UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                               FORM 40-F

   [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES
                         EXCHANGE ACT OF 1934
                                  OR
        [X] ANNUAL REPORT PURSUANT TO SECTION 13(A) OR 15(D)
               OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005    Commission File Number 000-24876

                           TELUS Corporation

         (Exact Name of Registrant as specified in its charter)

                       British Columbia, Canada
    (Province or other jurisdiction of incorporation or organization)

                                 4812

  (Primary Standard Industrial Classification Code Number (if applicable))

                         8 - 555 Robson Street
           Vancouver, British Columbia  V6B 3K9, Canada
                             (604) 697-8044

(Address and telephone number of Registrant's principal executive offices)
        CT Corporation System, 111 Eighth Avenue, 13th Floor
                      New York, New York 10011
                          (212) 590-9200
(Name, Address (including zip code) and Telephone Number of Agent
                for Service in the United States)

Securities registered pursuant to section 12(b) of the Act.

						Name of each exchange
	Title of Each Class			On Which Registered
	Non-Voting Shares			New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                                      None
                               (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
 of the Act.

                   Warrants to Purchase Non-Voting Shares

                           7.5% Notes due 2007

                           8.0% Notes due 2011

                            (Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

[X] Annual information form      [X] Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer's classes of
 capital or common stock as of December 31, 2005:

183,530,655 Common Voting Shares and 166,566,504 Non-Voting Shares.

Indicate by check mark whether the Registrant by filing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
(the "Exchange Act"). If "Yes" is marked, indicate the filing number assigned
to the Registrant in connection with such Rule.

Yes 	  82-				No 	X
         -----                                 ----

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes 	  X				No
         ----                                  ----


TABLE OF CONTENTS

DISCLOSURE CONTROLS AND PROCEDURES
AUDIT COMMITTEE FINANCIAL EXPERT
CODE OF ETHICS
PRINCIPAL ACCOUNTANT FEES AND SERVICES
OFF-BALANCE SHEET ARRANGEMENTS
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
IDENTIFICATION OF AUDIT COMMITTEE
UNDERTAKING
SIGNATURES
EXHIBIT INDEX



DISCLOSURE CONTROLS AND PROCEDURES

Based on the Registrant's evaluation as of December 31, 2005 of the
effectiveness of the design and operations of the Registrant's disclosure
controls and procedures under the supervision of the Audit Committee, including
the Registrant's Chief Executive Officer and Chief Financial Officer, the Chief
Executive Officer and Chief Financial Officer have concluded that the
Registrant's disclosure controls and procedures as defined in Rule 13a-15(e)
under the Securities and Exchange Act of 1934 (the "Exchange Act") are
effective to ensure that information required to be disclosed by the Registrant
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
United States Securities and Exchange Commission ("SEC") rules and forms.

IDENTIFICATION OF AUDIT COMMITTEE

TELUS has a separately designated standing Audit Committee. The current members
of the Audit Committee are Brian F. MacNeill (Chair), A. Charles Baillie,
Micheline Bouchard, Ruston Goepel and Pierre Ducros. All members of the
Committee are "independent" as such term is defined under applicable securities
laws and applicable New York Stock Exchange ("NYSE") rules.

AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors (the "Board") of TELUS Corporation ("TELUS" or the
"Registrant") has determined that the Audit Committee Chair is an "audit
committee financial expert" as such term is defined by U.S. securities laws and
"independent" as noted above. The information contained under the heading
"Audit Committee" on page * of TELUS' 2005 Annual Information Form, filed as
Exhibit 3 to this annual report on Form 40-F, is incorporated by reference
herein.

CODE OF ETHICS

The Registrant has adopted an Ethics Policy that applies to all directors,
officers, including the Chief Executive Officer and the Chief Financial
Officer, and employees. The Policy has been posted on the Registrant's Internet
website at telus.com. The Policy is also available to any person, upon request,
without charge by contacting TELUS Investor Relations at 1-800-667-4871 or 30 -
10020 100th Street NW, Edmonton, Alberta T5J 0N5.

The Board amended the Policy in February 2005 to stipulate that if the Board
delegates approval of any waivers to the Policy to be granted to directors or
executive officers, such delegate must be a committee of the Board. The Policy
was further amended to provide guidance regarding the selection of suppliers,
contracts, consultants and agents. All other amendments to the Policy were
housekeeping in nature.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table is a summary of billing by Deloitte & Touche, LLP, as
external auditors of TELUS, during the period from January 1, 2005 to December
31, 2005:


<TABLE>
<CAPTION>
                          Deloitte & Touche         Total Fees       %
Type of work
<S>	  	          <C>		    	    <C>	             <C>
-------------------------------------------------------------------------------
Audit fees                $2,237,606               $2,237,606        90.7
Audit-related fees          $195,584                 $195,58         47.9
Tax fees                     $33,180                  $33,180         1.4
All other fees                  --                        --          --
-------------------------------------------------------------------------------
Total                     $2,466,760               $2,466,760       100.0
===============================================================================
</TABLE>

The following table is a summary of billing by Deloitte & Touche, LLP, as
external auditors of TELUS, during the period from January 1, 2004 to December
31, 2004:
<TABLE>
<CAPTION>
                         Deloitte & Touche      Total Fees           %
Type of work
<S>	  	         <C>		    	 <C>	             <C>
------------------------------------------------------------------------------
Audit fees               $2,102,260              $2,102,260          79.5
Audit-related fees         $313,325                $313,325          11.8
Tax fees                   $231,278                $231,278           8.7
All other fees             --                           --             --
------------------------------------------------------------------------------
Total                    $2,646,863              $2,646,863         100.0
===============================================================================
</TABLE>


TELUS' policy regarding pre-approval of all audit, audit related and non-audit
services provided by its External Auditor is based upon compliance with the
Sarbanes-Oxley Act of 2002, the subsequent implementation rule from the SEC
titled "Final Rule: Strengthening the Commission's Requirements Regarding
Auditor Independence" and any additional determination's regarding
impermissible services issued by the Public Company Accounting Oversight Board
(PCAOB).

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, TELUS has 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 review, evaluation and pre-approval or denial
on behalf of the Audit Committee (with the 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.

OFF-BALANCE SHEET ARRANGEMENTS

The information provided under the subheading "Off-Balance Sheet Arrangements,
Commitments and Contingent Liabilities" set forth in the "Management's
Discussion and Analysis" filed as Exhibit 4 to this annual report on Form 40-F,
is incorporated by reference herein.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The information provided under the heading "Contractual Obligations" (Note 16)
set forth under the heading "Commitments and Contingent Liabilities" set forth
in the notes to the audited consolidated financial statements filed as Exhibit
4 to this annual report on Form 40-F, is incorporated by reference herein.

UNDERTAKING

Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the SEC staff, and to furnish
promptly, when requested to do so by the SEC staff, information relating to:
the securities registered pursuant to Form 40-F; the securities in relation to
which the obligation to file an annual report on Form 40-F arises; or
transactions in said securities.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that
it meets all of the requirements for fling on Form 40-F and has duly caused
this annual report to be signed on its behalf by the undersigned, thereto duly
authorized.

Registrant:	TELUS Corporation


By:   /S/ Audrey T. Ho
      _________________
          Audrey T. Ho

      Vice President, Legal Services and General Counsel
      and Corporate Secretary

Date:   March 20, 2006


                            EXHIBIT INDEX

The following documents are filed as exhibits to this Form 40-F:
Exhibit

Number	 Document
------   --------
1.       Certification of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 302 of the Sarbanes-Oxley Act

2.       Certification of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of the Sarbanes-Oxley Act

3.       Annual Information Form dated March 20, 2006

4.       Audited Consolidated Financial Statements as at and for the year ended
         December 31, 2005 and Management's Discussion and Analysis

5.       Consent of Independent Registered Chartered Accountants

6.       Amended 2005 Ethics Policy


_______________________________________________________________________________

Exhibit 1:
                            Certification

I, Darren Entwistle, President and Chief Executive Officer of TELUS
Corporation, certify that:

1. I have reviewed this annual report on Form 40-F of TELUS
   Corporation.

2. Based on my knowledge, this report does not contain any untrue statement
   of a material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this
   report.

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material
   respects the financial condition, results of operations and cash flows of
   the issuer as of, and for, the periods presented in this report.

4. The issuer's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

   (a) designed such disclosure controls and procedures, or caused such
       disclosure controls and procedures to be designed under our supervision,
       to ensure that material information relating to the issuer, including
       its consolidated subsidiaries, is made known to us by others within
       those entities, particularly during the period in which this report is
       being prepared;

   (b) evaluated the effectiveness of the issuer's disclosure controls and
       procedures and presented in this report our conclusions about the
       effectiveness of the disclosure controls and procedures, as of the end
       of the period covered by this report based on such evaluation; and

   (c) disclosed in this report any change in the issuer's internal control
       over financial reporting that occurred during the period covered by the
       annual report that has materially affected, or is reasonably likely to
       materially affect, the issuer's internal control over financial
       reporting.

5. The issuer's other certifying officer and I have disclosed, based
   on our most recent evaluation of internal control over financial reporting,
   to the issuer's auditors and the audit committee of the issuer's board of
   directors (or persons performing equivalent function):

   a) all significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the issuer's ability to record,
      process, summarize and report financial information; and

   b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the issuer's internal control
      over financial reporting.


       Date: March 20, 2006.

       /S/ Darren Entwistle
       _____________________

           Darren Entwistle
           President and Chief Executive Officer


                            Certification

I, Robert G. McFarlane, Executive Vice President and Chief Financial Officer of
TELUS Corporation, certify that:

1. I have reviewed this annual report on Form 40-F of TELUS Corporation.

2. Based on my knowledge, this report does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this report.

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material respects
   the financial condition, results of operations and cash flows of the issuer
   as of, and for, the periods presented in this report.

4. The issuer's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

  (a) designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the issuer, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

  (b) evaluated the effectiveness of the issuer's disclosure controls
      and procedures and presented in this report our conclusions about the
      effectiveness of the disclosure controls and procedures, as of the end of
      the period covered by this report based on such evaluation; and

  (c) disclosed in this report any change in the issuer's internal
      control over financial reporting that occurred during the period covered
      by the annual report that has materially affected, or is reasonably
      likely to materially affect, the issuer's internal control over financial
      reporting.

5. The issuer's other certifying officer and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting, to
   the issuer's auditors and the audit committee of the issuer's board of
   directors (or persons performing equivalent function):

   a) all significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the issuer's ability to record,
      process, summarize and report financial information; and

   b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the issuer's internal control
      over financial reporting.


       Date: March 20, 2006.

       /S/ Robert G. McFarlane
       _______________________

           Robert G. McFarlane
           Executive Vice President and Chief Financial Officer

_______________________________________________________________________________

Exhibit 2:
                            Certifications

Pursuant to 18 U.S.C. 1350, the undersigned officers of TELUS Corporation
("TELUS") hereby certify that to his or her knowledge, (a) the annual report
for the period ended December 31, 2005 (the "Report") fully complies with the
requirements of Section 13(a) or 15(d), as applicable, of the Securities and
Exchange Act of 1934 and (b) the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of TELUS.

Date: March 20, 2006.

/S/Darren Entwistle
___________________

   Darren Entwistle
   President and Chief Executive Officer


Date: March 20, 2006.

/S/Robert G. McFarlane
______________________

   Robert G. McFarlane
   Executive Vice President and Chief Financial Officer


_______________________________________________________________________________

Exhibit 3: Annual Information Form dated March 20, 2006.


                       TELUS Corporation

                    annual information form

              for the year ended December 31, 2005


                          March 20, 2006



FORWARD LOOKING STATEMENTS
TELUS
OPERATIONS, ORGANIZATION AND CORPORATE DEVELOPMENTS
EMPLOYEE RELATIONS
CAPITAL ASSETS AND GOODWILL
ALLIANCES
LEGAL PROCEEDINGS
FOREIGN OWNERSHIP RESTRICTIONS
REGULATION
COMPETITION
DIVIDENDS DECLARED
CAPITAL STRUCTURE OF TELUS
RATINGS
DIRECTORS AND OFFICERS
MARKET FOR SECURITIES
INTERESTS OF EXPERTS
AUDIT COMMITTEE
MATERIAL CONTRACTS
TRANSFER AGENTS AND REGISTRARS
ADDITIONAL INFORMATION

                    Exchange Rate Information

TELUS publishes its consolidated financial statements in Canadian dollars. In
this annual information form, except where otherwise indicated, all reference,
to "dollars" or "$" are to Canadian dollars. The Bank of Canada noon spot
exchange rate on March 1, 2006 was Cdn. $1.1369= U.S. $1.00. The following
table sets forth, for the fiscal years and dates indicated, certain exchange
rate information based on the noon spot rate:

      December 31, 2003----------------------------------------------1.292
      December 31, 2004----------------------------------------------1.2036
      December 31, 2005----------------------------------------------1.1659

FORWARD LOOKING STATEMENTS

This annual information form and management's discussion and analysis
incorporated by reference hereto, contain statements about expected future
events and financial and operating results of TELUS Corporation ("TELUS" or the
"Company") that are forward looking. By their nature, forward-looking
statements require the Company to make assumptions and are subject to inherent
risks and uncertainties. There is significant risk that predictions and other
forward-looking statements will not prove to be accurate. Readers of this
document are cautioned not to place undue reliance on our forward-looking
statements as a number of factors could cause actual future results,
conditions, actions or events to differ materially from the operating targets,
expectations, estimates or intentions expressed in the forward-looking
statements. Factors that could cause actual results to differ materially
include but are not limited to: competition; technology (including reliance on
systems and information technology); regulatory developments; human resources
(including possible labour disruptions); business integrations and internal
reorganizations; process risks (including the conversion of legacy systems and
security); financing and debt requirements (including share repurchases and
debt redemptions); tax matters; health, safety and environment developments;
litigation and legal matters; business continuity events (including man-made
and natural threats); economic growth and fluctuations; and other risk factors
discussed herein and listed from time to time in TELUS' reports, public
disclosure documents or other filings with securities commissions in Canada
(filed on SEDAR at www.sedar.com) and the United States (filed on EDGAR at
www.sec.gov). See "Management's Discussion and Analysis - Section 10 Risks and
risk management" in TELUS' 2005 Annual Report - Financial Review for further
information.

TELUS

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 ("CBCA") 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) (the "New
BC Act"), 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, Vancouver, B.C.

Subsidiaries of TELUS

As of December 31, 2005, the only material subsidiaries of TELUS are TELUS
Communications Inc. ("TCI") and TELE-MOBILE COMPANY ("TELE-MOBILE"), each
owning assets which constitute more than 10 per cent of the consolidated assets
of TELUS as at December 31, 2005 and each generating sales and operating
revenues which exceed 10 per cent of the consolidated sales and operating
revenues of TELUS for the year ended December 31, 2005. TELUS owns 100 per cent
of the voting shares in TCI directly, and 100 per cent of the partnership
interests in TELE-MOBILE indirectly.

On November 24, 2005, TELUS announced the merger of the wireline and wireless
segments of its business into a single operating structure (the
"wireline-wireless merger"). This was partly effected by way of a legal entity
restructure on March 1, 2006, at which time TELUS combined its wireline and
wireless businesses; which were formerly located in TCI and TELE-MOBILE
respectively (the "2006 legal entity restructure") into a new partnership,
TELUS Communications Company ("TCC"). TCC is a partnership organized under the
laws of B.C. whose partners are TCI and TELE-MOBILE. Immediately prior to the
aforementioned 2006 legal entityrestructure, 3817873 Canada Inc., a partner in
TELE-MOBILE, was continued into Alberta as 1219723 Alberta ULC. TELUS owns 100
per cent of the partnership interest in TCC indirectly.

The following organization chart sets forth the material TELUS subsidiaries and
partnerships, as well as their respective jurisdictions of incorporation or
establishment and TELUS ownership prior to March 1, 2006:


                 -------------------------------
                    TELUS Corporation ("TELUS")
                     (British Columbia)
                 -------------------------------
                   |  100%
                   |
                   |            100%
          -----------------              ------------
              TELUS                        3817873
            Communications   ---------   Canada Inc.
               Inc.                       (Federal)
            (Federal)                    ------------
          ----------------                |
                        |                 |
                        |                 |                           |
                        |                 |                           |
                        |                 |                           |
               99%      |                 |    1%                     |
                        |                 |                         TELUS
                        |                 |                        Wireline
                        |                 |                        Segment
                        |                 |
------------------------------------------------------------------------------
                            TELE-MOBILE                         TELUS Wireless
                             COMPANY                               Segment
                            (Ontario)                                 |
                                                                      |
                                                                      |

The following organization chart sets forth the material TELUS subsidiaries and
partnerships, as well as their respective jurisdictions of incorporation or
establishment and TELUS ownership from March 1, 2006:


                 ---------------------------
                  TELUS Corporation ("TELUS")
                    (British Columbia)
                 ---------------------------
                100 %    |
                         |                         ---------------
              ---------------------------   100%   1219723 Alberta
               TELUS Communications Inc.   -------     ULC
          ---        (Federal)                       (Alberta)
         |    ---------------------------          ---------------
         |               |  99%                       |
         |               |                            | 1%
         |          TELE-MOBILE                       |
         |       COMPANY / SOCIETE   -----------------
         |         TELE - MOBILE
         |           (Ontario)
         |                |
         |                |
         |       TELUS Communications
          ---     Company / Societe
                 TELUS Communications
                  (British Columbia)


In this annual information form, references to "TELUS" are to TELUS Corporation
and all of its subsidiaries and partnerships as a whole, except where it is
clear that these terms mean only TELUS Corporation. Unless the context
otherwise requires, "TELUS wireline" refers to the wireline businesses carried
on primarily through TCC presently and through TCI within the TELUS
Communications segment prior to the wireline-wireless merger, and "TELUS
Mobility" or TELUS wireless refers to the wireless businesses carried on
through TCC presently and through TELE-MOBILE prior to the wireline-wireless
merger.


OPERATIONS, ORGANIZATION AND CORPORATE DEVELOPMENTS


Operations

TELUS is the largest telecommunications company in western Canada and the
second largest telecommunications company in Canada. It provides a wide range
of wireline and wireless telecommunications products and services including
data, Internet protocol ("IP"), voice, video and entertainment services.

Organization
TELUS is organized into four customer facing business units:

* Consumer Solutions, which provides wireline and wireless IP service, voice
  and entertainment services to households and individuals across Canada;

* Business Solutions, which delivers innovative wireline and wireless data,
  IP, voice and business process in-sourcing solutions to small and
  medium-sized businesses and entrepreneurs and brings customized wireline,
  wireless, voice, data, IP, Information Technology ("IT") and e.business
  solutions to large multinational, corporate and public sector customers;

* TELUS Quebec, which focuses on the unique needs of the Quebec marketplace
  by offering businesses and consumers comprehensive and integrated wireless
  and wireline telecommunications solutions, including data, Internet and
  voice; and

* Partner Solutions, which provides services to wholesale customers,
  including telecommunications carriers, resellers, Internet service providers
  ("ISPs"), wireless communications companies, competitive local access
  providers and cable-TV operators.

These customer facing business units receive essential support from the
business capabilities units comprised of Network Operations, Business
Transformation and Technology Strategy, as well as from the business enabling
units comprised of Finance, Corporate Affairs (which includes public policy,
law, regulation, government relations and corporate communications) and Human
Resources.

Prior to the wireline-wireless merger, TELUS divided its operations into two
separate business segments: the wireline segment (formerly known as TELUS
Communications) and the wireless segment (branded as TELUS Mobility). Wireline
products and services were provided primarily through TCI, and wireless
products and services were provided through TELE-MOBILE. The four customer
facing units of Consumer Solutions, Business Solutions, Partner Solutions and
TELUS Quebec provided the wireline products and services and received essential
support from the business capabilities units and business enabling units within
TELUS Communications, while TELUS Mobility provided the wireless products and
services and received essential support for employee services, engineering,
finance, information systems, sales and marketing, operations, legal and
regulatory matters from departments within TELUS Mobility.

By combining its wireline and wireless businesses into a single operation in
the wireline-wireless merger, which included the 2006 legal restructure, TELUS
expects to be better able to leverage the ongoing convergence between wireline
and wireless communications technology, more effectively compete with telecom
and cable TV operators, differentiate its business from those of its
competitors by having TCC provide wireline and wireless services to customers,
and provide new services to customers regardless of the physical medium used to
deliver the service. The combining of the wireline and wireless businesses in
TCC should also improve operating effectiveness and efficiency. TELUS will
continue to report financial results separately for the wireless and wireline
segments.

During the three years ended December 31, 2005, the corporate structure of the
Company underwent other changes. On July 1, 2004, through an internal
reorganization, TCI acquired substantially all of the assets and the wireline
operations of TELUS Communications (Quebec) Inc. ("TELUS Communications
(Quebec)"). TCI assumed substantially all the liabilities of TELUS
Communications (Quebec) including $30 million principal amount of First
Mortgage Bonds and $70 million principal amount of Medium Term Notes, which
were the publicly held debt of TELUS Communications (Quebec). By combining in a
single entity ownership of the network assets in Quebec with those outside of
Quebec, TELUS expects to be able, over the long-run, to build common systems
and processes that otherwise would have been more difficult to build due to
regulatory requirements. These changes should allow TELUS to better serve
customers whose service requirements span Canada.

On November 30, 2004, Verizon Communications Inc. ("Verizon") and the Company
entered into an agreement pursuant to which the independent members of the
Board of Directors of TELUS agreed to accommodate Verizon's desire to divest
all of its 20.5 per cent equity investment in the Company. Such divestiture was
effected by a public secondary offering of Verizon's entire equity interest in
the Company. Post divestiture, Verizon and the Company are no longer related
parties (the "Verizon Sale"). Concurrently with the divestiture, Verizon and
the Company further adjusted their business relationships to reflect changes in
their business requirements since the alliance was first established. See
section "Alliances" on page 17 of this annual information form for further
information.

On December 30, 2004, through an internal reorganization, a subsidiary of
TELUS, TELUS Solutions Holdings Inc., was wound up into TCI. Upon this wind
up, TELUS Services Partnership ceased to exist and its business was transferred
by operation of law to TCI.


Amendments to Charter Documents

TELUS' charter documents, the Notice of Articles and the Articles of the
Company, were amended in 2005 with the requisite approval of its shareholders.
In particular, these amendments:

* decreased the minimum number of directors from 12 to 10;
* replaced the then existing Articles with a new form of Articles which
  conformed with the New BC Act;
* reduced the threshold for a special resolution and a special separate
  resolution from 3/4 to 2/3;
* subject to several exceptions, removed a requirement that the Company,
  before purchasing any of its shares, must make an offer to every shareholder
  holding shares of the class or series to be purchased, to purchase the
  shares pro rata;
* eliminated cumulative voting rights with respect to the election of
  directors and amended the Articles to permit holders of common shares to
  vote by a separate resolution for each director rather than a slate; and
* amended the Articles to provide that the special rights and restrictions
  relating to foreign ownership compliance under the Telecommunications Act
  (Canada) attaching to the common shares and the non-voting shares be
  extended to ensure similar compliance under both the Radiocommunication Act
  (Canada) and the Broadcasting Act (Canada).


DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENTS

TELUS is the largest incumbent telecommunications service provider in western
Canada and provides a wide range of telecommunication products and services
including data, IP, voice, video and other services to consumers and businesses
and operates as a full-service incumbent local exchange carrier ("ILEC") in
western Canada and eastern Quebec. With its national wireline fibre-optic
network which offers advanced IP-based network applications, TELUS is a
national provider of data, IP and voice solutions for business customers across
Canada. TELUS is also a national facilities-based wireless provider, with more
than 4.5 million subscribers, offering digital personal communications services
("PCS"), enhanced specialized mobile radio ("ESMR") services, wireless Internet
and data, paging and analogue cellular services.

The Company earns the majority of its revenue (voice local, voice long
distance, data and wireless network revenue) from access to, and usage of, the
Company's telecommunication infrastructure. The majority of the balance of the
Company's revenue (other revenue and wireless equipment revenue) arises from
providing products that facilitate access to, and usage of, the Company's
telecommunication infrastructure.


TELUS' national growth strategy

Since the January 1999 merger between BC TELECOM and TC, the Company has been
pursuing a national wireline and wireless growth strategy outside Alberta and
B.C. into the rest of Canada, most particularly into central Canada. This has
been implemented by both organic growth and through a series of acquisitions
which have provided TELUS with a regional full service presence in the province
of Quebec, national digital wireless communications networks and subscribers,
PCS and other wireless spectrum nationally, employees, infrastructure and sales
distribution channels in central and eastern Canada. Through growth, investment
and a series of strategic acquisitions completed prior to 2002, TELUS became a
leading managed data-hosting provider in Canada with a national network of
intelligent Internet data centres.

The Company has a coast-to-coast backbone fibre optic-network, which
interconnects cities between Halifax and Vancouver and extends into the U.S.
via points of presence in Albany, Ashburn, Palo Alto, Buffalo, Chicago,
Detroit, New York and Seattle. This network is fully integrated with TELUS'
extensive metropolitan networks in Alberta and B.C. and connects into networks
constructed in Montreal, Ottawa, Toronto and other cities. As at December 31,
2005, the total amount of network fibre has been expanded to more than 14,000
kilometres.

In 2003, TELUS started migrating toll voice traffic onto its fibre-optic
network, beginning the transformation of the TELUS network to a single IP
network designed to carry high quality voice, data and video applications. In
2005, TELUS successfully completed a migration of 99 per cent of its long
distance traffic from the old Stentor platform. This fibre-optic network
provides TELUS with certain competitive advantages in the business marketplace.
For business customers, TELUS provides a full suite of IP-based advanced
application services and the ability to integrate voice mail, e-mail, data and
video through a user-friendly online Web portal. TELUS is exploiting the
competitive head-start it has in managed data and IP solutions, utilizing its
IP network to secure recurring data revenues in Ontario and Quebec. A number of
large national contracts for managed data solutions were signed in 2005,
including an eight-year agreement with Intrawest Corporation to be the
exclusive supplier of certain IP and telecommunications services at Intrawest
resorts across Canada, and an agreement with a large manufacturer to provide
and manage Internet-based voice and data services.

In June 2004, as a result of research and development activities that TELUS had
undertaken, the next phase of the IP-One (R) product family was launched and is
being offered to businesses in many cities in Ontario and Quebec. In 2005, the
Company expanded its suite of advanced IP-based network applications with the
introduction of IP-One Evolution (R). This new service enables business
customers to migrate from their existing Centrex systems to IP telephony at a
pace that best suits their needs. The Company also began a transformational
billing initiative to re-engineer processes in the wireline segment for order
entry, pre-qualification, service fulfillment and assurance, customer care,
billing, collections/credit, customer contract and information management. The
expected benefits of this project include streamlined and standardized
processes and the elimination over time of multiple legacy information systems.

Another important element of the Company's wireline revenue growth strategy is
the TELUS Future Friendly? Home initiative being offered in its incumbent
service areas. TELUS offers a suite of integrated, advanced digital and
wireless services that leverage the Company's significant investments in
high-speed Internet. Two services, TELUS Home Networking and TELUS
HomeSitter (R), were launched in 2004. In 2005, TELUS began a targeted launch of
its digital television service, TELUS TV, in select neighbourhoods in Edmonton
and Calgary following extensive trials with TELUS employees.

Non-core assets, including real estate properties, were sold in 2003, 2004 and
2005 for total proceeds of $92 million.

In conjunction with the ongoing build-out of TELUS' wireless networks, TELUS
entered into enhanced and extended roaming/resale agreements in 2001 with Bell
Mobility and certain affiliates and Aliant Wireless, a division of Aliant
Telecom Inc. ("the Roaming/Resale Agreements"). These agreements significantly
expanded TELUS' digital PCS coverage areas outside of major urban markets in
Ontario, Quebec and Atlantic Canada and were subsequently amended to include 1X
and with respect to Bell Mobility, the Evolution Data Optimize ("EVDO")
high-speed network. On November 29, 2004, TELUS Mobility and Verizon Wireless
expanded their Canada and U.S. roaming arrangements under a consolidated
long-term roaming agreement to improve each other's ability to provide more
consistent and comprehensive roaming services to each other's customers.

In 2005, TELUS continued the enhancement of digital wireless capacity and
coverage and the construction of significant microwave facilities aimed at
reducing future leased line costs. In August 2005, TELUS launched its mobile TV
service, which allows wireless clients to access live television on their
wireless phones. In late 2005, EVDO services were also introduced in five major
centres across Canada (Vancouver, Calgary, Edmonton, Toronto and Montreal),
offering business customers wireless data downloads at typical speeds of 400 -
700 kilobits per second.

TELUS - wireline business segment

TELUS operates as an ILEC in Alberta, B.C. and eastern Quebec where it provides
comprehensive local, long distance, data, Internet and information services in
its incumbent or ILEC territories and is a competitive local exchange carrier
("CLEC") offering services primarily in central Canada through its
non-incumbent or non-ILEC operations. TELUS' ILEC operations serve a population
of approximately 7.6 million in its incumbent western Canada service territory,
and a population of more than one half million in its incumbent eastern Quebec
territory. On a combined basis, wireline services accounted for revenue of
$4,847 million for the year ended December 31, 2005 ($4,769 million for the
year ended December 31, 2004), representing 60 per cent of the total revenue of
TELUS for 2005 (63 per cent of the total revenue of TELUS for 2004).

TELUS continues to focus on enhancing operational efficiency and effectiveness
in its wireline business. In 2003, TELUS substantially completed Phases 2 and 3
of its operational efficiency program ("OEP") and achieved its goal of
improving the profitability of TELUS, through the reduction of positions and
closure and consolidation of customer contact centres in its ILEC region. In
2004, a number of comparatively smaller initiatives were undertaken, noticeably
in the information technology resources area and in the merger of two
customer-facing business units, aimed to enable greater efficiencies of scale,
improve effectiveness of program delivery, improve competitiveness in the
marketplace and improve operating and capital productivity. In 2005, TELUS
continued to undertake initiatives aimed at improving operating and capital
productivity and expects such initiatives to continue in 2006.

The operating profitability of non-ILEC operations has been steadily improving
because of continued data-focused growth, cost containment efforts and
increases in the proportion of services provided on TELUS facilities ("on-net").
TELUS started migrating toll voice traffic onto its IP network in 2003. See
"TELUS' national growth strategy".

In addition, a partnership with the Calgary Health Region was established to
deliver human resources and end-to-end solutions to healthcare and other
organizations. A new call centre business was established in Montreal to
in-source Internet help desk services from a third party and offer call centre
solutions to other external customers.

In November 2004, TELUS signed a 10-year contract with the Government of B.C.,
in which the Government transferred approximately 140 staff members and all
government payroll and human resource services to TELUS Sourcing Solutions Inc.
("TSS"), an indirect subsidiary of TELUS. This contract builds upon the
partnership between TSS and the Calgary Health Region. In October 2005, TSS
entered into a 10-year contract with the Calgary Board of Education ("CBE"), in
which 50 CBE employees transferred to TSS. This contract will provide for the
delivery of some of the district's human resources services. TSS also signed a
15-year agreement with Hamilton Health Sciences to deliver the process and
information technology components of its human resources services.

 Local

Local wireline services allow customers to complete calls in their local
calling areas and to access long distance networks, wireless networks and the
Internet. Virtually all homes and businesses in TELUS' incumbent service areas
have access to some or all of its local services. In addition to local calling,
local services generally include enhanced calling features, such as call
display, call waiting, call forwarding and voice mail; Centrex for business
customers; public pay telephones; and competitive long distance carrier access.
Local access or exchange service is the largest component of local wireline
service, and is generally provided on a monthly flat rate basis.

CLECs operating in Canada provide service to their customers over facilities
they have constructed or leased from ILECs in a given region or by reselling
the local services of the ILECs (including TELUS). CLECs that use their own
facilities or facilities leased from TELUS Communications are eligible to
receive a subsidy when they provide service to residential customers living in
areas where TELUS, as an ILEC, receives a subsidy (see "Regulation - Regulation
of Local Services").

TELUS is competing outside its incumbent territories as a non-dominant carrier
and has obtained approval to operate as a CLEC in certain targeted markets in
central Canada where it concentrates on providing business wireline services.
TELUS is continuing to pursue CLEC status in other areas in central and eastern
Canada.

	Long distance

Wireline long distance services interconnect customers in different local
calling areas, and provide domestic and international connectivity. TELUS
offers its residential and business customers a range of long distance savings
plans, billing options, and call options. The largest component of wireline
long distance services is message toll services, which are transmitted through
fibre optic cables, microwave radio systems, cable carrier systems and
satellite channels. National and international wireline long distance services
are provided through TELUS' national network and by way of interconnection with
the networks of other facilities-based carriers and resellers.

      Data, Internet and IT services

TELUS provides both "traditional" or "legacy" data services and "enhanced" data
services. Traditional data services include circuit switched, packet switched
and dedicated private lines. Enhanced data services provide greater
functionality to the customer, allowing a customer to compress their
telecommunications applications onto a single infrastructure. The primary
enhanced data services offered by TELUS are Internet access, private intranets,
wide area network outsourcing and electronic commerce. Customers may choose
from a wide range of data services to suit the complexity of their
requirements, including required speed and volume.

TELUS is the second largest ISP in Alberta and B.C. and is the fourth largest
wireline Internet service provider in Canada. As at December 31, 2005, TELUS
had 999,200 wireline Internet subscribers, including 763,100 high-speed
Internet subscribers. In 2005, the number of high-speed subscribers increased
by approximately 11 per cent. TELUS has seen an increase in the use of data
services such as business Intranets by business customers and in the use of
personal computer and Internet access by residential customers. TELUS also
offers a range of broadcast, teleconferencing and advanced intelligent network
services - services that can be customized to meet the specific needs of
individual customers through software changes to network switches. These
services include special number services such as toll free 1-800 and 1-900 and
enhanced call routing.

TELUS provides businesses with IT services such as IT outsourcing, application
development and sustainment, and national IT consulting. As a provider of Web
hosting services, TELUS also offers managed hosting, co-location including
shared Web and e-mail hosting services, media streaming, data storage and
security services. In addition, TELUS offers managed applications services and
software such as online backup Web conferencing, expense management, customer
relationship management and sales force automation. These services are
available across Canada and can be enhanced by connection with TELUS'
infrastructure through points of presence throughout Alberta and B.C.,
Winnipeg, Regina, Saskatoon, and many cities in Ontario and Quebec.

In February 2005, TELUS purchased a controlling interest in Ambergris Solutions
Inc. ("Ambergris"), which provides TELUS with international call centre
capability and backup capabilities. The international call centre capability
provides support for TELUS' bids to offer competitive call centre services to
potential new clients.

The following table sets forth certain statistical information with respect to
the wireline business segment:

<TABLE>
<CAPTION>
Wireline business                                       December 31
                                                     2005      2004      2003
<S>                                                  <C>       <C>       <C>
-------------------------------------------------------------------------------
Network access lines (000's)                        4,691    4,808      4,870
High-speed Internet net additions (000s) (1)         73.4      128        152
High-speed Internet subscribers (000's) (1)           736      690        562
Dial-up Internet net reductions (000's) (1)        (45.5)   (38.2)     (71.9)
Dial-up Internet subscribers (000's) (1)              236      282        320
Total Internet subscribers (000's)                    999      971        881
Full-time equivalent employees(2)                     n/a   18,839     18,430
Total employees                                    22,888   19,500     19,029
------------------------------------------------------------------------------
<FN>
(1) As a result of a subscriber audit following a billing system conversion
    in the third quarter of 2002, Internet subscriber counts and net additions
    for 2003 are net of reductions of approximately 13,000 dial-up subscribers
    and approximately 4,700 high-speed Internet subscribers.
(2) The measure for full-time equivalent employees is not available for 2005
    as it does not factor in the effective overtime hours on staff equivalents
    because of the labour disruption from July to November.
</FN>
------------------------------------------------------------------------------
</TABLE>

The total number of employees in 2005 included approximately 3,200 employees
from the acquisition of a controlling interest in Ambergris in February 2005.

	TELUS wireline network

TELUS' network includes the Alberta and B.C. portion of the transcontinental
high-density fibre optic transmission system used by the various ILECs across
Canada. As part of TELUS' national strategy, TELUS has also built its own
national inter-city fibre-optic backbone network that interconnects the network
in Alberta and B.C. with major centres in Ontario and Quebec. This fibre-optic
network is supplemented by new local fibre optic networks in 34 CLEC exchanges
or metropolitan areas. TELUS' network also interconnects with the networks of
Verizon and other carriers in the U.S. for the exchange of U.S. and
international traffic.

TELUS- wireless business segment

TELUS is one of three national Canadian facilities-based wireless service
providers. TELUS is licensed to operate a national digital PCS network and
analogue/digital cellular facilities in Alberta, B.C., and eastern Quebec.
TELUS also operates Canada's only national ESMR network. Its national PCS
wireless network utilizes 1X, code division multiple access ("CDMA") digital
technology. In late 2005, a new CDMA-based wireless high speed network (EVDO)
was introduced in major centers across Canada offering customers wireless data
transfers at speeds at least six times faster than previous TELUS wireless data
services. TELUS offers wireless voice and data services to consumers and
businesses nationally on both the ESMR and the PCS/cellular networks. As a
result of acquisitions and purchases completed in previous years, TELUS holds a
significant mobile spectrum position. TELUS is also a leading wireless
communications service provider in Canada in terms of average monthly revenue
per subscriber unit ("ARPU"), churn, operating margins and operating cash flow
yield based on publicly available information.

TELUS introduced two new global communications solutions in 2005: the Motorola
A840 worldphone, which operates on both CDMA and global system for mobile
("GSM") networks, and a GSM global roaming card.

For the year ended December 31, 2005, the wireless business segment accounted
for revenue of $3,296 million ($2,812 million for the year ended December 31,
2004), representing approximately 40 per cent of the total revenue of TELUS in
2005 (37 per cent of the total revenue of TELUS for 2004).

In 2001, TELE-MOBILE entered into the Roaming/Resale Agreements, which extended
and enhanced then existing roaming and resale arrangements by, among other
things, reducing the wholesale pricing for such services, to encourage the use
of existing CDMA networks. The implementation of these agreements began in 2002
and has expanded TELUS' addressable PCS market by approximately 7.5 million
people as of the end of 2005, while allowing TELUS to avoid estimated capital
expenditures of approximately $800 million over the 10-year term of the
agreements. In 2002 and in 2005, these Roaming/Resale Agreements were amended
to include roaming for 1X and EVDO, respectively. At the end of 2005, TELUS'
national digital networks combined with coverage provided by the Roaming/Resale
Agreements reached approximately 30.6 million Canadians.

The following table sets forth certain statistical information with respect to
the wireless business segment:

<TABLE>
<CAPTION>
Wireless business                                          December 31
                                                     2005      2004      2003
<S>                                                  <C>       <C>       <C>
-------------------------------------------------------------------------------
Net subscriber additions (000's) (1)                   584       512       431
Gross subscriber additions (000's)                   1,279     1,121       987
Wireless subscribers (000's) (1)                     4,521     3,936     3,424
Penetration rate (2)                                 14.5%     12.9%     11.5%
Wireless market share, subscriber based              26.9%     26.1%     25.5%
Average monthly revenue per subscriber unit            $62       $60       $57
Minutes of use per subscriber per month ("MOU")        399       384       350
Cost of acquisition, per gross addition               $386      $389      $430
Monthly deactivations (churn rate)(1)                 1.4%      1.4%      1.5%
Digital population coverage (millions) (3)            30.6      30.0      29.5
Full-time equivalent employees(4)                      n/a     5,915     5,387
Total employees                                      6,931     6,298     5,690
------------------------------------------------------------------------------
<FN>
(1) Based on an audit of the prepaid platform in 2003, a one-time adjustment
    was made to the prepaid subscriber base. Cumulative subscribers were
    reduced by approximately 7,600. Of the 7,600, net additions as recorded for
    2003 reflected a 5,000 adjustment for current year deactivations.
    Management believes the deactivations related to the prior period are
    immaterial and therefore net additions have not been restated. Furthermore,
    2003 churn was calculated to reflect the 5,000 deactivations in the current
    year.
(2) Subscribers divided by population coverage.
(3) Includes expanded population coverage in 2005 of approximately
    7.5 million in the PCS coverage area (2003 - approximately 7 million) due
    to the Roaming/Resale Agreements.
(4) The measure for full-time equivalent employees is not available for 2005
    as it does not factor in the effective overtime hours on staff equivalents
    because of the labour disruption.
</FN>
----------------------------------------------------------------------------
</TABLE>



      TELUS wireless networks

TELUS owns and operates a national digital PCS network, and analogue and
digital cellular networks in Alberta, B.C., and eastern Quebec, with 40 to 45
MHz of PCS spectrum throughout all major population regions of Canada. TELUS
continues to build significant microwave facilities in order to reduce costs.
TELUS has combined these networks under one national brand. Substantially all
of TELUS' digital subscribers are provided extended coverage in Canada, the
U.S. and various other countries through analogue and digital roaming
arrangements with other carriers by means of dual-mode or tri-mode, dual-band
handsets.

TELUS also owns and operates an ESMR digital wireless business communications
service under the MikeTM trademark using the integrated digital enhanced
network ("iDEN") technology. The Mike network covers the larger population
centers and surrounding areas in Alberta, B.C., Manitoba, Ontario and Quebec
(including Toronto and Montreal), and many non-urban areas in Ontario, Quebec
and western Canada. The Mike network utilizes frequencies in the 800 MHz range
which have propagation advantages over higher frequencies such as those used in
digital 1900 MHz PCS networks, resulting in more cost effective geographic
coverage. While the amount of 800 MHz spectrum licensed to TELUS varies by
region, TELUS has in excess of 10 MHz of spectrum available for its Mike
network in Montreal, Toronto and Vancouver, Canada's three most populous
metropolitan areas. The Mike service is marketed primarily through independent
and corporate-owned dealers to businesses and other organizations as a digital
PCS-like service with the added benefit of Mike's Direct Connect Push to
Talk functionality, which provides low-cost instant connectivity for work
groups.

TELUS also operates analogue specialized mobile radio ("SMR") systems in most
major urban centres in Canada. TELUS operates paging networks in Alberta, B.C.,
and eastern Quebec.

EMPLOYEE RELATIONS

As at December 31, 2005, TELUS had a total of approximately 29,819 employees,
of which 24,177 were regular full-time or regular part-time employees; the
balance were temporary employees. Approximately 14,589 employees were unionized
of which approximately 11,778 were part of the wireline business segment and
approximately 2,811 were employed in the wireless business segment.

A labour disruption that began on July 21, 2005 was settled on November 18,
2005, following the ratification of a new five-year collective agreement
covering approximately 14,000 employees (including inactive employees) in both
the wireline and wireless business segments located predominantly in TELUS'
western incumbent region in B.C. and Alberta. The new agreement, effective
November 20, 2005 and expiring November 19, 2010, merged six previously
separate collective agreements into one and applies to all unionized team
members in B.C. and Alberta represented by the Telecommunications Workers Union
("TWU"), as well as TELUS Mobility team members in central Canada who were
included in the scope of the TWU's bargaining unit by Canada Industrial
Relations Board ("CIRB") Decisions 1088 and 278.

TELUS- wireline business segment

The TWU represents approximately 10,047 unionized employees in TELUS wireline
operations in Alberta and B.C. These employees are covered by the new
collective agreement with the TWU mentioned above.

TELUS - wireless business segment

TELUS wireless operations has approximately 2,811 unionized employees in two
separate bargaining units with the majority of unionized employees included in
the TWU's national bargaining unit and a smaller number in a separate unit in
Quebec.

As noted above, the formerly non-union TELUS Mobility employees predominantly
located in Ontario and Quebec were included in the scope of the TWU's national
bargaining unit. After unsuccessful appeals of these decisions, including
denial of leave to appeal to the Supreme Court of Canada, TELUS and the TWU
reached an agreement on the inclusion of these employees in the TWU's national
bargaining unit with the applicable negotiated terms and conditions of
employment included in the new collective agreement between TELUS and the TWU
mentioned above.

The unionized groups at TELUS' wireless segment are:

    * Approximately 2,794 clerical and technical employees across Canada
      represented by the TWU covered by the new collective agreement that will
      expire on November 19, 2010.

    * Approximately 17 former QuebecTel Mobilite professional and supervisory
      employees represented by the Syndicat des Agents de Maitrise de TELUS
      covered by a collective agreement that will expire on March 31, 2007.

TELUS Quebec

Approximately 1,516 unionized employees of TELUS Quebec are represented by two
bargaining agents. The two unionized groups are:

    * Approximately 523 professional and supervisory employees, represented by
      the Syndicat des agents de maitrise de TELUS. The current collective
      agreement covering these employees is in effect until March 31, 2006.
      The parties have reached an agreement in principle, which is subject
      to ratification, to extend the term of this agreement to March 31, 2007.
      The outcome of the ratification process is expected by March 31, 2006.

    * Approximately 993 office, clerical and technical employees, represented
      by the Syndicat Quebecois des employes de TELUS. The collective agreement
      covering these employees expired on December 31, 2005. Negotiations to
      renew this agreement commenced in 2005 and are currently ongoing.

Until a new collective agreement is reached, the terms and conditions of the
expired collective agreements continue to apply. (See "Management's Discussion
and Analysis -Risks and Risk Management - Section 10.5 Human Resources" in
TELUS' 2005 Annual Report -Financial Review).

CAPITAL ASSETS AND GOODWILL

As at December 31, 2005, the total investment of TELUS in capital assets and
goodwill was recorded at a net book value of $14.1 billion on a consolidated
basis.

Capital assets and goodwill

The principal capital assets of TELUS consist of telecommunications property,
plant and equipment and intangible assets and do not lend themselves to
description by exact location. As at December 31, 2005, the total investment of
TELUS in capital assets was recorded at a net book value of $10.9 billion on a
consolidated basis. Such assets, located principally in Alberta, B.C., Ontario
and Quebec, include network facilities, relay and transmission towers,
switching equipment, terminal devices, computers, motor vehicles, tools and
test equipment, furniture, office equipment and intangible assets. Spectrum
licenses, which had a net book value of $3.0 billion as at December 31, 2005,
comprise the majority of identifiable intangible assets.

With the exception of terminal devices located at customer premises, most of
the Company's communications plant and equipment are located on land owned or
leased, or on rights-of-way obtained, by TELUS.

The properties of TELUS include: (i) office space; (ii) work centres for field
service and materials management personnel; and (iii) space for exchange, toll
and mobile radio equipment. A small number of buildings are constructed on
leasehold land and the majority of the relay stations for TELUS' public service
radio-telephone network are situated on lands held under leases or licenses for
varying terms. The network facilities of TELUS are constructed under or along
streets or highways pursuant to rights-of-way granted by the owners of land
including municipalities and on land owned by the Crown or on freehold land
owned by TELUS. Other communications property, plant and equipment consist of
plant under construction and materials and supplies used for construction and
repair purposes. Identifiable intangible assets include wireless spectrum
licenses, subscriber base and computer software.


As at December 31, 2005, goodwill had a net book value of $3.2 billion.
Goodwill represents the excess of cost of acquired businesses over the fair
value attributed to the net identifiable assets. TELUS monitors its operations
for compliance with applicable environmental requirements and standards, and
implements preventative and remedial actions as required. TELUS' business of
telecommunications services does not generate significant waste products that
would be considered hazardous. For these reasons, remedial action has not been
significant to the ongoing operations and expenditures of TELUS.

Value of intangible assets and goodwill

The carrying value of intangible assets with indefinite lives, and goodwill,
are periodically tested for impairment using a two-step impairment test. The
frequency of the impairment test generally is the reciprocal of the stability
of the relevant events and circumstances, but intangible assets with indefinite
lives and goodwill must, at a minimum, be tested annually; the Company has
selected December as its annual test time. No impairment amounts arose from the
December 2005, 2004 and 2003 annual tests. The test is applied to each of the
Company's two reporting units (the reporting units being identified in
accordance with the criteria in the Canadian Institute of Chartered Accountants
("CICA") Handbook section for intangible assets and goodwill): wireline and
wireless.

Intangible assets with finite lives ("intangible assets subject to
amortization") are amortized on a straight-line basis over their estimated
lives; estimated lives are reviewed at least annually and are adjusted as
appropriate.

RISK FACTORS

Management's discussion and analysis -- Section 10 Risks and risk management in
TELUS' 2005 Annual Report - Financial Review is hereby incorporated by
reference. Management's discussion and analysis is available at www.sedar.com.


ALLIANCES

Verizon's Sale of TELUS Equity

Pursuant to the Long-Term Relationship Agreement between TELUS and certain
Verizon corporations dated January 31, 1999 (the "Long Term Relationship
Agreement"), Verizon was prohibited from selling its equity interest in TELUS
to below 19.9 per cent without the approval of the independent directors of
TELUS. On November 30, 2004, TELUS and Verizon announced that they have entered
into an agreement pursuant to which TELUS' independent directors agreed to
accommodate Verizon's sale of all of its equity interest in TELUS, being
48,551,972 Common Shares and 24,942,368 Non-Voting Shares held indirectly
through a subsidiary, on certain conditions set out in that agreement. Under
that agreement, Verizon paid to TELUS U.S. $125 million. The Long Term
Relationship Agreement was terminated on December 14, 2004 on the completion of
the Verizon Sale. Concurrently, the two Verizon executives who sat on the Board
of Directors of TELUS resigned.

Verizon software and related technology and services

Concurrently with the Verizon Sale, Verizon and TELUS adjusted their business
relationships to reflect changes in their business requirements since the
alliance was first established. A number of business agreements (including the
agreements described in this section) between Verizon and TELUS or their
subsidiaries were amended or terminated.

Verizon adopted, with certain changes, the February 1, 1999 agreement (the "GTE
Agreement") made between TELUS and a predecessor to Verizon, GTE Corporation,
with respect to certain GTE intellectual property rights and services. The
agreement between TELUS and Verizon (the "Verizon Agreement") was made
effective January 1, 2001 and contains provisions which, subject to existing
third party rights and certain other exceptions and conditions, give TELUS and
its affiliates certain rights to purchase exclusive licences of Verizon
software and other technology, trademarks and service marks as specified by
TELUS, and to use exclusively the remaining Verizon software and other
technology, trademarks and service marks, in each instance in connection with
the provision of Telecommunications Services (as defined in the Verizon
Agreement) in Canada. Telecommunications Services do not include the provision
of content for broadcasting, video, cable or Internet services, or the sale,
publication or provision of directories. If Verizon proposes to transfer all or
a substantial portion of the software and other technology underlying the
intellectual property rights sold or licensed to TELUS to a third party
unrelated to Verizon, and the transferred software and other technology were in
fact used in the U.S. (excluding Puerto Rico) or Canada by Verizon at the time
of transfer, Verizon must use commercially reasonable efforts to obtain for
TELUS substantially the same rights obtained by Verizon to use all upgrades,
enhancements, additions and modifications to the transferred software and other
technology developed by the third party transferee. As amended on December 14,
2004, TELUS retains the exclusive licenses in Canada to specified Verizon
trademarks, and software and technology where such licenses were purchased or
such trademarks, software and technology were used by TELUS prior to the
closing of the Verizon Sale, together with certain collateral rights associated
therewith granted under the Verizon Agreement, but not to any other Verizon
trademarks or software and technology. TELUS also has relinquished certain
purchasing rights. Verizon is required to continue to provide upgrade and
support on the retained software and technology.

Verizon's obligation to provide intellectual property rights, or any other
right, service or product called for in the Verizon Agreement is subject to
compliance with U.S. regulatory requirements by Verizon and its affiliates.

The Verizon Agreement requires Verizon to provide certain functional and
consulting services to TELUS as requested by TELUS. As amended on December 14,
2004, TELUS has the right to require Verizon to provide such services under
commercial terms with respect to those software and technology and their
upgrades that are licensed to TELUS. The parties have also agreed, subject to
existing obligations, to use reasonable efforts to provide services and
products that are seamless with each other and each has agreed to use
reasonable efforts to purchase for itself and its customers the
Telecommunications Services of the other party in that party's territory. As
amended on December 14, 2004, the two companies will use each other's
cross-border services where capabilities and customer requirements permit. The
Verizon Agreement also contains certain joint marketing and non-competition
provisions, which do not apply to Verizon Wireless or TELUS Mobility. As at
December 14, 2004, TELUS was released from its obligation not to compete
against Verizon in the U.S., and the exceptions to the remaining
non-competition obligations were in some cases clarified or modified.

The Verizon Agreement applies to Verizon and its American and Canadian
affiliates, but specifically excludes Verizon Wireless. Independent of the
Verizon Agreement, TELUS Mobility and Verizon Wireless negotiated and
implemented mutually beneficial changes to their reciprocal roaming
arrangements. On November 29, 2004, TELUS Mobility and Verizon Wireless
expanded their roaming agreements under a consolidated long-term roaming
agreement to improve each other's ability to provide more consistent and
comprehensive Canada and U.S. roaming services to each other's customers.

The initial term of the Verizon Agreement was for one year ending December 31,
2001. Prior to the amendment made on December 14, 2004, the term was renewable
annually for successive one-year periods at TELUS' sole discretion with a last
renewal right for a term ending December 31, 2008. Any renewal beyond December
31, 2008 requires the mutual agreement of the parties. In the event of
termination, there will be in most instances a two-year transition period and
TELUS will have a licence to use the then current software and other technology
on a non-exclusive basis, allowing TELUS to properly manage the transition to
new technology. TELUS has renewed the Verizon Agreement for 2005, and as at
December 14, 2004, the term of the agreement was further extended to December
31, 2008 without any transition period.

The Verizon Agreement provides for the following annual payments to be made by
TELUS (including both licence purchase prices and fees to be paid for all other
property rights and services provided or granted to TELUS under the Verizon
Agreement): U.S. $155 million during the initial term (2001), U.S. $100 million
in the first renewal term (2002), U.S. $20 million in 2003 and in each
subsequent annual renewal term up to December 31, 2008. As amended on
December 14, 2004, annual payments in the aggregate of U.S. $82 million for the
years 2005 to 2008 were reduced to an aggregate nominal amount of only four
U.S. dollars for that time period.

Genuity software and related technology and services

In order to obtain regulatory approvals for the merger between GTE Corporation
and Bell Atlantic Corporation, GTE Corporation transferred substantially all of
its Internet business into a separate public corporation known as Genuity Inc.
(formerly GTE Internetworking) prior to the closing of the merger.

Effective June 30, 2000, Genuity Inc. and its subsidiary, Genuity Solutions
Inc. (collectively, "Genuity"), and TELUS entered into a Brand, Technology and
Co-Marketing Agreement (the "Genuity Agreement") that was similar to the GTE
Agreement. Subject to rights of early termination in certain instances, the
initial term of the Genuity Agreement was to expire on January 31, 2009, during
which term TELUS was not required to make any payments directly to Genuity and
TELUS' payments to Verizon under the Verizon Agreement constituted sufficient
consideration in that regard.

On or about July 24, 2002, Verizon announced that it would not exercise its
right to reacquire control of Genuity Inc. On November 27, 2002, Genuity Inc.
together with Genuity Solutions Inc. and certain other affiliates
(collectively, the "Debtors") filed voluntary petitions for relief under
chapter 11 of the United States Bankruptcy Code. On February 4, 2003, the
Debtors sold substantially all of their assets and operations to Level 3
Communications Inc. and certain of its subsidiaries (collectively, "Level 3").

Level 3 Communications Inc.

By consensus of the interested parties, the Genuity Agreement was terminated as
of the closing of the sale of the Debtors' assets to Level 3, and TELUS and
Genuity ended their further rights and obligations with respect to each other
under the Genuity Agreement. Effective as of June 25, 2003, the Genuity
Agreement was reinstated, with certain modifications, between TELUS and Level
3. Level 3 was, in large measure, substituted as the contracting party in place
of Genuity. Such modified agreement between TELUS and Level 3 (the "Level 3
Agreement"), among other things, designates Level 3 as the first preferred
supplier to TELUS over Verizon on IP Services (as defined in the Level 3
Agreement) and Verizon as the first preferred supplier to TELUS over Level 3 on
the remaining Telecommunications Services, provides for continued rights to
certain pre-existing Genuity software and other intellectual property, and sets
out joint marketing and non-compete provisions. The Level 3 Agreement
terminated on June 30, 2005.

TELUS had negotiated wholesale agreements with Verizon and Level 3 including
agreements to route traffic onto Verizon's and Level 3's U.S. and international
network.

Directory Business

In 2001, TELUS sold its directory advertising services business to Verizon
Information Services - Canada Inc. ("VIS"), a subsidiary of Verizon. At the
same time, various TELUS subsidiaries and VIS entered into a series of
commercial arrangements whereby VIS acquired the exclusive right to publish
TELUS directories and provide on-line directories on TELUS portals, in Canada
and within 40 miles of the Canada-U.S. border, for an initial term of 30 years
with certain renewal rights thereafter, and TELUS agreed not to compete with
this business for the terms of the agreement.

On November 9, 2004, Verizon announced that it had completed a transaction to
sell VIS to Advertising Directory Solutions Holdings Inc. ("ADSHI"), an
affiliate of Bain Capital. On May 25, 2005, the Yellow Pages Group announced
that it, through Yellow Pages Income Fund had completed the purchase of ADSHI
from an affiliate of Bain Capital.


LEGAL PROCEEDINGS

On May 8, 1998, an action was commenced against BC TEL (now TCI) by certain
holders of the $117.75 million principal amount of First Mortgage Bonds, 11.35
per cent Series AL (the "Bonds") which were redeemed by BC TEL on December 30,
1997. The action alleged that the Bonds were improperly redeemed and claimed
damages as a result thereof. TCI successfully defended the action, which was
dismissed by the Ontario Superior Court of Justice in January 2003. On June 8,
2005, the Ontario Court of Appeal overturned the lower court decision and ruled
that the redemption of the Bonds breached the terms of the First Mortgage
Bonds. The Court of Appeal referred the matter back to the lower court for an
assessment of damages. On January 26, 2006, the Supreme Court of Canada denied
TCI's leave to appeal the decision of the Court of Appeal. TELUS accrued an
estimate of damages, which was included in financing costs for the second
quarter of 2005. Should the assessed damages be significantly different from
management's expectations, a material adjustment could be recorded in the
Company's Statements of Income.

On December 16, 1994, the TWU filed a complaint against BC TEL with the
Canadian Human Rights Commission (the "CHRC"), alleging that wage differences
between unionized male and female employees in British Columbia were contrary
to the equal pay for work of equal value provisions in the Canadian Human
Rights Act. In December 1998, the CHRC advised it would commence an
investigation of the TWU complaint and following the investigation of
preliminary matters referred the complaint to conciliation under the Canadian
Human Rights Act. Conciliation did not result in resolution and the matter was
referred back to the Commission for further investigation. Included in the
terms of the ratified settlement of the 2005 collective agreement between TELUS
and the TWU, was a letter of agreement under which the Company has agreed to
establish a pay equity fund of $10,000,000 to be paid out to persons covered by
the complaint subject to the TWU's withdrawal of the complaint and the CHRC's
acceptance of and concurrence that the complaint is withdrawn and settled. On
December 21, 2005, the TWU withdrew and discontinued this complaint.
Subsequently, in a letter dated January 30, 2006 TELUS was advised by the CHRC
that it would take no further proceedings and close its file on the matter.

Two lawsuits were commenced against TELUS and other defendants in the Alberta
Court of Queen's Bench on December 31, 2001 and January 2, 2002 respectively,
by plaintiffs alleging to be either members or business agents of the TWU. In
one action, the three plaintiffs alleged to be suing on behalf of all current
or future beneficiaries of the TELUS Corporation Pension Plan ("TCPP"), and in
the other action, the two plaintiffs allege to be suing on behalf of all
current or future beneficiaries of the TELUS Edmonton Pension Plan ("TEPP").
The statement of claim in the TCPP-related action named TELUS, certain of its
affiliates and certain present and former trustees of the TCPP as defendants,
and claims damages in the sum of $445 million. The statement of claim in the
TEPP-related action named TELUS, certain of its affiliates and certain
individuals who are alleged to be trustees of the TEPP and claims damages in
the sum of $15.5 million. In May 2002, the statements of claim were amended by
the plaintiffs and include allegations, inter alia, that benefits provided
under the TCPP and TEPP are less advantageous than the benefits provided under
the respective former pension plans, contrary to applicable legislation, that
insufficient contributions were made to the plans and contribution holidays
were taken and that the defendants wrongfully used the diverted funds, and that
administration fees and expenses were improperly deducted. TELUS has filed
statements of defence to both the original and the amended statements of
claims. As a term of settlement of the 2005 collective agreement between TELUS
and the TWU, the TWU has agreed to not provide any direct or indirect financial
or other assistance to the plaintiffs in these actions, and to communicate to
the plaintiffs the TWU's desire and recommendation that these proceedings be
dismissed or discontinued. TELUS has been advised by the TWU that the
plaintiffs have not agreed to dismiss or discontinue these actions. While the
likelihood of the actions being determined adversely against TELUS is still
being evaluated, but TELUS believes it has good defences to the actions. Should
the lawsuits continue because of the actions of the court, the plaintiffs or
for any other reason, and their ultimate resolution differ from management's
assessment and assumptions, a material adjustment to the Company's financial
position and the results of its operations could result.

A class action was brought August 9, 2004, under the Class Actions Act
(Saskatchewan), against a number of past and present wireless service providers
including the Company. The claim alleges that each of the carriers is in breach
of contract and has violated competition, trade practices and consumer
protection legislation across Canada in connection with the collection of
system access fees, and seeks to recover direct and punitive damages in an
unspecified amount. Similar proceedings have been filed by or on behalf of
plaintiffs' counsel in other provincial jurisdictions, but will not proceed
until the Saskatchewan action has been decided. The class has not been
certified. The Company believes it has good defences to the action.

FOREIGN OWNERSHIP RESTRICTIONS

Certain subsidiaries of TELUS or partnerships in which TELUS has a controlling
interest,as Canadian carrier, holders of radio authorizations or licences, and
holders of broadcast distribution licences, are required by the
Telecommunications Act (Canada) (the "Telecommunications Act") the
Radiocommunication Act (Canada) (the "Radiocommunication Act") and a direction
to the 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. After the 2006 legal entity restructure, TELUS filed
with the CRTC the requisite documentation affirming TCC's status as a Canadian
carrier. TELUS further intends that TCC will remain controlled by TELUS and
that it will ensure that TCC remains "Canadian" for the purposes of these
ownership requirements.

The Telecommunications Act also provides 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 must be owned by Canadians and TELUS must
not otherwise be controlled in fact by non-Canadians. To the best of TELUS'
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.

The regulations under the Telecommunications Act provide Canadian carriers and
carrier holding companies, such as TELUS, with the time and ability to rectify
ineligibility resulting from insufficient Canadian ownership of voting shares.
Under these 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:

(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 distribution
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.

REGULATION

General

The provision of telecommunications service in Canada is regulated by the
Canadian Radio-television and Telecommunications Commission (the "CRTC")
pursuant to the Telecommunications Act. In addition, the provision of cellular
and other wireless services using radio spectrum is subject to regulation and
licensing by Industry Canada pursuant to the Radiocommunication Act.

The Telecommunications Act gives the CRTC the power to forbear from regulating
certain services or classes of services if it finds that the service or class
of service is subject to a degree of competition which is sufficient to protect
the interests of customers. In December 1996, the CRTC confirmed an earlier
decision to forbear from regulating the entire portfolio of wireless and paging
services. However, some of these services continue to be subject to CRTC
regulation for certain matters, including network access and interconnection
issues. The CRTC has also forborne from regulation of a number of wireline
services, including interexchange voice services, wide area network services
and retail Internet services. Wireline services are in general subject to a
much greater degree of regulation than wireless services.

The major categories of telecommunications services provided by TELUS that are
subject to rate regulation or have been forborne from rate regulation are as
follows:

Regulated services                     Forborne services (not subject to rate
                                       regulation)
-------------------------------------------------------------------------------
* Residential wireline services in     * Non-incumbent local exchange carrier
  incumbent local exchange carrier       services
  regions                              * Long distance services
* Business wireline services in        * Internet services
  incumbent local exchange carrier     * International telecommunication
  regions                                services
* Competitor services                  * Interexchange private line services(1)
* Public telephone services            * Certain data services
                                       * Cellular, enhanced specialized
                                         mobile radio and digital personal
                                         communications services
                                       * Other wireless services, including
                                         paging
                                       * Sale of customer premises equipment

(1) Forborne on routes where one or more competitors are offering or providing
service at DS-3 or greater bandwidth.

In 2005, the CRTC undertook a review of the framework for the regulation of
residential and business local exchange services. The CRTC's decision on local
forbearance is expected to determine the timing and the conditions under which
forbearance will be granted. The CRTC's decision is anticipated in the first
half of 2006.

In 2005, the federal government undertook a review of Canada's
telecommunications policy and regulatory framework. The review panel, reporting
to the Minister of Industry, was asked to provide recommendations on how to
modernize Canada's telecommunications framework in order to benefit Canadian
industry and consumers. The report is expected to be presented in the first
half of 2006.

Regulation of local services

In 1997, the CRTC issued Decision 97-8. This decision, together with several
later decisions and orders, effectively opened Canada's local switched services
voice market to full competition. Additionally, in Decision 97-9 the CRTC
adopted a four-year price cap regulatory regime for a number of local services
provided by the ILECs, which placed price caps on the amount by which rates for
these services could be increased but which also allowed the ILECs to respond
more quickly and flexibly to competitive conditions in their local markets than
under the previous regulatory system. This decision was followed in 2002
(Decision 2002-34), with a second four-year price cap regulation period for
TELUS. The four-year price cap regulation period was extended to five years,
ending May 31, 2007, by the CRTC in Decision 2005-69.

TCC is subject to regulation as an ILEC in Alberta, B.C. and in eastern Quebec.
On July 31, 2002, the CRTC issued Decision 2002-43 adopting the first price cap
regulatory regime for TELUS Communications (Quebec) similar to the manner
adopted in Decision 2002-34 for the larger ILECs. Local competition in the
incumbent operating territory of TELUS Quebec was allowed in September 2002
following Telecom Order CRTC 2001-761.

In other areas of Canada, TELUS operates as a CLEC. TELUS has received
regulatory approval to operate as a CLEC in Brampton, Burlington, Chatham,
Cooksville, Guelph, Hamilton, Kanata, Kingston, Kitchener, London,
Malton-Mississauga, Oakville, Oshawa, Ottawa-Hull, Roxboro, St. Catherines,
Thornhill, Toronto, Unionville, and Windsor in the province of Ontario; in
Boucherville, Chicoutimi, Chomedey, Drummondville, Ile Perrot, Le Gardeur,
Lac-Megantic, Levis, Longueuil, Lorretville, Montreal, Pont-Viau, Quebec City,
Riviere-du-Loup, Saint-Hyacinthe, Saint-Jovite, Saint-Vincent-de-Paul,
Sainte-Geneviere, Sainte-Rose, Sainte-Therese, Sherbrooke, and Trois-Rivieres
in the province of Quebec; and in Regina and Saskatoon in the province of
Saskatchewan.

Price cap regulation

Price cap regulation applies to a basket of local services provided by ILECs.
On May 30, 2002, the CRTC issued Decision 2002-34 and established a second
four-year price cap regulation period. This four-year price cap regulation
period was extended to five years by the CRTC in Decision 2005-69. The CRTC
modified the price cap basket structure and established multiple baskets for
price capped services. In the initial four-year price cap period, there was one
overall price cap basket and three sub-baskets. The current price cap basket
structure has seven separate baskets for residential services in non high-cost
serving areas, residential services in high-cost serving areas, business
services, other capped services, competitor services, services with frozen
rates and payphones. While TELUS has a degree of flexibility to raise and lower
rates in response to market pressures, prices within baskets are capped using a
formula that depends on the relationship between the inflation rate as measured
by the chain-weighted Gross Domestic Product Price Index and an estimate of the
telephone companies' productivity gains, which the CRTC has set at 3.5 per cent
for each year of the current price cap regulation regime, irrespective of the
unique operating conditions of each telephone company. On average, rates for
basic residential services should not increase unless inflation goes above 3.5
per cent whereas business services rates are allowed to increase by the annual
inflation rate. Initially, the CRTC established a four-year price cap period,
but in Decision 2005-69, the Commission added a fifth year to the price cap
period. The current price cap period is scheduled to end on May 31, 2007. The
rates for payphone services will remain at current levels until the CRTC
reviews payphone service policy issues. For specific details on price cap
constraints, see Note 3 to the Annual Consolidated Financial statements, on
page 72 of the Financial Review in TELUS' 2005 Annual Report.

TELUS Quebec became subject to price cap regulation in 2002, after previously
being regulated on a rate of return basis. In Decision 2002-43, issued on
July 31, 2002, the CRTC established a regulatory framework for TELUS Quebec
that is directly comparable to the price cap regulation regime set out in
Decision 2002-34 for the large ILECs. In Decision 2005-70, the CRTC extended
the price regulation period for TELUS Quebec so that it now ends on July 31,
2007.

The CRTC stated in Decisions 2005-69 and 2005-70 that it will be initiating a
review of the price regulation framework for TCI and TELUS Quebec in the first
half of 2006 in order to establish the price regulation framework that will be
in effect beginning June 1, 2007.

On February 16, 2006, the CRTC determined that the funds that had accumulated
in TCI's and TELUS Quebec's deferral accounts in the current price cap period
should be used to extend broadband service in rural and remote areas (95%) and
to enhance access to telecommunications services for disabled persons (5%). The
CRTC also determined that the recurring balance in the deferral accounts and
the required productivity adjustment to the residential services basket on June
1, 2006 will be passed on to residential customers in non high-cost serving
areas through reduced rates. As a result, no new funds will be added to these
deferral accounts.

Quality of Service. On March 24, 2005, the CRTC issued Retail quality of
service rate adjustment plan and related issues, Decision 2005-17 in which it
finalized the retail quality of service rate adjustment plan. The rate
adjustment plan sets the maximum rate adjustment at 5% of local service
revenues and this amount is divided equally among the 13 quality of service
indicators. For each quality of service indicator where the average annual
performance is below the standard, a rate adjustment is triggered in a varying
amount based on the degree that the average performance is below the standard.
In addition, if the results for a quality of service indicator are below the
standard for five or more months during the year, but the average performance
is above the standard, a rate adjustment is also triggered. The rate adjustment
plan allows an ILEC to apply to the CRTC to exclude the impact of natural
disasters or other adverse events beyond the control of the company from its
quality of service results on a case-by-case basis.

TELUS applied to the CRTC to adjust its quality of service results to take into
account three adverse events, all of which occurred during the latter half of
2003. These events were severe forest fires in the interior of BC and
southwestern Alberta, a major cable cut in Vancouver and unprecedented flooding
in the lower mainland. TELUS is awaiting the CRTC's decision on this
application. TELUS will also be applying to the CRTC to adjust its quality of
service results to take into account a series of floods in southern Alberta
during the month of June 2005 that resulted in severe damage to the Company's
and customers' facilities as well as the impact of TELUS' labour disruption in
2005 on the Company's ability to meet quality of service standards on retail
and competitor services.

Local competition framework

The regulatory framework for local services competition has a number of
components, the more important of which are summarized below.

Unbundling of Essential Facilities. In 1997, in an effort to foster
facilities-based competition in the provision of telecommunications services
the CRTC determined in Decision 97-8 that ILECs must make certain "essential or
near-essential facilities" available to CLECs, at rates based on the ILEC's
incremental cost plus an approved mark-up. The CRTC has defined essential
facilities as facilities which are monopoly controlled, required by competitors
as an input to provide services and which cannot be economically or technically
duplicated by competitors (which should include central office codes,
subscriber listings and certain local loops in high-cost serving areas).
Initially, for a five-year period, the ILECs were required to provide certain
non-essential facilities, which the CRTC deemed to be near essential, such as
local loop facilities in low cost areas and transiting arrangements, at prices
determined as if they were essential facilities. In Order CRTC 2001-184, the
CRTC extended the period of time during which near-essential facilities in
low-cost areas must be made available to competitors at mandated rates. This
obligation on the part of the ILECs will continue until such time as the market
for near essential loops and transiting arrangements is competitive.

Competitor Services. On February 3, 2005, the CRTC issued Competitor Digital
Network Services, Decision 2005-6, and expanded the services and facilities
that the ILECs are required to make available to competitors and wireless
service providers to include digital network access ("DNA") intra-exchange,
central office channelization and non-forborne metropolitan inter-exchange
facilities. Prior to Decision 2005-6, Competitor Digital Network ("CDN)
Services only included the Access and Link components of DNA. To mitigate the
revenue loss resulting from the introduction of CDN Services, the CRTC has
allowed the ILECs to draw down their deferral accounts by an amount equal to
the initial revenue reduction.

Traffic termination arrangements. A "bill and keep" mechanism, which applies to
traffic that is interchanged between local service carriers, was expanded to
include both local and toll traffic in Decision 2004-46. Additionally,
exchanges have been consolidated to form local interconnection regions. Under
the bill and keep mechanism, all local services carriers terminate each other's
traffic within the local interconnection region, but do not specifically
compensate each other for the traffic termination functions that they perform.
Where the exchange of traffic between local exchange carriers is not balanced,
a local carrier is compensated for terminating traffic in accordance with a
mutual per-minute traffic termination scheme based on CRTC-approved cost based
tariffs.

Mandated resale. With the exception of subscriber listings, the ILECs are
required to make all of their residential local services available for resale.
In contrast to regulatory decisions in the U.S., the CRTC did not mandate the
provision of these services to resellers at discounted or wholesale rates,
deciding, among other things, that the rates for residential local services are
already priced below cost.

Regulation of CLECs. CLECs own or operate local transmission facilities, which
means that they must be a "Canadian carrier" as defined in the
Telecommunications Act. Canadian carriers are subject to foreign ownership
restrictions. CLECs are required to file intercarrier agreements and tariffs
for services provided to other local carriers but not for services that they
provide to end-users. They are also subject to certain obligations, including
the provision of 9-1-1 and message relay services, the protection of customer
privacy, and the provision of information to their customers and the CRTC
regarding their billing and payment policies.

Contribution and portable subsidies. The cost to local exchange carriers of
providing the basic level of residential services in high cost serving areas
(as required by the CRTC) is higher than the amounts the CRTC allows the local
exchange carriers to charge for the level of service. Accordingly, the CRTC
collects contribution payments from all Canadian telecommunication service
providers (including voice, data and wireless service providers) that are then
disbursed as portable subsidy payments to subsidize the costs of providing
residential telephone services in these high-cost serving areas. The portable
subsidy payments are paid based upon a total subsidy requirement calculated on
a per line/per band subsidy rate. The CRTC currently determines, at a national
level, the total contribution requirement necessary to pay the portable
subsidies and then collects contribution payments from the Canadian
telecommunication service providers, calculated as a percentage of their
telecommunication service revenue. Internet, paging and terminal equipment
revenues are exempt from the revenue charge. In November 2005, the CRTC
finalized the contribution revenue percentage charge for 2005 at 1.03 per cent
and set an interim rate for 2006 at 1.03 per cent as well (see "Management's
Discussion and Analysis - Risks and risk management - Section 10 Regulatory -
Price cap regulation" in TELUS' 2005 Annual Report - Financial Review).

The portable subsidy mechanism provides a portable subsidy for every
residential local customer in high-cost serving areas served by an ILEC. The
portable subsidy amounts for each high-cost band in the serving territories of
the large ILECs are updated annually by the CRTC.

Co-location. Co-location is an arrangement that allows ILEC customers and
competitors to place their transmission facilities in the ILECs' central
offices, thereby allowing competitors to configure their networks in a more
efficient manner. In Decision 97-15, the CRTC ruled that, subject to space
availability, both physical and virtual co-location must be provided to
"Canadian carriers" pursuant to a tariffed service or an interconnection
agreement. This decision has been subsequently extended to registered ADSL
providers.

Telecommunications access to public rights-of-way. On January 25, 2001, the
CRTC issued Order CRTC 2001-23, which ruled on a dispute over Ledcor Industries
Limited's access to rights-of-way in the City of Vancouver. In this order, the
CRTC confirmed its jurisdiction over telecommunications access to public
rights-of-way; determined that municipalities cannot charge carriers rent for
access to, or occupancy of, rights-of-way; indicated that carriers are
responsible for the out-of-pocket expenses associated with gaining access to
rights-of-way; and decided that it is not appropriate for municipalities to
impose upon carriers a requirement to construct additional capacity beyond
their needs. The principles established in this proceeding will generally be
applicable to other municipalities. However, the Federation of Canadian
Municipalities appealed the CRTC's order to the Federal Court of Appeal. In its
decision, the Federal Court of Appeal upheld the CRTC's order and affirmed the
CRTC's jurisdiction to regulate on matters respecting access to public
rights-of-way by telecommunications companies and cable-TV undertakings. On
February 28 and March 3, 2003, a number of municipalities filed an application
for leave to appeal the Federal Court of Appeal's decision to the Supreme Court
of Canada. On September 4, 2003, the Supreme Court of Canada decided not to
hear the appeal and the significant claims for annual fees by the cities will
not be payable. As a result, TELUS was put in a more favourable position to
negotiate fair and reasonable terms of access to municipal rights-of-way for
placement of facilities.

Building access. In June 2003, the CRTC issued Decision 2003-45, which, set out
the principles for access by all local telephone companies to equipment and
wiring in multi-dwelling units. The decision reduced considerably the
uncertainty TELUS faced in gaining access to such buildings. From a financial
perspective, the decision reduced TELUS' exposure to potentially significant
increased costs of building access. In November 2003 an association
representing building owners was granted leave to appeal Decision 2003-45 to
the Federal Court of Appeal. However, the Federal Court dismissed this appeal
in June 2004.

Pricing safeguards. On April 29, 2005, the CRTC issued Review of price floor
safeguards for retail services and related issues, Decision 2005-27 and
modified selected pricing safeguards for retail tariff services. The CRTC did
not change the imputation test for stand alone services and maintained an
imputation test based on the underlying costs of these services. The imputation
test for any service or service bundle that incorporates a Category I
Competitor Service was changed to include the tariffed rate for the Category I
Competitor Service. The previous imputation test included the tariffed rate for
only those Category I Competitor Services that were deemed essential. Category
II Competitor Services continue to be included in imputation tests based on
their underlying costs. The CRTC also changed the imputation test for volume
and term contracts so that every per-unit rate in a rate grid must pass the
imputation test. Previously, services available under volume and term contracts
only had to pass the imputation test at the service level (or at the rate band
level in the case of access services). There was no requirement that every rate
in a volume and term rate grid had to pass the imputation test. While the new
pricing safeguards are somewhat more restrictive than the previous safeguards,
the CRTC in Decision 2005-27 did not abandon the basic concept of an imputation
test based on underlying costs. Decision 2005-27 did not approve the radical
changes to the pricing safeguards put forward by the CRTC or proposals for
guaranteed margins put forward by the competitors.

Quality of Service. On March 31, 2005, the CRTC issued Finalization of quality
of service rate rebate plan for competitors, Decision 2005-20 in which it
finalized the quality of service rate rebate plan for competitors. The rate
rebate plan sets the total potential rebate amount ("TPRA") at 5% of the
revenues for services provided to a competitor in the month. The total rebate
payable in a month is equal to the TPRA time the number of quality of service
indicators that are missed divided by the total number of quality of service
indicators active in that month. The rate rebate plan allows an ILEC to apply
to the CRTC to exclude the impact of circumstances beyond the control of the
company from its quality of service results on a case-by-case basis.

Promotions. On April 27, 2005, the CRTC issued Promotions of local wireline
services, Decision 2005-25. The CRTC determined that promotions are a
legitimate business practice that should be permitted, subject to the following
competitive safeguards: promotions involving local wireline service must be
equally available and promoted across one or more entire rate bands; must pass
an imputation test; cannot exceed six months; cannot lock customers in beyond
the promotion period; and there must be a minimum six-month period between the
expiry of a promotion and a new promotion involving the same wireline service.
Decision 2005-25 strikes a reasonable balance between protecting the interests
of competitors and permitting the ILECs to respond to competition.

Voice over Internet Protocol ("VoIP"). On May 12, 2005, the CRTC issued
Regulatory framework for voice communication services using Internet Protocol,
Decision 2005-28. The CRTC determined that local VoIP services are functionally
equivalent to local exchange service and that the current regulatory framework
governing local competition will apply to local VoIP service providers. The
CRTC determined that ILECs may only provide VoIP services in their incumbent
territories in accordance with approved tariffs.

On July 28, 2005 Aliant Telecom Inc., Bell Canada, Saskatchewan
Telecommunications, Telebec, societe en commandite, and TELUS Communications
Inc. petitioned the Governor in Council to intervene and eliminate the economic
regulation of VoIP services. In addition, Bell Canada, Saskatchewan
Telecommunications and TELUS have appealed Decision 2005-28 to the Federal
Court to eliminate the application of the winback rule on VoIP services.

Regulation of long distance services

In 1992, the CRTC issued Decision 92-12 which removed most of the restrictions
on resale in the Canadian public long distance voice market and established the
terms and conditions for entry by service providers which own and operate their
own transmission facilities. This decision also established the rules which
mandate the provision of equal ease of access to services of long distance
carriers, the protection of competitor confidential information, the methods
for interconnection by long distance carriers and resellers to the local
telephone networks of local exchange carriers and the requirement for the
payment of a contribution by long distance carriers and resellers to local
exchange carriers which is used to subsidize the costs of providing below-cost
local telephone services. In Decision 93-17, the CRTC extended the terms and
conditions for long distance competition established in Decision 92-12 to the
Alberta market.

In Decision 97-19, issued in December 1997, the CRTC concluded that the long
distance and toll-free markets were sufficiently competitive to protect the
interests of customers, and that it would be appropriate to forbear from
regulation of these services. As a result, TELUS is no longer required to file
and obtain CRTC approval of tariffs specifying rates for such services.
However, TELUS is required to provide the CRTC, and to make publicly available,
rate schedules setting out the rates for North American basic long distance
service, and to update them within 14 days of any change in such rates. In
addition, the CRTC has placed a cap on these schedules so that the weighted
average rate for each schedule will not be allowed to increase. These
conditions were reviewed and retained by the CRTC as part of the review of the
price cap regulation regime that applies to TELUS.

Regulation of wireless services

The use of radio spectrum is subject to regulation and licensing by Industry
Canada pursuant to the Radiocommunication Act, which is administered by
Industry Canada. All of TELUS'wireless communications services depend on the
use of radio frequencies.

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
"Management's Discussion and Analysis - Risks and risk management - Section 10
Regulatory - "Radiocommunications licences regulated by Industry Canada" and
"Foreign ownership restrictions" in TELUS' 2005 Annual Report - Financial
Review).

Radiocommunications spectrum licences

TELUS holds radiocommunication spectrum licences and authorizations for a
variety of wireless services and applications, both mobile and fixed. TELUS
holds significant 1.9 GHz PCS spectrum throughout Canada, is the leading holder
of 800 MHz SMR/ESMR spectrum in all of the major Canadian markets, and holds 25
MHz of cellular 800 MHz spectrum in Alberta, B.C. and eastern Quebec. In
addition, TELUS holds various radio spectrum licences for paging services,
analogue two-way radio services, and legacy mobile-telephone and other
miscellaneous wireless services.

PCS/cellular. Including the acquisition of TELUS Quebec, but before the 2001
PCS spectrum auction and the acquisition of Clearnet Communications, TELUS held
authorizations for 10 MHz of 1.9 GHz PCS spectrum and 25 MHz of cellular
spectrum in Alberta, B.C. and eastern Quebec. With the acquisition of Clearnet,
TELUS acquired an additional 30 MHz national PCS licence, but was required to
return 20 MHz of PCS spectrum in Alberta, B.C. and the TELUS Quebec territory
to Industry Canada to comply with Industry Canada's spectrum cap limitation,
which limitation has since been removed. In the PCS spectrum auction held in
early 2001, TELUS obtained 10 MHz of additional PCS spectrum in the Industry
Canada defined tier 2 licence areas of Nova Scotia and Prince Edward Island,
southern Quebec, eastern Ontario, southern Ontario and Manitoba (see
"Management's Discussion and Analysis - Risks and risk management - Section
10.3 Regulatory - Foreign ownership restrictions" in TELUS' 2005 Annual Report
- Financial Review).

SMR/ESMR. TELUS offers its unique digital Mike ESMR service in all major
Canadian markets using 800 MHz SMR/ESMR spectrum. TELUS holds varying amounts
of SMR/ESMR spectrum in different areas of Canada, but has in excess of 10 MHz
of ESMR spectrum available to it in each of the major Canadian market areas.

Other. TELUS provides one-way messaging service (alpha-numeric and numeric
paging) regionally and nationally with spectrum in the 150 and 931 MHz range in
Alberta, B.C., the TELUS Quebec region of the province of Quebec and via
roaming arrangements. TELUS currently operates a variety of other two-way radio
services across the country in various spectrum bands. TELUS also operates the
Autotel mobile telephone service in B.C. in the 150 MHz band and a number of
microwave transmission links.

Licence terms and renewals. Currently, spectrum licences in Canada for PCS and
cellular spectrum will expire in 2011 and 2013 (see "Management's Discussion
and Analysis - Risk and Uncertainties - Section 10.3 Regulatory -
Radiocommunications licences regulated by Industry Canada" and "Foreign
Ownership Restrictions" in TELUS' 2005 Annual Report - Financial Review). The
spectrum licences for the auctioned 24/38 GHz and PCS spectrum have a ten-year
term from the date of issuance. Most other radiocommunications spectrum
licences are renewed annually (see "Management's Discussion and Analysis -
Risks and risk management - Section 10.3 Regulatory - Radiocommunication
licences regulated by Industry Canada" in TELUS' 2005 Annual Report - Financial
Review).

Wireless Number Portability. Wireless number portability enables consumers to
retain their telephone number when switching between wireless service providers
and when switching between wireline and wireless service. On December 20, 2005,
the CRTC issued Decision 2005-72 directing Bell Mobility, Rogers Wireless Inc.
and the wireless division of TELUS to implement wireless number portability in
British Columbia, Alberta, Ontario and Quebec where LEC-to-LEC local number
portability is currently in place by March 14, 2007. In other areas and for
other wireless carriers, wireless number portability (where LEC-to-LEC local
number portability is currently in place) for porting-out must be implemented
by March 14, 2007 and for porting-in must be implemented by September 12, 2007.

Broadcasting services

The provision of broadcasting services in Canada is regulated by the CRTC
pursuant to the Broadcasting Act (Canada) (the "Broadcasting Act"). This act
applies to all types of broadcasting activities including commercial off-air
radio and television broadcasting as well as the distribution of cable
television service and the provision of cable television services like
video-on-demand ("VOD").

The Broadcasting Act and its associated regulations give the CRTC the authority
to issue licences for specific categories of broadcasting undertakings and to
regulate the content provided and rates charged by each category of
broadcasting undertaking. In August 1996, the federal government issued its
policy under which "telecommunications common carriers" (as defined in the
Telecommunications Act) would be allowed to apply for broadcasting distribution
undertaking licenses to provide cable television service. In 1997, the CRTC
confirmed that new entrant broadcasting distribution undertakings, including
telecommunications common carriers, would not be rate regulated and would not
have an obligation to serve. However, the CRTC confirmed that entrants would
have to meet all the same content and carriage obligations as incumbent
distribution undertakings.

Bundled services

In March 1998, the CRTC issued Decision 98-4, in which it removed restrictions
on the joint marketing of wireless and wireline services and, subject to
certain regulatory requirements, permitted telephone companies to offer bundled
wireless and wireline services.

COMPETITION

TELUS expects continued strong competition in the wireline and wireless
businesses within both its ILEC and non-ILEC territories. The following is a
summary of the competitive environment in each of TELUS' principal markets and
geographic areas:

Wireline segment

TELUS companies have always experienced competition for data services, while
the long distance and local access voice services have faced competition since
1993 and 1998 respectively.

TELUS' wireline competitive environment is split into two regions, ILEC and
Non-ILEC, based on its treatment under CRTC rules. TELUS is an ILEC in Alberta,
B.C. and parts of Quebec, while it operates as a CLEC in the rest of Canada.
Where it competes as a CLEC, TELUS has significantly more freedom from
regulation than in the regions where it competes as the ILEC. As such its
competitive position differs greatly between the geographies. Generally TELUS
has higher market share in areas where it is the ILEC however that has been
changing over time.

Within TELUS' ILEC territories a number of competitors offer voice and data
service through a combination of their own facilities and unbundled network
elements provided by TELUS. The primary competitors are: BCE, Shaw
Communications, Allstream (a subsidiary of Manitoba Telecom Services Inc),
Rogers Telecom (formerly Sprint Canada), and Primus Telecommunications Canada.
Certain of these competitors have built extensive local fibre optic networks in
TELUS' ILEC service territories. All of these competitors are increasingly
integrating or bundling voice and data services in order to provide both
discounted and more extensive service offerings to customers.

TELUS is an Internet service provider in Alberta, B.C., and in parts of Ontario
and Quebec. In the residential sector and, to a lesser extent, the business
sector, cable-TV companies are also providing high-speed Internet access and
represent significant competition to the ILECs. Shaw Communications is the
primary competitor with TELUS in the provisioning of high-speed Internet
services to consumers in Alberta and B.C. ILEC regions; in Quebec ILEC regions
the primary competitor is Cogeco.

In recent years a number of new Internet based competitors have entered the
market for local and long distance voice services in TELUS' ILEC and non-ILEC
regions. These competitors utilize voice over Internet protocol ("VoIP")
technology to offer customers phone service over existing Internet connections.
In the past year, non-facilities based VoIP service providers (such as Vonage
and Skype) have had some success, however the cable companies including Shaw
Communications, Rogers, Videotron and Cogeco, are expected to be the more
capable competitors in this space having already captured more than 200,000
VoIP service subscribers in 2005. At present VoIP competitors are largely free
from regulatory burden, offering them significant flexibility in competing
against ILECs such as TELUS. Competition from VoIP competitors is expected to
intensify in 2006 and in coming years.

TELUS also faces competition from companies without wireline networks. Wireless
service providers offer rate plans and services that are intended to compete
directly with ILEC local services. Resellers of primary local exchange services
and smaller competitors in niches such as dial-around plans and calling card
services have been in operation in Alberta and B.C. for several years and also
present competition to TELUS' ILEC operations.

In its non-ILEC territories, TELUS' major competitors for wireline voice and
data services are the incumbent carriers. In most cases these competitors are
subsidiaries or affiliates of BCE Inc. The other primary competitors are
Allstream and Rogers Telecom with increasing competition beginning to emerge
from cable companies and municipal hydro company owned telecommunications
providers.

For higher bandwidth and other data services to businesses nationally, systems
integrators such as IBM Canada and EDS also represent a competitive threat as
they compete with TELUS not only in IT services but also in the provision of
data and voice network management and network integration services.


Wireless segment

TELUS offers wireless voice and data services to consumers and businesses
nationally on both the ESMR (branded Mike) and the PCS/cellular networks and
competes in both the prepaid and postpaid markets.

The primary competitors with TELUS are Bell Mobility and Rogers Wireless, both
of which have national networks, a broad offering of wireless voice and data
services for consumers and businesses, and a large existing customer base.
In April 2005, Virgin Mobile began offering services across Canada. Virgin
Mobile is a Mobile Virtual Network Operator ("MVNO") which is owned in part by
Bell Mobility and utilizes the Bell Mobility network for the provisioning of
services. Its strategy is to focus on simple prepaid products and services at
discounted prices by targeting the youth segment. In addition, both Bell
Mobility and Rogers Communications are supporting other MVNO partnerships with
cable companies and other resellers.

TELUS also competes with numerous national, regional and local-paging companies
for paging customers in Alberta, B.C., and eastern Quebec. TELUS offers a
number of wireless Internet offerings using the networks noted above as well as
wireless LAN services such as WiFi (802.11) in so-called "hotspots" and other
areas utilizing unlicensed spectrum. In offering wireless Internet and LAN
access service, TELUS competes, to a limited extent, with wireline business
Internet access providers. It also competes with major equipment manufacturers
for private radio engineered systems.


Other emerging competitive services

Over the longer term there are a number of factors that are expected to
increase competition in the communications industry. Of note is the competitive
escalation resulting from the continuing convergence of cable-TV, satellite,
computer, wireline and wireless technologies. In November 2005, TELUS
commercially launched TELUS TV within select neighbourhoods in the Edmonton and
Calgary markets and there are plans underway to launch it in other major
centres within its ILEC territories. In this segment, TELUS competes with
established video providers such as Shaw Communications, with direct broadcast
satellite companies, Bell ExpressVu and Star Choice and expects to compete with
Cogeco as well.

Competition is also intense in other areas as TELUS continues its growth into
emerging markets such as Web hosting and application services and human
resource (HR) process outsourcing.

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, 2005,
are shown below.

<TABLE>
<CAPTION>
Quarter ended (1)                  2005     2004      2003
<S>                                <C>      <C>       <C>
                                  -------------------------
March 31                           $0.20    $0.15     $0.15
June 30                            $0.20    $0.15     $0.15
September 30                       $0.20    $0.15     $0.15
December 31                       $0.275    $0.20     $0.15

<FN>
(1) Paid on the first business day of the next month.
</FN>
</TABLE>


TELUS' Board of Directors reviews its dividend rate quarterly. On November 10,
2005, TELUS announced that it was increasing its dividend to $0.275 per share
on the issued and outstanding Common and Non-Voting Shares. This 37.5% increase
was consistent with the Company's forward-looking dividend payout ratio
guideline of 45 to 55% of sustainable net earnings first set in October 2004.
TELUS' quarterly dividend rate will depend on an ongoing assessment of free
cash flow generation and financial indicators including leverage, dividend
yield and payout ratio.

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 and; 4) 1,000,000,000 Second Preferred shares without par value. 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. See "Market for Securities".

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.

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 members 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
members 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.

In 2005, with the requisite shareholder approval, the Articles of TELUS were
amended to remove cumulative voting for directors and replace it with a
provision permitting holders of common shares 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 in any 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 members 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 or 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 TELUS'
ongoing compliance with the foreign ownership provisions of the
Telecommunications Act, the Radiocommunication Act and the Broadcasting Act. As
well, holders of Common Shares will have the right, 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.

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 members 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 members 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 Rights Plan

TELUS adopted a shareholder rights plan (the "Rights Plan") in March 2000 and
issued one right (a "Series A Right") in respect of each Common Share
outstanding as at such date and issued one right (a "Series B Right") in
respect of each Non-Voting Share outstanding as of such date. The Rights Plan
has a term of 10 years subject to shareholder confirmation every three years.
The Rights Plan was amended and confirmed as amended by the shareholders first
in 2003 and then in 2005 and as currently stated will again require
confirmation in 2008. Each 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 voting shares of TELUS
(otherwise than through the "Permitted Bid" requirements of the Rights Plan) to
purchase from TELUS $320 worth of Non-Voting Shares for $160 (i.e., at a 50 per
cent discount).

RATINGS

Ratings information contained in Management's Discussion and Analysis --
Section 7.7 Credit Ratings in TELUS' 2005 Annual Report -Financial Review is
hereby incorporated by reference. Management's Discussion and Analysis is
available at www.sedar.com. 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.


A description of the rating categories applied to TELUS as at December 31, 2005
from each agency is below. The outlook or trend for TELUS from all agencies is
stable.


<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------
Institution   Rating                                        Outlook
<S>           <C>                                           <C>
--------------------------------------------------------------------------------------------------
              BBB" ratings indicate that there is           An Outlook indicates the direction
Fiich         currently expectations of low                 a rating is likely to move over a
              credit risk. The capacity for                 one to two-year period. Outlooks
              payment of financial commitments is           may be positive, stable or
              considered adequate but adverse               negative. A positive or negative
              changes in circumstances and                  Rating Outlook does not imply a
              economic conditions are more likely           rating change is inevitable.
              to impair this capacity. This is              Similarly, ratings for which
              the lowest investment grade                   outlooks are 'stable' could be
              category. The modifiers "+" or "-"            upgraded or downgraded before an
              may be appended to ratings "AA" to            outlook moves to positive or
              "CCC" to denote relative status               negative if circumstances warrant
              within major rating categories.               such an action.
--------------------------------------------------------------------------------------------------
              Long-term debt rated "A" is of                Each DBRS rating category is
DBRS          satisfactory credit quality.                  appended with one of three rating
              Protection of interest and                    trends - "Positive", "Stable", or
              principal is still substantial, but           "Negative". The rating trend helps
              the degree of strength is less than           to give the investor an
              that of AA rated entities. While              understanding of DBRS's opinion
              "A" is a respectable rating,                  regarding the outlook for the
              entities in this category are                 rating in question. However, the
              considered to be more susceptible             investor must not assume that a
              to adverse economic conditions and            positive or negative trend
              have greater cyclical tendencies              necessarily indicates that a rating
              than higher-rated securities.                 change is imminent.
              Long-term debt rated "BBB" is of
              adequate credit quality. Protection
              of interest and principal is
              considered acceptable, but the
              entity is fairly susceptible to
              adverse changes in financial and
              economic conditions, or there may
              be other adverse conditions present
              which reduce the strength of the
              entity and its rated securities.
              The ratings from "AA" to "C" 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.
--------------------------------------------------------------------------------------------------
              An obligation rated 'BBB' exhibits            Rating outlooks assess the
S&P           adequate protection parameters.               potential direction of a rating,
              However, adverse economic                     typically over a six-month to
              conditions or changing                        two-year period. An outlook does
              circumstances are more likely to              not necessarily precede a rating
              lead to a weakened capacity of the            change or CreditWatch placement.
              obligor to meet its financial                 Outlooks may be positive, negative,
              commitment on the obligation. The             stable, or developing and they
              ratings from 'AA' to 'CCC' may be             accompany all long-term credit
              modified by the addition of a plus            ratings except those on
              or minus sign to show relative                CreditWatch.
              standing within the major rating
              categories.
--------------------------------------------------------------------------------------------------
              Issuers rated "Baa" are subject to            A Moody's rating outlook is an
Moody's       moderate credit risk. They are                opinion regarding the likely
              considered medium-grade and as such           direction of a rating over the
              may possess certain speculative               medium term. Where assigned, rating
              characteristics. Moody's appends              outlooks fall into the following
              numerical modifiers 1, 2, and 3 to            four categories: Positive (POS),
              each generic rating classification            Negative (NEG), Stable (STA), and
              from 'Aa' through 'Caa'. The                  Developing (DEV -- contingent upon
              modifier 1 indicates that the                 an event).
              obligation ranks in the higher end
              of its generic rating category; the
              modifier 2 indicates a mid-range
              ranking; and the modifier 3
              indicates a ranking in the lower
              end of that generic rating
              category.
--------------------------------------------------------------------------------------------------
</TABLE>

See also "Material Contracts" on page 46 of this annual information form for
more information.

DIRECTORS AND OFFICERS

Directors

The names, municipalities of residence, principal occupations of the directors
of TELUS and the date the person became a director of TELUS are as set out
below. Currently, there are 12 directors on the TELUS Board.

Directors of TELUS
Name and municipality of             Director
residence                             since (1)       Principal occupation
--------------------------------   ------------   ----------------------------
R.H. (Dick) Auchinleck(3)(4)          2003        Corporate Director
Calgary, Alberta

A. Charles Baillie(2)                 2003        Corporate Director
Toronto, Ontario

Micheline Bouchard(2)                 2004        President and Chief Executive
Montreal, Quebec                                  Officer, ART Advanced
                                                  Research Technologies
                                                  (biomedical company)

R. John Butler  (4) (5-Chair)         1995        Counsel, Bryan & Company
Edmonton, Alberta                                 (law firm)

Brian A. Canfield (5)                 1993        Chair,TELUS Corporation

Point Roberts, Washington
Pierre Ducros(2)                      2005        President of P. Ducros &
Montreal, Quebec                                  Associes Inc.(investment and
                                                  administration firm)

Darren Entwistle                      2000        President and Chief Executive
Vancouver, B.C.                                   Officer, TELUS Corporation

Ruston E.T. Goepel(2)                 2004        Senior Vice President,Raymond
Vancouver, B.C.                                   James Financial Ltd.
                                                  (investment firm)

John S. Lacey (3-Chair) (4)           2000        Chairman, Alderwoods Group,
Toronto, Ontario                                  Inc.(funeral home operator)

Brian F. MacNeill (2 - Chair)         2001        Chairman, Petro Canada
Calgary, Alberta                                  (oil and gas company)

Ronald P. Triffo (4 - Chair) (5)      1995        Chairman, Stantec Inc.
Edmonton, Alberta                                 (engineering company)

Donald Woodley (3) (5)                1998        CEO and President,
Orangeville, Ontario                              GENNUM Corporation
                                                  (technology company)
-------------------------------------------------------------------------------
(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: Dick Auchinleck was employed by Gulf Canada for 25 years, retiring in
2001 as President and Chief Executive Officer of Gulf Canada Resources after
the sale of the company to Conoco Inc.; Charles Baillie was Chairman and Chief
Executive Officer of the Toronto-Dominion Bank from 1998 until 2003; Micheline
Bouchard was Corporate Vice-President and General Manager, Enterprise Services
Organization of Motorola Inc. in Chicago from 2001 to 2002 and Corporate
Vice-President and then President and Chief Executive Officer of Motorola
Canada Inc. from 1998 to 2000; Brian F. MacNeill was President and Chief
Executive Officer of Enbridge Inc. prior to January 2001; and Rusty Goepel was
Deputy Chairman of Goepel McDermid Inc. (subsequently acquired by Raymond James
Financial Ltd.) prior to 2001.

Officers

The name, municipality of residence and present and principal occupations of
each of the officers of TELUS, as of March 1, 2006, are as follows:

Officers of TELUS
Name and municipality of residence        Position held with TELUS
-------------------------------------------------------------------------------

Brian A. Canfield                     Chair,
Point Roberts, Washington             TELUS Corporation

Darren Entwistle                      President and Chief Executive Officer,
Vancouver, B.C.                       TELUS Corporation

Robert S. Gardner                     Senior Vice President and Treasurer
Vancouver, B.C.

Joseph R. Grech                       Executive Vice President,
Vancouver, B.C.                       TELUS Network Operations

Audrey T. Ho                          Vice President, Legal Services,
Vancouver, B.C.                       General Counsel and Corporate Secretary

Robert G. McFarlane                   Executive Vice President
Vancouver, B.C.                       and Chief Financial Officer

Joe M. Natale                         Executive Vice President and President,
Toronto, Ontario                      Business Solutions

Karen Radford                         Executive Vice President and President,
Montreal, Quebec                      Partner Solutions and TELUS Quebec

Kevin A. Salvadori                    Executive Vice President,
Vancouver, B.C.                       Business Transformation and
                                      Chief Information Officer

Judy A. Shuttleworth                  Executive Vice President,
Surrey, B.C.                          Human Resources

Eros Spadotto                         Executive Vice President,
Toronto, Ontario                      Technology Strategy

John Watson                           Executive Vice President and President,
Toronto, Ontario                      Consumer Solutions

Janet S. Yale                         Executive Vice President,
Ottawa, Ontario                       Corporate Affairs



All of the officers above have been engaged for the past five years in the
specified present principal occupations with TELUS, its subsidiaries,
affiliates or predecessors thereof, except as described as follows: Joseph R.
Grech held various executive positions with Cable & Wireless plc., the last of
which was the President, Global Carrier Services of Cable & Wireless plc., from
October 1999 to June 2000 at which time he joined TELUS as Executive Vice
President and President, Partner Solutions. He remained in that role until July
2004 until his responsibilities changed and he became Executive Vice President,
Technology & Operations. He held that position until November 2005 at which
point he assumed his current position; Janet Yale was President and Chief
Executive Officer of the Canadian Cable Television Association from 1999 until
she joined TELUS in 2003 as Executive Vice President, Government and Regulatory
Affairs. In 2004, she became Executive Vice President, Legal, Government and
Regulatory Affairs and in May 2005, she became Executive Vice President,
Corporate Affairs; Karen Radford was VP, Technology and Operations from 2000 to
2004 when she was promoted to her current position; Eros Spadotto was Executive
Vice President & Chief Technology Officer of TELUS Mobility from May 2000 to
November 2005 when he was promoted to his current position; John Watson was
Executive Vice President, Client Operations with TELUS Mobility from 2000 to
April 2005 when he was promoted to Executive Vice President and President,
Consumer Solutions: Robert Gardner was Director, Treasury from 2001 to 2002 and
Vice President and Treasurer from 2003 to November 2005 when he was promoted to
Senior Vice President and Treasurer; and Audrey Ho was Associate General
Counsel from 2000 to 2002 when she became Vice President, Legal Services. She
assumed the role of General Counsel in 2003 and Corporate Secretary in May
2004.

TELUS shares held by directors and officers

As at March 1, 2006, the directors and executive officers of TELUS, as a group,
beneficially owned, directly or indirectly, or exercised control or direction
over 131,163 Common Shares, which represented approximately 0.07 per cent of the
outstanding Common Shares and 886,959 Non-Voting Shares, which represented
approximately 0.53 per cent of the outstanding Non-Voting Shares.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Other than as disclosed, for the ten years ended December 31, 2005, TELUS is
not aware that any current director or officer of TELUS had been a director or
officer of another issuer which, while that person was acting 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, arrangements or
compromises with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets. In December 1998, J.S. Lacey was asked by a group
of shareholders to lead the Loewen restructuring, as Chairman of the Board, a
position he held at the time of Loewen's filing under Chapter 11 of the U.S.
Bankruptcy Code and the Companies' Creditors Arrangement Act (Canada).

For the ten years ended December 31, 2005, TELUS is not aware that any current
director or officer of TELUS had been a director or officer of another issuer
which, while that person was acting in that capacity, was the subject of a
cease trade or similar order or was subject to an event that resulted, after
the director or executive officer ceased to be a director or executive officer,
of the company being the subject of a cease trade or similar order that denied
the company relevant access to any exemption under securities legislation for a
period of more than 30 consecutive days.

MARKET FOR SECURITIES

TELUS Common Shares and Non-Voting Shares are listed on the Toronto Stock
Exchange ("TSX") under "T" and "T.NV" respectively and the TELUS Non-Voting
Shares are listed on the New York Stock Exchange under "TU". Beginning May 13,
2006, TELUS' Non-Voting Shares will trade on the TSX under the symbol "T.A".
TELUS 6.75% unsecured subordinate redeemable convertible debentures traded on
the Toronto Stock Exchange under "T.DB" until the Company redeemed them on
June 16, 2005. Monthly share prices and volumes for 2005 are listed below:

<TABLE>
<CAPTION>
TSX - Common and Non-Voting
-------------------------------------------------------------------------------
Month                 Common                          Non-Voting
<S>            <C>       <C>       <C>            <C>       <C>      <C>
               High($)   Low($)    Volume         High($)   Low($)   Volume
-------------------------------------------------------------------------------
January        37.07     35.13     15,362,152     35.94     33.65    11,263,372
-------------------------------------------------------------------------------
February       38.98     35.16     17,058,090     37.08     33.79    13,844,975
-------------------------------------------------------------------------------
March          40.00     37.72     20,051,663     38.96     36.41    17,837,786
-------------------------------------------------------------------------------
April          39.17     36.61     12,232,534     37.85     35.40     9,795,864
-------------------------------------------------------------------------------
May            42.40     37.65     17,603,078     40.65     36.35    12,932,283
-------------------------------------------------------------------------------
June           45.08     41.21     14,030,497     43.38     39.75    10,198,448
-------------------------------------------------------------------------------
July           44.74     41.75     12,493,240     43.58     40.45     7,675,894
-------------------------------------------------------------------------------
August         46.55     43.65     12,071,177     45.00     42.47     8,732,157
-------------------------------------------------------------------------------
September      49.99     44.90     13,624,241     48.84     43.55     9,912,221
-------------------------------------------------------------------------------
October        48.88     44.55     12,663,702     47.50     43.36    11,701,812
-------------------------------------------------------------------------------
November       48.95     44.41     17,092,016     47.20     43.17    12,805,052
-------------------------------------------------------------------------------
December       48.70     43.67     14,794,915     47.63     42.51    11,021,603
-------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
NYSE - Non-Voting
-------------------------------------------------------------------------------
Month	                  High ($)	          Low ($)	     Volume
<S>                       <C>                     <C>                <C>
-------------------------------------------------------------------------------
January	                  29.36	                  27.59	               781,200
-------------------------------------------------------------------------------
February	          29.98	                  27.15  	     1,004,000
-------------------------------------------------------------------------------
March                     32.30                   29.91              2,469,500
-------------------------------------------------------------------------------
April                     31.06                   28.47              2,275,700
-------------------------------------------------------------------------------
May                       32.69                   29.00              1,970,700
-------------------------------------------------------------------------------
June                      35.20                   31.91              1,954,600
-------------------------------------------------------------------------------
July                      35.47                   33.27              1,577,500
-------------------------------------------------------------------------------
August                    37.54                   34.86              1,801,600
-------------------------------------------------------------------------------
September                 41.46                   36.85              1,693,600
-------------------------------------------------------------------------------
October                   40.78                   36.57              2,178,300
-------------------------------------------------------------------------------
November                  39.60                   36.33              1,815,300
-------------------------------------------------------------------------------
December                  40.90                   36.77              2,641,800
-------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
TSX - 6.75% unsecured subordinate redeemable convertible debentures
-------------------------------------------------------------------------------
Month                    High ($)           Low ($)           Volume
<S>                      <C>                <C>               <C>
-------------------------------------------------------------------------------
January                  110.00             106.60             28,271
-------------------------------------------------------------------------------
February                 110.00             100.25             77,020
-------------------------------------------------------------------------------
March                    103.80             101.25             78,470
-------------------------------------------------------------------------------
April                    103.00             100.51             86,855
-------------------------------------------------------------------------------
May                      102.69             100.25            412,195
-------------------------------------------------------------------------------
June                     108.00             100.00            473,583
-------------------------------------------------------------------------------
</TABLE>


In October 2005, the Company also announced the early redemption of its
C$1,578,000,000 7.50%, Series CA, Notes due June 1, 2006. This redemption was
completed on December 1, 2005. The redemption price and amount per C$1,000
principal amount for these notes is set out below:

<TABLE>
<CAPTION>
<S>                                        <C>
------------------------------------------------------------------------------
Redemption Price                           C$1,018.130
------------------------------------------------------------------------------
Accrued and unpaid interest:                  C$37.500
------------------------------------------------------------------------------
Total Redemption Amount:                   C$1,055.630
------------------------------------------------------------------------------
</TABLE>

INTERESTS OF EXPERTS

Deloitte & Touche LLP has audited the Consolidated financial statements of the
Company for the years ended December 31, 2005 and 2004, and that are included
in the Company's Annual Report filed under National Instrument 51-102
Continuous Disclosure (portions of which are incorporated by reference into
this AIF).

AUDIT COMMITTEE

The Audit Committee of the Company supports the Board in fulfilling its
oversight responsibilities regarding the integrity of the Company's 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 Company's external and
internal auditors, the management of the Company's 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 Brian F. MacNeill (Chair), A.
Charles Baillie, Micheline Bouchard, Ruston Goepel and Pierre Y. Ducros. 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 Brian MacNeill is an audit committee financial expert and
has accounting or related financial management expertise. 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.

Brian MacNeill chairs the Audit Committee. He holds a Bachelor of Commerce from
Montana State University and has over 35 years of experience in accounting
having earned his Certified Public Accounting designation (California) and his
Chartered Accountant designation (Canada). In 1995, Mr. MacNeill was made a
Fellow of the Chartered Accountants of Alberta. Mr. MacNeill served as Chief
Executive Officer of Enbridge Inc. from 1990 until his retirement in 2001.
Prior to that, he served as Chief Operating Officer of Enbridge and held
numerous financial positions with various Canadian companies.

A. Charles Baillie holds an Honours B.A. from Trinity College, University of
Toronto and an M.B.A. from Harvard Business School. Mr. Baillie served as
Chairman and Chief Executive Officer of the Toronto-Dominion Bank from 1998
until his retirement in 2003. He is a Fellow of The Institute of Canadian
Bankers and has served on the audit committees of four other public companies,
including George Weston Limited and Canadian National Railway.

Micheline Bouchard holds a Bachelor of Applied Science (Engineering Physics)
and a Master of Applied Science (Electrical Engineering) from Ecole
Polytechnique. She has been the Chief Executive Officer of ART Advanced
Research Technologies since 2002 and prior to that, she held senior executive
positions at both Motorola Inc. and Motorola Canada Limited. Ms. Bouchard has
served on seven audit committees, including Sears Canada, Corby Distilleries
and Ford Canada, and served as chair for two of them.

Pierre Y. Ducros obtained a Bachelor of Arts Degree from the Universite de
Paris at College Stanislas in Montreal and a Bachelor of Engineering
(Communications) degree from McGill University. Mr. Ducros was President and
CEO of DMR Consulting Group, Inc. (Canada), an information technology services
company, which he co-founded in 1973. Mr. Ducros has also held various
management positions at IBM Canada Limited and serves on the board of a number
of other public companies.

Ruston E.T. Goepel holds a Bachelor of Commerce from the University of British
Columbia and has over 35 years of experience in the investment industry. He is
currently Senior Vice President with Raymond James Financial Ltd. Mr. Goepel is
a director of several public companies, and currently serves as a member of the
audit committee of Amerigo Resources Ltd.

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, TELUS has 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
CFO for further review. Pending the CFO'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 review, evaluation
and pre-approval or denial on behalf of the Audit Committee (with the 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, 2005 to December
31, 2005:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                        Deloitte & Touche         Total             %
Type of work                                      Fees
<S>                      <C>                      <C>               <C>
-------------------------------------------------------------------------------
Audit fees               $2,237,606               $2,237,606         90.7
Audit-related fees          195,584                 $195,584          7.9
Tax fees                     33,180                  $33,180          1.4
All other fee                   --                       --            --
-------------------------------------------------------------------------------
Total                    $2,466,760               $2,466,760        100.0
===============================================================================
</TABLE>

The following table is a summary of billing by Deloitte & Touche, LLP, as
external auditors of TELUS, during the period from January 1, 2004 to December
31, 2004:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Type of work           Deloitte & Touche          Total             %
                                                  Fees
<S>                      <C>                      <C>               <C>
-------------------------------------------------------------------------------
Audit fees               $2,102,260               $2,102,260         79.5
Audit-related fees          313,32                  $313,325         11.8
Tax fees                    231,278                 $231,278          8.7
All other fees                   --                       --          --
-------------------------------------------------------------------------------
Total                    $2,646,863                 $2,646,863      100.0
===============================================================================
</TABLE>

(1) Fees to Deloitte Consulting were paid pursuant to contracts entered into
    before Deloitte and Touche LLP became the auditors of the Company in 2002,
    and were for systems integration services.

MATERIAL CONTRACTS

On July 19, 2002, TCI entered into a Purchase and Servicing Agreement with an
arm's-length securitization receivables trust which enables TCI to sell an
interest in certain of its receivables up to a maximum of $650 million. This
revolving period securitization has an initial term ending July 18, 2007. TCI
is required to maintain at least a BBB (low) credit rating by Dominion Bond
Rating Service ("DBRS"), or the purchaser may require the sale program to be
wound down. The necessary credit rating was exceeded by three levels at A (low)
as of February 24, 2006. The proceeds of securitized receivables were
$500 million at December 31, 2005, as compared with $150 million a year
earlier. Section 7.6 - Accounts receivable sale of Management's discussion and
analysis in TELUS' 2005 Annual Report - Financial Review and Note 10 to the
audited Consolidated financial statements of TELUS for the year ended
December 31, 2005 are hereby incorporated by reference.

On November 30, 2004, Verizon and the Company entered into an agreement
pursuant to which the independent members of the Board of Directors of the
Company agreed to accommodate Verizon's desire to divest all of its equity
interest in the Company. See page 6 of this annual information form for further
details.

TRANSFER AGENTS AND REGISTRARS

The Company's 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
www.sedar.com and EDGAR at www.sec.gov. Additional information regarding
directors' and officers' remuneration, indebtedness and options to purchase
securities, is contained in the TELUS information circular dated March 15, 2006
for the annual general meeting to be held on May 3, 2006. Additional financial
information, including supplementary quarterly financial data and the audited
Consolidated financial statements of TELUS for the year ended December 31,
2005, are set out in the 2005 Annual Report - Financial Review. All of the
above information can also be found at telus.com.


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 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, following 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, following 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.

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

3.1 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 choose to 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;

  d) earnings press releases and earnings guidance, if any;

  e) Management's Statement on Financial Reporting; and

  f) 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, 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.

  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.

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) oversee the work of the internal auditors including reviewing and
     approving the annual internal audit plan and updates thereto;

  c) 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

  d) 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
     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 and compliance with regulators,
     and the accuracy and timeliness of filings with regulatory authorities;
     and

  c) annually, the ethics policy, management's approach to business ethics
     and corporate conduct and the program used by management to monitor
     compliance with the policy.

4.8 Risk Management

  The Committee will:

  a) consider reports on the annual enterprise business risk assessment and
     updates thereto;

  b) consider reports on the business continuity disaster recovery plan(s)
     for the Company;

  c) consider reports on the insurance coverage of the Company;

  d) consider reports on financial risk management including derivative
     exposure and policies;

  e) monitor, on behalf of the Board, the Company's compliance with
     environmental legislation and the adequacy of the Company's environmental
     budget expenditures;

  f) monitor, on behalf of the Board, the Company's health and safety
     policies and receive and review regular reports concerning the Company's
     health and safety programs, policies and results from the Chief Internal
     Auditor and the Chief Compliance Officer;

  g) review and recommend to the Board for approval environmental policies
     and procedure guidelines and any amendments or changes thereto;

  h) report to the Board, and require management to report to the Committee,
     on environmental matters each quarter; and

  i) review other risk management matters as from time to time 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 and CEO and will assess the
     Company's policies and procedures with respect to the Executive Leadership
     Team members' expense accounts and perquisites, including their use of
     corporate assets;

  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; and

  e) at least once annually, and evaluate 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;

  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.


_______________________________________________________________________________


Exhibit 4:  Audited Consolidated Financial Statements as at and for the year
            ended December 31, 2005 and Management's Discussion and Analysis

                  _______________________________________________

                               TELUS CORPORATION

                       CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2005

                  _______________________________________________


MANAGEMENT'S REPORT


Management's responsibility for the financial statements

Management is responsible to the Board of Directors for the preparation of the
consolidated financial statements of the Company and its subsidiaries. These
financial statements have been prepared in accordance with Canadian generally
accepted accounting principles ("GAAP") and necessarily include some amounts
based on estimates and judgements. Financial information presented elsewhere in
this annual report is consistent with that in the consolidated financial
statements.


Management's responsibility for the financial reporting process that produces
the financial statements

     Internal controls: The Company maintains a system of internal controls
that provides management with reasonable assurance that assets are safeguarded
and that reliable financial records are maintained. This system includes
written policies and procedures, an organizational structure that segregates
duties and a comprehensive program of periodic audits by the internal auditors.
The Company has also instituted policies and guidelines that require TELUS team
members (including Board members and Company employees) to maintain the highest
ethical standards, and has established mechanisms for the reporting to the
Audit Committee of perceived accounting and ethics policy complaints. In
addition, the Chief Compliance Officer, appointed in 2003, works to ensure the
Company has appropriate policies, controls and measurements in place to ensure
compliance with all legal and regulatory requirements. Annually, the Company
conducts an extensive risk assessment process, which includes interviews with
senior management, a web-enabled risk and control assessment survey distributed
to a large sample of employees, and input from the Company's strategic planning
activities. (During 2005, certain aspects of the risk assessment process were
modified due to the labour disruption that occurred during the second half of
the year.) Results of this process influence the development of the internal
audit program. Key enterprise-wide risks are assigned to executive owners for
the development and implementation of appropriate risk mitigation plans. During
2002, the Company implemented a Sarbanes-Oxley certification enablement
process, which, among other things, cascades informative certifications from
the key stakeholders within the financial reporting process, which are reviewed
by the Chief Executive Officer and the Chief Financial Officer as part of their
due diligence process. In 2004, the process was enhanced to comply with new
Canadian securities regulations, which went into effect in the first quarter of
2004. There were no changes in the Company's internal controls over financial
reporting that occurred during the year ended December 31, 2005, that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

The Company believes that its efforts will allow it to comply with Section 404
of the Sarbanes-Oxley Act for fiscal year 2006.

     Disclosure controls and procedures: The Company has a formal Policy on
Corporate Disclosure and Confidentiality of Information, which sets out
policies and practices including the mandate of the Disclosure Committee; the
Policy was approved by the Board of Directors, and put into effect, in 2003.

The Chief Executive Officer and the Chief Financial Officer have evaluated the
effectiveness of the Company's disclosure controls and procedures as at the end
of December 31, 2005. They have concluded that the Company's disclosure
controls and procedures were effective, at a reasonable assurance level, to
ensure that material information relating to the Company and its consolidated
subsidiaries would be made known to them by others within those entities,
particularly during the period in which the management's discussion and
analysis and the consolidated financial statements contained in this report
were being prepared.

     Certification: TELUS' Chief Executive Officer and Chief Financial Officer
expect to certify TELUS' annual filing with the United States' Securities and
Exchange Commission on Form 40-F as required by the United States
Sarbanes-Oxley Act. TELUS also expects the Chief Executive Officer and Chief
Financial Officer to certify its annual filings, including its Annual
Information Form, that are filed with Canadian securities regulatory
authorities.

The role of the Board of Directors and its Audit Committee

The Board of Directors has reviewed and approved these consolidated financial
statements. To assist the Board in meeting its oversight responsibilities, it
has appointed an Audit Committee, which is comprised entirely of independent
directors. All the members of the committee are financially literate and the
Chair of the committee is an audit committee financial expert as defined in
accordance with applicable securities laws. The committee oversees the
Company's 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
Company's external and internal auditors, the management of the Company's
risks, its creditworthiness, treasury plans and financial policy, and its
whistleblower and accounting and ethics complaint procedures. The Audit
Committee meets no less than quarterly and, as a standard feature of regularly
scheduled meetings, holds an in-camera session with the external auditors and
separately with the internal auditors without other management, including



MANAGEMENT'S REPORT


management directors, present. It oversees the work of the external auditors
and approves the annual audit plan. It also receives reports on the external
auditor's internal quality control procedures and independence. Furthermore,
the Audit Committee reviews: the Company's major accounting policies, including
alternatives and potential key management estimates and judgements; the
Company's financial policies and compliance with such policies; the evaluation
by either the internal or external auditors of management's internal control
systems; and 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. The Audit Committee also considers reports on
the Company's business continuity and disaster recovery plans; reports on
financial risk management including derivative exposure and policies; tax
planning, environmental, health and safety risk management and management's
approach for safeguarding corporate assets; and regularly reviews key capital
expenditures. The Audit Committee pre-approves all audit, audit-related and
non-audit services provided to the Company by the external auditors and its
affiliates. The Audit Committee's terms of reference are available, on request,
to shareholders and are available at telus.com/governance.

                                                   /S/ Robert G. McFarlane
                                                   _______________________
                                                       Robert G. McFarlane
                                                   Executive Vice-President
                                                   and Chief Financial Officer


AUDITORS' REPORT

To the Shareholders of TELUS Corporation


We have audited the consolidated balance sheets of TELUS Corporation as at
December 31, 2005 and 2004 and the consolidated statements of income, retained
earnings and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31,
2005 and 2004 and the results of its operations and its cash flows for the
years then ended in accordance with Canadian generally accepted accounting
principles.

                                                  /S/ Deloitte & Touche LLP
                                                  ________________________
                                                  Deloitte & Touche LLP
                                                  Chartered Accountants
                                                  Vancouver, B.C.
                                                  February 14, 2006



CONSOLIDATED STATEMENTS OF INCOME

<TABLE>

Years ended December 31 (millions except per share amounts)                              2005               2004
---------------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                                 <C>                <C>
OPERATING REVENUES                                                                  $    8,142.7       $    7,581.2
---------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
   Operations                                                                            4,793.5            4,438.0
   Restructuring and workforce reduction costs (Note 5)                                     53.9               52.6
   Depreciation                                                                          1,342.6            1,307.8
   Amortization of intangible assets                                                       281.1              335.3
---------------------------------------------------------------------------------------------------------------------
                                                                                         6,471.1            6,133.7
---------------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                                         1,671.6            1,447.5
   Other expense, net                                                                       18.4                8.7
   Financing costs (Note 6)                                                                623.1              613.3
---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST                                  1,030.1              825.5
   Income taxes (Note 7)                                                                   322.0              255.1
   Non-controlling interests                                                                 7.8                4.6
---------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                                 700.3              565.8
   Preference and preferred share dividends                                                   --                1.8
---------------------------------------------------------------------------------------------------------------------
COMMON SHARE AND NON-VOTING SHARE INCOME                                            $      700.3       $      564.0
=====================================================================================================================
INCOME PER COMMON SHARE AND NON-VOTING SHARE (Note 8)
     - Basic                                                                        $       1.96       $       1.58
     - Diluted                                                                      $       1.94       $       1.57
DIVIDENDS DECLARED PER COMMON SHARE AND NON-VOTING SHARE                            $       0.875      $       0.65
TOTAL WEIGHTED AVERAGE COMMON SHARES AND NON-VOTING SHARES OUTSTANDING
     - Basic                                                                               357.1              355.3
     - Diluted                                                                             361.0              357.6

The accompanying notes are an integral part of these consolidated financial statements


CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Years ended December 31 (millions)                                                        2005           2004
------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD                                                       $    1,008.1     $   741.7
Transitional amount for share-based compensation arising from share options                    --         (25.1)
------------------------------------------------------------------------------------------------------------------
Adjusted opening balance                                                                  1,008.1         716.6
Net income                                                                                  700.3         565.8
------------------------------------------------------------------------------------------------------------------
                                                                                          1,708.4       1,282.4
Less:  Common Share and Non-Voting Share dividends paid, or payable, in cash                312.2         204.7
       Common Share and Non-Voting Share dividends reinvested, or to be
         reinvested, in shares issued from Treasury                                            --          26.9
       Purchase of Common Shares and Non-Voting Shares in excess of stated capital
         (Note 15(g))                                                                       541.1          38.6
       Warrant proceeds used in determining intrinsic value of warrants in excess
         of amounts ultimately received (Note 15(c))                                          2.0            --
       Purchase of share options not in excess of their fair value                            3.4            --
       Preference and preferred share dividends                                                --           1.8
       Redemption premium on preference and preferred shares in excess of amount
         chargeable to contributed surplus                                                     --           2.3
------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD (Note 15)                                                   $      849.7     $ 1,008.1

==================================================================================================================


The accompanying notes are an integral part of these consolidated financial statements

</TABLE>



CONSOLIDATED BALANCE SHEETS

<TABLE>

As at December 31 (millions)                                                                      2005                2004
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

ASSETS
Current Assets
<S>                                                                                           <C>                <C>
   Cash and temporary investments, net                                                        $        8.6       $      896.5
   Accounts receivable (Notes 10, 17(b))                                                             610.3              863.5
   Income and other taxes receivable                                                                 103.7              132.5
   Inventories                                                                                       138.8              133.3
   Prepaid expenses and other (Note 17(b))                                                           154.7              183.4
   Current portion of future income taxes                                                            226.4              438.4
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                   1,242.5            2,647.6
-----------------------------------------------------------------------------------------------------------------------------
Capital Assets, Net (Note 11)
   Property, plant, equipment and other                                                            7,339.4            7,528.2
   Intangible assets subject to amortization                                                         637.5              737.0
   Intangible assets with indefinite lives                                                         2,964.6            2,955.8
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                  10,941.5           11,221.0
-----------------------------------------------------------------------------------------------------------------------------
Other Assets
   Deferred charges (Note 17(b))                                                                     850.2              704.4
   Future income taxes                                                                                  --               99.8
   Investments                                                                                        31.2               38.4
   Goodwill (Note 12)                                                                              3,156.9            3,126.8
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                   4,038.3            3,969.4
-----------------------------------------------------------------------------------------------------------------------------
                                                                                              $   16,222.3       $   17,838.0
=============================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
   Accounts payable and accrued liabilities (Note 17(b))                                      $    1,393.7       $    1,362.6
   Restructuring and workforce reduction accounts payable and accrued liabilities (Note 5)            57.1               70.7
   Advance billings and customer deposits (Note 17(b))                                               571.8              531.5
   Current maturities of long-term debt (Note 14)                                                      5.0                4.3
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                   2,027.6            1,969.1
-----------------------------------------------------------------------------------------------------------------------------
Long-Term Debt (Note 14)                                                                           4,639.9            6,332.2
-----------------------------------------------------------------------------------------------------------------------------
Other Long-Term Liabilities (Note 17(b))                                                           1,635.3            1,506.1
-----------------------------------------------------------------------------------------------------------------------------
Future Income Taxes                                                                                1,023.9              991.9
-----------------------------------------------------------------------------------------------------------------------------
Non-Controlling Interests                                                                             25.6               13.1
-----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity (Note 15)
   Convertible debentures conversion option                                                             --                8.8
   Common equity                                                                                   6,870.0            7,016.8
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                   6,870.0            7,025.6
-----------------------------------------------------------------------------------------------------------------------------
                                                                                              $   16,222.3       $   17,838.0
=============================================================================================================================

Commitments and Contingent Liabilities (Note 16)

The accompanying notes are an integral part of these consolidated financial statements

</TABLE>

Approved by the Directors:

Director:                                            Director:

/S/Brian F. MacNeill                                 /S/Brian A. Canfield
_____________________                                _____________________
   Brian F. MacNeill                                    Brian A. Canfield




CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>

Years ended December 31 (millions)                                                      2005             2004
------------------------------------------------------------------------------------------------------------------
<CAPTION>


OPERATING ACTIVITIES
<S>                                                                               <C>                <C>
Net income                                                                        $      700.3       $      565.8
Adjustments to reconcile net income to cash provided by operating activities:
   Depreciation and amortization                                                       1,623.7            1,643.1
   Future income taxes                                                                   340.0              380.9
   Share-based compensation                                                               24.3               23.8
   Net employee defined benefit plans expense                                              3.9               18.4
   Employer contributions to employee defined benefit
     plans                                                                              (118.8)            (136.8)
   Restructuring and workforce reduction costs, net of cash payments (Note 5)            (13.6)             (70.3)
   Payment received from Verizon Communications Inc. (Note 20)                              --               33.3
   Amortization of deferred gains on sale-leaseback of buildings, amortization
     of deferred charges and other, net                                                    1.1               27.9
   Net change in non-cash working capital (Note 17(c))                                   353.7               52.0
------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities                                                  2,914.6            2,538.1
------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (Notes 11, 19)                                                   (1,319.0)          (1,319.0)
Acquisition (Note 12)                                                                    (29.4)             (12.2)
Proceeds from the sale of property and other assets                                        4.5               35.9
Change in non-current materials and supplies, purchase of investments and other          (11.3)              (4.2)
------------------------------------------------------------------------------------------------------------------
Cash used by investing activities                                                     (1,355.2)          (1,299.5)
------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Common Shares and Non-Voting Shares issued                                               219.4              148.8
Dividends to shareholders                                                               (312.2)            (248.7)
Purchase of Common Shares and Non-Voting Shares for cancellation (Note 15(g))           (892.1)             (78.0)
Payment for redemption of preference and preferred shares                                   --              (72.8)
Long-term debt issued (Note 14)                                                          147.4               39.8
Redemptions and repayment of long-term debt (Note 14)                                 (1,601.1)            (248.6)
Dividends paid by a subsidiary to non-controlling interest                                (7.9)                --
Payment received from Verizon Communications Inc. (Note 20)                                 --              114.8
Other                                                                                     (0.8)              (3.6)
------------------------------------------------------------------------------------------------------------------
Cash used by financing activities                                                     (2,447.3)            (348.3)
------------------------------------------------------------------------------------------------------------------
CASH POSITION
Increase (decrease) in cash and temporary investments, net                              (887.9)             890.3
Cash and temporary investments, net, beginning of
   period                                                                                896.5                6.2
------------------------------------------------------------------------------------------------------------------
Cash and temporary investments, net, end of period                                $        8.6       $      896.5
==================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Interest (paid) (Note 17(c))                                                      $     (638.3)      $     (632.9)
==================================================================================================================
Interest received                                                                 $       47.3       $       27.3
==================================================================================================================
Income taxes (inclusive of Investment Tax Credits (Note 7)) received, net         $       69.5       $      194.6
==================================================================================================================

The accompanying notes are an integral part of these consolidated financial statements

</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER 31, 2005

TELUS Corporation is one of Canada's largest telecommunications companies,
providing a full range of telecommunications products and services. The Company
is the largest incumbent telecommunications service provider in Western Canada
and provides data, Internet protocol, voice and wireless services to Central
and Eastern Canada.

<TABLE>

Notes to consolidated financial statements                            Description
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>      <C>                                                          <C>
1.       Summary of significant accounting policies                   Summary review of accounting principles and the methods
                                                                      used in their application by the Company
-------------------------------------------------------------------------------------------------------------------------------
2.       Accounting policy developments                               Summary review of forthcoming generally accepted
                                                                      accounting principle developments that may affect the
                                                                      Company
-------------------------------------------------------------------------------------------------------------------------------
3.       Regulation of rates charged to customers                     Summary review of rate regulation impacts on Company
                                                                      operations and revenues
-------------------------------------------------------------------------------------------------------------------------------
4.       Financial instruments                                        Summary schedule and review of financial instruments,
                                                                      including fair values thereof
-------------------------------------------------------------------------------------------------------------------------------
5.       Restructuring and workforce reduction costs                  Summary continuity schedules and review of restructuring
                                                                      and workforce reduction costs
-------------------------------------------------------------------------------------------------------------------------------
6.       Financing costs                                              Summary schedule of items comprising financing costs by
                                                                      nature
-------------------------------------------------------------------------------------------------------------------------------
7.       Income taxes                                                 Summary reconciliations of statutory rate income tax
                                                                      expense to provision for income taxes and analyses of
                                                                      future income tax asset and liability
-------------------------------------------------------------------------------------------------------------------------------
8.       Per share amounts                                            Summary schedules and review of numerators and
                                                                      denominators used in calculating per share amounts and
                                                                      related disclosures
-------------------------------------------------------------------------------------------------------------------------------
9.       Share-based compensation                                     Summary schedules and review of compensation arising from
                                                                      share options, restricted stock units and employee share
                                                                      purchase plan
-------------------------------------------------------------------------------------------------------------------------------
10.      Accounts receivable                                          Summary schedule and review of arm's-length
                                                                      securitization trust transactions and related disclosures
-------------------------------------------------------------------------------------------------------------------------------
11.      Capital assets                                               Summary schedule of items comprising capital assets
-------------------------------------------------------------------------------------------------------------------------------
12.      Goodwill                                                     Summary schedule of goodwill and review of reported
                                                                      fiscal year acquisitions from which goodwill arises
-------------------------------------------------------------------------------------------------------------------------------
13.      Short-term obligations                                       Summary review of bilateral bank facilities
-------------------------------------------------------------------------------------------------------------------------------
14.      Long-term debt                                               Summary schedule of long-term debt and related
                                                                      disclosures
-------------------------------------------------------------------------------------------------------------------------------
15.      Shareholders' equity                                         Summary schedules and review of shareholders' equity and
                                                                      changes therein including share option price
                                                                      stratification and normal course issuer bid summaries
-------------------------------------------------------------------------------------------------------------------------------
16.      Commitments and contingent liabilities                       Summary review of contingent liabilities, labour
                                                                      negotiations, commitments, lease obligations, guarantees,
                                                                      claims and lawsuits
-------------------------------------------------------------------------------------------------------------------------------
17.      Additional financial information                             Summary schedules of items comprising certain primary
                                                                      financial statement line items
-------------------------------------------------------------------------------------------------------------------------------
18.      Employee future benefits                                     Summary and review of employee future benefits and
                                                                      related disclosures
-------------------------------------------------------------------------------------------------------------------------------
19.      Segmented information                                        Summary disclosure of segmented information regularly
                                                                      reported to the Company's chief operating decision maker
-------------------------------------------------------------------------------------------------------------------------------
20.      Related party transactions                                   Summary and review of 2004 transactions with a formerly
                                                                      related party
-------------------------------------------------------------------------------------------------------------------------------
21.      Differences between Canadian and United States               Summary schedules and review of differences between
         generally accepted accounting principles                     Canadian and United States generally accepted accounting
                                                                      principles as they apply to the Company
-------------------------------------------------------------------------------------------------------------------------------

</TABLE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies

     The accompanying consolidated financial statements have been prepared in
     accordance with accounting principles generally accepted in Canada and are
     expressed in Canadian dollars.

     The terms "TELUS" or "Company" are used to mean TELUS Corporation and,
     where the context of the narrative permits, or requires, its subsidiaries.

     (a)  Consolidation

     The consolidated financial statements include the accounts of the Company
     and all of the Company's subsidiaries, of which the principal one is TELUS
     Communications Inc. TELUS Communications Inc. includes substantially all
     of the Company's Wireline segment's operations and all of the Wireless
     segment's operations, currently through the TELE-MOBILE COMPANY
     partnership.

     The financing arrangements of the Company and all of its subsidiaries do
     not impose restrictions on inter-corporate dividends.

     On a continuing basis, TELUS Corporation reviews its corporate
     organization and effects changes as appropriate so as to enhance its
     value. This process can, and does, affect which of the Company's
     subsidiaries are considered principal subsidiaries at any particular point
     in time.

     (b)  Use of Estimates

     The preparation of financial statements in conformity with generally
     accepted accounting principles ("GAAP") requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the
     date of the financial statements and the reported amounts of revenues and
     expenses during the reporting period. Actual results could differ from
     those estimates.

     Examples of significant estimates include:
     o    the key economic assumptions used to determine the fair value of
          residual cash flows arising from accounts receivable securitization;
     o    the allowance for doubtful accounts;
     o    the allowance for inventory obsolescence;
     o    the estimated useful lives of assets;
     o    the recoverability of tangible assets;
     o    the recoverability of intangible assets with indefinite lives;
     o    the recoverability of long-term investments;
     o    the recoverability of goodwill;
     o    the composition of the future income tax asset and future income tax
          liability;
     o    the accruals for payroll and other employee-related liabilities;
     o    the accruals for restructuring and workforce reduction costs;
     o    the accruals for Canadian Radio-television and Telecommunications
          Commission deferral account liabilities; and
     o    certain actuarial and economic assumptions used in determining
          defined benefit pension costs, accrued pension benefit obligations
          and pension plan assets.

     (c)  Revenue Recognition

     The Company earns the majority of its revenue (voice local, voice long
     distance, data (including data and information technology managed
     services) and wireless network) from access to, and usage of, the
     Company's telecommunication infrastructure. The majority of the balance of
     the Company's revenue (other and wireless equipment) arises from providing
     products and services facilitating access to, and usage of, the Company's
     telecommunication infrastructure.

     The Company offers complete and integrated solutions to meet its
     customers' needs. These solutions may involve the delivery of multiple
     services and products occurring at different points in time and/or over
     different periods of time. As appropriate, these multiple element
     arrangements are separated into their component accounting units,
     consideration is measured and allocated amongst the accounting units based
     upon their relative fair values and then the Company's relevant revenue
     recognition polices are applied to them.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Voice Local, Voice Long Distance, Data and Wireless Network: The
     Company recognizes revenues on the accrual basis and includes an estimate
     of revenues earned but unbilled. Wireline and wireless service revenues
     are recognized based upon usage of the Company's network and facilities
     and upon contract fees.

     Advance billings are recorded when billing occurs prior to rendering the
     associated service; such advance billings are recognized as revenue in the
     period in which the services are provided. Similarly, and as appropriate,
     upfront customer activation and connection fees, along with the
     corresponding direct costs not in excess of the revenues, are deferred and
     recognized over the average expected term of the customer relationship.

     When the Company receives no identifiable, separable benefit for
     consideration given to a customer (e.g. discounts and rebates), the
     consideration is recorded as a reduction of revenue rather than as an
     expense as the Company considers this to result in a more appropriate
     presentation of transactions in the financial statements.

     The Company follows the liability method of accounting for its quality of
     service penalties that arise from the jurisdiction of the Canadian
     Radio-television and Telecommunications Commission ("CRTC").

     The CRTC has established a portable subsidy mechanism to subsidize Local
     Exchange Carriers, such as the Company, that provide residential service
     to high cost serving areas ("HCSAs"). The CRTC has determined the per
     line/per band portable subsidy rate for all Local Exchange Carriers. The
     Company recognizes the portable subsidy on an accrual basis by applying
     the subsidy rate to the number of residential network access lines it has
     in HCSAs. Differences, if any, between interim and final subsidy rates set
     by the CRTC, are accounted for as a change in estimate in the period in
     which the CRTC finalizes the subsidy rate.

         Other and Wireless Equipment: The Company recognizes product revenues,
     including wireless handsets sold to re-sellers and customer premises
     equipment, when the products are delivered and accepted by the end-user
     customers. Revenues from operating leases of equipment are recognized on a
     systematic and rational basis (normally a straight-line basis) over the
     term of the lease. When the Company receives no identifiable, separable
     benefit for consideration given to a customer (e.g. discounts and
     rebates), the consideration is recorded as a reduction of revenue rather
     than as an expense as the Company considers this to result in a more
     appropriate presentation of transactions in the financial statements.

         Non-HCSA Deferral Account: On May 30, 2002, and on July 31, 2002, the
     CRTC issued Decision 2002-34 and Decision 2002-43, respectively,
     pronouncements that will affect the Company's wireline revenues for
     five-year (2004 - four-year) periods beginning June 1, 2002, and August 1,
     2002, respectively. In an effort to foster competition for residential
     basic service in non-high cost serving areas ("non-HCSAs"), the concept of
     a deferral account mechanism was introduced by the CRTC, as an alternative
     to mandating price reductions.

     The deferral account arises from the CRTC requiring the Company to defer
     the income statement recognition of a portion of the monies received in
     respect of residential basic services provided to non-HCSAs. The revenue
     deferral is based on the rate of inflation (as measured by a
     chain-weighted Gross Domestic Product Price Index), less a productivity
     offset of 3.5%, and an "exogenous factor" that is associated with allowed
     recoveries in previous price cap regimes that have now expired. The
     Company may recognize the deferred amounts upon the undertaking of
     qualifying actions, such as Service Improvement Programs ("SIPs") in
     qualifying non-HCSAs, rate reductions (including those provided to
     competitors as required in Decision 2002-34 and Decision 2002-43) and/or
     rebates to customers. To the extent that a balance remains in the deferral
     account, interest expense of the Company is required to be accrued at the
     Company's short-term cost of borrowing.

<TABLE>

     Price cap factors for price cap years commencing June 1,              2005       2004
     ---------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                        <C>         <C>
     Rate of inflation (as measured by the chain-weighted Gross
       Domestic Product Price Index)                                       3.2%        3.4%
     Exogenous factor                                                        0%          0%
     ---------------------------------------------------------------------------------------

</TABLE>

     The Company has adopted the liability method of accounting for the
     deferral account. This results in the Company recording a liability to the
     extent that activities it has undertaken, realized rate reductions for
     Competitor Services and other future qualifying events do not extinguish
     the balance of the deferral account, as further discussed in Note 16(a)
     and quantified in Note 17(b). This also results in the Company continuing
     to record incremental liability amounts, subject to reductions for the
     mitigating activities, for the remaining duration of the Decisions'
     four-year periods. Other than for the interest accrued on the balance of
     the deferral account, which would be included in financing costs,
     substantially all income statement effects of the deferral account are
     recorded through operating revenues. The CRTC can direct that the Company
     undertake activities drawing down the deferral account that would not
     affect the income statement; the financial statement impacts of those
     activities would be contingent on what the CRTC directed.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     (d)  Cost of Acquisition and Advertising Costs
     Cost of acquiring customers, which include the total cost of hardware
     subsidies, commissions, advertising and promotion related to the initial
     customer acquisition, are expensed as incurred and are included in the
     Consolidated Statements of Income as a component of "Operations" expense.
     Costs of advertising production, airtime and space are expensed as
     incurred.

     (e)  Research and Development
     Research and development costs are expensed except in cases where
     development costs meet certain identifiable criteria for deferral.
     Deferred development costs are amortized over the life of the commercial
     production, or in the case of serviceable property, plant and equipment,
     are included in the appropriate property group and are depreciated over
     its estimated useful life.

     (f)  Depreciation and Amortization
     Assets are depreciated on a straight-line basis over their estimated
     useful life as determined by a continuing program of studies. Depreciation
     includes amortization of assets under capital leases. Intangible assets
     with finite lives ("intangible assets subject to amortization") are
     amortized on a straight-line basis over their estimated lives; estimated
     lives are reviewed at least annually and are adjusted as appropriate. The
     continuing program of asset life studies considers such items as timing of
     technological obsolescence, competitive pressures and future
     infrastructure utilization plans; such considerations could also indicate
     that carrying values of assets may not be recoverable. If the carrying
     values of assets were not considered recoverable, an impairment provision
     (measured at the amount by which the carrying values of the assets exceeds
     their fair values) would be recorded.

     Estimated useful lives for the majority of the Company's capital assets
     subject to depreciation and amortization are as follows:

<TABLE>

                                                                              Estimated
                                                                               useful
                                                                               lives(1)
   -------------------------------------------------------------------------------------------
<CAPTION>

   Property, plant, equipment and other
      Telecommunication assets
<S>                                                                           <C>
        Outside plant                                                         17 to 40 years
        Inside plant                                                          8 to 20 years
        Wireless site equipment                                               6.5 to 8 years
      Balance of depreciable property, plant, equipment and other             5 to 20 years
   Intangible assets subject to amortization
      Subscriber base
        Wireline                                                              50 years
        Wireless                                                              7 years
      Software                                                                3 to 5 years
      Access to rights-of-way and other                                       7 to 30 years
   -------------------------------------------------------------------------------------------
</TABLE>

     (1)  The composite depreciation rate for the year ended December 31, 2005,
          was 6.4% (2004 - 6.5%). The rate is calculated by dividing
          depreciation expense by an average gross book value of depreciable
          assets for the reporting period. A result of this methodology is that
          the composite depreciation rate will be lower in a period that has a
          higher proportion of fully depreciated assets remaining in use.

     The Company chose to depreciate and amortize its assets on a straight-line
     basis as it believes that this method better reflects the consumption of
     resources related to the economic lifespan of the assets than use of an
     accelerated method and thus is more representative of the economic
     substance of the underlying use of the assets.

     The carrying value of intangible assets with indefinite lives, and
     goodwill, are periodically tested for impairment using a two-step
     impairment test. The frequency of the impairment test generally is the
     reciprocal of the stability of the relevant events and circumstances, but
     intangible assets with indefinite lives and goodwill must, at a minimum,
     be tested annually; the Company has selected December as its annual test
     time. No impairment amounts arose from the December 2005 and December 2004
     annual tests. The test is applied to each of the Company's two reporting
     units (the reporting units being identified in accordance with the
     criteria in the Canadian Institute of Chartered Accountants ("CICA")
     Handbook section for intangible assets and goodwill): Wireline and
     Wireless.

     The Company assesses its goodwill by applying the prescribed method of
     comparing the fair value of its reporting units to the carrying amounts of
     its reporting units. Consistent with current industry-specific valuation
     methods, a combination of the discounted cash flow approach, the market
     comparable approach and analytical review of industry and Company-specific
     facts is used in determining the fair value of the Company's reporting
     units.







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (g)  Translation of Foreign Currencies

     Trade transactions completed in foreign currencies are translated into
     Canadian dollars at the rates prevailing at the time of the transactions.
     Monetary assets and liabilities denominated in foreign currencies are
     translated into Canadian dollars at the rate of exchange in effect at the
     balance sheet date with any resulting gain or loss being included in the
     Consolidated Statements of Income (see Note 6). Hedge accounting is
     applied in specific instances as further discussed in Note 1(h).

     The Company has a minor foreign subsidiary that is considered to be
     self-sustaining. Accordingly, foreign exchange gains and losses arising
     from the translation of the minor foreign subsidiary's accounts into
     Canadian dollars are deferred and reported as cumulative foreign currency
     translation adjustment in the equity section of the Consolidated Balance
     Sheets, as set out in Note 15(a).

     (h)  Hedge Accounting

          General: The Company applies hedge accounting to the financial
     instruments used to:
     o    establish designated currency hedging relationships for its U.S.
          Dollar denominated long-term debt future cash outflows (semi-annual
          interest payments and principal payments at maturity), as set out in
          Note 4 and further discussed in Note 14(b);
     o    notionally convert fixed interest rate debt to floating interest rate
          debt (semi-annual interest payments), as set out in Note 4 and
          further discussed in Note 14(b);
     o    fix the compensation cost arising from specific grants of restricted
          stock units, as set out in Note 4 and further discussed in Note 9(c);
     o    establish designated currency hedging relationships for U.S. Dollar
          denominated temporary investments, as set out in Note 4; and
     o    for certain U.S. Dollar denominated future purchase commitments, as
          set out in Note 4.

          Hedge accounting: The purpose of hedge accounting, in respect of the
     Company's designated hedging relationships, is to ensure that
     counterbalancing gains and losses are recognized in the same periods. The
     Company chose to apply hedge accounting, as it believes this is more
     representative of the economic substance of the underlying transactions.

     In order to apply hedge accounting, a high correlation (which indicates
     effectiveness) is required in the offsetting changes in the values of the
     financial instruments (the "hedging items") used to establish the
     designated hedging relationships and all, or a part, of the asset,
     liability or transaction having an identified risk exposure that the
     Company has taken steps to modify (the "hedged items"). The Company
     assesses the anticipated effectiveness of designated hedging relationships
     at inception and for each reporting period thereafter. A designated
     hedging relationship is considered effective by the Company if the
     following critical terms match between the hedging item and the hedged
     item: the notional amount of the hedging item and the principal of the
     hedged item; maturity dates; payment dates; and interest rate index (if,
     and as, applicable). Any ineffectiveness, such as from a difference
     between the notional amount of the hedging item and the principal of the
     hedged item, or if a previously effective designated hedging relationship
     becomes ineffective, is reflected in the Consolidated Statements of Income
     as "Financing costs" if in respect of long-term debt or U.S. Dollar
     denominated temporary investments and as "Operations" expense if in
     respect of restricted stock units or U.S. Dollar denominated future
     purchase commitments.

     Unrealized changes in the fair value of hedging items, net of the hedge
     value recorded, as set out in Note 17(b), are recognized when all the
     hedged cash flows have occurred, as further discussed in Note 4.

         Deferred hedging assets and liabilities: In the application of hedge
     accounting to U.S. Dollar denominated long-term debt future cash outflows
     and U.S. Dollar denominated temporary investments, an amount (the "hedge
     value") is recorded in respect of the fair value of the hedging items only
     to the extent that their value counterbalances the difference between the
     Canadian dollar equivalent of the value of the hedged items at the rate of
     exchange at the balance sheet date and the Canadian dollar equivalent of
     the value of the hedged items at the rate of exchange in the hedging
     items.

     In the application of hedge accounting to the compensation cost arising
     from a specific grant of restricted stock units, an amount (the "hedge
     value") is recorded in respect of the fair value of the hedging items only
     to the extent that their value counterbalances the difference between the
     quoted market price of the Company's Non-Voting Shares at the balance
     sheet date and the price of the Company's Non-Voting Shares in the hedging
     items.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (i)  Income Taxes
     The Company follows the liability method of accounting for income taxes.
     Under this method, current income taxes are recognized for the estimated
     income taxes payable for the current year. Future income tax assets and
     liabilities are recognized for temporary differences between the tax and
     accounting bases of assets and liabilities as well as for the benefit of
     losses available to be carried forward to future years for tax purposes
     that are more likely than not to be realized.

     The operations of the Company are complex, and related tax
     interpretations, regulations and legislation are continually changing. As
     a result, there are usually some tax matters in question that result in
     uncertain tax positions. The Company only recognizes the income tax
     benefit of uncertain tax-related positions when it is more likely than not
     that the ultimate determination of the tax treatment of the positions will
     result in those benefits being realized. The Company accrues for interest
     charges on current tax liabilities that have not been funded.

     The Company's research and development activities may be eligible to earn
     Investment Tax Credits. The Company's research and development activities
     and their eligibility to earn Investment Tax Credits is a complex matter
     and, as a result, the threshold of more likely than not is normally only
     achieved after the relevant taxation authorities have made specific
     determinations. When it is more likely than not that the Investment Tax
     Credits will be received, they are accounted for using the cost reduction
     method whereby such credits are deducted from the expenditures or assets
     to which they relate, as set out in Note 7.

     (j)  Share-Based Compensation
     Commencing with the Company's 2004 fiscal year, the amended
     recommendations of the CICA for accounting for share-based compensation
     apply to the Company. The amendments resulted in the Company no longer
     being able to use the intrinsic value based method of accounting for share
     options granted to employees for purposes of Canadian GAAP. Canadian GAAP
     now requires, for share options granted after 2001, that a fair value be
     determined for share options at the date of grant and that such fair value
     be recognized in the financial statements.

     For fiscal years prior to 2004, the Company applied the intrinsic value
     based method of accounting for share-based compensation awards granted to
     employees; accordingly, no compensation cost was recorded in the accounts
     for its share option plans prior to 2004. In respect of share options
     awarded to employees after 2001, for fiscal years prior to 2004, it was
     permissible to use either the fair value based method or the intrinsic
     value based method; however, if the intrinsic value based method was used,
     pro forma disclosure was required so as to show what the effect would have
     been had the fair value based method been applied. Proceeds arising from
     the exercise of share options are credited to share capital.

     In implementing the amended recommendations, the Company used the
     retroactive application without restatement method (also referred to as
     the modified-prospective transition method). Transitioning from the
     intrinsic value based method to the fair value based method of accounting
     for share options granted to employees resulted in the December 31, 2003,
     balances of Non-Voting Shares increasing by $0.4 million, contributed
     surplus increasing by $24.7 million and retained earnings decreasing by
     $25.1 million.

     In respect of restricted stock units, as set out in Note 9(c), the Company
     accrues a liability equal to the product of the vesting restricted stock
     units multiplied by the fair market value of the corresponding shares at
     the end of the reporting period (unless hedge accounting is applied, as
     set out in Note 1(h)). The expense for restricted stock units that are
     forfeited or cancelled is reversed against the expense that had been
     recorded up to the date of forfeiture or cancellation.

     When share-based compensation vests in one amount at a future point in
     time ("cliff vesting"), the expense is recognized by the Company in the
     Consolidated Statements of Income on a straight-line basis over the
     vesting period. When share-based compensation vests in tranches ("graded
     vesting"), the expense is recognized by the Company in the Consolidated
     Statements of Income using the accelerated expense attribution method.

     (k)  Cash and Temporary Investments, Net
     Cash and temporary investments, which include investments in money market
     instruments that are purchased three months or less from maturity, are
     presented net of outstanding items including cheques written but not
     cleared by the bank as at the balance sheet date. Cash and temporary
     investments, net, are classified as a liability on the balance sheet when
     the amount of the cheques written but not cleared by the bank exceeds the
     amount of the cash and temporary investments.

     (l)  Sales of Receivables
     Transfers of receivables in securitization transactions are recognized as
     sales when the Company is deemed to have surrendered control over the
     transferred receivables and consideration, other than for its beneficial
     interests in the transferred receivables, has been received. When the
     Company sells its receivables, it retains reserve accounts, which are





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     retained interests in the securitized receivables, and servicing rights.
     When a transfer is considered a sale, the Company derecognizes all
     receivables sold, recognizes at fair value the assets received and the
     liabilities incurred and records the gain or loss on sale in the
     Consolidated Statements of Income as "Other expense, net". The amount of
     gain or loss recognized on the sale of receivables depends in part on the
     previous carrying amount of the receivables involved in the transfer,
     allocated between the receivables sold and the retained interests based
     upon their relative fair market value at the sale date. The Company
     estimates the fair value for its retained interests based on the present
     value of future expected cash flows using management's best estimates of
     the key assumptions (credit losses, the weighted average life of the
     receivables sold and discount rates commensurate with the risks involved).

     (m)  Inventories
     The Company's inventory consists primarily of wireless handsets, parts and
     accessories and communications equipment held for resale. Inventories of
     wireless handsets, parts and accessories are valued at the lower of cost
     and replacement cost, with cost being determined on an average cost basis.
     Inventories of the Wireline segment's equipment are valued at the lower of
     cost and net realizable value, with cost being determined on an average
     cost basis.

     (n)  Capital Assets
         General: Property is recorded at historical cost and, with respect to
     self-constructed property, includes materials, direct labour and
     applicable overhead costs. In addition, where construction projects exceed
     $20 million and are of a sufficiently long duration (generally, longer
     than twelve months), an amount is capitalized for the cost of funds used
     to finance construction. The rate for calculating the capitalized
     financing costs is based on the Company's one-year cost of borrowing.

     When property, plant and/or equipment are sold by the Company, the
     historical cost less accumulated depreciation is netted against the sale
     proceeds and the difference is included in the Consolidated Statements of
     Income as "Other expense, net".

         Asset retirement obligations: Liabilities are recognized for
     statutory, contractual or legal obligations, normally when incurred,
     associated with the retirement of property, plant and equipment (primarily
     certain items of outside plant and wireless site equipment) when those
     obligations result from the acquisition, construction, development or
     normal operation of the assets. The obligations are measured initially at
     fair value, determined using present value methodology, and the resulting
     costs capitalized into the carrying amount of the related asset. In
     subsequent periods, the liability is adjusted for the accretion of
     discount and any changes in the amount or timing of the underlying future
     cash flows. The capitalized asset retirement cost is depreciated on the
     same basis as the related asset and the discount accretion is included in
     determining the results of operations.

     (o)  Leases
     Leases are classified as capital or operating depending upon the terms and
     conditions of the contracts.

     Where the Company is the lessee, asset values recorded under capital
     leases are amortized on a straight-line basis over the period of expected
     use. Obligations recorded under capital leases are reduced by lease
     payments net of imputed interest.

     For the year ended December 31, 2005, real estate and vehicle operating
     lease expenses, which are net of the amortization of the deferred gain on
     the sale-leaseback of buildings, were $165.1 million (2004 - $165.8
     million). The unamortized balances of the deferred gains on the
     sale-leaseback of buildings are set out in Note 17(b).

     (p)  Investments
     The Company accounts for its investments in companies over which it has
     significant influence using the equity basis of accounting whereby the
     investments are initially recorded at cost and subsequently adjusted to
     recognize the Company's share of earnings or losses of the investee
     companies and reduced by dividends received. The excess of the cost of
     equity investments over the underlying book value at the date of
     acquisition, except for goodwill, is amortized over the estimated useful
     lives of the underlying assets to which it is attributed.

     The Company accounts for its other investments using the cost basis of
     accounting whereby investments are initially recorded at cost and earnings
     from such investments are recognized only to the extent received or
     receivable.

     Carrying values of equity and cost investments are reduced to estimated
     market values if there is other than a temporary decline in the value of
     the investment; such reduction recorded is included in the Consolidated
     Statements of Income as "Other expense, net".





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (q)  Employee Future Benefit Plans
     The Company accrues its obligations under employee defined benefit plans,
     and the related costs, net of plan assets. The cost of pensions and other
     retirement benefits earned by employees is actuarially determined using
     the projected benefit method pro-rated on service and management's best
     estimate of expected plan investment performance, salary escalation and
     retirement ages of employees. For the purpose of calculating the expected
     return on plan assets, those assets are valued at fair value. The excess
     of the net actuarial gain (loss) over 10% of the greater of the benefit
     obligation and the fair value of the plan assets is amortized over the
     average remaining service period of active employees of the plan, as are
     past service costs and transitional assets and liabilities.

     The Company uses defined contribution accounting for the Telecommunication
     Workers Pension Plan and the British Columbia Public Service Pension Plan
     that cover certain of the Company's employees.

     (r)  Comparative Amounts
     Certain of the comparative amounts have been reclassified to conform to
     the presentation adopted currently.

2.   Accounting Policy Developments

     (a)  Earnings per Share
     Possibly commencing in the Company's 2006 fiscal year, proposed amendments
     to the recommendations of the Canadian Institute of Chartered Accountants
     ("CICA") for the calculation and disclosure of earnings per share (CICA
     Handbook Section 3500) may apply to the Company. These proposed
     amendments, in the Company's specific instance, may result in the diluted
     earnings per share denominator being adjusted, using the reverse treasury
     stock method, for the theoretical issuance of shares from treasury to
     settle obligations arising from the issuance of restricted stock units
     that have the possibility of equity settlement; for purposes of the
     calculation the Company will be required to assume that shares will be
     necessary to settle the obligation, and that the shares will be issued
     from Treasury. Restricted stock units are further described in Note 9(c).
     The restricted stock units issued by the Company that do not have the
     possibility of equity settlement will not be affected by these proposed
     amendments. The Company does not expect to be materially affected by the
     proposed amendments to the recommendations.

     (b)  Non-Monetary Transactions
     Commencing with the Company's 2006 fiscal year, the amended
     recommendations of the CICA for measurement of non-monetary transactions
     (CICA Handbook Section 3830) will apply to the Company. The amended
     recommendations will result in non-monetary transactions normally being
     measured at their fair values, unless certain criteria are met. The
     Company's current operations are not materially affected by the amended
     recommendations.

     (c)  Comprehensive Income
     Commencing with the Company's 2007 fiscal year, the new recommendations of
     the CICA for accounting for comprehensive income (CICA Handbook Section
     1530), for the recognition and measurement of financial instruments (CICA
     Handbook Section 3855) and for hedges (CICA Handbook Section 3865) will
     apply to the Company. In the Company's specific instance, the transitional
     rules for these sections require implementation at the beginning of a
     fiscal year; the Company will not be implementing these recommendations in
     its 2006 fiscal year. The concept of comprehensive income for purposes of
     Canadian GAAP will be to include changes in shareholders' equity arising
     from unrealized changes in the values of financial instruments.
     Comprehensive income as prescribed by U.S. GAAP, and which is disclosed in
     Note 21(i), is largely aligned with comprehensive income as prescribed by
     Canadian GAAP. In the Company's specific instance, however, there is a
     difference in other comprehensive income in that U.S. GAAP includes the
     concept of minimum pension liabilities and Canadian GAAP does not.

     (d)  Business Combinations
     Commencing with the Company's 2007 fiscal year, the proposed amended
     recommendations of the CICA for accounting for business combinations will
     apply to the Company's business combinations, if any, with an acquisition
     date of January 1, 2007, or later. Whether the Company would be materially
     affected by the proposed amended recommendations would depend upon the
     specific facts of the business combinations, if any, occurring on or after
     January 1, 2007. Generally, the proposed recommendations will result in
     measuring business acquisitions at the fair value of the acquired entities
     and a prospectively applied shift from a parent company conceptual view of
     consolidation theory (which results in the parent company recording the
     book values attributable to non-controlling interests) to an entity
     conceptual view (which results in the parent company recording the fair
     values attributable to non-controlling interests).

     (e)  Convergence with International Reporting Standards
     In early 2006, Canada's Accounting Standards Board ratified a strategic
     plan that will result in Canadian GAAP, as used by public companies, being
     converged with International Financial Reporting Standards over a
     transitional period. During 2006, the Accounting Standards Board is



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     expected to develop and publish a detailed implementation plan with a
     transition period expected to be approximately five years. As this
     convergence initiative is very much in its infancy as of the date of these
     consolidated financial statements, it would be premature to currently
     assess the impact of the initiative, if any, on the Company.

3.   Regulation of Rates Charged to Customers

     (a)  General
     The provision of telecommunications services by the Company through TELUS
     Communications Inc. and the TELE-MOBILE COMPANY partnership is subject to
     regulation under provisions of the Telecommunications Act. The regulatory
     authority designated to implement the Telecommunications Act is the CRTC,
     which is established pursuant to the terms of the Canadian
     Radio-television and Telecommunications Act.

     Pursuant to Part III of the Telecommunications Act, the CRTC may forbear,
     conditionally or unconditionally, from regulating the rates for certain
     telecommunications services, or certain classes of telecommunications
     service providers, where the CRTC finds that the service or class of
     service provided by the telecommunications service provider is subject to
     competition sufficient to protect the interests of customers. The
     TELE-MOBILE COMPANY partnership has, for example, been granted forbearance
     from regulation in relation to its entire portfolio of wireless and paging
     services. TELUS Communications Inc., in comparison, has been granted
     forebearance in relation to the setting of rates for a number of its
     wireline telecommunications services, including interexchange voice
     services, wide area network services and retail Internet services. TELUS
     Communications Inc. also operates as a forborne telecommunications service
     provider when it provides telecommunications services (primarily business
     local exchange service) outside of its traditional incumbent serving
     territory (Alberta, British Columbia and parts of Quebec) and, as such,
     all of its services are not subject to rate regulation.

     The fact that the Company is subject to rate regulation does not result in
     the Company selecting accounting policies that would differ from generally
     accepted accounting principles.

     Less than one-third of the Company's revenues are from Wireline segment
     regulated services and subject to CRTC price regulation; none of the
     Company's Wireless segment revenues are currently subject to CRTC
     regulation.

     The major categories of telecommunications services provided by TELUS
     Communications Inc. that are subject to rate regulation or have been
     forborne from rate regulation are as follows:

<TABLE>

                    Regulated services                              Forborne services (not subject to rate regulation)
    ----------------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>    <C>                                                   <C>    <C>
    o  Residential wireline services in incumbent local       o     Non-incumbent local exchange carrier services
       exchange carrier regions                               o     Long distance services
    o  Business wireline services in incumbent local          o     Internet services
       exchange carrier regions                               o     International telecommunication services(1)
    o  Competitor services                                    o     Interexchange private line services
    o  Public telephone services                              o     Certain data services
                                                              o     Cellular, enhanced specialized mobile radio
                                                                    digital ("ESMR digital") and personal communications
                                                                    services digital ("PCS digital")
                                                              o     Other wireless services, including paging
                                                              o     Sale of customer premises equipment ("CPE")

    (1) Forborne on routes where one or more competitors are offering or providing services at DS-3 or greater bandwidth.
</TABLE>


     (b)  Price Caps Form of Regulation
     The CRTC has adopted a form of price cap regulation as the means by which
     it regulates the prices for the Company's telecommunications rate
     regulated services. The current four-year price regulation regime
     commenced on June 1, 2002, with the issuance of the CRTC's Decision
     2002-34. On December 16, 2005, the CRTC issued Decision 2005-69 that
     extended the current price cap regime, without changes, for a period of
     one year to May 31, 2007. The CRTC has indicated it will initiate a
     proceeding to review the existing price regulation regime in the first
     half of 2006. The Company will account for any necessary changes arising
     from this proceeding on a prospective basis.

         Rate-setting methodology: Under the current price regulation
     framework, services are separated into seven service categories, or
     "baskets". While the Company has a degree of flexibility to raise and
     lower rates in response to market pressures, prices within baskets are
     capped using a formula that depends on the relationship between the
     inflation rate (as measured by the chain-weighted Gross Domestic Product
     Price Index) and an estimate of the telephone companies' productivity
     gains, which the CRTC has set at 3.5% for each of the four years of the
     current price cap regime, and subsequent one-year extension period,



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     irrespective of the unique operating conditions of each telephone company.
     On average, rates for basic residential services should not increase
     unless inflation goes above 3.5% whereas business services rates are
     allowed to increase, on average, by the annual inflation rate.

     Specific details on price cap constraints are as follows:

<TABLE>

                                                                                Price cap constraint
                                                      -------------------------------------------------------------------------
                                                                           Inflation                              Overriding
                                                                           less 3.5%                               maximum
                                                                          productivity       Deferral              annual
    Capped basket                                       Inflation           offset           account(1)           increase
   ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                        <C>                <C>                <C>                <C>

    Residential wireline services in incumbent
      local exchange carrier regions
      In non-high cost serving areas                                           X                  X                 5%(2)
      In high cost serving areas                                               X                                    5%(2)
    Business wireline services in incumbent local
      exchange carrier regions                              X                                                      10%
    Other capped services                                                      X
    Competitor services                                                        X
    Public telephone services                                                                                       0%(3)
    Services with frozen rates (e.g. 9-1-1 service)                                                                 0%
   ----------------------------------------------------------------------------------------------------------------------------

     (1)  When inflation is less than 3.5%, an amount equal to the revenue reduction otherwise required by the pricing
          constraint, but not implemented, will be placed in the deferral account (see Note 1(c), Note 16(a) and Note 17(b)).
          The Company may subsequently recognize the deferred amounts upon the undertaking of qualifying actions, such as
          Service Improvement Programs in qualifying non-high cost serving areas, rate reductions (including those
          mandatorily provided to competitors) and/or rebates to customers. The deferral account is the most significant
          obligation recorded on the Consolidated Balance Sheets that arises from the CRTC's regulatory authority.
     (2)  For residential optional features, the maximum annual increase is $1 per feature, excepting service bundles.
     (3)  The rates for payphone services will remain at current levels until the CRTC reviews payphone service policy
          issues.

</TABLE>

     (c)  Other Non-Price Cap Regulation
         Other: The CRTC has adopted an imputation test filing requirement to
     set floor prices for rate regulated services. The imputation test filing
     requirements ensure that the incumbent telephone companies do not reduce
     rates for services below their costs in an effort to thwart competitive
     entry or engage in predatory pricing to drive out existing competitors.

         Unbundling of essential facilities: In an effort to foster
     facilities-based competition in the provision of telecommunications
     services, the CRTC has mandated that certain essential or near-essential
     facilities be made available to competitors at rates based on their
     incremental costs plus an approved mark-up. The CRTC has defined essential
     facilities as facilities which are monopoly controlled, required by
     competitors as an input to provide services and which cannot be
     economically or technically duplicated by competitors (which include
     central office codes, subscriber listings and certain local loops in
     high-cost serving areas). The incumbent local exchange carriers must
     provide certain non-essential facilities, which the CRTC deems to be near
     essential, such as local loop facilities in low cost areas and transiting
     arrangements, at prices determined as if they were essential facilities.
     This obligation on the part of the incumbent local exchange carriers will
     continue until the market for near essential loops and transiting
     arrangements is competitive.

     Voice contribution expense and portable subsidy revenue: Local exchange
     carriers' costs of providing the level of basic residential services that
     the CRTC requires to be provided in high cost serving areas is more than
     the CRTC allows the local exchange carriers to charge for the level of
     service. To ameliorate the situation, the CRTC collects contribution
     payments, in a central fund, from all Canadian telecommunication service
     providers (including voice, data and wireless service providers) that are
     then disbursed as portable subsidy payments to subsidize the costs of
     providing residential telephone services in high cost serving areas. The
     portable subsidy payments are paid based upon a total subsidy requirement
     calculated on a per line/per band subsidy rate, as further discussed in
     Note 1(c). The CRTC currently determines, at a national level, the total
     contribution requirement necessary to pay the portable subsidies and then
     collects contribution payments from the Canadian telecommunication service
     providers, calculated as a percentage of their telecommunication service
     revenue (as defined in CRTC Decision 2000 - 745 and Telecom Order CRTC
     2001-220). The final contribution expense rate for 2005 is 1.03% and the
     interim rate for 2006 has been similarly set at 1.03%. The Company's
     contributions to the central fund, $63.0 million for the year ended
     December 31, 2005 (2004 - $59.8 million), are accounted for as an
     operations expense and the portable subsidy receipts, $72.2 million for
     the year ended December 31, 2005 (2004 - $62.1 million), are accounted for
     as local revenue.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.   Financial Instruments
     The Company's financial instruments consist of cash and temporary
     investments, accounts receivable, investments accounted for using the cost
     method, as further discussed in Note 1(p), accounts payable, restructuring
     and workforce reduction accounts payable, dividends payable, short-term
     obligations, long-term debt, interest rate swap agreements, restricted
     stock unit compensation cost hedges, as further discussed in Note 9(c),
     and foreign exchange hedges.

     The Company uses various financial instruments, the fair values of some
     which are not reflected on the balance sheets, to reduce or eliminate
     exposure to interest rate and foreign currency risks and to reduce or
     eliminate exposure to increases in the compensation cost arising from
     specified grants of restricted stock units. These instruments are
     accounted for on the same basis as the underlying exposure being hedged.
     The majority of these instruments, from a notional amount view, which were
     newly added during 2001, pertain to TELUS' U.S. Dollar borrowing. Use of
     these instruments is subject to a policy, which requires that no
     derivative transaction be effected for the purpose of establishing a
     speculative or a levered position, and sets criteria for the
     creditworthiness of the transaction counterparties.

         Price risk - interest rate: The Company is exposed to interest rate
     risk arising from fluctuations in interest rates on its temporary
     investments, short-term obligations and long-term debt.

         Price risk - currency: The Company is exposed to currency risks
     arising from fluctuations in foreign exchange rates on its U.S. Dollar
     denominated long-term debt. Currency hedging relationships have been
     established for the related semi-annual interest payments and principal
     payments at maturity, as further discussed in Note 1(h) and set out in
     Note 14(b).

     The Company's foreign exchange risk management also includes the use of
     foreign currency forward contracts to fix the exchange rates on short-term
     foreign currency transactions and commitments. Hedge accounting is applied
     to these short-term foreign currency forward contracts on an exception
     basis only.

     As at December 31, 2005, the Company had entered into foreign currency
     forward contracts that have the effect of fixing the exchange rates on
     U.S.$47.0 million of fiscal 2006 purchase commitments; hedge accounting
     has been applied to these foreign currency forward contracts, all of which
     relate to the Wireless segment.

         Credit risk: The Company is exposed to credit risk with respect to its
     short-term deposits, accounts receivable, interest rate swap agreements
     and foreign exchange hedges.

     Credit risk associated with short-term deposits is minimized substantially
     by ensuring that these financial assets are placed with governments,
     well-capitalized financial institutions and other creditworthy
     counterparties. An ongoing review is performed to evaluate changes in the
     status of counterparties.

     Credit risk associated with accounts receivable is minimized by the
     Company's large customer base, which covers all consumer and business
     sectors in Canada. The Company follows a program of credit evaluations of
     customers and limits the amount of credit extended when deemed necessary.
     The Company maintains provisions for potential credit losses, and any such
     losses to date have been within management's expectations.

     Counterparties to the Company's interest rate swap agreements and foreign
     exchange hedges are major financial institutions that have all been
     accorded investment grade ratings by a primary rating agency. The dollar
     amount of credit exposure under contracts with any one financial
     institution is limited and counterparties' credit ratings are monitored.
     The Company does not give or receive collateral on swap agreements and
     hedges due to its credit rating and those of its counterparties. While the
     Company is exposed to credit losses due to the nonperformance of its
     counterparties, the Company considers the risk of this remote; if all
     counterparties were not to perform, the pre-tax effect would be limited to
     the value of any deferred hedging asset.

         Fair value: The carrying value of cash and temporary investments,
     accounts receivable, accounts payable, restructuring and workforce
     reduction accounts payable, dividends payable and short-term obligations
     approximates their fair values due to the immediate or short-term maturity
     of these financial instruments. The carrying values of the Company's
     investments accounted for using the cost method would not exceed their
     fair values.

     The fair values of the Company's long-term debt are estimated based on
     quoted market prices for the same or similar issues or on the current
     rates offered to the Company for debt of the same maturity as well as the
     use of discounted future cash flows using current rates for similar
     financial instruments subject to similar risks and maturities. The fair
     values of the Company's derivative financial instruments used to manage
     exposure to interest rate and currency risks are estimated similarly.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>

   As at December 31                                               2005                                  2004
   ----------------------------------------------------------------------------------------------------------------------------
                                   Hedging item
                                     maximum             Carrying                             Carrying
   (millions)                     maturity date           amount             Fair value        amount             Fair value
   ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

   Assets

<S>                                <C>                <C>                <C>                <C>                <C>
     Derivatives(2)(3) used to
       manage changes in
       compensation costs
       arising from restricted
       stock units (Note 9(c))    November 2008       $       12.2       $       19.5       $        2.1       $        6.3
   ============================================================================================================================
     Derivatives(2)(3) used to
       manage currency risks
       arising from U.S. dollar
       denominated temporary
       investments                      --            $         --       $         --       $        3.4       $        3.4
   ============================================================================================================================
   Liabilities
     Long-term debt
      Principal(1) (Note 14)                          $    4,644.9       $    5,371.6       $    6,345.3       $    7,342.3
      Derivatives(2)(3) used to
        manage interest rate
        and currency risks
        associated with U.S.
        dollar denominated debt
        (Note 14(b))                June 2011              1,154.3            1,470.5            1,032.6            1,299.5
      Derivatives(2)(4) used to
        manage interest rate
        risk associated with
        Canadian dollar
        denominated debt                --                      --                 --                 --                1.3
   ----------------------------------------------------------------------------------------------------------------------------
                                                      $    5,799.2       $    6,842.1       $    7,377.9       $    8,643.1
   ============================================================================================================================
     Derivatives(2)(3) used to
       manage currency risks
       arising from U.S. dollar
       denominated purchases
       - To which hedge
       accounting is applied        June 2006         $         --       $        0.1       $         --       $        2.6
       - To which hedge
       accounting is not applied    March 2006        $         --       $        0.4       $         --       $        2.0
   ============================================================================================================================

     (1)  The December 31, 2004, carrying amount of long-term debt, for purposes of this table, includes the carrying amount
          of the convertible debenture conversion option.
     (2)  Notional amount of all derivative financial instruments outstanding is $4,904.8 (2004 - $5,651.6).
     (3)  Designated as cash flow hedging items.
     (4)  Designated as fair value hedging items.

</TABLE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.   Restructuring and Workforce Reduction Costs

     (a)  Overview

<TABLE>

     Years ended December 31
      (millions)                                         2005                                           2004
   ---------------------------------------------------------------------------------  ---------------------------------------
                                General         Office       Programs                                Operational
                                programs       closures      initiated                  Programs     Efficiency
                                initiated         and         prior to                  initiated      Program
                                 in 2005    contracting out     2005        Total       in 2004     (2001-2003)      Total
   --------------------------------------------------------------------------------------------------------------------------
<CAPTION>

    Restructuring and
     workforce reduction costs
     Workforce reduction
<S>                            <C>           <C>             <C>          <C>          <C>            <C>          <C>
      Voluntary                $     0.6     $    25.5       $   --       $   26.1     $     --       $     --     $    --
      Involuntary                   24.2           --            0.9          25.1          49.7            --         49.7
     Lease termination               1.5           --            --            1.5           --             --          --
     Other                           0.4           --            0.8           1.2           2.0           0.9          2.9
   --------------------------------------------------------------------------------------------------------------------------
                                    26.7          25.5           1.7          53.9          51.7           0.9         52.6
   --------------------------------------------------------------------------------------------------------------------------
    Disbursements
     Workforce reduction
      Voluntary (Early
      Retirement Incentive
      Plan, Voluntary
      Departure Incentive
      Plan and other)                0.9           --           26.5          27.4           --           70.7         70.7
      Involuntary and other          8.4           --           28.8          37.2          16.3          28.8         45.1
     Lease termination               3.6           --            1.2           4.8           --            4.0          4.0
     Other                           0.4           --            0.8           1.2           1.8           1.3          3.1
   --------------------------------------------------------------------------------------------------------------------------
                                    13.3           --           57.3          70.6          18.1         104.8        122.9
   --------------------------------------------------------------------------------------------------------------------------
    Expenses greater than
      (less than) disbursements     13.4          25.5         (55.6)        (16.7)         33.6        (103.9)       (70.3)
    Other                            3.1           --            --            3.1           --             --           --
   --------------------------------------------------------------------------------------------------------------------------
   Change in restructuring          16.5          25.5         (55.6)        (13.6)         33.6        (103.9)       (70.3)
     and workforce reduction
     accounts payable and
     accrued liabilities
      Balance, beginning of
      period                          --           --           70.7          70.7            --         141.0        141.0
    --------------------------------------------------------------------------------------------------------------------------
      Balance, end of period   $    16.5     $    25.5       $  15.1      $   57.1     $    33.6    $     37.1     $   70.7
   ===========================================================================================================================

</TABLE>

     (b)  Programs Initiated Prior to 2005
         Programs initiated in 2004: In the first quarter of 2004, a
     departmental reorganization was initiated, primarily in the Wireline
     segment information technology resources area, consolidating from 15
     locations to two primary locations. This reorganization, which had an
     implementation cost in 2004 of approximately $12 million, is expected to
     enable greater efficiencies of scale and effectiveness of program
     delivery.

     In the third quarter of 2004, a departmental reorganization was initiated
     in the Wireline segment with the merging of two customer-facing business
     units. The resulting integration and consolidation aimed to improve the
     Company's competitiveness as well as its operating and capital
     productivity. This reorganization had an implementation cost in 2004 of
     approximately $24 million.

     In addition to the foregoing initiatives, the Company had undertaken
     additional activities in 2004 aimed at improving its operating and capital
     productivity and competitiveness. These additional activities had a cost
     in 2004 of approximately $16 million.

     As at December 31, 2005, no future expenses remain to be accrued or
     recorded under the programs initiated in 2004, but variances from
     estimates currently recorded may be recorded in subsequent periods.

         Operational Efficiency Program (2001-2003): In 2001, the Company
     initiated the phased Operational Efficiency Program aimed at improving the
     Company's operating and capital productivity and competitiveness. The
     first phase of the Operational Efficiency Program was to complete
     merger-related restructuring activities in TELUS Mobility and the
     reorganization for TELUS Communications. The second phase of the
     Operational Efficiency Program, which commenced at the beginning of 2002,
     continued to focus on reducing staff, but also entailed a comprehensive





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     review of enterprise-wide processes to identify capital and operational
     efficiency opportunities. The third phase of the Operational Efficiency
     Program, which commenced in the third quarter of 2002, was focused on
     operationalizing the initiatives identified during the second phase review
     and included: streamlining of business processes; reducing the TELUS
     product portfolio and processes that support them; optimizing the use of
     real estate, networks and other assets; improving customer order
     management; reducing the scope of corporate support functions;
     consolidating operational and administrative functions; and consolidating
     customer contact centres.

     As at December 31, 2005, no future expenses remain to be accrued or
     recorded under the Operational Efficiency Program (2001-2003), but
     variances from estimates currently recorded may be recorded in subsequent
     periods.

     (c)  Programs Initiated in 2005

         General: In 2005, the Company undertook a number of smaller
     initiatives, such as operational consolidation, rationalization and
     integrations. These initiatives are aimed to improve the Company's
     operating and capital productivity. As at December 31, 2005, no future
     expenses remain to be accrued or recorded under the smaller initiatives
     initiated, and substantially completed, in 2005, but variances from
     estimates currently recorded may be recorded in subsequent periods.

         Office closures and contracting out: In connection with the collective
     agreement signed in the fourth quarter of 2005, as further discussed in
     Note 16(b), an accompanying letter of agreement set out the planned
     closure, on February 10, 2006, of a number of offices in British Columbia.
     This initiative is aimed to improve the Company's operating and capital
     productivity and is a component of the Company's competitive efficiency
     program. The approximately 250 bargaining unit employees affected by these
     office closures were offered the option of redeployment or participation
     in a voluntary departure program (either the Early Retirement Incentive
     Plan or the Voluntary Departure Incentive Plan).

     Similarly, an additional accompanying letter of agreement set out that the
     Company intends to contract out specific non-core functions over the term
     of the collective agreement. This initiative is aimed at allowing the
     Company to focus its resources on those core functions that differentiate
     the Company for its customers and is a component of the Company's
     competitive efficiency program. The approximately 250 bargaining unit
     employees currently affected by contracting out initiatives were offered
     the option of redeployment or participation in the voluntary departure
     program (either the Early Retirement Incentive Plan or the Voluntary
     Departure Incentive Plan).

     As at December 31, 2005, no future expenses remain to be accrued or
     recorded under the letter of agreement setting out the planned closure of
     a number of offices in British Columbia, but variances from estimates
     currently recorded may be recorded in subsequent periods. Other costs,
     such as other employee departures and those associated with real estate,
     will be incurred and recorded subsequent to December 31, 2005.

     As at December 31, 2005, no future expenses remain to be accrued or
     recorded under the letter of agreement setting out the contracting out of
     specific non-core functions, in respect of the approximately 250
     bargaining unit employees currently affected, but variances from estimates
     currently recorded may be recorded in subsequent periods. Future costs
     will be incurred as the initiative continues.

         Integration of Wireline and Wireless operations: On November 24, 2005,
     the Company announced the integration of its Wireline and Wireless
     operations, an initiative that will continue into future years and that is
     a component of the Company's competitive efficiency program. During the
     year ended December 31, 2005, $3.0 million of restructuring and workforce
     reduction costs were recorded in respect of this initiative and were
     included with general programs initiated in 2005.

     (d)  2006

     The Company's estimate of restructuring and workforce reduction costs in
     2006, arising from its competitive efficiency program, which includes the
     office closures and contracting out and integration of wireline and
     wireless operations, does not currently exceed $100 million.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.   Financing Costs

<TABLE>

   Years ended December 31 (millions)                                        2005                2004
   --------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                     <C>                 <C>
   Interest on long-term debt                                           $      635.5        $      647.0
   Interest on short-term obligations and other                                  8.2                 8.5
   Foreign exchange(1)                                                           4.6                (3.1)
   Loss on redemption of long-term debt(2)                                      33.5                  --
   --------------------------------------------------------------------------------------------------------
                                                                               681.8               652.4
   Interest income
      Interest on tax refunds                                                  (25.2)              (26.2)
      Other interest income                                                    (33.5)              (12.9)
   --------------------------------------------------------------------------------------------------------
                                                                               (58.7)              (39.1)
   --------------------------------------------------------------------------------------------------------
                                                                        $      623.1        $      613.3
   ========================================================================================================

   (1)  For the year ended December 31, 2005, these amounts include losses (gains) of $(0.1) (2004 -
        $0.6), in respect of cash flow hedge ineffectiveness; no gains or losses were experienced arising
        from fair value hedge ineffectiveness.

   (2)  This amount includes a loss of $2.3, which arose from the associated settlement of financial
        instruments that were used to manage a portion of the interest rate risk associated with Canadian
        dollar denominated debt that was redeemed during the fourth quarter of 2005 (see Note 6 and Note
        14(b)).

</TABLE>

7.   Income Taxes

<TABLE>

   Years ended December 31 (millions)                                         2005               2004
   --------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                      <C>                 <C>
    Current                                                              $      (18.0)       $     (125.8)
    Future                                                                      340.0               380.9
   --------------------------------------------------------------------------------------------------------
                                                                         $      322.0        $      255.1
   ========================================================================================================
</TABLE>

     The Company's income tax expense differs from that calculated by applying
     statutory rates for the following reasons:

<TABLE>

   Years ended December 31 ($ in millions)                      2005                          2004
   ------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                     <C>              <C>        <C>               <C>
    Basic blended federal and provincial tax at
      statutory income tax rates                        $    352.3       34.2%      $   286.6         34.7%
    Change in estimates of available deductible
      differences in prior years                             (37.5)                      (9.1)
    Tax rate differential on, and consequential
      adjustments from, reassessment of prior year
      tax issues                                             (13.9)                     (41.2)
    Share option compensation                                  4.9                        6.6
    Revaluation of future income tax asset and
      liability for changes in statutory income
      tax rates                                               (5.1)                     (12.9)
    Other                                                      4.8                        6.6
   ------------------------------------------------------------------------------------------------------------
                                                             305.5       29.7%          236.6         28.7%
   Large corporations tax                                     16.5                       18.5
   ------------------------------------------------------------------------------------------------------------
    Income tax expense per Consolidated Statements
      of Income                                         $    322.0       31.3%      $   255.1         30.9%
   ============================================================================================================

</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     As referred to in Note 1(b), the Company must make significant estimates
     in respect of the composition of its future income tax asset and future
     income tax liability. The operations of the Company are complex, and
     related tax interpretations, regulations and legislation are continually
     changing. As a result, there are usually some tax matters in question.
     Temporary differences comprising the future income tax asset (liability)
     are estimated as follows:

<TABLE>
     As at December 31 (millions)                                              2005               2004
     ---------------------------------------------------------------------------------------------------------
<CAPTION>

     Capital assets
<S>                                                                        <C>                 <C>
       Property, plant, equipment, other and intangible assets
         subject to amortization                                           $    (8.4)          $   (13.4)
       Intangible assets with indefinite lives                                (974.4)             (991.9)
     Pension amounts                                                          (171.4)             (132.8)
     Losses available to be carried forward                                    164.0               424.9
     Reserves not currently deductible                                         111.3               167.9
     Other                                                                      81.4                91.6
     ---------------------------------------------------------------------------------------------------------
                                                                           $  (797.5)          $  (453.7)
     =========================================================================================================
     Presented on the Consolidated Balance Sheets as:
       Future income tax asset
         Current                                                           $   226.4           $   438.4
         Non-current                                                              --                99.8
     ---------------------------------------------------------------------------------------------------------
                                                                               226.4               538.2
       Future income tax liability                                          (1,023.9)             (991.9)
     ---------------------------------------------------------------------------------------------------------
       Net future income tax asset (liability)                             $  (797.5)          $  (453.7)
     =========================================================================================================
</TABLE>

     The Company expects to be able to substantially utilize its non-capital
     losses over the next two years. The Company's assessment is that the risk
     of expiry of such non-capital losses is remote.

     The Company conducts research and development activities, which are
     eligible to earn Investment Tax Credits. During the year ended December
     31, 2005, the Company recorded Investment Tax Credits of $0.4 million
     (2004 - $0.6 million), all of which was recorded as a reduction of
     "Operations expense".

8.   Per Share Amounts

     Basic income per Common Share and Non-Voting Share is calculated by
     dividing Common Share and Non-Voting Share income by the total weighted
     average Common Shares and Non-Voting Shares outstanding during the period.
     Diluted income per Common Share and Non-Voting Share is calculated to give
     effect to share options and warrants and shares issuable on conversion of
     debentures.

     The following tables present the reconciliations of the numerators and
     denominators of the basic and diluted per share computations.

<TABLE>

     Years ended December 31 (millions)                                            2005                2004
     -----------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                             <C>                 <C>
     Net income                                                                 $      700.3        $    565.8
     Deduct:
        Preference and preferred share dividends                                         --                1.8
        Redemption premium on preference and preferred shares in
          excess of amount chargeable to contributed surplus                             --                2.3
     ------------------------------------------------------------------------------------------------------------
     Diluted Common Share and Non-Voting Share income                           $      700.3        $    561.7
     ============================================================================================================

     Years ended December 31 (millions)                                             2005                2004
     ------------------------------------------------------------------------------------------------------------
     Basic total weighted average Common Shares and Non-Voting
       Shares outstanding                                                              357.1             355.3
     Effect of dilutive securities
        Exercise of share options                                                        3.9               2.0
        Exercise of warrants (see Note 15(c))                                            --                0.3
   --------------------------------------------------------------------------------------------------------------
     Diluted total weighted average Common Shares and Non-Voting Shares outstanding    361.0             357.6
   ==============================================================================================================

</TABLE>

     For the year ended December 31, 2005, certain outstanding share options,
     in the amount of 1.1 million (2004 - 7.9 million) were not included in the
     computation of diluted income per Common Share and Non-Voting Share
     because the share options' exercise prices were greater than the average
     market price of the Common Shares and Non-Voting Shares during the
     reported periods. Convertible debentures, which were convertible into 3.8
     million shares, were not included in the computation of diluted income per
     Common Share and Non-Voting Share for the year ended December 31, 2004, as
     they were antidilutive. The redemption of convertible debentures is
     further discussed in Note 14(d).



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   Share-Based Compensation

     (a)  Details of Share-Based Compensation Expense
     Reflected in the Consolidated Statements of Income as "Operations expense"
     are the following share-based compensation amounts:

<TABLE>

     Years ended December 31 (millions)                                                     2005              2004
     ---------------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                                       <C>              <C>
     Share options                                                                        $    14.2        $   19.1
     Restricted stock units                                                                    18.5             9.4
     Employee share purchase plan                                                              35.7            23.0
     ---------------------------------------------------------------------------------------------------------------------
     Amounts recognized as Operations expense in consolidated statements of income             68.4            51.5
     Less - Income tax benefit arising from share-based compensation (see Note 7)              18.5            11.2
     ---------------------------------------------------------------------------------------------------------------------
                                                                                          $    49.9        $   40.3
     =====================================================================================================================
</TABLE>

     (b)  Share Options
     Effective January 1, 2004, for purposes of Canadian generally accepted
     accounting principles, the Company applies the fair value based method of
     accounting for share-based compensation awards granted to employees. As
     only share options granted after 2001 are included, the compensation
     expense arising from share options is not likely to be representative of
     the effects on reported net income for future years. Share options
     typically vest over a three-year period (the requisite service period),
     but may vest over periods of up to five years. The vesting method of share
     options, which is determined at the date of grant, may be either cliff or
     graded.

     The weighted average fair value of options granted, and the weighted
     average assumptions used in the fair value estimation at the time of
     grant, using the Black-Scholes model (a closed-form option pricing model),
     are as follows:

<TABLE>

     Years ended December 31                                             2005           2004
     -------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                 <C>              <C>
     Share option fair value (per share option)                     $    12.08       $   7.76
     Risk free interest rate                                              3.8%           3.9%
     Expected lives(1) (years)                                            4.7            4.5
     Expected volatility                                                 38.9%          40.0%
     Dividend yield                                                       2.3%           2.5%
     -------------------------------------------------------------------------------------------
</TABLE>

     (1)  The maximum contractual term of the share options granted in 2005 and
          2004 was seven years.

     The risk free interest rate used in determining the fair value of the
     share options is based on a Government of Canada yield curve that is
     current at the time of grant. The expected lives of the share options are
     based on historical share option exercise data of the Company. Similarly,
     expected volatility is based on historical volatility of the Company's
     Non-Voting Shares. The dividend yield is the annualized dividend current
     at the date of grant divided by the share option exercise price. Dividends
     are not paid on unexercised share options and are not subject to vesting.

     Had weighted average assumptions for grants of share options that are
     reflected in the expense disclosures above been varied by 10% and 20%
     changes, the compensation cost arising from share options for the year
     ended December 31, 2005, would have varied as follows:

<TABLE>

                                                                     Hypothetical change
                                                                      in assumptions(1)
     ($ in millions)                                                 10%              20%
     -----------------------------------------------------------------------------------------
<CAPTION>

<S>                                                              <C>              <C>
     Risk free interest rate                                     $     0.2        $     0.5
     Expected lives (years)                                      $     0.5        $     1.0
     Expected volatility                                         $     1.2        $     2.4
     Dividend yield                                              $     0.3        $     0.6
     -----------------------------------------------------------------------------------------
</TABLE>

     (1)  These sensitivities are hypothetical and should be used with caution.
          Favourable hypothetical changes in the assumptions result in a
          decreased amount, and unfavourable hypothetical changes in the
          assumptions result in an increased amount, of the pro forma
          compensation cost arising from share options. As the figures
          indicate, changes in fair value based on a 10% variation in
          assumptions generally cannot be extrapolated because the relationship
          of the change in assumption to the change in fair value may not be
          linear; in particular, variations in expected lives are constrained
          by vesting periods and legal lives. Also, in this table, the effect
          of a variation in a particular assumption on the amount of the pro
          forma compensation cost arising from share options is calculated
          without changing any other assumption; in reality, changes in one
          factor may result in changes in another (for example, increases in
          risk free interest rates may result in increased dividend yields),
          which might magnify or counteract the sensitivities.

     (c)  Restricted Stock Units
     The Company uses restricted stock units as a form of incentive
     compensation. Each restricted stock unit is equal in value to one
     Non-Voting Share and the dividends that would have arisen thereon had it
     been an issued and outstanding Non-Voting Share are recorded as additional
     restricted stock units during the life of the restricted stock unit. The
     restricted stock units become payable as they vest over their lives.
     Typically, the restricted stock units vest over a period of 33 months. The



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     vesting method, which is determined at the date of grant, may be either
     cliff or graded. The following table presents a summary of the activity
     related to the Company's restricted stock units.

<TABLE>

     Years ended December 31                                  2005                                        2004
     -------------------------------------------------------------------------------    -------------------------------------
                                                                                                                  Weighted
                                            Number of restricted          Weighted      Number of restricted       average
                                                stock units               average           stock units             grant
                                           ------------------------      grant date    -----------------------    date fair
                                           Non-vested      Vested        fair value     Non-vested      Vested      value
     ------------------------------------------------------------------------------------------------------------------------
<CAPTION>

     Outstanding, beginning of period
<S>                                           <C>          <C>          <C>                <C>        <C>          <C>
       Non-vested                             880,053          --      $    23.36         237,857        --       $   16.48
       Vested                                    --         118,434         18.47            --        78,773         16.34
     Issued
       Initial allocation                   1,076,966          --           37.91         884,624        --           24.11
       In lieu of dividends                    33,421          --           43.30          27,479        --           25.02
     Vested                                  (158,877)      158,877         19.67        (224,174)    224,174         16.48
     Settled in cash                             --        (214,874)        18.46            --      (184,513)        17.93
     Forfeited and cancelled                 (186,033)         --           32.08         (45,733)       --           24.12
     ------------------------------------------------------------------------------------------------------------------------
     Outstanding, end of period
       Non-vested                           1,645,530          --           32.16         880,053        --           23.36
       Vested                                    --          62,437    $    26.43            --       118,434     $   18.47
     ========================================================================================================================
</TABLE>

     With respect to certain issuances of restricted stock units, the Company
     entered into cash-settled equity forward agreements that fix the cost to
     the Company, as set out in the following table:

<TABLE>

                                                                                                          Cost fixed
                                                                                                            to the
                                                                                       Number of          Company per
                                                                                       restricted         restricted
                                                                                      stock units         stock unit
     ------------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                                        <C>            <C>
     Issued in first quarter of 2004; cliff vesting in the fourth quarter of 2006          652,550        $      26.61
     Issued in first quarter of 2005; cliff vesting in the fourth quarter of 2007          600,000        $      40.91
     Issued in fourth quarter of 2005; cliff vesting in the fourth quarter of 2008         160,000        $      50.91
     ------------------------------------------------------------------------------------------------------------------
</TABLE>


     The following is a schedule of vesting of the Company's non-vested
     restricted stock units outstanding as at December 31, 2005:

                                                           Number of
                                                          restricted
     Years ending December 31 (millions)                  stock units
     ------------------------------------------------------------------
     2006                                                    724,978
     2007                                                    690,534
     2008                                                    230,018
     ------------------------------------------------------------------
                                                           1,645,530
     ==================================================================

     (d)  Employee Share Purchase Plan
     The Company has an employee share purchase plan under which eligible
     employees can purchase Common Shares through regular payroll deductions by
     contributing between 1% and 10% of their pay. The Company contributes 45%,
     for the employee population up to a certain job classification, for every
     dollar contributed by an employee, to a maximum of 6% of employee pay; for
     more highly compensated job classifications, the Company contributes 40%.
     Commencing July 25, 2005, and concluding November 19, 2005, the Company
     increased its contribution to 100% for all plan participants, other than
     the executive leadership team, up to 6% of participants' eligible pay.
     There are no vesting requirements and the Company records its
     contributions as a component of operating expenses.

<TABLE>

     Years ended December 31 ($ in millions)                2005                             2004
     ----------------------------------------------------------------------------------------------------------
                                                  Number of                     Number of
                                                    shares          Total         shares              Total
     ----------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                               <C>          <C>                <C>              <C>
     Employee contributions                       1,470,251    $    61.9          2,218,645        $   57.4
     Company contributions                          824,847         35.7            887,949            23.0
     ----------------------------------------------------------------------------------------------------------
                                                  2,295,098    $    97.6          3,106,594        $   80.4
     ==========================================================================================================
     Source of Common Shares purchased
       Market purchase                            2,295,098    $    97.6            871,304        $   24.3
       Treasury issuance                                 --           --          2,235,290            56.1
   ------------------------------------------------------------------------------------------------------------
                                                  2,295,098    $    97.6          3,106,594        $   80.4
   ============================================================================================================

</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Under this plan, the Company has the option of offering shares from
     Treasury or having the trustee acquire shares in the stock market. Prior
     to February 2001 and subsequent to November 1, 2004, all Common Shares
     issued to employees under the plan were purchased on the market at normal
     trading prices; in the intervening period, shares were also issued from
     Treasury.

     (e)  Unrecognized, Non-Vested Share-Based Compensation
     As at December 31, 2005, compensation cost related to non-vested
     share-based compensation that has not yet been recognized is set out in
     the following table and is expected to be recognized over a weighted
     average period of 2.8 years (2004 - 1.6 years).

     These disclosures are not likely to be representative of the effects on
     reported net income for future years for the following reasons:
     o    these amounts reflect an estimate of forfeitures;
     o    these amounts do not reflect any provision for future awards;
     o    these amounts do not reflect any provision changes in the intrinsic
          value for vested restricted stock units; and
     o    for non-vested restricted stock units, these amounts reflect
          intrinsic values as at the balance sheet dates.

<TABLE>

     As at December 31 (millions)                                      2005           2004
     --------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                  <C>            <C>
     Share options                                                   $  27.1        $  21.0
     Restricted stock units(1)                                          31.8           13.1
     --------------------------------------------------------------------------------------------
                                                                     $  58.9        $  34.1
     ============================================================================================
</TABLE>

     (1)  The compensation cost that has not yet been recognized in respect of
          non-vested restricted stock units is calculated based upon the
          intrinsic value of the non-vested restricted stock units as at the
          balance sheet date, net of the impacts of associated cash-settled
          equity forward agreements.

10.  Accounts Receivable
     On July 26, 2002, TELUS Communications Inc., a wholly-owned subsidiary of
     TELUS, entered into an agreement, which was amended September 30, 2002,
     with an arm's-length securitization trust under which TELUS Communications
     Inc. is able to sell an interest in certain of its trade receivables up to
     a maximum of $650 million. As a result of selling the interest in certain
     of the trade receivables on a fully-serviced basis, a servicing liability
     is recognized on the date of sale and is, in turn, amortized to earnings
     over the expected life of the trade receivables. This "revolving-period"
     securitization agreement has an initial term ending July 18, 2007. TELUS
     Communications Inc. is required to maintain at least a BBB (low) credit
     rating by Dominion Bond Rating Service or the securitization trust may
     require the sale program to be wound down prior to the end of the initial
     term; at December 31, 2005, the rating was A (low).

<TABLE>

     As at December 31 (millions)                                      2005             2004
     -------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                <C>            <C>
     Total managed portfolio                                       $    1,129.3   $    1,021.7
     Securitized receivables                                             (599.2)        (181.3)
     Retained interest in receivables sold                                 80.2           23.1
     -------------------------------------------------------------------------------------------
     Receivables held                                              $      610.3   $      863.5
     ===========================================================================================
</TABLE>

     For the year ended December 31, 2005, the Company recognized losses of
     $3.9 million (2004 - $1.1 million) on the sale of receivables arising from
     the securitization.

     Cash flows from the securitization are as follows:

<TABLE>

     Years ended December 31 (millions)                                               2005               2004
     -----------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                              <C>               <C>
     Cumulative proceeds from securitization, beginning of period                $      150.0      $      300.0
     Proceeds from new securitizations                                                  350.0                --
     Securitization reduction payments                                                     --            (150.0)
     -----------------------------------------------------------------------------------------------------------
     Cumulative proceeds from securitization, end of period                      $      500.0      $      150.0
     ===========================================================================================================
     Proceeds from collections reinvested in revolving-period securitizations    $    1,679.3      $    1,745.6
     ===========================================================================================================
     Proceeds from collections pertaining to retained interest                   $      275.3      $      313.6
     ===========================================================================================================
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The key economic assumptions used to determine the loss on sale of
     receivables, the future cash flows and fair values attributed to the
     retained interest, as further discussed in Note 1(l), are as follows:

<TABLE>

     Years ended December 31                                            2005              2004
     ----------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                      <C>              <C>
     Expected credit losses as a percentage of accounts
       receivable sold                                                   1.2%             1.4%
     Weighted average life of the receivables sold (days)                39               39
     Effective annual discount rate                                      3.6%             3.4%
     Servicing                                                           1.0%             1.0%
   ------------------------------------------------------------------------------------------------

</TABLE>

     Generally, the sold trade receivables do not experience prepayments.

     At December 31, 2005, key economic assumptions and the sensitivity of the
     current fair value of residual cash flows to immediate 10% and 20% changes
     in those assumptions are as follows:

<TABLE>

                                                                                     Hypothetical change
                                                                                      in assumptions(1)
     ($ in millions)                                                 2005            10%            20%
     -----------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                               <C>             <C>             <C>
     Carrying amount/fair value of future cash flows              $    80.2
     Expected credit losses as a percentage of accounts
       receivable sold                                                            $    0.7        $   1.4
     Weighted average life of the receivables sold (days)                         $     --        $   0.1
     Effective annual discount rate                                               $     --        $   0.1
     -----------------------------------------------------------------------------------------------------
</TABLE>

     (1)  These sensitivities are hypothetical and should be used with caution.
          Favourable hypothetical changes in the assumptions result in an
          increased value, and unfavourable hypothetical changes in the
          assumptions result in a decreased value, of the retained interest in
          receivables sold. As the figures indicate, changes in fair value
          based on a 10% variation in assumptions generally cannot be
          extrapolated because the relationship of the change in assumption to
          the change in fair value may not be linear. Also, in this table, the
          effect of a variation in a particular assumption on the fair value of
          the retained interest is calculated without changing any other
          assumption; in reality, changes in one factor may result in changes
          in another (for example, increases in market interest rates may
          result in increased credit losses), which might magnify or counteract
          the sensitivities.

11.  Capital Assets

     (a)  Capital Assets, Net

<TABLE>

                                                                    Accumulated
                                                                 Depreciation and
                                                        Cost       Amortization             Net Book Value
     --------------------------------------------------------------------------------------------------------------
     As at December 31 (millions)                                                         2005            2004
     --------------------------------------------------------------------------------------------------------------
<CAPTION>

     Property, plant, equipment and other
<S>                                               <C>             <C>                <C>            <C>
      Telecommunications assets                   $   17,583.7    $   12,092.8       $    5,490.9   $    5,814.3
      Assets leased to customers                         529.6           466.2               63.4          106.5
      Buildings and leasehold improvements             1,754.8           916.8              838.0          852.6
      Office equipment and furniture                     980.7           717.6              263.1          253.8
      Assets under capital lease                          18.5             6.1               12.4           11.7
      Other                                              329.3           244.4               84.9           91.1
      Land                                                46.7              --               46.7           46.8
      Assets under construction                          516.4              --              516.4          329.6
      Materials and supplies                              23.6              --               23.6           21.8
     --------------------------------------------------------------------------------------------------------------
                                                      21,783.3        14,443.9            7,339.4        7,528.2
     --------------------------------------------------------------------------------------------------------------
     Intangible assets subject to amortization
      Subscriber base                                    362.9           116.2              246.7          268.2
      Software                                         1,207.1           884.4              322.7          388.4
      Access to rights-of-way and other                  119.3            51.2               68.1           80.4
     --------------------------------------------------------------------------------------------------------------
                                                       1,689.3         1,051.8              637.5          737.0
     --------------------------------------------------------------------------------------------------------------
     Intangible assets with indefinite lives
      Spectrum licences(1)                             3,983.1         1,018.5            2,964.6        2,955.8
     --------------------------------------------------------------------------------------------------------------
                                                  $   27,455.7    $   16,514.2       $   10,941.5   $   11,221.0
     ==============================================================================================================
</TABLE>

     (1)  Accumulated amortization of spectrum licences is amortization
          recorded prior to 2002 and the transitional impairment amount.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The following table presents items included in capital expenditures.

<TABLE>

     Years ended December 31 (millions)                               2005          2004
     ---------------------------------------------------------------------------------------
<CAPTION>

     Additions of intangible assets
<S>                                                              <C>             <C>
       - Subject to amortization                                 $    191.8      $   227.8
       - With indefinite lives                                          8.8            1.2
     ---------------------------------------------------------------------------------------
                                                                 $    200.6      $   229.0
     =======================================================================================

     The following table presents items included in capital expenditures.

     Years ended December 31 (millions)                                2005         2004
     ---------------------------------------------------------------------------------------

     Capitalized internal labour costs                           $    213.0       $  255.3
     =======================================================================================

     (b)  Intangible Assets Subject to Amortization
     Estimated aggregate amortization expense for intangible assets subject to
     amortization, calculated upon such assets held as at December 31, 2005,
     for each of the next five fiscal years is as follows:

     Years ending December 31 (millions)
     -------------------------------------------------------------------------------------
     2006                                                                   $   211.8
     2007                                                                       124.7
     2008                                                                        44.8
     2009                                                                         9.7
     2010                                                                         8.0

</TABLE>

     (c)  Intangible Assets with Indefinite Lives
     As referred to in Note 1(b) and Note 1(f), the carrying value of
     intangible assets with indefinite lives and goodwill are periodically
     tested for impairment and this test represents a significant estimate for
     the Company. There is a material degree of uncertainty with respect to
     this estimate given the necessity of making key economic assumptions about
     the future. The Company considers a range of reasonably possible amounts
     and decides upon an amount that represents management's best estimate. If
     the future was to adversely differ from management's best estimate of key
     economic assumptions and associated cash flows were to be materially
     adversely affected, the Company could potentially experience future
     material impairment charges in respect of its intangible assets with
     indefinite lives and goodwill.

     Consistent with current industry-specific valuation methods, a combination
     of the discounted cash flow approach, the market-comparable approach and
     analytical review of industry and Company-specific facts is used in
     determining the fair value of its spectrum licences and goodwill. The
     discounted cash flow methodology uses management's best estimate of the
     cash flows and a discount rate established by calculating a weighted
     average cost of capital for each reporting unit. The market comparable
     approach uses current (at the time of test) market consensus estimates and
     equity trading prices for U.S. and Canadian firms in the same industry. In
     addition, the Company ensures that the combination of the valuations of
     the reporting units is reasonable based on current market values of the
     Company.

     Based upon sensitivity testing conducted as a part of the December 2005
     annual test, and the results of operations for 2005, the Company estimates
     that its annual cash flows would be sufficient to recover the carrying
     value of its intangible assets with indefinite lives and goodwill. A
     component of the sensitivity testing was a break-even analysis; an
     assumption of no growth rate, with all other assumptions being held
     constant, resulted in the Company continuing to be able to recover the
     carrying value of its intangible assets with indefinite lives and goodwill
     for the foreseeable future. Stress testing included moderate declines in
     annual cash flows with all other assumptions being held constant; this too
     resulted in the Company continuing to be able to recover the carrying
     value of its intangible assets with indefinite lives and goodwill for the
     foreseeable future.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


12.  Goodwill

<TABLE>

     Years ended December 31 (millions)                                            2005                2004
     ----------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                           <C>                 <C>
     Balance, beginning of period                                             $    3,126.8        $    3,118.0
     Goodwill arising from current period acquisitions                                24.5                 6.9
     Goodwill arising from contingent consideration paid in respect
       of a prior year's acquisition                                                   7.9                  --
     Foreign exchange on goodwill of self-sustaining foreign operations               (2.3)                1.3
     Other                                                                              --                 0.6
     ----------------------------------------------------------------------------------------------------------
     Balance, end of period                                                   $    3,156.9        $    3,126.8
     ==========================================================================================================
</TABLE>

         Ambergris Solutions Inc.: The goodwill addition in the year ended
     December 31, 2005, none of which is expected to be deductible for tax
     purposes, arose from the cash acquisition of an effective 52.5% economic
     interest in Ambergris Solutions Inc., a business process outsourcing
     company. The acquisition was effected in two steps: one on February 15,
     2005, for an effective 49% economic interest and one on May 13, 2005, for
     an effective 3.5% economic interest. The initial effective 49% economic
     interest resulted in the Company controlling Ambergris Solutions Inc. as
     the Company controlled, but did not wholly-own, an intermediate holding
     company which, in turn, controlled, but did not wholly-own, Ambergris
     Solutions Inc. This investment was made with a view to enhancing the
     Company's competitiveness in contact centre offerings. The primary factor
     that contributed to a purchase price that resulted in the recognition of
     goodwill is the low degree of net tangible assets in the industry relative
     to the market value of established Asian operations. Effective February
     15, 2005, Ambergris Solutions Inc.'s results are included in the Company's
     Consolidated Statements of Income and are included in the Company's
     Wireline segment.

         Adcom Inc.: The 2004 goodwill addition, none of which is expected to
     be deductible for tax purposes, arose from the November 15, 2004, cash
     acquisition of Adcom Inc., a national videoconferencing company. The
     investment was made with a view to the ongoing advancement of the
     Company's national data and Internet protocol growth strategy. The primary
     factor that contributed to a purchase price that resulted in the
     recognition of goodwill is the low degree of net tangible assets relative
     to the earnings capacity of the acquired business. Effective the same
     date, Adcom Inc.'s results are included in the Company's Consolidated
     Statements of Income and are included in the Company's Wireline segment.

         Summarized balance sheet information: The following is a summarized
     balance sheet disclosing the fair values assigned to each major asset and
     liability class as at the dates of acquisition:

<TABLE>

                                                                             Ambergris
     (millions)                                                           Solutions Inc.     Adcom Inc.
     ----------------------------------------------------------------------------------------------------
<CAPTION>

     Assets
<S>                                                                       <C>              <C>
       Current Assets                                                     $     8.4        $     5.9
     ----------------------------------------------------------------------------------------------------
       Capital Assets, Net
         Property, plant, equipment and other                                  13.3              1.0
         Intangible assets subject to amortization(1)                            --              1.5
     ----------------------------------------------------------------------------------------------------
                                                                               13.3              2.5
     ----------------------------------------------------------------------------------------------------
       Other Assets
         Future income taxes                                                     --              2.9
         Other                                                                  0.5               --
         Goodwill                                                              24.5              6.9
     ----------------------------------------------------------------------------------------------------
                                                                               25.0              9.8
     ----------------------------------------------------------------------------------------------------
                                                                          $    46.7        $    18.2
     ====================================================================================================
     Liabilities
       Current Liabilities                                                $     6.9        $     5.6
       Future Income Taxes                                                      5.4              0.4
     ----------------------------------------------------------------------------------------------------
                                                                               12.3              6.0
     ----------------------------------------------------------------------------------------------------
     Non-Controlling Interest                                                   5.0               --
     ----------------------------------------------------------------------------------------------------
     Purchase Price                                                            29.4             12.2
     ----------------------------------------------------------------------------------------------------
                                                                          $    46.7        $    18.2
     ====================================================================================================

     (1)  Intangible assets subject to amortization will be amortized on a straight-line basis over four years.
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Pro forma supplemental information: The following pro forma
     supplemental information represents certain results of operations as if
     the business acquisitions had been completed as at the beginning of the
     periods presented.

<TABLE>

     Years ended December 31 ($ in millions except
     per share amounts)                                             2005                                   2004
     ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                         As reported        Pro forma(1)       As reported         Pro forma(2)
<S>                                                     <C>                <C>                <C>                 <C>
     Operating revenues                                 $    8,142.7       $    8,147.5       $    7,581.2        $    7,630.3
     Net income                                         $      700.3       $      700.8       $      565.8        $      569.1
     Income per Common Share and Non-Voting Share
       - Basic                                          $       1.96       $       1.96       $       1.58        $       1.59
       - Diluted                                        $       1.94       $       1.94       $       1.57        $       1.58
     ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

     (1)  Pro forma amounts for 2005 reflect Ambergris Solutions Inc.
     (2)  Pro forma amounts for 2004 reflect Ambergris Solutions Inc. and Adcom
          Inc. Adcom Inc. was purchased effective November 15, 2004, and its
          results have been included in the Company's Consolidated Statements
          of Income effective the same date.

13.  Short-Term Obligations

     At December 31, 2005, the Company's available bilateral bank facilities
     totalled $74 million, unchanged from 2004, none of which was utilized in
     the form of an overdraft, also unchanged from 2004; $7.3 million (2004 -
     $7.2 million) was utilized as outstanding undrawn letters of credit.

14.  Long-Term Debt

     (a)  Details of Long-Term Debt

<TABLE>

     ($ in millions)                                                                    As at December 31
     Series                     Rate of interest               Maturity              2005             2004
     ------------------------------------------------------------------------------------------------------------
<CAPTION>

     TELUS Corporation Notes
<S>                                    <C>                     <C>             <C>                <C>
          U.S. (2)                     7.5%(1)                 June 2007        $    1,354.4       $    1,398.6
          U.S. (3)                     8.0%(1)                 June 2011             2,230.6            2,303.9
           CA                          7.5%(1)                 June 2006                  --            1,574.6
     ------------------------------------------------------------------------------------------------------------
                                                                                     3,585.0            5,277.1
     ------------------------------------------------------------------------------------------------------------
     TELUS Corporation Credit
        Facilities                     5.00%                   May 2008                142.0                 --
     ------------------------------------------------------------------------------------------------------------
     TELUS Corporation Convertible Debentures
                                       6.75%(1)                June 2010                  --              141.6
     ------------------------------------------------------------------------------------------------------------
     TELUS Communications Inc. Debentures
             1                        12.00%(1)                May 2010                 50.0               50.0
             2                        11.90%(1)                November 2015           125.0              125.0
             3                        10.65%(1)                June 2021               175.0              175.0
             5                         9.65%(1)                April 2022              249.0              249.0
             B                         8.80%(1)                September 2025          200.0              200.0
     ------------------------------------------------------------------------------------------------------------
                                                                                       799.0              799.0
     ------------------------------------------------------------------------------------------------------------
     TELUS Communications Inc. First Mortgage Bonds
             U                        11.50%(1)                July 2010                30.0               30.0
     ------------------------------------------------------------------------------------------------------------
     TELUS Communications Inc. Medium Term Notes
             1                         7.10%(1)                February 2007            70.0               70.0
     ------------------------------------------------------------------------------------------------------------
     Capital leases issued at varying rates of interest
       from 4.1% to 16.7% and maturing on various dates up to 2013                      12.5               10.7
     ------------------------------------------------------------------------------------------------------------
     Other                                                                               6.4                8.1
     ------------------------------------------------------------------------------------------------------------
     Total debt                                                                      4,644.9            6,336.5
     Less - current maturities                                                           5.0                4.3
     ------------------------------------------------------------------------------------------------------------
     Long-Term Debt                                                             $    4,639.9       $    6,332.2
     ============================================================================================================

     (1)  Interest is payable semi-annually.
     (2)  Principal face value of notes is U.S.$1,166.5 million (2004 -
          U.S.$1,166.5 million).
     (3)  Principal face value of notes is U.S.$1,925.0 million (2004 -
          U.S.$1,925.0 million).

</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (b)  TELUS Corporation Notes

     The notes are senior, unsecured and unsubordinated obligations of the
     Company and rank equally in right of payment with all existing and future
     unsecured, unsubordinated obligations of the Company, are senior in right
     of payment to all existing and future subordinated indebtedness of the
     Company, and are effectively subordinated to all existing and future
     obligations of, or guaranteed by, the Company's subsidiaries.

     The indentures governing the notes contain certain covenants which, among
     other things, place limitations on the ability of TELUS and certain of its
     subsidiaries to: grant security in respect of indebtedness, enter into
     sale and lease-back transactions and incur new indebtedness.

         2007 and 2011 (U.S. Dollar) Notes: In May 2001, the Company issued
     U.S.$1.3 billion 2007 Notes at a price of U.S.$995.06 per U.S.$1,000.00 of
     principal to the public and U.S.$2.0 billion 2011 Notes at a price of
     U.S.$994.78 per U.S.$1,000.00 of principal to the public. The notes are
     redeemable at the option of the Company, in whole at any time, or in part
     from time to time, on not fewer than 30 nor more than 60 days' prior
     notice, at a redemption price equal to the greater of (i) the present
     value of the notes discounted at the Adjusted Treasury Rate plus 25 basis
     points in the case of the 2007 Notes and 30 basis points in the case of
     the 2011 Notes, or (ii) 100% of the principal amount thereof. In addition,
     accrued and unpaid interest, if any, will be paid to the date fixed for
     redemption.

         2007 and 2011 Cross Currency Interest Rate Swap Agreements: With
     respect to the 2007 and 2011 (U.S. Dollar) Notes, U.S.$3.1 billion (2004 -
     U.S.$3.1 billion) in aggregate, the Company entered into cross currency
     interest rate swap agreements which effectively convert the principal
     repayments and interest obligations to Canadian dollar obligations with
     effective fixed interest rates of 8.109% (2004 - 8.109%) and 8.493% (2004
     - 8.493%), respectively.

     The cross currency interest rate swap agreements contain an optional early
     termination provision which states that either party may elect to
     terminate these swap agreements on May 30, 2006, if (i) the highest of the
     long-term unsecured unsubordinated debt ratings of the Company falls below
     BBB as determined by Standard & Poor's Rating Services or Baa2 as
     determined by Moody's Investors Service or (ii) in the case of these two
     ratings having a difference of two or more rating increments, the lower of
     the two ratings is below BBB- or Baa3 or (iii) the rating for the
     Company's counterparties fall below A or A2.

     The counterparties of the swap agreements are highly rated financial
     institutions and the Company does not anticipate any non-performance.
     TELUS has not required collateral or other security from the
     counterparties due to its assessment of their creditworthiness (see Note
     4).

     As further discussed in Note 1(g), the Company translates items such as
     the U.S. Dollar notes into equivalent Canadian dollars at the rate of
     exchange in effect at the balance sheet date. The swap agreements, which
     at December 31, 2005, comprised a deferred hedging liability of $1,154.3
     million, as set out in Note 17(b) (2004 - $1,032.6 million), in addition
     to fixing the Company's effective interest rate, effectively fix the
     economic exchange rate of the U.S. Dollar notes at $1.54:U.S.$1.00 (2004 -
     $1.54:U.S.$1.00). The asset value of the swap agreements increases
     (decreases) when the balance sheet date exchange rate increases
     (decreases) the Canadian dollar equivalent of the U.S. Dollar notes.

         2006 (Canadian Dollar) Notes: In May 2001, the Company issued $1.6
     billion 7.50%, Series CA, Notes at a price of $992.30 per $1,000.00 of
     principal to the public. The notes are redeemable at the option of the
     Company, in whole at any time, or in part from time to time, on not fewer
     than 30 and not more than 60 days' prior notice, at a redemption price
     equal to the greater of (i) the present value of the notes discounted at
     the Government of Canada yield plus 35 basis points, or (ii) 100% of the
     principal amount thereof. In addition, accrued and unpaid interest, if
     any, will be paid to the date fixed for redemption.

     During the third quarter of 2002, the Company repurchased 7.50%, Series
     CA, Notes with a face value of $22.0 million.

     On October 17, 2005, the Company exercised its right to early redeem, on
     December 1, 2005, the remaining $1,578.0 million of 7.50%, Series CA,
     Notes outstanding. The loss on redemption, as set out in Note 6, was $33.5
     million.

         2006 Interest Rate Swap Agreements: In 2004 the Company entered into a
     series of interest rate swap agreements which resulted in the notional
     conversion of $500 million of the 7.50%, Series CA, Notes from a fixed
     interest rate of 7.5% to a floating interest rate based upon the
     three-month Banker's Acceptance Canadian Dollar Offered Rate plus a
     spread. The counterparties of the swap agreements were highly rated
     financial institutions and the Company did not anticipate any
     non-performance. TELUS had not required collateral or other security from
     the counterparties due to its assessment of their creditworthiness. The
     swap agreements were terminated concurrent with the redemption of the
     7.50%, Series CA, Notes.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (c)  TELUS Corporation Credit Facilities
     On May 4, 2005, TELUS Corporation entered into a new $1.6 billion bank
     credit facility with a syndicate of financial institutions. The new credit
     facilities consist of: (i) an $800 million (or U.S. Dollar equivalent)
     revolving credit facility expiring on May 7, 2008, to be used for general
     corporate purposes, and (ii) an $800 million (or U.S. Dollar equivalent)
     revolving credit facility expiring on May 4, 2010, to be used for general
     corporate purposes. These new facilities replaced the Company's existing
     committed credit facilities prior to the availability termination dates of
     such facilities.

     TELUS Corporation's new credit facilities are unsecured and bear interest
     at prime rate, U.S. Dollar Base Rate, a bankers' acceptance rate or London
     interbank offered rate ("LIBOR") (all such terms as used or defined in the
     credit facilities), plus applicable margins. The credit facilities contain
     customary representations, warranties and covenants including two
     financial quarter end financial ratio tests. The financial ratio tests are
     that the Company may not permit its long-term debt to operating cash flow
     ratio to exceed 4.0:1 and may not permit its operating cash flow to
     interest expense ratio to be less than 2.0:1, each as defined under the
     credit facilities.

     Continued access to TELUS Corporation's credit facilities is not
     contingent on the maintenance by TELUS Corporation of a specific credit
     rating.

<TABLE>

                                                                                Outstanding,
                                                                                 undrawn
                                                    Gross                       letters of
   As at December 31, 2005 (millions)              available         Drawn       credit          Net available
   --------------------------------------------------------------------------------------------------------------
<CAPTION>

     Revolving credit facility expiring
<S>                                             <C>               <C>           <C>               <C>
        May 7, 2008                             $     800.0       $    142.0    $    100.6        $   557.4
        May 4, 2010                                   800.0               --            --            800.0
   --------------------------------------------------------------------------------------------------------------
                                                $   1,600.0       $    142.0    $    100.6        $ 1,357.4
   ==============================================================================================================
</TABLE>

     (d)  TELUS Corporation Convertible Debentures
     The 6.75% convertible debentures were unsecured, subordinated obligations
     of the Company that were to mature on June 15, 2010, and were convertible
     at the holders' option into Non-Voting Shares of the Company at a rate
     reflecting a share price of $39.73. The convertible debentures were not
     redeemable prior to June 15, 2003. Redemption in the period from June 15,
     2003, through June 15, 2005, was allowed if the average trading price of
     the Non-Voting Shares for a defined period exceeds 125% of the conversion
     price.

     The holder's embedded conversion option was valued using the residual
     value approach and was presented as a component of shareholders' equity in
     Note 15(a). Commencing with the Company's 2004 fiscal year, the Company
     classified the convertible debentures as a liability on its balance sheet
     in response to 2003 amendments to the recommendations of the CICA for the
     presentation and disclosure of financial instruments (CICA Handbook
     Section 3860) specifically concerning the classification of obligations
     that an issuer can settle with its own equity instruments.

     On May 9, 2005, the Company provided notice of redemption for its
     convertible debentures at par, plus accrued and unpaid interest, for
     redemption on June 16, 2005. Convertible debenture holders exercised
     conversion options resulting in $131.7 million of convertible debenture
     principal being converted into 3,316,047 Non-Voting Shares, as presented
     in Note 15(b). The conversion option in respect of $17.9 million of
     convertible debenture principal was not exercised and this principal
     amount was redeemed on June 16, 2005.

     (e)  TELUS Communications Inc. Debentures
     The outstanding Series 1 through 5 debentures were issued by BC TEL, a
     predecessor corporation of TELUS Communications Inc., under a Trust
     Indenture dated May 31, 1990, and are non-redeemable.

     The outstanding Series B Debentures were issued by AGT Limited, a
     predecessor corporation of TELUS Communications Inc., under a Trust
     Indenture dated August 24, 1994, and a supplemental trust indenture dated
     September 22, 1995. They are redeemable at the option of the Company, in
     whole at any time or in part from time to time, on not less than 30 days'
     notice at the higher of par and the price calculated to provide the
     Government of Canada Yield plus 15 basis points.

     Pursuant to an amalgamation on January 1, 2001, the Debentures became
     obligations of TELUS Communications Inc. The debentures are not secured by
     any mortgage, pledge or other charge and are governed by certain covenants
     including a negative pledge and a limitation on issues of additional debt,
     subject to a debt to capitalization ratio and interest coverage test.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (f)  TELUS Communications Inc. First Mortgage Bonds
     The first mortgage bonds are secured by an immovable hypothec and by a
     movable hypothec charging specifically certain immovable and movable
     property of the subsidiary TELUS Communications Inc., such as land,
     buildings, equipment, apparatus, telephone lines, rights-of-way and
     similar rights limited to certain assets located in the province of
     Quebec. The first mortgage bonds are not redeemable prior to maturity.
     Pursuant to a corporate reorganization effected July 1, 2004, the
     outstanding TELUS Communications (Quebec) Inc. First Mortgage Bonds became
     obligations of TELUS Communications Inc.

     (g)  TELUS Communications Inc. Medium Term Notes
     The medium term notes were issued under a trust indenture dated September
     1, 1994, as supplemented from time to time, and are unsecured and not
     redeemable prior to maturity. New issues of medium term notes are subject
     to restrictions as to debt ratio and interest coverage. Pursuant to a
     corporate reorganization effected July 1, 2004, the outstanding TELUS
     Communications (Quebec) Inc. Medium Term Notes became obligations of TELUS
     Communications Inc.

     (h)  Long-Term Debt Maturities
     Anticipated requirements to meet long-term debt repayments during each of
     the five years ending December 31 are as follows:

     (millions)                                                     Total(1)
     ------------------------------------------------------------------------
     2006                                                      $        5.0
     2007                                                           1,873.4
     2008                                                             147.5
     2009                                                               1.5
     2010                                                              81.7

     (1)  Where applicable, repayments reflect hedged foreign exchange rates.

15.  Shareholders' Equity

     (a)  Details of Shareholders' Equity

<TABLE>

     As at December 31 ($ in millions except per share amounts)                     2005             2004
     -----------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                 <C>                        <C>               <C>
     Convertible debentures conversion option (Note 14(d))                     $       --        $        8.8
     -----------------------------------------------------------------------------------------------------------
     Preferred equity
        Authorized                         Amount
          First Preferred Shares       1,000,000,000
          Second Preferred Shares      1,000,000,000
     Common equity
      Share capital
        Shares
          Authorized                       Amount
            Common Shares              1,000,000,000
            Non-Voting Shares          1,000,000,000
          Issued
            Common Shares (b)                                                     2,311.6             2,407.5
            Non-Voting Shares (b)                                                 3,556.7             3,426.7
   -----------------------------------------------------------------------------------------------------------
                                                                                  5,868.3             5,834.2
   -----------------------------------------------------------------------------------------------------------
      Other
        Options and warrants (c)                                                      5.9                26.9
        Accrual for shares issuable under channel stock incentive plan (d)             --                 0.8
   -----------------------------------------------------------------------------------------------------------
                                                                                      5.9                27.7
   -----------------------------------------------------------------------------------------------------------
      Cumulative foreign currency translation adjustment                             (7.3)               (2.2)
      Retained earnings                                                             849.7             1,008.1
      Contributed surplus (e)                                                       153.4               149.0
   -----------------------------------------------------------------------------------------------------------
                                                                                  6,870.0             7,016.8
   -----------------------------------------------------------------------------------------------------------
     Total Shareholders' Equity                                                $  6,870.0        $    7,025.6
   ===========================================================================================================

</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (b)  Changes in Common Shares and Non-Voting Shares

<TABLE>

     Years ended December 31 ($ in millions)                        2005                               2004
     -----------------------------------------------------------------------------------------------------------------------
                                                        Number of                             Number of
                                                          shares           Share capital       shares       Share capital
     -----------------------------------------------------------------------------------------------------------------------
<CAPTION>

     Common Shares
<S>                                                    <C>               <C>                 <C>                <C>
      Beginning of period                              192,748,738       $    2,407.5        190,800,015        $    2,349.1
      Exercise of share options (f)                      1,000,328               32.2            267,584                 6.5
      Purchase of shares for cancellation pursuant
        to normal course issuer bid (g)                (10,137,769)            (127.1)          (755,711)               (9.4)
      Expiration of predecessor share exchange
        privilege (h)                                      (80,642)              (1.0)                --                  --
      Employees' purchase of shares (Note 9(d))                 --                 --          2,235,290                56.1
      Dividends reinvested in shares                            --                 --            201,560                 5.2
     -----------------------------------------------------------------------------------------------------------------------
      End of period                                    183,530,655       $    2,311.6        192,748,738        $    2,407.5
     =======================================================================================================================
     Non-Voting Shares
      Beginning of period                              165,803,123       $    3,426.7        161,042,369        $    3,296.6
      Transitional amount for share-based
        compensation arising from share options
        (Note 1(j))                                             --                 --                 --                 0.4
     -----------------------------------------------------------------------------------------------------------------------
      Adjusted opening balance                         165,803,123            3,426.7        161,042,369             3,297.0
      Exercise of warrants (c)                             561,732               20.8            190,989                 7.1
      Exercise of convertible debenture conversion
        option                                           3,316,047              132.9                 --                  --
      Channel stock incentive plan (d)                      12,225                0.4             46,075                 1.1
      Exercise of share options (f)                      7,556,004              200.4          4,231,196               112.4
      Purchase of shares for cancellation pursuant
        to normal course issuer bid (g)                (10,656,300)            (223.9)        (1,451,400)              (30.0)
      Expiration of predecessor share exchange
        privilege (h)                                      (26,327)              (0.6)                --                  --
      Dividend Reinvestment and Share Purchase Plan (i)
        Dividends reinvested in shares                          --                 --          1,709,610                38.3
        Optional cash payments                                  --                 --             34,284                 0.8
     -----------------------------------------------------------------------------------------------------------------------
      End of period                                    166,566,504       $    3,556.7        165,803,123        $    3,426.7
     =======================================================================================================================

     Amounts credited to the Common Share capital account upon exercise of
     share options is cash received. Amounts credited to the Non-Voting Share
     capital account are comprised as follows:

     Years ended December 31 (millions)                                                          2005              2004
     -----------------------------------------------------------------------------------------------------------------------
     Non-Voting Shares
      Cash received from share option exercises                                             $   180.3        $       77.7
      Amounts credited to share capital arising from intrinsic value accounting
        applied to former Clearnet Communications Inc. options (c)                                9.1                20.0
      Share option expense reclassified from contributed surplus upon exercise of
        share options (e)                                                                        11.0                14.7
     =======================================================================================================================
                                                                                            $   200.4        $      112.4
</TABLE>

     (c)  Options and Warrants
     Upon its acquisition of Clearnet Communications Inc. in 2000, the Company
     was required to record the intrinsic value of Clearnet Communications Inc.
     options and warrants outstanding at that time. As these options and
     warrants are exercised, the corresponding intrinsic values are
     reclassified to share capital. As these options and warrants are forfeited
     or as they expire, the corresponding intrinsic values are reclassified to
     contributed surplus. Proceeds arising from the exercise of these options
     and warrants are credited to share capital.

     Under the terms of the arrangement to acquire Clearnet Communications
     Inc., effective January 18, 2001, TELUS Corporation exchanged the warrants
     held by former Clearnet Communications Inc. warrant holders. Each warrant
     entitled the holder to purchase a Non-Voting Share at a price of
     U.S.$10.00 per share until September 15, 2005.

     (d)  Channel Stock Incentive Plan
     The Company initiated the Plan to increase sales of various products and
     services by providing additional performance-based compensation in the
     form of Non-Voting Shares. During the first half of 2005, terms of the
     Plan were amended such that the Non-Voting Shares earned were no longer to
     be issued from Treasury and, as a result, as at December 31, 2005,
     Non-Voting Shares earned are no longer accrued as a component of Common
     Equity.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (e)  Contributed Surplus
     The following table presents a summary of the activity related to the
     Company's contributed surplus for the years ended December 31.

<TABLE>

     Years ended December 31 (millions)                                 2005            2004
     ---------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                                 <C>               <C>
     Balance, beginning of period                                   $    149.0        $     5.9
     Transitional amount for share-based compensation
       arising from share options (Note 1(j))                               --             24.7
   -----------------------------------------------------------------------------------------------
     Adjusted opening balance                                            149.0             30.6
     Share option expense recognized in period (Note 9(a))                14.2             19.1
     Share option expense reclassified to Non-Voting Share
       capital account upon exercise of share options                    (11.0)           (14.7)
     Unexercised, expired convertible debenture conversion option          1.2              --
     Redemption premium on preference and preferred shares(1)              --              (0.8)
     Payment received from Verizon Communications Inc. (Note 20)           --             114.8
   -----------------------------------------------------------------------------------------------
     Balance, end of period                                         $    153.4        $   149.0
   ===============================================================================================
</TABLE>

     (1)  Pursuant to its right to redeem the TELUS Communications Inc.
          Preference and Preferred shares upon giving three months' previous
          notice, on March 25, 2004, TELUS Communications Inc. issued notices
          of redemption for all nine classes of its outstanding publicly traded
          preference and preferred shares for redemption during the third
          quarter of 2004 for total consideration of approximately $72.8. Of
          the redemption premium of $3.1, $0.8 is chargeable against
          contributed surplus with the balance being charged to retained
          earnings.

     (f)  Share Option Plans
     The Company has a number of share option plans under which directors,
     officers and other employees receive options to purchase Common Shares
     and/or Non-Voting Shares at a price equal to the fair market value at the
     time of grant. Options currently granted under the plans may be exercised
     over specific periods not to exceed seven years from the time of grant;
     prior to 2003, share options were granted with exercise periods not to
     exceed ten years.

     The following table presents a summary of the activity related to the
     Company's share option plans for the years ended December 31.

<TABLE>

     Years ended December 31                                  2005                                2004
     ----------------------------------------------------------------------------------------------------------------
                                                   Number of          Weighted         Number of          Weighted
                                                     share          average share        share         average share
                                                    options         option price        options         option price
     ----------------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                                                <C>              <C>               <C>               <C>
     Outstanding, beginning of period              21,914,760       $    26.07        25,773,832        $    24.85
     Granted                                        1,916,575            38.85         1,849,341             24.78
     Exercised(1)                                  (8,556,332)           24.84        (4,498,780)            18.75
     Forfeited                                     (1,239,547)           29.22        (1,078,652)            25.42
     Expired and cancelled                           (140,855)           41.63          (130,981)            24.76
     ----------------------------------------------------------------------------------------------------------------
     Outstanding, end of period                    13,894,601       $    28.14        21,914,760        $    26.07
     ================================================================================================================

     (1)  The total intrinsic value of share options exercised for the year ended December 31, 2005, was $128.5
          million (2004 - $49.9 million).
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following is an option life and price stratification of the Company's
     share options outstanding as at December 31, 2005.

<TABLE>

     Options outstanding                                                                                      Options exercisable
     -----------------------------------------------------------------------------------------------------    -------------------
       Range of option prices                                                                    Total
     -----------------------------------------------------------------------------------------------------
                                                                                                                        Weighted
         Low                               $   5.95   $  9.08   $  14.63   $ 21.99   $  34.88   $     5.95    Number    average
         High                              $   8.43   $ 13.56   $  19.92   $ 32.83   $  46.75   $    46.75    of shares   price
                                                                                                              -------------------
         Year of expiry and number of shares:
     -----------------------------------------------------------------------------------------------------
<CAPTION>

<S>      <C>                                  <C>     <C>         <C>        <C>       <C>         <C>          <C>      <C>
         2006                                 4,908        --         --       6,700         --     11,608       11,608   $ 18.02
         2007                                 2,959    19,562     10,736     152,266         --    185,523      185,523   $ 27.76
         2008                                 3,272        --         --     103,339    144,800    251,411      251,411   $ 39.57
         2009                                    --   171,075   1,375,993    214,199    220,060  1,981,327    1,981,327   $ 19.48
         2010                                    --        --     292,661  2,228,258    725,390  3,246,309    1,063,474   $ 33.70
         2011                                    --        --      10,999  3,222,265  2,596,091  5,829,355    4,245,714   $ 30.75
         2012                                31,466    27,965     400,900     75,000  1,853,737  2,389,068      531,331   $ 16.53
     -------------------------------------------------------------------------------------------------------------------
                                             42,605   218,602   2,091,289  6,002,027  5,540,078 13,894,601    8,270,388   $ 27.70
     ============================================================================================================================
      Weighted average remaining
         contractual life (years)               5.3       3.9         4.5        5.1        5.4        5.1
      Weighted average price               $   8.09   $ 12.84   $   16.03  $   24.81   $  37.09 $    28.14
      Aggregate intrinsic value(1)
        (millions)                         $    1.6   $   7.4   $    64.1  $   131.8   $   54.3 $    259.2

     Options exercisable
     ------------------------------------------------------------------------------------------------------
       Number of shares                      38,605   218,602   1,870,028  2,456,812  3,686,341  8,270,388
       Weighted average remaining
         contractual life (years)               5.2       3.9         4.6         5.1       4.8        4.8
       Weighted average price              $   8.06   $ 12.84   $   16.14  $    25.44  $  36.15 $    27.70
       Aggregate intrinsic value(1)
         (millions)                        $    1.5   $   7.4   $    57.1  $     52.7  $   40.0 $    158.7
</TABLE>

     (1)  The aggregate intrinsic value is calculated upon December 31, 2005,
          per share prices of $47.86 for Common Shares and $46.67 for
          Non-Voting Shares.

     At December 31, 2005, 1.5 million (2004 - 3.0 million) Common Shares and
     22.1 million (2004 - 26.4 million) Non-Voting Shares were reserved for
     issuance, from Treasury, under the share option plans.

     (g)  Purchase of Shares for Cancellation Pursuant to Normal Course Issuer
          Bid
     The Company purchased, for cancellation, Common Shares and Non-Voting
     Shares pursuant to two normal course issuer bids. The first program ran
     for a twelve-month period ending December 19, 2005, for up to 14.0 million
     Common Shares and 11.5 million Non-Voting Shares and the second runs for a
     twelve-month period ending December 19, 2006, for up to 12.0 million
     Common Shares and 12.0 million Non-Voting Shares. The excess of the
     purchase price over the average stated value of shares purchased for
     cancellation was charged to retained earnings. The Company ceases to
     consider shares outstanding on the date of the Company's purchase of its
     shares although the actual cancellation of the shares by the transfer
     agent and registrar occurs on a timely basis on a date shortly thereafter.
     As at December 31, 2005, 634,469 Common Shares (2004 - 120,000 Common
     Shares) and 607,700 Non-Voting Shares (2004 - 151,400 Non-Voting Shares)
     had been purchased and not yet cancelled.


<TABLE>
<CAPTION>



     Years ended December 31 ($ in millions)
    ----------------------------------------------------------------------------------------------------------------------
                                                                                          Purchase price
                                                                         -------------------------------------------------
                                                                                                               Charged to
                                                        Number of                         Charged to            retained
                                                         shares          Paid           share capital           earnings
   -----------------------------------------------------------------------------------------------------------------------
   Common Shares purchased for cancellation
      Program commencing December 20, 2004
<S>                                                       <C>        <C>             <C>                 <C>
        During fiscal 2004 year                            755,711    $    27.3       $     9.4        $     17.9
        During fiscal 2005 year                          9,503,300        412.5           119.1             293.4
  ------------------------------------------------------------------------------------------------------------------------
        Program total                                   10,259,011        439.8           128.5             311.3
  ------------------------------------------------------------------------------------------------------------------------
      Program commencing December 20, 2005
        During fiscal 2005 year                            634,469        29.7              8.0              21.7
    -------------- -------------------------------------------------------------------------------------------------------
      Both programs - inception to date                 10,893,480    $   469.5       $   136.5        $    333.0
   =======================================================================================================================
      Both programs - during fiscal 2005 year           10,137,769    $   442.2       $   127.1        $    315.1
   =======================================================================================================================
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S>                                                   <C>            <C>             <C>              <C>
   Non-Voting Shares purchased for cancellation
      Program commencing December 20, 2004
        During fiscal 2004 year                          1,451,400    $    50.7       $    30.0        $     20.7
        During fiscal 2005 year                         10,048,600        422.1           211.0             211.1
   -----------------------------------------------------------------------------------------------------------------------
        Program total                                   11,500,000        472.8           241.0             231.8
    ----------------------------------------------------------------------------------------------------------------------
      Program commencing December 20, 2005
        During fiscal 2005 year                            607,700         27.8            12.9              14.9
   -----------------------------------------------------------------------------------------------------------------------
      Both programs - inception to date                 12,107,700    $   500.6       $   253.9        $    246.7
   =======================================================================================================================
      Both programs - during fiscal 2005 year           10,656,300    $   449.9       $   223.9        $    226.0
   =======================================================================================================================
   Common Shares and Non-Voting Shares purchased
      for cancellation
      Program commencing December 20, 2004
        During fiscal 2004 year                          2,207,111    $    78.0       $    39.4        $     38.6
        During fiscal 2005 year                         19,551,900        834.6           330.1             504.5
    ----------------------------------------------------------------------------------------------------------------------
        Program total                                   21,759,011        912.6           369.5             543.1
   -----------------------------------------------------------------------------------------------------------------------
      Program commencing December 20, 2005
        During fiscal 2005 year                          1,242,169         57.5            20.9              36.6
   -----------------------------------------------------------------------------------------------------------------------
      Both programs - inception to date                 23,001,180    $   970.1       $   390.4        $    579.7
   =======================================================================================================================
      Both programs - during fiscal 2005 year           20,794,069    $   892.1       $   351.0        $    541.1
   =======================================================================================================================
</TABLE>

     (h)  Expiration of Predecessor Share Exchange Privilege
     As set out in the Joint Management Proxy Circular of December 8, 1998,
     holders of BC TELECOM Inc. Common Shares and holders of Alberta-based
     TELUS Corporation Common Shares had six years to exchange their shares
     for shares that have become what are now the Company's Common Shares and
     Non-Voting Shares; such period elapsed on January 31, 2005. The amounts
     corresponding with the unexchanged shares have been removed from the
     equity accounts.

     (i)  Dividend Reinvestment and Share Purchase Plan
     The Company has a Dividend Reinvestment and Share Purchase Plan under
     which eligible shareholders may acquire Non-Voting Shares through the
     reinvestment of dividends and additional optional cash payments.
     Excluding Non-Voting Shares purchased by way of additional optional cash
     payments, the Company, at its discretion, may offer the Non-Voting Shares
     at up to a 5% discount from the market price. During the year ended
     December 31, 2005, the Company did not offer Non-Voting Shares at a
     discount. Shares purchased through optional cash payments are subject to
     a minimum investment of $100 per transaction and a maximum investment of
     $20,000 per calendar year.

     Under this Plan, the Company has the option of offering shares from
     Treasury or having the trustee acquire shares in the stock market. Prior
     to July 1, 2001, when the acquisition of shares from Treasury commenced,
     all Non-Voting Shares were acquired in the market at normal trading
     prices; acquisition in the market at normal trading prices recommenced on
     January 1, 2005.

     In respect of Common Share and Non-Voting Share dividends declared during
     the year ended December 31, 2005, $5.7 million (2004 - $29.3 million) was
     to be reinvested in Non-Voting Shares.

16.  Commitments and Contingent Liabilities

     (a)  CRTC Decisions 2002-34 and 2002-43 Deferral Accounts
     On May 30, 2002, and on July 31, 2002, the CRTC issued Decisions 2002-34
     and 2002-43, respectively, and introduced the concept of a deferral
     account. The Company must make significant estimates and assumptions in
     respect of the deferral accounts given the complexity and interpretation
     required of Decisions 2002-34 and 2002-43. Accordingly, the Company
     estimates, and records, a liability, $158.7 million as at December 31,
     2005 (2004 - $128.7 million), to the extent that activities it has
     undertaken, other qualifying events and realized rate reductions for
     Competitor Services do not extinguish it. Management is required to make
     estimates and assumptions in respect of the offsetting nature of these
     items. If the CRTC, upon its annual review of the Company's deferral
     account, disagrees with management's estimates and assumptions, the CRTC
     may adjust the deferral account balance and such



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     adjustment may be material. Ultimately, this process results in the CRTC
     determining if, and when, the deferral account liability is settled.

     On March 24, 2004, the CRTC issued Telecom Public Notice CRTC 2004-1
     "Review and disposition of the deferral accounts for the second price cap
     period", which initiated a public proceeding inviting proposals on the
     disposition of the amounts accumulated in the incumbent local exchange
     carriers' deferral accounts during the first two years of the second
     price cap period. The Company is uncertain when the CRTC will make its
     determination on this proceeding.

     Due to the Company's use of the liability method of accounting for the
     deferral account, the CRTC Decision 2005-6, as it relates to the
     Company's provision of Competitor Digital Network services, is not
     expected to affect the Company's revenues. To the extent that the CRTC
     Decision 2005-6 requires the Company to provide discounts on Competitor
     Digital Network services, both for current and prior periods, the Company
     draws down the deferral account by an offsetting amount. For the year
     ended December 31, 2005, the Company drew down the deferral account by
     $50.5 million in respect of discounts on Competitor Digital Network
     services.

     (b)  Labour Negotiations
     In 2000, TELUS commenced collective bargaining with the
     Telecommunications Workers Union for a new collective agreement replacing
     the multiple legacy agreements from BC TELECOM and Alberta-based TELUS.
     This was the first round of collective bargaining since the merger of BC
     TELECOM and TELUS Alberta and the Company's aim was to replace the legacy
     collective agreements with a single collective agreement for the new
     bargaining unit.

     On November 6, 2005, the Telecommunications Workers Union and the Company
     announced that they had reached a tentative agreement that included the
     terms of a five-year collective agreement that was to be submitted to the
     Telecommunications Workers Union members for ratification. The
     Telecommunications Workers Union Executive Council and Bargaining
     Committee had both recommended acceptance of the tentative agreement. On
     November 18, 2005, the Telecommunications Workers Union announced that
     its members voted to accept the tentative agreement that was announced on
     November 6, 2005; the members voted 67.3% in favour to accept the
     tentative agreement. The terms and conditions of the new collective
     agreement are effective from November 20, 2005, to November 19, 2010.

     Incremental expenses during the year ended December 31, 2005, that arose
     from emergency operations procedures included management reassignments,
     paid overtime, third-party security and contractor costs, travel and
     accommodation. These incremental expenses exceeded cost savings, such as
     those arising from lower compensation expenses for employees who stayed
     off work and adjustments to accruals for payroll and other
     employee-related liabilities, by approximately $133 million.

     (c)  Contractual Obligations
     The Company's known contractual obligations at December 31, 2005, are as
     follows:


<TABLE>
<CAPTION>


                       Long-term debt maturities(1)
                             (see Note 14(h))                   Other
                    ---------------------------------         long-term         Operating
                        All except                         liabilities(2)        leases            Purchase
    (millions)      capital leases     Capital leases      (see Note 17(b))  (see Note 16(d))    obligations(3)        Total
    --------------------------------------------------------------------------------------------------------------------------
<S>                <C>               <C>                <C>                <C>                <C>                <C>
   2006            $        1.8      $        3.2       $       17.9       $      177.2       $      380.1       $      580.2
   2007                 1,869.9               3.5               28.4              155.7              160.1            2,217.6
   2008                   144.2               3.3               17.8              139.3              106.1              410.7
   2009                     0.7               0.8               17.1              126.7               44.9              190.2
   2010                    80.0               1.7               16.9              112.7               10.1              221.4
   Thereafter           3,716.5                --              140.1              476.7               34.6            4,367.9
   ---------------------------------------------------------------------------------------------------------------------------
   Total           $    5,813.1      $       12.5       $      238.2       $    1,188.3       $      735.9       $    7,988.0
   ===========================================================================================================================


</TABLE>

     (1)  Where applicable, long-term debt maturities reflect hedged foreign
          exchange rates.
     (2)  Items that do not result in a future outlay of economic resources,
          such as deferred gains on sale-leasebacks of buildings and deferred
          customer activation and connection fees, have been excluded. As
          long-term debt maturities reflect hedged foreign exchange rates, the
          deferred hedging liability is included therein. Funding of pension
          and other benefit plans has been included for 2006 for all plans
          that have a net accrued benefit liability position as at the current
          year end; only funding of unfunded plans has been included in years
          subsequent to 2006, up to the liability recognized at the current
          year end.
     (3)  Where applicable, purchase obligations reflect foreign exchange
          rates as at the current year end. Purchase obligations include both
          future operating and capital expenditures that have been contracted
          for as at the current year end and include most likely estimates of
          prices and volumes where necessary. As purchase obligations reflect
          market conditions at the time the obligation was incurred for the
          items being purchased, they may not be representative of future
          years. Excepting a significant, multi-year information technology
          services agreement, obligations arising from personnel supply
          contracts and other such labour agreements have been excluded.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     (d)  Leases
          The  Company occupies leased premises in various centres and has land,
          buildings and equipment under operating leases. As a result of the
          consolidation of leased premises arising from various initiatives,
          including the Operational Efficiency Program that is further
          discussed in Note 5, some of the leased building premises were
          sub-let. At December 31, 2005, the future minimum lease payments
          under capital leases and operating leases, and future receipts from
          real estate operating sub-leases, are as follows:

<TABLE>
<CAPTION>


                                                                  Operating lease payments
                                              ---------------------------------------------------------------
                                                          Land and buildings                                        Operating
                                              ---------------------------------------                                lease
                                  Capital                                                  Vehicles                 receipts from
                                  lease                     Occupancy                      and other                sublet land
    (millions)                   payments       Rent         costs         Gross           equipment    Total      and buildings
   -------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>           <C>           <C>           <C>           <C>           <C>
    2006                       $     3.4     $   103.4     $    59.9     $   163.3     $    13.9     $   177.2     $     1.0
    2007                             3.8          91.2          56.6         147.8           7.9         155.7           0.1
    2008                             3.6          80.0          55.1         135.1           4.2         139.3           0.1
    2009                             0.9          71.3          52.4         123.7           3.0         126.7           0.1
    2010                             1.9          62.1          49.0         111.1           1.6         112.7           0.1
    ------------------------------------------------------------------------------------------------------------------------------
    Total future minimum           13.6
      lease payments
    Less imputed interest           1.1
    ------------------------------------------------------------------------------------------------------------------------------
    Capital lease liability    $   12.5
   ===============================================================================================================================

</TABLE>


     (e)  Guarantees
     Canadian generally accepted accounting principles require the disclosure
     of certain types of guarantees and their maximum, undiscounted amounts.
     The maximum potential payments represent a "worst-case scenario" and do
     not necessarily reflect results expected by the Company. Guarantees
     requiring disclosure are those obligations that require payments
     contingent on specified types of future events. In the normal course of
     its operations, the Company enters into obligations that GAAP may
     consider to be guarantees. As defined by Canadian GAAP, guarantees
     subject to these disclosure guidelines do not include guarantees that
     relate to the future performance of the Company.

       Performance guarantees: Performance guarantees contingently require a
     guarantor to make payments to a guaranteed party based on a third party's
     failure to perform under an obligating agreement. TELUS provides sales
     price guarantees in respect of employees' principal residences as part of
     its employee relocation policies. In the event that the Company is
     required to honour such guarantees, it purchases (for immediate resale)
     the property from the employee.

     The Company has guaranteed third parties' financial obligations as part
     of a facility naming rights agreement. The guarantees, in total, run
     through to August 31, 2008, on a declining-balance basis and are of
     limited recourse.

     As at December 31, 2005, the Company has no liability recorded in respect
     of the aforementioned performance guarantees.

       Financial guarantees: In conjunction with its 2001 exit from the
     equipment leasing business, the Company provided a guarantee to a third
     party with respect to certain specified telecommunication asset and
     vehicle leases. If the lessee were to default, the Company would be
     required to make a payment to the extent that the realized value of the
     underlying asset is insufficient to pay out the lease; in some instances,
     the Company could be required to pay out the lease on a gross basis and
     realize the underlying value of the leased asset itself. As at December
     31, 2005, the Company has a liability of $0.5 million (2004 - $1.0
     million) recorded in respect of these lease guarantees.

     The following table quantifies the maximum undiscounted guarantee amounts
     as at December 31, 2005, without regard for the likelihood of having to
     make such payment.

                        Performance         Financial
   (millions)           guarantees(1)      guarantees(1)         Total
   -----------------------------------------------------------------------
   2006               $    3.6       $        1.4        $        5.0
   2007                    1.5                0.8                 2.3
   2008                    1.0                0.3                 1.3
   2009                    0.5                 --                 0.5


     (1)  Annual amounts for performance guarantees and financial guarantees
          include the maximum guarantee amounts during any year of the term of
          the guarantee.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       Indemnification obligations: In the normal course of operations, the
     Company may provide indemnification in conjunction with certain
     transactions. The term of these indemnification obligations range in
     duration and often are not explicitly defined. Where appropriate, an
     indemnification obligation is recorded as a liability. In many cases,
     there is no maximum limit on these indemnification obligations and the
     overall maximum amount of the obligations under such indemnification
     obligations cannot be reasonably estimated. Other than obligations
     recorded as liabilities at the time of the transaction, historically the
     Company has not made significant payments under these indemnifications.

     In connection with its 2001 disposition of TELUS' directory business, the
     Company agreed to bear a proportionate share of the new owner's increased
     directory publication costs if the increased costs were to arise from a
     change in the applicable CRTC regulatory requirements. The Company's
     proportionate share would be 80% through May 2006, declining to 40% in
     the next five-year period and then to 15% in the final five years. As
     well, should the CRTC take any action which would result in the owner
     being prevented from carrying on the directory business as specified in
     the agreement, TELUS would indemnify the owner in respect of any losses
     that the owner incurred.

     As at December 31, 2005, the Company has no liability recorded in respect
     of indemnification obligations.

     (f)  Claims and Lawsuits
       General: A number of claims and lawsuits seeking damages and other
     relief are pending against the Company. It is impossible at this time for
     the Company to predict with any certainty the outcome of such litigation.
     However, management is of the opinion, based upon legal assessment and
     information presently available, that it is unlikely that any liability,
     to the extent not provided for through insurance or otherwise, would be
     material in relation to the Company's consolidated financial position,
     excepting the items enumerated following.

       Pay equity: On December 16, 1994, the Telecommunications Workers Union
     filed a complaint against BC TEL, a predecessor of TELUS Communications
     Inc., with the Canadian Human Rights Commission, alleging that wage
     differences between unionized male and female employees in British
     Columbia were contrary to the equal pay for work of equal value provisions
     in the Canadian Human Rights Act. In December 1998, the Canadian Human
     Rights Commission advised that it would commence an investigation of the
     Telecommunications Workers Union complaint. In February 2003, the Canadian
     Human Rights Commission offered to mediate a settlement of the complaint,
     but the Company declined the offer. The Canadian Human Rights Commission
     referred the complaint to conciliation under the Canadian Human Rights Act
     and appointed a conciliator to assist in settling the complaint. The
     complaint was not resolved through conciliation and it was referred back
     to the Canadian Human Rights Commission in December 2004. The Canadian
     Human Rights Commission has since decided to resume its investigation of
     the complaint. The Company believes that it has good defences to the
     Telecommunications Workers Union's complaint and has taken the position
     that it should be dismissed. As a term of the settlement between TELUS
     Communications Inc. and the Telecommunications Workers Union that resulted
     in the collective agreement effective November 20, 2005, and subject to
     acceptance by the Canadian Human Rights Commission of the settlement and
     closure of its file on this complaint, the parties have agreed to settle
     this complaint without any admission of liability, on the basis that the
     Company will establish a pay equity fund of $10 million to be paid out
     during the term of the new collective agreement and the Telecommunications
     Workers Union will withdraw and discontinue this complaint. On December
     21, 2005, the Telecommunications Workers Union withdrew and discontinued
     this complaint. On January 10, 2006, the Canadian Human Rights Commission
     advised the Company that its investigator had recommended no further
     proceedings in the complaint; however, the Company is awaiting the
     Canadian Human Rights Commission's decision in this regard. Should the
     Canadian Human Rights Commission refuse consent or the complaint continue
     for any other reason and its ultimate resolution differ from management's
     assessment and assumptions, a material adjustment to the Company's
     financial position and the results of its operations could result.

       TELUS Corporation Pension Plan and TELUS Edmonton Pension Plan: Two
     statements of claim were filed in the Alberta Court of Queen's Bench on
     December 31, 2001, and January 2, 2002, respectively, by plaintiffs
     alleging to be either members or business agents of the Telecommunications
     Workers Union. In one action, the three plaintiffs alleged to be suing on
     behalf of all current or future beneficiaries of the TELUS Corporation
     Pension Plan and in the other action, the two plaintiffs alleged to be
     suing on behalf of all current or future beneficiaries of the TELUS
     Edmonton Pension Plan. The statement of claim in the TELUS Corporation
     Pension Plan related action named the Company, certain of its affiliates
     and certain present and former trustees of the TELUS Corporation Pension
     Plan as defendants, and claims damages in the sum of $445 million. The
     statement of claim in the TELUS Edmonton Pension Plan related action named
     the Company, certain of its affiliates and certain individuals who are
     alleged to be trustees of the TELUS Edmonton Pension Plan and claims
     damages in the sum of $15.5 million. On February 19, 2002, the Company
     filed statements of defence to both actions and also filed notices of
     motion for certain relief, including an order striking out the actions as
     representative or class actions. On May 17, 2002, the statements of claim
     were amended by the plaintiffs and include allegations,



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     inter alia, that benefits provided under the TELUS Corporation Pension
     Plan and the TELUS Edmonton Pension Plan are less advantageous than the
     benefits provided under the respective former pension plans, contrary to
     applicable legislation, that insufficient contributions were made to the
     plans and contribution holidays were taken and that the defendants
     wrongfully used the diverted funds, and that administration fees and
     expenses were improperly deducted. The Company filed statements of defence
     to the amended statements of claim on June 3, 2002. The Company believes
     that it has good defences to the actions. As a term of the settlement
     reached between TELUS Communications Inc. and the Telecommunications
     Workers Union that resulted in a collective agreement effective November
     20, 2005, the Telecommunications Workers Union has agreed to not provide
     any direct or indirect financial or other assistance to the plaintiffs in
     these actions, and to communicate to the plaintiffs the Telecommunications
     Workers Union's desire and recommendation that these proceedings be
     dismissed or discontinued. The Company has been advised by the
     Telecommunications Workers Union that the plaintiffs have not agreed to
     dismiss or discontinue these actions. Should the lawsuits continue because
     of the actions of the court, the plaintiffs or for any other reason, and
     their ultimate resolution differ from management's assessment and
     assumptions, a material adjustment to the Company's financial position and
     the results of its operations could result.

       Uncertified class action: A class action was brought August 9, 2004,
     under the Class Actions Act (Saskatchewan), against a number of past and
     present wireless service providers including the Company. The claim
     alleges that each of the carriers is in breach of contract and has
     violated competition, trade practices and consumer protection legislation
     across Canada in connection with the collection of system access fees,
     and seeks to recover direct and punitive damages in an unspecified
     amount. The class has not been certified. The Company believes that it
     has good defences to the action.

     Similar proceedings have been filed by, or on behalf of, plaintiffs'
     counsel in other provincial jurisdictions, but will not proceed until the
     Saskatchewan action has been decided.

     Should the ultimate resolution of this action differ from management's
     assessments and assumptions, a material adjustment to the Company's
     financial position and the results of its operations could result.

<TABLE>
<CAPTION>

17.  Additional Financial Information

     (a)  Income Statement


<S>                                                                                              <C>                 <C>
   (millions)                                                                                    2005                2004
   -------------------------------------------------------------------------------------------------------------------------
   Operations expense(1):
      Cost of sales and service
        Three months ended - March 31                                                       $      616.5        $      584.8
                           - June 30                                                               617.6               593.0
                           - September 30                                                          689.7               612.2
                           - December 31                                                           729.1               617.2
   -------------------------------------------------------------------------------------------------------------------------
        Years ended December 31                                                                  2,652.9             2,407.2
   -------------------------------------------------------------------------------------------------------------------------
      Selling, general and administrative
        Three months ended - March 31                                                              492.6               481.8
                           - June 30                                                               528.5               487.1
                           - September 30                                                          531.8               500.6
                           - December 31                                                           587.7               561.3
   -------------------------------------------------------------------------------------------------------------------------
        Years ended December 31                                                                  2,140.6             2,030.8
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $    4,793.5        $    4,438.0
   =========================================================================================================================
   Advertising expense - years ended December 31                                            $      224.0        $      165.0
   =========================================================================================================================


    (1)  Cost of sales and service include cost of goods sold and costs to
         operate and maintain access to and usage of the Company's
         telecommunication infrastructure. Selling, general and administrative
         costs include sales and marketing costs (including commissions),
         customer care, bad debt expense, real estate costs and corporate
         overhead costs such as information technology, finance (including
         billing services, credit and collection), legal, human resources and
         external affairs.

         Employee salaries, benefits and related costs are included in one of
         the two components of operations expense to the extent that the costs
         are related to the component functions.
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

(b)      Balance Sheet

   As at December 31 (millions)                                                                  2005                2004
   -------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                  <C>
     Accounts receivable
      Customer accounts receivable                                                          $      451.1        $      727.0
      Accrued receivables - customer                                                               113.2               114.1
      Allowance for doubtful accounts                                                              (57.2)              (69.3)
   -------------------------------------------------------------------------------------------------------------------------
                                                                                                   507.1               771.8
      Accrued receivables - other                                                                   94.3                81.7
      Other                                                                                          8.9                10.0
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      610.3        $      863.5
   =========================================================================================================================
   Prepaid expense and other
      Prepaid expenses                                                                      $       87.7        $      101.4
      Deferred customer activation and connection costs                                             66.4                76.2
      Other                                                                                          0.6                 5.8
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      154.7        $      183.4
   =========================================================================================================================
   Deferred charges
      Recognized transitional pension assets and pension plan
        contributions in excess of charges to income                                        $      687.9        $      556.7
      Deferred customer activation and connection costs                                            104.4                94.4
      Cost of issuing debt securities, less amortization                                            23.5                32.1
      Other                                                                                         34.4                21.2
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      850.2        $      704.4
   =========================================================================================================================
   Accounts payable and accrued liabilities
      Accrued liabilities                                                                   $      508.6        $      409.1
      Payroll and other employee-related liabilities                                               388.7               535.4
      Asset retirement obligations                                                                   4.1                 3.1
   -------------------------------------------------------------------------------------------------------------------------
                                                                                                   901.4               947.6
      Trade accounts payable                                                                       394.4               313.0
      Interest payable                                                                              54.8                65.0
      Other                                                                                         43.1                37.0
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $    1,393.7        $    1,362.6
   =========================================================================================================================
   Advance billings and customer deposits
      Advance billings                                                                      $      322.4        $      294.4
      CRTC Decisions 2002-34 and 2002-43 deferral accounts (Note 16(a))                            158.7               128.7
      Deferred customer activation and connection fees                                              66.4                79.6
      Customer deposits                                                                             24.3                28.8
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      571.8        $      531.5
   =========================================================================================================================
   Other Long-Term Liabilities
      Deferred hedging liability                                                            $    1,154.3        $    1,032.6
      Pension and other post-retirement liabilities                                                189.1               172.8
      Deferred customer activation and connection fees                                             104.4                94.4
      Deferred gain on sale-leaseback of buildings                                                  81.1                98.7
      Asset retirement obligations                                                                  28.9                19.2
      Other                                                                                         77.5                88.4
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $    1,635.3        $    1,506.1
   =========================================================================================================================

(c)      Supplementary Cash Flow Information

   Years ended December 31 (millions)                                                            2005                2004
   -------------------------------------------------------------------------------------------------------------------------
   Net change in non-cash working capital
      Accounts receivable                                                                   $      262.7        $     (139.7)
      Income and other taxes receivable                                                             28.8                54.9
      Inventories                                                                                   (5.5)               (9.8)
      Prepaid expenses and other                                                                    28.7               (19.2)
      Accounts payable and accrued liabilities                                                      (1.3)               79.3
      Advance billings and customer deposits                                                        40.3                86.5
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      353.7        $       52.0
   =========================================================================================================================
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

   Years ended December 31 (millions)                                                            2005                2004
   -------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                  <C>
   Interest (paid)
      Amounts (paid) in respect of interest expense                                         $     (607.4)       $     (632.9)
      Amounts (paid) in respect of loss on redemption of long-term debt (Note 14(b))               (30.9)                 --
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $     (638.3)       $     (632.9)
   =========================================================================================================================
</TABLE>

18.  Employee Future Benefits

     The Company has a number of defined benefit and defined contribution plans
     providing pension, other retirement and post-employment benefits to most
     of its employees. Other benefit plans include TELUS Quebec Inc. healthcare
     costs. The benefit plan(s) in which an employee is a participant reflects
     the general development of the Company.

       Pension Plan for Management and Professional Employees of TELUS
     Corporation: This defined benefit pension plan, which ceased accepting new
     participants on January 1, 2006, and which comprises approximately
     one-quarter of the Company's total accrued benefit obligation, provides a
     non-contributory base level of pension benefits. Additionally, on a
     contributory basis, employees can annually choose increased and/or
     enhanced levels of pension benefits over the base level of pension
     benefits. At an enhanced level of pension benefits, the defined benefit
     pension plan has indexation of 100% of a specified cost-of-living index,
     to a maximum of 2%. Pensionable remuneration is determined by the average
     of the best five consecutive years.

       TELUS Corporation Pension Plan: Management and professional employees in
     Alberta who joined the Company prior to January 1, 2001, and certain
     unionized employees are covered by this contributory defined benefit
     pension plan, which comprises slightly more than one-half of the Company's
     total accrued benefit obligation. Indexation is up to 70% of a specified
     cost-of-living index and pensionable remuneration is determined by the
     average of the best five years in the last ten years preceding retirement.

       TELUS Corporation Pension Plan for Employees of TELUS Communications
     (Quebec) Inc. (formerly the TELUS Communications Quebec Pension Plan):
     This contributory defined benefit, which comprises approximately one-tenth
     of the Company's total accrued benefit obligation, has no indexation and
     pensionable remuneration is determined by the average of the best four
     years.

       TELUS Edmonton Pension Plan: This contributory defined benefit pension
     plan ceased accepting new participants on January 1, 1998. Indexation is
     60% of a specified cost-of-living index and pensionable remuneration is
     determined by the annualized average of the best sixty consecutive months
     in the last ten years preceding retirement.

       Other defined benefit pension plans: In addition to the foregoing plans,
     the Company has non-registered, non-contributory supplementary defined
     benefit pension plans which have the effect of maintaining the earned
     pension benefit once the allowable maximums in the registered plans are
     attained.

     The Company has three contributory, non-indexed pension plans arising from
     a pre-merger acquisition which comprise less than 1% of the Company's
     total accrued benefit obligation; these plans ceased accepting new
     participants in September 1989.

       Other defined benefit plans: Other defined benefit plans, which are all
     non-contributory, are comprised of a disability income plan, a healthcare
     plan for retired employees and a life insurance plan. The healthcare plan
     for retired employees and the life insurance plans ceased accepting new
     participants effective January 1, 1997. In connection with the collective
     agreement signed in the fourth quarter of 2005, as further discussed in
     Note 16(b), the disability income plan will be provided by an external
     supplier effective January 1, 2006. The existing disability income plan
     will continue to provide payments to previously approved claimants and
     qualified eligible employees.

       Telecommunication Workers Pension Plan: Certain employees in British
     Columbia are covered by a union pension plan. Contributions are determined
     in accordance with provisions of negotiated labour contracts and are
     generally based on employee gross earnings.

       British Columbia Public Service Pension Plan: Certain employees in
     British Columbia are covered by a public service pension plan.
     Contributions are determined in accordance with provisions of labour
     contracts negotiated by the Province of British Columbia and are generally
     based on employee gross earnings.

       Defined contribution pension plans: The Company offers two defined
     contribution pension plans. The first of the Company's defined
     contribution pension plans requires a 3% base level of Company
     contributions. Additionally, employees can annually choose to contribute
     to the plan, at a rate of between 3% and 6% of their pensionable earnings,
     and the Company will match the contributions of the employees to a maximum
     of 50%, depending upon the amount of the employee contribution and the
     years of service of the employee. In the second of the Company's



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     defined contribution pension plans, employees can choose to contribute to
     the plan, at a rate of between 2% and 5% of their pensionable earnings,
     and the Company will match the contributions of the employees to a maximum
     of 80%. Similarly, for certain employees, the Company offers a registered
     retirement savings plan-based program in which the Company matches
     employee contributions, dollar for dollar, to an annual maximum of $2,500
     per employee.

<TABLE>
<CAPTION>

(a)  Defined Benefit Plans
Information concerning the Company's defined benefit plans, in aggregate, is as follows:

                                                            Pension Benefit Plans                  Other Benefit Plans
    (millions)                                             2005               2004               2005                2004
   -------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                 <C>                <C>                 <C>
   Accrued benefit obligation:
      Balance at beginning of year                    $    5,366.7       $    5,038.7       $       61.1        $       67.7
      Current service cost                                   105.6              103.5                3.4                 4.8
      Interest cost                                          319.3              312.4                8.2                 2.4
      Benefits paid (b)                                     (255.5)            (242.0)              (5.3)               (5.3)
      Actuarial loss (gain)                                  809.2              154.1                1.7                (8.5)
   -------------------------------------------------------------------------------------------------------------------------
      Balance at end of year (c)-(d)                       6,345.3            5,366.7               69.1                61.1
   -------------------------------------------------------------------------------------------------------------------------
   Plan assets (f):
      Fair value at beginning of year                      5,457.2            5,002.4               48.2                49.6
      Annual return on plan assets                           840.3              527.3               (0.3)                2.7
      Employer contributions (g)                             119.6              135.8                1.2                 1.2
      Employees' contributions                                37.3               33.7                 --                  --
      Benefits paid (b)                                     (255.5)            (242.0)              (5.3)               (5.3)
   -------------------------------------------------------------------------------------------------------------------------
      Fair value at end of year                            6,198.9            5,457.2               43.8                48.2
   -------------------------------------------------------------------------------------------------------------------------
   Funded status - plan surplus (deficit)                   (146.4)              90.5              (25.3)              (12.9)
   Unamortized net actuarial loss (gain)                   1,109.0              769.1              (17.1)              (23.6)
   Unamortized past service costs                              6.0                6.6                 --                  --
   Unamortized transitional obligation (asset)              (278.1)            (322.8)               3.2                 4.0
   -------------------------------------------------------------------------------------------------------------------------
   Accrued benefit asset (liability)                         690.5              543.4              (39.2)              (32.5)
   Valuation allowance                                      (152.5)            (127.0)                --                  --
   -------------------------------------------------------------------------------------------------------------------------
   Accrued benefit asset (liability), net of
      valuation allowance                             $      538.0       $      416.4       $      (39.2)       $      (32.5)
   =========================================================================================================================
</TABLE>

   In 2001, the Company sold substantially all of the TELUS Advertising
   Services directory business and the TELUS Quebec directory business. As a
   result of this transaction, the pension obligation relating to the former
   TELUS Advertising Services employees, contained within the TELUS Corporation
   Pension Plan, will be transferred upon receipt of the requisite regulatory
   approvals; such approvals have not been received as at December 31, 2005.
   The pension obligation of $17.2 million has been actuarially determined as
   at July 31, 2001. In accordance with the sale agreement, TELUS Corporation
   Pension Plan assets of $17.2 million, plus interest accrued to December 31,
   2005, of $6.0 million (2004 - $4.5 million) will be transferred along with
   the pension obligation. Interest will continue to accrue, at 7% per annum,
   up to the date that the assets are transferred. The transfer will be
   accounted for as a settlement in the period in which the transfer occurs.

   The accrued benefit asset (liability), net of valuation allowance, is
   reflected in the Consolidated Balance Sheets as follows:

<TABLE>
<CAPTION>

<S>                                                                                       <C>                 <C>
    As at December 31 (millions)                                                                 2005                2004
   -------------------------------------------------------------------------------------------------------------------------
   Pension benefit plans                                                                    $      538.0        $      416.4
   Other benefit plans                                                                             (39.2)              (32.5)
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      498.8        $      383.9
   =========================================================================================================================
   Presented on the Consolidated Balance Sheets as:
      Deferred charges (Note Note 17(b))                                                    $      687.9        $      556.7
      Other long-term liabilities (Note 17(b))                                                    (189.1)             (172.8)
   -------------------------------------------------------------------------------------------------------------------------
                                                                                            $      498.8        $      383.9
   =========================================================================================================================
</TABLE>

     The measurement date used to determine the plan assets and accrued benefit
     obligation was December 31.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Company's net defined benefit plan costs were as follows:

<TABLE>
<CAPTION>

   Years ended December 31 (millions)                       2005                                        2004
   -------------------------------------------------------------------------------------------------------------------------
                                           Incurred      Matching      Recognized      Incurred      Matching      Recognized
                                           in period   adjustments(1)   in period      in period   adjustments(1)  in period
   -------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>            <C>             <C>           <C>             <C>
   Pension benefit plans
      Current service cost                 $   68.3      $     --      $   68.3        $   70.4      $     --      $   70.4
      Interest cost                           319.3            --         319.3           312.4            --         312.4
      Return on plan assets                  (840.3)        448.0        (392.3)         (527.3)        154.2        (373.1)
      Past service costs                         --           0.6           0.6              --           0.7           0.7
      Actuarial loss (gain)                   809.2        (789.1)         20.1           154.1        (129.5)         24.6
      Valuation allowance provided
        against accrued benefit asset            --          25.5          25.5              --          25.4          25.4
      Amortization of transitional asset         --         (44.7)        (44.7)             --         (44.8)        (44.8)
   -------------------------------------------------------------------------------------------------------------------------
                                           $  356.5      $ (359.7)     $   (3.2)       $    9.6      $    6.0      $   15.6
   =========================================================================================================================

     (1) Accounting adjustments to allocate costs to different periods so as to recognize the long-term nature of employee future
         benefits.


   Years ended December 31 (millions)                       2005                                        2004
   -------------------------------------------------------------------------------------------------------------------------
                                           Incurred      Matching      Recognized      Incurred      Matching      Recognized
                                           in period   adjustments(1)  in period       in period   adjustments(1)  in period
   -------------------------------------------------------------------------------------------------------------------------
   Other benefit plans
      Current service cost                 $    3.4      $     --      $    3.4        $    4.8      $     --      $    4.8
      Interest cost                             8.2            --           8.2             2.4            --           2.4
      Return on plan assets                     0.3          (2.8)         (2.5)           (2.7)          0.1          (2.6)
      Actuarial loss (gain)                     1.7          (3.7)         (2.0)           (8.5)          7.1          (1.4)
      Amortization of transitional
        obligation                               --           0.8           0.8              --           0.8           0.8
   -------------------------------------------------------------------------------------------------------------------------
                                           $   13.6      $   (5.7)     $    7.9        $   (4.0)     $    8.0      $    4.0
   =========================================================================================================================

     (1) Accounting adjustments to allocate costs to different periods so as to recognize the long-term nature of employee future
         benefits.

     (b)  Benefit Payments
     Estimated future benefit payments from the Company's defined benefit plans are as follows:

                                                                                             Pension          Other Benefit
   Years ending December 31 (millions)                                                      Benefit Plans           Plans
   -------------------------------------------------------------------------------------------------------------------------
   2006                                                                                     $      265.4        $        5.4
   2007                                                                                            275.9                 5.6
   2008                                                                                            287.7                 5.8
   2009                                                                                            302.9                 6.0
   2010                                                                                            318.2                 6.0
   2011-2015                                                                                     1,840.1                32.1

     (c)  Disaggregation of Defined Benefit Pension Plan Funding Status
     Accrued benefit obligations are the actuarial present values of benefits attributed to employee services rendered to a
     particular date. The Company's disaggregation of defined benefit pension plans surplus and deficits at year-end are as
     follows:

   As at December 31 (millions)                             2005                                        2004
   -------------------------------------------------------------------------------------------------------------------------
                                                                         Funded                                      Funded
                                                                        status -                                    status -
                                            Accrued                       plan         Accrued                        plan
                                            benefit                     surplus        benefit                       surplus
                                           obligation   Plan assets    (deficit)      obligation    Plan assets     (deficit)
   -------------------------------------------------------------------------------------------------------------------------
   Pension plans that have plan assets     $ 3,562.7     $ 3,805.0     $   242.3       $ 2,977.5     $ 3,356.9     $   379.4
      in excess of accrued benefit
      obligations
   Pension plans that have accrued
      benefit obligations in excess of
      plan assets
      Funded                                 2,611.4       2,393.9        (217.5)        2,230.2       2,100.3        (129.9)
      Unfunded                                 171.2            --        (171.2)          159.0            --        (159.0)
   -------------------------------------------------------------------------------------------------------------------------
                                             2,782.6       2,393.9        (388.7)        2,389.2       2,100.3        (288.9)
   -------------------------------------------------------------------------------------------------------------------------
   (see (a))                               $ 6,345.3     $ 6,198.9     $  (146.4)      $ 5,366.7     $ 5,457.2     $    90.5
   =========================================================================================================================
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     At December 31, 2005 and 2004, undrawn Letters of Credit, further
     discussed in Note 14(c), secured certain of the unfunded defined benefit
     pension plans.

     (d)      Disaggregation of Other Defined Benefit Plan Funding Status
     Accrued benefit obligations are the actuarial present values of benefits
     attributed to employee services rendered to a particular date. The
     Company's disaggregation of other defined benefit plans surplus and
     deficits at year-end are as follows:

<TABLE>
<CAPTION>

   As at December 31 (millions)                             2005                                        2004
   -------------------------------------------------------------------------------------------------------------------------
                                                                         Funded                                     Funded
                                                                        status -                                   status -
                                            Accrued                       plan          Accrued                      plan
                                            benefit         Plan         surplus        benefit         Plan        surplus
                                           obligation      assets       (deficit)      obligation      assets      (deficit)
   --------------------------------------- ----------- - ----------- - ------------ -- ----------- - ----------- - -----------
<S>                                        <C>           <C>           <C>             <C>           <C>           <C>
   Other benefit plans that have plan      $    35.0     $    43.8     $     8.8       $    33.9     $    48.2     $    14.3
      assets in excess of accrued
      benefit obligations
   Unfunded other benefit plans that
      have accrued benefit obligations
      in excess of plan assets                  34.1            --         (34.1)           27.2            --         (27.2)
   -------------------------------------------------------------------------------------------------------------------------
   (see (a))                               $    69.1     $    43.8     $   (25.3)      $    61.1     $    48.2     $   (12.9)
   =========================================================================================================================

     (e)      Accumulated Pension Benefit Obligations
     Accumulated benefit obligations differ from accrued benefit obligations in
     that accumulated benefit obligations do not include assumptions about
     future compensation levels. The Company's disaggregation of defined
     pension benefit plans accumulated benefit obligations and plan assets at
     year-end are as follows:

   As at December 31 (millions)                             2005                                        2004
   -------------------------------------------------------------------------------------------------------------------------
                                          Accumulated                                 Accumulated
                                            benefit         Plan                        benefit        Plan
                                           obligation      assets     Difference      obligation      assets      Difference
   -------------------------------------------------------------------------------------------------------------------------
   Pension plans that have plan assets     $ 4,188.5     $ 4,695.5     $   507.0       $ 3,582.1     $ 4,126.5     $   544.4
      in excess of accumulated benefit
      obligations
   Pension plans that have accumulated
      benefit obligations in excess of
      plan assets
      Funded                                 1,561.3       1,503.4         (57.9)        1,357.5       1,330.7         (26.8)
      Unfunded                                 160.1            --        (160.1)          148.4            --        (148.4)
   -------------------------------------------------------------------------------------------------------------------------
                                             1,721.4       1,503.4        (218.0)        1,505.9       1,330.7        (175.2)
   -------------------------------------------------------------------------------------------------------------------------
                                           $ 5,909.9     $ 6,198.9     $   289.0       $ 5,088.0     $ 5,457.2     $   369.2
   =========================================================================================================================
</TABLE>

     (f)      Plan investment Strategies and Policies
     The Company's primary goal for the defined benefit plans is to ensure the
     security of the retirement income and other benefits of the plan members
     and their beneficiaries. A secondary goal of the Company is to maximize
     the long-term rate of return of the defined benefit plans' assets within a
     level of risk acceptable to the Company.

       Risk management: The Company considers absolute risk (the risk of
     contribution increases, inadequate plan surplus and unfunded obligations)
     to be more important than relative return risk. Accordingly, the defined
     benefit plans' designs, the nature and maturity of defined benefit
     obligations and characteristics of the plans' memberships significantly
     influence investment strategies and policies. The Company manages risk
     through specifying allowable and prohibited investment types, setting
     diversification strategies and determining target asset allocations.

       Allowable and prohibited investment types: Allowable and prohibited
     investment types, along with associated guidelines and limits, are set out
     in each fund's Pension Benefits Standards Act required Statement of
     Investment Policies and Procedures ("SIP&P"), which is reviewed and
     approved annually by the designated governing fiduciary. The SIP&P
     guidelines and limits are further governed by the Pension Benefits
     Standards Regulations' permitted investments and lending limits. As well
     as conventional investments, each fund's SIP&P may provide for the use of
     derivative products to facilitate investment operations and to manage risk
     provided that no short position is taken, no use of leverage is made and
     there is no violation of guidelines and limits established in the SIP&P.
     Internally managed funds are prohibited from increasing grandfathered
     investments in securities of the Company; grandfathered investments were
     made prior to the merger of BC TELECOM Inc. and TELUS Corporation, the
     Company's predecessors. Externally managed funds are permitted to invest
     in securities of the Company, provided that the investments are consistent
     with the funds' mandate and are in compliance with the relevant SIP&P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       Diversification: The Company's strategy for equity security investments
     is to be broadly diversified across individual securities, industry
     sectors and geographical regions. A meaningful portion (15-25% of total
     plans' assets) of the investment in equity securities is allocated to
     foreign equity securities with the intent of further increasing the
     diversification of the plans' assets. Debt securities may include a
     meaningful allocation to mortgages with the objective of enhancing cash
     flow and providing greater scope for the management of the bond component
     of the plans' assets. Debt securities also may include real return bonds
     to provide inflation protection, consistent with the indexed nature of
     some defined benefit obligations. Real estate investments are used to
     provide diversification of plans' assets, potential long-term inflation
     hedging and comparatively stable investment income.

       Relationship between plan assets and benefit obligations: With the
     objective of lowering its long-term costs of defined benefit plans, the
     Company purposely mismatches plan assets and benefit obligations. This
     mismatching is implemented by including equity investments in the
     long-term asset mix as well as fixed income securities and mortgages with
     durations that differ from the benefit obligations. Compensation for
     liquidity issues that may have otherwise arisen from mismatching of plan
     assets and benefit obligations comes from broadly diversified investment
     holdings (including cash and short-term investment holdings) and cash
     flows from dividends, interest and rents from diversified investment
     holdings.

       Asset allocations: Information concerning the Company's defined benefit
     plans' target asset allocation and actual asset allocation is as follows:

<TABLE>
<CAPTION>

                                                    Pension Benefit Plans                       Other Benefit Plans
   -------------------------------------------------------------------------------------------------------------------------
                                             Target         Percentage of plan         Target           Percentage of plan
                                           allocation      assets at end of year       allocation     assets at end of year
                                              2006          2005           2004           2006          2005          2004
   -------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>             <C>
   Equity securities                          58-64%           62%             64%          --             --           --
   Debt securities                            32-38%           34%             33%          --             --           --
   Real estate                                  4-6%            4%              3%          --             --           --
   Other                                        0-2%           --%             --%         100%           100%         100%
   -------------------------------------------------------------------------------------------------------------------------
                                                              100%            100%                        100%         100%
   =========================================================================================================================
</TABLE>

     At December 31, 2005, shares of TELUS Corporation accounted for less than
     1% of the assets held in the pension and other benefit trusts administered
     by the Company.

     (g)      Employer Contributions
     The best estimates of fiscal 2006 employer contributions to the Company's
     defined benefit plans are approximately $114 million and $1 million for
     defined benefit pension plans and other defined benefit plans,
     respectively. These estimates are based upon the mid-year 2005 annual
     funding reports that were prepared by actuaries using December 31, 2004,
     actuarial valuations. The funding reports are based on the pension plans'
     fiscal years, which are calendar years. The next annual funding valuations
     are expected to be prepared mid-year 2006.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (h)      Assumptions
     Management is required to make significant estimates about certain
     actuarial and economic assumptions to be used in determining defined
     benefit pension costs, accrued benefit obligations and pension plan
     assets. These significant estimates are of a long-term nature, which is
     consistent with the nature of employee future benefits. The significant
     weighted average actuarial assumptions arising from these estimates and
     adopted in measuring the Company's accrued benefit obligations are as
     follows:

<TABLE>
<CAPTION>

                                                            Pension Benefit Plans                  Other Benefit Plans
                                                           2005               2004               2005                2004
   ---------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                    <C>              <C>                   <C>
   Discount rate used to determine:
      Net benefit costs for the year ended
        December 31                                           6.00%              6.25%              5.34%               5.55%
      Accrued benefit obligation as at December 31            5.00%              6.00%              4.83%               5.30%
   Expected long-term rate of return(1) on plan
      assets used to determine:
      Net benefit costs for the year ended
        December 31                                           7.25%              7.50%              5.50%               5.50%
      Accrued benefit obligation as at December 31            7.25%              7.25%              5.50%               5.50%
   Rate of future increases in compensation used to
      determine:
      Net benefit costs for the year ended
        December 31                                           3.00%              3.50%                --                   --
      Accrued benefit obligation as at December 31            3.00%              3.00%                --                   --
   ---------------------------------------------------------------------------------------------------------------------------

     (1) The expected long-term rate of return is based upon forecasted returns of the major asset categories and weighted by the
         plans' target asset allocations (see (f)). Forecasted returns arise from the Company's ongoing review of trends, economic
         conditions, data provided by actuaries and updating of underlying historical information.

    2005 sensitivity of key assumptions                     Pension Benefit Plans                  Other Benefit Plans
   ---------------------------------------------------------------------------------------------------------------------------
     (millions)                                         Change in          Change in          Change in           Change in
                                                        obligation          expense           obligation           expense
   ---------------------------------------------------------------------------------------------------------------------------
   Impact of hypothetical 0.25% change(1) in:
      Discount rate                                   $      223.1       $       17.2       $        1.5        $        0.1
      Expected long-term rate of return on plan assets                   $       13.5                           $        0.1
      Rate of future increases in compensation        $       30.5       $        6.4       $         --        $         --
   ---------------------------------------------------------------------------------------------------------------------------

     (1) These sensitivities are hypothetical and should be used with caution. Favourable hypothetical changes in the assumptions
         result in decreased amounts, and unfavourable hypothetical changes in the assumptions result in increased amounts, of the
         obligations and expenses. Changes in amounts based on a 0.25% variation in assumptions generally cannot be extrapolated
         because the relationship of the change in assumption to the change in amounts may not be linear. Also, in this table, the
         effect of a variation in a particular assumption on the change in obligation or change in expense is calculated without
         changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases
         in discount rates may result in increased expectations about the long-term rate of return on plan assets), which might
         magnify or counteract the sensitivities.

   The Company's health benefit costs for the defined benefit plan for retired employees were estimated to increase at an annual
   rate of 9.0% (2004 - 9.5%), decreasing to an annual growth rate of 5% (2004 - 5%) over an eight-year period.

     (i)      Defined Contribution Plans
     The Company's total defined contribution pension plan costs recognized were as follows:

    Years ended December 31 (millions)                                                           2005                2004
   ---------------------------------------------------------------------------------------------------------------------------
   Union pension plan and public service pension plan contributions                         $       26.3        $       38.6
   Other defined contribution pension plans                                                         15.1                13.9
   ---------------------------------------------------------------------------------------------------------------------------
                                                                                            $       41.4        $       52.5
   ===========================================================================================================================
</TABLE>

     19.      Segmented Information

     The Company's reportable segments, which are used to manage the business,
     are Wireline and Wireless. The Wireline segment includes voice local,
     voice long distance, data and other telecommunication services excluding
     wireless. The Wireless segment includes digital personal communications
     services, equipment sales and wireless Internet services. Segmentation is
     based on similarities in technology, the technical expertise required to
     deliver the products and services, and the distribution channels used.
     Intersegment sales are recorded at the exchange value, which is the amount
     agreed to by the parties. The following segmented information is regularly
     reported to the Company's chief operating decision maker.


<TABLE>
<CAPTION>

   Years ended December 31         Wireline                 Wireless                Eliminations             Consolidated
   (millions)                  2005        2004         2005        2004          2005        2004         2005        2004
   ---------------------------------------------------------------------------------------------------------------------------
<S>                        <C>         <C>           <C>        <C>           <C>         <C>           <C>         <C>
   Operating revenues
     External revenue       $4,847.2    $4,769.3     $3,295.5    $2,811.9      $    --     $    --      $8,142.7    $7,581.2
     Intersegment revenue       90.4        96.6         23.5        21.5       (113.9)     (118.1)           --          --
   ---------------------------------------------------------------------------------------------------------------------------
                             4,937.6     4,865.9      3,319.0     2,833.4       (113.9)     (118.1)      8,142.7     7,581.2
   ---------------------------------------------------------------------------------------------------------------------------
   Operating expenses
     Operations expense      3,031.4     2,864.9      1,876.0     1,691.2       (113.9)     (118.1)      4,793.5     4,438.0
     Restructuring and
       work-force
       reduction costs          53.9        52.6           --          --           --          --          53.9        52.6
   ---------------------------------------------------------------------------------------------------------------------------
                             3,085.3     2,917.5      1,876.0     1,691.2       (113.9)     (118.1)      4,847.4     4,490.6
   ---------------------------------------------------------------------------------------------------------------------------
   EBITDA(1)                $1,852.3    $1,948.4     $1,443.0    $1,142.2      $    --      $   --      $3,295.3    $3,090.6
   ===========================================================================================================================
   CAPEX(2)                  $ 914.2     $ 964.3     $  404.8    $  354.7      $    --      $   --      $1,319.0    $1,319.0
   ===========================================================================================================================
   EBITDA less CAPEX         $ 938.1     $ 984.1     $1,038.2    $  787.5      $    --      $   --      $1,976.3    $1,771.6
   ===========================================================================================================================
                                                                             EBITDA (from above)        $3,295.3    $3,090.6
                                                                             Depreciation                1,342.6     1,307.8
                                                                             Amortization                  281.1       335.3
                                                                             -------------------------------------------------
                                                                             Operating income            1,671.6     1,447.5
                                                                             Other expense, net             18.4         8.7
                                                                             Financing costs               623.1       613.3
                                                                             -------------------------------------------------
                                                                             Income before income taxes  1,030.1       825.5
                                                                               and non-controlling
                                                                               interests
                                                                             Income taxes                  322.0       255.1
                                                                             Non-controlling interests       7.8         4.6
                                                                             -------------------------------------------------
                                                                             Net income                 $  700.3    $  565.8
                                                                             =================================================
</TABLE>

     (1) Earnings Before Interest, Taxes, Depreciation and Amortization
         ("EBITDA") is a non-GAAP measure and is defined by the Company as
         operating revenues less operations expense and restructuring and
         workforce reduction costs. The Company has issued guidance on, and
         reports, EBITDA because it is a key measure used by management to
         evaluate performance of its business segments and is utilized in
         measuring compliance with certain debt covenants.

     (2) Total capital expenditures ("CAPEX").

     20.      Related Party Transactions

     In 2001, the Company entered into an agreement with Verizon Communications
     Inc. ("Verizon", including its subsidiaries), then a significant
     shareholder, with respect to acquiring certain rights to Verizon's
     software, technology, services and other benefits, thereby replacing and
     amending a previous agreement between the Company and GTE Corporation.

     On November 30, 2004, Verizon and the Company entered into an agreement
     pursuant to which the Company's independent members of the Board of
     Directors agreed to facilitate the divestiture by Verizon of its 20.5%
     equity investment in the Company. Such agreement was necessary due to
     certain restrictive provisions in the Long Term Relationship Agreement,
     dated January 31, 1999, between Verizon and the Company. Such divestiture
     was effected by a public secondary offering of Verizon's entire equity
     interest in the Company on December 14, 2004; post divestiture, Verizon
     and the Company are no longer related parties for purposes of generally
     accepted accounting principles and Verizon no longer has a pre-emptive
     right to buy shares from Treasury.

     Pursuant to the agreement, and the amended agreement pursuant to which the
     Company acquires certain rights to Verizon's software, technology,
     services and other benefits, Verizon paid the Company $148 million
     (U.S.$125 million). This related party transaction was not in the normal
     course of operations and did not result in a substantive change in
     ownership interests, so the transaction was measured at the respective
     parties' carrying amounts.

<TABLE>
<CAPTION>

     The analysis of the payment is as follows:

   Year ended December 31 (millions)                                                                                2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                             <C>
   Allocation of net proceeds
      Refund of amounts prepaid in respect of software and related technology
        Prepaid expenses and other                                                                              $        8.1
        Deferred charges                                                                                                25.2
      Contributed surplus                                                                                              114.8
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                                                $      148.1
   ============================================================================================================================
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     In conjunction with the divestiture, a number of agreements between
     Verizon and the Company were terminated or altered, including the amended
     and restated software and related technology and services agreement
     ("SRT") pursuant to which the Company acquired certain rights to Verizon's
     software, technology, services and other benefits. The term of the SRT was
     extended to 2008. The Company will continue to have exclusive rights in
     Canada to specified Verizon trademarks, software and technology acquired
     prior to Verizon's divestiture of its investment in the Company and
     Verizon is required to continue to provide upgrade and support on the
     software and technology licensed to the Company. The annual fees payable
     by the Company under the SRT for the years 2006 to 2008 have been reduced
     to three U.S. dollars; Verizon and the Company remain committed to use
     each other's cross-border services where capabilities and customer
     requirements permit and the Company has been released from its obligation
     not to compete in the United States.

     As of December 31, 2004, in aggregate, $312.1 million of specified
     software licences and a trademark licence had been acquired under the
     agreement and have been recorded as capital and other assets. These assets
     were valued at fair market value at the date of acquisition as determined
     by an arm's-length party's appraisal. The total commitment under the SRT
     is U.S.$275 million for the period 2001 to 2008 and the commitment
     remaining after December 31, 2005, was three U.S. dollars.

     In the normal course of operations and on market terms and conditions,
     ongoing services and other benefits have been received and expensed. In
     connection with the 2001 disposition of TELUS' directory business to
     Verizon, the Company bills customers, and collects, for directory listings
     on Verizon's behalf.
<TABLE>
<CAPTION>

   Year ended December 31 (millions)                                                                                 2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                             <C>
   Verizon agreement - Ongoing services and benefits expensed                                                   $       25.2
   Sales to Verizon (Verizon customers' usage of TELUS' telecommunication infrastructure and other)             $       52.4
   Purchases from Verizon (TELUS customers' usage of Verizon's telecommunication infrastructure and other)      $       33.2
   ----------------------------------------------------------------------------------------------------------------------------

     21.      Differences between Canadian and United States Generally Accepted Accounting Principles
     The consolidated financial statements have been prepared in accordance with Canadian GAAP. The principles adopted in these
     financial statements conform in all material respects to those generally accepted in the United States except as summarized
     below. Significant differences between Canadian GAAP and U.S. GAAP would have the following effect on reported net income of
     the Company:
</TABLE>

<TABLE>
<CAPTION>

   Years ended December 31 (millions except per share amounts)                                   2005                2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>                 <C>
   Net income in accordance with Canadian GAAP                                              $      700.3        $      565.8
   Adjustments:
      Operating expenses
        Operations (b)                                                                              (2.7)                2.2
        Depreciation (c)                                                                               --                6.5
        Amortization of intangible assets (d)                                                      (81.8)              (81.8)
      Financing costs (f)                                                                            5.5                 8.4
      Accounting for derivatives (g)                                                                 4.1                (4.4)
      Taxes on the above adjustments (h)                                                            36.1                32.1
   ----------------------------------------------------------------------------------------------------------------------------
   Net income in accordance with U.S. GAAP                                                         661.5               528.8
   Other comprehensive income (loss) (i)
      Foreign currency translation adjustment                                                       (5.1)                0.5
      Change in unrealized fair value of derivatives designated as cash flow hedges                (79.5)              (47.5)
      Change in minimum pension liability                                                          (41.8)              (15.5)
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                                  (126.4)              (62.5)
   ----------------------------------------------------------------------------------------------------------------------------
   Comprehensive income in accordance with U.S. GAAP                                        $      535.1        $      466.3
   ============================================================================================================================
   Net income in accordance with U.S. GAAP per Common Share and Non-Voting Share
      - Basic                                                                               $       1.85        $       1.48
      - Diluted                                                                             $       1.83        $       1.46
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

   The following is an analysis of retained earnings (deficit) reflecting the application of U.S. GAAP:

   Years ended December 31 (millions)                                                            2005                2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>                 <C>
   Retained Earnings under Canadian GAAP                                                    $      849.7        $      983.0
      Adjustments:
        Purchase versus Pooling Accounting
                                                                                                (1,489.8)           (1,606.5)
        Amortization of additional goodwill on Clearnet purchase                                    (7.9)               (7.9)
        Share-based compensation                                                                    58.4                44.2
        Accounting for derivatives                                                                  (0.3)               (3.0)
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                                (1,439.6)           (1,573.2)
   ----------------------------------------------------------------------------------------------------------------------------
   Retained Earnings under U.S. GAAP                                                        $     (589.9)       $     (590.2)
   ============================================================================================================================
   Schedule of Retained Earnings under U.S. GAAP
      Balance at beginning of period                                                        $     (590.2)       $     (844.7)
      Net income in accordance with U.S. GAAP                                                      661.5               528.8
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                                    71.3              (315.9)
      Less: Common Share and Non-Voting Share dividends paid, or payable, in cash                  312.2               204.7
            Common Share and Non-Voting Share dividends reinvested, or to be
              reinvested, in shares issued from Treasury                                              --                26.9
            Purchase of Common Shares and Non-Voting Shares in excess of stated
              capital                                                                              343.6                38.6
            Warrant proceeds used in determining intrinsic value of warrants in excess
              of amounts ultimately received (Note 15(c))                                            2.0                  --
            Purchase of share options not in excess of their fair value                              3.4                  --
            Preference and preferred share dividends                                                  --                 1.8
            Redemption premium on preference and preferred shares in excess of amount
              chargeable to contributed surplus                                                       --                 2.3
   ----------------------------------------------------------------------------------------------------------------------------
      Balance at end of period                                                              $     (589.9)       $     (590.2)
   ============================================================================================================================
    The following is an analysis of major balance sheet categories reflecting the application of U.S. GAAP:

    As at December 31 (millions)                                                                2005                  2004
   ----------------------------------------------------------------------------------------------------------------------------
    Current Assets                                                                          $    1,242.5        $    2,647.6
    Capital Assets
       Property, plant, equipment and other                                                      7,339.4             7,528.2
       Intangible assets subject to amortization                                                 2,295.2             2,476.5
       Intangible assets with indefinite lives                                                   2,964.6             2,955.8
    Goodwill                                                                                     3,575.5             3,545.4
    Deferred Income Taxes                                                                             --               218.8
    Other Assets                                                                                   736.3               658.5
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                            $   18,153.5        $   20,030.8
   ============================================================================================================================
    Current Liabilities                                                                     $    2,027.5        $    1,969.1
    Long-Term Debt                                                                               4,639.9             6,341.1
    Other Long-Term Liabilities                                                                  2,024.9             1,763.8
    Deferred Income Taxes                                                                        1,410.8             1,593.7
    Non-Controlling Interest                                                                        25.6                13.1
    Shareholders' Equity                                                                         8,024.8             8,350.0
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                            $   18,153.5        $   20,030.8
   ============================================================================================================================
</TABLE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

     The following is a reconciliation of shareholders' equity incorporating the differences between Canadian and U.S. GAAP:

    As at December 31 (millions)                                                                2005                 2004
    --------------------------------------------------------------------------------------- --------------- --- ---------------
<S>                                                                                         <C>                 <C>
    Shareholders' Equity under Canadian GAAP                                                $    6,870.0        $    7,025.6
    Adjustments:
       Purchase versus Pooling Accounting (a), (c) - (f)                                         1,399.9             1,458.9
       Additional goodwill on Clearnet purchase (e)                                                123.5               123.5
       Convertible debentures (including conversion option) (f)                                       --                (8.0)
       Accounting for derivatives (g)                                                               (0.3)               (3.0)
       Accumulated other comprehensive income (loss) (i), excluding cumulative foreign
         currency translation adjustment                                                          (368.3)             (247.0)
   ----------------------------------------------------------------------------------------------------------------------------
    Shareholders' Equity under U.S. GAAP                                                    $    8,024.8        $    8,350.0
   ============================================================================================================================
    Composition of Shareholders' Equity under U.S. GAAP
       Common equity
         Common Shares                                                                      $    4,136.4        $    4,341.0
         Non-Voting Shares                                                                       4,728.1             4,700.8
         Options and warrants (Note 15(c))                                                           5.9                26.9
         Accrual for shares issuable under channel stock incentive plan                               --                 0.8
         Retained earnings (deficit)                                                              (589.9)             (590.2)
         Accumulated other comprehensive income (loss) (i)                                        (375.6)             (249.2)
         Contributed surplus                                                                       119.9               119.9
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                            $    8,024.8        $    8,350.0
   ============================================================================================================================
</TABLE>

     (a)      Merger of BC TELECOM and TELUS
     The business combination between BC TELECOM and TELUS Corporation (renamed
     TELUS Holdings Inc., which was wound up June 1, 2001) was accounted for
     using the pooling of interests method under Canadian GAAP. Under Canadian
     GAAP, the application of the pooling of interests method of accounting for
     the merger of BC TELECOM and TELUS Holdings Inc. resulted in a restatement
     of prior periods as if the two companies had always been combined. Under
     U.S. GAAP, the merger is accounted for using the purchase method. Use of
     the purchase method results in TELUS (TELUS Holdings Inc.) being acquired
     by BC TELECOM for $4,662.4 million (including merger related costs of
     $51.9 million) effective January 31, 1999.

    (b)      Operating Expenses - Operations
<TABLE>
<CAPTION>

<S>                                                                                          <C>                 <C>
   Years ended December 31 (millions)                                                           2005                2004
   ----------------------------------------------------------------------------------------------------------------------------
   Future employee benefits                                                                 $      (16.9)       $      (16.9)
   Share-based compensation                                                                         14.2                19.1
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                            $       (2.7)       $        2.2
   ============================================================================================================================
</TABLE>

       Future employee benefits: Under U.S. GAAP, TELUS' future employee
     benefit assets and obligations have been recorded at their fair values on
     acquisition. Accounting for future employee benefits under Canadian GAAP
     changed to become more consistent with U.S. GAAP effective January 1,
     2000. Canadian GAAP provides that the transitional balances can be
     accounted for prospectively. Therefore, to conform to U.S. GAAP, the
     amortization of the transitional amount needs to be removed from the
     future employee benefit expense.

       Share-based compensation: Effective January 1, 2004, Canadian GAAP
     required the adoption of the fair value method of accounting for
     share-based compensation for awards made after 2001. The Canadian GAAP
     disclosures for share-based compensation awards are set out in Note 9(b).
     U.S. GAAP requires disclosure of the impact on net income and net income
     per Common Share and Non-Voting Share as if the fair value based method of
     accounting had been applied for awards made after 1994; the Company
     continues to use the intrinsic value method for purposes of U.S. GAAP. The
     fair values of the Company's options granted in 2005 and 2004, and the
     weighted average assumptions used in estimating the fair values, are set
     out in Note 9(b). Such impact, using the fair values set out in Note 9(b),
     would approximate the pro forma amounts in the following table.


<TABLE>
<CAPTION>

   Years ended December 31 (millions except per share amounts)                                   2005                2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                  <C>
    Net income in accordance with U.S. GAAP
      As reported                                                                           $      661.5        $      528.8
      Deduct: Share-based compensation arising from share options determined under
        fair value based method for all awards                                                     (14.2)              (22.0)
   ----------------------------------------------------------------------------------------------------------------------------
      Pro forma                                                                             $      647.3        $      506.8
   ============================================================================================================================
   Net income in accordance with U.S. GAAP per Common Share and Non-Voting Share
      Basic
        As reported (using intrinsic value method)                                          $       1.85        $       1.48
        Pro forma (using fair value method)                                                 $       1.81        $       1.42
      Diluted
        As reported (using intrinsic value method)                                          $       1.83        $       1.46
        Pro forma (using fair value method)                                                 $       1.79        $       1.40
</TABLE>

     Effective January 1, 2006, U.S. GAAP requires the adoption of the fair
     value method of accounting for share-based compensation, as further
     discussed in (j). On a prospective basis, commencing January 1, 2006, this
     will result in there no longer being a difference between Canadian GAAP
     and U.S. GAAP share-based compensation expense recognized in the results
     of operations. As share options granted subsequent to 1994 and prior to
     2002 are captured by U.S. GAAP, but are not captured by Canadian GAAP,
     differences in common equity accounts arising from these awards will
     continue.

     (c)      Operating Expenses - Depreciation
       Merger of BC TELECOM and TELUS: Under the purchase method, TELUS'
     capital assets on acquisition have been recorded at fair value rather than
     at their underlying cost (book values) to TELUS. Therefore, depreciation
     of such assets based on fair values at the date of acquisition under U.S.
     GAAP will be different than TELUS' depreciation based on underlying cost
     (book values). As of March 31, 2004, the amortization of this difference
     had been completed.

     (d)      Operating Expenses - Amortization of Intangible Assets
     As TELUS' intangible assets on acquisition have been recorded at their
     fair value (see (a)), amortization of such assets, other than for those
     with indefinite lives, needs to be included under U.S. GAAP; consistent
     with prior years, amortization is calculated using the straight-line
     method.

<TABLE>
<CAPTION>
     The incremental amounts recorded as intangible assets arising from the TELUS acquisition above are as follows:

                                                                          Accumulated
                                                           Cost           Amortization                Net Book Value
   ----------------------------------------------------------------------------------------------------------------------------
   As at December 31 (millions)                                                                 2005                  2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                <C>
   Intangible assets subject to amortization
      Subscribers - wireline                          $    1,950.0       $      295.8       $    1,654.2        $    1,692.6
      Subscribers - wireless                                 250.0              246.5                3.5                46.9
   ----------------------------------------------------------------------------------------------------------------------------
                                                           2,200.0              542.3            1,657.7             1,739.5
   ----------------------------------------------------------------------------------------------------------------------------
   Intangible assets with indefinite lives
      Spectrum licences(1)                                 1,833.3            1,833.3                 --                  --
   ----------------------------------------------------------------------------------------------------------------------------
                                                      $    4,033.3       $    2,375.6       $    1,657.7        $    1,739.5
   ============================================================================================================================
</TABLE>

     (1)      Accumulated amortization of spectrum licences is amortization
     recorded prior to 2002 and the transitional impairment amount.

     Estimated aggregate amortization expense for intangible assets subject to
     amortization, calculated upon such assets held as at December 31, 2005,
     for each of the next five fiscal years is as follows:
<TABLE>
<CAPTION>

   Years ending December 31 (millions)
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                             <C>
   2006                                                                                                         $      253.7
   2007                                                                                                                163.1
   2008                                                                                                                 83.2
   2009                                                                                                                 48.1
   2010                                                                                                                 46.4
</TABLE>

     (e)      Goodwill
       Merger of BC TELECOM and TELUS: Under the purchase method of accounting,
     TELUS' assets and liabilities at acquisition (see (a)) have been recorded
     at their fair values with the excess purchase price being allocated to
     goodwill


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     in the amount of $403.1 million. Commencing January 1, 2002, rather than
     being systematically amortized, the carrying value of goodwill is
     periodically tested for impairment.

       Additional goodwill on Clearnet purchase: Under U.S. GAAP, shares issued
     by the acquirer to effect an acquisition are measured at the date the
     acquisition was announced; however, under Canadian GAAP, at the time the
     transaction took place, shares issued to effect an acquisition were
     measured at the transaction date. This results in the purchase price under
     U.S. GAAP being $131.4 million higher than under Canadian GAAP. The
     resulting difference is assigned to goodwill. Commencing January 1, 2002,
     rather than being systematically amortized, the carrying value of goodwill
     is periodically tested for impairment, as further discussed in Note 1(f).

     (f)      Financing Costs
       Merger of BC TELECOM and TELUS: Under the purchase method, TELUS'
     long-term debt on acquisition has been recorded at its fair value rather
     than at its underlying cost (book value) to TELUS. Therefore, interest
     expense calculated on the debt based on fair values at the date of
     acquisition under U.S. GAAP will be different from TELUS' interest expense
     based on underlying cost (book value). As of December 31, 2005, the
     amortization of this difference had been completed.

       Convertible debentures: Under Canadian GAAP, the conversion option
     embedded in the convertible debentures was presented separately as a
     component of shareholders' equity. Under U.S. GAAP, the embedded
     conversion option was not subject to bifurcation and was thus presented as
     a liability along with the balance of the convertible debentures. The
     principal accretion occurring under Canadian GAAP was not required under
     U.S. GAAP and the adjustment was included in the interest expense
     adjustment in the reconciliation.

     (g)      Accounting for Derivatives
     On January 1, 2001, the Company adopted, for U.S. GAAP purposes, the
     provisions of Statement of Financial Accounting Standards No. 133,
     "Accounting for Derivative Instruments and Hedging Activities." This
     standard requires that all derivatives be recognized as either assets or
     liabilities and measured at fair value. This is different from the
     Canadian GAAP treatment for financial instruments. Under U.S. GAAP,
     derivatives which are fair value hedges, together with the financial
     instrument being hedged, will be marked to market with adjustments
     reflected in income and derivatives which are cash flow hedges will be
     marked to market with adjustments reflected in comprehensive income (see
     (i)).

     (h)      Income Taxes
<TABLE>
<CAPTION>

   Years ended December 31 (millions)                                                            2005                2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>                 <C>
    Current                                                                                 $      (18.0)       $     (125.8)
    Deferred                                                                                       303.9               348.8
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                                   285.9               223.0
    Investment Tax Credits                                                                          (0.4)               (0.6)
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                            $      285.5        $      222.4
   ============================================================================================================================
     The Company's income tax expense (recovery), for U.S. GAAP purposes, differs from that calculated by applying statutory
     rates for the following reasons:

   Years ended December 31  ($ in millions)                         2005                                  2004
   ----------------------------------------------------------------------------------------------------------------------------
    Basic blended federal and provincial tax at       $      326.7               34.2%      $      262.0                34.7%
      statutory income tax rates
    Change in estimates of available deductible
      differences in prior years                             (37.5)                                 (9.1)
    Tax rate differential on, and consequential
      adjustments from, reassessment of prior year
      tax issues                                             (13.9)                                (41.2)
    Revaluation of deferred tax assets and
      liabilities for changes in statutory income tax
      rates                                                  (10.8)                                (14.0)
    Investment Tax Credits                                    (0.3)                                 (0.4)
    Other                                                      4.8                                   6.6
   ----------------------------------------------------------------------------------------------------------------------------
                                                             269.0               28.3%             203.9                27.0%
   Large corporations tax                                     16.5                                  18.5
   ----------------------------------------------------------------------------------------------------------------------------
    U.S. GAAP income tax expense (recovery)           $      285.5               30.0%      $      222.4                29.5%
   ============================================================================================================================
</TABLE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

     As referred to in Note 1(b), the Company must make significant estimates in respect of the composition of its deferred income
     tax asset and deferred income tax liability. The operations of the Company are complex, and related tax interpretations,
     regulations and legislation are continually changing. As a result, there are usually some tax matters in question. Temporary
     differences comprising the deferred income tax asset (liability) are estimated as follows:

    As at December 31 (millions)                                                                 2005               2004
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                  <C>
    Capital assets
      Property, plant, equipment, other and intangible assets subject to amortization       $     (578.0)       $     (615.2)
      Intangible assets with indefinite lives                                                     (974.4)             (991.9)
    Pension amounts                                                                                (93.0)              (80.7)
    Losses available to be carried forward                                                         164.0               424.9
    Reserves not currently deductible                                                              111.3               167.9
    Other                                                                                          185.7               158.5
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                            $   (1,184.4)       $     (936.5)
   ============================================================================================================================
    Deferred income tax asset
      Current                                                                               $      226.4        $      438.4
      Non-current                                                                                     --               218.8
   ----------------------------------------------------------------------------------------------------------------------------
                                                                                                   226.4               657.2
    Deferred income tax liability                                                               (1,410.8)           (1,593.7)
   ----------------------------------------------------------------------------------------------------------------------------
    Deferred income tax asset (liability)                                                   $   (1,184.4)       $     (936.5)
   ============================================================================================================================
     (i)      Additional Disclosures Required Under U.S. GAAP - Comprehensive Income
     Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", requires that a statement of
     comprehensive income be displayed with the same prominence as other financial statements. Comprehensive income, which
     incorporates net income, includes all changes in equity during a period except those resulting from investments by and
     distributions to owners. There is no requirement to disclose comprehensive income under Canadian GAAP prior to fiscal periods
     beginning on or after January 1, 2007.

   Years ended                                      2005                                             2004
   December 31 (millions)
   ----------------------------------------------------------------------------------------------------------------------------
                                            Unrealized
                                            fair
                                            value                                            Unrealized
                                Cumulative  of                                   Cumulative  fair value
                                foreign     derivative                             foreign       of
                                currency    cash        Minimum                   currency   derivative    Minimum
                                translation  flow        pension                  translation   cash flow    pension
                                adjustment   hedges     liability    Total       adjustment    hedges     liability   Total
   ----------------------------------------------------------------------------------------------------------------------------
   Amount arising               $   (5.1)   $(119.1)    $ (62.1)    $(186.3)     $    0.5    $  (72.9)   $  (23.6)   $ (96.0)
   Income tax expense
     (recovery)                       --      (39.6)      (20.3)      (59.9)           --       (25.4)       (8.1)     (33.5)
   ----------------------------------------------------------------------------------------------------------------------------
   Net                              (5.1)     (79.5)      (41.8)     (126.4)          0.5       (47.5)      (15.5)     (62.5)
   Accumulated other
     comprehensive income
     (loss), beginning of
     period                         (2.2)    (121.1)     (125.9)     (249.2)         (2.7)      (73.6)     (110.4)    (186.7)
   ----------------------------------------------------------------------------------------------------------------------------
   Accumulated other
     comprehensive income
     (loss), end of period      $   (7.3)   $(200.6)    $(167.7)    $(375.6)     $   (2.2)   $ (121.1)   $ (125.9)   $(249.2)
   ============================================================================================================================

     (j)      Recently Issued Accounting Standards Not Yet Implemented

        Equity-based compensation: Under U.S. GAAP, effective for its 2006 fiscal year, the Company will be required to apply the
     fair value method of accounting for share-based compensation awards granted to employees, as prescribed by Statement of
     Financial Accounting Standards 123(R), "Share-Based Payment". The Company has selected the modified prospective transition
     method. The modified prospective transition method results in no share option expense being recognized in the U.S. GAAP
     reconciliation disclosures, other than on a pro forma basis as set out in (b), in fiscal years prior to 2006. The share
     option expense that is recognized in fiscal years subsequent to 2005 is in respect of share options granted after 1994 and
     vesting in fiscal periods subsequent to 2005.
</TABLE>


<TABLE>
<CAPTION>

     To reflect the fair value of options granted subsequent to 1994, and vesting prior to 2006, certain components of common
     equity in the December 31, 2005, U.S. GAAP reconciliation disclosures would have been restated as follows (had restatement
     occurred):

     December 31, 2005 (millions)                                                             Cumulative
                                                                                              transition
                                                                                            adjustment for
                                                                                              share-based
                                                                          As currently   compensation arising     As will be
                                                                            reported      from share options       reported
   ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                 <C>
    Common equity
      Common Shares                                                      $    4,136.4       $        7.4        $    4,143.8
      Non-Voting Shares                                                       4,728.1               76.4             4,804.5
      Options and warrants                                                        5.9                 --                 5.9
      Retained earnings (deficit)                                              (589.9)            (195.6)             (785.5)
      Accumulated other comprehensive income (loss)                            (375.6)                --              (375.6)
      Contributed surplus                                                       119.9              111.8               231.7
   ----------------------------------------------------------------------------------------------------------------------------
                                                                         $    8,024.8       $         --        $    8,024.8
   ============================================================================================================================

     Other: As would affect the Company, there are no other U.S. accounting standards currently issued and not yet implemented that
     would differ from Canadian accounting standards currently issued and not yet implemented.
</TABLE>





Forward-looking statements
_______________________________________________________________________________

This report and Management's discussion and analysis contain statements about
expected future events and financial and operating results of TELUS Corporation
(TELUS or the Company) that are forward-looking. By their nature,
forward-looking statements require the Company to make assumptions and are
subject to inherent risks and uncertainties. There is significant risk that
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 actual future results, conditions, actions
or events to differ materially from financial and operating targets,
expectations, estimates or intentions expressed in the forward-looking
statements.

Assumptions for 2006 target purposes include: economic growth consistent with
recent provincial and national estimates by the Conference Board of Canada that
were available in 2005, including gross domestic product growth of 3.1% in
Canada; increased wireline competition in both business and consumer markets; a
wireless industry market penetration gain similar to the approximately five
percentage point gain in 2005; approximately $100 million restructuring and
workforce reduction expenses; an effective tax rate of approximately 35%; no
prospective significant acquisitions or divestitures; no change in foreign
ownership rules; and maintenance or improvement of investment-grade credit
ratings.

Factors that could cause actual results to differ materially include but are
not limited to: competition; technology (including reliance on systems and
information technology); regulatory developments; human resources (including
possible labour disruptions); business integrations and internal
reorganizations; process risks (including the conversion of legacy systems and
security); financing and debt requirements (including share repurchases and
debt redemptions); tax matters; health, safety and environment developments;
litigation and legal matters; business continuity events (including manmade and
natural threats); economic growth and fluctuations; and other risk factors
discussed herein and listed from time to time in TELUS' reports, public
disclosure documents including the Annual Information Form, and other filings
with securities commissions in Canada (filed on SEDAR at sedar.com) and the
United States (filed on EDGAR at sec.gov).

For further information, see Section 10: Risks and risk management of
Management's discussion and analysis.
_______________________________________________________________________________

Management's discussion and analysis

February 24, 2006

The following is a discussion of the consolidated financial condition and
results of operations of TELUS Corporation for the years ended December 31,
2005 and 2004, and should be read together with TELUS' Consolidated financial
statements. This discussion contains forward-looking information that is
qualified by reference to, and should be read together with, the discussion
regarding forward-looking statements above.

TELUS' Consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles (GAAP), which differ in
certain respects from U.S. GAAP. See Note 21 to the Consolidated financial
statements for a summary of the principal differences between Canadian and U.S.
GAAP as they relate to TELUS. The Consolidated financial statements and
Management's discussion and analysis were reviewed by TELUS' Audit Committee
and approved by TELUS' Board of Directors. All amounts are in Canadian dollars
unless otherwise specified.

The Company has issued guidance on and reports on certain non-GAAP measures
that are used by management to evaluate performance of business units and
segments. Non-GAAP measures are used in measuring compliance with debt
covenants. Because non-GAAP measures do not have a standardized meaning,
securities regulations require that non-GAAP measures be clearly defined and
qualified, and reconciled with their nearest GAAP measure. For the readers'
reference, the definition, calculation and reconciliation of consolidated
non-GAAP measures is provided in Section 11: Reconciliation of non-GAAP
measures and definition of key operating indicators.

Management's discussion and analysis contents

<TABLE>
<CAPTION>
 Section	                              Contents
<S>					      <C>
---------------------------------------------------------------------------------------------------------------------------------
1.Overall performance	                      A summary of 2005 consolidated results and a description of performance against
                                              annual targets set for 2005
---------------------------------------------------------------------------------------------------------------------------------
 2.Core business, vision and strategy	      A discussion of TELUS' core business, vision and strategy, including examples of
                                              TELUS' activities in support of its six strategic imperatives
---------------------------------------------------------------------------------------------------------------------------------
 3.Key performance drivers	              Corporate priorities in place for 2005 and planned for 2006
---------------------------------------------------------------------------------------------------------------------------------
 4.Capability to deliver results	      A description of the factors that affect the capability to execute strategies,
                                              manage key performance drivers and deliver results
---------------------------------------------------------------------------------------------------------------------------------
 5.Results from operations	              A detailed discussion of operating results for 2005
---------------------------------------------------------------------------------------------------------------------------------
 6.Financial condition	                      A discussion of significant changes in the balance sheet at December 31, 2005, as
                                              compared to December 31, 2004
---------------------------------------------------------------------------------------------------------------------------------
 7.Liquidity and capital resources	      A discussion of cash flow, liquidity, credit facilities, off-balance sheet
                                              arrangements and other disclosures
---------------------------------------------------------------------------------------------------------------------------------
 8.Critical accounting estimates and          A description of accounting estimates, which are critical to determining financial
   accounting policy developments	      results, and changes to accounting policies
---------------------------------------------------------------------------------------------------------------------------------
 9.Looking forward to 2006	              A discussion of the outlook for 2006 and TELUS' 2006 financial and operational
                                              targets, including key assumptions and financing plans
---------------------------------------------------------------------------------------------------------------------------------
10.Risks and risk management	              An update of risks and uncertainties facing TELUS and how it manages these risks
---------------------------------------------------------------------------------------------------------------------------------
11.Reconciliation of non-GAAP                 A description, calculation and reconciliation of certain measures used by
   measures and definition of key             management
   operating indicators
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1. Overall performance

1.1 Materiality for disclosures

Management determines whether or not information is material based on whether
it believes a reasonable investor's decision to buy, sell or hold securities in
the Company would likely be influenced or changed if the information were
omitted or misstated.

1.2 Canadian telecommunications market

Canadian real GDP (gross domestic product) growth was recently estimated at
2.8% in 2005 by the Conference Board of Canada. Canadian wireless industry
revenues grew by approximately 16% as market penetration for the industry
increased by approximately five percentage points. TELUS' wireless segment,
carrying on business as TELUS Mobility, achieved 17% revenue growth in 2005 and
its largest ever wireless subscriber net additions of 584,300. Price
competition and technological substitution of voice services to wireless and
Internet contributed to further softness in Canadian wireline industry
revenues, estimated to have been flat in 2005. TELUS' wireline segment revenues
grew by 1.5% in 2005.

Voice over Internet protocol (VoIP) services became an important competitive
factor in the wireline consumer market in 2005. TELUS' major cable-TV
competitors began to offer VoIP telephony in the Company's incumbent
territories, while other VoIP competitors expanded their offerings. At the end
of 2005, the Company began a limited commercial launch of TELUS TV services
following extended employee-based trials. The business market is also
increasingly adopting Internet protocol (IP) and managed services as a means of
achieving operational efficiencies and improving revenue generation. Wireless
resellers entered the prepaid market in 2005. Technology also continues to
evolve, both increasing the Company's opportunities and facilitating increased
competition. See Risks and risk management Sections 10.1 Competition and 10.2
Technology for the discussion of competitive and technology risks facing TELUS.

1.3 Consolidated highlights


<TABLE>
<CAPTION>
($ in millions, except margin and per share	                Years ended December 31
 amounts)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Operating revenues			                        8,142.7 		7,581.2 		 7.4 %
EBITDA(1)		                                        3,295.3 		3,090.6 		 6.6 %
EBITDA margin (%)(2)		                                   40.5 		   40.8 		(0.3) pts
Operating income		                                1,671.6 		1,447.5 		15.5 %
Net income		                                          700.3 		  565.8 		23.8 %

Earnings per share, basic ($)		                            1.96 		    1.58 		24.1 %
Earnings per share, diluted ($)		                            1.94 		    1.57 		23.6 %

Cash dividends declared per share ($)		                    0.875 		    0.65 		34.6 %
Cash provided by operating activities		                2,914.6 	        2,538.1 		14.8 %
Cash used by investing activities		                1,355.2 		1,299.5 		 4.3 %
	Capital expenditures		                        1,319.0 		1,319.0 		 0.0 %
Cash used by financing activities		                2,447.3 		  348.3 		  n.m.
Free cash flow(3)		                                1,465.5 		1,297.3 		13.0 %
---------------------------------------------------------------------------------------------------------------------------------
<FN>
pts- percentage points
n.m. -- not meaningful
(1) Earnings before interest, taxes, depreciation and amortization is a non-GAAP measure.
    See Section 11.1 Earnings before interest, taxes, depreciation and amortization (EBITDA).
(2) EBITDA margin is EBITDA divided by Operating revenues.
(3) Free cash flow is a non-GAAP measure. See Section 11.2 Free cash flow.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Despite the labour disruption experienced in Western Canada from late July to
late November of 2005, solid growth in consolidated Operating revenues was
achieved, with wireless segment revenues increasing by 17% for the full year.
Wireline segment revenues increased by 1.5% for the full year, as growth in
data revenues more than offset the decline in voice long distance and equipment
revenues. The increase in consolidated EBITDA resulted from improved wireless
profitability, partly offset by a temporary increase in wireline expenses in
order to maintain operations during the labour disruption. The 6.6% growth in
consolidated EBITDA was the primary contributor to $224.1 million higher
Operating income in 2005, when compared with 2004. The net effect of the labour
disruption was estimated at approximately $133 million additional operations
expense in 2005.

Net income and earnings per share increased for the full year of 2005, when
compared with 2004, due primarily to increased Operating income, partly offset
by one-time financing costs arising from the early redemption of $1.578 billion
Canadian dollar Notes on December 1, 2005.

Cash provided by operating activities increased by $376.5 million in 2005, when
compared with 2004. The increase was primarily from the receipt of $350 million
additional proceeds from securitized accounts receivable on November 30. Free
cash flow increased because of improved EBITDA, lower payments under
restructuring programs and higher interest received, partly offset by lower
cash tax recoveries.


                 GRAPH                              GRAPH

           Operating revenues               Basic earnings per share ($)
             ( $ millions)

     Effect of the labour disruption on TELUS operations during 2005

TELUS 2005 results were affected by a labour disruption that commenced on July
21 and concluded following the ratification of a collective agreement on
November 18 (see Reaching a collective agreement in Section 3.1 Corporate
priorities for 2005). Revenue grew at a slower pace in the second half of the
year due in part to the work stoppage and increased competitive activity.
However, the recent increase in competition for local residential telephony
services by resellers, cable-TV companies, and other competitors offering VoIP
services makes it difficult to fully separate the competitive effects from the
impacts of the labour disruption on wireline revenues and subscribers. Reduced
availability of field resources resulted in the Company giving priority to
repair activities, and business and data services, which limited installations
of residential access lines.

Significant emergency operations planning costs were incurred in the second
quarter. With the labour disruption beginning in July, emergency operations
procedures were put in place to maintain customer service at the highest
possible level. The labour disruption was most evident in British Columbia,
where all unionized employees were not at work for the duration of the labour
disruption. A sizeable number of bargaining unit employees were working in
Alberta. There was no labour disruption in the Ontario and Quebec operations,
but additional costs were incurred for extra workload in areas such as call
centres. Incremental expenses that arose from emergency operations procedures
included management reassignments, paid overtime, third-party security and
contractor costs, travel and accommodation and reduced capitalization of
labour. These incremental expenses exceeded cost savings, such as those arising
from lower compensation expenses for employees who stayed off work and
adjustments to accruals for payroll and other employee-related expenses, as
shown in the table that follows.

With ratification of the new collective agreement and the return to work of
TELUS team members by early December, certain capital spending resumed, and in
fact increased, in the fourth quarter of 2005, when compared to the same period
in 2004. For the full year of 2005, capital expenditures were still lower than
originally planned, due to deferral of some construction activities, while the
balance of assets under construction rose due to delays in completion of
in-progress work.

The new five-year agreement provides increased operating flexibility and
productivity, while facilitating better service for customers in an
increasingly competitive marketplace. It fosters a performance culture with
universal variable incentive pay, when performance metrics are met, and
promotions that are based on performance as well as seniority. The agreement
also establishes a new paradigm. For example, the Company and union agreed to
work together to withdraw various types of lawsuits between the parties. As
well, a Common Interest Forum has been established as a mechanism for
co-operation and dialogue.



<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Estimated impacts of the work stoppage	                           2005 Quarterly	                        2005
                                                         -------------------------------------------
                                                           Q2 		      Q3 	        Q4              Full year
<S>						           <C>		      <C>	        <C>	        <C>
---------------------------------------------------------------------------------------------------------------------------------
Net incremental Operations expenses,
pre-tax ($ millions)		                               16 	          65 	            52 		   133

Approximate earnings per share impact, after tax ($)       (0.03)	      (0.12)	        (0.10)	        (0.25)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1.4 Performance scorecard for 2005 results

TELUS' original targets for 2005 did not include the impacts of the four-month
work stoppage. Despite this, the majority of the original targets were achieved
or exceeded as a result of being ahead of plan early in the year. Guidance was
revised for selected items in the interim reports for the first, second and
third quarters (released in May, August and November, respectively), as well as
the December 16, 2005 announcement of 2006 targets. Generally, guidance
revisions were improvements from the original targets or narrowing of guidance
ranges. All of the final guidance items were achieved. See Section 9: Looking
forward to 2006 for the 2006 targets announced on December 16, 2005.

* The original target for consolidated revenues was exceeded because of strong
  wireless average revenue per subscriber unit per month (ARPU) and subscriber
  growth, as well as growth in wireline data revenues.

* The original targets for consolidated and wireline EBITDA were achieved,
  while the original target for wireless EBITDA was exceeded. Guidance for
  wireline segment EBITDA was revised upward in the first quarter to $1.875
  billion to $1.925 billion based on being ahead of plan at the time, but this
  higher range was not achieved as a result of the work stoppage. Guidance for
  wireline EBITDA was lowered in the third quarter to $1.8 billion to $1.875
  billion to reflect the net effects of the work stoppage somewhat offset by
  lower restructuring charges, and updated in December to narrow the expected
  range to $1.84 billion to $1.865 billion.

* The guidance for consolidated capital expenditures was revised in May to
  approximately $1.4 billion due to an expected increase in the wireline
  segment. The expectation was subsequently reduced in November to
  approximately $1.3 billion as a result of the work stoppage. Guidance for
  wireline capital expenditures increased to the upper end of the target range
  of approximately $1.0 billion in May, and was subsequently reduced to
  approximately $900 million in November. The original consolidated target was
  achieved.

* The original target for free cash flow was exceeded because of lower
  capital expenditures and higher wireless EBITDA.

* The target for high-speed Internet subscriber net additions was not
  achieved, as the work stoppage limited gross additions of subscribers and
  increased competitor activity, particularly in the third quarter. Guidance
  was lowered to approximately 65,000, while competitive activity increased in
  the second half of 2005. In December, the guidance was revised to more than
  65,000, which was achieved.

* The original target for wireless subscriber net additions was exceeded due
  to successful wireless marketing, as well as the fact that the Canadian
  wireless industry market penetration increased by approximately five
  percentage points rather than the approximately four percentage points
  originally anticipated.
<TABLE>
<CAPTION>
                                         2005	              Original targets
  			                 results              for 2005                 Result   Final guidance             Result
<S>					 <C>	              <C>	               <C>	<C>		           <C>
---------------------------------------------------------------------------------------------------------------------------------
Performance to 2005 targets
and revised guidance

++  Outperformed target or guidance
+   Met target or guidance
-   Approximated target or guidance
X   Missed target or guidance
---------------------------------------------------------------------------------------------------------------------------------
Consolidated

  Revenues	                         $8.14 billion        $7.9 to $8.0 billion     ++	$8.1 to $8.15 billion	   +

  EBITDA(1)	                         $3.295 billion       $3.2 to $3.3 billion      +	$3.275 to $3.325 billion   +

  Earnings per share - basic	         $1.96	              $1.65 to $1.85	       ++	$1.90 to $2.00	           +

  Capital expenditures                   $1.32 billion	      $1.3 to $1.4 billion      +	Approx. $1.3 billion	   +

  Free cash flow(2)                      $1.47 billion	      $1.2 to $1.3 billion     ++	$1.4 to $1.5 billion	   +

---------------------------------------------------------------------------------------------------------------------------------
Wireline segment

  Revenue (external)	                 $4.85 billion	      $4.7 to
                                                              $4.75 billion	       ++	$4.825 to $4.85 billion	   +
    Non-ILEC(3) revenue	                 $632 million	      $600 to $650 million	+	$625 to $635 million	   +

  EBITDA	                         $1.85 billion	      $1.85 to $1.9 billion	+	$1.84 to $1.865 billion	   +

    Non-ILEC EBITDA	                 $21 million	      $0 to $10 million	       ++	$15 to $20 million	  ++

  Capital expenditures	                 $914 million	      $950 million to 	       ++	Approx. $900 million	   +
					                        $1.0 billion
  High-speed Internet subscriber 	   73,400	      Approx. 100,000	        X  	More than 65,000	   +
   net additions
---------------------------------------------------------------------------------------------------------------------------------
Wireless segment
  Revenue (external)	                 $3.30 billion	      $3.2 to $3.25 billion    ++	$3.275 to $3.3 billion	   +

  EBITDA	                         $1.44 billion	      $1.35 to $1.4 billion    ++	$1.425 to $1.45 billion	   +

  Capital expenditures                 	 $405 million	      $350 to $400 million	-	Approx. $400 million	   +

  Wireless subscriber net additions	   584,300	       425,000 to 475,000      ++	More than 550,000	   +
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Section 11.1 Earnings before interest, taxes, depreciation and amortization (EBITDA).
(2) See Section 11.2 Free cash flow.
(3) Non-incumbent local exchange carrier
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

2. Core business, vision and strategy

The following discussion is qualified in its entirety by the Forward-looking
statements at the beginning of Management's discussion and analysis, and
Section 10: Risks and risk management.

2.1 Core business

TELUS Corporation, as the largest telecommunications company in Western Canada
and the second largest in Canada, provides a wide range of wireline and
wireless telecommunications products and services including data, Internet,
voice, video and entertainment services. TELUS earns the majority of its
revenue from access to, and the use of, the Company's national
telecommunications infrastructure, or from providing products and services that
facilitate access to and usage of this infrastructure.

The Company has two reportable segments: wireline and wireless. Segmentation is
based on similarities in technology, the technical expertise required to
deliver the products and services, the distribution channels used and
regulatory treatment. Intersegment sales are recorded at the exchange value.
Segmented information is regularly reported to the Company's chief operating
decision maker.

At December 31, 2005, the Company's principal subsidiary is wholly owned TELUS
Communications Inc. (TCI), including the TELE-MOBILE COMPANY partnership.

2.2 Vision and strategy

TELUS' strategic intent, or vision, is to unleash the power of the Internet to
deliver the best solutions to Canadians at home, in the workplace and on the
move. TELUS' strategy for growth is to focus on its core telecommunications
business in Canada. As a result, it has evolved from a regional
telecommunications company in 1999, serving markets with only 28% of Canada's
population, to a strong national facilities-based player in the growth areas of
wireless, data and Internet protocol (IP). The Company embarked on this
strategy in 2000 to take advantage of the significant growth opportunities the
national market offers.

TELUS continues to be guided by its six long-standing strategic imperatives
that guide the Company's actions and are generating the financial results of
the Company. TELUS' activities in support of, and the results from, these
imperatives include the following:

     Building national capabilities across data, IP, voice and wireless

In 2005, the Company expanded its suite of advanced IP-based network
applications with the introduction of TELUS IP-One Evolution(R). This new
service enables business customers to migrate from their existing Centrex
systems to IP telephony at a pace that best suits their needs. In addition to
utilizing the benefits of Centrex, customers gain the power of IP telephony,
which converges voice, data and Internet and offers productivity-enhancing
applications like integrated messaging and remote activation of services.

Expansion in Central Canada is key to TELUS' business growth strategy. An
example of this is the new five-year contract that TELUS signed with a large
manufacturer to provide and manage Internet-based voice and data services. The
contract will migrate Centrex-based infrastructure to an IP-One Evolution
solution. Another example is the eight-year, $30 million agreement with
Intrawest Corporation to be the exclusive supplier of certain IP and
telecommunications services to all Intrawest resorts across Canada.

Wireless population coverage was extended to 600,000 more Canadians in 2005,
ending the year at 30.6 million. Distribution was extended with 19 new
Company-owned wireless stores to approximately 140 corporate stores and a total
of more than 2,000 retail locations across Canada. International roaming for
PCS clients was expanded to China, New Zealand and Taiwan, building on existing
roaming capability in, among other countries, Bermuda, the Dominican Republic,
Guam, Hong Kong, Mexico, Puerto Rico, South Korea, the U.S. Virgin Islands,
Venezuela and the United States. Two new global communications solutions were
introduced in 2005: the Motorola A840 Worldphone, operating on both code
division multiple access (CDMA) and global system for mobile (GSM) networks,
and a GSM global roaming card. TELUS wireless clients can roam in more than 120
countries worldwide.

TELUS mobile TV service, launched in August, allows wireless clients to access
unlimited live television on their wireless phones for just $15 per month.
TELUS mobile TV now offers access to ten channels and boasts a high-quality
display rate of four to six frames per second. In addition to faster speeds
with EVDO (evolution data optimized), channel and handset selection for TELUS
mobile TV is being expanded.

In addition, the wireless segment introduced the multi-network data access
(MNDA) solution, a reliable way for public safety and enterprise clients to
access mission-critical data wirelessly and pass it between data networks
without losing connections. In late 2005, a new wireless high-speed network
(EVDO) was introduced in major centres across Canada, offering business
customers wireless data transfers at typical speeds of 400 to 700 kilobits per
second -- at least six times faster than previous TELUS wireless data services.

     Providing integrated solutions that differentiate TELUS from its
     competitors

The Calgary Board of Education (CBE) signed in October a 10-year, $65 million
contract with TELUS Sourcing Solutions for the delivery of some of the
district's human resource (HR) services. This groundbreaking collaboration will
allow the school board to benefit from leading-edge HR technology and expertise
without up-front capital investment. The CBE is the first Canadian school
district to enter into this type of HR services agreement with a private sector
organization. TELUS Sourcing Solutions will provide a range of HR and payroll
services to the CBE. To support the delivery of these services, TELUS will
implement and manage a new Human Resource Management System (HRMS) for the CBE,
delivering services including payroll, benefits, leave administration and
recruitment and administrative activities related to the placement of support
and temporary staff. This will enable the CBE to focus on its business of
providing quality education programs for students. Approximately 50 CBE
employees transferred to TELUS Sourcing Solutions under their existing terms
and conditions of employment.

TELUS Sourcing Solutions signed a 15-year agreement with Hamilton Health
Sciences to deliver the process and information technology components of its HR
services. Valued at $137 million, the agreement will see TELUS implement
technology and application upgrades to Hamilton Health Sciences' HR management
system, as well as assume the day-to-day management and delivery of its HR
services including payroll, recruitment, compensation, occupational health and
safety and benefits. Through the partnership, approximately 70 Hamilton Health
Sciences employees joined TELUS. The agreement will also see the establishment
of a new TELUS Centre of Excellence in Ontario, enabling TELUS in co-operation
with Hamilton Health Sciences to develop, test and evaluate innovative HR
system solutions that will be marketed to other health sector and broader
public sector clients.

TELUS announced the extension of its Future Friendly Home(R) strategy and the
expansion of its suite of services from mobility and security to entertainment.
TELUS began a targeted launch of its innovative all-digital television service,
TELUS TV, in Edmonton and Calgary. Further expansion of TELUS TV is expected to
continue on a targeted basis through a phased neighbourhood roll-out, with
TELUS' own skilled team members selling, installing and supporting TELUS TV.
For the associated technology risks, see Section 10.2 Technology.

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

The acquisition of a 52.5% ownership interest in Ambergris Solutions Inc. in
February 2005, combined with the acquisition of ADCOM, Inc. in November 2004,
provided aggregate incremental revenues of approximately $59 million and
incremental EBITDA of approximately $10 million in 2005. The purchase of
Ambergris provides TELUS with international call centre capabilities and backup
capabilities. The international capability also supports TELUS in its bids to
offer competitive call centre services to potential new clients. The purchase
of ADCOM gained TELUS a new customer base, multi-site operations and
state-of-the-art equipment.

In April 2005, TELUS and the B.C. provincial government announced an
initiative, called Connecting Communities, that consolidates some 340 existing
competitive services contracts (covering 10 broader public sector entities such
as Crown corporations and health authorities) into one contract with the
Province of B.C. and is to bring access to high-speed data and voice services
to 119 rural B.C. communities by the end of 2006. TELUS expects to invest an
estimated $110 million over four years to connect the communities to high-speed
Internet and expand broadband services. With the additional 119 communities, a
total of 334 communities in B.C. are to be connected by TELUS.

This agreement helps secure a large share of provincial government business
projected at more than $245 million for the next four years. It also positions
TELUS for new revenue growth opportunities for up to seven years by enabling
the Company to deploy innovative IP-based technology and services. TELUS will
create a $12 million innovation fund to allow the public sector in B.C. to
develop pilot opportunities in strategic areas of future growth, including
health care and education. The fund can be used for future upgrades and
infrastructure enhancements, subject to certain criteria and approval by TELUS,
as set out in the contract.

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

TELUS continued to achieve strong consolidated growth in 2005 based on record
wireless subscriber net additions of 584,300, a 17% increase in wireless
revenue and an 8% increase in wireline data revenue.

While TELUS ranks third in the Canadian wireless industry in terms of total
subscribers, the success of its leadership position is reflected by TELUS
Mobility generating the highest EBITDA and EBITDA less capital expenditures of
the three national Canadian operators. TELUS continues to focus on profitable
wireless growth in the national market, which is now made up of three major
facilities-based players and niche-market competitors operating on a resale
basis.

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

Holiday season promotions in late 2005 using TELUS' nature-based brand were
well received by the public and generated a significant amount of media
attention. The popular and instantly recognized national master brand provides
TELUS with a strong and differentiated marketing edge. For example, TELUS ads
were ranked number one in the National Most Liked and Most Noticed categories
in November as reported by Marketing Magazine.

TELUS is committed to improving the economic, social and environmental
well-being of communities across Canada. With a focus on young Canadians, TELUS
looks for opportunities to use its technology and expertise in ways that
positively influence the communities in which TELUS team members live, work and
serve. To ensure the greatest impact possible, TELUS community investment
efforts are focused in three areas -- arts and culture, education and sport,
and health and wellness. In 2005, seven TELUS Community Boards were established
across Canada. Located in Vancouver, Edmonton, Calgary, Toronto, Ottawa,
Montreal and Rimouski, the Boards meet quarterly to discuss local giving
opportunities and strategically allocate approximately $3.5 million annually to
local charities. In doing so, the Boards help TELUS determine where and how to
invest resources to best optimize the benefits that flow to the community.

In 2005, TELUS formed partnerships with five science centres across Canada to
help promote technological innovation and learning in science and technology.
Over the next 20 years, TELUS expects to invest more than $43 million in the
TELUS World of Science(R) centres in Vancouver, Calgary and Edmonton, and the
Ontario and Montreal Science Centres. These partnerships will help to foster
educational opportunities for young Canadians through the innovative use of
technology and ensure these facilities remain leading-edge for future
generations.

     Investing in internal capabilities to build a high-performance culture
     and efficient operations

As a full-service telecom operator, TELUS should increasingly benefit from
wireless and wireline synergistic bundling opportunities. This is a
differentiating competitive advantage compared to competitors with narrow or
stand-alone service offerings, and is expected to be supported by the
integration of wireline and wireless operations, initiated in late 2005,
subject to the risks described in Section 10.5 Business integration and
internal reorganizations.

3. Key performance drivers

To advance our strategy, focus on the near term opportunities and challenges,
and create value for shareholders, TELUS sets corporate priorities each year. A
report on the progress against 2005 priorities is described below.

3.1 Corporate priorities for 2005 -- reporting back

------------------------------------------------------------------------------
                      Progress against 2005 corporate priorities
------------------------------------------------------------------------------
Enhancing TELUS' leadership position in wireless

* Generated a record number of subscriber net additions at 584,300,
  representing 34% of the net additions of the three national competitors,
  while obtaining 36% of the EBITDA and 39% of EBITDA less capital expenditures
* Launched a new wireless high-speed network called EVDO for business in five
  major cities across Canada
* Introduced real-time access of live television programming to wireless
  phones in 2005 with the August launch of TELUS mobile TV service
* Continued to lead the Canadian industry with the highest average revenue
  per subscriber unit per month (ARPU) of $62, while maintaining one of the
  lowest churn rates in North America at 1.39%. With significant EBITDA growth,
  EBITDA less capital expenditures increased to a record $1,038.2 million or
  33.9% of Network revenue, as compared with $788 million or 30.3% of 2004
  Network revenue.
----------------------------------------------------------------------------
Leveraging investments in high-speed Internet technology through Future
Friendly Home services in B.C., Alberta and Eastern Quebec

* Starting in May, promoted two additional varieties of high-speed Internet:
  o TELUS High-Speed Enhanced Internet service offers much more speed than
    TELUS' regular high-speed Internet service and is ideal for online gaming
    and downloading large files
  o TELUS High-Speed Lite Internet service offers speeds five times faster
    than dial-up Internet, but is not as fast as TELUS' regular high-speed
    Internet, and is suitable for surfing the Internet and accessing e-mail
* In November, started a phased neighbourhood roll-out in Edmonton and
  Calgary of TELUS TV, an innovative all-digital television service.
------------------------------------------------------------------------------
Accelerating wireline performance in Ontario and Quebec business markets

* Non-ILEC revenue of $632 million increased by 12.6% when compared with 2004
* Full-year non-ILEC EBITDA became positive for the first time in 2005 at $21
  million
* Gained a number of new large multi-year customers including Hamilton Health
  Sciences and the Government of Quebec.
------------------------------------------------------------------------------
Growing brand value by delivering a superior customer experience via leading
IP solutions and excellence in customer care

* Launched three new TELUS IP security solutions:
  o Intrusion Prevention Service (a hardware-based solution, which
    continuously monitors customer network traffic for anomalies and destroys
    them before they affect legitimate users' services)
  o Secure Socket Layer virtual private network (VPN) (a turn-key solution
    that insulates a network environment against external attacks)
  o Distributed Denial of Service (eliminates the need for client software
    deployment, costly maintenance and desktop support by utilizing the
    Internet's capacity for data transportation)
* Launched TELUS Telecommuting, a suite of communications services that allow
  business clients to work out of their homes. The services -- high-speed
  Internet, VPN, a variety of phone options, and collaboration services such as
  web, audio and video conferencing -- allow workers to create virtual offices
  at home
* TELUS and Telephony@Work partnered to offer Canada's first fully integrated
on-demand hosted contact centre service, CallCentreAnywhere(TM).
------------------------------------------------------------------------------
Driving continual improvements in productivity across TELUS

* A number of smaller efficiency initiatives were undertaken in 2005,
  facilitated by $54 million in Restructuring and workforce reduction costs,
  with many activities delayed by the four-month work stoppage.
------------------------------------------------------------------------------
Reaching a collective agreement

* A positive outcome for TELUS and team members was the ratification of a new
  five-year collective agreement on November 18, 2005. For a summary of labour
  relations activity in 2005 and the new contract, see Reaching a collective
  agreement below.
------------------------------------------------------------------------------

     Reaching a collective agreement

A labour disruption that began on July 21, 2005 was settled on November 18,
2005, following the ratification of a new five-year collective agreement
covering approximately 14,000 employees located predominantly in TELUS' western
incumbent region in B.C. and Alberta. The new agreement merges six previously
separate collective agreements into one and applies to all unionized team
members in B.C. and Alberta represented by the Telecommunications Workers Union
(TWU), as well as TELUS Mobility team members in Central Canada who were
included in the scope of the bargaining unit by Canada Industrial Relations
Board (CIRB) Decisions 1088 and 278.

The new agreement provides TELUS and its team members the flexibility to
compete on a level playing field and supports TELUS' leadership position in
data, IP and wireless. After ratification, substantially all regular team
members were recalled and working by the first week of December. The terms and
conditions of the new collective agreement are effective from November 20, 2005
to November 19, 2010.

The following are highlights of the new contract:

* One-time lump sum payments in lieu of retroactive wage adjustments were
  provided for the period from the expiry of the previous collective
  agreements to the effective date of the ratified agreement (January 1, 2001
  to November 20, 2005).

* Total compensation increases, consistent with earlier guidance, for the
  majority of employees include base pay increases of a minimum of 2% per year
  with additional variable pay increasing over the term of the contract from 3
  to 5% per year. Base pay harmonization between similar jobs in B.C. and
  Alberta is provided for.

* Terms and conditions related to contracting out, scheduling of hours of
  work, paid time off the job, benefits, etc., are in line with competitive
  telecom benchmarks and are believed to provide TELUS with the required
  flexibility to effectively compete.

* A foundation now exists for a renewed, constructive union-management
  relationship. For example, the parties agreed to work together to withdraw a
  number of cases currently before the CIRB, Federal Court of Appeal and other
  courts or administrative bodies, to enable the parties to put an end to
  previous disputes. In addition, Common Interest Forums will involve
  executives from both the union and TELUS for ongoing constructive dialogue
  on issues.

* The proposed settlement of a long-standing pay equity complaint with
  respect to employees in British Columbia includes the establishment of a $10
  million pay equity fund by TELUS, subject to acceptance by the Canadian
  Human Rights Commission.

* By March 2006, team members currently working in TELUS National Systems
  (TNS) and TELUS solutions de soutien will be included in the bargaining
  unit. In addition, the parties have agreed that team members employed in
  TELUS Mobility's directly owned retail store operations are to remain
  excluded from the bargaining unit.

* Transition options, including the offer of a voluntary departure package,
  are available for approximately 700 team members affected by three offices
  that were closed in February 2006 and the outsourcing of non-core functions.
  In addition, TELUS made a commitment that several remaining call centres in
  B.C. will remain open for the term of the contract.

3.2 Corporate priorities for 2006

TELUS developed new corporate priorities for 2006 to: advance its
industry-leading strategy; achieve meaningful commercial differentiation in the
markets; capitalize on the technology convergence of wireless and wireline; and
drive continued operating efficiency and effectiveness.

------------------------------------------------------------------------------
           2006 corporate priorities across wireline and wireless
------------------------------------------------------------------------------
Advance TELUS' leadership in the consumer market through:

* TELUS' future friendly suite of data applications for customers at home
  and on the move
* Best-in-class customer loyalty through cost-effective customer experience
* Expanding TELUS' channel partner relationships to strengthen its distribution.
------------------------------------------------------------------------------
Advance TELUS' position in the business market through:

* Innovative solutions that enhance the competitiveness of TELUS' customers
  and deepen their loyalty to TELUS
* Increasing the Company's share in the business market by leveraging TELUS'
  mobile solutions such as high-speed data
* Improving delivery of managed solutions to small business customers.
-----------------------------------------------------------------------------
Advance TELUS' position in the wholesale market through:

* Strengthening the Company's North American reach through innovative IP
  solutions
* Establishing creative and preferred partnerships to grow TELUS' national
  customer base
* Optimizing the use of partner networks to complement TELUS' network
  investments.
-----------------------------------------------------------------------------
Drive improvements in productivity and service excellence by:

* Realizing efficiencies from the integration of wireline and wireless
  operations
* Driving improvements in enterprise-wide productivity and customer service
  excellence to increase competitiveness
* Capturing value from TELUS' investments in technology and innovation to
  streamline operations.
-----------------------------------------------------------------------------
Strengthen the spirit of the TELUS team and brand, and develop the best
talent in the global communications industry by:

* Continuing to leverage best practices across the Company
* Cultivating a business ownership culture that embraces a philosophy of
  "our business, our customers, our team, my responsibility"
* Capitalizing on TELUS' reputation as a progressive, high-performance
  Company to attract and retain the best team in Canada
* Providing team members innovative opportunities for growth, development
  and employment options.
-----------------------------------------------------------------------------
4. Capability to deliver results

4.1 Operational capabilities -- Wireline

Less than one-third of the Company's revenues are from wireline segment
regulated revenues. Wireline regulated services include residential and
business wireline services in incumbent local exchange carrier (ILEC) regions,
competitor services and payphone services. Services that are forborne from
regulation include non-incumbent local exchange carrier (non-ILEC) services,
long distance services, Internet services, international telecommunications
services, inter-exchange private line services, certain data services, and the
sale of customer premises equipment.

In 2005, ongoing industry-wide trends of increased competition and new
technologies facilitated the decline in network access lines and reduced long
distance prices. With agreements such as those with the Government of B.C. and
the Calgary Board of Education, and growth initiatives in the business markets
in Ontario and Quebec, TELUS endeavours to retain existing customers and
position itself for future revenue growth, particularly in the areas of data
and IP. Measures taken for consumer services include new Future Friendly Home
services introduced in 2004, limited commercial launch of TELUS TV in 2005, and
the introduction of a three-year contract option for consumer optional features
bundles in 2005. This initiative was launched to help retain customers, lock in
revenues over the contract period, and delay or reduce churn to competitors. In
addition, TELUS expects to achieve further improvements in efficiency and
productivity through the recently implemented five-year collective agreement,
including office closures and contracting out of specified non-core functions,
as well as integration of operations in the wireline and wireless segments. See
Section 5.4 Wireline segment results -- Restructuring and workforce reduction
costs and Section 10.5 Business integration and internal reorganizations.

During 2005, the Company continued to develop a new billing system in the
wireline segment, which will include re-engineering processes for order entry,
pre-qualification, service fulfillment and assurance, customer care,
collections/credit, customer contract and information management. The expected
benefits of this project include streamlined and standardized processes and the
elimination over time of multiple legacy information systems. The Company plans
to implement this project in phases, beginning with a launch for consumer mass
market accounts currently planned in 2006. See Section 10.6 Process risks.

<TABLE>
<CAPTION>
The Company's principal wireline geographic markets and competitors are:
<S>			       <C>		                                   <C>
---------------------------------------------------------------------------------------------------------------------------------
Canadian geographic mark       TELUS wireline	                                   Competition
---------------------------------------------------------------------------------------------------------------------------------
National -- business           IP-based national network overlaying                BCE and Manitoba Tel (Allstream) competing
                               extensive switched network in incumbent             with their own national infrastructures, and
                               territories in Western Canada and Eastern           others such as Navigata (owned by SaskTel).
                               Quebec.
                                                                                   System integrators of managed solutions,
                               Rate-regulated in incumbent territories of          such as CGI, EDS and IBM.
                               B.C., Alberta and Eastern Quebec for access
                               and certain competitive digital network             Substitution to wireless including to TELUS
                               access services.                                    wireless offerings.

                               Non-rate-regulated operations in non-
                               incumbent areas of Ontario and Quebec.
                               Focused on managed data solutions in the
                               business market.
--------------------------------------------------------------------------------------------------------------------------------
Western Canada (B.C. and       Access to virtually every home. Rate-               Substitution to wireless including to TELUS
Alberta)-consumer              regulated for local services.                       wireless offerings.

                               Significant investment in Internet                  Shaw Cable -- access to most homes in
                               infrastructure and innovative services.             market. Provides Internet, entertainment and
                                                                                   VoIP-based telephony services. Not rate-
                               Plans to offer VoIP service.                        regulated by the CRTC.

                               Has broadcasting distribution licences to offer     Call-Net (owned by Rogers Communications),
                               digital television services in select               Navigata, Primus, Vonage, and various others-
                               communities across Alberta and B.C., as well        urban focus. Collectively offer local service
                               as licences to offer commercial video-on-           on a resale basis and with VoIP offerings,
                               demand services. Began roll-out of service in       Internet services sometimes on a resale
                               Edmonton and Calgary following extensive            basis, and long distance services.
                               employee trials.
--------------------------------------------------------------------------------------------------------------------------------
Eastern Quebec -- consumer     Access to virtually every home. Significant         Substitution to wireless including to TELUS
                               investment in Internet infrastructure and           wireless offerings.
                               innovative services.
                                                                                   COGECO (cable-TV) - urban focus. Offers
                               Has broadcasting distribution licences and          entertainment and VoIP-based telephony
                               video-on-demand licences.                           services.

                                                                                   Sprint, Excel, Distributel, Sears and Caztel
                                                                                   compete in the provision of long distance
                          	                                                   services.

                                                                                   BCE and Vonage compete for VoIP-based
                                                                                   services.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

4.2 Operational capabilities -- Wireless

TELUS Mobility's continued delivery of value-added solutions, excellent network
quality, and an exceptional client service experience, contributed to
profitable growth despite new competitive pressures. Future profitability and
cash flow growth are expected to be realized from continued subscriber growth
and operating scale efficiencies through a well managed client-focused
organization, as well as integration of operations with the wireline segment.

Wireless services are not rate-regulated by the CRTC. The Company's principal
wireless market and competitors are:

<TABLE>
<CAPTION>

<S>			       <C>		                                   <C>
--------------------------------------------------------------------------------------------------------------------------------
Canadian geographic market     TELUS wireless	                                   Competition
--------------------------------------------------------------------------------------------------------------------------------
National, business and 	       Facilities-based services with access to 94%        Facilities-based competitors such as Rogers
consumer                       of Canadian population, operating a CDMA            Wireless, nationally, and wireless offerings by
                               network with state-of-the-art high speed            various regional telcos including Bell Mobility,
                               EVDO in major centres, and iDEN-based               SaskTel, MTS Mobility and Aliant Telecom
                               Push To Talk service focused on the                 Wireless.
                               commercial marketplace.
                                                                                   Resellers of BCE and Rogers networks, such
                                                                                   as the Virgin MobileGroup, 7-eleven and
                                                                                   certain cable-TV companies.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

4.3 Liquidity and capital resources

TELUS generally achieved all of the objectives under its 2005 financing plan,
as illustrated in the following table. With access to undrawn credit facilities
of $1.4 billion at December 31, 2005, and expected cash flow from operations,
the Company believes it has sufficient capability to fund its requirements in
2006. See Section 9.3 Financing plan for 2006 and the associated risks in
Section 10.7 Financing and debt requirements.

-------------------------------------------------------------------------------
2005 financing plan and results
-------------------------------------------------------------------------------
TELUS' 2005 financing plan was to use free cash flow generated by its
business operations to:
-------------------------------------------------------------------------------
* Maintain cash-on-hand in anticipation of the maturity of $1.578 billion of
  7.5% TELUS Corporation Notes in June of 2006

  The Company exercised its right to early redeem, on December 1, 2005, the
  remaining $1.578 billion of 7.50%, Series CA, Notes outstanding. See Section
  7.3 Cash used by financing activities.
------------------------------------------------------------------------------
* Repurchase Common Shares and Non-Voting Shares under the Normal Course
  Issuer Bid (NCIB)

  Repurchased approximately 20.8 million TELUS shares for $892.1 million
  during 2005 under two NCIB programs.

  Purchased for cancellation 73% of the maximum 14.0 million Common Shares and
  100% of the maximum 11.5 million Non-Voting Shares permitted under the first
  program, which was effective from December 20, 2004 to December 19, 2005,
  for a cumulative outlay of approximately $913 million.

  A second program was approved that runs for a 12-month period ending
  December 19, 2006, for potential repurchase and cancellation of up to 12.0
  million Common Shares and 12.0 million Non-Voting Shares. Approximately
  634,000 Common Shares and 608,000 Non-Voting Shares were repurchased under
  this NCIB in December 2005 for $57.5 million. See Section 7.3 Cash used by
  financing activities.
------------------------------------------------------------------------------
* Pay dividends

  Dividends of 20 cents per share were declared for each of the first three
  quarters. The declared dividend was increased to 27.5 cents per share for
  the fourth quarter dividend, which was paid on January 1, 2006. The target
  dividend payout ratio guideline continues to be in the range of 45 to 55% of
  sustainable earnings.
------------------------------------------------------------------------------
* Give consideration to redeeming or repurchasing debt in the open market

  On May 9, 2005, the Company provided notice of redemption for its
  convertible debentures at par, plus accrued and unpaid interest, for
  redemption on June 16, 2005. Convertible debenture holders exercised
  conversion options resulting in $131.7 million of convertible debenture
  principal being converted into approximately 3.3 million Non-Voting Shares.
  The conversion option in respect of $17.9 million of convertible debenture
  principal was not exercised and this principal amount was redeemed. See
  Section 6 Financial condition -- Shareholders' equity.
------------------------------------------------------------------------------
Other financing objectives included:
-----------------------------------------------------------------------------
* Preserve access to the capital markets at a reasonable cost by maintaining
  investment grade credit ratings and targeting improved credit ratings in the
   range of BBB+ to A-- in the future

  Investment grade credit ratings were maintained and improved ratings were
  received from all four rating agencies that cover TELUS. See Section 7.7
  Credit ratings.

* Maintain position of fully hedging foreign exchange exposure for
  indebtedness

  Maintained as planned.

* Renew the $800 million 364-day revolving credit facility in May 2005

  TELUS arranged for new credit facilities in May 2005 to replace $1.6 billion
  of prior credit facilities. See Section 7.5 Credit facilities.

* Maintain a minimum $1 billion in unutilized liquidity

  Maintained as planned throughout the year, with more than $1.4 billion of
  unused credit facilities at December 31, 2005, as well as availability under
  the accounts receivable securitization program and cash on hand.
------------------------------------------------------------------------------

4.4 Disclosure controls and procedures

Management's responsibility for the financial reporting process that produces
the financial statements is described in Management's report in the
Consolidated financial statements. TELUS Corporation has a formal Policy on
Corporate Disclosure and Confidentiality of Information, which sets out
policies and practices including the mandate of the Disclosure Committee; the
Policy was approved by the Board of Directors, and put into effect, in 2003.

The Chief Executive Officer and the Chief Financial Officer have evaluated the
effectiveness of the Company's disclosure controls and procedures as at the end
of December 31, 2005. They have concluded that the Company's disclosure
controls and procedures were effective, at a reasonable assurance level, to
ensure that material information relating to the Company and its consolidated
subsidiaries would be made known to them by others within those entities,
particularly during the period in which the Management's discussion and
analysis and the Consolidated financial statements contained in this report
were being prepared.

     Certification

TELUS' Chief Executive Officer and Chief Financial Officer expect to certify
TELUS' annual filing with the United States' Securities and Exchange Commission
on Form 40-F as required by the United States Sarbanes-Oxley Act. TELUS also
expects the Chief Executive Officer and Chief Financial Officer to certify its
annual filings, including its Annual Information Form, that are filed with
Canadian securities regulatory authorities. For the year ending December 31,
2006, TELUS expects to comply with Section 404 of the Sarbanes-Oxley Act.

5. Results from operations

5.1 Selected annual information

The following selected three-year consolidated financial information has been
derived from and should be read in conjunction with the Consolidated financial
statements of TELUS for the year ended December 31, 2005, and its annual
Consolidated financial statements for previous years. Certain comparative
information has been restated on a basis consistent with the 2005 presentation.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Years ended December 31	                                        2005 	                2004 	                2003
($ in millions except per share amounts)
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Operating revenues		                                8,142.7 		7,581.2 	        7,146.0
Operations expense		                                4,793.5 		4,438.0 		4,301.9
Restructuring and workforce reduction costs		           53.9 		   52.6 		   28.3
Financing costs and other expense		                  641.5 		  622.0 		  662.6
Income taxes	                                       	          322.0 		  255.1 		  172.7

Net income		                                          700.3 		  565.8 		  324.4
Common Share and Non-Voting Share income		          700.3 		  564.0 		  320.9

Earnings per share(1) -- basic 		                            1.96 		    1.58 		    0.92
Earnings per share(1) -- diluted		                    1.94 		    1.57 		    0.91
Cash dividends declared per share(1)		                    0.875 		    0.65 		    0.60

Total assets		                                       16,222.3 	       17,838.0 	       17,477.5
Current maturities of long-term debt		                    5.0 		    4.3 		  221.1

   Long-term debt		                                4,639.9 		6,332.2 		6,609.8
   Deferred hedging and other long-term financial
     liabilities		                                1,420.9 		1,293.8		          983.8
                                                          ---------------          ----------------       ----------------
Total long-term financial liabilities		                6,060.8		        7,626.0		        7,593.6
Future income tax liabilities		                        1,023.9 		  991.9 		1,007.0
Non-controlling interest		                           25.6 		   13.1 		   10.7
Common equity 		                                        6,870.0 		7,016.8 		6,442.7
Preference and preferred share capital 		                     -- 		     -- 		   69.7
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes Common Shares and Non-Voting Shares.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Some significant changes over the three years included:

* Wireless segment revenues increased to approximately 40% of consolidated
  revenues in 2005 (approximately 37% in 2004 and 33% in 2003). This reflects
  wireless revenue growth rates of 15 to 17% in each of the last two years,
  while wireline revenue growth was 0 to 1.5% in each of the last two years.

* Consolidated operations expenses in 2005 included the effects of a
  four-month work stoppage including incremental expenses of approximately
  $133 million net of cost savings. These incremental costs primarily affected
  the wireline segment.

* Financing costs in 2005 included two significant one-time expenses
  totaling $51.0 million, as discussed in Section 5.3 Consolidated results
  from operations.

* Net income included significant favourable impacts for the settlement of
  prior years' tax matters and consequential adjustments. The amounts were
  approximately $65 million (18 cents per share) in 2005, approximately $73
  million (21 cents per share) in 2004, and approximately $72 million (20
  cents per share) in 2003.

5.2 Quarterly results summary

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
($ in millions,
except per
share amounts)               2005 Q4      2005 Q3      2005 Q2      2005 Q1      2004 Q4      2004 Q3      2004 Q2      2004 Q1
<S>                          <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
---------------------------------------------------------------------------------------------------------------------------------
Segmented revenue
(external)
  Wireline segment           1,209.9      1,198.6      1,216.5 	    1,222.2      1,209.3      1,199.9 	   1,189.0      1,171.1
  Wireless segment             876.8        864.2        802.0 	      752.5 	   755.6        747.0 	     676.6        632.7
                             -------      -------      -------      -------      -------      -------      -------      -------
Operating revenues
   (consolidated)            2,086.7      2,062.8      2,018.5 	    1,974.7      1,964.9      1,946.9      1,865.6      1,803.8

Net income		        78.5 	    190.1        189.5 	      242.2 	   135.6        156.6 	     172.3        101.3
Per weighted average Common
 Share and Non-Voting Share
 outstanding
    - basic		         0.22 	      0.53 	   0.53 	0.67 	     0.38 	  0.44 	       0.48 	    0.28
    - diluted		         0.22 	      0.53 	   0.52 	0.66 	     0.37 	  0.43 	       0.48 	    0.28
Dividends declared per
  Common Share and Non-Voting
  Share outstanding              0.275 	      0.20 	   0.20 	0.20 	     0.20	  0.15 	       0.15	    0.15
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The trend in consolidated Operating revenues continued to reflect strong
wireless growth resulting from an increased subscriber base and increased
average revenue per subscriber unit (ARPU). TELUS' wireline segment revenue
growth slowed in the second half of 2005, due in part to the work stoppage and
increased competitive activity. The wireline revenue growth continues to be
generated from data revenues, partially offset by reduced voice long distance
revenues and voice equipment sales. Wireline segment revenues include the
impacts of regulatory price cap decisions.

Net income and earnings per share for the second, third and fourth quarters of
2005 were impacted by increased net expenses leading up to and resulting from
the labour disruption, as described earlier. In addition, financing costs in
the fourth quarter of 2005 included a one-time $33.5 million pre-tax loss on
early redemption of debt, while in the second quarter of 2005, a one-time $17.5
million pre-tax provision was recorded for estimated damages stemming from an
Ontario Court of Appeal ruling. See Section 10.10 Litigation and legal matters.
Aside from the effects of the work stoppage and one-time financing costs, the
trend in Net income and earnings per share reflected improved operating
profitability and lower interest on long-term and short-term debt.

There is significant fourth quarter seasonality in terms of wireless subscriber
gross additions, related acquisition costs and equipment sales, and to a lesser
extent, wireline high-speed Internet subscriber gross additions. For a more
detailed discussion of fourth quarter results, refer to TELUS' fourth quarter
press release, including Management's discussion and analysis.

Net income and earnings per share for seven of the quarters included net
favourable impacts for the settlement of prior years' tax matters and
consequential adjustments, as shown in the table below:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
($ in millions,
except per
share amounts)	             2005 Q4	  2005 Q3      2005 Q2	    2005 Q1	 2004 Q4      2004 Q3      2004 Q2	2004 Q1
<S>                          <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
---------------------------------------------------------------------------------------------------------------------------------
Approximate Net income
 impact                         4 	     4 	          3	      54 	   14 	       -- 	    45 	          14
Approximate earnings
 per share impact	     0.01 	  0.01 	       0.01 	    0.15 	 0.04 	       -- 	   0.13 	0.04
Approximate basic
 earnings per share,
 excluding favourable
 tax-related impacts	     0.21	  0.52	       0.52 	    0.54 	 0.34 	      0.44 	   0.35 	0.24
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

On February 15, 2006, the Board of Directors of TELUS declared a quarterly
dividend of 27.5 cents per share on outstanding Common and Non-Voting Shares
payable on April 1, 2006 to shareholders of record on the close of business on
March 10, 2006.

5.3 Consolidated results from operations

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
($ in millions except EBITDA margin)	                        Years ended December 31
	                                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Operating revenues		                                 8,142.7 		 7,581.2 		 7.4 %
Operations expense		                                 4,793.5 		 4,438.0 		 8.0 %
Restructuring and workforce reduction costs		            53.9 		    52.6 	         2.5 %
---------------------------------------------------------------------------------------------------------------------------------
EBITDA (1)		                                         3,295.3 		 3,090.6 		 6.6 %
---------------------------------------------------------------------------------------------------------------------------------
EBITDA margin (%) (2)		                                    40.5 		    40.8 	        (0.3) pts
Total employees, end of period	                                29,819 	                25,798 	                15.6 %
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) EBITDA is a non-GAAP measure. See Section 11.1 Earnings before interest, taxes, depreciation and amortization (EBITDA).
(2) EBITDA margin is EBITDA divided by Operating revenues.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Consolidated Operating revenues increased by $561.5 million in 2005, when
compared with 2004, primarily as a result of strong revenue growth in the
wireless segment as well as growth in wireline segment data revenues.
Consolidated EBITDA increased by $204.7 million in 2005, when compared with
2004, as a result of improved wireless profitability, partly offset by the
effects of the labour disruption. The increase in employees was primarily from
the acquisition of Ambergris in February 2005, which had approximately 3,200
employees at the end of 2005, as well as growth at TELUS Mobility to support a
larger subscriber base.

For further detail by segment, see Section 5.4 Wireline segment results and
Section 5.5 Wireless segment results.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization	                                Years ended December 31
($ in millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Depreciation		                                        1,342.6 		1,307.8 		  2.7 %
Amortization of intangible assets		                  281.1 		  335.3 		(16.2)%
---------------------------------------------------------------------------------------------------------------------------------
		                                                1,623.7 		1,643.1 		 (1.2)%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Depreciation increased in 2005, when compared with 2004, due primarily to
growth in shorter life data and wireless network assets and a reduction in
service lives for ADSL (high-speed Internet) customer equipment, partly offset
by lower depreciation arising from full amortization of older cell sites.
Amortization of intangible assets decreased in 2005, when compared with 2004,
as a result of several software assets becoming fully depreciated partly offset
by a $5.0 million write-down of an intangible right, related to termination of
an indefeasible right-of-use contract for fibre, in the third quarter of 2005.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Other expense, net	                                        Years ended December 31
($ millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
                                                                18.4 		        8.7 		        111.5 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Other expense includes charitable donations, accounts receivable securitization
expense, gains and losses on disposal of property, and income (loss) or
impairments in equity or portfolio investments. Charitable donations were
approximately $9 million in 2005, an increase of approximately $2 million, when
compared with 2004. The accounts receivable securitization expense was $7.3
million in 2005, or approximately $3 million higher than 2004, as a result of
the $350 million increase in proceeds from securitized accounts receivable on
November 30, 2005 (see Section 7.6 Accounts receivable sale). The balance of
other expense in both years included losses and impairments in equity and
portfolio investments, net of gains from the sale of real estate. Gains on real
estate in 2005 included recognition of a portion of gain deferred under sale
and leaseback arrangements for administrative properties sold in 2002,
following the return of some space to the respective landlords. The balance of
other expense in 2004 also included a write-off of approximately $5 million of
accumulated acquisition costs for the expired offer to purchase Microcell.

<TABLE>
<CAPTION>
Financing costs	                                                Years ended December 31
($ millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt before unusual items 	        618.0 		        647.0 		        (4.5)%
Accrual for settlement of a lawsuit		                 17.5 		           -- 		         n. m.
---------------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt		                        635.5 		        647.0 		        (1.8)%
Interest on short-term obligations and other		          8.2  		          8.5 		        (3.5)%
---------------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt, short-term obligations
  and other	                                                643.7 		        655.5 		        (1.8)%
Loss on redemption of long-term debt		                 33.5 		           -- 		         n. m.
Foreign exchange losses (gains)		                          4.6 		         (3.1)		         n. m.
Interest income		                                        (58.7)		        (39.1)		        (50.1)%
---------------------------------------------------------------------------------------------------------------------------------
		                                                623.1 		        613.3 		          1.6 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

In 2005, Financing costs included two significant one-time items. The first
item was the second quarter accrual for estimated damages stemming from a June
Ontario Court of Appeal ruling on litigation affecting TELUS Communications
Inc. (TCI). This ruling related to a BC TEL bond redemption matter dating back
to 1997. See Section 10.10 Litigation and legal matters. The second one-time
item was a loss on redemption of long-term debt recorded when the Company
exercised its right to early redeem, on December 1, 2005, the remaining $1.578
billion of 7.50%, Series CA, Notes outstanding. The loss on redemption amount
included the loss that arose from the settlement of the financial instrument
that was an interest rate hedge associated with the debt redeemed on December
1. The loss on redemption was lower than the interest expense that would have
been recorded over the remaining term of the debt.

Aside from these one-time items, interest on long-term debt decreased by $29.0
million, when compared with 2004. This included approximately $10 million lower
interest expense in December 2005 as a result of the early redemption. The
remaining decrease was primarily due to the repayment of TCI Debentures and
Medium-term Notes in 2004 and conversion/redemption of convertible debentures
in the second quarter of 2005. TELUS maintains a hedging program using cross
currency swaps, and as a result, long-term financing costs were generally
unaffected by fluctuations in the value of the Canadian dollar against the U.S.
dollar. Debt (the sum of Long-term Debt, Current maturities and the deferred
hedging liability) was $5,803.0 million at December 31, 2005, a 21% reduction
when compared with $7,374.2 million one year earlier.

Interest income earned in 2005 includes $25.2 million interest for the
settlement of various prior years' tax matters (as compared to $26.2 million in
2004). The balance of interest income earned primarily from cash and temporary
investments was $33.5 million in 2005 and $12.9 million in 2004.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Income taxes	                                               Years ended December 31

($ millions, except tax rates)		                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Blended federal and provincial statutory income
  tax based on net income before tax		                352.3 		        286.6 		         22.9 %
Changes in estimates of available deductible
  differences in prior years		                        (37.5)		         (9.1) 		         n. m.
Tax rate differential on, and consequential
  adjustments from, the reassessment of prior
  year tax issues		                                (13.9)		        (41.2)		         66.3 %
Revaluation of future tax assets and liabilities for
  changes in statutory income tax rates	                         (5.1)		        (12.9)		         60.5 %
Large corporations tax and other		                 26.2 		         31.7 		        (17.4)%
---------------------------------------------------------------------------------------------------------------------------------
                                                        	322.0 		        255.1 		         26.2 %
---------------------------------------------------------------------------------------------------------------------------------
     Blended federal and provincial statutory tax
       rates (%)                                                 34.2 		         34.7 		         (0.5) pts
     Effective tax rates (%)		                         31.3 		         30.9 		          0.4  pts
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The increase in the blended federal and provincial statutory income tax expense
was due to 24.8% growth in income before taxes in 2005, when compared with
2004. The blended federal and provincial tax rate decreased due mainly to
changes in the B.C. tax rate. The B.C. provincial government enacted a
reduction to general corporate income tax rates from 13.5% to 12.0% on income
taxed in B.C, effective July 1, 2005. The change in the B.C. tax rate also
required a revaluation of the future tax liability and the future tax asset,
resulting in a further net recovery of $12.8 million, recorded in the third
quarter of 2005. The Quebec provincial government substantially enacted an
increase to general corporate income tax rates from 8.9% to 11.9% to be phased
in over four years beginning January 1, 2006. The prospective increases in the
Quebec tax rate required a revaluation of the future tax liability and the
future tax asset, resulting in a net expense of $7.7 million in the fourth
quarter of 2005. Reductions in tax also included changes in estimates of
available deductible differences in prior years and a tax rate differential and
consequential adjustments from the favourable reassessment of prior years' tax
issues.

Based on the assumption of the continuation of the rate of TELUS earnings, the
legal entity structure and the first quarter of 2006 reorganization of TELUS,
and no substantive changes to tax regulations, the Company expects to be able
to fully utilize its non-capital losses before the end of 2007. The Company's
assessment is that the risk of expiry of such non-capital losses is remote.
Based on a review of the Company's tax position, any material current income
taxes recorded in 2006 are not expected to be paid until 2008.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Other items	                                                Years ended December 31
($ millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Non-controlling interest		                        7.8 		        4.6 		          69.6 %

Preference and preferred dividends		                 -- 		        1.8 		        (100.0)%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Non-controlling interest represents minority shareholders' interests in several
small subsidiaries, including minority shareholders' interest in Ambergris,
acquired in February 2005.

Preference and preferred dividends ceased with the redemption of all of the
publicly held TELUS Communications Inc.
Preference and Preferred Shares, completed on August 3, 2004.


                 Graph                                  Graph
Interest on long-term and short-term debt            Net income
            ($ millions)                            ($ millions)

                 Graph                                  Graph
Segmented external Operating revenues              Segmented EBITDA
            ($ millions)                            ($ millions)


5.4 Wireline segment results

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Operating revenues -- wireline segment	                        Years ended December 31
($ millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Voice local		                                        2,174.1 		2,145.4 		  1.3 %
Voice long distance		                                  888.4 		  921.3 		 (3.6)%
Data		                                                1,533.4 		1,416.4 		  8.3 %
Other		                                                  251.3 		  286.2 	        (12.2)%
---------------------------------------------------------------------------------------------------------------------------------
External operating revenue		                        4,847.2 		4,769.3 		  1.6 %
Intersegment revenue		                                   90.4 		   96.6 		 (6.4)%
---------------------------------------------------------------------------------------------------------------------------------
Total operating revenue		                                4,937.6 		4,865.9 		  1.5 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Key operating indicators -- wireline segment

	                                                               At December 31

(000s)		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Residential network access lines		                2,937 		        3,047 		         (3.6)%
Business network access lines		                        1,754 		        1,761 		         (0.4)%
                                                                -----------------------------------------------------------------
Total network access lines(1)		                        4,691 		        4,808 		         (2.4)%

High-speed Internet subscribers		                         763.1 		        689.7 		         10.6 %
Dial-up Internet subscribers		                         236.1 		        281.6 		        (16.2)%
                                                                -----------------------------------------------------------------
Total Internet subscribers (2)		                         999.2 		        971.3 		          2.9 %

	                                                        Years ended December 31
(000s)		                                                2005 		        2004 		        Change
			                                        -----------------------------------------------------------------
Change in residential network access lines		        (110)		         (39)		       (182.1)%
Change in business network access lines		                  (7)		         (23)		         69.6 %
                                                                -----------------------------------------------------------------
Change in total network access lines		                (117)		         (62)		        (88.7)%

High-speed Internet net additions		                 73.4 		        128.1 		        (42.7)%
Dial-up Internet net reductions		                        (45.5)		        (38.2)		        (19.1)%
                                                                -----------------------------------------------------------------
Total Internet subscriber net additions		                 27.9 		         89.9 		        (69.0)%
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Network access lines are measured at the end of the reporting period based on
    information in billing and other systems.
(2) Internet subscribers are measured at the end of the reporting period based on
    Internet access counts from billing and other systems.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireline revenues increased by $71.7 million in 2005, when compared with 2004,
as growth in data services revenue significantly exceeded long distance revenue
erosion and lower voice equipment sales.

* Voice local revenue increased by $28.7 million in 2005, when compared with
  2004, as regulatory recoveries and the effect of business rate increases
  implemented June 1, 2005 were partly offset by the effect of continued line
  losses and a one-time regulatory recovery in 2004. Regulatory recoveries in
  2005 included approximately $50 million drawn from the price cap deferral
  account to offset mandated additional discounts for competitive digital
  network services (in basic data services) pursuant to CRTC Decision 2005-6.
  This adjustment was required because TELUS used the liability method for
  recording price cap deferrals. See the discussion below for data revenues,
  which contains the equal and offsetting negative revenue impact for Decision
  2005-6. Another regulatory recovery affecting 2005 results was a one-time
  positive $6.4 million recorded in the first quarter of 2005 for CRTC
  Decision 2005-4 (pertaining to subsidy requirements for high cost serving
  areas in TELUS Quebec ILEC territory for 2003 to 2005). In 2004, a $10.2
  million regulatory recovery was recognized in the second quarter (in respect
  of CRTC Decision 2004-42 pertaining to deferral account recognition items).

  The increase in residential line losses in 2005, when compared with 2004,
  was due to increased competition from resellers, VoIP competitors (including
  the introduction of cable telephony in Calgary, Edmonton, Rimouski and
  Victoria), technological substitution to wireless services, lower numbers of
  second lines resulting from migration of dial-up Internet subscribers to
  high-speed Internet, and the labour disruption. The trend of declining
  residential network access lines may worsen in the future due to increased
  competition facilitated by cable telephony launches in January 2006 into
  Vancouver and likely into additional regions in the future. Net business
  line losses in 2005 improved from 2004 due to growth in non-incumbent
  regions partly offsetting competitive losses and migration to more efficient
  ISDN (integrated services digital network) services in ILEC regions.

* Voice long distance revenues decreased by $32.9 million in 2005, when
  compared with 2004. The decrease is consistent with industry-wide trends of
  strong price competition and technological substitution. The 3.6% rate of
  revenue erosion for the full year of 2005 improved from the 4.1% rate of
  erosion experienced in 2004, because of increased minute volumes (including
  growth in non-incumbent volumes) as well as an increase in the monthly long
  distance administration fee in certain long distance plans. This was despite
  continued decreases in average per-minute prices arising from strong
  competition as well as reduced call centre winback activity in the second
  half of the year because of the labour disruption.

* Wireline segment data revenues increased by $117.0 million in 2005, when
  compared with 2004. This included an aggregate increase of approximately $59
  million from two recent acquisitions (Ambergris in February 2005 and ADCOM
  in late 2004).

  Data revenue growth that was not attributable to acquisitions was
  approximately $58 million in 2005. This growth was primarily due to: (i)
  increased Internet, enhanced data and hosting service revenues of
  approximately $79 million as a result of traction from new business
  contracts, continued growth in high-speed Internet subscribers and a
  higher average price; (ii) increased managed data revenues from the
  provision of business process outsourcing services to customers; and (iii)
  increased data equipment sales. These increases were partly offset by the
  additional discounts for competitive digital network services of
  approximately $50 million recorded in basic data services, mandated by
  CRTC Decision 2005-6, as well as migration to enhanced data services. The
  increase in data revenues from acquisitions described above was
  substantially offset by these additional discounts in the same periods.

  The rate of growth in high-speed Internet subscribers has slowed, as
  expected, from that observed in 2004 due to the high existing household
  penetration rates for high-speed Internet services in Western Canada and
  lower gross additions caused by increased competitive activity and the
  labour disruption, mitigated in part by fewer deactivations of existing
  customers. In addition, the Company had experienced high net additions in
  the first quarter of 2004 due to a very attractive introductory marketing
  promotion of limited duration.

* Other revenue decreased by $34.9 million in 2005, when compared with 2004,
  due mainly to lower voice equipment sales. In addition, an increase in the
  provision for expected retail and competitive quality of service penalties
  was made for lower service levels resulting from the work stoppage. The
  Company expects to apply to the CRTC in 2006 for an exemption from quality
  of service penalties related to the work stoppage.

* Intersegment revenue represents services provided by the wireline segment
  to the wireless segment. These revenues are eliminated upon consolidation
  together with the associated expense in the wireless segment.

Total external operating revenue discussed above included non-ILEC revenues of
$631.6 million in 2005, an increase of $70.9 million or 12.6% when compared
with 2004. The increase was a result of revenues from the purchase of ADCOM and
growth in data service revenues, partly offset by competitive pricing pressures
on voice services.

<TABLE>
<CAPTION>
Operations expense -- wireline segment	                        Years ended December 31
($ millions, except employees)		                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Salaries, benefits and
   other employee-related costs		                         1,612.8 		1,649.4 		(2.2)%
Other operations expenses		                         1,418.6 		1,215.5 		16.7 %
---------------------------------------------------------------------------------------------------------------------------------
Total operations expense		                         3,031.4 		2,864.9 		 5.8 %
---------------------------------------------------------------------------------------------------------------------------------
Total employees, end of period		                        22,888 		       19,500 		        17.4 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Operations expense increased by $166.5 million in 2005, when compared with
2004. The increase was due primarily to activation of emergency operations
procedures to minimize the impact on customer services during the labour
disruption. As a result, customer service was maintained at higher than
anticipated levels. Increased temporary expenses associated with the labour
disruption included: management reassignments, overtime, third-party security
and contractor costs, travel and accommodation, and lower capitalization of
labour, which exceeded savings in compensation for employees who were not
working, and a revision to the labour settlement estimate. Expenses increased
by $49 million in aggregate due to acquisitions (ADCOM in late 2004 and
Ambergris in February 2005). The addition of a contract in late 2004 to provide
payroll services to the B.C. government, as well as two new human resource
services contracts in the fourth quarter of 2005, also contributed to increased
expenses. The total number of employees, aside from those added with the
acquisition of Ambergris and the new payroll and HR services contracts, was not
significantly changed in 2005.

* Salaries, benefits and employee-related expenses decreased by $36.6
  million in 2005, when compared with 2004. The decrease was due primarily to
  lower compensation expenses for employees who stayed off work and
  adjustments to accruals for payroll and other employee-related expenses,
  partly offset by increased expenses due to acquisitions and new contracts
  for the provision of payroll and human resources services described above,
  as well as increased compensation. The expense for defined benefit pension
  plans decreased by approximately $16 million for the year due to favourable
  returns on plan assets more than offsetting the negative impact of a lower
  discount rate for 2005, when compared with 2004.

* Other operations expenses increased by $203.1 million in 2005, when
  compared with 2004. The increase was due primarily to temporary expenses
  incurred during the labour disruption, such as increased third-party
  security and contractors. Increased expenses of approximately $43 million
  for the year were recorded due to lower capitalization of labour resulting
  from deferral of capital expenditures and reassignment of staff to
  operational activities during the labour disruption. Expenses also increased
  as a result of acquisitions and the new contracts for the provision of
  payroll and human resources services described above, and increased product
  and service cost of sales associated with higher data equipment sales.
  Otherwise, expenses decreased as a result of: (i) nominal payments to
  Verizon under the renegotiated Software and Related Technology and Service
  Agreement, compared with approximately $33 million in 2004; (ii) reduced
  facilities, transit and termination costs of approximately $22 million due
  to the movement of traffic on-net and price cap discounts from competitor
  ILECs arising from CRTC Decision 2005-6, partly offset by higher outbound
  traffic volumes; and (iii) a lower bad debt expense of approximately $10
  million due to lower credit risk and continued improvement of collection
  practices that have reduced credit loss exposure.

Included in the total segment expenses discussed above are non-ILEC operations
expenses of $610.4 million in 2005, an increase of $27.5 million or 4.7%, when
compared with 2004. The increase in operations expense supported growth in
non-ILEC revenues for the same period.



<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Restructuring and workforce reduction costs-
wireline segment	                                        Years ended December 31
($ millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>

---------------------------------------------------------------------------------------------------------------------------------
		                                                53.9 		        52.6 		        2.5 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     General

In 2005, the Company undertook a number of smaller initiatives within the ILEC
portion of the wireline segment, such as operational consolidation,
rationalization and integrations. These initiatives are aimed at improving the
Company's operating and capital productivity. As at December 31, 2005, no
future expenses remain to be accrued or recorded under the smaller initiatives
substantially completed in 2005, but variances from estimates currently
recorded may be recorded in subsequent periods. The Company's estimate of
restructuring and workforce reduction costs in 2006, arising from its
competitive efficiency program, which includes the office closures and
contracting out and integration of wireline and wireless operations, does not
currently exceed $100 million. See Forward-looking statements at the beginning
of Managements discussion and analysis.

     Office closures and contracting out

In connection with the collective agreement signed in the fourth quarter of
2005, as further discussed, an accompanying letter of agreement set out the
planned closure, on February 10, 2006, of a number of offices in British
Columbia. This initiative is aimed to improve the Company's operating and
capital productivity and is a component of the Company's competitive efficiency
program. The approximately 250 bargaining unit employees affected by these
office closures were offered the option of redeployment or participation in a
voluntary departure program (either the Early Retirement Incentive Plan or the
Voluntary Departure Incentive Plan).

Similarly, an additional accompanying letter of agreement set out that the
Company intends to contract out specific non-core functions over the term of
the collective agreement. This initiative is aimed at allowing the Company to
focus its resources on those core functions that differentiate the Company for
its customers and is a component of the Company's competitive efficiency
program. The approximately 250 bargaining unit employees currently affected by
contracting out initiatives were offered the option of redeployment or
participation in the voluntary departure program (either the Early Retirement
Incentive Plan or the Voluntary Departure Incentive Plan).

As at December 31, 2005, no future expenses remain to be accrued or recorded
under the letter of agreement setting out the planned closure of a number of
offices in British Columbia, but variances from estimates currently recorded
may be recorded in subsequent periods. Other costs, such as other employee
departures and those associated with real estate, will be incurred and recorded
subsequent to December 31, 2005.

As at December 31, 2005, no future expenses remain to be accrued or recorded
under the letter of agreement setting out the contracting out of specific
non-core functions, in respect of the approximately 250 bargaining unit
employees currently affected, but variances from estimates currently recorded
may be recorded in subsequent periods. Future costs will be incurred as the
initiative continues.

     Integration of wireline and wireless operations

On November 24, 2005, the Company announced the integration of its wireline and
wireless operations, an initiative that will continue into future years and
that is a component of the Company's competitive efficiency program. During the
year ended December 31, 2005, $3.0 million of restructuring and workforce
reduction costs were recorded in respect of this initiative and were included
with general programs initiated in 2005.

<TABLE>
<CAPTION>
EBITDA and EBITDA margin - wireline segment	                Years ended December 31
		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
EBITDA ($ millions)		                                1,852.3 		1,948.4 	        (4.9)%
EBITDA margin (%)		                                   37.5 		   40.0 		(2.5) pts
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

EBITDA decreased by $96.1 million in 2005, when compared with 2004. The primary
causes included temporary expenses associated with maintaining operations
during the labour disruption, emergency operations planning expenses prior to
July 21, increased restructuring charges and flat revenues in the second half
of 2005, despite improved non-ILEC profitability. Included in these results
were net labour disruption related expenses of approximately $133 million for
the full year. Non-ILEC EBITDA was $21.2 million in 2005, compared with $(22.2)
million in 2004.

Wireline segment capital expenditures are discussed in Section 7.2 Cash used by
investing activities.

5.5 Wireless segment results

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Operating revenues - wireless segment	                        Years ended December 31
($ millions)		                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Network revenue		                                        3,064.6 		2,599.9 		17.9 %
Equipment revenue		                                  230.9 		  212.0 		 8.9 %
---------------------------------------------------------------------------------------------------------------------------------
External operating revenue		                        3,295.5 		2,811.9 		17.2 %
Intersegment revenue		                                   23.5 		   21.5 		 9.3 %
---------------------------------------------------------------------------------------------------------------------------------
Total operating revenue		                                3,319.0 		2,833.4 		17.1 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Key operating indicators -- wireless segment
---------------------------------------------------------------------------------------------------------------------------------
(000s)	                                                               At December 31
		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Subscribers -- postpaid		                                3,666.8 		3,240.3 	        13.2 %
Subscribers -- prepaid		                                  853.9 		  696.1 		22.7 %
                                                               ----------              ---------               ---------
Subscribers -- total(1) 		                        4,520.7 		3,936.4 		14.8 %

Digital POPs(2) covered including
	roaming/resale (millions)(3)		                   30.6 		   30.0 		 2.0 %
			                                       ------------------------------------------------------------------
	                                                       Years ended December 31

(000s)		                                               2005 		        2004 		        Change
			                                       ------------------------------------------------------------------
Subscriber net additions -- postpaid		                  426.5 		  428.5 		(0.5)%
Subscriber net additions -- prepaid		                  157.8 		   83.9 		88.1 %
                                                               ------------------------------------------------------------------
Subscriber net additions -- total		                  584.3 		  512.4 		14.0 %

Churn, per month (%)(4)		                                   1.39 		   1.40 	        (0.01) pts
COA(5) per gross subscriber addition ($)(4)		            386 		    389 		(0.8)%
ARPU ($)(4)		                                             62 		     60 		 3.3 %
Average minutes of use
per subscriber per month (MOU)		                            399 		    384 		 3.9 %

EBITDA to network revenue (%)		                           47.1 		   43.9 	         3.2 pts
Retention spend to network revenue(4) (%)		            6.0 		    5.1 	         0.9 pts
EBITDA ($ millions)		                                1,443.0 		1,142.2 		26.3 %
EBITDA excluding COA ($ millions)(4)		                1,937.3 		1,578.0 		22.8 %
---------------------------------------------------------------------------------------------------------------------------------
<FN>
pts - percentage points
(1) Subscribers are measured at the end of the reporting period based on information
     from billing systems.
(2) POPs is an acronym for population. A POP refers to one person living in a population
     area, which in whole or substantial part is included in the coverage areas.
(3) At December 31, 2005, TELUS' wireless PCS digital population coverage included expanded
    coverage of approximately 7.5 million PCS POPs due to roaming/resale agreements principally
    with Bell Mobility and Aliant Telecom Wireless.
(4) See Section 11.3 Definition of key operating indicators. These are industry measures useful
    in assessing operating performance of a wireless company, but are not defined under accounting
    principles generally accepted in Canada and the U.S.
(5) Cost of acquisition.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Wireless segment Network revenue increased by $464.7 million in 2005, when
  compared with 2004. Wireless Network revenue for 2005 was a record for
  TELUS. This growth was a result of the 14.8% expansion of the subscriber
  base combined with a $2 increased average revenue per subscriber unit per
  month (ARPU). The ARPU growth can be attributed to increased data usage
  including text messaging, mobile computing and downloads as well as higher
  voice revenues related to increased roaming, features and average minutes of
  use per subscriber per month (MOU).

  At December 31, 2005, postpaid subscribers represented 81.1% of the total
  cumulative subscriber base, remaining relatively stable from one year
  earlier and contributing to the significant ARPU premium attained over
  TELUS' competitors. Despite the commercial launch by new competitors in the
  prepaid market, the wireless segment achieved significant growth in prepaid
  net subscriber additions primarily as a result of a successful offering of
  the Talk Away bundle. Consequently, total subscriber net additions of
  584,300 for the full year of 2005 represented an annual record for the
  wireless segment.

  Blended postpaid and prepaid monthly churn rates improved slightly in 2005,
  when compared with 2004. This is a significant accomplishment in the context
  of the challenges from labour disruptions, new competition, and other
  aggressive prepaid and Push To Talk(TM) offerings. Deactivations were 694,700
  in 2005 as compared with 608,300 in 2004. The monthly churn rate has
  improved steadily during 2005. These churn and deactivation results reflect
  a continued focus on customer care including successful loyalty and
  retention efforts, enhanced product offerings and superior network quality.

* Equipment sales, rental and service revenue for the full year of 2005
  increased mainly due to continued subscriber growth. Gross subscriber
  additions grew to 1,279,000 in 2005 as compared with 1,120,700 in 2004.
  Handset revenues associated with gross subscriber activations are included
  in COA per gross subscriber addition.

* Intersegment revenues represent services provided by the wireless segment
  to the wireline segment and are eliminated upon consolidation along with the
  associated expense in the wireline segment.


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Operations expense -- wireless segment	                        Years ended December 31
($ millions, except employees)					2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Equipment sales expenses		                          478.9 		  424.7 	        12.8 %
Network operating expenses		                          392.2 		  401.1 		(2.2)%
Marketing expenses		                                  403.7 		  329.2 		22.6 %
General and administration expenses		                  601.2 		  536.2 		12.1 %

Total operations expense		                        1,876.0 		1,691.2 		10.9 %
Total employees, end of period		                        6,931 		        6,298 		        10.1 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireless segment operations expense increased in 2005, when compared with 2004,
to support growth in the subscriber base. The wireless segment continued to
achieve economies of scale as total 2005 operations expenses increased by only
10.9%, while the corresponding Network revenue growth was 17.9% and
year-over-year subscriber growth was 14.8%.

* Expenses related to equipment sales increased in 2005, when compared with
  2004, principally due to an increase in gross subscriber activations, higher
  handset costs from a shift in product mix and increased retention activity.
  Handset costs associated with gross subscriber activations are included in
  COA per gross subscriber addition.

* The decrease in Network operating expenses in 2005, when compared with
  2004, was a result of efforts to improve roaming rates and reduce leased
  line costs through microwave build, as well as scale efficiencies, and the
  competitive digital network services discounts arising from CRTC Decision
  2005-6. In addition, the fourth quarter of 2005 included a $5.3 million
  credit related to years 2003 to 2005, which reflected the December 6, 2005
  Federal Court ruling that TELUS not be required to include wireless revenues
  in the calculation of telecommunications fees payable to the CRTC. These
  decreases were partly offset by increased transmission and site-related
  expenses to support the greater number of cell sites, a larger subscriber
  base, and improved network quality and coverage. The digital population
  coverage grew to 30.6 million at December 31, 2005, as a result of continued
  activation of digital roaming regions and network expansion.

* Marketing expenses in 2005 increased primarily due to higher dealer
  compensation costs, expenses associated with the expanded subscriber base,
  increased advertising and promotions costs and increased re-contracting
  activity. COA per gross subscriber addition improved by $3 to $386 for the
  full year of 2005, when compared with the same period in 2004. With the
  higher ARPU and lower churn rate, COA per gross subscriber addition
  expressed as a ratio of the lifetime revenue of the subscriber improved for
  the full year of 2005 as compared with the same period in 2004.

* General and administration expenses increased by 12.1% in 2005, when
  compared to 2004 due to the increase in employees to support the significant
  growth in the subscriber base and continued expansion in the number of
  Company-owned retail stores. For the full year, the impact of additional
  labour disruption-related costs was offset by the payroll savings from fewer
  active employees during the labour disruption.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
EBITDA and EBITDA margin --
wireless segment 	                                        Years ended December 31
		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
EBITDA ($ millions)		                                1,443.0 		1,142.2 		26.3 %
EBITDA margin (%)		                                   43.5 		   40.3 		 3.2 pts
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireless segment EBITDA increased by $300.8 million in 2005, when compared to
2004. Despite the labour disruption, the improvement in EBITDA and EBITDA
margin in 2005 was attributed to the wireless segment's focus on profitable
subscriber growth, increased ARPU, a lower COA per gross subscriber addition,
excellent monthly churn rates, and successful cost containment efforts. The
EBITDA margin, when calculated as a percentage of Network revenue, improved to
47.1% in 2005, compared with 43.9% in 2004, representing an increase of 3.2
percentage points.

Wireless segment capital expenditures are discussed in Section 7.2 Cash used by
investing activities.

6. Financial condition

The following are the significant changes in the Consolidated balance sheets
between December 31, 2004 and December 31, 2005.

<TABLE>
<CAPTION>

<S>			         <C>	    <C>	       <C>	    <C>		<C>
---------------------------------------------------------------------------------------------------------------------------------

		                 Dec. 31,   Dec. 31,   Change 	    % Change 	Explanation
($ millions)		         2005 	    2004
---------------------------------------------------------------------------------------------------------------------------------
Current Assets
  Cash and temporary
  investments, net		   8.6 	     896.5 	(887.9)	     (99.0)%	Used accumulated cash to partially fund debt
                                                                                redemptions
                                                                                See Section 7. Liquidity and capital resources
---------------------------------------------------------------------------------------------------------------------------------
  Accounts receivable	         610.3 	     863.5 	(253.2)	     (29.3)%	Reduced by the $350 million increase in proceeds
                                                                                from securitized accounts receivable on
                                                                                November 30, partly offset by higher sales
---------------------------------------------------------------------------------------------------------------------------------
  Income and other taxes
  receivable		         103.7 	     132.5 	(28.8)	     (21.7)%	Refunds received net of changes in estimates of
                                                                                near-term recoverable taxes
---------------------------------------------------------------------------------------------------------------------------------
  Inventories		         138.8 	     133.3 	  5.5 	       4.1 %	Primarily an increase in wireless inventory
                                                                                levels
---------------------------------------------------------------------------------------------------------------------------------
  Prepaid expenses and other     154.7 	     183.4 	(28.7)	     (15.6)%	Primarily net amortization of maintenance
                                                                                contracts and a reduction in connection and
                                                                                activation fees
---------------------------------------------------------------------------------------------------------------------------------
  Current portion of future
  income taxes		         226.4 	     438.4     (212.0)	     (48.4)%	Decrease in available tax loss pools and
                                                                                non-deductible reserves
---------------------------------------------------------------------------------------------------------------------------------
Current Liabilities
  Accounts payable and
  accrued liabilities	       1,393.7 	   1,362.6 	31.1 	       2.3 %	Principally an increase in payables associated
                                                                                with higher fourth quarter capital expenditures,
                                                                                and the accrual for settlement of a lawsuit,
                                                                                partly offset by reduced payroll liabilities and
                                                                                lower interest payable
---------------------------------------------------------------------------------------------------------------------------------
  Restructuring and workforce     57.1 	     70.7      (13.6)	     (19.2)%	Payments under previous programs exceeded new
  reduction accounts payable                                                    obligations
  and accrued liabilities
---------------------------------------------------------------------------------------------------------------------------------
  Advance billings and           571.8 	    531.5 	40.3 	       7.6 %	Primarily an increase in price cap deferred
  customer deposits                                                             revenues and increased Mobility billings,
                                                                                partly offset by lower activation and connection
                                                                                fees
---------------------------------------------------------------------------------------------------------------------------------
  Current maturities of
  long-term debt	           5.0 	      4.3 	 0.7 	      16.3 %	Current maturities of capital leases
---------------------------------------------------------------------------------------------------------------------------------
Working capital (1)		(785.1)	    678.5   (1,463.6)	      n. m.  	Primarily the reduction of cash and an increase
                                                                                in securitized receivables associated with early
                                                                                redemption of debt, as well as the decrease in
                                                                                the current future income tax asset
---------------------------------------------------------------------------------------------------------------------------------
Capital Assets, Net	      10,941.5 	 11,221.0     (279.5)	      (2.5)%	See Sections 5.3 Consolidated results from
                                                                                operations - Depreciation and amortization and
                                                                                7.2 Cash used by investing activities
---------------------------------------------------------------------------------------------------------------------------------
Other Assets
  Deferred charges	         850.2 	   704.4       145.8 	      20.7 %	Primarily pension plan contributions in excess
                                                                                of charges to income
---------------------------------------------------------------------------------------------------------------------------------
  Future income taxes		    - 	    99.8       (99.8)	    (100.0)%	Reflects use of loss carry forward amounts and
                                                                                reclassifications to the long-term future income
                                                                                tax liability
---------------------------------------------------------------------------------------------------------------------------------
  Investments		         31.2 	    38.4        (7.2)	     (18.8)%	Write-down of certain portfolio investments, net
                                                                                of new investments
---------------------------------------------------------------------------------------------------------------------------------

  Goodwill		      3,156.9 	 3,126.8 	30.1 	       1.0 %	Primarily goodwill added for acquisition of
                                                                                Ambergris, net of foreign exchange changes
---------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt		      4,639.9 	 6,332.2   (1,692.3)	     (26.7)%	TELUS Corporation 7.5% Notes ($1.578 billion)
                                                                                were redeemed early on Dec. 1, 2005; the $141.6
                                                                                million Dec. 31, 2004 balance of Convertible
                                                                                debentures was converted to equity or redeemed;
                                                                                and the Canadian dollar value of U.S. dollar Notes
                                                                                decreased by $120.4 million because of a
                                                                                strengthening Canadian dollar. Partly offsetting
                                                                                these items was a draw of $142 million against
                                                                                TELUS' three-year credit facility outstanding at
                                                                                the end of 2005
---------------------------------------------------------------------------------------------------------------------------------
Other Long-Term Liabilities   1,635.3 	 1,506.1      129.2 	       8.6 %	Primarily an increase in the deferred hedging
                                                                                liability for U.S. dollar Notes, resulting from a
                                                                                strengthening Canadian dollar
---------------------------------------------------------------------------------------------------------------------------------
Future Income Taxes	      1,023.9 	   991.9       32.0 	       3.2 %	Reclassification from the long-term future income
                                                                                tax asset plus the net increase in temporary
                                                                                differences for long-term assets and liabilities,
                                                                                particularly pension assets
---------------------------------------------------------------------------------------------------------------------------------
Non-Controlling Interest         25.6 	    13.1       12.5 	      95.4 %	The increase arose from minority partners' share
                                                                                of several small subsidiaries, including an
                                                                                acquisition in 2005
---------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
  Convertible debentures           -         8.8       (8.8)	    (100.0)%	$7.8 million was transferred to share capital
                                                                                (in Common equity) when shareholders exercised
                                                                                their conversion option in 2005, while the
                                                                                balance was transferred to contributed surplus
                                                                                (in Common equity) with the redemption of the
                                                                                remaining debentures on June 15, 2005
---------------------------------------------------------------------------------------------------------------------------------
  Common equity	              6,870.0 	 7,016.8     (146.8)	      (2.1)%	The reduction during 2005 was comprised of:

                                                                                * Normal Course Issuer Bid expenditures of $892.1
                                                                                  million to repurchase 10.7 million Non-Voting
                                                                                  Shares and 10.1 million Common Shares;
                                                                                * Dividends of $312.2 million; and
                                                                                * Other of $7.1 million;
                                                                                partly offset by increases from:
                                                                                * Net income of $700.3 million;
                                                                                * Share options exercised of $232.6 million to
                                                                                  issue 7.6 million Non-Voting Shares and 1.0
                                                                                  million Common Shares; and
                                                                                * Conversion of $131.7 million of Convertible
                                                                                  debentures into 3.3 million Non-Voting Shares
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Current assets subtracting Current liabilities - an indicator of the ability
     to finance current operations and meet obligations as they fall due.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7. Liquidity and capital resources

7.1 Cash provided by operating activities

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------------
($ millions)	                                                Years ended December 31
		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
		                                                2,914.6 		2,538.1 		14.8 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash provided by operating activities increased by $376.5 million in 2005, when
compared with 2004. Changes in cash provided by operating activities were
mainly due to the following:

* Cash was provided by a $350 million increase in proceeds from securitized
  accounts receivable in 2005, compared with a $150 million reduction in
  securitized accounts receivable in 2004

* EBITDA increased by $204.7 million

* Restructuring and workforce reduction payments decreased by $52.3 million

* Interest received increased by $20.0 million

* Employer contributions to employee defined benefit plans decreased by
  $18.0 million due to updated actuarial valuations and net acceleration of
  funding in 2004. The Pension Plan for Management and Professional Employees
  of TELUS Corporation ceased accepting new participants on January 1, 2006.
  See Note 18 of the Consolidated financial statements for further information
  on TELUS employee future benefits.

Partly offsetting the above were:

* Income tax recoveries net of installment payments decreased by 125.1
  million

* In 2004, TELUS received $33.3 million from Verizon, recorded as a
  reduction of prepaid and deferred services. The $33.3 million was part of
  the $148.1 million (U.S. $125 million) received when the independent
  Directors of TELUS agreed to facilitate the divestiture by Verizon of its
  entire 20.5% equity interest in TELUS

* Interest paid increased by $5.4 million due to the $30.9 million paid in
  respect of early redemption of 7.50%, Series CA, Notes on December 1, 2005,
  partly offset by lower interest due to conversion and redemption of
  Convertible debentures in 2005, and debt repayments in 2004

* Other changes in non-cash working capital in 2005 including a reduction in
  payroll and employee-related liabilities, and the payment of lump sum
  amounts to bargaining unit employees.

7.2 Cash used by investing activities

<TABLE>
<CAPTION>
($ millions)	                                                Years ended December 31
		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
		                                                 1,354.6 		1,299.5 		4.2 %
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash used by investing activities increased by $55.7 million in 2005, when
compared with 2004. The increase was primarily from the $29.4 million
investment in Ambergris (compared with the acquisition of ADCOM for $12.2
million in 2004) and lower proceeds from the sale of non-core assets. Assets
under construction increased to $516.4 million at December 31, 2005, compared
with $329.6 million at December 31, 2004, due to delays in completing capital
projects caused by the labour disruption, as well as capitalized costs related
to development of a new billing system in the wireline segment.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Capital expenditures by segment	                                Years ended December 31
($ in millions, except capital expenditure intensity)		2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Wireline segment		                                  914.2 		  964.3 		(5.2)%
Wireless segment		                                  404.8 		  354.7 		14.1 %
---------------------------------------------------------------------------------------------------------------------------------
TELUS consolidated	                                	1,319.0 		1,319.0 		 0.0 %
---------------------------------------------------------------------------------------------------------------------------------
Capital expenditure intensity(1) (%)	             	           16.2 		   17.4 		(1.2) pts
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Capital expenditure intensity is measured by dividing capital expenditures
    by operating revenues. This measure provides a method of comparing the level
    of capital expenditures to other companies of varying size within the same industry.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Wireline segment ILEC capital expenditures decreased by 3.3% to
  approximately $799 million in 2005, when compared with 2004. The decrease
  included some deferral of capital expenditures due to the work stoppage.
  Greater investment in internal systems and processes was more than offset by
  lower expenditures on network infrastructure and other projects.

  For the full year of 2005, non-ILEC capital expenditures decreased by 16.6%
  to $115 million, when compared with 2004, as spending in 2004 required
  up-front investment to support certain major enterprise customers.

  The wireline segment capital expenditure intensity ratio was 18.5% in 2005,
  compared with 19.8% in 2004. Cash flow (EBITDA less capital expenditures)
  decreased by 4.7% to $938.1 million in 2005, when compared to 2004, due to
  lower EBITDA.

                 GRAPH
    Segmented capital expenditures
             ($ millions)

* Wireless segment capital expenditures increased by $50.1 million in 2005
  and were attributed to strategic investments in next-generation EVDO-capable
  wireless network technology and continued enhancement of digital wireless
  capacity and coverage.

  Capital expenditure intensity for the wireless segment was 12.2% in 2005, as
  compared with 12.5% in 2004, as growth in capital expenditures paralleled
  growth in revenues. The work stoppage resulted in lower than originally
  planned capital expenditures for the full year of 2005. Wireless cash flow
  in 2005 exceeded wireline cash flow for the first time on a full year basis,
  increasing by 31.8% over 2004 to a wireless segment record $1,038.2 million.

TELUS' EBITDA less capital expenditures (see Section 11.1 EBITDA for the
calculation) increased by 11.6% to $1,976.3 million in 2005, when compared with
2004, as a result of higher EBITDA.

7.3 Cash used by financing activities

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
($ millions)	                                                Years ended December 31
		                                                2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
		                                                2,446.7 		348.3 		        n.m.
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash used by financing activities increased significantly in 2005, when
compared with 2004, primarily due to the early redemption on December 1, 2005,
of the remaining $1.578 billion of 7.50%, Series CA, Notes, as well as
purchases of shares under Normal Course Issuer Bids (NCIBs). Financing
activities included:

* Proceeds from Common Shares and Non-Voting Shares issued were $219.4
  million in 2005, an increase of $70.6 million when compared with 2004. The
  increase was mainly due to the exercise of options and warrants in 2005,
  partly offset by lower proceeds from share purchases for employee share
  plans, as TELUS now purchases these shares in the market rather than issue
  shares from treasury.

  In addition, during the second quarter of 2005, convertible debentures with
  a principal value of $131.7 million were converted into approximately 3.3
  million Non-Voting Shares. Due to the non-cash nature of these transactions,
  the conversions are shown as balance sheet adjustments and are not included
  in the financing activities of the cash flow statements.

* Cash dividends paid to shareholders were $312.2 million in 2005,
  representing an increase of $63.5 million when compared with 2004. The
  increase arose principally from the declaration of higher per share
  dividends in 2005, when compared with 2004, as well as the purchase of
  dividend reinvestment plan shares in the market rather than issuing shares
  from treasury. Dividends declared were 87.5 cents per share in 2005,
  compared with 65 cents per share in 2004.

* Under the first NCIB program that was initiated on December 20, 2004 and
  expired on December 19, 2005, TELUS purchased for cancellation approximately
  73% of the maximum 14 million Common Shares permitted and 100% of the
  maximum 11.5 million Non-Voting Shares permitted. The $912.6 million total
  outlay under this program was comprised of a $369.5 million reduction to
  share capital representing the book value of shares repurchased, and a
  $543.1 million reduction to retained earnings representing the amount in
  excess of book value.

  On December 16, 2005, TELUS announced that a new NCIB program was accepted
  by the Toronto Stock Exchange (TSX). Under the new program, TELUS may
  purchase for cancellation over a 12-month period up to 12 million of its
  outstanding Common Shares and up to 12 million of its outstanding Non-Voting
  Shares, representing approximately 6.5% and 7.2%, respectively, of the
  public float on the date of the announcement. The new program became
  effective on December 20, 2005, and will expire on December 19, 2006. By
  December 31, 2005, TELUS had purchased for cancellation under this new
  program approximately 634,000 Common Shares and 608,000 Non-Voting Shares.
  The $57.5 million outlay under the new program was comprised of a $20.9
  million reduction to share capital and a $36.6 million reduction to retained
  earnings.

  The following tables enumerate the shares repurchased and costs under these
  programs for 2005 and cumulatively.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Normal Course Issuer Bid Programs -- shares
---------------------------------------------------------------------------------------------------------------------------------
Shares	                     First program
repurchased for        beginning Dec. 20, 2004 and                Second program                   Total of both programs
cancellation              ending Dec. 19, 2005	             beginning Dec. 20, 2005
<S>			       <C>			             <C>			            <C>
                 ----------------------------------------------------------------------------------------------------------------
                 In 2005     Total for 	  Percentage      In 2005     Maximum      Percentage        In 2005    Cumulative (1)
                             program         of                       shares          of
                             duration     maximum                    permitted      maximum
                                          permitted                    for         permitted
                                                                    repurchase
---------------------------------------------------------------------------------------------------------------------------------
Common	        9,503,300    10,259,011	    73.3 %	 634,469    12,000,000	      5.3 %	     10,137,769	    10,893,480
Non-Voting     10,048,600    11,500,000	   100.0 %	 607,700    12,000,000	      5.1 %	     10,656,300	    12,107,700
---------------------------------------------------------------------------------------------------------------------------------
	       19,551,900    21,759,011	    85.3 %     1,242,169    24,000,000	      5.2 %	     20,794,069	    23,001,180
---------------------------------------------------------------------------------------------------------------------------------
Normal Course Issuer Bid programs - cost
---------------------------------------------------------------------------------------------------------------------------------
Outlay                   First program                            Second program                   Total of both programs
($ millions)           beginning Dec. 20, 2004 and           beginning Dec. 20, 2005
                         ending Dec. 19, 2005
                -----------------------------------------------------------------------------------------------------------------
	         In 2005     Total for 		          In 2005			             In 2005	Cumulative (1)
                             program
                             duration
---------------------------------------------------------------------------------------------------------------------------------
Reduction of:
  Share capital	  330.1	      369.5		            20.9			               351.0	    390.4

  Retained
    earnings	  504.5	      543.1		            36.6			               541.1	     579.7
---------------------------------------------------------------------------------------------------------------------------------
	          834.6	      912.6		            57.5			               892.1	     970.1
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) From December 20, 2004 to December 31, 2005
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Long-term debt issued in 2005 was comprised of a draw of $142 million
  against TELUS' three-year facility, and the balance was capital leases.
  Repayments in 2005 consisted of the early redemption of the $1.578 billion
  Canadian dollar Notes described earlier, and the June 16, 2005 redemption of
  convertible debentures not converted into Non-Voting Shares, of $17.9
  million.

* In 2004, the redemption of all of the publicly held TELUS Communications
  Inc. Preference and Preferred Shares was completed for an outlay of $72.8
  million.

* In 2004, TELUS received $114.8 million from Verizon, part of the $148.1
  million (U.S. $125 million) received when the independent Directors of TELUS
  agreed to facilitate the divestiture by Verizon of its entire 20.5% equity
  interest in TELUS.

* Long-term debt issues in 2004 were primarily bank facilities that were
  repaid. Debt redemptions in 2004 included $189.5 million of TELUS
  Communications Inc. Series A Debentures and $20 million of TELUS
  Communications Inc. Medium-term Notes.

7.4 Liquidity and capital resource measures

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Years ended December 31	                                        2005 		        2004 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Components of debt and coverage ratios (1)
Net debt ($ millions)		                                 5,794.4 		 6,477.7 		(683.3)
Total capitalization -- book value ($ millions)		        12,690.0 	        13,516.4 		(826.4)

EBITDA excluding restructuring ($ millions)		         3,349.2 		 3,143.2 		 206.0
Net interest cost ($ millions)		                           623.1 		   613.3 		  (9.8)

Debt ratios
Fixed-rate debt as a proportion of total
	indebtedness (%)		                            97.6 		    93.2 		   4.4
Average term to maturity of debt (years)	    	             5.4 		     5.4 		    -

Net debt to total capitalization (%) (1)		            45.7 		    47.9 		  (2.2)
Net debt to EBITDA (1) 		                                     1.7 		     2.1 		  (0.4)

Coverage ratios (1)
Interest coverage on long-term debt		                     2.5 		     2.3 		   0.2
EBITDA interest coverage		                             5.4 		     5.1 		   0.3

Other measures
Free cash flow ($ millions) (2)		                         1,465.5 		 1,297.3 		 168.2
Dividend payout ratio (%) (1)		                              56 		      51 		     5

---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Section 11.4 Definition of liquidity and capital resource measures.
(2) See Section 11.2 Free cash flow.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Net debt decreased at the end of 2005, when compared to 2004, due to early
redemption of Notes and the conversion and redemption of convertible debentures
in 2005, partly offset by the use of cash and temporary investments (cash is
netted against debt for the purposes of this calculation). The proportion of
fixed-rate debt increased when TELUS terminated swap agreements concurrent with
the early redemption of Notes. Total capitalization also decreased for these
reasons as well as a decrease in common equity due primarily to share
repurchases under NCIB programs. The net debt to EBITDA ratio measured at
December 31, 2005 improved significantly, when compared with one year earlier,
as a result of debt reduction and an increase in 12-month trailing EBITDA
excluding restructuring.

Interest coverage on long-term debt improved because of increased income before
interest and taxes, partly offset by higher interest expense. The EBITDA
interest coverage ratio improved by 0.3 as a result of higher EBITDA excluding
restructuring, and decreased by 0.1 due to higher interest. The free cash flow
measure for 2005 increased, when compared with 2004, primarily because of
improved EBITDA, lower payments under restructuring programs and higher
interest received, partly offset by lower cash tax recoveries and higher
interest paid. The dividend payout ratio for 2005 exceeded the target guideline
of 45 to 55% of reported net earnings as a result of the temporary expenses
associated with the work stoppage and the loss on debt redemption. More
relevantly, the dividend payout ratio for 2005, excluding these two items, was
approximately 48%.

Long-term guidelines for certain of TELUS' liquidity measures, as defined in
Section 11.4 Definition of liquidity and capital resource measures, are:

    * Net debt to total capitalization of 45 to 50%

    * Net debt to EBITDA of 1.5:1 to 2.0:1

    * Dividend payout ratio of 45 to 55% of sustainable net earnings.


                 GRAPH                              GRAPH
         Net debt to EBITDA           Net debt to total capitalization (%)


7.5 Credit facilities

TELUS arranged new credit facilities in May 2005 to replace $1.6 billion of
prior credit facilities. The prior 364-day facility, which was due to expire,
and a term facility with three years remaining to maturity were replaced with a
new three-year facility due in May 2008 and a longer maturity five-year term
facility due in May 2010. The new credit facilities have no substantial changes
in terms and conditions, other than reduced pricing and the extension of term,
which reflect favourable market conditions and TELUS' strong financial
position.

TELUS had unutilized available liquidity in excess of $1.4 billion at December
31, 2005.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Credit Facilities                                                                                         Outstanding
At December 31, 2005                                                                                    undrawn letters of
($ in millions)                                 Expiry	            Size	        Drawn               credit
<S>						<C>		    <C>		        <C>  		    <C>
---------------------------------------------------------------------------------------------------------------------------------
Five-year revolving facility (1)		May 4, 2010	    800.0	        --		    --
Three-year revolving facility (1)		May 7, 2008	    800.0	        142.0		    100.6
Other bank facilities		                    --		     74.0		--		      7.3
---------------------------------------------------------------------------------------------------------------------------------
Total		                                    --		  1,674.0	        142.0		    107.9
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Canadian dollars or U.S. dollar equivalent.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TELUS' credit facilities contain customary covenants including a requirement
that TELUS not permit its consolidated Leverage Ratio (Funded Debt to trailing
12-month EBITDA) to exceed 4.0:1 (approximately 1.7:1 at December 31, 2005) and
not permit its consolidated Coverage Ratio (EBITDA to Interest Expense on a
trailing 12-month basis) to be less than 2.0:1 (approximately 5.6:1 at December
31, 2005) at the end of any financial quarter. There are certain minor
differences in the calculation of the Leverage Ratio and Coverage Ratio under
the credit agreement as compared with the calculation of net debt to EBITDA and
EBITDA interest coverage. The calculations are not materially different. The
covenants are not impacted by revaluation of capital assets, intangible assets
and goodwill for accounting purposes, and continued access to TELUS' credit
facilities is not contingent on the maintenance by TELUS of a specific credit
rating.

7.6 Accounts receivable sale

TELUS Communications Inc. (TCI), a wholly owned subsidiary of TELUS, is able to
sell an interest in certain of its receivables up to a maximum of $650 million
and is required to maintain at least a BBB (low) credit rating by Dominion Bond
Rating Service (DBRS), or the purchaser may require the sale program to be
wound down. The necessary credit rating was exceeded by three levels at A (low)
as of February 24, 2006. The proceeds of securitized receivables increased from
$150 million to $500 million on November 30, 2005. The balance of proceeds from
securitized receivables was reduced on January 31, 2006 to $325 million.

7.7 Credit ratings

During 2005, each of the four credit rating agencies that cover TELUS increased
their investment grade ratings for the Company's debt instruments. On June 27,
Moody's Investors Service Inc. increased its rating for TELUS Corporation Notes
from Baa3 with a positive outlook to Baa2 with a stable outlook. On September
27, Standard & Poor's (S&P) raised its ratings for long-term corporate credit
and senior unsecured debt of TELUS Corporation and TCI from BBB to BBB+, while
revising the outlook to stable. On October 18, Fitch Ratings upgraded its
long-term BBB ratings for TELUS and TCI to BBB+ with a stable outlook. On
October 24, DBRS upgraded its BBB rating for TELUS Corporation Notes and its
BBB (high) ratings for TCI to BBB (high) and A (low), respectively, while the
trend was revised to stable.

TELUS has an objective to preserve access to capital markets at a reasonable
cost by maintaining and improving investment grade credit ratings in the range
of BBB+ to A-, or the equivalent.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Credit rating summary	                        DBRS(1)	            S&P(1)	        Moody's(1)	    Fitch(1)
<S>						<C>		    <C>		        <C>  		    <C>
---------------------------------------------------------------------------------------------------------------------------------
TELUS Corporation
  Senior bank debt	                        --	            --	                --	            BBB+
  Notes	                                        BBB (high)	    BBB+	        Baa2	            BBB+

TELUS Communications Inc.
  Debentures	                                A (low)	            BBB+	        --	            BBB+
  Medium-term Notes	                        A (low)	            BBB+	        --	            BBB+
  First mortgage bonds	                        A (low)	            A-	                --	            --
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Outlook or trend stable.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7.8 Off-balance sheet arrangements, commitments and contingent liabilities

     Financial instruments (Note 4 of the Consolidated financial statements)

The Company's financial instruments consist of cash and temporary investments,
accounts receivable, investments accounted for using the cost method, accounts
payable, restructuring and workforce reduction accounts payable, dividends
payable, short-term obligations, long-term debt, interest rate swap agreements,
restricted stock unit compensation cost hedges, and foreign exchange hedges.

The Company uses various financial instruments, the fair values of some which
are not reflected on the balance sheets, to reduce or eliminate exposure to
interest rate and foreign currency risks and to reduce or eliminate exposure to
increases in the compensation cost arising from specified grants of restricted
stock units. These instruments are accounted for on the same basis as the
underlying exposure being hedged. The majority of these instruments, from a
notional amount view, which were newly added during 2001, pertain to TELUS'
U.S. dollar borrowing. Use of these instruments is subject to a policy, which
requires that no derivative transaction be effected for the purpose of
establishing a speculative or a levered position, and sets criteria for the
credit worthiness of the transaction counterparties.

Price risk -- interest rate: The Company is exposed to interest rate risk
arising from fluctuations in interest rates on its temporary investments,
short-term obligations and long-term debt.

Price risk -- currency: The Company is exposed to currency risks arising from
fluctuations in foreign exchange rates on its U.S. dollar denominated long-term
debt. Currency hedging relationships have been established for the related
semi-annual interest payments and principal payments at maturity, as further
discussed in Note 1(h) and set out in Note 14(b).

The Company's foreign exchange risk management also includes the use of foreign
currency forward contracts to fix the exchange rates on short-term foreign
currency transactions and commitments. Hedge accounting is applied to these
short-term foreign currency forward contracts on an exception basis only.

As at December 31, 2005, the Company had entered into foreign currency forward
contracts that have the effect of fixing the exchange rates on U.S. $47.0
million of fiscal 2006 purchase commitments; hedge accounting has been applied
to these foreign currency forward contracts, all of which relate to the
wireless segment.

Credit risk: The Company is exposed to credit risk with respect to its
short-term deposits, accounts receivable, interest rate swap agreements and
foreign exchange hedges.

Credit risk associated with short-term deposits is minimized substantially by
ensuring that these financial assets are placed with governments,
well-capitalized financial institutions and other creditworthy counterparties.
An ongoing review is performed to evaluate changes in the status of
counterparties.

Credit risk associated with accounts receivable is minimized by the Company's
large customer base, which covers all consumer and business sectors in Canada.
The Company follows a program of credit evaluations of customers and limits the
amount of credit extended when deemed necessary. The Company maintains
provisions for potential credit losses, and any such losses to date have been
within management's expectations.

Counterparties to the Company's interest rate swap agreements and foreign
exchange hedges are major financial institutions that have all been accorded
investment grade ratings by a primary rating agency. The dollar amount of
credit exposure under contracts with any one financial institution is limited
and counterparties' credit ratings are monitored. The Company does not give or
receive collateral on swap agreements and hedges due to its credit rating and
those of its counterparties. While the Company is exposed to credit losses due
to the nonperformance of its counterparties, the Company considers the risk of
this remote; if all counterparties were not to perform, the pre-tax effect
would be limited to the value of any deferred hedging asset.

Fair value: The carrying value of cash and temporary investments, accounts
receivable, accounts payable, restructuring and workforce reduction accounts
payable, dividends payable and short-term obligations approximates their fair
values due to the immediate or short-term maturity of these financial
instruments. The carrying values of the Company's investments accounted for
using the cost method would not exceed their fair values.

The fair values of the Company's long-term debt are estimated based on quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same maturity as well as the use of discounted
future cash flows using current rates for similar financial instruments subject
to similar risks and maturities. The fair values of the Company's derivative
financial instruments used to manage exposure to interest rate and currency
risks are estimated similarly. The carrying amount and fair value of long-term
debt are as follows:


<TABLE>
<CAPTION>
	                                          As at December 31, 2005		 As at December 31, 2004
---------------------------------------------------------------------------------------------------------------------------------
($ millions)	                                Carrying 	    Fair value	       Carrying 	   Fair value
                                                amount                                 amount
<S>						<C>		    <C>		        <C>  		    <C>
---------------------------------------------------------------------------------------------------------------------------------
Long-term debt
  Principal		                        4,644.9 	    5,371.6 		6,345.3 	    7,342.3
  Derivative financial instruments used
    to manage interest rate and currency
    risks associated with U.S. dollar
    denominated debt (Hedging item
    maximum maturity date: June 2011)          1,154.3              1,470.5 		1,032.6 	    1,299.5
  Derivative financial instruments used
    to manage interest rate risk associated
    with Canadian dollar denominated debt          -- 		        -- 		    -- 			1.3
---------------------------------------------------------------------------------------------------------------------------------
		                                5,799.2 	    6,842.1 		7,377.9 	    8,643.1
=================================================================================================================================
</TABLE>

     Commitments and contingent liabilities (Note 16 of the Consolidated
     financial statements)

The Company has $57.1 million in outstanding commitments for its restructuring
programs as at December 31, 2005, of which $15.1 million relates to programs
initiated prior to 2005. In addition, the Company disclosed in its targets for
2006 that it expected to record approximately $100 million of restructuring and
employee reduction costs in 2006. See Forward-looking statements at the
beginning of Management's discussion and analysis.

In accordance with CRTC Price Cap Decisions 2002-34 and 2002-43, the Company
defers a portion of revenues in a deferral account, which at December 31, 2005
was $158.7 million. Due to the Company's use of the liability method of
accounting for the deferral account, the CRTC Decision 2005-6, as it relates to
the Compan's provision of Competitor Digital Network services, is not expected
to affect the Company's revenues. To the extent that the CRTC Decision 2005-6
requires the Company to provide discounts on Competitor Digital Network
services, both for current and prior periods, the Company draws down the
deferral account by an offsetting amount. For the year ended December 31, 2005,
the Company drew down the deferral account by $50.5 million in respect of
discounts on Competitor Digital Network services.

The Company's known contractual obligations at December 31, 2005, are
quantified in the following table. For further information, refer to Note 16(c)
of the Consolidated financial statements.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
            Long-term debt maturities
          -----------------------------
		   All except                          Other long-term 	  Operating           Purchase
($ millions)	capital leases	    Capital leases     liabilities	    leases	     obligations	     Total
<S>		    <C>		        <C>		   <C>		      <C>		 <C>		      <C>
---------------------------------------------------------------------------------------------------------------------------------
2006		     1.8 		 3.2 		   17.9 	     177.2 		380.1 	              580.2
2007		 1,869.9 		 3.5 		   28.4 	     155.7 		160.1 	            2,217.6
2008		   144.2 		 3.3 		   17.8 	     139.3 		106.1 	              410.7
2009		     0.7 		 0.8 		   17.1 	     126.7 		 44.9 	              190.2
2010		    80.0 		 1.7 		   16.9 	     112.7 		 10.1 	              221.4
Thereafter  	 3,716.5 		  -- 		   40.1 	     476.7 		 34.6 		    4,367.9
---------------------------------------------------------------------------------------------------------------------------------
Total		 5,813.1 		12.5 		  238.2 	   1,188.3 		735.9 		    7,988.0
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Canadian generally accepted accounting principles (GAAP) require the disclosure
of certain types of guarantees and their maximum, undiscounted amounts. The
maximum potential payments represent a "worst-case scenario" and do not
necessarily reflect results expected by the Company. Guarantees requiring
disclosure are those obligations that require payments contingent on specified
types of future events. In the normal course of its operations, the Company
enters into obligations that GAAP may consider to be guarantees. As defined by
Canadian GAAP, guarantees subject to these disclosure guidelines do not include
guarantees that relate to the future performance of the Company. As at December
31, 2005, the Company has no liability recorded in respect of performance
guarantees, and $0.5 million (December 31, 2004 -- $1.0 million) recorded in
respect of lease guarantees. The maximum undiscounted guarantee amounts as at
December 31, 2005, without regard for the likelihood of having to make such
payment, were not significant.

In the normal course of operations, the Company may provide indemnification in
conjunction with certain transactions. The term of these indemnification
obligations range in duration and often are not explicitly defined. Where
appropriate, an indemnification obligation is recorded as a liability. In many
cases, there is no maximum limit on these indemnification obligations and the
overall maximum amount of the obligations under such indemnification
obligations cannot be reasonably estimated. Other than obligations recorded as
liabilities at the time of the transaction, historically the Company has not
made significant payments under these indemnifications.

In connection with its 2001 disposition of TELUS' directory business, the
Company agreed to bear a proportionate share of the new owner's increased
directory publication costs if the increased costs were to arise from a change
in the applicable CRTC regulatory requirements. The Company's proportionate
share would be 80% through May 2006, declining to 40% in the next five-year
period and then to 15% in the final five years. As well, should the CRTC take
any action that would result in the owner being prevented from carrying on the
directory business as specified in the agreement, TELUS would indemnify the
owner in respect of any losses that the owner incurred. As at December 31,
2005, the Company has no liability recorded in respect of indemnification
obligations.

A number of claims and lawsuits seeking damages and other relief are pending
against the Company. It is impossible at this time for the Company to predict
with any certainty the outcome of such litigation. However, management is of
the opinion, based upon legal assessment and information presently available,
that it is unlikely that any liability, to the extent not provided for through
insurance or otherwise, would be material in relation to the Company's
Consolidated financial position, excepting items disclosed in Note 16(f) of the
Consolidated financial statements. See also Section 10.10 Litigation and legal
matters.

     Pay equity

On December 16, 1994, the Telecommunications Workers Union filed a complaint
against BC TEL, a predecessor of TELUS Communications Inc., with the Canadian
Human Rights Commission, alleging that wage differences between unionized male
and female employees in British Columbia were contrary to the equal pay for
work of equal value provisions in the Canadian Human Rights Act. As a term of
the settlement between TELUS Communications Inc. and the Telecommunications
Workers Union that resulted in the collective agreement effective November 20,
2005, and subject to acceptance by the Canadian Human Rights Commission of the
settlement and closure of its file on this complaint, the parties have agreed
to settle this complaint without any admission of liability, on the basis that
the Company will establish a pay equity fund of $10 million to be paid out
during the term of the new collective agreement and the TWU will withdraw and
discontinue this complaint. On December 21, 2005, the TWU withdrew and
discontinued this complaint. On January 10, 2006, the Canadian Human Rights
Commission advised the Company that its investigator had recommended no further
proceedings in this complaint, however, the Company is awaiting the Canadian
Human Rights Commission's decision in this regard. Should the Canadian Human
Rights Commission refuse consent or the complaint continue for any other reason
and its ultimate resolution differ from management's assessment and
assumptions, a material adjustment to the Company's financial position and the
results of its operations could result.

7.9 Outstanding share information

The following is a summary of the outstanding shares for each class of equity
at December 31, 2005 and at January 31, 2006. In addition, for January 31,
2006, the total number of outstanding and issuable shares is presented,
assuming full conversion of options. Issuable shares at January 31, 2006
include shares held in reserve, but not issued.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Class of equity security
	                                                       Common               Non-Voting                Total
                                                               Shares                 Shares                  Shares
(millions of shares)	 	                             outstanding            outstanding              outstanding
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
At December 31, 2005
  Common equity -- Common Shares outstanding		        183.5		           --		        183.5
  Common equity -- Non-Voting Shares outstanding		   --		        166.6		        166.6
                                                               -------	               -------                 -------
		                                                183.5		        166.6		        350.1	(1)
				                               -------                 -------                 -------
At January 31, 2006
  Common equity -- Common Shares outstanding		        183.5		          --		        183.5
  Common equity -- Non-Voting Shares outstanding		   --		        166.9		        166.9
                                                               -------	               -------                 -------
		                                                183.5		        166.9                   350.4
				                               -------                 -------                 -------
Outstanding and issuable shares(2) at January 31, 2006
  Common Shares and Non-Voting Shares outstanding		183.5		        166.9                   350.4
  Options		                                          1.5		         21.8                    23.3
---------------------------------------------------------------------------------------------------------------------------------
		                                                185.0		        188.7		        373.7
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) For the purposes of calculating diluted earnings per share for the full year of 2005,
    the number of shares was 361.0 million.
(2) Assuming full conversion and ignoring exercise prices.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

8. Critical accounting estimates and accounting policy developments

8.1 Critical accounting estimates

TELUS' significant accounting policies are described in Note 1 of the
Consolidated financial statements. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions. Management's estimates and assumptions affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The Company's critical accounting
estimates are described below and are generally discussed with the Audit
Committee each quarter.

General

* Unless otherwise specified in the discussion of the specific critical
  accounting estimates, the Company is not aware of trends, commitments,
  events or uncertainties that it reasonably expects to materially affect the
  methodology or assumptions associated with the critical accounting
  estimates, subject to the items identified in the Forward-looking statements
  section of this Management's discussion and analysis.

* In the normal course, changes are made to assumptions underlying all
  critical accounting estimates to reflect current economic conditions,
  updating of historical information used to develop the assumptions and
  changes in the Company's debt ratings, where applicable. Unless otherwise
  specified in the discussion of the specific critical accounting estimates,
  it is expected that no material changes in overall financial performance and
  financial statement line items would arise either from reasonably likely
  changes in material assumptions underlying the estimate or from selection of
  a different estimate from within a valid range of estimates.

* All critical accounting estimates are uncertain at the time of making the
  estimate and affect the following Consolidated income statement line items:
  income taxes (except for estimates about goodwill) and Common Share and
  Non-Voting Share income. Similarly, all critical accounting estimates affect
  the following Consolidated balance sheet line items: current assets (income
  and other taxes receivable); future income tax assets or liabilities; and
  shareholders' equity (retained earnings). Generally, the discussion of each
  critical accounting estimate does not differ between the Company's two
  segments: wireline and wireless. The critical accounting estimates affect
  the Consolidated income statement and Consolidated balance sheet line items
  as follows:


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
    Consolidated income                          Operating           Operating expenses                                  Other
	      statement                          revenues     -------------------------------                           expense,
                                                                        Restructuring                                      net
                                                                            and
                                                                          workforce                       Amortization
                                                                          reduction                     of intangible
Consolidated balance sheet		                    Operations	   costs        Depreciation       assets

<S>				                  <C>         <C>	    <C>	           <C>              <C>	          <C>
---------------------------------------------------------------------------------------------------------------------------------
Accounts receivable		                               X
Inventories		                                       X
Capital assets and goodwill(1)				                                    X	              X
Investments						                                                                   X
Payroll and other employee-related liabilities(2)	       X	  	            X	              X
Restructuring and workforce reduction costs			             X
Advanced billings and customer deposits	           X	       X		            X	              X
Employee defined benefit pension plans(2)		       X		            X	              X
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Accounting estimate, as applicable to intangible assets with indefinite
    lives and goodwill, primarily affects the Company's wireless segment.
(2) Accounting estimate impact due to internal labour capitalization rates.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Accounts receivable

General

* The Company considers the business area that gave rise to the accounts
  receivable, performs statistical analysis of portfolio delinquency trends
  and performs specific account identification when determining its allowance
  for doubtful accounts. This information is also used in conjunction with
  current market-based rates of borrowing to determine the fair value of its
  residual cash flows arising from accounts receivable securitization. The
  fair value of the Company's residual cash flows arising from the accounts
  receivable securitization is also referred to as its "retained interest."

* Assumptions underlying the allowance for doubtful accounts include
  portfolio delinquency trends and specific account assessments made when
  performing specific account identification. Assumptions underlying the
  determination of the fair value of residual cash flows arising from accounts
  receivable securitization include those developed when determining the
  allowance for doubtful accounts as well as the effective annual discount
  rate.

* These accounting estimates are in respect of the Accounts receivable line
  item on the Company's Consolidated balance sheet comprising approximately 4%
  of total assets as at December 31, 2005. If the future were to adversely
  differ from management's best estimates of the fair value of the residual
  cash flows and the allowance for doubtful accounts, the Company could
  experience a bad debt charge in the future. Such a bad debt charge does not
  result in a cash outflow.

Key economic assumptions used to determine the fair value of residual cash
flows arising from accounts receivable securitization

* The estimate of the Company's fair value of its retained interest could
  materially change from period to period due to the fair value estimate being
  a function of the amount of accounts receivable sold, which can vary on a
  monthly basis. See Note 10 of the Consolidated financial statements for
  further analysis.

The allowance for doubtful accounts

* The estimate of the Company's allowance for doubtful accounts could
  materially change from period to period due to the allowance being a
  function of the balance and composition of accounts receivable, which can
  vary on a month-to-month basis. The variance in the balance of accounts
  receivable can arise from a variance in the amount and composition of
  operating revenues, from a variance in the amount of accounts receivable
  sold to the securitization trust and from variances in accounts receivable
  collection performance.

Inventories
The allowance for inventory obsolescence

* The Company determines its allowance for inventory obsolescence based upon
  expected inventory turnover, inventory aging and current and future
  expectations with respect to product offerings.

* Assumptions underlying the allowance for inventory obsolescence include
  future sales trends and offerings and the expected inventory requirements
  and inventory composition necessary to support these future sales offerings.
  The estimate of the Company's allowance for inventory obsolescence could
  materially change from period to period due to changes in product offerings
  and consumer acceptance of those products.

* This accounting estimate is in respect of the Inventory line item on the
  Company's Consolidated balance sheet, which comprises approximately 1% of
  total assets as at December 31, 2005. If the allowance for inventory
  obsolescence was inadequate, the Company could experience a charge to
  operations expense in the future. Such an inventory obsolescence charge does
  not result in a cash outflow.

Capital assets and Goodwill

General

* The accounting estimates for Capital assets and Goodwill represent
  approximately 67% and 19%, respectively, of the Company's Consolidated
  balance sheet, as at December 31, 2005. If the Company's estimated useful
  lives of assets were incorrect, the Company could experience increased or
  decreased charges for amortization of intangible assets or depreciation in
  the future. If the future were to adversely differ from management's best
  estimate of key economic assumptions and associated cash flows were to
  materially decrease, the Company could potentially experience future
  material impairment charges in respect of its capital assets, including
  intangible assets with indefinite lives and goodwill. If intangible assets
  with indefinite lives were determined to have finite lives at some point in
  the future, the Company could experience increased charges for amortization
  of intangible assets. Such charges do not result in a cash outflow and of
  themselves would not affect the Company's immediate liquidity.

The estimated useful lives of assets; the recoverability of tangible assets

* The estimated useful lives of assets are determined by a continuing
  program of asset life studies. The recoverability of tangible assets is
  significantly impacted by the estimated useful lives of assets.

* Assumptions underlying the estimated useful lives of assets include timing
  of technological obsolescence, competitive pressures and future
  infrastructure utilization plans.

The recoverability of intangible assets with indefinite lives; the
recoverability of goodwill

* Consistent with current industry-specific valuation methods, the Company
  uses a discounted cash flow model combined with a market-based approach in
  determining the fair value of its spectrum licences and goodwill. See Note
  11(c) of the Consolidated financial statements for further discussion of
  methodology.

* The most significant assumptions underlying the recoverability of
  intangible assets with indefinite lives and goodwill include: future cash
  flow and growth projections including economic risk assumptions and
  estimates of achieving desired key operating metrics and drivers; future
  weighted average cost of capital; and annual earnings multiples. The
  significant factors impacting these assumptions include estimates of future
  market share, key operating metrics such as churn and ARPU, level of
  competition, technological developments, interest rates, market economic
  trends, debt levels and the cost of debt. See Note 11(c) of the Consolidated
  financial statements for a discussion of assumption sensitivity testing.

Investments

The recoverability of long-term investments

* The Company assesses the recoverability of its long-term investments on a
  regular, recurring basis. The recoverability of investments is assessed on a
  specific identification basis taking into consideration expectations about
  future performance of the investments and comparison of historical results
  to past expectations.

* The most significant assumptions underlying the recoverability of
  long-term investments are the achievement of future cash flow and operating
  expectations. The estimate of the Company's recoverability of long-term
  investments could materially change from period to period due to the
  recurring nature of the recoverability assessment and due to the nature of
  long-term investments (the Company does not control the investees).

* If the allowance for recoverability of long-term investments were
  inadequate, the Company could experience an increased charge to Other
  expense in the future. Such a provision for recoverability of long-term
  investments does not result in a cash outflow.

Future income tax assets and future income tax liabilities

The composition of future income tax assets and future income tax liabilities

* Future income tax assets and liabilities are comprised of temporary
  differences between the carrying amount and tax basis of assets and
  liabilities as well as tax losses carried forward. The timing of the
  reversal of the temporary differences is estimated and the tax rate
  substantively enacted for the period of reversal is applied to the temporary
  difference. The carrying amounts of assets and liabilities are based upon
  the amounts recorded in the financial statements and are therefore subject
  to accounting estimates that are inherent in those balances. The tax basis
  of assets and liabilities as well as tax losses carried forward are based
  upon the applicable income tax legislation, regulations and interpretations,
  all of which in turn are subject to interpretation. The timing of the
  reversal of the temporary differences is estimated based upon assumptions of
  expectations of future results of operations.

* Assumptions underlying the composition of future income tax assets and
  future income tax liabilities include expectations about future results of
  operations and the timing of reversal of deductible temporary differences
  and taxable temporary differences. These assumptions also affect
  classification between income and other taxes receivable and future income
  tax assets. See Section 10.8 Tax matters. The composition of future income
  tax assets and future income tax liabilities is reasonably likely to change
  from period to period because of the significance of these uncertainties.

* This accounting estimate is in respect of material asset and liability
  line items on the Company's Consolidated balance sheet comprising
  approximately 1% of total assets and 6% of total liabilities and
  shareholders' equity, respectively, as at December 31, 2005. If the future
  were to adversely differ from management's best estimate of future results
  of operations and the timing of reversal of deductible temporary differences
  and taxable temporary differences, the Company could experience material
  future income tax adjustments. Such future income tax adjustments do not
  result in immediate cash outflows and, of themselves, would not affect the
  Company's immediate liquidity.

Accounts payable and accrued liabilities (payroll and other employee-related
liabilities)

The accruals for payroll and other employee-related liabilities

* Contained within the accruals for payroll and other employee-related
  liabilities is a significant accrual in respect of performance-based,
  employee incentive compensation that may vary by quarter based upon
  estimates of achieving the pre-determined annual corporate objectives. In
  2005, as a result of reaching a new five-year collective agreement with the
  Telecommunications Workers Union, the Company revised estimates that had
  been made over a period of years, resulting in a revision of accruals for
  payroll and other employee-related liabilities.

* Assumptions underlying the accruals for payroll and other employee-related
  liabilities that are uncertain at the time of making the estimate include
  the personal performance of employees, and operational and financial
  performance as compared to pre-determined annual business unit and corporate
  objectives.

* These accounting estimates are included in the operating expense line
  within the Company's Consolidated income statement. If the performance
  objective achievement resulted in the Company's associated accrual being
  materially different, the immediate impact on the Company's financial
  position could impact liquidity and a material adjustment may be recorded in
  the results of operations.

Restructuring and workforce reduction costs

The accruals for restructuring and workforce reduction costs

* As required by generally accepted accounting principles, accruals for
  Restructuring and workforce reduction costs were built up from a
  sufficiently detailed action plan that included a cost estimate for each
  action therein.

* Assumptions underlying the accruals for Restructuring and workforce
  reduction costs that are uncertain at the time of making the estimate
  include the proportion of eligible participants accepting offers under
  various restructuring initiatives.

* This accounting estimate is in respect of a material line item on the
  Company's Consolidated income statement for the years ended December 31,
  2005 and 2004. If accruals for Restructuring and workforce reduction costs
  were inadequate, the Company could experience an increased charge to
  operations expense in the future.

Advance billings and customer deposits

The accruals for Canadian Radio-television and Telecommunications Commission
deferral account liabilities

* The deferral account arises from the CRTC requiring the Company to defer
  the income statement recognition of a portion of the monies received in
  respect of residential basic services provided to non-high cost serving
  areas. The revenue deferral is based on the rate of inflation, less a
  productivity offset of 3.5%, and an "exogenous factor" that is associated
  with allowed recoveries in previous price cap regimes that have now expired.
  The critical estimate arises from the Company's recognition of the deferred
  amounts. The Company may recognize the deferred amounts upon the undertaking
  of qualifying actions, such as Service Improvement Programs in qualifying
  non-high cost serving areas, rate reductions (including those already
  mandated by the CRTC in respect of discounts on Competitor Digital Network
  services) and/or rebates to customers.

* Assumptions underlying the accruals for the CRTC deferral account that are
  uncertain at the time of making the estimate include what actions will
  ultimately qualify for recognition of deferred amounts and over what period
  of time qualifying deferred amounts are to be recognized in the Company's
  income statement. The manner in which deferred amounts are recognized, and
  the amounts thereof, are reasonably likely to change as such recognition is
  ultimately dependent upon future decisions made by the CRTC.

* This accounting estimate is in respect of an item within the advance
  billings and customer deposits line item on the Company's Consolidated
  balance sheet and which, itself, comprises approximately 1% of total
  liabilities and shareholders' equity. If the Company's estimate of deferred
  amounts recognized, and the timing of the recognition thereof, were to
  differ materially from what the CRTC ultimately decides is allowable,
  revenues could possibly be materially impacted. Such a revenue impact would
  not be expected to be accompanied by a corresponding impact in net cash
  inflows.

Employee defined benefit pension plans

Certain actuarial and economic assumptions used in determining defined benefit
pension costs, accrued pension benefit obligations and pension plan assets

* The Company reviews industry practices, trends, economic conditions and
  data provided by actuaries when developing assumptions used in the
  determination of defined benefit pension costs and accrued pension benefit
  obligations. Pension plan assets are generally valued using market prices,
  however, some assets are valued using market estimates when market prices
  are not readily available. Defined benefit pension costs are also affected
  by the quantitative methods used to determine estimated returns on pension
  plan assets. Actuarial support is obtained for interpolations of experience
  gains and losses that affect the defined benefit pension costs and accrued
  benefit obligations. The discount rate, which is used to determine the
  accrued benefit obligation, is usually based upon the yield on long-term,
  high-quality fixed term investments, and is set annually. The expected
  long-term rate of return is based upon forecasted returns of the major asset
  categories and weighted by plans' target asset allocations. Future increases
  in compensation are based upon the current benefits policies and economic
  forecasts.

* Assumptions used in determining defined benefit pension costs, accrued
  pension benefit obligations and pension plan assets include: discount rates,
  long-term rates of return for plan assets, market estimates and rates of
  future compensation increases. Material changes in overall financial
  performance and financial statement line items would arise from reasonably
  likely changes, because of revised assumptions to reflect updated historical
  information and updated economic conditions, in the material assumptions
  underlying this estimate. See Note 18(h) of the Consolidated financial
  statements for further analysis.

* This accounting estimate is in respect of a component of the largest
  operating expense line item on the Company's Consolidated income statement.
  If the future were to adversely differ from management's best estimate of
  assumptions used in determining defined benefit pension costs, accrued
  benefit obligations and pension plan assets, the Company could experience
  future increased defined benefit pension expense. The magnitude of the
  immediate impact is lessened, as the excess of net actuarial gains and
  losses in excess of 10% of the greater of the benefit obligation and the
  fair value of the plan assets is amortized over the average remaining
  service period of active employees of the plan.

8.2 Accounting policy developments (Note 2 of the Consolidated financial
statements)

Possibly, commencing with the Company's 2006 fiscal year, proposed amendments
to the recommendations of the Canadian Institute of Chartered Accountants
(CICA) for the calculation and disclosure of earnings per share (CICA Handbook
Section 3500) may apply to the Company. The proposed amendments are not
expected to materially impact the Company.

Commencing with the Company's 2006 fiscal year, the amended recommendations of
the CICA for measurement of non-monetary transactions (CICA Handbook Section
3830) will apply to the Company. The amended recommendations will result in
non-monetary transactions normally being measured at their fair values, unless
certain criteria are met. The Company's current operations are not materially
affected by the amended recommendations.

In early 2006, Canada's Accounting Standards Board ratified a strategic plan
that will result in Canadian GAAP, as used by public companies, being converged
with International Financial Reporting Standards over a transitional period.
During 2006, the Accounting Standards Board is expected to develop and publish
a detailed implementation plan with a transition period expected to be
approximately five years. As this convergence initiative is very much in its
infancy as of the date of this report, it would be premature to currently
assess the impact of the initiative on the Company.

9. Looking forward to 2006

The following discussion is qualified in its entirety by the Forward-looking
statements at the beginning of Management's discussion and analysis, and
Section 10. Risks and risk management.

9.1 General outlook

In 2005, the telecommunications market displayed general trends similar to
recent years. The wireless sector continued to drive growth and equity values,
while the wireline sector remained soft with some recovery in data revenues.
Canadian telecommunications operators continued to follow strategies focused on
core operations and maintenance of cash flow, including efficiency measures and
the integration of past consolidating acquisitions.

The Canadian telecom industry, including wireline and wireless, generated
estimated revenues of approximately $35.5 billion in 2005, with Bell Canada and
its affiliated regional telecommunications companies representing about 48% of
the total. As the second largest full-service telecommunications provider in
Canada, TELUS generated $8.1 billion in 2005, or about 23% of the total.

Revenue growth in the Canadian telecom market in 2005 was approximately 3%,
similar to that experienced in 2004 and roughly in line with overall gross
domestic product (GDP) growth. Wireless continued to be the growth engine for
the sector with wireless revenues growing approximately 16% over 2004.
Offsetting wireless growth was continued general industry weakness in wireline
voice with declining long distance and legacy data revenues, partially offset
by growth in enhanced data services. With a focus over the past five years on
wireless, data and IP, TELUS outpaced the industry average in 2005 with 7%
consolidated revenue growth. Similar growth rates for both TELUS and the
industry are expected in 2006.

The competitive environment in 2006 is likely to be influenced by past industry
consolidations. In May, Rogers Communications acquired Call-Net and gained
access to Call-Net's residential and small business customer base and CLEC
(competitive local exchange carrier) network, potential operational synergies
and cost savings, as well as access to significant tax losses. Combined with
the acquisition of Microcell in 2004, this enhanced Rogers' national
competitive position across a number of business and consumer segments.
Transactions completed in 2004 -- including Manitoba Telecom Services'
acquisition of Allstream, primarily a national long distance and legacy data
provider, and BCE's acquisition of the assets of 360networks -- continue to
have some impact on the competitive telecom landscape.

With margins and growth rates in legacy voice and data services trending
downward, ILECs (incumbent local exchange carriers) are continuing to focus on
enhanced operating efficiencies. Indeed, most of the major ILECs have signaled
their intent to invest in restructuring wireline operations to improve
efficiencies in 2006. At TELUS, this has been an ongoing priority for four
years.

New service offerings are expected to play an important role in shaping the
competitive landscape in 2006. In February 2005, Shaw Communications launched
VoIP-based local telephony service in Calgary, and subsequently expanded it to
other major centres in Alberta, B.C. and Manitoba. Other cable-TV operators,
including Videotron, Cogeco and Rogers, have all launched comparable services
in Eastern Canada during 2005. Bell Canada responded with a VoIP offer.

Capital markets and investors are expected to watch closely how operators are
going to protect revenues and margins, and fend off competitive threats with
new and existing services as well as efficiency enhancements. At the same time,
they will be looking for growth in wireless and data to generate continued
operating earnings and cash flow growth.

     Wireless

The wireless industry continues to experience robust growth with year-over-year
industry revenue and EBITDA growth of approximately 16% and 22%, respectively.
Capital expenditure levels have generally stabilized as carriers leveraged
previous investments and took a disciplined approach to third generation (3G)
network upgrades, resulting in substantial industry cash flow improvement.

Wireless penetration in Canada increased to approximately 52% of the population
in 2005. Approximately 1.8 million new subscribers were added in Canada during
2005, representing a penetration gain of approximately five percentage points,
a third consecutive year of accelerated subscriber growth. There remains
considerable growth potential for the Canadian industry as subscriber growth is
expected to continue at a healthy pace towards penetration rates seen in other
developed countries such as the U.S. (currently estimated at more than 70%).

Industry revenues from wireless data have been growing exponentially in recent
years, and are expected to continue to gain traction with both the higher
penetration of existing data services (such as text messaging, picture
messaging, gaming, ringtones and Canada-U.S. /international data roaming) and
the introduction of new services (such as mobile TV, video messaging, java
games and music on demand). New devices such as BlackBerry devices, PDAs and
new high-speed EVDO network cards are expected to drive continued growth in the
business segment. Data growth is expected to help offset voice revenue
pressures or lower monthly revenues from new lower usage customers.

Both of TELUS' major national wireless competitors are pursuing wireless
resale, or MVNO (mobile virtual network operator), partnership opportunities.
In March 2005, Virgin Mobile launched prepaid consumer wireless service in
several of Canada's largest cities. Virgin Mobile Canada, a joint venture
between Virgin Mobile and Bell Mobility, uses Bell's network for the
provisioning of wireless resale services. Virgin's strategy focuses on offering
prepaid products and services at discounted prices to the youth segment. Other
MVNO wireless resale agreements have been announced including one by a
well-known food retailer. Though the MVNO market share is currently small in
Canada, this activity can create enhanced awareness and broaden distribution in
certain wireless market segments.

While wireless industry operating fundamentals remain healthy in Canada,
dynamic competition is expected to continue in 2006. There is likely to be
continued focus on the price-sensitive prepaid market and pricing pressures may
arise from other new MVNO entrants. Additionally, both of TELUS' major
competitors have continued to promote discount brands in the marketplace.

The wireless sector continues to pursue an industry-wide approach toward
implementing wireless local number portability (WLNP) on an expedited timeframe
by March 2007, as mandated by the federal government and Canadian
Radio-television and Telecommunications Commission (CRTC) in 2005. WLNP may
increase competitive intensity in the wireless industry, due to the removal of
a key barrier to switching from one carrier to another.

     Wireline

In contrast to the robust predictions for the wireless sector, expectations for
the more mature wireline segment are modest.

Consumer residential access line growth is expected to continue to be impacted
by the migration to wireless service, decreases in second lines, and
substitution to cable telephony and other VoIP services. The market for long
distance is also expected to continue declining, as VoIP providers promote
aggressively priced voice packages to entice customers to switch providers.

In past years, non-facilities-based VoIP service providers (such as Vonage,
Skype and Primus) had modest success with local telephony, although concerns
remained over reliability and safety issues due to provision over public
Internet versus the more reliable, circuit-switched telephony. However,
Canadian cable-TV companies with their own facilities and distribution channels
are expected to be more formidable competitors. It is estimated that the four
cable companies captured more than 300,000 local telephony subscribers in 2005.

Competition for the residential customer is expected to increasingly focus on
the best integrated offerings of voice, Internet, TV/video and wireless that
deliver reliability, enhanced functionality and convenience along with good
customer service. In November 2005, TELUS commercially launched TELUS TV in
Edmonton and Calgary with plans to launch in other urban centres of British
Columbia and Alberta. TELUS' goal is to achieve competitive differentiation
compared to its cable competitor by being able to offer a larger quadruple-play
range of services -- wireline local and long distance, wireless, high-speed
Internet and TV. The roll-out of video entertainment services gives TELUS the
opportunity to grow wallet share with retail customers, while enhancing
customer loyalty and retention due to customers using multiple services.

The business market continued to show signs of growth as evidenced by data
revenue growth in 2005. While voice and legacy data services are expected to
continue declining, growth in enhanced data service revenues is expected to at
least partially offset the trend, as the adoption of data services increases,
and as small and medium-sized business and enterprise customers look to upgrade
legacy networks and equipment. The business market segment is increasingly
adopting IP and managed services as a means of achieving operational
efficiencies and improving revenue generation.

Telecom providers are expected to continue migrating voice and data traffic to
a single IP-based platform over the next several years, providing combined IP
voice, data and video solutions. It is expected that the resulting cost
efficiencies will, at least in part, compensate for margin pressure anticipated
from the transition from legacy to enhanced IP-based services. There will
likely be an increasing effort to look at the end-to-end delivery chain and to
fundamentally redesign the processes and systems associated with each element
(ordering, provisioning, fulfillment, assurance, customer care, billing and
collections) to improve productivity.

In May 2005, the CRTC ruled that VoIP services are to be regulated for
incumbent telecommunications providers only, with the extension of all local
exchange tariff obligations to all ILEC local VoIP offerings in-territory. A
joint appeal made in July 2005 by TELUS, Bell Canada and other ILECs to the
Federal Cabinet to reverse the CRTC's VoIP decision is pending.

In December 2005, the CRTC announced the extension of the current price cap
regime by one year to mid-2007. Although the ILECs have advocated changes to
the price cap regime to allow more flexibility, the current CRTC price cap
framework established in 2002, as well as other recent decisions, continue to
support the CRTC's facilities-based competition framework. Carriers are also
awaiting a CRTC decision in 2006 on local forbearance signaling how long, and
under what conditions, ILECs can obtain increased freedom and flexibility to
compete with cable-TV and other providers of local services.

Within the CRTC's facilities-based competition framework, TELUS' strategic
focus on delivering national business services in data and IP, and its more
than 40% exposure to the fast-growing Canadian wireless market, positions the
company to generate above-average consolidated growth in 2006 and beyond.

9.2 Financial and operating targets for 2006

The following targets for 2006 were announced to the public on December 16,
2005. The Company has a practice of reaffirming or adjusting annual guidance on
a quarterly basis.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                   Targets for 2006	          Results for 2005	      Change
<S>							<C>			       <C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Consolidated
  Revenues	                                        $8.6   to $8.7 billion	       $8.14 billion	        6 to 7%
---------------------------------------------------------------------------------------------------------------------------------
  EBITDA(1)                                     	$3.5   to $3.6 billion	       $3.30 billion	        6 to 9%
---------------------------------------------------------------------------------------------------------------------------------
  Earnings per share - basic	                        $2.40  to $2.60	               $1.96	               22 to 33%
-------------------------------------------------------------------------------------------------------------------------------
  Capital expenditures	                                $1.5   to $1.55 billion        $1.32 billion	       14 to 17%
---------------------------------------------------------------------------------------------------------------------------------
  Free cash flow(2)                               	$1.55  to $1.65 billion        $1.47 billion	        5 to 12%
=================================================================================================================================
Wireline segment
  Revenue (external)	                                $4.825 to $4.875 billion       $4.85 billion	      (1) to 1%
---------------------------------------------------------------------------------------------------------------------------------
    Non-ILEC revenue	                                $650   to $700 million	       $632 million	        3 to 11%
---------------------------------------------------------------------------------------------------------------------------------
  EBITDA	                                        $1.8   to $1.85 billion	       $1.85 billion	      (3) to 0%
--------------------------------------------------------------------------------------------------------------------------------
    Non-ILEC EBITDA	                                $25    to $40 million	       $21 million	       18 to 89%
---------------------------------------------------------------------------------------------------------------------------------
  Capital expenditures	                                $1.05  to $1.1 billion	       $914 million	       15 to 20%
---------------------------------------------------------------------------------------------------------------------------------
  High-speed Internet net additions	                 More than 100,000	        73,400	            More than 36%
=================================================================================================================================
Wireless segment
  Revenue (external)	                                $3.775 to $3.825 billion       $3.30 billion	       14 to 17%
---------------------------------------------------------------------------------------------------------------------------------
  EBITDA	                                        $1.7 to $1.75 billion	       $1.44 billion	       18 to 22%
---------------------------------------------------------------------------------------------------------------------------------
  Capital expenditures	Approx.                         $450 million	               $405 million	      Approx. 11%
---------------------------------------------------------------------------------------------------------------------------------
  Wireless subscriber net additions	                More than 550,000	        584,300	            (6)% or better
=================================================================================================================================
<FN>
(1) See Section 11.1 Earnings before interest, taxes, depreciation and amortization (EBITDA) for the definition,
    calculation and reconciliation of 2004 EBITDA.
(2) See Section 11.2 Free cash flow for the definition, calculation and reconciliation of 2004 Free cash flow.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

For the wireline segment, 2006 EBITDA is expected to be flat to a decline of
$50 million, resulting from increased restructuring costs partially offset by
continued operating efficiencies. Wireline revenue growth in the non-incumbent
territory in Central Canada is expected to increase in the range of $18 million
to $68 million in 2006, while targeting another strong increase in EBITDA.

For the wireless segment, 2006 EBITDA is expected to increase by $260 million
to $310 million as a result of a 14 to 17% increase in revenues, continued
economies of scale, cost containment and continued strong growth in wireless
subscribers.

The 22 to 33% growth rate for earnings per share is being generated not only by
higher operating profitability, but also by lower financing costs as a
consequence of reduced debt levels. The significant growth in earnings per
share is despite expectations for higher restructuring costs in 2006. In
addition, the 2005 earnings included 18 cents of positive impacts from the
settlement of prior year tax matters, which are not projected to reoccur in
2006 to the same magnitude.

     Key assumptions and sensitivities for 2006 targets

For 2006 target purposes, a number of assumptions were made including:

* Economic growth consistent with recent provincial and national estimates
  by the Conference Board of Canada that were available in 2005, including
  gross domestic product growth of 3.1% in Canada

* Increased wireline competition in both business and consumer markets

* A wireless industry market penetration gain similar to the approximately
  five percentage point gain in 2005

* Approximately $100 million of restructuring and workforce reduction
  expenses ($53.9 million in 2005)

* Effective tax rate of approximately 35%

* No prospective significant acquisitions or divestitures are reflected

* No change in foreign ownership rules

* Maintenance or improvement of investment grade credit ratings.

Earnings per share, cash balances, net debt and common equity may be affected
by the potential purchases of up to 24 million TELUS shares under the Normal
Course Issuer Bid that was accepted by the Toronto Stock Exchange and commenced
December 20, 2005. There is no assurance that these assumptions or the 2006
financial and operating targets and projections will turn out to be accurate.

9.3 Financing plan for 2006

TELUS has no significant amount of debt maturing in 2006. TELUS' financing plan
is to use free cash flow generated by its business operations in 2006 to: (i)
repurchase TELUS Common Shares and Non-Voting Shares under the Normal Course
Issuer Bid; (ii) pay dividends; and (iii) retain cash-on-hand for corporate
purposes. The Company expects to increase and reduce the balance of proceeds
from securitized receivables and use bank facilities, as needed, to meet any
other cash requirements.

TELUS also expects to maintain its current position of fully hedging its
foreign exchange exposure for indebtedness and generally expects to maintain a
minimum of $1 billion in unutilized liquidity. At the end of 2005, almost all
of TELUS' total debt was borrowed on a fixed-rate basis.

TELUS may also consider refinancing all or a portion of its Notes due June 1,
2007 in advance of the regularly scheduled maturity date. These U.S. dollar
denominated liabilities were fully hedged into Canadian dollar liabilities at
the time of issue and TELUS may also terminate or restructure these swap
arrangements prior to maturity. Potential sources for the refinancing of these
Notes may include retained cash from operations as well as public long-term
debt and short-term debt such as commercial paper. For the related risk
discussion, see Section 10.7 Financing and debt requirements.

10.  Risks and risk management

                      GRAPHIC
     TELUS' risk and control assessment process


TELUS utilizes a three-level enterprise risk and control assessment process
that includes the expertise and insight of team members from all areas of the
business. Level one is the annual risk and control assessment, which includes
one-on-one interviews with key senior managers, an extensive risk and control
assessment survey based on the COSO (the Committee of Sponsoring Organizations
of the Treadway Commission) enterprise risk management and internal control
frameworks, a review of issues from recent internal and external audits, the
prioritization of key risks and the engagement of executive owners charged with
risk mitigation. Results of the annual risk and control assessment drive the
development of TELUS' internal audit program, are presented to senior
management and the Audit Committee of the Board of Directors and are used as an
input into the Company's strategic planning.

In level two, TELUS conducts a quarterly risk assessment review with key
internal stakeholders to capture dynamically changing business risks, monitor
the mitigation of key risks and provide ongoing assurance to the Audit
Committee.

In level three, TELUS conducts granular risk assessments for specific audit
engagements and various risk management initiatives (e.g. environmental
management system, safety audits, business continuity planning assessments,
physical property risk evaluations, network and IT vulnerability assessments,
proactive fraud and ethics risk assessments). The results of the annual,
quarterly and more detailed engagement level risk assessments are evaluated,
prioritized and updated throughout the year.

     TELUS definition of business risk

At TELUS, business risk is defined as the degree of exposure associated with
the achievement of key strategic, financial, organizational and process
objectives in relation to the effectiveness and efficiency of operations, the
reliability of financial reporting, compliance with laws and regulations, and
the safeguarding of assets within an ethical organizational culture.

The following sections summarize the principal risks and uncertainties that
could affect TELUS' future business results going forward.

10.1 Competition

     Aggressive competition may adversely affect market shares, volumes and
     pricing in certain TELUS market segments

Many of TELUS' key competitors, having either built or acquired their own
network facilities in Western Canada over the past several years, are now
focusing their efforts on marketing and revenue generation. These efforts are
particularly targeted at the small and medium-sized business market due to the
size of this market, its concentrated geographic urban clustering and generally
attractive margins. At the same time, competition remains very strong in the
large enterprise market, where a small number of major customers can deliver a
significant amount of revenue. In particular, vibrant competition in the
residential high-speed Internet access (HSIA) and long distance (LD) markets
continues. As a result, overall industry pricing remains very competitive,
especially in business long distance and data and IP markets. Due to industry
consolidation over the last few years, TELUS' major competitors have sound
financial strength, brand recognition and, for many, national scope. They are
likely to continue to pose a significant competitive challenge to TELUS and
there is no assurance that TELUS' response to the competition will be properly
timed or sufficient to maintain current financial performance.

     Wireline voice and data

Competition is expected to remain intense, not only from traditional telephony
and data and IP providers, but also from new entrants providing alternatives to
traditional wireline local access and long distance through the use of voice
over IP (VoIP) telephony.

TELUS expects local, long distance, and data and IP competitors -- ranging from
traditional facilities-based carriers to resellers, long distance dial-around
and card providers -- to continue to focus on both the business and residential
markets. Various VoIP, customer premises equipment (CPE) and IP Centrex
services have been available to the business market for several years now. In
addition, an increasing number of new VoIP competitors, the cable-TV companies
being most prominent, have begun combining residential local, long distance,
HSIA and, in some cases, wireless services into one bundled or discounted
monthly rate. Cable-TV operators now have the ability to offer the residential
market a triple-play -- local and long distance telephony, HSIA and video
(cable and direct-to-home or DTH satellite) services. The cable-TV companies
are also expected to increasingly target the small to medium-sized business
market with their VoIP services. The result is that traditional and
non-traditional competitors are now focused on providing the full range of
telecommunications services across both the consumer and business markets,
particularly in the major urban areas. Increased competition is causing
traditional providers, such as TELUS, to experience accelerated declines in
network access lines or NALs (for TELUS, NALs declined by 2.4% in 2005,
compared to 1.3% in 2004). Accelerated NALs and attendant revenue declines,
including long distance, can be expected as VoIP providers gain an increasing
share of the local access market.

The industry transition from legacy voice infrastructure to IP telephony, and
from legacy data platforms to multi-protocol label switching (MPLS) IP
platforms and IP-based service delivery models, accelerated in 2005 and will
continue to do so into 2006. Over the past few years, legacy data services in
particular have been subject to increasing commoditization, aggressive price
declines and the impact of regulatory decisions. Legacy data revenues and
margins have declined and are expected to be only partially offset by increased
demand and/or increased migration of customers to IP-based platforms, which is
also subject to intense pricing pressure and lower margins.

As a result, TELUS' competitors now offer varying arrays of long distance,
local and advanced data and IP services across both the residential and
business markets. In the business market in particular, in addition to bundling
price-discounted local access, wireless and advanced data and IP services,
competitors are also bundling web-based and e-commerce services, and other
information technology services and support. With this increasing bundling of
traditional telecom services with IT services, TELUS increasingly faces
competition from pure Internet and information technology hardware, software
and business process/consulting related companies. There can be no assurance
that TELUS will be able to continue to compete effectively in the future.

     Wireline Internet access

While the HSIA market continues to exhibit growth, the market is maturing,
given Canada's high penetration compared to many other countries. This is
expected to result in reduced net additions for all industry competitors and
pose a constraint on TELUS' ability to increase its share of total high-speed
Internet subscribers in the market. As well, differentiation through various
access speed options and value-added features may lead to lower pricing by all
competitors as the growth of the HSIA market slows and bundling options become
more prevalent. Residential dial-up Internet access competition and growth have
also declined dramatically, due in large part to increased high-speed Internet
access availability and lower priced service options. Losses of existing TELUS
dial-up subscribers to competitor high-speed services have been mitigated by
TELUS' efforts to transfer these customers to its own high-speed Internet
services. However, there can be no assurance that the rate of loss of dial-up
subscribers or market share retained by TELUS will be as expected, as TELUS
continues to face significant competition from cable-TV high-speed Internet
services.

     Wireless

Competition in the Canadian wireless market is expected to remain intense in
2006 in all regions of the country. TELUS is targeting more than 550,000
wireless net subscriber additions in 2006, and there can be no assurance that
it will achieve its objective given the level of competition or the possibility
of declining growth rates in the Canadian wireless industry.

With the entry of the Virgin Group to provide wireless services under the
Virgin Mobile brand name on a resale basis from Bell Mobility, competition
within the Canadian wireless market further intensified in 2005, particularly
in the prepaid and youth segments. TELUS' two national wireless competitors are
marketing discount brands to attract new subscribers. In addition, other
competitors, including several cable-TV operators, may offer wireless services
regionally or nationally on a resale basis. This increase in new brands and
offers could lead to pricing pressures and higher costs of acquisition in the
future, particularly in the prepaid market.

There is risk that increased competition could increase churn rates, cause
marketing costs of acquisition per subscriber to be higher, and lower the
average revenue per subscriber. Aggressive advertising and innovative marketing
approaches are expected to remain the norm. Certain competitors continue to
offer subsidized (low or zero-cost) handsets, and/or lowered airtime and
wireless data prices. Furthermore, Aliant Telecom Wireless launched an
unlimited cellular long distance plan in 2005, a wireless industry first. In
addition, certain carriers have launched competitive Push To Talk (PTT)
products in 2005, competing directly with TELUS' Mike and new CDMA PTT
services. (See Section 10.2 Technology.) TELUS' wireless high-speed EVDO
network currently provides certain competitive advantages - such as speeds of
400 to 700 kilobits per second (six times faster than previous TELUS mobile
data offerings) - over GSM carriers, which may diminish as Rogers builds out
and launches its higher-speed UMTS HSDPA (universal mobile telecommunications
system, high-speed downlink packet access) network. (See Section 10.2
Technology.) While TELUS intends to manage these risks by continuing to focus
on differentiated value-added services and profitable subscriber growth, there
can be no assurance that these efforts will be successful.

Bell Mobility entered Western Canada in the fall of 2001, built its own network
and operational capabilities, and launched its own 1X data network in urban
centres in Alberta and B.C. in the fall of 2002. In addition, roaming/resale
agreements among TELUS, Bell Mobility and affiliates, and Aliant Telecom
Wireless, first operationalized in mid-2002, have allowed Bell Mobility to
expand the availability and range of its wireless services to approximately 2.5
million incremental POPs throughout rural Alberta and B.C. This has allowed
Bell Mobility to expand its Western Canadian footprint earlier and market
services more cost-effectively, than if it had to wait to fully build out its
own rural network coverage. The entry of Bell Mobility in these rural areas
increased the effective number of competitors to three (including TELUS) in
these regions. Roaming/resale agreements have similarly allowed TELUS, on a
reciprocal basis, to expand its PCS network coverage and distribution primarily
in Central and Atlantic Canada by approximately 7.5 million people, generally
served by two other competitors, bringing TELUS' national digital wireless
coverage and addressable market to 30.6 million. There can be no assurance that
TELUS' marketing efforts will be as successful in the new markets going forward
as in existing coverage areas.

The introduction of wireless number portability has been mandated for
implementation by March 14, 2007 by TELUS and its major national competitors.
(See Section 10.3 Regulatory.) This will remove a key barrier to customers
switching from one carrier to another, and may increase the level of
competition in the market. While TELUS has the smallest installed subscriber
base and lowest churn rate of the major national carriers, which bodes well for
the Company's competitive position, there can be no assurance that TELUS will
be able to achieve the same level of success at maintaining or winning
customers as its national competitors.

Wireless competition is also expected from new digital wireless technologies,
which may be offered from both traditional and non-traditional sources
utilizing licensed and/or unlicensed spectrum, that deliver higher-speed data
and Internet services over current and future wireless devices. Such
availability may lead to increased re-subsidization costs related to the
migration of existing subscribers to advanced feature handsets based on newer
technologies. There can be no assurance that new services offered by TELUS
wireless will be available on time, or that TELUS wireless will be able to
charge incrementally for the services. (See Section 10.2 Technology.)

     Fixed wireless

While the technology is generally in an early stage of development and the
associated economic viability remains unproven, increased competition is
expected from fixed wireless technologies offered by new or existing providers
utilizing licensed and/or unlicensed spectrum to deliver higher-speed data and
Internet services.

Inukshuk Internet Inc., owned jointly by Rogers Communications and BCE, has
announced plans to build a high-speed fixed wireless network using licensed
spectrum in the 2.5GHz band. In addition, certain non-traditional telecom
players, such as municipalities, may contemplate building fixed wireless
ventures in urban and suburban locations, as has been the case in the United
States.

The build-out and availability of such networks may lead to the reduction of
traffic on TELUS' existing wireless mobile networks and/or increase competition
for TELUS' high-speed wireline Internet access service. There can be no
assurance that new or existing services offered by TELUS will be competitive
with such fixed wireless services, available on time, or that TELUS will be
able to charge incrementally for the services.

10.2 Technology

Technology is a key enabler for TELUS and its customers, however, technology
evolution brings risks and uncertainties. TELUS is vigorous in maintaining its
short and long-term technology strategy to optimize TELUS' selection and timely
use of technology while minimizing the associated costs, risks and
uncertainties. The following identifies the main technology risks and
uncertainties and how TELUS is proactively managing them.

     Evolving wired broadband access technology standards may outpace projected
     access infrastructure investment lifetimes

The technology standards for broadband access over copper loops to customer
premises are rapidly evolving. This evolution is enabling higher broadband
access speeds and is fuelled by user appetite for faster connectivity, the
threat of increasing competitor capabilities and offerings, and the desire of
service providers like TELUS to offer new services that require greater
bandwidth such as TV services. In general, the evolution to higher broadband
access speeds is achieved by deploying fibre further out from the central
office, thus shortening the copper loop portion of the access, and using faster
modem technologies on the shortened copper loop.

In 2005, TELUS began deploying ADSL2+, a second generation of asynchronous
digital subscriber line (ADSL) technology that enables transfers at up to 15
megabits per second (Mbps) to the customer premises, compared with up to six
Mbps for ADSL. ADSL2+ technology is compatible with ADSL and takes advantage of
TELUS' investments in extended reach access (ERA) copper/fibre access
infrastructure improvement programs. Looking forward, the technology for ADSL2+
bonding (using multiple pairs to multiply the available bandwidth) and VDSL2
(which can provide up to 45 Mbps on very short copper loops) is anticipated to
be available in the second half of 2006.

It is also anticipated that the first viable fibre to the home (FTTH)
technology will emerge in the form of a standards-based gigabit passive optical
network (GPON) and may be available for deployment by the end of 2006, enabling
transfers at 80 Mbps to the home. FTTH is one of several competing proposed
FTTx standards (where x stands for home, curb, pedestal, or neighbourhood) in
development that TELUS is actively monitoring. Fibre to the curb (FTTC), with
an Ethernet connection to the premises, which facilitates transfers of up to
100 Mbps may be a more practical technology to deploy generally. TELUS will be
trialing FTTx technologies in 2006.

These evolving standards, along with new techniques for quality of service
(QoS) and network traffic engineering, all support the TELUS Future Friendly
Home strategy to deliver IP-based Internet, voice and video services over a
common broadband access system. However, these technologies are evolving faster
than the traditional investment cycle for access infrastructure. The
introduction of these new technologies and the pace of adoption could result in
increased requirements for capital funding not currently envisaged or planned.

     IP-based telephony as a replacement for legacy analog telephony is
     immature and cost savings are uncertain

TELUS continues to monitor the evolution of IP-based telephony technologies and
service offerings and is developing and testing a consumer solution for
IP-based telephony over broadband access that will meet TELUS' standards for
quality, features and reliability. This solution could provide additional
telephone services over the same line as legacy analog telephone service or
could replace the legacy analog telephone service. However, the actual state of
technology developed to inter-work telephony, video and Internet access on the
same broadband infrastructure is in its infancy and there are risks and
uncertainties to be addressed such as ensuring all services can be delivered
simultaneously to the home (and to different devices within the home) with
uncompromised quality.

A long term technology strategy is to move all services to IP to simplify the
network, reduce costs and enable advanced future friendly services. Pursuing
this strategy to its full extent would involve transitioning TELUS' standard
telephone service offering to IP-based telephony and phasing out legacy
analog-based telephone service. To this point, TELUS' broadband access
infrastructure could be simplified if regular analog telephone lines were
discontinued in favour of digital-only broadband access lines supporting all
services including telephony, Internet and video. This would, for example,
allow inexpensive high-bandwidth conventional Ethernet to be used as the
broadband access technology. However, digital-only broadband access may not be
feasible or economical in many areas for some time, particularly in rural and
remote areas. TELUS needs to support both legacy and broadband voice systems
for some time and, therefore, will incur costs to maintain both systems. There
is a risk that investments in broadband voice may not be accompanied by
decreased costs of maintaining legacy voice systems.

     The convergence in a common IP-based application environment for
     telephony, Internet and video is complex

Traditionally the technology and systems associated with telephony, Internet
and video were different from each other and provided little opportunity for
common platforms for cost savings and little flexibility to integrate media and
services. The convergence in a common IP-based application environment carried
over a common IP-based network provides opportunity for cost savings and for
the rapid development of more advanced services, which are more flexible and
easier to use. Further, the global standards for drawing together classic
wireline and wireless services into a combined architecture using IP multimedia
subsystem (IMS) are being actively ratified. However, the transformation from
individual traditional silo systems and architectures to a common environment
is very complex.

For example, TELUS has launched TELUS TV, one of the world's first IPTV
systems, using middleware designed for video delivery only. Middleware allows
complex signaling communication between application software and system
hardware in the network and in the set-top box in the home. As all services
migrate to the IP-based infrastructure, technology roadmaps to converge the
underlying infrastructure towards a single converged IP application and
transport infrastructure are developmental in the short term due to lack of
maturity of the technology, particularly IPTV middleware and delivery
platforms.

This risk involves TELUS building more network-based service silos in the short
term and then incurring the cost and time to migrate to the end solution of a
converged network and application infrastructure. TELUS is proceeding in
incremental stages to create "proof-of-concept" parallel systems to ensure the
reliability and superiority of the new network prior to the removal of any part
of the legacy platform.

    Support systems will increasingly be critical to operational efficiency

TELUS currently has a very large number of interconnected operational support
systems and business support systems and the complexity is increasing. This is
typical of incumbent telecommunications providers that support a wide variety
of legacy and emerging telephony, mobility, data and video services. The
development and launch of a new service typically requires significant systems
development and integration. The associated developmental and ongoing
operational costs can be a significant factor in maintaining competitive
position and profit margins. TELUS is proactive in evolving to next generation
support systems, however, there is uncertainty with respect to the costs and
effectiveness of the solutions and the evolution.

In line with industry best practice, TELUS' approach is to separate the
business support systems from the operational support systems and underlying
network technology. The aim is to decouple the introduction of new network
technologies from the services sold to customers. This should allow TELUS to
optimize its network costs while not impacting customer services, and to
facilitate the introduction of new services by removing, where possible, any
development dependency on the operational support systems.

     The CDMA and iDEN technologies supporting TELUS' digital cellular/wireless
     services may become inferior

The wireless industry continues to expand the deployment of second (2G) and
third generation (3G) technologies to deliver increased data speeds required
for many new wireless, IP and data services. TELUS' evolution to deploying 3G
technologies involves technology paths for both CDMA technology-based services
and iDEN technology-based services.

TELUS continues to support and market 1X protocol 3G wireless services on its
digital CDMA PCS and cellular networks. TELUS began enhancing its wireless
network in 2005 with the next evolution of CDMA 3G technology, namely EVDO (or
1X evolution data optimized) launched in November 2005. EVDO provides average
speeds of 400 to 700 Kbps, compared to 100 Kbps for 1X. While EVDO has enjoyed
commercial success in North America (launched by Verizon Wireless in 2004) and
in Asia, there can be no assurance that EVDO will continue to enjoy success and
that TELUS will be able to successfully market EVDO services in Canada. While
the Company believes that its CDMA network has a reasonable and cost-effective
migration path to future evolutions of higher-speed technologies beyond EVDO,
there can be no assurance that it will be successful and timely.

TELUS' Mike service uses the iDEN technology protocol and has operated 2.5G
packet data capability and service offerings for more than three years. TELUS'
Mike network is in part differentiated by its wide-area, high-capacity,
high-performing digital Push To Talk (PTT) 2-way radio dispatch services, which
are marketed as Direct Connect(TM) service. TELUS is the largest Canadian PTT
operator. Both TELUS and Bell Mobility launched PTT services over CDMA in 2005,
and PTT capabilities continue to advance for other carriers using different
technologies. TELUS Mike maintains superiority in PTT services in terms of
speed of set-up and conversational latency. In the future, there can be no
assurance that TELUS' current market advantage of extensive product sales and
marketing experience, large installed base of Mike iDEN users and work groups,
and service superiority will be maintained.

TELUS' CDMA-based PTT service, launched early in 2005 and marketed as Instant
Talk(R), like other CDMA-based services, may with technological advancements be
competitive at some time with the iDEN technology utilized by the Mike network.
There can be no assurance that successful deployment and marketing of CDMA PPT
or other competitive technology will not reduce or eliminate the competitive
differentiation of TELUS' Mike network. Work is ongoing to determine an optimal
migration path for iDEN, but there can be no assurance on the availability of
technology for migration, or a quantification of the associated costs.

In 2005, CDMA-operator Sprint and iDEN-operator Nextel merged their operations.
It is expected that the Sprint-Nextel merger will promote greater seamless
interoperability between the CDMA and iDEN networks. Although TELUS is well
positioned to follow the lead of the major infrastructure developments in the
U.S., there can be no assurance that interoperability or the infrastructure
migration path will be successful or economical for TELUS or its customers.

     Emerging wireless technologies represent both an opportunity and a
     competitive threat

Wireless technologies and protocols continue to be developed and extended for a
variety of applications and circumstances, such as the Institute of Electrical
and Electronics Engineers (IEEE) 802.xx suite of standards. A number of
wireless technologies are capable of exploiting both licensed and unlicensed
spectrum for both fixed and future mobile applications. While TELUS constantly
reviews and examines such developments, and may from time to time choose to
utilize a number of these technologies, there can be no assurance that these
developments may not adversely impact TELUS in the future. In particular, the
emergence of Wi-Fi-based handsets may have a significant impact on traditional
CDMA PCS services, and this may trigger a movement to VoIP services on wireless
and promote revenue per user erosion. Further, this may also trigger an
accelerated incremental investment in next generation voice infrastructures.

As well, in recent years TELUS and certain of its current and potential
competitors have acquired through auction regional radio spectrum licences in
the 3.5GHz and 2.3GHz frequency bands. This spectrum may be used for the
deployment of wireless services utilizing WiMax (802.16) wireless technology.
WiMax is an emerging technology standard that will allow high bandwidth
services to be offered over much wider geographic areas than Wi-Fi. A WiMax
enabled service could attempt to compete against wireline services. At this
time, WiMax does not support mobile services, although a standard (802.16e)
that supports it has recently been ratified by the IEEE. Currently neither
TELUS nor any significant competitors have deployed a meaningful WiMax enabled
wireless service offering. In the third quarter of 2005, Bell Canada and Rogers
Communications announced that they would merge some of their wireless spectrum
resources under Inukshuk, a holder of a near national 2.5GHz spectrum licence,
and expressed the intent of investing $200 million over the next three years to
develop and deploy WiMax enabled services across Canada. There can be no
assurance that these emerging wireless technologies will represent a greater
opportunity than threat for TELUS.

10.3 Regulatory

     Regulatory developments could have an adverse impact on TELUS' operating
     procedures, costs and revenues

TELUS' telecommunications and broadcasting services are regulated under federal
legislation by the Canadian Radio-television and Telecommunications Commission
(CRTC), Industry Canada and Canadian Heritage. The CRTC has taken steps to
forbear from regulating prices for services offered in competitive markets,
such as long distance and some data services, and does not regulate the pricing
of wireless services. Local telecommunications services are regulated by the
CRTC using a price cap mechanism. Major areas of regulatory review currently
include the framework for forbearance from the regulation of residential and
business local exchange services, the framework for forbearance from the
regulation of high-speed intra-exchange digital services and the utilization of
the funds in the incumbent local exchange carriers' (ILEC) deferral accounts.

In 2005, the federal government undertook a review of Canada's
telecommunications policy and regulatory framework. The review panel, reporting
to the Minister of Industry, was asked to provide recommendations by the end of
2005 on how to modernize Canada's telecommunications framework in order to
benefit Canadian industry and consumers.

The outcome of the regulatory reviews, proceedings and court or Federal Cabinet
appeals discussed below and other regulatory developments could have a material
impact on TELUS' operating procedures, costs and revenues.

     Price cap regulation

Price cap regulation continues to apply to a basket of local services provided
by ILECs. TELUS is subject to price cap regulation as an ILEC in Alberta, B.C.
and Eastern Quebec. On May 30, 2002, the CRTC issued Decision 2002-34 and
established a second four-year price cap period. This four-year price cap
period was extended by one year to May 31, 2007 by the CRTC in Decision
2005-69. The CRTC incorporated a deferral account into the second price cap
period to which an amount equivalent to the cumulative annual productivity
adjustments for residential services in non-high-cost areas is added. The
productivity adjustments are determined using the gross domestic product
productivity index (GDP-PI) less the productivity offset for the second price
cap period of 3.5%.

In Decision 2005-69, the CRTC stated that it will be initiating a proceeding to
review the existing price regulation regime in the first half of 2006. There
can be no assurance that the price regulation regime for TELUS beginning in
June 2007 will be as or more favourable for TELUS than the current regime.

On February 16, 2006, the CRTC issued a long-awaited decision on the use of
funds in the deferral account: Telecom Decision CRTC 2006-9. In its decision,
the CRTC determined that initiatives to expand broadband services to rural and
remote communities and initiatives to improve accessibility to
telecommunications services for individuals with disabilities are an
appropriate use of funds for the ILEC deferral accounts. To the extent that the
accumulated deferral account exceeds approved initiatives, the remaining
balance will be distributed in the form of a one-time rebate to local non-high
cost serving area residential customers. Finally, the CRTC indicated that
prospectively no further amounts are to be added to the deferral account and
are to be dealt with via prospective residential local rate reductions. Given
the complexity of this decision and remaining outstanding issues, management is
currently analyzing the decision to determine what overall impact it may have
on TELUS.

     Quality of service penalties

The price cap decision also established a rate adjustment plan and associated
penalties for ILECs that do not meet the quality of service standards approved
by the CRTC. When the full impact of TELUS' work stoppage and the flooding that
occurred in Southern Alberta in 2005 is understood and quantified, TELUS plans
to apply to the CRTC for these events to be recognized as adverse events and
for their impact to be removed from TELUS' quality of service results.
Recognition of these adverse events by the CRTC would reduce the quality of
service penalties paid by the Company in 2005. Nevertheless, TELUS has no
assurance that these penalties will not affect earnings in the future.

     Pricing safeguards

On April 29, 2005, the CRTC issued Review of price floor safeguards for retail
services and related issues, Decision 2005-27 and modified selected pricing
safeguards for retail tariff services. The CRTC maintained a cost-based
imputation test to ensure services are not sold below cost, thereby providing
an unfair competitive advantage. While the new pricing safeguards are somewhat
more restrictive than the previous safeguards, the CRTC in Decision 2005-27 did
not abandon the basic concept of an imputation test based on underlying costs.
Decision 2005-27 did not approve the radical changes to the pricing safeguards
put forward by the CRTC or proposals for guaranteed margins put forward by the
competitors. However, there is no assurance that the new price floor safeguards
will not hamper TELUS' ability to compete effectively in the future.

     TELUS' broadcasting distribution undertakings

The CRTC has approved applications by TELUS to operate terrestrial broadcasting
distribution undertakings to serve various communities in Alberta and British
Columbia (August 2003) and Eastern Quebec (July 2005). In September 2003, the
CRTC approved TELUS' application for a video-on-demand undertaking licence with
the same terms and conditions as previously licensed video-on-demand
undertakings in Canada. The licence is national in scope and extends for a
seven-year term. There can be no assurance that implementation costs or
projected revenues and expenses for TELUS' television service will be as
planned.

     Voice over Internet protocol

On May 12, 2005, the CRTC issued Regulatory framework for voice communication
services using Internet protocol, Decision 2005-28. The CRTC determined that
local VoIP services are functionally equivalent to local exchange service and
that the current regulatory framework governing local competition will apply to
local VoIP service providers. The CRTC determined that ILECs may only provide
VoIP services in their incumbent territories in accordance with approved
tariffs. There can be no assurance that this CRTC decision will not
significantly impact TELUS' future ability to compete.

On July 28, 2005, TELUS, Aliant Telecom Inc., Bell Canada, Saskatchewan
Telecommunications and others petitioned the Governor in Council to intervene
and eliminate the economic regulation of VoIP services. In addition, TELUS,
Bell Canada and Saskatchewan Telecommunications have appealed Decision 2005-28
to the Federal Court to eliminate the application of the winback rule (a
12-month marketing restriction for customers lost to competitors) on VoIP
services. There can be no assurance that these actions will be successful.

     Radiocommunication licences regulated by Industry Canada

All wireless communications depend on the use of radio transmissions and,
therefore, require access to radio spectrum. Under the Radiocommunication Act,
Industry Canada regulates, manages and controls the allocation of spectrum in
Canada and licenses frequency bands and/or radio channels within various
frequency bands to service providers and private users. Voice and data wireless
communications via cellular, SMR, ESMR and PCS systems, among others, require
such licences. TELUS' PCS and cellular licences include various terms and
conditions such as: meeting certain performance levels, meeting Canadian
ownership requirements, obligations regarding coverage and build-out, spending
at least 2% of certain PCS and cellular revenues on research and development,
annual reporting and resale to competitors. While TELUS believes that it is
substantially in compliance with its licence conditions, there can be no
assurance that it will be found to comply with all licence conditions, or if
found not to be compliant that a waiver will be granted, or that the costs to
be incurred to achieve compliance will not be significant. Initial licence fees
and annual renewal fees are payable for licences that have not been obtained
via spectrum auction. There can be no assurance that Industry Canada will not
seek to increase these fees in the future.

     Implementation of wireless number portability (WNP) -- Telecom
     Decision CRTC 2005-72

On December 20, 2005, the CRTC issued Decision 2005-72 and directed Bell
Mobility, Rogers Wireless Inc. and the wireless division of TELUS to implement
wireless number portability in British Columbia, Alberta, Ontario and Quebec
where local exchange carrier-to-local exchange carrier (LEC-to-LEC) local
number portability is currently in place by March 14, 2007. In other areas and
for other wireless carriers, wireless number portability (where LEC-to-LEC
local number portability is currently in place) for porting-out must be
implemented by March 14, 2007 and for porting-in must be implemented by
September 12, 2007. There is no assurance that TELUS and the other Canadian
wireless carriers will be able to implement wireless number portability in the
required timeframe without incurring significant additional costs and/or
ongoing administration costs. Implementation of wireless number portability may
result in increased migration of network access lines to wireless services,
increased wireless subscriber monthly churn or additional customer retention
costs for TELUS.

WNP when instituted in the U.S. in 2003 did not cause a large increase in churn
as was initially anticipated. In addition, TELUS believes that WNP may open up
an opportunity to more effectively market into the business/enterprise market
in Central Canada where TELUS has a lower market share than our wireless
competitors and lack of WNP is believed to have decreased its sales
effectiveness. However, there can be no assurance that this will be the case.

     Foreign ownership restrictions

TELUS and its subsidiaries are subject to the foreign ownership restrictions
imposed by the Telecommunications Act, the Radiocommunication Act and the
Broadcasting Act. Although TELUS believes that TELUS Corporation and its
subsidiaries are in compliance with the relevant legislation, there can be no
assurance that a future CRTC, Industry Canada or Heritage Canada determination,
or events beyond TELUS' control, will not result in TELUS ceasing to comply
with the relevant legislation. If such a development were to occur, the ability
of TELUS' subsidiaries to operate as Canadian carriers under the
Telecommunications Act or to maintain, renew or secure licences under the
Radiocommunication Act and Broadcasting Act could be jeopardized and TELUS'
business could be materially adversely affected.

10.4 Human resources

     The outcome of outstanding collective bargaining at TELUS Quebec may result
     in increased costs, reduced productivity or work disruptions

Two collective agreements in the TELUS Quebec region are open for renewal
negotiations in 2006. On December 31, 2005, the collective agreement expired
between TELUS Quebec and the Syndicat Quebecois des employes de TELUS, covering
approximately 993 office, clerical and technical employees. A second agreement,
affecting approximately 523 professional and supervisory employees, between
TELUS Quebec and the Syndicat des agents de maitrise de TELUS expires on March
31, 2006. There can be no assurance that the negotiated compensation expenses
will be as planned, or that reduced productivity and work disruptions will not
occur as a result of or following these negotiations.

     Reliance on key personnel

The success of TELUS is largely dependent on the abilities and experience of
its key employees. Competition for highly skilled and entrepreneurial
management and other key employees is intense in the communications industry.
There can be no assurance that TELUS can retain its current key employees or
attract and retain additional executive officers or key employees as needed.
The loss of certain key employees, or deterioration in employee morale
resulting from organizational changes, unresolved collective agreements or
ongoing cost reductions could have an adverse impact upon TELUS' growth,
business and profitability.

Compensation at TELUS is designed to support its high-performance culture and
is both market-driven and performance-based. This includes medium and long-term
performance incentives including variable incentive pay based on performance at
an individual, business unit and organizational level; stock options,
restricted stock units (RSUs) and the TELUS Employee Share Purchase Plan; as
well as a benefits program, which allows the tailoring of personal benefits
plans to suit individual needs. Long-term performance incentives for certain
key personnel include primarily three-year vesting periods for options and
RSUs. By striving to ensure TELUS' compensation remains competitive, TELUS is
focusing on maintaining the ability to attract and retain key personnel.

10.5 Business integration and internal reorganizations

On November 24, 2005, TELUS Corporation announced the integration of the
wireline and wireless segments of the business -- formerly the TELUS
Communications and TELUS Mobility segments -- into a single operating
structure. This integration incorporates TELUS' customer-facing business units,
technology infrastructure, operations and shared services. There is no
assurance that this integration will provide the benefits and efficiencies that
are planned and/or that there will not be significant difficulties in combining
the two structures, which could result in a negative impact on operating and
financial results.

10.6 Process risks

     TELUS systems and processes could negatively impact financial results and
     customer service -- Billing/revenue assurance

TELUS continues to develop a new billing system for the wireline segment of our
business, which includes re-engineering processes for order entry,
pre-qualification, service fulfillment and assurance, customer care,
collections/credit, customer contract and information management. This
customer-focused project requires extensive system development and, in itself,
presents implementation risks due to the complexity of the implementation task
and resource constraints. TELUS plans to implement this project in phases
beginning with the implementation of consumer accounts in Alberta, currently
scheduled in 2006, and followed by implementation of consumer customer accounts
in B.C. There can be no assurance that this undertaking will not negatively
impact TELUS' customer service levels, competitive position and financial
results. As well, significant time delays in implementing this system could
negatively impact TELUS' competitive ability to quickly and effectively launch
new products and services; achieve and maintain a competitive cost structure;
and deliver better information and analytics to management.

Also, as a result of system changes, staff reduction and training requirements
associated with TELUS' ongoing efficiency improvement efforts, there is
potential for further impact on the operations of TELUS' internal processes
involved with billing that could negatively affect TELUS' earnings.

     Cost and availability of services

The availability of various data, video and voice services in competitive local
exchange carrier (CLEC) regions where TELUS' wireline network is only partly
available represents a significant challenge in terms of delivery deadlines,
quality and cost of services. The lease of facilities from other
telecommunications companies and rebilling for the use of their networks may
prove to be costly and unprofitable.

10.7 Financing and debt requirements

     TELUS' business plans and growth could be negatively affected if existing
     financing is not sufficient to cover funding requirements

TELUS may finance future capital requirements with internally generated funds
as well as, from time to time, borrowings under the unutilized portion of its
bank credit facility or through the issuance of debt or equity securities.
Disruptions in the capital markets, increased bank capitalization regulations,
reduced lending to the telecom sector, or a reduced number of active Canadian
chartered banks as a result of reduced activity or consolidation, could reduce
capital available for investment grade corporate credits such as TELUS.

In May 2005, TELUS entered into C$1.6 billion of new bank credit facilities,
which will partially mitigate this risk. The new credit facilities consist of a
C$800 million (or U.S. dollar equivalent) revolving three-year credit facility
and a C$800 million (or U.S. dollar equivalent) five-year revolving credit
facility.

On July 26, 2002, TELUS Communications Inc. (TCI), a wholly owned subsidiary of
TELUS, entered into an agreement with an arm's-length securitization trust
under which it is able to sell an interest in certain of its trade receivables
up to a maximum of $650 million. As at December 31, 2005, TCI had received
aggregate cash proceeds of $500 million. Under the program, TCI is required to
maintain at least a BBB(low) credit rating by Dominion Bond Rating Service --
currently A(low). In the event this rating is not maintained, the Company may
be required to wind down the program prior to the June 2007 termination date of
the agreement.

TELUS' financial policies include a target net debt to EBITDA ratio of 1.5 to
2.0 times (1.7 times as at December 31, 2005) and a target net debt to total
capitalization ratio of approximately 45 to 50% (45.7% as at December 31,
2005). TELUS thereby seeks to achieve, over time, debt credit ratings in the
range of BBB+ to A-, or equivalent. Three of the four credit rating agencies
that rate TELUS now have ratings that are in line with this target. A reduction
in TELUS credit ratings could impact TELUS' cost of and access to capital.
There can be no assurance that TELUS can maintain or improve current credit
ratings.

On December 16, 2005, TELUS announced a new Normal Course Issuer Bid (NCIB) for
24 million shares. This follows the previous NCIB that expired on December 19,
2005 under which the Company purchased 21.8 million shares for $912.6 million.
While anticipated cash flow is expected to be more than sufficient to meet
current requirements and remain in compliance with TELUS' financial policy,
these intentions could constrain TELUS' ability to invest in its operations for
future growth or to complete share repurchases.

Quarterly, the TELUS Board reviews the dividend based on a number of factors
including a target dividend payout ratio guideline of 45 to 55% of sustainable
net earnings. This review prompted a 37.5% increase in the quarterly dividend
payout rate from 20 cents to 27.5 cents effective with the dividend paid on
January 1, 2006. At the January 1, 2006 level of dividend and shares
outstanding, this would total approximately $387 million in dividends in 2006.

TELUS expects to generate material free cash flow in 2006, which would be
available to, among other things, repurchase shares and pay dividends to
shareholders. However, if actual results are different from TELUS'
expectations, there can be no assurance that TELUS will not need to change its
financing plans, including its intention to repurchase a significant amount of
shares, or pay dividends according to the target payout guideline.

10.8 Tax matters

     Income tax amounts, including tax expense, may be materially different
     than expected

The operations of TELUS are complex and related tax interpretations,
regulations and legislation pertaining to TELUS' activities are continually
subject to change. The Company has significant amounts of income taxes
receivable, future income tax assets, including tax loss carry forwards, and
future income tax liabilities. These amounts are based on estimates by TELUS
management and potential changes to them and the timing of realizing such
amounts can materially affect the determination of net income or realization of
cash in future periods.

Timing surrounding the monetization or realization of future income tax assets
is uncertain, since timing is dependent on future earnings of the Company and
other events. The amounts of future income tax assets and future income tax
liabilities are also uncertain, since the amounts are based upon substantially
enacted future income tax rates in effect at the time, which can be changed by
governments. The amount of future income tax assets is also based upon the
Company's anticipated mix of revenues among the jurisdictions in which it
operates, which is also subject to change.

The review activities of the Canada Revenue Agency and other jurisdictions' tax
authorities affect the ultimate determination of the actual amounts of income
taxes receivable, income taxes payable, future income tax assets and future
income tax liabilities. Therefore, there can be no assurance that income taxes
will be payable as anticipated and/or the amount and timing of receipt or use
of the tax-related assets will be as currently expected.

10.9 Health, safety and environment

     Team member health, wellness and safety

Lost work time, resulting from the illness or injury of a TELUS team member,
can negatively impact organizational productivity and employee benefit health
care costs. To minimize absence in the workplace, TELUS supports a holistic and
proactive approach to team member health by providing comprehensive wellness,
disability, ergonomic and employee assistance programs.

TELUS has long-standing programs to provide training and orientation to team
members, and contractors and suppliers who access TELUS facilities, in regards
to TELUS' safe work practices and expectations. However, there can be no
assurance that these practices will be effectively followed in all situations.

     Radio frequency emission concerns

Some studies have asserted that radio frequency emissions from wireless
handsets may be linked to certain adverse health effects. However, the
overwhelming evidence in the scientific community, as determined and published
in numerous studies worldwide, supports the conclusion that there is no
demonstrated public health risk associated with the use of wireless phones.
Government agencies in Canada responsible for establishing safe limits for
signal levels of radio devices also support the conclusion that wireless
telephones are not a health risk. TELUS believes that the handsets sold by
TELUS comply with all applicable Canadian and U.S. government safety standards.

There can be no assurance that future health studies, government regulations or
public concerns about the health effects of radio frequency emissions would not
have an adverse effect on the business and prospects for TELUS. For example,
public concerns could reduce customer growth and usage or increase costs as a
result of modifying handsets and product liability lawsuits.

     Responsible driving

Some studies, including reports released by the Insurance Corporation of B.C.
and the University of Montreal, have shown an increase in distraction levels
for drivers using wireless phones while driving.

In July 2004, New Jersey and Washington, D.C. followed a precedent set by New
York in 2001 by enacting bans on handheld wireless phone use by drivers. In
2002, Newfoundland & Labrador became the only Canadian jurisdiction to ban
drivers' use of handheld wireless phones (as with similar bans on handheld
phone use while driving, the province allows the use of hands-free wireless
kits).

TELUS promotes responsible driving and recommends that driving safely should be
every wireless customer's first responsibility. TELUS believes that current
laws adequately address all forms of careless and negligent driving, and laws
that are specific to mobile phones are unnecessary and counterproductive.

There can be no assurance that additional laws against using wireless phones
while driving will not be passed and that, if passed, such laws will not have a
negative effect on subscriber growth rates, usage levels or wireless revenues.

     Concerns about environmental issues, particularly related to contaminated
     property and the associated risk to human health or wildlife

To conduct its business operations, TELUS owns or leases a large number of
properties. To enable reliable service, many TELUS sites house fuel systems for
back-up power generation. In addition, several hazardous chemicals (e.g.
battery acid, treated wood poles, fire suppression/retardant) are commonly used
at many sites and within the telecommunications industry in general. As well,
certain hazardous materials are found at selected locations (e.g. asbestos as
insulation or fire retardant, beryllium in radio equipment). Based on the
volume of fuel stored and the nature of some of the specific chemicals handled,
there is a risk to the Company and its directors and officers posed by the
potential for spills and releases of hazardous chemicals into the environment.
A significant portion of this risk is associated with the clean-up of sites
contaminated by historic TELUS practices or by previous owners. Although these
are immaterial to TELUS' financial results, poorly executed environmental risk
mitigation could have negative legal, brand or community relations impacts.
Further detail on TELUS' environmental risks can be found in the TELUS
corporate social responsibility report (telus.com/socialresponsibility).
Although TELUS takes proactive measures to identify and mitigate environmental
exposures and employs a robust environmental management system, there can be no
assurance that specific environmental incidents will not impact TELUS
operations in the future.

10.10 Litigation and legal matters

     Investigations, claims and lawsuits

Given the size of TELUS, investigations, claims and lawsuits seeking damages
and other relief are regularly threatened or pending against the Company and
its subsidiaries. TELUS cannot predict with any certainty the outcome of such
investigations, claims and lawsuits and as such, there can be no assurance that
results will not be negatively impacted. See Note 16(f) of the Consolidated
financial statements of TELUS.

     TELUS Corporation Pension Plan and TELUS Edmonton Pension Plan

Two statements of claim were filed in the Alberta Court of Queen's Bench on
December 31, 2001, and January 2, 2002, respectively, by plaintiffs alleging to
be either members or business agents of the Telecommunications Workers Union.
In one action, the three plaintiffs alleged to be suing on behalf of all
current or future beneficiaries of the TELUS Corporation Pension Plan and in
the other action, the two plaintiffs allege to be suing on behalf of all
current or future beneficiaries of the TELUS Edmonton Pension Plan. The
statement of claim in the TELUS Corporation Pension Plan related action named
the Company, certain of its affiliates and certain present and former trustees
of the TELUS Corporation Pension Plan as defendants, and claims damages in the
sum of $445 million. The statement of claim in the TELUS Edmonton Pension Plan
related action named the Company, certain of its affiliates and certain
individuals who are alleged to be trustees of the TELUS Edmonton Pension Plan
and claims damages in the sum of $15.5 million. On February 19, 2002, the
Company filed statements of defence to both actions and also filed notices of
motion for certain relief, including an order striking out the actions as
representative or class actions. On May 17, 2002, the statements of claim were
amended by the plaintiffs and include allegations, inter alia, that benefits
provided under the TELUS Corporation Pension Plan and the TELUS Edmonton
Pension Plan are less advantageous than the benefits provided under the
respective former pension plans, contrary to applicable legislation, that
insufficient contributions were made to the plans and contribution holidays
were taken and that the defendants wrongfully used the diverted funds, and that
administration fees and expenses were improperly deducted. The Company filed
statements of defence to the amended statements of claim on June 3, 2002. The
Company believes that it has good defences to the actions. As a term of the
settlement reached between TELUS Communications Inc. and the Telecommunications
Workers Union that resulted in a collective agreement effective November 20,
2005, the Telecommunications Workers Union has agreed to not provide any direct
or indirect financial or other assistance to the plaintiffs in these actions,
and to communicate to the plaintiffs the Telecommunications Workers Union's
desire and recommendation that these proceedings be dismissed or discontinued.
The Company has been advised by the Telecommunications Workers Union that the
plaintiffs have not agreed to dismiss or discontinue these actions. Should the
lawsuits continue because of the actions of the court, the plaintiffs or for
any other reason, and their ultimate resolution differ from management's
assessment and assumptions, a material adjustment to the Company's financial
position and the results of its operations could result.

     Ontario Court of Appeal ruling in 2005

In June 2005, the Ontario Court of Appeal unanimously overturned a 2003 trial
court decision and ruled that when TCI's predecessor BC TEL redeemed $125
million of Series AL Bonds in December 1997, it was in breach of a covenant
contained in the deed of trust and mortgage under which the Bonds were issued.
The Ontario Court of Appeal returned the case to the trial courts to determine
damages and TELUS accrued an estimate of damages, which is included in
financing costs for the second quarter of 2005. Should the assessed damages be
significantly different than management's expectations, a material adjustment
could be recorded in the Company's Consolidated statements of income. The
Company sought leave to appeal to the Supreme Court of Canada, which was
dismissed in January 2006. This ruling relates to a matter prior to the 1999
merger of BC TELECOM and TELUS Corporation (Alberta), and does not impact
TELUS' current debt instruments.

     Bill 198

On December 31, 2005, provisions announced by the Government of Ontario came
into force, creating liability for misrepresentations by public companies in
written disclosure and oral statements. These amendments also created liability
for fraud and market manipulation.

The amendments create a right of action for damages against TELUS, its
directors and certain of its officers in the event that TELUS or a person with
actual, implied or apparent authority to act or speak on behalf of TELUS
releases a document or makes a public oral statement that contains a
misrepresentation or TELUS fails to make timely disclosure of a material
change.

This new legislation permits action to be taken by any person or company that
acquires or disposes of TELUS securities in the secondary market during the
period of time that the misrepresentation remains uncorrected in the public or,
in the case of an omission, until such time as the material change has been
disclosed. It is not necessary for the person or company to establish that they
relied on the misrepresentation in making the acquisition or disposition.

TELUS has conducted a review of its disclosure practices and procedures and the
extent to which they are documented. As part of that review, TELUS consulted
external advisors. This review indicated that TELUS has well-documented and
fulsome processes in place, including a corporate disclosure policy that
restricts spokespersons to specifically designated senior management, provides
a protocol for dealing with analysts and oral presentations, and creates a
disclosure committee to review and determine material facts and changes for
disclosure. However, there can be no assurance that TELUS' processes will be
followed by all team members at all times.

In December 2005, the Canadian Institute of Chartered Accountants recognized
TELUS with the Award of Excellence for Best Corporate Governance Disclosure
across all industry sectors. As well, in January 2006, IR Magazine Canada
Awards 2006 recognized TELUS for having the best disclosure policy. The IR
award was based on a survey of 250 Canadian investment professionals	.
TELUS' corporate disclosure policy is publicly available at
telus.com/governance.

     Legal and regulatory compliance

TELUS relies on its employees, officers, Board of Directors, key suppliers and
partners to demonstrate reasonable legal and ethical standards. TELUS has
instituted for its employees, officers and directors an ethics policy and a
toll-free EthicsLine for anonymous reporting by anyone who has issues or
complaints.

TELUS employs a designated compliance officer, whose role is to work across the
enterprise to ensure that the business has the appropriate controls and
measurements in place to facilitate legal and regulatory compliance, including
compliance under privacy legislation. The compliance officer reports jointly to
the Audit Committee of the Board of Directors, and to the Executive
Vice-President of Corporate Affairs. This dual reporting status provides a
direct line-of-sight reporting to the Audit Committee to address identified
risks.

Notwithstanding these initiatives and processes, situations might occur where
individuals do not adhere to TELUS policies, or where personal information of a
TELUS customer or employee is inadvertently collected, used or disclosed in a
manner that is not fully compliant with privacy legislation, thereby exposing
TELUS to the possibility of damages, sanctions and fines, or negatively
affecting financial or operating results. Although management cannot predict
outcomes with certainty, management believes it has appropriate policies,
processes and awareness in place for proper compliance.

10.11 Manmade and natural threats

     Concerns about natural disasters and intentional threats to TELUS'
     infrastructure and operations

Recognizing that TELUS, as a communications company, is a key provider of
critical infrastructure to Canada, there exists ongoing exposure of natural
disasters and intentional threats to TELUS' network, information technology
(IT), physical assets and team members. Although TELUS has robust and ongoing
business continuity planning processes, there can be no assurance that specific
events will not impact TELUS operations and results

     Security

     Electronic attack

Electronic attacks are the intentional acts of individuals or organized groups
to gain unauthorized access to TELUS information or to prevent legitimate users
from gaining access. These acts employ a number of methods ranging from social
engineering -- a non-technical kind of intrusion that relies heavily on human
interaction and the tricking of people into breaking normal security procedures
-- to the use of sophisticated malicious software. TELUS, using a layered
security approach, has implemented a number of proactive, reactive and
containment processes and systems to safeguard its IT infrastructure,
information repositories and information distribution. Information security
policies and procedures are in place governing the duties of those responsible
for information confidentiality and integrity. Intrusion detection systems,
access controls and incident response procedures are in place to provide
continuous monitoring of the TELUS IT infrastructure. Although TELUS has robust
and ongoing IT and network security planning processes, there can be no
assurance that specific events will not impact TELUS operations and results

TELUS faces potential exposure and risk when sharing information with external
business partners and these business partner systems are compromised. TELUS
reviews this risk when entering into new agreements.

     Vandalism

TELUS has a number of publicly situated physical assets ranging from public
payphones to network and telephone switch centres that could be subjected to
vandalism. Using such factors as the importance of the asset, the exposure
risks and the potential costs incurred should the asset be damaged, TELUS has
implemented an array of physical and electronic barriers, and controls and
monitoring systems to protect its assets.

As an additional level of risk management, TELUS has a corporate security group
that continually investigates and evaluates the risks and, in co-operation with
law enforcement and other external agencies, adjusts its protection to meet
changing risks. Although TELUS has thorough physical asset security planning
processes, there can be no assurance that specific events will not impact TELUS
operations and results.

10.12 Economic growth and fluctuations

     Significant economic downturns or recessions may adversely impact TELUS

Canadian real gross domestic product (GDP) was recently estimated by the
Conference Board of Canada to have grown at 2.8% during 2005. Consumer price
index (CPI) inflation has been very volatile due to fluctuations in gasoline
prices. However, there is little indication that this price pressure is
spilling over into other prices as core inflation remains within the Bank of
Canada core inflation target bands. The Canadian economy is currently operating
at full capacity and continues to adjust to the significant appreciation of the
Canadian dollar, higher commodity prices and increased competition, especially
from newly industrialized economies such as China and India. The principal risk
to Canadian economic growth may occur when the U.S. government and U.S.
households begin to address their twin deficits in a meaningful way through
significant reductions in fiscal spending and household consumption. The longer
the U.S. delays in addressing the deficit issues, the greater the risk of an
abrupt and disorderly adjustment, which would therefore negatively impact the
demand for Canadian produced goods and services.

In an uncertain economy, residential and business telecommunications customers
may delay new service purchases, reduce volumes of use and/or discontinue use
of services. Significant economic downturns or recessions could adversely
impact TELUS' profitability and free cash flow, realization of income tax
losses carried forward and bad debt expense, and/or require the Company to
record impairments to the carrying value of its assets including, but not
limited to, its intangible assets with indefinite lives (spectrum licences) and
its goodwill. Impairments to the carrying value of assets would result in a
charge to earnings and a reduction in shareholders' equity, but would not
affect cash flow.

TELUS, as it has expanded nationally in recent years and gained exposure to the
more diversified manufacturing based economies in Ontario and Quebec, has
become somewhat more immune to any regional economic weaknesses in B.C. and
Alberta due to their different government policies or cyclical resource based
economies.

     Pension funding risks

Economic fluctuations could also adversely impact the funding and expense
associated with the defined benefit pension plans that TELUS sponsors. In 2005
TELUS made cash contributions of $160 million to its pension plans (including
$119 million to its defined benefit plans) and similar levels are expected in
2006. Defined benefit funding risks may occur if total pension liabilities
exceed the total value of the respective trust funds. Unfunded differences may
arise from lower than expected investment returns, reductions in the discount
rate used to value pension liabilities, and actuarial loss experiences. TELUS
seeks to mitigate this risk through the implementation of policies and
procedures designed to control investment risk and ongoing monitoring of its
funding position. There can be no assurance that TELUS pension expense and
funding of its defined benefit pension plans will not need to increase in the
future and thereby negatively impact earnings and liquidity.

11. Reconciliation of non-GAAP measures and definition of key operating
    indicators

11.1 Earnings before interest, taxes, depreciation and amortization (EBITDA)

The Company has issued guidance on and reports EBITDA because it is a key
measure used by management to evaluate performance of business units and it is
utilized in measuring compliance with debt covenants. The Company also believes
EBITDA is a measure commonly reported and widely used by investors as an
indicator of a company's operating performance and ability to incur and service
debt, and as a valuation metric. The Company believes EBITDA assists investors
in comparing a company's performance on a consistent basis without regard to
depreciation and amortization, which are non-cash in nature and can vary
significantly depending upon accounting methods or non-operating factors such
as historical cost.

EBITDA is not a calculation based on Canadian or U.S. GAAP and should not be
considered an alternative to Operating income or Net income in measuring the
Company's performance or used as an exclusive measure of cash flow because it
does not consider the impact of working capital growth, capital expenditures,
debt principal reductions and other sources and uses of cash, which are
disclosed in the Consolidated statements of cash flows. Investors should
carefully consider the specific items included in TELUS' computation of EBITDA.
While EBITDA has been disclosed herein to permit a more complete comparative
analysis of the Company's operating performance and debt servicing ability
relative to other companies, investors should be cautioned that EBITDA as
reported by TELUS may not be comparable in all instances to EBITDA as reported
by other companies.

The following is a reconciliation of EBITDA with Net income and Operating
income:

<TABLE>
<CAPTION>
	                                                                                      Years ended December 31
($ millions)		                                                                        2005 		2004
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Net income		                                                                          700.3 	  565.8
  Other expense (income)		                                                           18.4 	    8.7
  Financing costs		                                                                  623.1 	  613.3
  Income taxes		                                                                          322.0 	  255.1
  Non-controlling interest		                                                            7.8 	    4.6
---------------------------------------------------------------------------------------------------------------------------------
Operating income	                                                                        1,671.6 	1,447.5
  Depreciation	                                                                        	1,342.6 	1,307.8
  Amortization of intangible assets	                                                	  281.1 	  335.3
---------------------------------------------------------------------------------------------------------------------------------
EBITDA		                                                                                3,295.3 	3,090.6
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

In addition to EBITDA, TELUS calculates EBITDA less capital expenditures as a
simple proxy for cash flow in its two reportable segments, which is used for
comparison to the reported results for other telecommunications companies, and
is subject to the potential comparability issues of EBITDA described above.
EBITDA less capital expenditures is calculated for TELUS as follows:

<TABLE>
<CAPTION>
	                                                                                      Years ended December 31
($ millions)		                                                                        2005 		2004
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
EBITDA		                                                                                 3,295.3 	 3,090.6
Capital expenditures (Capex)		                                                        (1,319.0)	(1,319.0)
---------------------------------------------------------------------------------------------------------------------------------
EBITDA less capital expenditures		                                                 1,976.3 	 1,771.6
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

11.2 Free cash flow

The Company has issued guidance on and reports free cash flow because it is a
key measure used by management to evaluate performance of the consolidated
operations. Free cash flow excludes certain working capital changes, and other
sources and uses of cash, which are disclosed in the Consolidated statements of
cash flows. Free cash flow is not a calculation based on Canadian or U.S. GAAP
and should not be considered an alternative to the Consolidated statements of
cash flows. Free cash flow is a measure that can be used to gauge TELUS'
performance over time. Investors should be cautioned that free cash flow as
reported by TELUS may not be comparable in all instances to free cash flow as
reported by other companies. While the closest GAAP measure is Cash provided by
operating activities less Cash used by investing activities, free cash flow is
relevant because it provides an indication of how much cash generated by
operations is available after capital expenditures, but before proceeds from
divested assets and changes in certain working capital items (such as trade
receivables, which can be significantly distorted by securitization changes
that do not reflect operating results, and trade payables).

The following reconciles free cash flow with Cash provided by operating
activities less Cash used by investing activities:

<TABLE>
<CAPTION>
	                                                                                      Years ended December 31
($ millions)		                                                                        2005 	        2004
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities		                                                 2,914.6 	 2,538.1
Cash (used) by investing activities		                                                (1,355.2)	(1,299.5)
---------------------------------------------------------------------------------------------------------------------------------
		                                                                                 1,559.4 	 1,238.6
Net employee defined benefit plans expense		                                            (3.9)	   (18.4)
Employer contributions to employee defined benefit plans		                           118.8 	   136.8
Amortization of deferred gains on sale-leaseback of buildings,
 amortization of deferred charges and other operating activities, net		                     5.3 	   (27.9)
Payment received from Verizon Communications Inc.		                                      -- 	   (33.3)
Reduction (increase) in securitized accounts receivable		                                  (350.0)	   150.0
Non-cash working capital changes except changes in taxes, interest and
 securitized accounts receivable, and other		                                            99.7 	  (129.0)
Acquisition		                                                                            29.4 	    12.2
Proceeds from the sale of property and other assets		                                    (4.5)	   (35.9)
Other investing activities		                                                            11.3 	     4.2
---------------------------------------------------------------------------------------------------------------------------------
Free cash flow		                                                                         1,465.5 	 1,297.3
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following shows management's calculation of free cash flow.

<TABLE>
<CAPTION>
	                                                                                       Years ended December 31
($ millions)											2005 		2004
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
EBITDA		                                                                                 3,295.3 	 3,090.6

Restructuring and workforce reduction costs, net of cash payments	                           (13.6)	   (70.3)
Share-based compensation	                                                         	    24.3 	    23.8
Cash interest paid		                                                                  (638.3)	  (632.9)
Cash interest received		                                                                    47.3 	    27.3
Income taxes received (paid)		                                                            69.5 	   194.6
Capital expenditures (Capex)		                                                        (1,319.0)	(1,319.0)
Investment tax credits received (reported in current or prior EBITDA
 or Capex, and in Income taxes received (paid)), and other	                              	      -- 	   (16.8)
---------------------------------------------------------------------------------------------------------------------------------
Free cash flow	                                                                                 1,465.5 	 1,297.3
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

11.3 Definition of key operating indicators

These measures are industry metrics and are useful in assessing the operating
performance of a wireless company.

Churn, per month
----------------
  Calculated as the number of subscriber units disconnected during a given
  period, divided by the average number of subscriber units on the network
  during the period, expressed as a rate per month. A prepaid subscriber is
  disconnected when the subscriber has no usage for 90 days following expiry
  of the prepaid card.

Cost of acquisition (COA)
-------------------------
  Consists of the total of handset subsidies, commissions, and advertising and
  promotion expenses related to the initial subscriber acquisition during a
  given period. As defined, COA excludes costs to retain existing subscribers
  (retention spend).

COA per gross subscriber addition
---------------------------------
  COA divided by gross subscriber activations during the period.

Average revenue per subscriber unit, or ARPU
--------------------------------------------
  Calculated as Network revenue divided by the average number of subscriber
  units on the network during the period, expressed as a rate per month.

Retention spend to Network revenue
----------------------------------
  Represents direct costs associated with marketing and promotional efforts
  aimed at the retention of the existing subscriber base, divided by Network
  revenue.

EBITDA excluding COA
--------------------
  A measure of operational profitability, normalized for the period costs of
  adding new customers.

11.4 Definition of liquidity and capital resource measures

Net debt
--------
  Net debt is a non-GAAP measure, whose nearest GAAP measure is the sum of
  Long-term debt and Current maturities of long-term debt, as reconciled
  below. Net debt is one component used to determine compliance with debt
  covenants (refer to the description of Net debt to EBITDA below).

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------------
                                                                                                   At December 31
($ millions)	                                                                                2005            2004
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Current maturities of long-term debt		                                                    5.0 	    4.3
Long-term debt		                                                                        4,639.9 	6,332.2
---------------------------------------------------------------------------------------------------------------------------------
		                                                                                4,644.9 	6,336.5
Deferred hedging liability		                                                        1,158.1 	1,037.7
---------------------------------------------------------------------------------------------------------------------------------
Debt		                                                                                5,803.0 	7,374.2
Deduct Cash and temporary investments		                                                   (8.6)	 (896.5)
---------------------------------------------------------------------------------------------------------------------------------
Net debt		                                                                        5,794.4 	6,477.7
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  The deferred hedging liability in the table above relates to cross currency
  interest rate swaps that effectively convert principal repayments and
  interest obligations to Canadian dollar obligations in respect of the U.S.
  $1,166.5 million debenture maturing June 1, 2007 and the U.S. $1,925.0
  million debenture maturing June 1, 2011. Management believes that Net debt
  is a useful measure because it incorporates the exchange rate impact of
  cross currency swaps put into place that fix the value of U.S.
  dollar-denominated debt, and because it represents the amount of long-term
  debt obligations that are not covered by available cash and temporary
  investments.

Total capitalization
--------------------
  Defined as Net debt plus Non-controlling interest and Shareholders' equity.

Net debt to total capitalization
--------------------------------
  Provides a measure of the proportion of debt used in the Company's capital
  structure. The long-term target ratio for Net debt to total capitalization
  is 45 to 50%.

EBITDA excluding restructuring
------------------------------
  EBITDA excluding restructuring is used for the calculation of Net debt to
  EBITDA and EBITDA interest coverage, consistent with the calculation of the
  Leverage Ratio and the Coverage Ratio in credit facility covenants.
  Restructuring and workforce reduction costs were $53.9 million and $52.6
  million, respectively, for the years ended December 31, 2005 and 2004.

Net debt to EBITDA
------------------
  Defined as Net debt as at the end of the period divided by the 12-month
  trailing EBITDA excluding restructuring. This measure is substantially the
  same as the Leverage Ratio covenant in TELUS' credit facilities. TELUS'
  revised guideline range for Net debt to EBITDA is from 1.5:1 to 2.0:1.

Net interest cost
-----------------
  Defined as Financing costs before gains on redemption and repayment of debt,
  calculated on a 12-month trailing basis. No gains on redemption and
  repayment of debt were recorded in the respective periods. Losses recorded
  on the redemption of long-term debt are included in net interest cost.

Interest coverage on long-term debt
-----------------------------------
  Calculated on a 12-month trailing basis as Net income before interest
  expense on long-term debt and income tax expense, divided by interest
  expense on long-term debt. Interest expense on long-term debt in 2005
  includes losses on redemption of long-term debt and an accrual for estimated
  costs to settle a lawsuit.

EBITDA interest coverage
------------------------
  Defined as EBITDA excluding restructuring divided by Net interest cost. This
  measure is substantially the same as the Coverage Ratio covenant in TELUS'
  credit facilities.

Dividend payout ratio
---------------------
  Defined as the most recent quarterly dividend declared per share multiplied
  by four and divided by basic earnings per share for the 12-month trailing
  period. The target guideline for the annual dividend payout ratio on a
  prospective basis is 45 to 55% of sustainable net earnings.

Funded debt
-----------
  In general terms, borrowed funds less cash on hand, as defined in the
  Company's bank agreements.


_______________________________________________________________________________

Exhibit 5:  Consent of Independent Registered Chartered Accountants

We consent to the use of our report dated February 14, 2006 appearing in this
Annual Report on Form 40-F of TELUS Corporation for the year ended December 31,
2005.

   /S/Deloitte & Touche, LLP
   __________________________

   (Signed Deloitte & Touche, LLP)
   Vancouver, British Columbia, Canada
   March 20, 2006

_______________________________________________________________________________

Exhibit 6:  Amended 2005 Ethics Policy


                           TELUS Ethics Policy
                              February 2005



                            Table of Contents

Introduction
Responsibilities
  Team TELUS
  Compliance/Exceptions
  Managers
  Senior Managers (EVP's, VP's and Directors)
  TELUS Board of Directors Members and Employees
    Who Represent TELUS as Directors on Other Organization Boards
Ethics Office
Ethics Work Group
Ethical Decision Making
    1.  Questions to Ask Yourself
    2.  Review Guidelines and Policies
    3.  Talk to Your Manager
    4.  Expert Assistance
    5.  TELUS EthicsLine
    6.  Last Resort Resolution
Ethical Guidelines
  Customer and Team TELUS Information
    Privacy of Communications
    Confidentiality of Information
    Case Studies
Integrity
    Personal and Corporate Integrity
    Proprietary Rights of Others
    Compliance with Laws
    Public Safety
    Political Activities
    Case Studies
Company Assets
    Company Information
    Business Records
    Financial Transactions
    Property
    Case Studies
Conflict of Interest
    Competition
    Future Business
    Outside Demands
    Relationships
    Information
    Insider Trading
    Gifts and Benefits
    Case Studies
Dealing with Suppliers, Contractors, Consultants and Agents
    Selecting Suppliers, Contractors, Consultants and Agents
    Adherence to applicable TELUS policies

Fellow TELUS team members:


Central to TELUS' purpose is to make the future friendly for our stakeholders.
One of the critical elements in realizing this ambition is to ensure our
individual and collective reputation is above reproach. How we work is just as
important as what we do. Our goal is to demonstrate the highest level of ethics
and integrity in our business dealings with all stakeholders (customers,
shareholders, suppliers, colleagues, community). This is a corporate priority
and a shared responsibility for all TELUS team members as each one of our
actions and decisions affect our company and its reputation.

This Ethics Policy outlines the responsibilities and guidelines that describe
the ethical standard expected of all team members. In addition, it provides a
decision making process supporting the resolution of ethical issues and
identifies members of the TELUS team who are available for help and advice.
Real life case studies are provided to illustrate how ethical responsibilities
and guidelines apply in everyday situations.

Please read this document carefully and make it an integral part of the way you
conduct business at TELUS. You play an important role in representing our
organization. Guided by these ethical standards, we build trusted relationships
with our customers, shareholders, suppliers, fellow team members and the
community.

Darren Entwistle
President and Chief Executive Officer

Robert McFarlane
Executive Vice-President and Chief Financial Officer

Judy Shuttleworth
Executive Vice-President, Human Resources



Introduction
------------

This Policy applies to all of TELUS, including members of the Board of
Directors, officers and employees of TELUS Corporation and its subsidiaries
(referred to as Team TELUS or team members).

It is not intended that there be any waivers to this Policy. In the unlikely
event that a waiver is considered and granted it must receive prior approval by
the Board of Directors or their delegate. The delegate must be a Board
committee for any waivers granted to members of the Board of Directors or
executive officers. In such circumstances, any waivers or amendments will be
disclosed subject to the TELUS Policy on Corporate Disclosure and
Confidentiality of Information.

In reviewing this Policy, team members are reminded that TELUS reserves the
right to vary, revoke or amend any terms of the Policy as is required by the
needs of the business. TELUS will notify team members of any amendments to the
Ethics Policy prior to the changes becoming binding. Nevertheless, team members
are encouraged periodically to review this Policy (at least annually) in order
to remain familiar with its terms. To assist this review, team members are
requested to complete the e.ethics training module each year. The Ethics Policy
constitutes a term of the employment contract.

This Policy is available on the Company's intranet and is publicly available on
the Company's website, at www.telus.com, www.telusmobility.com and
www.telusquebec.com.



Responsibilities
----------------

Team TELUS

All members of the TELUS team are expected to act honestly in all dealings,
comply with the laws and regulations governing our businesses, and maintain an
ethical work environment. This standard requires that each member of our team
understand and apply the guidelines in this policy to everyday actions and
decisions.

At TELUS, we not only do things right, but we should strive to do the right
things. Each member of our team takes responsibility for their actions
including:

    * Observance of the guidelines outlined in this and other company
      policies whether working inside or outside of Canada

    * Compliance with applicable local, provincial and federal laws and
      regulations

    * Compliance with regulations, tariffs and Terms of Service issued by
      the CRTC, Industry Canada, etc.

All business activities should be able to stand up to possible public scrutiny
and further investigation if required.

The guidelines in this policy are based upon generally accepted standards of
ethical business conduct in Canada, and applicable civil and criminal laws. The
absence of a guideline covering a particular situation does not relieve any of
us from the responsibility for acting ethically.

Team TELUS members, or any person acting under the direction thereof, are
prohibited from directly or indirectly taking any action to improperly
influence, coerce, manipulate or mislead the Company's external or internal
auditors or their representatives.

Compliance/Exceptions

In situations where the right ethical behaviour is unclear, or where there may
be the appearance of a contravention of these guidelines, we support each other
in seeking advice and clarification. If you are unsure as to the ethical course
of action, you should first discuss the situation with your manager or the
applicable department identified in this policy.

If you become aware of a possible violation of the Ethics Policy you are
requested to report this to the Director- Ethics and Controls Compliance at
1-866-515-6333 (for more details please refer to the TELUS EthicsLine section).
Members of the Board of Directors may also advise the Chair of the Board of
potential violations. The Chair will refer the matter to the Director - Ethics
and Controls Compliance for investigation, resolution and reporting.

Failure to act in accordance with the guidelines outlined in this policy may
have consequences for the individual, may create potential harm to TELUS'
reputation and brand, and may put TELUS at risk for legal penalty. Individual
consequences may include disciplinary action, up to and including dismissal.
Corporate consequences may include civil and criminal penalties. Therefore,
please regard the requirement to understand and to act in accordance with the
TELUS Ethics Policy as a most serious matter.


Managers

In addition to the aforementioned responsibilities, TELUS managers have the
additional responsibility to:

    * Be familiar with the TELUS Ethics Policy and resolution procedures
    * Promote and maintain a climate in which honest, ethical and legal
      business conduct is the norm
    * Communicate TELUS' commitment to such conduct to all members of the
      TELUS team
    * Encourage open discussion and resolution of all business concerns
    * Accept and investigate reports of possible business misconduct
    * Maintain, without compromise, our ethical standards in achieving
      goals and objectives, no matter how important the goal or objective
      may be
    * Review the Ethics Policy with teams and colleagues on a regular
      basis (at least annually)

Senior Managers (EVP's, VP's and Directors)

In addition to the aforementioned responsibilities, TELUS team members who have
roles regarding internal controls and financial reporting and disclosure
controls have, as outlined in the Policy on Corporate Disclosure and
Confidentiality of Information, the responsibility to make full, fair,
accurate, timely and understandable disclosure in reports and documents that
TELUS files with, or submits to, securities commissions and in other public
communications made by TELUS.

TELUS Board of Directors Members and Employees Who Represent TELUS as Directors
on Other Organization Boards

In addition to the aforementioned responsibilities, but subject to the
requirement that such individuals comply with their fiduciary obligations as a
director of another organization, TELUS Board members have the responsibility
to notify the Chair of the Board of TELUS or, in case of TELUS employees who
represent TELUS on the Boards of other organizations, the TELUS Ethics Work
Group of any potential perceived conflict of interest or other Ethics Policy
issues which arise during the course of their Board service.

Ethics Office

The Ethics Office is established to provide Team TELUS with a resource
regarding ethical matters. This Office conducts investigations, provides advice
on ethical dilemmas, develops ethics training, establishes and updates
appropriate policies, guidelines and processes for TELUS' expected standards of
business conduct, and reports on EthicsLine complaints to the Audit Committee
of the Board of Directors on a quarterly basis.

Ethics Work Group

An Ethics Work Group oversees the Ethics Policy and annual reporting to senior
management and the Audit Committee of the Board of Directors. If an ethical
issue is unresolved, as a body of last resort, the Ethics Work Group is
available to discuss and guide issue resolution and provide input on any
ethical situations brought forward. Members of the Ethics Work Group include
representatives from Risk Management, Human Resources, Legal Government &
Regulatory Affairs, Corporate Security and the Chief Financial Officer.

Ethical Decision Making
-----------------------

This policy reflects our commitment to high standards of ethical behaviour in
our professional and business dealings. The TELUS Ethics Policy is intended as
a living document that supports open and frank discussion and the satisfactory
resolution of ethical dilemmas.

Each of us is responsible for striving to ensure our behaviour is ethical and
for taking steps to resolve ethical dilemmas. The guidelines in this policy are
provided to assist with ethical decision-making. As business becomes
increasingly complex, the policy cannot provide guidance about every possible
situation. In these circumstances, discuss your situation with your manager or
with colleagues in support of determining the appropriate, ethical course of
action.

If you would like to discuss ethics further or have a dilemma with which you
would like help, follow the process below, stopping at the point at which your
situation has been resolved.

1.  Questions to Ask Yourself

Gather information and then determine if the situation you face is an ethical
dilemma. The questions below may help to clarify your situation and ethical
action.

    * What is my immediate feeling about this?
    * Is this an expected part of my job?
    * What is the cost - emotional, personal or financial - of this action?
    * How would others perceive this action?
    * What would my action be if my team members, peers, or supervisor were
      present?
    * Would I or TELUS be embarrassed if this situation were discussed in the
      newspaper?
    * Would I be putting TELUS or myself at unnecessary risk?
    * What impact would this have on my or the company's reputation?
    * Are there legal implications of my action?
    * Would I do this if this were my company?
    * Is this taking revenue or customers away from TELUS?
    * Was this intended to, or does this, influence my decisions?
    * What is the dollar value? Is it excessive?

2.  Review Guidelines and Policies

Review the guidelines in this policy and the case studies. If you need further
assistance, consider the following related policies as they may apply to your
situation.

    Signing Authority Policy
    Corporate Security Policies
    Respectful Workplace (harassment) Policies
    Alcohol and Drug Corporate Policy
    TELUS Health and Safety Policy
    Environmental Policy
    TELUS Privacy Code
    Corporate Credit Card Policy
    Corporate Disclosure and Confidentiality of Information
    Insider Trading Policy
    Document Retention Policy (To be issued)


3.  Talk to Your Manager

Often your manager is in the best position to help you work through the
dilemma. Your manager is responsible for supporting open discussion, working
through the ethical questions you have, and guiding your access to further
assistance as required. In situations where you are uncomfortable talking with
your manager, or your manager is unable to help, you should refer to the next
level of management or seek expert assistance as detailed in the next section.

4.  Expert Assistance

If you have tried the above sources but still have questions, assistance is
available through designated subject matter experts in Human Resources, Legal,
Privacy, Corporate Security, Regulatory Affairs and Accounting Policies. Names
and contact telephone numbers are listed on the company's internal website,
under Ethics. TELUS Mobility and TELUS Quebec team members should seek advice
from their local HR Representative, the TELUS Mobility HR Director or the TELUS
Quebec Director-Employee Relations.

5. TELUS EthicsLine

You may also contact the TELUS EthicsLine, toll-free, at 1-866-515-6333, send
an email to ethicsline@telus.com or complete the EthicsLine Reporting Form
located on the Intranet to request guidance or make a good-faith report about
misconduct or a perceived violation of this Policy, another company policy or
procedure or a government law or regulation, questionable business practices,
potential fraud or accounting or auditing matters that may not be in compliance
with this Policy. Reports may be made anonymously.

Handling of the Report

For Inquiries:
--------------
The Ethics Office will assist team members in ethical decision-making by
providing guidance concerning this Policy. The Ethics Office may also refer
team members to or involve subject matter experts within TELUS for assistance.
Inquiries regarding the union collective agreement or CIRB, personnel matters
of customer service complaints will be re-directed as indicated in the section
below.

For Complaints:
---------------
a) Assessment of complaint

The Ethics Office will assess the nature of the complaint. The following
matters for which other remedies exist will not be investigated by the Ethics
Office and will be redirected as follows:

    * Union collective agreement or CIRB related issues - Immediate manager or
      other members of management
    * Personnel matters such as promotions, reprimands, suspensions,
      dismissals, harassment, discrimination  - Human Resources
    * Customer service complaints - Customer Care or Client Care

With the exception of issues relating to the union collective agreement or
CIRB, the Ethics Office will track all complaints, including those that are
redirected to other areas of expert assistance, until they are resolved.

b) Investigation

All reports are taken seriously. Each allegation will be promptly investigated
by the Ethics Office in conjunction with subject matter experts within TELUS if
necessary. The Ethics Office may request the assistance of TELUS Corporate
Security for investigation of the allegation or other related issues. If
substantiated, the allegation will be resolved through appropriate corrective
action and/or discipline. If you choose to identify yourself, you will be
provided with feedback when the Ethics Office has completed its review. Every
effort will be made to maintain confidentiality for those who contact the
Ethics Office or who are accused of a breach of this Policy (although
disclosure may be necessary in some cases to effectively conduct an
investigation or support legal proceedings). It is expected that all reports to
the Ethics Office will be made in good faith. Deliberately making false claims
will result in disciplinary action.

c) Protection for Reporting

Retaliation or retribution against a team member for contacting the Ethics
Office violates our ethical principles and will not be tolerated. If you feel
you have been retaliated against, you should contact Human Resources or the
Director-Ethics & Controls Compliance immediately.

d) Opportunity to Respond

If it has been found that a team member has breached or may likely have
breached the Policy, this team member will be informed of the allegations in
due course and be provided the opportunity 1) to respond to them, and 2) where
appropriate, to contribute to the correction of the breach.

e) Reporting of Breaches

Any breach of the Policy will be reported to senior management with
recommendations for action. Ethical issues reported to the Ethics Office will
be summarized quarterly and reported to the Audit Committee of the Board of
Directors, together with results of investigations, recommendations and
management action.

f) File Documentation

Records of the report and investigation, including contents of meetings,
interviews, results of investigations and other relevant material, will be
maintained by the Ethics Office in a separate file, and managed in accordance
with the TELUS Privacy Code. Disclosure of information will be strictly limited
on a need-to-know basis only.

6. Last Resort Resolution

If an ethical issue remains unresolved, the Ethics Work Group is available as
the body of last resort to discuss the issue and guide the resolution of any
conflict of interest or other ethical situation brought forward. Members of the
Ethics Work Group are drawn from Risk Management, Legal Government & Regulatory
Affairs, Corporate Security, Chief Financial Officer and Human Resources. Their
names and contact telephone numbers are listed on the company's internal
website, under Ethics.

The Ethics Work Group has a reporting relationship with the Audit Committee of
the Board of Directors to ensure compliance with this Policy, and a process for
reporting potential breaches of the Policy through the Director - Ethics &
Controls Compliance without fear of retribution.

Ethical Guidelines
-------------------
Customer and Team TELUS Information

Privacy of Communications

We protect the privacy of customer communications, ensuring no tampering,
intrusion or disclosure except as authorized by law. This includes ensuring the
content, nature and existence of telephone calls and data transmissions are not
released to third parties.

A team member may intercept a private communication only when such interception
is necessary for the purpose of providing the service, for the purpose of
quality control checks, to protect the company's facilities from fraudulent
abuse, or when authorized by law.


Confidentiality of Information

We respect customer and team member related information and protect its
security, confidentiality and integrity. The definition of 'customer' includes
our direct customers, customers who are our competitors, third party customers
(customers of our clients), and team members. All customer and team member
personal information is confidential and may not be disclosed except as
outlined in the TELUS Privacy Code and permitted by law or by applicable
regulations.

Access to customer and team member personal information is strictly controlled
on a "need to know" basis and is used for legitimate business purposes only.

The TELUS Privacy Code and related practices set out guidelines for managing
customer and team member personal information. Various areas of the company may
have additional supporting management practices in place. Refer to your manager
for more information.


Case Studies

Problem

Joanne sells TELUS Business Solutions products and services. In meeting with a
customer in a specific industry, she learns her customer has plans to
aggressively expand their business to another city, but this information is not
publicly known. The next day, Joanne meets with a competitor to her previous
day's customer. The competitor indirectly asks several questions about the
first customer's business strategy. Joanne knows if she subtly mentions the
first customer's business plans, she can sell more TELUS products and services.

    Action

    Joanne's job is to sell TELUS products and services; however, she
    cannot disclose confidential information for any reason. Joanne must
    maintain the confidentiality of her customer's information.

Problem

TELUS Mobility recently hired someone who held an executive position with one
of our competitors. This person was deeply involved in planning the
competitor's expansion strategy, and has information that would be very
valuable to us. Can we ask him to disclose this information?

    Action

    Absolutely not. The new team member has an obligation to protect his
    former company's confidential or proprietary information, just as you
    would be obliged to protect the confidential or proprietary
    information of TELUS if you were to leave the company. You must
    respect the team member's personal integrity as well as his
    obligation to his former employer.

Problem

I am a customer service representative for the residential market. A competitor
informed me that a customer authorized him to obtain information about the
customer's service record from TELUS. Should I provide the information?

    Action

    As a general rule, TELUS does not disclose any customer information
    other than what is listed in published directories: name, address and
    telephone number. Since only the customer can authorize the release
    of further information, you should check that the customer did indeed
    authorize the competitor's representative to obtain the information.
    If you do not find written authorization, ask the competitor's
    representative to obtain the customer's consent in writing and send
    it to TELUS.

Problem

Kalev is a member of a large, dedicated team. He likes to personally recognize
his co-workers for their continued efforts by remembering their birthdays with
a card. Kalev asks a friend who has access to team member records, for a list
of his co-workers birth dates. Should his friend provide Kalev with the
information?

    Action

    While Kalev's intention is well meaning, his friend should not
    provide Kalev with a list of birth dates. Team member personal
    information is confidential and is to be used for legitimate business
    reasons only. Kalev should ask his co-workers directly for this
    information, so that they may decide whether or not to provide Kalev
    with their birth dates.

Problem

Shelley's friend calls her at work in the Call Centre to talk about the NHL
hockey player who has just moved to the city to join the team. She asks Shelley
to look up his address and phone number since this information is not yet
listed in the TELUS Super Pages. Should Shelley look this up and provide the
information?

Action

    Absolutely not. Unless Shelley has a business reason to look up the
    information, she should not even access this customer's account and
    should certainly not provide the requested information to her friend.

Integrity

Personal and Corporate Integrity

Individually and collectively, our personal integrity supports the honest use
of time, funds and property in ethical dealings with co-workers and others.
Business needs must take priority in the allocation of our time at work. Use of
company time and property is for business purposes only unless otherwise
authorized by management.

We consciously apply high standards of courtesy, professionalism, and honesty
in our interactions with customers, shareholders, suppliers, co-workers and the
community. We are fair in representing others' products and services and do not
improperly seek corporate trade secrets or confidential information.

We establish and maintain an ethical work place. We treat people fairly and
respect human rights. We recognize that there are differences among individuals
that go beyond race and gender, and value the contribution our differences
bring to the business. We provide team members with the training, tools, and
coaching necessary for the job.


Proprietary Rights of Others

We honour the proprietary rights of others as expressed in patents, copyrights,
trademarks and industrial designs. Examples of intellectual and real property
that may be protected include, but are not limited to, written materials,
logos, creative suggestions, pictures, audio and video products and computer
software. We respect conditions of use. Copyright materials are not copied in
whole or in part, or used in violation of any law or agreement with vendors,
licensors or other similar parties. Software license conditions may be included
in instruction manuals, in separate documents, or on the disk itself, and
breaking the seal on a disk package may constitute acceptance of the stated
agreement.

Compliance with Laws

We comply with all applicable laws and regulations.


Public Safety

When working on customer premises and public thoroughfares, we safeguard the
rights and safety of the customer, the public, the environment and ourselves.
We are expected to report fit for work; such that our ability to work safely is
not impaired by alcohol, drugs, medications or any other substance. Our actions
in these instances not only reflect on us as individuals, but on TELUS as a
whole.


Political Activities

As private citizens, we are free to make contributions to causes, candidates or
political parties of our choice. Unless expressly approved by TELUS, we will
not associate TELUS with our personal political activities. TELUS will comply
with all relevant laws regulating its participation in political affairs,
including political contributions.


Case Studies

Problem

Jerry, an installer is called to an out of town, visibly neglected acreage. The
customer, an elderly woman, tells Jerry several times that she is never very
comfortable when the phone does not work. It is important to her, being out in
the country, to have reliable service. Jerry discovers her repair is very
minor, consisting of a simple adjustment, and is hesitant to inform her of the
service charge. He looks around her modest home and feels she cannot afford the
service charge.

    Action

    Jerry's compassion is admirable. He should, however, inform his
    customer of the service charge. TELUS is legally required to apply
    tariff charges to every customer. Jerry is also presuming the elderly
    woman's financial status. In fact, she may be very able to pay the
    service charge. If she says she has a problem paying, Jerry can
    suggest some of TELUS' payment options or identify areas of the
    company where she can get more information.

Problem

My manager frequently makes racist comments about one of my co-workers. This
personally offends me but, because my manager is involved, I don't feel I can
speak up. What should I do?

    Action

    Racist comments are unacceptable. You have a right to express your
    disapproval of such comments - without fear of reprisal. If you are
    uncomfortable approaching your manager, you should speak to the Human
    Rights Coordinator or your manager's manager.

Problem

Anna is feeling the time crunch. It is only 15 days until Christmas and she has
not started shopping for gifts. With all her commitments - work, volunteer
activities, and family responsibilities - she is not sure when she can fit it
all in. Then a co-worker mentions how easy it is to buy gifts on-line and that
the gifts are delivered right to your door. Through the next two days, Anna
completes her Christmas shopping at work by ordering on the Internet - and it
only takes 4 hours instead of 4 days of trotting through the shopping mall!
Anna's Christmas crunch is solved, but was her solution a good one?

    Action

    As members of the TELUS team each of us has a responsibility to do a
    fair day's work. If Anna's activities occurred on company time, her
    work responsibilities would have been adversely affected. Anna's
    actions may have tied up office equipment like the printer or
    impacted network response time affecting her colleagues' ability to
    get the job done. Company time and tools, such as the Internet and
    e-mail, are provided for business purposes only and should not be
    used for personal use unless authorized by management.

Problem

TELUS, in partnership with a supplier, is offering an on-line Team TELUS
discount program on the purchase of books, CD's, and magazines. Cindy and Raj
would like to place orders, but do not have a PC at home from which to access
the web site. A co-worker suggests they use their work PC to place their
personal orders. They are very busy at present dealing with a backlog of ADSL
service requests. Is this an appropriate use of company equipment and time?

    Action

    Being a member of the TELUS team has privileges. From time to time,
    TELUS offers programs and incentives specifically for team members.
    Personal use of company property such as PC's is permitted, when
    approved by a team member's manager or corporately authorized, to
    enable team members to take advantage of these opportunities. Cindy
    and Raj may use company PC's to place their orders since the discount
    program has been authorized by management. Team members are reminded
    that authorized personal use should not interfere with business
    priorities and should be conducted on personal time.


Company Assets

Company assets are both physical (people, equipment, real estate, supplies,
tools, non-public information, funds) and logical (communication networks,
information systems, intellectual property, brand, goodwill, reputation).

Company Information

Technological change and an increasingly competitive environment make it
essential for us to safeguard company information. For further details on the
classification and safeguarding of TELUS' information assets, please refer to
the Corporate Security Policies.

Unless specifically published for external use, and public dissemination has
occurred, all company records, information, reports, data, plans, processes and
methods are considered company information and are prohibited from disclosure
without proper authorization. Access should be limited to those employees with
a legitimate business reason to seek the information.

Furthermore, TELUS is subject to strict securities rules regarding disclosure
of financial and other material information to the public. Selective disclosure
of confidential information by any team member can create liabilities for
TELUS. All discussions about TELUS in a public environment should comply with
the TELUS Policy on Corporate Disclosure and Confidentiality of Information.
For example, if a team member participates in an investment-related discussion
forum, chat room or bulletin board on the Internet, he or she must not disclose
any information about TELUS that may be confidential or potentially misleading
to investors.

Team members, including past members, must not use or disclose corporate trade
secrets, competitive information or other confidential, proprietary information
to benefit themselves or others. In situations where we would be willing to
share information, our Legal Department can draw up a confidentiality agreement
or license agreement to protect TELUS.

No team member should knowingly invoke a program or code that could damage
TELUS' information assets. All team members are responsible for taking
reasonable measures to ensure that software and data is clear of malicious code
and safe for use in TELUS' electronic data processing environment. It is also
important that you not share your computer access password.


Business Records

Accurate, reliable records are essential for effective company management to
enable us to meet our business, legal and financial obligations. We strive to
ensure all reports (whether for external or internal use), records, and other
data are factual, fair, complete, timely and understandable and are maintained
according to company practices and legal requirements. Information of
significant confidentiality should be properly identified, and respected as
such. To protect the accuracy of our records, only legal and approved software
is to be used on TELUS equipment.


Financial Transactions

It is expected those responsible for company financial transactions and records
follow approved procedures to protect, report, control, and accurately reflect
these transactions.

It is a violation to falsify time sheets or expense statements or to misuse
company-issued credit cards.

Team members whose duties involve authentication are responsible for the close
scrutiny and timely verification of all documents upon which monies are paid
out or received.


Property

We protect company facilities, equipment, tools, supplies, vehicles, property,
communication networks and information systems against loss, theft, damage,
vandalism, unauthorized use and unauthorized disposal.

Team members are expected to take reasonable measures to safeguard access
controls such as codes, identification cards, keys, cards and hand-held user
authentication devices. Team members are the first line of defense in
protecting TELUS assets.

The misuse or misappropriation of TELUS network, property or funds is not
permitted. Some examples of actions that are not allowed include:

    * Unauthorized use, or possession of TELUS property. This includes
      any and all types of equipment and supplies
    * Unauthorized use of the long distance network, fax machines,
      wireless devices, broadband, Internet, and email
    * Tampering with the network to bypass toll billing
    * Billing unauthorized charges
    * Unauthorized crediting of customer accounts

Team members must not make adjustments to their own accounts or services, or to
those of family members, friends, co-workers or acquaintances. Customer facing
business units may exercise their discretion to establish procedures for the
adjustment of team member accounts. Team members in Technology & Operations may
only do so if specifically authorized by trouble ticket or customer order.


Case Studies

Problem

How do I tell if a document (paper or electronic) is proprietary if it is not
marked as such?

    Action

    You should begin by asking the person who issued the document. If you
    cannot find the source of the information, consider the nature of the
    information itself. For example, does the information deal with
    highly sensitive company strategy, sales and marketing initiatives,
    or important human resources issues? If you are still uncertain,
    speak to your manager.

Problem

I am attending an important sales meeting next week and I have to prepare a
presentation using slides and fairly complicated charts. My co-worker has the
software I need to put the presentation together, and he has offered to lend me
his diskettes so I can install the program on my computer. Can I go ahead?

    Action

    No. The use of software on unlicensed computers is strictly
    prohibited by law. You must verify and respect the manufacturer's
    conditions of license or the agreement under which the software was
    acquired. By copying your colleague's software into your computer,
    you may be breaking the software company's agreement as well as
    copyright laws and placing the company at risk of prosecution for
    copyright infringement. You should speak to your group's computer
    administrator to discuss your software needs.

Problem

Chris is part of a team working on a piece of the quarterly financial results.
In the course of her work, she regularly sees the draft package of all the
results before they are approved for release. One evening, her neighbour asks
her, "How is TELUS doing these days?" In this casual conversation, is it
acceptable if she answers, "Well, I can tell you one thing; the results are
really good this quarter.

    Action

    No, it is not. This information is not yet public and therefore it
    should be regarded as confidential proprietary company information.
    In addition, if this information is material (i.e. would reasonably
    be expected to have a significant effect on the value or price of
    TELUS shares), Chris may also have engaged in "tipping" in violation
    of securities law.

Problem

Trina, a TELUS employee, and her partner Timothy are traveling to San Francisco
where Trina is attending a two-day conference on the convergence of data, IP,
and broadcasting technologies. Trina and Timothy are saving up to buy a new
home and carefully manage their personal expenses, so Trina is glad that the
Company calling card and credit card will be used to cover all business related
expenses. Timothy has brought only enough cash to pay for his meals and
incidental expenses.

While Trina is attending the conference, Timothy goes browsing and spots the
perfect gift for his parents' 40th wedding anniversary. It is a specialty item
that can't be purchased in Canada. Not only is it perfect, but it is on sale at
a 40% discount off the regular price. That evening Timothy tells Trina about
the gift and they talk about whether or not to buy it. They make several calls
home to talk with Timothy's brother and sisters about the gift, using Trina's
calling card. The next evening Trina and Timothy go to the store to purchase
the gift, using the company credit card. While they know the card is for
business use, they have left their personal credit cards at home and intend to
repay the Company as soon as they get back home. They are both so excited about
finding the perfect gift that neither realizes that Trina may be in serious
trouble when she returns to the office.

    Action

    Company issued assets such as calling cards and credit cards are for
    business use only. Even when assets such as calling cards have been
    authorized for personal use, such use must be reasonable and
    appropriate. For instance, a brief call home to talk with the family
    would be fine while several calls home to friends and extended
    families should be at one's personal expense. Use of the corporate
    credit card is strictly for business use only, and should not be used
    for personal purchases of any kind. Intent to repay does not negate
    the fact that the credit card has been used inappropriately. Since
    Trina has misused both the company calling card and credit card she
    may face discipline as a result of her actions.



Conflict of Interest

As team members, our first business loyalty must be to TELUS. We must avoid
situations or relationships that may be harmful or detrimental to the best
interests of the Company and result in a conflict of interest. A conflict
arises whenever we face a choice between what is in our personal interest
(financial or otherwise) and the interests of TELUS. We must not only avoid any
actual or potential conflict of interest, but also situations where there is an
appearance of conflict of interest.

We must disclose actual or potential conflicts of interest to our manager. Each
situation must be considered individually and the potential for conflict of
interest determined based on the parties involved, level of access to business
information, decision-making authority, job duties / responsibilities, position
within the organization, and potential impact on others.

Conflict of interest may exist when:

    * A team member has an ownership interest or is a director, officer
      or employee of a party that is engaged in a commercial relationship
      with TELUS and in the course of his or her employment with TELUS such
      team member:
         o Would be in a position to influence decisions that TELUS may make
           with respect to such third party; or
         o Would be exposed to TELUS confidential information relating to such
           party.
    * A relative or a person with whom a team member has a close personal
      relationship is an employee or significant shareholder of a competing
      company and is in a position to influence decisions affecting TELUS.
    * A team member is engaged on his or her own time in activities that
      compete with products and services offered by TELUS.
    * A team member is in a position to influence a decision to hire a
      relative, or friend of such team member.

This section is intended as a guide in those areas in which conflicts of
interest most often arise. It is not intended to be definitive or
all-inclusive, as guidelines cannot cover every situation that could give rise
to a conflict of interest.

Competition

Conflict of interest may occur when a team member or family member gains
personal benefit from an outside business in competition with TELUS. In such
circumstances, team members must take action to eliminate the conflict of
interest or the perception of conflict of interest.

This guideline does not prohibit team members from holding publicly traded
shares of a competitor provided that the team member does not have a
significant investment in the competing company and does not acquire the shares
based on material undisclosed confidential information obtained as a result of
employment with TELUS or by being a member of the Board of Directors of a TELUS
company.

Future Business

Over time, companies (including TELUS) may expand into new businesses or change
their product lines or services. Team members are responsible for re-examining
their individual situations on a regular basis to avoid becoming involved in a
conflict of interest situation where no such conflict previously existed.

Outside Demands

It is a conflict of interest to have an outside interest that demands so much
time and energy that it interferes with the team member's ability to do TELUS
work. This could include any charitable activities that require time and effort
during normal working hours, except for those activities previously approved by
the President and Chief Executive Officer or the Human Resources and
Compensation Committee of the Board of Directors or situations where the
individual is acting in a representative capacity at the request of TELUS with
the explicit and written permission of his or her manager.

Relationships

Conflict of interest may occur when a team or family member gains personal
benefit from a business relationship with TELUS, or from an outside business
with which TELUS has a relationship including suppliers, customers, or
contractors. In such circumstances, team members must take action to eliminate
the conflict of interest or the perception of conflict of interest.

Team members must not be involved in any negotiations or transactions with
suppliers, contractors, customers, or outside parties where the team member has
a personal, commercial or financial interest in the outcome of the
negotiations.

Board Members, Executives and Senior Finance Managers have a duty to disclose
whether they have a relationship with the Company's External Auditor.

Information

Team members may not disclose or use for any personal reason, including
personal gain, any confidential information (including competitive
intelligence) obtained through employment with TELUS or by being a member of
the Board of Directors of a TELUS company.

Insider Trading

As detailed in the TELUS Insider Trading Policy and summarized here, team
members may not trade in shares or securities of TELUS or any other company
while in possession of undisclosed material information relative to the shares
being traded. Nor may team members inform any other person, including their
immediate family, of any undisclosed material information, other than in the
"necessary course of business". The "necessary course of business" exception is
a limited one and exists so as not to unduly interfere with a company's
ordinary business activities. Please see the TELUS Insider Trading Policy for
more information.

Material information is information that could reasonably be expected to have a
significant effect on the market price or value of such securities.


Gifts and Benefits

TELUS team members shall not accept, directly or indirectly, gifts, gratuities,
rewards, favours or benefits from any organization or person having business
dealings with TELUS other than in the normal course of business.

TELUS team members shall not offer or provide gifts, gratuities, rewards,
favours or benefits to employees of any other company to secure or maintain
business other than in the normal course of business.

It is not a conflict of interest to accept hospitality or entertainment,
provided it is reasonable, and is within the limits of responsible and
generally accepted business practices. However, team members should not accept
gifts that are intended to influence, or appear to influence, a particular
business decision. Acceptable benefits in the normal course of business for
TELUS employees typically are less than $250 Canadian and include:

    * Transportation to or from the customer's or supplier's place of
      business
    * Hospitality suites
    * Attendance at sporting or cultural events
    * Business lunches or dinners
    * Small seasonal holiday gifts or prizes to be used in office draws
      and raffles

Team members with supplier selection, negotiation, purchasing or contract
management roles within TELUS are subject to more stringent professional
purchasing requirements regarding gifts and benefits and maintaining
appropriate relationships with suppliers and should therefore not accept any
gifts or benefits from suppliers or potential suppliers without the explicit
and written permission of his or her manager.

Case Studies

Problem

Arnold, a long time team TELUS member, and his wife have been looking for a way
to make some extra money. His neighbour introduces them to a multi-level
marketing firm that distributes hundreds of products at wholesale prices to
individuals. The individuals, in turn, sell the items to others at
higher-than-wholesale prices. Arnold's wife is confident she can sell the
products and they would benefit from the extra income. However, as Arnold flips
through the company catalogue, he sees the company sells products from a TELUS
competitor. His neighbour insists Arnold's wife can and should sell everything
in the catalogue. When Arnold points out the products in competition with
products offered by TELUS, his neighbour tells Arnold that since his wife is
not a team TELUS member it is okay for her to give her customers what they
want.

    Action

    Although Arnold's wife is selling a competitor's product, this does
    not automatically create a conflict of interest position. A conflict
    of interest will exist if Arnold's ability to act in the best
    interests of TELUS is compromised. Arnold and his wife need to
    carefully consider whether one or both of them have access to
    confidential or proprietary information such as, but not limited to,
    product specifications, marketing plans, or confidential team member,
    supplier, contractor, or customer information. Obtaining from, or
    disclosing to, one another such information will create a conflict of
    interest. Assuming no such situation exists, it is possible that
    Arnold would not be in a conflict of interest position. If he is in
    any doubt, Arnold should disclose and discuss the situation with his
    manager.


Problem

Jean Pierre, who works in a senior marketing position at TELUS, operates his
own business after hours. Though Jean Pierre uses his marketing skills, the
business in no way competes with TELUS business. Jean Pierre started small -
out of his basement. But his business is gradually generating more and more
revenue. He is considering hiring a part-time manager, as he is not ready to
leave his full time employment. Once his own business can pay him as much as
his salary does, Jean Pierre believes he will devote his full attention to it.
Jean Pierre believes he has the best of both worlds - a salary and a blossoming
business for future security. Is Jean Pierre in a conflict of interest?

    Action

    No. If, however, Jean Pierre's employer, TELUS, decides in the future
    to enter the same line of business Jean Pierre's company is in, Jean
    Pierre will be in a conflict of interest position, even though he was
    in that business first. Jean Pierre must then decide which of his two
    interests, his own company or his employer's, will receive his full
    attention. Since TELUS is not currently in the same line of business
    as Jean Pierre's company, Jean Pierre is operating ethically, as long
    as it remains an after- hours pursuit.

Problem

Courtney, a team member of TELUS Mobility, recently married a fellow who runs
his own business: he owns a local franchise selling a competitor's cellular
phone service. Courtney and her husband have agreed not to talk about their
business days. Instead their private conversations are filled with hopes and
dreams for their future, discussion of hobbies and mutual family events. One
day, Courtney's manager advises Courtney that she could be in a conflict of
interest position. What should Courtney do?

    Action

    Courtney is in a situation that may leave the impression of a
    conflict of interest. Even though she and her new husband have
    decided not to talk about their business lives, people outside the
    marriage-including her employer-may perceive she is in a conflict of
    interest position. Courtney should discuss her situation with her
    manager and identify the extent to which Courtney's access to TELUS
    Mobility's information could benefit her husband's company and
    develop alternatives to avoid any appearance of a conflict of
    interest.

Problem

I install telecommunications inside wiring for small-and medium-sized business
customers. With the growth of the Internet and other communications services,
demand for my expertise is booming. Can I take advantage of this opportunity
and start up an installation business on my own time?

    Action

    No. You cannot engage in any outside activity that might take
    business away from TELUS or any of its subsidiaries. Furthermore, as
    a team member, you are expected to contribute your energy and ideas
    to your job at TELUS. To avoid a conflict of interest, or even the
    appearance of such a conflict, you should discuss your planned
    outside business activities with your manager.

Problem

My husband has just become an executive sales manager for a company that
services the computers in my department. Do I need to tell anyone about this?

    Action

    Yes. One of your husband's competitors or a fellow TELUS team member
    could claim that your husband gets TELUS' business because you are a
    TELUS team member. You should notify your manager and make sure you
    are not involved in any decisions regarding your husband's company.

Problem

Tashie, a contract administrator with TELUS, loves the mountains. She has
mentioned her fondness for mountain parks a few times in general conversations
with a particular company supplier. While seeking bids for a major order,
Tashie receives a phone call from that supplier. He offers her and her family
free use of his luxury condominium in Banff. He says he is not using it and
says it would be a shame to have it sit empty when he knows how much Tashie
enjoys the mountains.

    Action

    The supplier has made a generous offer. Too generous. Her family's
    use of the condominium appears offered in exchange for future special
    treatment from Tashie in her position with TELUS. Tashie should
    decline the offer.

Problem

While at lunch, I overheard a conversation between two other TELUS team members
regarding company plans to make a minority investment in a business that
develops communications software. Can I buy shares in the software company or
suggest to my spouse that she do so?

    Action

    No. Although you found out about TELUS' planned investment by
    accident, you are prohibited from buying shares by virtue of the fact
    that you are a member of the TELUS team. Your spouse is also
    prohibited, because she obtained information about the proposed
    investment from you, a TELUS team member. However, you and your
    spouse will be able to buy shares when TELUS' investment in the
    software company becomes publicly disclosed.


Problem

Jack, a network engineer with TELUS, has significant influence over the
selection of the company's suppliers. Jack and the owner of one of TELUS'
suppliers, Don, have known each other since they were kids and have always
maintained a close personal relationship. Jack has no personal, commercial or
financial interest in the supplier. Is there still an appearance of conflict?



    Action

    Yes. Although Jack may not have a personal, commercial or financial
    interest in the outcome of the business relationship with Don, there
    may still be an appearance of bias or preferential treatment towards
    Don's company. Jack must take action to eliminate the perception of
    conflict of interest. Examples of such actions include removing his
    involvement from the selection of the company's preferred suppliers
    or having a second person (a superior or a peer) co-approve the
    supplier selection decision.


Dealing with Suppliers, Contractors, Consultants and Agents

We value our relationship with suppliers, contractors, consultants and
agents and those acting on behalf of TELUS because they contribute to
our overall success. We strive to ensure our business dealings with them
are ethical and that they understand our expectations of them for
compliance with applicable TELUS policies.

Selecting Suppliers, Contractors, Consultants and Agents

    * We strive to award business to suppliers, contractors, consultants
      and agents who are in compliance with applicable laws and regulations
      in their business relationships, including those with their
      employees, their communities and TELUS.

    * We strive to select our suppliers, contractors, consultants and
      agents based upon objective and fair criteria including but not
      necessarily limited to business need, price, service, quality,
      reputation for ethical conduct and health, safety and environmental
      business considerations.


Adherence to applicable TELUS policies

    * We expect the suppliers, contractors, consultants and agents with
      whom we do business to demonstrate similar values and standards as
      the applicable TELUS policies.

    * We strive to ensure that our suppliers, contractors, consultants
      and agents are made aware of applicable TELUS policies specific to
      the work for which they are being engaged.