**Exhibit 99.3**

 

**Annual Information Form for the year ended December 31, 2011, dated March 14, 2012**

 

[previously filed on SEDAR]

 

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**TELUS Corporation**

**Annual Information Form**

**for the year ended December 31, 2011**

 

**March 14, 2012**

 

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| **CAUTION   REGARDING FORWARD-LOOKING STATEMENTS**           | **3**  |
|--------------------------------------------------------------|--------|
| **CORPORATE STRUCTURE**                                      | **5**  |
| **DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENTS**     | **7**  |
| **EMPLOYEE RELATIONS**                                       | **14** |
| **RISK FACTORS**                                             | **14** |
| **FOREIGN OWNERSHIP RESTRICTIONS**                           | **15** |
| **REGULATION**                                               | **16** |
| **COMPETITION**                                              | **18** |
| **DIVIDENDS DECLARED**                                       | **18** |
| **CAPITAL STRUCTURE OF TELUS**                               | **19** |
| **RATINGS**                                                  | **22** |
| **MARKET FOR SECURITIES**                                    | **25** |
| **DIRECTORS AND OFFICERS**                                   | **26** |
| **LEGAL PROCEEDINGS AND REGULATORY ACTIONS**                 | **30** |
| **INTERESTS OF EXPERT**                                      | **30** |
| **AUDIT COMMITTEE**                                          | **30** |
| **MATERIAL CONTRACTS**                                       | **33** |
| **TRANSFER AGENT AND REGISTRAR**                             | **33** |
| **ADDITIONAL INFORMATION**                                   | **33** |
| **APPENDIX A: TERMS OF REFERENCE FOR THE   AUDIT COMMITTEE** | **34** |

 

Each section of the Management’s Discussion & Analysis (“MD&A”) for the fiscal year ended December 31, 2011 that is referred to in this Annual Information Form (“AIF”) is incorporated herein by reference. The MD&A is filed on SEDAR at sedar.com.  For greater certainty, notwithstanding references herein to the information circular, financial statements, the corporate social responsibility report and the telus.com website, these documents and website are not incorporated into this AIF.

 

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**CAUTION REGARDING FORWARD-LOOKING STATEMENTS**

 

This document and the Management’s Discussion & Analysis for the year ended December 31, 2011 (“MD&A”) contain forward-looking statements about expected future events and financial and operating performance of TELUS Corporation.  By their nature, forward-looking statements are subject to inherent risks and uncertainties, and require the Company to make assumptions. There is significant risk that assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause future performance, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed. Except as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, and reserves the right to change, at any time at its sole discretion, its current practice of updating annual targets and guidance. Annual targets for 2012 and related assumptions are described in *Sections 1.4 and 1.5*of the MD&A. Factors that could cause actual performance to differ materially include, but are not limited to:

 

·                  Competition including: continued intense competitive rivalry across all services among incumbent telecommunications companies, new entrant wireless operators, cable-TV providers, other communications companies and emerging over-the-top (OTT) services; active price and brand competition; TELUS’ ability to offer an enhanced customer service experience; industry growth rates including wireless penetration gain; network access line losses; subscriber additions and subscriber retention experience for wireless, TELUS TV® and Optik High SpeedTM Internet services; costs of subscriber acquisition and retention; pressures on wireless average revenue per subscriber unit per month (ARPU) such as through flat rate pricing trends for voice and data, inclusive long distance plans for voice, and increasing availability of Wi-Fi networks for data; levels of smartphone sales and associated subsidy levels; and ability to obtain and offer data content across multiple devices on wireless and TV platforms.

 

·                  Technological substitution including: reduced utilization and increased commoditization of traditional wireline voice local and long distance services; increasing numbers of households that have only wireless telephone services; continuation and acceleration of wireless voice ARPU declines such as through substitution to messaging and OTT applications such as Skype; and OTT IP services that may cannibalize TV and entertainment services.

 

·                  Technology including: subscriber demand for data that could challenge wireless network capacity, service levels and spectrum capacity; reliance on systems and information technology; broadband and wireless technology options and roll-out plans, including reliance on wireless reciprocal network access agreements; choice of suppliers and suppliers’ ability to maintain and service their product lines; wireless handset supplier concentration and market power; expected technology and evolution paths; expected benefits and performance of high-speed packet access plus (HSPA+) dual-cell technology and transition to long-term evolution (LTE) wireless technology; dependence of rural LTE roll-out strategy on ability to acquire spectrum in the 700 MHz band; successful deployment and operation of new wireless networks and successful introduction of new products (such as new LTE and tablet devices), new services and supporting systems; network reliability and change management; and successful upgrades of TELUS TV technology.

 

·                  Economic growth and fluctuations including: the strength and persistence of the economic recovery in Canada that may be influenced by international economic developments in the U.S., Europe, Asia and elsewhere; future interest rates; and pension investment returns and funding.

 

·                  Capital expenditure levels in 2012 and beyond due to the Company’s wireless deployment strategy for future technologies including LTE, wireline broadband initiatives, Internet data centre (IDC) initiatives, and future Industry Canada wireless spectrum auctions, including auction of spectrum in the 700 MHz and 2.5/2.6 GHz bands.

 

·                  Financing and debt requirements including ability to carry out refinancing activities.

 

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·                  Ability to sustain growth objectives to 2013 (including, over this timeframe, dividend growth of circa 10% per annum and CEO goals of generating low double-digit percentage annualized growth in earnings per share and greater growth in free cash flow). The growth objectives may be affected by factors such as regulatory and government developments and decisions, competitive environment, reasonable economic performance in Canada, and capital expenditure and spectrum auction requirements. The growth objectives are not necessarily indicative of earnings, dividends and free cash flow beyond 2013.

 

·                  Regulatory approvals and developments including: the design and impact of future spectrum auctions (including the spectrum auction rules and cost of acquiring spectrum in the 700 MHz and 2.5/2.6 GHz bands); whether application and enforcement of new regulatory safeguards regarding vertical integration by competitors into broadcast content ownership prove to be effective; increased foreign control of wireless entrants from federal policy decisions on foreign ownership restrictions; interpretation and application of tower sharing and roaming rules; and possible adoption of consumer protection legislation by provinces whose non-harmonized rules create risk of significant compliance costs.

 

·                  Human resource developments including employee retention and engagement matters and the outcome of collective bargaining for a Quebec region agreement that expired at the end of 2011 (covering approximately 510 employees).

 

·                  Ability to successfully implement cost reduction initiatives and realize expected savings net of restructuring costs, such as from business integrations, business process outsourcing, internal offshoring and reorganizations, without losing customer service focus or negatively impacting client care.

 

·                  Process risks including: reliance on legacy systems and ability to implement and support new products and services; and implementation of large enterprise deals that may be adversely impacted by available resources and degree of co-operation from other service providers.

 

·                  Tax matters including possible increases in certain provincial and/or federal corporate income tax rates.

 

·                  Business continuity events including human-caused threats such as electronic attacks, and natural disaster threats.

 

·                  Acquisitions or divestitures including realizing expected strategic benefits.

 

·                  Health, safety and environmental developments; Litigation and legal matters; and other risk factors discussed herein and listed from time to time in TELUS’ reports and public disclosure documents including its annual report and other filings with securities commissions in Canada (on SEDAR at **sedar.com**) and in its filings in the United States (on EDGAR at **sec.gov**). For further information, see *Section 10: Risks and risk management* in the MD&A.

 

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**CORPORATE STRUCTURE**

 

***Name, address and incorporation***

 

TELUS was incorporated under the *Company Act* (British Columbia) (the BC Company Act) on October 26, 1998 under the name BCT.TELUS Communications Inc. (“BCT”). On January 31, 1999, pursuant to a court-approved plan of arrangement under the *Canada Business Corporations Act* among BCT, BC TELECOM Inc. (“BC TELECOM”) and the former Alberta-based TELUS Corporation (“TC”), BCT acquired all of the shares of BC TELECOM and TC in exchange for common shares and non-voting shares of BCT, and BC TELECOM was dissolved. On May 3, 2000, BCT changed its name to TELUS Corporation and in February 2005, the Company transitioned under the *Business Corporations Act* (British Columbia), successor to the BC Company Act. TELUS maintains its registered office at Floor 21, 3777 Kingsway, Burnaby, British Columbia (B.C.) and its executive office at Floor 8, 555 Robson Street, Vancouver, B.C.

 

***Intercorporate relationships and TELUS subsidiaries***

 

The only material subsidiary of TELUS is TELUS Communications Inc. (“TCI”), being the only subsidiary which owned assets that constitute more than 10 per cent of the consolidated assets of TELUS and that generated sales and operating revenues that exceed 10 per cent of the consolidated sales and operating revenues of TELUS for the year ended December 31, 2011. In addition, all of the assets, sales and operating revenues of TELUS’ other subsidiaries (other than TCI), together do not exceed 20% of our total consolidated assets and 20% of our total consolidated sales and operating revenues as at December 31, 2011.

 

TELUS’ wireline and wireless businesses are primarily operated through TELUS Communications Company (“TCC”). TCC is a partnership organized under the laws of B.C. whose partners are TCI and TELE-MOBILE Company (“TELE-MOBILE”).

 

As part of a year-end internal reorganization in 2008, Emergis Inc. (“Emergis”), a TELUS subsidiary acquired in January 2008, became a partner of TELE-MOBILE. In addition, TELUS Services Inc. and TELUS Communications (Québec) Inc. converted their shareholding in TCI from preferred shares to ordinary shares.

 

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The following organization chart sets forth the relationships between these subsidiaries and partnerships, as well as their respective jurisdictions of incorporation or establishment and TELUS ownership as at December 31, 2011:

 

 

In this Annual Information Form, unless otherwise stated, references to “TELUS”, “the Company”, “we” or “us” are to TELUS Corporation and all of its subsidiaries and wholly or majority-owned partnerships as a whole, except where it is clear that these terms mean only TELUS Corporation.

 

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**DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENTS**

 

***Who we are***

 

TELUS is one of Canada’s largest telecommunications companies, providing a wide range of telecommunications services and products including wireless, data, Internet protocol, voice and television. In 2011, we**generated $10.4 billion in revenue and had approximately 12.7 million subscriber connections. This included 7.3 million wireless subscribers, 3.6 million wireline network access lines, 1.3 million Internet subscribers and more than 500,000 TELUS TV subscribers.

 

We earn the majority of our revenue from access to, and the use of, our telecommunications infrastructure, or from providing products and services that facilitate access to and usage of this infrastructure.

 

***Organization***

 

Our operating segments and reportable segments are wireless and wireline. Our wireless and wireline operations are integrated to leverage the convergence of technologies, to provide integrated solutions differentiating us from our competitors and to improve operating efficiency and effectiveness. Our financial reporting of wireless and wireline segments reflects the segmented information that is regularly reported to our Chief Executive Officer (our chief operating decision maker). Segmentation is based on similarities in technology, the technical expertise required to deliver the services and products, customer characteristics, distribution channels used and regulatory treatment. We offer our wireless and wireline services primarily through TCC.

 

***Our strategy***

 

Our strategic intent is to unleash the power of the Internet to deliver the best solutions to Canadians at home, in the workplace and on the move. Our strategy for growth is to focus on our core telecommunications business in Canada supported by international contact centre and outsourcing capabilities.

 

We developed six strategic imperatives in 2000 that management believes remain relevant for future growth, despite changing regulatory and competitive environments. The six strategic imperatives are:

 

·                  Building national capabilities across data, IP, voice and wireless

 

·                  Focusing relentlessly on the growth markets of data, IP and wireless

 

·                  Providing integrated solutions that differentiate TELUS from its competitors

 

·                  Partnering, acquiring and divesting to accelerate the implementation of TELUS’ strategy and focus TELUS’ resources on core business

 

·                  Investing in internal capabilities to build a high-performance culture and customer excellence

 

·                  Going to market as one team under a common brand, executing a single strategy

 

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A consistent focus on the strategic imperatives guides our actions and contributes to the achievement of our financial goals. See our discussion in MD&A *Section 2.2 Strategic imperatives.*Each year, we adopt a set of corporate priorities to advance our long-term strategic initiatives and address near-term opportunities and challenges. Our corporate priorities are discussed in MD&A *Section 3: Key performance drivers.*

 

***Business overview***

 

Our principal markets, our services and products and an overview of our competition are described in MD&A *Section 4.1 Principal markets addressed and competition*. Further details related to competition can be found in MD&A *Section 10.1.Competition.*

 

Our assets and resources, including employees, distribution methods, tangible properties (such as our telecommunications networks and network facilities), intangible properties (such as brand and wireless spectrum licences) and an overview of foreign operations are discussed in MD&A *Section 4.2**Operational resources.*Further details on our employees are provided below under *Employee relations* and further details on our wireless spectrum licences are provided below under *Regulation -**Radiocommunication spectrum licences*.

 

For revenue and other financial information on the two most recently completed financial years with respect to our wireless and wireline business, see MD&A *Section 5.4 Wireless segment*and *Section 5.5 Wireline segment.*

 

An overview of the Canadian economic environment and the telecommunications industry can be found in the MD&A *Section 1.2 Canadian economy and telecommunications industry*and *Section 9: General outlook.*As well, the cyclical or seasonal trends that have impacted the wireline and wireless business are described in the MD&A *Section 5.2 Summary of quarterly results and fourth quarter recap - Trends.*

 

We are committed to corporate social responsibility and achieving sustainable growth. Our triple bottom line approach to business balances economic growth with environmental and social goals. We aim to integrate environmental considerations into our business and offer innovative communications solutions while protecting the environment. Our environmental policy seeks to meet applicable legal and other requirements and, where possible, to go beyond to achieve corporate targets. We also try to demonstrate sustainable development by integrating environmental, economic and social considerations into each step of our operations. Our environmental policy and the associated Environmental Management System are reviewed regularly to facilitate continuing suitability and effectiveness. Our environmental objectives, targets and performance are monitored and reported yearly through our corporate social responsibility report which is available at **telus.com/csr**.

 

We are also committed to our community and aim to give where we live by: improving social outcomes for communities and creating a personal affinity for TELUS through our cause marketing campaigns; the efforts of our 11 TELUS Community Boards in Canada and three new international Community Boards; TELUS Community Ambassadors; and programs such as TELUS’ Charitable Giving Program, the TELUS Day of Giving and Dollars for Doers.  Details about our community investment program can be found in our 2011 Annual Report available at **telus.com/annualreport.**

 

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***Three year history***

 

During the three-year period ending on December 31, 2011, we continued to advance our national growth strategy, guided by our six strategic imperatives and our corporate priorities for those years.

 

*Building national capabilities across data, IP, voice and wireless*

 

A key focus of the Company since 2009 has been our investment in broadband networks and services to enhance our competitive position and support future growth opportunities.

 

In November 2009, we successfully launched our new national advanced wireless network based on the high-speed packet access (HSPA+) technology, facilitated by a network access agreement with Bell Canada.

 

In 2010, we began deployment of wireless HSPA+ dual cell technology. In early 2011, we launched services in our urban 1900 MHz footprint using this technology, which doubled manufacturer-rated maximum download speeds to up to 42 Mbps. The expected average download speed is 7 to 14 Mbps with a compatible device. Our HSPA+ network and the implementation of dual-cell technology provide an optimal transition to long-term evolution (LTE) technology.

 

We began urban construction of our next generation wireless 4G LTE network in the latter half of 2011 and launched services in February 2012. LTE technology supports manufacturer-rated peak data download speeds of up to 75 Mbps (typical speeds of 12 to 25 Mbps expected). Our LTE network operates on advanced wireless services (AWS) spectrum, acquired by the Company for $882 million in Industry Canada’s 2008 auction.

 

The urban launch of 4G over AWS spectrum is the first stage in our upgrade to LTE, but any potential roll-out into rural Canada will be dependent on the expected Industry Canada spectrum auction of frequencies in the 700 MHz band in late 2012 or early 2013. We are committed to enhancing the coverage and capacity of our wireless network by building out 4G LTE technology extensively across rural Canada using 700 MHz wireless spectrum. To support our plans to expand 4G LTE wireless service to rural markets, it will be important for the federal government to provide an opportunity for us to bid on and acquire 700 MHz spectrum in the planned auction. See the related risk discussion in MD&A *Section 10.3 Regulatory matters*.

 

In 2011, we substantially completed our wireline VDSL2 technology overlay following on a substantial completion of our ADSL2+ network in 2010. Our broadband high-definition (HD) coverage, including ADSL2+ coverage, was in nearly 2.3 million households in Alberta, B.C. and Eastern Quebec, up by close to 200,000 homes in 2011. Our deployment of VDSL2 fibre to the node (FTTN) technology since 2009 brings network download speeds of up to 25 Mbps, which permits up to four simultaneous TV streams in the home. In addition, we continue to deploy fibre to the home (FTTH) in new residential areas, fibre to the building in new multi-dwelling units and FTTH to selected areas in B.C.

 

We are enhancing our national network of data centres and related facilities, drawing upon green hydroelectric power, natural cooling and other technology to make them among the most environmentally sustainable operations of their type in North America. This includes investments in new intelligent Internet data centres in Rimouski, Quebec, with an expected completion date in 2012, and in Kamloops, B.C., with construction

 

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beginning in 2012. These data centres support cloud computing and unified communications solutions for our clients.

* *

*Focusing relentlessly on the growth markets of data, IP and wireless*

 

In May 2011, we entered into a five-year contract extension with the Government of Ontario to provide, manage and supply a portfolio of telecommunications services, including information technology security.

 

In addition, in the third quarter of 2011, following a three-year request for proposal and negotiation process, we signed a 10-year agreement with the Government of B.C. to provide telecommunications and strategic services to the government and its public sector partners. We were the government’s previous service provider for many of these services. We expect to invest approximately $350 million over a 10-year period to extend advanced communications technology into rural B.C.

 

*Providing integrated solutions that differentiate TELUS from its competitors*

 

Our ongoing investment in the expansion of our fibre-optic network has provided the capacity to introduce new home entertainment services in B.C. and Alberta since 2005. In June 2010, we launched the OptikTM brand in B.C. and Alberta, a new suite of advanced IP-based TV and high-speed Internet services. We launched the same innovative services in Eastern Quebec in April 2011. Optik services bring together our most advanced home services — Optik TVTM based on the Microsoft Mediaroom platform and Optik High Speed with Internet access speeds of up to 25 Mbps or more that can be accessed anywhere in the home with Wi-Fi. In 2011, we continued to enhance Optik TV services, including expansion of the South Asian channel line-up and the addition of a Facebook application enabling customers to view and use Facebook while watching TV. Optik TV now offers customers access to more than 500 digital channels of entertainment services, including more than 100 HD channels.

 

In May 2011, we announced the TELUS Future Friendly® Office suite of products and services for small and medium businesses (SMB). The suite was built in collaboration with Cisco and features Cisco Unified Communications technology that is built for companies with fewer than 100 employees. The Future Friendly Office includes TELUS-supported Cisco office systems linked to TELUS wireless and wireline network services, and is available across Canada. In October 2011, we introduced the TELUS Business FreedomTM bundle of wireless and wireline telecommunication services for SMBs in B.C. and Alberta. Two flexible packages are offered that include anytime device upgrades and changes to services, as well as 24/7 technical support and one bill. Business AnywhereTM is a solution for businesses with mobile employees who need to communicate outside the office. Business SelectTM is a solution for businesses that primarily work in a single location or have minimal mobility requirements. In November 2011, TELUS launched a new self-serve website where SMBs can shop for wireless services.

 

Since November 2009, TELUS continues to roll out new Clear & Simple® initiatives to enhance the customer experience by providing less complexity, more flexibility and freedom. In June 2011, TELUS reduced international wireless roaming rates for its customers with the introduction of Clear and Simple international travel pricing. Voice roaming rates were reduced by up to 50% and data roaming rates were reduced by up

 

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to 60%. Separate bundles and passes are no longer required to access the lower rates, making it easy for TELUS customers to use wireless services overseas. This was made possible by working with carriers around the world to negotiate reduced roaming rates.

 

*Partnering, acquiring and divesting to accelerate the implementation of TELUS’ strategy and focus TELUS’ resources on core business*

 

During 2011, we acquired certain independent TELUS-branded wireless dealership businesses for $81 million cash. These investments were made with a view to enhancing consistency and control over customer service, as well as enhancing distribution of wireless and wireline products across Western Canada.

 

In 2011, TELUS Health Solutions began three pilot projects with electronic medical records (EMR) providers KinLogix Medical, QHR Technologies and Wolf Medical Systems, whose solutions are connected with the TELUS Health Space® platform. The pilot projects are targeted to reach Canadians in Quebec, Ontario, Alberta and British Columbia. In addition, we signed a contract to provide Alberta Health Services with Microsoft HealthVault technology for the development of a personal health record solution for the province’s citizens. TELUS Health Space, powered by Microsoft HealthVault, is a secure and confidential online consumer platform that enables patients to access and manage their own health information, and is expected to improve the flow of personal health information among healthcare providers, regardless of where the patient is located. This is consistent with our vision of helping transform healthcare in Canada through communications technology to reduce costs and errors, better connect patients and help prevent illness.

 

In 2011, we acquired control of Transactel (Barbados) Inc. through a series of transactions that increased our equity interest to 95% from 29.99% at the beginning of the year. Transactel (Barbados) Inc. is a business process outsourcing and call centre company with facilities in two Central American countries (Guatemala and El Salvador). We invested $71 million in 2011 with a view to enhancing our business process outsourcing capacity, particularly regarding Spanish-language capabilities and acquiring multi-site redundancy in support of other TELUS facilities.

 

In March 2011, we announced that we are partnering in a residential, retail and commercial real estate redevelopment project in downtown Vancouver, TELUS Garden, which will transform a city block that includes our current national executive offices. It will feature a 46-storey residential condominium tower and a 22-storey office tower, as well as renovations to TELUS’ current downtown offices to provide leasable office and retail space. The commercial and residential buildings will be built to leadership in energy and environmental design (LEED) platinum and gold standards, respectively, and incorporate green initiatives.

 

The TELUS Garden project is on schedule to begin demolition in the first quarter of 2012 and construction expected to be completed in 2015. We plan to invest in the project predominantly through contribution of our existing real estate holdings on this city block, coupled with project debt. The project includes a city-owned parkade that we recently purchased. We plan to lease space in the new jointly owned office tower for our corporate headquarters. We do not plan to maintain an ownership position in the residential tower aside from some retail space after the construction and sale of condominium units.

 

In September 2009, we acquired Black’s Photo Corporation, a national imaging and digital retail company for $28 million.  This investment was made with a view to enhancing our distribution of wireless products and services across Canada and particularly in the province of Ontario.

 

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*Investing in internal capabilities to build a high-performance culture and customer excellence*

 

A key priority in 2011 and 2010 was to focus on delivering an improved customer experience. In May 2010, we created TELUS Customer Solutions by uniting two customer-facing business units, business solutions and consumer solutions under the leadership of Joe Natale, who was appointed Executive Vice-President and Chief Commercial Officer. This reorganization was carried out to increase our ability to approach customers as one team, with fully co-ordinated sales, marketing and customer care priorities while contributing to operational efficiencies and cost synergies.

 

In 2010, we implemented an array of initiatives that helped improve efficiency and reduce costs: simplifying or automating processes; simplifying organizational structures through consolidation of functions and reducing organizational layers, which includes workforce reductions; consolidating administrative real estate and reducing use of real estate space, which includes vacating certain locations; decommissioning uneconomic products and services; and leveraging both business process outsourcing and off-shoring to TELUS’ own international call centres.

 

In June 2010, we introduced the Customers First initiative, an internal program that brought all senior managers to the front line to listen to customers, learn from team members and identify customer service improvement initiatives. In 2011, approximately 1,600 senior leaders and management staff interacted for a day with front-line team members. Initiatives identified, such as improved interactive voice systems and more flexible installation times, are leading to quality of service improvements for our customers.

 

In 2011, we continued to implement initiatives that are improving the customer experience, increase efficiency and reduce costs: improving practices and processes that drive call centre volumes; adopting clear and simple rate plans and billing to reduce customer churn and inquiries; leveraging roaming agreements to more than 200 countries for better rates and customer experience; increasing smartphone adoption and usage through in-store learning centres; and increasing transparency on smartphone subsidies that allow customers to upgrade mid-contract.

 

*Going to market as one team under a common brand, executing a single strategy*

 

In June 2011, the membership of the Telecommunications Workers Union (“TWU”) ratified a new collective agreement that covers approximately 11,250 active TELUS team members, across Canada in the Company’s wireline and wireless business segments. The new agreement was reached without a labour disruption and will expire at the end of 2015. In addition, the Company began collective bargaining for a small Quebec region agreement that expired at the end of 2011. See below under *Employee Relations*and MD&A *Section 10.4*for further details.

 

For additional details on 2011 developments and other events or conditions that influenced our general development, see the MD&A*Section 2.2 Strategic imperatives,*as well as progress on our corporate priorities in MD&A *Section 3: Key performance**drivers.*For a discussion of changes in our business expected in 2012, see MD&A *Section 1.5 Financial and operating targets for 2012*and*Section 9: General Outlook.*

 

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For a review of the events and conditions that influenced our general development during 2009 and 2010 and how our business developed over those two years, see the MD&A*Section 1.2 Canadian economy and telecommunications industry, Section 2.2 Strategic imperatives,*as well as progress on our corporate priorities for the relevant year in MD&A *Section 3: Key performance drivers,*contained**in the 2009 and 2010 annual MD&As*.*

 

***2012 Year-to-date developments***

 

On February 21, 2012, TELUS announced that holders of its Common Shares and Non-Voting Shares will have the opportunity to decide whether to eliminate the Company’s Non-Voting Share class at an annual and special meeting to be held on May 9, 2012. Under the terms of the proposal, each Non-Voting Share would be converted into a Common Share on a one-for-one basis, effected by way of a court-approved plan of arrangement and will be subject to approval of two-thirds of the votes cast by the holders of Common Shares and two-thirds of the votes cast by the holders of Non-Voting Shares, each voting separately as a class (the “Plan of Arrangement”).  In addition to shareholder and court approvals for the transaction, the listing of the new Common Shares to be issued pursuant to the Arrangement is subject to approvals from the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”). NYSE approval will also be needed to list all outstanding Common Shares on the NYSE.  Provided those approvals are obtained, TELUS’ Common Shares would then trade on both the TSX and the NYSE. There can be no assurance that the proposal will receive voting approval. If this Plan of Arrangement is not completed, the market price of the Non-Voting Shares and/or Common Shares may decline. Further details will be provided in TELUS’ information circular for the annual and special meeting to be held on May 9, 2012.

 

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**EMPLOYEE RELATIONS**

 

As at December 31, 2011, we employed approximately 41,100 employees, including approximately 13,200 employees in TELUS International that are located outside of Canada. Approximately12,800 of our employees are unionized.

 

We are signatories to six collective agreements. The largest agreement is with the TWU, covering approximately 11,250 clerical, operator services and technical employees in the wireless and wireline segments across Canada. We negotiated a new agreement with the TWU that came into effect in June 2011 and expires at the end of 2015. Highlights of the new agreement include improved hours of work and scheduling provisions for frontline customer experience team members, improved ability to re-engage retired team members and provisions to enable continued participation in TELUS’ At Home Agent and Work Styles programs.

 

In the province of Quebec, our employees in the wireline segment are covered by two collective agreements. The agreement with the Syndicat Québécois des employés de TELUS, covering approximately 960 trades, clerical and operator services employees, was renegotiated and subsequently ratified on August 5, 2010. This agreement will expire on December 31, 2014. The second wireline agreement, with the Syndicat des agents de maîtrise de TELUS (“SAMT”), covers approximately 510 employees and expired on December 31, 2011. Negotiations to renew this collective bargaining agreement began in October 2011 and continue to progress. The terms and conditions of the expired contract continue to apply until a new agreement is reached. SAMT also represents a small number of employees in the wireless segment under a separate collective agreement.

 

Our subsidiary, TELUS Sourcing Solutions Inc., is a signatory to collective agreements with the BC Government and Services Employees’ Union (“BCGEU”) and the Canadian Union of Public Employees (“CUPE”). The BCGEU agreement covers approximately 60 employees and expires on April 30, 2013, while the CUPE agreement covers approximately 20 employees and expires on December 31, 2012.

 

**RISK FACTORS**

 

The risk factors in TELUS’ MD&A *Section 10 Risks and risk management*are hereby incorporated by reference.

 

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**FOREIGN OWNERSHIP RESTRICTIONS**

 

Certain subsidiaries of TELUS or partnerships in which TELUS has a controlling interest, are Canadian carriers, holders of radio authorizations or licences, and holders of broadcasting licences, and are required by the *Telecommunications Act* (Canada) (the Telecommunications Act), the *Radiocommunication Act* (Canada) (the Radiocommunication Act) and a Direction to the Canadian Radio-television and Telecommunications Commission (“CRTC”) (Ineligibility of Non-Canadians) given under the *Broadcasting Act* (Canada) (the “Broadcasting Act”) to be Canadian-owned and controlled. Each of the Canadian carriers, under the Telecommunications Act, is considered to be Canadian-owned and controlled as long as: (a) not less than 80 per cent of the members of its board of directors are individual Canadians; (b) Canadians beneficially own not less than 80 per cent of its issued and outstanding voting shares; and (c) it is not otherwise controlled in fact by persons who are not Canadians. Substantially the same rules apply under the Radiocommunication Act and the Broadcasting Act. We have filed with the CRTC the requisite documentation affirming TCC’s status as a Canadian carrier. We further intend that TCC will remain controlled by TELUS Corporation and that it will remain “Canadian” for the purposes of these ownership requirements.

 

The Canadian Telecommunications Common Carrier Ownership and Control Regulations (the “Ownership and Control Regulations”), made under the Telecommunications Act further provide that in order for a company that holds shares in a carrier to be considered Canadian, not less than 66-2/3 per cent of the issued and outstanding voting shares of that company must be owned by Canadians and that such company must not otherwise be controlled in fact by non-Canadians. Accordingly, not less than 66-2/3 per cent of the issued and outstanding voting shares of TELUS Corporation must be owned by Canadians and we must not otherwise be controlled in fact by non-Canadians. To the best of our knowledge, Canadians beneficially own and control in the aggregate not less than 66-2/3 per cent of the issued and outstanding Common Shares of TELUS and TELUS is not otherwise controlled in fact by non-Canadians. For the purposes of these regulations, “Canadian” means among other things: i) a Canadian citizen who is ordinarily resident in Canada; ii) a permanent resident of Canada who is ordinarily resident in Canada and has been so for more than one year after the date he or she was eligible to apply for Canadian citizenship;  iii) a corporation with not less than 66-2/3 per cent of the issued and outstanding voting shares of which are beneficially owned and controlled by Canadians and which is not otherwise controlled in fact by non-Canadians; or iv) a pension fund society the majority of whose members of its board of directors are individual Canadians, and that is established under applicable federal legislation or any provincial legislation relating to the establishment of pension fund societies.

 

The Ownership and Control Regulations provide Canadian carriers and carrier holding companies, such as TELUS Corporation, with the time and ability to rectify ineligibility resulting from insufficient Canadian ownership of voting shares. Under the Ownership and Control Regulations, such companies may restrict the issue, transfer and ownership of shares, if necessary, to ensure that they and their subsidiaries remain qualified under such legislation. For such purposes, in particular but without limitation, a company may, in accordance with the provisions contained in such regulations:

 

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| (i)    | refuse   to accept any subscription for any voting shares;                                        |
|--------|---------------------------------------------------------------------------------------------------|
|   |                                                                                              |
| (ii)   | refuse   to allow any transfer of voting shares to be recorded in its share register;             |
|   |                                                                                              |
| (iii)  | suspend   the rights of a holder of voting shares to vote at a meeting of its   shareholders; and |
|   |                                                                                              |
| (iv)   | sell,   repurchase or redeem any voting shares.                                                   |

 

To ensure that TELUS remains Canadian and that any subsidiary of TELUS, including TCC, is and continues to be eligible to operate as a telecommunications common carrier under the Telecommunications Act, to be issued radio authorizations or radio licences as a radiocommunications carrier under the Radiocommunication Act, or to be issued broadcasting licences under the Broadcasting Act, provisions substantially similar to the foregoing have been incorporated into TELUS’ Articles permitting the directors to make determinations to effect any of the foregoing actions.

 

The Federal Government announced on March 14, 2012 that it will amend the Telecommunications Act to remove foreign ownership restrictions for telecommunications companies that hold less than a 10-percent share of the total Canadian telecommunications market.  This change was made to enable telecommunications companies with a small market share to access the capital needed to grow and compete. We do not oppose the removal of foreign ownership restrictions in telecommunications and are hopeful that the changes to foreign ownership restrictions announced on March 14, 2012 are a first step towards liberalization of restrictions across the industry.

 

The discussion on foreign ownership restrictions contained in MD&A *Section 10.3 Regulatory*is hereby incorporated by reference. 

 

**REGULATION**

 

***General***

 

The provision of telecommunications services and broadcasting services in Canada is regulated by the CRTC pursuant to the Telecommunications Act and the Broadcasting Act, respectively. In addition, the provision of cellular and other wireless services using radio spectrum is also subject to regulation and licensing by Industry Canada pursuant to the Radiocommunication Act.

 

The Telecommunications Act gives the CRTC the power to regulate the provision of telecommunications services, and to forbear from regulating (i.e. not subject to rate regulation) certain services or classes of services if they are subject to a degree of competition which is sufficient to protect the interests of customers. However, even when the CRTC forbears from price regulation in respect of a service, it can continue to regulate these services in other respects, such as for the purposes of ensuring network access and interconnection.

 

See MD&A *Section 10.3 Regulatory*for further details related to regulation generally and specifically in relation to regulatory developments that could have a material impact on TELUS’ operating procedures, costs and revenues.

 

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***Regulation of wireless services***

 

The use of radio spectrum is subject to regulation and licensing by Industry Canada pursuant to the Radiocommunication Act. All of our wireless telecommunications services depend on the use of radio frequencies. While economic regulation of wireless services falls under CRTC jurisdiction, wireless services have, generally, been subject to regulatory forbearance.

 

The Minister of Industry has the authority to suspend or revoke radio spectrum licences if the licence holder has contravened the Radiocommunication Act, regulations or terms and conditions of its licence and after giving the holder of the licence a reasonable opportunity to make representations. Licence revocation is rare; licences are usually renewed upon expiration. See MD&A *Section 10.3 Regulatory*for further details related to regulation generally and specifically in relation to radiocommunication licences regulated by Industry Canada.

 

***Radiocommunications spectrum licences***

 

We hold radiocommunication spectrum licences and authorizations for a variety of wireless services and applications, both mobile and fixed. We hold significant 1.9 GHz personal communications services (PCS) spectrum throughout Canada, are the leading holder of 800 MHz SMR/ESMR spectrum in all of the major Canadian markets, and hold 25 MHz of cellular 800 MHz spectrum in Alberta, B.C. and eastern Québec. We also were successful in obtaining AWS spectrum licences for an average of approximately 16 MHz covering a national footprint in the Industry Canada spectrum auction in 2008. In addition, we hold various radio spectrum licences for fixed services in the 24/38 GHz, 2.3/3.5 GHz band throughout Canada, paging services, and other miscellaneous wireless services.

 

On March 14, 2011, Industry Canada released its decision concerning the*Renewal Process for Cellular and PCS Spectrum Licences*. This decision confirmed that where all conditions of licence for the current PCS/cellular licences have been met, licensees will be eligible to be issued a new licence for a 20-year term. This decision also determined that annual fees for these licences, including those spectrum licences from the 2001 PCS spectrum auction expiring in 2011, will be frozen at current rates.

 

On March 14, 2012, the Federal Government released its decision concerning the auction of available 700MHz and 2500MHz spectrum in the first half of 2013 and the first half of 2014 respectively.  In its decision, the Government capped the amount of prime 700MHz spectrum any individual bidder can acquire at 10MHz and capped the amount of 2500MHz spectrum any individual bidder can acquire at 40MHz. We look forward to participating fully in both the 700MHz and 2500MHz auctions and we are fully committed to meeting the conditions of licence associated with the deployment of service in urban and rural areas.

 

See MD&A *Section 10.3 Regulatory*for further details related to regulation generally and specifically in relation to future availability and cost of wireless spectrum and radiocommunication licences regulated by Industry Canada.

 

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***Broadcasting services***

 

We hold Class 1 Regional broadcasting distribution licences to serve areas in each of B.C., Alberta and Québec utilizing our IP facilities. We also hold a national licence to operate a video-on-demand programming service.

 

See MD&A *Section 10.3 Regulatory*for further details related to regulation generally and specifically in relation to TELUS’ broadcasting distribution undertakings and the CRTC’s review of vertical integration in the broadcasting industry to address the potential for anti-competitive behaviour by broadcasting companies which own interests in both broadcasting distribution services and programming services.

 

**COMPETITION**

 

We expect continued strong competition in the wireline and wireless businesses in all principal markets and geographic areas. See MD&A *Section 4.1 Principal markets addressed and competition*for a summary of the competitive environment in each of our principal markets and geographic areas. Also refer to MD&A *Section 10.1 Competition*for further details on the risks associated with such competitive environment and *Section 9: General outlook*for an assessment of our competitive position as it relates to the telecommunications industry generally and specifically as it relates to the wireless and wireline industries.

** **

**DIVIDENDS DECLARED**

 

The dividends per Common Share and Non-Voting Share declared with respect to each quarter by TELUS, during the three-year period ended December 31, 2011, are shown below:

 
| **Quarter ended ****(1)** | ** ** | **2011** | ** ** | **2010**   | ** ** | **2009**  | ** ** |
|-------------------------------------|------------|----------|------------|------------|------------|-----------|------------|
| March 31                       |       | $        | 0.525      |       | $          | 0.475     |       | $ | 0.475 |   |
| June 30                        |       | $        | 0.550      |       | $          | 0.500     |       | $ | 0.475 |   |
| September 30                   |       | $        | 0.550      |       | $          | 0.500     |       | $ | 0.475 |   |
| December 31                    |       | $        | 0.580      |       | $          | 0.525     |       | $ | 0.475 |   |
| **Total**                           | ** ** | **$**    | **2.205**  | ** ** | **$**      | **2.000** | ** ** | **$** | **1.900** | ** ** |

 

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(1) Paid on or about the first business day of the next month.

 

Our shareholders received a total of $2.205 per share in declared dividends in 2011, which was an increase of 10.3% from 2010. TELUS’ Board of Directors reviews our dividend rate quarterly. Our quarterly dividend rate will depend on an ongoing assessment of free cash flow generation and financial indicators including leverage, dividend yield and payout ratio. The Company’s dividend payout ratio target guideline of 45 to 55 per cent was increased in May 2010 by the Board of Directors to 55 to 65 per cent of sustainable net earnings, on a prospective basis.

 

TELUS announced a dividend growth model in May 2011, under which, subject to the Board of Directors’ assessment and determination, the Company expects to continue with two dividend increases per year to 2013 that would on an annual basis, provide an increase of 

 

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circa 10 per cent. The dividend increase policy is not necessarily indicative of dividends beyond 2013. See MD&A *Section 4.3* for the Company’s capital structure financial policies, results and plans.

 

On February 21, 2012, the Board of Directors declared a quarterly dividend of 61 cents per share on the issued and outstanding Common Shares and Non-Voting Shares of the Company, payable on July 3, 2012, to shareholders of record at the close of business on June 8, 2012. The 61 cent per share dividend declared for the second quarter of 2012 reflects an increase of six cents or 10.9% from the dividend one year earlier. This is consistent with TELUS’ dividend growth model discussed above. In the event that the Plan of Arrangement (see *2012 Year-to-date developments above*) receives all requisite approvals and is effective prior to the dividend record date of June 8, 2012, holders of record on such date who previously held Non-Voting Shares would hold Common Shares and would therefore receive the same dividend as all other holders of Common Shares.

 

**CAPITAL STRUCTURE OF TELUS**

 

The authorized capital of TELUS consists of 4,000,000,000 shares, divided into: 1) 1,000,000,000 Common Shares without par value; 2) 1,000,000,000 Non-Voting Shares without par value; 3) 1,000,000,000 First Preferred shares without par value, issuable in series and; 4) 1,000,000,000 Second Preferred shares without par value, issuable in series. The Common Shares and Non-Voting Shares are listed for trading on the Toronto Stock Exchange and the Non-Voting Shares are listed for trading on the New York Stock Exchange. No First Preferred or Second Preferred shares have been issued. See *Market for Securities* below.

 

In the event that the Plan of Arrangement (see *2012 Year-to-date developments above*) receives all requisite approvals, the authorized capital of TELUS and the Articles of the Company will be amended to eliminate the Non-Voting Share class pursuant to the Plan of Arrangement by converting all of the issued and unissued Non-Voting Shares to Common Shares and to increase the number of Common Shares that the Company is authorized to issue by that number of Non-Voting Shares that the Company was previously authorized to issue.  In addition to shareholder and court approvals for the transaction, the listing of the new Common Shares to be issued pursuant to the Arrangement is subject to approvals from the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”).  NYSE approval will also be needed to list all outstanding Common Shares on the NYSE.  Provided those approvals are obtained, TELUS’ Common Shares would then trade on both the TSX and the NYSE. Further details will be provided in TELUS’ information circular for the annual and special meeting to be held on May 9, 2012.

 

***TELUS Common Shares and TELUS Non-Voting Shares***

 

Subject to the prior rights of the holders of First Preferred shares and Second Preferred shares, the Common Shares and the Non-Voting Shares are entitled to participate equally with each other with respect to the payment of dividends and the distribution of assets of TELUS on the liquidation, dissolution or winding up of TELUS.

 

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Neither the Common Shares nor the Non-Voting Shares can be subdivided, consolidated, reclassified or otherwise changed unless the other class is changed in the same manner.

 

The holders of the Common Shares are entitled to receive notice of, attend, be heard and vote at any general meeting of the shareholders of TELUS on the basis of one vote per Common Share held. The holders of Non-Voting Shares are entitled to receive notice of, attend and be heard at all general meetings of the shareholders of TELUS and are entitled to receive all notices of meetings, information circulars and other written information from TELUS that the holders of Common Shares are entitled to receive from TELUS, but are not entitled to vote at such general meetings unless otherwise required by law. Holders of Common Shares are entitled to vote by a separate resolution for each director rather than a slate.

 

In order to ensure that the holders of the Non-Voting Shares can participate in any offer which is made to the holders of the Common Shares (but is not made to the holders of

 

Non-Voting Shares on the same terms), which offer, by reason of applicable securities legislation or the requirements of a stock exchange on which the Common Shares are listed, must be made to all or substantially all the holders of Common Shares who are inany province of Canada to which the requirement applies (an Exclusionary Offer), each holder of Non-Voting Shares will, for the purposes of the Exclusionary Offer only, be permitted to convert all or part of the Non-Voting Shares held into an equivalent number of Common Shares during the applicable conversion period. In certain circumstances (namely, the delivery of certificates, at specified times, by holders of 50 per cent or more of the issued and outstanding Common Shares to the effect that they will not, among other things, tender to such Exclusionary Offer or make an Exclusionary Offer), these conversion rights will not come into effect.

 

If all of the Telecommunications Act, the Radiocommunication Act and the Broadcasting Act are changed so that there is no restriction on any non-Canadians holding Common Shares, holders of Non-Voting Shares will have the right to convert all or part of their Non-Voting Shares into Common Shares on a one for one basis, and TELUS will have the right to require holders of Non-Voting Shares who do not make such an election to convert such shares into an equivalent number of Common Shares.

 

TELUS will provide notice to each holder of Common Shares before a general meeting of shareholders at which holders of Non-Voting Shares will be entitled to vote as a class. In such event, holders of Common Shares will have the right to convert all or part of their Common Shares into Non-Voting Shares on a one for one basis provided and to the extent that TELUS and its subsidiaries remain in compliance with the foreign ownership provisions of the Telecommunications Act, the Radiocommunication Act and the Broadcasting Act.

 

The Common Shares are subject to constraints on transfer to ensure our ongoing compliance with the foreign ownership provisions of the Telecommunications Act, the Radiocommunication Act and the Broadcasting Act. As well, holders of Common Shares may be required, if approved by the Board of Directors of TELUS, to convert Common Shares into Non-Voting Shares in order that TELUS be in compliance with the foreign ownership provisions of the Telecommunications Act, the Radiocommunication Act and the Broadcasting Act. In all other respects, each Common Share and each Non-Voting Share have the same rights and attributes.

 

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***First Preferred shares***

 

The First Preferred shares may be issued from time to time in one or more series, each series comprising the number of shares, and having attached thereto the designation, rights, privileges, restrictions and conditions which the board of directors of TELUS determines by resolution and subject to filing an amendment to the Notice of Articles and Articles of TELUS. No series of First Preferred shares may have attached thereto the right to vote at any general meeting of TELUS or the right to be convertible into or exchangeable for Common Shares. Except as required by law, the TELUS holders of the First Preferred shares as a class are not entitled to receive notice of, attend or vote at any meeting of the shareholders of TELUS. The First Preferred shares rank prior to the Second Preferred shares, Common Shares and Non-Voting Shares with respect to priority in payment of dividends and in the distribution of assets in the event of liquidation, dissolution or winding up of TELUS.

 

***Second Preferred shares***

 

The Second Preferred shares may be issued from time to time in one or more series, each series comprising the number of shares, and having attached thereto the designation, rights, privileges, restrictions and conditions, which the board of directors of TELUS determines by resolution and subject to filing an amendment to the Notice of Articles and Articles of TELUS. No series of Second Preferred shares may have attached thereto the right to vote at any general meeting of TELUS or the right to be convertible into or exchangeable for Common Shares. Except as required by law, the holders of the Second Preferred shares as a class are not entitled to receive notice of, attend or vote at any meeting of the shareholders of TELUS. The Second Preferred shares rank, subject to the prior rights of the holders of the First Preferred shares, prior to the Common Shares and Non-Voting Shares with respect to priority in payment of dividends and in the distribution of assets in the event of liquidation, dissolution or winding up of TELUS.

 

***TELUS shareholder rights plan***

 

We first adopted a shareholder rights plan in March 2000, which expired on March 20, 2010. The TELUS Board of Directors adopted a substantially similar shareholder rights plan (the “Rights Plan”) on March 12, 2010 (the “Effective Date”), which was ratified by shareholders of both share classes at the May 2010 annual and special meeting. Under the Rights Plan, TELUS issued one right (a “Series A Right”) in respect of each Common Share outstanding as at the Effective Date and issued one right (a “Series B Right”) in respect of each Non-Voting Share outstanding as of the Effective Date. The Rights Plan has a term of just over nine years,****subject to shareholder confirmation every three years. Each Series A Right or Series B Right, other than those held by an Acquiring Person (as defined in the Rights Plan) and certain of its related parties, entitles the holder in certain circumstances following the acquisition by an Acquiring Person of 20 per cent or more of the Common Shares of TELUS (otherwise than through the “Permitted Bid” requirements of the Rights Plan) to purchase from TELUS $320 worth of Common or Non-Voting Shares for $160 (i.e. at a 50 per cent discount) respectively.

 

In the event that the Plan of Arrangement (see *2012 Year-to-date developments above*) receives all requisite approvals, the Rights Plan will be amended and restated pursuant to the Plan of Arrangement to reflect the conversion of Non-Voting Shares to Common

 

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Shares. Further details will be provided in TELUS’ information circular for the annual and special meeting to be held on May 9, 2012.

 

**RATINGS**

 

The following information relating to our credit ratings is provided as it relates to our financing costs, liquidity and operations. Additional information relating to credit ratings is contained in MD&A *Section 7.4- Liquidity and capital resources*to *Section 7.6 — Accounts receivable sale,*which are hereby incorporated by reference.

 

Credit ratings are important to our borrowing costs and ability to obtain short-term and long-term financing and the cost of such financing. A reduction in the current rating on our debt by rating agencies, particularly a downgrade below investment grade ratings or a negative change in its ratings outlook could adversely affect our cost of financing and our access to sources of liquidity and capital. We believe our adherence to our stated financial policies and the resulting investment grade credit ratings, coupled with our efforts to maintain constructive relationship with banks, investors and credit rating agencies, continue to provide TELUS with reasonable access to capital markets.

 

In addition, credit ratings may be important to customers or counterparties when we compete in certain markets and when we seek to engage in certain transactions including transactions involving over-the-counter derivatives. TCI is also a party to an agreement expiring in August 2014 with an arm’s-length securitization trust associated with a major Schedule I bank, under which TCI is able to sell an interest in certain of its trade receivables up to a maximum of $500 million. TCI is required to maintain at least a BBB (low) credit rating by DBRS Ltd. or the securitization trust may require the sale program to be wound down.

 

The rating agencies regularly evaluate TELUS and/or TCI, and their ratings of our long-term and short-term debt are based on a number of factors, including our financial strength as well as factors not entirely within our control, including conditions affecting the telecommunications industry generally, and the wider state of the economy.

 

The Company’s****credit ratings are outlined in the chart below.  Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or suitability of a specific security for a particular investor.  In addition, real or anticipated changes in the rating assigned to a security will generally affect the market value of that security.  There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be revised or withdrawn entirely by a rating agency in the future.

 
| **Credit rating summary** | ** ** | **DBRS Ltd.** | ** ** | **Standard   & Poor’s**

**Rating**

**Services** | ** ** | **Moody’s**

**Investor**

**Services** | ** ** | **FitchRatings** |
|-------------------------------------|------------|--------------------|------------|-----------------------------------------------------------------|------------|----------------------------------------------|------------|------------------|
| **TELUS Corporation**               | ** ** | ** **         | ** ** | ** **                                                      | ** ** | ** **                                   | ** ** | ** **       |
| Notes                               |       | A (low)            |       | BBB+                                                            |       | Baa1                                         |       | BBB+             |
| Commercial paper                    |       | R-1 (low)          |       | —                                                          |       | —                                       |       | —           |
| **TELUS Communications Inc.**       | ** ** | ** **         | ** ** | ** **                                                      | ** ** | ** **                                   | ** ** | ** **       |
| Debentures                          |       | A (low)            |       | BBB+                                                            |       | —                                       |       | BBB+             |

 

The following descriptions of the rating categories prepared by the respective rating agencies (obtained from their public websites) are provided solely to satisfy 

 

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requirements of Canadian law and do not constitute an endorsement by TELUS of the categories or of the application of the respective rating agencies.

 
| **Institution**  | ** ** | **Rating**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **DBRS**         |       | The   DBRS® long-term rating scale provides an opinion on the risk of default. That   is, the risk that an issuer will fail to satisfy its financial obligations in   accordance with the terms under which an obligation has been issued. Ratings   are based on quantitative and qualitative considerations relevant to the   issuer, and the relative ranking of claims. All rating categories, other than   AAA and D, also contain subcategories “(high)” and “(low)”. The absence of   either a “(high)” or “(low)”designation indicates the rating is in the middle   of the category. An “A” rating denotes good credit quality. The capacity for   the payment of financial obligations is substantial, but of lesser credit   quality than AA. May be vulnerable to future events, but qualifying   negative factors are considered manageable.Long-term debt rated “BBB” is of   adequate credit quality. The capacity for the payment of financial   obligations is considered acceptable. May be vulnerable to future   events.

 

The   ratings from “AA” to “CCC” are denoted by the subcategories “high” and “low”.   The absence of either a “high” or “low” designation indicates the rating is   in the “middle” of the category.

 

The   DBRS® short-term debt rating scale provides an opinion on the risk that an   issuer will not meet its short-term financial obligations in a timely manner.   Ratings are based on quantitative and qualitative considerations relevant to   the issuer and the relative ranking of claims. The R-1 and R-2 rating   categories are further denoted by the subcategories “(high)”, “(middle)”, and   “(low)”. The R-1 (low) rating   category denotes good credit quality. The capacity for the payment of   short-term financial obligations as they fall due is substantial. Overall   strength is not as favourable as higher rating categories. May be   vulnerable to future events, but qualifying negative factors are considered   manageable. |
| ** **       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **S&P**      |       | A   Standard & Poor’s issue credit rating is a forward-looking opinion   about the creditworthiness of an obligor with respect to a specific financial   obligation, a specific class of financial obligations, or a specific   financial program (including ratings on medium-term note programs and   commercial paper programs).

 

An   obligation rated ‘BBB’ exhibits adequate protection parameters. However,   adverse economic conditions or changing circumstances are more likely to lead   to a weakened capacity of the obligor to meet its financial commitment on the   obligation.

 

The   ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus or minus   sign to show relative standing within the major rating categories.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Moody’s** |       | Moody’s   long-term ratings are opinions of the relative credit risk of financial   obligations with an original maturity of one year or more. They address the   possibility that a financial obligation will not be honored as promised. Such   ratings use Moody’s Global Scale and reflect both the likelihood of default   and any financial loss suffered in the event of default. Obligations rated   “Baa” are subject to moderate credit risk. They are considered medium-grade   and as such may possess certain speculative characteristics.

 

Moody’s   appends numerical modifiers 1, 2, and 3 to each generic rating classification   from ‘Aa’ through ‘Caa’. The modifier 1 indicates that the obligation ranks   in the higher end of its generic rating category; the modifier 2 indicates a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

 

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| **Institution** | ** ** | **Rating**                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **      |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **      |       | mid-range   ranking; and the modifier 3 indicates a ranking in the lower end of that   generic rating category.                                                                                                                                                                                                                                                                                                                                                        |
| ** **      |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **Fitch**       |       | ‘BBB’   ratings indicate that expectations of default risk are currently low. The   capacity for payment of financial commitments is considered adequate but   adverse business or economic conditions are more likely to impair this   capacity. The modifiers “+” or “-”   may be appended to a rating to denote relative status within major rating   categories. Such suffixes are not added to the ‘AAA’ Long-Term rating |

 

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**MARKET FOR SECURITIES**

 

TELUS’ Common Shares and Non-Voting Shares are listed on the Toronto Stock Exchange (TSX) under “T” and “T.A” respectively and the TELUS Non-Voting Shares are listed on the New York Stock Exchange under “TU”. Monthly share prices and volumes for 2011 are listed below:

 

***TSX — Common and Non-Voting Shares***

 
| ** **    | ** ** | **Common Shares** | ** ** | **Non-Voting Shares** | ** ** |
|---------------|------------|------------------------|------------|----------------------------|------------|
| **Month**     | ** ** | **High($)**            | ** ** | **Low($)**                 | ** ** | **Volume** | ** ** | **High($)** | ** ** | **Low($)** | ** ** | **Volume** | ** ** |
| January       |       | 49.78                  |       | 44.98                      |       | 9,468,449 |   | 47.69 |   | 42.90 |   | 6,428,183 |   |
| February      |       | 49.98                  |       | 47.10                      |       | 10,842,778 |   | 47.98 |   | 45.20 |   | 5,314,216 |   |
| March         |       | 49.94                  |       | 46.17                      |       | 14,348,203 |   | 47.45 |   | 44.45 |   | 6,996,785 |   |
| April         |       | 50.29                  |       | 48.08                      |       | 8,854,363 |   | 48.24 |   | 46.00 |   | 4,257,455 |   |
| May           |       | 53.55                  |       | 49.35                      |       | 10,521,034 |   | 51.39 |   | 47.47 |   | 5,177,888 |   |
| June          |       | 53.59                  |       | 51.14                      |       | 13,160,210 |   | 51.39 |   | 48.88 |   | 6,154,862 |   |
| July          |       | 55.04                  |       | 51.05                      |       | 9,840,783 |   | 52.67 |   | 48.75 |   | 4,072,779 |   |
| August        |       | 54.00                  |       | 49.47                      |       | 14,733,376 |   | 51.39 |   | 46.86 |   | 8,934,646 |   |
| September     |       | 54.35                  |       | 50.17                      |       | 14,351,207 |   | 51.63 |   | 48.00 |   | 8,414,158 |   |
| October  |       | 55.66                  |       | 50.00                      |       | 12,676,770 |   | 52.94 |   | 47.45 |   | 8,879,972 |   |
| November      |       | 55.45                  |       | 52.60                      |       | 9,510,562 |   | 52.37 |   | 49.71 |   | 6,364,344 |   |
| December      |       | 57.74                  |       | 54.67                      |       | 17,529,275 |   | 54.77 |   | 51.89 |   | 9,083,969 |   |

 

***NYSE — Non-Voting Shares***

 
| **Month**     | ** ** | **High ($U.S.)** | ** ** | **Low ($U.S.)** | ** ** | **Volume** | ** ** |
|---------------|------------|-----------------------|------------|----------------------|------------|------------|------------|
| January       |       | 47.63                 |       | 43.09                |       | 1,931,162  |       |
| February      |       | 48.64                 |       | 45.81                |       | 1,751,038  |       |
| March         |       | 48.95                 |       | 45.00                |       | 2,274,108  |       |
| April         |       | 50.59                 |       | 47.80                |       | 2,646,498  |       |
| May           |       | 53.04                 |       | 49.41                |       | 2,737,265  |       |
| June          |       | 52.95                 |       | 49.53                |       | 2,758,405  |       |
| July          |       | 55.15                 |       | 51.41                |       | 2,636,072  |       |
| August        |       | 53.72                 |       | 46.99                |       | 5,996,444  |       |
| September     |       | 53.01                 |       | 46.20                |       | 4,050,728  |       |
| October  |       | 52.70                 |       | 44.63                |       | 3,887,992  |       |
| November      |       | 51.36                 |       | 47.75                |       | 2,007,239  |       |
| December      |       | 53.75                 |       | 50.81                |       | 2,397,117  |       |

 

25

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**DIRECTORS AND OFFICERS**

 

***Directors***

 

The names, municipalities of residence and principal occupations of the directors of TELUS, the date each such person became a director of TELUS and committee membership are as set out below. Currently, there are 13 directors on the TELUS Board. Each was elected at TELUS’ annual meeting on May 5, 2011, except for Stockwell Day who was appointed by the Board of Directors on July 1,****2011.  Each director’s term of office will expire immediately after the upcoming annual and special****meeting on May 9, 2012. They have, however, all been nominated for re-election at the upcoming meeting except for Ron Triffo who has decided to retire and will not be seeking re-election at the May 9, 2012 annual and special****meeting.

 
| **Directors of TELUS   (Name and municipality of residence)** | ** ** | **Director**

**since ****(1)** | ** ** | **Principal occupation**                                                                  |
|---------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------------------------------------------------------------------|
| ** **                                                                                  | ** ** | ** **                           | ** ** | ** **                                                                                     |
| R.H.   (Dick) Auchinleck (4   – Chair) (3)

Victoria,   British Columbia               |       | 2003                                 |       | Corporate   Director

                                                                    |
|                                                                                        |       |                                 |       |                                                                                           |
| A. Charles Baillie (3 – Chair) (5)

Toronto, Ontario                                   |       | 2003                                 |       | Chair,   Alberta Investment Management Corporation (pension investment corporation)            |
|                                                                                        |       |                                 |       |                                                                                           |
| Micheline   Bouchard (3)(5)

Montréal,   Québec                                   |       | 2004                                 |       | Corporate   Director                                                                           |
|                                                                                        |       |                                 |       |                                                                                           |
| R.   John Butler, Q.C.  (2)

Edmonton,   Alberta                                       |       | 1995                                 |       | Counsel,   Bryan & Company (law firm)                                                 |
|                                                                                        |       |                                 |       |                                                                                           |
| Brian   A. Canfield

Point   Roberts, Washington                                            |       | 1989                                 |       | Chair,

TELUS   Corporation                                                                    |
|                                                                                        |       |                                 |       |                                                                                           |
| Stockwell   Day (2)

West   Kelowna, British Columbia                                       |       | 2011                                 |       | Advisor   and Consultant                                                                       |
|                                                                                        |       |                                 |       |                                                                                           |
| Pierre Y. Ducros(3)(4)

Montréal, Québec                                          |       | 2005                                 |       | President   of P. Ducros & Associés Inc.

(investment   and administration firm) |
|                                                                                        |       |                                 |       |                                                                                           |
| Darren   Entwistle

Vancouver,   B.C.                                                       |       | 2000                                 |       | President   and Chief Executive Officer, TELUS Corporation                                     |
|                                                                                        |       |                                 |       |                                                                                           |
| Ruston E.T.(Rusty)  Goepel (4)(5)

Vancouver, B.C.                                     |       | 2004                                 |       | Senior   Vice President, Raymond James Financial Ltd. (investment firm)                        |
|                                                                                        |       |                                 |       |                                                                                           |
| John   S. Lacey (2)                                                                         |       | 2000                                 |       | Chairman,   Advisory Board, Brookfield                                                         |

 

26

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| **Directors of TELUS   (Name and municipality of residence)** | ** ** | **Director**

**since ****(1)** | ** ** | **Principal occupation**                                          |
|---------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------------------------------------------|
| Thornhill,   Ontario                                                                        |       |                                 |       | Special   Situations Partners Ltd. (formerly Tricap) (investment fund) |
|                                                                                        |       |                                 |       |                                                                   |
| William   (Bill) MacKinnon(2   – Chair)

Toronto,   Ontario                            |       | 2009                                 |       | Corporate Director                                                     |
|                                                                                        |       |                                 |       |                                                                   |
| Ronald P. Triffo (2)

Edmonton, Alberta                                                     |       | 1995                                 |       | Chairman,   Alberta Innovates – Technology Futures                |
|                                                                                        |       |                                 |       |                                                                   |
| Donald (Don) Woodley (4) (5 – Chair)

Mono Township, Ontario                      |       | 1998                                 |       | Corporate   Director                                                   |

 

----

| (1) | TELUS   or its predecessors                            |
|-----|--------------------------------------------------------|
| (2) | Member   of Audit Committee.                           |
| (3) | Member   of Human Resources and Compensation Committee |
| (4) | Member   of Corporate Governance Committee             |
| (5) | Member   of Pension Committee                          |

 

All of the directors of TELUS have held the principal occupations set forth above or executive positions with the same companies or firms referred to, or with affiliates or predecessors thereof, for the past five years except as follows: Stockwell Day was a member of the Federal Parliament and was appointed Minister of International Trade and Minister for the Asia-Pacific Gateway, Senior Minister Responsible for British Columbia and Chair of the Cabinet Committee on Afghanistan from 2008 to 2010 and from 2010 to May 2011, Stockwell Day was appointed President of the Treasury Board; Bill MacKinnon was Chief Executive Officer of KPMG Canada from April 1999 to December 2008; and Ron Triffo was Chairman of Stantec Inc. from 1998 to 2011.

 

27

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***Executive officers***

 

The name, municipality of residence and present and principal occupations of each of the executive officers of TELUS, as of March 14, 2012, are as follows:

 
| **Executive Officers of TELUS**

**(Name and municipality of residence)** | ** ** | **Position held with TELUS**                                            |
|--------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------|
| ** **                                                                                                   | ** ** | ** **                                                                             |
| Darren   Entwistle   Vancouver, B.C.                                                                         |       | President   and Chief Executive Officer                                                |
|                                                                                                         |       |                                                                                   |
| Robert G. McFarlane   Vancouver, B.C.                                                                        |       | Executive   Vice President and Chief Financial Officer                                 |
|                                                                                                         |       |                                                                                   |
| Josh Blair

Vancouver, B.C.                                                                                  |       | Executive   Vice President, Human Resources                                            |
|                                                                                                         |       |                                                                                   |
| François Côté

Montréal, Québec                                                     |       | Executive   Vice President and President, TELUS Québec and TELUS Health Solutions |
|                                                                                                         |       |                                                                                   |
| Joe M. Natale   Mississauga, Ontario                                                                         |       | Executive   Vice President and Chief Commercial Officer                                |
|                                                                                                         |       |                                                                                   |
| Eros   Spadotto

Oakville,   Ontario                                                                         |       | Executive   Vice President, Technology Strategy and Operations                         |
|                                                                                                         |       |                                                                                   |
| Monique Mercier

Vancouver, B.C.                                                                             |       | Senior Vice President, Chief Legal Officer   and Corporate Secretary                   |
|                                                                                                         |       |                                                                                   |
| Bill Sayles

Vancouver, B.C.                                                                                 |       | Senior Vice-President and Chief Information   Officer, Business Transformation         |

 

All of the executive officers of TELUS have held their present positions or other executive positions with the Company during the past five years or more, except as follows: François Côté was President and Chief Executive Officer of Emergis Inc. from November 2004 to January 2008 when Emergis was acquired by the Company; Monique Mercier was Executive Vice-President, Legal and Human Resources of Emergis Inc. from November 2004 to January 2008; and Bill Sayles was Vice-President and General Manager, IT Core System of Intel Corporation from 2006 to June 2008.

 

28

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***TELUS shares held by directors and executive officers***

 

As at March 7, 2012, the directors and executive officers of TELUS, as a group, beneficially owned, directly or indirectly, or exercised control or direction over 343,880 Common Shares, which represented approximately 0.20 per cent of the outstanding Common Shares and 501,873 Non-Voting Shares, which represented approximately 0.33 per cent of the outstanding Non-Voting Shares.

 

***Cease trade orders, bankruptcies, penalties or sanctions***

 

Other than as disclosed below, for the 10 years ended March 14, 2012, we are not aware that any current director or executive officer of TELUS had been a director or executive officer of any issuer which, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt or made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

 

·                  John Lacey was appointed to the board of directors of Stelco Inc. (“Stelco”) as a nominee of Tricap Management Limited (“Tricap”) in March 2006. Stelco had filed for bankruptcy protection under the CCAA in January 2004. Mr. Lacey’s appointment as a director was part of a court supervised restructuring, from which Stelco emerged on March 31, 2006 and pursuant to which Tricap had the right to appoint four of Stelco’s nine directors.

 

·                  Charles Baillie was formerly a director of Dana Corporation, which filed for bankruptcy in March 2006 under Chapter 11 of the U.S. Bankruptcy Code. He ceased to be director when the company emerged from bankruptcy on February 1, 2008.

 

·                  Robert G. McFarlane was a director of Ascalade Communications Inc. (“Ascalade”) until his resignation in February 2008. In March 2008, Ascalade filed for bankruptcy protection under the CCAA. In January 2010, the majority of the Ascalade’s assets were realized and distributed to its shareholders in accordance with its plan of arrangement.

 

Other than as disclosed below, for the 10 years ended March 14, 2012, we are not aware that any current director or executive officer of TELUS had been a director, chief executive officer or chief financial officer of any issuer which was the subject of a cease trade or similar order while that person was acting in that capacity, or was subject to such an order issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and resulted from an event that occurred while that person was acting in that capacity, or any order which denied such company access to any exemption under securities legislation for a period of more than 30 consecutive days.

 

·                  On June 14, 2006, and at the request of Cognos Incorporated (“Cognos”), the Ontario Securities Commission (“OSC”) issued a cease trade order against all directors of Cognos, including Pierre Ducros, in connection with a delay in filing its annual report with Canadian regulators. The delay was related to a review by the United States Securities and Exchange Commission (“SEC”) of the way

 

29

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Cognos allocated revenue between post-contract customer support and licence fees. The OSC lifted the cease trade order on August 3, 2006 after the SEC concluded that it did not object to Cognos’ revenue recognition policy. Mr. Ducros ceased to be a director of Cognos in February 2008 after its acquisition by IBM.

 

**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**

 

The description of legal proceedings described in MD&A *Section 10.9 Litigation and legal matters*is hereby incorporated by reference. In addition, there have not been any (a) penalties or sanctions imposed against us by a court relating to securities legislation or by a securities regulatory authority during the most recently completed financial year, (b) penalties or sanctions imposed by a court or regulatory body against us that would likely be considered important to a reasonable investor in making an investment decision, or (c) settlement agreements entered into by us before a court relating to securities legislation or with a securities regulatory authority during the most recently completed financial year.

 

**INTERESTS OF EXPERT**

 

Deloitte & Touche LLP, Chartered Accountants, are the auditors of the Company and are independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia.

 

**AUDIT COMMITTEE**

 

The Audit Committee of the Company supports the Board in fulfilling its oversight responsibilities regarding the integrity of our accounting and financial reporting, internal controls and disclosure controls, legal and regulatory compliance, ethics policy and timeliness of filings with regulatory authorities, the independence and performance of the our external and internal auditors, the management of the our risk, credit worthiness, treasury plans and financial policy and whistleblower and complaint procedures. A copy of the Audit Committee’s Terms of Reference is attached as Appendix A to this Annual Information Form.

 

The current members of the Audit Committee are Bill MacKinnon (Chair), John Butler, Stockwell Day, John Lacey and Ronald P. Triffo. Each member of the Audit Committee is independent and financially literate within the meaning of Multilateral Instrument 52-110 “Audit Committees” and the Board has determined that Bill MacKinnon is an audit committee financial expert and has accounting or related financial management expertise. As noted above, Ron Triffo has decided to retire and will not be standing for re-election at the May 2012 annual and special meeting.****The following lists the relevant education and experience of the members of TELUS’ Audit Committee that is relevant to his or her role on the committee.

 

**Bill MacKinnon** chairs the Audit Committee. He is the former Chief Executive Officer of KPMG Canada, serving from April 1999 to December 31, 2008. He first joined KPMG Canada in 1971, serving the company in numerous roles of increasing leadership for 37

 

30

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years, including his membership on the Board of Directors of each of KPMG Canada, KPMG International and KPMG Americas. Mr. MacKinnon obtained a Bachelor of Commerce with Honours from the University of Manitoba in 1967. He became a chartered accountant in 1971 and obtained his FCA designation from the Institute of Chartered Accountants of Ontario in 1994.

 

**John Butler**is a lawyer and counsel to Bryan & Company, a law firm with offices in Calgary and Edmonton, Alberta. He is also currently the Chair of the Board of Governors of the Canadian Football League. Mr. Butler is also a director of Liquor Stores N.A. John holds a Bachelor of Arts and a Bachelor of Laws from the University of Alberta.

 

**Stockwell Day**is a strategic advisor and consultant. He served at the provincial and federal levels of government for over 25 years. From 1986 to 2000, Mr. Day served with the Alberta government in a variety of roles including Minister of Labour, Minister of Social Services and Provincial Treasurer,  and Minister of Finance. From 2000 to May 2011, Mr. Day served as a Member of Parliament with the federal government, holding various positions including Leader of the Official Opposition, Minister of Public Safety, Minister of International Trade, Minister for the Asia-Pacific Gateway and Senior Minister Responsible for British Columbia and President of the Treasury Board. Mr. Day did not seek re-election in the May 2011 general election. Mr. Day is a well-known conference and event speaker. Mr. Day attended the University of Victoria and has an Honourary Doctorate from the University of St. Petersburg, Russia.

 

**John Lacey**is Chairman of the Advisory Board of Brookfield Special Situations Partners Ltd. (formerly Tricap). Mr. Lacey was previously the Chairman of the board of directors of Alderwoods Group, Inc., an organization operating funeral homes and cemeteries within North America, until November 2006. Mr. Lacey has completed the Program for Management Development at Harvard Business School.

 

**Ronald P. Triffo**is the Chairman of Alberta Innovates — Technology Futures and was, until his retirement in May 2011, Chairman and a director of Stantec Inc., an international engineering and architecture professional services company where he served in various executive management positions for more than 30 years. Mr. Triffo holds a Bachelor of Science (Civil Engineering) from the University of Manitoba, a Master of Science (Engineering) from the University of Illinois and an Honorary Doctorate of Laws from the University of Alberta.

 

***Audit, audit-related and non-audit services***

 

All requests for non-prohibited audit, audit-related and non-audit services provided by TELUS’ external auditor and its affiliates to TELUS are required to be pre-approved by the Audit Committee of TELUS’ Board of Directors. To enable this, we have implemented a process by which all requests for services involving the External Auditor are routed for review by the VP Risk Management and Chief Internal Auditor to validate that the requested service is a non-prohibited service and to verify that there is a compelling business reason for the request. If the request passes this review, it is then forwarded to the Chief Financial Officer for further review. Pending the Chief Financial Officer’s affirmation, the request is then presented to the Audit Committee for its review, evaluation and pre-approval or denial at its next scheduled quarterly meeting. If the timing of the request is urgent, it is provided to the Audit Committee Chair for his or her review, evaluation and pre-approval or denial on behalf of the Audit Committee (with the

 

31

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full committee’s review at the next scheduled quarterly meeting). Throughout the year, the Audit Committee monitors the actual versus approved expenditure for each of the approved requests.

 

The following table is a summary of billing by Deloitte & Touche LLP, as external auditors of TELUS, during the period from January 1, 2011 to December 31, 2011:

 
| **Type of work** | ** ** | **Deloitte & Touche LLP** | ** **    | **%**      | ** ** |
|----------------------------|------------|----------------------------------------------|---------------|------------|------------|
| Audit fees(1)              |       | $                                            | 3,470,547     |       | 95.1       |   |
| Audit-related fees(2)      |       | $                                            | 161,000       |       | 4.4        |   |
| Tax fees(3)                |       | $                                            | 18,001        |       | 0.5        |   |
| All other fees             |       | —                                       |          | —     |       |
| **Total**                  | ** ** | **$**                                        | **3,649,548** | ** ** | **100.0**  | ** ** |

 

----

| (1) | Audit fees include fees for services rendered by   the external auditors in relation to the audit and review of our financial   statements and in connection with our statutory and regulatory filings.                                                                                                    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Audit-related   fees include fees for services rendered by the external auditors in relation   to performing the audit of, or reviewing financial statements, that were not   part of audit fees. These include internal control reviews and consulting on   financial accounting and reporting standards. |
| (3) | Tax   fees relate to tax compliance, tax advice and tax planning.                                                                                                                                                                                                                                          |

 

The following table is a summary of billing by Deloitte & Touche LLP, as external auditors of TELUS, during the period from January 1, 2010 to December 31, 2010:

 
| **Type of work** | ** ** | **Deloitte & Touche LLP** | ** **    | **%**      |      |
|----------------------------|------------|----------------------------------------------|---------------|------------|-----------|
| Audit fees(1)              |       | $                                            | 3,375,731     |       | 95.7      |   |
| Audit-related fees(2)      |       | $                                            | 150,404       |       | 4.3       |   |
| Tax fees                   |       | —                                       |          | —     |      |
| All other fees             |       | —                                       |          | —     |      |
| **Total**                  | ** ** | **$**                                        | **3,526,135** | ** ** | **100.0** |   |

 

----

| (1) | Audit fees include fees for services rendered by   the external auditors in relation to the audit and review of our financial   statements and in connection with our statutory and regulatory filings.                                                                                                    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Audit-related   fees include fees for services rendered by the external auditors in relation   to performing the audit of, or reviewing financial statements, that were not   part of audit fees. These include internal control reviews and consulting on   financial accounting and reporting standards. |

 

32

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**MATERIAL CONTRACTS**

 

As at December 31, 2011, TCI continues to be a party to a three year agreement (expiry August 1, 2014) with an arm’s-length securitization trust associated with a major Schedule I bank, under which TCI is able to sell an interest in certain of its trade receivables up to a maximum of $500 million. TCI is required to maintain at least a BBB (low) credit rating by DBRS Ltd. or the securitization trust may require the sale program to be wound down. The necessary credit rating was exceeded as of March 14, 2012.

 

On November 3, 2011 TELUS entered into a replacement five year $2 billion unsecuredcredit facility (the “2011 Credit Facility”) with a syndicate of 15 financial institutions. The2011 Credit Facility replaces TELUS’ previous $2 billion facility which would have matured in May 2012. The 2011 Credit Facility may be used for general corporate purposes including the backstop of commercial paper. The material terms of the 2011 Credit Facility are substantively the same as TELUS’ previous credit facility other than pricing and an extension of the term to November 2016.

 

**TRANSFER AGENT AND REGISTRAR**

 

Our transfer agent and registrar is Computershare Trust Company of Canada. Computershare maintains the Company’s registers at 600, 530 - 8th Avenue SW, Calgary, Alberta T2P 3S8.

 

**ADDITIONAL INFORMATION**

 

Additional information relating to TELUS may be found on SEDAR at sedar.com and EDGAR at sec.gov. Additional information regarding directors’ and officers’ remuneration, and securities authorized for issuance under equity compensation plans, will be contained in TELUS’ information circular for the annual and special meeting to be held on May 9, 2012.****Additional financial information is provided in the Company’s consolidated financial statements and MD&A for the year ended December 31, 2011. All of the above information can also be found at telus.com.

 

33

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**APPENDIX A:  TERMS OF REFERENCE FOR THE AUDIT COMMITTEE**

 

The Board has established an Audit Committee (the “Committee”) to assist the Board in fulfilling its oversight responsibilities regarding the integrity of the Company’s accounting and financial reporting, the Company’s internal controls and disclosure controls, the Company’s legal and regulatory compliance, the Company’s ethics policy and timeliness of filings with regulatory authorities, the independence and performance of the Company’s external and internal auditors, the identification and management of the Company’s risks, the Company’s credit worthiness, treasury plans and financial policy and the Company’s whistleblower and complaint procedures.

 
| **1.** | **MEMBERSHIP**                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 1.1    | The   Committee will have a minimum of three members, including the chair of the   Committee. The Board, upon the recommendation of the Corporate Governance   Committee, will appoint and remove the members of the Committee by a majority   vote. The members will sit on the Committee at the pleasure of the Board.                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 1.2    | The   Board, upon the recommendation of the Corporate Governance Committee, will   appoint the chair of the Committee from the Committee’s members by a majority   vote. The chair of the Committee will hold such position at the pleasure of   the Board.                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 1.3    | All   members of the Committee will be Independent Directors.                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 1.4    | All   members of the Committee will be financially literate, as defined in   accordance with applicable securities laws and standards of the stock   exchanges on which the Company’s securities are listed.                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 1.5    | At   least one member of the Committee will be an audit committee financial   expert, as defined in accordance with applicable securities laws, and at   least one member of the Committee will have accounting or related financial   management expertise, as defined in accordance with applicable securities   laws.                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **2.** | **MEETINGS**                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.1    | The   Committee will meet at least once each quarter and otherwise as necessary.   Any member of the Committee may call meetings of the Committee.                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.2    | All   directors of the Company, including management directors, may attend meetings   of the Committee provided, however, that no director is entitled to vote at   such meetings and is not counted as part of the quorum for the Committee if   he or she is not a member of the Committee.                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.3    | Notwithstanding   section 2.2 above, the Committee will, as a regular feature of each regularly   scheduled meeting, hold an in-camera session with the external auditors and   separately with the internal auditors, without management or management   directors present. The Committee may, however, hold other in-camera sessions   with such members of management present as the Committee deems appropriate. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.4    | The   Corporate Secretary or his or her nominee will act as Secretary to the   Committee.                                                                                                                                                                                                                                                                                                                            |

 

34

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| 2.5                                                                                                                                                                                                                                                  | The   Committee will report to the Board on its meetings and each member of the   Board will have access to the minutes of the Committee’s meetings, regardless   of whether the director is a member of the Committee. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                         |
| 2.6                                                                                                                                                                                                                                                  | The   external auditors of the Company will receive notice of every meeting of the   Committee and may request a meeting of the Committee be called by notifying   the chair of the Committee of such request.               |
|                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                         |
| **3.**                                                                                                                                                                                                                                               | **QUORUM**                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                         |
| The quorum necessary for the transaction of   business at Committee meetings will be a majority of the members of the   Committee. A quorum once established is maintained even if   members of the Committee leave the meeting prior to conclusion. |
|                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                         |
| **4.**                                                                                                                                                                                                                                               | **DUTIES**                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                         |
| The   Board hereby delegates to the Committee the following duties to be performed   by the Committee on behalf of and for the Board:                                                                                                                |
|                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                         |
| **4.1**                                                                                                                                                                                                                                              | **Financial Reporting**                                                                                                                                                                                                      |
| ** **                                                                                                                                                                                                                                           | ** **                                                                                                                                                                                                                   |
| ** **                                                                                                                                                                                                                                           | Prior   to public disclosure, the Committee will review and recommend to the Board,   and where applicable, to the boards of the Company’s subsidiaries which are   reporting issuers, for approval:                    |
| ** **                                                                                                                                                                                                                                           | ** **                                                                                                                                                                                                                   | ** ** |
| ** **                                                                                                                                                                                                                                           | a)                                                                                                                                                                                                                           | the   annual audited consolidated financial statements and interim unaudited   consolidated financial statements of the Company and those of its subsidiaries   that are reporting issuers, as defined in accordance with applicable   securities laws; |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| ** **                                                                                                                                                                                                                                           | b)                                                                                                                                                                                                                           | the   interim and annual management’s discussion and analysis of financial   condition and results of operations (MD&A) of the Company and those of   its subsidiaries that are reporting issuers, as defined in accordance with   applicable securities laws; |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| ** **                                                                                                                                                                                                                                           | c)                                                                                                                                                                                                                           | earnings   press releases and earnings guidance, if any; and |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| ** **                                                                                                                                                                                                                                           | d)                                                                                                                                                                                                                           | all   other material financial public disclosure documents of the Company and those   of its subsidiaries that are reporting issuers, including prospectuses, press   releases with financial results and the Annual Information Form. |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| **4.2**                                                                                                                                                                                                                                              | **External Auditors**                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| ** **                                                                                                                                                                                                                                           | The   external auditors will report directly to the Committee and the Committee will:                                                                                                                                        |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| ** **                                                                                                                                                                                                                                           | a)                                                                                                                                                                                                                           | appoint   the external auditors, subject to the approval of the shareholders, and   determine the compensation of the external auditors; |
| ** **                                                                                                                                                                                                                                           |                                                                                                                                                                                                                         |   |
| ** **                                                                                                                                                                                                                                           | b)                                                                                                                                                                                                                           | oversee   the work of the external auditors and review and approve the annual audit   plan of the external auditors, including the scope of the audit to be   performed and the degree of co-ordination between the plans of the external   and internal auditors. The Committee will discuss with the internal auditors,   the external auditors and management, the adequacy and effectiveness of the   disclosure controls and internal controls of the Company and elicit   recommendations for the improvement of such controls or particular areas   where new or more detailed controls or procedures are desirable. Particular   emphasis will be given to the adequacy of internal controls to prevent or   detect any payments, |

 

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| ** ** |                                                                                                                                                                                                                                                                                                                                                      | transactions   or procedures that might be deemed illegal or otherwise improper;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | c)                                                                                                                                                                                                                                                                                                                                                        | meet   regularly with the external auditors without management present and ask the   external auditors to report any significant disagreements with management   regarding financial reporting, the resolution of such disagreements and any   restrictions imposed by management on the scope and extent of the audit   examinations conducted by the external auditors;                                                                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | d)                                                                                                                                                                                                                                                                                                                                                        | pre-approve   all audit, audit-related and non-audit services to be provided to the Company   or any of its subsidiaries, by the external auditors (and its affiliates), in   accordance with applicable securities laws;                                                                                                                                                                                                                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | e)                                                                                                                                                                                                                                                                                                                                                        | annually   review the qualifications, expertise and resources and the overall   performance of the external audit team and, if necessary, recommend to the   Board the termination of the external auditors or the rotation of the audit   partner in charge;                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | f)                                                                                                                                                                                                                                                                                                                                                        | at   least annually, obtain and review a report by the external auditors   describing: the firm’s internal quality-control procedures; any material   issues raised by the most recent internal quality control review, or peer review   of the firm, or by any inquiry or investigation by governmental or   professional authorities, within the preceding five years, respecting one or   more independent audits carried out by the firm, and any steps taken to deal   with such issues; and all relationships between the external auditors and the   Company; |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | g)                                                                                                                                                                                                                                                                                                                                                        | annually   assess and confirm the independence of the external auditors and require the   external auditors to deliver an annual report to the Committee regarding its   independence, such report to include disclosure regarding all engagements   (and fees related thereto) by the Company and relationships which may impact   the objectivity and independence of the external auditors;                                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | h)                                                                                                                                                                                                                                                                                                                                                        | require   the external auditors to deliver an annual acknowledgement in writing to the   Committee that the shareholders, as represented by the Board and the   Committee, are its primary client;                                                                                                                                                                                                                                                                                                                                                                        |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | i)                                                                                                                                                                                                                                                                                                                                                        | review   post-audit or management letters, containing recommendations of the external   auditors and management’s response;                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | j)                                                                                                                                                                                                                                                                                                                                                        | review   reports of the external auditors; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | k)                                                                                                                                                                                                                                                                                                                                                        | pre-approve   the hiring of employees and former employees of current and former auditors   in accordance with applicable securities laws and TELUS policies.                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | Notwithstanding   section 4.2(d) above, the Committee may delegate the pre-approval of   audit, audit-related and non-audit services to any one member of the   Committee, provided, however, a report is made to the Committee on any   pre-approval of such services at the Committee’s first scheduled meeting   following the pre-approval. |

 

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| **4.3**    | **Internal Auditors**                                                                                                                                                                                                                                                                                                                                                                                                                         |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | The internal auditors will report functionally to   the Committee and administratively to the Chief Financial Officer and the   Committee will:                                                                                                                                                                                                                                                                                               |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | a)                                                                                                                                                                                                                                                                                                                                                                                                                                            | review and approve management’s   appointment, termination or replacement of the Chief Internal Auditor; |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | b)                                                                                                                                                                                                                                                                                                                                                                                                                                            | review and consider the annual performance   objectives, performance evaluation and compensation treatment of the Chief   Internal Auditor; |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | c)                                                                                                                                                                                                                                                                                                                                                                                                                                            | oversee the work of the internal auditors   including reviewing and approving the annual internal audit plan and updates   thereto; |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | d)                                                                                                                                                                                                                                                                                                                                                                                                                                            | review the report of the internal auditors   on the status of significant internal audit findings, recommendations and   management’s responses and review any other reports of the internal auditors;   and |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | e)                                                                                                                                                                                                                                                                                                                                                                                                                                            | review the scope of responsibilities and   effectiveness of the internal audit team, its reporting relationships,   activities, organizational structure and resources, its independence from   management, its credentials and its working relationship with the external   auditors. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | The   internal auditors will report quarterly to the Committee on the results of   internal audit activities and will also have direct access to the chair of   the Committee when the internal auditors determine it is necessary.                                                                                                                                                                                                           |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **4.4**    | **Whistleblower, Ethics and Internal Controls   Complaint Procedures**                                                                                                                                                                                                                                                                                                                                                                        |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | The   Committee will ensure that the Company has in place adequate procedures for:                                                                                                                                                                                                                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | a)                                                                                                                                                                                                                                                                                                                                                                                                                                            | the   receipt, retention and treatment of complaints received by the Company   regarding accounting, internal controls or auditing matters; and |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | b)                                                                                                                                                                                                                                                                                                                                                                                                                                            | the   confidential, anonymous submission by employees of the Company of concerns   regarding questionable accounting or auditing matters. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | The   CEO or CFO will report to the Committee, and the Committee will review such   reports, on any fraud, whether or not material, that involves management or   other employees who have a significant role in the Company’s internal   controls. Where the CEO, CFO and/or the Chief Internal Auditor are named in a   complaint, the Director of Ethics and Internal Controls will speak directly   with the Chair of the Committee. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| ** ** | The   Chief Internal Auditor will report to the Committee, and the Committee will   consider such reports, on the results of the investigation of whistleblower,   ethics and internal controls complaints.                                                                                                                                                                                                                                   |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **4.5**    | **Accounting   and Financial Management**                                                                                                                                                                                                                                                                                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|       | The   Committee will review:                                                                                                                                                                                                                                                                                                                                                                                                                  |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                            | with   management and the external auditors, the Company’s major accounting   policies, including the impact of alternative accounting policies and key   management estimates and judgments that could materially |

 

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|    |                                                         | affect   the financial results and whether they should be disclosed in the MD&A;                                                                                                                                                           |
|---------|--------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                         |                                                                                                                                                                                                                                           |
|    | b)                                                           | emerging   accounting issues and their potential impact on the Company’s financial   reporting;                                                                                                                                           |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | c)                                                           | significant   judgments, assumptions and estimates made by management in preparing   financial statements;                                                                                                                                     |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | d)                                                           | the   evaluation by either the internal or external auditors of management’s   internal control systems, and management’s responses to any identified   weaknesses;                                                                  |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | e)                                                           | the   evaluation by management of the adequacy and effectiveness in the design and   operation of the Company’s disclosure controls and internal controls for   financial reporting;                                                      |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | f)                                                           | audits   designed to report on management’s representations on the effectiveness and   efficiency of selected projects, processes, programs or departments;                                                                               |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | g)                                                           | management’s   approach for safeguarding corporate assets and information systems, the   adequacy of staffing of key financial functions and their plans for   improvements; and                                                          |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | h)                                                           | internal   interim and post implementation reviews of major capital projects.                                                                                                                                                                  |
|    |                                                         |                                                                                                                                                                                                                                           |
| **4.6** | **Credit   Worthiness, Treasury Plans and Financial Policy** |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | The   Committee will review with management:                 |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | a)                                                           | the   Company’s financial policies and compliance with such policies;                                                                                                                                                                     |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | b)                                                           | the   credit worthiness of the Company;                                                                                                                                                                                                        |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | c)                                                           | the   liquidity of the Company; and                                                                                                                                                                                                            |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | d)                                                           | important   treasury matters including financing plans.                                                                                                                                                                                        |
|    |                                                         |                                                                                                                                                                                                                                           |
| **4.7** | **Legal/Regulatory   Matters and Ethics**                    |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | The   Committee will review:                                 |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | a)                                                           | with   management, the external auditors and legal counsel, any litigation, claim or   other contingency, including any tax assessment, that could have a material   effect upon the financial position or operating results of the Company;   |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | b)                                                           | annually,   management’s relationships with regulators, and the accuracy and timeliness   of filings with regulatory authorities;                                                                                                         |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | c)                                                           | annually   and recommend to the Board for approval, together with the Human Resources   and Compensation Committee, the ethics policy and material changes thereto;                                                                            |
|    |                                                         |                                                                                                                                                                                                                                           |
|    | d)                                                           | quarterly   reports on ethics breaches pertaining to internal controls over financial   reporting, including fraud involving management or other employees who have a   role in the Company’s internal controls over financial reporting; |

 

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|    | e)                                                                                                                                                                                     | quarterly   reports from the Chief General Counsel on compliance with laws and   regulations; and                                                                                                                                                                                  |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | f)                                                                                                                                                                                     | quarterly   reports from the Chief Compliance Officer on legal and regulatory compliance   activities.                                                                                                                                                                             |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
| **4.8** | **Risk Management**                                                                                                                                                                    |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | The   Committee will:                                                                                                                                                                  |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | a)                                                                                                                                                                                     | consider   reports on the annual enterprise business risk assessment and updates   thereto;                                                                                                                                                                                        |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | b)                                                                                                                                                                                     | except   to the extent that responsibility is reserved to the Board or delegated to   another Board committee, review management’s implementation of risk policies   and procedures, and assess the appropriateness and comprehensiveness of those   policies and procedures; |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | c)                                                                                                                                                                                     | consider   reports on financial risk management including derivative exposure and   policies; and                                                                                                                                                                                  |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | d)                                                                                                                                                                                     | review   other risk management matters from time to time as the Committee may consider   suitable or the Board may specifically direct.                                                                                                                                            |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
| **4.9** | **Other**                                                                                                                                                                              |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | The   Committee will review:                                                                                                                                                           |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | a)                                                                                                                                                                                     | the   expenses of the Chair of the Board;                                                                                                                                                                                                                                          |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | b)                                                                                                                                                                                     | the   proposed disclosure concerning the Committee to be included in the Company’s   Annual Information Form to verify, among other things, that it is in   compliance with applicable securities law requirements;                                                      |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | c)                                                                                                                                                                                     | significant   related party transactions and actual and potential conflicts of interest   relating thereto to verify their propriety and that disclosure is   appropriate;                                                                                                         |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | d)                                                                                                                                                                                     | the   disclosure policy of the Company;                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | e)                                                                                                                                                                                     | and   evaluate, at least once annually, the adequacy of these Terms of Reference   and the Committee’s performance, and report its evaluation and any   recommendations for change to the Corporate Governance Committee.                                                     |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | The   Committee will also have such other duties and responsibilities as are   delegated to it and review such other matters as, from time to time, are   referred to it by the Board. |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
| **5.**  | **AUTHORITY**                                                                                                                                                                          |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | The   Committee, in fulfilling its mandate, will have the authority to:                                                                                                                |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | a)                                                                                                                                                                                     | engage   and set compensation for independent counsel and other advisors;                                                                                                                                                                                                          |
|    |                                                                                                                                                                                   |                                                                                                                                                                                                                                                                               |
|    | b)                                                                                                                                                                                     | communicate   directly with the Chief Financial Officer, internal and external auditors,   Chief Compliance Officer and Chief General Counsel;                                                                                                                                     |

 

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|   | c)     | delegate   tasks to Committee members or subcommittees of the Committee; and         |
|--------|--------|--------------------------------------------------------------------------------------|
|   |   |                                                                                 |
|   | d)     | access   appropriate funding as determined by the Committee to carry out its duties. |

 

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