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STOCK BROKER/INVESTOR
CONFERENCE CALL
[QUANTUM LEAP LOGO]
[TELUS LOGO] [CLEARNET LOGO]
WEDNESDAY, AUGUST 30, 2000
SLIDE 1
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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. This presentation and the accompanying commentary do not
constitute an offer of securities for sale in the United States. No securities
will be offered for sale in the United States absent registration with the
United States Securities and Exchange Commission, by means of a prospectus which
will contain detailed information about TELUS and its management, as well as
financial statements.
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
PRESIDENT & CEO, TELUS
STRUCTURE OF CALL:
- TELUS strategy and deal benefits
- Clearnet perspective
- Financing and valuation
- Investment opportunity
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INTRODUCTION
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$6.6B - LARGEST ACQUISITION IN CANADIAN TELECOMMUNICATIONS HISTORY
SLIDE 4
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TELUS STRATEGY
- 100 day plan
- 2 immediate priorities
- National wireless footprint
- Accelerate deployment of data & IP
- Strategic Partnerships
- Verizon - owns 26.6% of TELUS
SLIDE 5 [QUANTUM LEAP LOGO]
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NATIONAL WIRELESS: BUY VS. BUILD?
ADVANTAGES TO BUYING:
- Speed to market
- Skilled employees
- Spectrum richness
- NPV $1.5B
NO CONTEST: IT WOULD HAVE TAKEN US THREE YEARS TO REACH THIS POSITION
SLIDE 6 [QUANTUM LEAP LOGO]
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WHY CLEARNET? GREAT FIT
- 2 networks
- Mike - covers 21 million POPs
- PCS - covers 17 million POPs
- National license 30.7 million POPs
- Compatible CDMA technology
- Key partners: Motorola & Nextel
- 2,600 entrepreneurial employees
SLIDE 7 [QUANTUM LEAP LOGO]
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DEAL HIGHLIGHTS
- Acquire 100% Clearnet shares
- 50/50 cash and shares - $2.3B of each
- $70 per Clearnet share as of August 18
- 1.636 TELUS NV shares per Clearnet share (subject to pro-ration)
- Nextel and Motorola electing 100% and 75% TELUS NV shares respectively
- Plan to list on U.S. exchange
SLIDE 8 [QUANTUM LEAP LOGO]
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OPPORTUNE TIMING
- Wireless penetration now at 25% - the inflexion growth point
- Eliminate spectrum auction uncertainty
SLIDE 9 [QUANTUM LEAP LOGO]
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DEAL 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
CLEARNET PROFILE:
- 2,600 entrepreneurial employees
- 700,000 subscribers
- Raised over $3B in capital
- Leader in post-paid growth
- Leader in revenue growth
SLIDE 11 [QUANTUM LEAP LOGO]
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REASONS FOR DEAL
- Improved competitive position
- Creates shareholder value
- $70 per 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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NEW TELUS MOBILITY
MARKET LEADER*:
- Leading customer growth - 400,000 new customers (up 29%)
- Highest wireless revenue - $1.5B
- Highest ARPU - over $57
- North American spectrum leader (45-55 MHz)
- Industry leading churn rate of 1.74%
*pro forma for last 12 months
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JOHN WHEELER
VP INVESTOR RELATIONS, TELUS
FINANCING:
- $7.7B in bank bridge financing
- Underwritten by TD Securities and J.P. Morgan
- Seeking investment grade debt rating
- Plan to re-finance up to $5B
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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 views)
<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
- No Canadian precedent
- 100% control
- Spectrum richness and certainty
- Synergies
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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 worlds
- Speed, Vision and Focus
- Unique investment - growth stock with strong cash flow and cash earnings
OUTSTANDING INVESTMENT OPPORTUNITY
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QUESTIONS
&
ANSWERS
SLIDE 22 [QUANTUM LEAP LOGO]
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THANK YOU FOR JOINING US FOR OUR STOCK BROKER/INVESTOR CONFERENCE CALL
For more information:
TELUS CLEARNET
INVESTOR RELATIONS INVESTOR RELATIONS
1-800-667-4871 (416) 279-3289
[email protected] [email protected]
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