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, 2006   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.


                       7.5%  Notes due 2007
                       8.0%  Notes due 2011
                       5.00% Notes due 2013
                       4.50% Notes due 2012
                       4.95% Notes due 2017

                        (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, 2006:

438,766,871 Common Voting Shares and 437,042,951 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

CONTROLS AND PROCEDURES	                                               1
IDENTIFICATION OF AUDIT COMMITTEE	                               1
AUDIT COMMITTEE FINANCIAL EXPERT	                               1
CODE OF ETHICS	                                                       1
PRINCIPAL ACCOUNTANT FEES AND SERVICES	                               2
OFF-BALANCE SHEET ARRANGEMENTS	                                       3
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS	                       3
UNDERTAKING	                                                       3
SIGNATURES	                                                       4
EXHIBIT INDEX	                                                       5




CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Based on the Registrant's evaluation as of December 31, 2006 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.

Management's Annual Report on Internal Control over Financial Reporting

The report of management on our internal control over financial reporting is
located under the heading "Management's Annual Report on Internal Control Over
Financial Reporting" in our audited consolidated financial statements, which
are filed as Exhibit 4 to this annual report on Form 40-F and is incorporated
by reference herein.


Attestation Report of the Registered Public Accounting Firm

The attestation report on management's assessment of our internal control over
financial reporting is located under the heading "Independent Auditor's Report
on Internal Controls" in our audited consolidated financial statements, which
are filed as Exhibit 4 to this annual report on Form 40-F and is incorporated
by reference herein.

Changes in Internal Controls

There were no changes in our internal control over financial reporting
identified in connection with the above evaluation that occurred during the
period covered by this annual report on Form 40-F that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

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 37 of TELUS' 2006 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 555
Robson Street, Vancouver, B.C. V6B 3K9.

The Board amended the Policy in February and May 2006 to add guidance on hiring
and supervising family members and close personal friends and to make other
amendments that 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, 2006 to December
31, 2006:

<TABLE>
<CAPTION>

                               Deloitte & Touche                 %
Type of work
<S>			       <C>			         <C>
------------------------------------------------------------------------------
Audit fees                     $3,757,244                        94.11
Audit-related fees             $  162,000                         4.06
Tax fees                       $   72,763                         1.83
All other fees
------------------------------------------------------------------------------
Total                          $3,992,007                         100
==============================================================================
</TABLE>


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                 %
Type of work
<S>			       <C>			         <C>
------------------------------------------------------------------------------
Audit fees                     $2,237.606                        90.7
Audit-related fees             $  195,584                         7.9
Tax fees                       $   33,180                         1.4
All other fees                       --                           --
------------------------------------------------------------------------------
Total                          $2,466,370                         100
==============================================================================
</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 determinations 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
19(b)) 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 filing 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/s Audrey T. Ho
        ________________
            Audrey T. Ho

        Vice President, Legal Services and General Counsel
        and Corporate Secretary

Date:   March 16, 2007


                     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 16, 2007

4. Audited Consolidated Financial Statements as at and for the year ended
   December 31, 2006 and Management's Discussion and Analysis

5. Consent of Independent Registered Chartered Accountants

6. Amended 2006 Ethics Policy




Exhibit 1:
                            Certification


I, Darren Entwistle 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)) and internal control over financial
  reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)designed such internal control over financial reporting, or caused such
     internal control over financial reporting to be designed under our
     supervision, to provide reasonable assurance regarding the reliability of
     financial reporting and the preparation of financial statements for
     external purposes in accordance with generally accepted accounting
     principles;

  (c)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

  (d)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; and

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 16, 2007.

       /s/ Darren Entwistle
       _____________________
           Darren Entwistle
           President and Chief Executive Officer


                            Certification


I, Robert G. McFarlane 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)) and internal control over financial
  reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such
      internal control over financial reporting to be designed under our
      supervision, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for
      external purposes in accordance with generally accepted accounting
      principles;

  (c) 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

  (d) 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; and


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 16, 2007.

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


Exhibit 2:
                      Certifications


Pursuant to 18 U.S.C. 1350, each of the undersigned officers of TELUS
Corporation ("TELUS") hereby certifies that to his knowledge, (a) the annual
report for the period ended December 31, 2006 (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 16, 2007.

      /s/ Darren Entwistle
      ____________________
          Darren Entwistle
          President and Chief Executive Officer


      Date: March 16, 2007.

      /s/Robert G. McFarlane
       ______________________
         Robert G. McFarlane
         Executive Vice President and Chief Financial Officer


Exhibit 3: Annual Information Form dated March 16, 2007.




                     TELUS Corporation
                   annual information form
             for the year ended December 31, 2006


                     March 16, 2007


FORWARD LOOKING STATEMENTS
TELUS
OPERATIONS, ORGANIZATION AND CORPORATE DEVELOPMENTS
EMPLOYEE RELATIONS
CAPITAL ASSETS AND GOODWILL
ALLIANCES
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
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
Appendix A:  Terms of Reference for the Audit Committee

                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 9, 2007 was Cdn. $1.1712= 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, 2004...............................1.2036
     December 31, 2005...............................1.1659
     December 29, 2006...............................1.1653

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 (including local
forbearance, local price cap reductions, wireless number portability and the
timing, rules, process and cost of future spectrum auctions); human resource
developments (including possible labour disruptions; process risks (including
internal reorganizations, conversion of legacy systems and billing system
integrations); financing and debt requirements (including share repurchases,
debt redemptions, potential issuance of commercial paper and changes to credit
facilities); tax matters (including acceleration or deferral of required
payments of significant amounts of cash taxes); health, safety and
environmental developments; litigation and legal matters; business continuity
events (including manmade and natural threats); economic growth and
fluctuations (including pension performance, funding and expenses); 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' 2006 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, 2006, the only material subsidiary of TELUS was TELUS
Communications Inc. ("TCI"), being the only subsidiary which owned assets that
constitute more than 10 per cent of the consolidated assets of TELUS as at
December 31, 2006 and generated sales and operating revenues that exceed 10 per
cent of the consolidated sales and operating revenues of TELUS for the year
ended December 31, 2006.

TELUS' wireline and wireless businesses were formerly located in TCI and
TELE-MOBILE Company ("TELE-MOBILE") respectively. On November 24, 2005, TELUS
announced the merger of those segments into a single operating structure (the
"wireline-wireless merger"). This was partly effected by way of a legal entity
restructure on March 1, 2006 (the "2006 legal entity restructure"), at which
time TELUS combined its wireline and wireless businesses into 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 2006 legal entity restructure,
3817873 Canada Inc., a partner in TELE-MOBILE, was continued into Alberta as
1219723 Alberta ULC. TELUS owns 100 per cent of the voting shares in TCI
directly, and 100 per cent of the partnership interests in TELE-MOBILE and 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 a leading national telecommunications company in Canada, offering a
wide range of wireline and wireless communications products and services
including data, voice and entertainment. TELUS generated $8.7 billion in annual
revenue in 2006 and has 10.7 million customer connections including 5.1 million
wireless subscribers, 4.5 million wireline network access lines and 1.1 million
Internet subscribers. As a result of TELUS' national growth strategy, revenue
grew by seven per cent in 2006 and total customer connections increased by
504,000.

Organization

TELUS is organized into four customer facing business units:

* Consumer Solutions, which provides wireline, and wireless Internet
  Protocol ("IP") data services, 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
  and wireless voice and 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.

In addition to the wireline-wireless merger, the corporate structure of TELUS
underwent other changes during the three years ended December 31, 2006. 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 communications regulatory requirements. These changes should allow
TELUS to better serve customers whose service requirements span Canada.

On December 14, 2004, Verizon Communications Inc. ("Verizon") divested all of
its 20.5 per cent equity investment in the Company by way of a public secondary
offering. Post divestiture, Verizon and the Company ceased to be related
parties. 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 15 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.

In 2005 and 2006, TELUS proceeded with additional internal reorganizations that
were modest in nature.

On September 11, 2006, the Company announced that its Board of Directors had
unanimously approved a proposal to reorganize the Company in its entirety into
an income trust. On October 31, 2006, the federal Minister of Finance announced
a new tax plan that would increase the taxation of income trusts. The Company
re-evaluated its proposal in light of the Minister's announcement and, on
November 24, 2006, the Company announced that it would not proceed with the
proposal as TELUS management and the Board of Directors believed it was no
longer in the best interests of the Company and its shareholders to do so.

DESCRIPTION OF THE BUSINESS AND GENERAL DEVELOPMENTS

TELUS is the largest incumbent telecommunications company in Western Canada and
one of the largest telecommunications companies in Canada. It has two
reportable segments: wireline and wireless.

In the wireline segment, TELUS offers the following solutions: voice (local,
long distance, call management and the sale, rental and maintenance of
telephone equipment); Internet (high-speed or dial-up with security features);
TELUS TV available in select neighbourhoods with Video on Demand and Pay Per
View; data (IP networks, private line, switched services, network wholesale,
network management and hosting); converged voice and data solutions (TELUS
IP-One Innovation(R) and TELUS IP-One Evolution(R)); hosting and infrastructure
(managed IT and infrastructure solutions delivered through TELUS' IP networks
connected to TELUS' Internet Data Centres); security solutions (managed and
non-managed solutions to protect business networks, messaging and data, in
addition to security consulting services); and customized solutions such as
contact centre services including Call Centre Anywhere(TM), conferencing
services (webcasting, audio, web and video) and human resource and health and
safety outsourcing solutions

In the wireless segment, TELUS offers the following solutions: digital voice
services (PCS postpaid, PCS Pay & Talk(R) prepaid, Mike(R) all-in-one (iDEN)
and Push To Talk(TM) capability on both Mike (Direct Connect(R)) and PCS
(Instant Talk(R))); Internet (TELUS Spark(TM) including wireless web, text,
picture and video messaging, music, ringtones, image and game downloads, TELUS
Mobile Music(R), TELUS Mobile Radio(TM) and TELUS Mobile TV(TM), and Wi-Fi
Hotspots); and data devices including PC cards and personal digital assistants
(PDAs) available for use on wireless high-speed (evolution data optimized or
EVDO), 1X and Mike packet data networks.

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

TELUS' national growth strategy

Since 1999, the Company has been pursuing a national wireline and wireless
growth strategy outside Alberta and B.C. into the rest of 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
(personal communication service) and other wireless spectrum nationally,
employees, infrastructure and sales distribution channels in central and
eastern Canada.

Non-core assets, including real estate properties, were sold in 2004, 2005 and
2006 for total proceeds of approximately $55 million.

TELUS' networks

The Company has a coast-to-coast 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, 2006, the total
amount of network fibre reached over 15,000 kilometres.

       TELUS wireline networks

TELUS' wireline network includes the Alberta and B.C. portion of the
transcontinental high-density fibre optic transmission system used by the
various incumbent local exchange carriers ("ILECs") across Canada. As part of
the national strategy, TELUS 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 competitive local exchange carrier ("CLEC")
exchanges or metropolitan areas. TELUS' network interconnects with the networks
of Verizon and other carriers in the U.S. for the exchange of U.S. and
international traffic.

       TELUS wireless networks

TELUS is one of three national Canadian facilities-based wireless service
providers, and offers wireless voice and data services to consumers and
businesses nationally on two networks. As a result of acquisitions and
purchases completed in previous years, TELUS holds a significant mobile
spectrum position.

       PCS/cellular networks

TELUS owns and operates a national digital PCS network and analogue/digital
cellular facilities in Alberta, B.C., and eastern Quebec, with 40 to 45 MHz of
PCS spectrum throughout all major population regions of Canada. Its national
PCS wireless network utilizes 1X, CDMA (code division multiple access) and EVDO
digital technology.
TELUS expanded its network coverage through roaming/resale agreements
originally entered into in 2001 ("the Roaming/Resale Agreements"), principally
with Bell Canada and certain of its affiliates. These agreements 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 the
EVDO high-speed network.

The Roaming/Resale Agreements expanded TELUS' addressable PCS market by
approximately 7.5 million people as of the end of 2006, while allowing TELUS to
avoid estimated capital expenditures of approximately $800 million over the
10-year term of the agreements. At the end of 2006, TELUS' national digital
networks, combined with coverage provided by the Roaming/Resale Agreements,
reached approximately 31.0 million Canadians.

In 2004, TELUS 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. 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.

Beginning in late 2005, EVDO services were introduced in major centers across
Canada offering to customers typical wireless data transfers at speeds of 400 -
700 kilobits per second. In 2006, TELUS continued its investment in
higher-speed wireless EVDO network technology and continued the enhancement of
digital wireless capacity and coverage.

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

       iDEN network

       TELUS also owns and operates Canada's only national enhanced specialized
mobile radio ("ESMR") network. ESMR digital wireless business communications
services are offered under the Mike trademark using iDEN technology from
Motorola. 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 and transport corridors 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 licenced 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(TM) Push to
Talk(TM) functionality, which provides low-cost instant connectivity for work
groups.

In 2006, Sprint/Nextel completed a mandatory shift of channels (rebanding) for
its iDEN service due to concerns from the Federal Communications Commission
("FCC") about interference with public safety operations. Part of the TELUS
Mike network utilizes channels under control of the FCC.

       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 7.7 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
$4,823 million for the year ended December 31, 2006 ($4,847 million for the
year ended December 31, 2005) representing 56 per cent of the total revenue of
TELUS for 2006 (60 per cent of the total revenue of TELUS for 2005).

       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 the fourth largest
wireline ISP in Canada. As at December 31, 2006, TELUS had 1,110,800 wireline
Internet subscribers, including 916,700 high-speed Internet subscribers. In
2006, the number of high-speed subscribers increased by approximately 20 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.

Through growth, investment and a series of strategic acquisitions completed
prior to 2002, TELUS also became a leading managed data-hosting provider in
Canada with a national network of intelligent Internet data centres.

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.

	Recent developments - consumer

An important element of the Company's wireline revenue growth strategy is the
TELUS Future Friendly(R) Home initiative in its incumbent service areas. TELUS
offers a suite of integrated, advanced digital and wireless services that
leverage its significant investments in high-speed Internet. Two services,
TELUS Home Networking and TELUS HomeSitter(R), were launched in 2004. In 2006,
TELUS continued the expansion of its digital television service, TELUS TV(R),
in select neighbourhoods in Calgary and Edmonton, and launched service in
Vancouver following extensive trials with TELUS employees. Employee trials of
TELUS TV are underway in Rimouski. In September 2006, TELUS announced that it
intends to invest $600 million between 2007 and 2009 to enhance its broadband
infrastructure. This investment will enable emerging high-speed Internet
services and expand network coverage across British Columbia, Alberta and
Eastern Quebec . The broadband project complements a rural capital investment
program to bring high-speed Internet services to more than 450 additional
remote communities B.C., Alberta and Eastern Quebec by 2010. (See "Management's
Discussion and Analysis - Risks and Risk Management - Section 10.3 Regulatory"
in TELUS' 2006 Annual Report - Financial Review).

	Recent developments - business

In 2004, TELUS launched the IP-One? product family, offering it 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?. This 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. As part of this initiative, in the third
quarter of 2006, the Company successfully implemented a pilot billing system
conversion for a sample set of customers. A commercial launch of the converged
billing system platform for consumer accounts is expected to progress in 2007,
with additional phases of conversion planned over the next few years. The
expected benefits of this project include streamlined and standardized
processes and the elimination over time of multiple legacy information systems.
(See "Management's Discussion and Analysis - Risks and Risk Management -
Section 10.5 Process risks" in TELUS' 2006 Annual Report - Financial Review).

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 advantage it has in managed data and IP solutions, utilizing its IP
network to secure recurring data revenues in Ontario and Quebec.

A partnership indirectly wholly owned by TELUS delivers human resources and
end-to-end solutions to healthcare and other organizations.

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. In October 2005, TSS entered into a
10-year contract with the Calgary Board of Education, in which 50 Calgary Board
employees were transferred to TSS. This contract provides 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.

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 2006, in addition to
several other multi-million dollar contracts, TELUS secured a five-year
$140 million contract with the Government of Ontario to provide fully managed
network access services.

In 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. In 2006, TELUS further increased its ownership interest in
Ambergris.

In 2006, TELUS strengthened its IT capabilities by acquiring Assurent Secure
Technologies, a world-leading Canadian information technology security services
and research company. TELUS is leveraging Assurent's global reputation and
expertise to provide solutions that help customers protect their assets,
identities, and information.

TELUS continues to focus on enhancing operational efficiency and effectiveness
in its wireline business. In 2004 and 2005, a number of 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 2006, TELUS fully or partially contracted out a number of
non-core functions including property management, custodial services, building
maintenance, mail services, fleet maintenance, and pay phone coin counting. In
addition, management rationalized a number of offices into larger centres and
completed the consolidation of two field dispatch centres. In addition, a
number of process improvement and automation initiatives were undertaken.

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"). See "TELUS' national growth strategy".

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

<TABLE>
<CAPTION>

Wireline business                                       December 31
                                              2006          2005         2004
<S>                                           <C>	    <C>	         <C>
-------------------------------------------------------------------------------
Network access lines (000's)                  4,548         4,691        4,808
High-speed Internet net additions (000s)        154            73          128
High-speed Internet subscribers (000's)         917           763          690
Dial-up Internet net reductions (000's)         (42)          (46)         (38)
Dial-up Internet subscribers (000's)            194           236          282
Total Internet subscribers (000's)            1,111           999          971
Full-time equivalent employees               23,884(2)      n/a(1)      18,839
Total employees                              24,228(2)   22,888(2)      19,500

<FN>
(1) 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.
(2) Includes TELUS International.
</FN>
</TABLE>

TELUS - wireless business segment

TELUS is 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.

For the year ended December 31, 2006, the wireless business segment accounted
for revenue of $3,858 million ($3,296 million for the year ended December
31, 2005), representing approximately 44 per cent of the total revenue of TELUS
in 2006 (40 per cent of the total revenue of TELUS for 2005).

In 2006, TELUS introduced SPARK(TM), a new brand name for its portfolio of
mobile entertainment, information and messaging services. TELUS Spark services
include TELUS Mobile Music(R) and TELUS Mobile Radio(TM), launched in 2006 and
TELUS Mobile TV(TM), launched in August 2005.

EVDO services, first launched in late 2005, are now available in more than 50
regions across Canada, representing two-thirds of the Canadian population.

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

<TABLE>
<CAPTION>
Wireless business                                        December 31
                                                2006        2005         2004
<S>                                             <C>	    <C>	         <C>
-------------------------------------------------------------------------------
Net subscriber additions (000's)                  535         584          512
Gross subscriber additions (000's)              1,293       1,279        1,121
Wireless subscribers (000's)                    5,056       4,521        3,936
Penetration rate (1)                            16.2%       14.5%        12.9%
Wireless market share, subscriber based           27%         27%          26%
Average monthly revenue per subscriber unit       $63         $62          $60
Minutes of use per subscriber per month ("MOU")   403         399          384
Cost of acquisition, per gross addition          $412        $386         $389
Monthly deactivations (churn rate)               1.3%        1.4%         1.4%
Digital population coverage (millions)           31.0        30.6         30.0
Full-time equivalent employees                  7,210         n/a(2)     5,915
Total employees                                 7,727       6,931        6,298

<FN>
(1) Subscribers divided by population coverage.
(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.
</FN>
</TABLE>



EMPLOYEE RELATIONS

As at December 31, 2006, TELUS had a total of approximately 31,955 employees.
Approximately 15,055 of them (approximately 11,629 in the wireline business
segment and 3,426 in the wireless business segment) were unionized.

On November 20, 2005, a new five-year collective agreement came into effect
covering approximately 14,200 employees (including inactive employees) in both
the wireline and wireless business segments. The new agreement replaces six
previously separate collective agreements and applies to all unionized team
members represented by the Telecommunications Workers Union ("TWU") located
predominantly in B.C., Alberta, Ontario and Quebec . The agreement expires on
November 19, 2010.

TELUS - wireline business segment


The TWU represents approximately 9,973 unionized employees in TELUS' wireline
operations across Canada. These employees are covered by the new collective
agreement with the TWU mentioned above. Approximately 1,020 office, clerical
and technical employees in the wireline segment in Quebec are represented by
the Syndicat Quebecois des employes de TELUS, under a new collective agreement
that will expire on December 31, 2009. This collective agreement, signed in
September 2006, replaced the former agreement which expired on December 31,
2005. In addition, the Syndicat des Agents de Maitrise de TELUS ("SAMT")
represents approximately 511 unionized employees in TELUS' wireline operations
in Quebec under a collective agreement that will expire on March 31, 2007. TSS,
which employs approximately 125 unionized employees in the payroll and human
resources services business, is signatory to three separate collective
agreements in the provinces of Alberta and BC.


TELUS - wireless business segment

TELUS' wireless operations employed approximately 3,426 unionized employees in
two separate bargaining units with the majority of unionized employees
(approximately 3,406 clerical and technical employees across Canada) included
in the TWU's national bargaining unit and a smaller number (approximately 20
professional and supervisory employees) represented by the "SAMT" in Quebec
under a collective agreement that will expire on March 31, 2007.


Collective Bargaining in 2007

Renewal negotiations on the two collective agreements with the SAMT have
commenced in 2007. The terms of these contracts will continue to apply until
new collective agreements are put in place. (See "Management's Discussion and
Analysis - Risks and Risk Management - Section 10.4 Human Resources" in TELUS'
2006 Annual Report - Financial Review).

CAPITAL ASSETS AND GOODWILL

As at December 31, 2006, the total investment of TELUS in capital assets and
goodwill was recorded at a net book value of $14.2 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, 2006, the total investment of
TELUS in capital assets was recorded at a net book value of $11.0 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
licences, which had a net book value of $3.0 billion as at December 31, 2006,
comprise the majority of identifiable intangible assets included in capital
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 licences 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
licences, subscriber base and computer software.

As at December 31, 2006, 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 2006, 2005 and 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.
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' 2006 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 had 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 2004 sale by Verizon of its equity interest in TELUS,
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.

The alliance agreement between TELUS and Verizon (the "Verizon Agreement"),
which came into effect on January 1, 2001, 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 licenced 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 licences in Canada to specified Verizon
trademarks, and software and technology where such licences 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 licenced 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. TELUS had renewed the
Verizon Agreement each year and as at December 14, 2004, the term of the
agreement was further extended to December 31, 2008. In most instances, TELUS
will have a right to use the licensed software and technology on a
non-exclusive basis following the expiry or other termination of the agreement.

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.

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 term 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 AND REGULATORY ACTIONS

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. On November 2, 2006,
the Ontario Superior Court of Justice ruled that the lawsuit should be treated
as a representative action by all bondholders and not just the named
plaintiffs. The magnitude of damages payable by the Company remains to be
determined. The magnitude of damages will depend in part on the method of
calculating damages, which remains to be litigated. TELUS had accrued an
estimate of damages as part of financing costs for the second quarter of 2005,
and increased its accrual in the fourth quarter of 2006 to take into account
the November ruling.

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 CHRC 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. 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. On July 18, 2006, the
Saskatchewan court declined to certify the action as a class action, but
granted the plaintiffs leave to renew their application in order to further
address certain statutory requirements respecting class actions. 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 carriers, holders of radio authorizations or licences,
and holders of broadcasting 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 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 services and broadcasting services in
Canada is regulated by the Canadian Radio-television and Telecommunications
Commission (the "CRTC") pursuant to the Telecommunications Act and the
Broadcasting Act, respectively. In addition, the provision of cellular and
other wireless services using radio spectrum is subject to regulation and
licensing by Industry Canada pursuant to the Radiocommunication Act.

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

Regulation of local services

TELUS is subject to regulation as an ILEC in Alberta, B.C. and in eastern
Quebec and as a CLEC in other areas of Canada.

Price cap regulation

Price cap regulation applies to a basket of local services provided by ILECs.
The current price cap basket structure has 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. The current price
cap period is scheduled to end on May 31, 2007 for TELUS' ILEC operations in
Alberta and B.C. and on July 31, 2007 for TELUS' ILEC operations in eastern
Quebec. For specific details on price cap constraints, see Note 4 to the Annual
Consolidated Financial statements, on page 77 of the Financial Review in TELUS'
2006 Annual Report.

In May 2006, the CRTC released Public Notice 2006-5 and initiated a review of
the current price regulation regime for the purpose of establishing the
parameters for the next price cap period beginning June 1, 2007. TELUS proposed
a single price cap for its ILEC operations in B.C., Alberta and Quebec. This
review was completed in November 2006 and the CRTC is expected to render its
decision in this proceeding by the end of April 2007.

On February 16, 2006, the CRTC released Decision 2006-9 and determined that the
funds that had accumulated in TCC'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.

On September 1, 2006, TCC filed its proposal for broadband expansion and
service enhancement for the disabled with the CRTC. On September 22, 2006, the
Federal Court of Appeal granted the Consumers Association of Canada and the
National Anti-Poverty Organization leave to appeal CRTC Telecom Decision
2006-9. These consumer groups are expected to ask the Court to direct rebates
to local telephone subscribers, rather than have the accumulated deferral
account funds used for purposes determined by the CRTC, as noted above. Bell
Canada was also granted leave to appeal Decision 2006-9 on the grounds that the
CRTC would exceed its jurisdiction to the extent it approves rebates from the
deferral account. These matters are expected to be heard in 2007.

Subsequently, on November 30, 2006, the CRTC issued Public Notice 2006-15 to
examine in greater detail the ILECs' proposals to dispose of the funds in their
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 in 2005 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 also applied to the CRTC in 2006 to adjust its
quality of service results on retail and competitor services 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 for the
third and fourth quarters of 2005 and the first quarter of 2006. The CRTC
issued a decision for the June 2005 Alberta flooding which resulted in a
partial rebate for competitor services. TELUS is awaiting decisions from the
CRTC on the remaining applications.

Local Forbearance

The CRTC and federal government announced many changes to local forbearance in
2006, beginning on April 6, 2006, when the CRTC issued Forbearance from the
regulation of retail local exchange services, Decision 2006-15, and established
the framework for forbearance (price deregulation) for local exchange services.
This framework provides guidance on when the ILECs will be eligible for
forbearance for their retail residential and business local exchange services.
Wholesale regulation related to the provision of local exchange service was not
within the scope of this proceeding. As proposed, an ILEC will be eligible for
forbearance from price regulation of residential or business retail local
exchange services in individual geographic areas known as "Local Forbearance
Regions" (LFRs) when all of the following five conditions are satisfied: (1)
the ILEC's competitors in the LFR have a combined market share of at least 25%;
(2) the ILEC has met the required standards for each of 14 specified competitor
quality of service indicators for the six-month period preceding the date of
the application; (3) The ILEC makes certain services available to competitors
(i.e., bundled ADSL (high speed Internet access), Ethernet access and transport
services); (4) the ILEC has implemented competitor access to its operational
support systems; and (5) the ILEC has demonstrated that competition exists in
the relevant market.

The CRTC also shortened the period during which an ILEC is prohibited from
contacting a former residential local exchange customer (regarding any
services) for the purpose of attempting to win the former customer back from 12
months to 90 days in all LFRs (though the existing restrictions on promotions,
bundling, and waiving of service charges remain in place until forbearance).
The equivalent winback restriction for business customers remains at 90 days.
In addition, an ILEC will be eligible to have the local winback no-contact rule
eliminated entirely in a given LFR when both of the following conditions are
satisfied: (1) the ILEC's competitors in the LFR have a combined market share
of at least 20%; and (2) the ILEC has met the required standards for each of 14
specified competitor quality of service indicators for the three-month period
preceding the date of the application.

On October 5, 2006, TELUS applied to the CRTC to review and vary Decision
2006-15 by either removing the requirement for the ILECs to meet competitor
quality of service standards as part of the forbearance criteria, or to limit
the extent to which competitor quality of service standards are included in the
forbearance test.

On December 11, 2006, the Minister of Industry announced a proposal to change
Decision 2006-15 by revising the criteria for the forbearance of retail local
exchange services. His proposal would eliminate the current marketing
restrictions on winbacks and other promotions; reduce the geographic area for
which forbearance must be applied to either an exchange or a local
interconnection region (LIR) at the option of the ILEC; allow forbearance for
residential local exchange service when there are three facilities-based
providers present within an exchange or local interconnection region and nine
quality of service measures have been met for a six-month period; and allow
forbearance for business local exchange service when there is another
facilities-based provider present within an exchange or local interconnection
region and nine quality of service measures have been met for a six-month
period.

In addition to the initiatives related to Decision 2006-15, the CRTC initiated
Public Notice 2006-9 to determine whether mobile wireless services should be
considered to be part of the same relevant market as wireline local exchange
services for forbearance analysis purposes. The CRTC also initiated Public
Notice 2006-12 to reassess certain aspects of Decision 2006-15 including: (1)
whether the market share forbearance criterion threshold of 25 percent should
be adjusted; and (2) whether the 20 percent market share loss threshold related
to the local winback rule remains appropriate.

In March 2006, the Telecommunications Policy Review panel issued its report on
its review of Canada's telecommunications policy and regulatory framework,
initiated by the federal government in 2005. The panel recommended, first, an
end to the presumption that telecommunications services must be regulated and,
second, a shift to reliance on market forces. TELUS endorses these
recommendations and will continue to press for their implementation in 2007.

Finally, on December 18, 2006, the Minister of Industry issued a direction to
the CRTC to rely on market forces to the maximum extent feasible; to ensure
technological and competitive neutrality and enable competition from new
technologies; to use tariff approval mechanisms that are as minimally intrusive
as possible; to complete a review of the framework for mandated access to
wholesale services; to publish and maintain performance standards for its
various processes; and, to continue to explore new ways of streamlining its
processes.

Local competition framework

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

Essential Services.

The CRTC requires ILECs like TELUS to 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 defines "essential facilities" as facilities
that are monopoly-controlled, required by competitors as an input to provide
services and that cannot be economically or technically duplicated by
competitors. The CRTC issued Public Notice 2006-14 in November 2006 which will
review the current definition of an essential service and the classifications
and pricing principles for these services and non-essential services made
available by the ILECs to their competitors. This proceeding will include an
oral hearing and is currently scheduled to conclude in January 2008. TELUS has
no assurance that the regulatory regime for the provision of essential and
non-essential services to competitors will be less onerous than the current
regime.

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 2006, the CRTC
finalized the contribution revenue percentage charge for 2006 at 1.03 per cent
and set an interim rate for 2007 at 1.03 per cent as well (see "Management's
Discussion and Analysis - isks and risk management - Section 10.3 Regulatory -
Price cap regulation" in TELUS' 2006 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.

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 five per cent 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.

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.

In Decision 2006-53, the CRTC reaffirmed Decision 2005-28 and the regulatory
regime established for VoIP services. However, on November 9, 2006, the
Governor in Council varied Decisions 2005-28 and 2006-53. As a result, the CRTC
will no longer regulate the provision of access independent VoIP services
provided by the ILECs within their incumbent territories.

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
10.3 Regulatory - "Radiocommunications licences regulated by Industry Canada"
and "Foreign ownership restrictions" in TELUS' 2006 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. In Decision 2005-72,
the CRTC 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 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.

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 fixed services in the
2.3/3.5 GHz band throughout Canada, paging services, analogue two-way radio
services, and legacy mobile-telephone and other miscellaneous wireless
services.

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 risk management - Section 10.3 Regulatory -
Radiocommunications licences regulated by Industry Canada" and "Foreign
Ownership Restrictions" in TELUS' 2006 Annual Report - Financial Review). The
spectrum licences for the auctioned 24/38 GHz, 2.3/3.5 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' 2006 Annual
Report - Financial Review).

Upcoming spectrum auction. On February 16, 2007, Industry Canada released a
discussion paper for the upcoming auction for advanced wireless services (AWS)
spectrum in various spectrum bands. Comments on the consultation paper are due
in May 2007, with further reply in June 2007. It is expected that the final
auction rules will be issued in the fall with an auction likely in early 2008.
Timing of the auction is at the discretion of the Industry Minister.

While the auction(s) may provide opportunities for TELUS to increase capacity
for third generation ("3G") and others services, there is a risk that the
process may result in the establishment of increased entry on a national or
regional basis.

Broadcasting services

The Broadcasting Act governs all types of broadcasting activities including
commercial off-air radio and television broadcasting, the operation of other
programming services such as specialty and pay television, as well as the
distribution of television services through cable or satellite undertakings.

The Broadcasting Act and its 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 ("BDU") licences to provide cable television service. In 1997, the
CRTC confirmed that new entrant BDUs, including telecommunications common
carriers, would not be rate regulated and would not have an obligation to
serve. However, the CRTC confirmed that new entrants would have to meet all the
same content and carriage obligations as incumbent BDUs.

TELUS has been licenced by the CRTC to operate Class 1 Regional BDUs in each of
B.C., Alberta and Quebec utilizing its IP facilities. TELUS also holds a
national licence to operate a video-on-demand programming service. All of
TELUS' services are fully digital and thus benefit from the more flexible
regulatory regime regarding BDU packaging established by the CRTC in its
Digital Migration Framework.

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 divided 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 Inc. including its
subsidiary Bell Canada, 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 ISP 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 TELUS' primary
competitor 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-TV companies including Shaw
Communications, Rogers, Videotron and Cogeco, are expected to be the more
capable competitors in this area having already
captured approximately 1,200,000 VoIP service subscribers in 2006. 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 intensified in 2006 and is expected to continue to do so
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-TV 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. In addition, both Bell Mobility and Rogers Communications are
supporting other MVNO partnerships with cable-TV companies such as Videotron
and Eastlink, and other resellers, such as President's Choice, Petro-Canada and
7-Eleven. In the price-sensitive market, Bell and Rogers are promoting their
respective discount brand offerings to compete against the MVNOs and TELUS. In
2006, TELUS signed an agreement with Amp'd Mobile, a specialized provider of
wireless multimedia services to target the young adult market with services
beginning in 2007. Competition within the wireless market is anticipated to
remain intense. There is a risk that the auction processes for AWS or a future
auction of 2.5 GHz spectrum could lead to additional wireless providers or
increased entry on a regional basis.

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 unlicenced 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. In 2006, the expansion continued with a targeted commercial
launch in Vancouver, and there are plans underway to launch it in other major
centres within its ILEC territories. In this segment, TELUS competes with
established cable-TV video providers Shaw Communications and Cogeco, and with
direct-to-home broadcast satellite companies, Bell ExpressVu and Star Choice.

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 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, 2006,
are shown below.

<TABLE>
<CAPTION>

Quarter ended (1)                     2006        2005        2004
<S>                                   <C>	  <C>	      <C>
-------------------------------------------------------------------------------
March 31                              $0.275      $0.20       $0.15
June 30                               $0.275      $0.20       $0.15
September 30                          $0.275      $0.20       $0.15
December 31                           $0.375      $0.275      $0.20

<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 3,
2006, TELUS announced that it was increasing its dividend to $0.375 per share
on the issued and outstanding Common and Non-Voting Shares. This 36% 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' 2006 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, 2006
from each agency is below. The outlook or trend for TELUS from three agencies
was stable, while Moody's investment grade rating was under review for possible
upgrade.

Subsequent updates

On February 16, 2007, DBRS assigned a preliminary short term credit rating of
R-1 (low) with a stable trend to TELUS' planned $800 million Commercial Paper
program.

On February 26, 2007 Moody's Investor Service ("Moody's") upgraded the rating
for TELUS' senior unsecured to Baa1 from Baa2 with a stable outlook.

On March 5, 2007, DBRS Limited ("DBRS") upgraded the rating of TELUS Notes to A
(low) from BBB (high) and confirmed its A (low) ratings for TCI debt and R-1
(low) rating for TELUS' commercial paper, all with a stable trend.

On March 13, 2007, TELUS closed an offering of 4.50% Notes, Series CC, due
March 15, 2012 (the "4.50% Notes") for aggregate proceeds of approximately $300
million, and 4.95% Notes, Series CD due March 15, 2017 (together with the 4.50%
Notes, the "Notes") for aggregate gross proceeds of approximately C$700
million. Net proceeds of the offering will be used for general corporate
purposes including the redemption of TELUS' 7.50 % U.S. $ Series 1 Notes due
June 2007. The Notes have been rated BBB+, stable outlook, by Standard &
Poor's, Baa1, stable outlook, by Moody's, BBB+, stable outlook by Fitch Ratings
("Fitch") and A(low), stable trend by DBRS.


<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
Institution   Rating                                            Outlook
<S>           <C>                                               <C>
------------------------------------------------------------------------------------------------------------
Fitch        "BBB" ratings indicate that there is               An Outlook indicates the direction a rating
              currently expectation of low credit risk.        is likely to move over a one to two-year
              The capacity for payment of financial             period.Outlooks may be positive, stable or
              commitments is considered adequate but            negative. A positive or negative Rating
              adverse changes in circumstances and              Outlook does not imply a rating change is
              economic conditions are more likely to            inevitable. Similarly, ratings for which
              impair this capacity. This is the lowest          outlooks are'stable' could be upgraded or
              investment grade category.                        downgraded before an outlook moves to
                                                                positive or negative if circumstances
              The modifiers "+" or "-" may be appended          warrant such an action.
              to ratings "AA" to "CCC" to denote
              relative status within major rating
              categories.
------------------------------------------------------------------------------------------------------------
DBRS         Long-term debt rated "A" is of satisfactory        Each DBRS rating category is appended with
             credit quality. Protection of interest and         one of three rating trends - "Positive",
             principal is still substantial, but the            "Stable",or "Negative". The rating trend
             degree of strength is less than that of AA         helps to give the investor an understanding
             rated entities.                                    of DBRS's opinion regarding the outlook for
                                                                the rating in question. However, the
             While "A" is a respectable rating, entities        investor  must not assume that a positive or
             in this category are considered to be more         negative trend necessarily indicates that a
             susceptible to adverse economic conditions         rating change is imminent.
             and have greater cyclical tendencies than
             higher-rated securities.

             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.

             DBRS' short-term debt rating scale is meant
             to give an indication of the risk that a
             borrower will not fulfill its near-term debt
             obligations in a timely manner. The ratings
             range from R-1 (high) to D. Short-term debt
             rated R-1 (low) is of satisfactory credit
             quality. The overall strength and outlook for
             key liquidity, debt, and profitability ratios
             is not normally as favourable as with higher
             rating categories, but these considerations
             are still respectable. Any qualifying negative
             factors that exist are considered manageable,
             and the entity is normally of sufficient size
             to have some influence in its industry.
------------------------------------------------------------------------------------------------------------
S&P          An obligation rated 'BBB' exhibits adequate        Rating outlooks assess the potential
             protection parameters.However, adverse             direction of a rating, typically over a
             economic conditions or changing circumstances      six-month to two-year period. An outlook
             are more likely to lead to a weakened capacity     does not necessarily precede a rating change
             of the obligor to meet its financial commitment    or CreditWatch placement. Outlooks may be
             on the obligation.                                 positive,negative, stable, or developing
                                                                and they accompany all long-term credit
             The ratings from 'AA' to 'CCC' may be modified     ratings except those on CreditWatch.
             by the addition of a plus or minus sign to
             show relative standing within the major
             rating categories.
------------------------------------------------------------------------------------------------------------
Moody's      Issuers rated "Baa" are subject to moderate        "Under Review for Upgrade"  A Ratings Under
             credit risk. They are considered medium-           Review designation indicates that the issuer
             grade and as such may possess certain              has one or more ratings under review for
             speculative characteristics.                       possible change, and thus overrides the
                                                                outlook designation
             Moody's appends numerical modifiers 1, 2,
             and 3 to each generic rating classification        Moody's also provides a rating outlook which
             from 'Aa' through 'Caa'. The modifier 1            is an opinion regarding the likely direction
             indicates that the obligation ranks in the         of a rating over the medium term. Where
             higher end of its generic rating category;         assigned, rating outlooks fall into the
             the modifier 2 indicates a mid-range ranking;      following four categories: Positive (POS),
             and the modifier 3 indicates a ranking in the      Negative (NEG), Stable (STA), and Developing
             lower end of that generic rating category.         (DEV -- contingent upon an event.
------------------------------------------------------------------------------------------------------------
</TABLE>

See also "Material Contracts" on page 40 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. Each was elected at TELUS' annual general meeting on May 3, 2006
for a one year term.

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        Corporate Director
Montreal, Quebec

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

Brian A. Canfield (5)                 1989        Chair,
Point Roberts, Washington                         TELUS Corporation

Pierre Y. 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, Advisory Board,
Toronto, Ontario                                  Tricap Restructuring Fund
                                                  (investment fund)

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        President,
Orangeville, Ontario                              The Fifth Line Enterprise
                                                  (strategic advisory services
                                                  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: Charles Baillie was Chairman and Chief
Executive Officer of the Toronto-Dominion Bank from 1998 until 2003;
Micheline Bouchard was President and CEO, ART Advanced Research
Technologies Inc. from 2002 to July 2006 and Corporate Vice-President
and General Manager, Enterprise Services Organization of Motorola Inc.
in Chicago from 2001 to 2002; and Don Woodley was interim CEO and
President of GENNUM Corporation from November 2005 to September 2006.

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,
Westmount, 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 with TELUS,
its subsidiaries, affiliates or predecessors thereof, except as described as
follows: Janet Yale was President and Chief Executive Officer of the Canadian
Cable Television Association from 1999 until she joined TELUS in 2003.

TELUS shares held by directors and officers

As at March 9, 2006, the directors and executive officers of TELUS, as a group,
beneficially owned, directly or indirectly, or exercised control or direction
over 86,623 Common Shares, which represented approximately 0.05 per cent of
the2
outstanding Common Shares and 476,505 Non-Voting Shares, which represented
approximately 0.3 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, 2006,
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, John 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) ("CCAA"). In March 2006, Mr. Lacey was appointed to the board
of directors of Stelco Inc. ("Stelco") as a nominee of Tricap Management
Limited ("Tricap"). Stelco filed for bankruptcy protection under the
CCAA in January 2004. Mr. Lacey's appointment as a director was part of
a court supervised restructuring, from which Stelco emerged on March 31,
2006 and pursuant to which Tricap had the right to appoint four of
Stelco's nine directors. Charles Baillie is a director of Dana
Corporation, which filed for bankruptcy in March 2006 under Chapter 11
of the U.S. Bankruptcy Code. The company has indicated that it expects
to emerge from bankruptcy in late 2007.

Other than as disclosed, for the ten years ended December 31, 2006,
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, in 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. On June 14,
2006, and at the request of Cognos Incorporated ("Cognos"), the Ontario
Securities Commission ("OSC") issued a cease trade order against all
directors of Cognos, including Pierre Ducros, in connection with a delay
in filing its annual report with Canadian regulators. The delay was
related to a review by the United States Securities and Exchange
Commission ("SEC") of the way Cognos allocated revenue between
post-contract customer support and licence fees. The OSC lifted the
cease trade order on August 3, 2006 after the SEC concluded that it did
not object to Cognos' revenue recognition policy.

MARKET FOR SECURITIES

TELUS Common Shares and Non-Voting Shares are listed on the Toronto
Stock Exchange ("TSX") under "T" and "T.A" respectively and the TELUS
Non-Voting Shares are listed on the New York Stock Exchange under "TU".
Monthly share prices and volumes for 2006 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        49.29     44.23     16,876,142     47.98     43.00    10,318,998
-------------------------------------------------------------------------------
February       45.75     42.62     23,080,182     45.20     42.05    26,826,870
-------------------------------------------------------------------------------
March          47.98     44.36     20,433,280     47.30     44.00    12,428,985
-------------------------------------------------------------------------------
April          47.45     44.85     11,383,622     46.70     44.20     8,934,425
-------------------------------------------------------------------------------
May            48.88     43.72     17,346,083     48.25     43.06    12,482,466
-------------------------------------------------------------------------------
June           47.33     43.52     16,820,767     46.09     42.57     9,023,909
-------------------------------------------------------------------------------
July           49.12     44.39     12,982,608     47.84     43.10     9,307,729
-------------------------------------------------------------------------------
August         54.97     48.46     23,195,348     53.35     47.15    11,932,765
-------------------------------------------------------------------------------
September      64.74     52.54     40,899,827     64.25     50.54    36,100,026
-------------------------------------------------------------------------------
October        65.60     60.37     29,504,351     65.35     59.94    20,128,831
-------------------------------------------------------------------------------
November       58.70     53.00     34,876,606     58.01     51.81    26,538,141
-------------------------------------------------------------------------------
December       57.49     52.15     21,208,325     56.30     51.15    13,588,610
-------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
NYSE - Non-Voting
-------------------------------------------------------------------------------
Month	                  High ($)	          Low ($)	     Volume
<S>                       <C>                     <C>                <C>
-------------------------------------------------------------------------------
January	                  41.69	                  37.04	             1,214,900
-------------------------------------------------------------------------------
February	          39.21                   36.39              1,447,100
-------------------------------------------------------------------------------
March                     41.22                   38.50              1,577,400
-------------------------------------------------------------------------------
April                     41.48                   37.96              1,153,300
-------------------------------------------------------------------------------
May                       43.58                   37.69              1,423,600
-------------------------------------------------------------------------------
June                      41.90                   38.28              2,267,500
-------------------------------------------------------------------------------
July                      42.08                   37.87                783,700
-------------------------------------------------------------------------------
August                    48.02                   41.83              1,143,300
-------------------------------------------------------------------------------
September                 57.54                   45.08              2,082,300
-------------------------------------------------------------------------------
October                   58.00                   52.94              1,281,900
-------------------------------------------------------------------------------
November                  52.51                   47.11              3,124,600
-------------------------------------------------------------------------------
December                  48.98                   44.26              1,620,200
-------------------------------------------------------------------------------
</TABLE>


INTERESTS OF EXPERTS

Deloitte & Touche LLP has audited the Consolidated financial statements
of the Company for the years ended December 31, 2006 and 2005, 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 E. T. 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 currently serves as the
Chair of the audit committee of George Weston Limited and as a member of
the audit committee of 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 served as President and CEO of ART Advanced
Research Technologies, a biomedical company, from 2002 until July 2006
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
banking 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, 2006 to
December 31, 2006:

<TABLE>
<CAPTION>
Type of work                  Deloitte & Touche                 %
<S>                              <C>                          <C>
------------------------------------------------------------------------------
Audit fees                       $3,757,244                   94.11
Audit-related fees                 $162,000                    4.06
Tax fees                            $72,763                    1.83
All other fees                           --                      --
------------------------------------------------------------------------------
Total                            $3,992,007                   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, 2005 to
December 31, 2005:

<TABLE>
<CAPTION>
Type of work                  Deloitte & Touche                 %
<S>                              <C>                          <C>
------------------------------------------------------------------------------
Audit fees                       $2,237,606                   90.7
Audit-related fees                 $195,584                    7.9
Tax fees                            $33,180                    1.4
All other fees                           --                     --
------------------------------------------------------------------------------
Total                            $2,466,370                  100.0
==============================================================================
</TABLE>


MATERIAL CONTRACTS

On July 26, 2002, TCI entered into a Purchase and Servicing Agreement,
which was amended September 30, 2002, March 1, 2006, and November 30,
2006, 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; the November 30, 2006 amendment
resulted in the term being extended to July 18, 2008.. 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 14, 2007. The proceeds of securitized receivables
were $500 million at December 31, 2006, unchanged from one year earlier.
Section 7.6 - Accounts receivable sale of Management's discussion and
analysis in TELUS' 2006 Annual Report - Financial Review and Note 13 to
the audited Consolidated financial statements of TELUS for the year
ended December 31, 2006 are hereby incorporated by reference.

On March 2, 2007, TELUS announced that it had entered into a replacement five
year $2 billion unsecured credit facility (the "2007 Credit Facility") with a
syndicate of 18 financial institutions. The 2007 Credit Facility replaces
TELUS' $1.6 billion previously existing credit facilities, which consisted of
an $800 million facility, which would have expired in May 2008 and an $800
million facility, which would have expired in May 2010. The 2007 Credit
Facility may be used for general corporate purposes including the backstop of
commercial paper. The material terms of the 2007 Credit Facility are
substantively the same as under TELUS' previous credit facilities other than
reduced pricing and an extension of the term of May 2012.


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 9, 2006 for the annual general meeting to be held on May 2,
2007. Additional financial information, including supplementary
quarterly financial data and the audited Consolidated financial
statements of TELUS for the year ended December 31, 2006, are set out in
the 2006 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 in accordance with applicable securities laws and TELUS
       policies.

Notwithstanding section 4.2(d) above, the Committee may delegate the
pre-approval of audit, audit-related and non-audit services to any one
member of the Committee, provided, however, a report is made to the
Committee on any pre-approval of such services at the Committee's first
scheduled meeting following the pre-approval.

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, 2006 and Management's Discussion and Analysis


             TELUS CORPORATION CONSOLIDATED FINANCIAL STATEMENTS
                                   AND
                    MANAGEMNT'S DISUSSION AND ANALYSIS
                           DECEMBER 31, 2006


______________________________________________________________________________

                            TELUS CORPORATION

                    CONSOLIDATED FINANCIAL STATEMENTS


                            DECEMBER 31, 2006


______________________________________________________________________________


management's report


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 judgments.
   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 comply with all
legal and regulatory requirements. Annually, the Company performs 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. 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. In 2006, the final stages of Section 404 of the United States
Sarbanes-Oxley Act regarding internal controls over financial reporting were
successfully implemented. One of the 2006 developments included the integration
of SOX 404 sign-offs with the SOX 302 cascading certifications of key
stakeholders in the financial reporting process.
   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 related
to the preparation of the Management's discussion and analysis and the
Consolidated financial statements, as well as other information contained in
this report. 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.
   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 has financial expertise and
meets the applicable securities laws as a financial expert. 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 credit worthiness, treasury plans and financial
policy, and its whistleblower and accounting and ethics complaint procedures.
The 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 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
judgments; 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
plan; 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
material capital expenditure initiatives. The committee pre-approves all audit,
audit-related and non-audit services provided to the Company by the external
auditors (and its affiliates). The committee's terms of reference are
available, on request, to shareholders and at telus.com/governance.


/s/Robert G. McFarlane                      /s/Darren Entwistle
______________________                      ____________________

Robert G. McFarlane	                    Darren Entwistle
Executive Vice-President	            President
and Chief Financial Officer	            and Chief Executive Officer
February 14, 2007	                    February 14, 2007



report of management on internal control over financial reporting


   Management of TELUS is responsible for establishing and maintaining adequate
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting.
   TELUS' Chief Executive Officer and Chief Financial Officer have assessed the
effectiveness of the Company's internal control over financial reporting as at
December 31, 2006 in accordance with the criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). Internal control over
financial reporting is a process designed by, or under the supervision of, the
Chief Executive Officer ("CEO") and the Executive Vice President and Chief
Financial Officer ("CFO") and effected by the Board of Directors, management
and other personnel to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
   Due to its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements on a timely basis. Also projections of
any evaluation of the effectiveness of internal control over financial
reporting to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. Based on this
assessment, management has determined that the Company's internal control over
financial reporting is effective as at December 31, 2006. In connection with
this assessment, no material weaknesses in the Company's internal control over
financial reporting were identified by management.
   Management's assessment of the effectiveness of the Company's internal
control over financial reporting as at December 31, 2006, has been audited by
Deloitte & Touche LLP, the Company's Independent Registered Chartered
Accountants, who also audited the Company's Consolidated Financial Statements
for the year ended December 31, 2006. As stated in the Report of Independent
Registered Chartered Accountants, they have expressed an unqualified opinion on
management's assessment of the Company's internal control over financial
reporting and an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting as of December 31, 2006.

/s/Robert G. McFarlane                      /s/Darren Entwistle
______________________                      ____________________
Robert G. McFarlane	                    Darren Entwistle
Executive Vice-President	            President
and Chief Financial Officer	            and Chief Executive Officer
February 14, 2007	                    February 14, 2007



report of independent registered chartered accountants


To the Board of Directors and Shareholders of TELUS Corporation

We have audited management's assessment, included in the accompanying report of
management on internal control over financial reporting, that TELUS Corporation
and subsidiaries (the "Company") maintained effective internal control over
financial reporting as of December 31, 2006, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal
control over financial reporting based on our audit.
   We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.
   A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and
principal financial officers, or persons performing similar functions, and
effected by the company's board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.
   Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
   In our opinion, management's assessment that the Company maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2006, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
   We have also audited, in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements as of and for the
year ended December 31, 2006, of the Company and our report dated February 14,
2007, expressed an unqualified opinion on those financial statements.

                                  /s/Deloitte & Touche LLP
                                  ________________________
                                  Deloitte & Touche LLP
                                  Independent Registered Chartered Accountants
                                  Vancouver, Canada
                                  February 14, 2007


report of independent registered chartered accountants


To the Board of Directors and Shareholders of TELUS Corporation

We have audited the accompanying consolidated balance sheets of TELUS
Corporation and subsidiaries (the "Company") as at December 31, 2006 and 2005,
and the related 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.
   With respect to the financial statements for the year ended December 31,
2006,we conducted our audit in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight
Board (United States). With respect to the financial statements for the year
ended December 31, 2005, we conducted our audit in accordance with Canadian
generally accepted auditing standards. Those standards require that we plan and
perform the 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. We believe that our audits provide a
reasonable basis for our opinion.
   In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of TELUS Corporation and
subsidiaries as of December 31, 2006 and 2005, and the results of their
operations and their cash flows for the years then ended in conformity with
Canadian generally accepted accounting principles.
   We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of December 31, 2006, based on the
criteria established in Internal Control--Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated February 14, 2007, expressed, an unqualified opinion on management's
assessment of the effectiveness of the Company's internal control over
financial reporting and an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting.

                                  /s/Deloitte & Touche LLP
                                  ________________________
                                  Deloitte & Touche LLP
                                  Independent Registered Chartered Accountants
                                  Vancouver, B.C.
                                  February 14, 2007



consolidated statements of income

<TABLE>
<CAPTION>

Years ended December 31 (millions except per share amounts)				        2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES					                                      $	8,681.0        $ 8,142.7
--------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
  Operations						                                        5,022.9 	 4,793.5
  Restructuring and workforce reduction costs (Note 7)			                           67.8 	    53.9
  Depreciation 						                                        1,353.4 	 1,342.6
  Amortization of intangible assets						                  222.2 	   281.1
--------------------------------------------------------------------------------------------------------------------------------
						                                                6,666.3 	 6,471.1
--------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME						                                2,014.7 	 1,671.6
   Other expense, net 						                                   28.0 	    18.4
   Financing costs (Note 8) 						                          504.7     	   623.1
--------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST		    	                        1,482.0 	 1,030.1
   Income taxes (Note 9)					      	                          351.0  	   322.0
   Non-controlling interests						                            8.5 	     7.8
--------------------------------------------------------------------------------------------------------------------------------
NET INCOME AND COMMON SHARE AND NON-VOTING SHARE INCOME		                              $	1,122.5        $   700.3
================================================================================================================================
INCOME PER COMMON SHARE AND NON-VOTING SHARE (Note 10)
    -- Basic 					                                              $	    3.27       $     1.96
    -- Diluted					                                              $	    3.23       $     1.94
DIVIDENDS DECLARED PER COMMON SHARE AND NON-VOTING SHARE		                      $	    1.20       $     0.875
TOTAL WEIGHTED AVERAGE COMMON SHARES AND NON-VOTING SHARES OUTSTANDING
   -- Basic						                                          343.8 	   357.1
   -- Diluted						                                          347.4 	   361.0
</TABLE>

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



consolidated statements of retained earnings


<TABLE>
<CAPTION>

Years ended December 31 (millions)								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD	                                                              $	  849.7       $	1,008.1
Net income	                                                                      	        1,122.5 	  700.3
--------------------------------------------------------------------------------------------------------------------------------
		                                                                                1,972.2 	1,708.4
Common Share and Non-Voting Share dividends paid, or payable, in cash 		                 (411.7)	 (312.2)
Purchase of Common Shares and Non-Voting Shares in excess of stated capital (Note 18(f))         (498.6)	 (541.1)
Adjustment for purchase of share option awards not in excess of their fair value		    2.1 	   (3.4)
Adjustment of tax treatment of items charged directly to retained earnings		           16.1 	     --
Warrant proceeds used in determining intrinsic value of warrants in excess of amounts
 ultimately received (Note 18(c))		                                                    -- 		   (2.0)
--------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD (Note 18)	                                                      $	1,080.1       $	  849.7
================================================================================================================================
</TABLE>

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


consolidated balance sheets

<TABLE>
<CAPTION>
As at December 31(millions)									2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
  Cash and temporary investments, net	                                                      $	     --       $	     8.6
  Short-term investments							                  110.2 	      --
  Accounts receivable (Notes 13, 20(b))						                  707.2 	   610.3
  Income and other taxes receivable 						                   95.4 	   103.7
  Inventories											  196.4 	   138.8
  Prepaid expenses and other (Note 20(b))					                  195.3 	   154.7
  Deferred hedging asset (Note 17(b))						                   40.4 	      --
  Current portion of future income taxes					                     -- 	   226.4
--------------------------------------------------------------------------------------------------------------------------------
										                1,344.9 	 1,242.5
--------------------------------------------------------------------------------------------------------------------------------
Capital Assets, Net (Note 14)
  Property, plant, equipment and other					                        7,466.5 	 7,339.4
  Intangible assets subject to amortization				                          549.2 	   637.5
  Intangible assets with indefinite lives					                2,966.4          2,964.6
--------------------------------------------------------------------------------------------------------------------------------
										               10,982.1         10,941.5
--------------------------------------------------------------------------------------------------------------------------------
Other Assets
  Deferred charges (Note 20(b))							                  976.5            850.2
  Investments								                           35.2             31.2
  Goodwill (Note 15)						                                3,169.5 	 3,156.9
--------------------------------------------------------------------------------------------------------------------------------
								                                4,181.2 	 4,038.3
--------------------------------------------------------------------------------------------------------------------------------
							                                      $16,508.2       $	16,222.3
================================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Cash and temporary investments, net	                                                      $	   11.5       $	      --
  Accounts payable and accrued liabilities (Note 20(b))		                                1,363.6  	 1,393.7
  Income and other taxes payable		                                                   10.3 	      --
  Restructuring and workforce reduction accounts payable and accrued liabilities (Note 7)	   53.1 	    57.1
  Advance billings and customer deposits (Note 20(b))		                                  606.3 	   571.8
  Current maturities of long-term debt (Note 17)		                                1,434.4 	     5.0
  Current portion of deferred hedging liability (Note 17(b))		                          165.8 	      --
  Current portion of future income taxes		                                           93.2 	      --
---------------------------------------------------------------------------------------------------------------------------------
		                                                                                3,738.2 	 2,027.6
---------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt (Note 17) 		                                                        3,493.7 	 4,639.9
---------------------------------------------------------------------------------------------------------------------------------
	ther Long-Term Liabilities (Note 20(b))		                                        1,257.3 	 1,635.3
---------------------------------------------------------------------------------------------------------------------------------
Future Income Taxes	                                                           	        1,067.3 	 1,023.9
---------------------------------------------------------------------------------------------------------------------------------
Non-Controlling Interests		                                                           23.6 	    25.6
---------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity (Note 18)	                                             	                6,928.1 	 6,870.0
---------------------------------------------------------------------------------------------------------------------------------
	                                                                                      $16,508.2       $ 16,222.3
================================================================================================================================
</TABLE>

Commitments and Contingent Liabilities (Note 19)

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

Approved by the Directors:

   Director:	           Director:
/s/Brian F. MacNeill	/s/Brian A. Canfiel
____________________    ___________________
   Brian F. MacNeill	   Brian A. Canfield



consolidated statements of cash flows

<TABLE>
<CAPTION>

Years ended December 31 (millions)								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income					                                              $	1,122.5       $	   700.3
Adjustments to reconcile net income to cash provided by operating activities:
  Depreciation and amortization						                        1,575.6 	 1,623.7
  Future income taxes 						                                  409.2 	   340.0
  Share-based compensation (Note 11(a))					                 	   25.1 	    24.3
  Net employee defined benefit plans expense						           (5.4)	     3.9
  Employer contributions to employee defined benefit plans					 (123.3)	  (118.8)
  Restructuring and workforce reduction costs, net of cash payments (Note 7)			   (4.0)	   (13.6)
  Amortization of deferred gains on sale-leaseback of buildings, amortization
    of deferred charges and other, net			                                           51.7 	     1.1
  Net change in non-cash working capital (Note 20(c))						 (247.7)	   353.7
--------------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities						                2,803.7 	 2,914.6
--------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (Notes 6, 14)						               (1,618.4)        (1,319.0)
Acquisitions						                                          (49.0)	   (29.4)
Proceeds from the sale of property and other assets					  	   14.9 	     4.5
Change in non-current materials and supplies, purchase of investments and other			  (22.7)	   (11.3)
--------------------------------------------------------------------------------------------------------------------------------
Cash used by investing activities						               (1,675.2)	(1,355.2)
--------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Common Shares and Non-Voting Shares issued						          104.5 	   219.4
Dividends to shareholders						                         (411.7)          (312.2)
Purchase of Common Shares and Non-Voting Shares for cancellation (Note 18(f))			 (800.2)	  (892.1)
Long-term debt issued (Note 17)						                        1,585.9 	   147.4
Redemptions and repayment of long-term debt (Note 17)					       (1,314.7)	(1,601.1)
Partial payment of deferred hedging liability (Note 17(b))					 (309.4)	      --
Dividends paid by a subsidiary to non-controlling interests					   (3.0)	    (7.9)
Other						                                                     -- 	    (0.8)
--------------------------------------------------------------------------------------------------------------------------------
Cash used by financing activities						               (1,148.6)        (2,447.3)
--------------------------------------------------------------------------------------------------------------------------------
CASH POSITION
Decrease in cash and temporary investments, net			                                  (20.1)	  (887.9)
Cash and temporary investments, net, beginning of period					    8.6 	   896.5
---------------------------------------------------------------------------------------------------------------------------------
Cash and temporary investments, net, end of period				  	      $	  (11.5)$	     8.6
================================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Interest (paid) (Note 20(c))				                       	              $	 (516.1)$	  (638.3)
================================================================================================================================
Interest received					                                      $	   24.2 $	    47.3
================================================================================================================================
Income taxes (inclusive of Investment Tax Credits (Note 9)) received, net		      $	   98.3 $	    69.5
================================================================================================================================
</TABLE>

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

notes to consolidated financial statements

DECEMBER 31, 2006

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 also provides data, Internet protocol, voice and wireless services to
Central and Eastern Canada.


<TABLE>
<CAPTION>

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

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 TELUS Communications Company partnership and
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:
* the key economic assumptions used to determine the fair value of residual
  cash flows arising from accounts receivable securitization;
* the allowance for doubtful accounts;
* the allowance for inventory obsolescence;
* the estimated useful lives of assets;
* the recoverability of tangible assets;
* the recoverability of intangible assets with indefinite lives;
* the recoverability of long-term investments;
* the recoverability of goodwill;
* the amount and composition of income tax assets and income tax liabilities,
  including the amount of unrecognized tax benefits;
* the accruals for Canadian Radio-television and Telecommunications Commission
  ("CRTC") deferral account liabilities; and
* 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
telecommunications 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 telecommunications
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 the
accounting units.
   The Company's revenues are recorded net of any value-added, sales and/or use
taxes billed to the customer concurrent with a revenue-producing transaction.
   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 rate rebate amounts that arise from the jurisdiction of the 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. 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 high cost serving areas.
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-High Cost Serving Area 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
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, 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-high cost serving areas. 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 in qualifying non-high cost serving areas, 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>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Price cap factors for price cap years commencing June 1, 		                        2006		2005
<S>											        <C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Rate of inflation (as measured by the chain-weighted
Gross Domestic Product Price Index)			                                          3.1%	          3.2%
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 19(a) and quantified in Note
20(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.

(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 and amortization of leasehold
improvements. Leasehold improvements are normally amortized over the lesser of
their expected average service life or the term of the lease. 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>
<CAPTION>
					                                                        Estimated
                                                                                                useful lives(1)
<S>												<C>
--------------------------------------------------------------------------------------------------------------------------------
Property, plant, equipment and other
  Telecommunications assets
    Outside plant								                17 to 40 years
    Inside plant								                 5 to 15 years
    Wireless site equipment								        6.5 to 8 years
  Balance of depreciable property, plant, equipment and other					 4 to 20 years
Intangible assets subject to amortization
  Subscriber base
    Wireline					                                                      40 years
    Wireless					                                                       7 years
  Software					                                                  3 to 5 years
  Access to rights-of-way and other				                     	         8 to 30 years
--------------------------------------------------------------------------------------------------------------------------------
</FN>
(1) The composite depreciation rate for the year ended December 31, 2006, was 6.3% (2005 -- 6.4%).
    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.
<FN>
</TABLE>

  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 2006 and December 2005 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.

(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, as set out in Note 8. 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 18(a) and discussed further in Note 2(b).

(h) Hedge accounting

General: The Company applies hedge accounting to the financial instruments
used to:

* 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 5 and further
  discussed in Note 17(b);
* forward starting interest rate swap agreements, as further discussed in Note
  5;
* fix the compensation cost arising from specific grants of restricted stock
  units, as set out in Note 5 and further discussed in Note 12(c); and
* for certain U.S. Dollar denominated future purchase commitments, as set out
  in Note 5.

  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
share-based compensation or U.S. Dollar denominated future purchase
commitments.

  Deferred hedging assets and liabilities: In the application of hedge
accounting to U.S. Dollar denominated long-term debt future cash outflows, 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
share-based compensation, 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 Common Shares and/or Non-Voting Shares at the balance sheet date and
the price of the Company's Common Shares and/or Non-Voting Shares in the
hedging items.

(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 based upon the expected timing of the reversal of such
temporary differences, or usage of such tax losses, and application of the
substantively enacted tax rates at the time of such reversal or usage.

  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 an uncertain tax
position when it is more likely than not that the ultimate determination of
the tax treatment of the position will result in that benefit being realized.
The Company accrues for interest charges on current tax liabilities that have
not been funded, which would include interest and penalties arising from
uncertain tax positions. The Company includes such charges as a component of
financing costs.

  The Company's research and development activities may be eligible to earn
Investment Tax Credits; the determination of eligibility is a complex matter.
The Company only recognizes the Investment Tax Credits when it is more likely
than not that the ultimate determination of the eligibility of the Company's
research and development activities will result in the Investment Tax Credits
being received. 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 9.

(j) Share-based compensation

Canadian GAAP 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. Proceeds arising from the
exercise of share options are credited to share capital.

  In respect of restricted stock units, as set out in Note 11(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) 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.

(l) 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. When cash and temporary investments, net, are
classified as a liability, they may also include overdraft amounts drawn on
the Company's bilateral bank facilities, which revolve daily and are discussed
further in Note 16.

(m) 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 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).

(n) Inventories

The Company's inventory consists primarily of wireless handsets, parts and
accessories and communications equipment held for resale. Inventories are
valued at the lower of cost and net realizable value, with cost being
determined on an average cost basis. Prior to 2006, inventories of wireless
handsets, parts and accessories were valued at the lower of cost and
replacement cost, with cost being determined on an average cost basis; the
Company was not materially affected by the change in valuation method, which
was prospectively applied.

(o) Capital assets

General: Capital assets are recorded at historical cost and, with respect to
self-constructed property, plant, equipment and other, include materials,
direct labour and applicable overhead costs. With respect to
internally-developed, internal-use software, recorded historical costs include
materials, direct labour and direct labour-related costs. Where property,
plant, equipment and other construction projects exceed $50 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.

(p) 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, 2006, real estate and vehicle operating lease
expenses, which are net of the amortization of the deferred gain on the
sale-leaseback of buildings, were $178.1 million (2005 -- $165.1 million). The
unamortized balances of the deferred gains on the sale-leaseback of buildings
are set out in Note 20(b).

(q) 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".

(r) Comparative amounts

Certain of the comparative amounts have been reclassified to conform to the
presentation adopted currently.

2 accounting policy developments

(a) Convergence with International Financial Reporting Standards

In 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
currently expected to be approximately five years. The precise timing of
convergence will depend on an Accounting Standards Board "progress review" to
be undertaken by early 2008.
  Canadian GAAP will be converged with International Financial Reporting
Standards through a combination of two methods: as current joint-convergence
projects of the United States' Financial Accounting Standards Board and the
International Accounting Standards Board are agreed upon, they will be adopted
by Canada's Accounting Standards Board and may be introduced in Canada before
the complete changeover to International Financial Reporting Standards; and
standards not subject to a joint-convergence project will be exposed in an
omnibus manner.
  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.

(b) 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 prospective implementation at the beginning of a fiscal year
(the exception being in respect of the cumulative foreign currency translation
adjustment, which is retroactively adjusted for at the beginning of the fiscal
year of adoption). Currently, the concept of comprehensive income for purposes
of Canadian GAAP, in the Company's specific instance, will be primarily to
include changes in shareholders' equity arising from unrealized changes in the
fair values of financial instruments.
  The majority of the impact on the Company of adopting the other comprehensive
income and related standards currently arises from the Company's cross
currency interest rate swap agreements, as discussed further in Note 5 and
Note 17(b) and, to a lesser extent, the cash-settled equity forward agreements
that the Company entered into in respect of share-based compensation, as
discussed further in Note 5 and Note 11(c).
  In the application of hedge accounting to U.S. Dollar denominated long-term
debt future cash outflows, an amount (the "hedge value") is recorded in the
Consolidated Balance Sheets in respect of the value of the hedging items. The
difference between the hedge value that would be recorded on the consolidated
balance sheet subsequent to, and prior to, the adoption of the new CICA
recommendations, in respect of the U.S. Dollar denominated long-term debt
future cash flows, is the difference between the fair value of the hedging
items and the hedging asset or liability necessary to recognized the Canadian
dollar equivalent of the value of the hedged items at the rate of exchange in
the hedging items.
  Comprehensive income as prescribed by U.S. GAAP, and which is disclosed in
Note 21(h), is largely aligned with comprehensive income as prescribed by
Canadian GAAP, including the impacts of the new recommendations for the
recognition and measurement of financial instruments and for hedges. The
magnitude of the impacts on the Company of adopting the new recommendations
would not differ materially from the impacts reflected in Note 21(h), other
than for pension accounting impacts. In the Company's specific instance there
is currently a difference in other comprehensive income in that U.S. GAAP
includes, in respect of pension and other defined benefit plans, the
difference between the net funded status of the plans and the net accrued
benefit asset or liability; Canadian GAAP does not include this currently, but
an exposure draft from Canada's Accounting Standards Board is expected in the
first half of 2007 that would eliminate this difference.

(c) Accounting changes

Commencing with the Company's 2007 fiscal year, the new recommendations of the
CICA for accounting changes (CICA Handbook Section 1506) will apply to the
Company. Most significantly, the new recommendations stipulate that voluntary
changes in accounting policy are made only if they result in the financial
statements providing reliable and more relevant information and that new
disclosures are required in respect of changes in accounting policies, changes
in accounting estimates and correction of errors. The Company is not currently
materially affected by the new recommendations.

(d) Business combinations

Possibly commencing in 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
subsequent to the amended recommendations coming into force. 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 subsequent to the amended recommendations coming into force.
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) Capital structure financial policies

Effective December 31, 2006, the Company early adopted the new recommendations
of the CICA for disclosure of the Company's objectives, policies and processes
for managing capital (CICA Handbook Section 1535), as discussed further in
Note 3.

(f) Financial instruments -- disclosure and presentation

Commencing with the Company's 2008 fiscal year, the new recommendations of the
CICA for financial instrument disclosures and presentation (CICA Handbook
Section 3862) will apply to the Company. The new recommendations will result
in incremental disclosures, relative to those currently, with an emphasis on
risks associated with both recognized and unrecognized financial instruments
to which an entity is exposed during the period and at the balance sheet date,
and how an entity manages those risks. The Company is assessing how it will be
affected by these new recommendations.

(g) Earnings per share

Amendments were proposed to the recommendations of the CICA for the
calculation and disclosure of earnings per share (CICA Handbook Section 3500);
such amendments had progressed to the typescript stage. In July 2006, the
typescript with the proposed amendments, which would have applied to the
Company, was withdrawn and an announcement was made indicating that an
International Financial Reporting Standards-based exposure draft from Canada's
Accounting Standards Board would be issued at a later date, now expected in
the first half of 2007.

3 capital structure financial policies

The Company's objectives when managing capital are: (i) to maintain a flexible
capital structure which optimizes the cost of capital at acceptable risk; and
(ii) to manage capital in a manner which balances the interests of equity and
debt holders.
  In the management of capital, the Company includes shareholders' equity
(excluding accumulated other comprehensive income), long-term debt (including
any associated hedging assets or liabilities, net of amounts recognized in
accumulated other comprehensive income), cash and temporary investments and
securitized accounts receivable in the definition of capital.
  The Company manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders, purchase
shares for cancellation pursuant to normal course issuer bids, issue new
shares, issue new debt, issue new debt to replace existing debt with different
characteristics and/or increase or decrease the amount of sales of trade
receivables to an arm's-length securitization trust.
  The Company monitors capital on a number of bases, including: net debt to
total capitalization; net debt to Earnings Before Interest, Taxes,
Depreciation and Amortization -- excluding restructuring and workforce
reduction costs ("EBITDA -- excluding restructuring and workforce reduction
costs"); and dividend payout ratio of sustainable net earnings.
  Net debt to total capitalization is calculated as net debt divided by total
capitalization. Net-debt is a non-GAAP measure, whose nearest GAAP measure is
long-term debt; the calculation of net-debt is as set out in the following
schedule. Net debt, before addition of securitized accounts receivable, is one
component of a ratio used to determine compliance with debt covenants. Total
capitalization is defined as the sum of net debt, non-controlling interest and
shareholders' equity (excluding accumulated other comprehensive income).
  Net debt to EBITDA -- excluding restructuring and workforce reduction costs
is calculated as net-debt at the end of the period divided by twelve-month
trailing EBITDA -- excluding restructuring and workforce reduction costs. The
calculation of EBITDA -- excluding restructuring and workforce reduction costs
is a non-GAAP measure whose nearest GAAP measure is net income; the
calculation of EBITDA -- excluding restructuring and workforce reduction costs
is as set out in the following schedule. This measure, historically, is
substantially the same as the leverage ratio covenant in the Company's credit
facilities.
  Dividend payout ratio of sustainable net earnings is calculated as the most
recent quarterly dividend declared per share multiplied by four and divided by
basic earnings per share for the twelve-month trailing period.
  During 2006, the Company's strategy, which was unchanged from 2005, was to
maintain the liquidity measures set out in the following schedule. The Company
believes that these liquidity measure targets are currently at the optimal
level and provide access to capital at a reasonable cost by maintaining credit
ratings in the range of BBB+ to A-, or the equivalent.


<TABLE>
<CAPTION>
	                                                             Liquidity measure
As at, or years ended, December 31 ($ in millions)	                 targets	           2006		      2005
<S>								         <C>			   <C>		      <C>
--------------------------------------------------------------------------------------------------------------------------------
Components of debt and coverage ratios
  Net debt (including securitized accounts receivable)(1)				         $  6,278.1 	    $  6,294.4
  Total capitalization -- book value 					                         $ 13,229.8 	    $ 12,690.0
  EBITDA -- excluding restructuring and workforce reduction costs(2)			         $  3,658.1 	    $  3,349.2
  Net interest cost(3)				                                                 $    504.7 	    $    623.1
Debt ratios
  Net debt to total capitalization			                 45 -- 50%		       47.5%		  47.7%
  Net debt to EBITDA -- excluding restructuring and workforce
    reduction costs 	                                              1.5:1 -- 2.0:1	    	        1.7		   1.9
Coverage ratios
  Interest coverage on long-term debt(4)					                        3.9		   2.5
  EBITDA -- excluding restructuring and workforce reduction costs
    interest coverage(5)			                                                        7.2		   5.4
Other measures
  Dividend payout ratio of sustainable net earnings		         45 -- 55%		        46%		   56%
--------------------------------------------------------------------------------------------------------------------------------
(1) Net debt is calculated as follows:

    As at December 31					                                           2006		      2005
--------------------------------------------------------------------------------------------------------------------------------
    Long-term debt (Note 17)					                                 $  4,928.1 	    $  4,644.9
    Deferred hedging liability, net						                      838.5 	       1,158.1
--------------------------------------------------------------------------------------------------------------------------------
						                                                    5,766.6 	       5,803.0
    Cash and temporary investments, net						                       11.5 		  (8.6)
    Securitized accounts receivable (Note 13)						              500.0 		 500.0
--------------------------------------------------------------------------------------------------------------------------------
    Net debt					                                                 $  6,278.1 	    $  6,294.4
================================================================================================================================
(2) EBITDA -- excluding restructuring and workforce reduction
    costs is calculated as follows:

    Years ended December 31					                                   2006		      2005
--------------------------------------------------------------------------------------------------------------------------------
    EBITDA (see Note 6)					                                         $  3,590.3 	    $  3,295.3
    Restructuring and workforce reduction costs (Note 7)					       67.8 	          53.9
---------------------------------------------------------------------------------------------------------------------------------
    EBITDA -- excluding restructuring and workforce reduction costs				 $  3,658.1 	    $  3,349.2
================================================================================================================================

(3) Net interest cost is defined as financing costs before gains on redemption
    and repayment of debt, calculated on a twelve-month trailing basis (losses
    recorded on the redemption of long-term debt are included in net interest
    cost).

(4) Interest coverage on long-term debt is defined as net income before
    interest expense on long-term debt and income tax expense, divided by interest
    expense on long-term debt (including losses recorded on the redemption of
    long-term debt).

(5) EBITDA -- excluding restructuring and workforce reduction costs interest
    coverage is defined as EBITDA -- excluding restructuring and workforce
    reduction costs divided by net interest cost. This measure is substantially
    the same as the coverage ratio covenant in the Company's credit facilities.
</TABLE>

  As net debt was comparable year-over-year, the increase in total
capitalization is attributed to an increase in shareholders' equity (mainly
increased retained earnings net of lower share capital, which was due
primarily to share repurchases under normal course issuer bid share repurchase
programs, as further discussed in Note 18(f)).
  The net debt to EBITDA -- excluding restructuring and workforce reduction
costs ratio measured at December 31, 2006, improved as a result of increased
EBITDA -- excluding restructuring and workforce reduction costs.
  Interest coverage on long-term debt improved by 0.9 because of lower interest
expenses and improved by 0.5 because of increased income before taxes and
interest expense. The EBITDA -- excluding restructuring and workforce reduction
costs interest coverage ratio improved by 1.3 due to lower net interest cost
and improved by 0.5 due to higher EBITDA -- excluding restructuring and
workforce reduction costs.
  The dividend payout ratio for the twelve-month period ended December 31, 2006,
was near the low end of the target guideline of 45 to 55% for sustainable net
earnings due mainly to actual earnings including positive impacts from tax rate
changes and tax recoveries that were unique to 2006. The dividend payout ratio
was 54% when calculated excluding these 2006 income tax items. The dividend
payout ratio for the twelve-month period ending December 31, 2005, was higher
than the target guideline due primarily to actual earnings including after-tax
labour negotiations-related emergency operations procedures expenses.



4 regulation of rates charged to customers

(a) General

The provision of telecommunications services by the Company through TELUS
Communications Company partnership 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 forbearance 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 a portion of the Company's operations remain 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>
<CAPTION>
Regulated services		                                           Forborne services (not subject to rate regulation)
<S>									   <C>
---------------------------------------------------------------------------------------------------------------------------------
* Residential wireline services in incumbent local                         * Non-incumbent local exchange carrier services
  exchange carrier regions                                                 * Long distance services
* Business wireline services in incumbent local                            * Internet services
  exchange carrier regions                                                 * International telecommunications services(1)
* Competitor services                                                      * Interexchange private line services
* Public telephone services                                                * Certain data services
                                                                           * Cellular, enhanced specialized mobile radio digital
                                                                             ("ESMR digital") and personal communications
                                                                              services digital ("PCS digital")
                                                                           * Other wireless services, including paging
                                                                           * Sale of customer premises equipment ("CPE")
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Forborne on routes where one or more competitors are offering or providing services
    at DS-3 or greater bandwidth.
</FN>
</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 conducted
a review of the existing price cap regulation which included an oral hearing
held in Gatineau, Quebec. This proceeding was concluded in the fourth quarter
of 2006 and the Company anticipates the CRTC will issue its decision in this
matter in mid-2007. 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, 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.

<TABLE>
<CAPTION>

Specific details on price cap constraints are as follows:

	                                                                            Price cap constraint
                                                   ------------------------------------------------------------------------------
	                                                               Inflation less                                Overriding
                                                                       3.5%                                          maximum
                                                                       productivity           Deferral               annual
Capped basket	                                   Inflation           offset                 account(1)             increase
<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%
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(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 19(a) and Note 20(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.
</FN>
</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 telecommunications 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 telecommunications service providers, calculated as a percentage of
their telecommunications service revenue (as defined in CRTC Decision 2000 --
745 and Telecom Order CRTC 2001-220). The final contribution expense rate for
2006 is 1.03% and the interim rate for 2007 has been similarly set at 1.03%.
The Company's contributions to the central fund, $65.9 million for the year
ended December 31, 2006 (2005 -- $63.0 million), are accounted for as an
operations expense and the portable subsidy receipts, $63.2 million for the
year ended December 31, 2006 (2005 -- $72.2 million), are accounted for as
local revenue.

5 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, short-term obligations, long-term debt, interest
rate swap agreements, share-based compensation cost hedges, as further
discussed in Note 11(b)-(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 certain forms of
share-based compensation; effective January 1, 2007, the fair values of all
such financial instruments will be reflected on the consolidated balance
sheets, as further discussed in Note 2(b). These instruments are accounted for
on the same basis as the underlying exposure being hedged. The majority of the
notional value of these instruments was added during 2001 and pertains to
TELUS' U.S. Dollar borrowing. During the second quarter of 2006, as further
discussed in Note 17(b), the Company terminated a number of cross currency
interest rate swap agreements and entered into new cross currency interest
rate swap agreements in respect of the Company's U.S. Dollar Notes maturing in
June 2007.
  Use of these instruments is subject to a policy, which requires that no
derivative transaction be entered into 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.
  In contemplation of the planned refinancing of the debt maturing June 1,
2007,as set out in Note 17, the Company has entered into forward starting
interest rate swap agreements that, as at December 31, 2006, have the effect
of fixing the underlying interest rate on up to $500 million of replacement
debt. Hedge accounting has been applied to these forward starting interest
rate swap agreements.
  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 17(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, 2006, the Company had entered into foreign currency
forward contracts that have the effect of fixing the exchange rates on U.S.$13
million of fiscal 2007 purchase commitments; hedge accounting has been applied
to these foreign currency forward contracts, all of which relate to the
Wireless segment.
  Price risk -- other: The Company is exposed to a market risk with respect to
its short-term investments in that the fair value will fluctuate because of
changes in market prices.
  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 substantially 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, foreign
exchange hedges and share-based compensation cost 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 assets.
  Fair value: The carrying value of cash and temporary investments, accounts
receivable, accounts payable, restructuring and workforce reduction accounts
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 fair values of the Company's derivative financial instruments used to
manage exposure to increases in compensation costs arising from certain forms
of share-based compensation are estimated based upon fair value estimates of
the related cash-settled equity forward agreements provided by the
counterparty to the transactions.

<TABLE>
<CAPTION>
As at December 31			                              2006		                   2005
--------------------------------------------------------------------------------------------------------------------------------
                                        Hedging item
                                        maximum             Carrying                             Carrying
(millions)                              maturity date       amount             Fair value        amount	           Fair value
<S>					  <C>		    <C>		       <C>		 <C>	           <C>
--------------------------------------------------------------------------------------------------------------------------------
Assets
Derivatives(1)(2) used to manage
  changes in compensation costs
  arising from restricted stock
  units (Note 11(c))	               November 2008	    $	    6.0 	$      11.4 	 $      12.2 	   $	   19.5
=================================================================================================================================

Derivatives(1)(2) used to manage
  currency risks arising from U.S.
  Dollar denominated purchases to
  which hedge accounting is
  - Applied	                       March 2007	    $	     -- 	$       0.5 	 $        -- 	   $	     --
  - Not applied	                       December 2007	    $	     -- 	$       5.6 	 $        -- 	   $	     --
=================================================================================================================================
Liabilities
 Long-term debt
  Principal (Note 17)			                    $	4,928.1 	$   5,535.9 	 $   4,644.9 	   $	5,371.6
  Derivatives(1)(2) used to manage
   interest rate and currency risks
   associated with U.S. Dollar
   denominated debt (Note 17(b))
   - Deferred hedging asset				          (40.4)				  --
   - Deferred hedging liability
   - Current				                          165.8 				  --
   - Non-current				                  710.3 			     1,154.3
 		                                           -------------                        -------------
				                                  835.7 			     1,154.3
   - Interest payable				                    6.3 				 9.7
                                                           ------------- 		        -------------
  Net	                               June 2011	          842.0 	    1,090.6 	     1,164.0 	        1,470.5
Derivatives(1)(2) used to manage
   interest rate risk associated
   with planned refinancing of
   debt maturing June 1, 2007          June 2007		     -- 		6.5 	          -- 		     --
---------------------------------------------------------------------------------------------------------------------------------
			                                    $	5,770.1 	$   6,633.0 	 $   5,808.9 	   $	6,842.1
=================================================================================================================================
Derivatives(1)(2) used to manage
   currency risks arising from U.S.
   Dollar denominated purchases to
   which hedge accounting is
   - Applied	                       June 2006	    $	     -- 	$	 -- 	 $	  -- 	    $	   0.1
   - Not applied	               March 2006	    $	     -- 	$	 -- 	 $	  -- 	    $	   0.4
=================================================================================================================================
<FN>
(1)Notional amount of all derivative financial instruments outstanding is
   $5,138.6 (2005 -- $4,904.8).
(2) Designated as cash flow hedging items.
</FN>
</TABLE>

6 segmented information

The Company's reportable segments are Wireline and Wireless. The Wireline
segment includes voice local, voice long distance, data and other
telecommunications 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, the
distribution channels used and regulatory treatment. 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 Executive Officer (the Company's chief operating decision maker).


<TABLE>
<CAPTION>
Years ended
December 31                  Wireline		         Wireless		   Eliminations		    Consolidated
(millions)	       2006	      2005	    2006	 2005	       2006	    2005	  2006	      2005
<S>                    <C>            <C>           <C>          <C>           <C>          <C>           <C>          <C>
---------------------------------------------------------------------------------------------------------------------------------
Operating revenues
External revenue       $ 4,823.1     $ 4,847.2 	   $ 3,857.9 	$ 3,295.5     $      --     $     -- 	 $ 8,681.0    $ 8,142.7
Intersegment revenue	    98.3 	  90.4 		23.4 	     23.5 	 (121.7)      (113.9)	        -- 	     --
---------------------------------------------------------------------------------------------------------------------------------
		         4,921.4       4,937.6 	     3,881.3 	  3,319.0 	 (121.7)      (113.9)	   8,681.0 	8,142.7
---------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Operations expense	 3,020.5       3,031.4 	     2,124.1 	  1,876.0 	 (121.7)      (113.9)	   5,022.9 	4,793.5
Restructuring and
 work-force reduction
  costs		            61.6 	  53.9 		 6.2 	      -- 	     -- 	  -- 	      67.8  	   53.9
---------------------------------------------------------------------------------------------------------------------------------
		         3,082.1       3,085.3 	     2,130.3 	  1,876.0 	 (121.7)      (113.9)	   5,090.7 	4,847.4
---------------------------------------------------------------------------------------------------------------------------------
EBITDA(1)	       $ 1,839.3     $ 1,852.3 	   $ 1,751.0 	$ 1,443.0      $     --     $	  -- 	 $ 3,590.3    $	3,295.3
=================================================================================================================================
CAPEX(2)	       $ 1,191.0     $   914.2 	   $   427.4 	$   404.8      $     --     $	  -- 	 $ 1,618.4    $	1,319.0
=================================================================================================================================
EBITDA less CAPEX      $   648.3     $   938.1 	   $ 1,323.6 	$ 1,038.2      $     --     $	  -- 	 $ 1,971.9    $	1,976.3
=================================================================================================================================
								        EBITDA (from above)	         $ 3,590.3    $	3,295.3
								        Depreciation		           1,353.4 	1,342.6
								        Amortization		             222.2 	  281.1
                                                                        ---------------------------------------------------------

								        Operating income		   2,014.7 	1,671.6
								        Other expense, net		      28.0 	   18.4
								        Financing costs		             504.7 	  623.1
                                                                        ---------------------------------------------------------

								        Income before income taxes
                                                                          and non-controlling interests	   1,482.0 	1,030.1
								        Income taxes		             351.0 	  322.0
								        Non-controlling interests	       8.5 	    7.8
                                                                        --------------------------------------------------------

								        Net income	                 $ 1,122.5    $	  700.3
                                                                        ========================================================

<FN>
(1) Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a
    measure that does not have any standardized meaning prescribed by GAAP and is therefore
    unlikely to be comparable to similar measures presented by other issuers; EBITDA 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").
</FN>
</TABLE>


7 restructuring and workforce reduction costs


<TABLE>
<CAPTION>
(a) Overview


Years ended December 31 (millions)	                                            2006		                 2005
--------------------------------------------------------------------------------------------------------            ------------
                                                                    Office closures    General programs
                                               General programs     and               initiated prior to
                                               initiated in 2006    contracting out   2006		 Total	       Total
<S>					       <C>		    <C>	              <C>		 <C>	       <C>
--------------------------------------------------------------------------------------------------------------------------------
Restructuring and workforce reduction costs
 Workforce reduction
   Voluntary	                               $    24.5 	    $   3.5 	      $    -- 	        $   28.0       $  26.1
   Involuntary		                            32.7 		4.5 		 (1.5)	            35.7 	  25.1
 Lease termination		                      -- 		0.1 		   -- 	             0.1 	   1.5
 Other		                                     3.5 		0.5 		   -- 	             4.0 	   1.2
--------------------------------------------------------------------------------------------------------------------------------
		                                    60.7 		8.6 		 (1.5)	            67.8 	  53.9
---------------------------------------------------------------------------------------------------------------------------------
Disbursements
 Workforce reduction
  Voluntary(1)		                            11.1 	       15.2 		   -- 	            26.3 	  27.4
  Involuntary and other	               	            18.6 	        2.1 		 19.9 	            40.6 	  37.2
 Lease termination	             	              -- 		0.1 		  0.8 	             0.9 	   4.8
 Other		                                     3.5 		0.5 		   -- 	             4.0 	   1.2
--------------------------------------------------------------------------------------------------------------------------------
		                                    33.2 	       17.9 		 20.7 	            71.8 	  70.6
--------------------------------------------------------------------------------------------------------------------------------

Expenses greater than (less than)
  disbursements		                            27.5 	       (9.3)		(22.2)	            (4.0)	 (16.7)
Other		                                      -- 		 -- 		   -- 		      -- 	   3.1
--------------------------------------------------------------------------------------------------------------------------------
Change in restructuring and workforce
 reduction accounts payable and accrued
 liabilities		                            27.5 	       (9.3)		(22.2)	            (4.0)	 (13.6)
   Balance, beginning of period	   	              -- 	       25.5 		 31.6 	            57.1   	  70.7
--------------------------------------------------------------------------------------------------------------------------------
   Balance, end of period	               $    27.5 	    $  16.2 	      $   9.4 	          $ 53.1       $  57.1
================================================================================================================================
<FN>
(1) Early Retirement Incentive Plan, Voluntary Departure Incentive Plan and other.
</FN>
</TABLE>

(b) Programs initiated prior to 2006

General: In 2005, the Company undertook a number of smaller initiatives, such
as operational consolidation, rationalization and integrations. These
initiatives aimed to improve the Company's operating and capital productivity.
As at December 31, 2006, no future expenses remain to be accrued or recorded
under the smaller initiatives, 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, 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 a component of the Company's
competitive efficiency program and is aimed at improving the Company's
operating and capital productivity. 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).
  As at December 31, 2006, 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, 2006.
  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 a component of the Company's
competitive efficiency program and is aimed at allowing the Company to focus
its resources on those core functions that differentiate the Company for its
customers. 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, 2006, no future expenses remain to be accrued or recorded
under the letter 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.

(c) Programs initiated in 2006

General: In the first quarter of 2006, arising from its competitive efficiency
program, the Company undertook a number of smaller initiatives, such as
operational consolidation, rationalization and integration. These initiatives
are aimed to improve the Company's operating productivity and competitiveness.
For the year ended December 31, 2006, $37.9 million of restructuring and
workforce reduction costs were recorded in respect of these smaller
initiatives.
  Also arising from its competitive efficiency program, the Company undertook
an initiative for a departmental reorganization and reconfiguration, resulting
in integration and consolidation. In the first quarter of 2006, approximately
600 bargaining unit employees 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). As affected
employees were not required to select an option until after March 31, 2006, the
associated expenses were not eligible for recording prior to the second quarter
of 2006. In the second quarter of 2006, approximately 275 bargaining unit
employees accepted either the option of redeployment or participation in a
voluntary departure program. For the year ended December 31, 2006, $17.7
million of restructuring and workforce reduction costs were recorded in respect
of this initiative and were included with general programs initiated in 2006.
As at December 31, 2006, no future expenses remain to be accrued or recorded
under this initiative, but variances from estimates currently recorded may be
recorded in subsequent periods.
  Continuing with its competitive efficiency program for integration of Wireline
and Wireless operations, for the year ended December 31, 2006, $12.2 million of
restructuring and workforce reduction costs were recorded in respect of this
initiative and were included with general programs initiated in 2006.

(d) 2007

The Company's estimate of restructuring and workforce reduction costs in 2007,
arising from its competitive efficiency program, which includes the continued
integration of Wireline and Wireless operations, does not currently exceed $50
million.

8 financing costs

<TABLE>
<CAPTION>
Years ended December 31 (millions) 					                        2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt					                              $   508.0       $   635.5
Interest on short-term obligations and other 						            2.6 	    8.2
Foreign exchange(1)						                                    6.4 	    4.6
Loss on redemption of long-term debt(2)						                     -- 	   33.5
--------------------------------------------------------------------------------------------------------------------------------
						                                                  517.0 	  681.8
Interest income
  Interest on tax refunds						                           (9.3)	  (25.2)
  Other interest income						                                   33.0)	  (33.5)
--------------------------------------------------------------------------------------------------------------------------------
                                 						                  (12.3)	  (58.7)
--------------------------------------------------------------------------------------------------------------------------------
					                                                       $  504.7        $  623.1
=================================================================================================================================
<FN>
(1) For the year ended December 31, 2006, these amounts include gains of NIL
    (2005 -- $0.1) 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 17(b)).
</FN>
</TABLE>

9 income taxes

<TABLE>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Current					                                                      $   (58.2)      $   (18.0)
Future						                                                  409.2 	  340.0
--------------------------------------------------------------------------------------------------------------------------------
					                                                      $   351.0       $   322.0
=================================================================================================================================
</TABLE>


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

<TABLE>
<CAPTION>
Years ended December 31 ($ in millions) 			 2006					 2005
<S>							<C>		  <C>			<C>		   <C>
--------------------------------------------------------------------------------------------------------------------------------
Basic blended federal and provincial tax at
 statutory income tax rates	                        $  497.3 	    33.6%	        $  352.3 	     34.2%
Revaluation of future income tax liability
 for change in statutory income tax rates		  (107.0)	    		            (5.1)
Tax rate differential on, and consequential
 adjustments from, reassessment of prior year
 tax issues		                                   (40.3)				   (13.9)
Share option award compensation		                     6.4 				     4.9
Change in estimates of available deductible
 differences in prior years		                      -- 				   (37.5)
Other		                                            (5.4)				     4.8
---------------------------------------------------------------------------------------------------------------------------------
	                                          	   351.0            23.7%		   305.5 	    29.7%
Large corporations tax		                              -- 				    16.5
---------------------------------------------------------------------------------------------------------------------------------
Income tax expense per Consolidated Statements
 of Income	                                        $  351.0            23.7%	        $  322.0 	    31.3%
=================================================================================================================================
</TABLE>

  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>
<CAPTION>
As at December 31 (millions)									2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Capital assets
 Property, plant, equipment, other and intangible assets subject to amortization	      $    (56.9)     $    (8.4)
 Intangible assets with indefinite lives					                  (866.1)	 (974.4)
Working capital, excluding reserves						                  (506.1)	    2.8
Pension amounts						                                          (192.9)	 (171.4)
Losses available to be carried forward				                            	   315.4 	  164.0
Reserves not currently deductible				                          	    97.7 	  111.3
Other					                                                            48.4 	   78.6
---------------------------------------------------------------------------------------------------------------------------------
				                                                     	      $	(1,160.5)     $	 (797.5)
=================================================================================================================================
Presented on the Consolidated Balance Sheets as:
 Future income tax asset
  Current					                                              $	      --      $	  226.4
Future income tax liability
  Current					                                               	   (93.2)	     --
  Non-current					                                    	        (1,067.3)      (1,023.9)
---------------------------------------------------------------------------------------------------------------------------------
					                                       	                (1,160.5)      (1,023.9)
---------------------------------------------------------------------------------------------------------------------------------
Net future income tax asset (liability)				                     	      $	(1,160.5)     $  (797.5)
=================================================================================================================================
</TABLE>

  The Company expects to be able to substantially utilize its non-capital
losses over the next year. The Company's assessment is that the probabilistic
risk of expiry of such non-capital losses is remote.
  The Company has net capital losses and such losses may only be applied
against realized taxable capital gains. The Company has included a net capital
loss carry-forward of $799.7 million (2005 -- $645.0 million) in its Canadian
income tax returns, of which $188.0 million has been recognized in the
determination of its net future income tax liability as at December 31, 2006
(2005 -- NIL). Of the net capital losses carried-forward, as at December 31,
2006, $603.7 million have been denied on audit by the Canada Revenue Agency
and the Company is considering various courses of action with a view to
confirming all or a part of such net capital losses.
  The Company conducts research and development activities, which are eligible
to earn Investment Tax Credits. During the year ended December 31, 2006, the
Company recorded Investment Tax Credits of $18.5 million (2005 -- $0.4
million), $18.1 million of which was recorded as a reduction of capital (2005
-- NIL) and the balance of which was recorded as a reduction of Operations
expense.

10 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 option
awards and, in the comparative period, warrants.
  The following table presents the reconciliations of the denominators of the
basic and diluted per share computations. Net income equalled diluted Common
Share and Non-Voting Share income for all periods presented.

<TABLE>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Basic total weighted average Common Shares and Non-Voting Shares outstanding			  343.8 	  357.1
Effect of dilutive securities
   Exercise of share option awards						                    3.6 	    3.9
--------------------------------------------------------------------------------------------------------------------------------
Diluted total weighted average Common Shares and Non-Voting Shares outstanding			  347.4 	  361.0
================================================================================================================================
</TABLE>

  For the year ended December 31, 2006, certain outstanding share option
awards, in the amount of 0.3 million (2005 -- 1.1 million), were not included
in the computation of diluted income per Common Share and Non-Voting Share
because the share option awards' exercise prices were greater than the average
market price of the Common Shares and Non-Voting Shares during the reported
periods.

11 share-based compensation

(a) Details of share-based compensation expense

Reflected in the Consolidated Statements of Income as "Operations expense" and
the Consolidated Statements of Cash Flows are the following share-based
compensation amounts:


<TABLE>
<CAPTION>
Years ended December 31 (millions)	                2006		                                2005
--------------------------------------------------------------------------------------------------------------------------------
	                                          Associated      Statement of                    Associated       Statement of
                                    Operations    operating       cash flows      Operations      operating        cash flows
	                            expense	  cash outflows   adjustment      expense         cash outflows    adjustment
<S>				    <C>		  <C>		  <C>		  <C>		   <C>	 	   <C>
--------------------------------------------------------------------------------------------------------------------------------
Share option awards	            $   19.0      $    -- 	  $  19.0 	  $   14.2 	   $	-- 	   $   14.2
Restricted stock units		        26.5 	    (20.4)	      6.1 	      18.5 	      (8.4)	       10.1
Employee share purchase plan	        32.2 	    (32.2)	       -- 	      35.7 	     (35.7)	         --
---------------------------------------------------------------------------------------------------------------------------------
	                            $   77.7 	  $ (52.6)	  $  25.1 	  $   68.4 	   $ (44.1)	   $   24.3
=================================================================================================================================
</TABLE>

  For the year ended December 31, 2006, the associated operating cash flows in
respect of restricted stock units are net of hedging benefits of $18.6 million
(2005 -- NIL), as discussed further in (c) and Note 5. For the year ended
December 31, 2006, the income tax benefit arising from share-based compensation
was $19.7 million (2005 -- $18.5 million); as disclosed in Note 9, not all
share-based compensation amounts are deductible for income tax purposes.

(b) Share option awards

The Company applies the fair value based method of accounting for share-based
compensation awards granted to employees. Share option awards 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 option awards, which
is determined at the date of grant, may be either cliff or graded; all share
option awards granted subsequent to 2004 have been cliff-vesting awards.
  Some share option awards have a net-equity settlement feature. As discussed
further in Note 18(e), it is at the Company's option whether the exercise of a
share option is settled as a share option or using the net-equity settlement
feature. So as to align with the accounting treatment that is afforded to the
associated share options, the Company has selected the equity instrument fair
value method of accounting for the net-equity settlement feature.
  The weighted average fair value of share option awards 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>
<CAPTION>
Years ended December 31										2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Share option award fair value (per share option)		                              $	   12.45      $    12.08
Risk free interest rate					                                            4.0%	    3.8%
Expected lives(1) (years)					                                    4.6	  	    4.7
Expected volatility					                                           35.7%	   38.9%
Dividend yield					                                                    2.6%	    2.3%
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The maximum contractual term of the share option awards granted in 2006 and
    2005 was seven years.
</FN>
</TABLE>

  The risk free interest rate used in determining the fair value of the share
option awards is based on a Government of Canada yield curve that is current
at the time of grant. The expected lives of the share option awards are based
on historical share option award exercise data of the Company. Similarly,
expected volatility considers the 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 award exercise price. Dividends
are not paid on unexercised share option awards 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, 2006, would have varied as follows:

<TABLE>
<CAPTION>
	                                                                                      Hypothetical change in
                                                                                                  assumptions(1)
($ in millions)					                                                10%		20%
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Risk free interest rate					                                      $	    0.3       $	     0.6
Expected lives (years)			                                                      $     0.7       $	     1.3
Expected volatility				                                              $	    1.5       $	     3.1
Dividend yield				                                                      $	    0.4       $	     0.8
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>

  Subsequent to December 31, 2006, the Company amended substantially all of its
share option awards that were granted prior to January 1, 2005, and which were
outstanding on January 1, 2007, by adding a net-cash settlement feature; the
optionee has the choice of exercising the net-cash settlement feature. The
result of such amendment is that the affected outstanding share option awards
largely take on the characteristics of liability instruments rather than equity
instruments. For the outstanding share option awards that were amended and
which were granted subsequent to 2001, the minimum expense recognized for them
will be their grant-date fair values.
  In conjunction with the amendment, the Company entered into a cash-settled
equity swap agreement that will substantially fix the Company's cost associated
with the affected outstanding share option awards.
  The consolidated statement of income transitional effect (an expense increase)
of such amendment, reflecting vesting as at December 31, 2006, and which is
expected to be recorded in the first quarter of 2007, is as follows:

<TABLE>
<CAPTION>
($ in millions except per share amounts)			Wireline		Wireless		Consolidated
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Change in:
  Operations expense(1)			                       $   125.1 	      $	  27.8 	      	      $   152.9
====================================================================================================
		                               Income taxes(2) -- future	                                   60.6
                                               ---------------------------------------------------------------------------------
		                               Net income and Common Share and Non-Voting Share income        $	   92.3
=================================================================================================================================

	                                       Income per Common Share and Non-Voting Share(1)(2)
=================================================================================================================================
2
		                                  -- Basic		                                      $	   0.27
		                                  -- Diluted		                                      $	   0.27
<FN>
(1) This transitional amount does not result in an immediate cash outflow. The
    timing of the associated cash outflows is predicated upon when optionees
    exercise their share option awards and upon them choosing to use the net-cash
    settlement feature.
       This transitional amount excludes the effects of vesting, forfeitures,
    cancellations and expiries that may occur subsequent to December 31, 2006.
    Further, it excludes the effects of any hedging agreements substantially fixing
    the cost of the share option awards to the Company as well as any changes in
    the prices of the Company's Common Shares and Non-Voting Shares.

(2) Income taxes -- future, and per share amounts, are based upon the
    corresponding amounts used for the year ended December 31, 2006, calculations.
</FN>
</TABLE>

Had such amendment occurred immediately prior to January 1, 2007, certain line
items of the Company's December 31, 2006, Consolidated Balance Sheet would
have been adjusted as follows to reflect the transitional effect:

<TABLE>
<CAPTION>
As at December 31, 2006 ($ in millions)			        	                Impact of amending
                                                                As currently            outstanding share
                                                                reported                option awards(1)        Pro forma
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Current liabilities
  Accounts payable and accrued liabilities
    Accrued share option award liability		      $	     -- 	      $	  180.6 	      $	  180.6
  Future income taxes			                      $	   93.2 	      $	  (60.6)	      $	   32.6
Shareholders' equity
  Options, warrants and other			              $	    0.8 	      $	   (0.8)	      $      --
  Retained earnings			                      $ 1,080.1 	      $	  (92.3)	      $	  987.8
  Contributed surplus		                              $	  163.5 	      $	  (26.9)	      $	  136.6
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) This transitional amount excludes the effects of vesting, forfeitures,
    cancellations and expiries that may occur subsequent to December 31, 2006.
    Further, it excludes the effects of any hedging agreements substantially fixing
    the cost of the share option awards to the Company as well as any changes in
    the prices of the Company's Common Shares and Non-Voting Shares.
</FN>
</TABLE>


(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; the notional dividends are recorded as additional issuances
of 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 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>
<CAPTION>


Years ended December 31,		              2006		                            2005
--------------------------------------------------------------------------------------------------------------------------------
                                      Number of restricted stock    Weighted      Number of restricted stock         Weighted
                                               units	            average                units                     average
                                      -------------------------     grant date    --------------------------         grant date
                                      Non-vested      Vested	    fair value      Non-vested      Vested	     fair value
<S>				      <C>	      <C>	      <C>	    <C>		    <C>		     <C>
--------------------------------------------------------------------------------------------------------------------------------
Outstanding, beginning of period
  Non-vested		              1,645,530            -- 	      $ 32.16 	      880,053 	         -- 	    $  23.36
  Vested		                     --        62,437 		26.43 		   -- 	    118,434 	       18.47
Issued
  Initial allocation		        659,682            -- 		44.70 	    1,076,966 	         -- 	       37.91
  In lieu of dividends		         48,293 	   -- 		49.17 	       33,421 		 -- 	       43.30
Vested		                       (706,599)      706,599 	        24.46 	     (158,877)	    158,877 	       19.67
Settled in cash		                     --      (731,785)	        24.58 		   -- 	   (214,874)	       18.46
Forfeited and cancelled		       (128,293)	   -- 		32.40 	     (186,033)	         -- 	       32.08
--------------------------------------------------------------------------------------------------------------------------------
Outstanding, end of period
  Non-vested		              1,518,613 	   -- 		40.99 	    1,645,530 		 -- 	       32.16
  Vested		                     -- 	37,251 	      $	38.85 		   -- 	     62,437 	    $  26.43
=================================================================================================================================
</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; that information, as well as a schedule of the Company's non-vested
restricted stock units outstanding as at December 31, 2006, is set out in the
following table.

<TABLE>
<CAPTION>
                                                        Number of          Cost fixed to        Number of        Total number
                                                        fixed-cost         the Company          variable-cost    of non-vested
                                                        restricted         per restricted       restricted       restricted
                                                        stock units        stock unit           stock units      stock units
<S>							<C>		   <C>			<C>		 <C>
--------------------------------------------------------------------------------------------------------------------------------
Vesting in years ending December 31:
  2007		                                          600,000 	   $   40.91 		66,720 		   666,720
  2008		                                          160,000 	   $   50.91
		                                          440,000 	   $   50.02
 				                       ----------
		                                          600,000 				251,893            851,893
---------------------------------------------------------------------------------------------------------------------------------
		                                        1,200,000 				318,613          1,518,613
=================================================================================================================================
</TABLE>

(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>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Employee contributions					                                      $	    75.9      $	   61.9
Company contributions						                                    32.2 	   35.7
---------------------------------------------------------------------------------------------------------------------------------
					                                                      $	   108.1      $	   97.6
=================================================================================================================================
</TABLE>

  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, 2006, 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 1.3 years
(2005 -- 2.3 years).

<TABLE>
<CAPTION>
As at December 31 (millions)(1)	 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Share option awards					                                      $	   24.1      $	   27.1
Restricted stock units(2)						                           38.8 	   31.8
---------------------------------------------------------------------------------------------------------------------------------
					                                                      $	   62.9      $	   58.9
=================================================================================================================================
<FN>
(1) These disclosures are not likely to be representative of the effects on
    reported net income for future periods for the following reasons: these amounts
    reflect an estimate of forfeitures; these amounts do not reflect any provision
    for future awards; these amounts do not reflect any provision for changes in
    the intrinsic value of vested restricted stock units; these amounts do not
    reflect any provision for the impacts of modification of share option awards
    allowing for net-cash settlement; and for non-vested restricted stock units,
    these amounts reflect intrinsic values as at the balance sheet dates.

(2) 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 dates, net of
    the impacts of associated cash-settled equity forward agreements.
</FN>
</TABLE>

12 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 a TELUS Quebec Inc. retiree healthcare
plan. 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 an annual maximum of 2%. Pensionable remuneration is determined by
the annualized average of the best sixty consecutive months.
  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. The plan contains a supplemental benefit account which may provide
indexation up to 70% of the annual change 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 pension plan, 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 the
annual change 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. As is common
with non-registered plans of this nature, these plans are funded only as
benefits are paid.
  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 2005, an external supplier commenced providing a new
long-term disability plan 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 the negotiated labour contract 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: During the latter half of 2006, the
Company revised its defined contribution pension plan offerings for 2007.
Effective January 1, 2007, the Company will now offer one defined contribution
pension plan, which will be contributory, and will be the only
Company-sponsored pension plan available to non-unionized and certain
unionized employees joining the Company after that date. Generally, employees
can annually choose to contribute to the plan at a rate of between 3% and 6%
of their pensionable earnings. The Company will match 100% of the
contributions of the employees up to 5% of their pensionable earnings and will
match 80% of employee contributions greater than that.

<TABLE>
<CAPTION>
Contributions as a percentage of pensionable earnings	         2007		                         2006
	                                                Minimum		Maximum		        Minimum		Maximum
<S>							<C>		<C>			<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Employee contribution(1)	                        3.0%		6.0%		          0%		6.0%
Employer contribution	                                3.0%		5.8%		        3.0%		6.0%
--------------------------------------------------------------------------------------------------------------------------------
Total contribution(2)	                                6.0%		11.8%		        3.0%		12.0%
================================================================================================================================
<FN>
(1) Generally, membership in the defined contribution pension plan is
    voluntary until an employee's third year service anniversary.
(2) In the event that annual contributions exceed allowable maximums, excess
    amounts are contributed to a non-registered supplementary defined contribution
    pension plan.
</FN>
</TABLE>

(a) Defined benefit plans

Information concerning the Company's defined benefit plans, in aggregate,
is as follows:

<TABLE>
<CAPTION>
                                                       Pension Benefit Plans		        Other Benefit Plans
(millions)	                                        2006		2005		        2006		2005
<S>							<C>		<C>			<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Accrued benefit obligation:
  Balance at beginning of year	                       $ 6,345.3       $ 5,366.7 	       $    69.1       $   61.1
  Current service cost		                           132.4 	   105.6 		     3.5 	    3.4
  Interest cost		                                   315.9 	   319.3 		     3.7 	    8.2
  Benefits paid (b)		                          (273.9)	  (255.5)		    (5.5)	   (5.3)
  Actuarial loss (gain)		                            59.9 	   809.2 		     0.9 	    1.7
---------------------------------------------------------------------------------------------------------------------------------
  Balance at end of year (c)-(d)		         6,579.6   	 6,345.3 		    71.7  	   69.1
---------------------------------------------------------------------------------------------------------------------------------
Plan assets (f):
  Fair value at beginning of year	  	         6,198.9 	 5,457.2 		    43.8 	   48.2
  Annual return on plan assets		                   759.5 	   840.3 		     0.7 	   (0.3)
  Employer contributions (g)		                   123.4   	   119.6 		     1.3            1.2
  Employees' contributions		                    35.3 	    37.3 		      -- 	     --
  Benefits paid (b)		                          (273.9)	  (255.5)		    (5.5)	   (5.3)
--------------------------------------------------------------------------------------------------------------------------------
  Fair value at end of year		                 6,843.2 	 6,198.9 		    40.3 	   43.8
---------------------------------------------------------------------------------------------------------------------------------
Funded status -- plan surplus (deficit)	  	           263.6 	  (146.4)		   (31.4)	  (25.3)
Unamortized net actuarial loss (gain)		           812.5 	 1,109.0 		   (12.8)	  (17.1)
Unamortized past service costs		                     5.3 	     6.0 		      -- 	     --
Unamortized transitional obligation (asset)	          (233.4)	  (278.1)		     2.4 	    3.2
---------------------------------------------------------------------------------------------------------------------------------
Accrued benefit asset (liability)		           848.0 	   690.5 		   (41.8)	  (39.2)
Valuation allowance		                          (178.7)	  (152.5)		      -- 	     --
---------------------------------------------------------------------------------------------------------------------------------
Accrued benefit asset (liability),
   net of valuation allowance	                       $   669.3       $   538.0 	       $   (41.8)      $  (39.2)
=================================================================================================================================
</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 and the TELUS Edmonton Pension Plan, will be transferred upon
receipt of the requisite regulatory approvals; such approvals have not been
received as at December 31, 2006. The TELUS Corporation Pension Plan pension
obligation of $17.2 million and the TELUS Edmonton Pension Plan pension
obligation of $3.8 million and the TELUS Edmonton Pension Plan obligation of
$3.8 million have 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, 2006, of $7.6 million
(2005 -- $6.0 million) will be transferred along with the pension obligation;
the corresponding amounts in respect of the TELUS Edmonton Pension Plan are
$3.8 million, plus accrued interest of $1.7 million (2005 -- $1.3 million).
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>
As at December 31 (millions)									2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Pension benefit plans					                                      $	  669.3       $	  538.0
Other benefit plans						                                  (41.8)	  (39.2)
--------------------------------------------------------------------------------------------------------------------------------
					                                                      $	  627.5       $	  498.8
=================================================================================================================================
Presented on the Consolidated Balance Sheets as:
Deferred charges (Note 20(b))					                      	      $	  826.2       $	  687.9
Other long-term liabilities (Note 20(b))						         (198.7) 	 (189.1)
--------------------------------------------------------------------------------------------------------------------------------
					                                                      $	  627.5       $	  498.8
=================================================================================================================================
</TABLE>

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

(b) Defined benefit plans -- cost (recovery)
The Company's net defined benefit plan costs (recoveries) were as follows:

<TABLE>
<CAPTION>
Years ended December 31 (millions)	                2006		                                2005
-----------------------------------------------------------------------------------    -----------------------------------------
                                    Incurred in       Matching        Recognized in    Incurred in    Matching     Recognized in
                                      period	     adjustments(1)     period	       period       adjustments(1)    period
<S>					<C>		<C>		<C>		<C>		<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Pension benefit plans
  Current service cost
    (employer portion)	              $	 97.1 	      $	    -- 	      $	  97.1 	      $	  68.3 	     $	   -- 	      $	  68.3
  Interest cost		                315.9 		    -- 		 315.9 		 319.3 		   -- 	 	 319.3
  Return on plan assets		       (759.5)		 314.4 		(445.1)		(840.3)	  	448.0 		(392.3)
  Past service costs		           -- 		   0.7 		   0.7 		    -- 	 	  0.6 		   0.6
  Actuarial loss (gain)		         59.9 		 (17.9)		  42.0 		 809.2 	       (789.1)	  	  20.1
  Valuation allowance provided
    against accrued benefit asset	   -- 		  26.2 		  26.2 		    --  	  25.5 		  25.5
  Amortization of transitional asset	   -- 		 (44.7)		 (44.7)	   	    -- 	         (44.7)		 (44.7)
--------------------------------------------------------------------------------------------------------------------------------
	                              $(286.6)	       $ 278.7 	      $   (7.9)	      $	 356.5       $	(359.7)	      $   (3.2)
=================================================================================================================================
<FN>
(1)Accounting adjustments to allocate costs to different periods so as to
   recognize the long-term nature of employee future benefits.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Years ended December 31 (millions)	                2006		                                2005
-----------------------------------------------------------------------------------    -----------------------------------------
                                    Incurred in       Matching        Recognized in    Incurred in    Matching     Recognized in
                                      period	     adjustments(1)     period	       period       adjustments(1)    period
<S>					<C>		<C>		<C>		<C>		<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Other benefit plans
  Current service cost
   (employer portion)	              $	  3.5 	      $	    -- 	      $	   3.5 	      $	   3.4 	     $	   -- 	      $	   3.4
  Interest cost		                  3.7 		    -- 		   3.7 		   8.2 		   -- 	 	   8.2
  Return on plan assets		         (0.7)		  (1.8)		  (2.5)		   0.3 		 (2.8)		  (2.5)
  Actuarial loss (gain)		          0.9 		  (2.5)		  (1.6)		   1.7 		 (3.7)		  (2.0)
  Amortization of transitional
   obligation		                   -- 		   0.8 		   0.8 		    -- 		  0.8 		   0.8
---------------------------------------------------------------------------------------------------------------------------------
	                              $	  7.4 	      $	  (3.5)	      $	   3.9 	      $	  13.6 	     $	 (5.7)	$	   7.9
=================================================================================================================================
<FN>
(1)Accounting adjustments to allocate costs to different periods so as to
   recognize the long-term nature of employee future benefits.
</FN>
</TABLE>

(c) Benefit payments

Estimated future benefit payments from the Company's defined benefit plans are
as follows:

<TABLE>
<CAPTION>
Years ending December 31 (millions)					                      Pension 	    Other Benefit
                                                                                            Benefit Plans      Plans
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
2007					                                                      $	  280.0       $	    5.6
2008						                                                  292.2 	    5.8
2009						                                                  307.2 	    6.1
2010						                                                  322.5 	    6.2
2011						                                                  340.6 	    6.3
2012-2016						                                        1,947.8 	   32.3
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(d) 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:

<TABLE>
<CAPTION>
As at December 31 (millions)	                        2006		                                2005
----------------------------------------------------------------------------------    ------------------------------------------
                                       Accrued                     Funded status -    Accrued                    Funded status -
                                       benefit                       plan surplus     benefit                      plan surplus
                                      obligation     Plan assets     (deficit)      obligation	    Plan assets      (deficit)
<S>					<C>		<C>		<C>		<C>		<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Pension plans that have plan assets
 in excess of accrued benefit
  obligations	                       $ 4,130.3       $ 4,602.9       $  472.6       $	3,562.7        $ 3,805.0       $  242.3
Pension plans that have accrued
 benefit obligations in excess
  of plan assets
  Funded		                 2,270.0 	 2,240.3 	  (29.7)	2,611.4 	 2,393.9 	 (217.5)
  Unfunded		                   179.3 	      -- 	 (179.3) 	  171.2 	      -- 	 (171.2)
---------------------------------------------------------------------------------------------------------------------------------
		                         2,449.3 	 2,240.3 	 (209.0)	2,782.6 	 2,393.9 	 (388.7)
---------------------------------------------------------------------------------------------------------------------------------
(see (a))	                       $ 6,579.6       $ 6,843.2       $  263.6       $	6,345.3        $ 6,198.9       $ (146.4)
=================================================================================================================================
</TABLE>

As at December 31, 2006 and 2005, undrawn Letters of Credit, further discussed
in Note 17(c), secured certain of the unfunded defined benefit pension plans.

(e) 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)				2006					      2005
----------------------------------------------------------------------------------    ------------------------------------------
                                       Accrued                     Funded status -    Accrued                    Funded status -
                                       benefit                       plan surplus     benefit                      plan surplus
                                      obligation     Plan assets     (deficit)      obligation	    Plan assets      (deficit)
<S>					<C>		<C>		<C>		<C>		<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Other benefit plans that have
 plan assets in excess of accrued
 benefit obligations	               $    31.0       $    40.3       $    9.3       $	   35.0        $    43.8       $    8.8
Unfunded other benefit plans
 that have accrued benefit
 obligations in excess of plan
 assets		                            40.7  	      -- 	  (40.7)	   34.1 	      --	  (34.1)
---------------------------------------------------------------------------------------------------------------------------------
(see (a))	                       $    71.7       $    40.3      $	  (31.4)      $	   69.1        $    43.8       $  (25.3)
=================================================================================================================================
</TABLE>

(f) 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:

<TABLE>
<CAPTION>
As at December 31 (millions)	                        2006		                              2005
----------------------------------------------------------------------------------    -------------------------------------------
                                      Accumulated	                              Accumulated
                                      benefit                                         benefit
                                      obligation      Plan assets    Difference       obligation    Plan assets      Difference
<S>					<C>		<C>		<C>		<C>		<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Pension plans that have plan
 assets in excess of accumulated
 benefit obligations	               $ 5,994.3       $ 6,825.7      $	  831.4       $	4,188.5        $ 4,695.5        $ 507.0
Pension plans that have
 accumulated benefit obligations
 in excess of plan assets
 Funded		                            18.1 	    17.5 	   (0.6)	1,561.3 	 1,503.4 	  (57.9)
 Unfunded	                  	   166.0 	      -- 	 (166.0)	  160.1 	      --    	 (160.1)
---------------------------------------------------------------------------------------------------------------------------------
	                      	           184.1 	    17.5 	 (166.6)	1,721.4 	 1,503.4  	 (218.0)
---------------------------------------------------------------------------------------------------------------------------------
                    	               $ 6,178.4       $ 6,843.2      $	  664.8       $	5,909.9        $ 6,198.9       $  289.0
=================================================================================================================================
</TABLE>

(g) 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.
  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
                                        2007            2006		2005		2007		2006		2005
<S>					<C>		<C>		<C>		<C>		<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Equity securities		        58-64%		61%		62%		-- 		-- 		--
Debt securities		                32-38%		33%		34%		-- 		-- 		--
Real estate		                  4-6%		5%		4%		-- 		-- 		--
Other		                          0-2%		1%		-- 		100%		100%		100%
--------------------------------------------------------------------------------------------------------------------------------
				                       100%		100%		                100%		100%
=================================================================================================================================
</TABLE>

At December 31, 2006, shares of TELUS Corporation accounted for less than 1%
of the assets held in the pension and other benefit trusts administered by the
Company.

(h) Employer contributions

The best estimates of fiscal 2007 employer contributions to the Company's
defined benefit plans are approximately $111 million and approximately $1
million for defined benefit pension plans and other defined benefit plans,
respectively. These estimates are based upon the mid-year 2006 annual funding
reports that were prepared by actuaries using December 31, 2005, 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 2007.

(i) 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
	                                                2006		2005		        2006		2005

<S>							<C>		<C>			<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Discount rate used to determine:
  Net benefit costs for the year ended December 31	5.00%	        6.00%			5.00%		5.34%
  Accrued benefit obligation as at December 31		5.00%		5.00%			4.84%		4.83%
Expected long-term rate of return(1) on plan assets
  used to determine:
  Net benefit costs for the year ended December 31	7.25%		7.25%			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%		3.00%			  --		  --
  Accrued benefit obligation as at December 31		3.00%		3.00%			  --	   	  --
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(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 (g)). Forecasted returns arise from the Company's ongoing review of
   trends, economic conditions, data provided by actuaries and updating of
   underlying historical information.
</FN>
</TABLE>

<TABLE>
<CAPTION>
2006 sensitivity of key assumptions			Pension Benefit Plans			Other Benefit Plans
--------------------------------------------------------------------------------------------------------------------------------


	                                              Change in       Change in 	     Change in 	      Change in
(millions)                                            obligation      expense                obligation       expense
<S>							<C>		<C>			<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Impact of hypothetical 0.25% change(1) in:
Discount rate	                                       $ 229.8 	       $  22.2 		       $  1.1 	       $    --
Expected long-term rate of return on plan assets		       $  15.3 				       $   0.1
Rate of future increases in compensation	       $  30.5 	       $   6.2 		       $   -- 	       $    --
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>

The Company's health benefit costs for the defined benefit plan for retired
employees were estimated to increase at an annual rate of 10% (2005 -- 9.0%),
decreasing to an annual growth rate of 5% (2005 -- 5%) over an ten-year period
(2005 -- eight-year period).

(j) Defined contribution plans

The Company's total defined contribution pension plan costs recognized were as
follows:

<TABLE>
<CAPTION>
Years ended December 31 (millions) 					                        2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Union pension plan and public service pension plan contributions		              $	   30.7       $	   26.3
Other defined contribution pension plans						           18.2 	   15.1
---------------------------------------------------------------------------------------------------------------------------------
					                                                      $	   48.9       $	   41.4
=================================================================================================================================
</TABLE>


13 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, March
1, 2006, and November 30, 2006, 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 had an initial term ending
July 18, 2007; the November 30, 2006, amendment resulted in the term being
extended to July 18, 2008. 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, 2006, the rating was A (low).


<TABLE>
<CAPTION>
As at December 31 ($ in millions)								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Total managed portfolio	                                                                      $	1,216.1       $	1,129.3
Securitized receivables		                                                                 (567.3)	 (599.2)
Retained interest in receivables sold		                                                   58.4 	   80.2
---------------------------------------------------------------------------------------------------------------------------------
Receivables held	                                                                      $	  707.2       $	  610.3
=================================================================================================================================
</TABLE>

  For the year ended December 31, 2006, the Company recognized losses of $5.1
million (2005 -- $3.9 million) on the sale of receivables arising from the
securitization.
  Cash flows from the securitization are as follows:

<TABLE>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Cumulative proceeds from securitization, beginning of period		                      $	  500.0	      $	  150.0
Proceeds from new securitizations					                       	  410.0		  350.0
Securitization reduction payments					   	                 (410.0)	     --
---------------------------------------------------------------------------------------------------------------------------------
Cumulative proceeds from securitization, end of period					      $	  500.0       $	  500.0
=================================================================================================================================
Proceeds from collections reinvested in revolving-period securitizations		      $	3,863.0       $	1,679.3
=================================================================================================================================
Proceeds from collections pertaining to retained interest				      $	  499.3       $	  275.3
=================================================================================================================================
</TABLE>

  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(m), are as follows:

<TABLE>
<CAPTION>
Years ended December 31										2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Expected credit losses as a percentage of accounts receivable sold				  1.2%		  1.2%
Weighted average life of the receivables sold (days)						   39   	   39
Effective annual discount rate						                          4.7%		  3.6%
Servicing						                                          1.0%		  1.0%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  Generally, the sold trade receivables do not experience prepayments.
  At December 31, 2006, 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>
<CAPTION>

					                                                  Hypothetical change in
                                                                                              assumptions(1)

($ in millions)							2006			10%			20%

<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Carrying amount/fair value of future cash flows			$  58.4
Expected credit losses as a percentage of accounts
 receivable sold				                                        $   0.6 		$   1.2
Weighted average life of the receivables sold (days)					$    -- 		$   0.1
Effective annual discount rate					                        $    -- 		$   0.1
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>

14 capital assets

(a) Capital assets, net


<TABLE>
<CAPTION>
As at December 31 (millions)	                             2006	                              	2005
--------------------------------------------------------------------------------------------------------------------------------
			                                   Accumulated  			     Accumulated
                                                          depreciation                              depreciation
                                                             and          Net book                      and          Net book
                                            Cost	 amortization      value           Cost      amortization    value
<S>				            <C>		   <C>		   <C>		   <C>		<C>	      <C>
--------------------------------------------------------------------------------------------------------------------------------
Property, plant, equipment and other
  Telecommunications assets	            $ 18,061.8 	   $ 12,755.3 	   $  5,306.5 	   $ 17,380.4 	$ 12,002.2    $  5,378.2
  Assets leased to customers		         693.3 		550.9 	        142.4 	        732.9 	     556.8 	   176.1
  Buildings and leasehold improvements	       1,852.5 	      1,002.7 		849.8 	      1,754.8 	     916.8 	   838.0
  Office equipment and furniture	       1,110.6 	        840.8 		269.8 	        980.7 	     717.6 	   263.1
  Assets under capital lease		          18.5 		  9.4 		  9.1 	         18.5 	       6.1 	    12.4
  Other		                                 340.6 		259.6 		 81.0 	        329.3 	     244.4 	    84.9
  Land		                                  48.9 		   -- 		 48.9 		 46.7 	        -- 	    46.7
  Assets under construction		         725.4 		   -- 		725.4 		516.4 	        -- 	   516.4
  Materials and supplies	                  33.6 		   -- 	         33.6 		 23.6 	        -- 	    23.6
---------------------------------------------------------------------------------------------------------------------------------
		                              22,885.2 	     15,418.7 	      7,466.5 	     21,783.3 	  14,443.9 	 7,339.4
---------------------------------------------------------------------------------------------------------------------------------
Intangible assets subject to amortization
  Subscriber base		                 362.9 		138.3 		224.6 	        362.9 	     116.2 	   246.7
  Software		                       1,306.0 	      1,043.4 	 	262.6 	      1,207.1 	     884.4 	   322.7
  Access to rights-of-way and other 	         122.3 		 60.3 		 62.0 	        119.3 	      51.2 	    68.1
---------------------------------------------------------------------------------------------------------------------------------
		                               1,791.2 	      1,242.0 	        549.2 	      1,689.3 	   1,051.8 	   637.5
---------------------------------------------------------------------------------------------------------------------------------
Intangible assets with indefinite lives
  Spectrum licences(1)	  	               3,984.9 	      1,018.5 	      2,966.4 	      3,983.1 	   1,018.5 	 2,964.6
---------------------------------------------------------------------------------------------------------------------------------
	                                    $ 28,661.3 	   $ 17,679.2 	   $ 10,982.1 	   $ 27,455.7   $ 16,514.2    $ 10,941.5
=================================================================================================================================
<FN>
(1) Accumulated amortization of spectrum licences is amortization recorded prior
    to 2002 and the transitional impairment amount.
</FN>
</TABLE>

The following table presents items included in capital expenditures.

<TABLE>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Additions of intangible assets
  -- Subject to amortization					                                $  139.1 	$  191.8
  -- With indefinite lives						                             1.8 	     8.8
---------------------------------------------------------------------------------------------------------------------------------
					                                                        $  140.9 	$  200.6
=================================================================================================================================
</TABLE>

The following table presents items included in capital expenditures.

<TABLE>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Capitalized internal labour costs					                        $  306.8 	$  213.0
=================================================================================================================================
</TABLE>

(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, 2006, for
each of the next five fiscal years is as follows:

<TABLE>
<CAPTION>
Years ending December 31 (millions)
<S>														<C>
---------------------------------------------------------------------------------------------------------------------------------
2007			                                                                                        $  178.0
2008				                                                                                    89.7
2009				                                                                                    33.3
2010				                                                                                    12.9
2011				                                                                                    10.8
---------------------------------------------------------------------------------------------------------------------------------
</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.
  Sensitivity testing was conducted as a part of the December 2006 annual test.
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.

15 goodwill

<TABLE>
<CAPTION>
Years ended December 31 (millions)								2006		2005
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Balance, beginning of period	                                                                $  3,156.9      $  3,126.8
Goodwill arising from current period acquisitions		                                      40.4 	      24.5
Foreign exchange on goodwill of self-sustaining foreign operations		                       0.7 	      (2.3)
Goodwill arising from contingent consideration paid in respect of a prior year's acquisition		-- 	       7.9
Other		                                                                                     (28.5)	        --
---------------------------------------------------------------------------------------------------------------------------------
Balance, end of period	                                                                          $3,169.5 	   $3,156.9
=================================================================================================================================
 </TABLE>

FSC Internet Corp.: Of the 2006 goodwill addition, $17.5 million, none of
which is expected to be deductible for tax purposes, arose from the April 7,
2006, cash acquisition of FSC Internet Corp., operating as Assurent Secure
Technologies, a provider of information technology security services and
products. The investment was made with a view to the ongoing advancement of
the Company's existing suite of security solutions.
  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 acquisition
date, the acquired company's results are included in the Company's
Consolidated Statements of Income and are included in the Company's Wireline
segment.
  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.
  In the second half of 2006, the Company increased its total effective
economic interest in the entity from 52.5% to 97.4%, resulting in a 2006
goodwill addition of $22.9 million, none of which is expected to be deductible
for tax purposes.
  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.
Ambergris Solutions Inc.'s results have been included in the Company's
Consolidated Statements of Income and the Company's Wireline segment since the
acquisition of control on February 15, 2005.
  Other: During 2006, the Company updated its estimate of the net income tax
benefits that were obtained in the course of pre-2005 business combinations.
This has resulted in a decrease in the future income tax liability of $26.5
million, which has been recorded as a reduction of the unamortized balance of
goodwill arising from the acquisitions.

16 short-term obligations

At December 31, 2006, the Company's available bilateral bank facilities
totalled $74 million (2005 -- $74 million), $1.2 million (2005 -- NIL) of
which was utilized in the form of an overdraft; $2.6 million (2005 -- $7.3
million) was utilized as outstanding undrawn letters of credit.

17 long-term debt

(a) Details of long-term debt

<TABLE>
<CAPTION>
As at December 31 ($ in millions)
Series		                           Rate of interest	     Maturity	   	     2006	       2005
<S>				                 <C>	             <C>	             <C>	        <C>
--------------------------------------------------------------------------------------------------------------------------------
TELUS Corporation Notes
    U.S. (2)		                         7.50%(1)	     June 2007		     $  1,358.8        $  1,354.4
    U.S. (3)		                         8.00%(1)	     June 2011		        2,236.7 	  2,230.6
     CB     		                         5.00%(1)	     June 2013			  299.7 	       --
---------------------------------------------------------------------------------------------------------------------------------
						                                                3,895.2 	  3,585.0
---------------------------------------------------------------------------------------------------------------------------------
TELUS Corporation Credit Facilities	         5.31%		     May 2008			  120.0 	    142.0
---------------------------------------------------------------------------------------------------------------------------------
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 16.69% and
 maturing on various dates up to 2013		                                                    9.2 	     12.5
---------------------------------------------------------------------------------------------------------------------------------
Other 			                                                                            4.7 	      6.4
---------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt					                                    	        4,928.1 	  6,336.5 		4,644.9
Less -- current maturities					                                1,434.4 	      5.0
---------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt -- non-current			                                   	     $  3,493.7 	$ 4,639.9
=================================================================================================================================
<FN>
(1) Interest is payable semi-annually.
(2) Principal face value of notes is U.S.$1,166.5 million (2005 -- U.S.$1,166.5 million).
(3) Principal face value of notes is U.S.$1,925.0 million (2005 -- U.S.$1,925.0 million).
</FN>
</TABLE>

(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 publicly issued
U.S.$1.3 billion 2007 Notes at a price of U.S.$995.06 per U.S.$1,000.00 of
principal and U.S.$2.0 billion 2011 Notes at a price of U.S.$994.78 per
U.S.$1,000.00 of principal. 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 (2005 -- 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 and fixed economic exchange rates.
  The cross currency interest rate swap agreements contain an optional early
termination provision which states that either party could 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 ratings for the Company's counterparties fall
below A or A2.
  In contemplation of the planned refinancing of the 2007 (U.S. Dollar) Notes,
in May 2006 the Company replaced approximately 63% of the notional value of
the existing cross currency interest rate swap agreements with a like amount
of new cross currency interest rate swap agreements which have a lower
effective fixed interest rate and a lower effective fixed exchange rate. This
replacement happened concurrent with the issuance of the 2013 (Canadian
Dollar) Notes (see below); the two transactions had the composite effect of
deferring, from June 2007 to June 2013, the payment of $300 million,
representing a portion of the amount that would have been due either under the
cross currency interest rate swap agreements or to the 2007 (U.S. Dollar) Note
holders (to whom the amounts would ultimately have been paid would depend upon
changes in interest and foreign exchange rates over the period to maturity of
the underlying debt).
  To terminate the previous cross currency interest rate swap agreements, the
Company made a payment of $354.6 million, including $14.0 million in respect
of hedging of then-current period interest payments, to the counterparties.
The remaining $340.6 million portion of the payment made to the counterparties
of the previous cross currency interest rate swap agreements exceeded the
associated amount of the deferred hedging liability, such excess being $25.8
million and which will be deferred and amortized over the remainder of the
life of the 2007 (U.S. Dollar) Notes.
  The following table sets out the composition of the payments made to the
counterparties to the cross currency interest rate swap agreements and the
related accounting amounts.


<TABLE>
<CAPTION>
                                                           At date of early termination of cross             Amounts to be
                                                           currency interest rate swap agreements	     deferred and
                                                           --------------------------------------            amortized over
                                                                                       Hedging             remainder of life of
                                                              Amounts paid             amounts              2007 (U.S. Dollar)
(millions)	                                              in advance(1)            recorded                Notes(2)
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
In respect of principal		                                $  309.4 		$  314.8 		$  (5.4)
In respect of interest that would have been incurred
 subsequent to termination date and prior to maturity
 of 2007 (U.S. Dollar) Notes		                            31.2 		      -- 		   31.2
--------------------------------------------------------------------------------------------------------------------------------
			                                      	   340.6 		   314.8 		   25.8
In respect of hedge accounting affecting accrued interest
 to date of early termination of cross currency interest
 rate swap agreements		                                    14.0 		    14.0 		     --
--------------------------------------------------------------------------------------------------------------------------------
			                                        $  354.6 		$  328.8 		   25.8
=================================================================================================
	                                                        Amortization for the year ended
                                                                 December 31, 2006  			           15.5
                                                                ----------------------------------------------------------------

                                                         	Prepaid expense arising from early
                                                                 termination of cross currency interest
                                                                 rate swap agreements, December 31, 2006        $  10.3
                                                                =================================================================
<FN>
(1) Amounts paid in advance represent present value of cash flows, at early
    termination date, which would have arisen pursuant to early terminated cross
    currency interest rate swap agreements.

(2) Had the early terminated cross currency interest rate swap agreements
    matured in the normal course, the associated period amounts that would have
    been recorded would equal the future value of the amounts to currently be
    deferred and amortized (assuming that the associated future exchange and
    interest rates over the period to maturity of the 2007 (U.S. Dollar) Notes
    would be equal to those at the date of early termination of the cross currency
    interest rate swap agreements).
</FN>
</TABLE>

  The weighted average effective fixed interest rates and effective fixed
exchange rates arising from the cross currency interest rate swap agreements
are summarized in the following table:

<TABLE>
<CAPTION>

As at December 31						2006					2005
--------------------------------------------------------------------------------------------------------------------------------
                                                                           Effective fixed                      Effective fixed
                                                     Effective fixed 	   exchange rate      Effective fixed   exchange rate
                                                     interest rate         ($: U.S.$1.00)      interest rate    ($: U.S.$1.00)
<S>							<C>		    <C>		        <C>	  	    <C>
--------------------------------------------------------------------------------------------------------------------------------
2007 (U.S. Dollar) Notes				7.046%		    $  1.2716 		8.109%		    $  1.5414
2011 (U.S. Dollar) Notes				8.493%		    $  1.5327 		8.493%		    $  1.5327
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  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.

  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 at December 31, 2006, comprised a net deferred hedging
liability of $835.7 million, as set out in Note 20(b) (2005 -- $1,154.3
million). 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.

  2013 (Canadian Dollar) Notes: In May 2006, the Company publicly issued $300
million 5.00%, Series CB, Notes at a price of $998.80 per $1,000.00 of
principal. 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
16 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.

  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 were 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 and 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 8, 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.

(c) TELUS Corporation credit facilities

On May 4, 2005, TELUS Corporation entered into a $1.6 billion bank credit
facility with a syndicate of financial institutions. The 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
facilities replaced the Company's pre-existing committed credit facilities
prior to the availability termination dates of such facilities.
  TELUS Corporation's 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 net 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>
<CAPTION>
As at December 31 (millions)		    2006		                                    2005
------------------------------------------------------------------------    ----------------------------------------------------
                                            Outstanding,       	                                    Outstanding,
                     Gross                    undrawn           Net          Gross                    undrawn           Net
                   available	 Drawn     letters of credit  available     available      Drawn   letters of credit  available
<S>                  <C>          <C>           <C>              <C>          <C>         <C>           <C>           <C>
--------------------------------------------------------------------------------------------------------------------------------
Revolving credit
 facility expiring
  May 7, 2008	     $  800.0 	  $  120.0 	$  100.1 	 $  579.9     $ 800.0     $ 142.0 	$  100.6      $  557.4
  May 4, 2010		800.0 	        -- 	      -- 	    800.0       800.0          --             --         800.0
--------------------------------------------------------------------------------------------------------------------------------
 		     $1,600.0     $  120.0 	$  100.1 	 $1,379.9     $1,600.0    $ 142.0 	$  100.6      $1,357.4
=================================================================================================================================
</TABLE>

(d) 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.

(e) TELUS Communications Inc. first mortgage bonds

The first mortgage bonds were issued by TELUS Communications (Quebec) Inc. and
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 first mortgage bonds became obligations of TELUS Communications
Inc.

(f) TELUS Communications Inc. medium term notes

The medium term notes were issued by TELUS Communications (Quebec) Inc. under
a trust indenture dated September 1, 1994, as supplemented from time to time,
are unsecured and are 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
medium term notes became obligations of TELUS Communications Inc.

(g) 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.
  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. 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.

(h) Long-term debt maturities

Anticipated requirements to meet long-term debt repayments, including related
hedge amounts and calculated upon such long-term debts owing as at December
31, 2006, during each of the five years ending December 31 are as follows:

<TABLE>
<CAPTION>
(millions)	                       		                                  Deferred hedging
                                                             Principal(1)          liability, net              Total
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
2007	                                                        $ 1,436.1 		$  122.9 	        $ 1,559.0
2008		                                                    124.8 		      -- 		    124.8
2009		                                                      1.5 		      -- 		      1.5
2010		                                                     81.7 		      -- 		     81.7
2011		                                                  2,240.3 		   710.3 		  2,950.6
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Where applicable, principal repayments reflect foreign exchange rates
   at December 31, 2006.
</FN>
</TABLE>

18 shareholders' equity

(a) Details of shareholders' equity


<TABLE>
<CAPTION>
As at December 31 ($ in millions)								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
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)	                                                                $  2,264.4 	$  2,311.6
	 Non-Voting Shares (b)	                                              	                   3,420.8 	   3,556.7
---------------------------------------------------------------------------------------------------------------------------------
		                                                                                   5,685.2  	   5,868.3
---------------------------------------------------------------------------------------------------------------------------------
Options (c)		                                                                               0.8 	       5.9
Cumulative foreign currency translation adjustment		                                      (1.5)	      (7.3)
Retained earnings		                                                                   1,080.1 	     849.7
Contributed surplus (d)		                                                                     163.5 	     153.4
---------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity	                                                                $  6,928.1 	$  6,870.0
=================================================================================================================================
</TABLE>

(b) Changes in Common Shares and Non-Voting Shares
<TABLE>
<CAPTION>
Years ended December 31 ($ in millions)				    2006		                   2005
--------------------------------------------------------------------------------------------------------------------------------
			                            Number of shares	Share capital	 Number of shares	Share capital
<S>							<C>		    <C>		        <C>		    <C>
--------------------------------------------------------------------------------------------------------------------------------
Common Shares
 Beginning of period		                        183,530,655 	    $ 2,311.6           192,748,738 	    $  2,407.5
 Common Shares issued pursuant to exercise of
  share options (e)		                            627,779 		 21.9 		  1,000,328 		  32.2
 Purchase of shares for cancellation pursuant to
  normal course issuer bid (f)		                 (5,490,600)		(69.1)		(10,137,769)	        (127.1)
 Expiration of predecessor share exchange privilege (g)		 -- 	           -- 		    (80,642)	          (1.0)
--------------------------------------------------------------------------------------------------------------------------------
End of period		                                178,667,834 	    $ 2,264.4 	        183,530,655 	    $  2,311.6
=================================================================================================================================
Non-Voting Shares
 Beginning of period		                        166,566,504 	    $ 3,556.7 	        165,803,123 	    $  3,426.7
 Non-Voting Shares issued pursuant to exercise of
  share options (e)		                          3,190,967 	  	 94.2 		  7,556,004 		 200.4
 Non-Voting Shares issued pursuant to use of share
  option award net-equity settlement feature (e)	    371,386 		  2.4 			-- 		    --
 Purchase of shares for cancellation pursuant to
  normal course issuer bid (f)		                (10,888,123)	       (232.5)		(10,656,300)		(223.9)
 Exercise of warrants (c)		                         -- 		   -- 	 	    561,732 	  	  20.8
 Expiration of predecessor share exchange privilege (g)	         -- 		   -- 		    (26,327)	 	  (0.6)
 Channel stock incentive plan (h)		                 -- 		   -- 		     12,225 		   0.4
 Exercise of convertible debenture conversion
  option (Note 17(g))		                                 -- 		   -- 		  3,316,047 	 	 132.9
---------------------------------------------------------------------------------------------------------------------------------
 End of period		                                159,240,734 		$3,420.8 	166,566,504 	    $  3,556.7
=================================================================================================================================
</TABLE>

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

<TABLE>
<CAPTION>
Years ended December 31 (millions)								2006		2005

<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Non-Voting Shares issued pursuant to exercise of share options
 Cash received from exercise of share options					                $   82.6 	$   180.3
 Amounts credited to share capital arising from intrinsic value accounting
   applied to former Clearnet Communications Inc. options (c)			                     5.0 	      9.1
Share option award expense reclassified from contributed surplus upon exercise
   of share options (d)		                                                                     6.6 	     11.0
---------------------------------------------------------------------------------------------------------------------------------
					                                                        $   94.2 	$   200.4
=================================================================================================================================
</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) 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>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Balance, beginning of period					                                $  153.4 	$   149.0
Share option award expense
 - Recognized in period (Note 11(a))			                                            19.0 	     14.2
 - Reclassified to Non-Voting Share capital account
   - Upon exercise of share options			                                            (6.6)	    (11.0)
   - Upon use of share option award net-equity settlement feature			            (2.4)	       --
Amounts credited to contributed surplus arising from intrinsic value accounting
  applied to former Clearnet Communications Inc. options (c)			                     0.1 	       --
Unexercised, expired convertible debenture conversion option			                      -- 	      1.2
---------------------------------------------------------------------------------------------------------------------------------
Balance, end of period					                                        $  163.5 	$   153.4
=================================================================================================================================
</TABLE>

(e) Share option plans

The Company has a number of share option plans under which officers and other
employees may receive options to purchase Non-Voting Shares at a price equal
to the fair market value at the time of grant; prior to 2001, options were
also similarly awarded in respect of Common Shares. Prior to 2002, directors
were also awarded options to purchase Non-Voting Shares and Common Shares at a
price equal to the fair market value at the time of grant. Option awards
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 option
awards 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>
<CAPTION>

Years ended December 31						2006		                        2005
--------------------------------------------------------------------------------------------------------------------------------
	                                              Number of 	   Weighted  	      Number of 	 Weighted
                                                       share             average share         share 	       average share
                                                      options            option price	      options          option price
<S>							<C>		    <C>			<C>		    <C>
--------------------------------------------------------------------------------------------------------------------------------
Outstanding, beginning of period		        13,894,601 	    $	28.14 		21,914,760 	    $	26.07
Granted		                                         1,627,132 		43.66 		 1,916,575 	    	38.85
Exercised(1)		                                (4,365,475)		25.94 		(8,556,332)	    	24.84
Forfeited		                                  (586,796)		27.78 		(1,239,547)	     	29.22
Expired and cancelled	                          	        -- 		   -- 		  (140,855)	    	41.63
---------------------------------------------------------------------------------------------------------------------------------
Outstanding, end of period	                        10,569,462 	    $	31.46 		13,894,601 	    $	28.14
=================================================================================================================================
<FN>
(1)The total intrinsic value of share option awards exercised for the year
ended December 31, 2006, was $105.7 million (2005 -- $128.5 million).
</FN>
</TABLE>

  In 2006, certain outstanding grants of share option awards, which were made
after 2001, had a net-equity settlement feature applied to them. This event
does not result in the optionees receiving incremental value and therefore
modification accounting is not required for it. The optionee does not have the
choice of exercising the net-equity settlement feature. It is at the Company's
discretion whether an exercise of the share option award is settled as a share
option or using the net-equity settlement feature. Subsequent to December 31,
2006, certain outstanding grants of share option awards had a net-cash
settlement feature applied to them, as further discussed in Note 11(b); the
optionee has the choice of exercising the net-cash settlement feature.
  The following table reconciles the number of share options exercised and the
associated number of Common Shares and Non-Voting Shares issued.

<TABLE>
<CAPTION>
Year ended December 31										2006		2005
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Non-Voting Shares issued pursuant to exercise of share option awards			        3,190,967 	7,556,004
Non-Voting Shares issued pursuant to use of share option award net-equity
 settlement feature			                                                          371,386 	       --
Impact of Company choosing to settle share option award exercises using net-equity
 settlement feature		                                                                  175,343 	       --
---------------------------------------------------------------------------------------------------------------------------------
Non-Voting Shares issuable pursuant to exercising of share option awards		        3,737,696 	7,556,004
Common Shares issued and issuable pursuant to exercise of share option awards		          627,779 	1,000,328
---------------------------------------------------------------------------------------------------------------------------------
Share option awards exercised			                                                4,365,475 	8,556,332
=================================================================================================================================
</TABLE>

The following is a life and exercise price stratification of the Company's
share options outstanding as at December 31, 2006.

<TABLE>
<CAPTION>
Options outstanding(1)	                                                                                 Options exercisable
<S>                   <C)        <C>       <C>         <C>         <C>          <C>         <C>          <C>           <C>
------------------------------------------------------------------------------------------------------   ------------------------
Range of option prices									    Total
------------------------------------------------------------------------------------------------------   ------------------------
		                                                                                                       Weighted
 Low 		      $	 5.95 	$  9.14    $  14.63    $   21.99   $   34.88 	$  54.45     $ 5.95      Number of     average
 High		      $	 8.43 	$ 13.56    $  19.92    $   32.83   $   47.22 	$  57.37     $ 57.37     shares        price
Year of expiry and                                                                                       ------------------------
number of shares
------------------------------------------------------------------------------------------------------
 2007		        2,959 	  5,908          -- 	  23,266          --  	      --        32,133 	    32,133     $  24.83
 2008		        3,272 	     --          -- 	  42,880      80,800 	      --       126,952 	   126,952     $  40.26
 2009		           -- 	  3,644     541,982 	 126,443     130,782 	      --       802,851 	   802,851     $  21.48
 2010			   -- 	     --     127,076    1,531,576     452,891 	      --     2,111,543 	 2,111,543     $  26.64
 2011			   -- 	     --       5,366    2,380,788   1,400,438 	      --     3,786,592 	 2,301,628     $  30.69
 2012		       11,066 	  9,267     212,033 	  75,000   1,793,692 	      --     2,101,058 	   307,366     $  17.61
 2013		           -- 	     --          -- 	      --   1,541,626 	  66,707     1,608,333 	        --          --
-------------------------------------------------------------------------------------------------------------------
		       17,297 	 18,819     886,457    4,179,953   5,400,229 	  66,707    10,569,462 	 5,682,473     $  27.36
===================================================================================================================
Weighted average
 remaining contractual
 life (years)		  4.0 	    3.6 	3.7 	     4.1 	5.0 	    6.9 	  4.6
Weighted average price	$7.68 	 $10.39      $16.01 	  $24.60     $39.17 	 $55.39        $31.46
Aggregate intrinsic
 value(2) (millions)	 $0.8 	   $0.8       $31.9 	  $115.0      $70.4 	 $   --        $218.9
Options exercisable
------------------------------------------------------------------------------------------------------
Number of shares       17,297 	 18,819     886,457    2,694,989  2,064,911          --     5,682,473
Weighted average
 remaining contractual
 life (years)	 	  4.0 	    3.6         3.7 	     4.1       3.8	     -- 	  3.9
Weighted average price	$7.68 	 $10.39      $16.01	  $24.51    $36.26       $   --        $27.36
Aggregate intrinsic
 value(2) (millions)	 $0.8 	   $0.8       $31.9 	   $74.5     $33.5 	     --        $141.5
<FN>
(1) As at December 31, 2006, 10,317,956 share options, with a weighted average
    remaining contractual life of 4.5 years, a weighted average price of $31.17
    and an aggregate intrinsic value of $216.7 million, are vested or were
    expected to vest.
(2) The aggregate intrinsic value is calculated upon December 31, 2006, per
    share prices of $53.52 for Common Shares and $52.03 for Non-Voting Shares.
</FN>
</TABLE>

  As at December 31, 2006, 0.8 million Common Shares and 18.5 million Non-
Voting Shares were reserved for issuance, from Treasury, under the share
option plans.

(f) Purchase of shares for cancellation pursuant to normal course issuer bid

The Company purchased, for cancellation, through the facilities of the Toronto
Stock Exchange, Common Shares and Non-Voting Shares pursuant to successive
normal course issuer bids; the Company's most current normal course issuer bid
runs for a twelve-month period ending December 19, 2007, 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, 2006, NIL Common Shares (2005 -- 120,000 Common Shares) and
103,923 Non-Voting Shares (2005 -- 607,700 Non-Voting Shares) had been
purchased and not yet cancelled.


<TABLE>
<CAPTION>
Years ended December 31 ($ in millions)
--------------------------------------------------------------------------------------------------------------------------------
		                                                                            Purchase price
--------------------------------------------------------------------------------------------------------------------------------
                                                       Number of                             Charged to 	 Charged to
                                                       shares               Paid           share capital       retained earnings
<S>							<C>		    <C>			<C>		    <C>
--------------------------------------------------------------------------------------------------------------------------------
Common Shares purchased for cancellation
 Program commencing December 20, 2004
   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
   During fiscal 2006 year		                 5,490,600 	       260.4 		     69.1 		191.3
---------------------------------------------------------------------------------------------------------------------------------
   Program total		                         6,125,069 	       290.1 		     77.1 		213.0
---------------------------------------------------------------------------------------------------------------------------------
 Program commencing December 20, 2006
   During fiscal 2006 year		                        -- 		  -- 		       -- 		   --
---------------------------------------------------------------------------------------------------------------------------------
 All programs -- inception to date		        16,384,080 	    $	729.9 		$   205.6 	    $   524.3
=================================================================================================================================
 All programs -- during fiscal 2006 year	         5,490,600 	    $	260.4 		$    69.1 	    $   191.3
=================================================================================================================================
 All programs -- during fiscal 2005 year	        10,137,769 	    $	442.2 		$   127.1 	    $   315.1
=================================================================================================================================
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
   During fiscal 2006 year		                10,701,400 		530.0 		    228.5 		301.5
--------------------------------------------------------------------------------------------------------------------------------
   Program total		                        11,309,100 		557.8 		    241.4 		316.4
--------------------------------------------------------------------------------------------------------------------------------
 Program commencing December 20, 2006
   During fiscal 2006 year		                   186,723 		  9.8 		      4.0 		  5.8
---------------------------------------------------------------------------------------------------------------------------------
 All programs -- inception to date		        22,995,823 	    $ 1,040.4 		$   486.4 	    $   554.0
=================================================================================================================================

 All programs -- during fiscal 2006 year	        10,888,123 	    $	539.8 		$   232.5 	    $   307.3
=================================================================================================================================

 All 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
   During fiscal 2006 year		                16,192,000 		790.4 		    297.6 		492.8
---------------------------------------------------------------------------------------------------------------------------------
   Program total		                        17,434,169 		847.9 		    318.5 		529.4
---------------------------------------------------------------------------------------------------------------------------------
 Program commencing December 20, 2006
   During fiscal 2006 year		                   186,723 		  9.8 		      4.0 		  5.8
---------------------------------------------------------------------------------------------------------------------------------
 All programs -- inception to date		        39,379,903 	    $ 1,770.3 		$   692.0 	    $ 1,078.3
=================================================================================================================================

 All programs -- during fiscal 2006 year		16,378,723 	    $	800.2 		$   301.6 	    $   498.6
=================================================================================================================================

 All programs -- during fiscal 2005 year		20,794,069 	    $	892.1 		$   351.0 	    $   541.1
=================================================================================================================================
</TABLE>

(g) 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.

(h) 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 were no longer accrued as a component of Common Equity.

(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 years ended December 31, 2006 and 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, 2006, $7.4 million (2005 -- $5.7 million) was to be
reinvested in Non-Voting Shares.


19 commitments and contingent liabilities

(a) Canadian Radio-television Telecommunications Commission Decisions 2002-34,
    2002-43 and 2006-9 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, an aggregate liability of $164.8 million as at December 31, 2006
(2005 -- $158.7 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
periodic review of the Company's deferral account, disagrees with management's
estimates and assumptions, the CRTC may adjust the deferral account balance
and such 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.
  On February 16, 2006, the CRTC issued Decision CRTC 2006-9, "Disposition of
funds in the deferral account". In its decision the CRTC determined that the
majority of the accumulated liability within the respective incumbent local
exchange carrier's deferral account was to be made available for initiatives
to expand broadband services within their incumbent local exchange carrier
operating territories to rural and remote communities where service is
currently not available. In addition, a minimum of five per cent of the
accumulated deferral account balance must be used for initiatives that enhance
accessibility to telecommunications services for individuals with disabilities.
To the extent that the deferral account balance exceeds the approved
initiatives, the remaining balance will be distributed in the form of a
one-time rebate to local residential service customers in non-high cost
serving areas. Finally, the CRTC indicated that subsequent to May 31, 2006, no
additional amounts are to be added to the deferral account and, instead, are
to be dealt with via prospective rate reductions.
 In September 2006, the Federal Court of Appeal granted the Consumers
Association of Canada and the National Anti-Poverty Organization leave to
appeal CRTC Telecom Decision 2006-9. These consumer groups are expected to
file their appeal over the coming months asking the Court to direct rebates to
local telephone subscribers, rather than have the accumulated deferral account
funds used for purposes determined by the CRTC, as noted above. Bell Canada
was also granted leave to appeal Decision 2006-9 on the grounds that the CRTC
exceeded its jurisdiction to the extent it approves rebates from the deferral
account. These matters are expected to be heard in 2007. In the event that
Bell Canada is successful in its appeal, the Company may realize additional
revenue equal to the amount of the deferral account that would otherwise have
been rebated by the CRTC. Should the consumer groups be successful in their
appeals, the Company may be required to remit a one-time refund of an amount
up to, but not exceeding, the aggregate liability of approximately $165
million in individually small amounts to its entire local residential
subscriber base. As the deferral account balance was fully provided for in
previous financial statements, the potential refund will not impact the
Company's subsequent income from operations. In addition, subject to the
potential outcome of this leave to appeal, the Company may need to re-address
its intent to extend broadband services to uneconomic remote and rural
communities. The Company supports Decision 2006-9 and its designated uses of
the deferral account in order to extend high-speed broadband internet service
to rural and remote communities and improve telecommunications services for
people with disabilities.
  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 consolidated revenues. Specifically, to the extent that the CRTC
Decision 2005-6 requires the Company to provide discounts on Competitor
Digital Network services, through May 31, 2006, the Company drew down the
deferral account by an offsetting amount; subsequent to May 31, 2006, the
income statement effects did not change and the Company no longer needed to
account for these amounts through the deferral account. For the year ended
December 31, 2006, the Company drew down the deferral account by $19.9 million
(2005 -- $50.5 million) in respect of discounts on Competitor Digital Network
services.
  On November 30, 2006, the CRTC issued Telecom Public Notice CRTC 2006-15,
"Review of proposals to dispose of the funds accumulated in the deferral
accounts", which initiated a public proceeding to consider the proposals
submitted by the incumbent local exchange carriers to dispose of the funds
accumulated in their respective deferral accounts. The Company expects the
CRTC to render its decision in this matter in the latter part of 2007.

(b) Contractual obligations

The Company's known contractual obligations at December 31, 2006, are as
follows:

<TABLE>
<CAPTION>

                     Long-term debt maturities(1)
                           (see Note 17(h))
                   -------------------------------      Other long-term    Operating
	               All except 		        liabilities(2)      leases		Purchase
(millions)          capital leases   Capital leases   (see Note 20(b))   (see Note 19(c))     obligations(3)        Total
<S>			<C>		  <C>		    <C>		       <C>		  <C>	  	     <C>
--------------------------------------------------------------------------------------------------------------------------------
2007	                $ 1,555.0 	  $   4.0 	    $	18.0 	       $   197.6 	  $  506.6 	     $ 2,281.2
2008		            122.2 	      2.6 		23.1 	           184.9 	     127.2 	 	 460.0
2009		              0.7 	      0.8 		28.2 		   198.3 	      73.7 		 301.7
2010		             80.0 	      1.7 		17.6 		   185.5 	      30.8 		 315.6
2011		          2,950.5             0.1 		17.7 		   168.3 	      11.5 	       3,148.1
Thereafter		  1,049.0 	       -- 	       150.7 	         1,202.6 	      33.8             2,436.1
--------------------------------------------------------------------------------------------------------------------------------
Total	                $ 5,757.4 	  $   9.2 	    $  255.3 	       $ 2,137.2 	  $  783.6 	     $ 8,942.7
================================================================================================================================
<FN>
(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.
</FN>
</TABLE>

(c) 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, some of the
leased building premises were sub-let. At December 31, 2006, 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
                                    -----------------------------------------------------------------------         Operating
                                              Land and buildings                                                      lease
                      Capital       ------------------------------------------        Vehicles                     receipts from
                       lease                         Occupancy                       and other                     sub-let land
(millions)	      payments	       Rent	       costs	       Gross	     equipment	       Total	   and buildings
<S>		         <C>		 <C>		<C>		<C>		<C>		<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
2007	                 $  4.3 	$ 118.4 	$  60.4 	$ 178.8 	$ 18.8 	        $ 197.6 	$ 1.7
2008		            3.1 	  110.7 	   62.0 	  172.7 	  12.2 		  184.9 	  1.6
2009		            1.0 	  116.7 	   72.8 	  189.5 	   8.8 		  198.3 	  1.4
2010	  	            1.8 	  106.1 	   71.4 	  177.5 	   8.0 		  185.5 	  0.8
2011		            0.2 	   91.8 	   72.0 	  163.8 	   4.5 		  168.3 	  0.5
---------------------------------------------------------------------------------------------------------------------------------
Total future minimum
 lease payments		   10.4
Less imputed interest	    1.2
---------------------------------------------------------------------------------------------------------------------------------
Capital lease liability	 $  9.2
=================================================================================================================================
</TABLE>

  Total future minimum operating lease payments at December 31, 2006, were
$2,137.2 million. Of this amount, $2,083.6 million was in respect land and
buildings; approximately 60% of this amount was in respect of the Company's
five largest leases, all of which were for office premises over various terms,
none of which expire after 2024.

(d) 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, 2006, 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 telecommunications 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, 2006, the Company has a liability of $0.2
million (2005 -- $0.5 million) recorded in respect of these lease guarantees.
  The following table quantifies the maximum undiscounted guarantee amounts as
at December 31, 2006, without regard for the likelihood of having to make such
payment.

<TABLE>
<CAPTION>
(millions)			                              Performance              Financial
                                                             guarantees(1)	      guarantees(1)	        Total
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
2007			                                        $  1.6 		        $  0.4 		        $  2.0
2008				                                   0.5 			   0.2 			   0.7
---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Annual amounts for performance guarantees and financial guarantees include
    the maximum guarantee amounts during any year of the term of the guarantee.
</FN>
</TABLE>

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 have been 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, 2006, the Company has no liability recorded in respect of
indemnification obligations.

(e) 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.
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, 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; the Telecommunications Workers Union withdrew
and discontinued this complaint on December 21, 2005. During the first quarter
of 2006, the Canadian Human Rights Commission advised the Company that it
accepted this settlement and that it would close its file on the complaint.
  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, 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. Similar proceedings have also been filed by,
or on behalf of, plaintiffs' counsel in other provincial jurisdictions. On
July 18, 2006, the Saskatchewan court declined to certify the action as a
class action, but granted the plaintiffs leave to renew their application in
order to further address certain statutory requirements respecting class
actions. The Company believes that it has good defences to the action. 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.


20 additional financial information

(a) Income statement

<TABLE>
<CAPTION>
Years ended December 31 (millions)								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Operations expense(1):
  Cost of sales and service						                        $ 2,742.0 	$ 2,652.9
  Selling, general and administrative						                  2,280.9   	  2,140.6
--------------------------------------------------------------------------------------------------------------------------------
					                                                        $ 5,022.9 	$ 4,793.5
================================================================================================================================
                                                                                                $   276.6       $   224.0
================================================================================================================================
<FN>
(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 telecommunications
    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.
</FN>
</TABLE>

(b) Balance sheet

<TABLE>
<CAPTION>
As at December 31 (millions)									2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Accounts receivable
  Customer accounts receivable				                                        $   545.6 	$    451.1
  Accrued receivables -- customer 					                             83.2 	     113.2
  Allowance for doubtful accounts					                            (54.8)	     (57.2)
--------------------------------------------------------------------------------------------------------------------------------
				                                                  	            574.0 	     507.1
  Accrued receivables -- other 				                              	            125.4 	      94.3
  Other				                                           	                      7.8 	       8.9
---------------------------------------------------------------------------------------------------------------------------------
				                                                                $   707.2       $    610.3
=================================================================================================================================
Prepaid expense and other
  Prepaid expenses				                                                $   109.9 	$     87.7
  Deferred customer activation and connection costs					             33.0 	      66.4
  Prepaid expense arising from early termination of cross
    currency interest rate swap agreements (Note 17(b))			                             10.3 	        --
  Other					                                                             42.1 	       0.6
---------------------------------------------------------------------------------------------------------------------------------
				                                                                $   195.3 	$    154.7
=================================================================================================================================
Deferred charges
  Recognized transitional pension assets and pension plan
   contributions in excess of charges to income 	                                        $   826.2 	$    687.9
  Deferred customer activation and connection costs		                                    115.4 	     104.4
  Cost of issuing debt securities, less amortization		                                     19.9 	      23.5
  Other		                                                                                     15.0 	      34.4
---------------------------------------------------------------------------------------------------------------------------------
	                                                                                        $   976.5 	$    850.2
=================================================================================================================================
Accounts payable and accrued liabilities
  Accrued liabilities				                                                $   449.7 	$   508.6
  Payroll and other employee-related liabilities					            383.8 	    388.7
  Asset retirement obligations					                                      4.1 	      4.1
---------------------------------------------------------------------------------------------------------------------------------
					                                                            837.6 	    901.4
  Trade accounts payable					                                    427.3 	    394.4
  Interest payable					                                             47.7 	     54.8
  Other					                                                             51.0 	     43.1
---------------------------------------------------------------------------------------------------------------------------------
				                                                                $ 1,363.6       $ 1,393.7
=================================================================================================================================
Advance billings and customer deposits
  Advance billings				                                                $   351.6 	$   322.4
  Regulatory deferral accounts (Note 19(a))		                                            164.8 	    158.7
  Deferred customer activation and connection fees					             69.5 	     66.4
  Customer deposits					                                             20.4 	     24.3
---------------------------------------------------------------------------------------------------------------------------------
				                                                                $   606.3 	$   571.8
=================================================================================================================================
Other long-term liabilities
  Deferred hedging liability (Note 17(b))	                                                   $710.3       $ 1,154.3
  Pension and other post-retirement liabilities		                                            198.7 	    189.1
  Other		                                                                                    128.2 	     77.5
---------------------------------------------------------------------------------------------------------------------------------
		                                                                                  1,037.2 	  1,420.9
  Deferred customer activation and connection fees		                                    115.4 	    104.4
  Deferred gain on sale-leaseback of buildings	                                            	     71.6 	     81.1
  Asset retirement obligations	                                                         	     33.1 	     28.9
---------------------------------------------------------------------------------------------------------------------------------
	                                                                                        $ 1,257.3 	$ 1,635.3
=================================================================================================================================
</TABLE>

(c) Supplementary cash flow information

<TABLE>
<CAPTION>
Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Net change in non-cash working capital
  Short-term investments					                                $  (110.2)	$      --
  Accounts receivable						                                    (95.6)	    262.7
  Inventories						                                            (57.6)	     (5.5)
  Prepaid expenses and other						                            (27.4)	     28.7
  Accounts payable and accrued liabilities						            (27.2)	     (1.3)
  Income and other taxes receivable and payable, net						     35.8 	     28.8
  Advance billings and customer deposits						             34.5 	     40.3
---------------------------------------------------------------------------------------------------------------------------------
					                                                        $  (247.7)      $   353.7
=================================================================================================================================
Years ended December 31 (millions) 					                        2006		 2005
--------------------------------------------------------------------------------------------------------------------------------
Interest (paid)
  Amount (paid) in respect of interest expense					                $  (484.9)	$  (607.4)
  Interest related portion of cross currency interest
   rate swap agreement termination payments (Note 17(b))			                    (31.2)	       --
  Amounts (paid) in respect of loss on redemption of long-term debt			                -- 	    (30.9)
--------------------------------------------------------------------------------------------------------------------------------
					                                                          $(516.1)	$  (638.3)
=================================================================================================================================
</TABLE>

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>
<CAPTION>

Years ended December 31 (millions except per share amounts)					2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
							                                                   (as adjusted -- (b))
Net income in accordance with Canadian GAAP					                $ 1,122.5 	$   700.3
Adjustments:
  Operating expenses
   Operations (b)						                                    (16.9)	   ( 16.9)
   Amortization of intangible assets (c)						             50.7)	    (81.8)
  Financing costs (e)						                                       -- 	      5.5
  Accounting for derivatives (f)						                      6.0 	      4.1
Taxes on the above adjustments and tax rate changes (g)			                             76.6 	     36.1
--------------------------------------------------------------------------------------------------------------------------------

Net income in accordance with U.S. GAAP						                  1,137.5 	    647.3
Other comprehensive income (loss), net of taxes (h)
  Foreign currency translation adjustment						              5.8 	     (5.1)
  Change in unrealized fair value of derivatives designated as cash flow hedges			     36.8 	    (79.5)
  Change in pension related other comprehensive income accounts			                   (106.1)	    (41.8)
--------------------------------------------------------------------------------------------------------------------------------
						                                                    (63.5)	   (126.4)
--------------------------------------------------------------------------------------------------------------------------------
Comprehensive income in accordance with U.S. GAAP					        $ 1,074.0 	$   520.9
================================================================================================================================
Net income in accordance with U.S. GAAP per Common Share and Non-Voting Share
  - Basic					                                                $     3.31 	$     1.81
  - Diluted					                                                $     3.27 	$     1.79

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


Years ended December 31 (millions) 								2006		2005
--------------------------------------------------------------------------------------------------------------------------------
			                                                                                   (as adjusted -- (b))
Schedule of retained earnings (deficit) under U.S. GAAP
  Balance at beginning of period					                        $  (785.5)	$  (590.2)
  Transitional amount for share-based compensation arising
   from share option awards (b)			                                                       --          (185.5)
--------------------------------------------------------------------------------------------------------------------------------
  Adjusted opening balance						                           (785.5)	   (775.7)
  Net income in accordance with U.S. GAAP						          1,137.5 	    647.3
--------------------------------------------------------------------------------------------------------------------------------
						                                                    352.0 	   (128.4)
  Common Share and Non-Voting Share dividends paid, or payable, in cash 			   (411.7)	   (312.2)
  Purchase of Common Shares and Non-Voting Shares in excess of stated capital 			   (361.9)	   (339.5)
  Adjustment to purchase of share option awards not in excess of their fair value		      2.1 	     (3.4)
  Warrant proceeds used in determining intrinsic value of warrants in excess of
   amounts ultimately received (Note 18(c))			                                       -- 	     (2.0)
--------------------------------------------------------------------------------------------------------------------------------
  Balance at end of period 		                                                        $  (419.5)	$  (785.5)
================================================================================================================================
</TABLE>


The following is an analysis of major balance sheet categories reflecting the
application of U.S. GAAP:

<TABLE>
<CAPTION>

As at December 31 (millions)									2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Current Assets	                                                                                $ 1,344.9 	$ 1,242.5
Capital Assets
  Property, plant, equipment and other	                            	                          7,466.5         7,339.4
  Intangible assets subject to amortization	                  	                          2,156.2 	  2,295.2
  Intangible assets with indefinite lives	                 	                          2,966.4 	  2,964.6
Goodwill		                                                                          3,572.0 	  3,575.5
Other Assets		                                                                            675.7 	    736.3
---------------------------------------------------------------------------------------------------------------------------------
	                                                                                        $18,181.7 	$18,153.5
=================================================================================================================================
Current Liabilities	                                                                         $3,738.2 	 $2,027.5
Long-Term Debt		                                                                          3,493.7 	  4,639.9
Other Long-Term Liabilities		                                                          1,550.0 	  2,024.9
Deferred Income Taxes	                                         	                          1,363.7 	  1,410.8
Non-Controlling Interest	                                	                             23.6 	     25.6
Shareholders' Equity		                                                                  8,012.5 	  8,024.8
---------------------------------------------------------------------------------------------------------------------------------
	                                                                                        $18,181.7 	$18,153.5
=================================================================================================================================
</TABLE>

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

<TABLE>
<CAPTION>
	                                                        Shareholders' Equity
                              --------------------------------------------------------------------------------------------------
                                                                           Cumulative
As at                                                                      foreign       Accumulated
December 31, 2006                                               Retained   currency      other
 (millions)  	              Common   Non-Voting  Options and  earnings   translation   comprehensive   Contributed
                              Shares    Shares	   warrants    (deficit)   adjustment    income (loss)    surplus    Total
<S>                            <C>        <C>        <C>        <C>         <C>           <C>             <C>        <C>
--------------------------------------------------------------------------------------------------------------------------------
Under Canadian GAAP	       $2,264.4   $3,420.8   $ 0.8      $1,080.1    $ (1.5)	  $  --           $  163.5   $6,928.1
Adjustments:
  Merger of BC TELECOM
   and TELUS (a),(c),(d)        1,770.1      993.0      --      (1,368.3)	-- 	     -- 	        --    1,394.8
  Share-based compensation (b)     10.6       63.3      -- 	  (131.2)       -- 	     -- 	      57.3 	   --
   Acquisition of Clearnet
    Communications Inc.
     Goodwill (d)		    -- 	     131.4      -- 	    (7.9)       -- 	     -- 	        -- 	123.5
     Convertible debentures         -- 	      (2.9)     -- 	     4.1        -- 	     --              (1.2)	--
  Accounting for derivatives (f)    -- 	        --      -- 	     3.7        --    	     --   	        -- 	  3.7
  Accumulated other
 comprehensive income
   (loss) (h)		            -- 	        --      -- 	      --       1.5 	   (439.1)              --     (437.6)
--------------------------------------------------------------------------------------------------------------------------------
Under U.S. GAAP	              $4,045.1    $4,605.6   $ 0.8       $(419.5)   $	--        $(439.1)	  $  219.6   $8,012.5
=================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>

                                                                Shareholders' Equity (as adjusted -- (b))
                              --------------------------------------------------------------------------------------------------
As at                                                                          foreign       Accumulated
December 31, 2005                                                 Retained     currency      other
 (millions)  	              Common     Non-Voting  Options and  earnings     translation  comprehensive  Contributed
                              Shares(b)  Shares(b)   warrants    (deficit)(b)  adjustment   income (loss)  surplus(b)  Total
<S>                            <C>        <C>        <C>         <C>           <C>          <C>            <C>         <C>
--------------------------------------------------------------------------------------------------------------------------------
Under Canadian GAAP	       $2,311.6    $3,556.7   $  5.9 	 $ 849.7       $ (7.3)	    $    -- 	    $ 153.4    $6,870.0
Adjustments:
Merger of BC TELECOM and
 TELUS (a), (c) -- (e)		1,824.8     1,069.0 	  -- 	(1,493.9)	   -- 		 -- 	         -- 	1,399.9
Share-based compensation (b)	    7.4        50.3 	  -- 	  (137.2)	   -- 		 -- 	       79.5 	     --
Acquisition of Clearnet
Communications Inc.
Goodwill (d)		            -- 	      131.4 	  -- 	    (7.9)	   -- 		 -- 		 -- 	  123.5
Convertible debentures		    -- 	       (2.9)	  -- 	     4.1 	   -- 		 -- 	       (1.2)	     --
Accounting for derivatives (f)	    -- 	         -- 	  -- 	    (0.3)	   -- 		 -- 	         -- 	   (0.3)
Accumulated other comprehensive
 income (loss) (h)		    -- 	         -- 	  -- 	      -- 	  7.3 	     (375.6)		 -- 	 (368.3)
---------------------------------------------------------------------------------------------------------------------------------
Under U.S. GAAP	               $4,143.8    $4,804.5 	$5.9 	$ (785.5)     $    -- 	    $(375.6)	    $  231.7   $8,024.8
=================================================================================================================================
</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

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.
  Effective as of the end of the first year ending after December 15, 2006,
U.S.GAAP requires the full recognition of obligations associated with its
employee future benefit plans as prescribed by Financial Accounting Standards
Board Statement of Financial Accounting Standard No. 158, "Employers'
Accounting for Defined Benefit Pension and other Postretirement Plans".
Applying this standard, the funded status of the Company's plans is shown
gross on the consolidated balance sheets and the difference between the net
funded plan status and the net accrued benefit asset or liability is included
as a component of other comprehensive income. Retrospective application of
this standard is not permitted. The effect on the December 31, 2006, U.S. GAAP
statement of financial position is set out in the following table.

<TABLE>
<CAPTION>
                                                              Excluding               Incremental
                                                              effect of                effect of
                                                             application of          application of
December 31, 2006 (millions)		                       SFAS 158		       SFAS 158		      As reported
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Current Assets			                                $  1,344.9 		$      -- 		$  1,344.9
Capital Assets
  Property, plant, equipment and other				   7,466.5 		       -- 		   7,466.5
  Intangible assets subject to amortization			   2,156.2 		       -- 		   2,156.2
  Intangible assets with indefinite lives			   2,966.4 		       -- 		   2,966.4
Goodwill				                           3,572.0 		       -- 		   3,572.0
Other Assets				                           1,020.0 		   (344.3)		     675.7
---------------------------------------------------------------------------------------------------------------------------------
			                                        $ 18,526.0 		$  (344.3)		$ 18,181.7
=================================================================================================================================
Current Liabilities			                        $  3,738.2 		$      -- 		  $3,738.2
Long-Term Debt				                           3,493.7 		       -- 		   3,493.7
Other Long-Term Liabilities				           1,499.0 		     51.0 		   1,550.0
Deferred Income Taxes				                   1,485.2 		   (121.5)		   1,363.7
Non-Controlling Interest				              23.6 		       -- 		      23.6
Shareholders' Equity				                   8,286.3 		   (273.8)		   8,012.5
---------------------------------------------------------------------------------------------------------------------------------
			                                        $ 18,526.0 		 $ (344.3)		$ 18,181.7
=================================================================================================================================
 </TABLE>

  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 11.
  Effective January 1, 2006, U.S. GAAP required the adoption of the fair value
method of accounting for share-based compensation for awards made after 1994.
Prior to the adoption of the fair value method of accounting, the intrinsic
value based method was used to account for share option awards granted to
employees. The Company has selected the modified-retrospective transition
method and such method results in share option award expense being recognized
in net income in accordance with U.S. GAAP in fiscal years prior to 2006. The
share option award expense that is recognized in fiscal years subsequent to
2005 is in respect of share option awards granted after 1994 and vesting in
fiscal periods subsequent to 2005.
  As the Company has selected the modified-retrospective transition method, it
must disclose the impact on net income in accordance with U.S. GAAP, and net
income in accordance with U.S. GAAP per Common Share and Non-Voting Share, as
if the fair value based method of accounting for the share-based compensation
had been applied in the comparative period.
  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
arising from current share-based compensation awards accounted for as equity
instruments. As share option awards granted subsequent to 1994 and prior to
2002 are captured by U.S. GAAP, but are not captured by Canadian GAAP,
differences in shareholders' equity accounts arising from these awards will
continue.
  The application of the modified-retrospective transition method had the
following effect on comparative net income amounts presented:


<TABLE>
<CAPTION>

Year ended December 31, 2005 (millions except per share amounts)
<S>													<C>
--------------------------------------------------------------------------------------------------------------------------------
Net income in accordance with U.S. GAAP
As previously reported							                                $  661.5
Deduct: Share-based compensation arising from share option awards
 determined under fair value based method for all awards(1)					           (14.2)
--------------------------------------------------------------------------------------------------------------------------------
As currently reported							                                $  647.3
=================================================================================================================================
Net income in accordance with U.S. GAAP per Common Share and Non-Voting Share
Basic
  As previously reported (using intrinsic value method)						        $    1.85
  As currently reported (using fair value method)						        $    1.81
Diluted
  As previously reported (using intrinsic value method)						        $    1.83
  As currently reported (using fair value method)						        $    1.79

<FN>
(1) The effect of the fair value method of accounting for share-based
    compensation arising from share option awards on income before income taxes
    and non-controlling interest and net income does not differ. Further, the fair
    value method of accounting for share-based compensation arising from share
    option awards does not affect cash flows from operating activities nor does it
    affect cash flows from financing activities.
</FN>
</TABLE>

To reflect the fair value of share option awards granted subsequent to 1994,
and vesting prior to 2006, certain components of shareholders' equity,
reflecting the application of U.S. GAAP, as at December 31, 2005, have been
restated as follows:


	Shareholders' Equity

<TABLE>
<CAPTION>
                                                                                         Accumulated
                                                              Options      Retained        other
                                      Common	 Non-Voting     and        earnings      comprehensive  Contributed
(millions)	                      Shares	  Shares      warrants	   (deficit)	 income	        surplus	     Total
<S>                   	               <C>         <C>          <C>           <C>          <C>           <C>          <C>
--------------------------------------------------------------------------------------------------------------------------------
Cumulative transition adjustment
 for share-based compensation
 arising from share option awards
 granted in fiscal years ending
 December 31:
   2002 and 2003 (total Canadian
    GAAP transitional amounts)	       $     --    $  0.4 $  	    -- 	      $ (25.1)	   $	--       $   24.7     $	    --
   2004 and 2005		             --      25.7 	    -- 	        (33.3)		-- 	      7.6  	    --
---------------------------------------------------------------------------------------------------------------------------------
Total Canadian GAAP amounts
 recognized as at December 31,
  2005		                             --      26.1 	    -- 		(58.4)		-- 	     32.3 	    --
Cumulative transition adjustment
 for share-based compensation
 (and associated effects) arising
 from share option awards granted
 in fiscal years ending December
31, 1995 through 2001, inclusive(1)         7.4      50.3 	    -- 		(137.2)		-- 	     79.5 	    --
--------------------------------------------------------------------------------------------------------------------------------
Total U.S. GAAP transitional amounts	    7.4      76.4 	    -- 		(195.6)		-- 	    111.8 	    --
December 31, 2005, U.S. GAAP amounts,
 as previously reported	                4,136.4   4,728.1 	   5.9 		(589.9)	    (375.6)	    119.9 	8,024.8
---------------------------------------------------------------------------------------------------------------------------------

January 1, 2006, U.S. GAAP amounts     $4,143.8  $4,804.5       $  5.9 	      $	(785.5)	   $(375.6)      $  231.7     $	8,024.8
=================================================================================================================================
<FN>
(1)As share option awards granted subsequent to 1994 and prior to 2002
   are captured by U.S. GAAP, but are not captured by Canadian GAAP, differences
   in shareholders' equity accounts arising from these awards will continue.
</FN>
</TABLE>

To reflect the fair value of share option awards granted subsequent to 1994,
and vesting prior to 2005, certain components of shareholders' equity,
reflecting the application of U.S. GAAP, as at December 31, 2004, have been
restated as follows:

<TABLE>
<CAPTION>

                                                                                         Accumulated
                                                              Options      Retained        other
                                      Common	 Non-Voting   warrants     earnings     comprehensive  Contributed
(millions)	                      Shares	  Shares      and other	   (deficit)	 income	        surplus	     Total
<S>                   	               <C>         <C>          <C>           <C>          <C>           <C>          <C>
--------------------------------------------------------------------------------------------------------------------------------
Cumulative transition adjustment
 for share-based compensation
 arising from share option awards
 granted in fiscal years ending
 December 31:
2002 and 2003 (total Canadian
 GAAP transitional amounts)	       $  -- 	   $    0.4 	$     --      $	(25.1)	   $	-- 	 $  24.7      $      --
2004		                          -- 	       14.7 	      -- 	(19.1)	   	-- 	     4.4 	     --
---------------------------------------------------------------------------------------------------------------------------------
Total Canadian GAAP amounts
 recognized as at December 31,
 2004		                          -- 	       15.1 	      -- 	(44.2)	   	-- 	    29.1 	     --
Cumulative transition adjustment
 for share-based compensation
(and associated effects) arising
 from share option awards granted
 in fiscal years ending December 31,
 1995 through 2001, inclusive(1)	    3.4        10.5 	     -- 	(141.3)	  	-- 	   127.4 	     --
---------------------------------------------------------------------------------------------------------------------------------
Total U.S. GAAP transitional amounts  	    3.4        25.6 	     -- 	(185.5)		-- 	   156.5 	     --
December 31, 2004, U.S. GAAP amounts,
as previously reported		        4,341.0     4,700.8 	   27.7 	(590.2)	    (249.2)	   119.9 	8,350.0
---------------------------------------------------------------------------------------------------------------------------------
January 1, 2005, U.S. GAAP amounts     $4,344.4    $4,726.4 	$  27.7       $	(775.7)	   $(249.2)      $ 276.4      $	8,350.0
=================================================================================================================================
<FN>
(1)As share option awards granted subsequent to 1994 and prior to 2002
   are captured by U.S. GAAP, but are not captured by Canadian GAAP, differences
   in shareholders' equity accounts arising from these awards will continue.
</FN>
</TABLE>

  Subsequent to December 31, 2006, the Company amended substantially all of its
share option awards that were granted prior to January 1, 2005, and which were
outstanding on January 1, 2007, by adding a net-cash settlement feature; the
optionee has the choice of exercising the net-cash settlement feature. The
result of such amendment is that the affected outstanding share option awards
largely take on the characteristics of liability instruments rather than
equity instruments; the minimum expense recognized for the affected share
option awards will be their grant-date fair values. Under U.S. GAAP, the
grant-date fair values of affected outstanding share option awards granted
subsequent to 1994 affect the transitional amount whereas Canadian GAAP only
considers grant-date fair values for affected outstanding share option awards
granted subsequent to 2001.
  The consolidated statement of income transitional effect (an expense increase)
of such amendment, reflecting the application of U.S. GAAP and vesting as at
December 31, 2006, and which is expected to be recorded in the first quarter
of 2007, is as follows:

<TABLE>
<CAPTION>
($ in millions except per share amounts)
<S>														<C>
---------------------------------------------------------------------------------------------------------------------------------
Change in:
  Operations expense(1)							                                        $  126.1
  Income taxes(2) -- future						                                            60.6
---------------------------------------------------------------------------------------------------------------------------------

  Net income and Common Share and Non-Voting Share income				                        $   65.5
=================================================================================================================================
  Income per Common Share and Non-Voting Share(1)(2)
   -- Basic					                                                                $    0.19
   -- Diluted					                                                                $    0.19
<FN>
(1) This transitional amount does not result in an immediate cash outflow. The
    timing of the associated cash outflows is predicated upon when optionees
    exercise their share option awards and upon them choosing to use the net-cash
    settlement feature.
      This transitional amount excludes the effects of vesting, forfeitures,
    cancellations and expiries that may occur subsequent to December 31, 2006.
    Further, it excludes the effects of any hedging agreements substantially
    fixing the cost of the share option awards to the Company as well as any
    changes in the prices of the Company's Common Shares and Non-Voting Shares.
(2) Income taxes -- future, and per share amounts, are based upon the
    corresponding amounts used for the year ended December 31, 2006, calculations.
</FN>
</TABLE>

Had such amendment occurred immediately prior to January 1, 2007, certain line
items of the Company's December 31, 2006, Consolidated Balance Sheet,
reflecting the application of U.S. GAAP, would have been adjusted as follows
to reflect the transitional effect:

<TABLE>
<CAPTION>

As at December 31, 2006 ($ in millions)				                 Impact of amending
                                                             As currently        outstanding share
                                                              reported            option awards(1)            Pro forma
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Current liabilities
 Accounts payable and accrued liabilities
  Accrued share option award liability			        $     -- 		$  180.5 		$  180.5
 Future income taxes		                             	$   93.2 		$  (60.6)		$   32.6
Shareholders' equity
 Options, warrants and other			                $    0.8 		$   (0.8)		$    --
 Retained earnings			                        $ (419.5)		$  (65.5)		$ (485.0)
 Contributed surplus			                        $  219.6 		$  (53.6)		$  166.0

<FN>
(1) This transitional amount excludes the effects of vesting, forfeitures,
    cancellations and expiries that may occur subsequent to December 31, 2006.
    Further, it excludes the effects of any hedging agreements substantially
    fixing the cost of the share option awards to the Company as well as any
    changes in the prices of the Company's Common Shares and Non-Voting Shares.
</FN>
</TABLE>

(c) 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.
  The incremental amounts recorded as intangible assets arising from the TELUS
acquisition above are as follows:

<TABLE>
<CAPTION>
	                                                                Accumulated 	            Net Book Value
                                                        Cost            Amortization
<S>						        <C>		    <C>		        <C>		    <C>
--------------------------------------------------------------------------------------------------------------------------------
As at December 31 (millions)					                                2006		    2005
--------------------------------------------------------------------------------------------------------------------------------
Intangible assets subject to amortization
 Subscribers -- wireline	                        $  1,950.0 	    $	 343.0 		$  1,607.0 	    $  1,654.2
 Subscribers -- wireless 		                     250.0 	         250.0 			-- 		   3.5
---------------------------------------------------------------------------------------------------------------------------------
		                                           2,200.0 		 593.0 		   1,607.0 	       1,657.7
--------------------------------------------------------------------------------------------------------------------------------
Intangible assets with indefinite lives
 Spectrum licences(1)		                           1,833.3 	       1,833.3 			-- 	   	    --
---------------------------------------------------------------------------------------------------------------------------------
                                                        $  4,033.3 	    $  2,426.3 		$  1,607.0 	    $  1,657.7
=================================================================================================================================
<FN>
(1) Accumulated amortization of spectrum licences is amortization recorded
    prior to 2002 and the transitional impairment amount.
</FN>
</TABLE>

  Estimated aggregate amortization expense for intangible assets subject to
amortization, calculated upon such assets held as at December 31, 2006, for
each of the next five fiscal years is as follows:

<TABLE>
<CAPTION>

Years ending December 31 (millions)
<S>														<C>
--------------------------------------------------------------------------------------------------------------------------------
2007			       											$  228.1
2008														   139.8
2009														    83.4
2010														    63.0
2011														    60.9
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(d) 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
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.

(e) 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.

(f) Accounting for derivatives

Under U.S. GAAP, all derivatives need to be recognized as either assets or
liabilities and measured at fair value. This is different from the Canadian
GAAP treatment for financial instruments as currently applied by the Company;
see Note 2(b). 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 (h)).

(g) Income taxes

<TABLE>
<CAPTION>

Years ended December 31 (millions) 								2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Current					                                                        $   (58.2)      $   (18.0)
Deferred						                                            332.6 	    303.9
---------------------------------------------------------------------------------------------------------------------------------
						                                                    274.4    	    285.9
Investment Tax Credits						                                    (18.5) 	     (0.4)
--------------------------------------------------------------------------------------------------------------------------------
					                                                           $255.9 	 $  285.5
=================================================================================================================================
</TABLE>


The Company's income tax expense (recovery), for U.S. GAAP purposes, differs
from that calculated by applying statutory rates for the following reasons:

<TABLE>
<CAPTION>

Years ended December 31  ($ in millions)		      2006	                  	      2005
<S>							<C>		    <C>			<C>		    <C>
--------------------------------------------------------------------------------------------------------------------------------
Basic blended federal and provincial tax at
 statutory income tax rates	                        $   470.4 	      33.6%		$   321.8	       34.2%
Revaluation of deferred income tax liability
 for change in statutory income tax rates		   (162.9)	                            (10.8)
Share option award compensation		                      6.4 				      4.9
Tax rate differential on, and consequential
 adjustments from, reassessment of prior year
 tax issues		                                   (40.3)	                            (13.9)
Change in estimates of available deductible
 differences in prior years		                      -- 				    (37.5)
Investment Tax Credits, net of tax		           (12.3)	                             (0.3)
Other		                                            (5.4)				      4.8
---------------------------------------------------------------------------------------------------------------------------------

		                                           255.9 	      18.3%		    269.0 	       28.6%
Large corporations tax		                              -- 	                             16.5
---------------------------------------------------------------------------------------------------------------------------------

U.S. GAAP income tax expense (recovery)	                $  255.9 	      18.3%		$   285.5 	       30.4%
=================================================================================================================================
</TABLE>

  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:


<TABLE>
<CAPTION>

As at December 31 (millions)                                                                    2006		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Capital assets
  Property, plant, equipment, other and intangible assets subject to amortization	        $   (553.7)	$   (578.0)
  Intangible assets with indefinite lives						            (866.1)	    (974.4)
Working capital, excluding reserves						                    (506.1)	       2.8
Pension amounts						                                             (74.2)	     (93.0)
Losses available to be carried forward						                     315.4 	     164.0
Reserves not currently deductible						                      97.7 	     111.3
Other						                                                     130.1 	     182.9
---------------------------------------------------------------------------------------------------------------------------------
					                                                        $ (1,456.9)	$ (1,184.4)
=================================================================================================================================
Deferred income tax asset
  Current					                                                $	-- 	$    226.4
Deferred income tax liability
  Current						                                             (93.2)	        --
  Non-current						                                          (1,363.7)	  (1,410.8)
--------------------------------------------------------------------------------------------------------------------------------
						                                                  (1,456.9)	  (1,410.8)
--------------------------------------------------------------------------------------------------------------------------------
Deferred income tax asset (liability)					                        $ (1,456.9)     $ (1,184.4)
=================================================================================================================================
</TABLE>

(h) Additional disclosures required under U.S. GAAP -- Comprehensive income

U.S. GAAP 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.

<TABLE>
<CAPTION>
Years ended December 31 (millions)	    2006	                     	               2005
----------------------------------------------------------------------    ------------------------------------------------------
                      Cumulative    Unrealized                               Cumulative    Unrealized
                      foreign       fair value of                            foreign       fair value of
                      currency      derivative     Pension and               currency      derivative     Minimum
                      translation   cash flow      other benefit             translation   cash flow      pension
                      adjustment     hedges        plans(1)       Total      adjustment    hedges         liability   Total
<S>                     <C>          <C>            <C>           <C>        <C>           <C>            <C>         <C>
--------------------------------------------------------------------------------------------------------------------------------
Amount arising(2)	$   5.8      $  57.4 	    $ (140.6)	  $ (77.4)    $  (5.1)     $ (119.1)	   $ (62.1)    $ (186.3)
Income tax expense
 (recovery)		     --  	20.6 	       (34.5)	    (13.9)	   -- 	      (39.6)	     (20.3)	  (59.9)
---------------------------------------------------------------------------------------------------------------------------------
Net		            5.8		36.8 	      (106.1)	    (63.5)	 (5.1)	      (79.5)	     (41.8)	 (126.4)
Accumulated other
 comprehensive income
 (loss), beginning of
 period		           (7.3)      (200.6)	      (167.7)	   (375.6)	 (2.2)	     (121.1)	    (125.9)	 (249.2)
---------------------------------------------------------------------------------------------------------------------------------
Accumulated other
 comprehensive income
 (loss), end of period	$  (1.5)     $(163.8)	    $ (273.8)	 $ (439.1)    $  (7.3)    $  (200.6)	   $(167.7)    $ (375.6)
=================================================================================================================================
<FN>
(1) With the introduction of SFAS 158 (see (b)), gains or losses associated
    with pension or other postretirement benefits, prior service costs or credits
    associated with pension or other postretirement benefits, transition assets or
    obligations associated with pension or other postretirement benefits are to be
    presented as a separate component of other comprehensive income. The income
    tax provision reflects the reversal of the minimum pension liability at a rate
    of 34.2% and the set up the new pension items at a rate of 30.7%.

(2) The amount arising for Pension and other benefit plans for the year ended
    December 31, 2006, includes an adjustment to reflect that the concept of
    minimum pension liability is no longer recognized as a component of other
    comprehensive income.
</FN>
</TABLE>

  The closing accumulated other comprehensive income amounts in respect of
components of net periodic benefit costs not yet recognized, and the amounts
expected to be recognized in fiscal 2007, are as follows:

<TABLE>
<CAPTION>

                                                       Accumulated other comprehensive income amounts
                                                      -------------------------------------------------	         Amounts
                                                                                                               expected to be
                                                       Gross (see                                              recognized in
As at December 31, 2006 (millions)                     Note 12(a))       Tax effect             Net             fiscal 2007
<S>							<C>	  	    <C>			<C>		    <C>
---------------------------------------------------------------------------------------------------------------------------------
Pension benefit plans
  Unamortized net actuarial loss (gain)	                $  812.5 	    $	249.8 		$  562.7 	    $   11.0
  Unamortized past service costs		             5.3 		  1.6 		     3.7 		 0.7
  Unamortized transitional obligation (asset)		  (412.1)	       (126.7)		  (285.4)	       (20.1)
---------------------------------------------------------------------------------------------------------------------------------
	                                            	   405.7 		124.7 		   281.0 		(8.4)
---------------------------------------------------------------------------------------------------------------------------------
Other benefit plans
  Unamortized net actuarial loss (gain)		           (12.8)		 (3.9)		    (8.9)		(2.4)
  Unamortized transitional obligation (asset)		     2.4 	  	  0.7 		     1.7 		 0.8
---------------------------------------------------------------------------------------------------------------------------------
		                                           (10.4)		 (3.2)		    (7.2)		(1.6)
---------------------------------------------------------------------------------------------------------------------------------
                                                    	$  395.3 	    $	121.5 		$  273.8 	    $  (10.0)
=================================================================================================================================
</TABLE>

(i) Recently issued accounting standards not yet implemented

Uncertain income tax positions: Under U.S. GAAP, effective for its 2007 fiscal
year, the Company is expected to be required to comply with accounting for
uncertain income tax positions, as prescribed by Financial Accounting
Standards Board Financial Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes". The Company has assessed the cumulative impact of adopting
this new standard as of January 1, 2007. Based upon this review, the Company
does not expect the adoption of this Interpretation will have a material
impact on its consolidated financial statements.
  Single definition of "fair value". Under U.S. GAAP, effective for its 2008
fiscal year, the Company is expected to be required to comply with a unified
approach to fair value measurement of assets and liabilities, as prescribed by
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements". The Company is assessing the
provisions of this statement.
  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.





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, assumptions (see below) 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 2007 targets include: economic growth consistent with recent
provincial and national estimates by the Conference Board of Canada, including
2007 real GDP (gross domestic product) growth of 2.7% in Canada; increased
wireline competition in both business and consumer markets, particularly from
cable-TV and voice over Internet protocol (VoIP) companies; forbearance for
local retail wireline services in major urban incumbent markets by the second
half of 2007; no further price cap mandated consumer price reductions; a
wireless industry market penetration gain of 4.5 to five percentage points;
approximately $50 million restructuring and workforce reduction expenses;
statutory tax rate of 33 to 34%; a discount rate of 5.0% and an expected
long-term average return of 7.25% for pension accounting, unchanged from 2006;
and average shares outstanding of 330 to 335 million. Earnings per share
(EPS), cash balances, net debt and common equity may be affected by the
potential purchases of up to 24 million TELUS shares over a 12-month period
under the normal course issuer bid that commenced December 20, 2006.

Factors that could cause actual results to differ materially include but are
not limited to: competition; economic growth and fluctuations (including
pension performance, funding and expenses); capital expenditure levels
(including possible spectrum asset purchases); financing and debt requirements
(including share repurchases, debt redemptions, potential issuance of
commercial paper and changes to credit facilities); tax matters (including
acceleration or deferral of required payments of significant amounts of cash
taxes); human resource developments (including possible labour disruptions);
technology (including reliance on systems and information technology);
regulatory developments (including local forbearance, local price cap
reductions, wireless number portability and the timing, rules, process and
cost of future spectrum auctions); process risks (including internal
reorganizations, conversion of legacy systems and billing system
integrations); health, safety and environmental developments; litigation and
legal matters; business continuity events (including manmade and natural
threats); and other risk factors discussed herein and listed from time to time
in TELUS' reports and public disclosure documents, including annual reports,
and in 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).

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

Management's discussion and analysis

February 14, 2007

The following is a discussion of the consolidated financial condition and
results of operations of TELUS Corporation for the years ended
December 31, 2006 and 2005, 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,
segments and the Company. In addition, non-GAAP measures are used in measuring
compliance with debt covenants and are used to manage the capital structure.
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.Introduction and performance summary      A summary of consolidated results and a description of performance against annual
                                             targets set for 2006
--------------------------------------------------------------------------------------------------------------------------------
 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 2006 and planned for 2007
--------------------------------------------------------------------------------------------------------------------------------
 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 2006
--------------------------------------------------------------------------------------------------------------------------------
 6.Financial condition                       A discussion of significant changes in the balance sheet at December 31, 2006,
                                             as compared to December 31, 2005
--------------------------------------------------------------------------------------------------------------------------------
 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 2007          	     A discussion of the outlook for 2007 and TELUS' 2007 financial and operational
                                             targets, including key assumptions and financing plans
--------------------------------------------------------------------------------------------------------------------------------
10.Risks and risk management	             Risks and uncertainties facing TELUS and how the Company manages these risks
--------------------------------------------------------------------------------------------------------------------------------
11.Reconciliation of non-GAAP measures       A description, calculation and reconciliation of certain measures used by
   and definition of key operating           management
   indicators
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1. Introduction and performance summary

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 Proposed reorganization as an income trust

On November 24, 2006, the Company announced that it had re-evaluated its
proposal announced on September 11, 2006 to reorganize in its entirety into an
income trust. TELUS management and the Board of Directors believe it is no
longer in the best interests of the Company and its shareholders to proceed
with the reorganization. This decision is in light of the federal Minister of
Finance's announcement on October 31, 2006 of a new tax fairness plan that
would increase the taxation of income trusts.

1.3 Canadian telecommunications market

Canadian real GDP growth was recently estimated at 2.7% in 2006 by the
Conference Board of Canada. Canadian wireless industry revenues grew by an
estimated 16% as market penetration for the industry increased by
approximately 4.6 percentage points to 56% of the population. TELUS' wireless
segment achieved 17% revenue growth and 12% subscriber growth in 2006.

The Canadian wireline industry continued to face pressures in 2006 in the form
of expanding voice over Internet protocol (VoIP) offers by cable-TV
competitors and others, as well as continued technological substitution of
voice services to wireless, which contributed to losses of residential access
lines by incumbent telephone companies. TELUS' external wireline segment
revenues decreased by 0.5% in 2006 as growth in data services nearly offset
losses in voice services. TELUS' residential access lines decreased 5% in
2006, while TELUS' total access lines decreased 3% due to modest growth in
business lines.

While the Company's major cable-TV competitors and others expand their VoIP
telephony offers in the Company's incumbent territories, TELUS continues a
limited commercial launch of TELUS TV(R) services to select neighbourhoods in
its incumbent territories. The business market continues to adopt Internet
protocol (IP) and managed services as a means of achieving operational
efficiencies and improving revenue generation. Technology also continues to
evolve, both increasing the Company's opportunities and facilitating increased
competition. See Risks and risk management - Section 10.1 Competition and
Section 10.2 Technology for a complete discussion of these matters.

In addition, the regulatory environment is undergoing change. The federal
government undertook a review of Canada's telecommunications policy and
regulatory framework in 2005 and the review panel released its
Telecommunications Policy Review report of recommendations to the Minister of
Industry in March 2006. Some of the key points of this report were: there
should be an end to the presumption that telecom services must be regulated
and a shift to reliance on market forces, and where regulation remains, it
should be light-handed and flexible and must be justified in all
circumstances. The federal government directed the Canadian Radio-television
and Telecommunications Commission (CRTC) to make specific changes to the
regulation of incumbent telephone companies, of which some took effect in 2006
and some are expected to take effect in 2007. See Risks and risk management -
Section 10.3 Regulatory.

1.4 Consolidated highlights

<TABLE>
<CAPTION>

($ millions, except shares, per share	                                     Years ended December 31
 amounts, subscribers and ratios)				2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Consolidated statements of income
--------------------------------------------------------------------------------------------------------------------------------
Operating revenues		                                 8,681.0 		8,142.7 		  6.6 %
Operating income		                                 2,014.7 		1,671.6 		 20.5 %
Income before income taxes and non-controlling interest		 1,482.0 		1,030.1 		 43.9 %
Net income		                                         1,122.5 		  700.3 		 60.3 %
Earnings per share, basic ($)		                             3.27 		    1.96 		 66.8 %
Earnings per share, diluted ($)		                             3.23 		    1.94 		 66.5 %
Cash dividends declared per share ($)	                             1.20 		    0.875		 37.1 %
--------------------------------------------------------------------------------------------------------------------------------
Consolidated statements of cash flows
--------------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities		                 2,803.7 		2,914.6 		 (3.8)%
Cash used by investing activities		                 1,675.2 		1,355.2 		 23.6 %
    Capital expenditures		                         1,618.4 		1,319.0 		 22.7 %
Cash used by financing activities		                 1,148.6 		2,447.3 		(53.1)%
--------------------------------------------------------------------------------------------------------------------------------
Subscribers and other measures
--------------------------------------------------------------------------------------------------------------------------------
Subscriber connections(1) (thousands) at Dec. 31	 	10,715 		       10,211 		          4.9 %
EBITDA (2)		                                         3,590.3 		3,295.3 		  9.0 %
Free cash flow (3)		                                 1,600.4 		1,465.5 		  9.2 %
--------------------------------------------------------------------------------------------------------------------------------
Debt and payout ratios
--------------------------------------------------------------------------------------------------------------------------------
Net debt to total capitalization ratio (%) (4)		            47.5 		   47.7 		 (0.2) pts
Net debt to EBITDA ratio (5)		                             1.7 		    1.9 		 (0.2)
Dividend payout ratio (%)(6)		                            46 		           56 		        (10) pts
--------------------------------------------------------------------------------------------------------------------------------
<FN>
pts- percentage point(s)

(1) The sum of wireless subscribers, network access lines and Internet subscribers measured
    at the end of the respective periods.
(2) EBITDA is a non-GAAP measure. See Section 11.1 Earnings before interest, taxes,
    depreciation and amortization (EBITDA).
(3) Free cash flow is a non-GAAP measure. See Section 11.2 Free cash flow.
(4) See Section 11.4 Definition of liquidity and capital resource measures.
(5) Net debt to EBITDA, where EBITDA excludes restructuring. See Section 11.4 Definition
    of liquidity and capital resource measures.
(6) The current annualized rate of dividend declared per share multiplied by four and
    divided by basic earnings per share for the 12-month trailing period.
</FN>
</TABLE>

Highlights, as discussed in Section 5: Results from operations, include the
following (comparing results for 2006 to 2005):

*   The Company met or exceeded four of its five consolidated targets, and
    met or exceeded seven of the ten segmented targets for 2006. See Section
    1.5 Performance scorecard for 2006 results.
*   Subscriber connections increased by 504,000 in the year ended
    December 31, 2006, as the number of wireless subscribers grew by 11.8% to
    5.06 million, the number of Internet subscribers grew by 11.2% to
    1.11 million and the number of network access lines decreased by 3.0% to
    4.55 million.
*   Operating revenues increased due primarily to growth in wireless and data
    revenues, which made up approximately 63% of consolidated revenues in 2006,
    compared to 59% in 2005.
*   Operating income increased mainly because of growth in wireless
    subscribers and average revenue per subscriber unit per month (ARPU) as
    well as the absence in 2006 of expenses related to the labour disruption.
    In addition, the amortization of intangible assets decreased as several
    software assets are fully amortized and certain investment tax credits were
    recognized following a determination of eligibility by a revenue authority.
*   Net income and earnings per share increased due to improved operating
    performance, described above, as well as lower financing costs. The average
    numbers of shares outstanding in 2006 were approximately 4% lower than 2005
    due to share repurchase programs, which contributed to increased 2006
    earnings per share. Favourable impacts of tax-related adjustments,
    including changes in statutory tax rates affecting future income tax
    liabilities, were approximately $165 million or 48 cents per share,
    compared with approximately $70 million or 20 cents per share in 2005.

Highlights, as discussed in Section 7: Liquidity and capital resources, include
the following (comparing results for 2006 to 2005):

*   Cash provided by operating activities decreased primarily due to
    proceeds from securitized accounts receivable being unchanged in 2006,
    compared with an increase of $350 million in 2005.
*   Cash used by investing activities increased primarily due to greater
    capital expenditures for investments in the broadband networks in B.C.,
    Alberta and Quebec, network access growth to serve strong housing growth
    in B.C. and Alberta, TELUS TV, strategic investments in EVDO-capable
    higher-speed wireless network technology and continued enhancement of
    digital wireless capacity and coverage. To a lesser extent, there was a
    deferral of activity from 2005 to 2006 due to the 2005 labour disruption.
*   Cash used by financing activities decreased due mainly to the early
    redemption of $1.578 billion of Canadian dollar Notes on December 1, 2005.
*   Free cash flow increased primarily due to higher EBITDA and lower
    interest paid, which were partly offset by higher capital expenditures.
*   Net debt to total capitalization at December 31, 2006 continued to be in
    the target range of 45 to 50%.
*   Net debt to EBITDA continued to be in the target range of 1.5 to 2.0
    times.
*   The dividend payout ratio for 2006, measured as the annualized dividend
    declared in the fourth quarter divided by 2006 earnings per share, was
    near the low end of the target guideline of 45 to 55% for sustainable net
    earnings due mainly to the inclusion in actual earnings of positive
    impacts from 2006 tax-related adjustments.

1.5 Performance scorecard for 2006 results

Eleven of 15 original targets for 2006 were met or exceeded. The following
items were not met:

*   Consolidated capital expenditures and wireline capital expenditures
    exceeded target ranges as a result of access growth requirements in
    Alberta and B.C. and other factors;
*   Wireline external revenue was just under the bottom of the target range;
    and
*   The number of wireless subscribers was approximately 3% lower than
    TELUS' original target for 2006 as a result of market growth being slower
    than originally expected, as discussed further below. By retaining focus
    on profitable subscriber growth and retention activity, the lifetime
    revenue per average subscriber increased by $346 to $4,771 in 2006, when
    compared with 2005. Churn rates remained low, while postpaid subscriber
    net additions in 2006 were 77% of the total net subscriber additions,
    comparing favourably to 73% in 2005.

The following table summarizes TELUS' 2006 performance against its original
targets and compares 2007 targets to 2006 results. For further detail on
expectations for 2007, see Section 9: Looking forward to 2007.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Performance to 2006 targets               2006           Original targets                     Targets	         Change
and 2007 targets                         results            for 2006              Result      for 2007          from 2006
<S>					  <C>		      <C>	          <C>	      <C>		  <C>
--------------------------------------------------------------------------------------------------------------------------------
++  Exceeded target range
+   Met target
X   Missed target
--------------------------------------------------------------------------------------------------------------------------------
Consolidated
   Revenues	                          $8.681 billion      $8.6 to             +           $9.175 to           6 to 7%
                                                              $8.7 billion	              $9.275 billion
   EBITDA (1) excluding charge for        $3.590 billion      $3.5 to             +           $3.725 to           4 to 7%
   cash settlement feature for                                $3.6 billion	    	      $3.825 billion
   vested options in 2007 (2)

   Earnings per share (EPS) - basic       $3.27              $2.40 to $2.60	  ++	      No target	            --

   EPS excluding after-tax charge           --	                   --	          --	      $3.25 to $3.45	  (1) to 6%
   for cash settlement of options
   in 2007 (3)

   Capital expenditures	                  $1.618 billion      $1.5 to
                                                              $1.55 billion	  X           	Approx.
                                                                                              $1.75 billion	     8%

   Free cash flow (4)	                  $1.600 billion      $1.55 to
                                                              $1.65 billion	  +	      No target	             --
--------------------------------------------------------------------------------------------------------------------------------
Wireline segment
  Revenue (external)	                  $4.823 billion      $4.825 to           X           $4.85 to	          1 to 2%
                                                              $4.875 billion	              $4.9 billion

    Non-ILEC(5) revenue	                  $657 million	      $650 to             +           No target	             --
                                                              $700 million

  EBITDA excluding charge for cash        $1.839 billion      $1.8 to             +	      $1.775 to           (3) to (1)%
  settlement of vested options in                             $1.85 billion	              $1.825 billion
  2007 (2)

   Non-ILEC EBITDA	                  $32 million	      $25 to $40 	  +	       No target	     --
					                      million
  Capital expenditures	                  $1.191 billion      $1.05 to            X  	       Approx.            Unchanged
                                                              $1.1 billion	               $1.2 billion

  High-speed Internet subscriber          153,700	      More than 	  ++           More than 	  (12) % or
  net additions	                                              100,000                          135,000              better
--------------------------------------------------------------------------------------------------------------------------------
Wireless segment
  Revenue (external)	                  $3.858 billion     $3.775 to            ++	       $4.325 to	  12 to 13%
                                                             $3.825 billion	               $4.375 billion


  EBITDA excluding charge for cash	  $1.751 billion     $1.7 to	          ++           $1.95 to           11 to 14%
   settlement of vested options in                           $1.75 billion                     $2.0 billion
   2007 (2)

  Capital expenditures	                  $427 million	     Approx.              ++           Approx.	             29%
		                                             $450 million                      $550 million

  Wireless subscriber net additions	  535,200	     More than 	           X           More than 	  3% or more
                                                             550,000                           550,000
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Section 11.1 Earnings before interest, taxes, depreciation and amortization
    (EBITDA).
(2) Excluding an expense of $150 to $200 million in 2007 for a change to add a cash
    settlement choice for vested option, of which, $120 to $150 million is in wireline
    and $30 to $50 million is in wireless.
(3) Excluding $0.30 to $0.40 for cash settlement of options in 2007.
(4) See Section 11.2 Free cash flow.
(5) Non-incumbent local exchange carrier.
--------------------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>

<TABLE>
<CAPTION>
The following key assumptions were made at the time the original targets for
2006 were announced on December 16, 2005.
<S>							  <C>
--------------------------------------------------------------------------------------------------------------------------------
Key assumption for 2006 targets                  	  Actual result and impact on results
--------------------------------------------------------------------------------------------------------------------------------
Canadian real GDP growth of 3.1%	                  2.7% (estimate). Canadian real GDP growth was lower than originally
                                                          expected, although recent estimates showed very high growth rates in
                                                          Alberta and B.C. The modestly lower national growth rate did not affect
                                                          results significantly.

Increased wireline competition in both                    Confirmed. Examples of increased competition in the business market
business and consumer markets	                          include bundling of web-based and information technology services with
                                                          access, wireless and other data services. Increased competition in the
                                                          consumer market with cable-TV phone sales was one factor in the 5.2%
                                                          decrease in residential access lines in 2006.


Canadian wireless industry market penetration             Estimated at 4.6 percentage points. Market growth was at the low end
gain would be approximately five percentage points        of expectations and contributed to achieving 3% fewer net additions of
                                                          wireless subscribers than original targets.

TELUS would record approximately $100 million of          $67.8 million. A lower charge was recorded primarily as a result of
restructuring and workforce reduction charges	          the restructuring initiatives being implemented more efficiently than
                                                          expected with a greater number of staff being redeployed to growth
                                                          areas of the business and therefore not requiring severance costs.

An effective income tax rate of approximately 35%	  Approximately 24%. The tax rate was reduced by the revaluation of the
                                                          future tax liability from the enactment of lower federal and provincial
                                                          tax rates, elimination of the federal large corporations tax and
                                                          reassessments relating to prior years.

No prospective significant acquisitions or                Confirmed.
divestitures and no change in foreign ownership rules

Maintenance or improvement in credit ratings	          Confirmed. Moody's Investors Service placed its Baa2 rating for TELUS
                                                          under review for possible upgrade.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TELUS consolidated results and 2007 targets. See Forward-looking statements at
the beginning of Management's discussion and analysis.

    [graphs - Consolidated revenue; Consolidated EBITDA]

    [graphs - Consolidated capital expenditures; Earnings per share]


1.6 TELUS segments at a glance

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 Executive
Officer (the chief operating decision-maker). Segmented disclosure is reported
in Note 6 of the Consolidated financial statements. The following is a summary
of key actual and target metrics for the two segments.

    TELUS wireline segment

Offers the following solutions: voice (local, long distance, call management
and the sale, rental and maintenance of telephone equipment), Internet
(high-speed or dial-up with security features); TELUS TV available in select
neighbourhoods with Video on Demand and Pay Per View; data (IP networks,
private line, switched services, network wholesale, network management and
hosting); converged voice and data solutions (TELUS IP-One Innovation and
TELUS IP-One Evolution(R)); hosting and infrastructure (managed IT and
infrastructure solutions delivered through TELUS' IP networks connected to
TELUS' Internet Data Centres); security solutions (managed and non-managed
solutions to protect business networks, messaging and data, in addition to
security consulting services);and customized solutions such as contact centre
services including Call Centre Anywhere(TM), conferencing services
(webcasting, audio, web and video) and human resource and health and safety
outsourcing solutions.

Wireline segment 2007 targets. See Forward looking statements at the beginning
of Management's discussion and analysis.

    [graphs - wireline external revenue; wireline EBITDA]

    [graphs - wireline capital expenditures; net additions of high-speed
     Internet subscribers]

    TELUS wireless segment

Offers the following solutions: digital voice services (PCS postpaid, PCS Pay
& Talk(R) prepaid, Mike(R) all-in-one (iDEN) and Push To Talk(TM)
capability on both Mike (Direct Connect(R)) and PCS (Instant Talk(R)));
Internet (TELUS Spark(TM) including wireless web, text, picture and video
messaging, music, ringtones, image and game downloads, TELUS Mobile Music(R),
TELUS Mobile Radio(TM) and TELUS Mobile TV(TM), and Wi-Fi Hotspots); and data
- devices including PC cards and personal digital assistants (PDAs) available
for use on wireless high-speed (EVDO), 1X and Mike packet data networks.

Wireless segment 2007 targets. See Forward looking statements at the beginning
of Management's discussion and analysis.

    [graphs - wireless external revenue; wireless EBITDA]

    [graphs - wireless capital expenditures; net additions of wireless
     subscribers]

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

At December 31, 2006, the Company's principal subsidiary is wholly owned TELUS
Communications Inc. (TCI).

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.

TELUS continues to be guided by its six long-standing strategic imperatives
that guide the Company's actions, which generate the financial results of
the Company. Activities during 2006 that supported the Company's six strategic
imperatives include the following:

    Building national capabilities across data, IP, voice and wireless

With a focus on key vertical market segments (energy sector, financial
services, public sector and the healthcare industry), TELUS offers
differentiated applications to win new business contracts. For example, in the
healthcare sector, Ontario's Saint Elizabeth Health Care has contracted TELUS
to deploy its IP network to deliver hosting, voice and data communications
services. The Peterborough Regional Health Centre became the first to deploy
TELUS' unique Integrated Bedside Terminal solution with an order for 500
units. The bedside terminals provide patients and their caregivers with
clinical information, communication and entertainment on one interactive
screen. TELUS also launched Wireless Physician, an all-in-one wireless medical
database held in wireless devices that provides healthcare professionals with
up-to-date drug and diagnostic information in the palm of their hand to save
time and reduce errors.

In the public sector, TELUS was selected by the Ontario Ministry of Government
Services to provide, manage and supply its portfolio of network services
including information technology security for the entire government network.
The five-year contract is expected to generate approximately $140 million of
revenue. TELUS' network solution for the Government of Ontario is based on an
IP platform that provides secure transmission and electronic sharing of
information, and includes videoconferencing and web conferencing services.

Indicative of TELUS' growing presence in Central Canada is the increase in
team members from just over 300 people in early 2000 to almost 10,000 in
Ontario and Quebec at the end of 2006.

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

TELUS expanded the availability of its wireless high-speed service to
two-thirds of the Canadian population in 2006. Wireless high-speed services
have typical download speeds of 400 to 700 kilobits per second, based on the
CDMA 1xEVDO standard, the newest third generation (3G) wireless data
technology available. TELUS also offers a variety of wireless high-speed PCS
phones and data devices, providing customers with the ability to use them on
TELUS' national 1X data network (which covers 92% of the Canadian population).
In December 2006, wireless high-speed roaming was extended to 230 U.S. cities.

TELUS introduced SPARK, a new name for its portfolio of mobile entertainment,
information and messaging services for consumers, and launched TELUS Mobile
Music and TELUS Mobile Radio. The SPARK portfolio also includes TELUS Mobile
TV, multimedia messaging, downloadable images, ringtones, videos and games,
and new web browser features, including search tools and a broad range of new
online content.

TELUS continued its targeted launch of TELUS TV service in selected
neighbourhoods in B.C., and Alberta. Employee trials of TELUS
TV began in Quebec. In addition, TELUS constructed a "head end" facility in
B.C. to gather TV signals from dozens of satellites for transmission to
customers in B.C. and Alberta. This new facility and the existing one in
Edmonton both serve customers in the two provinces and provide back-up
capability to each other in the event of an outage.

    Building integrated solutions that differentiate TELUS from its competitors

TELUS announced in September 2006 that it intends to invest $600 million
between 2007 and 2009 to enhance its broadband infrastructure. This investment
will enable emerging high-speed Internet services and expand network coverage
across British Columbia, Alberta and Eastern Quebec.

TELUS' broadband project is an important investment, paving the way for
additional gains in the competitive high-speed Internet market and emerging
services including high-definition TELUS TV. The Company is installing
advanced Internet equipment in more than 7,000 sites across its network and
running fibre optic cable closer to customers' homes. Bringing fibre closer to
homes is expected to provide Internet access speeds of 15 to 30 megabits per
second and beyond.

The broadband project complements a rural capital investment program to bring
high-speed Internet services to more than 450 additional remote communities in
British Columbia, Alberta, and Eastern Quebec by 2010. Certain of these
initiatives are eligible to be recognized for deferral account treatment. See
the related discussion in Section 7.8 Commitments and contingent liabilities -
Price cap deferral accounts.

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

Under a previously announced agreement with the Government of B.C., TELUS has
completed construction of fibre to distribution points in 113 remote
communities in British Columbia, which enables future provision of high-speed
Internet service to these communities by regional or community-based Internet
service providers. An additional five communities specified in the agreement
are expected to be connected in early 2007.

In August 2006, TELUS and Amp'd Mobile, Inc. announced an exclusive
relationship for the sale and distribution of Amp'd branded services in
Canada. As a result, Amp'd Mobile's highly interactive and customized mobile
entertainment, information and messaging services are currently expected to be
offered in Canada operating on TELUS' wireless high-speed network in the
second quarter of 2007. Under the terms of the Licensing and Services
Agreement, Amp'd Mobile will be responsible for bringing unique entertainment
content to TELUS' subscribers as well as providing optimized handsets capable
of fast download speeds. TELUS will manage sales and distribution, billing,
client care, network operations and pricing. TELUS will have the exclusive
right to use Amp'd trademarks, premium data services, handsets and content
delivery platforms in Canada. This represents an opportunity for TELUS to more
effectively reach the high-value young adult (18 to 35) market with Amp'd
Mobile's highly differentiated, premium data and content-centric services.
TELUS Ventures, the strategic venture investment division of TELUS, also made
a U.S. $7.5 million equity investment in Amp'd Mobile, Inc., which is
headquartered in California.

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

TELUS continues to make progress toward merging into a single
customer-oriented organization that is focused on being one team and defined
by one national brand. The TELUS logo replaced the logos of TELUS Mobility(R),
TELUS Quebec(R), TELUS Partner Solutions and TELUS Business Solutions where
they appeared in the marketplace and internally across the Company. The
adoption of one TELUS logo reinforces the strength of the TELUS brand and
advances the Company's corporate brand strategy as it pertains to an
integrated and differentiated approach in the marketplace.

    Investing in internal capabilities to build a high-performance culture and
    efficient operations

As the Company implemented the new collective agreement signed in late 2005,
it began to realize the benefits - aligning systems and processes, integrating
business units, and focusing on its core business. TELUS' operating efficiency
initiatives fall into three broad categories: outsourcing of non-core or
peak-load work; consolidation of offices and call centres; and process
improvement and automation.

With respect to outsourcing, TELUS has fully or partially contracted out a
number of non-core functions including property management, custodial
services, building maintenance, mail services, fleet maintenance, and pay
phone coin counting. As a result of these outsourcing initiatives,
approximately 250 employees have accepted either an offer of redeployment or a
voluntary departure package.

With respect to office consolidation, to achieve greater efficiency and
improve customer service, management has rationalized a number of offices into
larger centres, including the consolidation of the retail office and call
centre in Victoria into Calgary and Edmonton, as well as consolidation of the
conference operation into the Lower Mainland of B.C. Additionally, management
has completed the consolidation of two field dispatch centres in Greater
Vancouver into Calgary. Through these initiatives, approximately 525 employees
have accepted either an offer of redeployment or a voluntary departure
package. The Company is also transforming to a more variable cost structure
through the increased use of temporary employees, which management expects to
allow better synchronization of resources with variable customer demand.

In the area of process improvement and automation, TELUS continues to focus on
streamlining functional area processes, which includes building on the
learnings from the deployment of management teams during the 2005 labour
disruption. Examples include automating directory listing functions and making
process improvements in business support functions, such as human resources.

TELUS is experiencing short conventional payback periods with respect to
office and call centre consolidations, whereas in the area of outsourcing
activities, implementation takes longer and paybacks can extend over several
years. It should be noted, however, that all such initiatives are expected to
provide positive economic returns.

In addition, two new collective agreements in the province of Quebec were
negotiated and ratified in 2006. In the first quarter of 2006, TELUS Quebec
and the Syndicat des agents de maitrise de TELUS concluded negotiations for a
new collective agreement covering more than 500 professional and supervisory
employees. This one-year agreement came into effect on April 1. In July, TELUS
Quebec and Syndicat quebecois des employes de TELUS reached an agreement,
which was ratified at the end of August. The agreement covers more than 1,000
office, clerical and technical employees, and is effective until the end of
2009.

3. Key performance drivers

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

Management sets new corporate priorities each year to advance TELUS' strategy,
focus on the near-term opportunities and challenges and create value for
shareholders.

3.1 Corporate priorities for 2006 - reporting back

Management 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

*    TELUS expanded wireless high-speed (EVDO) service to two-thirds of the
     Canadian population . Combined with the newest portable communications
     devices, TELUS is delivering innovative mobile data and entertainment
     solutions.
*   TELUS introduced SPARK, a new name for its portfolio of mobile
    entertainment, information and messaging services for consumers. These
    services include TELUS Mobile Music, TELUS Mobile Radio, TELUS Mobile TV
    and Apnes Des, a South Asian entertainment service featuring video, news
    and sports.
*   To reaffirm the Company's commitment to excellent customer service,
    TELUS launched three Future Friendly (R) Promises to mobile clients: a
    dependable network, fast client service and new phone offers. The success
    of this program is evident by TELUS' churn rates that are among the
    lowest in North America.
*   A three-year, $600 million investment program to enhance TELUS'
    broadband network in B.C., Alberta and Eastern Quebec was announced,
    paving the way for emerging services such as high-definition TELUS TV.
*   TELUS TV services were rolled into select neighbourhoods in the Lower
    Mainland of B.C., delivering 100% digital TV to consumers. In addition,
    employee trials of TELUS TV service began in Eastern Quebec.
*   Compelling high-speed Internet (ADSL) promotions helped TELUS achieve
    153,700 net additions of Internet subscribers in 2006, which outpaced a
    major cable-TV competitor.
*   TELUS implemented community-focused general manager positions across
    B.C., Alberta and Quebec to improve consumer and business service
    delivery.
*   ADSL service was expanded to 117 rural neighbourhoods in Quebec in
    preparation for the 2007 consumer launch of TELUS TV and continued growth
    in TELUS' share of the Quebec market.

Advance TELUS' position in the business market

*   A five-year, $140 million contract was won with the Government of
    Ontario to provide fully managed network access services.
*   Several other multi-million dollar contracts were also secured,
    including those with Alberta Treasury Branches (ATB) Financial, Consumer
    Impact Marketing and Finning International.
*   The business brand "Backed by TELUS" was launched and innovative
    solutions were introduced, including the TELUS Business One (R) bundle,
    TELUS SafetyNet (TM) service, Wireless Physician, Integrated Bedside
    Terminal, Crisis Management Conferencing and Wireless Field Ticketing. In
    addition, the portfolio of wireless solutions was expanded, including
    wireless high-speed services, Push To Talk service and GPS solutions.
*   TELUS strengthened its capabilities by acquiring Assurent Secure
    Technologies, a world-leading Canadian information technology security
    services company. TELUS' AssureLogic security solution received a
    globally recognized certification.

Advance TELUS' position in the wholesale market

*   TELUS was recognized for the fourth time by The Paisley Group as a
    leader in directory assistance services, and was named number one in
    Canada and number two in the U.S.

Drive improvements in productivity and service excellence

*   TELUS successfully launched a pilot conversion for a sample set of more
    than 20,000 Alberta customers, as part of a major billing system
    consolidation project.
*   In major centres in B.C. and Alberta, TELUS increased the proportion of
    installation and repair appointments offered to customers on a two-hour
    or four-hour window basis.
*   More than 1,200 field technicians were trained to promote and provide
    additional services during installation and repair visits, as part of the
    TELUS Solutions Program, generating additional sales.
*   TELUS opened a new centre of excellence in Montreal to align tier 1 and
    tier 2 technical support operations for small business, and to
    consolidate call centre entry points from four to one, providing quicker
    resolution of issues and bilingual support.
*   TELUS aligned the human resources, finance, logistics and project
    management systems and processes of TELUS Quebec, TELUS Solutions
    d'Affaires and the eastern operations of TELUS Mobility.
*   TELUS launched "Habitat," an integrated, bilingual portal for all team
    members across Canada.

Strengthen the spirit of the TELUS team and brand, and develop the best
talent in the global communications industry

*   Through periodic electronic surveys of employees, known as pulse check,
    TELUS obtains crucial feedback about the business. In the latest survey,
    notable improvements were measured in team member engagement, pride and
    outlook for the future.
*   On September 30, more than 5,000 TELUS team members, alumni and family
    across Canada volunteered their time and energy to 1,400 volunteer
    projects and activities as part of the TELUS National Day of Service.
*   TELUS, its team members and retirees pledged $5.5 million in the 2006
    Dollars for Dollars campaign, which will be distributed in 2007 to
    Canadian charities.
*   In 2006, TELUS held more than 150 external recruiting events to attract
    talented new team members to the Company at all levels across many
    disciplines. The events included job fairs, information sessions,
    academic sponsorships and innovative canvassing efforts.
*   TELUS' brand was showcased through hosting of events such as the TELUS
    Skins and TELUS World Ski and Snowboard Festival.
*   For the third consecutive year, TELUS was awarded a Thomson Illuminati
    award for worldwide excellence in employee learning programs and
    practices.
*   The Company launched the TELUS Community Ambassadors(TM) program giving
    support to team members and alumni for programs such as those that supply
    backpacks of school supplies to children in need.
*   The Company now has seven fully functional TELUS Community Boards,
    which include external community leaders who help direct annual
    donations of $3.5 million to worthwhile causes in seven cities across
    Canada.
------------------------------------------------------------------------------

3.2 Corporate priorities for 2007

Each year, TELUS identifies key corporate priorities that support its national
growth strategy and create value for investors.

------------------------------------------------------------------------------
                     2007 corporate priorities
------------------------------------------------------------------------------
Advancing TELUS' leadership position in the consumer market
*   Combining TELUS' suite of data applications with deregulated heritage
    services
*   Attaining best-in-class customer loyalty and growth through unparalleled
    customer experiences
*   Achieving customer addition targets by expanding distribution channels and
    addressing key market segments with new service offerings.
------------------------------------------------------------------------------
Advancing TELUS' leadership position in the business market
*   Progressing further in key industry verticals with specific applications
    that provide non-price-based differentiation
*   Leveraging wireless number portability to expand TELUS' business market
    share in Central Canada
*   Focusing on small business customer loyalty and growth with innovative
    solutions
------------------------------------------------------------------------------
Advancing TELUS' leadership position in the wholesale market
*   Growing in domestic and international markets through recognition that
    TELUS is Canada's IP leader
*   Achieving excellence in customer service to support local forbearance in
    key incumbent markets
*   Expanding the Company's markets, channels and products by focusing on
    strategic relationships with TLEUS' partners.
------------------------------------------------------------------------------
Driving TELUS' technology evolution and improvements in productivity and
service excellence
*   Implementing technology roadmaps for Future Friendly Home and wireless
    service offerings that simplify TELUS' product portfolio and improve
    service development and execution
*   Rolling out consolidated customer care systems to replace multiple legacy
    systems in Alberta and B.C.
*   Accelerating customer service delivery dates.
------------------------------------------------------------------------------
Strengthening the spirit of the TELUS team and brand, and developing the best
talent in the global communications industry
*   Growing TELUS' business ownership culture with a team philosophy of "our
    business, our customers, our team, my responsibility" thereby attracting,
    developing and retaining great talent
*   Leading the way in corporate social responsibility as TELUS strives to be
    Canada's premier corporate citizen.
-----------------------------------------------------------------------------

4. Capability to deliver results

4.1 Principal markets addressed and competitors
------------------------------------------------------------------------------
National wireless services for consumers and businesses
------------------------------------------------------------------------------
    TELUS has facilities-based services with access to approximately 95% of
    the Canadian population, operating a CDMA network with state-of-the-art
    high-speed EVDO (evolution data optimized) in major centres, and
    iDEN-based Push To Talk service focused on the commercial marketplace.

    Competition includes: (i) facilities-based competitors such as Rogers
    Wireless and Bell Mobility, nationally, and wireless offerings by various
    regional telcos including SaskTel and MTS Mobility; and (ii) resellers of
    Bell and Rogers networks, such as the Virgin Mobile Group, 7-Eleven and
    certain cable-TV companies.
------------------------------------------------------------------------------
National wireline business services
------------------------------------------------------------------------------
    TELUS has an IP-based national network overlaying an extensive switched
    network in incumbent territories in B.C., Alberta and Eastern Quebec.
    Access services and certain competitive digital network access services
    are subject to rate regulation in these incumbent territories. Operations
    in non-incumbent areas of Ontario and Quebec are not rate regulated.
    Managed solutions, such as the provision of human resources outsourcing
    services to business customers, are offered nationally. Wholesale
    services are provided to telecommunications carriers, resellers, Internet
    service providers (ISPs), wireless communications companies, competitive
    local access providers and cable-TV operators.

    Competition for voice and data communications services includes Bell
    Canada and Manitoba Tel (Allstream) competing with their own national
    infrastructures, and others such as Navigata (owned by SaskTel), as well
    as substitution to wireless services including those offered by TELUS.
    Competitors for managed solutions include system integrators CGI, EDS and
    IBM.
------------------------------------------------------------------------------
Wireline consumer services in incumbent territories
------------------------------------------------------------------------------
    TELUS has access to virtually every urban and rural home in its incumbent
    territories in B.C., Alberta and Eastern Quebec. Through an extensive
    switched network and significant investment in Internet infrastructure,
    the Company provides local, long distance and Internet services. The
    Company also has broadcasting distribution licences to offer digital
    television services in select communities across its incumbent
    territories, and licences to offer commercial video-on-demand services. A
    staged neighbourhood-by-neighbourhood roll-out of TELUS TV services is
    underway.

    Competition includes: (i) substitution of wireless services, including
    TELUS' own wireless offerings, for local and long distance services; (ii)
    cable-TV providers Shaw Communications Inc. in B.C. and Alberta, and
    Cogeco Cable Inc. in Eastern Quebec, which have access to most urban and
    suburban homes, and provide Internet, entertainment and VoIP-based
    telephony services; (iii) Rogers Communications, Navigata, Primus,
    Vonage, Bell Canada and various others that collectively offer local
    service, Internet and long distance services; and (iv) satellite-based
    entertainment and Internet services.
------------------------------------------------------------------------------

4.2 Operational capabilities

    Regulation

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. Wireline
regulated services include residential and business 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.

Major areas of regulatory review in 2007 include the framework for forbearance
from regulation of local exchange services, price cap regulation, high-speed
intra-exchange digital services, and the use of funds in ILECs' deferral
accounts. See Section 10.3 Regulatory.

There has been some speculation that Industry Canada may encourage additional
competition through a spectrum auction, expected in 2008, by capping the amount
of spectrum any one provider can purchase or setting spectrum aside for a new
entrant. See Section 10.1 Competition - Future availability of wireless
spectrum.

    Development of a new billing system in the wireline segment

The development of a new wireline billing system progressed in 2006. The
development includes re-engineering processes for order entry,
pre-qualification, service fulfillment and assurance, customer care,
collections/credit, customer contact, and information management. The expected
customer service and cost benefits of this project include streamlined and
standardized processes and the elimination over time of multiple legacy
information systems. In the third quarter of 2006, the Company successfully
implemented a pilot conversion for a sample set of customers. A commercial
launch of the converged billing system platform for consumer accounts is
expected to progress in 2007, with additional phases of conversion planned over
the next few years. See Section 10.5 Process risks.

4.3 Liquidity and capital resources

The following discussion is qualified in its entirety by the Forward-looking
statements at the beginning of Management's discussion and analysis, as well as
Section 9.3 Financing plan for 2007 and Section 10.6 Financing and debt
requirements.

    Capital structure financial policies (Note 3 of the Consolidated financial
    statements)

The Company's objectives when managing capital are: (i) to maintain a flexible
capital structure which optimizes the cost of capital at acceptable risk; and
(ii) to manage capital in a manner which balances the interests of equity and
debt holders.

In the management of capital, the Company includes shareholders' equity,
long-term debt (including any associated hedging assets or liabilities), cash
and temporary investments and securitized accounts receivable in the definition
of capital.

The Company manages the capital structure and makes adjustments to it in light
of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders, purchase
shares for cancellation pursuant to normal course issuer bids, issue new
shares, issue new debt, issue new debt to replace existing debt with different
characteristics and/or increase or decrease the amount of sales of trade
receivables to an arm's-length securitization trust. In its annual Management's
discussion and analysis, management describes its financing plan. The results
of TELUS' 2006 financing plan are presented in the table below.

The Company monitors capital on a number of bases, including: net debt to total
capitalization; net debt to EBITDA - excluding restructuring and workforce
reduction costs; and dividend payout ratio of sustainable net earnings. For
further discussion and specific guidelines, see Section 7.4 Liquidity and
capital resource measures.

    Liquidity and financing

At December 31, 2006, TELUS had access to undrawn credit facilities of more
than $1.4 billion. The Company believes it has sufficient capability to fund
its requirements from these facilities and expected cash flow from operations.
The following table describes the status of TELUS' financing plan.

------------------------------------------------------------------------------
2006 financing plan and results
------------------------------------------------------------------------------
TELUS' 2006 financing plan was to use free cash flow generated by its business
operations to:
------------------------------------------------------------------------------
*   Repurchase TELUS Common Shares and TELUS Non-Voting Shares under the
    normal course issuer bid (NCIB)

    The Company's NCIB program was renewed effective December 20, 2006 and
    with an expiry of December 19, 2007. During 2006, approximately
    5.5 million Common Shares and 10.9 million Non-Voting Shares were
    repurchased for cancellation for a total outlay of approximately
    $800 million. Between December 20, 2004 and December 31, 2006, the
    Company repurchased approximately 16 million Common Shares and 23 million
    Non-Voting Shares for a total outlay of $1.77 billion under three NCIB
    programs. See Section 7.3 Cash used by financing activities.

*   Pay dividends

    Quarterly dividends of 27.5 cents per share were paid in 2006 for an
    annual total of $1.10. The declared dividend for the fourth quarter of
    2006, payable on January 1, 2007, was 37.5 cents per share, an increase
    of 36.4%.

*   Retain cash-on-hand for corporate purposes

    The $500 million balance of securitized accounts receivable was unchanged
    at December 31, 2006 when compared to one year earlier. During 2006, the
    balance varied between $325 million and $535 million.

    Amounts outstanding under the three-year credit facility and other bank
    facilities were $121 million at December 31, a decrease of $21 million
    from December 31, 2005.
------------------------------------------------------------------------------
Other financing objectives included:
------------------------------------------------------------------------------
*   Maintain a minimum $1 billion in unutilized liquidity

    TELUS had available liquidity from unutilized credit facilities of more
    than $1.4 billion at December 31, 2006.

*   Maintain position of fully hedging foreign exchange exposure for
    indebtedness

    In contemplation of the planned refinancing of the 2007 (U.S. dollar)
    Notes, in May 2006 the Company replaced approximately 63% of the notional
    value of the existing cross currency interest rate swap agreements with a
    like amount of new cross currency interest rate swap agreements, which
    have a lower effective fixed interest rate and a lower effective fixed
    exchange rate. This replacement happened concurrent with the issuance of
    the 2013 (Canadian dollar) Notes (see below); the two transactions had
    the composite effect of deferring, from June 2007 to June 2013, the
    payment of $300 million.

*   Give consideration to refinancing all or a portion of U.S. dollar
    denominated Notes due June 1, 2007 in advance of their scheduled maturity

    Concurrently with the above, in May 2006, the Company publicly issued
    $300 million 5.00%, Series CB, Notes, which mature in 2013. The net
    proceeds of the offering were used to pay for the early termination of
    cross currency swap agreements described above. In contemplation of the
    planned refinancing of the U.S. $1.17 billion of debt maturing
    June 1, 2007, the Company had entered into forward starting interest rate
    swap agreements during 2006 that, as at December 31, 2006, have the
    effect of fixing the underlying interest rate on up to $500 million of
    replacement debt.

*   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-, or the equivalent, in the future

    Investment grade credit ratings from the four rating agencies that cover
    TELUS were maintained. The ratings assigned by three credit rating
    agencies are currently within TELUS' desired range, while Moody's
    Investors Service's Baa2 rating for TELUS (equivalent to BBB) is one
    position below TELUS' desired range. In November 2006, Moody's placed its
    rating for TELUS under review for possible upgrade.

4.4 Management's report on disclosure controls and procedures and internal
    control over financial reporting

    Disclosure controls and procedures

Disclosure controls and procedures are designed to provide reasonable assurance
that all relevant information is gathered and reported to senior management,
including the President and Chief Executive Officer (CEO) and the Executive
Vice-President and Chief Financial Officer (CFO), on a timely basis so that
appropriate decisions can be made regarding public disclosure.

The CEO and the CFO have evaluated the effectiveness of the Company's
disclosure controls and procedures related to the preparation of the
Management's discussion and analysis and the Consolidated financial statements.
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.

    Internal control over financial reporting

Internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements in accordance with Canadian generally accepted
accounting principles and the requirements of the Securities and Exchange
Commission in the United States, as applicable. TELUS' CEO and CFO have
assessed the effectiveness of the Company's internal control over financial
reporting as at December 31, 2006 in accordance with Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this assessment, TELUS' CEO and CFO have
determined that the Company's internal control over financial reporting is
effective as at December 31, 2006 and expect to certify TELUS' annual filings
with the U.S. Securities and Exchange Commission on Form 40-F as required by
the United States Sarbanes-Oxley Act and with Canadian securities regulatory
authorities.

Deloitte & Touche LLP, the shareholders' auditors, have audited management's
assessment of TELUS' internal control over financial reporting in addition to
the Company's Consolidated financial statements as at December 31, 2006. In
order to provide their independent opinions, Deloitte & Touche reviewed the
Company's system of internal controls and performed any audit procedures to the
extent they considered appropriate.

    Changes in internal control over financial reporting

There were no changes in internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

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, 2006, and its annual
Consolidated financial statements for previous years.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Years ended December 31						2006 			2005 			2004
($ in millions except per share amounts)
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Operating revenues		                                8,681.0 		8,142.7 		7,581.2
Operations expense						5,022.9 		4,793.5 		4,438.0
Restructuring and workforce reduction costs			   67.8 		   53.9 		   52.6
Financing costs and other expense				  532.7 		  641.5 		  622.0
Income before income taxes and non-controlling interest		1,482.0 		1,030.1 		  825.5
Income taxes							  351.0 		  322.0 		  255.1
Net income							1,122.5 		  700.3 		  565.8
Common Share and Non-Voting Share income			1,122.5 		  700.3 		  564.0
Earnings per share(1) - basic 					    3.27 		    1.96 		    1.58
Earnings per share(1) - diluted					    3.23 		    1.94 		    1.57
Cash dividends declared per share(1)		                    1.20 	  	    0.875 		    0.65
Total assets		                                       16,508.2 	       16,222.3 	       17,838.0
Current maturities of long-term debt		                1,434.4 		    5.0 		    4.3

   Long-term debt		                                3,493.7 		4,639.9 		6,332.2
   Deferred hedging and other long-term financial
    liabilities		                                        1,037.2 		1,420.9 		1,293.8
--------------------------------------------------------------------------------------------------------------------------------
Total long-term financial liabilities		                4,530.9 		6,060.8		        7,626.0
Future income taxes		                                1,067.3 		1,023.9 		  991.9
Non-controlling interest		                           23.6 		   25.6 	 	   13.1
Common equity 		                                        6,928.1 		6,870.0 		7,016.8

---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes Common Shares and Non-Voting Shares.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Some changes over the three years include:

*   Wireless and data revenues increased to approximately 63% of
    consolidated revenues in 2006 (approximately 59% in 2005 and 56% in
    2004).

*   Consolidated operations expense in 2005 included the effects of a
    four-month labour disruption including incremental expenses of
    approximately $133 million net of cost savings. These incremental
    affected the wireline segment.

*   Financing costs in 2005 included a $33.5 million loss on early
    redemption of $1.578 billion of Canadian dollar Notes on December 1,
    2005.

*   Net income included significant favourable tax adjustments, including
    interest and the effects of tax rate changes on future income tax
    liabilities and assets. The amounts were approximately $165 million (48
    cents per share) in 2006, approximately $70 million (20 cents per share)
    in 2005, and approximately $86 million (24 cents per share) in 2004.

5.2 Quarterly results summary

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
($ in millions,
 except per
 share amounts)	                  2006 Q4    2006 Q3	 2006 Q2    2006 Q1     2005 Q4    2005 Q3     2005 Q2    2005 Q1
<S>                               <C>        <C>         <C>        <C>         <C>        <C>         <C>        <C>
--------------------------------------------------------------------------------------------------------------------------------
Segmented revenue (external)
  Wireline segment	          1,234.3    1,200.3 	 1,189.9    1,198.6 	1,209.9    1,198.6     1,216.5    1,222.2
  Wireless segment		  1,020.3    1,010.4 	   945.3      881.9 	  876.8      864.2       802.0      752.5
--------------------------------------------------------------------------------------------------------------------------------
Operating revenues
   (consolidated)		  2,254.6    2,210.7 	 2,135.2    2,080.5 	2,086.7    2,062.8 	2,018.5   1,974.7
  Operations expense		  1,368.6    1,245.8 	 1,207.4    1,201.1 	1,316.8    1,221.5 	1,146.1   1,109.1
  Restructuring and workforce
   reduction costs		      7.9       12.5 	    30.7       16.7 	   35.5        1.6 	    7.4       9.4
--------------------------------------------------------------------------------------------------------------------------------
EBITDA (1)		            878.1      952.4 	   897.1      862.7 	  734.4      839.7  	  865.0     856.2
  Depreciation		            353.2      325.8 	   335.2      339.2 	  346.2      335.6 	  330.9     329.9
  Amortization of intangible
   assets		             53.9       57.5 	    46.9       63.9 	   67.0       73.6 	   68.2      72.3
--------------------------------------------------------------------------------------------------------------------------------
Operating income		    471.0      569.1 	   515.0      459.6 	  321.2      430.5 	  465.9     454.0
  Other expense (income)  	     10.1 	 4.0 	     9.6        4.3 	    9.3        7.1 	    0.5       1.5
  Financing costs		    133.6      116.6 	   127.5      127.0 	  171.7      144.8 	  168.2     138.4
--------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and
  non-controlling interest	    327.3      448.5 	   377.9      328.3	  140.2      278.6 	  297.2     314.1
  Income taxes		             89.7      126.5 	    18.7      116.1 	   58.8       86.9 	  106.0      70.3
  Non-controlling interests	      1.4 	 2.4 	     2.6        2.1 	    2.9        1.6 	    1.7       1.6
--------------------------------------------------------------------------------------------------------------------------------
Net income		            236.2      319.6 	   356.6      210.1 	   78.5      190.1 	  189.5     242.2
================================================================================================================================
Income per Common Share and
 Non-Voting Share - basic	      0.70       0.94 	     1.03       0.60 	    0.22       0.53 	    0.53      0.67
	          - diluted	      0.69	 0.92 	     1.02       0.60 	    0.22       0.53 	    0.52      0.66
Dividends declared per Common
 Share and Non-Voting Share	      0.375 	 0.275 	     0.275      0.275 	    0.275      0.20 	    0.20      0.20
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) EBITDA is a non-GAAP measure. See Section 11.1 Earnings before interest, taxes,
    depreciation and amortization (EBITDA).
</FN>
</TABLE>

The trend in consolidated Operating revenues continues to reflect strong
growth in wireless revenue, which was a record quarterly amount for TELUS in
the fourth quarter of 2006. In addition, wireline revenue for the fourth
quarter of 2006 was the highest quarterly amount in four years. Wireless
revenue growth is due to increasing ARPU as well as a growing subscriber base.
ARPU, in turn, is growing due to increasing provision and adoption of wireless
data services, which is more than offsetting the decline in voice ARPU. The
trend also reflects growth in wireline segment data revenue, while wireline
voice local and long distance revenues are decreasing. In addition to
continued substitution to wireless services, the impact of increased
competition from VoIP competitors and resellers on wireline revenues became
apparent in 2006. Decreases in long distance revenues are consistent with
industry-wide trends of strong price competition and technological
substitution (to Internet and wireless). Wireline revenues until May 31, 2006
include the generally negative effect of regulatory price cap decisions.

Historically, there is significant fourth quarter seasonality with higher
wireless subscriber additions and related acquisition costs and equipment
sales, resulting in lower wireless EBITDA. The seasonality affects, to a
lesser extent, wireline high-speed Internet subscriber additions and related
costs.

The trend in Operating income was affected by temporary net expenses leading
up to and resulting from an extended labour disruption in 2005; such temporary
expenses included in Operations expense were estimated to be approximately
$16 million, $65 million and $52 million, respectively, for the second, third
and fourth quarters of 2005. Restructuring and workforce reduction charges
varied by quarter, depending on the progress of ongoing initiatives underway.
Depreciation expense in the fourth quarter of 2006 includes a provision of
approximately $17 million to align estimated useful lives for TELUS Quebec
assets, resulting from integration of financial systems. Amortization of
intangible assets is decreasing as several software assets have been fully
amortized. Amortization expenses in the second quarter and fourth quarter of
2006 were reduced by approximately $12 million and $5 million, respectively,
for investment tax credits following a determination of eligibility by a
revenue authority relating to assets capitalized in prior years that are now
fully amortized.

Within Financing costs, interest expenses trended lower except for the
following items: (i) interest expense in respect of a court decision in a
lawsuit related to a 1997 BC TEL bond redemption (including $17.5 million in
the second quarter of 2005 and $7.8 million in the fourth quarter of 2006 -
see Section 10.9 Litigation and legal matters); and (ii) a charge of
$33.5 million in the fourth quarter of 2005 for early redemption of
$1.578 billion of Notes. The early redemption of Notes on December 1, 2005,
contributed to lower financing costs in 2006. Financing costs are net of
varying amounts of interest income.

The trend in Net income and earnings per share reflect the items noted above
as well as a second quarter 2006 future income tax reduction arising from
enacted income tax rate reductions and the elimination of the federal large
corporations tax. The trend was also affected by tax adjustments and related
interest for prior periods; the larger quarterly amounts were approximately
$20 million or six cents per share in the fourth quarter of 2006,
approximately $30 million (nine cents per share) in the third quarter of 2006,
approximately $115 million (33 cents per share) in the second quarter of 2006,
approximately $17 million (five cents per share) in the third quarter of 2005
and approximately $54 million (15 cents per share) in the first quarter of
2005.

Further detail on TELUS' fourth quarter results were included in the
Management's discussion and analysis contained in the February 2007 news
release, filed on SEDAR and EDGAR.

5.3 Consolidated results from operations

<TABLE>
<CAPTION>

($ in millions except EBITDA margin)	                                       Years ended December 31
								2006 			2005 			Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Operating revenues		                                8,681.0 		8,142.7 		6.6 %
Operations expense		                                5,022.9 		4,793.5 		4.8 %
Restructuring and workforce reduction costs		           67.8 		   53.9 		25.8 %
--------------------------------------------------------------------------------------------------------------------------------
EBITDA (1)		                                        3,590.3 		3,295.3 		9.0 %
Depreciation		                                        1,353.4 		1,342.6 		0.8 %
Amortization of intangible assets		                  222.2 		  281.1 	      (21.0)%
--------------------------------------------------------------------------------------------------------------------------------
Operating income		                                2,014.7 		1,671.6 	       20.5 %
--------------------------------------------------------------------------------------------------------------------------------
EBITDA margin (%) (2)		                                   41.4 		   40.5 	        0.9 pts

Total employees at end of period		               31,955 		       29,819 		        7.2 %
-------------------------------------------------------------------------------------------------------------------------------
<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>

The following discussion is for the consolidated results of TELUS. Further
detail by segment is provided for Operating revenues, Operations expense,
Restructuring and workforce reduction costs, EBITDA and Capital expenditures
in Section 5.4 Wireline segment results, Section 5.5 Wireless segment results
and Section 7.2 Cash used by investing activities - capital expenditures.

    Operating revenues

Consolidated Operating revenues increased by $538.3 million in 2006 when
compared with 2005. The increase was due to growth in wireless revenues and
wireline data revenues, which exceeded erosion in wireline voice local and
long distance revenues.

    Operations expense

Consolidated operations expense increased by $229.4 million in 2006 when
compared with 2005. Operations expense in 2005 included net labour disruption
expenses of approximately $133 million, which were primarily in the wireline
segment. Excluding labour disruption impacts, consolidated operations expenses
increased primarily due to growth in the wireless segment, increased wireline
advertising, promotions and costs of sales, and restructuring charges. The net
expense for defined benefit pension plans did not change significantly, as
favourable returns on plan assets in 2005 offset the use of a lower discount
rate for 2006.

The number of employees increased by 7.2%, reflecting growth in the wireless
segment and TELUS' wireline international call centre operations.

    Restructuring and workforce reduction costs

Restructuring and workforce reduction costs increased by $13.9 million in 2006
when compared to 2005. TELUS' estimate of restructuring and workforce
reduction costs in 2007, which arises from its competitive efficiency program
and includes the continued integration of wireline and wireless operations,
does not currently exceed $50 million.

    General

In 2005, the Company undertook a number of smaller initiatives, such as
operational consolidation, rationalization and integrations. These initiatives
aimed to improve the Company's operating and capital productivity. As at
December 31, 2006, no future expenses remain to be accrued or recorded under
the smaller initiatives, but variances from estimates currently recorded may
be recorded in subsequent periods. On November 24, 2005, the Company announced
the integration of its wireline and wireless operations, an initiative that
will continue into future years and is a component of the Company's
competitive efficiency program.

In the first quarter of 2006, arising from its competitive efficiency program,
the Company undertook a number of smaller initiatives, such as operational
consolidation, rationalization and integration. These initiatives are aimed to
improve the Company's operating productivity and competitiveness. For the year
ended December 31, 2006, $37.9 million of restructuring and workforce
reduction costs were recorded in respect of these smaller initiatives.

Also arising from its competitive efficiency program, the Company undertook an
initiative for a departmental reorganization and reconfiguration, resulting in
integration and consolidation. In the first quarter of 2006, approximately 600
bargaining unit employees 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). In the second
quarter of 2006, approximately 275 bargaining unit employees accepted either
the option of redeployment or participation in a voluntary departure program.
In 2006, $17.7 million of restructuring and workforce reduction costs were
recorded in respect of this initiative and were included with general programs
initiated in 2006. As at December 31, 2006, no future expenses remain to be
accrued or recorded under this initiative, but variances from estimates
currently recorded may be recorded in subsequent periods.

Continuing with its competitive efficiency program for the integration of
wireline and wireless operations, $12.2 million of restructuring and workforce
reduction costs were recorded for the year ended December 31, 2006 in respect
of this initiative and were included with general programs initiated in 2006.

    Office closures and contracting out

In connection with the collective agreement signed in the fourth quarter of
2005, 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 a component of the Company's competitive efficiency program and is aimed at
improving the Company's operating and capital productivity. 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).

As at December 31, 2006, 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, 2006.

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 a component of the Company's
competitive efficiency program and is aimed at allowing the Company to focus
its resources on those core functions that differentiate the Company for its
customers. The approximately 250 bargaining unit employees currently affected
by contracting out initiatives 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).

As at December 31, 2006, no future expenses remain to be accrued or recorded
under the letter 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.

    EBITDA

EBITDA increased by $295.0 million in 2006, when compared with 2005. Excluding
labour disruption expense impacts in 2005, consolidated EBITDA increased by
approximately $162 million due primarily to growth in the wireless segment,
partly offset by decreases in wireline segment EBITDA.

    Depreciation and amortization expenses

Depreciation expense increased by $10.8 million in 2006 when compared with
2005. The increase primarily reflected a fourth quarter provision of
approximately $17 million to align estimated useful lives for TELUS Quebec
assets upon integration of financial systems, partly offset by a reduction in
expense as more assets are fully depreciated.

Amortization of intangible assets decreased by $58.9 million in 2006 when
compared with 2005. The decrease was primarily as a result of several software
assets becoming fully amortized. In addition, the decrease included
approximately $17 million recorded in 2006 to recognize investment tax credits
following a determination of eligibility by a revenue authority, for assets
capitalized in prior years that are now fully amortized.

    Operating income

Operating income increased by $343.1 million in 2006, when compared with 2005,
due primarily to growth in EBITDA and reduced amortization of intangible
assets, as described above.

    Other income statement items

<TABLE>
<CAPTION>

Other expense, net							     Years ended December 31
($ millions)							2006 			2005 			Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
                                                         	28.0 		        18.4 		        52.2 %
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Other expense includes accounts receivable securitization expense, charitable
donations, gains and losses on disposal of real estate, and income (loss) or
impairments in equity or portfolio investments. The accounts receivable
securitization expense was $18.0 million in 2006, as compared to $7.3 million
in 2005. The increase resulted primarily from a higher balance of proceeds
from securitized accounts receivable in 2006 (see Section 7.6 Accounts
receivable sale). Net gains on the sale of investments and real estate in 2006
exceeded net gains in 2005, and charitable donations increased.

[graphs - interest on long-term and short-term debt; interest income]

<TABLE>
<CAPTION>

Financing costs								     Years ended December 31
($ millions)							2006 		        2005 		        Change
<S>								<C>			<C>			<C>
-------------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt:
  Before estimates for settlement of a lawsuit		        499.0 		        618.0 		         (19.3)%
  Estimates for settlement of a lawsuit		                  9.0 		         17.5 		         (48.6)%
Interest on short-term debt and other		                  2.6 		          8.2 		         (68.3)%
-------------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt, short-term obligations and other	510.6 		        643.7 		         (20.7)%
Loss on debt redemption		                                   -- 		         33.5 		        (100.0)%
Foreign exchange losses (gains)	                       	          6.4 		          4.6 		          39.1 %
Interest income		                                        (12.3)		        (58.7)		          79.0 %
--------------------------------------------------------------------------------------------------------------------------------
		                                                504.7 		        623.1 		         (19.0)%
=================================================================================================================================
</TABLE>

Interest on long-term debt, excluding estimates to settle a lawsuit, decreased
by $119.0 million in 2006, when compared with 2005. The decrease was due
primarily to early redemption of $1.578 billion of 7.50%, Series CA, Notes on
December 1, 2005, for which a $33.5 million loss on redemption was recorded in
2005. The decrease was also due to the conversion/redemption of convertible
debentures in the second quarter of 2005. Amounts totalling $26.5 million were
recorded in 2005 and 2006 in respect of court decisions in a lawsuit related
to a 1997 BC TEL bond redemption matter. See Section 10.9 Litigation and legal
matters. Debt, measured as the sum of Long-term debt, current maturities and
the net deferred hedging liability, was $5,767 million at December 31, 2006,
as compared to $5,803 million on December 31, 2005.

Increased interest expense associated with the May 2006 public issue of
$300 million of Notes was offset by a reduction in interest expense resulting
from replacement of certain previous cross currency interest rate swap
agreements associated with 2007 U.S. dollar Notes. The replacement swaps
have a lower effective fixed interest rate as well as a more favourable
effective fixed exchange rate. TELUS' hedging program using cross currency
swaps continues for its 2007 and 2011 U.S. dollar Notes.

Interest income decreased by $46.4 million in 2006, when compared with 2005,
due primarily to: (i) lower cash and temporary investments as available cash
balances were used for the December 2005 debt redemption; and (ii) recognition
of greater tax refund interest in 2005.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
Income taxes								      Years ended December 31
($ millions, except tax rates)		                        2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Blended federal and provincial statutory income tax
 based on net income before tax		                         497.3 		        352.3 		        41.2 %

Revaluation of future tax liability for change in statutory
 tax rates		                                        (107.0)		         (5.1)		          --

Tax rate differential on, and consequential adjustments
 from, reassessments for prior years		                 (40.3)		        (13.9)		          --

Changes in estimates of available deductible differences
 in prior years		                                            -- 		        (37.5)		          --

Other and large corporations tax		                   1.0 		         26.2 		          --

--------------------------------------------------------------------------------------------------------------------------------
		                                                 351.0 		        322.0 		         9.0 %
--------------------------------------------------------------------------------------------------------------------------------
Blended federal and provincial statutory tax rates (%)		  33.6 		         34.2 		        (0.6) pts
Effective tax rates (%)		                                  23.7 		         31.3 		        (7.6) pts
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The 41.2% increase in the blended federal and provincial statutory income tax
expense in 2006, when compared with 2005, relates primarily to the 43.9%
increase in income before taxes. The blended federal and provincial tax rate
for 2006 decreased from 2005 due primarily to a reduction in general corporate
income tax rates on income taxed in Alberta effective April 1, 2006, partly
offset by an increase in general corporate income tax rates in Quebec
beginning January 1, 2006.

The revaluation of net future income tax liabilities in 2006 arose from the
second quarter enactment of both lower federal tax rates for future years and
lower Alberta tax rates. The federal large corporations tax was eliminated
effective January 1, 2006. Reductions in tax expense also resulted from
reassessments for prior years and, in 2005, from changes in estimates of
available deductible differences in prior years.

Based on the assumption of the continuation of the rate of TELUS earnings, the
existing legal entity structure, and no substantive changes to tax
regulations, the Company expects to be able to substantially 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. Under the existing
legal entity structure, TELUS currently expects cash tax payments to be
minimal in 2007, increasing in 2008, with substantial cash tax payments in
2009. The blended federal and provincial statutory tax rate for 2007 is
expected to be approximately 33 to 34%.

<TABLE>
<CAPTION>

Non-controlling interests	                                             Years ended December 31
($ millions)		                                        2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
                                                 		8.5 		        7.8 		        9.0 %
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Non-controlling interests represents minority shareholders' interests in
several small subsidiaries.

[graphs - income before income taxes and non-controlling interest; net income]

5.4 Wireline segment results

<TABLE>
<CAPTION>

Operating revenues - wireline segment	                                      Years ended December 31
($ millions)		                                        2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Voice local		                                        2,119.8 		2,174.1 		(2.5)%
Voice long distance		                                  810.3 		  888.4 		(8.8)%
Data		                                                1,642.5 		1,533.4 		 7.1 %
Other		                                                  250.5 		  251.3 		(0.3)%
--------------------------------------------------------------------------------------------------------------------------------
External operating revenue		                        4,823.1 		4,847.2 		(0.5)%
Intersegment revenue		                                   98.3 		   90.4 		 8.7 %
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenue		                                4,921.4 		4,937.6 		(0.3)%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Network access lines
                                                                                  At December 31
(000s)		                                                2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Residential network access lines		                2,775 		        2,928 		         (5.2)%
Business network access lines		                        1,773 		        1,763 		          0.6 %
--------------------------------------------------------------------------------------------------------------------------------
Total network access lines(1)		                        4,548 		        4,691 		         (3.0)%

	                                                                     Years ended December 31
(000s)		                                                2006 		        2005 		        Change

Change in residential network access lines		        (153)		        (110)		         39.1 %
Change in business network access lines		                  10 		          (7)		         n.m.
---------------------------------------------------------------------------------------------------------------------------------
Change in total network access lines(1)		                (143)		        (117)		        (22.2)%
---------------------------------------------------------------------------------------------------------------------------------
<FN>
    n.m - not meaningful
(1) Network access lines are measured at the end of the reporting period based
    on information in billing and other systems. Consistent with the presentation
    for 2006, network access lines for 2005, and for the end of 2004, include a
    reclassification of approximately nine thousand from residential to business;
    no change was recorded in total access lines.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Internet subscribers
                                                                                   At December 31
(000s)		                                                2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
High-speed Internet subscribers					916.7 		        763.1 		         20.1 %
Dial-up Internet subscribers					194.1 		        236.1 		        (17.8)%
--------------------------------------------------------------------------------------------------------------------------------
Total Internet subscribers (1)				      1,110.8 			999.2 		         11.2 %

									      Years ended December 31
(000s)								2006 		        2005 		        Change
---------------------------------------------------------------------------------------------------------------------------------
High-speed Internet net additions				153.7 		         73.4 		        109.4 %
Dial-up Internet net reductions					(42.1)		        (45.5)		          7.5 %
--------------------------------------------------------------------------------------------------------------------------------
Total Internet subscriber net additions				111.6 		         27.9 		          n.m.
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Internet subscribers are measured at the end of the reporting period based on
    Internet access counts from billing and other systems.
</FN>
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Wireline segment revenues decreased by $16.2 million in 2006, when compared
with 2005.

*   Voice local revenue decreased by $54.3 million in 2006 when compared
    with 2005. The decrease was due primarily to lower revenues from basic
    access and optional enhanced services arising from increased competition
    for residential subscribers, partly offset by increased managed voice
    local services for business. In addition, the decrease included the
    impact of one-time regulatory recoveries of approximately $13 million
    recorded in the first quarter of 2005.

    Residential line losses included the effect of increased competition from
    resellers, VoIP competitors including cable-TV companies, technological
    substitution to wireless services, and a lower number of second lines
    resulting from migration of dial-up Internet subscribers to high-speed
    Internet service. In 2006, competitors' cable telephony was introduced in
    more places within TELUS' incumbent regions including Fort McMurray,
    Rimouski and Vancouver, while in 2005 cable telephony was available in
    Calgary (February 2005), Edmonton (April 2005) and Victoria (October
    2005). Total business lines increased in 2006 as growth in non-incumbent
    regions exceeded competitive losses and migration to more efficient ISDN
    (integrated services digital network) services in incumbent local
    exchange carrier (ILEC) regions. Business line losses in 2005 included
    the loss of a large wholesale business customer.

*   Voice long distance revenues decreased by $78.1 million in 2006 when
    compared with 2005. The decrease was due primarily to lower consumer and
    retail business minute volumes and prices, consistent with industry-wide
    trends of strong price competition and technological substitution (to
    Internet and wireless). In September 2006, the Company introduced a
    simpler set of domestic, North American and international long distance
    calling plans directly targeted to the usage patterns of customers. The
    plans are for various usage levels combining set per-minute rates with
    monthly subscription fees, and are designed to help retain and win back
    customers. Improved winback levels were achieved in the fourth quarter.

*   Wireline segment data revenues increased by $109.1 million in 2006 when
    compared with 2005. This growth was primarily due to increased Internet,
    enhanced data and hosting service revenues from growth in business
    services and high-speed Internet subscribers. Monthly rates for
    high-speed Internet services were raised by one dollar per month in the
    second quarter of 2006 for those customers not on rate protection plans,
    which contributed to an overall increase in average revenue per
    subscriber. Managed data revenues from the provision of business process
    outsourcing services to customers also increased. Basic data services and
    data equipment sales decreased, partly offset by increased broadcast and
    videoconferencing sales and services.

    The improvement in high-speed Internet subscriber net additions during
    2006 was due partly to new promotions, resulting in increased gross
    additions particularly for premium Internet services, which have a higher
    monthly rate. In addition, deactivations of existing high-speed Internet
    customers decreased. In contrast, the second half of 2005 was constrained
    by a labour disruption that limited installation activity.

*   Other revenue decreased by $0.8 million in 2006 when compared with
    2005, primarily due to a negative adjustment for reduced co-location DC
    power rates mandated by the CRTC to be retroactive to November 2000
    (Telecom Decision 2006-42-1). This was partly offset by lower quality of
    service rate rebates due to improvement in retail and competitor service
    levels in 2006 as compared to 2005 when the labour disruption adversely
    affected service levels. The Company applied to the CRTC in 2006 for an
    exclusion from quality of service rate rebates related to the 2005 labour
    disruption and severe flooding events; a decision by the CRTC on the
    exclusion application is expected in 2007. Voice equipment sales were
    relatively unchanged.

*   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 included non-ILEC revenues of $656.9 million
and $631.6 million, respectively, for 2006 and 2005, representing an increase
of 4.0% due primarily to growth in enhanced data and managed workplace service
revenues. Voice local revenues increased modestly, while voice and data
equipment sales decreased. Growth in revenues was partly offset by re-pricing
of renewal contracts and competitive pricing affecting new contracts.



<TABLE>
<CAPTION>

Operating expenses - wireline segment	                                      Years ended December 31
($ millions, except employees)					2006 			2005 			Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Salaries, benefits and
   other employee-related costs					 1,688.7 		 1,612.8 		 4.7 %
Other operations expenses					 1,331.8 	 	 1,418.6 		(6.1)%
--------------------------------------------------------------------------------------------------------------------------------
Operations expense						 3,020.5 		 3,031.4 		(0.4)%
Restructuring and workforce reduction costs			    61.6 		    53.9 		14.3 %
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses					 3,082.1 		 3,085.3 		(0.1)%
================================================================================================================================
Total employees at end of period (1)			        24,228 		        22,888 		         5.9 %
--------------------------------------------------------------------------------------------------------------------------------
<FN>
 (1) The number of employees in TELUS' international call centres was approximately
     4,890 on December 31, 2006 and 3,320 on December 31, 2005.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Total operating expenses decreased by $3.2 million 2006, when compared with
2005. Operations expenses, excluding labour disruption impacts in 2005,
increased by approximately $122 million due primarily to increased advertising
and promotion activity and cost of sales for higher subscriber loadings for
Internet services. Network support and maintenance activities increased due to
the use of contractors in the first quarter, facilitating clearance of backlogs
and freeing up TELUS staff to improve customer service. Quality-of-service
metrics defined by the CRTC improved during 2006. Excluding employment at
international call centres, the number of employees at December 31, 2006
decreased by approximately 230, when compared to one year earlier.

*   Salaries, benefits and employee-related expenses increased by
    $75.9 million in 2006 when compared with 2005. The increase was mainly a
    result of lower net expenses recorded in 2005 because of the labour
    disruption that lasted from late July to late November.

*   Other operations expenses decreased by $86.8 million in 2006 when
    compared with 2005, mainly due to the absence of labour disruption
    expenses in 2006. Labour disruption expenses in 2005 included third-party
    security and contractors. Aside from labour disruption impacts in 2005,
    other operations expenses increased when compared with 2005 due to: (i)
    advertising and promotions increases primarily for high-speed Internet
    offers and business advertising; (ii) increased product cost of sales
    consistent with increased high-speed Internet additions and business
    equipment sales (iii) increased expenses for outsourcing of non-core
    functions; (iv) increased facilities, transit and termination costs due
    to increased service demand and traffic volumes; and (v) increased
    network support and maintenance costs as a result of increased network
    elements to support new products and services and growth; net of (vi)
    reduced expenses for higher capitalization of labour associated with 2006
    capital programs.

*   Restructuring and work force reduction costs applicable to the wireline
    segment increased by $7.7 million in 2006, when compared with 2005.

Total expenses discussed above included non-ILEC expenses of $624.5 million
and $610.4 million, respectively, in 2006 and 2005, an increase of 2.3%.
Expense increases supporting the 4.0% growth in revenue included higher
salaries, benefits and employee-related costs, and increased contract and
consulting expenses, as well as higher facilities, transit and termination
costs to support increased data and voice services. These increases were party
offset by a lower cost of sales related to lower equipment sales revenue.

<TABLE>
<CAPTION>
EBITDA and EBITDA margin - wireline segment	                              Years ended December 31
		                                                2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
EBITDA ($ millions)		                                1,839.3 		1,852.3 		(0.7)%
EBITDA margin (%)		                                   37.4 		   37.5 		(0.1) pts
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireline segment EBITDA decreased by $13.0 million in 2006 when compared with
2005. The decrease was net of an $11.2 million improvement in non-ILEC EBITDA
in 2006 when compared to 2005. Excluding labour disruption impacts, total
wireline EBITDA decreased by approximately $146 million in 2006 when compared
to 2005. The decrease was due mainly to increased competition for local
services and continued long distance revenue erosion, as well as an increase
in advertising, promotions and cost of sales. For the full year, the increased
network support and maintenance costs, and increased restructuring charges
contributed to reduce EBITDA.

5.5 Wireless segment results

<TABLE>
<CAPTION>
Operating revenues - wireless segment	                                       Years ended December 31
($ millions)		                                        2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Network revenue		                                        3,605.5 		3,064.6 		17.6 %
Equipment revenue		                                  252.4 		  230.9 		 9.3 %
--------------------------------------------------------------------------------------------------------------------------------
External operating revenue		                        3,857.9 		3,295.5 		17.1 %
Intersegment revenue		                                   23.4 		   23.5 		(0.4)%
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenue		                                3,881.3 		3,319.0 		16.9 %
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Key operating indicators - wireless segment

(000s)										 As at December 31
								2006 		        2005 		        Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Subscribers - postpaid						4,078.6 		3,666.8 		 11.2 %
Subscribers - prepaid						  977.3 		  853.9 		 14.5 %
---------------------------------------------------------------------------------------------------------------------------------
Subscribers - total(1) 						5,055.9 		4,520.7 		 11.8 %
Digital POPs(2) covered including
    roaming/resale (millions)(3)				   31.0 		   30.6 		  1.3 %

	                                                                      Years ended December 31
(000s)		                                                2006 		        2005 		        Change
---------------------------------------------------------------------------------------------------------------------------------
Subscriber gross additions - postpaid				  837.5 		  870.3 		 (3.8)%
Subscriber gross additions - prepaid				  455.5 		  408.7 	 	 11.5 %
---------------------------------------------------------------------------------------------------------------------------------
Subscriber gross additions - total				1,293.0 		1,279.0 		  1.1 %

Subscriber net additions - postpaid				  411.8 		  426.5 		 (3.4)%
Subscriber net additions - prepaid				  123.4 		  157.8 	        (21.8)%
---------------------------------------------------------------------------------------------------------------------------------
Subscriber net additions - total				  535.2 		  584.3 		 (8.4)%
Churn, per month (%)(4)(5)					    1.33 		    1.39 		(0.06) pts
COA(6) per gross subscriber addition ($)(4)			    412 		    386 		  6.7 %
ARPU ($)(4)							   63.46 		   61.51 		  3.2 %
Average minutes of use
per subscriber per month (MOU)		                           403 		            399 		  1.0 %
EBITDA to network revenue (%)		                           48.6 		   47.1 	          1.5 pts
Retention spend to network revenue (4) (%)	        	    6.7 		    6.0 	          0.7 pts
EBITDA ($ millions)		                                1,751.0 		1,443.0 		 21.3 %
EBITDA excluding COA ($ millions)(4)		                2,283.6 		1,937.3 		 17.9 %
=================================================================================================================================
<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 abbreviation 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, 2006, TELUS' wireless PCS digital population coverage
    included expanded coverage of approximately 7.5 million PCS POPs due to
    roaming/resale agreements principally with Bell Canada.
(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) A change in business policy early in 2006, requiring postpaid
    customers to provide 30 days notice prior to deactivation, resulted in a
    one-time deferral of approximately 4,800 deactivations. Excluding this
    one-time positive impact, the churn rate was 1.34% in 2006.
(6) Cost of acquisition.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireless segment revenues increased by $562.3 million in 2006 when compared
with 2005, due to the following:

*   Network revenue increased by $540.9 million in 2006, when compared to
    2005, as a result of the 11.8% expansion of the subscriber base combined
    with increased average revenue per subscriber unit per month. ARPU
    increased by $1.95 in 2006, when compared to 2005, principally due to
    increased data usage and higher voice minutes of use per subscriber per
    month (MOU). ARPU has increased for four consecutive years.

    Data revenues in 2006 increased to 7.8% of Network revenue, or
    $279.9 million, as compared with 4.3% of Network revenue, or
    $130.6 million, in 2005 - reflecting a growth rate of 114.3%. Data ARPU
    increased by 88.8% to $4.89 in 2006 when compared with $2.59 in 2005.
    This growth was principally related to text messaging, PDA devices,
    mobile computing, Internet browser activities and pay-per-use downloads
    such as ringtones, music, games and videos.

    At December 31, 2006, postpaid subscribers represented 80.7% of the total
    cumulative subscriber base, remaining relatively stable from one year
    earlier. Postpaid subscriber net additions improved to 76.9% of all net
    additions when compared with 73.0% of all net additions for the same
    period in 2005.

    The blended churn rate in 2006 was 1.33% as compared with 1.39% in 2005.
    The postpaid monthly churn rate for 2006 was less than one per cent, an
    improvement from 2005, while the prepaid churn rate increased slightly in
    2006 when compared with 2005. Total deactivations were 757,800 in 2006 as
    compared to 694,700 in 2005, which primarily reflects the growing
    subscriber base. The improved churn and favourable subscriber net
    addition mix reflect the continued focus on profitable subscriber growth
    and retention.

*   Equipment sales, rental and service revenue increased by $21.5 million
    in 2006, when compared to 2005. The increase was due mainly to continued
    subscriber growth and increased retention activity. Gross subscriber
    additions were 1,293,000 in 2006 as compared with 1,279,000 in 2005.
    Handset revenues associated with gross subscriber activations are
    included in COA per gross subscriber addition, while handset revenues
    associated with retention efforts are included in the overall retention
    spend amount.

*   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>
Operating expenses - wireless segment                                  	      Years ended December 31
($ millions, except employees)					2006 			2005 			Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
Equipment sales expenses					  574.9 	  	  478.9 		20.0 %
Network operating expenses					  451.2 		  392.2 		15.0 %
Marketing expenses					 	  422.5 	 	  403.7 		 4.7 %
General and administration expenses				  675.5 		  601.2 		12.4 %
--------------------------------------------------------------------------------------------------------------------------------
Operations expense					        2,124.1 	        1,876.0 		13.2 %
Restructuring and workforce reduction costs			    6.2 		     -- 	         n.m.
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses					2,130.3 		1,876.0 		13.6 %
=================================================================================================================================
Total employees at end of period				7,727 		        6,931 		        11.5 %
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireless segment total operating expenses increased by $254.3 million in 2006,
when compared with 2005, to promote, retain and support the 11.8% growth in
the subscriber base and increase in Network revenue.

*   Equipment sales expenses increased by $96.0 million in 2006, when
    compared to 2005, due principally to an increase in gross subscriber
    activations, higher handset costs related to product mix, and increased
    retention activity. Handset costs associated with gross subscriber
    activations are included in COA per gross subscriber addition. Handset
    costs related to retention efforts, ahead of the implementation of
    wireless number portability (WNP) in early 2007, are included in the
    overall retention spend amount.

*   Network operating expenses increased by $59.0 million in 2006, when
    compared to 2005. The increase was principally due to higher roaming
    volumes combined with transmission and site-related expenses to support
    the greater number of cell sites, a larger subscriber base, third-party
    data content providers, and improved network quality and coverage.
    Moreover, network operating expenses in 2005 included competitive digital
    network services discounts arising from CRTC Decision 2005-6 as well as a
    $5.3 million credit related to years 2003 to 2005, which reflected the
    December 6, 2005 Federal Court ruling that TELUS should not be required
    to include wireless revenues in the calculation of telecommunications
    fees payable to the CRTC.

*   Marketing expenses increased by $18.8 million in 2006 when compared
    with 2005. COA per gross subscriber addition increased by $26 in 2006
    when compared with 2005, principally due to higher subsidies on certain
    popular handsets driven by competitive activity, increased dealer
    compensation costs related to the higher gross subscriber additions, and
    higher advertising and promotion spending related to new product
    launches. In 2006, lifetime revenue per subscriber increased by $346 to
    $4,771. COA as a percentage of lifetime revenue was 8.6% in 2006,
    representing a record low for TELUS and reflecting continued execution of
    its profitable growth strategy.

*   General and administration expenses increased by $74.3 million in 2006,
    when compared to 2005, due principally to the increase in employees to
    support the significant growth in the subscriber base and continued
    expansion of the client care team and Company-owned retail stores.
    Moreover, occupancy and client-related costs were higher as well as bad
    debts expense related to increased write-offs.

*   Restructuring and workforce reduction costs were related to staff
    reductions associated with the integration of the wireline and wireless
    operations.



<TABLE>
<CAPTION>
EBITDA and EBITDA margin -
wireless segment 	                                                       Years ended December 31
								2006 			2005 			Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
EBITDA ($ millions)		                                1,751.0 		1,443.0 		21.3 %
EBITDA margin (%)		                                   45.1 		43.5 		         1.6 pts
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Wireless segment EBITDA increased by $308.0 million in 2006, when compared to
2005, as a result of the strong revenue growth, partially offset by higher COA
per gross subscriber addition, increased retention investment ahead of the
implementation of wireless number portability in 2007 and increased operations
expense to support growth. The EBITDA margin, when calculated as a percentage
of Network revenue, was a TELUS record at 48.6% in 2006 (47.1% in 2005).

6. Financial condition

The following are the significant changes in the Consolidated balance sheets
in the year ended December 31, 2006.

<TABLE>
<CAPTION>
		                   Dec. 31,    Dec. 31,	   Change     % Change 	  Explanation of the change in balance
($ millions)		            2006 	2005
<S>				    <C>	     	<C>	   <C>	       <C>	  <C>
--------------------------------------------------------------------------------------------------------------------------------
Current Assets				                                          The balance of cash and temporary investments
  Cash and temporary                   (11.5) 	     8.6      (20.1)	  n.m.    at December 31, 2006 represents net cheques in
  investments, net                                                                circulation and overdrafts after deduction of
  		        	                                                  cash balances. See Section 7: Liquidity and
                                                                                  capital resources
  Short-term investments	       110.2 	      --       110.2   	  n.m. 	  Investments of surplus cash
  Accounts receivable		       707.2 	   610.3       96.9 	 15.9 %	  Primarily growth in the wireless business and
                                                                                  accrued inducements for renegotiated leases
  Income and other taxes                95.4 	   103.7       (8.3) 	 (8.0)%	  Refunds of $127 million including interest we
  receivable		                                                          received, net of an increase for recent
                                                                                  reassessments and investment tax credit
                                                                                  accruals
  Inventories		               196.4 	   138.8       57.6 	 41.5 %	  An increase in wireless handset inventories due
                                                                                  to the introduction of several new handsets and
                                                                                  lower than anticipated gross subscriber
                                                                                  additions in the fourth quarter
  Prepaid expenses and other 	       195.3 	   154.7       40.6 	 26.2 %	  Includes the deferred loss on termination
                                                                                  and replacement of cross currency interest
                                                                                  rate swaps, prepaid licences and insurance
  Deferred hedging asset	        40.4 	      --        40.4 	  n.m. 	  New hedges entered into for 2007 U.S. dollar
                                                                                  Notes had favourable exchange rates compared
                                                                                  to the rate at the balance sheet date. See Note
                                                                                  17(b) of the Consolidated financial statements
  Current portion of future               -- 	   226.4     (226.4)   (100.0)%   Refer to current liabilities section below
  income taxes
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities		     1,363.6 	 1,393.7      (30.1)	 (2.2)%   Primarily reduced payroll and employee-related
  Accounts payable and                                                            liabilities
  accrued liabilities
  Income and other taxes payable	10.3 	      --        10.3 	  n.m. 	  Provincial capital taxes and foreign income
                                                                                  taxes payable over the next 12 months
  Restructuring and workforce           53.1 	    57.1       (4.0)     (7.0)%   Payments under previous and current programs
  reduction accounts payable                                                      andexceeded new obligations
  accrued liabilities
  Advance billings and customer        606.3 	   571.8       34.5 	  6.0% 	  Increased billings, price cap deferred revenue
  deposits                                                                        and activation and connection fees
  Current maturities of long-term    1,434.4 	    5.0     1,429.4       n.m.    Includes $70 million of 7.1% TCI medium-term
  debt		                     	                                          Notes maturing in February 2007 and $1,359
                                                                                  million of 7.5% TELUS Corporation U.S. dollar
                                                                                  Notes due June 2007
  Current portion of deferred          165.8 	     -- 	      165.8       n.m.    Reclassified from long-term liabilities for
  hedging liability		       		      	                          2007 U.S. dollar Notes
  Current portion of future             93.2 	     -- 	       93.2  	  n.m.    The tax effect of differences between the
  income taxes		                	                                  accounting and tax basis of working capital,
                                                                                  net of losses available for deduction within
                                                                                  the next 12 months
--------------------------------------------------------------------------------------------------------------------------------
Working capital (1)		   (2,393.3)	 (785.1)   (1,608.2)	  n.m. 	  Includes an increase in the current portions
                                                                                  of long-term debt - see Section 9.3 Financing
                                                                                  plan for 2007
--------------------------------------------------------------------------------------------------------------------------------
<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>


<TABLE>
<CAPTION>
Table continued from the previous page.
--------------------------------------------------------------------------------------------------------------------------------
		                    Dec. 31,	Dec. 31,   Change     Change 	  Explanation of the change in balance
($ millions)		            2006 	2005
<S>				    <C>		<C>	   <C>	       <C>	  <C>
--------------------------------------------------------------------------------------------------------------------------------
Capital Assets, Net		    10,982.1 	10,941.5       40.6       0.4 %   See Sections 5.3 Consolidated results from
                                                                                  operations - Depreciation and amortization and
                                                                                  7.2 Cash used by investing activities - Capital
                                                                                  expenditures
--------------------------------------------------------------------------------------------------------------------------------
Other Assets
  Deferred charges		       976.5 	   850.2      126.3 	 14.9 %	  Primarily pension plan contributions in excess
                                                                                  of charges to income
  Investments		                35.2 	    31.2 	4.0 	 12.8 %	  New investments net of divestitures
  Goodwill		             3,169.5 	 3,156.9       12.6 	  0.4 %	  The acquisition of FSC Internet Corp. and an
                                                                                  increase in economic interest in Ambergris
                                                                                  (international call centre operations) to 97.4%
                                                                                  partly offset by a reclassification of goodwill
                                                                                  to a reduction of the current future income tax
                                                                                  liability for a change in estimate of available
                                                                                  tax losses for prior years
--------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt		             3,493.7 	 4,639.9   (1,146.2)    (24.7)%	  Primarily a reclassification to current
                                                                                  maturities of TCI medium-term Notes maturing in
                                                                                  February 2007 and TELUS Corporation U.S. dollar
                                                                                  Notes due June 2007, partly offset by the public
                                                                                  issue in May 2006 of $300 million 5.00%, Series
                                                                                  CB Notes
--------------------------------------------------------------------------------------------------------------------------------
Other Long-Term Liabilities	     1,257.3 	 1,635.3     (378.0)	(23.1)%	  Primarily a reduction in the deferred hedging
                                                                                  liability through:
                                                                                  * Replacement of previous cross currency
                                                                                    interest rate swap agreements associated with
                                                                                    2007 (U.S. dollar) Notes with a like amount
                                                                                    of new cross currency interest rate swap
                                                                                    agreements, which have a lower effective
                                                                                    fixed interest rate and a lower effective
                                                                                    fixed exchange rate. See Note 17(b) of the
                                                                                    Consolidated financial statements; and
                                                                                  * Reclassification of $165.8 million to current
                                                                                    liabilities;
                                                                                  partly offset by deferred lease inducements
                                                                                  from renegotiated building leases
--------------------------------------------------------------------------------------------------------------------------------
Future Income Taxes	  	     1,067.3 	 1,023.9       43.4       4.2 %	  An increase in temporary differences for long-
                                                                                  term assets and liabilities net of a
                                                                                  revaluation of liabilities at lower enacted
                                                                                  future income tax rates
---------------------------------------------------------------------------------------------------------------------------------
Non-Controlling Interests	        23.6 	    25.6       (2.0)	 (7.8)%	  --
--------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common equity		             6,928.1 	 6,870.0       58.1 	  0.8 %	  Increased primarily from:
                                                                                  * Net income in 2006 of $1,122.5 million; and
                                                                                  * An increase of $118.5 million in Common Share
                                                                                    and Non-Voting Share capital for the exercise
                                                                                    of options;
                                                                                  partly offset by:
                                                                                  * Normal course issuer bid expenditures of
                                                                                    $800.2 million; and
                                                                                  * Dividends of $411.7 million
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7. Liquidity and capital resources

7.1 Cash provided by operating activities


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
($ millions)	                                                              Years ended December 31
								2006 			2005 			Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
								2,803.7 		2,914.6 		(3.8)%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash provided by operating activities decreased by $110.9 million in 2006,
when compared with 2005. The decrease was primarily due to the following:

*   Proceeds from securitized accounts receivable were unchanged in 2006
    compared with an increase of $350 million in 2005;

*   Short-term investments increased by $110.2 million;

*   Employer contributions to employee defined benefits plans were
    $123.3 million in 2006, an increase of $4.5 million, when compared with
    2005. The best estimate of fiscal 2007 employer contributions to the
    Company's defined benefit pension plans is approximately $111 million;

*   Interest received decreased by $23.1 million in 2006, when compared to
    2005, due primarily to lower cash balances in 2006; and

*   Other changes in non-cash working capital.

The above decreases were partly offset by the following:

*   EBITDA increased by $295.0 million in 2006 when compared to 2005, as
    described in Section 5: Results from operations;

*   Income taxes received net of installment payments increased by
    $28.8 million in 2006, when compared to 2005, due mainly to collection of
    income taxes receivable during 2006; and

*   Interest paid decreased by $122.2 million in 2006, when compared to
    2005. The decrease was due mainly to the early redemption of notes on
    December 1, 2005. Interest paid in 2006 included a $31.2 million payment
    in respect of the termination of cross currency interest rate swaps, as
    well as a partial payment of previously accrued interest in respect of a
    court decision in a lawsuit over a BC TEL bond redemption matter dating
    back to 1997.

    [graphs - cash provided by operating activities; cash used by investing
              activities]

7.2 Cash used by investing activities

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
($ millions)	                                                              Years ended December 31
                                                                2006 			2005	 		Change
<S>								<C>			<C>			<C>
---------------------------------------------------------------------------------------------------------------------------------
								1,675.2 		1,355.2 		23.6 %
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash used by investing activities increased by $320.0 million in 2006, when
compared with 2005, due primarily to greater capital expenditures. Funds used
for small acquisitions increased $19.6 million in 2006, when compared with
2005. Assets under construction increased to $725.4 million at December 31,
2006, compared with $516.4 million at December 31, 2005, due to capitalized
costs related to development of a new wireline billing system as well as
in-progress costs for TELUS TV and network enhancement.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Capital expenditures	                                                     Years ended December 31

($ in millions, except capital expenditure intensity)		2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Wireline segment		                                1,191.0 		914.2 		        30.3 %
Wireless segment		                                  427.4 		404.8 		         5.6 %
--------------------------------------------------------------------------------------------------------------------------------
TELUS consolidated		                                1,618.4 	      1,319.0 		        22.7 %
--------------------------------------------------------------------------------------------------------------------------------
Capital expenditure intensity(1) (%)		                   18.6 		 16.2 		         2.4 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>

TELUS' EBITDA less capital expenditures (see Section 11.1 EBITDA for the
calculation) decreased by 0.2% to $1.97 billion as growth in EBITDA largely
offset increased capital expenditures.

*   Wireline segment capital expenditures increased by $276.8 million in
    2006, when compared to 2005, due primarily to increased ILEC
    expenditures, which increased by approximately $272 million to
    $1,071 million in 2006. The increased ILEC spending was directed
    primarily to investments in the broadband networks in B.C., Alberta and
    Quebec, network access growth to serve strong housing growth in B.C. and
    Alberta, TELUS TV and service development. To a lesser extent, there was
    a deferral of activity from 2005 to 2006 due to the 2005 labour
    disruption. The remaining increases supported non-incumbent operations.

    The wireline segment capital expenditure intensity ratio was 24.2% in 2006,
    compared with 18.5% in 2005. This increase was caused by reduced capital
    expenditures during the 2005 labour disruption as well as higher planned
    expenditures levels in 2006. For these reasons, wireline cash flow (EBITDA
    less capital expenditures) decreased by approximately 31% to $648.3 million
    in 2006, when compared to 2005.

*   Wireless segment capital expenditures increased by $22.6 million in
    2006, when compared with 2005, due principally to strategic investments
    in next generation EVDO-capable higher-speed wireless network technology
    and continued enhancement of digital wireless capacity and coverage.
    Capital expenditure intensity for the wireless segment was 11.0% in 2006,
    as compared with 12.2% in 2005. Wireless cash flow (EBITDA less capital
    expenditures) set a TELUS full year record at $1,323.6 million, an
    increase of 27.5% from 2005.

7.3 Cash used by financing activities

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
($ millions)	                                                             Years ended December 31
								2006 		        2005 		        Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
								1,148.6 		2,447.3 		(53.1)%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Cash used by financing activities decreased by $1,298.7 million in 2006, when
compared with 2005. Financing activities included:

*   Proceeds from Common Shares and Non-Voting Shares issued were
    $104.5 million in 2006, a decrease of $114.9 million when compared to
    2005. The decrease was due mainly to a smaller number of options being
    exercised in 2006 and implementation of the net equity settlement feature
    on May 1, 2006.

*   Cash dividends paid to shareholders were $411.7 million in 2006, an
    increase of $99.5 million when compared with 2005. The increase was due
    to the higher quarterly dividend paid per share, partly offset by lower
    average shares outstanding.

*   Consistent with its intent to return surplus cash to shareholders, the
    Company renewed its NCIB program, which has been in place since December
    2004. The renewed program (Program 3) came into effect on December 20,
    2006 and is set to expire on December 19, 2007. The maximum number of
    shares that may be purchased under Program 3 is 12 million Common Shares
    and 12 million Non-Voting Shares. The shares are purchased on the Toronto
    Stock Exchange (TSX) and all repurchased shares will be cancelled.
    Investors may obtain a copy of the notice filed with the TSX without
    charge by contacting TELUS Investor Relations.

    The Company repurchased 73% of the maximum shares allowed under the
    program that ended December 19, 2006 (Program 2) and 85% of the maximum
    shares allowed under the program that ended December 19, 2005 (Program
    1).


<TABLE>
<CAPTION>

Normal course issuer bid programs
--------------------------------------------------------------------------------------------------------------------------------
	                                       Shares repurchased		     Purchase cost ($ millions)
--------------------------------------------------------------------------------------------------------------------------------
By fiscal year and program
                                                                                    Charged to       Charged to
                                      Common	    Non-Voting                     Share capital   Retained earnings
                                      Shares          Shares           Total            (1)             (2)            Paid
<S>					<C>		<C>		<C>		<C>		<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
2004
Program 1 beginning Dec. 20		   755,711       1,451,400	 2,207,111	 39.4 	           38.6 	   78.0
--------------------------------------------------------------------------------------------------------------------------------
2005
Program 1 ending Dec. 19	         9,503,300	10,048,600	19,551,900	330.1 	          504.5           834.6
Program 2 beginning Dec. 20	           634,469	   607,700	 1,242,169	 20.9 	           36.6 	   57.5
--------------------------------------------------------------------------------------------------------------------------------
		                        10,137,769	10,656,300	20,794,069	351.0 	          541.1 	  892.1
---------------------------------------------------------------------------------------------------------------------------------
2006
Program 2 ending Dec. 19		 5,490,600	10,701,400	16,192,000	297.6 	          492.8 	  790.4
Program 3 beginning Dec. 20		        --	186,723	           186,723	  4.0 	            5.8 	    9.8
---------------------------------------------------------------------------------------------------------------------------------
		                         5,490,600	10,888,123	16,378,723	301.6 	          498.6    	  800.2
---------------------------------------------------------------------------------------------------------------------------------
Totals
Program 1		                10,259,011	11,500,000	21,759,011	369.5 	          543.1 	  912.6
Program 2		                 6,125,069	11,309,100	17,434,169	318.5 	          529.4 	  847.9
Program 3		                        --          186,723	   186,723	  4.0 	            5.8 	    9.8
---------------------------------------------------------------------------------------------------------------------------------
Cumulative		                16,384,080	22,995,823	39,379,903	692.0 	        1,078.3         1,770.3
=================================================================================================================================
<FN>
(1) Represents the book value of shares repurchased.
(2) Represents the cost in excess of the book value of shares repurchased.
</FN>
</TABLE>

*   Long-term debt issues in 2006 included the May 2006 public issue of
    $300 million 5.00%, Series CB Notes at a price of $998.80 per $1,000.00
    of principal, which mature in 2013. See Note 17(b) of the Consolidated
    financial statements. The net proceeds of the offering were used to
    terminate cross currency swap agreements. The remaining debt issues in
    2006 were mainly periodic draws on the TELUS Corporation credit
    facilities, which were offset by periodic repayments of the credit
    facilities. On December 1, 2005, $1.578 billion of Canadian dollar
    Notes were redeemed early. On a net basis, the amount drawn from credit
    facilities at December 31, 2006 decreased by $21 million since
    December 31, 2005.

*   A partial payment of $309.4 million of the deferred hedging liability
    was completed in the second quarter of 2006. In contemplation of the
    planned refinancing of the 2007 U.S. dollar Notes, in May 2006, the
    Company replaced approximately 63% of the notional value of the existing
    cross currency interest rate swap agreements with a like amount of new
    cross currency interest rate swap agreements, which have a lower
    effective fixed interest rate and a lower effective fixed exchange rate.
    This replacement happened concurrent with the issuance of the 2013
    Canadian dollar Notes; the two transactions had the composite effect of
    deferring, from June 2007 to June 2013, the payment of $300 million,
    representing a portion of the amount that would have been due either
    under the cross currency interest rate swap agreements or to the 2007
    U.S. dollar Note holders (to whom the amounts would ultimately have
    been paid would depend upon changes in interest and foreign exchange
    rates over the period to maturity of the underlying debt).

    [graphs - debt reduction, net; cash returned to shareholders]

7.4 Liquidity and capital resource measures
<TABLE>
<CAPTION>

As at, or years ended, December 31				2006 			2005 			Change
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF DEBT AND COVERAGE RATIOS (1)
 ($ millions)
Net debt (including securitized accounts receivables)		 6,278.1 		 6,294.4 		(16.3)
Total capitalization - book value		                13,229.8 		13,190.0 		 39.8

EBITDA excluding restructuring and workforce
 reduction costs	                                         3,658.1 		 3,349.2 		 308.9
Net interest cost		                                   504.7 		   623.1 		(118.4)

DEBT RATIOS
Fixed-rate debt as a proportion of total
 indebtedness (%)		                                    90.6 		    89.8 		   0.8 pts
Average term to maturity of debt (years)		             4.5 		     5.4 		  (0.9)

Net debt to total capitalization (%) (1)	  	            47.5 		    47.7 		  (0.2) pts
Net debt to EBITDA (1) (3)		                             1.7 		     1.9 		  (0.2)

COVERAGE OF RATIOS (1)
Interest coverage on long-term debt		                     3.9 		     2.5 		   1.4
EBITDA (3) interest coverage		                             7.2 		     5.4 		   1.8

OTHER MEASUIRES
Free cash flow ($ millions) (2)		                        1,600.4 	         1,465.5 		 134.9
Dividend payout ratio (%) (1)		                           46 			    56 			 (10) pts

--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Section 11.4 Definition of liquidity and capital resource measures.
(2) See Section 11.2 Free cash flow.
(3) EBITDA excluding restructuring.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TELUS revised the definition of net debt to include securitized accounts
receivable to be more consistent with the practice of credit rating agencies.
Total capitalization increased from higher common equity (mainly increased
retained earnings net of lower share capital). The net debt to EBITDA ratio
measured at December 31, 2006 improved primarily as a result of higher EBITDA.
The average term to maturity of debt is now less than five years as more debt
was redeemed than issued over the course of 2005 and 2006. See Section 9.3
Financing plan for 2007.

Interest coverage on long-term debt improved by 0.9 because of lower interest
expense, and improved by 0.5 because of increased income before taxes and
interest expense. The EBITDA interest coverage ratio improved by 1.3 due to
lower net interest cost and improved by 0.5 due to higher EBITDA (excluding
restructuring). The free cash flow measure improved for the year ended
December 31, 2006 primarily because increased EBITDA and lower interest paid
were partly offset by increased capital expenditures. The dividend payout
ratio for December 31, 2006 was near the low end of the target guideline of 45
to 55% for sustainable net earnings due mainly to the inclusion in actual
earnings of positive impacts from 2006 tax rate changes and tax recoveries.
The dividend payout ratio was about 54% when calculated excluding these 2006
income tax items. The dividend payout ratio for December 31, 2005 was higher
than the target guideline due primarily to the inclusion in actual earnings of
after-tax labour disruption expenses.

During 2006, the Company's strategy, which was unchanged from 2005, was to
maintain the liquidity measures set out below. The Company believes that these
liquidity measure targets are currently at the optimal level and provide
access to capital at a reasonable cost by maintaining credit ratings in the
range of BBB+ to A-, or the equivalent.

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 to 2.0 times; and

*   Dividend payout ratio of 45 to 55% of sustainable net earnings.

    [graphs - net debt to total capitalization; net debt to EBITDA]

7.5 Credit facilities

TELUS had available liquidity from unutilized credit facilities of more than
$1.4 billion at December 31, 2006.

<TABLE>
<CAPTION>

Credit facilities                                                                                          Outstanding
At December 31, 2006                                                                                     undrawn letters
($ in millions)					   Expiry	        Size	           Drawn	    of 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		    120.0		100.1
Other bank facilities		                             --		   74.0		      1.2		  2.6
---------------------------------------------------------------------------------------------------------------------------------
Total		                                             --		1,674.0		    121.2		102.7

=================================================================================================================================
<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, 2006)
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 7.4:1 at
December 31, 2006) 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. Historically, the calculations have not
been materially different. The covenants are not impacted by revaluation of
capital assets, intangible assets and goodwill for accounting purposes.
Continued access to TELUS' credit facilities is not contingent on the
maintenance by TELUS of a specific credit rating.

TELUS has received commitments from a syndicate of 18 financial institutions
that are expected to result in a new $2 billion credit facility being
established, subject to completion of documentation and normal conditions
precedent. This new facility would replace the $1.6 billion of existing credit
facilities. The new credit facility is expected to have more favourable terms
and mature in 2012. The use of proceeds is for general corporate purposes, and
proceeds may be used to back up commercial paper issuance.

7.6 Accounts receivable sale

On July 26, 2002, TCI, a wholly owned subsidiary of TELUS, entered into an
agreement, which was amended September 30, 2002, March 1, 2006, and November
30, 2006, with an arm's-length securitization trust under which TCI 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 had
an initial term ending July 18, 2007; the November 30, 2006 amendment resulted
in the term being extended to July 18, 2008.

TCI is required to maintain at least a BBB (low) credit rating by Dominion
Bond Rating Service Limited (DBRS) or the securitization trust may require the
sale program to be wound down. The necessary credit rating was exceeded by
three levels at A (low) as of February 14, 2007. The balance of proceeds from
securitized receivables varied between $325 million and $535 million during
2006, closing at $500 million on December 31, 2006. Balances in 2005 were
$150 million from January 1 to November 29 (the minimum necessary to keep this
program active), and $500 million for the rest of the year.

7.7 Credit ratings

As of February 14, 2007 TELUS and TCI investment grade credit ratings were
unchanged from those reported in TELUS' 2005 annual Management's discussion
and analysis in Section 7.7. However, in November 2006, Moody's Investors
Service affirmed its rating of Baa2 and placed TELUS under review for possible
upgrade. 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(2)	        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.
(2) Under review for possible upgrade.
</FN>
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7.8 Off-balance sheet arrangements, commitments and contingent liabilities

Financial instruments (Note 5 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, short-term
obligations, long-term debt, interest rate swap agreements, share-based
compensation cost hedges and foreign exchange hedges.

The Company uses various financial instruments, the fair values of some of
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 and cash settled options; effective January 1, 2007,
the fair values of all such financial instruments will be reflected on the
balance sheets. These instruments are accounted for on the same basis as the
underlying exposure being hedged. The majority of the notional value of these
instruments was added during 2001 and pertains to TELUS' U.S. dollar
borrowing. During the second quarter of 2006, the Company terminated a number
of cross currency interest rate swap agreements and entered into new cross
currency interest rate swap agreements in respect of the Company's U.S. dollar
Notes maturing in June 2007.

Use of these instruments is subject to a policy, which requires that no
derivative transaction be entered into for the purpose of establishing a
speculative or a levered position, and sets criteria for the creditworthiness
of the transaction counterparties.

    Price risk

Interest rates: 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. In contemplation of the planned refinancing of
the debt maturing June 1, 2007, the Company has entered into forward starting
interest rate swap agreements that, as at December 31, 2006, have the effect
of fixing the underlying interest rate on up to $500 million of replacement
debt. Hedge accounting has been applied to these forward starting interest
rate swap agreements.

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.

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, 2006, the Company had entered into foreign currency forward
contracts that have the effect of fixing the exchange rates on U.S. $13
million of fiscal 2007 purchase commitments; hedge accounting has been applied
to these foreign currency forward contracts, all of which relate to the
wireless segment.

Other: the Company is exposed to a market risk with respect to its short-term
investments in that the fair value will fluctuate because of changes in market
prices.

    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 substantially 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, foreign
exchange hedges and share-based compensation cost 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 non-performance 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 assets.

    Fair value

The carrying value of cash and temporary investments, accounts receivable,
accounts payable, restructuring and workforce reduction accounts 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.

<TABLE>
<CAPTION>

As at December 31			                                    2006		                     2005
--------------------------------------------------------------------------------------------------------------------------------
($ millions)	                               Hedging
                                                item
                                               maximum
	                                       maturity        Carrying 	               Carrying
                                                 date           amount	     Fair value         amount	      Fair value
<S>					         <C>		 <C>		 <C>		 <C>		 <C>
--------------------------------------------------------------------------------------------------------------------------------
Liabilities
  Long-term debt
  Principal				                         4,928.1         5,535.9         4,644.9 	 5,371.6
  Derivatives(1)(2) used to manage interest
   rate and currency risks associated with
   U.S. dollar denominated debt
   - Deferred hedging asset				          (40.4)			      --
   - Deferred hedging liability
     - Current				                          165.8 			      --
     - Non-current				                  710.3 			 1,154.3
---------------------------------------------------------------------------------------------------------------------------------
				                                  835.7 			 1,154.3
   - Interest payable				                    6.3 			     9.7
---------------------------------------------------------------------------------------------------------------------------------
   Net	                                         June 2011        842.0 	 1,090.6 	 1,164.0 	 1,470.5
  Derivatives(1)(2) used to manage
   interest rate risk associated with
   planned refinancing of debt maturing
   June 1, 2007	                                 June 2007  	     -- 	     6.5 	      -- 	      --

---------------------------------------------------------------------------------------------------------------------------------
				                                5,770.1 	 6,633.0 	5,808.9 	 6,842.1
=================================================================================================================================

<FN>
(1) Notional amount of all derivative financial instruments outstanding is
    $5,138.6 (2005 - $4,904.8).
(2) Designated as cash flow hedging items.
</FN>
</TABLE>


    Commitments and contingent liabilities (Note 19 of the Consolidated
    financial statements)

The Company has a $53.1 million liability recorded for outstanding commitments
under its restructuring programs as at December 31, 2006. In addition, the
Company disclosed in its targets for 2007 that it expected to record
approximately $50 million of restructuring and employee reduction costs in
2007. See Forward-looking statements at the beginning of Management's
discussion and analysis.

    Price cap 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, an aggregate liability of $164.8 million as at December 31, 2006
(2005 - $158.7 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
periodic review of the Company's deferral account, disagrees with management's
estimates and assumptions, the CRTC may adjust the deferral account balance
and such 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.

On February 16, 2006, the CRTC issued Decision CRTC 2006-9, Disposition of
funds in the deferral account. In its decision, the CRTC determined that the
majority of the accumulated liability within the respective ILEC's deferral
account was to be made available for initiatives to expand broadband services
within their ILEC operating territories to rural and remote communities where
service is currently not available. In addition, a minimum of 5% of the
accumulated deferral account balance must be used for initiatives that enhance
accessibility to telecommunications services for individuals with
disabilities. To the extent that the deferral account balance exceeds the
approved initiatives, the remaining balance will be distributed in the form of
a one-time rebate to local residential service customers in non-high cost
serving areas. Finally, the CRTC indicated that, subsequent to May 31, 2006,
no additional amounts are to be added to the deferral account and, instead,
are to be dealt with via prospective rate reductions.

In September 2006, the Federal Court of Appeal granted the Consumers
Association of Canada and the National Anti-Poverty Organization leave to
appeal CRTC Telecom Decision 2006-9. These consumer groups are expected to
file their appeal over the coming months asking the Court to direct rebates to
local telephone subscribers, rather than have the accumulated deferral account
funds used for purposes determined by the CRTC, as noted above. Bell Canada
was also granted leave to appeal Decision 2006-9 on the grounds that the CRTC
exceeded its jurisdiction to the extent it approves rebates from the deferral
account. These matters are expected to be heard in 2007. In the event that
Bell Canada is successful in its appeal, the Company may realize additional
revenue equal to the amount of the deferral account that would otherwise have
been rebated by the CRTC. Should the consumer groups be successful in their
appeals, the Company may be required to remit a one-time refund of an amount
up to, but not exceeding, the aggregate liability of approximately $165
million in individually small amounts to its entire local residential
subscriber base. As the deferral account balance was fully provided for in
previous financial statements, the potential refund will not impact the
Company's subsequent income from operations. In addition, subject to the
potential outcome of this leave to appeal, the Company may need to re-address
its intent to extend broadband services to uneconomic remote and rural
communities. The Company supports Decision 2006-9 and its designated uses of
the deferral account in order to extend high-speed broadband Internet service
to rural and remote communities and improve telecommunications services for
people with disabilities.

Due to the Company's use of the liability method of accounting for the
deferral account, 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 consolidated revenues. Specifically, to the extent that CRTC
Decision 2005-6 requires the Company to provide discounts on Competitor
Digital Network services, through May 31, 2006, the Company drew down the
deferral account by an offsetting amount; subsequent to May 31, 2006, the
income statement effects did not change and the Company no longer needed to
account for these amounts through the deferral account. For the year ended
December 31, 2006, the Company drew down the deferral account by $19.9 million
(2005 - $50.5 million) in respect of discounts on Competitor Digital Network
services.

On November 30, 2006, the CRTC issued Telecom Public Notice CRTC 2006-15,
Review of proposals to dispose of the funds accumulated in the deferral
accounts, which initiated a public proceeding to consider the proposals
submitted by the incumbent local exchange carriers to dispose of the funds
accumulated in their respective deferral accounts. The Company expects the
CRTC to render its decision in this matter in the latter part of 2007.

    Contractual obligations

The Company's known contractual obligations at December 31, 2006, are
quantified in the following table. Interest obligations are not included in
the table.

<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>
--------------------------------------------------------------------------------------------------------------------------------
2007	                     1,555.0 	      4.0 	        18.0 		 197.6 		 506.6 		  2,281.2
2008		               122.2 	      2.6 	        23.1 		 184.9 		 127.2 		    460.0
2009		                 0.7 	      0.8 	        28.2 		 198.3 		  73.7 	  	    301.7
2010		                80.0 	      1.7 	        17.6 	 	 185.5 		  30.8 		    315.6
2011	          	     2,950.5 	      0.1 	        17.7 		 168.3 		  11.5 		  3,148.1
Thereafter		     1,049.0 	       -- 	       150.7 	       1,202.6 	          33.8 		  2,436.1
---------------------------------------------------------------------------------------------------------------------------------
Total		             5,757.4 	      9.2 	       255.3 	       2,137.2 	         783.6 		  8,942.7
=================================================================================================================================
</TABLE>

    Guarantees

Canadian GAAP requires 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.

In the normal course of operations, the Company may provide indemnification in
conjunction with certain transactions. The term of these indemnification
obligations ranges in duration and often is 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,
2006, the Company has no liability recorded in respect of indemnification
obligations.

    Claims and lawsuits

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, other than as disclosed in Note 19(e) of the
Consolidated financial statements and Section 10.9 Litigation and legal
matters.

7.9 Outstanding share information

The following is a summary of the outstanding shares for each class of equity
at December 31, 2006 and at January 31, 2007. In addition, for January 31,
2007 the total number of outstanding and issuable shares is presented assuming
full conversion of options including those shares held in reserve, but not yet
issued.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Outstanding shares
(millions of shares)
---------------------------------------------------------------------------------------------------------------------------------
                                                               Common                 Non-Voting                Total
                                                               Shares                  Shares 	               shares
<S>								<C>			<C>			<C>
--------------------------------------------------------------------------------------------------------------------------------
Common equity
  Outstanding shares at December 31, 2006 and
  January 31, 2007		                                178.7		        159.2		        337.9 (1)

Options outstanding and issuable(2) at January 31, 2007		  0.8		         18.2		         19.0
---------------------------------------------------------------------------------------------------------------------------------
                                                         	179.5		        177.4		        356.9
=================================================================================================================================
<FN>
(1) For the purposes of calculating diluted earnings per share, the number of shares
    was 347.4 for the year ended December 31, 2006.
(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 Net income.
    Similarly, all critical accounting estimates affect the following
    Consolidated balance sheet line items: current assets (income and other
    taxes receivable); current liabilities (income and other taxes payable);
    future income tax 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>

<S>				  	  <C>		   <C>		  <C>                <C>                 <C>
_______________________________________________________________________________________________________________________________
-     Consolidated income    |            Operating                 Operating expenses                           Other
    -        statement       |            revenues		                                                expense,
        -                    |                         --------------------------------------------------          net
             -               |                                                               Amortization
                  -          |                                                               of intangible
Consolidated         -	     |                           Operations       Depreciation          assets
balance sheet           -    |
_____________________________|__________________________________________________________________________________________________

Accounts receivable		                               X
--------------------------------------------------------------------------------------------------------------------------------
Inventories		                                       X
--------------------------------------------------------------------------------------------------------------------------------
Capital assets and goodwill(1)			                                X                   X
--------------------------------------------------------------------------------------------------------------------------------
Investments				                                                                            X
--------------------------------------------------------------------------------------------------------------------------------

Advance billings and customer deposits        X                X              	X	             X
--------------------------------------------------------------------------------------------------------------------------------
-
Employee defined benefit pension plans		               X	        X (2)	             X (2)
________________________________________________________________________________________________________________________________
<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, 2006. 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 13 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, 2006. 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 TELUS' Consolidated
    balance sheet, as at December 31, 2006. If TELUS' estimated useful lives
    of assets were incorrect, it 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 14(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.
    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. Note 14(c) of the
    Consolidated financial statements discusses 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 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 liabilities

The composition of future income tax liabilities

*   Future income liabilities are comprised of the tax effect of temporary
    differences between the carrying amount and tax basis of assets and
    liabilities as well as the tax effect of undeducted tax losses. The
    timing of the reversal of the temporary differences is estimated and the
    tax rate substantively enacted for the periods of reversal is applied to
    the temporary differences. 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 the amount
    of undeducted tax losses 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 and the timing of deduction of tax losses are estimated based
    upon assumptions of expectations of future results of operations.

*   Assumptions underlying the composition of future income tax liabilities
    include expectations about future results of operations, the timing of
    reversal of deductible temporary differences and taxable temporary
    differences, and the timing of deduction of tax losses. These assumptions
    also affect classification between income and other taxes receivable or
    payable and future income tax liabilities. See Section 10.7 Tax matters.
    The composition of future income tax liabilities is reasonably likely to
    change from period to period because of changes in the estimation of
    these significant uncertainties.

*   This accounting estimate is in respect of material asset and liability
    line items on the Company's Consolidated balance sheet comprising
    approximately 7% of total liabilities and shareholders' equity as at
    December 31, 2006. 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 could result in
    acceleration of cash outflows at an earlier time than might otherwise be
    expected.

Advance billings and customer deposits

The accruals for CRTC deferral account liabilities

*   The deferral account arose 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; such deferral requirement ended on May 31, 2006. The revenue
    deferral was based on the rate of inflation, less a productivity offset
    of 3.5%, and an "exogenous factor" that was 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. As described in
    Note 19(a) of the Consolidated financial statements and Section 10.3
    Regulatory - Price cap regulation, amounts in the deferral account are
    currently the subject of appeals to the Federal Court of Appeal by
    certain consumer groups and Bell Canada.

*   Assumptions underlying the accruals for the CRTC deferral account that
    were 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 Consolidated 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, and resolution of appeals to the courts.

*   This accounting estimate is in respect of an item within the advance
    billings and customer deposits line item on TELUS' Consolidated balance
    sheet and which, itself, comprises approximately 4% 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.
    Should the consumer groups be successful in their appeal of the use of
    deferral account amounts, the Company may be required to remit a one-time
    refund to its entire local residential subscriber base. As the deferral
    account balance was fully provided for in previous financial statements,
    the potential refund will not impact TELUS' subsequent income from
    operations. Such a refund would result in a net cash outflow, potentially
    offset by reduced capital investment as the Company re-addresses its
    intent to extend broadband services to uneconomic remote and rural
    communities. In the event that Bell Canada is successful in its appeal,
    TELUS may realize additional revenue equal to the amount of the deferral
    account that would otherwise have been rebated by the CRTC. 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 12(i) 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)

Commencing with the Company's 2006 fiscal year, the Company adopted the
amended recommendations of the Canadian Institute of Chartered Accountants
(CICA) for measurement of non-monetary transactions (CICA Handbook Section
3830). The Company's operations were not materially affected by the amended
recommendations.

    Convergence with International Reporting Standards

In 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
currently expected to be about five years. The precise timing of convergence
will depend on an Accounting Standards Board progress review to be undertaken
by early 2008. 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 TELUS.

    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 prospective implementation at the beginning of a fiscal year
(the exception being in respect of the cumulative foreign currency translation
adjustment, which is retroactively adjusted for at the beginning of the fiscal
year of adoption). Currently, the concept of comprehensive income for purposes
of Canadian GAAP, in the Company's specific instance, will be primarily to
include changes in shareholders' equity arising from unrealized changes in the
fair values of financial instruments.

Comprehensive income as prescribed by U.S. GAAP is largely aligned with
comprehensive income as prescribed by Canadian GAAP, including the impacts of
the new recommendations for the recognition and measurement of financial
instruments and for hedges. In the Company's specific instance, however, there
is currently a difference in other comprehensive income in that U.S. GAAP
includes, in respect of pension and other defined benefit plans, the
difference between the net funded plan status and the net accrued benefit
asset or liability. Canadian GAAP does not include this currently, but an
exposure draft from Canada's Accounting Standards Board is expected in the
first half of 2007 that would eliminate this difference.

The majority of the impact on the Company of adopting the other comprehensive
income and related standards currently arises from the Company's cross
currency interest rate swap agreements, and to a lesser extent, the
cash-settled equity forward agreements that the Company entered into in
respect of share-based compensation.

    Accounting changes and Business combinations

Commencing with the Company's 2007 fiscal year, the new recommendations of the
CICA for accounting changes (CICA Handbook Section 1506) will apply to the
Company. Most significantly, the new recommendations stipulate that voluntary
changes in accounting policy are made only if they result in the financial
statements providing reliable and more relevant information and that new
disclosures are required in respect of changes in accounting policies, changes
in accounting estimates and correction of errors. The Company is not currently
materially affected by the new recommendations.

    Capital disclosures

Effective December 31, 2006, the Company early adopted the new recommendations
of the CICA for disclosure of the Company's objectives, policies and processes
for managing capital (CICA Handbook Section 1535), as discussed further in
Note 3 of the Consolidated financial statements.

    Earnings per share

Amendments were proposed to the recommendations of the CICA for the
calculation and disclosure of earnings per share (CICA Handbook Section 3500)
and would have applied to the Company; such amendments had progressed to the
typescript stage. In July 2006, the typescript with the proposed amendments
was withdrawn and an announcement was made indicating that an International
Financial Reporting Standards-based exposure draft from Canada's Accounting
Standards Board would be issued at a later date, now expected in the first
half of 2007.

    Other recently issued accounting standards not yet implemented

Under U.S. GAAP, effective for its 2007 fiscal year, the Company is expected
to be required to comply with accounting for uncertain income tax positions,
as prescribed by Financial Accounting Standards Board Financial Interpretation
No. 48, Accounting for Uncertainty in Income Taxes. TELUS has assessed the
cumulative impact of adopting this new standard as of January 1, 2007. Based
upon this review, the Company does not expect the adoption of this
Interpretation will have a material impact on its Consolidated financial
statements.

9. Looking forward to 2007

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 2006, the telecommunications market experienced trends similar to those in
recent years. The wireless sector continued to face competitive pressures,
while generating profitable growth. The wireline sector faced increased
competitive pressures and lower profitability. Canadian telecommunications
operators maintained their focus on core operations and cash flow generation,
and continued to pursue enhanced efficiencies and divestiture of non-core
assets.

The Canadian telecom industry, including wireline and wireless, generated
estimated revenues of approximately $38 billion in 2006, with Bell Canada
and its affiliated telecommunications companies representing about 45% of
the total. As the second largest telecommunications provider in Canada, TELUS
generated almost $8.7 billion of revenue in 2006, or approximately 23% of
the total.

Revenue growth in the Canadian telecom market in 2006 was about 6%, an
improvement on the 3.5 to 4.5% growth experienced over the past few years, and
better than overall GDP growth. Wireless and enhanced data continued to be the
growth engine for the sector with revenues growing approximately 17% over
2005. Offsetting wireless growth was continued general industry weakness in
wireline voice with declining long distance and legacy data revenues, although
this decline was partially offset by growth in enhanced data services. TELUS'
focus on wireless, data and IP resulted in TELUS surpassing the industry
average in 2006 with 6.6% consolidated revenue growth. A similar growth rate
for TELUS is expected in 2007.

The telecom landscape is expected to remain competitive. On the wireline
front, traditional services remain under pressure with industry revenues
declining for the fifth consecutive year. Local and long distance revenues are
expected to continue to be impacted by consumer migration from wireline to
wireless and VoIP services.

With basic cable-TV subscriber additions flat and high-speed Internet
subscriber growth slowing, cable-TV companies have increased certain pricing,
are launching higher-speed Internet services and are rolling out Internet
telephony and digital cable-TV services to fuel growth. By the end of 2006,
Shaw Communications had captured approximately 200,000 residential telephone
subscribers in B.C. and Alberta, and announced plans to roll out their service
throughout both provinces in 2007. Similarly, Rogers Communications and
Videotron have launched Internet telephony service in their service areas in
Central Canada.

The wireless market in Canada is predicted to continue to be competitive and
to generate continued growth as penetration rates (wireless subscribers
divided by population) increase.

Overall, the telecom industry appears to be heading towards a less regulated
environment with several decisions from the federal government and CRTC
removing regulatory constraints. The federal government has stated its intent
to move the telecommunications industry from its current regulated
environment towards a more open environment that is based on a reliance on
market forces to the maximum extent feasible.

In April, the CRTC established a framework for forbearance from the regulation
of local services. Subsequently, the federal government proposed changes to
the regulatory environment that, if implemented, will significantly alter the
terms of the CRTC's local forbearance framework. Similarly, in November, the
federal Minister of Industry overruled the CRTC's previous decision to
regulate telecom VoIP offerings by deregulating access-independent VoIP
providers.

In 2006, companies with greater wireless exposure generally benefited from
higher revenue and cash flow growth, resulting in share price appreciation.
Capital markets and investors continue to look for growth in wireless and data
to generate ongoing operating earnings and cash flow growth, while closely
monitoring how operators protect their legacy revenues and margins. Toward the
end of 2006, both telecom and cable-TV companies announced plans to return
capital to shareholders through share buybacks and increased dividends.

With 44% of consolidated revenue being wireless, as well as exposure to other
growth services such as high-speed Internet, TELUS TV and IP and data services
for enterprise clients, TELUS is well positioned to potentially continue its
strong performance.

    Wireless

The wireless industry continues to experience robust growth with
year-over-year industry revenue and EBITDA growth of approximately 16% and
28%, respectively.

The growth opportunity remains given that Canada's penetration rate trails
those of other developed countries due to structural and timing differences.
The penetration rates in many Western European countries passed 100% in 2006,
whereas Asian countries such as Korea are approaching 80% penetration. These
penetration rates are not exactly comparable or achievable in Canada or the
U.S. due to higher quality, lower cost, fixed-rate local service here,
multiple subscriptions being possible on one GSM handset in Europe and
differences in postpaid and prepaid mix. Closer to home, the U.S. wireless
industry is more comparable to Canada, with a penetration rate of approximate
76%, but has benefited from a start two years earlier than Canada. In
contrast, when looking at the major reporting Canadian operators, Canada is
continuing to grow strongly with approximately 1.7 million new subscribers in
2006, or a 4.6 point increase in penetration to more than 56%. A similar rate
of growth in 2007 is generally expected.

Another growth opportunity in the wireless industry is in data services such
as text messaging, mobile computing, gaming, ringtones, music, mobile TV and
PDAs. As adoption and usage rates accelerate, these services are driving
higher data ARPU. To capture this opportunity, Canadian wireless providers are
well advanced in building next generation higher-speed wireless networks. Data
ARPU increases are offsetting the decline in voice revenues caused by price
competition and flat minutes of use.

Data ARPU as a percentage of total ARPU varies throughout the world, with Asia
and Europe at approximately 20% and 15%, respectively. Data in
the U.S. is approximately 15% of total revenue, in Canada is approaching
10%, and is growing strongly in both countries.

Competition within the wireless market is anticipated to remain intense due to
a number of factors. While TELUS, Rogers and Bell account for the majority of
market share, the mobile virtual network operator (MVNO) market is expected to
continue to expand in 2007. Virgin Mobile grew its presence in 2006, and was
joined by Videotron, partnering with Rogers to offer an MVNO wireless phone
service. Retailer brands such as President's Choice and 7-Eleven stores also
launched MVNO offerings. In 2006, TELUS announced the 2007 launch of premium,
differentiated services under the Amp'd Mobile brand. In the price-sensitive
prepaid market, Bell and Rogers are promoting their respective Solo and Fido
discount brand offerings to compete against the MVNOs and TELUS.

As mandated by the CRTC, an industry-wide implementation of a wireless number
portability capability for end users is expected to come into effect in March
2007. The removal of this key switching barrier may increase overall industry
churn rates through the remainder of 2007. (See Section 10.3 Regulatory -
Implementation of wireless number portability.)

There has been some speculation that Industry Canada may encourage additional
competition through a spectrum auction, expected in 2008, by capping the
amount of spectrum any one provider can purchase or setting spectrum aside for
a new entrant. While a new entrant provider would face significant hurdles
such as high penetration rates and large capital commitments for network
investment and start-up costs, the introduction of a new competitor could
likely increase competitive intensity. (See Section 10.1 Competition - Future
availability of wireless spectrum.)

TELUS is well positioned in the Canadian wireless market where it leads the
major industry providers with the lowest churn and highest ARPU. While TELUS
does not have any MVNO relationships or discount brands, its exclusive
relationship with Amp'd Mobile will target young adults and is expected to
bring highly differentiated and premium data-focused entertainment,
information and messaging services to Canadians in the second quarter of 2007.

    Wireline

In contrast to wireless, expectations for the mature wireline segment are more
modest. Residential access lines continue to be impacted by migrations to
wireless services, reduction in the number of second lines, and substitution
to VoIP services, particularly those offered by cable-TV providers. The long
distance market is expected to decline further, as VoIP providers continue to
aggressively price and promote voice packages to customers, and customers use
other technologies such as e-mail.

While non-facilities-based VoIP service providers have had modest success with
local telephony, the biggest challenge to incumbent telecom players is coming
from Canadian cable-TV companies that operate their own facilities and
distribution channels. It is estimated that the four cable-TV companies had
more than 1.1 million local cable telephony subscribers in 2006, up almost
800,000 from 2005.

The consumer market is expected to continue to be highly competitive as
advances in technology blur the boundaries between the telecom, video,
broadcast and entertainment distribution sectors. With its Future Friendly
Home strategy, TELUS is positioned to grow wallet share with consumers, while
enhancing retention and loyalty through its multiple service offerings.
Following its launch of TELUS TV in 2005, TELUS has continued to roll out this
service in certain markets in British Columbia and Alberta. Combined with its
wireline local and long distance, wireless, and high-speed Internet services,
TELUS' goal is to use a quadruple play product offering to achieve competitive
differentiation compared to competitors by offering a premium, integrated set
of services that allows customers more freedom, flexibility and choice.

TELUS' ability to compete effectively in wireline is expected to be enhanced
by the changing regulatory environment in Canada. For example, the federal
government recently proposed that regulation of local phone services no longer
be required in markets where consumers have the choice of the ILEC and two
other facilities-based providers (including a competitive wireless provider).
Similarly, forbearance may be applied where businesses have a choice between
the ILEC and one other facilities-based provider. As this would apply to
markets where an ILEC, an independent wireless provider and another
facilities-based provider such as a cable-TV company are present, TELUS would
expect to be in a position to achieve deregulation in most of its incumbent
urban local exchanges in 2007, if the proposal is enacted in early 2007. In
addition, no further price cap regulation is expected in the local consumer
market when the current price cap regime ends in June 2007.

Certain elements of the business market, such as IP and data, continue to show
signs of strength. However, the frontier between telecom and IT remains
competitive, with IT service providers moving down the value chain into the
communications space, and telcos looking to push beyond their traditional
niche. Network equipment manufacturers are also moving up the value chain into
the managed network space.

Legacy voice and data services are expected to continue to decline due to the
accelerated adoption of IP services as a result of businesses and large
enterprises upgrading their legacy networks and equipment. TELUS expects to
have continued success by offering enterprise clients integrated, managed
solutions focused on key verticals such as the energy sector, financial
services, the public sector and the healthcare industry.

In order to grow their businesses, telcos continue to move outside of their
traditional ILEC areas into non-ILEC territories by focusing on managed
solutions and high priority verticals. They are expected to continue
developing single IP-based platforms to provide combined IP voice, data and
video solutions, thereby creating cost efficiencies to, at least in part,
compensate for future margin pressures from the migration from legacy to
IP-based services.

TELUS' strategic focus on delivering national business services in data and
IP, coupled with its exposure to the wireless market, solidly position the
Company to continue its growth in 2007 and beyond.

9.2 Financial and operating targets for 2007

The following discussion is qualified in its entirety by the Forward-looking
statements at the beginning of Management's discussion and analysis, as well
as Section 10: Risks and risk management. TELUS' 2007 targets were originally
announced on December 14, 2006.

The Company has received regulatory approval to amend its share option plans
to provide for cash settlement, and in January 2007, determined that the
feature would be available for substantially all currently vested options and
those vesting in 2007. Cash settlement mitigates dilution from issuing shares
from treasury, and allows cash payments for the difference in value between
the market price and the exercise price of shares to be deductible for tax
purposes when options are exercised, which is expected to result in
significant future tax savings. This change results in an increased non-cash
option expense (an operating expense) for accounting purposes, which is
estimated at $150 to $200 million ($120 to $150 million in wireline and $30 to
$50 million in wireless). The expense is expected to be substantially recorded
in the first quarter of 2007. TELUS' 2007 stated targets for segmented EBITDA,
consolidated EBITDA and EPS exclude the non-cash accounting expense expected
to be recorded in regards to implementing the cash settlement for options.

Wireline revenue is expected to increase 1 to 2% in 2007, driven largely by
data. Wireline EBITDA, prior to the change to 2007 expenses for cash
settlement of options, is expected to be down 1 to 3% due to continued
competitive pressures, initial expenses related to launch of growth-oriented
products and services, and lower profitability margins.

Wireless revenue is expected to increase 12 to 13% in 2007 due to continued
strong growth in wireless subscribers and increased wireless data adoption and
usage. Wireless EBITDA, prior to the change to 2007 expenses for cash
settlement of options, is expected to increase 11 to 14% in the year.

The expected earnings per share in 2007 reflects overall higher operating
profitability, lower financing costs as a consequence of reduced debt levels
and lower interest rates on debt refinancing, and an expected decrease in
total outstanding shares. The 2007 EPS growth is expected to be affected by
increased depreciation expense and $0.30 to $0.40 for an after-tax impact from
the change to cash settlement of options. TELUS' comparative EPS for 2006
included approximately $0.48 of positive impacts from the settlement of tax
matters and changes to tax legislation. Because of these factors, EPS for
2007, excluding the change to cash settlement of options, is expected to be
flat to 6% higher than reported for 2006.

Earnings per share, cash balances, net debt and common equity may be affected
by the potential purchases of up to 24 million TELUS shares over a 12-month
period under the normal course issuer bid that commenced December 20, 2006.


<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
                                                  Targets for 2007	     	    Results for 2006	       Change
<S>						        <C>			         <C>		        <C>
--------------------------------------------------------------------------------------------------------------------------------
Consolidated
  Revenues                                              $9.175 to $9.275 billion      $8.681 billion              6 to 7%
  EBITDA (1) excluding charge for cash settlement
  feature for vested options in 2007 (2)	        $3.725 to $3.825 billion      $3.590 billion	          4 to 7%
  Earnings per share (EPS) excluding after-tax
  charge for cash settlement of options in 2007 (3)     $3.25 to $3.45	              $3.27	                (1) to 6%
  Capital expenditures                             	Approx. $1.75 billion	      $1.618 billion	             8%

---------------------------------------------------------------------------------------------------------------------------------
Wireline segment
  Revenue (external)              	                $4.85 to $4.9 billion	      $4.823 billion	          1 to 2%
  EBITDA excluding charge for cash settlement
  of options in 2007 (2)                               	$1.775 to $1.825 billion      $1.839 billion	        (3) to (1)%
  Capital expenditures	                                Approx. $1.2 billion	      $1.191 billion	        Unchanged
  High-speed Internet net additions	                More than 135,000	        153,700	               12)% or better

---------------------------------------------------------------------------------------------------------------------------------
Wireless segment
  Revenue (external)	                                $4.325 to $4.375 billion      $3.858 billion	         12 to 13%

  EBITDA excluding charge for cash settlement
  of options in 2007 (2)	                        $1.95 to $2.0 billion	      $1.751 billion	         11 to 14%

  Capital expenditures	                                Approx. $550 million	      $427 million       	    29%

  Wireless subscriber net additions	                More than 550,000	        535,200	                 3% or more
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See Section 11.1 Earnings before interest taxes depreciation and amortization
   (EBITDA), alternatively calculated as Operating revenues less Operations expense
    less Restructuring and workforce reduction costs.
(2) Excluding an expense of $150 to $200 million in 2007 for a change to add a cash
    settlement choice for vested options, of which, $120 to $150 million is in wireline
    and $30 to $50 million is in wireless.
(3) Excluding $0.30 to $0.40 for cash settlement of options.
</FN>
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Assumptions for 2007 targets include:

*   Economic growth consistent with recent provincial and national estimates by
    the Conference Board of Canada, including the revised 2007 real GDP growth
    of 2.7% in Canada;
*   Increased wireline competition in both business and consumer markets,
    particularly from cable-TV and VoIP companies;
*   Forbearance for local retail wireline services in major urban markets by
    the second half of 2007;
*   No further price cap mandated consumer price reductions;
*   A wireless industry market penetration gain of 4.5 to five percentage
    points;
*   Approximately $50 million of restructuring and workforce reduction expenses
    ($67.8 million in 2006);
*   A statutory tax rate of approximately 33 to 34%;
*   A discount rate of 5.0% and an expected long-term average return of 7.25%
    for pension accounting, unchanged from 2006; and
*   Average shares outstanding of 330 to 335 million shares for the full year.

As described in Section 5 Consolidated results from operations - Income taxes,
TELUS currently expects minimal cash tax payments in 2007.

TELUS continues to have long-term policy guidelines including Net debt to
EBITDA of 1.5 to 2.0 times, Net debt to total capitalization of 45 to 50% and
a dividend payout ratio guideline of 45 to 55% of sustainable net earnings.
The 2007 targets are in compliance with these policy guidelines.

9.3 Financing plan for 2007

TELUS expects to generate free cash flow in 2007, which would be available to,
among other things, repay debt, repurchase shares and pay dividends to
shareholders. The Company expects to use the proceeds from securitized
receivables and bank facilities, as needed, to supplement its free cash flow
and 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 2006, almost all
of TELUS' total debt was on a fixed-rate basis, and the weighted average term
to maturity was approximately 4.5 years.

In respect of debt maturities, TELUS has U.S. $1,165.5 million of principal
maturing on June 1, 2007. TELUS has taken several steps towards refinancing a
significant amount of these Notes. In May 2006, TELUS successfully issued
$300 million of 5.00% Notes, Series CB, with a seven year maturity. The net
proceeds of the offering were used to pay for the early termination of cross
currency swap agreements related to TELUS' 7.5% U.S. dollar Notes that mature
in June 2007. In addition, the Company has entered into forward starting
interest rate swap agreements that have the effect of fixing the underlying
interest rate on up to $500 million of future debt issuance.

If circumstances warrant, TELUS may consider refinancing all or a portion of
these Notes due June 1, 2007 in advance of the regularly scheduled maturity
date. 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. Commercial paper issuance in Canada generally
requires an R-1 (low) rating from Dominion Bond Rating Service and is required
to be supported by committed bank credit facilities. TELUS may increase its
bank credit facilities to support an issuance of commercial paper. TELUS also
has access to a shelf prospectus pursuant to which it can issue a further
$2.7 billion of debt and equity. TELUS believes that its investment grade
credit ratings provide reasonable access to capital markets to facilitate
future debt issuance. For the related risk discussion, see Section 10.6
Financing and debt requirements.

<TABLE>
<CAPTION>
Debt maturities as at December 31, 2006
                                                                                           Long-term debt maturities
                                                                                          ---------------------------
($ millions)	                                                                             All except      Capital
                                                                                           capital leases     leases
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
2007										                1,555.0 	4.0
2008										                  122.2         2.6
2009										                    0.7        	0.8
2010										                   80.0         1.7
2011										                2,950.5         0.1
Thereafter									                1,049.0          --
---------------------------------------------------------------------------------------------------------------------------------
Total										                5,757.4 	9.2
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

10. Risks and risk management

[TELUS' risk and control assessment process diagram]

TELUS utilizes a three-level enterprise risk and control assessment process
that solicits and incorporates the expertise and insight of team members from
all areas of the Company.

Level one is the annual risk and control assessment. Key sources of input into
this process include interviews with key senior managers, information and
learnings from TELUS' ongoing strategic planning process and the results of
its annual web-enabled risk and control assessment survey, which is widely
distributed to TELUS' management leadership team (all EVP, VP and Director
level team members and a random sample of management). The survey is based on
the COSO (Committee of Sponsoring Organizations of the Treadway Commission)
enterprise risk management and internal control frameworks.

Additionally, TELUS' assessment process incorporates input from recent
internal and external audits, and commencing in 2006, incorporates input from
management's SOX 404 (Sarbanes Oxley Act of 2002) internal control over
financial reporting compliance activities. Key enterprise business risks are
identified, defined and prioritized, and executive risk owners are engaged and
charged with risk mitigation. Results of the annual risk and control
assessment drive the development of TELUS' internal audit program and are
presented to senior management and the Audit Committee. Risk assessments are
also incorporated back into the Company's strategic planning processes.

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, network and IT
vulnerability, and fraud and ethics assessments). The results of the multiple
risk assessments are evaluated, prioritized and updated throughout the year.
TELUS initially implemented its three-level risk and control assessment
process in 2002 and tracks multi-year trends to various key risks and control
environment perceptions across the organization.

   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, and associated risk
mitigation activities.

10.1 Competition

   Aggressive competition may adversely affect market shares, volumes and
   pricing in certain TELUS market segments

TELUS' key competitors, having either built or acquired their own network
facilities in Western Canada over the past several years, continue to focus
their efforts on marketing and revenue generation. In the broad business
market, efforts are particularly targeted at the small and medium-sized
business (SMB) market due to its size, its concentrated geographic urban
clustering and generally attractive margins. Competition also remains intense
in the large enterprise market, where traditionally a small number of major
customers can deliver a significant amount of revenue.

Technological advances are blurring the traditional boundaries between
broadcasting, Internet and telecom. With cable-TV companies now offering local
services across most of their regions, competition has also intensified in the
residential local, high-speed Internet access (HSIA) and long distance
markets. As a result, overall industry pricing and customer acquisition
efforts have become competitive across almost all product and service
categories, and customer market segments. Due to industry consolidation in
recent years, TELUS' major competitors have sound financial strength, brand
recognition and, for many, national scope. TELUS' major competitors are
expected to continue to pose a significant 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.

Risk mitigation: TELUS recently merged its wireline and wireless operations,
giving it the ability to go to market as one national team, under a common
brand, offering a full suite of integrated solutions designed to differentiate
TELUS from its competitors. TELUS also expects to drive continued growth in
non-incumbent markets in Central Canada to offset competitive losses in its
traditional incumbent markets.

    Wireline voice and data

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, continues at a strong pace.
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.

Competition is expected to remain intense, not only from traditional
telephony, data, IP and IT providers, but also from new entrants providing
alternatives to traditional wireline local access and long distance through
the use of voice over Internet protocol (VoIP) telephony. Competitors -
ranging from traditional facilities-based carriers to resellers, IT systems
integrators, long distance dial-around and card providers, and cable-TV
companies - are expected to continue to focus on both the business and
residential markets.

In the business market, various VoIP, customer premises equipment (CPE) and IP
Centrex, data, IP and IT services have been available for several years now
and, in addition to bundling price-discounted local access, wireless and
advanced data and IP services, business market competitors are also bundling
web-based and e-commerce services, and other IT services and support. With
this broader 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. In the
coming year, cable-TV companies are also expected to increasingly target the
SMB 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 to business markets, particularly in the major
urban areas.

Risk mitigation in the business market: To improve its ability to compete
against this expanded competition, TELUS continues to increase its
capabilities in the overall business market. Through a combination of
acquisitions and partnerships, a focus on priority vertical markets and
continued expansion of strategic solution sets in the enterprise market and a
mass modular approach in the SMB market, TELUS expects to not only counter
competitive inroads, but also to expand its market share nationally.

In the consumer residential market, an increasing number of new VoIP
competitors have emerged over the past few years. The cable-TV companies are
combining residential local VoIP, long distance, HSIA and, in some cases,
wireless services into one bundled or discounted monthly rate, along with
their traditional broadcast services. In addition, non-facilities based
competitors are offering local and long distance VoIP services over the
Internet. This competition, as well as increased technological and wireless
substitution, is expected to continue to contribute to declines in residential
network access lines (NALs). The loss of NALs and attendant revenue declines,
including associated long distance revenues, can be expected to continue as
VoIP providers gain an increasing share of the local access market.

Risk mitigation in the consumer market: TELUS continues to expand its own IP
infrastructure to not only meet the threat of local VoIP services, but also to
expand its ability to enter new markets such as video. TELUS TV is now
available in select areas in Edmonton, Calgary and Vancouver. This helps TELUS
counter the threat from the cable-TV competition in its incumbent markets, and
to regain and grow revenues with a quadruple offering of local and long
distance telephony, HSIA, wireless and IP TV entertainment services, as it
continues to leverage its assets in Internet, wireless and TV to create one of
the best integrated, cross-platform multimedia experiences available in the
market. However, cable competitors including the satellite operations of Shaw
and Bell ExpressVu are expected to compete vigorously to defend market share.
(See Broadcasting below.)

    Wireline Internet access

Though the HSIA market is maturing, as just over half of Canadian households
(and more than 60% in Western Canada) and numerous businesses now have HSIA,
growth is still expected while overall pricing is expected to remain
relatively stable. TELUS and its competitors continue to seek differentiation
through a mix of various speed options, value-added features, bundling and,
especially in the business market, managed services solutions. With a more
mature market, net additions for all industry competitors may be reduced, thus
posing a constraint on TELUS' ability to increase its share of total
high-speed Internet subscribers in its territories. Residential dial-up
Internet access lines are declining due in large part to increased HSIA
availability and lower priced high-speed options. 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 in urban areas. However, in rural areas,
TELUS' main competitor to dial-up Internet service is satellite-based
services.

Risk mitigation: Losses of TELUS dial-up Internet subscribers to competitor
high-speed services have been partially mitigated by TELUS' efforts to
transfer these customers to its own high-speed Internet services. TELUS is
increasingly differentiated and able to increase the revenue per household by
the ability to offer a full suite of voice, long distance, wireless and
entertainment services alongside high-speed Internet.

    Wireless

Competition in the Canadian wireless market is expected to remain intense in
2007. TELUS is targeting more than 550,000 wireless net subscriber additions
for the year, 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.

Aggressive advertising and innovative marketing approaches are expected to
remain the norm. TELUS' two national wireless competitors are marketing
discount brands in addition to their traditional brands to attract new
subscribers. These and other competitors continue to offer highly subsidized
handsets, lowered airtime and wireless data prices, and other incentives in
order to attract new customers and obtain enhanced channels of distribution to
market. In addition, the number of wireless brands continues to increase
significantly. Some cable-TV providers have added wireless services through
resale agreements with TELUS' competitors. Virgin Mobile provides wireless
services on a resale basis from Bell Mobility. Competition in the Canadian
wireless market remained intense in 2006, particularly in the prepaid and
youth segments because of these and other resellers. In future, other
competitors, including cable-TV operators or regional telephone companies, may
offer wireless services regionally or nationally on a resale basis, and/or
acquire spectrum and build out their own networks in the event that they
become licensed and obtain spectrum. (See Section 10.3 Regulatory.)

There is risk that increased competition and new brands could increase churn
rates, cause marketing costs of acquisition per subscriber to be higher, and
lower ARPU. In addition, certain carriers launched competitive Push To Talk
(PTT) products in 2005, and other technologies exist that could result in new
PTT services competing more directly with TELUS' Mike and CDMA PTT services.
(See Section 10.2 Technology.)

Bell Mobility entered Western Canada in the fall of 2001, and has its own 1X
network and operational capabilities in urban centres in Alberta and B.C. In
addition, roaming/resale agreements among TELUS, Bell Mobility and affiliates
of Bell were operationalized in mid-2002 and 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 also been extended to
higher-speed EVDO services.

Risk mitigation: While TELUS intends to manage these risks by continued focus
on upgrading and enhancing its network, and by continuing to focus on
differentiated value-added services and profitable subscriber growth, there
can be no assurance that these efforts will be successful. Roaming/resale
agreements have similarly allowed TELUS, on a reciprocal basis, to expand its
PCS network coverage and distribution in Central and Atlantic Canada by
approximately 7.5 million people, generally served by two other competitors
previously, bringing TELUS' national digital wireless coverage and addressable
market to 31 million people. TELUS continues to expand its coverage for
higher-speed EVDO services, reaching two-thirds of the Canadian population at
the end of 2006. In addition, in 2007, TELUS intends to launch Amp'd Mobile
powered by TELUS, a premium, differentiated data-focused service, targeting
the young adult market. TELUS' industry-leading churn and ARPU are evidence of
its successful efforts, historically. In 2006, TELUS recorded its highest
annual gross additions and second highest annual net additions in its history.
Wireless Number Portability (WNP)

The introduction of wireless number portability has been mandated for
implementation by March 14, 2007 for all major national competitors. There is
no assurance that TELUS and the other Canadian wireless carriers will be able
to implement WNP. (See Section 10.3 Regulatory.) WNP will remove a barrier to
wireless customers switching from one carrier to another, or from switching
landline phone numbers to wireless or vice versa, and may increase the level
of churn in the market.

Risk mitigation: While TELUS has the smallest installed wireless 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 competitors.

    Future availability of wireless spectrum

Pursuant to the release of the Telecommunications Policy Review Report in
early 2006, and an anticipated spectrum auction policy consultation process,
there has been speculation that the federal government may license a fourth
national carrier either on a preferential basis, or in conjunction with a
removal of foreign ownership restrictions, or by mandating roaming or tower
sharing. This could likely increase competitive intensity. While the current
government has clearly indicated its preference to rely on market forces in
the telecommunications sector, there is no guarantee that it will rely on
market forces to determine the number of competitors or the basis of
competition. (See section 10.3 Regulatory.)

Risk mitigation: New entrant wireless carriers would face significant hurdles
such as large capital commitments for network investment and start-up costs
and increasing penetration rates for Canadians using wireless services. TELUS
intends to be active throughout the expected regulatory consultation process,
underlining the existence of robust competition in the wireless market and
advocating an open auction process that excludes the establishment of
government interventions to subsidize the entry of new carriers.

    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 over current and future wireless devices. (See Section 10.2
Technology.) 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 will be available on time, or that TELUS will be able to
charge incrementally for the services.

Currently spectrum at 2500 MHz has been used for fixed wireless and wireless
broadcast applications. However, 2500 MHz has been given a primary mobile
designation by Industry Canada and is anticipated to become a common global
band for mobile services. In 2006, Industry Canada issued a policy that
provides for a claw back of a portion of the band for auction when mobile
service is implemented in the band, and has announced it intends to auction
unassigned portions of the multipoint distribution service portion of the
band. TELUS expects a 2500 MHz spectrum auction to be announced in 2007 and
scheduled sometime in late 2007 or 2008. Bell and Rogers hold significant
amounts of spectrum at 2500 MHz through their Inukshuk partnership, have
deployed it in major cities including Toronto, Montreal, Calgary, Edmonton and
Vancouver, and are marketing portable DSL service with moderate print and
billboard campaigns. Although TELUS has experienced only limited competition
from this and similar services to date, there can be no assurance that future
marketing of these services will not negatively impact TELUS' wireless or
wireline services.

Industry Canada has issued experimental licences in the 700 MHz range to
various rural operators in the provinces of Alberta and B.C. These operators
are utilizing this spectrum, as well as unlicensed bands, to establish
wireless based point to multipoint networks to market HSIA and VoIP services
to SMB, as well as general consumer users, in rural areas. As TELUS is
generally the only carrier in these areas, there is a risk of market share
loss with the increase in viable alternatives.

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 U.S. or in Toronto Hydro Telecom's One
Zone service. The build-out and availability of such meshed networks based on
802.11g standards may lead to the reduction of traffic on TELUS' existing
wireless mobile networks and/or increased competition for TELUS' wireline HSIA
service. There can be no assurance that new or existing services offered by
TELUS will be competitive with such fixed wireless services, will be available
on time or that TELUS will be able to charge incrementally for the services.

Risk mitigation: Currently only U.S.-based Sprint-Nextel is looking at mobile
Wi-Max at 2500 MHz, and the development of a vibrant ecosystem appears to be a
number of years out. TELUS intends to monitor developments in this area and
continue to take a proactive approach to product testing and development. It
also intends to lobby Industry Canada to claw back spectrum as soon as
possible and auction it for mobile purposes to ensure Canada is a fast
follower in this band. While there is no guarantee this will occur, the
expected advanced wireless services (AWS) auction also provides an alternative
path to mobile broadband.

    Broadcasting

In order to pursue increased revenue opportunities and protect heritage
markets from erosion, TELUS has initiated a targeted neighbourhood commercial
launch of TELUS TV in Edmonton, Calgary and Vancouver area markets. TELUS TV,
a licensed broadcasting distribution undertaking (BDU) service using IP
technology, is still at an early stage in its roll-out, but the Company
expects the service to increase penetration significantly in 2007 and 2008 as
ADSL2+ build-outs are completed, which will expand the addressable market
covered and allow high-definition capability to be integrated into the TELUS
TV offering. While IP TV service will provide opportunities for a quadruple
play offering by TELUS, it is anticipated that cable-TV competitors including
the satellite operations of Shaw and Bell ExpressVu will remain dominant
suppliers in the broadcast distribution market through 2008, and may compete
vigorously to defend market share.

Risk mitigation: IP TV affords TELUS unique competitive advantages relative to
cable-TV such as time shifting programming flexibility, caller ID, text
messaging and an all-digital, near-unlimited selection of channels. In
addition, since only the selected content is sent to the home and with
compression capabilities, less bandwidth is required, resulting in more
capacity for other IP-based services. TELUS continues to pursue a strategy
based on differentiation and value-added service and not on discounted
pricing. This includes a multi-platform content strategy to develop new and
emerging Internet and wireless content opportunities, while it rolls out IP
TV. These platforms are expected to provide advantages relative to traditional
cable offerings, as well as interactivity and customization advantages
relative to satellite.

10.2 Technology

Technology is a key enabler for TELUS and its customers, however, technology
evolution brings risks, uncertainties and opportunities. 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 addressing 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 network, and
using faster modem technologies on the shortened copper loop.

Risk mitigation: In 2005, TELUS began deploying ADSL2+, a next generation of
ADSL technology that enables link rates at up to 24 megabits per second (Mbps)
to the customer premises, compared with up to 8 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 and in the installed base of ADSL modems. In 2007, TELUS anticipates
it will begin utilizing ADSL2+ bonding and very high bit rate digital
subscriber line (VDSL2) technologies to extend the capabilities of the copper
loops to at least double previous speeds and provide 80 Mbps capabilities.

In 2007, TELUS expects to continue field trials of fibre to the home (FTTH)
technologies utilizing standards-based gigabit passive optical network (GPON)
technology. 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 sustained transfers of up to 100 Mbps and peak
transfers up to one gigabit per second (Gbps), may be a more practical
technology to deploy in new green field neighbourhoods or multiple dwelling
units than the current copper loops. In addition, TELUS is exploring business
models for the economical deployment of fibre-based technologies in areas
currently connected by copper.

These evolving standards, enabled with 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 infrastructure. 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 planned.

    IP-based telephony as a replacement for legacy analog telephony is
    evolving 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 in line with the Company's strategic
imperatives and in accordance with 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. One of the realities of VoIP in the consumer space
is that 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. These issues are
exacerbated when the exchange of information is between service providers with
different broadband infrastructures.

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' legacy voice network
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 in the multiple dwelling unit model. 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, is
expected to continue to 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. There is also the risk that broadband
access infrastructure and corresponding IP-telephony platforms may not be in
place in time to avoid some re-investment in traditional switching platforms
to support the legacy public switched telephone network access base in certain
areas, resulting in some investment in line adaptation in non-broadband
central offices.

Risk mitigation: TELUS continues to monitor and conduct trials of IP-based
voice technologies to better assess their technical applicability and evolving
cost profiles, as well as to determine the appropriate timing for
implementation by service area in line with TELUS' commitments to the CRTC and
its customers. TELUS is making investments in FTTN technologies and access
technologies that consider the future evolution of IP-based telephony. TELUS
is also working with manufacturers to optimize the operations and cost
structure of analog 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,
services and service development environments. 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 that 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 are being actively
ratified. However, the transformation from individual traditional silo systems
and architectures to a common environment is very complex.

TELUS has commercially launched one of the world's first IP TV systems, TELUS
TV, utilizing middleware designed specifically for video delivery. The
middleware is designed to allow complex signaling communication between
application software and system hardware in the network, and in the set-top
box in the home. Given that IP TV is in an early stage of development, there
is risk of obsolescence with middleware technology.

Risk mitigation: TELUS is mitigating this risk through modular architectures,
lab investments, partnering with system integrators where appropriate, and
using hardware that is common to most other North American IP TV deployments.
TELUS is ensuring that the IP TV deployment is part of an open framework that
will fit into the overall transformation strategy once standards are ratified
and the actual implementations have stabilized, particularly with the set-top
box.

    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 are a significant factor in maintaining competitive position
and profit margins. TELUS is proactive in evolving to next generation support
systems. As next generation services are introduced, they must be designed to
work with both legacy and next generation support systems, which introduces
uncertainty with respect to the costs and effectiveness of the solutions and
the evolution.

Risk mitigation: 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 network costs while limiting the impact on customer
services, and to facilitate the introduction of new services by removing,
where possible, any development dependency on the operational support systems.
In addition, TELUS is an active participant in the TeleManagement Forum that
is working to develop standard industry-defined modules in order to reduce the
cost through scale and increase the adoption through scope.

    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), third
generation (3G), and what some are calling fourth generation (4G) 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 CDMA2000 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) and continued widespread deployment of this
technology in 2006, reaching two-thirds of the Canadian population by the end
of the year. EVDO reliably provides average speeds of 400 to 700 Kbps. In late
2006, TELUS began deploying technology that will enable EVDO revision A (DOrA)
services to be turned up in certain markets in late 2007. DOrA is expected to
allow for a more symmetrical uplink speed to be achieved as well as ultimately
allow QoS services to be enjoyed on the data link.

In late 2006, Rogers launched their UMTS (Universal Mobile Telephone Service)
based HSDPA (High Speed Downlink Packet Access) network in the Golden
Horseshoe area of Ontario with stated plans for national deployment through
2007. UMTS is the evolution of the GSM network toward CDMA-based technologies.
While the underlying technologies of CDMA2000 and UMTS are very similar, they
are implemented in differing standards with no current opportunity for synergy
between the technologies. HSDPA provides downlink speeds similar to EVDO.
Further UMTS standard capabilities have been announced that will continue to
increase downlink speeds as well as introduce improvements to uplink speeds.

As international markets have also begun to deploy UMTS and HSPDA, some
CDMA2000-based international carriers have decided to overlay UMTS-based
networks on their CDMA2000 networks particularly for roaming considerations
or, in some cases, have announced an intention to convert the CDMA2000
subscriber base to UMTS once their networks are completed. Telstra (Australia)
has announced that it intends to migrate all current CDMA2000 subscribers to
UMTS by the end of 2007. Vivo (Brazil) has announced that it intends to
operate both a CDMA2000 and a UMTS service.

While TELUS has enjoyed commercial success with EVDO, and the CDMA2000-based
technologies continue to enjoy scale economies particularly in North America
(vis-a-vis handsets shipped that conform to the CDMA2000 standard versus
UMTS), there can be no assurance that these economies of scale will continue.
Further, there can be no assurance that CDMA2000 path will continue to mature
beyond DOrA into capabilities that will effectively compete with the emerging
UMTS/HSDPA path in terms of speeds and device types. In this regard, TELUS
will be influenced by the technology decisions made by large North American
CDMA carriers as they historically have driven industry-wide economies of
scale that TELUS cannot generate independently. Accordingly, there is risk
that TELUS' future capital expenditures may be higher depending on the
evolution of technology choices made by other large wireless operators,
particularly in North America.

TELUS continues to enjoy commercial success with the Mike service in Canada.
Mike is based on iDEN technology, which is used by 27 million users in a
number of countries around the world, and continues to grow its international
footprint. TELUS' Mike product is differentiated against current CDMA-based
PTT services in Canada in that Mike Direct Connect (iDEN PTT) has superior
call set-up time and inter-call latency. With its Mike service and CDMA based
Instant Talk service, TELUS remains the Canadian leader with the largest
number of subscribers using PTT. Notably, there is currently no GSM-based PTT
service in the Canadian market, but there is risk that one could be introduced
in the future.

Sprint-Nextel, the largest single operator of the iDEN technology, has
publicly committed to improve and market the iDEN network for PTT-centric
customers in the United States to 2012 and beyond. Further, Nextel
International, which markets iDEN-based services in Latin and South America,
has entered into a multi-year commercial agreement with Motorola that ensures
the continued development on subscriber devices up to the end of 2011. TELUS
continues to be active with Motorola and the iDEN community to successfully
commercialize new and evolving subscriber devices.

During 2006, Sprint-Nextel continued to merge its operations as a result of
Sprint's acquisition of Nextel. Sprint-Nextel announced that it will utilize
Q-Chat technology, developed by Qualcomm, to provide future PTT services on
its EVDO revision A (DOrA) CDMA network in addition to its PTT services on the
iDEN network. Q-Chat on CDMA promises potential PTT performance approaching
that of the iDEN technology in terms of call set-up time. It is anticipated
that Sprint-Nextel will commercialize the DOrA-based Q-Chat service in 2008.
It is also expected that Sprint-Nextel will promote interoperability between
its iDEN PTT base and Q-Chat PTT service through a gateway technology once the
Q-Chat service is launched. As TELUS has both iDEN and CDMA-based networks, it
is well positioned to benefit from these technological advancements, however,
there can be no assurance that these technologies will be commercially
successful, or economic for TELUS.

Risk mitigation: As common and continual practice, TELUS optimizes capital
investments to ensure positive payback periods for its investments and strong
flexibility to consider future technology evolutions. Further, a portion of
capital investments (such as towers, leasehold improvements, power systems,
etc.) are technology agnostic. TELUS actively maintains leading performance
indicators for its wireless networks in terms of network performance (such as
dropped and blocked calls) and client management (such as churn indicators).
TELUS maintains a close liaison with its network technology suppliers to
influence and benefit from developments in iDEN and CDMA technology, including
the promotion of convergence of the two technologies in order to maximize
synergies from operating both. In addition, TELUS' roaming/resale agreements
are possible because Bell Mobility and TELUS have similar CDMA technologies.

    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 new Wi-Fi networks, including municipal
deployments, and the development of Wi-Fi-based handsets may have a
significant impact on traditional wireless services, and this may trigger a
movement to VoIP services and promote erosion in ARPU. Further, this may also
trigger an accelerated incremental investment in next generation wireless
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 can 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 mobile services has recently been ratified by the IEEE. During
2006, Rogers and Bell Canada jointly built a network using pre-WiMax
technology utilizing the Inukshuk 2.5GHz spectrum in numerous major Canadian
cities. There can be no assurance that these emerging wireless technologies
will represent a greater opportunity than threat for TELUS. (See Section 10.1
Competition.) In 2006, Industry Canada issued a policy that provides for a
claw back of a portion of the 2500 MHz band for auction when mobile service is
implemented in the band. (See Section 10.3 Regulatory.)

Risk mitigation: TELUS actively maintains a proactive approach to both the
analysis and testing of emerging and alternative wireless access technologies.
TELUS has categorized what could be considered evolutions of 3G technologies
as well as what could be considered emerging 4G technologies for the purposes
of determining technology maturity, deployment suitability and market
readiness. In parallel, TELUS continues to invest in network upgrades that are
technology agnostic and can be levered across various access technologies.

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, price cap regulation, 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. In March 2006, the review
panel provided its Final Report to the Minister of Industry, recommending an
end to the presumption that telecommunications services must be regulated and
a shift to reliance on market forces. TELUS endorses the recommendations made
by the Telecommunications Policy Review panel in its Final Report and will
continue to advocate implementation of the panel's recommendations in 2007.

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.

    Local forbearance

On April 6, 2006, the CRTC issued Forbearance from the regulation of retail
local exchange services, Decision 2006-15, and established the framework for
forbearance (price deregulation) for local exchange services. This framework
provided guidance on when the ILECs will be eligible for forbearance for their
retail residential and business local exchange services. Wholesale regulation
related to the provision of local exchange service was not within the scope of
this proceeding. An ILEC will be eligible for forbearance from price
regulation of residential or business retail local exchange services in
individual geographic areas known as local forbearance regions (LFRs) when all
of the following five conditions are satisfied: (1) the ILEC's competitors in
the LFR have a combined market share of at least 25%; (2) the ILEC has met the
required standards for each of 14 specified competitor quality of service
(CQoS) indicators for the six-month period preceding the date of the
application; (3) the ILEC makes certain services available to competitors
(i.e., bundled ADSL, Ethernet access and transport services); (4) the ILEC has
implemented competitor access to its operational support systems; and (5) the
ILEC has demonstrated that rivalrous behaviour exists in the relevant market.

The CRTC also shortened the period during which an ILEC is prohibited from
contacting a former residential local exchange customer (regarding any
services), for the purpose of attempting to win the former customer back, from
12 months to 90 days in all LFRs. The existing restrictions on promotions,
bundling, and waiving of service charges would remain in place until
forbearance. The equivalent winback restriction in the business market
remained at 90 days. In addition, an ILEC would be eligible to have the local
winback no-contact rule eliminated entirely in a given LFR when both of the
following two conditions are satisfied: (1) the ILEC's competitors in the LFR
have a combined market share of at least 20%; and (2) the ILEC has met the
required standards for each of 14 specified CQoS indicators for the
three-month period preceding the date of the application.

Since Decision 2006-15 was issued, the CRTC initiated Public Notice 2006-9 to
determine whether mobile wireless services should be considered to be part of
the same relevant market as wireline local exchange services for forbearance
analysis purposes. The CRTC has also initiated Public Notice 2006-12 to
reassess certain aspects of Decision 2006-25 including: (1) whether the market
share forbearance criterion threshold of 25% should be adjusted; and (2)
whether the 20% market share loss threshold related to the local winback rule
remains appropriate.

On October 5, 2006, TELUS applied to the CRTC to review and vary Decision
2006-15 by either removing the requirement for the ILECs to meet competitor
quality of service standards as part of the forbearance criteria, or to limit
the extent to which competitor quality of service standards are included in
the forbearance test. TELUS has no assurance that the CRTC will agree with
TELUS' request to review and vary Decision 2006-15 and modify the forbearance
criteria.

On December 11, 2006, the Minister of Industry proposed significant changes to
the CRTC's framework for forbearance from regulation of residential and
business local exchange services. The proposal would eliminate the current
marketing restrictions on winbacks and most other promotions including the
prohibition on waiving service charges for winback customers. The proposal
would also replace the 25% market share loss test with a simple competitive
presence test that would require the presence of at least three
facilities-based telecommunications service providers (one of which could be
an unaffiliated wireless service provider) for residential local exchange
services, or at least two facilities-based telecommunications service
providers for business local exchange services. As well, the proposal would
reduce the competitor quality of service criteria that must be met as a
pre-condition for forbearance and permit the ex parte filing of tariff
applications for promotions. The proposed forbearance framework is subject to
a public comment period after which the Federal Cabinet can issue an Order in
Council to implement the proposed framework in its present form or revised to
reflect input received during the comment period. There is no guarantee that
this forbearance framework will be issued as proposed.

On December 18, 2006, the Governor in Council issued a direction to the CRTC
to rely on market forces to the maximum extent feasible; to ensure
technological and competitive neutrality and enable competition from new
technologies; to use tariff approval mechanisms that are as minimally
intrusive as possible; to complete a review of the framework for mandated
access to wholesale services; to publish and maintain performance standards
for its various processes; and to continue to explore new ways of streamlining
its processes.

    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 serving 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%.

The CRTC undertook a thorough review of the current price regulation regime in
2006 for the purpose of establishing the parameters for the next price cap
period. This review was completed in November 2006 and the CRTC is expected to
render its decision in this proceeding by the end of April 2007. 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.

In February 2006, the CRTC issued Telecom Decision CRTC 2006-9 in which 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 the funds accumulated in the ILEC deferral accounts. To the
extent that the accumulated deferral account exceeds approved initiatives, the
remaining balance would 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.

In response to Decision 2006-9, TELUS filed its proposal for the use of the
funds accumulated in its deferral account during the second price cap period.
In September, TELUS proposed to expand broadband services to rural and remote
communities and undertake initiatives to improve accessibility to
telecommunications services for individuals with disabilities. On November 30,
2006, the CRTC issued Review of proposals to dispose of the funds accumulated
in the deferral accounts, Telecom Public Notice CRTC 2006-15. This proceeding
will more closely examine the ILECs' proposals for broadband expansion and
allow Internet service providers an opportunity to identify where they are
providing, and intend to provide, high-speed Internet service. TELUS is also
waiting for decisions on two appeals filed with the Federal Court on how the
funds in the ILECs' deferral accounts should be treated. There is no guarantee
that the ILECs will be able to proceed with their proposals for the use of
deferral account funds pending the outcome of the CRTC proceeding initiated by
Public Notice 2006-15 and the appeals to the Federal Court.

    Essential services

The CRTC has issued Telecom Public Notice CRTC 2006-14, which will review the
current definition of an essential service and the classifications and pricing
principles for these services and non-essential services made available by the
ILECs to their competitors. This proceeding will include an oral hearing and
is currently scheduled to conclude in January 2008. TELUS has no assurance
that the regulatory regime for the provision of essential and non-essential
services to competitors will not be more onerous than the current regime.

    Quality of service rebate program

As part of the current price cap regime, the CRTC established a rate
adjustment plan and associated rate rebates for ILECs that do not meet
approved quality of service standards. TELUS has applied for the impact of
events beyond its control, including TELUS' labour disruption and the flooding
that occurred in Southern Alberta in 2005, 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 rate rebates paid by the Company. Nevertheless, TELUS has no assurance
that these penalties will not affect earnings 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 B.C. (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 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

In 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 also determined that ILECs may only provide VoIP
services in their incumbent territories in accordance with approved tariffs.

In Decision 2006-53, the CRTC reaffirmed Decision 2005-28 and the regulatory
regime established for VoIP services. However, on November 9, 2006, the
Governor in Council issued Order in Council P.C. 2006-1314 and varied
Decisions 2005-28 and 2006-53. As a result, the CRTC will no longer regulate
the provision of access independent VoIP services provided by the ILECs within
their incumbent territories.

    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.

A consultation process for the auction of AWS spectrum is expected to be
announced in the first half of 2007, with a subsequent auction expected in
late 2007 or 2008. An AWS auction was recently held in the United States with
existing carriers and U.S. cable-TV companies actively participating. Canadian
cable-TV companies and other entities may be interested in acquiring AWS
spectrum. TELUS supports an open auction for AWS spectrum, without
preferential treatment, but there is no guarantee that government will not
reserve spectrum for new entrants or require incumbents to allow roaming or
tower sharing for new entrants. (See Section 10.1 Competition.)

There is also speculation that Industry Canada may initiate an auction
consultation process for spectrum that has not been assigned in the 2500 and
2600 MHz ranges, particularly in Alberta and Atlantic Canada. While spectrum
in the 2500 and 2600 MHz ranges can be used for both fixed and mobile purposes
(see emerging technologies above), it remains uncertain whether a claw back
for one third of the currently licensed spectrum across Canada, in order to
move to mobile use, will occur prior to the end of licence periods for
Inukshuk and others in 2011. Moreover there is no guarantee that government
will not reserve spectrum for new entrants.

    Implementation of wireless number portability (WNP)

In Decision 2005-72, the CRTC directed Bell Mobility, Rogers Wireless Inc. and
the wireless division of TELUS to implement WNP 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, WNP (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 WNP in the required timeframe and/or
without incurring significant additional costs and/or ongoing administration
costs. Implementation of WNP portability may result in increased migration of
network access lines to wireless services, increased wireless subscriber
monthly churn and/or additional customer retention costs for TELUS.

When implemented in the U.S. in 2003, WNP did not cause a large increase in
churn as 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 its
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.

While TELUS anticipates the chances of removal of foreign ownership
restrictions under a minority government are low, if foreign ownership
restrictions were reduced or eliminated, the risk of entry of a fourth foreign
owned or financed wireless carrier by way of the anticipated upcoming wireless
spectrum auction would be heightened. (See Section 10.1 Competition.)

Risk mitigation for regulatory matters: TELUS advocates a regulatory
environment that relies, to the greatest extent possible, on market
competition rather than regulatory intervention. TELUS believes this is in the
best interest of customers. TELUS has also supported the relaxation of foreign
ownership restrictions in the past, but believes that any such relaxation must
be on an equal basis for broadcasting and telecommunications companies.

10.4 Human resources

    Collective bargaining at TELUS Quebec

Two collective agreements between TELUS Quebec and the Syndicat des agents de
maitrise de TELUS covering professional and supervisory team members in Quebec
expire on March 31, 2007 and are open for renewal negotiations. The larger of
the two covers approximately 511 team members while the other agreement
affects a smaller unit of 20 team members. In any set of labour negotiations,
there can be no assurance that the negotiated compensation expenses or changes
to operating efficiency will be as planned or that reduced productivity and
work disruptions will not occur as a result of or following these
negotiations.

Risk mitigation: A governance model is in place to ensure the financial and
operating impact of any proposed terms of settlement are analyzed and
determined to be aligned with TELUS' strategic direction. As is prudent in any
round of collective bargaining, while negotiations proceed, any potential need
to continue operations in response to work disruptions will be addressed
through contingency planning.

    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 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. The largest external contributor to this risk, namely the
forthcoming retirement of Canada's largest generation, will continue to
increase in magnitude over the next several years.

Risk mitigation: 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. Over the past 12 months, TELUS has
further increased focus on talent attraction and retention by leveraging the
merger of the wireless and wireline operations to establish best practices for
recruitment throughout the enterprise; strengthening its focus on enhancing
employee engagement and morale; and launching a strategic retention program
including five-year vesting of certain long-term incentives for highly
regarded senior personnel, diagnosing methods for enhanced retention of all
employees, and implementing targeted retention solutions for employees with
talents that are scarce in the marketplace.

10.5 Process risks

    TELUS systems, processes and internal reorganizations could negatively
    impact financial results and customer service

TELUS continues to develop a new billing system for the wireline segment,
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, as well
as reliance on newly developed third-party software. TELUS plans to implement
this project in phases beginning with certain consumer accounts in 2007, and
additional phases of conversion are planned over the next few years.

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.

The ongoing integration of wireless and wireline operations into a single
operating structure 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 expected, or that there will not be significant difficulties in
combining the structures, which could result in a negative impact on operating
and financial results.

Risk mitigation: In July 2006, TELUS implemented a pilot of the new billing
system solution with more than 20,000 consumer accounts to test the entire
solution in a production environment. In addition, project management of this
initiative includes extensive risk, scope and change control, resource, and
quality management. The quality assurance of the solution includes extensive
functional, performance, and revenue assurance testing. TELUS has successfully
implemented several new products and services on its existing billing solution
in advance of implementation. As a result of these factors, the overall risk
for this initiative has declined over the past 12 months and, based on the
current implementation schedule, this risk is expected to be further reduced
over the next 12 months.

With regard to internal reorganizations, TELUS has a dedicated business
transformation group that closely manages these events leveraging expertise,
learnings, and best practices gained from numerous merger and business
integrations as well as efficiency-related reorganizations in recent years.

    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 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.

Risk mitigation: TELUS continues to build its own facilities to reduce
third-party reliance as facilitated by improved economics associated with
winning additional business in the marketplace.

10.6 Financing and debt requirements

     TELUS' business plans and growth could be negatively affected if existing
     financing is not sufficient to cover funding requirements

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.

Risk mitigation: 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.

In May 2005, TELUS entered into $1.6 billion of new bank credit facilities,
which partially mitigates this risk. The new credit facilities consist of an
$800 million (or U.S. dollar equivalent) revolving three-year credit facility
and an $800 million (or U.S. dollar equivalent) five-year revolving credit
facility. TELUS has more than $1.4 billion of available liquidity from
unutilized credit facilities at December 31, 2006.

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, 2006, 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 termination date of the
agreement. Effective November 30, 2006, the termination date was extended by
one year to July 2008.

    Ability to finance maturing debt

TELUS has significant debt maturities in 2007 including U.S. $1.17 billion of
TELUS 7.5% Notes maturing in June.

Risk mitigation: TELUS has taken several steps towards refinancing a
significant amount of these Notes. In May 2006, TELUS successfully issued
$300 million of 5.00% Notes, Series CB, with a seven-year maturity. The net
proceeds of the offering were used to pay for the early termination of cross
currency swap agreements related to TELUS' 7.5% U.S. dollar Notes that mature
in June 2007. In addition, the Company has entered into forward starting
interest rate swap agreements that have the effect of fixing the underlying
interest rate on up to $500 million of future debt issuance. TELUS also has
access to a shelf prospectus pursuant to which it can issue a further
$2.7 billion of debt and equity. TELUS believes that its investment grade
credit ratings provide reasonable access to capital markets to facilitate
future debt issuance.

     A reduction in TELUS credit ratings could impact TELUS' cost of capital
     and access to capital

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.

Risk mitigation: TELUS 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 and the
fourth currently has TELUS under review for possible upgrade. TELUS has
financial policies in place that were established to help maintain or improve
existing credit ratings. Financial policies include long-term targets for the
net debt to EBITDA ratio of 1.5 to 2.0 times (1.7 times as at December 31,
2006) and the net debt to total capitalization ratio of approximately 45 to
50% (47.5% as at December 31, 2006).

    Lower than expected free cash flow could constrain ability to invest in
    operations or make purchases under NCIBs

TELUS expects to generate free cash flow in 2007, which would be available to,
among other things, repurchase shares and pay dividends to shareholders. While
anticipated cash flow is expected to be more than sufficient to meet current
requirements and remain in compliance with TELUS' financial policies, these
intentions could constrain TELUS' ability to invest in its operations for
future growth or to complete share repurchases. TELUS has set its financial
policies with the expectation that payment of material cash income taxes will
commence in 2008 and be substantial in 2009, as noted in Section 10.7 Tax
matters. Payment of cash income taxes in the future will reduce the after-tax
cash flow otherwise available to return capital to shareholders. 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.

Risk mitigation: In recent years, TELUS had sufficient cash flow to repurchase
shares under NCIBs. The Company announced a new NCIB, effective from December
20, 2006 to December 19, 2007, to repurchase a maximum of 24 million TELUS
shares. Under NCIB programs in place from December 2004 to December 2006, the
Company has repurchased 39.4 million shares for a total of $1.77 billion. As
the Company begins paying cash income taxes after 2007, it may choose to not
renew or to reduce the size of NCIBs, as warranted.

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 36.4% increase in the quarterly dividend
payout rate from 27.5 cents to 37.5 cents effective with the dividend paid on
January 1, 2007. At the January 1, 2007 level of dividend and shares
outstanding, this would total approximately $507 million in dividends in 2007.

10.7 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 subject to
continual change. The Company has significant amounts of income taxes
receivable and payable, as well as future income tax liabilities. These
amounts are based on estimates by TELUS management and potential changes to
them. The timing of realizing such amounts can materially affect the
determination of net income or cash flows in future periods. As noted in
Section 5: Results of operations - Income taxes, TELUS currently expects cash
income taxes to be minimal in 2007, increasing in 2008, and substantial in
2009. In addition, the expected blended statutory income tax rate is expected
to be 33 to 34% in 2007. There can be no assurance that these expectations
will not change as a result of changes in interpretations, regulations and
legislation.

The timing concerning the monetization or realization of future income tax
accounts is uncertain, as it is dependent on future earnings of TELUS and
other events. The amounts of future income tax liabilities are also uncertain,
as the amounts are based upon substantively enacted future income tax rates in
effect at the time, which can be changed by governments. The amount of future
income tax liabilities 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.

In 2006, the Company continued to further expand its activities into the
United States and other foreign jurisdictions. In the U.S., federal, state and
local jurisdictions have created varying regimes for income, revenue, sales
and use and property taxes. In addition to such regimes being complex, the
sheer number and variation of such regimes in the U.S. jurisdictions in which
the Company has entered into transactions are causes for additional financial
risk to the Company.

Each foreign jurisdiction in which the Company has entered into transactions
has its own taxation peculiarities in addition to the language and currency
complexities such jurisdictions impose. Accordingly, TELUS' foreign expansions
during 2006 have added to the exposure to tax risk the Company faces.

Risk mitigation: The Company maintains an internal Taxation function comprised
of professionals who are trained and educated in taxation administration and
who maintain an up-to-date knowledge base of new developments in the
underlying law, its interpretations and jurisprudence. This function is also
responsible for the specialized accounting required for income taxes and
accordingly this group is charged with maintaining state-of-the-art knowledge
of tax accounting developments and the implementation of such relevant
measures as are required from time to time.

The transactions of the Company are under continuous review by the Company's
Taxation department whereby transactions of an unusual or non-recurring
nature, in particular, are assessed from multiple risk-based perspectives.
Tax-related transaction risks are regularly communicated to and reassessed by
external tax counsel as a check to initial exposure assessment. As a matter of
regular practice, large transactions are reviewed by external counsel and
other third-party advisors may also be engaged to express their view as to the
potential for tax eligibility.

The Company has engaged external counsel and advisors as appropriate to
provide advice and to comply with tax laws in the jurisdictions in which it
has operations of any significance. The advice and returns provided by such
advisors and counsel are reviewed for reasonableness by the TELUS internal
Taxation function.

10.8 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
healthcare costs.

Risk mitigation: 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.

Risk mitigation: 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. These include a study published in the Journal of
the National Cancer Institute in 2006, involving 420,000 cell phone users in
Denmark, which found that cell phone users are no more likely than anyone else
to suffer a range of cancer types. 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, incremental legal requirements and
product liability lawsuits. TELUS continues to monitor developments in this
area.

    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.

Risk mitigation: 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. Newfoundland & Labrador is currently the only Canadian
province to ban drivers' use of handheld wireless phones, however, 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 the matter, 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 business operations, TELUS owns or leases a large number of
properties. The presence of fuel systems for back-up power generation enables
the provision of reliable service, but also poses the most significant
environmental risk to the Company. Spills or releases of fuel from these
systems have occurred at times in the past, with maximum cost incurred at any
site of approximately $1 million. Hazardous chemicals are commonly used at
many sites and within the telecommunications industry in general. As well,
certain hazardous materials are found only at some locations. Based on the
volume 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 liability from
potential 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. There has been
little change to TELUS' environmental risks over the past 12 months. Although
TELUS takes proactive measures to identify and mitigate environmental
exposures and employs an environmental management system, there can be no
assurance that specific environmental incidents will not impact TELUS
operations in the future.

Risk mitigation: TELUS' environmental risks are considered immaterial to
TELUS' financial results, however, poorly executed environmental performance
or risk mitigation could have negative legal, brand or community relations
impacts. The risk posed by fuel systems is being addressed through a program
to install containment and monitoring equipment at sites with systems of
qualifying size. Further detailed assessment of environmental risks can be
found in the TELUS corporate social responsibility report on the Company's
website.

10.9 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.

    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 (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
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, 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.

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

Risk mitigation: As a term of the settlement reached between TELUS
Communications Inc. and the TWU that resulted in a collective agreement
effective November 20, 2005, 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. However, the Company has been
advised by the TWU that the plaintiffs have not agreed to dismiss or
discontinue these actions, and the Company has not been informed of any change
in this regard.

    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 its $125
million 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 the Supreme Court of Canada denied leave to appeal by the Company
in January 2006. The Ontario Court of Appeal further ruled in November 2006
that this lawsuit should be treated as a representative action by all
bondholders and not just the named plaintiffs. The magnitude of amounts
ultimately paid will depend in part on the method of calculating damages and
who are entitled to damages, which remain to be litigated. 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.

Risk mitigation: The Company believes that it has conservatively accrued for
damages. 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. Since then, other provinces have
adopted or are expected to adopt similar legislation.

These 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 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.

Risk mitigation: In 2005, TELUS 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 (publicly available on telus.com/corporate governance) that
restricts spokespersons to specifically designated senior management, provides
a protocol for dealing with analysts and oral presentations, and has a
disclosure committee to review and determine disclosure of material facts and
information, as well as the communication approach to issues. TELUS
re-evaluated its disclosure practices and procedures in 2006, and believes
that they continue to be appropriate and prudent and that its risk exposure is
reasonable and has not changed significantly over the past 12 months. However,
there can be no assurance that TELUS' processes will be followed by all team
members at all times.

    Legal and regulatory compliance

TELUS relies on its employees, officers, Board of Directors, key suppliers and
partners to demonstrate reasonable legal and ethical standards. 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
legislation, thereby exposing TELUS to the possibility of damages, sanctions
and fines, or negatively affecting financial or operating results.

In 2006, the Company continued to expand its activities into the United States
and other foreign jurisdictions. Its subsidiaries that operate in foreign
jurisdictions are required to comply with local laws and regulations, which
may differ substantially from Canadian laws and add to the legal exposure the
Company faces.

Risk mitigation: Although management cannot predict outcomes with certainty,
management believes it has reasonable policies, processes and awareness in
place for proper compliance and that these programs are having a positive
effect on reducing risks. Since 2002, TELUS has instituted for its employees,
officers and directors an ethics policy and in 2003, established a toll-free
EthicsLine for anonymous reporting by anyone who has issues or complaints.
Since 2003, TELUS has 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 and 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. In addition, external
legal advisors qualified in the relevant foreign jurisdictions are engaged by
TELUS' subsidiaries to provide legal advice as appropriate.

10.10 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 to natural
disasters and intentional threats to TELUS' network, IT, physical assets and
team members.

Risk mitigation: TELUS has an extensive business continuity program (BCP) with
resources dedicated to design, maintain and execute business
continuity/disaster recovery plans. The mandate of TELUS' business continuity
office is to develop and maintain a common business continuity program
(policies, processes and metrics) across the organization based on best
practices. This critical program enables TELUS' continued ability to serve
customers, protect corporate assets, and strive to ensure employee protection
and safety.

During 2006, TELUS made progress in regards to a number of multi-year business
continuity readiness initiatives including: updating the health epidemic plan,
improving building structures to mitigate seismic risks, and implementing
web-enabled BCP software to support customized BCP site plan development for
all TELUS locations. In addition, contingency planning was renewed for
outstanding labour negotiations.

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 - non-technical types of intrusion that rely heavily on
human interaction and tricking people into breaking normal security procedures
- to the use of sophisticated malicious software.

Risk mitigation: 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 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.

    Security - Vandalism and theft

TELUS has a number of publicly situated physical assets, including public
payphones, copper cable, network and telephone switch centres, that could be
subjected to vandalism and/or theft.

Risk mitigation: Using factors such as the importance of the asset, the
exposure risks and the potential costs incurred should the asset be damaged or
stolen, 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.

    Climate change impacts

TELUS recognizes that the impacts of climate change, including severe weather
events, may bring additional exposure to TELUS infrastructure and operations.
In 2006, specific attention was directed to climate change within the TELUS
business continuity planning framework, including issues such as rising sea
levels, altered patterns of agriculture, potential for increased incidence of
extreme weather events (including flash flooding and high winds), drier
conditions resulting in more wildfires, and the expansion of the range of
tropical diseases, as well as pandemics. Each of these threats has the
potential to affect TELUS operations, from physical damage to scarcity of
resources, thus resulting in impacts on customer service and provision of
emergency services.

Risk mitigation: TELUS has a number of business continuity and network
operations plans and practices in place to address a spectrum of scenarios
linked to climate change impacts. These include but are not limited to the use
of flood tube technology to protect building and network assets from flooding,
the development of equipment relocation plans, and the designed redundancy and
diversity of the Company's networks.

Although TELUS has practices and planning processes in place, there can be no
assurance that specific events will not impact TELUS operations and financial
results.

10.11 Economic growth and fluctuations

Canadian real GDP growth for 2006 was recently estimated by the Bank of Canada
at 2.8%. This estimated growth reflects weaker net Canadian exports and the
weaker near-term outlook for the U.S. economy. The U.S. economy has recently
been constrained by the significant slowdown that is occurring in the U.S.
housing sector and the slowing demand for automobiles. Accordingly, the Bank
of Canada views the U.S. slowdown as a cyclical correction leading to a
temporary slowing of economic growth and not a contraction. The Canadian
consumer price index (CPI) inflation has been volatile due to developments in
the energy markets and effects of the one percentage point reduction in the
federal goods and services tax. However, there are indications of increased
price pressure spilling over into other prices as Canadian core inflation
increased from near 1% to 2% by mid-2006. This was an indication that the
Canadian economy had been operating at just above its productive capacity. The
principal risk to Canadian economic growth is a more pronounced U.S. economic
slowdown and/or a significant decline in global demand for commodities. This
would have a significant negative impact on the demand for Canadian produced
goods and services.

Growth in B.C. and Alberta (estimated 2006 GDP growth rates of 3.6% and 6.6%,
respectively) was higher than the national average, leading to strong housing
growth, and increased business activity in TELUS' incumbent territory. Growth
rates are expected to be moderate in 2007, but remain stronger in the West
than in Central Canada. As noted in Forward-looking statements, TELUS'
assumption for economic growth in Canada is approximately 2.7% in 2007,
consistent with recent estimates from the Conference Board of Canada. There
can be no assurance that Canadian economic growth will attain this level.

    Significant economic downturns or recessions may adversely impact TELUS

In the event of an uncertain economy or an economic downturn, residential and
business telecommunications customers may delay new service purchases, reduce
volumes of use, discontinue use of services, or seek lower-priced
alternatives. Significant economic downturns or recessions could adversely
impact TELUS' profitability, free cash flow and bad debt expense, and
potentially 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.

Risk mitigation: The Company cannot completely mitigate economic risks.
However, by expanding nationally since 2000, TELUS has gained exposure to the
more diversified manufacturing economies in Ontario and Quebec, and has become
somewhat less exposed to regional weakness. TELUS is currently benefiting from
growth in the cyclical resource economies in B.C. and Alberta. Conversely,
reduced growth in Ontario and Quebec has likely contributed to more moderate
growth in TELUS' non-incumbent wireline operations.

    Pension funding

Economic fluctuations could also adversely impact the funding and expense
associated with the defined benefit pension plans that TELUS sponsors. There
can be no assurance that TELUS pension expense and funding of its defined
benefit pension plans will not increase in the future and thereby negatively
impact earnings and/or cash flow. 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.

Risk mitigation: 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. In 2006, TELUS made cash contributions of
$172 million to its pension plans (including $123 million to its defined
benefit plans) and slightly reduced levels are expected in 2007. While TELUS
cannot apply the surplus in one defined benefit pension plan to a deficit in
another plan, at December 31, 2006, TELUS' defined benefit pension plans in
aggregate were in a surplus position by $263.6 million, as plan assets
exceeded accrued benefit obligations.

11. Reconciliation of non-GAAP measures and definition of key operating
     indicators

11.1 Earnings before interest, taxes, depreciation and amortization (EBITDA)

TELUS has issued guidance on and reports EBITDA because it is a key measure
used by management to evaluate performance of business units, segments and the
Company. EBITDA is also utilized in measuring compliance with debt covenants -
see Section 11.4 EBITDA excluding restructuring and workforce reduction costs.
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, nor should it be 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)											2006 		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Net income		                                                                        1,122.5           700.3
Other expense (income)		                                                                   28.0 	   18.4
Financing costs		                                                                          504.7 	  623.1
Income taxes		                                                                          351.0 	  322.0
Non-controlling interest		                                                            8.5 	    7.8
---------------------------------------------------------------------------------------------------------------------------------
Operating income		                                                                2,014.7 	1,671.6
Depreciation		                                                                        1,353.4 	1,342.6
Amortization of intangible assets		                                                  222.2 	  281.1
---------------------------------------------------------------------------------------------------------------------------------
EBITDA		                                                                                3,590.3 	3,295.3
=================================================================================================================================
</TABLE>

In addition to EBITDA, TELUS calculates EBITDA less capital expenditures as a
simple proxy for cash flow in its two reportable segments. EBITDA less capital
expenditures 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)											2006 		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
EBITDA												 3,590.3 	 3,295.3
Capital expenditures (Capex)		                                                        (1,618.4)	(1,319.0)
--------------------------------------------------------------------------------------------------------------------------------
EBITDA less capital expenditures		                                                 1,971.9 	 1,976.3
=================================================================================================================================
</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 its performance. 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
considered 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)		 									2006 		2005
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities		                                                 2,803.7  	 2,914.6
Cash (used) by investing activities		                                                (1,675.2)       (1,355.2)
--------------------------------------------------------------------------------------------------------------------------------
	                            	                                                         1,128.5 	 1,559.4
Net employee defined benefit plans expense		                                             5.4 	    (3.9)
Employer contributions to employee defined benefit plans		                           123.3 	   118.8
Amortization of deferred gains on sale-leaseback of buildings,
 amortization of deferred charges and other, net		                                   (51.7)	    (1.1)
Reduction (increase) in securitized accounts receivable		                                      -- 	  (350.0)
Non-cash working capital changes except changes in taxes, interest
 and securitized accounts receivable, and other		                                           338.1 	   106.1
Acquisitions		                                                                            49.0 	    29.4
Proceeds from the sale of property and other assets		                                   (14.9)	    (4.5)
Other investing activities		                                                            22.7 	    11.3
---------------------------------------------------------------------------------------------------------------------------------
Free cash flow (2006 definition)		                                                 1,600.4 	 1,465.5
Donations and securitization fees included in
Other expense		                                                                           (29.1)	   (14.6)
--------------------------------------------------------------------------------------------------------------------------------
Free cash flow (2007 definition)		                                                 1,571.3 	 1,450.9
=================================================================================================================================
</TABLE>

The following shows management's calculation of free cash flow.

<TABLE>
<CAPTION>
											      Years ended December 31
($ millions)											2006 		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
EBITDA		                                                                                3,590.3 	 3,295.3

Restructuring and workforce reduction costs net of cash payments		                   (4.0)	   (13.6)
Share-based compensation		                                                           25.1 	    24.3
Cash interest paid		                                                                 (516.1)	  (638.3)
Cash interest received		                                                                   24.2 	    47.3
Income taxes received (paid), less investment tax credits received that
 were previously recognized in either EBITDA or capital expenditures, and other		           99.3 	    69.5
Capital expenditures		                                                               (1,618.4)	(1,319.0)
--------------------------------------------------------------------------------------------------------------------------------
Free cash flow (2006 definition)		                                                1,600.4 	 1,465.5
Donations and securitization fees included in
  Other expense		                                                                          (29.1)	   (14.6)
--------------------------------------------------------------------------------------------------------------------------------
Free cash flow (2007 definition)		                                                1,571.3 	 1,450.9

=================================================================================================================================
</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.

Average revenue per subscriber unit per month (ARPU) is calculated as Network
revenue divided by the average number of subscriber units on the network
during the period, and expressed as a rate per month. Data ARPU is a component
of ARPU, calculated on the same basis for revenues derived from services such
as text messaging, mobile computing, personal digital assistance devices,
Internet browser activity and pay-per-use downloads.

Churn per month is 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, and 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 for 2006 was
$532.6 million. COA for 2005 was $494.3 million.

COA per gross subscriber addition is calculated as cost of acquisition divided
by gross subscriber activations during the period.

EBITDA excluding COA is a measure of operational profitability normalized for
the period costs of adding new customers.

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.

11.4 Definition of liquidity and capital resource measures

Dividend payout ratio is 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, rather than on a trailing basis, is 45 to
55% of sustainable net earnings.

EBITDA excluding restructuring and workforce reduction costs 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
$67.8 million and $53.9 million, respectively, for the years ended
December 31, 2006 and 2005.

EBITDA interest coverage is 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.

Funded debt, in general terms, is borrowed funds less cash on hand as defined
in the Company's bank agreements.

Interest coverage on long-term debt is 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 for the 12-month trailing period ending December 31, 2006 includes losses
on redemption of long-term debt. The 12-month periods ended December 31, 2006
and 2005 include accruals for estimated costs to settle a lawsuit.

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.
The definition was changed in 2006 to include securitized accounts receivable,
which is closer to methods used by credit rating agencies. Net debt, before
addition of securitized accounts receivable and certain other minor
differences, is one component of a ratio used to determine compliance with
debt covenants (refer to the description of Net debt to EBITDA below).

<TABLE>
<CAPTION>

                                                                                                   At December 31
($ millions)											2006 		2005
<S>												<C>		<C>
---------------------------------------------------------------------------------------------------------------------------------
Current maturities of long-term debt								1,434.4 	    5.0
Long-term debt											3,493.7 	4,639.9
---------------------------------------------------------------------------------------------------------------------------------
												4,928.1 	4,644.9
Net deferred hedging liability									  838.5 	1,158.1
---------------------------------------------------------------------------------------------------------------------------------
Debt												5,766.6 	5,803.0
Cash and temporary investments									   11.5 	   (8.6)
Securitized accounts receivable									  500.0 	  500.0
---------------------------------------------------------------------------------------------------------------------------------
Net debt											6,278.1 	6,294.4
=================================================================================================================================
</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.

Net debt to EBITDA is defined as Net debt as at the end of the period divided
by the 12-month trailing EBITDA excluding restructuring and workforce
reduction costs. TELUS' guideline range for Net debt to EBITDA is from 1.5 to
2.0 times. Historically, Net debt to EBITDA is substantially the same as the
Leverage Ratio covenant in TELUS' credit facilities.

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%.

Net interest cost is 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. Net interest costs for the 12-months ending December 31, 2006
and 2005 are equivalent to reported quarterly financing costs over those
periods.

Total capitalization is calculated as follows:

<TABLE>
<CAPTION>
                                                                                                   At December 31
($ millions)		2006 		2005
<S>												<C>		<C>
--------------------------------------------------------------------------------------------------------------------------------
Net debt	                                                         	                 6,278.1 	 6,294.4
Non-controlling interests		                                                            23.6 	    25.6
Shareholders equity		                                                                 6,928.1  	 6,870.0
---------------------------------------------------------------------------------------------------------------------------------
Total capitalization (book value)	                            	                        13,229.8 	13,190.0
=================================================================================================================================
</TABLE>




Exhibit 5:  Consent of Independent Registered Chartered Accountants


We consent to the incorporation by reference in Registration Statement No.
333-1275770 on form F-10 and Registration Statement No.'s 333-125486,
333-121629, 333-115750, 333-110964 and 333-103562 on form S-8 of our reports
dated February 14, 2007 relating to the financial statements of TELUS
Corporation for the year ended December 31, 2006 and management's report on the
effectiveness of internal controls over financial reporting as of December 31,
2006 appearing in this Annual Report on Form 40-F of TELUS Corporation for the
year ended December 31, 2006.

       /s/Deloitte & Touche, LLP
       ____________________________
       (Signed Deloitte & Touche, LLP)
       Vancouver, British Columbia, Canada
       March 16, 2007



Exhibit 6:  Amended 2006 Ethics Policy

                            TELUS ETHICS POLICY

                                 May 2006

                            TELUS Ethics Policy

                            Table of Contents

Introduction	                                                    4
Responsibilities	                                            5
   Team TELUS	                                                    5
   Compliance/Exceptions	                                    5
   Managers                                                         6
   Senior Managers (Directors and above)	                    6
   TELUS Board of Directors Members and Employees Who Represent
     TELUS as Directors on Other Organization Boards	            6
   Ethics Office	                                            6
   Ethics Work Group	                                            6
Ethical Decision Making	                                            7
     1.  Questions to Ask Yourself	                            7
     2.  Review Guidelines and Policies	                            7
     3.  Talk to Your Manager	                                    8
     4.  Expert Assistance	                                    8
     5. TELUS EthicsLine	                                    8
     6.  Last Resort Resolution	                                    9
Ethical Guidelines	                                           10
   Customer and Team TELUS Information	                           10
     Privacy of Communications	                                   10
     Confidentiality of Information	                           10
     Case Studies	                                           10
Integrity	                                                   13
     Personal and Corporate Integrity	                           13
     Proprietary Rights of Others	                           13
     Compliance with Laws	                                   13
     International Operations	                                   13
     Public Safety	                                           14
     Political Activities	                                   14
     Case Studies	                                           14
Company Assets	                                                   16
     Company Information	                                   16
     Public Disclosure	                                           16
     Business Records	                                           17
     Financial Transactions	                                   17
     Property	                                                   17
     Case Studies	                                           18
Conflict of Interest	                                           20
     Relationships	                                           20
     Competition	                                           21
     Future Business	                                           21
     Outside Demands	                                           21
     Information	                                           21
     Insider Trading	                                           21
    Gifts and Benefits	                                           22
    Case Studies	                                           22
Dealing with Suppliers, Contractors, Consultants and Agents	   25
    Selecting Suppliers, Contractors, Consultants and Agents	   25
    Adherence to applicable TELUS policies	                   25
    Case Study	                                                   26

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 required 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.telusinternational.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
      wherever in the world we are working

    * Compliance with applicable local, provincial and federal laws and
      regulations

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 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 (for
more details please refer to the TELUS EthicsLine section). Members of the
TELUS 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 (Directors and above)

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 TELUS 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, Corporate 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 and Corporate Security Manual
    Respectful Workplace Policy
    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
    Records 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 Quebec team members should seek advice from the TELUS
Quebec Director-Labour Relations and Ambergris Solutions team members should
contact their Vice President for Human Resources.

5. TELUS EthicsLine

You may also contact the TELUS EthicsLine 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.

Phone toll free: 1-866-515-6333 (in North America)
Email: ethicsline@telus.com or ambergris.ethicsline@telus.com

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 labour relations and employment matters or 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 under the direction
of Legal Services where appropriate. The following matters for which other
remedies exist will not be investigated by the Ethics Office and will be
redirected as follows:

    * Labour relations issues - Immediate manager or other members of
      management
    * Employment 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 union collective agreements, 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 or other departments 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 or for assisting or participating in an investigation of a complaint
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, Corporate 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

We 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 TV
personality who has just moved to the city. She asks Shelley to look up his
address and phone number since this information is not listed in the public
directory. 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
belonging to others. This does not preclude gathering information with the
owner's consent or from the public domain.

We are committed to free competition based upon the merits of our products and
services and do not support any agreements, actions or concerted actions that
restrict or impede fair competition in contravention of applicable law. Under
certain circumstances, we may, for strategic marketing reasons, develop and
contract services exclusively with a given partner. Legal Services must be
consulted before all such arrangements are established.

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 wherever we conduct
business. Team members should be familiar with the laws and regulations that
relate to their work and to comply with them. It is the responsibility of
managers to ensure that members of their team are aware of their
responsibilities in this regard and to seek advice from Legal Services or
Regulatory Affairs in they are unsure.

International Operations

Many countries have laws that regulate the import and export of goods,
services, software and technology for a variety of reasons, including national
security and foreign policy. We will comply with all the laws of Canada and
those of other countries that may apply, concerning the import and export of
goods, services , software and technology.

In countries outside of Canada, customs vary regarding exchanging business
courtesies. We will ensure that any exchange of business courtesies when
conduciting business conforms to Canadian and local laes and TELUS standards.
Particular care should be taken when dealing with government employees in this
regard.

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. Team members are referred to the Alcohol and Drug Corporate Policy
for further details.

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. Team members are referred
to the Corporate Security Policies for further details on the classification
and safeguarding of TELUS' information assets.

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.

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 Services Department can draw up a
confidentiality agreement or license agreement to protect TELUS.

No team member should knowingly invoke a software 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.

Public Disclosure

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, to
which team members are referred for further details.

Examples of situations that may lead to inappropriate public disclosure
include:

    * Participating in an investment-related discussion forum, chat room or
      bulletin board on the Internet. The team member must not disclose any
      confidential or material information about TELUS.
    * Contact with a member of the investment community or the media. All
      inquiries from these groups must be referred to those team members
      authorized to communicate on behalf of TELUS. For further information,
      contact Investor Relations or External Communications.
    * Presentations to business, educational and community groups using
      non-public TELUS information. Team members invited to make such
      presentations should receive approval from the VP Investor Relations or
      External Communications prior to accepting the invitation. In addition,
      all such public speeches and presentations must be provided in advance to
      Investor Relations and External Communications for review where requested
      by them.

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 all team members understand their role and responsibility for
the company's financial transactions and records and follow approved
procedures to protect, report, control, and accurately reflect these
transactions.

It is a violation to falsify company records or documents (including, for
example, contracts, orders, time sheets, adjustments and expense statements)
and 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 display pride of ownership on behalf of the TELUS team as we protect
company facilities, equipment, tools, supplies, vehicles, property,
communication networks and information systems against loss, theft, damage,
vandalism, gross neglect, 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 Network Operations
may only do so if specifically authorized by trouble ticket or customer order.

Team members are referred to the Corporate Security Policies for further
details on the acceptable use of company equipment (including emails and
internet use).

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
it to me 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.

roblem

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 cannot be purchased locally. 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 or the perception 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.

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.

This guideline does not prohibit team members from holding publicly traded
shares of an entity with which TELUS has a business relationship or a
competitor provided that the team member does not have a significant
investment in the entity 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.

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 such as a customer, supplier, contractor,
consultant, agent, vendor, customer, channel partner or dealer. This personal
benefit may take the form of an ownership interest in or a role as a director,
officer or employee of an entity that is engaged in a business relationship
with TELUS.

Team members may not participate in a decision to hire, transfer or promote a
family member, or be in a position of direct or indirect position of influence
over a family member. Team members may not supervise a family member nor have
direct or indirect authority over employment-related decisions of a family
member such as pay, performance ratings, work assignments, discipline,
training or termination.

Family member is defined as a spouse (including common-law spouse and same sex
partner), child, stepchild, parent, sibling, niece, nephew, aunt, uncle,
cousin, grandparent, grandchild, in-law (including mother-in-law,
father-in-law, son-in-law, daughter-in-law, sister-in-law, brother-in-law) or
any person (other than domestic employees) residing in the same household as
the TELUS team member.

TELUS Board members must disclose any family or personal relationship with
TELUS team members or with TELUS job applicants to the Chair of the Corporate
Governance Committee in order that the Committee may determine whether the
relationship impacts the Director's independent status.

Situations may arise where broader familial relationships and other close
personal associations cause real or perceived conflicts of interest or the
possibility of real or perceived improper influence. Team members should be
sensitive to these concerns and demonstrate good business judgment in the best
interest of TELUS and in keeping with the spirit and intent of this policy.
Any uncertainty should be discussed with the appropriate HR business partner.

Team members must not be involved in any negotiations or transactions with
customers, suppliers, contractors, consultants, agents, vendors 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.

Competition

Conflict of interest may occur when a team member or family member gains
personal benefit from an outside business in competition with TELUS.

Future Business

Over time, TELUS may expand into new businesses or change its 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.

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 or the close equivalent
in other currencies 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 neighbor 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 neighbor 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 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' 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 vacation condominium. 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.

Problem

Susan is a customer service manager with TELUS and her nephew is seeking
employment as an engineer with TELUS. Is Susan able to recommend her nephew
for employment?

       Action

    To avoid a conflict of interest, Susan should have no involvement in the
    selection decision. However, she may provide a written personal reference
    to the appropriate HR recruitment manager.

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.

Case Study

Problem

Our team was tasked to construct a specialized telephone network for a
customer in a very restricted timeline. We chose a locally reputable
contractor that was not on TELUS' preferred list of contractors because none
of these contractors had the resources or skills to complete this project by
the deadline. In our contractor selection we ensured it was not done at the
expense of objective fair criteria such as quality service and price. What
else should we do?

	Action
    We should also ensure our contractor is made aware of applicable TELUS
    policies specific to the work for which they are being engaged.



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: March 16, 2007
				    TELUS Corporation


			 	   /s/ Audrey Ho
				_____________________________
				Name:  Audrey Ho
                                Title: Vice President, Legal Services and
                                       General Counsel and Corporate Secretary