Good morning, ladies and gentlemen, and welcome to the TELUS second quarter conference call. I would now like to introduce your chairperson, John Wheeler, Vice President of TELUS Investor Relations. Please go ahead, sir.

Good morning. It is John Wheeler here. Thank you very much for joining us for the second quarter conference call and webcast. Let me introduce the TELUS executives online with us today. They are Darren Entwistle, President and CEO; and Bob McFarlane, Executive Vice President and CFO here with me in Vancouver. As well with us today is a special guest speaker, Peter Adderton, CEO and Founder of Amp'd Mobile, who is joining us from the eastern U.S. We will start with introductory comments by Darren, Peter and then Bob. This will be followed by a question-and-answer Session with Darren and Bob. The news release on second quarter financial and operating results and detailed supplemental investor information are posted on our website at TELUS.com. In addition, a joint release of TELUS and Amp’d Mobile has just been released. For those with access to the internet, the slides are posted for viewing at TELUS.com on the investor site. You will be in listen-only mode during the opening comments. Let me direct your attention to slide 2. The forward-looking nature of the presentations, answers to questions and statements about future financial results and guidance are subject to risks and uncertainties and assumptions. Accordingly, TELUS’ actual results could differ materially from statements made today, so do not place undue reliance on them. I ask that you read your legal disclaimers and refer you to the risks and assumptions outlined in our public disclosure and filings with securities commissions in Canada and the U.S. Now over to Darren on slide 3. Darren Entwistle: Good morning. During my remarks today I will provide TELUS' perspective on recent developments in the Canadian telecom industry, followed by the highlights of TELUS' strong second quarter results. Additionally, I will be introducing an exciting and innovative wireless service that…

Thank you very much, Darren. We're very pleased to be here to tell your investors and the Canadian media a little about Amp’d Mobile. Of course we appreciate the vote of confidence by TELUS as evidenced by your investment in our company, Amp’d Mobile Inc. here in the U.S., alongside our other select group of investors. Just a short note on the investors that TELUS is joining. MTV Networks out of New York, Intel, Capital, Universal Music -- one of the largest music providers in the world; Qualcomm, the founders of the EV-DO CDMA technology, and premium equities funds here in the U.S. So we are pleased to have TELUS as one of the high caliber investors that we have in our company. We look forward to providing you and the organization there at TELUS an excellent return on the investment. We think we're off to a great start here in the U.S., and we believe we'll get the same traction that we're getting in the U.S. in Canada. I will just take a little moment to talk about slide 13 and 14 to explain our successful Amp’d Mobile concept here in the U.S. and for the Canadian Audience; and for the international investors who may not be that familiar with the Amp’d Mobile brand. Amp’d Mobile’s broadband wireless services combines acquiring coverage with the fastest download speed in North America. Amp’d offers traditional services such as voice and text, but we have a completely different fresh user interface that is really designed to optimize the third generation technology that TELUS has recently rolled out. We have fully customized handsets and content, Amp’d Mobile Amp’d Live environment brings more relevant, personal experience to the wireless lifestyle with unique music, video, community, and entertainment and sports and games. We really believe…

Thank you very much, Bob. Just before I turn the call over to Tammy to conduct the Q&A session, can I ask your cooperation for one question at a time, please. However, if you need a follow-up question related to the answer to your first question, that is appropriate, of course. Tammy, please proceed.

(Operator Instructions) Our first question from Simon Flannery – Morgan Stanley. Simon Flannery – Morgan Stanley: Thank you very much. Good morning. Sprint yesterday was talking about the dual mode handsets they were expecting to get over the next couple of quarters, push to talk on IDEN combined with CDMA voice; and also the progress they're making on Q Chat over Rev A. Can you talk about the potential plans that you might have to use some of these devices and potentially follow along with what Sprint plans to do in terms of network migration? Thanks. Darren Entwistle: Thanks for the question Simon. I think in TELUS’ case it is fair to say we're somewhat of a cheerleader if you will for Sprint/Nextel in this regard, because as you know and many investors should realize, we both have the CDMA and the IDEN technologies. So essentially in our case we are a follower given that the economies of scale are really driven by the Sprint Nextel decision on these technologies. So I think what is fair to say is that we're well positioned to reap the benefits of those decisions, and we're eagerly supporting the direction that Sprint Nextel is taking. Simon Flannery – Morgan Stanley: Thank you.

Our next question comes from Peter McDonald - GMP Securities. Peter McDonald - GMP Securities : Thanks. Just before I ask my question, I think Simon also asked about the network migration that Sprint talked about, if you can address that part of it. Darren Entwistle: I don't recall -- what are you specifically referring to by network migration? Peter McDonald - GMP Securities : I think what he was referring to was network migration to GSM. Darren Entwistle: I don't think that's what I heard. I think he was referring to the convergence of IDEN CDMA and what is the nature of the technology to be deployed to bring high speed capability to IDEN. Peter McDonald - GMP Securities : Okay, then maybe you can discuss then, the network migration that Sprint talked about that they're contemplating it and what your thoughts are on that. Darren Entwistle: Well, in terms of network migration -- are you referring to GSM technology? Peter McDonald - GMP Securities : Yes. Darren Entwistle: I think it is pretty early days to be speculating about CDMA versus GSM technology, certainly with an investment in CDMA, it is somewhat akin to the old Beta/VHS argument of years ago. In our respect, if you look at our results, if you look at our CapEx intensity, if you look at our network sharing arrangement with the Bell organization which is to our mutual advantage, I think a unilateral swap to a different technology would not be a prudent move to take. In terms of the evolution to 4G technologies, I think similar to the answer I gave Simon, in the case of TELUS we will be observing the developments of the larger carriers. So in our respect we certainly have no intentions or contemplations of changing our…

Our next question comes from Jonathan Allen - RBC Capital Markets. Jonathan Allen - RBC Capital Markets : Thanks very much. Just a quick follow-up question on the Amp’d Mobile. First of all, from a customer perspective or from a reporting number, will you be consolidating those into your post-paid base or will this be showing up as some sort of a separate wholesale line? The second question, Darren, you mentioned that Amp’d Mobile is bringing exclusive content to the business. I was wondering if as part of the agreement TELUS would also have access to use some of that content for your existing Spark plans for the core post-paid base? Darren Entwistle: Jonathan, the answer to your latter question is yes. We have access to that content not just by the way for the Spark brand in terms of wired or mobile offering. We would also have access to that content to support TELUS TV. In respect to reporting I will hand it over to Bob McFarlane. Robert McFarlane: We would of course be reporting these as post-paid subscribers as they are sold in post-paid format, so these are our subscribers. It is not a wholesale arrangement like an MVNO. There is really not even a close call on this one. They're subscribers of TELUS.

If I could follow up on one other question; in the U.S. though we haven't seen specific results, it had been rumored that Amp'd had gotten off to a fairly slow start. I believe the rumor was about 50,000 adds in the first six months. I was just wondering if you see any differences between the Canadian and U.S. market where Amp’d would be more successful, in your view, than they were in the U.S.? Robert McFarlane: Actually having conducted due diligence pursuant to our venture capital investment, we're very pleased with results. They haven't disclosed them but let's just say that the economic profile and the rate of growth of this organization in the United States has been truly a positive one, and I am not sure why you would have heard rumors to the contrary. Obviously we've done the due diligence. We know the numbers. They're outstanding, and we're excited to bring this concept to Canada. Darren Entwistle: Both in respect of subscriber growth and ARPU performance, Jonathan.

Great. Thanks very much.

Thank you. Our next question comes from Marie Silva from Goldman Sachs. Please go ahead with your question.

Thank you. I wanted to get your thoughts on the overall prepaid market this quarter. You guys obviously performed better than others but it still seems like there is a year-over-year slowdown. I would just like to understand the dynamics there. Also, just thinking about the prepaid ARPU and the beta contribution there, I just wanted to see if you can give any color on that. Thank you. Robert McFarlane: In regard to prepaid comments in the market, I think as a general orientation, if you look at the heritage of the respective firms, tell us historically a lower prepaid in our base. Rogers, by way of an example, through the acquisition of Microcell, really augmented the significant base of prepaid, and of course acquired an organization with a certain churn profile as well, so they have done quite well focusing on post-paid. I think that is really where most marketing dollars and distribution channel emphasis has been in the Canadian market. If you look at a relative change, I would say the other two competitors, more so on the post-paid side. Of course, the Bell organization effectively out-sources part of its sub prepaid focus through the Virgin Mobile MVNO. In our case, it is all internal and we have really continued. We had no specific promotions in the area in this quarter. We are very comfortable with the mix that we had. I think the reason we are seeing why we have net adds where that is not the case for certain of the other organizations, is one had significant write-downs as they cleared the ship for the new team, and the other one, of course, has a materially higher churn rate. Really, the issue on prepaid is driving economics, in our case at the $26 ARPU, which is…

Then, the use of ARPU -- data contribution to ARPU on prepaid versus post-paid? Robert McFarlane: Yes, I know you answered it. You notice John did have a one-question limit, so I was hoping the referee would enforce it, but we do not disclose our data by prepaid and post-paid specifically, but what I would say, and you are on to something, is the way in which we have taken prepaid to the market, and this is consistent over, really from the beginning of the prepaid offering, is we do not position it as a discount offering. We do not position it as an inferior offering. It is similar handsets we are selling to a market that tends to be youth-orientated. They tend to be using data services and value-added services, and that drives a much higher ARPU than relative to our competitors. Really, it is a different payment mechanism, and that is a different marketing approach than some other organizations have traditionally done in North America. I think that is one of the contributors to why we have superior economics.

Thank you. Our next question is from Vince Valentini from TD Newcrest. Please go ahead with your question.

Thank you. I will limit myself to one question on cap-ex, but I hope you guys go a bit longer than normal today, because your remarks were a bit longer than normal, and I think there are a lot of questions left in the queue. On cap-ex, Darren, you talked about sweating the assets on the wireline side. I think that is a great strategy but if I look at your cap-ex, you are spending way more than any of your peers on the wireline side. The new guidance would suggest about 24% cap-ex intensity for this year versus your peers are in the 15% to 19% range. Is 2006 an unusual year, with a bunch of projects that all hit and a bit of catch-up from the strike last year? Or do you view this 24% as a new trendline going forward? Thank you. Darren Entwistle: I would say 2006 is a year where we are experiencing some strains, without a doubt, given that we came off a year where in 2005, we could not effectively deploy capital because our ability to implement was infringed upon by the work stoppage. Clearly we have a lot of catch-up to do in that regard. It is also exacerbated by some other considerations. In both Alberta and B.C., there is a considerable amount of access network expansion related to new home starts. Clearly this is not a situation where we can mop up all of that connectivity ourselves, given that we now have a competitive model within that market, given that we are experiencing for the first time effectively, competition within the access infrastructure itself with our cable competitor. The home starts for us are driving capital, when previously we would secure 100% of the connections, but of course, within a competitive…

Next question.

Thank you. Our next question is from Glen Campbell from Merrill Lynch Canada. Please go ahead with your question.

Thank you. My question is for Darren. There has been some volatility in the stock, and a lot of speculation in investors around the question of whether there is or is not a process underway to review the possibility of income trust conversion. I was wondering if you could comment on that, and in particular whether there is a formal process, whether the board is involved, whether the process would end with a specific decision. Thank you.

Thanks for that question, Glen. Firstly, let me point out that the answer I provided on the last quarterly call, the Q1 call, was both comprehensive and exacting. I embellished upon that answer in late June at a Montreal investor lunch that was broadcast on the web and covered by one of the analysts on this call, but it was publicly available information -- in fact, widely available information. Again, the comment I made in Q1 and, more to the point, the elaborate comments that I proceeded with in late June at the Montreal investor lunch, they stand as stated. I guess if I am going to make any additional comments, it would be fair to say that the management team at TELUS, the leadership team at TELUS, the CEO of TELUS, and the Board of TELUS bring no bias to the issue of income trust in this organization. What I can say is that we do bring a bias to the following matters. We are biased against financial engineering for the sake of financial engineering. We are biased in favor of financial engineering or any legal structures that support the implementation of the company’s strategy. At the end of the day, we believe that financial engineering should further the company’s strategy, not be a replacement for it. The next comment I would have to say is that we are not supportive of any type of hybrid income trust model, because that drives an operational dichotomy into the organization, which serves to frustrate the implementation and the successful realization of the strategy. So to the extent which we have an axiom that everything that we do within this organization has to support the strategy. We are not going to pursue a legal structure or financial engineering that would server to…

Next question, please.

Thank you. Rob Goff from Haywood Securities, please go ahead with your question.

Thank you very much. My question would be on the TELUS TV, what your expectations are there and how they may have changed with development south of the border. Thank you. Darren Entwistle: Our expectations in respect to TELUS TV have not changed. We continue to believe that entertainment distribution, coupled with providing data networking within a home on both a wireline and a wireless basis is a core component to our Future Friendly Home Strategy. We have progressed with commercial rollouts in Calgary and Edmonton, are looking to expand that in Alberta. We are of course now conducting inaugural employee trials in the lower mainland of B.C., with a view to commercial deployment later this year. TELUS TV is proceeding according to plan. We are positively disposed to the progress that we are making in respect of both the product and the network and process infrastructure that has to support it. Obviously we will have some hiccups along the way but it would be fair to say that our position on TELUS TV is as strong now as it has ever been. It is also important to point out, unlike high-speed Internet access in the early days, where effectively it was a footrace between ourselves and our cable competitor for verging customers in the marketplace, and it mattered who got to the customer first, so to speak, speed had an importance to it. It would be fair to say that the entertainment distribution market is a sedentary market, which allows us the opportunity to be very considered in our approach, to take our time in terms of our deployment -- to make sure that all of the factors that I talked about previously from the economics of TELUS TV to the technology of TELUS TV to the commercial differentiation…

Next question.

Thank you. Our next question is John Henderson from Scotia Capital. Please go ahead.

Thank you. I have a question around your voluntary retirement program. I am wondering how the pace of adoption of that has proceeded, whether it was at all back-end or front-end loaded throughout the quarter. Just as a quick follow-up on the retroactive revenue hit to other revenue in the quarter, I wonder if we can get some sense of the size of that. Robert McFarlane: John, the retro that hit the other income was in the neighborhood of $2 million, $2.5 million. That was in relation to a CRTC decision on space and power charges from other carriers into our facilities, so that was the second quarter impact. The first part of your question I believe related to early retirement offers, et cetera. We do not have a broad-based, nor do we have any intentions for, a broad-based early retirement offer like we did a number of years ago, with the first phases of our operational efficiency program. Rather, we are giving targeted offers to the areas that Darren referenced by way of example, where we have a specific call center operation or function that we are consolidating operations, or moving, so on and so forth, or outsourcing, and so have a targeted offer to the team members affected in those specific areas. Now, in the relation to outsourcing as negotiated in the new collective agreement, the affected team member has a variety of options. He can either follow the work, if it is to a new location. He can be redeployed elsewhere in the company, if there is an available position, or of course he could elect to go and work for the outsourcer at whatever compensation and arrangements the outsourcer pays their own people. If they in fact stay in the organization, elect to not take advantage…

Thank you. Next question.

Thank you. Our next question is from Peter Ramey from BMO Capital Market.

A follow-up on the previous question, and then one of my own. What I hear you saying there, Darren, is it sounds like a lot of the financial benefits of some of the actions you are taking now will be more of an impact in '07 versus '06. Would that be a fair statement, or am I oversimplifying? Robert McFarlane: Peter, maybe I will just give Darren a breather. That is exactly correct. The typical efficiency effort, where you are recognizing the costs up-front, you are paying them out over, in terms of departures, over the next few months and, as just mentioned, in some cases upwards to a year down the road. The savings, of course, are on a monthly basis as you have reduced your cost structure. So in terms of a net impact of savings, there is some in-year benefit but it is really driven into subsequent years. It is not only a 2007 -- it flows through into subsequent years.

Okay, perfect, and… Darren Entwistle: Just for your modeling purposes, in terms of what we have said publicly on the record in the past at investor meetings, is that holistically across the three broad-based programs that I talked about, on average you are looking at payback periods between 18 and 24 months. To be more explicit, to break it down, as it relates to consolidations, on a consolidation basis, you are going to have a payback period in the 18-month zone. As it relates to outsourcing, outsourcings can go beyond 24-month period. What we try to do is to say on average, typically that is the type of thing that we would see in combined outsourcing and consolidations where, on a consolidation basis, you got an 18-month payback, on an outsourcing basis, it could be 24 months or longer. We have had a little bit more of a bias thus far towards consolidation. That is the range that we talked about. When you get into process automation and process re-engineering type programs, you can have paybacks that extend well beyond 24 months. Just to give you a flavor of the payback associated with the program, so that you can get a view. The most important point is the point that Bob made, that once the efficiency gain is realized, it is recurring in nature, rather than a one-off benefit. When you look at the benefit being implemented, it is on a multi-year basis thereafter.

That will be very useful for trying to get this incorporated in my model. With regard to competition in voice-over IP from the cable competitor, you lost 52,000 lines in the quarter. I think I am going to get this wrong, Bob, but 30,000 you lost in Q1. I was wondering if you could add some color on what specific actions, if any, did the cable competitor take different in Q2 versus Q1, and any actions that you might have taken that were different -- what the nature of the footprint expansion of the cable operator was. You do have the flexibility now to do win-backs. I was wondering if that was material in the quarter. Thank you. Robert McFarlane: Firstly, in terms of our cable operator, they have continued to increase the geographic territory in which they have marketed to, so whether that is on a year over year or on a sequential quarterly basis, they are continuing to ramp up the geography which they cover. That is a built-in dynamic that would be affecting the residential line losses. In addition to the cable competitor, there is also Rogers and the other CLEC operators typically with VoIP, unlike Rogers, but they are all aggressively offering their products at a deep discounted basis in the marketplace. That is driving some of the line loss. As I referenced earlier, or alluded to in my comments, wireless substitution continues to be a significant trend. You may be familiar with some of the recent reports where lower mainland actually leads the country in terms of the percentage of households that have adopted wireless only communication, which leads to another topic which we will not go into, but the whole forbearance decision and why it is appropriate for it to be reviewed, i.e. the…

Operator, we have gone on for about 45 minutes here, so we will take one more question, please.

Thank you. Our last question is from Devi Goss from Genuity Capital Markets. Please go ahead.

I wanted to ask you about your non-ILEC basis. On a factual basis, does it include Cogeco cable’s wholesale revenues? Are they included in your business access lines? You have reduced your non-ILEC guidance. You only did 4% year-over-year revenue growth in the quarter, despite the fact that I assume you are including the wholesale business from Cogeco, so that suggests perhaps the retail business is even worse. Can you confirm all of that and tell us what these drivers are? Is it pricing competition from a competitor, lack of demand, IP substitution putting pressure on margins, et cetera? Darren Entwistle: I will kick it off and provide Bob the opportunity to comment as well. A couple of things to note -- it would be fair to say, as I indicated in my comments that the competitive intensity in some of the repricing pressure that we are experiencing, if you would, experiencing within Ontario and Quebec is mitigating the growth that we aspire to at the revenue and at the EBITDA level for our performance in Ontario and Quebec. Just to get some figures on this down, essentially right now, what we have done in revising downwards our guidance is to say that we are now expecting 3% to 6% revenue growth -- not what we had aspired to, but not an abysmal performance by any stretch of the imagination. If you go to the EBITDA level as it relates to our non-ILEC business, again, despite the haircut that we have given to the upper end of our range, reducing it from $40 million to $30 million, that would still represent an EBITDA year-over-year improvement of 18% to 42%. When you are looking upwards of 6% revenue growth and potentially upwards of 42% EBITDA growth, now what we would have…

We will wrap it up here. There was a lot of information disseminated over the course of today, particularly augmented by the Amp’d announcement. I want to thank you all for your participation and the excellent questions. I appreciate your support of TELUS and I wish you all the best for the long weekend.

Thank you. This now concludes the TELUS second quarter investor conference call. Thank you from TELUS.