Asaresult,ithasbecomeincreasinglydifficultandimpracticaltoobjectivelyandclearlydistinguishbetweenourwirelessandwirelineoperationsandcashflows,andtheassetsfromwhichthosecashflowsarise.Ourjudgmentastowhethertheseoperationscancontinuetobejudgedtobeindividualcomponentsofthebusinessanddiscreteoperatingsegmentshaschanged;effectiveJanuary1, 2020,weembarkeduponmodifyingourinternalandexternalreportingprocesses,systemsandinternalcontrolstoaccommodatethetechnologyconvergence-drivencessationofthehistoricaldis-tinctionbetweenourwirelessandwirelineoperationsatthelevelofregularlyreporteddiscreteperformancemeasuresthatareprovidedtoourchiefoperatingdecision-maker.Weanticipatetransitioningtoanewsegmentreportingstructureduring2020andwillcontinuetoreportwirelessandwirelineoperationsuntilsuchtransitionissubstantiallycompleted. Theimpracticalityofobjectivelydistinguishingbetweenourwirelessandwirelinecashflows,andtheassetsfromwhichthosecashflowsarise,isevidenceoftheirincreasinginterdependence,andthishasresultedintheunificationofthewirelesscash-generatingunitandthewirelinecash-generatingunitasasingletelecommuni-cationscash-generatingunitforfutureimpairmenttestingpurposes.Asourbusinesscontinuestoevolve,newcash-generatingunitsmayalsodevelop. • TheviewthatourspectrumlicencesgrantedbyInnovation,ScienceandEconomicDevelopmentCanada(includingspectrumlicencesthathavebeensubordinatedtous)willlikelyberenewed;thatweintendtorenewthem;thatwebelievewehavethefinancialandoperationalabilitytorenewthem;andthus,thattheyhaveanindefinitelife,asdiscussedfurtherinNote 18(e). • Inconnectionwiththeannualimpairmenttestingofintangibleassetswithindefinitelivesandgoodwill,thereareinstancesinwhichwemustexercisejudgmentinallocatingournetassets,includingsharedcorporateandadministrativeassets,toourcash-generatingunits whendeterminingtheircarryingamounts.Thesejudgmentsarenecessarybecauseoftheconvergencethatourwirelessandwirelinetelecommunicationsinfrastructuretechnologyandoperationshaveexperiencedtodate,andbecauseofourcontinuousdevelopment.Thereareinstancesinwhichsimilarjudgmentsmustalsobemadeinrespectoffuturecapitalexpendituresinsupportofbothwirelessandwirelineoperations,whichareacomponentofthedeterminationofrecoverableamountsusedintheannualimpairmenttesting,asdiscussedfurtherinNote 18(f). • Inrespectofclaimsandlawsuits,asdiscussedfurtherinNote 29(a),thedeterminationofwhetheranitemisacontingentliabilityorwhetheranoutflowofresourcesisprobableandthusneedstobeaccountedforasaprovision.

(if,andas,applicable).AssetoutinNote 4(i),anyineffectiveness,suchaswouldresultfromadifferencebetweenthenotionalamountofthehedgingitemandtheprincipalamountofthehedgeditem,orfromapreviouslyeffectivedesignatedhedgingrelationshipbecomingineffective,isreflectedintheConsolidatedstatementsofincomeandothercom-prehensiveincomeasFinancingcostsifinrespectoflong-termdebt,asGoodsandservicespurchasedifinrespectofU.S.dollar-denominatedfuturepurchasecommitments,orasEmployeebenefitsexpenseifin respectofshare-basedcompensation. Hedging assets and liabilities Intheapplicationofhedgeaccounting,anamount(thehedgevalue)isrecordedintheConsolidatedstatementsoffinancialpositioninrespectofthefairvalueofthehedgingitems.Thenetdifference,ifany,betweentheamountsrecognizedinthedeterminationofnetincomeandtheamountsnecessarytoreflectthefairvalueofthedesignatedcashflowhedgingitemsrecordedintheConsolidatedstatementsoffinancialpositionisrecognizedasacomponentofOthercomprehensiveincome,assetoutinNote 11. Intheapplicationofhedgeaccountingtothecompensationcostarisingfromshare-basedcompensation,theamountrecognizedinthedeterminationofnetincomeistheamountthatcounterbalancesthedifferencebetweenthequotedmarketpriceofourCommonSharesatthestatementoffinancialpositiondateandthepriceofourCommon Sharesinthehedgingitems. Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. 132 • TELUS2019 ANNUAL REPORT (e) Revenue recognition General Weearnthemajorityofourrevenues(wireless:networkrevenues(voiceanddata);wireline:datarevenues(whichinclude:internetprotocol;television;hosting,managedinformationtechnologyandcloud-basedservices;customercareandbusinessservices;certainhealthcaresolutions;andhomeandbusinesssmarttechnology(includingsecurity))andvoicerevenues)fromaccessto,andusageof,ourtelecommunicationsinfrastructure.Themajorityofthebalanceofourrevenues(wirelessequipmentandother)arisesfromprovidingservicesandproductsfacilitatingaccessto,andusageof,ourtelecommunicationsinfrastructure. Weoffercompleteandintegratedsolutionstomeetourcustomers’needs.Thesesolutionsmayinvolvedeliveriesofmultipleservicesandproducts(ourperformanceobligations)thatoccuratdifferentpointsintimeand/oroverdifferentperiodsoftime;asreferredtoin(b),thisisasignificantjudgmentforus.Asrequired,theperformanceobligationsofthesemultipleelementarrangementsareidentified,thetransactionpricefortheentiremultipleelementarrangementisdeterminedandallocatedamongtheperformanceobligationsbaseduponourrelativestand-alonesellingpricesforeachofthem,andourrelevantrevenuerecognitionpoliciesarethenapplied,sothatrevenueisrecognizedwhen,oras,wesatisfytheperformanceobligations.Totheextentthatvariableconsiderationisincludedindeterminingtheminimumtransac-tionprice,itisconstrainedtothe“minimumspend”amountrequiredinacontractwithacustomer.Servicerevenuesarisingfromcontractswithcustomerstypicallyhavevariableconsideration,becausecustomershavetheongoingabilitytobothaddandremovefeaturesandservices,andbecausecustomerusageofourtelecommunicationsinfrastructuremayexceedthebaseamountsprovidedforintheircontracts. Ourcontractswithcustomersdonothaveasignificantfinancingcomponent.Withtheexceptionofbothequipment-relatedupfrontpay-mentsthatmayberequiredunderthetermsofcontractswithcustomersandin-store“cashandcarry”salesofequipmentandaccessories,paymentsaretypicallydue30daysfromthebillingdate.Billingsaretypicallyrenderedonamonthlybasis. Multiplecontractswithasinglecustomerarenormallyaccountedforasseparatearrangements.Ininstanceswheremultiplecontractsareenteredintowithacustomerinashortperiodoftime,thecontractsarereviewedasagrouptoensurethat,aswithmultipleelementarrange-ments,theirrelativetransactionpricesareappropriate. Leaseaccountingisappliedtoanaccountingunitifitconveystoacustomertherighttouseaspecificassetbutdoesnotconveytherisksand/orbenefitsofownership. Ourrevenuesarerecordednetofanyvalue-addedand/orsalestaxes billedtothecustomerconcurrentwitharevenue-generatingtransaction. Weusethefollowingrevenueaccountingpracticalexpedients providedforinIFRS15,Revenue from Contracts with Customers: • Noadjustmentofthecontractedamountofconsiderationfortheeffectsoffinancingcomponentswhen,attheinceptionofacontract,weexpectthattheeffectofthefinancingcomponentisnotsignificantattheindividualcontractlevel. • Nodeferralofcontractacquisitioncostswhentheamortizationperiod forsuchcostswouldbeoneyearorless. • Whenestimatingminimumtransactionpricesallocatedtoanyremainingunfulfilled,orpartiallyunfulfilled,performanceobligations,exclusionofamountsarisingfromcontractsoriginallyexpectedtohaveadurationofoneyearorless,aswellasamountsarisingfromcontractsunderwhichwemayrecognizeandbillrevenueinanamountthatcorrespondsdirectlywithourcompletedperformanceobligations. Contract assets Manyofourmultipleelementarrangementsarisefrombundlingthesaleofequipment(e.g.awirelesshandset)withacontractedserviceperiod.Althoughthecustomerreceivestheequipmentatcontractinceptionandtherevenuefromtheassociatedcompletedperformanceobligationisrecognizedatthattime,thecustomer’spaymentfortheequipmentwilleffectivelybereceivedrateablyoverthecontractedserviceperiodtotheextentitisnotreceivedasalump-sumamountatcontractinception.ThedifferencebetweentheequipmentrevenuerecognizedandtheassociatedamountcumulativelybilledtothecustomerisrecognizedontheConsolidatedstatementsoffinancialpositionasacontractasset. Contractassetsmayalsoariseininstanceswherewegiveconsider-ationtoacustomer.Whenwereceivenoidentifiable,separablebenefitforconsiderationgiventoacustomer,theamountoftheconsiderationisrecordedasareductionofrevenueratherthanasanexpense.Suchamountsareincludedinthedeterminationoftransactionpricesforallocationpurposesinmultipleelementarrangements. • Someformsofconsiderationgiventoacustomer,effectivelyatcon-tractinception,suchasrebates(includingprepaidnon-bankcards)and/orequipment,areconsideredtobeperformanceobligationsinamultipleelementarrangement.Althoughtheperformanceobligationissatisfiedatcontractinception,thecustomer’spaymentassociatedwiththeperformanceobligationwilleffectivelybereceivedrateablyovertheassociatedcontractedserviceperiod.Thedifferencebetween

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 1 property,plantandequipmentdepreciationexpensebyanaverageofthegrossbook amortizationareasfollows: Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. TELUS2019 ANNUAL REPORT • 133 Werecognizethesubsidyonanaccrualbasisbyapplyingthesubsidyratetothenumberofresidentialnetworkaccesslinesweprovideinhighcostservingareas,asdiscussedfurtherinNote 7.Differences,ifany,betweeninterimandfinalsubsidyratessetbytheCRTCareaccountedforasachangeinestimateintheperiodinwhichtheCRTCfinalizesthesubsidyrate. Other and wireless equipment Werecognizeproductrevenues,includingamountsrelatedtowirelesshandsetssoldtore-sellersandcustomerpremisesequipment,whentheproductsarebothdeliveredtoandacceptedbytheend-usercustomers,irrespectiveofwhichsupplychanneldeliverstheproduct.Withrespecttowirelesshandsetssoldtore-sellers,weconsiderourselvestobetheprincipalandprimaryobligortotheend-usercustomers.Revenuesfromoperatingleasesofequipmentarerecogn izedonasystematicandrationalbasis(normallyastraight-linebasis)overthetermofthelease. (f) Depreciation, amortization and impairment Depreciation and amortization Property,plantandequipment(includingright-of-useleaseassets)aredepreciatedonastraight-linebasisovertheirestimatedusefullives(leasetermsforright-of-useleaseassets)asdeterminedbyacontinuingprogramofassetlifestudies.Depreciationincludesamortizationofleaseholdimprovementsand,priortofiscal2019,amortizationofassetsunderfinanceleases.Leaseholdimprovementsarenormallyamortizedoverthelesseroftheirexpectedaverageservicelifeorthetermofthelease.Intangibleassetswithfinitelives(intangibleassetssubjecttoamortization)areamortizedonastraight-linebasisovertheirestimatedusefullives,whicharereviewedatleastannuallyandadjustedasappro-priate.Asreferredtoin(b),theuseofastraight-linebasisofdepreciationandamortizationisasignificantjudgmentforus. Estimatedusefullivesforthemajorityofourproperty,plantandequipmentandright-of-useleaseassetssubjecttodepreciationareasfollows: Estimatedusefullives1 Networkassets Outsideplant 17to40years Insideplant4to25years Wirelesssiteequipment 5to7years Realestateright-of-useleaseassets 5to20years Balanceofdepreciableproperty,plantandequipment andright-of-useleaseassets3to40years 1 Thecompositeproperty,plantandequipmentdepreciationratefortheyearendedDecember31,2019,was5.0%(2018–5.0%).Therateiscalculatedbydividing valueofproperty,plantandequipmentdepreciableassetsoverthereportingperiod. Estimatedusefullivesforthemajorityofourintangibleassetssubjectto Estimatedusefullives Wirelinesubscriberbase 25years Customercontractsandrelatedcustomerrelationships 4to10years Software2to10years Accesstorights-of-wayandother5to30years therevenuearisingfromthesatisfiedperformanceobligationandtheassociatedamountcumulativelyreflectedinbillingstothecustomerisrecognizedontheConsolidatedstatementsoffinancialpositionasacontractasset. • Otherformsofconsiderationgiventoacustomer,eitheratcontractinceptionoroveraperiodoftime,suchasdiscounts(includingprepaidbankcards),mayresultinusreceivingnoidentifiable,separ-ablebenefitandthusarenotconsideredperformanceobligations.Suchconsiderationisrecognizedasareductionofrevenuerateablyoverthetermofthecontract.Thedifferencebetweentheconsider-ationprovidedandtheassociatedamountrecognizedasareductionofrevenueisrecognizedontheConsolidatedstatementsoffinancialpositionasacontractasset. Contract liabilities Advancebillingsarerecordedwhenbillingoccurspriortoprovisionoftheassociatedservices;suchadvancebillingsarerecognizedasrevenueintheperiodinwhichtheservicesand/orequipmentareprovided(seeNote 24).Similarly,andasappropriate,upfrontcustomeractivationandconnectionfeesaredeferredandrecognizedovertheaverageexpectedtermofthecustomerrelationship. Costs of contract acquisition and contract fulfilment Costsofcontractacquisition(typicallycommissions)andcostsofcontractfulfilmentarecapitalizedandrecognizedasanexpense,generallyoverthelifeofthecontractonasystematicandrationalbasisconsistentwiththepatternofthetransferofgoodsorservicestowhichtheassetrelates.TheamortizationofsuchcostsisincludedintheConsolidatedstatementsofincomeandothercomprehensiveincomeasacomponentofGoodsandservicespurchased,withtheexceptionofamountspaidtoouremployees,whichareincludedasEmployeebenefitsexpense. Thetotalcostofwirelessequipmentsoldtocustomersandadvertisingandpromotioncostsrelatedtoinitialcustomeracquisitionareexpensedasincurred;thecostofequipmentweownthatissituatedatcustomers’premisesandassociatedinstallationcostsarecapitalizedasincurred.Costsofadvertisingproduction,advertisingairtimeandadvertisingspaceareexpensedasincurred. Voice and data Werecognizerevenuesonanaccrualbasisandincludeanestimateofrevenuesearnedbutunbilled.Wirelessandwirelineservicerevenuesarerecognizedbaseduponaccessto,andusageof,ourtelecommunicationsinfrastructureanduponcontractfees. Advancebillingsarerecordedwhenbillingoccurspriortoprovisionoftheassociatedservices;suchadvancebillingsarerecognizedasrevenueintheperiodinwhichtheservicesareprovided.Similarly,andasappropriate,upfrontcustomeractivationandconnectionfeesaredeferredandrecognizedovertheaverageexpectedtermofthecustomerrelationship. WeusetheliabilitymethodofaccountingfortheamountsofourqualityofserviceraterebatesthatarisefromthejurisdictionoftheCanadianRadio-televisionandTelecommunicationsCommission(CRTC). TheCRTChasestablishedamechanismtosubsidizelocalexchangecarriers,suchasourselves,thatprovideresidentialbasictelephoneservicetohighcostservingareas.TheCRTChasdeterminedthepernetworkaccessline/perbandsubsidyrateforalllocalexchangecarriers.

(g) Translation of foreign currencies TradetransactionscompletedinforeigncurrenciesaretranslatedintoCanadiandollarsattheratesofexchangeprevailingatthetimeofthetransactions.MonetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintoCanadiandollarsattherateofexchangeineffectatthestatementoffinancialpositiondate,withanyresultinggainorlossrecordedintheConsolidatedstatementsofincomeandothercomprehensiveincomeasacomponentofFinancingcosts,assetoutinNote 9.Hedgeaccountingisappliedinspecificinstances,asdiscussedfurtherin(d)preceding. WehaveforeignsubsidiariesthatdonothavetheCanadiandollarastheirfunctionalcurrency.Foreignexchangegainsandlossesarisingfromthetranslationoftheseforeignsubsidiaries’accountsintoCanadiandollarsarereportedasacomponentofothercomprehensiveincome, assetoutinNote 11. Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. 134 • TELUS2019 ANNUAL REPORT (h) Income and other taxes Wefollowtheliabilitymethodofaccountingforincometaxes;asreferredtoin(b),thisisasignificantestimateforus.Underthismethod,currentincometaxesarerecognizedfortheestimatedincometaxespayableforthecurrentyear.Deferredincometaxassetsandliabilitiesarerecognizedfortemporarydifferencesbetweenthetaxandaccountingbasesofassetsandliabilities,andalsoforanybenefitsoflossesandInvestmentTaxCreditsavailabletobecarriedforwardtofutureyearsfortaxpurposesthataremorelikelythannottoberealized.Theamountsrecognizedinrespectofdeferredincometaxassetsandliabilitiesarebasedupontheexpectedtimingofthereversaloftemporarydifferencesortheusageoftaxlossesandtheapplicationofthesubstantivelyenactedtaxratesatthetimeofreversalorusage. Weaccountforanychangesinsubstantivelyenactedincometaxratesaffectingdeferredincometaxassetsandliabilitiesinfullintheperiodinwhichthechangesaresubstantivelyenacted.Weaccountforchangesintheestimatesoftaxbalancesforprioryearsasestimaterevisionsintheperiodinwhichchangesintheestimatesarise;wehaveselectedthisapproachasitsemphasisonthestatementoffinancialpositionismoreconsistentwiththeliabilitymethodofaccountingforincometaxes. Ouroperationsarecomplexandtherelateddomesticandforeigntaxinterpretations,regulations,legislationandjurisprudencearecontinuallychanging.Asaresult,thereareusuallysometaxmattersinquestionthatresultinuncertaintaxpositions.Werecognizetheincometaxbenefitofanuncertaintaxpositiononlywhenitismorelikelythannotthattheultimatedeterminationofthetaxtreatmentofthepositionwillresultinthatbenefitbeingrealized;however,thisdoesnotmeanthattaxauthoritiescannotchallengethesepositions.Weaccrueanamountforinterestchargesoncurrenttaxliabilitiesthathavenotbeenfunded,whichwouldincludeinterestandpenaltiesarisingfromuncertaintaxpositions.WeincludesuchchargesintheConsolidatedstatementsofincomeandothercomprehensiveincomeasacomponentofFinancingcosts. OurresearchanddevelopmentactivitiesmaybeeligibletoearnInvestmentTaxCredits,forwhichthedeterminationofeligibilityisacomplexmatter.WerecognizeInvestmentTaxCreditsonlywhenthereisreasonableassurancethattheultimatedeterminationoftheeligibilityofourresearchanddevelopmentactivitieswillresultintheInvestmentTaxCreditsbeingreceived,atwhichtimetheyareaccountedforusingthecostreductionmethod,wherebysuchcreditsaredeductedfromtheexpendituresorassetstowhichtheyrelate,assetoutinNote 10(c). Impairment – general Impairmenttestingcomparesthecarryingvaluesoftheassetsorcash-generatingunitsbeingtestedwiththeirrecoverableamounts(therecoverableamountbeingthegreaterofanasset’soracash-generatingunit’svalueinuseoritsfairvaluelesscostsofdisposal);asreferredtoin(b),thisisasignificantestimateforus.Impairment lossesareimmediatelyrecognizedtotheextentthatthecarryingvalueofanassetoracash-generatingunitexceedsitsrecoverableamount.Shouldtherecoverableamountsforimpairedassetsorcash-generatingunitssubsequentlyincrease,theimpairmentlossespreviouslyrecog-nized(otherthaninrespectofgoodwill)maybereversedtotheextentthatthereversalisnotaresultof“unwindingofthediscount”andthattheresultingcarryingvaluesdonotexceedthecarryingvalueswhichwouldhavebeentheresultifnoimpairmentlosseshadbeenrecognizedpreviously. Impairment – property, plant and equipment; intangible assets subject to amortization Thecontinuingprogramofassetlifestudiesconsiderssuchitemsasthetimingoftechnologicalobsolescence,competitivepressuresandfutureinfrastructureutilizationplans;theseconsiderationscouldalsoindicatethatthecarryingvalueofanassetmaynotberecoverable.Ifthecarryingvalueofanassetwerenotconsideredtoberecoverable,animpairmentlosswouldberecorded. Impairment – intangible assets with indefinite lives; goodwill Thecarryingvaluesofintangibleassetswithindefinitelivesandgoodwillareperiodicallytestedforimpairment.Thefrequencyoftheimpairmenttestingisgenerallythereciprocalofthestabilityoftherelevanteventsandcircumstances,butintangibleassetswithindefinitelivesandgoodwillmust,ataminimum,betestedannually;wehaveselectedDecemberasthetimeofourannualtest. Weassessourintangibleassetswithindefinitelivesbycomparingtherecoverableamountsofourcash-generatingunitstotheircarryingvalues(includingtheintangibleassetswithindefinitelivesallocatedtoacash-generatingunit,butexcludinganygoodwillallocatedtoacash-generatingunit).Totheextentthatthecarryingvalueofacash-generatingunit(includingtheintangibleassetswithindefinitelivesallocatedtothecash-generatingunit,butexcludinganygoodwillallocatedtothecash-generatingunit)exceedsitsrecoverableamount,theexcessamountwouldberecordedasareductioninthecarryingvalueofintangibleassetswithindefinitelives. Subsequenttoassessingintangibleassetswithindefinitelives,weassessgoodwillbycomparingtherecoverableamountsofourcash-generatingunitstotheircarryingvalues(includingtheintangibleassetswithindefinitelivesandanygoodwillallocatedtoacash-generatingunit).Totheextentthatthecarryingvalueofacash-generatingunit(includingtheintangibleassetswithindefinitelivesandthegoodwillallocatedtothecash-generatingunit)exceedsitsrecoverableamount,theexcessamountwouldfirstberecordedasareductioninthecarryingvalueofgoodwillandanyremainderwouldberecordedasareductioninthecarryingvaluesoftheassetsofthecash-generatingunitona pro-ratedbasis.

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 1 (i) Share-based compensation General Whenshare-basedcompensationvestsinitsentiretyatonefuturepointintime(cliffvesting),werecognizetheexpenseonastraight-linebasisoverthevestingperiod.Whenshare-basedcompensationvestsintranches(gradedvesting),werecognizetheexpenseusingtheacceleratedexpenseattributionmethod.Anestimateofforfeituresduringthevestingperiodismadeatthedateofgrantofsuchshare-basedcompensation;thisestimateisadjustedtoreflectactualexperience. Restricted share units Inrespectofrestrictedshareunitswithneitheranequitysettlementfeaturenormarketperformanceconditions,assetoutinNote 14(b),weaccruealiabilityequaltotheproductofthenumberofvestingrestrictedshareunitsmultipliedbythefairmarketvalueofthecorrespondingCommonSharesattheendofthereportingperiod(unlesshedgeaccountingisapplied,assetoutin(d)preceding).Similarly,weaccruealiabilityforthenotionalsubsetofourrestrictedshareunitswithoutanequitysettlementfeatureandwithmarketperformanceconditionsusingaMonteCarlosimulation-determinedfairvalue.Restrictedshareunitsthathaveanequitysettlementfeatureareaccountedforasequityinstruments.Theexpenseforrestrictedshareunitsthatdonotultimatelyvestisreversedagainst theexpensethatwaspreviouslyrecordedintheirrespect. (k) Cash and temporary investments, net Cashandtemporaryinvestments,whichmayincludeinvestmentsinmoneymarketinstrumentsthatarepurchasedthreemonthsorlessfrommaturity,arepresentednetofoutstandingitems,includingchequeswrittenbutnotclearedbytherelatedbanksasatthestatementoffinancialpositiondate.Cashandtemporaryinvestments,net,areclassifiedasaliabilityinthestatementoffinancialpositionwhenthetotalamountofallchequeswrittenbutnotclearedbytherelatedbanksexceedstheamountofcashandtemporaryinvestments.Whencashandtemporaryinvestments,net,areclassifiedasaliability,theymayalsoincludeoverdraftamountsdrawnonourbilateralbankfacilities,whichrevolvedailyandarediscussedfurtherinNote 22. Share option awards Afairvalueforshareoptionawardsisdeterminedatthedateofgrantandthatfairvalueisrecognizedinthefinancialstatements.Proceedsarisingfromtheexerciseofshareoptionawardsarecreditedtosharecapital,asaretherecognizedgrant-datefairvaluesoftheexercisedshareoptionawards. Shareoptionawardsthathaveanet-equitysettlementfeature,assetoutinNote 14(d),areaccountedforasequityinstruments.Wehaveselectedtheequityinstrumentfairvaluemethodofaccountingforthenet-equitysettlementfeatureasitisconsistentwiththeaccounting treatmentappliedtotheassociatedshareoptionawards. (l) Inventories Ourinventoriesprimarilyconsistofwirelesshandsets,partsandaccessoriestotalling$375millionatyear-end(2018–$320million)andcommunicationsequipmentheldforresale.CostsofgoodssoldfortheyearendedDecember31,2019,totalled$2.1billion(2018–$2.1billion). Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. TELUS2019 ANNUAL REPORT • 135 (j) Employee future benefit plans Defined benefit plans Weaccrueamountsforourobligationsunderemployeedefinedbenefitplansandtherelatedcosts,netofplanassets.Thecostofpensionsandotherretirementbenefitsearnedbyemployeesisactuariallydeter-minedusingtheaccruedbenefitmethodpro-ratedonserviceandmanagement’sbestestimatesofsalaryescalationandtheretirementagesofemployees.Inthedeterminationofnetincome,netinterestforeachplan,whichistheproductoftheplan’ssurplus(deficit)multipliedbythediscountrate,isincludedasacomponentofFinancingcosts,assetoutinNote 9. Anamountreflectingtheeffectofdifferencesbetweenthediscountrateandtheactualrateofreturnonplanassetsisincludedasacom-ponentofemployeedefinedbenefitplanre-measurementswithinOthercomprehensiveincome,assetoutinNote 11andNote 15.Wedeterminethemaximumeconomicbenefitavailablefromtheplans’assetsonthebasisofreductionsinfuturecontributionstotheplans. Onanannualbasis,ataminimum,thedefinedbenefitplankeyassumptionsareassessedandrevisedasappropriate;asreferredtoin(b),thesearesignificantestimatesforus. (m) Property, plant and equipment; intangible assets General Property,plantandequipmentandintangibleassetsarerecordedathistoricalcost,whichforself-constructedproperty,plantandequipmentincludesmaterials,directlabourandapplicableoverheadcosts.Forinternallydeveloped,internal-usesoftware,thehistoricalcostrecordedincludesmaterials,directlabouranddirectlabour-relatedcosts.Whereproperty,plantandequipmentconstructionprojectsareofsufficientsizeandduration,anamountiscapitalizedforthecostoffundsusedtofinanceconstruction,assetoutin Note 9.Therateforcalculatingthecapitalizedfinancingcostisbasedontheweightedaveragecostofborrowingweexperienceduringthereportingperiod. Whenwesellproperty,plantand/orequipment,thenetbookvalueisnettedagainstthesaleproceedsandthedifference,assetoutinNote 7,isincludedintheConsolidatedstatementsofincomeandothercomprehensiveincomeasOtheroperatingincome. Asset retirement obligations Provisionsforliabilities,assetoutinNote 25,arerecognizedforstatutory,contractualorlegalobligations,normallywhenincurred,associatedwiththeretirementofproperty,plantandequipment(primarilycertainitemsofoutsideplantandwirelesssiteequipment)whenthoseobligationsresultfromtheacquisition,construction,developmentand/ornormaloperationoftheassets;asreferredtoin(b),thisisasignificantestimateforus. Defined contribution plans WeusedefinedcontributionaccountingfortheTelecommunicationWorkersPensionPlanandtheBritishColumbiaPublicServicePensionPlan,whichcovercertainofouremployeesandprovidedefinedbenefitstotheirmembers.Intheabsenceofanyregulationsgoverningthecalculationoftheshareoftheunderlyingfinancialpositionandplanper-formanceattributabletoeachemployer-participant,andintheabsenceofcontractualagreementsbetweentheplansandtheemployer-participantsrelatedtothefinancingofanyshortfall(ordistributionofanysurplus),weaccountfortheseplansasdefinedcontributionplansinaccordancewithInternationalAccountingStandard19,Employee Benefits.

methodofaccounting,wherebytheinvestmentsareinitiallyrecordedatcostandsubsequentlyadjustedtorecognizeourshareofearningsorlossesoftheinvesteecompaniesandanyearningsdistributionsreceived.Theexcessofthecostofanequityinvestmentoveritsunderlyingbookvalueatthedateofacquisition,exceptforgoodwill,isamortizedovertheestimatedusefullivesoftheunderlyingassetstowhichtheexcesscostisattributed. Similarly,weaccountforourinterestsintherealestatejointventures,asdiscussedfurtherinNote 21,usingtheequitymethodofaccounting.Unrealizedgainsandlossesfromtransactionswith(includingcontribu-tionsto)therealestatejointventuresaredeferredinproportiontoourremaininginterestintherealestatejointventures. Weaccountforourotherlong-terminvestmentsattheirfairvaluesunlesstheyareinvestmentsecuritiesthatdonothavequotedmarketpricesinanactivemarketordonothaveotherclearandobjectiveevidenceoffairvalue.Whenwedonotaccountforourotherlong-terminvestmentsattheirfairvalues,weusethecostbasisofaccounting,wherebytheinvestmentsareinitiallyrecordedatcost,andearningsfromthoseinvestmentsarerecognizedonlytotheextentreceivedorreceivable.Whenthereisasignificantorprolongeddeclineinthevalueofanotherlong-terminvestment,thecarryingvalueofthatotherlong-terminvestmentisadjustedtoitsestimated fairvalue. (n) Leases SeeNote 2forsignificantchangestoIFRS-IASBthathavebeenappliedeffectiveJanuary1,2019.Priortofiscal2019,leaseswereclassifiedaseitherfinanceoroperating,dependinguponthetermsandconditionsofthecontracts.Wherewewerethelessee,assetvaluesrecordedunderfinanceleaseswereamortizedonastraight-linebasisovertheperiodofexpecteduse.Obligationsrecordedunderfinanceleaseswerereducedbyleasepaymentsnetofimputedinterest. (o) Investments Weaccountforourinvestmentsincompaniesoverwhichwehave significantinfluence,asdiscussedfurtherinNote 21,usingtheequity (a) Initial application of standards, interpretations and amendments to standards and interpretations in the reporting period InJanuary2016,theInternationalAccountingStandardsBoardreleasedIFRS16,Leases,whichisrequiredtobeappliedforyearsbeginningonorafterJanuary1,2019,andwhichsupersedesIAS17,Leases.TheInternationalAccountingStandardsBoardandtheFinancialAccountingStandardsBoardoftheUnitedStatesworkedtogethertomodifytheaccountingforleases,generallybyeliminatinglessees’classificationofleasesaseitheroperatingleasesorfinanceleasesand,forIFRS-IASB,introducingasinglelesseeaccountingmodel. Themostsignificanteffectofthenewstandardisthelessee’srecognitionoftheinitialpresentvalueofunavoidablefutureleasepaymentsasright-of-useleaseassetsandleaseliabilitiesonthestatementoffinancialposition,includingthoseformostleasesthatwouldpreviouslyhavebeenaccountedforasoperatingleases.Bothleaseswithdurationsof12monthsorlessandleasesforlow-valueassetsmaybeexempted. Themeasurementofthetotalleaseexpenseoverthetermofaleaseisunaffectedbythenewstandard.However,thenewstandardresultsinanaccelerationofthetimingofleaseexpenserecognitionforleasesthatwouldpreviouslyhavebeenaccountedforasoperatingleases;theInternationalAccountingStandardsBoardexpectsthatthiseffectmaybemutedbyalesseehavingaportfolioofleaseswithvaryingmaturitiesandlengthsofterm,andweexpectthatwewillbesimilarlyaffected.Thepresentationonthestatementofincomeand othercomprehensiveincomerequiredbythenewstandardresultsinthe presentationofmostnon-executoryleaseexpensesasdepreciationofright-of-useleaseassetsandfinancingcostsarisingfromleaseliabilities,ratherthanasapartofgoodsandservicespurchased(executoryleaseexpensesremainapartofgoodsandservicespurchased);reportedoperatingincomeisthushigherunderthenewstandard. Relativetotheresultsofapplyingthepreviousstandard,althoughactualcashflowsareunaffected(butcertainoperatingmetricsare),thelessee’sstatementofcashflowsreflectsincreasesincashflowsfromoperatingactivitiesoffsetequallybydecreasesincashflowsfromfinan-cingactivities.Thisistheresultofthepresentationofthepaymentsofthe“principal”componentofleases,whichwerepreviouslyaccountedforasoperatingleases,asacashflowusewithinfinancingactivitiesunderthenewstandard. Wehaveappliedthestandardretrospectively,withthecumulativeeffectoftheinitialapplicationofthenewstandardrecognizedatthedateofinitialapplication,January1,2019,subjecttopermittedandelectedpracticalexpedients;suchmethodofapplicationdoesnotresultintheretrospectiveadjustmentofamountsreportedforperiodspriortofiscal 2019.ThenatureofthetransitionmethodselectedissuchthattheleasepopulationasatJanuary1,2019,andthediscountratesdeterminedcontemporaneously,serveasthebasisforthecumulativeeffectsrecorded asofthatdate. Implementation Asatransitionalpracticalexpedientpermittedbythenewstandard,wehavenotreassessedwhethercontractsare,orcontained,leases asatJanuary1,2019,applyingthecriteriaofthenewstandard;asat Denotesaccountingpolicyrequiring,forus,amoresignificantchoiceamongaccountingpoliciesand/oramoresignificantapplicationofjudgment. 136 • TELUS2019 ANNUAL REPORT 2 ACCOUNTING POLICY DEVELOPMENTS Theobligationsaremeasuredinitiallyatfairvalue,whichisdeterminedusingpresentvaluemethodology,andtheresultingcostsarecapitalizedasapartofthecarryingvalueoftherelatedasset.Insubsequentper-iods,theprovisionsfortheseliabilitiesareadjustedfortheaccretionofdiscount,foranychangesinthemarket-baseddiscountrateandforanychangesintheamountortimingoftheunderlyingfuturecashflows.Thecapitalizedassetretirementcostisdepreciatedonthesamebasisastherelatedassetandthediscountaccretion,assetoutinNote 9,isincludedintheConsolidatedstatementsofincomeandothercom-prehensiveincomeasacomponentofFinancingcosts.

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 2 (b) Standards, interpretations and amendments to standards not yet effective and not yet applied InOctober2018,theInternationalAccountingStandardsBoardamendedIFRS3,Business Combinations,seekingtoclarifywhetheranacquisitiontransactionresultsintheacquisitionofanassetortheacquisitionofabusiness.TheamendmentsareeffectiveforacquisitiontransactionsonorafterJanuary1,2020,althoughearlierapplicationispermitted.Theamendedstandardhasanarrowerdefinitionofabusiness,whichcouldresultintherecognitionoffewerbusinesscombinationsthanunderthecurrentstandard;theimplicationofthisisthatamountswhichmayhavebeenrecognizedasgoodwillinabusinesscombinationunderthecurrentstandardmaynowberecognizedasallocationstonetidentifiableassetsacquiredundertheamendedstandard(withanassociatedeffectinanentity’sresultsofoperationsthatwoulddifferfromtheeffectofgoodwillhavingbeenrecognized).Wearecurrentlyassessingtheimpactsandtransitionprovisionsoftheamendedstandard;however,weexpectthatwewillapplythestandardprospectivelyfromJanuary1,2020.Theeffects,ifany,oftheamendedstandardonourfinancialperformanceanddisclosurewillbedependentonthefactsandcircumstancesofanyfutureacquisitiontransactions. January1,2019,onlycontractsthatwerepreviouslyidentifiedas leasesapplyingIAS17,Leases,andIFRIC4,Determining whether an Arrangement contains a Lease,areapartofthetransitiontothenew standard.Onlycontractsenteredinto(orchanged)afterDecember31, 2018,havebeenassessedforbeing,orcontaining,leasesapplying thecriteriaofthenewstandard. Theweightedaveragediscountratereflectedintheleaseliabilityrecognizedontransitionwas4.16%.ThedifferencebetweenthetotaloftheminimumleasepaymentssetoutinNote 19ofourconsolidatedfinancialstatementsfortheyearendedDecember31,2018,andtheadditionstolong-termdebtsetoutin(c)followingarisesbecauseoftheeffectofdiscountingtheminimumleasepayments(approximatelytwo-thirdsofthedifference)andbecausetheminimumleasepaymentssetoutinNote 19ofourconsolidatedfinancialstatementsfortheyearendedDecember31,2018,includepaymentsforleasesthathavecommencementdatessubsequenttoDecember31,2018(approximatelyone-thirdofthedifference). Thenewstandardrequiresanumberofincrementalrecurringdis-closures,aswellassettingouthowthosedisclosuresaretobemade;wehavemadethesedisclosures,orincorporatedthembycross-reference fromothernotestothefinancialstatements,inNote 19. (c) Impacts of application of new standard in fiscal 2019 IFRS16,Leases,affectedourConsolidatedstatementofincomeandothercomprehensiveincomeasfollows: Excludingeffects ofIFRS16 Ascurrently reported YearendedDecember31,2019(millionsexceptpershareamounts) Note IFRS16effects Operating revenues $14,656 $ 2 $14,658 Operating expenses Goodsandservicespurchased EmployeebenefitsexpenseDepreciation Amortizationofintangibleassets 6,369 3,034 1,742 648 (299) – 187 – 6,070 3,034 1,929 648 11,793 (112) 11,681 Operating income Financingcosts 2,863 669 114 64 2,977 733 Income before income taxes Incometaxes 2,194 455 50 13 2,244 468 Net income 1,739 37 1,776 Other comprehensive income Cumulativeforeigncurrencytranslationadjustment Other 15 (242) 5 – 20 (242) (227) 5 (222) Comprehensive income $ 1,512 $ 42 $ 1,554 Net income attributable to: CommonShares Non-controllinginterests $ 1,708 31 $ 38 (1) $ 1,746 30 $ 1,739 $ 37 $ 1,776 Comprehensive income attributable to: CommonShares Non-controllinginterests $ 1,475 37 $ 41 1 $ 1,516 38 $ 1,512 $ 42 $ 1,554 Net income per Common Share Basic Diluted 28(b) $ 2.84 $ 2.84 $0.06 $0.06 $ 2.90 $ 2.90 TELUS2019 ANNUAL REPORT • 137

IFRS16,Leases,affectedouropeningJanuary1,2019,Consolidatedstatementoffinancialpositionasfollows: Excludingeffects ofIFRS16 Ascurrently reported AsatJanuary1,2019(millions) Note IFRS16effects Currentassets Prepaidexpenses Non-currentassets Property,plantandequipment,net Currentliabilities Accountspayableandaccruedliabilities Provisions Currentmaturitiesoflong-termdebt Non-currentliabilities Provisions Long-termdebt Otherlong-termliabilities Deferredincometaxes Owners’equity Retainedearnings Accumulatedothercomprehensiveincome– cumulativeforeigncurrencytranslationadjustment Non-controllinginterests $ 539 $ 12 $ 551 17 $12,091 $1,041 $13,132 $ 2,570 $ 129 $ 836 $ (6) $ (9) $ 180 $ 2,564 $ 120 $ 1,016 25 $ 728 $13,265 $ 731 $ 3,148 $ (48) $1,201 $ (50) $ (53) $ 680 $14,466 $ 681 $ 3,095 $ 4,474 $ (153) $ 4,321 11 $ 12 $ 82 $ (1) $ (8) $ 11 $ 74 IFRS16,Leases,affectedourConsolidatedstatementofcashflowsasfollows: Excludingeffects ofIFRS16 Ascurrently reported YearendedDecember31,2019(millions) IFRS16effects Operating activities NetincomeAdjustmentstoreconcilenetincometocashprovidedbyoperatingactivities: Depreciationandamortization DeferredincometaxesAllotheroperatingactivitieslineitems $ 1,739 $ 37 $ 1,776 2,390 102 (540) 187 13 (1) 2,577 115 (541) Cashprovidedbyoperatingactivities 3,691 236 3,927 Investing activities Cashusedbyinvestingactivities (5,044) – (5,044) Financing activities Redemptionsandrepaymentoflong-termdebt Allotherfinancingactivitieslineitems (5,025) 6,499 (236) – (5,261) 6,499 Cashprovided(used)byfinancingactivities 1,474 (236) 1,238 Cash position Increase(decrease)incashandtemporaryinvestments,net $ 121 $ – $ 121 Supplemental disclosure of operating cash flows Interestpaid $ (645) $ (69) $ (714) 138 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 3 IFRS16,Leases,affectedcertainofourcapitalmanagementmeasures(seeNote 3)asfollows: Excludingeffects ofIFRS16 Ascurrently reported(Note 3) Asat,orforthe12-monthperiodendedDecember31,2019($inbillions) IFRS16effects Componentsofdebtandcoverageratios Netdebt EBITDA*–excludingrestructuringandothercostsNetinterestcost Debtratio NetdebttoEBITDA–excludingrestructuringandothercosts Coverageratios Earningscoverage EBITDA–excludingrestructuringandothercostsinterestcoverage $16.6 $ 5.4 $ 0.7 $ 1.6 $ 0.3 $ 0.1 $18.2 $ 5.7 $ 0.8 3.06 0.14 3.20 4.3 7.8 (0.3) (0.3) 4.0 7.5 General Ourobjectivewhenmanagingcapitalistomaintainaflexiblecapitalstruc-turethatoptimizesthecostandavailabilityofcapitalatacceptablerisk. Inthemanagementofcapitalandinitsdefinition,weincludecommonequity(excludingaccumulatedothercomprehensiveincome),long-termdebt(includinglong-termcreditfacilities,commercialpaperbackstoppedbylong-termcreditfacilitiesandanyhedgingassetsorliabilitiesassociatedwithlong-termdebtitems,netofamountsrecog-nizedinaccumulatedothercomprehensiveincome),cashandtemporaryinvestments,andshort-termborrowingsarisingfromsecuritizedtradereceivables. Wemanageourcapitalstructureandmakeadjustmentstoitinlightofchangesineconomicconditionsandtheriskcharacteristicsofourbusiness.Inordertomaintainoradjustourcapitalstructure,wemayadjusttheamountofdividendspaidtoholdersofCommonShares,purchaseCommonSharesforcancellationpursuanttonormalcourseissuerbids,issuenewshares,issuenewdebt,issuenewdebttoreplaceexistingdebtwithdifferentcharacteristicsand/orincreaseordecreasetheamountoftradereceivablessoldtoan arm’s-lengthsecuritizationtrust. During2019,ourfinancialobjectives,whicharereviewedannually,wereunchangedfrom2018.Webelievethatourfinancialobjectivesaresupportiveofourlong-termstrategy. Wemonitorcapitalutilizinganumberofmeasures,including:netdebttoearningsbeforeinterest,incometaxes,depreciationandamortization(EBITDA*)–excludingrestructuringandothercostsratio;coverageratios; anddividendpayoutratios. Debt and coverage ratios NetdebttoEBITDA–excludingrestructuringandothercostsiscalculatedasnetdebtattheendoftheperiod,dividedby12-monthtrailingEBITDA–excludingrestructuringandothercosts.Thismeasure,historically,issubstantiallysimilartotheleverageratiocovenantinourcreditfacilities.NetdebtandEBITDA–excludingrestructuringandothercostsaremeasuresthatdonothaveanystandardizedmeaningsprescribedbyIFRS-IASBandarethereforeunlikelytobecomparabletosimilarmeasurespresentedbyothercompanies.Thecalculationofthesemeasuresissetoutinthefollowingtable.Netdebtisonecomponentofaratiousedtodeterminecompliancewithdebtcovenants. *EBITDAdoesnothaveanystandardizedmeaningprescribedbyIFRS-IASBandisthereforeunlikelytobecomparabletosimilarmeasurespresentedbyotherissuers;wedefineEBITDAasoperatingrevenueslessgoodsandservicespurchasedandemployeebenefitsexpense.Wehaveissuedguidanceon,andreport,EBITDAbecauseitisakeymeasurethatmanagementusestoevaluatetheperformanceofourbusiness,anditisalsoutilizedinmeasuringcompliancewithcertaindebtcovenants. TELUS2019 ANNUAL REPORT • 139 3 CAPITAL STRUCTURE FINANCIAL POLICIES

Asat,orforthe12-monthperiodsended,December31($inmillions) Objective 2019 2018 Componentsofdebtandcoverageratios Netdebt1 EBITDA–excludingrestructuringandothercosts2 Netinterestcost3 Debtratio NetdebttoEBITDA–excludingrestructuringandothercosts Coverageratios Earningscoverage5 EBITDA–excludingrestructuringandothercostsinterestcoverage6 $ 18,199 $13,770 $ 5,421 $ 644 $ $ 5,688 755 2.20–2.704 2.54 3.20 4.0 7.5 4.4 8.4 1 Netdebtiscalculatedasfollows: AsatDecember31 3 Netinterestcostisdefinedasfinancingcosts,excludingemployeedefinedbenefitplansnetinterest,recoveriesonlong-termdebtprepaymentpremiumandrepaymentofdebt,calculatedona12-monthtrailingbasis(expensesrecordedforlong-termdebtprepaymentpremium,ifany,areincludedinnetinterestcost). Ourlong-termobjectiverangeforthisratiois2.20–2.70times,reflectinga0.20shiftintherangesubsequenttoDecember31,2019,toreflectanaccommodationfortheeffectsofimplementingIFRS16(seeNote 2).TheratioasatDecember31,2019,isoutsidethelong-termobjectiverange.Wemaypermit,andhavepermitted,thisratiotogooutsidetheobjectiverange(forlong-terminvestmentopportunities),butwewillendeavourtoreturnthisratiotowithintheobjectiverangeinthemediumterm(followingupcomingspectrumauctions),aswebelievethatthisrangeissupportiveofourlong-termstrategy.Weareincompliancewiththeleverageratiocovenantinourcreditfacilities,whichstatesthatwemaynotpermitournetdebttooperatingcashflowratiotoexceed4.00:1.00(seeNote 26(d));thecalculationofthedebtratioissubstantiallysimilartothecalculationoftheleverageratiocovenantinourcreditfacilities. Earningscoverageisdefinedasnetincomebeforeborrowingcostsandincometaxexpense,dividedbyborrowingcosts(interestonlong-termdebt;intereston short-termborrowingsandother;long-termdebtprepaymentpremium),andaddingbackcapitalizedinterest. EBITDA–excludingrestructuringandothercostsinterestcoverageisdefinedasEBITDA–excludingrestructuringandothercosts,dividedbynetinterestcost.Thismeasureissubstantiallysimilartothecoverageratiocovenantinourcreditfacilities. Note 2019 2018 Long-termdebtDebtissuancecostsnettedagainst long-termdebt Derivative(assets)liabilities,net AccumulatedothercomprehensiveincomeamountsarisingfromfinancialinstrumentsusedtomanageinterestrateandcurrencyrisksassociatedwithU.S.dollar-denominatedlong-termdebt–excludingtaxeffects Cashandtemporaryinvestments,net Short-termborrowings 26 $ 18,474 $14,101 4 87 (37) 93 (73) 110 (535) 100 (37) (414) 100 22 Netdebt $ 18,199 $13,770 5 2 EBITDA–excludingrestructuringandothercostsiscalculatedasfollows: YearsendedDecember31 Note 2019 2018 6 EBITDA Restructuringandothercosts 5 16 $ 5,554 134 $ 5,104 317 EBITDA–excludingrestructuring andothercosts $ 5,688 $ 5,421 NetdebttoEBITDA–excludingrestructuringandothercostswas 3.20timesasatDecember31,2019,upfrom2.54timesoneyearearlier.Theeffectoftheincreaseinnetdebt,attributedinparttotherecognitionofleaseliabilitiesupontheapplicationofIFRS16effectiveJanuary1,2019(seeNote 2(a)),wasexceededbytheeffectofgrowthinEBITDA–excludingrestructuringandothercosts;theimplemen-tationofIFRS16hadtheeffectofincreasingtheratiobyapproximately 0.14asatDecember31,2019.Theearningscoverageratioforthe twelve-monthperiodendedDecember31,2019,was4.0times,down from4.4timesoneyearearlier.Higherborrowingcosts,includingthe recognitionofinterestonleaseliabilitiesupontheapplicationofIFRS16,reducedtheratioby0.6,andanincreaseinincomebeforeborrowingcostsandincometaxesincreasedtheratioby0.2.TheEBITDA–excludingrestructuringandothercostsinterestcoverageratioforthetwelve-monthperiodendedDecember31,2019,was7.5times,downfrom8.4timesoneyearearlier.GrowthinEBITDA–excludingrestruc-turingandothercostsincreasedtheratioby0.4,whileanincreaseinnetinterestcosts,includingtherecognitionofinterestonleaseliabilities upontheapplicationofIFRS16,reducedtheratioby1.3. 140 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 4 Dividend payout ratio ThedividendpayoutratiopresentedisahistoricalmeasurecalculatedasthesumofthelastfourquarterlydividendsdeclaredperCommonShare,asrecordedinthefinancialstatements,dividedbythesumofbasicearningspershareforthemostrecentfourquartersforinterimreportingperiods(dividedbyannualbasicearningspershareifthereportedamountisinrespectofafiscalyear).Thedividendpayoutratioofadjustednetearningspresented,alsoahistoricalmeasure,differsinthatitexcludesthegainonexchangeofwirelessspectrumlicences,netgainsandequityincomefromrealestatejointventures,provisionsrelatedtobusinesscombinations,long-termdebtprepaymentpremiumandincometax-relatedadjustments. Forthe12-monthperiodsendedDecember31($inmillions) Objective 2019 2018 Dividendpayoutratio Dividendpayoutratio ofadjustednetearnings 65%–75%1 78% 78% 84% 81% 1 Ourobjectiverangeforthedividendpayoutratiowas65%–75%ofsustainableearningsonaprospectivebasisin2019.Soastobeconsistentwiththewaywemanageourbusiness,wehaverevisedourtargetguideline,effectiveJanuary1,2020,tobecalculatedas60%to75%offreecashflowonaprospectivebasis(freecashflowdoesnothaveanystandardizedmeaningprescribedbyIFRS-IASBandisthereforeunlikelytobecomparabletosimilarmeasurespresentedbyotherissuers).Adjustednetearnings(adjustednetearningsdoesnothaveanystandardizedmeaningprescribedbyIFRS-IASBandisthereforeunlikelytobecomparabletosimilarmeasurespresentedbyotherissuers)attributabletoCommonSharesiscalculatedasfollows: Forthe12-monthperiodsendedDecember31 2019 2018 NetincomeattributabletoCommonShares Gainandnetequityincomerelatedtorealestate redevelopmentproject,afterincometaxes Businesscombination-relatedprovisions,afterincometaxes Incometax-relatedadjustments Long-termdebtprepaymentpremium,afterincometaxes InitialandcommitteddonationtoTELUSFriendlyFutureFoundation,afterincometaxes $ 1,746 $1,600 5 (13) (142) 20 (150) (17) (7) 25 – 90 AdjustednetearningsattributabletoCommonShares $ 1,616 $1,541 (a) Risks – overview Ourfinancialinstruments,theiraccountingclassificationandthenatureofcertainriskstowhichtheymaybesubjectaresetoutinthefollowingtable. Risks Marketrisks Accounting classification Financialinstrument Credit Liquidity Currency Interestrate Otherprice Measured at amortized cost Accountsreceivable Contractassets Constructioncreditfacilitiesadvancestorealestatejointventure Short-termborrowings Accountspayable Provisions(includingrestructuringaccountspayable) Long-termdebt AC1 AC1 AC1 AC1 AC1 AC1 AC1 X X X X X X X X X X X X X X X Measured at fair value Cashandtemporaryinvestments Long-terminvestments(notsubjecttosignificantinfluence)3 Foreignexchangederivatives4 Share-basedcompensationderivatives4 FVTPL2 FVTPL/FVOCI3 FVTPL2 FVTPL2 X X X X X X X X X X X 1 2 Foraccountingrecognitionandmeasurementpurposes,classifiedasamortizedcost(AC). Foraccountingrecognitionandmeasurementpurposes,classifiedasfairvaluethroughnetincome(FVTPL).Unrealizedchangesinthefairvaluesoffinancialinstrumentsareincludedinnetincomeunlesstheinstrumentispartofacashflowhedgingrelationship.Theeffectiveportionsofunrealizedchangesinthefairvaluesoffinancialinstrumentsheldforhedgingareincludedinothercomprehensiveincome. Long-terminvestmentsoverwhichwedonothavesignificantinfluencearemeasuredatfairvalueifthosefairvaluescanbereliablymeasured.Foraccountingrecognitionandmeasurementpurposes,onaninvestment-by-investmentbasis,long-terminvestmentsareclassifiedaseitherfairvaluethroughnetincomeorfairvaluethroughothercomprehensiveincome(FVOCI). Useofderivativefinancialinstrumentsissubjecttoapolicywhichrequiresthatnoderivativetransactionistobeenteredintoforthepurposeofestablishingaspeculativeorleveragedposition(thecorollarybeingthatallderivativetransactionsaretobeenteredintoforriskmanagementpurposesonly)andsetscriteriaforthecreditworthinessofthetransactioncounterparties. Derivativesthatarepartofanestablishedanddocumentedcashflowhedgingrelationshipareaccountedforasheldforhedging.Webelievethatclassificationasheldforhedging resultsinabettermatchingofthechangeinthefairvalueofthederivativefinancialinstrumentwiththeriskexposurebeinghedged. Inrespectofhedgesofanticipatedtransactions,hedgegains/lossesareincludedwiththerelatedexpenditureandareexpensedwhenthetransactionisrecognizedinourresults ofoperations.Wehaveselectedthismethodaswebelievethatitresultsinabettermatchingofthehedgegains/losseswiththeriskexposurebeinghedged. Derivativesthatarenotpartofadocumentedcashflowhedgingrelationshipareaccountedforasheldfortradingandthusaremeasuredatfairvaluethroughnetincome. 3 4 TELUS2019 ANNUAL REPORT • 141 4 FINANCIAL INSTRUMENTS

Derivative financial instruments WeapplyhedgeaccountingtofinancialinstrumentsusedtoestablishhedgeaccountingrelationshipsforU.S.dollar-denominatedtransactionsandtofixthecostofsomeshare-basedcompensation.Webelievethatouruseofderivativefinancialinstrumentsforhedgingorarbitrageassistsusinmanagingourfinancingcostsand/orreducingtheuncertaintyassociatedwithourfinancingorotherbusinessactivities.Uncertaintyassociatedwithcurrencyriskandotherpriceriskisreducedthroughouruseofforeignexchangederivativesandshare-basedcompensationderivativesthateffectivelyswapfloatingcurrencyexchangeratesandsharepricesforfixedratesandprices.Whenenteringintoderivativefinancialinstrumentcontracts,weseektoalignthecashflowtimingofthehedgingitemswiththatofthehedgeditems.Theeffectsofthisrisk managementstrategyanditsapplicationaresetoutin(i)following. (excludingincometaxeffects)tocreditrisk,whichisaworst-case scenarioanddoesnotreflectresultsweexpect,issetoutinthe followingtable: AsatDecember31(millions) 2019 2018 Cashandtemporaryinvestments,net Accountsreceivable Contractassets Derivativeassets $ 535 2,187 1,065 84 $ 414 1,647 1,318 103 $ 3,871 $3,482 Cash and temporary investments, net Creditriskassociatedwithcashandtemporaryinvestmentsismanagedbyensuringthatthesefinancialassetsareplacedwith:governments;majorfinancialinstitutionsthathavebeenaccordedstronginvestmentgraderatingsbyaprimaryratingagency;and/orothercreditworthycounterparties.Anongoingreviewevaluateschangesinthestatus ofcounterparties. (b) Credit risk Excludingcreditrisk,ifany,arisingfromcurrencyswapssettledon agrossbasis,thebestrepresentationofourmaximumexposure Accounts receivable Creditriskassociatedwithaccountsreceivableisinherentlymanagedbythesizeanddiversityofourlargecustomerbase,whichincludessubstantiallyallconsumerandbusinesssectorsinCanada.Wefollowaprogramofcreditevaluationsofcustomersandlimittheamountofcreditextendedwhendeemednecessary.Accountsareconsideredtobepastdue(indefault)whencustomershavefailedtomakethecontractuallyrequiredpaymentswhendue,whichisgenerallywithin30daysofthebillingdate.Anylatepaymentchargesareleviedatanindustry-basedmarketornegotiatedrate onoutstandingnon-currentcustomeraccountbalances. AsatDecember31(millions) 2019 2018 Note Gross Allowance Net1 Gross Allowance Net1 Customer accounts receivable, net of allowance for doubtful accounts Lessthan30dayspastbillingdate 30–60dayspastbillingdate 61–90dayspastbillingdate Morethan90dayspastbillingdate Unbilledcustomerfinancereceivables $ 803 331 74 73 523 $ (10) (8) (5) (14) (18) $ 793 323 69 59 505 $ 762 354 80 67 47 $(13) (10) (8) (22) – $ 749 344 72 45 47 $ 1,804 $ (55) $ 1,749 $1,310 $(53) $1,257 Current Non-current $ 1,570 234 $ (46) (9) $ 1,524 225 $1,263 47 $(53) – $1,210 47 20 $ 1,804 $ (55) $ 1,749 $1,310 $(53) $1,257 1 NetamountsrepresentcustomeraccountsreceivableforwhichanallowancehadnotbeenmadeasatthedatesoftheConsolidatedstatementsoffinancialposition(seeNote 6(b)). Wemaintainallowancesforlifetimeexpectedcreditlossesrelatedtodoubtfulaccounts.Currenteconomicconditions(includingforward-lookingmacroeconomicdata),historicalinformation(includingcreditagencyreports,ifavailable),reasonsfortheaccountsbeingpastdueandthelineofbusinessfromwhichthecustomeraccountsreceivablearoseareallconsideredwhendeterminingwhethertomakeallowancesforpast-dueaccounts.Thesamefactorsareconsideredwhendeterminingwhethertowriteoffamountschargedtotheallowancefordoubtfulaccountsagainstthecustomeraccountsreceivable;amountschargedtothecustomeraccountsreceivableallowancefordoubtfulaccountsthatwerewrittenoffbutwerestillsubjecttoenforcementactivityasatDecember31,2019,totalled$449million(2018–$353million). Thedoubtfulaccountsexpenseiscalculatedonaspecific-identification basisforcustomeraccountsreceivableaboveaspecificbalancethresholdandonastatisticallyderivedallowancebasisfortheremainder.Nocustomeraccountsreceivablearewrittenoffdirectlytothedoubtfulaccountsexpense. Thefollowingtablepresentsasummaryoftheactivityrelatedtoour allowancefordoubtfulaccounts. YearsendedDecember31(millions) 2019 2018 Balance,beginningofperiod Additions(doubtfulaccountsexpense) Accountswrittenoff,netofrecoveries Other $ 53 64 (66) 4 $43 56 (55) 9 Balance,endofperiod $ 55 $53 142 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 4 Contract assets Creditriskassociatedwithcontractassetsisinherentlymanagedbythesizeanddiversityofourlargecustomerbase,whichincludessubstantiallyallconsumerandbusinesssectorsinCanada.Wefollowaprogramofcreditevaluationsofcustomersandlimittheamountofcreditextendedwhen deemednecessary. AsatDecember31(millions) 2019 2018 Net (Note 6(c)) Net (Note 6(c)) Gross Allowance Gross Allowance Contract assets, net of impairment allowance Tobebilledandthusreclassified toaccountsreceivableduring: The12-monthperiodendingoneyearhence The12-monthperiodendingtwoyearshence Thereafter $ 952 322 21 $ (42) (14) (1) $ 910 308 20 $1,068 466 15 $(51) (22) (1) $1,017 444 14 $ 1,295 $ (57) $ 1,238 $1,549 $(74) $1,475 (c) Liquidity risk Asacomponentofourcapitalstructurefinancialpolicies,discussed furtherinNote 3,wemanageliquidityriskby: Wemaintainallowancesforlifetimeexpectedcreditlossesrelatedtocontractassets.Currenteconomicconditions,historicalinformation(includingcreditagencyreports,ifavailable),andthelineofbusinessfromwhichthecontractassetaroseareallconsideredwhendeterminingimpairmentallowances.Thesamefactorsareconsideredwhendeterminingwhethertowriteoffamountschargedtotheimpairment allowanceforcontractassetsagainstcontractassets. • maintainingadailycashpoolingprocessthatenablesustomanageouravailableliquidityandourliquidityrequirementsaccordingtoouractualneeds;maintaininganagreementtoselltradereceivablestoan arm’s-lengthsecuritizationtrustandbilateralbankfacilities(Note 22),acommercialpaperprogram(Note 26(c))andsyndicatedcreditfacilities(Note 26(d),(f)); maintaininganin-effectshelfprospectus; continuouslymonitoringforecastandactualcashflows;and managingmaturityprofilesoffinancialassetsandfinancialliabilities. • Derivative assets (and derivative liabilities) Counterpartiestoourshare-basedcompensationcash-settledequityforwardagreementsandforeignexchangederivativesaremajorfinancialinstitutionsthathavebeenaccordedinvestmentgraderatingsbyaprimarycreditratingagency.Thetotaldollaramountofcreditexposureundercontractswithanyonefinancialinstitutionislimitedandcounter-parties’creditratingsaremonitored.Wedonotgiveorreceivecollateralonswapagreementsandhedgingitemsduetoourcreditratingandthoseofourcounterparties.Whileweareexposedtotheriskofpotentialcreditlossesduetothepossiblenon-performanceofourcounterparties,weconsiderthisriskremote.Ourderivativeliabilitiesdonothavecredit risk-relatedcontingentfeatures. • • • OurdebtmaturitiesinfutureyearsareasdisclosedinNote 26(i).AsatDecember31,2019,wecouldoffer$2.0billionofdebtorequitysecuritiespursuanttoashelfprospectusthatisineffectuntilAugust2022(2018–$2.5billionpursuanttoashelfprospectusthatwasineffectuntilJune2020).Webelievethatourinvestmentgradecreditratingscontributetoreasonableaccesstocapitalmarkets. Wecloselymatchthecontractualmaturitiesofourderivativefinancial liabilitieswiththoseoftheriskexposurestheyarebeingusedtomanage. TELUS2019 ANNUAL REPORT • 143

Theexpectedmaturitiesofourundiscountedfinancialliabilitiesdonotdiffersignificantlyfromthecontractualmaturities,otherthanasnotedbelow. Thecontractualmaturitiesofourundiscountedfinancialliabilities,includinginterestthereon(whereapplicable),aresetoutinthefollowingtables: Non-derivative Derivative Composite long-term debt agreement amounts 1 Cashoutflowsinrespectofinterestpaymentsonourshort-termborrowings,commercialpaperandamountsdrawnunderourcreditfacilities(ifany)havebeencalculatedbasedupon theinterestratesineffectasatDecember31,2019. Theamountsincludedinundiscountednon-derivativelong-termdebtinrespectofU.S.dollar-denominatedlong-termdebt,andthecorrespondingamountsinthelong-termdebtcurrencyswapsreceivecolumn,havebeendeterminedbaseduponthecurrencyexchangeratesineffectasatDecember31,2019.ThehedgedU.S.dollar-denominatedlong-termdebtcontractualamountsatmaturity,ineffect,arereflectedinthelong-termdebtcurrencyswapspaycolumnasgrosscashflowsareexchangedpursuanttothecurrencyswapagreements. 2 Non-derivative Derivative Compositelong-termdebt agreementamounts 1 Cashoutflowsinrespectofinterestpaymentsonourshort-termborrowings,commercialpaperandamountsdrawnunderourcreditfacilities(ifany)havebeencalculatedbasedupon theinterestratesineffectasatDecember31,2018. Theamountsincludedinundiscountednon-derivativelong-termdebtinrespectofU.S.dollar-denominatedlong-termdebt,andthecorrespondingamountsinthelong-termdebtcurrencyswapsreceivecolumn,havebeendeterminedbaseduponthecurrencyexchangeratesineffectasatDecember31,2018.ThehedgedU.S.dollar-denominatedlong-termdebtcontractualamountsatmaturity,ineffect,arereflectedinthelong-termdebtcurrencyswapspaycolumnasgrosscashflowsareexchangedpursuanttothecurrencyswapagreements. 2 (d) Currency risk OurfunctionalcurrencyistheCanadiandollar,butcertainroutinerevenuesandoperatingcostsaredenominatedinU.S.dollarsandsomeinventorypurchasesandcapitalassetacquisitionsaresourcedinternationally.TheU.S.dollaristheonlyforeigncurrencytowhichwehaveasignificantexposureasatthebalancesheetdate. Ourforeignexchangeriskmanagementincludestheuseofforeigncurrencyforwardcontractsandcurrencyoptionstofixtheexchangeratesonavaryingpercentage,typicallyintherangeof50%to75%,ofourdomesticshort-termU.S.dollar-denominatedtransactionsandcommitmentsandallU.S.dollar-denominatedcommercialpaper. OtherthaninrespectofU.S.dollar-denominatedcommercialpaper, wedesignateonlythespotelementoftheseinstrumentsasthehedging item;theforwardelementiswhollyimmaterial;inrespectofU.S. dollar-denominatedcommercialpaper,wedesignatetheforwardrate. AsdiscussedfurtherinNote 26(b)andNote 26(f),wearealsoexposedtocurrencyriskinthatthefairvalueorfuturecashflowsofourU.S.DollarNotesandourTELUSInternational(Cda)Inc.creditfacilityU.S.dollarborrowingscouldfluctuatebecauseofchangesinforeignexchangerates.Currencyhedgingrelationshipshavebeenestablishedfortherelatedsemi-annualinterestpaymentsandtheprincipalpaymentatmaturityinrespectoftheU.S.DollarNotes;wedesignateonlythespotelementoftheseinstrumentsasthehedgingitem;theforwardelementiswhollyimmaterial. 144 • TELUS2019 ANNUAL REPORT AsatNon-interestConstructionDecember31,bearingcreditfacilities 2018financialShort-term commitment (millions)liabilitiesborrowings1 (Note 21) Long-term debt1 Finance leases Currencyswapagreementamountstobeexchanged2 Currencyswap tobeexchanged Other(Receive)PayTotal (Receive) Pay 2019$2,372$ 3$45 20202513 – 2021102103– 202218–– 202319–– 2024–202820–– Thereafter––– $ 1,349$ 55$ (877) 1,56751(95) 1,567–(95) 2,086–(95) 886–(95) 6,240–(1,917) 7,744–(1,964) $ 851 89 89 89 89 1,847 1,832 $–$(542)$516$ 3,772 1 ––1,867 –––1,766 1 ––2,099 –––899 –––6,190 –––7,612 Total $2,782$109$45 $21,439$106$(5,138) $ 4,886 $2$(542)$516$24,205 Total $21,293 Long-Asat Non-interest Construction term debt, December31, bearing credit facility excluding 2019financialShort-term commitmentleases1 (millions) liabilities borrowings1(Note 21)(Note 26) 2020$ 2,639$3$ 10$ 1,657 Leases (Notes 2(c), 26) $ 373 Currency swap agreement amounts to be exchanged2 Currency swap to be exchanged Other (Receive)PayTotal (Receive) $ (1,140) Pay 1,698338(119) 2,235207(119) 1,021189(119) 1,595157(119) 202143103– 20227–– 20235–– 20245–– $ 1,153 118 118 118 118 1,944 3,020 $ –$ (917)$ 921$ 4,699 –––2,181 8––2,456 –––1,214 –––1,756 –––7,769 –––10,491 2025–20294––7,311 Thereafter–––10,102 429 388 (1,919) (3,019) Total $ 2,703$ 106$ 10$ 25,619 $ 2,081 $ (6,554) $ 6,589 $ 8$ (917)$ 921$ 30,566 Total(Note 26(i)) $ 27,735

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 4 (f) Other price risk AsthefunctionalcurrencyofourTELUSInternational(Cda)Inc.sub-sidiaryistheU.S.dollar,fluctuationsinforeignexchangeratesaffectingitsborrowingsarereflectedasaforeigncurrencytranslationadjustmentwithinothercomprehensiveincome. AssetoutinNote 18(d),subsequenttoDecember31,2019,weacquiredabusinessinwhichcertainroutinerevenuesandoperatingcostsaredenominatedinEuropeaneuros.Forcommercialreasons,assetoutinNote 26(f),wehaveborrowedU.S.dollarstofundtheEuropean euro-denominatedbusinessacquisition. Long-term investments Weareexposedtoequitypriceriskarisingfrominvestmentsclassifiedasfairvaluethroughothercomprehensiveincome.Suchinvestmentsare heldforstrategicratherthantradingpurposes. Share-based compensation derivatives Weareexposedtootherpriceriskarisingfromcash-settledshare-basedcompensation(appreciatingCommonSharepricesincreaseboththeexpenseandthepotentialcashoutflow).Certaincash-settledequityswapagreementshavebeenenteredintothatfixthecostassociatedwithourestimateofTELUSCorporationrestrictedshareunitswhichareexpected tovest,assetoutinNote 14(b). (e) Interest rate risk Changesinmarketinterestrateswillcausefluctuationsinthefairvaluesorfuturecashflowsoftemporaryinvestments,constructioncreditfacilityadvancesmadetotherealestatejointventure,short-termobligations,long-termdebtandinterestrateswapderivatives. Whenwehavetemporaryinvestments,theyhaveshortmaturitiesandfixedinterestratesand,asaresult,theirfairvalueswillfluctuatewithchangesinmarketinterestrates;absentmonetizationpriortomaturity,therelatedfuturecashflowswillnotchangeduetochangesinmarketinterestrates. Ifthebalanceofshort-terminvestmentsincludesdividend-paying equityinstruments,wecouldbeexposedtointerestraterisk. Duetotheshort-termnatureoftheapplicableratesofinterestcharged,thefairvalueoftheconstructioncreditfacilityadvancesmadetotherealestatejointventureisnotmateriallyaffectedbychangesinmarketinterestrates;theassociatedcashflowsrepresentinginterestpaymentswillbeaffecteduntilsuchadvancesarerepaid. Asshort-termobligationsarisingfrombilateralbankfacilities,whichtypicallyhavevariableinterestrates,arerarelyoutstandingforperiodsthatexceedonecalendarweek,interestrateriskassociatedwiththisitemisnotmaterial. Short-termborrowingsarisingfromthesalesoftradereceivablestoanarm’s-lengthsecuritizationtrustarefixed-ratedebt.Duetotheshortmaturitiesoftheseborrowings,interestrateriskassociatedwiththisitemisnotmaterial. Allofourcurrentlyoutstandinglong-termdebt,otherthancommercial paperandamountsdrawnonourcreditfacilities(Note 26(c),(e)),isfixed-ratedebt.Thefairvalueoffixed-ratedebtfluctuateswithchangesinmarketinterestrates;absentearlyredemption,therelatedfuturecashflowswillnotchange.Duetotheshortmaturitiesofcommercialpaper,itsfairvalueisnotmateriallyaffectedbychangesinmarketinterestrates,buttheassociatedcashflowsrepresentinginterestpaymentsmaybeaffectedifthecommercialpaperisrolledover. Amountsdrawnonourshort-termandlong-termcreditfacilitieswill beaffectedbychangesinmarketinterestratesinamannersimilarto commercialpaper. (g) Market risks NetincomeandothercomprehensiveincomefortheyearsendedDecember31,2019and2018,couldhavevariediftheCanadiandollar:U.S.dollarexchangerateandourCommonSharepricevariedbyreasonablypossibleamountsfromtheiractualstatementsoffinancialpositiondateamounts. Thesensitivityanalysisofourexposuretocurrencyriskatthereportingdatehasbeendeterminedbaseduponahypotheticalchangetakingplaceattherelevantstatementoffinancialpositiondate.TheU.S.dollar-denominatedbalancesandderivativefinancialinstrumentnotionalamountsasatthestatementsoffinancialpositiondateshavebeenusedinthecalculations. Thesensitivityanalysisofourexposuretootherpriceriskarisingfromshare-basedcompensationatthereportingdatehasbeendeterminedbaseduponahypotheticalchangetakingplaceattherelevantstatementoffinancialpositiondate.TherelevantnotionalnumberofCommonSharesattherelevantstatementoffinancialpositiondate,whichincludesthoseinthecash-settledequityswapagreements,hasbeenusedinthecalculations. Incometaxexpense,whichisreflectednetinthesensitivity analysis,reflectstheapplicablestatutoryincometaxratesforthe reportingperiods. TELUS2019 ANNUAL REPORT • 145

Netincome Othercomprehensiveincome Comprehensiveincome YearsendedDecember31(increase(decrease)inmillions) 2019 2018 2019 2018 2019 2018 Reasonablypossiblechangesinmarketrisks1 10%changeinC$:US$exchangerate Canadiandollarappreciates Canadiandollardepreciates 25basispointchangeininterestrates Interestratesincrease CanadianinterestrateU.S.interestrate Combined Interestratesdecrease CanadianinterestrateU.S.interestrate Combined 25%2changeinCommonShareprice3 Priceincreases Pricedecreases $ – $ – $(1) $ 1 $ (80) $ 80 $(33) $ 33 $ (80) $ 80 $(34) $ 34 $ (2) $ – $ (2) $(2) $ – $(2) $ 93 $ (95) $ (2) $ 61 $(59) $ 2 $ 91 $ (95) $ (4) $ 59 $(59) $ – $ $ $ 2 – 2 $ 2 $ – $ 2 $ (98) $ 101 $(63) $ 62 $ (1) $ (96) $ 101 $(61) $ 62 $ 1 $ 3 $ 5 $ (5) $ 13 $ – $ 5 $ $ 5 (5) $ (1) $ 1 $ $ – 8 $ (1) $ 6 1 Thesesensitivitiesarehypotheticalandshouldbeusedwithcaution.Changesinnetincomeand/orothercomprehensiveincomegenerallycannotbeextrapolatedbecausetherelationshipofthechangeinassumptiontothechangeinnetincomeand/orothercomprehensiveincomemaynotbelinear.Inthistable,theeffectofavariationinaparticularassumptionontheamountofnetincomeand/orothercomprehensiveincomeiscalculatedwithoutchanginganyotherfactors;inreality,changesinonefactormayresultinchangesinanother,whichmightmagnifyorcounteractthesensitivities. Thesensitivityanalysisassumesthatwewouldrealizethechangesinexchangerates;inreality,thecompetitivemarketplaceinwhichweoperatewouldhaveaneffectonthis assumption. NoconsiderationhasbeenmadeforadifferenceinthenotionalnumberofCommonSharesassociatedwithshare-basedcompensationawardsmadeduringthereportingperiodthatmayhavearisenduetoadifferenceintheCommonShareprice. Tofacilitateongoingcomparisonofsensitivities,aconstantvarianceofapproximatemagnitudehasbeenused.Reflectingatwelve-monthdataperiodandcalculatedonamonthlybasis,thevolatilityofourCommonSharepriceasatDecember31,2019,was9.9%(2018–10.9%). ThehypotheticaleffectsofchangesinthepriceofourCommonSharesarerestrictedtothosewhichwouldarisefromourshare-basedcompensationawardsthatareaccountedforasliabilityinstrumentsandtheassociatedcash-settledequityswapagreements. 2 3 (h) Fair values maturity,aswellasdiscountedfuturecashflowsdeterminedusingcurrentratesforsimilarfinancialinstrumentsofsimilarmaturitiessubjecttosimilarrisks(suchfairvalueestimatesbeinglargelybasedontheCanadiandollar:U.S.dollarforwardexchangerateasatthestatementsoffinancialpositiondates). Thefairvaluesofthederivativefinancialinstrumentsweusetomanageourexposuretoincreasesincompensationcostsarisingfromcertainformsofshare-basedcompensationarebasedonfairvalueestimatesoftherelatedcash-settledequityforwardagreementsprovidedbythecounterpartytothetransactions(suchfairvalueestimatesbeinglargelybasedonourCommonSharepriceasatthestatementsof financialpositiondates). General Thecarryingvaluesofcashandtemporaryinvestments,accountsreceiv-able,short-termobligations,short-termborrowings,accountspayableandcertainprovisions(includingrestructuringprovisions)approximatetheirfairvaluesduetotheimmediateorshort-termmaturityofthesefinancialinstruments.Thefairvaluesaredetermineddirectlybyreferencetoquotedmarketpricesinactivemarkets. Thefairvaluesofourinvestmentfinancialassetsarebasedonquotedmarketpricesinactivemarketsorotherclearandobjectiveevidenceoffairvalue. Thefairvalueofourlong-termdebt,excludingleases,isbasedon quotedmarketpricesinactivemarkets. Thefairvaluesofthederivativefinancialinstrumentsweusetomanageourexposuretocurrencyriskareestimatedbasedonquotedmarketpricesinactivemarketsforthesameorsimilarfinancialinstrumentsoronthecurrentratesofferedtousforfinancialinstrumentsofthesame Derivative Thederivativefinancialinstrumentsthatwemeasureatfairvalueonarecurringbasissubsequenttoinitialrecognitionaresetoutinthe followingtable. 146 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 4 AsatDecember31(millions) 2019 2018 Fair value1 and carrying value Fairvalue1 andcarrying value Maximum maturity date Maximum maturity date Notional amount Notional amount Designation Price or rate Priceorrate Current Assets2 Derivativesusedtomanage CurrencyriskarisingfromU.S.dollar-denominatedpurchases CurrencyriskarisingfromU.S.dollarrevenues Changesinshare-based compensationcosts(Note 14(b)) Currencyriskarisingfrom U.S.dollar-denominated long-termdebt(Note 26(b)–(c)) Currencyriskassociatedwith Europeaneuro-denominated businessacquisition(Note 26(f)) HFH3 – $ – $ – – 2019 $ 414 $25 US$1.00:C$1.28 HFT4 2020 $ 36 1 US$1.00: C$1.30 2019 $ 74 1 US$1.00:C$1.36 HFH3 2020 $ 72 4 $ 48.796 2019 $ 63 2 $45.466 HFH3 – $ – – – 2019 $ 761 21 US$1.00:C$1.33 HFH3 2020 $ 472 3 €1.00: C$1.45 – $ – – – $ 8 $49 Other Long-Term Assets2 Derivativesusedtomanage CurrencyriskarisingfromU.S.dollar-denominated long-termdebt5(Note 26(b)–(c)) HFH3 2048 $ 3,068 $ 76 US$1.00: C$1.28 2048 $3,134 $54 US$1.00:C$1.28 Current Liabilities2 Derivativesusedtomanage CurrencyriskarisingfromU.S.dollar-denominatedpurchases CurrencyriskarisingfromU.S.dollarrevenues Changesinshare-based compensationcosts(Note 14(b)) Currencyriskarisingfrom U.S.dollar-denominated long-termdebt(Note 26(b)–(c)) Interestrateriskassociated withnon-fixedratecreditfacility amountsdrawn(Note 26(f)) Interestrateriskassociatedwith refinancingofdebtmaturing HFH3 2020 $ 412 $ 6 US$1.00: C$1.32 2019 $ 11 $ – US$1.00:C$1.36 HFT4 – $ – – – 2019 $ 18 – US$1.00:C$1.36 HFH3 – $ – – – 2019 $ 2 – $47.396 HFH3 2020 $ 1,037 17 US$1.00: C$1.32 – $ – – – HFH3 2022 $ 8 – 2.64% 2019 $ 8 – 2.64% 2.40%,GOC 10-yearterm HFH3 – $ – – – 2019 $ 250 9 $ 23 $ 9 Other Long-Term Liabilities2 Derivativesusedtomanage Changesinshare-based compensationcosts(Note 14(b)) Currencyriskarisingfrom U.S.dollar-denominated long-termdebt5(Note 26(b)–(c)) Interestrateriskassociated withnon-fixedratecreditfacility amountsdrawn(Note 26(f)) HFH3 – $ – $ – – 2020 $ 67 $ 3 $48.716 HFH3 2049 $ 2,485 22 US$1.00: C$1.34 2027 $ 991 2 US$1.00:C$1.33 HFH3 2022 $ 130 4 2.64% 2022 $ 145 1 2.64% $ 26 $ 6 1 2 3 Fairvaluemeasuredatreportingdateusingsignificantotherobservableinputs(Level2). Derivativefinancialassetsandliabilitiesarenotsetoff. Designatedasheldforhedging(HFH)uponinitialrecognition(cashflowhedgingitem);hedgeaccountingisapplied.Unlessotherwisenoted,hedgeratiois1:1andisestablishedbyassessingthedegreeofmatchingbetweenthenotionalamountsofhedgingitemsandthenotionalamountsoftheassociatedhedgeditems. Designatedasheldfortrading(HFT)andclassifiedasfairvaluethroughnetincomeuponinitialrecognition;hedgeaccountingisnotapplied. Wedesignateonlythespotelementasthehedgingitem.AsatDecember31,2019,theforeigncurrencybasisspreadincludedinthefairvalueofthederivativeinstruments,whichisusedforpurposesofassessinghedgeineffectiveness,was$38(2018–$29). SeeNote 28(b). 4 5 6 TELUS2019 ANNUAL REPORT • 147

Non-derivative Ourlong-termdebt,whichismeasuredatamortizedcost,andthefairvaluethereof,aresetoutinthefollowingtable. AsatDecember31(millions) 2019 2018 Carrying value Fair value Carryingvalue Fairvalue Long-termdebt,excludingleases(Note 26) $ 16,813 $ 17,930 $13,999 $14,107 (i) Recognition of derivative gains and losses Thefollowingtablesetsoutthegainsandlosses,excludingincometaxeffects,arisingfromderivativeinstrumentsthatareclassifiedascashflow hedgingitemsandtheirlocationwithintheConsolidatedstatementsofincomeandothercomprehensiveincome. Creditriskassociatedwithsuchderivativeinstruments,asdiscussedfurtherin(b),wouldbetheprimarysourceofhedgeineffectiveness.Therewasnoineffectiveportionofthederivativeinstrumentsclassifiedascashflowhedgingitemsfortheperiodspresented. Gain(loss)reclassifiedfromothercomprehensive incometoincome(effectiveportion)(Note 11) Amountofgain(loss)recognizedinothercomprehensiveincome(effectiveportion)(Note 11) Amount YearsendedDecember31(millions) Note 2019 2018 Location 2019 2018 Derivativesusedtomanagecurrencyrisk ArisingfromU.S.dollar-denominatedpurchases ArisingfromU.S.dollar-denominated long-termdebt1 ArisingfromEuro-denominated businessacquisition $ (16) $ 39 Goodsandservicespurchased $ 11 $ 6 26(b)–(c) (21) 194 Financingcosts (162) 241 26(f) 3 – Financingcosts – – 233 247 (34) (151) Derivativesusedtomanageothermarketrisk Arisingfromchangesinshare-based compensationcostsandother 14(b) 10 (8) Employeebenefitsexpense 12 2 $ (24) $225 $ (139) $249 1 Amountsrecognizedinothercomprehensiveincomearenetofthechangeintheforeigncurrencybasisspread(whichisusedforpurposesofassessinghedgeineffectiveness) includedinthefairvalueofthederivativeinstruments;suchamountfortheyearendedDecember31,2019,was$9(2018–$25). Thefollowingtablesetsoutthegainsandlossesarisingfromderivativeinstrumentsthatareclassifiedasheldfortradingandthatarenotdesignated asbeinginahedgingrelationship,andtheirlocationwithintheConsolidatedstatementsofincomeandothercomprehensiveincome. Gain(loss)recognizedinincomeonderivatives YearsendedDecember31(millions) Location 2019 2018 Derivativesusedtomanagecurrencyrisk Financingcosts $(7) $ – General Operatingsegmentsarecomponentsofanentitythatengageinbusinessactivitiesfromwhichtheyearnrevenuesandincurexpenses(includingrevenuesandexpensesrelatedtotransactionswiththeothercomponent(s)),theoperationsofwhichcanbeclearlydistinguishedandforwhichtheoperatingresultsareregularlyreviewedbyachiefoperatingdecision-makertomakeresourceallocationdecisionsandtoassessperformance.AsreferredtoinNote 1(b),effectiveJanuary1, 2020,weembarkeduponmodifyingourinternalandexternalreporting processes,systemsandinternalcontrolstoaccommodatethetech-nologyconvergence-drivencessationofthehistoricaldistinctionbetweenourwirelessandwirelineoperationsatthelevelofregularlyreporteddiscreteperformancemeasuresthatareprovidedtoourchiefoperatingdecision-maker.Weanticipatetransitioningtoanewsegmentreportingstructureduring2020,butdonotanticipateasubstantivechangetoourproductsandservicesrevenuereportingfromsuchtransition;wewillcontinuetoreportwirelessandwirelineoperationsuntilsuch transitionissubstantiallycompleted. 148 • TELUS2019 ANNUAL REPORT 5 SEGMENT INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 5 As wedo not currently aggregate perating segments, our reportable segments as at December 31, 2019, are also wireless and wireline. The wireless segment includes network revenues and equipment sales arising from mobile technologies. The wireline segment includes data revenues (which include internet protocol; television; hosting, managed information technology and cloud-based services; customer care and business services; certain healthcare solutions; and home and busi-ness security), voice and other telecommunications services revenues (excluding wireless arising from mobile technologies), and equipment sales. Segmentation has been based on similarities in technology (mobile versus fixed), the technical expertise required to deliver the services and products, customer characteristics, the distribution channels used and regulatory treatment. Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties. The segment information regularly reported to our Chief Executive Officer (our chief operating decision-maker), and the reconciliations thereof to our products and services view of revenues, other revenues and income before income taxes, are set out in the following table. Wireless Wireline Eliminations Consolidated Years ended December 31 (millions) 2019 2018 2019 2018 2019 2018 2019 2018 Operating revenues External revenues Service Equipment $ 6,165 1,964 $ 6,054 1,963 $ 6,235 225 $ 5,828 250 $ – – $ – – $ 12,400 2,189 $ 11,882 2,213 Revenues arising from contracts with customers Other operating income 8,129 20 8,017 118 6,460 49 6,078 155 – – – – 14,589 69 14,095 273 8,149 53 8,135 47 6,509 251 6,233 207 – (304) – (254) 14,658 – 14,368 – Intersegment revenues $ 8,202 $ 8,182 $ 6,760 $ 6,440 $ (304) $ (254) $ 14,658 $ 14,368 Pro forma EBITDA1 reported to chief operating decision-maker Retrospective IFRS 16 simulation2 $ 3,693 $ 3,544 $ 1,861 $ 1,785 $ – $ – $ 5,554 $ 5,329 – (113) – (112) – – – (225) EBITDA1 $ 3,693 $ 3,431 $ 1,861 $ 1,673 $ – $ – $ 5,554 $ 5,104 CAPEX, excluding spectrum licences3 $ 889 $ 896 $ 2,017 $ 2,018 $ – $ – $ 2,906 $ 2,914 Operating revenues – external (above) Goods and services purchased Employee benefits expense $ 14,658 6,070 3,034 $ 14,368 6,368 2,896 EBITDA (above) Depreciation Amortization 5,554 1,929 648 5,104 1,669 598 Operating income Financing costs 2,977 733 2,837 661 Income before income taxes $ 2,244 $ 2,176 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 it is also utilized in measuring compliance with certain debt covenants. For purposes of the chief operating decision-maker’s assessment of performance during the 2019 fiscal year relative to the 2018 fiscal year, we have simulated IFRS 16 adjustments to the fiscal 2018 results in calculating pro forma results. The simulated IFRS 16 adjustments: (i) are a cash-based proxy and should not be considered comparable to the results that would have been reported had IFRS 16 been applied retrospectively to each comparative period applying IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors (see Note 2(a)); and (ii) do not have any standardized meaning prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other issuers. Total capital expenditures (CAPEX); see Note 31(a) for a reconciliation of capital expenditures, excluding spectrum licences to cash payments for capital assets, excluding spectrum licences reported in the Consolidated statements of cash flows. 2 3 Geographical information We attribute revenues from external customers to individual countries on the basis of the location where the goods and/or services are provided. We attribute less than ten per cent of our revenues to countries other than Canada (our country of domicile), and we do not have significant amounts of property, plant, equipment and/or intangible assets located outside of Canada. As at December 31, 2019, on a historical cost basis, we had $568 million (2018 – $546 million) of goodwill located outside of Canada. TELUS 2019 ANNUAL REPORT • 149

(a) Revenues In the determination of the minimum transaction prices in contracts with customers, amounts are allocated to fulfilling, or completion of fulfilling, future contracted performance obligations. These unfulfilled, or partially unfulfilled, future contracted performance obligations are largely in respect of services to be provided over the duration of the contract. The following table sets out our aggregate estimated minimum transaction prices allocated to remaining unfulfilled, or partially unfulfilled, future contracted performance obligations and the timing of when we might expect to recognize the associated revenues; actual amounts could differ from these estimates due to a variety of factors, including the unpredictable nature of: customer behaviour; industry regulation; the economic environments in which we operate; and competitor behaviour. As at December 31 (millions) 2019 2018 Estimated minimum transaction price allocated to remaining unfulfilled, or partially unfulfilled, performance obligations to be recognized as revenue in a future period1,2 During the 12-month period ending one year hence During the 12-month period ending two years hence Thereafter $ 2,405 930 40 $ 2,306 933 24 $ 3,375 $ 3,263 1 Excludes constrained variable consideration amounts, amounts arising from contracts originally expected to have a duration of one year or less and, as a permitted practical expedient, amounts arising from contracts that are not affected by revenue recognition timing differences arising from transaction price allocation or from contracts under which we may recognize and bill revenue in an amount that corresponds directly with our completed performance obligations. 2 IFRS-IASB requires the explanation of when we expect to recognize as revenue the amounts disclosed as the estimated minimum transaction price allocated to remaining unfulfilled, or partially unfulfilled, performance obligations. The estimated amounts disclosed are based upon contractual terms and maturities. Actual minimum transaction price revenues recognized, and the timing thereof, will differ from these estimates primarily due to the frequency with which the actual durations of contracts with customers do not match their contractual maturities. (b) Accounts receivable As at December 31 (millions) Note 2019 2018 Customer accounts receivable Accrued receivables – customer Allowance for doubtful accounts $ 1,570 180 (46) $ 1,263 175 (53) 4(b) 1,704 258 1,385 215 Accrued receivables – other $ 1,962 $ 1,600 (c) Contract assets Years ended December 31 (millions) Note 2019 2018 Balance, beginning of period Net additions arising from operations Amounts billed in period and thus reclassified to accounts receivable1 Change in impairment allowance, net Other $ 1,303 1,455 (1,284) (1) 2 $ 1,475 1,161 (1,416) 17 1 4(b) Balance, end of period $ 1,238 $ 1,475 To be billed and thus reclassified to accounts receivable during: The 12-month period ending one year hence The 12-month period ending two years hence Thereafter $ 910 308 20 $ 1,017 444 14 Balance, end of period $ 1,238 $ 1,475 Reconciliation of contract assets presented in the Consolidated statements of financial position – current Gross contract assets Reclassification to contract liabilities of contracts with contract assets less than contract liabilities Reclassification from contract liabilities of contracts with contract liabilities less than contract assets $ 910 (7) (166) $ 1,017 (3) (154) 24 24 $ 737 $ 860 1 For the year ended December 31, 2019, amounts billed for our wireless segment and reclassified to accounts receivable totalled $1,288 (2018 – $1,180). 150 • TELUS 2019 ANNUAL REPORT 6 REVENUE FROM CONTRACTS WITH CUSTOMERS

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 6 – 8 Years ended December 31 (millions) Note 2019 2018 Government assistance Other sublet revenue Investment income, gain (loss) on disposal of assets and other Interest income Changes in business combination-related accrued receivables and provisions $ 22 2 24 4 17 $ 23 – 230 3 17 19 21 21(b) 25 $ 69 $ 273 We receive government assistance, as defined by IFRS-IASB, from a number of sources and include such amounts received in Other operating income. We recognize such amounts on an accrual basis as the subsidized services are provided or as the subsidized costs are incurred. calculated on a per network access line/per band subsidy rate. For the year ended December 31, 2019, our subsidy receipts were $15 million (2018 – $18 million). The CRTC currently determines, at a national level, the total annual contribution requirement necessary to pay the subsidies and then collects contribution payments from the Canadian telecommunications service providers, calculated as a percentage of their CRTC-defined tele-communications service revenue; such definition, commencing in fiscal 2020, has been expanded to reflect amounts that will now be used to support the CRTC’s Broadband Fund. The final contribution expense rate for 2019 was 0.52% and the interim rate for 2020 has been set at 0.45%. CRTC subsidy Local exchange carriers’ costs of providing the level of residential basic telephone services that the CRTC requires to be provided in high cost serving areas are greater than the amounts the CRTC allows the local exchange carriers to charge for the level of service. To ameliorate the situation, the CRTC directs the collection of contribution payments, in a central fund, from all registered Canadian telecommunications service providers (including voice, data and wireless service providers) that are then disbursed to incumbent local exchange carriers as subsidy payments to partially offset the costs of providing residential basic telephone services in non-forborne high cost serving areas. The subsidy payment disbursements are based upon a total subsidy requirement Government of Quebec Salaries for qualifying employment positions in the province of Quebec, mainly in the information technology sector, are eligible for tax credits. In respect of such tax credits, for the year ended December 31, 2019, we recorded $7 million (2018 – $4 million). Years ended December 31 (millions) Note 2019 2018 Employee benefits expense – gross Wages and salaries Share-based compensation Pensions – defined benefit Pensions – defined contribution Restructuring costs Other $ 3,017 147 78 92 63 184 $ 2,800 136 95 88 126 163 14 15(a) 15(f) 16(a) 3,581 3,408 Capitalized internal labour costs, net Contract acquisition costs Capitalized Amortized Contract fulfilment costs Capitalized Amortized Property, plant and equipment Intangible assets subject to amortization 20 (54) 48 (55) 45 20 (3) 4 (351) (191) (3) 3 (332) (170) (547) (512) $ 3,034 $ 2,896 TELUS 2019 ANNUAL REPORT • 151 8 EMPLOYEE BENEFITS EXPENSE 7 OTHER OPERATING INCOME

Years ended December 31 (millions) Note 2019 2018 Interest expense Interest on long-term debt, excluding lease liabilities – gross Interest on long-term debt, excluding lease liabilities – capitalized1 $ 634 (23) $ 598 – 18(a) Interest on long-term debt, excluding lease liabilities Interest on lease liabilities Interest on short-term borrowings and other Interest accretion on provisions Long-term debt prepayment premium 611 67 8 22 28 598 – 6 21 34 19 25 26(a) 659 17 (6) 736 1 3 Employee defined benefit plans net interest Foreign exchange 15 740 (7) 670 (9) Interest income $ 733 $ 661 1 Interest on long-term debt, excluding lease liabilities, at a composite rate of 4.33% was capitalized to intangible assets with indefinite lives in the period. (a) Expense composition and rate reconciliation Years ended December 31 (millions) 2019 2018 Current income tax expense For the current reporting period Adjustments recognized in the current period for income taxes of prior periods $ 416 (63) $ 483 (5) 353 478 Deferred income tax expense Arising from the origination and reversal of temporary differences Revaluation of deferred income tax liability to reflect future income tax rates Adjustments recognized in the current period for income taxes of prior periods 193 (124) 46 75 – (1) 115 74 $ 468 $ 552 152 • TELUS 2019 ANNUAL REPORT 10 INCOME TAXES 9 FINANCING COSTS

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 9 –10 Our income tax expense and effective income tax rate differ from those calculated by applying the applicable statutory rates for the following reasons: Years ended December 31 ($ in millions) 2019 2018 Income taxes computed at applicable statutory rates Revaluation of deferred income tax liability to reflect future income tax rates Adjustments recognized in the current period for income taxes of prior periods Other $ 604 26.9% $ 586 27.0% (124) (5.5) – – (17) 5 (0.8) 0.2 (6) (28) (0.3) (1.3) Income tax expense per Consolidated statements of income and other comprehensive income $ 468 20.8% $ 552 25.4% (b) Temporary differences We must make significant estimates in respect of the composition of our deferred income tax liability. Our operations are complex and the related income tax interpretations, regulations, legislation and jurisprudence are continually changing. As a result, there are usually some income tax matters in question. Temporary differences comprising the net deferred income tax liability and the amounts of deferred income taxes recognized in the Consolidated statements of income and other comprehensive income and the Consolidated statements of changes in owners’ equity are estimated as follows: Property, plant and equipment (owned) and intangible assets subject to amortization Property, plant and equipment (leased), net of lease liabilities Net pension and Contract share-based assets and compensation Losses available to be carried forward1 Net deferred income tax liability Intangible assets with indefinite lives Provisions not currently deductible liabilities amounts Other As at January 1, 20182 Deferred income tax expense recognized in Net income Other comprehensive income Deferred income taxes charged directly to owners’ equity and other (Note 18(c)) $ 1,221 $ 1,561 $ – $ 441 $ (120) $ (140) $ (7) $ (20) $ 2,936 (11) – 78 – (1) – 55 – (20) 119 (10) – 1 – (18) (6) 74 113 (6) 79 – – – (54) – 1 20 As at December 31, 20183 $ 1,204 $ 1,718 $ (1) $ 496 $ (21) $ (204) $ (6) $ (43) $ 3,143 As at January 1, 2019 IFRS 16, Leases transitional amount (Note 2(c)) $ 1,204 $ 1,718 $ (1) $ 496 $ (21) $ (204) $ (6) $ (43) $ 3,143 – – (82) – – 15 – 14 (53) As adjusted Deferred income tax expense recognized in Net income Other comprehensive income Deferred income taxes charged directly to owners’ equity and other (Note 18(b)) 1,204 1,718 (83) 496 (21) (189) (6) (29) 3,090 332 – (110) – 6 – (78) – (9) (110) (23) – (5) – 2 32 115 (78) 70 – – – – – – 1 71 As at December 31, 20194 $ 1,606 $ 1,608 $ (77) $ 418 $ (140) $ (212) $ (11) $ 6 $ 3,198 1 2 3 4 We expect to be able to utilize our non-capital losses prior to expiry. Deferred tax liability of $2,941, net of deferred tax asset of $5 (included in Other long-term assets). Deferred tax liability of $3,148, net of deferred tax asset of $5 (included in Other long-term assets). Deferred tax liability of $3,204, net of deferred tax asset of $6 (included in Other long-term assets). TELUS 2019 ANNUAL REPORT • 153

Temporary differences arise from the carrying value of investments in subsidiaries and partnerships exceeding their tax base, for which no deferred income tax liabilities have been recognized because the parent is able to control the timing of the reversal of the difference and it is probable that it will not reverse in the foreseeable future. In our specific instance, this is relevant to our investments in Canadian subsidiaries and Canadian partnerships. We are not required to recognize such deferred income tax liabilities, as we are in a position to control the timing and manner of the reversal of the temporary differences, which would not be expected to be exigible to income tax, and it is probable that such differences will not reverse in the foreseeable future. We are in a position to control the timing and manner of the reversal of temporary differences in respect of our non-Canadian subsidiaries, and it is probable that such differences will not reverse in the foreseeable future. (c) Other We conduct research and development activities, which may be eligible to earn Investment Tax Credits. During the year ended December 31, 2019, we recorded Investment Tax Credits of $8 million (2018 – $10 million). Of this amount, $4 million (2018 – $6 million) was recorded as a reduction of property, plant and equipment and/or intangible assets and the balance was recorded as a reduction of Goods and services purchased. Items that may subsequently be reclassified to income Item never reclassified to income Item never reclassified to income Change in unrealized fair value of derivatives designated as cash flow hedges in current period (Note 4(i)) Derivatives used to manage currency risk Derivatives used to manage other market risks Cumulative Accumulated (49) $ 333 $ 284 (1) (300) (78) ) 154 • TELUS 2019 ANNUAL REPORT Years ended December 31 (millions) Prior period Gains (gains) losses (losses) transferred to arisingnet income Total Prior period Gains (gains) losses (losses) transferred to arisingnet income Total foreign Change in other Employee Other currency measurement compre-defined compre-translation of investment hensive benefit plan hensive Total adjustment financial assetsincome re-measurementsincome Accumulated balance as at January 1, 2018 Other comprehensive income (loss) Amount arising Income taxes $ (9) $ 233 $ (247) (14) $ 40 $ (44) (4) $ 8 $ (8)$ (2)(10) $ (2)$ – (2) $ (1)$ 53 $ 1 $ 53 (24) (30) (1) (55)$ 452 $ 397 (6) – – (6) 119 113 Net (10) (8) (18) (30) (1) $ (448) $ (110) Accumulated balance as at December 31, 2018 $ (19) $ – $ (19)$ 23 $ – $ 4 Accumulated balance as at January 1, 2019 As previously reported IFRS 16, Leases transitional amount (Note 2(c)) $ (19) – $ – – $ (19)$ 23 $ – $ 4 – (1) – As adjusted Other comprehensive income (loss) Amount arising Income taxes (19) $ (34)$ 151117 $ 10$ 2232 – $ 10$ (12)(2) $ 2$ (3)(1) (19) 22 – 3 1152013148 31–132 Net 85 (1) 842012116 $ (338) $ (222 Accumulated balance as at December 31, 2019 $ 66 $ (1) $ 65$ 42$ 12$ 119 Attributable to: Common Shares Non-controlling interests $ 119 – $ 119 11 OTHER COMPREHENSIVE INCOME

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 11–13 Basic net income per Common Share is calculated by dividing net income attributable to Common Shares by the total weighted average number of Common Shares outstanding during the period (see Note 28(b)). Diluted net income per Common Share is calculated to give effect to share option awards and restricted share units. The denominators of the basic and diluted per share computations were result-equal, and net income was equal to diluted net income, for all periods presented. For the year ended December 31, 2019, no outstanding equity-settled restricted share unit awards were excluded in the computation of diluted income per Common Share. For the years ended December 31, 2019 and 2018, no outstanding TELUS Corporation share option awards were excluded in the calculation of diluted net income per Common Share; as at December 31, 2019, no TELUS Corporation share option awards were outstanding (see Note 14(d)). (a) Dividends declared Years ended December 31 (millions except per share amounts) 2019 2018 Declared Declared Paid to shareholders Paid to shareholders Common Share dividends Effective Per share1 Total Effective Per share1 Total Quarter 1 dividend Quarter 2 dividend Quarter 3 dividend Quarter 4 dividend Mar. 11, 2019 June 10, 2019 Sep. 10, 2019 Dec. 11, 2019 $ 0.5450 0.5625 0.5625 0.5825 Apr. 1, 2019 July 2, 2019 Oct. 1, 2019 Jan. 2, 2020 $ 329 339 338 352 Mar. 9, 2018 June 8, 2018 Sep. 10, 2018 Dec. 10, 2018 $ 0.5050 0.5250 0.5250 0.5450 Apr. 2, 2018 July 3, 2018 Oct. 1, 2018 Jan. 2, 2019 $ 299 315 313 326 $ 2.2525 $ 1,358 $ 2.1000 $ 1,253 1 See Note 28(b). (b) Dividend Reinvestment and Share Purchase Plan We have a Dividend Reinvestment and Share Purchase Plan under which eligible holders of Common Shares may acquire additional Common Shares by reinvesting dividends and by making additional optional cash payments to the trustee. Under this plan, we have the option of offering Common Shares from Treasury or having the trustee acquire Common Shares in the stock market. We may, at our discretion, offer Common Shares at a discount of up to 5% from the market price under the plan. Effective with our dividends paid October 1, 2019, we offered Common Shares from Treasury at a discount of 2%. In respect of Common Shares held by eligible shareholders who have elected to participate in the plan, dividends declared during the year ended December 31, 2019, of $256 million (2018 – $54 million) were to be reinvested in Common Shares. On February 12, 2020, the Board of Directors declared a quarterly dividend of $0.5825 per share (see Note 28(b)) on our issued and out-standing Common Shares payable on April 1, 2020, to holders of record at the close of business on March 11, 2020. The final amount of the dividend payment depends upon the number of Common Shares issued and outstanding at the close of business on March 11, 2020. TELUS 2019 ANNUAL REPORT • 155 13 DIVIDENDS PER SHARE 12 PER SHARE AMOUNTS

(a) Details of share-based compensation expense Reflected in the Consolidated statements of income and other comprehensive income as Employee benefits expense and in the Consolidated statements of cash flows are the following share-based compensation amounts: Years ended December 31 (millions) 2019 2018 Employee benefits expense Associated operating cash outflows Statement of cash flows adjustment Employee benefits expense Associated operating cash outflows Statement of cash flows adjustment Note Restricted share units Employee share purchase plan Share option awards (b) (c) (d) $ 107 37 3 $ (112) (37) – $ (5) – 3 $ 99 37 5 $ (88) (37) – $ 11 – 5 $ 147 $ (149) $ (2) $ 141 $ (125) $ 16 For the year ended December 31, 2019, the associated operating cash outflows in respect of restricted share units were net of cash inflows arising from cash-settled equity forward agreements of $13 million (2018 – $19 million). For the year ended December 31, 2019, the income tax benefit arising from share-based compensation was $39 million (2018 – $37 million). are cliff-vesting. Accounting for restricted share units, as either equity instruments or liability instruments, is based upon the expected manner of their settlement when they are granted. Grants of restricted share units prior to fiscal 2019 are accounted for as liability instruments, as the associated obligation is normally cash-settled. TELUS Corporation restricted share units We also award restricted share units that largely have the same features as our general restricted share units, but have a variable payout (0%–200%) that depends upon the achievement of our total customer connections performance condition (with a weighting of 25%) and the total shareholder return on our Common Shares relative to an international peer group of telecommunications companies (with a weighting of 75%). The grant-date fair value of the notional subset of our restricted share units affected by the total customer connections performance condition equals the fair market value of the corresponding Common Shares at the grant date, and thus the notional subset has been included in the presentation of our restricted share units with only service conditions. The estimate, which reflects a variable payout, of the fair value of the notional subset of our restricted share units affected by the relative total shareholder return performance condition is determined using a Monte Carlo simulation. Grants of restricted share units in 2019 are accounted for as equity-settled, as that was their expected manner of settlement when granted. The following table presents a summary of outstanding TELUS Corporation non-vested restricted share units. (b) Restricted share units General We use restricted share units as a form of retention and incentive compensation. Each restricted share unit is nominally equal in value to one equity share and is nominally entitled to the dividends that would arise thereon if it were an issued and outstanding equity share. The notional dividends are recorded as additional issuances of restricted share units during the life of the restricted share unit. Due to the notional dividend mechanism, the grant-date fair value of restricted share units equals the fair market value of the corresponding equity shares at the grant date, other than for the notional subset of our restricted share units affected by the relative total shareholder return performance condition (which have their grant-date fair value determined using a Monte Carlo simulation). The restricted share units generally become payable when vesting is complete and typically vest over a period of 33 months (the requisite service period). The vesting method of restricted share units, which is determined on or before the date of grant, may be either cliff or graded; the majority of restricted share units outstanding Number of non-vested restricted share units as at December 31 2019 2018 Restricted share units without market performance conditions Restricted share units with only service conditions Notional subset affected by total customer connections performance condition 3,093,427 141,050 3,037,881 155,639 3,234,477 3,193,520 Restricted share units with market performance conditions Notional subset affected by relative total shareholder return performance condition 423,149 466,917 3,657,626 3,660,437 156 • TELUS 2019 ANNUAL REPORT 14 SHARE-BASED COMPENSATION

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 14 The following table presents a summary of the activity related to TELUS Corporation restricted share units without market performance conditions. Years ended December 31 2019 2018 Weighted average grant-date fair value2 Weighted average grant-date fair value2 Number of restricted share units1 Number of restricted share units1 Non-vested Vested Non-vested Vested Outstanding, beginning of period Non-vested Vested Issued Initial award In lieu of dividends Vested Settled in cash Forfeited and cancelled 3,193,520 – – 63,383 $ 44.85 $ 44.89 3,481,916 – – 32,848 $ 41.87 $ 41.00 2,046,047 166,800 (2,002,081) – (169,809) – 289 2,002,081 (2,050,353) – $ 47.64 $ 45.93 $ 44.56 $ 44.57 $ 45.30 1,769,092 208,503 (1,963,722) – (302,269) – 359 1,963,722 (1,933,546) – $ 45.72 $ 46.32 $ 40.34 $ 40.08 $ 43.16 Outstanding, end of period Non-vested Vested 3,234,477 – – 15,400 $ 46.73 $ 44.04 3,193,520 – – 63,383 $ 44.85 $ 44.89 1 Excluding the notional subset of restricted share units affected by the relative total shareholder return performance condition. 2 See Note 28(b). With respect to 1.5 million TELUS Corporation restricted share units vesting in the year ending December 31, 2020, we have entered into cash-settled equity forward agreements that fix our cost at $48.79 per restricted share unit. TELUS International (Cda) Inc. restricted share units We also award restricted share units that largely have the same features as the TELUS Corporation restricted share units, but have a variable payout (0%–150%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions. The following table presents a summary of the activity related to TELUS International (Cda) Inc. restricted share units. Years ended December 31 2019 2018 US$ denominated Canadian $ denominated US$ denominated Canadian $ denominated Weighted average grant-date fair value Number of vested restricted share units Weighted average grant-date fair value Weighted average grant-date fair value Number of vested restricted share units Weighted average grant-date fair value Number of restricted share units Number of restricted share units Non-vested Vested Non-vested Vested Outstanding, beginning of period Non-vested Vested Issued Vested Settled in cash Forfeited and cancelled 561,712 – 185,810 (263,672) – (18,605) – – – 263,672 (263,672) – US$ 25.68 – 32,299 – – (32,299) – $ – 374,786 – 197,495 – – (10,569) – – – – – – US$ 24.45 US$ – US$ 28.07 US$ – US$ – US$ 26.28 – 32,299 – – – – $ – $ 21.36 $ – $ – $ – $ – US$ – $ 21.36 US$ 32.96 US$ 22.94 US$ 22.94 US$ 26.75 $ $ – – $ 21.36 $ – Outstanding, end of period Non-vested Vested 465,245 – – – US$ 27.49 – – $ $ – – 561,712 – – – US$ 25.68 US$ – – 32,299 $ – $ 21.36 US$ – TELUS 2019 ANNUAL REPORT • 157

(c) Employee share purchase plan We have an employee share purchase plan under which eligible employees up to a certain job classification can purchase our Common Shares through regular payroll deductions. In respect of Common Shares held within the employee share purchase plan, Common Share dividends declared during the year ended December 31, 2019, of $34 million (2018 – $34 million) were to be reinvested in Common Shares acquired by the trustee from Treasury, with no discount applicable prior to October 1, 2019; subsequent to that date, a discount was applicable, as set out in Note 13(b). pricing model). The risk-free interest rate used in determining the fair value of the share option awards is based on a Government of Canada yield curve that is current at the time of grant. The expected lives of the share option awards are based on our historical share option award exercise data. Similarly, expected volatility considers the historical volatility in the price of our Common Shares in respect of TELUS Corporation share options and the average historical volatility in the prices of a peer group’s shares in respect of TELUS International (Cda) Inc. share options. The dividend yield is the annualized dividend current at the time of grant divided by the share option award exercise price. Dividends are not paid on unexercised share option awards and are not subject to vesting. (d) Share option awards TELUS Corporation share options Employees may be granted options to purchase Common Shares at an exercise price equal to the fair market value at the time of grant. Share option awards granted under the plan may be exercised over specific periods not to exceed seven years from the time of grant. No share option awards were granted in fiscal 2019 or 2018. These share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature. General We use share option awards as a form of retention and incentive com-pensation. We apply the fair value method of accounting for share-based compensation awards granted to officers and other employees. Share option awards typically have a three-year vesting period (the requisite service period). The vesting method of share option awards, which is determined on or before the date of grant, may be either cliff or graded; all share option awards granted subsequent to 2004 have been cliff-vesting. The weighted average fair value of share option awards granted is calculated by using the Black-Scholes model (a closed-form option The following table presents a summary of the activity related to the TELUS Corporation share option plan. Years ended December 31 2019 2018 Weighted average share option price2 Weighted average share option price2 Number of share options Number of share options Outstanding, beginning of period Exercised1 Forfeited Expired 326,164 (323,448) (456) (2,260) $ 29.22 $ 29.22 $ 29.18 $ 29.18 740,471 (402,528) (2,046) (9,733) $ 26.99 $ 25.26 $ 29.19 $ 23.24 Outstanding, end of period – $ – 326,164 $ 29.22 1 The total intrinsic value of share option awards exercised for the year ended December 31, 2019, was $6 million (2018 – $8 million), reflecting a weighted average price at the dates of exercise of $48.88 per share (2018 – $46.04 per share). The difference between the number of share options exercised and the number of Common Shares issued (as reflected in the Consolidated statements of changes in owners’ equity) is the effect of our choosing to settle share option awards exercised using the net-equity settlement feature. 2 See Note 28(b). TELUS International (Cda) Inc. share options Employees may be granted equity share options (equity-settled) to purchase TELUS International (Cda) Inc. common shares at a price equal to, or a multiple of, the fair market value at the time of grant and/ or phantom share options (cash-settled) that provide them with exposure to TELUS International (Cda) Inc. common share price appreciation. Share option awards granted under the plan may be exercised over specific periods not to exceed ten years from the time of grant. All equity share option awards and most phantom share option awards have a variable payout (0%–100%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions. 158 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 15 The following table presents a summary of the activity related to the TELUS International (Cda) Inc. share option plan. Years ended December 31 2019 2018 US$ denominated Canadian $ denominated US$ denominated Canadian $ denominated Weighted average share option price1 Weighted average share option price Number of share options Number of share options Share option price2 Number of share options Number of share options Share option price Outstanding, beginning of period Granted Forfeited 858,735 137,885 – US$ 29.83 US$ 38.09 53,832 – – $ 21.36 748,626 111,281 (1,172) US$ 30.12 US$ 27.81 US$ 27.70 53,832 – – $ 21.36 $ – $ – $ $ – – US$ – Outstanding, end of period 996,620 US$ 31.11 53,832 $ 21.36 858,735 US$ 29.83 53,832 $ 21.36 1 The range of share option prices is US$21.90–US$40.26 per TELUS International (Cda) Inc. equity share and the weighted average remaining contractual life is 7.7 years. 2 The weighted average remaining contractual life is 6.5 years. We have a number of defined benefit and defined contribution plans that provide pension and other retirement and post-employment benefits to most of our employees. As at December 31, 2019 and 2018, all regis-tered defined benefit pension plans were closed to substantially all new participants and substantially all benefits had vested. The benefit plans in which our employees are participants reflect developments in our corporate history. TELUS Québec Defined Benefit Pension Plan This contributory defined benefit pension plan, which ceased accepting new participants on April 14, 2009, covers any employee not governed by a collective agreement in Quebec who joined us prior to April 1, 2006, any non-supervisory employee governed by a collective agreement who joined us prior to September 6, 2006, and certain other unionized employees. The plan comprises approximately one-tenth of our total defined benefit obligation accrued. The plan has no indexation and pensionable remuneration is determined by the average of the best four years of remuneration. TELUS Corporation Pension Plan Management and professional employees in Alberta who joined us prior to January 1, 2001, and certain unionized employees who joined us prior to June 9, 2011, are covered by this contributory defined benefit pension plan, which comprises slightly more than one-half of our total defined benefit obligation accrued. The plan contains a supplemental benefit account that may provide indexation of up to 70% of the annual increase in a specified cost-of-living index. Pensionable remuneration is determined by the average of the best five years of remuneration in the last ten years preceding retirement. TELUS Edmonton Pension Plan This contributory defined benefit pension plan ceased accepting new participants on January 1, 1998. Indexation is 60% of the annual increase in a specified cost-of-living index and pensionable remuneration is deter-mined by the annualized average of the best 60 consecutive months of remuneration. The plan comprises less than one-tenth of our total defined benefit obligation accrued. Pension Plan for Management and Professional Employees of TELUS Corporation This defined benefit pension plan, which with certain limited exceptions ceased accepting new participants on January 1, 2006, and which comprises approximately one-quarter of our total defined benefit obli-gation accrued, provides a non-contributory base level of pension benefits. Additionally, on a contributory basis, employees annually can choose increased and/or enhanced levels of pension benefits above the base level. At an enhanced level of pension benefits, the plan has indexation of 100% of the annual increase in a specified cost-of-living index, to an annual maximum of 2%. Pensionable remuneration is determined by the annualized average of the best 60 consecutive months of remuneration. Other defined benefit pension plans In addition to the foregoing plans, we have non-registered, non- contributory supplementary defined benefit pension plans, which have the effect of maintaining the earned pension benefit once the allowable maximums in the registered plans are attained. As is common with non-registered plans of this nature, these plans are typically funded only as benefits are paid. These plans comprise less than 5% of our total defined benefit obligation accrued. We have three contributory non-indexed defined benefit pension plans arising from a pre-merger acquisition, which comprise less than 1% of our total defined benefit obligation accrued; these plans ceased accepting new participants in September 1989. During the year ended December 31, 2018, these plans were settled. TELUS 2019 ANNUAL REPORT • 159 15 EMPLOYEE FUTURE BENEFITS

(a) Defined benefit pension plans – funded status overview Information concerning our defined benefit pension plans, in aggregate, is as follows: Telecommunication Workers Pension Plan Certain employees in British Columbia are covered by a negotiated-cost, target-benefit union pension plan. Our contributions are determined in accordance with provisions of negotiated labour contracts (the current contract will expire on December 31, 2021), and are generally based on employee gross earnings. We are not required to guarantee the benefits or assure the solvency of the plan, and we are not liable to the plan for other participating employers’ obligations. For the years ended December 31, 2019 and 2018, our contributions comprised a significant proportion of the employer contributions to the union pension plan; similarly, a significant proportion of the plan participants were our active and retired employees. As at December 31 (millions) 2019 2018 Present value of the defined benefit obligations Balance, beginning of year Current service cost Past service cost Interest expense Actuarial loss (gain) arising from: Demographic assumptions Financial assumptions Settlements Benefits paid $ 8,723 91 – 335 $ 9,419 108 1 318 20 984 – (469) (62) (588) (16) (457) British Columbia Public Service Pension Plan Certain employees in British Columbia are covered by a public service pension plan. Contributions are determined in accordance with provisions of labour contracts negotiated by the Province of British Columbia and are generally based on employee gross earnings. Balance, end of year 9,684 8,723 Plan assets Fair value, beginning of year Return on plan assets Notional interest income on plan assets at discount rate Actual return on plan assets (less than) greater than discount rate Settlements Contributions Employer contributions (d) Employees’ contributions Benefits paid Administrative fees 9,043 9,195 Defined contribution pension plans We offer three defined contribution pension plans, which are contributory, and these are the pension plans that we sponsor that are available to our non-unionized and certain of our unionized employees. Employees, annually, can generally choose to contribute to the plans at a rate of between 3% and 6% of their pensionable earnings. Generally, we match 100% of the contributions of employees up to 5% of their pensionable earnings and 80% of contributions of employees greater than that. Membership in a defined contribution pension plan is generally voluntary until an employee’s third-year service anniversary. In the event that annual contributions exceed allowable maximums, excess amounts are in certain cases contributed to a non-registered supplementary defined contribution pension plan. 344 306 408 – (51) (16) 41 19 (469) (6) 52 20 (457) (6) Fair value, end of year 9,380 9,043 Effect of asset ceiling limit Beginning of year Change Other defined benefit plans Other defined benefit plans, which are all non-contributory and, as at December 31, 2019 and 2018, non-funded, are comprised of a healthcare plan for retired employees and a life insurance plan, both of which ceased accepting new participants on January 1, 1997. (263) 142 (110) (153) End of year (121) (263) Fair value of plan assets at end of year, net of asset ceiling limit 9,259 8,780 Funded status – plan surplus (deficit) $ (425) $ 57 The measurement date used to determine the plan assets and defined benefit obligations accrued was December 31. 160 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 15 (b) Defined benefit pension plans – details Expense Our defined benefit pension plan expense (recovery) was as follows: Years ended December 31 (millions) 2019 2018 Employee benefits expense (Note 8) Other comprehensive income (Note 11) Employee benefits expense (Note 8) Other Financing comprehensive Financing costs (Note 9) costs (Note 9) income (Note 11) Recognized in Total Total Current service cost $ 72 $– $ – $ 72 $ 88 $ – $ – $ 88 Past service costs – – – – 1 – – 1 Net interest; return on plan assets Interest expense arising from defined benefit obligations accrued Return, including interest income, on plan assets1 Interest effect on asset ceiling limit – 335 – 335 – 318 – 318 – – (344) 10 (408) – (752) 10 – – (306) 4 51 – (255) 4 – 1 (408) (407) – 16 51 67 Administrative fees 6 – – 6 6 – – 6 Re-measurements arising from: Demographic assumptions Financial assumptions – – – – 20 984 20 984 – – – – (62) (588) (62) (588) – – 1,004 1,004 – – (650) (650) Changes in the effect of limiting net defined benefit assets to the asset ceiling – – (152) (152) – – 149 149 $ 78 $1 $ 444 $ 523 $ 95 $ 16 $ (450) $ (339) 1 The interest income on the plan assets portion of the employee defined benefit plans net interest amount included in Financing costs reflects a rate of return on plan assets equal to the discount rate used in determining the defined benefit obligations accrued. TELUS 2019 ANNUAL REPORT • 161

Disaggregation of defined benefit pension plan funding status Defined benefit obligations accrued are the actuarial present values of benefits attributed to employee services rendered to a particular date. Our disaggregation of defined benefit pension plan surpluses and deficits at year-end is as follows: As at December 31 (millions) 2019 2018 Defined benefit obligations accrued PBSR solvency position1 Defined benefit obligations accrued PBSR solvency position1 Difference (Notes 20, 27) Difference (Notes 20, 27) Plan assets Plan assets Pension plans that have plan assets in excess of defined benefit obligations accrued Pension plans that have defined benefit obligations accrued in excess of plan assets Funded Unfunded $ 8,277 $ 8,432 $ 155 $ 626 $ 7,479 $ 7,982 $ 503 $ 460 1,167 240 827 – (340) (240) (58) N/A2 1,038 206 798 – (240) (206) (59) N/A2 1,407 827 (580) (58) 1,244 798 (446) (59) $ 9,684 $ 9,259 $ (425) $ 568 $ 8,723 $ 8,780 $ 57 $ 401 Defined benefit obligations accrued owed to: Active members Deferred members Pensioners $ 2,184 513 6,987 $ 1,960 469 6,294 $ 9,684 $ 8,723 1 The Office of the Superintendent of Financial Institutions, by way of the Pension Benefits Standards Regulations, 1985 (PBSR) (see (d)), requires that a solvency valuation be performed on a periodic basis. The actual PBSR solvency positions are determined in conjunction with mid-year annual funding reports prepared by actuaries (see (d)); as a result, the PBSR solvency positions in this table as at December 31, 2019 and 2018, are interim estimates and updated estimates, respectively. The interim estimate as at December 31, 2018, was a net surplus of $276. Interim estimated solvency ratios as at December 31, 2019, ranged from 98% to 112% (2018 – updated estimate is 97% to 109%; interim estimate was 94% to 106%) and the estimated three-year average solvency ratios, adjusted as required by the PBSR, ranged from 98% to 109% (2018 – updated estimate is 96% to 107%; interim estimate was 95% to 106%). The solvency valuation effectively uses the fair value (excluding any asset ceiling limit effects) of the funded defined benefit pension plan assets (adjusted for theoretical wind-up expenses) to measure the solvency assets. Although the defined benefit obligations accrued and the solvency liabilities are calculated similarly, the assumptions used for each differ, primarily in respect of retirement ages and discount rates, and the solvency liabilities, due to the required assumption that each plan is terminated on the valuation date, do not reflect assumptions about future compensation levels. Relative to the experience-based estimates of retirement ages used for purposes of determining the defined benefit obligations accrued, the minimum no-consent retirement age used for solvency valuation purposes may result in either a greater or lesser pension liability, depending upon the provisions of each plan. The solvency positions in this table reflect composite weighted average discount rates of 3.00% (2018 – 3.24%). A hypothetical decrease of 25 basis points in the composite weighted average discount rate would result in a $295 decrease in the PBSR solvency position as at December 31, 2019 (2018 – $303); these sensitivities are hypothetical, should be used with caution, are calculated without changing any other assumption and generally cannot be extrapolated because changes in amounts may not be linear. PBSR solvency position calculations are not required for the three pre-merger, acquisition-related pension plans that were settled in the year ended December 31, 2018, or for the non-registered, unfunded pension plans. 2 Fair value measurements Information about the fair value measurements of our defined benefit pension plan assets, in aggregate, is as follows: Fair value measurements at reporting date using Quoted prices in active markets for identical items Total Other As at December 31 (millions) 2019 2018 2019 2018 2019 2018 Asset class Equity securities Canadian Foreign Debt securities Issued by national, provincial or local governments Corporate debt securities Asset-backed securities Commercial mortgages Cash, cash equivalents and other Real estate $ 979 2,405 $ 1,048 1,943 $ 787 663 $ 821 581 $ 192 1,742 $ 227 1,362 1,698 1,628 30 1,012 621 1,007 1,494 1,243 30 1,631 338 1,316 1,519 – – – 21 – 1,369 – – – 8 – 179 1,628 30 1,012 600 1,007 125 1,243 30 1,631 330 1,316 9,380 (121) 9,043 (263) $ 2,990 $ 2,779 $ 6,390 $ 6,264 Effect of asset ceiling limit $ 9,259 $ 8,780 162 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 15 As at December 31, 2019, pension benefit trusts that we administered held no TELUS Corporation Common Shares and held debt of TELUS Corporation with a fair value of approximately $2 million (2018 – $2 million) (see (c) – Allowable and prohibited investment types). As at December 31, 2019 and 2018, pension benefit trusts that we administered did not lease real estate to us. component of the plan assets. Debt securities also may include real return bonds to provide inflation protection, consistent with the indexed nature of some defined benefit obligations. Real estate investments are used to provide diversification of plan assets, hedging of potential long-term inflation and comparatively stable investment income. Relationship between plan assets and benefit obligations With the objective of lowering the long-term costs of our defined benefit pension plans, we purposely mismatch plan assets and benefit obliga-tions. This mismatching is effected by including equity investments in the long-term asset mix, as well as fixed income securities and mortgages with durations that differ from those of the benefit obligations. As at December 31, 2019, the present value-weighted average timing of estimated cash flows for the obligations (duration) of the defined benefit pension plans was 13.7 years (2018 – 13.0 years) and of the other defined benefit plans was 6.2 years (2018 – 6.4 years). Compensation for liquidity issues that may otherwise have arisen from the mismatching of plan assets and benefit obligations is provided by broadly diversified investment holdings (including cash and short-term investments) and cash flows from dividends, interest and rents from those diversified investment holdings. Future benefit payments Estimated future benefit payments from our defined benefit pension plans, calculated as at December 31, 2019, are as follows: Years ending December 31 (millions) 2020 2021 2022 2023 2024 2025–2029 $ 463 471 475 479 484 2,473 (c) Plan investment strategies and policies Our primary goal for the defined benefit pension plans is to ensure the security of the retirement income and other benefits of the plan members and their beneficiaries. A secondary goal is to maximize the long-term rate of return on the defined benefit plans’ assets within a level of risk acceptable to us. Asset allocations Our defined benefit pension plans’ target asset allocations and actual asset allocations are as follows: Target allocation Percentage of plan assets at end of year Risk management We consider absolute risk (the risk of contribution increases, inadequate plan surplus and unfunded obligations) to be more important than relative return risk. Accordingly, the defined benefit plans’ designs, the nature and maturity of defined benefit obligations and the characteristics of the plans’ memberships significantly influence investment strategies and policies. We manage risk by specifying allowable and prohibited investment types, setting diversification strategies and determining target asset allocations. Years ended December 31 2020 2019 2018 Equity securities Debt securities Real estate Other 25–55% 40–75% 10–30% 0–15% 36% 53% 11% – 33% 52% 15% – 100% 100% (d) Employer contributions The determination of the minimum funding amounts necessary for sub-stantially all of our registered defined benefit pension plans is governed by the Pension Benefits Standards Act, 1985, which requires that, in addition to current service costs being funded, both going-concern and solvency valuations be performed on a specified periodic basis. Allowable and prohibited investment types Allowable and prohibited investment types, along with associated guidelines and limits, are set out in each plan’s required Statement of Investment Policies and Procedures (SIPP), which is reviewed and approved annually by the designated governing body. The SIPP guide-lines and limits are further governed by the permitted investments and lending limits set out in the Pension Benefits Standards Regulations, 1985. As well as conventional investments, each fund’s SIPP may provide for the use of derivative products to facilitate investment operations and to manage risk, provided that no short position is taken and no guidelines and limits established in the SIPP are violated. Internally and externally managed funds are not permitted to directly invest in our securities and are prohibited from increasing grandfathered investments in our securities; any such grandfathered investments were made prior to the merger of BC TELECOM Inc. and TELUS Corporation, our predecessors. • Any excess of plan assets over plan liabilities determined in the going-concern valuation reduces our minimum funding requirement for current service costs, but may not reduce the requirement to an amount less than the employees’ contributions. The going-concern valuation generally determines the excess (if any) of a plan’s assets over its liabilities on a projected benefit basis. As of the date of these consolidated financial statements, the solvency valuation generally requires that a plan’s average solvency liabilities, determined on the basis that the plan is terminated on the valuation date, in excess of its assets (if any) be funded, at a minimum, in equal annual amounts over a period not exceeding five years. So as to manage the risk of overfunding the plans, which results from the solvency valuation for funding purposes utilizing average solvency ratios, our funding may include the provision of letters of credit. As at December 31, 2019, undrawn letters of credit in the amount of $173 million (2018 – $174 million) secured certain obli-gations of the defined benefit pension plans, including non-registered unfunded plans. • Diversification Our strategy for investments in equity securities is to be broadly diversified across individual securities, industry sectors and geographical regions. A meaningful portion (20%–30% of total plan assets) of the plans’ invest-ment in equity securities is allocated to foreign equity securities with the intent of further diversifying plan assets. Debt securities may include a meaningful allocation to mortgages, with the objective of enhancing cash flow and providing greater scope for the management of the bond TELUS 2019 ANNUAL REPORT • 163

Our best estimate of fiscal 2020 employer contributions to our defined benefit plans is approximately $46 million for defined benefit pension plans. This estimate is based upon the mid-year 2019 annual funding valuations that were prepared by actuaries using December 31, 2018, actuarial valuations. The funding reports are based on the pension plans’ fiscal years, which are calendar years. The next annual funding valuations are expected to be prepared mid-year 2020. Financial assumptions The discount rate, which is used to determine a plan’s defined benefit obligations accrued, is based upon the yield on long-term, high- quality, fixed-term investments, and is set annually. The rate of future increases in compensation is based upon current benefits policies and economic forecasts. The significant weighted average actuarial assumptions arising from these estimates and used in measuring our defined benefit obligations accrued are as follows: (e) Assumptions As referred to in Note 1(b), management is required to make significant estimates related to certain actuarial and economic assumptions that are used in determining defined benefit pension costs, defined benefit obligations accrued and pension plan assets. These significant estimates are of a long-term nature, consistent with the nature of employee future benefits. 2019 2018 Discount rate1 used to determine: Net benefit costs for the year ended December 31 Defined benefit obligations accrued as at December 31 Current service cost in subsequent fiscal year Rate of future increases in compensation used to determine: Net benefit costs for the year ended December 31 Defined benefit obligations accrued as at December 31 3.90% 3.40% 3.10% 3.20% 3.90% 4.00% Demographic assumptions In determining the defined benefit pension expense recognized in net income for the years ended December 31, 2019 and 2018, we utilized the Canadian Institute of Actuaries CPM 2014 mortality tables. 2.70% 2.80% 2.90% 2.80% 1 The discount rate disclosed in this table reflects the computation of an average discount rate that replicates the timing of the obligation cash flows. Sensitivity of key assumptions The sensitivity of our key assumptions for our defined benefit pension plans was as follows: Years ended, or as at, December 31 2019 2018 Change in obligations Change in expenses Change in obligations Change in expenses Increase (decrease) (millions) Sensitivity of key demographic assumptions to an increase of one year1 in life expectancy Sensitivity of key financial assumptions to a hypothetical decrease of 25 basis points1 in: Discount rate Rate of future increases in compensation $ 297 $ 9 $ 242 $ 11 $ 342 $ (32) $ 13 $ (4) $ 292 $ (27) $ 16 $ (3) 1 These sensitivities are hypothetical and should be used with caution. Favourable hypothetical changes in the assumptions result in decreased amounts, and unfavourable hypothetical changes in the assumptions result in increased amounts, of the obligations and expenses. Changes in amounts based on a variation in assumptions of one year or 25 basis points generally cannot be extrapolated because the relationship of the change in assumption to the change in amounts may not be linear. Also, in this table, the effect of a variation in a particular assumption on the change in obligations or change in expenses is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in the discount rate may result in changes in expectations about the rate of future increases in compensation), which might magnify or counteract the sensitivities. 164 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 16 (f) Defined contribution plans – expense Our total defined contribution pension plan costs recognized were as follows: (g) Other defined benefit plans For the year ended December 31, 2019, other defined benefit plan current service cost was $2 million (2018 – $NIL), financing cost was $NIL (2018 – $1 million) and other re-measurements recorded in other comprehensive income were $4 million (2018 – $2 million). Estimated future benefit payments from our other defined benefit plans, calculated as at December 31, 2019, are $1 million annually for the five-year period from 2020 to 2024 and $5 million for the five-year period from 2025 to 2029. Years ended December 31 (millions) 2019 2018 Union pension plan and public service pension plan contributions Other defined contribution pension plans $ 22 70 $ 22 66 $ 92 $ 88 We expect that our 2020 union pension plan and public service pension plan contributions will be approximately $25 million. (a) Details of restructuring and other costs With the objective of reducing ongoing costs, we incur associated incremental non-recurring restructuring costs, as discussed further in (b) following. We may also incur atypical charges when undertaking major or transformational changes to our business or operating models or post- acquisition business integration. In other costs, we include incremental atypical external costs incurred in connection with business acquisition or disposition activity, as well as significant litigation costs in respect of losses or settlements, and adverse retrospective regulatory decisions. Restructuring and other costs are presented in the Consolidated statements of income and other comprehensive income, as set out in the following table: Restructuring (b) Other (c) Total Years ended December 31 (millions) 2019 2018 2019 2018 2019 2018 Goods and services purchased Employee benefits expense $ 56 63 $ 52 126 $ 9 6 $ 129 10 $ 65 69 $ 181 136 $ 119 $ 178 $ 15 $ 139 $ 134 $ 317 (b) Restructuring provisions Employee-related provisions and other provisions, as presented in Note 25, include amounts in respect of restructuring activities. In 2019, restructuring activities included ongoing and incremental efficiency initiatives, some of which involved personnel-related costs and ration-alization of real estate. These initiatives were intended to improve our long-term operating productivity and competitiveness. (c) Other During the year ended December 31, 2019, incremental external costs were incurred in connection with business acquisition activity. In connection with business acquisitions, non-recurring atypical business integration expenditures that would be considered neither restructuring costs nor part of the fair value of the net assets acquired have been included in other costs. As well, in fiscal 2018, we funda-mentally transformed our operating model in respect of our philanthropic giving. We made an initial donation to the TELUS Friendly Future Foundation of $100 million of TELUS Corporation Common Shares and committed to subsequent donations of $18 million. TELUS 2019 ANNUAL REPORT • 165 16 RESTRUCTURING AND OTHER COSTS

Owned assets Right-of-use lease assets (Note 19) (934) (12) (885) 1 For the year ended December 31, 2019, additions include $153 (2018 – $(15)) in respect of asset retirement obligations (see Note 25). 2 For the year ended December 31, 2019, depreciation includes $5 in respect of impairment of real estate right-of-use lease assets. As at December 31, 2019, our contractual commitments for the acquisition of property, plant and equipment totalled $136 million over a period ending December 31, 2022 (2018 – $148 million over a period ending December 31, 2022). 166 • TELUS 2019 ANNUAL REPORT (millions) Note Buildings and Assets Network leasehold under assets improvementsOtherLand constructionTotal Network Real assetsestateOtherTotal Total At cost As at January 1, 2018 Additions1 Additions arising from business acquisitions Dispositions, retirements and other Assets under construction put into service $ 28,724 $ 3,077 $ 1,095 $ 48 $ 655 $ 33,599 1,039 27 37 – 1,265 2,368 4 13 9 – – 26 (767) 56 (52) – – (763) 956 100 85 – (1,141) – $ – $ – $ – $ – – 1,011 30 1,041 101 – 1 102 $ 35,230 1,041 – As at December 31, 2018 $ 29,956 $ 3,273 $ 1,174 $ 48 $ 779 $ 35,230 As at January 1, 2019 As previously reported IFRS 16, Leases transitional amount2(c) Reclassification arising from implementation of IFRS 16 $ 29,956 $ 3,273 $ 1,174 $ 48 $ 779 $ 35,230 – – – – – – (101) – (1) – – (102) As adjusted Additions1 Additions arising from business acquisitions 18(b) Dispositions, retirements and other Assets under construction put into service Net foreign exchange differences 29,855 3,273 1,173 48 779 35,128 1,0734284–1,2172,416 127 312––142 (644)(125)(48) – –(817) 1,302121152–(1,575)– –––––– 101 1,011 31 1,143 21927416509 – 1211 23 (101)(18) 2(117) –––– –(12)–(12) 36,271 2,925 165 – As at December 31, 2019 $ 31,713$ 3,314 $ 1,373 $ 48$ 421 $ 36,869 $ 219 $ 1,267$ 60 $ 1,546 $ 38,415 Accumulated depreciation As at January 1, 2018 Depreciation Dispositions, retirements and other $ 19,638 $ 1,884 $ 709 $ – $ – $ 22,231 1,431 115 123 – – 1,669 (769) 51 (43) – – (761) $ – $ – $ – $ – 1 – – 1 $ 23,139 – As at December 31, 2018 $ 20,300 $ 2,050 $ 789 $ – $ – $ 23,139 As at January 1, 2019 As previously reported Reclassification arising from implementation of IFRS 16 $ 20,300 $ 2,050 $ 789 $ – $ – $ 23,139 (1) – – – – (1) As adjusted Depreciation2 Dispositions, retirements and other 20,299 2,050 789 – – 23,138 1,473 120135––1,728 (712)(118) (49)––(879) 1 – – 1 1317711201 (8) (3) 5 (6) 23,139 1,929 As at December 31, 2019 $ 21,060$ 2,052 $ 875 $ –$– $ 23,987 $6 $ 174$ 16 $ 196 $ 24,183 Net book value As at December 31, 2018 $ 9,656 $ 1,223 $ 385 $ 48 $ 779 $ 12,091 $ – $ – $ – $ – $ 12,091 As at December 31, 2019 $ 10,653$ 1,262 $ 498 $ 48$ 421 $ 12,882 $ 213 $ 1,093$ 44 $ 1,350 $ 14,232 17 PROPERTY, PLANT AND EQUIPMENT

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 17–18 (a) Intangible assets and goodwill, net Intangible assets subject to amortization Intangible assets with indefinite lives Customer contracts, related customer relationships and subscriber base1 Total intangible assets and goodwill Access to rights-of-way and other Total intangible assets Assets under construction Spectrum licences (millions) Software Total Goodwill2 At cost As at January 1, 2018 Additions Additions arising from business acquisitions1 Dispositions, retirements and other Assets under construction put into service Net foreign exchange differences $ 558 – $ 4,667 69 $ 97 5 $ 344 582 $ 5,666 656 $ 8,693 1 $ 14,359 657 $ 4,600 – $ 18,959 657 197 (138) 19 (248) – 1 – – 216 (385) – – 216 (385) 470 – 686 (385) – (1) 585 – – – (585) – – (1) – – – (1) – 41 – 40 As at December 31, 2018 Additions Additions arising from business acquisitions (b) Dispositions, retirements and other (including capitalized interest (see Note 9)) Assets under construction put into service Net foreign exchange differences 616 – 5,092 60 103 8 341 592 6,152 660 8,694 1,217 14,846 1,877 5,111 – 19,957 1,877 453 173 – – 626 – 626 617 1,243 (29) (166) 24 – (171) 26 (145) – (145) – (8) 679 – – – (679) – – (8) – – – (8) – (33) – (41) As at December 31, 2019 $ 1,032 $ 5,838 $ 135 $ 254 $ 7,259 $ 9,937 $ 17,196 $ 5,695 $ 22,891 Accumulated amortization As at January 1, 2018 Amortization Dispositions, retirements and other $ 310 56 (140) $ 3,330 538 (247) $ 61 4 – $ – – – $ 3,701 598 (387) $ – – – $ 3,701 598 (387) $ 364 – – $ 4,065 598 (387) As at December 31, 2018 Amortization Dispositions, retirements and other 226 70 (11) 3,621 573 (166) 65 5 1 – – – 3,912 648 (176) – – – 3,912 648 (176) 364 – – 4,276 648 (176) As at December 31, 2019 $ 285 $ 4,028 $ 71 $– $ 4,384 $ – $ 4,384 $ 364 $ 4,748 Net book value As at December 31, 2018 $ 390 $ 1,471 $ 38 $ 341 $ 2,240 $ 8,694 $ 10,934 $ 4,747 $ 15,681 As at December 31, 2019 $ 747 $ 1,810 $ 64 $ 254 $ 2,875 $ 9,937 $ 12,812 $ 5,331 $ 18,143 1 Amounts for customer contracts, related customer relationships and subscriber base, and goodwill arising from business acquisitions for the year ended December 31, 2018, have been adjusted, as set out in (c). 2 Accumulated amortization of goodwill is amortization recorded prior to 2002; there are no accumulated impairment losses in the accumulated amortization of goodwill. As at December 31, 2019, our contractual commitments for the acquisition of intangible assets totalled $45 million over a period ending December 31, 2024 (2018 – $48 million over a period ending December 31, 2021). Innovation, Science and Economic Development Canada’s 600 MHz auction occurred during the period from March 14, 2019, through April 4, 2019. We were the successful auction participant on 12 spectrum licences for a total purchase price of $931 million. During the quarter ended September 30, 2019, we obtained the use of certain AWS-4 spectrum licences from the original licensee and have accounted for them as intangible assets with indefinite lives; such subordination of licences has been approved by Innovation, Science and Economic Development Canada. The terms of payment for the obtained spectrum licences are such that the amounts owed to the original licensee are accounted for as a long-term financial liability, as set out in Note 26(g). TELUS 2019 ANNUAL REPORT • 167 18 INTANGIBLE ASSETS AND GOODWILL

(b) Business acquisitions See Note 2(b) for changes to IFRS-IASB that are not yet effective and have not yet been applied. ADT Security Services Canada, Inc. On November 5, 2019, we acquired the customers, assets and operations of ADT Security Services Canada, Inc., a business that is complementary to our existing lines of business. The investment was made with a view to leveraging our telecommunications infrastructure and expertise to continue to enhance connected home, business, security and health services for our customers. The primary factor that contributed to the recognition of goodwill was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the acquired workforce and the benefits of acquiring an established busi-ness). The amount assigned to goodwill is not expected to be deductible for income tax purposes. Telecommunications business On January 14, 2019, we acquired a telecommunications business that is complementary to our existing lines of business, for consideration consisting of cash and accounts payable and accrued liabilities of $75 million and TELUS Corporation Common Shares of $38 million. The investment was made with a view to growing our managed network, cloud, security and unified communications services. The primary factor that contributed to the recognition of goodwill was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the acquired workforce and the benefits of acquiring an established business). A portion of the amount assigned to goodwill is expected to be deductible for income tax purposes. Individually immaterial transactions During the year ended December 31, 2019, we acquired 100% owner-ship of businesses complementary to our existing lines of business. The primary factor that gave rise to the recognition of goodwill was the earnings capacity of the acquired businesses in excess of the net tangible and intangible assets acquired (such excess arising from the low level of tangible assets relative to the earnings capacities of the businesses). A portion of the amounts assigned to goodwill may be deductible for income tax purposes. Smart data solutions business On August 12, 2019, for consideration consisting of cash and accounts payable and accrued liabilities of $135 million, we acquired a business that is complementary to, and with a view to growing, our existing information technology solutions business. The primary factor that contributed to the recognition of goodwill was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the acquired workforce and the benefits of acquiring an established business). Not all of the amount assigned to goodwill is expected to be deductible for income tax purposes. 168 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 18 Acquisition-date fair values Acquisition-date fair values assigned to the assets acquired and liabilities assumed are set out in the following table: Smart data solutions business1 ADT Security Services Canada, Inc.1 Individually immaterial transactions1 Telecommunications business (millions) Total Assets Current assets Cash Accounts receivable2 Other $ 2 6 1 $ 7 6 1 $ 8 11 6 $ 6 10 – $ 23 33 8 9 14 25 16 64 Non-current assets Property, plant and equipment Owned assets Right-of-use lease assets Intangible assets subject to amortization3 Other 6 2 41 – – 6 91 – 93 11 326 3 43 4 168 – 142 23 626 3 49 97 433 215 794 Total identifiable assets acquired 58 111 458 231 858 Liabilities Current liabilities Short-term borrowings Accounts payable and accrued liabilities Advance billings and customer deposits Current maturities of long-term debt – 21 4 – – 4 6 2 – 32 14 4 1 12 5 1 1 69 29 7 25 12 50 19 106 Non-current liabilities Long-term debt Other long-term liabilities Deferred income taxes 2 – 5 4 4 9 7 15 48 6 1 7 19 20 69 7 17 70 14 108 Total liabilities assumed 32 29 120 33 214 Net identifiable assets acquired Goodwill 26 87 82 53 338 345 198 132 644 617 Net assets acquired $ 113 $ 135 $ 683 $ 330 $ 1,261 Acquisition effected by way of: Cash consideration Accounts payable and accrued liabilities Issue of TELUS Corporation Common Shares Pre-existing relationship effectively settled $ 63 12 38 – $ 116 19 – – $ 683 – – – $ 254 32 34 10 $ 1,116 63 72 10 $ 113 $ 135 $ 683 $ 330 $ 1,261 1 The purchase price allocation, primarily in respect of customer contracts, related customer relationships and leasehold interests and deferred income taxes, had not been finalized as of the date of issuance of these consolidated financial statements. As is customary in a business acquisition transaction, until the time of acquisition of control, we do not have full access to the books and records of the acquired businesses. Upon having sufficient time to review the books and records of the acquired businesses, we expect to finalize our purchase price allocations. The fair value of accounts receivable is equal to the gross contractual amounts receivable and reflects the best estimates at the acquisition dates of the contractual cash flows expected to be collected. Customer contracts and customer relationships (including those related to customer contracts) are generally expected to be amortized over a period of 8–10 years; software is expected to be amortized over a period of 4–10 years. 2 3 TELUS 2019 ANNUAL REPORT • 169

Pro forma disclosures The following pro forma supplemental information represents certain results of operations as if the business acquisitions noted above had been completed at the beginning of the fiscal 2019 year. supple mental information is not necessarily indicative of our consoli-dated financial results in future periods or the actual results that would have been realized had the business acquisitions been completed at the beginning of the period presented. The pro forma supplemental information includes incremental property, plant and equipment depreci-ation, intangible asset amortization, financing and other charges as a result of the acquisitions, net of the related tax effects. Year ended December 31, 2019 (millions except per share amounts) Note As reported1 Pro forma2 Operating revenues Net income Net income per Common Share Basic Diluted $ 14,658 $ 1,776 $ 14,980 $ 1,755 (c) Business acquisition – prior period In 2018, we acquired Medisys Health Group Inc., a business that is complementary to our existing lines of healthcare business. As at December 31, 2018, the purchase price allocation had not been finalized. During the six-month period ended June 30, 2019, prelim-inary acquisition-date values assigned for customer relationships, goodwill, advance billings and customer deposits, other long-term liabilities and deferred income taxes were increased (decreased) by $(22 million), $14 million, $3 million, $(7 million) and $(4 million), respectively; as required by IFRS-IASB, comparative amounts have been adjusted so as to reflect those increases (decreases) effective the acquisition date. 28(b) $ 2.90 $ 2.90 $ 2.87 $ 2.87 1 Operating revenues and net income for the year ended December 31, 2019, include: $39 and $8, respectively, in respect of the telecommunications business; $19 and $(3), respectively, in respect of the smart data solutions business; and $40 and $(5), respectively, in respect of ADT Security Services Canada, Inc. 2 Pro forma amounts for the year ended December 31, 2019, reflect the acquired businesses. The results of the acquired businesses have been included in our Consolidated statements of income and other comprehensive income effective the dates of acquisition. The pro forma supplemental information is based on estimates and assumptions that are believed to be reasonable. The pro forma (d) Business acquisition – subsequent to reporting period Competence Call Center On December 4, 2019, we announced that we had entered into an agreement to acquire 100% of Competence Call Center for approximately $1.3 billion (€915 million), less debt assumed and subject to customary closing conditions, including regulatory approvals. Competence Call Center, which will be consolidated with our TELUS International (Cda) Inc. subsidiary, is a provider of higher-value-added business services with a focus on customer relationship management and content moderation. Subsequently, the requisite regulatory approvals were obtained and the transaction closed on January 31, 2020. As of February 13, 2020, our initial estimates of acquisition-date fair values are as set out following: Preliminary estimates1 of acquisition-date fair values (billions) Assets Intangible assets Goodwill Liabilities and consideration Net debt Deferred income taxes $ 0.7 0.8 $ 0.2 0.2 0.4 Consideration Cash2 1.1 $ 1.5 $ 1.5 1 As is customary in a business acquisition transaction, until the time of acquisition of control, we do not have full access to the books and records of the acquired business. Upon having sufficient time to review the books and records of the acquired business, as well as obtaining new and additional information about the related facts and circumstances as of the acquisition date, we will adjust the provisional amounts for identifiable assets acquired and liabilities assumed and thus finalize our purchase price allocation. 2 Concurrent with this business acquisition, for both the purchase of shares and to advance funds to repay third-party debt, our TELUS International (Cda) Inc. subsidiary drew an incremental $1.0 on its credit facility (as described further in Note 26(f)) and issued shares of itself to non-controlling interests for cash consideration of approximately $0.2. (e) Intangible assets with indefinite lives – spectrum licences Our intangible assets with indefinite lives include spectrum licences granted by Innovation, Science and Economic Development Canada, which are used for the provision of both mobile and fixed wireless services. The spectrum licence policy terms indicate that the spectrum licences will likely be renewed. We expect our spectrum licences to be renewed every 20 years following a review of our compliance with licence terms. In addition to current usage, our licensed spectrum can be used for planned and new technologies. As a result of our assessment of the combination of these significant factors, we currently consider our spectrum licences to have indefinite lives and, as referred to in Note 1(b), this represents a significant judgment for us. (f) Impairment testing of intangible assets with indefinite lives and goodwill General As referred to in Note 1(f), the carrying values of intangible assets with indefinite lives and goodwill are periodically tested for impairment and, as referred to in Note 1(b), this test represents a significant estimate for us, while also requiring significant judgments to be made. Also as referred to in Note 1(b), effective January 1, 2020, we embarked upon modifying our internal and external reporting processes, systems and internal controls to accommodate the technology convergence-driven cessation of the historical distinction between our wireless and wireline operations and this reflects a concurrent redetermination of cash-generating units; although the future annual testing will commensurately change to reflect this redetermination, the December 2019 and December 2018 annual tests reflect the historical distinction. 170 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 19 The carrying values allocated to intangible assets with indefinite lives and goodwill are set out in the following table. Intangible assets with indefinite lives Goodwill Total As at December 31 (millions) 2019 2018 2019 20181 2019 2018 Wireless Wireline $ 9,937 – $ 8,694 – $ 2,890 2,441 $ 2,861 1,886 $ 12,827 2,441 $ 11,555 1,886 $ 9,937 $ 8,694 $ 5,331 $ 4,747 $ 15,268 $ 13,441 1 The goodwill balance for wireline as at December 31, 2018, has been adjusted, as set out in (c). The recoverable amounts of the cash-generating units’ assets have been determined based on a fair value less costs of disposal calculation. There is a material degree of uncertainty with respect to the estimates of the recoverable amounts of the cash-generating units’ assets, given the necessity of making key economic assumptions about the future. Recoverable amounts based on fair value less costs of disposal calcula-tions are categorized as Level 3 fair value measures. We validate our recoverable amount calculation results through a market-comparable approach and an analytical review of industry facts and facts that are specific to us. The market-comparable approach uses current (at time of test) market consensus estimates and equity trading prices for U.S. and Canadian firms in the same industry. In addition, we ensure that the combination of the valuations of the cash-generating units is reasonable based on our current (at time of test) market value. The key assumptions for cash flow projections are based upon our approved financial forecasts, which span a period of three years and are discounted, for December 2019 annual impairment test purposes, at a consolidated post-tax notional rate of 7.0% (2018 – 7.0%). For impairment testing valuations, cash flows subsequent to the three-year projection period are extrapolated, for December 2019 annual impairment test purposes, using perpetual growth rates of 2.00% (2018 – 2.00%) for each of the wireless cash-generating unit and the wireline cash-generating unit; these growth rates do not exceed the long-term average growth rates observed in the markets in which we operate. We believe that any reasonably possible change in the key assumptions on which the calculation of the recoverable amounts of our cash-generating units is based would not cause the cash-generating units’ carrying values (including the intangible assets with indefinite lives and the goodwill allocated to each cash-generating unit) to exceed their recoverable amounts. If the future were to adversely differ from management’s best estimates for the key assumptions and associated cash flows were to be materially adversely affected, we could potentially experience future material impairment charges in respect of our intangible assets with indefinite lives and goodwill. Key assumptions The fair value less costs of disposal calculation uses discounted cash flow projections that employ the following key assumptions: future cash flows and growth projections (including judgments about the allocation of future capital expenditures to support both wireless and wireline operations); associated economic risk assumptions and estimates of the likelihood of achieving key operating metrics and drivers; estimates of future generational infrastructure capital expenditures; and the future weighted average cost of capital. We consider a range of reasonably possible amounts to use for key assumptions and decide upon amounts that represent management’s best estimates of market amounts. In the normal course, we make changes to key assumptions so that they reflect current (at time of test) economic conditions, updates of historical information used to develop the key assumptions and changes (if any) in our debt ratings. Sensitivity testing Sensitivity testing was conducted as a part of the December 2019 annual impairment test, a component of which was hypothetical changes in the future weighted average cost of capital. Stress testing included a scenario of moderate declines in annual cash flows with all other assumptions being held constant; under this scenario, we would be able to recover the carrying values of our intangible assets with indefinite lives and goodwill for the foreseeable future. See Note 2(a) for details of significant changes to IFRS-IASB that have been applied effective January 1, 2019. We have the right of use of land, buildings and equipment under leases. Most of our leases for real estate that we use for office, retail or network (including wireless site) purposes typically have options to extend the lease terms, which we use to protect our investment in leasehold improvements (including wireless site equipment), to mitigate relocation risk and/or which reflect the importance of the underlying real estate right-of-use lease assets to our operations. Judgments about lease terms are determinative of the measurement of right-of-use lease assets and their associated lease liabilities. Our judgment in respect of lease terms for leased real estate utilized in connection with our telecom-munications infrastructure, more so than for any other right-of-use lease assets, routinely includes periods covered by options to extend the lease terms, as we are reasonably certain that we will extend such leases. In the normal course of operations, there are future non-executory cash outflows in respect of leases to which we are potentially exposed and which are not included in our lease liabilities as at the reporting date. TELUS 2019 ANNUAL REPORT • 171 19 LEASES

A significant, and increasing, portion of our wireless site lease payments have consumer price index-based price adjustments and such adjustments result in future periodic re-measurements of the lease liabilities with commensurate adjustments to the associated real estate right-of-use lease assets (and associated future depreciation amounts); these adjustments would represent our current variable lease payments. As well, we routinely and necessarily commit to leases that have not yet commenced. As mandated by Innovation, Science and Economic Development Canada, telecommunications companies are obligated to allow, on their real estate assets owned, on their real estate right-of-use lease assets and/or on their owned-equipment situated on real estate right-of-use lease assets, competitors to co-locate telecommunications infrastruc-ture equipment. Of our real estate right-of-use lease assets used for purposes of situating telecommunications infrastructure equipment, approximately one-fifth have subleases that we, as lessor, account for as operating leases. Maturity analyses of our lease liabilities are set out in Note 4(c) and Note 26(i); the period interest expense in respect thereof is set out in Note 9. The additions to, the depreciation charges for, and the carrying amounts of, right-of-use lease assets are set out in Note 17. We have not currently elected to exclude low-value and short-term leases from lease accounting. Years ended December 31 (millions) 2019 2018 Income from subleasing right-of-use lease assets Co-location sublet revenue included in operating service revenues Lease payments $ 18 $ 400 $ 18 $ 280 As at December 31 (millions) Note 2019 2018 Pension assets Unbilled customer finance receivables Derivative assets Costs incurred to obtain or fulfill a contract with a customer Real estate joint venture advances Investment in real estate joint ventures Portfolio investments1 Prepaid maintenance Other 15(b) 4(b) 4(h) $ 155 225 76 109 104 3 110 55 82 $ 503 47 54 110 69 5 70 55 73 21(b) 21(b) $ 919 $ 986 1 Fair value measured at reporting date using significant other observable inputs (Level 2). The costs incurred to obtain and fulfill contracts with customers are set out in the following table: Years ended December 31 (millions) 2019 2018 Costs incurred to Costs incurred to Obtain contracts with customers Fulfill contracts with customers Obtain contracts with customers Fulfill contracts with customers Total Total Balance, beginning of period Additions Amortization $ 356 288 (300) $ 15 4 (5) $ 371 292 (305) $ 329 313 (286) $ 11 8 (4) $ 340 321 (290) Balance, end of period $ 344 $ 14 $ 358 $ 356 $ 15 $ 371 Current1 Non-current $ 243 101 $ 6 8 $ 249 109 $ 256 100 $ 5 10 $ 261 110 $ 344 $ 14 $ 358 $ 356 $ 15 $ 371 1 Presented on the Consolidated statements of financial position in prepaid expenses. 172 • TELUS 2019 ANNUAL REPORT 20 OTHER LONG-TERM ASSETS

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Our real estate joint ventures activity Our real estate joint ventures investment activity is set out in the following table. Years ended December 31 (millions) 2019 2018 Loans and receivables1 Loans and receivables1 Equity, net2 Equity, net2 Total Total Related to real estate joint ventures’ statements of income and other comprehensive income Comprehensive income (loss) attributable to us3 Related to real estate joint ventures’ statements of financial position Items not affecting currently reported cash flows Construction credit facilities financing costs charged by us and other (Note 7) Cash flows in the current reporting period Construction credit facilities Amounts advanced Financing costs paid to us Funds repaid to us and earnings distributed $ – $ (4) $ (4) $ – $ 171 $ 171 4 – 4 3 – 3 35 (4) – – – (3) 35 (4) (3) 22 (3) – – – (181) 22 (3) (181) Net increase (decrease) Real estate joint ventures carrying amounts Balance, beginning of period 35 (7) 28 22 (10) 12 69 5 74 47 15 62 Balance, end of period $ 104 $ (2) $ 102 $ 69 $ 5 $ 74 1 Loans and receivables are included in our Consolidated statements of financial position as Real estate joint venture advances and are comprised of advances under construction credit facilities. We account for our interests in the real estate joint ventures using the equity method of accounting. As at December 31, 2019, we had recorded equity losses in excess of our recorded equity investment in respect of one of the real estate joint ventures; such resulting balance has been included in long-term liabilities (Note 27). As the real estate joint ventures are partnerships, no provision for income taxes of the partners is made in determining the real estate joint ventures’ net income and comprehensive income. 2 3 We have entered into a lease agreement with the TELUS Sky real estate joint venture; for lease accounting purposes, the lease commenced during the three-month period ended March 31, 2019. Prior to the sale of the TELUS Garden income-producing properties, during the year ended December 31, 2018, the TELUS Garden real estate joint venture recognized $7 million of revenue from our TELUS Garden office tenancy; of this amount, one-half was due to our economic interest in the real estate joint venture and one-half was due to our partner’s economic interest in the real estate joint venture. Construction credit facility The TELUS Sky real estate joint venture has a credit agreement, maturing August 31, 2021, with Canadian financial institutions (as 66 2 3% lender) and TELUS Corporation (as 331 3% lender) to provide $342 million of construction financing for the project. The construction credit facility contains customary real estate construction financing representations, warranties and covenants and is secured by demand debentures constituting first fixed and floating charge mortgages over the underlying real estate assets. The construction credit facility is available by way of bankers’ acceptance or prime loan and bears interest at rates in line with similar construction financing facilities. Real estate joint ventures commitments and contingent liabilities Construction commitments The TELUS Sky real estate joint venture is expected to spend a total of approximately $450 million (2018 – $400 million) on the construction of a mixed-use tower. As at December 31, 2019, the real estate joint venture’s construction-related contractual commitments were approximately $37 million through to 2020 (2018 – $35 million through to 2019). As at December 31 (millions) Note 2019 2018 Construction credit facility commitment – TELUS Corporation Undrawn Advances 4(c) $ 10 104 $ 45 69 114 114 Construction credit facility commitment – other 228 228 $ 342 $ 342 174 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 22–24 On July 26, 2002, one of our subsidiaries, TELUS Communications Inc., entered into an agreement with an arm’s-length securitization trust associated with a major Schedule I bank under which it is able to sell an interest in certain trade receivables up to a maximum of $500 million (2018 – $500 million). The term of this revolving-period securitization agreement ends December 31, 2021, and it requires minimum cash proceeds of $100 million from monthly sales of interests in certain trade receivables. TELUS Communications Inc. is required to maintain a credit rating of at least BB (2018 – BB) from DBRS Limited or the securi-tization trust may require the sale program to be wound down prior to the end of the term. Sales of trade receivables in securitization transactions are recognized as collateralized short-term borrowings and thus do not result in our de-recognition of the trade receivables sold. When we sell our trade receivables, we retain reserve accounts, which are retained interests in the securitized trade receivables, and servicing rights. As at December 31, 2019, we had sold to the trust (but continued to recognize) trade receivables of $124 million (2018 – $120 million). Short-term borrowings of $100 million (2018 – $100 million) are com-prised of amounts advanced to us by the arm’s-length securitization trust pursuant to the sale of trade receivables. As at December 31, 2019, TELUS Corporation has received a commitment letter for a $750 million unsecured, single-drawdown, non-revolving credit facility, maturing one year from the completion of documentation, which is to be used for general corporate purposes. The facility will be available upon completion of documentation and satisfaction of conditions precedent; once available, we will have 30 days to draw upon the facility, after which time the undrawn committed amount will be cancelled. As at February 13, 2020, documentation had not been completed. The credit facility bears interest at prime rate or bankers’ acceptance rate (as such terms are used or defined in the credit facility), plus applicable margins; representations, warranties and covenants generally will not differ from those of the existing TELUS Corporation credit facility (see Note 26(d)). The balance of short-term borrowings (if any) is comprised of amounts drawn on our bilateral bank facilities. As at December 31 (millions) 2019 2018 Accrued liabilities Payroll and other employee-related liabilities Restricted share units liability $ 1,091 422 77 $ 1,159 429 72 1,590 892 160 107 1,660 686 157 67 Trade accounts payable Interest payable Other $ 2,749 $ 2,570 As at December 31 (millions) 2019 2018 Advance billings Deferred customer activation and connection fees Customer deposits $ 522 $ 538 9 14 10 13 Contract liabilities Other 545 130 561 95 $ 675 $ 656 TELUS 2019 ANNUAL REPORT • 175 24 ADVANCE BILLINGS AND CUSTOMER DEPOSITS 22 SHORT-TERM BORROWINGS 23 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Contract liabilities represent our future performance obligations to customers in respect of services and/or equipment for which we have received consideration from the customer or for which an amount is due from the customer. Our contract liability balances, and the changes in those balances, are set out in the following table: Years ended December 31 (millions) Note 2019 2018 Balance, beginning of period Revenue deferred in previous period and recognized in current period Net additions arising from operations Additions arising from business acquisitions $ 811 (648) 605 33 $ 780 (689) 708 12 18(b) Balance, end of period $ 801 $ 811 Current Non-current Deferred revenues Deferred customer activation and connection fees $ 718 $ 718 27 70 13 78 15 $ 801 $ 811 Reconciliation of contract liabilities presented in the Consolidated statements of financial position – current Gross contract liabilities Reclassification to contract assets for contracts with contract liabilities less than contract assets Reclassification from contract assets for contracts with contract assets less than contract liabilities $ 718 (166) (7) $ 718 (154) (3) $ 545 $ 561 Asset retirement obligation Employee- related Written put options (millions) Note Other Total As at January 1, 2018 Additions Reversal Use Interest effect Effects of foreign exchange, net $ 351 6 – (10) (11) – $ 36 124 – (72) – – $ 82 184 (15) – 10 21 $ 120 95 (7) (57) – – $ 589 409 (22) (139) (1) 21 As at December 31, 2018 $ 336 $ 88 $ 282 $ 151 $ 857 As at January 1, 2019 As previously reported IFRS 16, Leases transitional amount $ 336 – $ 88 – $ 282 – $ 151 (57) $ 857 (57) 2(c) As adjusted Additions Reversal Use Interest effect1 Effects of foreign exchange, net 336 15 – (5) 149 – 88 64 – (88) – – 282 – (17) (62) 11 (18) 94 105 (6) (69) – (1) 800 184 (23) (224) 160 (19) As at December 31, 2019 $ 495 $ 64 $ 196 $ 123 $ 878 Current Non-current $ 11 484 $ 59 5 $ 191 5 $ 27 96 $ 288 590 As at December 31, 2019 $ 495 $ 64 $ 196 $ 123 $ 878 1 The difference of $138 (2018 – $(22)) between the asset retirement obligation interest effect in this table and the amount included in the amount disclosed in Note 9 is in respect of the change in the discount rates applicable to the provision, such difference being included in the cost of the associated asset(s) by way of being included with (netted against) the additions detailed in Note 17. 176 • TELUS 2019 ANNUAL REPORT 25 PROVISIONS

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 25 –26 Asset retirement obligation We establish provisions for liabilities associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development and/or normal operation of the assets. We expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur proximate to the dates these assets are retired. Other The provisions for other include: legal claims; non-employee-related restructuring activities; and contract termination costs and onerous contracts related to business acquisitions. Other than as set out below, we expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur over an indeterminate multi-year period. As discussed further in Note 29, we are involved in a number of legal claims and we are aware of certain other possible legal claims. In respect of legal claims, we establish provisions, when warranted, after taking into account legal assessments, information presently available, and the expected availability of recourse. The timing of cash outflows associated with legal claims cannot be reasonably determined. In connection with business acquisitions, we have established provisions for contingent consideration, contract termination costs and onerous contracts acquired. Employee-related The employee-related provisions are largely in respect of restructuring activities (as discussed further in Note 16(b)). The timing of the cash outflows in respect of the balance accrued as at the financial statement date is substantially short-term in nature. Written put options In connection with certain business acquisitions, we have estab-lished provisions for written put options in respect of non-controlling interests. Provisions for written put options are determined based on the net present value of estimated future earnings results and require us to make key economic assumptions about the future. No cash outflows for the written put options are expected prior to their initial exercisability in 2020. (a) Details of long-term debt (b) TELUS Corporation senior notes The notes are senior unsecured and unsubordinated obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated obligations, are senior in right of payment to all of our existing and future subordinated indebtedness, and are effec-tively subordinated to all existing and future obligations of, or guaranteed by, our subsidiaries. The indentures governing the notes contain certain covenants that, among other things, place limitations on our ability, and the ability of certain of our subsidiaries, to: grant security in respect of indebtedness; enter into sale-leaseback transactions; and incur new indebtedness. Interest is payable semi-annually. The notes require us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture. At any time prior to the respective maturity dates set out in the table below, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 days’ and not more than 60 days’ prior notice. On or after the respective redemption present value spread cessation dates set out in the table below, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 days’ and not more than 60 days’ prior notice, at redemption prices equal to 100% of the principal amounts thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption. As at December 31 (millions) Note 2019 2018 Senior unsecured TELUS Corporation senior notes TELUS Corporation commercial paper TELUS Communications Inc. debentures Secured TELUS International (Cda) Inc. credit facility Other (b) (c) (e) $ 14,479 1,015 621 $ 12,186 774 620 (f) (g) 431 267 419 – 16,813 1,661 13,999 102 Lease liabilities (h) Long-term debt $ 18,474 $ 14,101 Current N on-current $ 1,332 17,142 $ 836 13,265 L ong-term debt $ 18,474 $ 14,101 TELUS 2019 ANNUAL REPORT • 177 26 LONG-TERM DEBT

Principal face amount Redemption present value spread Effective interest rate1 Outstanding at financial statement date Originally issued Basis points Series Issued Maturity Issue price Cessation date 5.05% Notes, Series CH 3.60% Notes, Series CM 3.20% Notes, Series CO 2.35% Notes, Series CT 3.35% Notes, Series CJ 3.35% Notes, Series CK 3.75% Notes, Series CQ 3.75% Notes, Series CV 2.75% Notes, Series CZ 2.80% U.S. Dollar Notes4 3.70% U.S. Dollar Notes4 3.625% Notes, Series CX 3.30% Notes, Series CY 3.15% Notes, Series CAA 4.40% Notes, Series CL 5.15% Notes, Series CN 4.85% Notes, Series CP 4.75% Notes, Series CR 4.40% Notes, Series CU 4.70% Notes, Series CW 4.60% U.S. Dollar Notes4 4.30% U.S. Dollar Notes4 3.95% Notes, Series CAB July 2010 November 2013 April 2014 March 2015 December 2012 April 2013 September 2014 December 2015 July 2019 September 2016 March 2017 March 2018 April 2019 December 2019 April 2013 November 2013 Multiple6 September 2014 March 2015 Multiple7 June 2018 May 2019 December 2019 July 20202 January 2021 April 2021 March 2022 March 2023 April 2024 January 2025 March 2026 July 2026 February 2027 September 2027 March 2028 May 2029 February 2030 April 2043 November 2043 April 2044 January 2045 January 2046 March 2048 November 2048 June 2049 February 2050 $997.44 $997.15 $997.39 $997.31 $998.83 $994.35 $997.75 $992.14 $998.73 US$991.89 US$998.95 $989.49 $991.75 $996.49 $997.68 $995.00 $987.916 $992.91 $999.72 $998.067 US$987.60 US$990.48 $991.54 5.08% 3.65% 3.24% 2.39% 3.36% 3.41% 3.78% 3.84% 2.77% 2.89% 3.71% 3.75% 3.40% 3.19% 4.41% 5.18% 4.93%6 4.80% 4.40% 4.71%7 4.68% 4.36% 4.00% $1.0 billion $400 million $500 million $1.0 billion $500 million $1.1 billion $800 million $600 million $800 million $NIL $400 million $500 million $1.0 billion $500 million $1.1 billion $800 million $600 million $800 million 472 353 303 35.53 403 363 38.53 53.53 333 205 205 373 43.53 39.53 473 503 463 51.53 60.53 58.53 255 255 57.53 N/A N/A Mar. 5, 2021 Feb. 28, 2022 Dec. 15, 2022 Jan. 2, 2024 Oct. 17, 2024 Dec. 10, 2025 May 8, 2026 Nov. 16, 2026 June 15, 2027 Dec. 1, 2027 Feb. 2, 2029 Nov. 19, 2029 Oct. 1, 2042 May 26, 2043 Oct. 5, 2043 July 17, 2044 July 29, 2045 Sept. 6, 2047 May 16, 2048 Dec. 15, 2048 Aug. 16, 2049 US$600 million US$600 million US$500 million US$500 million $600 million $1.0 billion $600 million $600 million $400 million $500 million6 $400 million $500 million $325 million7 $600 million $1.0 billion $600 million $600 million $400 million $900 million6 $400 million $500 million $475 million7 US$750 million US$750 million US$500 million US$500 million $400 million $400 million 1 2 The effective interest rate is that which the notes would yield to an initial debt holder if held to maturity. On May 31, 2019, we exercised our right to early redeem, on July 23, 2019, $650 million of our 5.05% Notes, Series CH. On July 3, 2019, we exercised our right to early redeem, on August 7, 2019, the remaining $350 million not called for redemption on May 31, 2019. The long-term debt prepayment premium recorded in the three-month period ended September 30, 2019, was $28 million before income taxes. The redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread calculated over the period to maturity, other than in the case of the Series CT, Series CU, Series CV, Series CW, Series CX, Series CY, Series CZ, Series CAA and Series CAB notes, for which it is calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof. We have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively converted the principal payments and interest obligations to Canadian dollar obligations as follows: 3 4 Canadian dollar equivalent principal Series Interest rate fixed at Exchange rate 2.95% 3.41% 4.41% 4.27% $792 million $667 million $974 million $672 million $1.3205 $1.3348 $1.2985 $1.3435 2.80% U.S. Dollar Notes 3.70% U.S. Dollar Notes 4.60% U.S. Dollar Notes 4.30% U.S. Dollar Notes 5 The redemption price is equal to the greater of (i) the present value of the notes discounted at the U.S. Adjusted Treasury Rate plus the redemption present value spread calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof. $500 million of 4.85% Notes, Series CP were issued in April 2014 at an issue price of $998.74 and an effective interest rate of 4.86%. This series of notes was reopened in December 2015 and a further $400 million of notes were issued at an issue price of $974.38 and an effective interest rate of 5.02%. $325 million of 4.70% Notes, Series CW were issued in March 2017 at an issue price of $990.65 and an effective interest rate of 4.76%. This series of notes was reopened in February 2018 and a further $150 million of notes were issued at an issue price of $1,014.11 and an effective interest rate of 4.61% in March 2018. 6 7 (c) TELUS Corporation commercial paper TELUS Corporation has an unsecured commercial paper program, which is backstopped by our $2.25 billion syndicated credit facility (see (d)) and is to be used for general corporate purposes, including capital expenditures and investments. This program enables us to issue commercial paper, subject to conditions related to debt ratings, up to a maximum aggregate amount at any one time of $1.4 billion (2018 – $1.4 billion). Foreign currency forward contracts are used to man-age currency risk arising from issuing commercial paper denominated in U.S. dollars. Commercial paper debt is due within one year and is classified as a current portion of long-term debt, as the amounts are fully supported, and we expect that they will continue to be supported, by the revolving credit facility, which has no repayment requirements within the next year. As at December 31, 2019, we had $1,015 million of commercial paper outstanding, all of which was denominated in U.S. dollars (US$781 million), with an effective weighted average interest rate of 2.11%, maturing through April 2020. 178 • TELUS 2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 26 (d) TELUS Corporation credit facility AsatDecember31,2019,TELUSCorporationhadanunsecuredrevolving$2.25billionbankcreditfacility,expiringonMay31,2023,withasyndicateoffinancialinstitutions,whichistobeusedforgeneralcorporatepurposes,includingthebackstoppingofcommercialpaper. TheTELUSCorporationcreditfacilitybearsinterestatprimerate,U.S.DollarBaseRate,abankers’acceptancerateorLondoninterbankofferedrate(LIBOR)(assuchtermsareusedordefinedinthecreditfacility),plusapplicablemargins.Thecreditfacilitycontainscustomaryrepresentations,warrantiesandcovenants,includingtwofinancialquarter-endratiotests.Thesetestsarethatournetdebttooperatingcashflowratiomustnotexceed4.00:1.00andouroperatingcashflowtointerestexpenseratiomustnotbelessthan2.00:1.00,allasdefinedinthecreditfacility. ContinuedaccesstotheTELUSCorporationcreditfacilityisnot contingentuponTELUSCorporationmaintainingaspecificcreditrating. AsatDecember31(millions) 2019 2018 Netavailable Backstopofcommercialpaper $ 1,235 1,015 $1,476 774 Grossavailable $ 2,250 $2,250 Wehad$184millionoflettersofcreditoutstandingasatDecember31, 2019(2018–$184million),issuedundervariousuncommittedfacilities;suchletterofcreditfacilitiesareinadditiontotheabilitytoprovidelettersofcreditpursuanttoourcommittedbankcreditfacility. Wehadarranged$880millionofincrementallettersofcredittoallowustoparticipateintheInnovation,ScienceandEconomicDevelopmentCanada600MHzwirelessspectrumauctionthatwasheldinMarch-April2019,asdiscussedfurtherinNote 18(a).Concurrentwithfundingthepurchaseofthespectrumlicences,theseincrementallettersof creditwereextinguished. (e) TELUS Communications Inc. debentures TheSeries3and5DebentureswereissuedbyapredecessorcorporationofTELUSCommunicationsInc.,BCTEL,underaTrustIndenturedatedMay31,1990.TheSeriesBDebentureswereissuedbyapredecessorcorporationofTELUSCommunicationsInc.,AGTLimited,underaTrustIndenturedatedAugust24,1994,andasupplementaltrustindenturedatedSeptember22,1995. Principalfaceamount Outstandingatfinancialstatementdate Redemptionpresentvaluespread(basispoints) Series1 Issued Maturity Issueprice Originallyissued 10.65%Debentures,Series3 9.65%Debentures,Series52 8.80%Debentures,SeriesB June1991 April1992 September1995 June2021 April2022 September2025 $998.00 $972.00 $995.10 $175million $150million $200million $175million $249million $200million N/A(non-redeemable) N/A(non-redeemable) 153 1 2 Interestispayablesemi-annually. Series4Debentureswereexchangeable,attheholder’soption,effectiveonApril8ofanyyearduringthefour-yearperiodfrom1996to1999,forSeries5Debentures;$99millionofSeries4DebentureswereexchangedforSeries5Debentures. Atanytimepriortothematuritydatesetoutinthetable,thedebenturesareredeemableatouroption,inwholeatanytime,orinpartfromtimetotime,onnotlessthan30days’priornotice.Theredemptionpriceisequaltothegreaterof(i)thepresentvalueofthedebenturesdiscountedattheGovernmentofCanadayieldplustheredemptionpresentvaluespread,or(ii)100%oftheprincipalamountthereof.Inaddition,accruedandunpaidinterest,ifany,willbepaidtothedatefixedforredemption. 3 ThedebenturesbecameobligationsofTELUSCommunicationsInc.pursuanttoanamalgamationonJanuary1,2001,arenotsecuredbyanymortgage,pledgeorotherchargeandaregovernedbycertaincovenants,includinganegativepledgeandalimitationonissuesofadditionaldebt,subjecttoadebttocapitalizationratioandaninterestcoveragetest.EffectiveJune12,2009,TELUSCorporationguaranteedthepaymentofthe debentures’principalandinterest. (f) TELUS International (Cda) Inc. credit facility AsatDecember31,2019,TELUSInternational(Cda)Inc.hadabankcreditfacility,securedbyitsassetsandexpiringonDecember20,2022,withasyndicateoffinancialinstitutions.ThecreditfacilityiscomprisedofaUS$350million(2018–US$350million)revolvingcomponentandanamortizingUS$120million(2018–US$120million)termloancomponent.Thecreditfacilityisnon-recoursetoTELUSCorporation.Theoutstandingrevolvingcomponenthadaweightedaverageinterestrateof3.25%asatDecember31,2019. AsatDecember31(millions) 2018 2019 Revolving component Term loan component1 Revolving component Termloan component Total Total Available Outstanding US$ 121 229 US$ N/A 107 US$ 121 336 US$150 200 US$ N/A 113 US$150 313 US$ 350 US$ 107 US$ 457 US$350 US$113 US$463 1 Wehaveenteredintoareceive-floatinginterestrate,pay-fixedinterestrateexchangeagreementthateffectivelyconvertsourinterestobligationsonthedebttoafixedrateof2.64%. TELUS2019 ANNUAL REPORT • 179

TheTELUSInternational(Cda)Inc.creditfacilitybearsinterestatprimerate,U.S.DollarBaseRate,abankers’acceptancerateorLondoninter-bankofferedrate(LIBOR)(assuchtermsareusedordefinedinthecreditfacility),plusapplicablemargins.Thecreditfacilitycontainscustomaryrepresentations,warrantiesandcovenants,includingtwoquarter-endfinancialratiotests:theTELUSInternational(Cda)Inc.netdebttooperat-ingcashflowratiomustnotexceed3.25:1.00,anditsoperatingcashflowtodebtservice(interestandscheduledprincipalrepayment)ratiomustnotbelessthan1.50:1.00,allasdefinedinthecreditfacility. Thetermloanissubjecttoanamortizationschedulewhichrequiresthat5%oftheprincipaladvancedberepaideachyearofthetermoftheagreement,withthebalancedueatmaturity. SubsequenttoDecember31,2019,thebankcreditfacilitywasamended,withanexpirydateofJanuary28,2025,therevolvingandamortizingtermloancomponentswereeachincreasedtoUS$600millionandTELUSCorporation(as12.5%lender)joinedthelendingsyndicate.Thequarter-endnetdebttooperatingcashflowfinancialratiotestwasamendedsuchthattheratiomustnotexceed:4.75:1.00duringfiscal2020;4.25:1.00duringfiscal2021;and3.50:1.00subsequently.Thequarter-endoperatingcashflowtodebtservicefinancialratio testwasunchanged,andthetermloancomponentremainssubject toanamortizationschedulewhichrequiresthat5%oftheprincipaladvancedberepaideachyearofthetermoftheagreement,withthebalancedueatmaturity. InconnectionwiththeacquisitionofCompetenceCallCentersubsequenttoDecember31,2019,asdiscussedfurtherinNote 18(d),incrementalamountsof$1,036million(US$798million)weredrawn,in U.S.dollars,onthefacility. (g) Other Otherliabilitiesbearinterestat3.29%,aresecuredbytheassociatedAWS-4spectrumlicences,andaresubjecttoanamortizationschedulewhichresultsintheprincipalbeingrepaidovertheperiodtomaturity,March31,2035. (h) Lease liabilities SeeNote 2(a)fordetailsofsignificantchangestoIFRS-IASBthathave beenappliedeffectiveJanuary1,2019. Leaseliabilitiesaresubjecttoamortizationschedules,whichresultsintheprincipalbeingrepaidovervariousperiods,includingreasonablyexpectedrenewals.Theweightedaverageinterestrateonleaseliabilitieswasapproximately4.50%asatDecember31,2019. (i) Long-term debt maturities Anticipatedrequirementstomeetlong-termdebtrepayments,calculatedforlong-termdebtsowingasatDecember31,2019,areasfollows: Other currencies Compositelong-termdebtdenominatedin Canadiandollars U.S.dollars Currencyswapagreement amountstobeexchanged Long-termdebt,excludingleases Long-termdebt,excludingleases Leases (Note 19) Leases (Note 19) Leases (Note 19) YearsendingDecember31(millions) Total (Receive)1 Pay Total Total 2020 2021 2022 2023 2024 2025–2029 Thereafter $ 12 1,088 1,263 514 1,115 4,086 4,388 $ 255 235 123 115 104 280 270 $ 267 1,323 1,386 629 1,219 4,366 4,658 $1,023 8 420 – – 1,429 1,624 $19 19 18 15 4 4 – $(1,021) – – – – (1,428) (1,623) $1,037 – – – – 1,459 1,646 $1,058 27 438 15 4 1,464 1,647 $ 30 29 21 20 17 38 16 $ 1,355 1,379 1,845 664 1,240 5,868 6,321 Futurecashoutflowsinrespectofcompositelong-termdebtprincipalrepayments Futurecashoutflowsinrespectofassociatedinterestandlikecarryingcosts2 12,466 1,382 13,848 4,504 79 (4,072) 4,142 4,653 171 18,672 6,124 385 6,509 2,525 14 (2,482) 2,447 2,504 50 9,063 Undiscountedcontractual maturities(Note 4(c)) $18,590 $1,767 $20,357 $7,029 $93 $(6,554) $6,589 $7,157 $221 $27,735 1 Whereapplicable,cashflowsreflectforeignexchangeratesasatDecember31,2019. 2 Futurecashoutflowsinrespectofassociatedinterestandlikecarryingcostsforcommercialpaperandamountsdrawnunderourcreditfacilities(ifany)havebeencalculatedbased upontheratesineffectasatDecember31,2019. 180 • TELUS2019 ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 27–28 AsatDecember31(millions) Note 2019 2018 Contractliabilities Other 24 $ 70 7 $ 78 7 Deferredrevenues Pensionbenefitliabilities Otherpost-employmentbenefitliabilities Restrictedshareunitanddeferredshareunitliabilities Derivativeliabilities Investmentinrealestatejointventures Other 77 580 53 42 26 5 10 85 446 45 63 6 – 71 15(b) 4(h) 21(b) 793 13 716 15 Deferredcustomeractivationandconnectionfees 24 $ 806 $731 (a) General Ourauthorizedsharecapitalisasfollows: (b) Share split SubsequenttoDecember31,2019,weannouncedasubdivisionofourCommonSharesonatwo-for-onebasistobeeffectedMarch17,2020.Inallinstances,unlessotherwiseindicated,thenumberofsharesauthor-ized,thenumberofsharesoutstanding,thenumberofsharesreserved,pershareamountsandshare-basedcompensationinformationintheconsolidatedfinancialstatementshavenotbeenretrospectivelyrestatedtoreflecttheimpactofthesubdivision;suchrestatementwouldtakeplacesubsequenttothesubdivision. AsatDecember31 20191 20181 FirstPreferredShares SecondPreferredShares CommonShares 1 billion 1 billion 2 billion 1billion 1billion 2billion 1 See(b). OnlyholdersofCommonSharesmayvoteatourgeneralmeetings,witheachholderofCommonSharesentitledtoonevoteperCommonShareheldatallsuchmeetingssolongasnotlessthan66 23%oftheissuedandoutstandingCommonSharesareownedbyCanadians.Withrespecttopriorityinthepaymentofdividendsandinthedistributionofassetsintheeventofourliquidation,dissolutionorwinding-up,whethervoluntaryorinvoluntary,oranyotherdistributionofourassetsamongourshareholdersforthepurposeofwindingupouraffairs,preferencesareasfollows:FirstPreferredShares;SecondPreferredShares;andfinallyCommonShares. AsatDecember31,2019,approximately22millionCommonShares(see(b))werereservedforissuancefromTreasuryunderadividendreinvestmentandsharepurchaseplan(seeNote 13(b)),approximately 12millionCommonShares(see(b))werereservedforissuancefromTreasuryunderarestrictedshareunitplan(seeNote 14(b))andapproxi-mately47millionCommonShares(see(b))werereservedforissuance fromTreasuryunderashareoptionplan(seeNote 14(d)). (c) Purchase of Common Shares for cancellation pursuant to normal course issuer bid AsreferredtoinNote 3,wemaypurchaseaportionofourCommonSharesforcancellationpursuanttonormalcourseissuerbidsinordertomaintainoradjustourcapitalstructure.InJuly2018,wereceivedapprovaltoamendanapprovednormalcourseissuerbid,whichwaseffectivefromNovember13,2017,toNovember12,2018,toallowawhollyownedsubsidiarytopurchaseourCommonShares,uptoamaximumamountof$105million,fordonationtoacharitablefoundationwehaveestablished,assetoutinNote 16(c).CommonSharetransactionsbyourwhollyownedsubsidiaryarepresentedintheConsolidatedstatementofchangesinowners’equityastreasurysharetransactions. InDecember2018,wereceivedapprovalforanormalcourseissuerbidtopurchaseandcancelupto8millionofourCommonShares(see(b))(uptoamaximumamountof$250million)fromJanuary2,2019,toJanuary1,2020.InDecember2019,wereceivedapprovalforanormalcourseissuerbidtopurchaseandcancelupto8millionofourCommonShares(see(b))(uptoamaximumamountof$250million)from January2,2020,toJanuary1,2021. TELUS2019 ANNUAL REPORT • 181 28 COMMON SHARE CAPITAL 27 OTHER LONG-TERM LIABILITIES

(a) Claims and lawsuits ondeceptiveorunconscionablepracticesundertheBritishColumbiaBusiness Practices and Consumer Protection Act,whichtheSupremeCourtofCanadadeclinedtostay.InJanuary2016,theBritishColumbiaSupremeCourtcertifiedthisclassactioninrelationtotheclaimundertheBusiness Practices and Consumer Protection Act.TheclassislimitedtoresidentsofBritishColumbiawhocontractedwirelessserviceswithusintheperiodfromJanuary21,1999,toApril2010.Wehaveappealedthecertificationdecision.AcompanionclassactionwasbroughtagainstusinAlbertaatthesametimeastheBritishColumbiaclassaction.TheAlbertaclassactionduplicatestheallegationsintheBritishColumbiaaction,buthasnotproceededtodateandisnotcertified.Subjecttoanumberofconditions,includingcourtapproval,wehavenowsettled boththeBritishColumbiaandtheAlbertaclassactions. General Anumberofclaimsandlawsuits(includingclassactionsandintellectualpropertyinfringementclaims)seekingdamagesandotherreliefarependingagainstusand,insomecases,otherwirelesscarriersandtelecommunicationsserviceproviders.Aswell,wehavereceivednoticeof,orareawareof,certainpossibleclaims(includingintellectualpropertyinfringementclaims)againstusand,insomecases,otherwirelesscarriersandtelecommunicationsserviceproviders. Itisnotcurrentlypossibleforustopredicttheoutcomeofsuchclaims,possibleclaimsandlawsuitsduetovariousfactors,including:thepreliminarynatureofsomeclaims;uncertaindamagetheoriesanddemands;anincompletefactualrecord;uncertaintyconcerninglegaltheoriesandproceduresandtheirresolutionbythecourts,atboththetrialandtheappeallevels;andtheunpredictablenatureofopposingpartiesandtheirdemands. However,subjecttotheforegoinglimitations,managementisoftheopinion,baseduponlegalassessmentsandinformationpresentlyavailable,thatitisunlikelythatanyliability,totheextentnotprovidedforthroughinsuranceorotherwise,wouldhaveamaterialeffectonourfinancialpositionandtheresultsofouroperations,includingcashflows, withtheexceptionoftheitemsenumeratedfollowing. Uncertified class actions Uncertifiedclassactionsagainstusinclude: 9-1-1 class actions In2008,aclassactionwasbroughtinSaskatchewanagainstusandotherCanadiantelecommunicationscarriersallegingthat,amongothermatters,wefailedtoprovidepropernoticeof9-1-1chargestothepublic,havebeendeceitfullypassingthemoffasgovernmentcharges,andhavecharged9-1-1feestocustomerswhoresideinareaswhere9-1-1serviceisnotavailable.Theplaintiffsadvancecausesofactioninbreachofcontract,misrepresentationandfalseadvertisingandseekcertificationofanationalclass.AvirtuallyidenticalclassactionwasfiledinAlbertaatthesametime,buttheAlbertaCourtofQueen’sBenchdeclaredthatclassactionexpiredagainstusasof2009.Nostepshavebeentaken inthisproceedingsince2016. Certified class actions Certifiedclassactionsagainstusincludethefollowing: Per minute billing class action In2008,aclassactionwasbroughtinOntarioagainstusallegingbreachofcontract,breachoftheOntarioConsumer Protection Act,breachoftheCompetition Actandunjustenrichment,inconnectionwithourpracticeof“roundingup”wirelessairtimetothenearestminuteandchargingforthefullminute.Theactionsoughtcertificationofanationalclass.InNovember2014,anOntarioclassonlywascertifiedbytheOntarioSuperiorCourtofJusticeinrelationtothebreachofcontract,breachofConsumer Protection Act,andunjustenrichmentclaims;allappealsofthecertificationdecisionhavenowbeenexhausted.Atthesametime,theOntarioSuperiorCourtofJusticedeclinedtostaytheclaimsofourbusinesscustomers,notwithstandinganarbitrationclauseinourcustomerserviceagreementswiththosecustomers.ThislatterdecisionwasappealedandonMay31,2017,theOntarioCourtofAppealdismissedourappeal.TheSupremeCourtofCanadagrantedusleavetoappealthisdecisionandonApril4,2019,granted ourappealandstayedtheclaimsofourbusinesscustomers. Electromagnetic field radiation class action In2013,aclassactionwasbroughtinBritishColumbiaagainstus,othertelecommunicationscarriers,andcellulartelephonemanufacturersallegingthatprolongedusageofcellulartelephonescausesadversehealtheffects.TheBritishColumbiaclassactionalleges:strictliability;negligence;failuretowarn;breachofwarranty;breachofcompetition,consumerprotectionandtradepracticeslegislation;negligentmisrepre-sentation;breachofadutynottomarkettheproductsinquestion;andwaiveroftort.Certificationofanationalclassissought.OnMarch18, 2019,pursuanttotermsofsettlement,theplaintiffsfiledaNoticeof Discontinuancediscontinuingtheirclaimagainstalldefendants. Public Mobile class actions In2014,classactionswerebroughtagainstusinQuebecandOntarioonbehalfofPublicMobile’scustomers,allegingthatchangestothetechnology,servicesandrateplansmadebyuscontraveneourstatutoryandcommonlawobligations.Inparticular,theQuebecactionallegesthatouractionsconstituteabreachoftheQuebecConsumer Protection Act,theQuebecCivil Code,andtheOntarioConsumer Protection Act.Ithasnotyetproceededtoanauthorizationhearing.TheOntarioclassactionallegesnegligence,breachofexpressandimpliedwarranty,breachoftheCompetition Act,unjustenrichment,andwaiveroftort.Nostepshavebeentakeninthisproceedingsinceitwasfiled andserved. Call set-up time class actions In2005,aclassactionwasbroughtagainstusinBritishColumbiaallegingthatwehaveengagedindeceptivetradepracticesinchargingforincomingcallsfromthemomentthecallerconnectstothenetwork,andnotfromthemomenttheincomingcallisconnectedtotherecipient.In2011,theSupremeCourtofCanadaupheldastayofallofthecausesofactionadvancedbytheplaintiffinthisclassaction,withoneexception,basedonthearbitrationclausethatwasincludedinourcustomer serviceagreements.Thesoleexceptionwasthecauseofactionbased 182 • TELUS2019 ANNUAL REPORT 29 CONTINGENT LIABILITIES

CONSOLIDATED FINANCIAL STATEMENTS: NOTE 29 Handset subsidy class action In2016,aclassactionwasbroughtinQuebecagainstusandothertelecommunicationscarriersallegingthatwebreachedtheQuebecConsumer Protection ActandtheCivil Code of Quebecbymakingfalseormisleadingrepresentationsrelatingtothehandsetsubsidyprovidedtoourwirelesscustomers,andbychargingourwirelesscustomersinflatedrateplanpricesandterminationfeeshigherthanthosepermittedundertheAct.Theclaimwaslateramendedtoalsoseekcompensationforamountspaidbyclassmemberstounlocktheirmobiledevices.TheauthorizationhearingwasheldonApril30andMay1,2019,andonJuly15,2019,theQuebecSuperiorCourtdismissedtheauthorization application.Theplaintiffhasappealedthisdecision. Summary Webelievethatwehavegooddefencestotheabovematters.Shouldtheultimateresolutionofthesemattersdifferfrommanagement’sassessmentsandassumptions,amaterialadjustmenttoourfinancialpositionandtheresultsofouroperations,includingcashflows,couldresult.Management’sassessmentsandassumptionsincludethatreliableestimatesofanysuchexposurecannotbemadeconsideringthecon-tinueduncertaintyabout:thenatureofthedamagesthatmaybesoughtbytheplaintiffs;thecausesofactionthatarebeing,ormayultimatelybe,pursued;and,inthecaseoftheuncertifiedclassactions,thecauses ofactionthatmayultimatelybecertified. (b) Indemnification obligations Inthenormalcourseofoperations,weprovideindemnificationinconjunctionwithcertaintransactions.Thetermsoftheseindemnificationobligationsrangeinduration.Theseindemnificationswouldrequireustocompensatetheindemnifiedpartiesforcostsincurredasaresultoffailuretocomplywithcontractualobligations,orlitigationclaimsorstatutorysanctions,ordamagesthatmaybesufferedbyanindemnifiedparty.Insomecases,thereisnomaximumlimitontheseindemnificationobligations.Theoverallmaximumamountofanindemnificationobligationwilldependonfutureeventsandconditionsandthereforecannotbereasonablyestimated.Whereappropriate,anindemnificationobligationisrecordedasaliability.Otherthanobligationsrecordedasliabilitiesatthetimeoftherelatedtransactions,historicallywehavenotmadesignificantpaymentsundertheseindemnifications. SeeNote 21(b)fordetailsregardingourguaranteestotherealestate jointventures. AsatDecember31,2019,wehadnoliabilityrecordedinrespectof ourindemnificationobligations. Intellectual property infringement claims Claimsandpossibleclaimsreceivedbyusinclude: 4G LTE network patent infringement claim ApatentinfringementclaimwasfiledinOntarioin2016allegingthatcommunicationsbetweendevices,includingcellulartelephones,andbasestationsonour4GLTEnetworkinfringethreethird-partypatents.Theplaintiffabandoneditsclaimsinrespectoftwoofthethreepatents.Theclaimsbasedonthethirdpatentweresettobetriedinthefourthquarterof2019,butthepartiessettledthematterbefore thetrialcommenced. Other claims Claimsandpossibleclaimsreceivedbyusinclude: Area code 867 blocking claim In2018,aclaimwasbroughtagainstusallegingbreachofaDirectConnectionCallTerminationServicesAgreement,breachofadutyofgoodfaith,andintentionalinterferencewitheconomicrelations.Theplaintiffsallegethatwehaveimproperlyblockedcallstoareacode 867(includingtocustomersofaplaintiff),forwhichasecondplaintiffprovideswholesalesessioninitiationtrunkingservices.Theplaintiffsseekdamagesof$135million.OnApril23,2019,theOntarioSuperiorCourtstayedthisclaimonthegroundthatthecourthasnojurisdictionover, orisnottheappropriateforumfor,thesubjectmatterofthisaction. TELUS2019 ANNUAL REPORT • 183

(a) Transactions with key management personnel Our key management personnel have authority and responsibility for overseeing, planning, directing and controlling our activities and consist of our Board of Directors and our Executive Leadership Team. Total compensation expense for key management personnel, and the composition thereof, is as follows: Years ended December 31 (millions) 2019 2018 Short-term benefits Post-employment pension1 and other benefits Share-based compensation $ 12 4 37 $ 12 8 44 $ 53 $ 64 1 Our Executive Leadership Team members are members of our Pension Plan for Management and Professional Employees of TELUS Corporation and certain other non-registered, non-contributory supplementary defined benefit pension plans. As disclosed in Note 14, we made initial awards of share-based compensation in 2019 and 2018, including, as set out in the following table, to our key management personnel. As most of these awards are cliff-vesting or graded-vesting and have multi-year requisite service periods, the related expense will be recognized rateably over a period of years and thus only a portion of the 2019 and 2018 initial awards are included in the amounts in the table above. Years ended December 31 2019 2018 Number of restricted share units Number of restricted share units Notional value1 Grant-date fair value1 Notional value1 Grant-date fair value1 ($ in millions) Awarded in period 474,704 $ 23 $ 15 608,849 $ 28 $ 36 1 Notional value is determined by multiplying the Common Share price at the time of award by the number of units awarded. The grant-date fair value differs from the notional value because the fair values of some awards have been determined using a Monte Carlo simulation (see Note 14(b)). The liability amounts accrued for share-based compensation awards to key management personnel are as follows: In the event of a change in control, Executive Leadership Team members are not entitled to treatment any different than that given to our other employees with respect to non-vested share-based compensation. As at December 31 (millions) 2019 2018 Restricted share units eferred share units1 D $ 25 23 $ 41 21 (b) Transactions with defined benefit pension plans During the year ended December 31, 2019, we provided management and administrative services to our defined benefit pension plans; the charges for these services were on a cost recovery basis and amounted to $6 million (2018 – $6 million). $ 48 $ 62 1 Our Directors’ Deferred Share Unit Plan provides that, in addition to his or her annual equity grant of deferred share units, a director may elect to receive his or her annual retainer and meeting fees in deferred share units, Common Shares or cash. Deferred share units entitle directors to a specified number of, or a cash payment based on the value of, our Common Shares. Deferred share units are paid out when a director ceases to be a director, for any reason, at a time elected by the director in accordance with the Directors’ Deferred Share Unit Plan; during the year ended December 31, 2019, $4 (2018 – $6) was paid out. (c) Transactions with real estate joint ventures During the years ended December 31, 2019 and 2018, we had transactions with the real estate joint ventures, which are related parties, as set out in Note 21. As at December 31, 2019, we had recorded lease liabilities of $77 million in respect of our TELUS Sky lease and monthly cash payments are made in accordance with the lease agreement; one-third of the amounts is due to our economic interest in the real estate joint venture. Employment agreements with members of the Executive Leadership Team typically provide for severance payments if an executive’s employment is terminated without cause: generally 18–24 months of base salary, benefits and accrual of pension service in lieu of notice, and 50% of base salary in lieu of an annual cash bonus. 184 • TELUS 2019 ANNUAL REPORT 30 RELATED PARTY TRANSACTIONS

CONSOLIDATED FINANCIAL STATEMENTS: NOTES 30 – 31 (a) Statements of cash flows – operating activities, investing activities and financing activities Years ended December 31 (millions) Note 2019 2018 Operating activities Net change in non-cash operating working capital Accounts receivable Inventories Contract assets Prepaid expenses Accounts payable and accrued liabilities Income and other taxes receivable and payable, net Advance billings and customer deposits Provisions $ (329) (61) 123 – 73 (287) (10) 159 $ 74 4 (103) (46) (11) 277 12 49 $ (332) $ 256 Investing activities Cash payments for capital assets, excluding spectrum licences Capital asset additions Gross capital expenditures Property, plant and equipment (excluding effects of asset retirement obligations) Intangible assets subject to amortization 17 18 $ (2,772) (660) $ (2,383) (657) (3,432) 509 17 (3,040) 102 24 Additions arising from leases Additions arising from non-monetary transactions 17 Capital expenditures Effects of asset retirement obligations 5 (2,906) (153) (2,914) 15 (3,059) (2,899) Other non-cash items included above Change in associated non-cash investing working capital Non-cash change in asset retirement obligation (31) 138 47 (22) 107 25 $ (2,952) $ (2,874) Financing activities Shares of subsidiary (purchased from) issued to non-controlling interests (Purchase) issue of shares Non-monetary issue of shares in business combination $ (9) – $ 43 (19) $ 24 $ (9) TELUS 2019 ANNUAL REPORT • 185 31 ADDITIONAL STATEMENT OF CASH FLOW INFORMATION

(b) Changes in liabilities arising from financing activities Statement of cash flows Non-cash changes (73) Beginning of period Statement of cash flows Non-cash changes (37) 186 • TELUS 2019 ANNUAL REPORT IFRS 16, Leases transitional As previously amount Year ended December 31, 2019 (millions) reported(Note 2(c))As adjusted Redemptions, Issued or repayments or receivedpayments Foreign exchange movementEnd of (Note 4(i))Other period Dividends payable to holders of Common Shares$ 326 $ – $ 326 Dividends reinvested in shares from Treasury – – – $–$ (1,332) –183 $–$ 1,358$352 –(183)– $ 326 $ – $ 326 $–$ (1,149) $–$ 1,175$352 Short-term borrowings$ 100 $ – $ 100 $850$ (851) $–$1$100 Long-term debt TELUS Corporation senior notes$ 12,186 $ – $ 12,186 TELUS Corporation commercial paper 774 – 774 TELUS Communications Inc. debentures 620 – 620 TELUS International (Cda) Inc. credit facility 419 – 419 Other – – – Lease liabilities 102 1,381 1,483 Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt – liability (asset) (73) – (73) $ 3,474$ (1,000) 4,135(3,860) –– 96(64) –(8) –(333) 3,860(3,856) $ (145)$(36)$ 14,479 (34)–1,015 –1621 (22)2431 –275267 (16)5271,661 179(147) 14,028 1,381 15,409 To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt – – – 11,565(9,121) (3,860)3,860 (38)62218,437 ––– $ 14,028 $ 1,381 $ 15,409 $ 7,705$ (5,261) $ (38)$ 622$ 18,437 Beginning of Year ended December 31, 2018 (millions)period Redemptions, Issued or repayments or received payments Foreign exchange movement End of (Note 4(i))Otherperiod Dividends payable to holders of Common Shares$ 299 Dividends reinvested in shares from Treasury – $ – $ (1,226) – 85 $ – $ 1,253 $ 326 – (85) – $ 299 $ – $ (1,141) $ – $ 1,168 $ 326 Short-term borrowings$ 100 $ 26 $ (93) $ (1)$ 68 $ 100 Long-term debt TELUS Corporation senior notes $ 11,561 TELUS Corporation commercial paper 1,140 TELUS Communications Inc. debentures 620 TELUS International (Cda) Inc. credit facility 339 Lease liabilities – Derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt – liability (asset) 93 $ 1,725 $ (1,250) 3,678 (4,115) – – 97 (50) – (3) 4,115 (4,074) $ 170 $ (20)$ 12,186 71 – 774 – – 620 33 – 419 – 105 102 (241) 34 13,753 To eliminate effect of gross settlement of derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt – 9,615 (9,492) (4,115) 4,115 33 119 14,028 – – – $ 13,753 $ 5,500 $ (5,377) $ 33 $ 119 $ 14,028

GLOSSARY GLOSSARY 4G (fourth generation): Wireless technologies, including HSPA+, LTE, LTE advanced and LTE advanced pro, as defined by the International Telecommunications Union. IP TV (internet protocol television): A television service (offered as Optik TV and Pik TV at TELUS) that uses a two-way digital broadcast signal sent through a network by way of a streamed broadband connection to a dedicated set-top box (or through an app for Pik TV). 5G (fifth generation): The next generation of converged wireless technologies, expected to provide higher speeds, improved coverage and lower latency, all of which are critical as the number of connected devices continues to increase rapidly. LAA (licensed assisted access): An LTE feature that makes use of unlicensed spectrum in combination with licensed spectrum to deliver enhanced performance for mobile device users. Fibre-optic network: Hair-thin glass fibres along which light pulses are transmitted. Optical fibre networks are used to transmit large amounts of data between locations at high upload and download speeds. LTE (long-term evolution): The leading 4G global wireless technology standard. LTE advanced (LTE-A) and LTE advanced pro offer higher speeds and greater capacity, moving networks closer to 5G. LTE is capable of delivering manufacturer-rated wireless data download speeds of up to 150 Mbps (typical speeds of 12 to 45 Mbps), and LTE-A can offer speeds nearly 10 times higher (in select regions). FTTx (fibre to the x): A collective term for any broadband network architecture using optical fibre to replace all or part of the existing copper local loops. FTTH denotes fibre to the home, FTTP denotes fibre to the premises and FTTN denotes fibre to the node or neighbourhood. M2M (machine-to-machine): Technologies and networked devices that are able to exchange information and perform actions without human intervention. GPON (gigabit-capable passive optical network): A fibre-based transmission technology that can deliver data download speeds of up to 2.4 Gbps and upload speeds of up to 1.2 Gbps. NCIB (normal course issuer bid): A program that enables a company to purchase its own shares, typically for cancellation, through exchanges or private purchases over a set period of time. HSPA+ (high-speed packet access plus): A 4G technology capable of delivering manufacturer-rated wireless data download speeds of up to 21 Mbps (typical speeds of 4 to 6 Mbps). HSPA+ dual-cell technology can double those download speeds. OTT (over-the-top): Content, services and applications in a video format, for which delivery occurs through a medium other than the established video delivery infrastructure. ILEC (incumbent local exchange carrier): An established telecommunications company providing local telephone service. Non-ILEC refers to the telecommunications operations of TELUS outside its traditional ILEC operating territories, where TELUS competes with the incumbent telephone company (e.g. Ontario and most of Quebec). Small cell: Low-powered radio access nodes that can operate in licensed and unlicensed spectrum within a limited range to provide densification and capacity to a macro wireless network. Spectrum: The range of electromagnetic radio frequencies used in the transmission of voice, data and video. The capacity of a wireless network is in part a function of the amount of spectrum licensed and utilized by the carrier. IoT (Internet of Things): A network of uniquely identifiable end points (or things) that interact without human intervention, most commonly over a wireless network. These systems collect, analyze and act on information in real time and can be deployed to enable the creation of smart connected businesses, homes, vehicles and cities. VoIP (voice over internet protocol): The transmission of voice signals over the internet or IP network. IP (internet protocol): A packet-based protocol for delivering data across networks. Wave 3 solutions: Next-generation wireless offerings that use IoT technology to provide solutions for businesses and consumers. IP-based network: A network designed using IP and QoS (quality of service) technology to reliably and efficiently support all types of customer traffic, including voice, data and video. An IP-based network allows a variety of IP devices and advanced applications to communicate over a single common network. Wi-Fi (wireless fidelity): Networking technology that allows any user with an enabled device to connect to a wireless access point or hotspot in high-traffic locations. xDSL: A fibre-to-the-node IP technology that allows existing telephone lines to carry voice, data and video. TELUS 2019 ANNUAL REPORT • 187 For financial definitions, see Section 11 of Management’s discussion and analysis

INVESTOR INFORMATION Stock exchanges and TELUS trading symbols Notwithstanding this, dividend decisions will continue to be dependent on earnings and free cash flow and subject to the Board’s assessment and determination of TELUS’ financial situation, capital requirements and economic outlook on a quarterly basis. There can be no assurance that the Company will maintain its dividend growth program through 2022. TELUS advises that, unless noted otherwise, all quarterly dividends paid since January 2006 are eligible dividends under the Income Tax Act. Under this legislation, Canadian residents may be entitled to enhanced dividend tax credits that reduce the income tax otherwise payable. For more information, visit telus.com/dividends. Toronto Stock Exchange (TSX) Common shares T CUSIP: 87971M103 New York Stock Exchange (NYSE) Common shares TU CUSIP: 87971M103 Member of • • • • • • • S&P/TSX Composite Index S&P/TSX 60 Index S&P/TSX Telecom Index • • • MSCI World Telecom Index Jantzi Social Index FTSE4Good Index Dow Jones Sustainability World Index Dow Jones Sustainability North America Index STOXX Global ESG Leaders indices Euronext Vigeo Index: World 120 Share ownership facts as at December 31, 2019 • T otal outstanding shares were 604,586,502 T ELUS team members held 14,907,222 shares in employee share plans, equivalent to 2.5% of the total number of outstanding shares, which collectively made team members our fourth largest TELUS shareholder W e estimate that approximately 70% of TELUS shares were held by institutional investors and 30% by retail investors R egistered shareholders of common • • Dividend reinvestment and share purchase plan Investors may take advantage of the automatic dividend reinvestment and share purchase plan to acquire additional common shares without fees. Under this plan, eligible shareholders can have their dividends reinvested automatically into additional shares. TELUS may elect to purchase common shares in the open market or by issuance from treasury (less a discount, if any, of up to 5%). TELUS will provide advance notification to participants if and when an election is made to change the method of purchasing common shares, and if by treasury issuance, any discount offered or any change in the rate of discount. In August 2019, TELUS announced changes to its dividend reinvestment plan. Effective October 1, 2019, until TELUS elects otherwise, TELUS offers shares from treasury at a 2% discount from the average market price. We also offer a share purchase feature, under which eligible share-holders can, on a monthly basis, buy TELUS shares (maximum $20,000 per calendar year and minimum $100 per transaction) without brokerage commissions or service charges. This plan is managed by Computershare Trust Company of Canada. • shares totalled 37,490. The Canadian Depository for Securities (CDS) represents one registration and holds securities for many non-registered shareholders. We estimate that TELUS had more than 669,000 non-registered shareholders at year-end. Dividend policy and dividend growth programs The January 2020 quarterly dividend paid was $0.5825, or $2.33 on an annualized basis, representing a 7% increase over the previous year. Our long-term dividend payout ratio guideline was previously 65 to 75% of prospective sustainable net earnings through 2019. Effective January 1, 2020, this has been revised to be calculated as 60 to 75% of prospective free cash flow. In May 2019, we announced our intention to target ongoing semi-annual dividend increases, with the increase to be seven to 10% annually, through to the end of 2022. This further extends our multi-year dividend growth program, which was originally announced in May 2011 and extended for three-year periods in both May 2013 and again in May 2016, and provides investors with ongoing clarity with respect to our intentions regarding our dividend growth program. Since 2011, we have raised our dividend 18 times, bringing the total number of our dividend increases to 25 since 2004. 188 • TELUS 2019 ANNUAL REPORT Visit telus.com/drisp or contact Computershare for information and enrolment forms ESTIMATED SHARE OWNERSHIP 23% 77% ¢ Canada ¢ Foreign TOTAL DIVIDENDS DECLARED TO SHAREHOLDERS ($ millions) 2019 1,358 20183 2017167 201691 201511 20145 20136 20124 1,25 1, 1,0 1,0 93 86 79

INVESTOR INFORMATION 2020 expected dividend1 and earnings dates Ex-dividend dates2 Dividend record dates Dividend payment dates Earnings release dates Quarter 1 March 10 March 11 April 1 May 7 Quarter 2 June 9 June 10 July 2 July 31 Quarter 3 September 9 September 10 October 1 November 6 Quarter 4 December 10 December 11 January 4, 2021 February 11, 2021 1 Dividends are subject to Board of Directors’ approval. 2 Shares purchased on this date forward will not be entitled to the dividend payable on the corresponding dividend payment date. Normal course issuer bid programs Our 2019 normal course issuer bid (NCIB) program, under which we did not purchase or cancel any shares, concluded in December. Further, we received TSX approval for our 2020 NCIB program to purchase and cancel up to eight million of our outstanding shares valued up to $250 million over the 12-month period ending January 1, 2021. Since beginning our multi-year share purchase program in May 2013 through to the end of 2019, we have purchased a total of 70 million shares for $2.6 billion. Of this amount, 1.0 million shares were purchased in 2016 for $45 million on behalf of an employee benefit plan, under which subs tantially all were distributed to team members. In addition, 2.1 million shares were purchased in 2018 for $100 million and sub-sequently donated to the TELUS Friendly Future Foundation. All other shares purchased were cancelled. We will purchase shares only when and if we consider it opportunistic. The share purchase program is subject to the Board’s assessment and determination, and there can be no assurance that the share purchase program will be completed or maintained. Per-share data Applying IFRS 16 Excluding IFRS 16 Applying IFRS 9 and IFRS 15 Excluding IFRS 9 and IFRS 15 2019 2018 2017 2016 2015 2014 Basic earnings $2.90 $ 2.68 $ 2.63 $ 2.06 $ 2.29 $ 2.31 Dividends declared $ 2.2525 $ 2.10 $ 1.97 $ 1.84 $ 1.68 $ 1.52 Dividends declared as per cent of basic earnings 78% 75% 89% 73% 66% 78% Free cash flow1 $ 1.55 $ 2.02 $ 1.63 $ 0.24 $ 1.79 $ 1.72 Common shares Closing price $ 50.28 $ 45.25 $ 47.62 $ 42.75 $ 38.26 $ 41.89 Dividend yield 4.5% 4.6% 4.1% 4.3% 4.4% 3.6% Price to earnings ratio 17 17 18 21 17 18 1 For a definition of free cash flow, see Section 11 of Management’s discussion and analysis. Share prices and volumes Toronto Stock Exchange Common shares (T) 2019 2018 (C$ except volume) Year 2019 Q4 Q3 Q2 Q1 Year 2018 Q4 Q3 Q2 Q1 High 51.43 51.43 49.37 51.22 49.85 49.15 48.37 49.15 47.15 47.60 Low 44.51 45.69 46.52 47.77 44.51 43.88 43.88 46.20 44.14 44.18 Close 50.28 50.28 47.15 48.41 49.46 45.25 45.25 47.61 46.70 45.24 Volume (millions) 270.0 69.7 61.5 65.5 73.4 249.8 76.0 48.9 58.8 66.1 Dividend declared (per share) 2.2525 0.5825 0.5625 0.5625 0.5450 2.10 0.5450 0.5250 0.5250 0.5050 New York Stock Exchange Common shares (TU) 2019 2018 (US$ except volume) Year 2019 Q4 Q3 Q2 Q1 Year 2018 Q4 Q3 Q2 Q1 High 38.89 38.89 37.76 38.32 37.35 38.20 37.24 37.70 36.23 38.20 Low 32.70 34.96 35.11 35.64 32.70 32.46 32.46 35.19 34.37 34.28 Close 33.14 33.14 36.84 35.51 35.16 38.73 38.73 35.62 36.91 37.04 Volume (millions) 103.1 27.1 26.1 25.3 24.6 95.2 26.5 20.9 20.9 26.9 Dividend declared (per share) 1.692 0.439 0.423 0.416 0.414 1.620 0.410 0.403 0.405 0.402 TELUS 2019 ANNUAL REPORT • 189

TELUS Corporation senior notes Coupon rate Long-term debt profile Face value Maturing Canadian Dollar Notes Series CM 3.60% $400 million January 2021 Series CO 3.20% $500 million April 2021 Series CT 2.35% $1.0 billion March 2022 Series CJ 3.35% $500 million March 2023 Series CK 3.35% $1.1 billion April 2024 Series CQ 3.75% $800 million January 2025 Series CV 3.75% $600 million March 2026 Series CZ 2.75% $800 million July 2026 Series CX 3.625% $600 million March 2028 Series CY 3.30% $1.0 billion May 2029 Series CAA 3.15% $600 million February 2030 Series CL 4.40% $600 million April 2043 Series CN 5.15% $400 million November 2043 Series CP1 4.85% $900 million April 2044 Series CR 4.75% $400 million January 2045 Series CU 4.40% $500 million January 2046 Series CW2 4.70% $475 million March 2048 Series CAB 3.95% $400 million February 2050 U.S. Dollar Notes 2.80% US$600 million February 2027 At the end of 2019, the average term to maturity of our long-term debt (excluding commercial paper, the revolving component of the TELUS International credit facility, lease liabilities and other long-term debt) was 12.8 years, compared to 12.2 years at the end of 2018. Additionally, the weighted average cost of our long-term debt (excluding commercial paper, the revolving component of the TELUS International credit facility, lease liabilities and other long-term debt) was 3.94% at the end of 2019, compared to 4.18% at the end of 2018. Average term to maturity continues to rise while the weighted average cost of long-term debt continues to decline, adding to the strength and flexibility of TELUS’ financial profile. For a detailed list of long-term debt of the Company and our subsidiaries, see Note 26 of the Consolidated financial statements. U.S. Dollar Notes 3.70% US$500 million September 2027 U.S. Dollar Notes 4.60% US$750 million November 2048 U.S. Dollar Notes 4.30% US$500 million June 2049 1 Includes $500 million originally issued in April 2014 and $400 million issued in December 2015. 2 Includes $325 million originally issued in March 2017 and $150 million issued in February 2018. Credit rating summary Standard & Poor’s Rating Services Moody’s Investors Service Fitch Ratings As of December 31, 2019 DBRS Ltd. TELUS Corporation N otes BBB (high) BBB+ Baa1 BBB+ Commercial paper R-2 (high) A-2 P-2 – TELUS Communications Inc. Debentures BBB (high) BBB+ – BBB+ 190 • TELUS 2019 ANNUAL REPORT AVERAGE TERM TO MATURITY AND WEIGHTED AVERAGE COST OF OUR LONG-TERM DEBT1 Years 1412.8 years 4.80% 124.60% 104.40% 84.20% 64.00% 3.94% 4Average term to maturity3.80% Weighted average cost of long-term debt 23.60% 201420152016201720182019 1 Excluding commercial paper, the revolving component of the TELUS International credit facility, lease liabilities and other long-term debt. 20152016201720182019 S&P/TSX Composite Index 20152016201720182019 TELUS TOTAL SHAREHOLDER RETURN COMPARISON ($) 175 $149 Assuming an investment of $100 on December 31, 2014 and reinvestment of dividends 150 $137 $136 125 100 TELUS common shares MSCI World Telecom Index 75Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 TELUS SHARES: FIVE-YEAR DAILY CLOSING PRICES ($) 55 $50.28 45 $38.73 35 25 T Toronto Stock Exchange (C$) TU New York Stock Exchange (NYSE) (US$) 15Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

INVESTOR INFORMATION Key TELUS events for investors Analyst coverage As of February 2020, 16 equity analysts covered TELUS. For a full list, see analyst coverage on telus.com/investors. • Extended our semi-annual dividend growth program with annual increases targeted in the range of seven to 10% from 2020 through 2022 Announced two quarterly dividend increases consistent with our dividend growth program, with 2019 dividends declared totalling $2.2525 per share Issued a total of approximately $3.5 billion in senior unsecured notes in 2019, in several financings, with 7-year, 10-year and 30-year maturities. We also early redeemed $1 billion in senior unsecured 5.05% notes with a July 2020 maturity Acquired ADT Security Services Canada, Inc., one of Canada’s leading providers of security and automation solutions for residential and business customers Acquired Competence Call Center, a leading provider of higher-value-added business services with a focus on customer relationship management and content moderation. Information for security holders outside of Canada Cash dividends paid to shareholders resident in countries with which Canada has an income tax convention are usually subject to Canadian non-resident withholding tax of 15%. If you have any questions, contact Computershare. For individual investors who are U.S. citizens and/or U.S. residents, quarterly dividends paid on TELUS shares are considered qualified dividends under the Internal Revenue Code and may be eligible for special U.S. tax treatment. • • • Foreign ownership monitoring – non-Canadian common shares Under federal legislation, total non-Canadian ownership of common shares of Canadian telecommunications companies, including TELUS, is limited to 33 1 3%. For registered shareholders and shares trading on the TSX, a reservation system controls and monitors this level. This system requires non-Canadian purchasers of common shares to obtain a reservation number from Computershare by contacting the Reservations Unit at 1-877-267-2236 (toll-free) or telusreservations@computershare.com. The purchaser is notified within two hours if common shares are available for registration. For shares trading on the NYSE, non-Canadian ownership is monitored by utilizing the Depository Trust & Clearing Corporation’s SEG-100 Account program. All TELUS common shares held by non-Canadians must be transferred to this account (no reservation application is required). • Awards • Earned the top spot in five major network awards, including Opensignal, J.D. Power, PCMag, Ookla and Tutela, for the coverage, speed, reliability or experience of our network Recognized for annual reporting excellence in the 2019 Annual Report on Annual Reports by ReportWatch for the TELUS 2018 annual report and ranked as one of the top 25 reports in the world Acknowledged for corporate social responsibility by being included in the: • • • • Dow Jones Sustainability World Index for the fourth year in a row Dow Jones Sustainability North America Index for the 19th consecutive year Corporate Knights Best 50 Corporate Citizens in Canada for the 13th time Corporate Knights 2020 Global 100 Most Sustainable Corporations in the world for the eighth time • Mergers and acquisitions – shareholder impacts Visit telus.com/m&a for information on how your shareholdings have been affected by various merger and acquisition transactions. Information is also available regarding capital gains, valuation dates and share prices for 1971 and 1994. • • Received the BEST Award for excellence in employee learning and development from the Association for Talent Development for the 14th time Recognized by Mediacorp Canada as one of Canada’s Top 100 Employers for the 11th time. • TELUS 2019 ANNUAL REPORT • 191

Contact TELUS Investor Relations 1-800-667-4871 or 1 (604) 643-4113 (outside North America) email: ir@telus.com TELUS executive office 510 West Georgia Street Vancouver, British Columbia Canada V6B 0M3 (604) 697-8044 TELUS general information 1-800-308-5992 (604) 432-2151 Ethics Line As part of our ethics policy, this hotline allows team members and others to anonymously and confidentially raise accounting, internal controls and ethical inquiries or complaints. 1-888-265-4112 visit: telus.ethicspoint.com Auditors Deloitte LLP 192 • TELUS 2019 ANNUAL REPORT For more information For questions regarding: For questions regarding: • Direct registration system (DRS) advice or accounts • Additional financial or statistical information • Dividend payments and the dividend reinvestment and share • Industry and Company developments purchase plan• The latest news releases and investor presentations • Change of address and e-delivery of shareholder documents • Transfer or loss of share certificates and estate settlements • Exchange of share certificates due to a merger or acquisition Contact the transfer agent and registrar visit: telus.com/investors Computershare Trust Company of Canada 1-800-558-0046 or 1 (514) 982-7129 (outside North America) email: telus@computershare.com visit: computershare.com

TELUS Corporation 510 West Georgia Street Vancouver, British Columbia Canada V6B 0M3 Phone (604) 697-8044 telus.com twitter.com/telus Instagram.com/telus facebook.com/telus youtube.com/telus Instagram.com/darren_entwistle Linkedin.com/company/telus Printed in Canada Please recycle Help us preser ve the world our children will inherit Sign up for electronic delivery of shareholder documents and help us protect the environment for future generations. The benefits of e-delivery include access to important Company documents in a convenient, timely and environmentally friendly way that also reduces our environmental impact, as well as printing and mailing costs. Approximately 33,000 of our shareholders currently receive the annual report by e-delivery. To help make a difference, sign up for e-delivery of TELUS information at telus.com/electronicdelivery.

Our social purpose Proven growth strategy Commitment to operational efficiency Disciplined capital allocation WHY INVEST IN TELUS INVEST IN THE LEADING SOCIAL CAPITALISM COMPANY Putting customers first Technology leadership Delivering exceptional customer experiences Enhancing our world-class broadband to further elevate our brand promisenetwork to elevate the customer experience, enhance reliability and sustain future growth Leveraging our technology to create Robust shareholder returns meaningful outcomes for the benefit of our Executing on our multi-year dividend growth customers and the communities we servemodel by returning more than $1.3 billion to our shareholders in 2019 Driving consistent profitable revenue and Strong financial profile customer growth across our evolving product Maintaining a strong balance sheet and portfolio and unique growth assetsinvestment grade credit ratings, enabling ready access to capital markets Amplifying our cost efficiency efforts and Leading disclosure enhancing our effectiveness in serving our Providing extensive and transparent growing customer basefinancial, corporate governance and sustainability disclosure Advancing our long-term growth strategy through generational investments while consistently returning capital to shareholders telus.com/annualreport telus.com/rapportannuel