Telus Releases More Details for Investors

| About: TELUS Corporation (TU)

Uncertainty related to cost reduction plans, relatively high capital intensity and the growth outlook for out-of-region enterprise strategy have been sources of concern for Telus Corp. (NYSE:TU) shareholders. But the company has released additional details regarding capital investment and its growth strategy, which provide greater insight into its outlook.

Telus indicated that capex should peak at around C$2.05-billion, or 19% of revenue, in 2009. Peter Rhamey at BMO Capital Markets explains that this is a result of peak investment on its wireless and wireline broadband build (40% of capex) and investments in its Eastern Competitive Local Exchange Carrier (5%).

“While we do not expect a dramatic reduction in the near term, having some assurance that spending would be contained going forward is a positive,” the analyst told clients.

He noted that cost reduction became a greater focus in the second half of 2008 and believes Telus is reviewing opportunities in this area, particularly wireless, where average revenue per user remains under pressure.

IPTV (Internet Protocol Television) details are limited, but Telus did indicate that 90% of Edmonton is served by HD, Calgary would hit that level by year-end and nearly a third of lower mainland British Columbia is covered.

Meanwhile, Mr. Rhamey noted that Telus provided greater details regarding contract wins and suggested that more financial information will be provided with its first quarter results due on May 7.

“All in, we see the additional disclosure and the fact that management is meeting with investors as a slight positive,” the analyst said.

He rates Telus “market perform” with a price target of C$38 per share.