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TELUS Reports Strong Results for Second Quarter 2015

VANCOUVER, BRITISH COLUMBIA — (Marketwired) — 08/07/15 — (TSX: T)(NYSE: TU) – TELUS Corporation–s consolidated operating revenue grew 5.1 per cent to $3.1 billion in the second quarter of 2015, from a year earlier, while earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 0.7 per cent. Significant restructuring and other like costs of $59 million, reflecting in part non-core retail real estate rationalization, impacted EBITDA and earnings this quarter. EBITDA excluding restructuring and other like costs increased by 5.1 per cent to $1.1 billion.

“Our strong second quarter results demonstrate the significant benefits of the TELUS team–s unwavering focus of putting customers first, each and every day,” said Darren Entwistle, Executive Chair. “Through our long-term and consistent approach to investing in core broadband technology and meaningful customer service and employee engagement initiatives, our team has delivered strong financial performance and unmatched customer loyalty, as illustrated by two consecutive years of wireless postpaid customer churn below one per cent.”

Mr. Entwistle added, “In addition to an ongoing focus of doing what is right for customers, the TELUS team–s track record of executing on a winning strategy has anchored our ability to return significant amounts of cash to shareholders through our ongoing multi-year dividend growth model and share purchase programs. In this regard, TELUS has returned $1.1 billion to investors in the first seven months of 2015; $3.4 billion over the past two years and $12.9 billion or more than $21 per share since 2000, reflecting our strong commitment to shareholder value creation.”

TELUS President and CEO Joe Natale said, “The TELUS team–s relentless focus on putting customers first has translated into industry-leading loyalty and retention that continues to underpin our solid financial performance. Through years of a company-wide commitment to genuinely earn customer loyalty, we continue to gain the trust of our customers as exemplified by this quarter–s North American-leading customer loyalty measure of a 0.86 per cent monthly postpaid wireless churn rate.”

Mr. Natale added, “Over the past two years, this focus has allowed TELUS to gain nearly 50 per cent of all net new wireless postpaid, high-speed Internet and TV customers versus its five major Canadian peers including an additional 115,000 in the second quarter. In this very dynamic and competitive Canadian marketplace, TELUS– consistent performance demonstrates how expecting more from ourselves translates into strong results for our customers and shareholders.”

John Gossling, TELUS Executive Vice-President and CFO said, “Our strong operational and financial results have allowed us to effectively manage through the peak spectrum investment cycle the telecom industry has absorbed in 2015. In the second quarter, this included acquiring 40 MHz of 2500 MHz spectrum nationally in Industry Canada–s 2500 MHz spectrum auction, which are core investments needed to support future growth in our business. Moving forward, we will remain focused on the appropriate balanced approach to capital allocation including shareholder friendly initiatives, measured investments in our core businesses, and maintaining investment grade credit ratings.”

Net income of $341 million was down 10.5 per cent, while basic earnings per share (EPS) declined by 9.7 per cent to $0.56. Both net income and EPS were negatively impacted by significantly higher restructuring and other like costs, unfavourable income tax-related adjustments resulting primarily from higher enacted corporate income tax rates in Alberta and an asset retirement charge for the planned retail real estate rationalization. Excluding these three items, net income increased by 4.9 per cent to $406 million and EPS was higher by 4.8 per cent to $0.66.

CONSOLIDATED FINANCIAL HIGHLIGHTS

TELUS continued to generate consolidated revenue growth as a result of higher data revenue in both wireless and wireline operations. Wireless data revenue increased 18 per cent, leading to overall network revenue growth of 6.1 per cent, while wireline data revenue increased 7.8 per cent from a year ago leading to 2.4 per cent growth in external wireline revenue. In wireless, data revenue was driven by subscriber growth, an increased proportion of higher-rate two-year rate plans in the subscriber mix, higher data usage from the continued adoption of smartphones and other data-centric devices, increased data roaming and the expansion of TELUS– LTE network coverage across Canada. Wireline data revenue growth was generated by an increase in Internet and enhanced data service revenue from continued high-speed Internet subscriber growth and higher revenue per customer, growth in business process outsourcing services, TELUS TV subscriber growth and higher TELUS Health revenues.

In the quarter, TELUS attracted 115,000 net wireless postpaid, high-speed Internet and TV customers. This included 76,000 wireless postpaid customers, 22,000 high-speed Internet subscribers, and 17,000 TELUS TV customers. These gains were partially offset by the loss of wireless prepaid customers and traditional telephone network access lines. TELUS– total wireless subscriber base is up 3.3 per cent from a year ago to 8.35 million, high-speed Internet connections are up 6.2 per cent to 1.5 million, and TELUS TV subscribers are up 10 per cent to 954,000.

TELUS– continued focus on putting customers first delivered an industry-leading postpaid wireless subscriber monthly churn of 0.86 per cent, a year-over-year improvement of 4 basis points. This is the eighth consecutive quarter, or two consecutive years, that this important metric was below one per cent.

Free cash flow of $300 million was higher by $90 million or 43 per cent from a year ago as higher EBITDA excluding restructuring and other like costs and lower income tax payments offset higher capital expenditures related to TELUS– ongoing strategic investments in wireless and wireline broadband infrastructure to support TELUS– long-term growth.

In the second quarter of 2015, TELUS returned $378 million to shareholders including $243 million in dividends paid and $135 million in share purchases under its 2015 normal course issuer bid (NCIB) program. Through the end of July, TELUS has returned $1,064 million to shareholders, including $740 million in dividends paid and the purchase of approximately 7.9 million shares for $324 million under its 2015 NCIB program.

TELUS is updating its 2015 consolidated capital expenditures guidance, as described in TELUS– fourth quarter 2014 results and 2015 financial target news release issued on February 12, 2015. TELUS now anticipates full year consolidated capital expenditures of approximately $2.5 billion compared to its previously estimated 2015 target of –similar to 2014– ($2.359 billion). The additional capital investments reflect continued investments in broadband infrastructure to support the increasing demand for data services and higher network speeds. 2015 EPS will be negatively impacted by net unfavourable income tax-related adjustments, including the revaluation of deferred income tax liabilities from the recent increase in corporate income tax rates in Alberta, as well as a $50 million increase to our original restructuring and other like cost assumption. However, excluding these items, TELUS still expects full year EPS to be within our original range of $2.40 to $2.60.

In addition, the assumptions for TELUS– 2015 annual targets, as described in Section 9, General trends, outlook and assumptions, in TELUS– 2015 annual MD&A, remain the same, except as updated below:

The preceding disclosure with respect to TELUS– 2015 financial targets, guidance and assumptions contains forward-looking information and is fully qualified by the –Caution regarding forward-looking statements– at the beginning of the accompanying Management–s discussion and analysis for the second quarter of 2015 and are based on management–s expectations and assumptions as set out in TELUS– fourth quarter 2014 results and 2015 financial target news release and in Section 9 entitled –General trends, outlook and assumptions– in TELUS– 2014 annual MD&A.

This news release contains statements about financial and operating performance of TELUS (the Company) and future events, including with respect to future dividend increases and normal course issuer bids through 2016 and the 2015 annual targets and guidance that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and predictions and are subject to inherent risks and uncertainties. There is significant risk that the 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 performance and events to differ materially from those expressed in the forward-looking statements. Accordingly, this news release is subject to the disclaimer and qualified by the assumptions (including assumptions for the 2015 annual targets and guidance, semi-annual dividend increases through 2016 and our ability to sustain and complete our multi-year share purchase program through 2016), qualifications and risk factors referred to in the first and accompanying second quarter Management–s discussion and analysis and in the 2014 annual report, and in other TELUS public disclosure documents and filings with securities commissions in Canada (on SEDAR at sedar.com) and in the United States (on EDGAR at sec.gov). Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements, and reserves the right to change, at any time at its sole discretion, its current practice of updating annual targets and guidance.

Corporate Highlights

TELUS makes significant contributions and investments in the communities where we live, work and serve and to the Canadian economy on behalf of customers, shareholders and team members by:

Second Quarter 2015 Operating Highlights

TELUS wireless

TELUS wireline

Dividend Declaration

The TELUS Board of Directors has declared a quarterly dividend of 42 cents ($0.42) Canadian per share on the issued and outstanding Common Shares of the Company payable on October 1, 2015 to holders of record at the close of business on September 10, 2015.

This third quarter dividend represents a four cent or 10.5 per cent increase from the $0.38 quarterly dividend paid on October 1, 2014.

About TELUS

TELUS (TSX: T)(NYSE: TU) is Canada–s fastest-growing national telecommunications company, with $12.3 billion of annual revenue and 13.9 million customer connections, including 8.4 million wireless subscribers, 3.1 million wireline network access lines, 1.5 million high-speed Internet subscribers and 954,000 TELUS TV customers. TELUS provides a wide range of communications products and services, including wireless, data, Internet protocol (IP), voice, television, entertainment and video, and is Canada–s largest healthcare IT provider.

In support of our philosophy to give where we live, TELUS, our team members and retirees have contributed more than $396 million to charitable and not-for-profit organizations and volunteered and more than 6 million hours of service to local communities since 2000. Created in 2005 by Executive Chairman Darren Entwistle, TELUS– 11 Canadian community boards and 4 International boards have led the Company–s support of grassroots charities and will have contributed more than $54 million in support of over 4,800 local charitable projects by the end of 2015, enriching the lives of more than 2.1 million children and youth. TELUS was honoured to be named the most outstanding philanthropic corporation globally for 2010 by the Association of Fundraising Professionals, becoming the first Canadian company to receive this prestigious international recognition.

For more information about TELUS, please visit telus.com.

Access to Quarterly results information

Interested investors, the media and others may review this quarterly earnings news release, management–s discussion and analysis, quarterly results slides, audio and transcript of the investor webcast call, supplementary financial information, and our full 2014 annual report at telus.com/investors.

TELUS– second quarter 2015 conference call is scheduled for August 7, 2015 at 11:00am ET (8:00am PT) and will feature a presentation followed by a question and answer period with investment analysts. Interested parties can access the webcast at telus.com/investors. A telephone playback will be available on August 7 until September 18 at 1-855-201-2300. Please use reference number 1182479# and access code 65844#. An archive of the webcast will also be available at telus.com/investors and a transcript will be posted on the website within a few business days.

TELUS CORPORATION

Management–s discussion and analysis

2015 Q2

Caution regarding forward-looking statements

This document contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, we, us and our refer to TELUS Corporation and where the context of the narrative permits or requires, its subsidiaries. Forward-looking statements include statements relating to annual targets, outlook, guidance and updates, our multi-year dividend growth program, our multi-year share purchase program, and trends. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, predict, could, expect, intend, may, plan, seek, should, strive and will. By their nature, forward-looking statements do not refer to historical facts, are subject to inherent risks and require us to make assumptions. There is significant risk that forward-looking statements will not prove to be accurate. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements. An update to our assumptions for 2015 is presented in Section 9 Update to assumptions in this Management–s discussion and analysis (MD&A).

Factors that could cause actual performance to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following:

Management–s discussion and analysis

August 7, 2015

Contents

1. Introduction

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of this Management–s discussion and analysis (MD&A).

1.1 Preparation of the MD&A

The following sections are a discussion of the consolidated financial position and financial performance of TELUS for the three-month and six-month periods ended June 30, 2015 and should be read together with TELUS– June 30, 2015 condensed interim consolidated financial statements (subsequently referred to as the interim consolidated financial statements). The generally accepted accounting principles (GAAP) we use are the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Our interim consolidated financial statements comply with IFRS-IASB and Canadian GAAP and have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Our use of the term IFRS in this MD&A is a reference to these standards. In our discussion, we also use certain non-GAAP financial measures, such as earnings before interest, income taxes, depreciation and amortization (EBITDA), to evaluate our performance, monitor compliance with debt covenants and manage our capital structure. These measures are defined, qualified and reconciled with their nearest GAAP measures in Section 11.1. All amounts are in Canadian dollars, unless otherwise specified.

Our disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management on a timely basis, so that appropriate decisions can be made regarding public disclosure. This MD&A and the interim consolidated financial statements were reviewed by TELUS– Audit Committee and authorized by the Board of Directors for issuance on August 7, 2015.

1.2 The environment in which we operate

Economic growth

We estimate that economic growth in Canada will be in the range of 1.0% to 1.5% in 2015, based on a composite of estimates from Canadian banks and other sources. Our growth assumption for 2015 reflects a decrease from our original assumption of 2.1% (see Section 9 Update to assumptions). The Bank of Canada–s July 2015 Monetary Policy Report estimated economic growth for Canada at just over 1% in 2015 and 2.5% in 2016. In respect of the national unemployment rate, Statistics Canada–s Labour Force Survey reported a rate of 6.8% for June 2015 (6.6% reported for December 2014 and 7.1% reported for June 2014).

Regulatory developments

There were a number of important regulatory developments in the second quarter of 2015. See Section 10.1 Regulatory matters.

1.3 Consolidated highlights

AWS-3 and 2500 MHz spectrum auctions

In March 2015, we purchased 15 wireless spectrum licences across Canada–s most-populated provinces in Industry Canada–s AWS-3 wireless spectrum auction (1755 – 1780 MHz and 2155 – 2180 MHz bands). The licences, acquired for $1.5 billion ($3.02/MHz/POP, where POP refers to person of population), equate to a national average of 15 MHz and are complementary to the 16.1 MHz of national AWS spectrum we purchased in 2008 that is now the foundation of our 4G wireless network. The AWS-3 acquisitions increased our national spectrum holdings by 16% by adding 20 MHz of spectrum in each of British Columbia, Alberta, Saskatchewan, Manitoba and Quebec, as well as 10 MHz of spectrum in Southern Ontario. AWS-3 spectrum is well-suited for delivering both coverage and added capacity in urban and rural environments. Moreover, we expect to incorporate this spectrum into our existing network within the next three years, once international standards for the spectrum frequencies are established and associated equipment is available. We paid a $302 million deposit in the first quarter of 2015 for these AWS-3 spectrum licences and remitted the balance of $1,209 million in April 2015.

In May 2015, we purchased 122 wireless spectrum licences covering every region across Canada in Industry Canada–s 2500 MHz spectrum auction (2500 – 2690 MHz band). The licences, acquired for $479 million or $0.36/MHz/POP, equate to 40 MHz of spectrum nationally and were fully paid for during the second quarter of 2015. This spectrum is ideal for carrying large amounts of data, making it especially valuable in urban centres, and will complement TELUS– existing low band spectrum, which is able to penetrate deeper into buildings and elevators and also travels farther in rural areas. We expect to commence the deployment of this spectrum into our existing network in the near future.

In aggregate, as a result of the three recent Industry Canada wireless spectrum auctions (700 MHz, AWS-3 and 2500 MHz), we have utilized new and existing debt facilities to acquire more than 70 MHz of spectrum nationally for $3.1 billion. As a consequence of this atypical number of spectrum auctions, we currently exceed our net debt to EBITDA – excluding restructuring and other like costs long-term objective range of 2.00 to 2.50 times (see Liquidity and capital resource highlights below). However, in the medium term, we will endeavour to return this ratio within the objective range as we believe that this range is supportive of our long-term strategy.

$1 billion fibre-optic network investment in Edmonton

In June 2015, we announced a $1 billion investment to bring our state-of-the-art fibre-optic network to Edmonton over the next six years, making it the first major urban centre in Western Canada to have access to a gigabit-capable network. When the service is launched in some areas of Edmonton later this year, local residents and businesses will be able to take advantage of Internet speeds of up to 150 megabits per second (mbps) – a dramatically faster service made possible by a direct fibre-optic network connection to the premises. In coming years, we plan to offer families and businesses in Edmonton increasingly higher speeds over this gigabit-enabled network. This investment is part of our broader fibre-optic strategy to bring our network of the future to communities across British Columbia, Alberta and Eastern Quebec. The fibre-optic network will ensure speed and capacity for many generations to come, and create the foundation for access to future solutions like the connected home, smart cities, Internet of Things services and our health applications. In addition, increased deployment of fibre networks is expected to help reduce costs of providing service over time.

Changes to the Board of Directors

At the 2015 annual general meeting on May 7, 2015, Sabi Marwah was elected to our Board of Directors. Sabi retired as the Vice Chairman and Chief Operating Officer of the Bank of Nova Scotia (Scotiabank) in 2014. As Vice Chairman, he was actively involved in developing the bank–s strategic plans and was responsible for its financial and administrative functions. Also, Charlie Baillie, an independent director who served as a TELUS director since 2003, retired from our Board of Directors on May 7, 2015. In addition to his other duties as a Board and committee member, Charlie served as Chair of the Human Resources and Compensation Committee from 2007 to 2014, regularly meeting with representatives from the Canadian Coalition for Good Governance and other shareholder advocacy groups to learn from their perspective when guiding TELUS– executive compensation practices and disclosure.

Operating highlights

Liquidity and capital resource highlights

2. Core business and strategy

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of this MD&A.

Our core business was described in our annual 2014 MD&A. The following are business updates grouped under our strategic imperatives.

Focusing relentlessly on growth markets of data, IP and wireless

External wireless revenues and wireline data revenues totalled $5.2 billion in the first six months of 2015, up by $363 million or 7.5% from the same period in 2014, while wireline voice and other revenues and Other operating income totalled $905 million in the first six months of 2015, down $79 million or 8.0% from the same period in 2014. Combined wireless revenues and wireline data revenues represented 85% of TELUS– consolidated revenues for the first six months of 2015, as compared to 83% in the same period in 2014.

Providing integrated solutions that differentiate TELUS from our competitors

In June 2015, we announced a free public Wi-Fi service available to both TELUS and non-TELUS customers at more than 8,000 hotspots across B.C. and Alberta. Since early 2014, we have been actively expanding our public Wi-Fi network by working with thousands of businesses and many major sporting and entertainment venues. This public Wi-Fi service is part of our network strategy to deploy small cells that integrate seamlessly with our 4G wireless network, automatically shifting our smartphone customers to Wi-Fi and off-loading data traffic from our wireless spectrum to increasingly available Wi-Fi hotspots.

In July 2015, we launched US Easy Roam to empower customers to stay connected and save while travelling to the United States. Available to customers on TELUS consumer monthly wireless postpaid rate plans, US Easy Roam is an optional service giving customers the ability to use their existing rate plan while in the United States for $7 a day.

Building national capabilities across data, IP, voice and wireless

In March 2015, we were a successful bidder on 15 wireless spectrum licences across the most populous Canadian provinces in Industry Canada–s AWS-3 wireless spectrum auction. AWS-3 spectrum is a valuable addition to our spectrum portfolio and is vital to handling the growing demand of streaming video and other data-intensive features of the latest smartphones. In May 2015, we purchased 40 MHz of wireless spectrum in every region of Canada in Industry Canada–s 2500 MHz spectrum auction. This spectrum is ideal for carrying large amounts of data, making it especially valuable in urban centres, and will complement TELUS– existing low band spectrum, which is able to penetrate further into buildings and elevators and also travels farther in rural areas.

In June 2015, we announced a $1 billion investment in Edmonton to connect more than 90 per cent of homes and businesses directly to the company–s state-of-the-art fibre-optic network over the next six years. Once the network is launched in some areas of Edmonton later this year, local residents and businesses will have access to dramatically faster Internet speeds of up to 150 megabits per second. In coming years, we plan to offer families and businesses in Edmonton increasingly higher speeds over this gigabit-capable network. This investment is part of our broader fibre-optic strategy to bring our network of the future to communities across British Columbia, Alberta and Eastern Quebec. Moreover, this investment provides a distinct advantage to Edmonton and its citizens by stimulating employment and economic growth, and allows healthcare providers, educators and technology companies to reimagine how they deliver services and develop entirely new solutions.

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

In May 2015, we partnered with a major Schedule I Canadian bank to launch a new co-branded credit card that allows customers to earn reward points on everyday card purchases, which can be redeemed for a selection of TELUS products and services.

In May 2015, we made a strategic investment in Sprout, a Canadian-based organization helping companies engage employees to improve their health and wellness and measure the positive impact to their business. Moreover, we have expanded our suite of personal health tracking technology solutions by entering into a reseller arrangement with Sprout that allows us to promote their Wellness Engagement Platform as part of our Self-Health online portal for large enterprise customers aimed at increasing health and wellness for their employees.

In June 2015, we announced the planned closure of all our Black–s Photography retail stores across Canada by August 2015. Technological innovations have changed the way Canadians take and share photographs, with fewer of them using retail photo outlets. As a result, we have determined that Black–s is not core to our future operations and have planned the closure of the remaining 59 retail stores that have not already closed or transitioned to the TELUS or Koodo brands.

In July 2015, we entered into an agreement with Les Pros de la Photo (Les Pros), a Quebec-based photo imaging company, to sell the Black–s trademark and online and mobile businesses effective August 4, 2015. As a result, Les Pros will carry forward the Black–s brand, serving the online photo needs of Canadians.

3. Corporate priorities for 2015

Our corporate priorities for 2015 were listed in our annual 2014 MD&A.

4. Capabilities

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of this MD&A.

4.1 Principal markets addressed and competition

For a full discussion of our principal markets and an overview of competition, please refer to Section 4.1 of our 2014 annual MD&A.

4.2 Operational resources

For a discussion of our Operational resources, please refer to Section 4.2 of our 2014 annual MD&A. The following discussion reflects changes that have occurred since our 2014 annual MD&A.

In 2015, we continued to deliver leading customer churn on a global basis. The second quarter of 2015 represents the eighth consecutive quarter that our monthly postpaid churn rate was below 1%. Blended churn of 1.17% and postpaid churn of 0.86% in the second quarter of 2015 are among our lowest quarterly churn rates since we became a national carrier 15 years ago. This further exemplifies the success of our differentiated customers first culture and our ongoing focus on delivering outstanding customer service, coupled with attractive new products and services.

Wireless segment

During the first quarter of 2015, we acquired 15 wireless licences equating to a national average of 15 MHz in Industry Canada–s AWS-3 wireless spectrum auction. We expect to incorporate these licences into our existing network within the next three years, once international standards for the spectrum frequencies are established and associated equipment is available. Moreover, in the second quarter of 2015, we acquired 122 wireless licences equating to a national average of 40 MHz in Industry Canada–s 2500 MHz wireless spectrum auction. We expect to commence the deployment of these spectrum licences into our existing network in the near future. For additional details on wireless spectrum licence acquisitions in 2015, see Section 1.3 Consolidated Highlights.

As well, in 2014, we acquired and commenced the deployment of the 700 MHz wireless spectrum, which we have begun to operationalize for the benefit of our customers. Since the middle of 2013, we have invested more than $3.5 billion to acquire wireless spectrum licences in Industry Canada spectrum auctions and other transactions, which has nearly doubled our national spectrum holdings, in support of our top corporate priority of putting customers first. Wireless data consumption has been increasing rapidly and we have responded by investing to extend the capacity of our network to support the additional data consumption and growth in our wireless customer base.

As at June 30, 2015, our 4G LTE network covered 95% of Canada–s population, up from more than 84% of the population covered as at June 30, 2014. Outside of LTE coverage areas, the LTE devices we offer also operate on our HSPA+ network, which covered 99% of Canada–s population as at June 30, 2015.

Wireline segment

We continue to invest in urban and rural communities with commitments to deliver broadband network capabilities to as many Canadians as possible. We are expanding our fibre footprint by connecting more homes and businesses directly to fibre. Our investment in fibre is analyzed on a community basis to ensure each project will generate appropriate economic value. We have also increased broadband Internet speeds, expanded our IP TV video-on-demand library and high-definition content, and enhanced marketing of data products and bundles. As well, we have continued to invest in our state-of-the art Internet data centres (IDCs), creating an advanced and regionally diverse computing infrastructure in Canada. As at June 30, 2015, our high-speed broadband coverage reached more than 2.8 million households in B.C., Alberta and Eastern Quebec.

4.3 Liquidity and capital resources

Capital structure financial policies

Our objective when managing capital is to maintain a flexible capital structure that optimizes the cost and availability of capital at acceptable risk.

In the management of capital and in its definition, we include Common Share equity (excluding Accumulated other comprehensive income), Long-term debt (including long-term credit facilities, commercial paper backstopped by long-term credit facilities and any associated hedging assets or liabilities, net of amounts recognized in Accumulated other comprehensive income), Cash and temporary investments, and securitized trade receivables.

We manage our capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of our telecommunications infrastructure. To maintain or adjust our capital structure, we may adjust the amount of dividends paid to holders of Common Shares, purchase shares for cancellation pursuant to our normal course issuer bids (NCIBs), issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or increase or decrease the amount of trade receivables sold to an arm–s-length securitization trust.

We monitor capital utilizing a number of measures, including the net debt to EBITDA – excluding restructuring and other like costs ratio and the dividend payout ratios. See definitions in Section 11.1.

Financing and capital structure management plans

4.4 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, our internal control over financial reporting.

5. Discussion of operations

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of this MD&A.

5.1 General

Our operating segments and reportable segments are wireless and wireline. Segmented information in Note 5 of the interim consolidated financial statements is regularly reported to our Chief Executive Officer (CEO) (the chief operating decision-maker).

5.2 Summary of consolidated quarterly results and trends

Trends

The consolidated revenue trend continues to reflect year-over-year increases in: (i) wireless network revenues generated from a growing subscriber base and higher average revenue per subscriber unit (ARPU) driven by an increased proportion of higher-rate two-year plans, growth in data usage, a more favourable postpaid subscriber mix and increased data roaming, partly offset by a decline in voice revenue; (ii) wireless equipment revenue that has generally increased due to sales of higher-value smartphones and higher retention volumes, especially in 2015 as two-year and three-year customer contracts began to expire coterminously; and (iii) growth in wireline data revenues, driven by Internet, enhanced data services, business process outsourcing, TELUS TV and TELUS Health services. This growth was partially offset by the continued declines in wireless voice revenues and wireline voice and other revenues.

Increasing wireless network revenues reflect growth from subscriber additions, an increased proportion of higher-rate two-year plans, growth in data usage and higher data roaming revenues, partly offset by declines in voice revenue. Data revenue growth reflects increased data consumption driven by the higher adoption of smartphones, tablets and other wireless devices, as well as greater use of applications and other wireless data, and the expansion of our LTE network. Consequently, monthly blended ARPU has increased year over year for 19 consecutive quarters. The data revenue growth trend is impacted by competitive pressures driving larger allotments of data provided in rate plans, including data sharing, unlimited messaging rate plans and off-loading of data traffic from our wireless network to increasingly available Wi-Fi hotspots. We introduced two-year wireless rate plans in July 2013, which have impacted acquisition and retention trends, as well as data usage, as subscribers optimize unlimited talk and text and shared data plans, and which we expect will increase the frequency of subscribers updating their devices and services. ARPU is expected to continue to increase over time, though at lower growth rates, as our customer base renews to the two-year plans that recover device subsidies in two years instead of three years and as data usage continues to grow. However, the level of ARPU is highly dependent on competition and consumer behaviour, government decisions, device selection and other factors. The Code applies to all wireless contracts as of June 3, 2015, even when the contracts were signed before the Code–s implementation on December 2, 2013 (see CRTC–s national Wireless Code/Provincial consumer protection legislation in Section 10.1 Regulatory matters). We may experience a negative impact on our wireless segment financial results in the near term as we expect retention volume and related handset subsidy costs to increase in the second half of the current year and subsequent periods. We may also experience a negative financial impact as some of our remaining clients on three-year contracts, who are subject to the Wireless Code, may choose to terminate their contracts early. Accordingly, our wireless segment operating results in the first six months of 2015 may not be reflective of those in the last six months of 2015.

Historically, there has been significant third and fourth quarter seasonality due to higher wireless subscriber additions, an increase in related acquisition costs and equipment sales, and higher retention costs due to contract renewals. Typically, these impacts can also be more pronounced around iconic device launches. Wireless EBITDA usually decreases sequentially from the third to the fourth quarter, due to seasonal loading volumes. Subscriber additions have typically been lowest in the first quarter. Historically, monthly wireless ARPU has experienced seasonal sequential increases in the second and third quarters, reflecting higher levels of usage and roaming in the spring and summer, followed by seasonal sequential declines in the fourth and first quarters. This seasonal effect on ARPU is expected to diminish in the future, as unlimited nationwide voice plans become prevalent and chargeable usage and long distance spikes become less pronounced.

The trend of increasing wireline data revenue reflects growth in high-speed Internet and enhanced data services, including increases in usage and adoption of higher-speed services, the continuing but moderating expansion of the TELUS TV subscriber base (up 10% in the 12-month period ended June 30, 2015), growth in business process outsourcing, growth in TELUS Health solutions and certain rate increases. Higher Internet service revenues are due to a larger high-speed Internet subscriber base (up 6.2% in the 12-month period ended June 30, 2015), bundling of offers with Optik TV and certain rate increases. A general trend of declining wireline voice revenues and network access lines (NALs) is due to competition from voice over IP (VoIP) service providers (including cable-TV competitors), resellers and facilities-based competitors, as well as technological substitution to wireless and IP-based services and applications. Business NALs have continued to decline due to increased competition in the small and medium-sized business market, the impact of the economic slowdown in the business market and associated customer right-sizing of services, as well as conversion of voice lines to more efficient IP services. The impact of this conversion has been to increase NAL losses without a similar decline in revenues. As such, the relevance of legacy business NALs as a performance indicator of current and future revenues is diminishing.

The trend in Goods and services purchased expense reflects increasing wireless equipment expenses associated with higher-value smartphones in the sales mix and higher retention volumes, and increasing content costs due to a growing wireline TELUS TV subscriber base, partly offset by lower wireless network operating expenses from operational efficiency initiatives.

The trend in Employee benefits expense reflects increases in compensation, partly offset by a decrease in wireless full-time equivalent (FTE) employees and higher capitalized labour costs associated with increased capital expenditures, as described in Section 7.3. Employee benefits expense includes employee-related restructuring costs, which tend to fluctuate from quarter to quarter.

The general trend in depreciation and amortization reflects slight increases due to growth in capital assets from acquisitions, the expansion of our broadband footprint and enhanced LTE network coverage, partially offset by adjustments related to our continuing program of asset life studies.

The general trend in financing costs reflects an increase in long-term debt outstanding associated with significant investments in wireless spectrum licences acquired in Industry Canada auctions in 2014 and 2015. Financing costs include long-term debt prepayment premiums of approximately $13 million in the third quarter of 2014. Financing costs also include the Employee defined benefit net interest expense that has increased for 2015, primarily due to the increase in the defined benefit plan deficit at December 31, 2014, as compared to the defined benefit plan surplus at December 31, 2013. Employee defined benefit plan net interest had decreased in 2014, relative to 2013, due to a decrease in the discount rate for the employee defined benefit pension plans and their associated deficit at the end of 2012 moving to a nominal surplus at the end of 2013. Moreover, commencing in the second quarter of 2015, financing costs are net of capitalized interest related to spectrum licences acquired during the spectrum auctions held by Industry Canada, which we expect to incorporate into our existing network in future periods. Financing costs for the eight periods shown include varying amounts of foreign exchange gains or losses and varying amounts of interest income, including $20 million of interest income in the second quarter of 2015 from the settlement of prior years– income tax-related matters.

The trend in net income reflects the items noted above, as well as non-cash adjustments arising from legislated income tax changes and adjustments recognized in the current period for income tax of prior periods, including any related after-tax interest on reassessments. The trend in basic earnings per share (basic EPS) also reflects the impact of share purchases under our 2015 NCIB program.

The trend in cash provided by operating activities reflects growth in consolidated EBITDA and lower income tax payments in 2015, net of higher interest expenses related to our financing activities. The trend in free cash flow reflects the factors in cash provided by operating activities, as well as increases in capital expenditures (excluding spectrum licences and non-monetary transactions), but excludes the effects of certain changes in working capital, such as trade accounts receivable and trade accounts payable.

5.3 Consolidated operations

The following is a discussion of our consolidated financial performance. Segmented information in Note 5 of the interim consolidated financial statements is regularly reported to our CEO (the chief operating decision-maker). We discuss the performance of our segments in Section 5.4 Wireless segment,Section 5.5 Wireline segment and capital expenditures in Section 7.3 Cash used by investing activities.

Consolidated Operating revenues increased by $151 million or 5.1% in the second quarter of 2015 when compared to the second quarter of 2014, and increased by $284 million or 4.9% in the first six months of 2015 when compared to the first six months of 2014.

Consolidated Operating expenses increased by $163 million or 7.0% in the second quarter of 2015 when compared to the second quarter of 2014 and increased by $231 million or 5.0% in the first six months of 2015 when compared to the first six months of 2014.

Operating income decreased year over year by $12 million or 1.9% in the second quarter of 2015, reflecting growth in wireless EBITDA of $11 million for the quarter (see Section 5.4), offset by a decline in wireline EBITDA of $3 million (see Section 5.5) and increases in depreciation and amortization expenses of $20 million for the quarter discussed above. In the first six months of 2015, operating income increased year over year by $53 million or 4.3% from growth in wireless EBITDA of $65 million and growth in wireline EBITDA of $1 million, partly offset by a net increase in total depreciation and amortization expenses of $13 million discussed above.

Financing costs decreased by $5 million or 4.3% in the second quarter of 2015 and increased by $10 million or 4.6% for the first six months of 2015 when compared to the same periods in 2014.

As a result of financing activities over the past 12 months, our weighted average interest rate on long-term debt (excluding commercial paper) was 4.42% as at June 30, 2015, as compared to 4.89% one year earlier. For additional details on our financing activities, see Long-term debtissues and repayments in Section 7.4.

Total income tax expense increased by $33 million or 25% in the second quarter of 2015 and $45 million or 17% in the first six months of 2015 when compared to the same periods in 2014, primarily due to a $48 million non-cash adjustment in the second quarter of 2015 to revalue deferred income tax liabilities arising from an increase to the Alberta provincial corporate tax rate from 10% to 12% effective July 1, 2015. Partly offsetting this adjustment is a $19 million recovery recorded in the second quarter of 2015 related to the settlement of prior years– income tax-related matters (excluding related interest income).

Comprehensive income decreased by $215 million or 50% in the second quarter of 2015 and $105 million or 11% in the first six months of 2015 when compared to the same periods in 2014. This was primarily due to decreases in employee defined benefit plan re-measurements and net income. Items that may be subsequently reclassified to income are composed of changes in the unrealized fair value of derivatives designated as cash flow hedges, foreign currency translation adjustments arising from translating financial statements of foreign operations, and changes in the unrealized fair value of available-for-sale investments.

5.4 Wireless segment

Total wireless operating revenues increased by $119 million or 7.4% in the second quarter of 2015 and $237 million or 7.4% in the first six months of 2015 when compared to the same periods in 2014. The increases reflect growth in both network and equipment revenues.

Network revenues from external customers increased year over year by $90 million or 6.1% in the second quarter of 2015 and $182 million or 6.2% for the first six months of 2015. Data network revenue increased year over year by 18% in the second quarter of 2015 and 19% in the first six months of 2015, reflecting growth in the subscriber base, an increased proportion of higher-rate two-year plans in the revenue mix, higher data usage from continued adoption of smartphones and other data-centric wireless devices, increased data roaming and the expansion of our LTE network coverage. Voice network revenue decreased year over year by 5.3% in the second quarter and first six months of 2015 due to the increased adoption of unlimited nationwide voice plans and continued but moderating substitution to data services.

Equipment and other revenues increased year over year by $28 million or 22% in the second quarter of 2015 and $53 million or 22% in the first six months of 2015, mainly due to increased retention volumes and higher-value smartphones in the sales mix, partly offset by lower gross additions.

Intersegment revenue in the wireless segment represents network services provided to the wireline segment. Such revenues are eliminated upon consolidation along with the associated expenses.

Wireless segment expenses increased by $108 million or 11.9% in the second quarter of 2015 and $172 million or 9.6% in the first six months of 2015 when compared to the same periods in 2014.

Equipment sales expenses increased year over year by $55 million or 18% in the second quarter of 2015 and $109 million or 18% in the first six months of 2015, reflecting increased retention volumes and higher-value smartphones in the sales mix, partly offset by lower gross additions.

Network operating expenses decreased year over year by $7 million or 3.6% in the second quarter of 2015 and $16 million or 4.1% in the first six months of 2015. The decreases were due to lower network maintenance and support costs resulting from turning down the Public Mobile CDMA network in the third quarter of 2014, as well as lower data content share fees, partly offset by higher roaming costs driven by volume increases.

Marketing expenses increased year over year by $8 million or 8.3% in the second quarter of 2015 and $15 million or 8.4% in the first six months of 2015. The increases were primarily due to higher commission expenses driven by higher retention volumes, as well as an increase in advertising and promotions expenses.

Other goods and services purchased increased year over year by $38 million or 27% in the second quarter of 2015 and $57 million or 20% in the first six months of 2015. The increases reflect higher non-labour restructuring and other like costs primarily from the planned closure of all Black–s Photography retail stores (see Section 2 Core business and strategy), as well as higher bad debt provisions to support the growing subscriber base, the expansion of our distribution channels, and increases in external labour and administrative costs.

Employee benefits expense increased year over year by $14 million or 8.6% in the second quarter of 2015, reflecting higher labour restructuring costs from the planned closure of all Black–s Photography retail stores and other efficiency initiatives, higher share-based compensation and lower capitalized labour costs. In the first six months of 2015, employee benefits expense increased $7 million or 2.1%, reflecting higher labour restructuring costs and share-based compensation noted above, partly offset by lower wages and salaries mainly from a reduction in the number of FTEs as a result of our ongoing operational efficiency initiatives, including the integration of Public Mobile.

Wireless EBITDA increased by $11 million or 1.5% in the second quarter of 2015 and $65 million or 4.6% in the first six months of 2015 when compared to the same periods in 2014. Wireless EBITDA – excluding restructuring and other like costs increased year over year by $44 million or 6.3% in the second quarter and $101 million or 7.1% in the first six months of 2015. The increases in EBITDA reflect network revenue growth driven by a larger customer base and higher ARPU, as well as ongoing operational efficiency initiatives including the integration of Public Mobile, partly offset by higher retention spend, increased customer service and distribution channel expenses, and higher restructuring and other like costs.

5.5 Wireline segment

Total wireline operating revenues increased by $32 million or 2.3% in the second quarter of 2015 and $50 million or 1.8% in the first six months of 2015 when compared to the same periods in 2014. The increases reflect continued growth in data revenue resulting from a larger high-speed Internet and TELUS TV subscriber base and growth in our business process outsourcing services and TELUS Health, partly offset by ongoing declines in legacy voice and equipment revenues, as well as continued competitive pressures in the business sector and from over-the-top (OTT) services.

Revenues arising from contracts with customers increased year over year by $34 million or 2.5% in the second quarter of 2015 and $53 million or 2.0% in the first six months of 2015.

Other operating income decreased year over year by $1 million or 7.7% in the second quarter of 2015 and $4 million or 13% in the first six months of 2015. The decreases were mainly a result of a reduction in current period amortization of deferred revenue in respect of the regulatory price cap deferral account for provisioning broadband Internet services to eligible rural and remote communities, and a decrease in recoveries of employee costs under eligible government-sponsored programs.

Intersegment revenue represents services provided to the wireless segment. Such revenue is eliminated upon consolidation along with the associated expenses.

Total wireline operating expenses increased by $35 million or 3.4% in the second quarter of 2015 and $49 million or 2.4% in the first six months of 2015 when compared to the same periods in 2014.

Wireline EBITDA decreased by $3 million or 0.9% in the second quarter of 2015 and increased by $1 million or 0.2% in the first six months of 2015 when compared to the same periods in 2014. EBITDA – excluding restructuring and other like costs increased year over year by 2.9% in the second quarter of 2015 and first six months of 2015, as compared to year-over-year revenue increases of 2.3% for the quarter and 1.8% for the six-month period reflecting improving margins in data services, including Internet, TELUS Health, TELUS TV and business process outsourcing services.

6. Changes in financial position

7. Liquidity and capital resources

Our discussion in this section is qualified in its entirety by the Caution regarding forward-looking statements at the beginning of this MD&A.

7.1 Overview

In the first six months of 2015, we paid $1.5 billion for the wireless spectrum licences acquired in the AWS-3 spectrum auction that took place in the first quarter of 2015 and $479 million for the wireless spectrum licences acquired in the 2500 MHz auction that took place in the second quarter of 2015. In March 2015, we publicly issued $1.75 billion in senior unsecured notes in three series with the proceeds mainly used to fund the AWS-3 spectrum licences, whereas we utilized existing Short-term borrowings and long-term credit facilities to fund the 2500 MHz spectrum licences.

In addition, we paid dividends of $487 million to the holders of Common Shares and returned $262 million of cash to shareholders through share purchases under our 2015 NCIB. On July 2, 2015, we paid dividends of $253 million to the holders of Common Shares and during the month of July 2015, purchased 0.7 million of our Common Shares by way of the automatic share purchase plan (ASPP) at a cost of $33 million.

Our capital structure financial policies, financing plan and report on financing and capital structure management plans are described in Section 4.3.

7.2 Cash provided by operating activities

Cash provided by operating activities increased year over year by $88 million or 10% in the second quarter of 2015 and $208 million or 14% in the first six months of 2015.

7.3 Cash used by investing activities

Cash used by investing activities increased year over year by $860 million or 57% in the second quarter of 2015 and $959 million or 41% in the first six months of 2015. The changes included the following:

Wireless segment capital expenditures were essentially unchanged year over year in the second quarter of 2015, reflecting our continued investment in wireless broadband infrastructure to enhance our network coverage, speed and capacity, including the ongoing deployment of 700 MHz spectrum. In the first six months of 2015, wireless capital expenditures increased year over year by $82 million or 21% mainly from higher investments in wireless broadband infrastructure as the deployment of 700 MHz spectrum commenced in the second quarter of 2014. We also continue to invest in system and network resiliency and reliability in support of our ongoing customers first initiatives and to ready the network and systems for future retirement of legacy assets. Wireless EBITDA less capital expenditures was $988 million for the first six months of 2015, reflecting a year-over-year decrease of $17 million as the increase in capital expenditures was only partially offset by growth in EBITDA.

Wireline segment capital expenditures increased year over year by $29 million or 7.1% in the second quarter of 2015 and $85 million or 12% in the first six months of 2015. The increases were primarily due to continuing investments in broadband infrastructure, including connecting more homes and businesses directly to our fibre-optic network. This investment supports our high-speed Internet and Optik TV subscriber growth, as well as our customers– demand for faster Internet speeds, and extends the reach and functionality of our healthcare solutions. We also continued our investments in system and network resiliency and reliability. Wireline EBITDA less capital expenditures was $(71) million in the first six months of 2015, reflecting a year-over-year decrease of $84 million as increases in our strategic investment in broadband infrastructure exceeded the growth in EBITDA.

7.4 Cash provided (used) by financing activities

Net cash used by financing activities was $68 million in the second quarter of 2015, as compared to $667 million net cash provided by financing activities in the second quarter of 2014. Net cash provided by financing activities was $1.7 billion in the first six months of 2015, as compared to $612 million net cash provided by financing activities in the first six months of 2014. Financing activities included the following:

Dividends paid to the holders of Common Shares

Dividends paid to the holders of Common Shares were $243 million in the second quarter of 2015 or an increase of $19 million from the second quarter of 2014. Dividends paid for the first six months of 2015 were $487 million or an increase of $41 million from the first six months of 2014. The increases reflect higher dividend rates under our dividend growth program (see Section 4.3), offset by lower outstanding shares resulting from shares purchased and cancelled under our 2015 NCIB program.

Purchase of Common Shares for cancellation

Under our 2015 NCIB, we purchased approximately 3.3 million shares in the second quarter of 2015 and approximately 7.1 million shares in the first six months of 2015, for $135 million in the quarter and $291 million for the six-month period. During the month-ended July 31, 2015, we purchased approximately 0.7 million shares for $33 million. In 2014, we purchased approximately 4.8 million shares in the second quarter and approximately 9.1 million shares in the first six months under our 2014 NCIB, for $188 million in the quarter and $349 million for the six-month period. See Section 4.3 for details of our planned multi-year share purchase program through 2016.

Short-term borrowings

Short-term borrowings are composed primarily of amounts advanced to us from an arm–s-length securitization trust pursuant to the sale of trade receivables in securitization transactions (see Section 7.7 Sale of trade receivables). Such proceeds were $100 million throughout the first quarter of 2015 and increased to $500 million during the second quarter of 2015. In comparison, such proceeds were $100 million throughout the second quarter of 2014, after being reduced by $300 million to $100 million in the first quarter of 2014.

Long-term debt issues and repayments

Long-term debt repayments, net of issues, were $119 million in the second quarter of 2015, whereas long-term debt issues, net of repayments, were $2.0 billion in the first six months of 2015, and were composed of:

In comparison, Long-term debt issues, net of repayments, were $1.1 billion in the second quarter of 2014 and $1.7 billion in the first six months of 2014. On April 4, 2014, we issued $1.0 billion in senior unsecured notes in two series: a $500 million offering at 3.20% due April 5, 2021 and a $500 million offering at 4.85% due April 5, 2044. The net proceeds were used to repay the approximately $914 million of indebtedness drawn to fund a portion of the purchase price of the 700 MHz spectrum licences and the remainder was used for general corporate purposes.

These debt issues, combined with those in the third quarter of 2014, increased our average term to maturity of long-term debt (excluding commercial paper) to approximately 10.9 years as at June 30, 2015, compared to approximately 10 years as at June 30, 2014. Additionally, our weighted average cost of long-term debt (excluding commercial paper) was 4.42% as at June 30, 2015, as compared to 4.89% as at June 30, 2014, as a result of our 2014 and 2015 re-financing activities.

7.5 Liquidity and capital resource measures

Net debt was $11.8 billion as at June 30, 2015, an increase of $2.5 billion when compared to one year earlier, resulting from our re-financing activities in 2014 and incremental debt issued (primarily for the acquisition of 700 MHz, AWS-3, and 2500 MHz spectrum licences), as well as an increase in Short-term borrowings, as discussed above.

Fixed-rate debt as a proportion of total indebtedness was 92% as at June 30, 2015, up from 91% one year earlier, due to our 2014 re-financing activities and financing of 700 MHz and AWS-3 spectrum licence purchases with fixed-rate debt, partly offset by an increase in Short-term borrowings and draws from our revolving credit facility, which emulate floating-rate debt during the second quarter of 2015.

Net debt to EBITDA – excluding restructuring and other like costs ratio was 2.67 times for the 12-month period ended June 30, 2015, up from 2.21 times one year earlier. Our long-term objective for this measure is 2.00 to 2.50 times, which we believe is consistent with maintaining investment grade credit ratings in the range of BBB+ or the equivalent and providing reasonable access to capital. At the end of the second quarter of 2015, this ratio was outside of the long-term objective range due to the issuance of incremental debt for the acquisition of spectrum licences, which has been auctioned in unprecedented amounts and in atypical concentrations during 2014 and 2015, partly offset by growth in EBITDA – excluding restructuring and other like costs. These acquired licences have nearly doubled our national spectrum holdings and represent an investment to extend our network capacity to support continuing data consumption growth, as well as growth in our wireless customer base. We will endeavour to return to within the objective range in the medium term, as we believe that this range is supportive of our long-term strategy. While this ratio currently exceeds our long-term objective range, we are well in compliance with the leverage ratio covenant in our credit facilities, which states that we may not permit our net debt to operating cash flow ratio to exceed 4.00:1.00 (see Section 7.6 Credit facilities).

Earnings coverage ratio for the 12-month period ended June 30, 2015 was 5.1 times, down from 5.7 times one year earlier. Higher borrowing costs reduced the ratio by 0.8, while growth in income before borrowing costs and income taxes increased the ratio by 0.2.

EBITDA – excluding restructuring and other like costs interest coverage ratio for the 12-month period ended June 30, 2015 was 9.8 times, down from 10.3 times one year earlier. An increase in net interest costs (including the September 2014 long-term debt prepayment premium) reduced the ratio by 1.0, while growth in EBITDA – excluding restructuring and other like costs increased the ratio by 0.5. See Section 7.6 Credit facilities.

Dividend payout ratios: Our financial objective is 65 to 75% of sustainable earnings on a prospective basis. The basic and adjusted dividend payout ratios for the 12-month periods ended June 30, 2015 and 2014 were consistent with the objective range.

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