<PAGE>
DEAL AT A GLANCE
LEADING THE CONVERGENCE REVOLUTION
This transaction is a Quantum Leap towards becoming Canada's leading player in
converging voice, data, IP and mobility services into solutions that deliver
competitive advantage to our customers.
FOCUSED ON WIRELESS DATA, IP MARKETS
Wireless and data applications are the fastest growing segments of the telecom
market: Wireless revenues rose from just 4.5% of total telecom revenues in 1990
to 15% in 1999
- Wireless revenues in 1999 totaled $4.2 billion, up 11% from the
previous year
- Web-enabled phones are expected to surpass PCs as the preferred method
of accessing the Internet by 2004
THE RIGHT TIME
- The Canadian wireless penetration rate is at the inflection point on
the growth curve
- Canada's wireless penetration is currently 25%, up 5 points from 1999
- Uncertainty inherent to fall spectrum auction has been eliminated
- Opportunity to build a strong national wireless company before
relaxation of restrictions on foreign ownership
FINANCIAL FLEXIBILITY
- Our cash flow and strong balance sheet give us the flexibility and
access to capital to support our data, IP and mobility growth
ambitions
A GREAT FIT
- We share everything from a passion for wireless, a focus on growth and
compatible technology to a belief that culture delivers competitive
advantage
- We offer the country's best wireline and wireless networks and
products, in most key markets
- We have a greatly enhanced ability to drive a larger share of the
mobility voice, data and Internet markets on a national basis
- We have gained increased exposure to high growth markets, and we have
expanded both geographically and in our product lines
<PAGE>
A BOLD NEW FORCE
Expect to see the TELUS team making similar bold moves in the future. Specifics
will differ, but our behaviour will be defined by certain hallmarks:
- We will act quickly and decisively in a manner that is consistent with
our strategy
- We will focus relentlessly on building our competitive position in the
high-growth, high-margin areas of data, IP and mobility
- We will continue to pay careful attention to the economic benefits and
financial implications of our actions
<PAGE>
TELUS CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2000
(MILLIONS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
TELUS Pro forma Combined
Corporation Clearnet Combined Adjustments Consolidated
----------- --------- -------- ----------- ------------
2(a) 2(b)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and short-term deposits $ 101.4 $ 299.5 $ 400.9 $ -- $ 400.9
Accounts receivable 870.2 73.5 943.7 -- 943.7
Inventories 51.5 39.2 90.7 -- 90.7
Current portion of future income taxes 182.4 -- 182.4 -- 182.4
Prepaid expenses and other 143.6 40.4 184.0 -- 184.0
-------- --------- --------- -------- ---------
1,349.1 452.6 1,801.7 -- 1,801.7
-------- --------- --------- -------- ---------
Property, plant and equipment, net 6,223.7 1,207.3 7,431.0 -- 7,431.0
-------- --------- --------- -------- ---------
Other assets
Future income taxes 404.5 -- 404.5 740.0 1,144.5
Goodwill 462.0 -- 462.0 4,833.6 5,295.6
Investments and other 255.2 296.3 551.5 97.3 648.8
-------- --------- --------- -------- ---------
1,121.7 296.3 1,418.0 5,670.9 7,088.9
-------- --------- --------- -------- ---------
$8,694.5 $ 1,956.2 $10,650.7 $5,670.9 $16,321.6
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
LIABILITIES
Current liabilities
Bank indebtedness $ -- $ -- $ -- $ -- $ --
Accounts payable and accrued liabilities 865.3 203.7 1,069.0 -- 1,069.0
Dividends payable 83.7 -- 83.7 -- 83.7
Advanced billings and customer deposits 167.6 -- 167.6 -- 167.6
Short-term obligations 1,137.4 -- 1,137.4 -- 1,137.4
-------- --------- --------- -------- ---------
2,254.0 203.7 2,457.7 -- 2,457.7
-------- --------- --------- -------- ---------
Long-term debt 1,727.1 2,428.8 4,155.9 2,690.2 6,846.1
-------- --------- --------- -------- ---------
Other long-term liabilities 153.2 -- 153.2 -- 153.2
-------- --------- --------- -------- ---------
Non-controlling interest 83.4 -- 83.4 -- 83.4
-------- --------- --------- -------- ---------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Common equity
Share capital 2,790.3 914.2 3,704.5 1,390.2 5,094.7
Retained earnings (deficit) 1,616.8 (1,735.6) (118.8) 1,735.6 1,616.8
-------- --------- --------- -------- ---------
4,407.1 (821.4) 3,585.7 3,125.8 6,711.5
-------- --------- --------- -------- ---------
Convertible debentures -- 145.1 145.1 (145.1) --
-------- --------- --------- -------- ---------
Preference and preferred shares 69.7 -- 69.7 -- 69.7
-------- --------- --------- -------- ---------
$8,694.5 $ 1,956.2 $10,650.7 $5,670.9 $16,321.6
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
</TABLE>
THESE PRO FORMA STATEMENTS ARE DRAFT ONLY AND MAY VARY FROM THE
PRO FORMA STATEMENTS TO BE INCLUDED IN THE TAKE-OVER BID CIRCULAR
<PAGE>
TELUS CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDING JUNE 30, 2000
(MILLIONS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
TELUS Pro forma Combined
Corporation Clearnet Combined Adjustments Consolidated
----------- --------- -------- ----------- ------------
2(a) 2(b,c)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Wireless $ 521.2 $ 244.5 $ 765.7 $ -- $ 765.7
Other 2,485.5 -- 2,485.5 -- 2,485.5
-------- ------- -------- ------- --------
3,006.7 244.5 3,251.2 -- 3,251.2
-------- ------- -------- ------- --------
OPERATIONS EXPENSE
Wireless 322.4 327.4 649.8 -- 649.8
Other 1,454.6 -- 1,454.6 -- 1,454.6
-------- ------- -------- ------- --------
1,777.0 327.4 2,104.4 -- 2,104.4
-------- ------- -------- ------- --------
EBITDA
Wireless 198.8 (82.9) 115.9 -- 115.9
Other 1,030.9 -- 1,030.9 -- 1,030.9
-------- ------- -------- ------- --------
1,229.7 (82.9) 1,146.8 -- 1,146.8
Depreciation and amortization 548.3 113.5 661.8 -- 661.8
-------- ------- -------- ------- --------
OPERATING INCOME 681.4 (196.4) 485.0 -- 485.0
-------- ------- -------- ------- --------
Other income, net 10.7 -- 10.7 -- 10.7
Financing costs 103.1 125.4 228.5 100.4 328.9
INCOME BEFORE INCOME TAXES
AND NON-CONTROLLING INTEREST 589.0 (321.8) 267.2 (100.4) 166.8
-------- ------- -------- ------- --------
Income taxes 255.7 1.7 257.4 (188.4) 69.0
-------- ------- -------- ------- --------
INCOME BEFORE NON-CONTROLLING INTEREST 333.3 (323.5) 9.8 88.0 97.8
-------- ------- -------- ------- --------
Non-controlling interest 2.9 -- 2.9 -- 2.9
-------- ------- -------- ------- --------
NET INCOME BEFORE GOODWILL CHARGES 330.4 (323.5) 6.9 88.0 94.9
-------- ------- -------- ------- --------
Goodwill amortization 3.0 -- 3.0 120.8 123.8
-------- ------- -------- ------- --------
NET INCOME 327.4 (323.5) 3.9 (32.8) (28.9)
-------- ------- -------- ------- --------
Preference and preferred share dividends 1.8 -- 1.8 -- 1.8
-------- ------- -------- ------- --------
COMMON SHARE INCOME $ 325.6 $(323.5) $ 2.1 $ (32.8) $ (30.7)
-------- ------- -------- ------- --------
-------- ------- -------- ------- --------
Earnings (loss) per share
Before goodwill charges $ 1.39 $ (5.57) $ 0.32
Net $ 1.37 $ (5.57) $ (0.11)
Average Class A equivalent shares
outstanding (millions) 58.1
Average Common shares outstanding
(millions) 236.9 53.9 290.8
Effective tax rate 43.4% -0.5% 41.4%
</TABLE>
<PAGE>
TELUS CORPORATION
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma financial statements for TELUS
Corporation have been prepared in accordance with generally accepted
accounting principles and are based on:
- the unaudited consolidated financial statements of TELUS Corporation
("TELUS") for the six months ended June 30, 2000; and
- the unaudited consolidated financial statements of Clearnet
Communications Inc. (Clearnet) for the six months ended June 30, 2000.
The pro forma consolidated financial statements are not necessarily
indicative of the results that actually would have occurred, or the results
expected in future periods, had the events reflected herein occurred on the
dates indicated.
2. ASSUMPTIONS AND ADJUSTMENTS
The pro forma consolidated financial statements have been prepared from the
following assumptions and adjustments:
(a) COMBINATION ASSUMPTIONS
The pro forma statement of income reflects the purchase as though it
had occurred on January 1, 2000. The pro forma balance sheet reflects
the purchase as if it had occurred on June 30, 2000.
- The purchase transaction comprises the acquisition of all the
outstanding shares of Clearnet, including exercisable options and
converted debentures, for $2,304.3 million in cash and 53.85
million Non-Voting Common shares of TELUS. The total purchase
price (including an estimated $30 million of related acquisition
costs) is $4,638.7 million. The cash component of the purchase
will be funded by debt issued by TELUS for approximately $2,334.3
million. The 53.85 million TELUS Common Non-Voting shares are
assumed to have been issued at $42.79 each for total
consideration of $2,304.4 million.
<PAGE>
(b) PRO FORMA ADJUSTMENTS
BALANCE SHEET
- A future income tax asset of $740.0 million has been recorded
representing the value of tax loss carry forwards in Clearnet
that will be available to reduce future taxable income in TELUS
after certain reorganization arrangements have been completed.
- Other assets have increased by $97.3 million of debt issuance
costs associated with replacement debt for Clearnet.
- Long-term debt has increased by:
(1) $2,334.3 million borrowed to fund part of the purchase; and
(2) a $355.9 million estimated fair market value adjustment to
Clearnet debt, which is based upon the company's debt
repayment plans and the expected market rates for debt with
similar terms and conditions.
- Common equity increased by:
(1) $2,304.4 million from TELUS equity issue;
(2) $821.4 million for the elimination of Clearnet common share
capital and retained deficit; and
(3) $145.1 million for the elimination of Clearnet convertible
debentures, which are assumed to be converted into common
equity.
- Goodwill has been recorded for the purchase price in excess of
net tangible assets, including the future income tax asset.
INCOME STATEMENT
- Financing costs have increased by:
(1) $93.4 million as a result of additional interest expense for
the purchase; and
(2) $7.0 million for amortization of the deferred financing
charge.
- The income tax adjustment reflects the recording of future income
tax benefit on the current year loss, as well as a reduction in
taxes associated with the increased financing costs. The
effective tax rate assumed was 44.6%.
- Amortization of goodwill of $120.8 million associated with the
purchase has been recorded, based upon an amortization period of
20 years.
(c) OTHER
- No other adjustments have been made to operating revenues and
expenses for any changes expected to occur in future years as a
result of this reorganization.
<PAGE>
FORWARD LOOKING STATEMENTS
SOME STATEMENTS IN THIS DOCUMENT LOOK FORWARD IN TIME AND DEAL WITH OTHER THAN
HISTORICAL OR CURRENT FACTS FOR TELUS AND CLEARNET. SUCH STATEMENTS ARE
QUALIFIED IN THEIR ENTIRETY BY THE INHERENT RISKS AND UNCERTAINTIES SURROUNDING
FUTURE EXPECTATIONS, INCLUDING BUT NOT LIMITED TO, THE RISKS ASSOCIATED WITH:
GENERAL BUSINESS CONDITIONS IN CANADA AND THE COMPANIES' SERVICE TERRITORIES IN
CANADA; COMPETITION ON WIRELESS SERVICES (CELLULAR), LOCAL AND LONG DISTANCE
SERVICES, DATA AND INTERNET SERVICES AND WITHIN THE CANADIAN TELECOMMUNICATIONS
INDUSTRY GENERALLY; ADVERSE REGULATORY ACTION; TECHNOLOGICAL CHANGE; TAXATION;
AVAILABILITY OF SUFFICIENT FUNDING; AND GENERATION OF OPERATING CASHFLOW
SUFFICIENT TO PROVIDE FINANCIAL VIABILITY. FOR ADDITIONAL INFORMATION WITH
RESPECT TO CERTAIN OF THESE AND OTHER FACTORS, SEE THE REPORTS FILED BY TELUS
AND CLEARNET WITH CANADIAN PROVINCIAL SECURITIES COMMISSIONS AND THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION. TELUS AND CLEARNET DISCLAIM ANY
INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE OFFER TO
EXCHANGE/PROSPECTUS, THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9
AND OTHER OFFER DOCUMENTATION REGARDING THE TRANSACTION TO BE FILED WITH
CANADIAN PROVINCIAL SECURITIES COMMISSIONS AND THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION, AS THEY WILL CONTAIN IMPORTANT INFORMATION. SECURITY
HOLDERS MAY OBTAIN A FREE COPY OF THE OFFER TO EXCHANGE/PROSPECTUS (WHEN
AVAILABLE) AND OTHER RELATED DOCUMENTS FILED BY TELUS AND CLEARNET AT THE SEC'S
WEB SITE AT WWW.SEC.GOV AND THE SEDAR WEB SITE AT WWW.SEDAR.COM. WHEN AVAILABLE,
THE OFFER TO EXCHANGE/PROSPECTUS AND THE OTHER DOCUMENTS MAY ALSO BE OBTAINED
FROM TELUS, ATTENTION: TELUS CORPORATION INVESTOR RELATIONS, FLOOR 30-D,
10020-100 STREET, EDMONTON, AB T5J 0N5.
