CEO letter to investors

Throughout 2021, our TELUS team demonstrated our social purpose in action by supporting our customers, our communities and each other. Even as we experienced more relaxed public health measures, our innovative digital My TELUS app, virtual call centres and touchless install, repair and fulfilment processes remained our primary means of interacting with customers. Similarly, our business clients capitalized on our expertise in digital connectivity to enable the productivity of their employees. In addition, we shared best practices for supporting the mental wellness of their teams and ensuring their own customers could do business safely. Moreover, through our #StandWithOwners campaign, we invited Canadians to support local entrepreneurs and celebrate small business heroes as they worked to sustain their companies through the pandemic. Importantly, our team assisted with COVID-19 vaccine efforts in Quebec, Ontario, Alberta and British Columbia. Your Company enabled the largest vaccine roll-out program in B.C.’s history, booking seven million vaccination appointments while accelerating the province’s timelines and ensuring our most vulnerable citizens were given access to vaccines expeditiously. At the same time, our team offered support to citizens across the country facing other challenges, including flooding and wildfires, reinforcing that when things are at their worst, our customers and communities can count on TELUS to be at our best.

Our team is driven by our collective desire to leverage our technological and human innovation to enable vital connectivity for Canadians. Since 2000, TELUS has invested $220 billion in network infrastructure, operations and spectrum to expand and evolve our networks and technology. Our world-leading wireless and PureFibre networks have earned consistent, multi-year recognition for speed, reliability, user experience and expansiveness from independent reports, including U.K.-based Opensignal, U.S.-based Ookla, PCMag and J.D. Power, and Canada’s Tutela. These acknowledgments reaffirm our belief that strong, reliable networks are the backbone of Canada’s digital economy, enabling positive outcomes for our fellow citizens. We are proud of the many ways in which our wireless and PureFibre networks, with their global-best speeds, reliability and reach, are driving economic growth, innovation and job creation. Moreover, our world-leading broadband networks and technology are improving the lives of Canadians by enabling online healthcare, education and teleworking flexibility during the pandemic; and accelerating Canada’s digital economy and society for heightened productivity, competitiveness and human welfare outcomes in the post-pandemic period.

Our broadband technology is supporting critical, transformational change in respect of: remediating the environmental state of our planet by bridging time and distance through technology virtualization; advancing agriculture efficiency and effectiveness and food quality production through data analytics; and bridging socio-economic and geographic divides so every member of our society has access to the technology that yields the opportunity to realize their full potential. These aforementioned objectives for our economy and society reflect TELUS’ responsibilities to progress the growth of skilled jobs, the physical and mental well-being of our citizens and the uplifting of marginalized constituencies as embodied by our brand promise, Let’s make the future friendly.

At a time when the human connection has never been more important, TELUS remains dedicated to ensuring all Canadians can stay connected to the people and information that matter the most. Our sustained network leadership powers our purpose, as evidenced by the connectivity your Company provides to millions of underserved Canadians through our Connecting for Good programs. Notably, TELUS Internet for Good offers low-cost, high-speed internet to qualified low-income families, seniors and people living with disabilities. Through TELUS Mobility for Good, we offer a free smartphone and fully subsidized data plan to youth transitioning out of foster care, eligible low-income senior citizens and Indigenous women at risk or surviving violence. TELUS Tech for Good provides differently abled Canadians facing challenges using smartphones and tablets with assistive technology and training that help them live more independently. Lastly, TELUS Health for Good enables TELUS mobile health clinics to bring primary healthcare to people in need and living on the streets across Canada.

We continue to focus on connecting Indigenous communities to our PureFibre network. Indeed, we have invested more than $75 million, alongside our co-funding partners, to connect 91 Indigenous communities and 151 Indigenous lands, with 48 Indigenous lands enabled in 2021 alone. Altogether, we are providing more than 80,000 people living in Indigenous communities with vital access to our PureFibre network. In 2021, we launched our Indigenous Reconciliation and Connectivity Report detailing the many ways your Company is working collaboratively with Indigenous partners to support long-term prosperity in communities around the country. Building on our long-standing, respectful and productive relationships with Indigenous Peoples, we engaged Elders, leaders and TELUS team members to create our Reconciliation Commitment and five-year Indigenous Reconciliation Action Plan. Central to our Reconciliation Commitment is the desire to support the diverse needs of Indigenous Peoples to build relationships between Indigenous and non-Indigenous businesses, helping to grow the economy and enabling prosperity for Indigenous Peoples. In this regard, we were proud to stand in solidarity with residential school survivors and their families through our $8 million commitment in 2021 toward Indigenous-led entrepreneurs, projects and initiatives. This includes a $1 million gift to digitize, promote and distribute the Witness Blanket (see sidebar), as well as investments from the TELUS Pollinator Fund in Indigenous-led businesses, and grants from the TELUS Community Boards and TELUS Friendly Future Foundation (TFFF).

The TELUS Pollinator Fund – one of the world’s largest social impact investing funds – celebrated its first anniversary in 2021, as it continued to invest in startups that are both enabling better social outcomes and achieving strong financial returns. Throughout the year, the Fund invested nearly $20 million to help scale socially responsible and innovative startups, of which 40 per cent are women-led and 50 per cent are led by Indigenous or racialized founders. These businesses are focused on social innovation that drives better health outcomes, sustainable food systems, inclusive communities and a greener planet. Likewise, the TFFF marked its third year and, in 2021, committed more than $8.7 million in cash donations to 500 charitable organizations, while fundraising more than $3 million. The TFFF has contributed over $25 million to our communities since its inception, supporting the incredible work of our TELUS Community Boards. Notably, since 2005, TELUS’ Community Boards have invested $91 million in cash donations to nearly 7,800 initiatives, providing support for underserved citizens, especially young people, around the world.

Your Company’s ability to support our customers and communities in a meaningful way is owing to the dedication, spirited teamwork and grit of the best team on the planet. Indeed, as the pandemic continued throughout 2021, we remained committed to the health and mental wellness of our team members. In alignment with the National Standard for Psychological Health and Safety in the Workplace, we introduced our TELUS Mental Health Commitment to reinforce the role we all play in promoting healthy practices and offer meaningful solutions and support to colleagues. These included the creation of our team member-led mental health first aid network and a customized training program to help team members identify and address potential mental health issues.

Your Company’s ability to support our customers and communities in a meaningful way is owing to the dedication, spirited teamwork and grit of the best team on the planet. Indeed, as the pandemic continued throughout 2021, we remained committed to the health and mental wellness of our team members. In alignment with the National Standard for Psychological Health and Safety in the Workplace, we introduced our TELUS Mental Health Commitment to reinforce the role we all play in promoting healthy practices and offer meaningful solutions and support to colleagues. These included the creation of our team member-led mental health first aid network and a customized training program to help team members identify and address potential mental health issues.

In 2021, your Company again earned a world-leading team member engagement score of 84 per cent, placing TELUS in the top 10 per cent of all employers globally. This result, which would be impressive in a normal year, was extraordinary considering the highly dynamic environment that characterized 2021. In keeping with our belief that a diverse work environment facilitates a broader exchange of ideas and elasticity of thought, helping us to better understand and support the needs of our stakeholders, your Company progressed our diversity and inclusion strategy across our TELUS family. This included launching a new TELUS Resource Group to support Black team members, and implementing an enhanced Board diversity policy that has enabled us to achieve 46 per cent female representation and 23 per cent of independent directors who represent a visible minority or are Indigenous.

Undeniably, our culture of caring was displayed throughout 2021 as our highly engaged team offered its support to those who needed us most. Through our TELUS Days of Giving, more than 55,000 members of our TELUS family contributed 1.3 million volunteer hours in communities worldwide. TELUS, our team members and retirees contributed $90 million in cash, in-kind contributions, time and programs to charitable and community organizations, representing approximately five per cent of our pre-tax profits. Since 2000, our extended TELUS family has gifted $1.4 billion, including $900 million and 1.8 million days of volunteerism, to make the world a better place. Increasingly, citizens are choosing to do business with organizations that share their values. In this regard, our team’s dedication to our customers,

communities and one another, drove our leading operational and financial results in 2021. Your Company, once again, led our industry in customer growth across our mobile and fixed portfolios, supported by world-leading customer loyalty and an unprecedented churn rate of less than one per cent within mobile phone, internet, Optik TV, security and voice.

We achieved strong financial results across our business as evidenced by operating revenues, net income and Adjusted EBITDA increasing by 9.8, 35 and 6.4 per cent, respectively. Across TELUS technology solutions (TTech), we generated industry-leading results in 2021. Overall, TTech revenue was $15 billion, while Adjusted EBITDA was $5.5 billion. Our team drove leading operational and financial results in our fixed portfolio, including data services revenue growth of more than 12 per cent. These results were bolstered by our highly differentiated and potent asset mix geared towards high-growth, technology-oriented verticals, including TELUS International (TI), TELUS Health and TELUS Agriculture (TAG). When looking at TELUS’ two-year performance through the pandemic period, from 2019 to 2021, our total revenue and EBITDA growth of close to 18 and seven per cent, respectively, as well as our more than 1.7 million net new total customer additions, represented industry-leading performance by a substantial margin and demonstrates the significant economic value we are creating through our superior product portfolio. TI continues to generate strong, double-digit revenue, net income and Adjusted EBITDA growth, concluding their first year as a public company with impressive results that surpassed their financial targets for 2021. These robust results reinforce TI’s position as the partner of choice for premier digital customer experiences, as clients around the world look to TI to design, build and deliver end-to-end next-generation digital solutions and services, including a unique and unparalleled mix of content moderation and artificial intelligence capabilities.

Similarly, TELUS Business Solutions contributed to TELUS’ strong performance and is expected to continue delivering robust outcomes with the expansion of 5G, Internet of Things and new industry-based solutions. For example, we launched a strategic alliance with GM Canada, the first of its kind in Canada, leveraging our world-leading 5G network to enable an unparalleled experience to keep millions of citizens safe and connected.

In 2021, TELUS’ operational excellence was again characterized by the consistent combination of industry-leading and profitable customer growth, with an all-time record 960,000 total new client additions – ranking TELUS number one in the industry for new customer growth, driven by industry-best mobile and fixed wireline additions.

In mobile, TELUS achieved industry-leading customer growth of 705,000 net additions. This included 367,000 mobile phone and 338,000 connected device net new customers, representing an all-time record high for connected devices for your Company. Mobile network revenue increased three per cent, reflective of our focus on high-quality customer growth, underpinned by an exceptional service experience, leading customer loyalty and strong base management. Moreover, postpaid mobile churn of 0.74 per cent improved by four basis points over 2020, representing our eighth consecutive year of industry-leading customer loyalty, with postpaid churn below one per cent. Notably, we earned a record 255,000 new TV, internet, voice and security customers, reflecting the potency of our expansive PureFibre network capabilities, as well as our superior bundled offerings and success in driving higher product intensity with our customers. Indeed, during a year fraught with anxiety and ambiguity, TELUS SmartHome Security and TELUS Secure Business provided increased peace of mind for consumers and businesses. As a result, we welcomed our 800,000th security client by the end of 2021, reflecting our innovation in virtual and do-it-yourself installations, and capacity for acquiring and integrating new assets, nationally.

Our leading results were supported by our high-growth verticals, which once again reflected the strength of our digital capabilities. TELUS Health continued to deliver improved health outcomes for citizens, driving double-digit year-over-year health services revenue growth. Indeed, our rebranded virtual care services, TELUS Health MyCare for consumers and our employer-subscribed TELUS Health Virtual Care, as well as our Home Health Monitoring and Virtual Visit services, enabled healthcare providers to safely support patients virtually throughout the pandemic. Similarly, our team launched TELUS Health LivingWell Companion on Apple Watch, becoming the first company in Canada to offer personal emergency response service through Apple Watch. This service enables Canadians with health issues or who may be at risk of falling with improved safety and peace of mind with 24/7 emergency monitoring. Notably, by year-end 2021, we covered more than 20 million lives through our health solutions, an increase of nearly 22 per cent, year-over-year, completed over 550 million digital health transactions and earned more than one million new virtual healthcare members, representing a 65 per cent increase over 2020. Impressively, TELUS Health MyCare is now the number one virtual care brand in respect of familiarity and usage across all of the markets in which we operate. Moreover, in early 2022, our team launched TELUS Health Virtual Pharmacy, providing Canadians with fast and reliable online access to prescription medications and refills. Furthermore, through our ongoing efforts to scale and integrate our unique TAG business, we generated double-digit revenue growth across our three lines of business – agribusiness; food, beverage and consumer goods; and animal health – concluding the year with annual revenue of over $400 million. These results are illustrative of the efforts of our skilled team of innovators at TAG who are working diligently toward the creation of a fully connected producer-to-consumer value chain, improving the quality, safety, distribution and sustainability of food and consumer goods. As one of the largest agriculture technology companies globally, TAG has more than 1,500 team members in 10 countries serving customers in over 50 countries, including nine of the 10 top agriculture companies in the world.

Our industry-leading financial returns reflect the collective efforts of our team, delivering on a proven and sustainable growth strategy that generates rewards for all stakeholders, including you, our investors. Throughout another challenging year, your Company returned significant capital to shareholders, while maintaining a robust balance sheet and making ongoing generational investments in innovative broadband technologies. Indeed, through our accelerated broadband investment program, we advanced approximately $1.5 billion of incremental capital expenditures into 2021 and 2022. Investing from a position of strength and leadership, these transformational investments bolster TELUS’ superior competitive position, including connecting thousands of additional homes and businesses to our PureFibre network, enhancing the speed and coverage of our 5G capabilities and amplifying the digital customer experience. Furthermore, as part of this accelerated broadband build, we are advancing our copper-to-fibre migration program. In this regard, our team exceeded our copper-to-fibre migration target in 2021 and is on track to substantially complete the migration by the end of 2022.

Importantly, these generational investments, combined with the accelerated decommissioning of legacy copper infrastructure, will fuel enhanced customer growth and improved connectivity, alongside significant operating efficiencies and positive cash flow benefits as our expedited broadband build nears completion. By advancing our world-leading networks, we are generating improved social and economic outcomes in the communities we serve. Additionally, as a result of the pull-forward of our broadband investments, commencing in 2023, we are targeting a significant decline in our annual capital expenditures to $2.5 billion, or less. Free cash flow will be strengthened by the expected capex decline of approximately $1 billion over 2022, in addition to strong ongoing EBITDA expansion. Importantly, this initiative will support the sustained advancement of our operational and financial performance well into the future, strengthening our confidence in the robust outlook for our business, amplified by strong anticipated future growth in our emerging growth businesses.

Our consistently strong results, supported by transformational investments in communities across Canada, underpin your Company’s ability to create unparalleled long-term value for our shareholders. Since the beginning of 2000 through December 31, 2021, TELUS has generated a total shareholder return of 700 per cent. This result is 357 points higher than the return for the Toronto Stock Exchange’s S&P/TSX Composite Index (TSX) of 343 per cent and 694 percentage points higher than the return from the MSCI World Telecom Services Index of six per cent. Moreover, over the past five, 10 and 15 years, TELUS has surpassed the TSX return by an average of 87 percentage points.

Importantly, we anticipate that our accelerated broadband investment initiative, coupled with your Company’s ongoing, leading operational and financial performance, will augment the long-term sustainability of our industry-leading dividend growth program, now in its 12th year. In 2021, we announced our 21st dividend increase, raising our annual dividends declared by 7.3 per cent over 2020. Notably, since 2004, TELUS has returned $21 billion to shareholders, including $15.7 billion in dividends and $5.2 billion in share purchases, representing over $15 per share. Through individual holdings, mutual funds and pension plans, as well as our own TELUS team members who collectively represent our fourth largest shareholder, TELUS investors are our neighbours, friends and colleagues. Undeniably, when our team puts our customers and communities first, the resulting prosperity enables us to improve the outcomes of Canadian families, retirees and pensioners who invest in TELUS.

Your Company further demonstrated the power of our purpose through the issuance of our inaugural sustainability-linked bond in 2021 – the first in Canada – raising $750 million of 10-year notes. This sustainable financing structure ties the effective interest rate to the achievement of our long-term, impactful operational greenhouse gas (GHG) reduction target, specifically, a 46 per cent reduction in scope 1 and 2 GHG emissions over 2019 levels by 2030, in addition to becoming net carbon neutral in our operations by 2030 or sooner.

Your Company further demonstrated the power of our purpose through the issuance of our inaugural sustainability-linked bond in 2021 – the first in Canada – raising $750 million of 10-year notes. This sustainable financing structure ties the effective interest rate to the achievement of our long-term, impactful operational greenhouse gas (GHG) reduction target, specifically, a 46 per cent reduction in scope 1 and 2 GHG emissions over 2019 levels by 2030, in addition to becoming net carbon neutral in our operations by 2030 or sooner.

Similarly, embracing tax morality is a means of investing in our communities. Since 2000, your Company has paid circa $51 billion in total tax and spectrum remittances to our federal, provincial and municipal governments in Canada, consisting of corporate income taxes, sales taxes, property taxes, employer portion of payroll taxes and various regulatory fees. These funds support public works projects, education, healthcare, cultural pursuits and other initiatives that improve the social and economic well-being of our communities.

For 20 years, we have been guided by our brand promise, the future is friendly, as we leverage the power of technology to create positive experiences and meaningful social outcomes for people around the world. The pandemic and social injustices have prompted us to reflect on what is truly important, including the values we hold dear. Our refreshed brand promise, Let’s make the future friendly, welcomes everyone to join us as we strive to make the world a better place. Your Company was recognized as one of Strategy Magazine’s 2021 Brands of the Year for our leadership in social capitalism. We meaningfully integrated purpose into marketing communications across all customer touchpoints, increasing socially responsible perceptions of TELUS by 30 per cent and reaching more than 10 million customers. In addition, TELUS enabled our team members to share our social purpose messaging on their own social networks.

Leveraging the momentum gained over the long term, in concert with the power of our globally leading networks, our high-performing team anticipates an equally successful 2022, as exemplified through our new community giving, social impact and financial targets. As we continue to empower citizens to lead healthier, safer, more connected lives, our social impact and giving targets for 2022 include: inspiring our TELUS family to contribute 1.4 million hours of volunteerism, improving the economic and health outcomes for a cumulative 320,000 low-income Canadians through our Connecting for Good programs, contributing $90 million to charitable and community organizations, inspiring $3.3 million in fundraising and stewardship for the TFFF and launching a new signature national student bursary program, and investing $20 million to support new socially responsible businesses through our TELUS Pollinator social impact investment fund.

In terms of our sustainability goals, we anticipate that 100 per cent of our electricity requirements will come from renewable or low-emitting sources by 2025, our operations will be net carbon neutral by 2030 or earlier, we will become a zero waste company by 2030, and energy efficiency will improve by 50 per cent over 2019 levels by 2030. As signatories to the United Nations Global Compact, we take action and share progress in respect of human rights, labour, environment and anti-corruption practices, reinforcing our commitment to creating stronger, more sustainable communities. Financially, our targets for 2022 include growth in both revenue and Adjusted EBITDA of eight to 10 per cent, capital expenditures of approximately $3.4 billion, and robust free cash flow of $1 billion to $1.2 billion. Notably, when compared to 2019, our targets for 2022 represent 25 to 27 per cent revenue growth, and 15 to 17 per cent EBITDA growth, versus the pre-pandemic period.

In 2021, our TELUS family passionately demonstrated the power of our purpose, driving positive outcomes for the many stakeholders we serve. Throughout 2022, you can count on our 100,000 TELUS team members and retirees, globally, to leverage that same passion and purpose to put our customers first and to drive the operational and financial results that allow us to invest in our philanthropy, the expansion of our networks and the success of our team, our communities and, you, our shareholders. Together, we are making the future friendly and I remain grateful for your ongoing support.

Darren Entwistle Proud member of the TELUS team for more than two decades February 18, 2022