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INVESTOR CONFERENCE CALL
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[TELUS LOGO] [CLEARNET LOGO]
MONDAY, AUGUST 21, 2000
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FORWARD LOOKING STATEMENT
Some statements in this presentation and accompanying commentary 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. 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.
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DARREN ENTWISTLE
MEMBER OF THE TELUS TEAM
STRUCTURE OF CALL:
- TELUS strategy and deal benefits
- Clearnet perspective
- Financing and valuation
- Investment opportunity
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INTRODUCTION
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LARGEST ACQUISITION IN CANADIAN
TELECOMMUNICATIONS HISTORY
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TELUS STRATEGY
- 100 day plan
- 2 immediate priorities
- National wireless footprint
- Accelerate deployment of data & IP
- Partnering with Verizon
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BUY VS. BUILD
- Advantages to buying:
- NPV $1.5 billion
- Speed to market
- Skilled employees
- Spectrum richness
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WHY CLEARNET? GREAT FIT
- 2 networks
- Mike - covers 21 millionPOPs
- PCS - covers 17 millionPOPs
- National license 30.7 million POPs
- Compatible CDMA technology
- Key relationships: Motorola & Nextel
- 2600 entrepreneurial employees
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NEW TELUS MOBILITY
Highest*:
- 400,000 new customers (up 29%)
- $1.5 billion revenue
- ARPU over $57
- Spectrum in North America
(45-55 MHz)
Lowest*:
- Churn rate of 1.74%
*pro forma for last 12 months
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DEAL HIGHLIGHTS
- Acquire 100% Clearnet shares
- 50/50 cash and shares
- $70 per Clearnet share
- 1.636 TELUS NV shares per Clearnet
share (subject to proration)
- Nextel and Motorola taking 100% and
75% TELUS NV shares
- Plan to list on U.S. exchange
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OPPORTUNE TIMING
- Penetration at 25% inflexion
growth point
- Eliminate auction uncertainty
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THE SYNERGIES
<TABLE>
<S> <C>
Operating* $1.6 billion
Tax $0.5-0.8
------------
$2.1+billion
</TABLE>
*Revenue, Operating and Capital
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GEORGE COPE
PRESIDENT & CEO
Clearnet Profile
- 2,600 entrepreneurial employees
- 700,000 subscribers
- Raised over $3 billion in capital
- Leader in post-paid growth
- Leader in revenue growth
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REASONS FOR DEAL
- Creates shareholder value
- $70/share is 4.5 times IPO
- Debt holders - credit enhanced
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LOGICAL CHOICE
- TELUS Mobility market leader in Western Canada
- Complementary CDMA technology
GREAT COMPANY GOING FORWARD
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BARRY BAPTIE
EXECUTIVE VP & CFO
Financing:
- $7.7 billion in bank bridge financing
- Underwritten by TD Securities and J.P. Morgan
- Seeking investment grade debt rating
- Plan to re-finance up to $5 billion
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STRUCTURE ACHIEVES 3 GOALS
- Finance future growth in data and Internet
- Maintain investment grade rating
- Maintain TELUS dividend
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PRO FORMA BALANCE SHEET
At June 30, 2000:
- $16.3 billion company
- Net debt $7.6 billion
- Shareholders' equity $6.8 billion
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NEW TELUS 2001 GUIDANCE
(based on current street analyst view)
<TABLE>
<S> <C>
Revenue* $7.4 billion
EBITDA* $2.7 billion
Interest Rate 8%
Tax Rate 44%
Goodwill 20 years
</TABLE>
* analyst estimates adjusted for synergies
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VALUATION ISSUES
- Focus on growth in revenues, EBITDA and cash earnings
- Clearnet premium in line with recent transactions
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THE VALUATION
<TABLE>
<CAPTION>
TRANSACTION VALUE TO
PREMIUM SUBSCRIBERS REVENUES
$CDN 1-DAY 52-WK HI FY0 FY1 FY0 FY1
<S> <C> <C> <C> <C> <C> <C>
CLEARNET 53% (4%) 7,241 5,238 11.9 8.8
DT/VOICESTREAM 56% 25% 23,647 13,561 31.4 16.3
VOICESTREAM/AERIAL 28% 28% 8,375 5,826 13.3 8.4
VOICESTREAM/OMNIPOINT 55% 29% 8,800 6,040 12.9 8.5
</TABLE>
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VALUATION OF NEW TELUS
- Sum of the parts appropriate
- Wireline, Mobility, Data and National
- Valuation multiples to growth rates are favourable
ON MANY MEASURES WE REPRESENT
GREAT VALUE
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INVESTMENT OPPORTUNITY
- Leading player in converging voice, data, IP and mobility world
- Speed, Vision and Focus
- Unique investment -- growth stock with strong cash flow and cash earnings
OUTSTANDING INVESTMENT OPPORTUNITY
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QUESTIONS
&
ANSWERS
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Thank you for joining us for our
Investor Conference Call
For more information:
TELUS Clearnet
Investor Relations Investor Relations
1-800-667-4871 (416) 279-3219
[email protected] [email protected]
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