Good afternoon ladies and gentlemen. Welcome to the TELUS First Quarter 2008 Earnings Conference Call. I would like to introduce your speaker Mr. John Wheeler. Please go ahead.

Thank you and welcome to the first quarter 2008 conference call and webcast. Let me introduce the TELUS executive online with us today. They are Bob McFarlane, Executive Vice President and CFO, and Darren Entwistle, President and CEO. Also in attendance today are Joe Natale, the President of Business Solutions, and Karen Radford, President of Partner Solutions and TELUS Québec. We'll start with the introductory comments by Bob. This will be followed by a question and answer session with both executives. The call is scheduled for one hour or less. The news release on the first quarter financial and operating results and detailed supplemental investor information are posted on our website at telus.com. This was released prior to our annual meeting here in Calgary. Darren's presentation to the shareholders this morning is also available on our website at telus.com, AGM. For those with access to the internet the first quarter slides are posted for viewing at telus.com investors, you will be on listen-only mode during the opening comment. Let me now direct your attention to slide 2, the forward-looking nature of the presentation, answers to questions and statements about future events are subject to risks and uncertainties and assumptions. Accordingly actual results could differ materially from statements made today so do not place undo reliance on them. We also disclaim any obligation to update forward-looking statements except as required by laws. I ask that you read our legal disclaimers and refer you to the risks and assumptions outlined in our public disclosure and filings with Securities Commissions in Canada and the United States. Now over to Bob on slide 3.

Great, thanks. Thanks John for the introduction and thanks everyone for joining us on the call today. Starting on slide 4. Our first quarter results were encouraging. Wireless revenues were up 10% in line with subscriber growth. Its revenue per customer remained relatively stable. EBITDA as adjusted increased just over 8%. We did see increases in certain network operating expenses due to a very strong growth in data usage and roaming as well as higher retention costs, however cost of acquisition was lower which I'll discuss in a moment. While CapEx decreased more than 40% year-over-year, if you look back several years $65 million is a seasonally normal level. CapEx in the first quarter of 2007 was higher due to network upgrades to EVDO Rev A which has since been completed as well as expenditures to implement wireless number portability incurred this time last year. Turning to slide 5 at 88,400 net additions TELUS had a good quarter in wireless subscriber loading with a higher proportion of postpaid net loading than in the past four quarters. Postpaid net additions were 72,400 representing 82% of TELUS's total net adds in the quarter. Slide 6 shows that total quarterly ARPU remained essentially flat, down by only $0.15 to $61.88 as declining voice ARPU was substantially offset by growth in data. Voice ARPU continued its declining pattern experienced in recent years due to lower per minute rates, increased price competition in the business in discount segments of the market and a slight decrease in voice roaming. Offsetting the voice decline was data ARPU which increased by $2.45 to $8.72 and now represents over 14% of total ARPU. Data service revenue increased by $51 million or 53% year-over-year from the strong growth in text messaging, increased browsing and internet use with smart phones in…

Thanks Bob, and just before I turn the call over Ron to conduct the Q&A session can I ask your cooperation please in one question at a time. Ron please proceed. Question And Answer

Great, thank you [Operator Instructions]. And the first question is from Greg MacDonald from National Bank Financial. Go ahead please.

Thanks, I am going to ask a strategic question on wireless. We saw a pretty big deal past week with Sprint and Clearwire includes a number of potential strategic backers or not potential real strategic backers including Cable Quest [ph]. One could argue that post this deal WiMAX could actually accelerate wireless broadband trend. TELUS has no WiMAX hedge like Rogers and Dell, not sure that that's important or not. But I was surprised in conjunction with that, that TELUS was one of the lower deposits in the spectrum auction. Wonder if you just might comment on whether the company feels at risk with respect to its ability to offer wireless broadband if in fact demand ends up going in that direction a lot more than we currently think.

Greg, really I think you introduced two concepts, at firstly this very directly we've deposited lesser credit efficient to acquire spectrum network, likely to acquiring on advice by counsel, we are not supposed to talk much more about intention etcetera in this so called quiet period leading up to the actual auction. But suffice it to say we have a secured intent and desire to acquire non-satisfied spectrum and we believe that will be consistent with our strategy to date, and we look forward to being successful in that regard. In respect of the Sprint Clearwire announcement which is real new news, seven way joint venture, so, that's an interesting dynamics but the participation in the Cable Codes [ph] there or some of them in any event is interesting because you may recall that the Cable Codes [ph] had participated in the joint venture to acquire more conventional spectrum in the past which they haven't deployed on. So, it seems to be bit of fragmentation on the cable side in regards to which technology path to pursue in the United States. Clearly in Canada, we have the incumbent Rogers organization which is operating on the conventional cellular band as well as partner with Dell and Inmarsat. Certainly in terms of technology path I think the evolution in the past three, four months have made one thing clear if that long term evolution or LTE is more likely to be the overwhelming choice of most carriers globally whether they're on the CDMA path currently or the GSM path currently. And so that's where most of industries is going evolve to which really raise the question as to what is... what's going to be done with WiMAX as Sprint's been troubled and to deal with the strategy, an evolution in that regard. So rather than go it alone they have brought in some other partners but it remains to be seen as to what the success of WiMAX deployment and business is going to be and certainly the overwhelming view in the industry is that LTE in the long term is where the vast majority of global carriers are going to go.

Okay, thank you. And the next question is from Scott Mallat [ph] from Goldman Sachs. Go ahead please.

Hey, good evening. Thanks so much I was just wondering if you could talk a little bit about your mike customers. And I know that flattened ARPU is pretty encouraging to us. I would assume that the mike customers not using the push talk functionality have higher churn rates probably as well as the lower ARPU, and I just wanted to make sure that's the case. And then Sprint talks about a quarter of their iDEN customers is having... somewhere in that range, is having little to no usage of the push to talk functionality. Just wondering if that's anywhere near your levels. Thanks.

Thanks for the question, Scott. Yes first of all I think we are encouraged by our ARPU overall essentially being flat, there's always gives and takes. But given we remain the highest ARPU I think that's good going in the Canadian Sea [ph]. In respect of mike I wouldn't say that those that use PTT are necessarily the highest ARPU users, it really depends on the profile. The handicap of the mike service is high speed data, and so as some of the users who are more voice and data intensive users as their needs have evolved really the solution that's appropriate for them is on our PCS service. So that's why we have been doing an orderly measured conversion program as contracts expire with retention incentives. And what we found is that's been a very positive program has on conversion, they have really taken typically a PDA device, taken a data subscription along with that and even though there is the voice re-price net, net we found the ARPU to go up for those users. The PTT centric users generally are lower ARPU than the average overall for mike but you are correct to say because of the nature of that service, because of the work group aspect of how it works in collaboration and as well as the advance in the technology, they tend to have attractive churn rates. Overall you may have noticed with our results that we have maintained a steady churn rates over the past three quarters. We did have a bit of bump after wireless number portability that would not be an iDEN related or specific factor. And so in that regard I think we have had good going for the organization. I think one of the big differences in our situation as it relates to say Sprint in the U.S. is the fact that we did not or Nextel or our predecessor, we did not emphasize iDEN for consumer markets. We have always from the getgo had a PCS capability, which had higher capacity, more mass marketing call and et cetera. And so we did not direct consumer loading onto our service and therefore we really don't have a situation where we've got a large embedded base of consumers looking to migrate and shopping around, which seemingly is a bit of the circumstance, which brings United States. What we have is a business centric base, and we are basically seeing those that are likely to want higher speed data solutions, like to be proactive, like to be responsive and convert them in an orderly way over to our PCS service. And so in that sense that's why here we are in the first quarter, we led the industry in subscriber growth in Canada, and that's certainly had a complete contrast to the enforcement situation that Sprint has been experiencing in recent periods. Next question, please.

Great, thank you. The next question is from Vince Valentini from TD Newcrest. Go ahead please.

Yes, thanks very much. Question on the EBITDA contribution from Emergis. I don't assume you will give us the figure for Q1, but can you give us some indication, would margins there have been in line with historical for Emergis? And how do you see this phasing over the course of the year? Are there some upfront integration projects that are depressing EBITDA at Emergis and then a little swing up as those projects get finished and as you start generate synergies?

Well, in respect of Emergis, you are right, Vince. We don't... we are not... tend to give specific disclosure with respect to their results. But in a general sense, yes, on the integration front, there are some costs. I think we gave a rough ballpark of $10 million of integration costs that are budgeted for that integration over time is certainly worried all in the first quarter. But over the course of this year and given that entity only came into the TELUS family on June... sorry, January 16th, it was an entity, where there were outstanding analysts expectations et cetera for 2008. So, there has really been no change in the business, and as you can imagine we required it during the quarter and they've continued trucking long sort to speak things are going well. But there has been no dramatic changes in their business. So, I would just refer you to the sort of public estimate that existed prior to the acquisition.

Okay. Next question, please.

Thank you. The next question is from Dvai Ghose from Genuity Capital Markets. Please go ahead please.

Yes, thanks very much. I was really amazed by how low the COA was in the quarter on the wireless side especially something like 60% of your gross additions were postpaid, generally generating relatively high COA. Were there any one-time handset credits or any items in the quarter? And is this number sustainable especially with the launch of Koodo which was very, very much at the end of first quarter and I assume it will be lot more expense in the second quarter?

Okay, well, a couple of comments there. As I thought I mentioned in the presentation, the new brand launch so late in the quarter, it really didn't affect our results notably whether you are trying to subscribers or the like. There were some startup costs that affected our expense line, which we mentioned. But other than that, it was very negligible impact in the first quarter. So, when you look at the COA number, clearly one thing I have to conclude is the fixed spend for advertising and promotions was effective or efficient, for anyone who want to subscribe it as fixed spend that was spread over a quite a good increase in gross loading and therefore the dividing the denominator gave a good ratio. Secondly, in terms of one time that affects what comes in mind if I would be... there weren't credits or anything like that. But on a year-over-year basis we did experience a significant appreciation of the Canadian dollar relative to the U.S. dollar which is the primary currency that we buy the handset. And that contributed roughly 25 bucks of the change, so that would be... whether that happens in the future or not is certainly a difficult to predict, but it's... it was a normal factor on a trailing basis. The other thing that comes to mind is that we had been expanding over the past while our investments in corporate owned distribution and we had an increased percentage of load through those channels. And they are more cost effective for us to third parties. So the mix in terms of the commission and comp structure in the channels was more favorable than the mix in prior quarters, so that helped the number. But at the end of the day, it was good going on the marketing front.

Okay, thank you, Ron.

Thank you. And the next question is from Jeffrey Fan from UBS Securities. Go ahead, please.

Thanks very much. I have a question on your wireless margins. When we look at a lot of the headline metrics like ARPU and COA as other speakers' question, I mean it all look very good across the board. But when we look at some of your expenses, one item kind of speck, it was the higher network operating expense. And it looks like it's related to some of your... related to some of your data revenue growth and related to some of the data content and licensing costs. Maybe in the... specifically in the quarter, can you talk about some of the impact and more longer-term you've got great ARPU on data but are these ARPU coming in at lower margin because of some of these other costs?

Okay. Let me parse through that. On the roaming side, we did have an uptick in roaming, on the data roaming particularly and in part. So not front, we also incur through a network sharing arrangement with the Dell organization where we roam on to their network, a roaming cost. So both the revenue went up from roaming as well as we had costs that went up. But we do make margin on that either way. So from a profitability perspective we are okay. Certainly when you look at the OpEx line network expense, that was one of the dynamics. You may recall that there is some flock rate pricing that was introduced by our peer and that drove a significant data growth for a period of time, although that has a return on back. In terms of content which you refer to absolutely as the mix goes away from say traditional messaging that's driven much of the data growth in the past years and we're getting into more content applications, on data growth. There is a higher cost associated with that most definitely. And so that's part of it. And so at the end of the day I think on the network expense side we are okay with that regard. When you are going to the overall EBITDA flow-through margins which I think you are really trying to garner as we had a new good COA. But the COA has prognossed [ph] that that and we had great gross loading growth etcetera but on a year-over-year basis we nevertheless had a higher churn rate. So we therefore didn't have the flow though from gross than that as much as we would have otherwise and consequently that impacts our profitability margins at least the growth rate year-over-year basis. The second material element in this area is cost retention. So I already referenced that, had a question on transition program mike PCS, but more broadly than that we also have had efforts as we have people just on PCS, they are maturing they are asking for smart phones, asking for PDAs which have a higher subsea cost associated with them and perhaps we make things to do so we've been making investments in that area on the retention side. And consequently that investment has led to some increased expenses. In the long run, I think it's the right thing to do. We think it mitigates churn, it mitigates to get ARPU erosion, key store customers have these so on and so forth and we actually have competitive reality dote there, but there is no dote. It has a short term in a margin impact same time. Net, net, it's a great quarter in wireless, so don't want to lose sight of that but that would be in a two normal items that would explain flow through being not as good that might first appear when look at our ARPU and our COA metrics.

Ron, the operator. We are getting some reports that the volumes get low, is it okay at your end?

Yes sir. I am finding it okay. It may depend the people that are having that problem are they... if they are on speaker phone it's possible. They get to try their volumes but it is fine we can hear.

Okay, well we will continue on and we will move the speaker look closer and try to get the volume up for our callers.

Great thank you. Okay and our next question is from Randall Rudniski from Credit Suisse. Go ahead please.

Thanks. Question on the migration of the mike customers who are migrating over CDMAs to take advantage of the better data functionality. The question is how far is through the migration process, are you at the present time and how long do you think it will take to... to complete the heavy lifting?

Hi, Randall. The... in terms of the migration program, I am sorry you used the word orderly measured and really what we are doing is as the contract base comes up and nearing maturity of their contracts, or contacting them and encourage them to convert it etcetera, so in that sense if you think we have contracts that go up to three years, get... tend to transition over a couple year period and we've been doing this for about a year or now. So, that gives sort of a broad idea of the time frame involved.

Next question Ron?

Thank you and the next question is from Simon Flannery from Morgan Stanley. Go ahead please.

Okay. Thank you very much, good afternoon. I think you mentioned in your comments throughout that you were seeing some impact in slower housing starts for benefiting your capital spending. Can you just talk about some of the sort of macroeconomic conditions you are seeing and to what extent that might some impact as the year goes on? Thanks a lot.

Sure and I know it's been a big topic particularly in the United States. The Canadian economy continues to grow certainly it's a much different situation in Canada. On a national basis the GDP growth rate that our conference board has been re-estimated to be 1.8% and really our guidance was predicated and are factored that in. Now 1.8% is the average, we don't have housing crisis or subprime crisis in Canada that really has not been the emergence really of a material subprime element that different culture, different lending practices people pin up equity in their homes, prices are appreciating across the country still. So it's quite a different dynamic in that respect. However, there are certain sectors of the economy that are export oriented such as manufacturing that depend on demand in the United States. And so the slowdown in the U.S. economy is having a secondary effect with respect to their production levels. And so the manufacturing industry in Canada is largely... not totally but largely present in the Ontario, Quebec, central Canada region. We are present, we're a national company but our relative degree of exposure is much more in Western Canada. In Western Canada, Alberta remains quite a boom country... region with GDP growth even this year to be in excess of 5%, British Columbia with resource industry etcetera is expected to have GDP growth of over 2.5%. So, our sort of home territory, if you will is certainly higher than the average for GDP growth this year. So, when we have talked about housing slowdown in the Canadian context it's really going from record housing construction rates to more moderate levels as opposed to what's being experienced the U.S where there basically is a complete shutdown, the new construction and a significant overhang of product in the marketplace. So, consequently in our bad debt line really hasn't changed notably. We are still seeing growth and quite frankly in Western Canada, there's been such hyper growth and labor shortage, from a broader labor perspective, balancing its market opportunity moderation and growth is probably a healthy thing. Although, certainly we are seeing in Ontario where we are less exposed and there is a relative slowdown in that particular region. So the net of it is a completely different dynamic than there is in the U.S. than we are today, so well insulated probably anywhere in North America happened to be located and dependent on the faster growing areas of the economy.

Next question Ron, please.

Thank you. And the next question is from Bob Becks [ph] from CIBC World Markets. Go ahead please.

Thanks, good afternoon. My questions are on wireline specifically on the residential line loss, they seem to have accelerated recently and certainly in the quarter, are there any changes in the competitive environment? I know you mentioned the CableGo competition ongoing and also from wireless substitution, but have been there any changes as far as bundling policies or programs when the cable goes? And related to that are there any thoughts to perhaps accelerate the IPTV rollout or are you really looking the [indiscernible] in place before you can make such decision? Thanks.

Yes. Thanks, Bob. Basically setting the context and then you got it right in your question. We experienced an increase in the erosion rate on our network access lines, so that's one way of looking at it which is appropriate. Another way is we probably have the lowest erosion rate in North America until growth, so growing significant margin, so that's good going. Certainly one that's has there been competition. And so basically we continue to do well but why has the trend worsened somewhat is in the consumer side as we continue to do quite well in the business side with roughly 2% year-over-year, now growth in the business segment. So whether it's the continued wins in Central Canada, that's how we're reporting or whether it's playing good defense actually in Western Canada where on the business front overall what that's blending into 2% growth rate and so we're doing quite well there. On the consumer side we got the 7% erosion rate that therefore leads to the blended 3.5% negative CAGR. Really what's going on is the further rollout of the Shaw Digital Phone Service where they are through continued geographic expansion on a year-over-year basis. They are certainly covering and marketing in much broader territories in Alberta, BC incumbent territory than they were in previous periods. So that's one dynamic, the other one combined with that specific to the first quarter this year is they did lower pricing in the marketplace on their bundled offerings and so that was a dynamic. And so clearly we believe that we lost incremental share to the Shaw organization in the quarter.

Ron?

Okay, thank you. And the next question is from John Henderson from Scotia Capital. Go ahead please.

I am just going to follow-up on the second part of that question on the IPTV and I wonder if you could... are prepared yet to share the, any details on the sort of dilutive impacts on EBITDA and earnings and any other updates in terms of maybe coverage by yearend '08 or '09?

Okay well respect to our TELUS TV branded IPTV service, we did continue to build out more coverage and therefore increased our marketing activities in new geographies more intensely and where we were previously marketing only neighborhoods. We've broadened that out in the case of, for example the city of Edmonton. The... they did add incremental costs, so if you in fact look at the wireline side did our cost increase year-over-year due to cost of acquisition etcetera on our TELUS TV service? Yes they did. We don't give specific numbers in that regard. But I would say it was one but just one of the minor contributors to a long list of items on the wireline side. And I think Bob referred in the prior question which I may not have completed my answer to, but clearly as part of TELUS' strategy that continue to roll out of TELUS TV service to invest in our network to increase speed, to offer HD as we are rolling that out in our geographies over the course of this year and next and so we believe that's an important strategic thrust of the company. And so I don't know about going faster. We are kind of going at the right speed given the resources that the organization has consistent with the guidance we previously given for CapEx all within the window. But it does reflect a significant investment in our internet network to bring the connections closer, the fiber closer to the premise. And therefore I have to do bang of increasing our internet speeds significantly which means a fundamental connectivity offering of TELUS is improved, while at the same time thereby allowing applications like TV are to be sold and to be bundled into our offering. So we do believe that's an important element in our strategy going forward.

Ron?

Thank you. And the next question is from Glen Campbell from Merrill Lynch. Go ahead please.

Thanks very much, is Darren on the line there?

Glen, he has stepped out of the room. So if you got something for me that...

Sure, I had one for you. You've mentioned in this last answer and also in your introduction about, I guess you are concerned about seeing wireline operating expenses stay on track and I was just wondering if give us a little bit more color and context around that. I mean are you... is this a concern sort of where you are relative to guidance which you reaffirmed or is... are there some expense in there that maybe didn't need to be in there? Are there objectives to kind of changes within the year? Could you just give us a little bit of an elaboration on that please?

Sure, we started off by saying that we do reaffirm our guidance for wireline as well as wireless. So we do believe we will be on track for our guidance ranges for wireline for the full year. One thing we are not counting on in the subsequent quarters is next to a day on the calendar that we did experience. And I don't want to make too much of it but that did contribute about $6 million of extra costs in the quarter that weren't there a year ago. What we did have in the quarter was a concentration of large data type of implementations, the large scale Calgary [indiscernible] insulation was completed in the quarter. And so, in these large sort of equipment-oriented implementations, the margins are much thinner than they are in other services. So, that was certainly an element. The other thing Glen is, as you know, we have been quite successful in Central Canada in terms of landing a number of high profile large complex deals and with that we're in implementation mode currently. Now as a result of revenues that are generated by these transactions is rather limited to date because in some cases having started, whereas obviously we're incurring some expenses putting those services and capabilities in place. That's consistent of the business plan, it's a class A hockey stick. I think what makes it different than the norm is when you think a Government of Ontario Department, National Defense Government of Canada and City of Montreal transactions in aggregate, there is the concentration that is lending a bit of unusual effect in terms of expense line. Finally, what I can say is that we... I think we can do better just on some discretionary cost control, we certainly have programs in place with that. So, I think it's our responsibility to improve the margins. And as we mentioned our guidance reflects our confidence in doing so over the balance of the year. And Glen, the question for Darren, do you want go ahead, please?

Yes, I was wondering if we get an update on the TV deployment in Edmonton, and not like for number so much but just a sense of how it's going well relative to your expectations and what are the kind of gaining factors on the speed of deployment and so on? Thanks.

Thanks for the question Glen. The deployment in Edmonton with the mass marketing given the strong footprint coverage that we have in Edmonton is certainly meeting our expectations, we are pleased with demand and we are pleased with our execution in terms of fulfilling that demand.

Okay. Ron, we'll take the last question now please.

Okay, thank you. The last question is from Peter Rhamey from BMO Nesbitt Burns. Go ahead please.

Great. Thank you for taking the question, under the wire I see and I want to switch back over to wireless, if Bob in your script you mentioned, increased penetration obviously of smart devices EVDO enabled devices but in the basis. I wonder you can give us that some color on to where you are and now that I know you had some heavy promotions at the end of Q4. And I am just wondering and what the adoption has been thus far and what the uptake by customers has been of data plans? Do they tend to get these devices and nibble away on plans and then start to use more over time, just to give us some sense of where we are on that curve for data adoption. Is it accelerating, is it steady state? Anything you could add to that, I've also noticed that you are promoting PC cards for the first time instead of mass market press which I thought it was a departure from your previous strategy?

Well I think generally, Peter we are encouraged by the trends that we've experienced. That was, I remarked before but maybe just repeating that we've observed a significant trend evolve over the past year in the consumer segment that really largely ignore the PDA segment. And then woke up to the likes of Blackberry and other devices and said they want some too. And so that trend has been ongoing in the Canadian marketplace over the past year and certainly with our product lineup having world addition Blackberry that is on EVDO etcetera. We've had leading product in the marketplace which has some indications... in some periods over the past number of years. And so we've done well in that regard. In terms of the investment we get PDAs or subsidize them on a retention program, we do tie that into a data subscription. So if someone is wanting a PDA on a contract renewal, we don't just say here's the PDA and continue on a voice service. We tie the incentive to a data subscription and therefore we sort of lock in the economics associated with that retention investment. And I think that's the prudent way to do it. So we are seeing significant data uptick, you've seen the growth 56% growth rate here in data year-over-year. So it is working and it's really across the board. The business segment has continued to grow and the consumer segment is there is an acceleration there and so we're getting both cylinders firing.

Okay, thank you very much everybody for taking the time to join us today. We certainly appreciate your interest and continued support of TELUS. Have a good day.

Thank you and this concludes the TELUS First Quarter 2008 Earnings Conference Call. Thank you from TELUS.