Enhanced Investments - Financial Portal

Published: 2022-08-05 00:00:00 ET

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Exhibit 99.1

TELUS CORPORATION

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

(UNAUDITED)

JUNE 30, 2022


condensed interim consolidated statements of income and other comprehensive income	(unaudited)


		Three months				Six months
Periods ended June 30 (millions except per share amounts)	Note	2022		2021		2022		2021
OPERATING REVENUES
Service		$	3,857	$	3,559	$	7,622	$	7,061
Equipment			516		550		1,007		1,070
Operating revenues (arising from contracts with customers)	6		4,373		4,109		8,629		8,131
Other income	7		28		2		54		4
Operating revenues and other income			4,401		4,111		8,683		8,135
OPERATING EXPENSES
Goods and services purchased			1,637		1,609		3,231		3,157
Employee benefits expense	8		1,171		1,051		2,290		2,066
Depreciation	17		536		527		1,087		1,051
Amortization of intangible assets	18		295		266		586		531
			3,639		3,453		7,194		6,805
OPERATING INCOME			762		658		1,489		1,330
Financing costs	9		97		203		276		410
INCOME BEFORE INCOME TAXES			665		455		1,213		920
Income taxes	10		167		111		311		243
NET INCOME			498		344		902		677
OTHER COMPREHENSIVE INCOME (LOSS)	11
Items that may subsequently be reclassified to income
Change in unrealized fair value of derivatives designated as cash flow hedges			13		28		102		110
Foreign currency translation adjustment arising from translating financial statements of foreign operations			(21)		(42)		(88)		(111)
			(8)		(14)		14		(1)
Items never subsequently reclassified to income
Change in measurement of investment financial assets			(4)		(3)		1		(4)
Employee defined benefit plan re-measurements			138		103		297		778
			134		100		298		774
			126		86		312		773
COMPREHENSIVE INCOME		$	624	$	430	$	1,214	$	1,450
NET INCOME ATTRIBUTABLE TO:
Common Shares		$	468	$	335	$	853	$	666
Non-controlling interests			30		9		49		11
		$	498	$	344	$	902	$	677
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Common Shares		$	591	$	441	$	1,182	$	1,476
Non-controlling interests			33		(11)		32		(26)
		$	624	$	430	$	1,214	$	1,450
NET INCOME PER COMMON SHARE	12
Basic		$	0.34	$	0.25	$	0.62	$	0.50
Diluted		$	0.34	$	0.25	$	0.62	$	0.50

TOTAL WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic			1,381		1,355		1,378		1,327
Diluted			1,387		1,359		1,384		1,331

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



2\|June 30, 2022


condensed interim consolidated statements of financial position	(unaudited)


		June 30,		December 31,
As at (millions)	Note	2022		2021
ASSETS
Current assets
Cash and temporary investments, net		$	382	$	723
Accounts receivable	6(b)		2,703		2,671
Income and other taxes receivable			140		206
Inventories	1(l)		437		448
Contract assets	6(c)		407		443
Prepaid expenses	20		717		528
Current derivative assets	4(d)		65		13
			4,851		5,032
Non-current assets
Property, plant and equipment, net	17		16,282		15,926
Intangible assets, net	18		17,625		17,485
Goodwill, net	18		7,439		7,281
Contract assets	6(c)		226		266
Other long-term assets	20		2,428		2,004
			44,000		42,962
		$	48,851	$	47,994

LIABILITIES AND OWNERS’ EQUITY
Current liabilities
Short-term borrowings	22	$	279	$	114
Accounts payable and accrued liabilities	23		3,406		3,705
Income and other taxes payable			114		104
Dividends payable	13		467		449
Advance billings and customer deposits	24		858		854
Provisions	25		82		96
Current maturities of long-term debt	26		3,146		2,927
Current derivative liabilities	4(d)		14		24
			8,366		8,273
Non-current liabilities
Provisions	25		538		774
Long-term debt	26		18,482		17,925
Other long-term liabilities	27		580		907
Deferred income taxes	10		4,205		4,056
			23,805		23,662
Liabilities			32,171		31,935
Owners’ equity
Common equity	28		15,716		15,116
Non-controlling interests			964		943
			16,680		16,059
		$	48,851	$	47,994
Contingent liabilities	29

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



		June 30, 2022\|3


condensed interim consolidated statements of changes in owners’ equity	(unaudited)


		Common equity
		Equity contributed							Accumulated
		Common Shares (Note 28)							other				Non-
		Number of	Share		Contributed		Retained		comprehensive				controlling
(millions)	Note	shares	capital		surplus		earnings		income		Total		interests		Total
Balance as at January 1, 2021		1,291	$	7,677	$	534	$	3,712	$	117	$	12,040	$	528	$	12,568
Net income		—		—		—		666		—		666		11		677
Other comprehensive income (loss)	11	—		—		—		778		32		810		(37)		773
Dividends	13	—		—		—		(832)		—		(832)		—		(832)
Dividends reinvested and optional cash payments	13(b), 14(c)	13		305		—		—		—		305		—		305
Equity accounted share-based compensation		—		—		68		—		—		68		—		68
Common Shares issued		51		1,267		—		—		—		1,267		—		1,267
Change in ownership interests of subsidiaries		—		—		432		—		—		432		392		824
Balance as at June 30, 2021		1,355	$	9,249	$	1,034	$	4,324	$	149	$	14,756	$	894	$	15,650
Balance as at January 1, 2022		1,370	$	9,644	$	1,013	$	4,256	$	203	$	15,116	$	943	$	16,059
Net income		—		—		—		853		—		853		49		902
Other comprehensive income (loss)	11	—		—		—		297		32		329		(17)		312
Dividends	13	—		—		—		(917)		—		(917)		—		(917)
Dividends reinvested and optional cash payments	13(b), 14(c)	11		317		—		—		—		317		—		317
Equity accounted share-based compensation	14(b)	—		—		68		—		—		68		7		75
Issue of Common Shares in business combination	18(b)	—		6		—		—		—		6		—		6
Change in ownership interests of subsidiary	28(c)	—		—		(56)		—		—		(56)		(18)		(74)
Balance as at June 30, 2022		1,381	$	9,967	$	1,025	$	4,489	$	235	$	15,716	$	964	$	16,680

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



4\|June 30, 2022

condensed interim consolidated statements of cash flows

(unaudited)


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
OPERATING ACTIVITIES
Net income		$	498	$	344	$	902	$	677
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			831		793		1,673		1,582
Deferred income taxes	10		(5)		(24)		(6)		(21)
Share-based compensation expense, net	14(a)		42		52		68		87
Net employee defined benefit plans expense	15(a)		25		30		52		56
Employer contributions to employee defined benefit plans	15(a)		(8)		(12)		(25)		(28)
Non-current contract assets			11		6		40		21
Non-current unbilled customer finance receivables	20		113		(44)		31		(67)
Loss from equity accounted investments	7, 21		3		2		7		6
Other			(148)		(26)		(155)		(43)
Net change in non-cash operating working capital	31(a)		(112)		123		(202)		(87)
Cash provided by operating activities			1,250		1,244		2,385		2,183
INVESTING ACTIVITIES
Cash payments for capital assets, excluding spectrum licences	31(a)		(1,016)		(771)		(2,029)		(1,521)
Cash payments for spectrum licences	18(a)		—		(21)		—		(272)
Cash payments for acquisitions, net	18(b)		(142)		(13)		(269)		(150)
Advances to, and investment in, real estate joint ventures and associates	21		(2)		(2)		(2)		(17)
Real estate joint venture receipts	21		1		1		2		2
Proceeds on disposition			7		1		12		1
Investment in portfolio investments and other			(286)		(55)		(351)		(56)
Cash used by investing activities			(1,438)		(860)		(2,637)		(2,013)
FINANCING ACTIVITIES	31(b)
Common Shares issued	28(a)		—		—		—		1,300
Dividends paid to holders of Common Shares	13(a)		(290)		(251)		(583)		(502)
Issue (repayment) of short-term borrowings, net			171		—		165		—
Long-term debt issued	26		1,770		1,250		4,057		2,225
Redemptions and repayment of long-term debt	26		(1,770)		(1,090)		(3,629)		(2,626)
Shares of subsidiary issued and sold to (purchased from) non-controlling interests, net	28(c)		(85)		—		(85)		827
Other			—		(13)		(14)		(59)
Cash provided (used) by financing activities			(204)		(104)		(89)		1,165
CASH POSITION
Increase (decrease) in cash and temporary investments, net			(392)		280		(341)		1,335
Cash and temporary investments, net, beginning of period			774		1,903		723		848
Cash and temporary investments, net, end of period		$	382	$	2,183	$	382	$	2,183
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS
Interest paid		$	(195)	$	(173)	$	(375)	$	(372)
Interest received		$	—	$	1	$	1	$	3
Income taxes paid, net
In respect of comprehensive income		$	(130)	$	(133)	$	(238)	$	(315)
In respect of business acquisitions			—		—		—		(38)
		$	(130)	$	(133)	$	(238)	$	(353)

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



		June 30, 2022\|5


notes to condensed interim consolidated financial statements	(unaudited)

JUNE 30, 2022

TELUS Corporation is one of Canada’s largest telecommunications companies, providing a wide range of technology solutions, including mobile and fixed voice and data telecommunications services and products, healthcare software and technology solutions, agriculture and consumer goods services (software, data management and data analytics-driven smart-food chain and consumer goods technologies), and digitally-led customer experiences. Data services include: internet protocol; television; hosting, managed information technology and cloud-based services; and home and business security.

TELUS Corporation was incorporated under the Company Act (British Columbia) 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 among BCT, BC TELECOM Inc. and the former Alberta-based TELUS Corporation (TC), BCT acquired all of the shares of BC TELECOM Inc. and TC in exchange for Common Shares and Non-Voting Shares of BCT, and BC TELECOM Inc. was dissolved. On May 3, 2000, BCT changed its name to TELUS Corporation and in February 2005, TELUS Corporation transitioned under the Business Corporations Act (British Columbia), successor to the Company Act (British Columbia). TELUS Corporation maintains its registered office at Floor 7, 510 West Georgia Street, Vancouver, British Columbia, V6B 0M3.



6\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

The terms “TELUS”, “we”, “us”, “our” or “ourselves” refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries. Our principal subsidiaries are: TELUS Communications Inc., in which, as at June 30, 2022, we have a 100% equity interest; and TELUS International (Cda) Inc., in which, as at June 30, 2022, we have a 56.1% equity interest, as discussed further in Note 28(c), and which completed its initial public offering in February 2021.

Notes to consolidated financial statements		Page
General application
1.	Condensed interim consolidated financial statements	8
2.	Accounting policy developments	9
3.	Capital structure financial policies	9
4.	Financial instruments	14
Consolidated results of operations focused
5.	Segment information	21
6.	Revenue from contracts with customers	24
7.	Other income	25
8.	Employee benefits expense	26
9.	Financing costs	27
10.	Income taxes	28
11.	Other comprehensive income	29
12.	Per share amounts	30
13.	Dividends per share	30
14.	Share-based compensation	31
15.	Employee future benefits	35
16.	Restructuring and other costs	38
Consolidated financial position focused
17.	Property, plant and equipment	39
18.	Intangible assets and goodwill	39
19.	Leases	42
20.	Other long-term assets	42
21.	Real estate joint ventures and investment in associate	43
22.	Short-term borrowings	46
23.	Accounts payable and accrued liabilities	46
24.	Advance billings and customer deposits	47
25.	Provisions	48
26.	Long-term debt	49
27.	Other long-term liabilities	53
28.	Owners’ equity	54
29.	Contingent liabilities	55
Other
30.	Related party transactions	57
31.	Additional statement of cash flow information	59



		June 30, 2022\|7


notes to condensed interim consolidated financial statements	(unaudited)

1	condensed interim consolidated financial statements

(a)Basis of presentation

The notes presented in our condensed interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our interim consolidated financial statements are referred to as condensed. Our condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2021.

Our condensed interim consolidated financial statements are expressed in Canadian dollars and follow the same accounting policies and methods of their application as set out in our consolidated financial statements for the year ended December 31, 2021. The generally accepted accounting principles that we use are International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) and Canadian generally accepted accounting principles. Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.

These consolidated financial statements for the three-month and six-month periods ended June 30, 2022, were authorized by our Board of Directors for issue on August 5, 2022.

(b)Financial instruments – recognition and measurement

In respect of the recognition and measurement of financial instruments, we have adopted the following policies:

●

Regular-way purchases or sales of financial assets or financial liabilities (purchases or sales that require actual delivery of financial assets or financial liabilities) are recognized on the settlement date. We have selected this method as the benefits of using the trade date method were not expected to exceed the costs of selecting and implementing that method.

●

Transaction costs, other than in respect of items held for trading, are added to the initial fair value of the acquired financial asset or financial liability. We have selected this method as we believe that it results in a better matching of the transaction costs with the periods in which we benefit from those costs.

●

A contract to receive renewable energy credits and the associated virtual power purchase agreement are distinct units of account. We have selected this method as we believe the receipt of the renewable energy credits is an executory contract and the virtual power purchase agreement meets the definition of a derivative.

(c)Inventories

Our inventories primarily consist of mobile handsets, parts and accessories totalling $340 million as at June 30, 2022 (December 31, 2021 – $381 million), 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. Costs of goods sold for the three-month and six-month periods ended June 30, 2022, totalled $0.5 billion (2021 - $0.5 billion) and $1.0 billion (2021 - $1.0 billion), respectively.



8\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

2	accounting policy developments

Standards, interpretations and amendments to standards and interpretations in the reporting period not yet effective and not yet applied

●

In February 2021, the International Accounting Standards Board issued narrow-scope amendments to IAS 1, Presentation of Financial Statements, IFRS Practice Statement 2, Making Materiality Judgements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application is permitted. The amendments will require the disclosure of material accounting policy information rather than disclosing significant accounting policies and clarify how to distinguish changes in accounting policies from changes in accounting estimates. We are currently assessing the impacts of the amended standards, but do not expect that our financial disclosure will be materially affected by the application of the amendments.

●

In May 2021, the International Accounting Standards Board issued targeted amendments to IAS 12, Income Taxes. The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application is permitted. With a view to reducing diversity in reporting, the amendments will clarify that companies are required to recognize deferred taxes on transactions where both assets and liabilities are recognized, such as with leases and asset retirement (decommissioning) obligations. Based upon our current facts and circumstances, we do not expect our financial performance or disclosure to be materially affected by the application of the amended standard.

3	capital structure financial policies

General

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

In our definition of capital, we include common equity (excluding accumulated other comprehensive income), non-controlling interests, long-term debt (including long-term credit facilities, commercial paper backstopped by long-term credit facilities and any hedging assets or liabilities associated with long-term debt items, net of amounts recognized in accumulated other comprehensive income), cash and temporary investments, and short-term borrowings, including those arising from 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 business. In order to maintain or adjust our capital structure, we may adjust the amount of dividends paid to holders of Common Shares, purchase Common Shares for cancellation pursuant to normal course issuer bids, issue new shares (including Common Shares and TELUS International (Cda) Inc. subordinate voting 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.

During 2022, our financial objectives, which are reviewed annually, were unchanged from 2021. We believe that our financial objectives are supportive of our long-term strategy.



		June 30, 2022\|9


notes to condensed interim consolidated financial statements	(unaudited)

We monitor capital utilizing a number of measures, including: net debt to earnings before interest, income taxes, depreciation and amortization (EBITDA*) – excluding restructuring and other costs ratio; coverage ratios; and dividend payout ratios.

Debt and coverage ratios

Net debt to EBITDA – excluding restructuring and other costs is calculated as net debt at the end of the period, divided by 12-month trailing EBITDA – excluding restructuring and other costs. This measure, historically, is substantially similar to the leverage ratio covenant in our credit facilities. Net debt and EBITDA – excluding restructuring and other costs are measures that do not have any standardized meanings prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other issuers. The calculation of these measures is set out in the following table. Net debt is one component of a ratio used to determine compliance with debt covenants.


As at, or for the 12-month periods ended, June 30 ($ in millions)	Objective			2022		2021
Components of debt and coverage ratios
Net debt ¹				$	21,693	$	18,169
EBITDA – excluding restructuring and other costs ²				$	6,715	$	5,846
Net interest cost ³ (Note 9)				$	755	$	786
Debt ratio
Net debt to EBITDA – excluding restructuring and other costs	2.20	–	2.70 ⁴		3.23		3.11
Coverage ratios
Earnings coverage ⁵					4.2		3.2
EBITDA – excluding restructuring and other costs interest coverage ⁶					8.9		7.4

1	Net debt and total capitalization are calculated as follows:


As at June 30	Note	2022		2021
Long-term debt	26	$	21,628	$	19,932
Debt issuance costs netted against long-term debt			100		100
Derivative (assets) liabilities, net			(172)		62
Accumulated other comprehensive income amounts arising from financial instruments used to manage interest rate and currency risks associated with U.S. dollar-denominated long-term debt — excluding tax effects			240		158
Cash and temporary investments, net			(382)		(2,183)
Short-term borrowings	22		279		100
Net debt			21,693		18,169
Common equity			15,716		14,756
Non-controlling interests			964		894
Less: accumulated other comprehensive income included above in common equity and non-controlling interests			(201)		(130)
Total managed capitalization		$	38,172	$	33,689

* EBITDA is not a standardized financial measure under IFRS-IASB and might not be comparable to similar measures disclosed by other issuers; we define EBITDA as operating revenues and other income less goods and services purchased and employee benefits expense. We report EBITDA because it is a key measure that management uses to evaluate the performance of our business, and it is also utilized in measuring compliance with certain debt covenants.



10\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

2	EBITDA – excluding restructuring and other costs is calculated as follows:


					EBITDA –
			Restructuring		excluding
	EBITDA		and other costs		restructuring
	(Note 5)		(Note 16)		and other costs
Add
Six-month period ended June 30, 2022	$	3,162	$	68	$	3,230
Year ended December 31, 2021		6,290		186		6,476
Deduct
Six-month period ended June 30, 2021		(2,912)		(79)		(2,991)
EBITDA – excluding restructuring and other costs	$	6,540	$	175	$	6,715

Net interest cost is defined as financing costs, excluding employee defined benefit plans net interest, virtual power purchase agreements unrealized change in forward element, recoveries on long-term debt prepayment premium and repayment of debt, calculated on a 12-month trailing basis (expenses recorded for long-term debt prepayment premium, if any, are included in net interest cost) (see Note 9).

Our long-term objective range for this ratio is 2.20 – 2.70 times. The ratio as at June 30, 2022, is outside the long-term objective range. We may permit, and have permitted, this ratio to go outside the objective range (for long-term investment opportunities), but we will endeavour to return this ratio to within the objective range in the medium term (following the 2021, and upcoming 2023 and 2024, spectrum auctions), as we believe that this range is supportive of our long-term strategy. We are 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 4.25:1.00 (see Note 26(d)); the calculation of the debt ratio is substantially similar to the calculation of the leverage ratio covenant in our credit facilities.

Earnings coverage is defined by Canadian Securities Administrators National Instrument 41-101 as net income before borrowing costs and income tax expense, divided by borrowing costs (interest on long-term debt; interest on short-term borrowings and other; long-term debt prepayment premium), and adding back capitalized interest, all such amounts excluding amounts attributable to non-controlling interests.

6	EBITDA – excluding restructuring and other costs interest coverage is defined as EBITDA – excluding restructuring and other costs, divided by net interest cost. This measure is substantially similar to the coverage ratio covenant in our credit facilities.

Net debt to EBITDA – excluding restructuring and other costs was 3.23 times as at June 30, 2022, as compared to 3.11 times one year earlier. The effect of the increase in net debt, primarily due to the acquisition of spectrum licences and business acquisitions, exceeded the effect of growth in EBITDA – excluding restructuring and other costs. EBITDA growth was reduced by COVID-19 pandemic impacts.

The earnings coverage ratio for the twelve-month period ended June 30, 2022, was 4.2 times, up from 3.2 times one year earlier. An increase in income before borrowing costs and income taxes increased the ratio by 1.1 and an increase in borrowing costs decreased the ratio by 0.1. The EBITDA – excluding restructuring and other costs interest coverage ratio for the twelve-month period ended June 30, 2022, was 8.9 times, up from 7.4 times one year earlier. Growth in EBITDA – excluding restructuring and other costs increased the ratio by 1.1 and a decrease in net interest costs increased the ratio by 0.4. EBITDA growth for the twelve-month period ended June 30, 2022, was reduced by COVID-19 pandemic impacts.



		June 30, 2022\|11


notes to condensed interim consolidated financial statements	(unaudited)

TELUS Corporation Common Share dividend payout ratio

So as to be consistent with the way we manage our business, our TELUS Corporation Common Share dividend payout ratio is presented as a historical measure calculated as the sum of the most recent four quarters’ dividends declared for TELUS Corporation Common Shares, as recorded in the financial statements net of dividend reinvestment plan effects (see Note 13), divided by the sum of free cash flow* amounts for the most recent four quarters for interim reporting periods (divided by annual free cash flow if the reported amount is in respect of a fiscal year).


For the 12-month periods ended June 30	Objective	2022		2021
Determined using most comparable IFRS-IASB measures
Ratio of TELUS Corporation Common Share dividends declared to cash provided by operating activities – less capital expenditures (excluding spectrum licences)		224	%	138	%
Determined using management measures
TELUS Corporation Common Share dividend payout ratio – net of dividend reinvestment plan effects	60%–75%¹	133	%	111	%

Our objective range for the TELUS Corporation Common Share dividend payout ratio is 60%-75% of free cash flow on a prospective basis. As at June 30, 2022, the ratio was outside of the objective range primarily due to: (i) our planned accelerated capital expenditures program to support our broadband capital investments, the build-out of our TELUS PureFibre infrastructure and the acceleration of our 5G network roll-out; and (ii) the reduction of EBITDA caused by the pandemic. Excluding the effects of our accelerated capital expenditures program of $1,173 million, as at June 30, 2022, the ratio was 56%.

* Free cash flow is not a standardized financial measure under IFRS-IASB and might not be comparable to similar measures presented by other issuers; we define free cash flow as EBITDA (operating revenues and other income less goods and services purchased and employee benefits expense) excluding certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the consolidated statements of cash flows. We have issued guidance on, and report, free cash flow because it is a key measure that management, and investors, use to evaluate the performance of our business.



12\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)


For the 12-month periods ended June 30 (millions)	2022		2021
TELUS Corporation Common Share dividends declared	$	1,796	$	1,609
Amount of TELUS Corporation Common Share dividends declared reinvested in TELUS Corporation Common Shares		(644)		(600)
TELUS Corporation Common Share dividends declared - net of dividend reinvestment plan effects	$	1,152	$	1,009

Our calculation of free cash flow, and the reconciliation to cash provided by operating activities, is as follows:


For the 12-month periods ended June 30 (millions)	Note	2022		2021
EBITDA	5	$	6,540	$	5,638
Deduct gain on disposition of financial solutions business			(410)		—
Deduct non-cash gains from the sales of property, plant and equipment			—		(2)
Restructuring and other costs, net of disbursements			7		(5)
Effects of contract asset, acquisition and fulfilment and TELUS Easy Payment device financing			(3)		(86)
Effect of lease principal	31(b)		(503)		(447)
Leases accounted for as finance leases prior to adoption of IFRS 16			—		32
Items from the Consolidated statements of cash flows:
Share-based compensation, net	14		120		50
Net employee defined benefit plans expense	15		109		106
Employer contributions to employee defined benefit plans			(50)		(52)
Interest paid			(747)		(736)
Interest received			15		10
Capital expenditures (excluding spectrum licences)	5		(3,787)		(2,952)
Free cash flow before income taxes			1,291		1,556
Income taxes paid, net of refunds			(486)		(646)
Effect of disposition of financial solutions business on income taxes paid			61		—
Free cash flow			866		910
Add (deduct):
Capital expenditures (excluding spectrum licences)	5		3,787		2,952
Effects of lease principal and leases accounted for as finance leases prior to adoption of IFRS 16			503		415
Gain on disposition of financial solutions business, net of effect on income taxes paid			(349)		—
Individually immaterial items included in net income neither providing nor using cash			(217)		(159)
Cash provided by operating activities		$	4,590	$	4,118



		June 30, 2022\|13


notes to condensed interim consolidated financial statements	(unaudited)

4	financial instruments

(a)

Credit risk

Excluding credit risk, if any, arising from currency swaps settled on a gross basis, the best representation of our maximum exposure (excluding income tax effects) to credit risk, which is a worst-case scenario and does not reflect results we expect, is set out in the following table.


	June 30,		December 31,
As at (millions)	2022		2021
Cash and temporary investments, net	$	382	$	723
Accounts receivable		3,217		3,216
Contract assets		633		709
Derivative assets		289		89
	$	4,521	$	4,737

Cash and temporary investments, net

Credit risk associated with cash and temporary investments is managed by ensuring that these financial assets are placed with: governments; major financial institutions that have been accorded strong investment grade ratings by a primary rating agency; and/or other creditworthy counterparties. An ongoing review evaluates changes in the status of counterparties.

Accounts receivable

Credit risk associated with accounts receivable is inherently managed by the size and diversity of our large customer base, which includes substantially all consumer and business sectors in Canada. We follow a program of credit evaluations of customers and limit the amount of credit extended when deemed necessary. Accounts are considered to be past due (in default) when customers have failed to make the contractually required payments when due, which is generally within 30 days of the billing date. Any late payment charges are levied at an industry-based market or negotiated rate on outstanding non-current customer account balances.


As at (millions)		June 30, 2022						December 31, 2021
	Note	Gross		Allowance		Net ¹		Gross		Allowance		Net ¹
Customer accounts receivable, net of allowance for doubtful accounts
Less than 30 days past billing date		$	934	$	(13)	$	921	$	900	$	(8)	$	892
30-60 days past billing date			262		(13)		249		338		(7)		331
61-90 days past billing date			85		(16)		69		93		(9)		84
More than 90 days past billing date			111		(35)		76		114		(21)		93
Unbilled customer finance receivables			1,333		(37)		1,296		1,323		(65)		1,258
		$	2,725	$	(114)	$	2,611	$	2,768	$	(110)	$	2,658
Current		$	2,196	$	(99)	$	2,097	$	2,194	$	(81)	$	2,113
Non-current	20		529		(15)		514		574		(29)		545
		$	2,725	$	(114)	$	2,611	$	2,768	$	(110)	$	2,658

1	Net amounts represent customer accounts receivable for which an allowance had not been made as at the dates of the Consolidated statements of financial position (see Note 6(b)).



14\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

We maintain allowances for lifetime expected credit losses related to doubtful accounts. Current economic conditions (including forward-looking macroeconomic data), historical information (including credit agency reports, if available), reasons for the accounts being past due and the line of business from which the customer accounts receivable arose are all considered when determining whether to make allowances for past-due accounts. The same factors are considered when determining whether to write off amounts charged to the allowance for doubtful accounts against the customer accounts receivable. The doubtful accounts expense is calculated on a specific-identification basis for customer accounts receivable above a specific balance threshold and on a statistically derived allowance basis for the remainder. No customer accounts receivable are written off directly to the doubtful accounts expense.

The following table presents a summary of the activity related to our allowance for doubtful accounts.


	Three months				Six months
Periods ended June 30 (millions)	2022		2021		2022		2021
Balance, beginning of period	$	107	$	134	$	110	$	140
Additions (doubtful accounts expense)		22		11		40		25
Accounts written off ¹less than recoveries		(18)		(18)		(41)		(39)
Other		3		2		5		3
Balance, end of period	$	114	$	129	$	114	$	129

1	For the three-month and six-month periods ended June 30, 2022, accounts written off, but that were still subject to enforcement activity, totalled $37 (2021 – $31) and $69 (2021 – $54), respectively.

Contract assets

Credit risk associated with contract assets is inherently managed by the size and diversity of our large customer base, which includes substantially all consumer and business sectors in Canada. We follow a program of credit evaluations of customers and limit the amount of credit extended when deemed necessary.


As at (millions)	June 30, 2022						December 31, 2021
	Gross		Allowance		Net (Note 6(c))		Gross		Allowance		Net (Note 6(c))
Contract assets, net of impairment allowance
To be billed and thus reclassified to accounts receivable during:
The 12-month period ending one year hence	$	561	$	(24)	$	537	$	595	$	(24)	$	571
The 12-month period ending two years hence		214		(9)		205		259		(11)		248
Thereafter		22		(1)		21		19		(1)		18
	$	797	$	(34)	$	763	$	873	$	(36)	$	837

We maintain allowances for lifetime expected credit losses related to contract assets. Current economic conditions, historical information (including credit agency reports, if available), and the line of business from which the contract asset arose are all considered when determining impairment allowances. The same factors are considered when determining whether to write off amounts charged to the impairment allowance for contract assets against contract assets.

Derivative assets (and derivative liabilities)

Counterparties to our material foreign exchange derivatives are major financial institutions that have been accorded investment grade ratings by a primary credit rating agency. The total dollar amount of credit exposure under contracts with any one financial institution is limited and counterparties’ credit ratings are monitored. We do not give or receive collateral on swap agreements and hedging items due to our credit rating and those of our counterparties. While we are exposed to the risk of potential credit losses due to the possible non-performance of our counterparties, we consider this risk remote. Our derivative liabilities do not have credit risk-related contingent features.



		June 30, 2022\|15


notes to condensed interim consolidated financial statements	(unaudited)

(b)

Liquidity risk

As a component of our capital structure financial policies, discussed further in Note 3, we manage liquidity risk by:

●	maintaining a daily cash pooling process that enables us to manage our available liquidity and our liquidity requirements according to our actual needs;

●	maintaining an agreement to sell trade receivables to an arm’s-length securitization trust and bilateral bank facilities (Note 22), a commercial paper program (Note 26(c)) and syndicated credit facilities (Note 26(d),(e));

●	maintaining in-effect shelf prospectuses;

●	continuously monitoring forecast and actual cash flows; and

●	managing maturity profiles of financial assets and financial liabilities.

Our debt maturities in future years are disclosed in Note 26(h). As at June 30, 2022, TELUS Corporation could offer $1.6 billion of debt or equity securities pursuant to a shelf prospectus that is in effect until June 2023 (December 31, 2021 – $2.75 billion). We believe that our investment grade credit ratings contribute to reasonable access to capital markets. TELUS International (Cda) Inc. has a shelf prospectus under which an unlimited amount of debt or equity securities could be offered and that is in effect until May 2024.

We closely match the contractual maturities of our derivative financial liabilities with those of the risk exposures they are being used to manage.

The expected maturities of our undiscounted financial liabilities do not differ significantly from the contractual maturities, other than as noted below. The contractual maturities of our undiscounted financial liabilities, including interest thereon (where applicable), are set out in the following tables.

Non-derivative

Derivative

Composite long-term debt

Long-term

Non-interest

debt,

bearing

excluding

Currency swap agreement

financial

Short-term

leases ¹

Leases

amounts to be exchanged ²

amounts to be exchanged

As at June 30, 2022 (millions)

liabilities

borrowings ¹

(Note 26)

(Note 26)

(Receive)

Pay

(Receive)

Pay

Total

2022 (remainder of year)

2,911

2,589

245

(2,027)

2,008

(356)

351

5,727

2023

251

1,216

382

(191)

191

(288)

284

1,849

2024

163

279

1,773

312

(191)

191

—

2,527

2025

—

2,198

188

(570)

557

—

2,385

2026

—

1,943

156

(157)

162

—

2,105

2027-2031

—

7,578

417

(2,010)

2,075

—

8,063

Thereafter

—

11,725

354

(4,031)

4,047

—

12,095

Total

3,341

289

29,022

2,054

(9,177)

9,231

(644)

635

34,751

Total (Note 26(h))

31,130

1	Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at June 30, 2022.

The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar-denominated long-term debt, and the corresponding amounts in the long-term debt currency swap receive column, have been determined based upon the currency exchange rates in effect as at June 30, 2022. The hedged U.S. dollar-denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swap pay column as gross cash flows are exchanged pursuant to the currency swap agreements.



16\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)


	Non-derivative								Derivative

					Composite long-term debt
					Long-term
	Non-interest				debt,
	bearing				excluding				Currency swap agreement						Currency swap agreement
	financial		Short-term		leases ¹		Leases		amounts to be exchanged ²						amounts to be exchanged
As at December 31, 2021 (millions)	liabilities		borrowings ¹		(Note 26)		(Note 26)		(Receive)		Pay		Other		(Receive)		Pay		Total
2022	$	3,395	$	15	$	3,130	$	504	$	(2,050)	$	2,059	$	8	$	(544)	$	540	$	7,057
2023		62		1		1,167		364		(149)		148		—		—		—		1,593
2024		13		101		1,724		305		(149)		148		—		—		—		2,142
2025		14		—		2,217		176		(522)		540		—		—		—		2,425
2026		2		—		1,901		144		(116)		118		—		—		—		2,049
2027-2031		7		—		7,351		398		(1,784)		1,852		—		—		—		7,824
Thereafter		—		—		10,499		344		(2,805)		2,877		—		—		—		10,915
Total	$	3,493	$	117	$	27,989	$	2,235	$	(7,575)	$	7,742	$	8	$	(544)	$	540	$	34,005

					Total						$	30,391

1	Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at December 31, 2021.

The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar-denominated long-term debt, and the corresponding amounts in the long-term debt currency swap receive column, have been determined based upon the currency exchange rates in effect as at December 31, 2021. The hedged U.S. dollar-denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swap pay column as gross cash flows are exchanged pursuant to the currency swap agreements.

(c)

Market risks

Net income and other comprehensive income for the six-month periods ended June 30, 2022 and 2021, could have varied if the Canadian dollar: U.S. dollar exchange rate, the U.S. dollar: European euro exchange rate and market interest rates varied by reasonably possible amounts from their actual statement of financial position date amounts.

The sensitivity analysis of our exposure to currency risk at the reporting date has been determined based upon a hypothetical change taking place at the relevant statement of financial position date. The U.S. dollar-denominated and European euro-denominated balances and derivative financial instrument notional amounts as at the statement of financial position dates have been used in the calculations.

The sensitivity analysis of our exposure to interest rate risk at the reporting date has been determined based upon a hypothetical change taking place at the beginning of the relevant fiscal year and being held constant through to the statement of financial position date. The principal and notional amounts as at the relevant statement of financial position date have been used in the calculations.



		June 30, 2022\|17


notes to condensed interim consolidated financial statements	(unaudited)

Income tax expense, which is reflected net in the sensitivity analysis, reflects the applicable statutory income tax rates for the reporting periods.



Six-month periods ended June 30	Net income				Other comprehensive income				Comprehensive income
(increase (decrease) in millions)	2022		2021		2022		2021		2022		2021
Reasonably possible changes in market risks ¹
10% change in C$: US$ exchange rate
Canadian dollar appreciates	$	—	$	1	$	(1)	$	(25)	$	(1)	$	(24)
Canadian dollar depreciates	$	—	$	(1)	$	1	$	25	$	1	$	24
10% change in US$: € exchange rate
U.S. dollar appreciates	$	14	$	9	$	(59)	$	(59)	$	(45)	$	(50)
U.S. dollar depreciates	$	(14)	$	(9)	$	59	$	59	$	45	$	50
25 basis point change in interest rates
Interest rates increase
Canadian interest rate	$	(2)	$	—	$	80	$	90	$	78	$	90
U.S. interest rate	$	—	$	—	$	(85)	$	(93)	$	(85)	$	(93)
Combined	$	(2)	$	—	$	(5)	$	(3)	$	(7)	$	(3)
Interest rates decrease
Canadian interest rate	$	2	$	—	$	(83)	$	(94)	$	(81)	$	(94)
U.S. interest rate	$	—	$	—	$	89	$	98	$	89	$	98
Combined	$	2	$	—	$	6	$	4	$	8	$	4

These sensitivities are hypothetical and should be used with caution. Changes in net income and/or other comprehensive income generally cannot be extrapolated because the relationship of the change in assumption to the change in net income and/or other comprehensive income may not be linear. In this table, the effect of a variation in a particular assumption on the amount of net income and/or other comprehensive income is calculated without changing any other factors; in reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.

The sensitivity analysis assumes that we would realize the changes in exchange rates and market interest rates; in reality, the competitive marketplace in which we operate would have an effect on this assumption.



18\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

(d)

Fair values

Derivative

The derivative financial instruments that we measure at fair value on a recurring basis subsequent to initial recognition are set out in the following table.


As at (millions)		June 30, 2022						December 31, 2021

		Maximum	Notional		Fair value ¹ and		Price or	Maximum	Notional		Fair value ¹ and		Price or
	Designation	maturity date	amount		carrying value		rate	maturity date	amount		carrying value		rate
Current Assets ²
Derivatives used to manage
Currency risk arising from U.S. dollar-denominated purchases	HFH ³	2023	$	461	$	9	US$1.00: C$1.26	2022	$	301	$	6	US$1.00: C$1.25
Currency risk arising from Indian rupee-denominated purchases	HFT ⁴	—	$	—		—	—	2022	$	12		—	US$1.00: ₹76
Currency risk arising from U.S. dollar-denominated long-term debt (Note 26(b)-(c))	HFH ³	2022	$	1,263		23	US$1.00: C$1.27	2022	$	664		2	US$1.00: C$1.26
Currency risk arising from European euro functional currency operations purchased with U.S. dollar-denominated long-term debt ⁷ (Note 26(e))	HFH ⁵	2025	$	29		18	€1.00: US$1.09	2025	$	31		3	€1.00: US$1.09
Interest rate risk associated with refinancing of debt maturing	HFH ³	2023	$	100		2	2.98%	2022	$	250		2	1.35%
Price risk associated with purchase of electrical power	HFT ⁴	2047	$	21		13	$34.73 MWh	—	$	—		—	—
					$	65					$	13
Other Long-Term Assets ²
Derivatives used to manage
Currency risk arising from U.S. dollar-denominated long-term debt ⁶ (Note 26(b)-(c))	HFH ³	2049	$	5,944	$	138	US$1.00: C$1.30	2048	$	2,133	$	76	US$1.00: C$1.27
Currency risk arising from European euro functional currency operations purchased with U.S. dollar-denominated long-term debt ⁷(Note 26(e))	HFH ⁵	2025	$	438		19	€1.00: US$1.09	—	$	—		—	—
Price risk associated with purchase of electrical power	HFT ⁴	2047	$	199		67	$34.73 MWh	—	$	—		—	—
					$	224					$	76
Current Liabilities ²
Derivatives used to manage
Currency risk arising from U.S. dollar revenues	HFT ⁴	2023	$	147	$	8	US$1.00: ₱52	2022	$	116	$	3	US$1.00: ₱50
Currency risk arising from U.S. dollar-denominated purchases	HFH ³	2023	$	23		—	US$1.00: C$1.29	2022	$	108		1	US$1.00: C$1.28
Currency risk arising from Indian rupee-denominated purchases	HFT ⁴	2022	$	4		—	US$1.00: ₹77	2022	$	2		—	US$1.00: ₹75
Currency risk arising from U.S. dollar-denominated long-term debt (Note 26(b)-(c))	HFH ³	2022	$	651		5	US$1.00: C$1.30	2022	$	1,248		12	US$1.00: C$1.28
Interest rate risk associated with non-fixed rate credit facility amounts drawn (Note 26(c))	HFH ³	2022	$	118		—	2.64%	2022	$	120		3	2.64%
Interest rate risk associated with refinancing of debt maturing	HFH ³	2023	$	150		1	3.36%	2022	$	500		5	1.59%
					$	14					$	24
Other Long-Term Liabilities ²
Derivatives used to manage
Currency risk arising from U.S. dollar-denominated long-term debt ⁶ (Note 26(b)-(c))	HFH ³	2027	$	909	$	20	US$1.00: C$1.33	2049	$	3,185	$	52	US$1.00: C$1.33
Currency risk arising from European euro functional currency operations purchased with U.S. dollar-denominated long-term debt ⁷ (Note 26(e))	HFH ⁵	—	$	—		—	—	2025	$	483		21	€1.00: US$1.09
					$	20					$	73

1	Fair value measured at reporting date using significant other observable inputs (Level 2).

2	Derivative financial assets and liabilities are not set off.

Designated as held for hedging (HFH) upon initial recognition (cash flow hedging item); hedge accounting is applied. Unless otherwise noted, hedge ratio is 1:1 and is established by assessing the degree of matching between the notional amounts of hedging items and the notional amounts of the associated hedged items.



		June 30, 2022\|19


notes to condensed interim consolidated financial statements	(unaudited)

4	Designated as held for trading (HFT) and classified as fair value through net income upon initial recognition; hedge accounting is not applied.

5	Designated as a hedge of a net investment in a foreign operation; hedge accounting is applied. Hedge ratio is 1:1 and is established by assessing the degree of matching between the notional amounts of hedging items and the notional amounts of the associated hedged items.

6	We designate only the spot element as the hedging item. As at June 30, 2022, the foreign currency basis spread included in the fair value of the derivative instruments, which is used for purposes of assessing hedge ineffectiveness, was $60 (December 31, 2021 – $53).

7	We designate only the spot element as the hedging item. As at June 30, 2022, the foreign currency basis spread included in the fair value of the derivative instruments, which is used for purposes of assessing hedge ineffectiveness, was $1 (December 31, 2021 - $1).

Non-derivative

Our long-term debt, which is measured at amortized cost, and the fair value thereof, are set out in the following table.

As at (millions)

June 30, 2022

December 31, 2021

Carrying

value

Fair value

value

Fair value

Long-term debt, excluding leases (Note 26)

19,864

18,427

18,976

20,383

(e)	Recognition of derivative gains and losses

The following table sets out the gains and losses, excluding income tax effects, arising from derivative instruments that are classified as cash flow hedging items and their location within the Consolidated statements of income and other comprehensive income.

Credit risk associated with such derivative instruments, as discussed further in (a), would be the primary source of hedge ineffectiveness. There was no ineffective portion of the derivative instruments classified as cash flow hedging items for the periods presented.


		Amount of gain (loss)
		recognized in other				Gain (loss) reclassified from other comprehensive
		comprehensive income				income to income (effective portion) (Note 11)
		(effective portion) (Note 11)					Amount
Periods ended June 30 (millions)	Note	2022		2021		Location	2022		2021
THREE-MONTH
Derivatives used to manage currency risk
Arising from U.S. dollar-denominated purchases		$	14	$	(4)	Goods and services purchased	$	4	$	(10)
Arising from U.S. dollar-denominated long-term debt ¹	26(b)-(c)		138		(26)	Financing costs		171		(63)
Arising from net investment in a foreign operation ²			30		(4)	Financing costs		(1)		—
			182		(34)			174		(73)
Derivatives used to manage other market risk
Other			1		(1)	Financing costs		—		(2)
		$	183	$	(35)		$	174	$	(75)
SIX-MONTH
Derivatives used to manage currency risk
Arising from U.S. dollar-denominated purchases		$	8	$	(8)	Goods and services purchased	$	5	$	(18)
Arising from U.S. dollar-denominated long-term debt ¹	26(b)-(c)		126		(3)	Financing costs		63		(111)
Arising from net investment in a foreign operation ²			54		22	Financing costs		(1)		—
			188		11			67		(129)
Derivatives used to manage other market risks
Other			1		—	Financing costs		(1)		(2)
		$	189	$	11		$	66	$	(131)

Amounts recognized in other comprehensive income are net of the change in the foreign currency basis spread (which is used for purposes of assessing hedge ineffectiveness) included in the fair value of the derivative instruments; such amounts for the three-month and six-month periods ended June 30, 2022, were $32 (2021 - $14) and $7 (2021 - $(58)), respectively.



20\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

Amounts recognized in other comprehensive income are net of the change in the foreign currency basis spread (which is used for purposes of assessing hedge ineffectiveness) included in the fair value of the derivative instruments; such amounts for the three-month and six-month periods ended June 30, 2022, were $2 (2021 – $NIL) and $NIL (2021 - $NIL), respectively.

The following table sets out the gains and losses arising from derivative instruments that are classified as held for trading and that are not designated as being in a hedging relationship, as well as their location within the Consolidated statements of income and other comprehensive income.


		Gain (loss) on derivatives recognized in income
		Three months				Six months
Periods ended June 30 (millions)	Location	2022		2021		2022		2021
Derivatives used to manage currency risk	Financing costs	$	(8)	$	(1)	$	(11)	$	—
Virtual power purchase agreements unrealized change in forward element	Financing costs	$	80	$	—	$	80	$	—

5	segment information

General

Operating segments are components of an entity that engage in business activities from which they earn revenues and incur expenses (including revenues and expenses related to transactions with the other component(s)), the operations of which can be clearly distinguished and for which the operating results are regularly reviewed by a chief operating decision-maker to make resource allocation decisions and to assess performance.

The TELUS technology solutions segment includes: network revenues and equipment sales arising from mobile technologies; data revenues (which include internet protocol; television; hosting, managed information technology and cloud-based services; and home and business security); healthcare software and technology solutions; agriculture and consumer goods services (software, data management and data analytics-driven smart-food chain and consumer goods technologies); voice and other telecommunications services revenues; and equipment sales.

The digitally-led customer experiences – TELUS International segment (DLCX), which has the U.S. dollar as its primary functional currency, is comprised of digital customer experience and digital-enablement transformation solutions, including artificial intelligence and content management solutions, provided by our TELUS International (Cda) Inc. subsidiary.

Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties.



		June 30, 2022\|21


notes to condensed interim consolidated financial statements	(unaudited)

The segment information regularly reported to our Chief Executive Officer (our chief operating decision-maker), and the reconciliations thereof to our products and services view of revenues, other revenues and income before income taxes, are set out in the following table.


													Digitally-led customer
	TELUS technology solutions												experiences – TELUS
	Mobile				Fixed				Segment total				International ¹				Eliminations				Total
Three-month periods ended June 30 (millions)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Operating revenues
External revenues
Service	$	1,647	$	1,544	$	1,538	$	1,465	$	3,185	$	3,009	$	672	$	550	$	—	$	—	$	3,857	$	3,559
Equipment		435		487		81		63		516		550		—		—		—		—		516		550
Revenues arising from contracts with customers	$	2,082	$	2,031	$	1,619	$	1,528		3,701		3,559		672		550		—		—		4,373		4,109

	Other income (Note 7)									28		2		—		—		—		—		28		2
										3,729		3,561		672		550		—		—		4,401		4,111
	Intersegment revenues									4		5		125		108		(129)		(113)		—		—
									$	3,733	$	3,566	$	797	$	658	$	(129)	$	(113)	$	4,401	$	4,111

	EBITDA ²								$	1,417	$	1,323	$	176	$	128	$	—	$	—	$	1,593	$	1,451
	Restructuring and other costs included in EBITDA (Note 16)									19		29		10		9		—		—		29		38
	Equity losses related to real estate joint venture									—		1		—		—		—		—		—		1
	Adjusted EBITDA ²								$	1,436	$	1,353	$	186	$	137	$	—	$	—	$	1,622	$	1,490
	CAPEX excluding spectrum licences ³								$	1,016	$	882	$	38	$	31	$	—	$	—	$	1,054	$	913

									Operating revenues – external and other income (above)												$	4,401	$	4,111
									Goods and services purchased													1,637		1,609
									Employee benefits expense													1,171		1,051
									EBITDA (above)													1,593		1,451
									Depreciation													536		527
									Amortization of intangible assets													295		266
									Operating income													762		658
									Financing costs													97		203
									Income before income taxes												$	665	$	455



22\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)


													Digitally-led customer
	TELUS technology solutions												experiences – TELUS
	Mobile				Fixed				Segment total				International ¹				Eliminations				Total
Six-month periods ended June 30 (millions)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Operating revenues
External revenues
Service	$	3,247	$	3,070	$	3,059	$	2,906	$	6,306	$	5,976	$	1,316	$	1,085	$	—	$	—	$	7,622	$	7,061
Equipment		852		939		155		131		1,007		1,070		—		—		—		—		1,007		1,070
Revenues arising from contracts with customers	$	4,099	$	4,009	$	3,214	$	3,037		7,313		7,046		1,316		1,085		—		—		8,629		8,131

	Other income (Note 7)									54		4		—		—		—		—		54		4
										7,367		7,050		1,316		1,085		—		—		8,683		8,135
	Intersegment revenues									8		10		240		212		(248)		(222)		—		—
									$	7,375	$	7,060	$	1,556	$	1,297	$	(248)	$	(222)	$	8,683	$	8,135

	EBITDA ²								$	2,817	$	2,659	$	345	$	253	$	—	$	—	$	3,162	$	2,912
	Restructuring and other costs included in EBITDA (Note 16)									54		57		14		22		—		—		68		79
	Equity losses related to real estate joint venture									—		2		—		—		—		—		—		2
	Adjusted EBITDA ²								$	2,871	$	2,718	$	359	$	275	$	—	$	—	$	3,230	$	2,993
	CAPEX, excluding spectrum licences ³								$	1,818	$	1,544	$	69	$	54	$	—	$	—	$	1,887	$	1,598

									Operating revenues – external and other income (above)												$	8,683	$	8,135
									Goods and services purchased													3,231		3,157
									Employee benefits expense													2,290		2,066
									EBITDA (above)													3,162		2,912
									Depreciation													1,087		1,051
									Amortization of intangible assets													586		531
									Operating income													1,489		1,330
									Financing costs													276		410
									Income before income taxes												$	1,213	$	920

1	The digitally-led customer experiences – TELUS International segment is comprised of our consolidated TELUS International (Cda) Inc. subsidiary. All of our other international operations are included in the TELUS technology solutions segment.

Earnings before interest, income taxes, depreciation and amortization (EBITDA), both unadjusted and adjusted, are not standardized financial measures under IFRS-IASB and may not be comparable to similar measures disclosed by other issuers (including those disclosed by TELUS International (Cda) Inc.); we define EBITDA as operating revenues and other income less goods and services purchased and employee benefits expense. We calculate adjusted EBITDA to exclude items that do not reflect our ongoing operations and, in our opinion, should not be considered in a long-term valuation metric or included in an assessment of our ability to service or incur debt. We report EBITDA and adjusted EBITDA because they are key measures that management uses to evaluate the performance of our business, and EBITDA is also utilized in measuring compliance with certain debt covenants.

3	Total capital expenditures (CAPEX); see Note 31(a) for a reconciliation of capital expenditures, excluding spectrum licences, to cash payments for capital assets, excluding spectrum licences, reported in the Consolidated statements of cash flows.



		June 30, 2022\|23


notes to condensed interim consolidated financial statements	(unaudited)

6revenue from contracts with customers

(a)Revenues

In the determination of the minimum transaction prices in contracts with customers, amounts are allocated to fulfilling, or completion of fulfilling, future contracted performance obligations. These unfulfilled, or partially unfulfilled, future contracted performance obligations are largely in respect of services to be provided over the duration of the contract. The following table sets out our aggregate estimated minimum transaction prices allocated to remaining unfulfilled, or partially unfulfilled, future contracted performance obligations and the timing of when we might expect to recognize the associated revenues; actual amounts could differ from these estimates due to a variety of factors, including the unpredictable nature of: customer behaviour; industry regulation; the economic environments in which we operate; and competitor behaviour.


	June 30,		December 31,
As at (millions)	2022		2021
Estimated minimum transaction price allocated to remaining unfulfilled, or partially unfulfilled, performance obligations to be recognized as revenue in a future period ^{1, 2}
During the 12-month period ending one year hence	$	2,380	$	2,369
During the 12-month period ending two years hence		911		915
Thereafter		71		56
	$	3,362	$	3,340

Excludes constrained variable consideration amounts, amounts arising from contracts originally expected to have a duration of one year or less and, as a permitted practical expedient, amounts arising from contracts that are not affected by revenue recognition timing differences arising from transaction price allocation or from contracts under which we may recognize and bill revenue in an amount that corresponds directly with our completed performance obligations.

IFRS-IASB requires the explanation of when we expect to recognize as revenue the amounts disclosed as the estimated minimum transaction price allocated to remaining unfulfilled, or partially unfulfilled, performance obligations. The estimated amounts disclosed are based upon contractual terms and maturities. Actual minimum transaction price revenues recognized, and the timing thereof, will differ from these estimates primarily due to the frequency with which the actual durations of contracts with customers do not match their contractual maturities.

(b)Accounts receivable


		June 30,		December 31,
As at (millions)	Note	2022		2021
Customer accounts receivable		$	2,196	$	2,194
Accrued receivables – customer			377		313
Allowance for doubtful accounts	4(a)		(99)		(81)
			2,474		2,426
Accrued receivables – other			229		245
Accounts receivable – current		$	2,703	$	2,671



24\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

(c)Contract assets


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
Balance, beginning of period		$	790	$	803	$	837	$	850
Net additions arising from operations			332		311		632		583
Amounts billed in the period and thus reclassified to accounts receivable			(360)		(331)		(708)		(655)
Change in impairment allowance, net	4(a)		1		2		2		5
Other			—		(1)		—		1
Balance, end of period		$	763	$	784	$	763	$	784
To be billed and thus reclassified to accounts receivable during:
The 12-month period ending one year hence						$	537	$	537
The 12-month period ending two years hence							205		229
Thereafter							21		18
Balance, end of period						$	763	$	784
Reconciliation of contract assets presented in the Consolidated statements of financial position – current
Gross contract assets						$	537	$	537
Reclassification to contract liabilities of contracts with contract assets less than contract liabilities	24						(16)		(12)
Reclassification from contract liabilities of contracts with contract liabilities less than contract assets	24						(114)		(113)
						$	407	$	412

7other income


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
Government assistance		$	—	$	2	$	2	$	5
Other sublet revenue	19		2		1		3		2
Investment income (loss), gain (loss) on disposal of assets and other			3		(2)		(1)		(5)
Interest income	21(b)		—		1		1		2
Changes in business combination-related provisions			23		—		49		—
		$	28	$	2	$	54	$	4



		June 30, 2022\|25


notes to condensed interim consolidated financial statements	(unaudited)

8	employee benefits expense


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
Employee benefits expense – gross
Wages and salaries ¹		$	1,154	$	1,026	$	2,259	$	2,017
Share-based compensation ²	14		54		63		103		123
Pensions – defined benefit	15(a)		25		30		52		56
Pensions – defined contribution	15(b)		30		28		56		50
Restructuring costs ²	16(a)		13		16		23		34
Employee health and other benefits			63		45		120		95
			1,339		1,208		2,613		2,375
Capitalized internal labour costs, net
Contract acquisition costs	20
Capitalized			(22)		(20)		(40)		(42)
Amortized			20		16		39		31
Contract fulfilment costs	20
Capitalized			(1)		(1)		(1)		(1)
Amortized			1		1		1		2
Property, plant and equipment			(99)		(96)		(192)		(186)
Intangible assets subject to amortization			(67)		(57)		(130)		(113)
			(168)		(157)		(323)		(309)
		$	1,171	$	1,051	$	2,290	$	2,066

1	For the three-month and six-month periods ended June 30, 2021, wages and salaries are net of Canada Emergency Wage Subsidy program amounts.

2	For the three-month and six-month periods ended June 30, 2022, $1 (2021 – $NIL) and $2 (2021 – $6), respectively, of share-based compensation in the digitally-led customer experiences segment was included in restructuring costs.



26\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

9	financing costs


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
Interest expense
Interest on long-term debt, excluding lease liabilities – gross		$	179	$	172	$	348	$	343
Interest on long-term debt, excluding lease liabilities – capitalized ¹			(12)		—		(27)		—
Interest on long-term debt, excluding lease liabilities			167		172		321		343
Interest on lease liabilities	19		17		17		33		34
Interest on short-term borrowings and other			3		4		7		7
Interest accretion on provisions	25		5		6		8		11
			192		199		369		395
Employee defined benefit plans net interest	15		2		7		4		13
Foreign exchange			(17)		(1)		(16)		5
Virtual power purchase agreements unrealized change in forward element			(80)		—		(80)		—
			97		205		277		413
Interest income			—		(2)		(1)		(3)
		$	97	$	203	$	276	$	410
Net interest cost	3					$	379	$	397
Interest on long-term debt, excluding lease liabilities – capitalized ¹							(27)		—
Employee defined benefit plans net interest							4		13
Virtual power purchase agreements unrealized change in forward element							(80)		—
						$	276	$	410

1	Interest on long-term debt, excluding lease liabilities, at a composite rate of 3.10% was capitalized to intangible assets with indefinite lives during the period.



		June 30, 2022\|27


notes to condensed interim consolidated financial statements	(unaudited)

10	income taxes


	Three months				Six months
Periods ended June 30 (millions)	2022		2021		2022		2021
Current income tax expense
For the current reporting period	$	176	$	150	$	321	$	279
Adjustments recognized in the current period for income taxes of prior periods		(4)		(15)		(4)		(15)
		172		135		317		264
Deferred income tax expense
Arising from the origination and reversal of temporary differences		(3)		(25)		(4)		(22)
Adjustments recognized in the current period for income taxes of prior periods		(2)		1		(2)		1
		(5)		(24)		(6)		(21)
	$	167	$	111	$	311	$	243

Our income tax expense and effective income tax rate differ from those computed by applying the applicable statutory rates for the following reasons:


Three-month periods ended June 30 ($ in millions)	2022				2021
Income taxes computed at applicable statutory rates	$	171	25.7	%	$	117	25.7	%
Adjustments recognized in the current period for income taxes of prior periods		(6)	(0.9)			(14)	(3.0)
Non-deductible amounts		3	0.3			6	1.3
Other		(1)	(0.1)			2	0.4
Income tax expense per Consolidated statements of income and other comprehensive income	$	167	25.0	%	$	111	24.4	%

Six-month periods ended June 30 ($ in millions)	2022				2021
Income taxes computed at applicable statutory rates	$	311	25.6	%	$	236	25.7	%
Adjustments recognized in the current period for income taxes of prior periods		(6)	(0.5)			(14)	(1.5)
Non-deductible amounts		8	0.7			12	1.3
Other		(2)	(0.2)			9	0.9
Income tax expense per Consolidated statements of income and other comprehensive income	$	311	25.6	%	$	243	26.4	%



28\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

11	other comprehensive income


																	Item never				Item never
																	reclassified to				reclassified to
	Items that may subsequently be reclassified to income																income				income
	Change in unrealized fair value of derivatives designated as cash flow hedges in current period (Note 4(e))
	Derivatives used to manage currency risk						Derivatives used to manage other market risks								Cumulative		Change in
			Prior period						Prior period						foreign		measurement				Employee
	Gains		(gains) losses				Gains		(gains) losses						currency		of investment		Accumulated		defined benefit
	(losses)		transferred to				(losses)		transferred to						translation		financial		other		plan		Other
Periods ended June 30 (millions)	arising		net income		Total		arising		net income		Total		Total		adjustment		assets		comp. income		re-measurements		comp. income
THREE-MONTH
Accumulated balance as at April 1, 2021					$	41					$	(5)	$	36	$	86	$	25	$	147
Other comprehensive income (loss)
Amount arising	$	(34)	$	73		39	$	(1)	$	2		1		40		(42)		(4)		(6)	$	139	$	133
Income taxes	$	(2)	$	14		12	$	—	$	—		—		12		—		(1)		11		36		47
Net						27						1		28		(42)		(3)		(17)	$	103	$	86
Accumulated balance as at June 30, 2021					$	68					$	(4)	$	64	$	44	$	22	$	130
Accumulated balance as at April 1, 2022					$	169					$	(2)	$	167	$	(42)	$	88	$	213
Other comprehensive income (loss)
Amount arising	$	182	$	(174)		8	$	1	$	—		1		9		(21)		(5)		(17)	$	186	$	169
Income taxes	$	26	$	(30)		(4)	$	—	$	—		—		(4)		—		(1)		(5)		48		43
Net						12						1		13		(21)		(4)		(12)	$	138	$	126
Accumulated balance as at June 30, 2022					$	181					$	(1)	$	180	$	(63)	$	84	$	201

SIX-MONTH
Accumulated balance as at January 1, 2021					$	(40)					$	(6)	$	(46)	$	155	$	26	$	135
Other comprehensive income (loss)
Amount arising	$	11	$	129		140	$	—	$	2		2		142		(111)		(5)		26	$	1,050	$	1,076
Income taxes	$	8	$	24		32	$	—	$	—		—		32		—		(1)		31		272		303
Net						108						2		110		(111)		(4)		(5)	$	778	$	773
Accumulated balance as at June 30, 2021					$	68					$	(4)	$	64	$	44	$	22	$	130
Accumulated balance as at January 1, 2022					$	81					$	(3)	$	78	$	25	$	83	$	186
Other comprehensive income (loss)
Amount arising	$	188	$	(67)		121	$	1	$	1		2		123		(88)		1		36	$	400	$	436
Income taxes	$	30	$	(9)		21	$	—	$	—		—		21		—		—		21		103		124
Net						100						2		102		(88)		1		15	$	297	$	312
Accumulated balance as at June 30, 2022					$	181					$	(1)	$	180	$	(63)	$	84	$	201
Attributable to:
Common Shares																			$	235
Non-controlling interests																				(34)
																			$	201



		June 30, 2022\|29


notes to condensed interim consolidated financial statements	(unaudited)

12	per share amounts

Basic net income per Common Share is calculated by dividing net income attributable to Common Shares by the total weighted average number of Common Shares outstanding during the period. Diluted net income per Common Share is calculated to give effect to share option awards and restricted share unit awards.

The following table presents reconciliations of the denominators of the basic and diluted per share computations. Net income was equal to diluted net income for all periods presented.


	Three months		Six months
Periods ended June 30 (millions)	2022	2021	2022	2021
Basic total weighted average number of Common Shares outstanding	1,381	1,355	1,378	1,327
Effect of dilutive securities - Restricted share units	6	4	6	4
Diluted total weighted average number of Common Shares outstanding	1,387	1,359	1,384	1,331

For the three-month and six-month periods ended June 30, 2022 and 2021, no outstanding equity-settled restricted share unit awards were excluded in the calculation of diluted income per Common Share. For the three-month and six-month periods ended June 30, 2022, no (2021 - less than 1 million) outstanding TELUS Corporation share option awards were excluded in the calculation of diluted net income per Common Share.

13	dividends per share

(a)

TELUS Corporation Common Share dividends declared

Six-month periods ended June 30 (millions except per share amounts)

2022

2021

TELUS Corporation

Declared

Paid to

Declared

Paid to

Common Share dividends

Effective

Per share

shareholders

Total

Effective

Per share

shareholders

Total

Quarter 1 dividend

Mar. 11, 2022

0.3274

Apr. 1, 2022

450

Mar. 11, 2021

0.3112

Apr. 1, 2021

404

Quarter 2 dividend

Jun. 10, 2022

0.3386

Jul. 4, 2022

467

Jun. 10, 2021

0.3162

Jul. 2, 2021

428

0.6660

917

0.6274

832

On August 4, 2022, the Board of Directors declared a quarterly dividend of $0.3386 per share on our issued and outstanding TELUS Corporation Common Shares payable on October 3, 2022, to holders of record at the close of business on September 9, 2022. The final amount of the dividend payment depends upon the number of TELUS Corporation Common Shares issued and outstanding at the close of business on September 9, 2022.

(b)

Dividend Reinvestment and Share Purchase Plan

We have a Dividend Reinvestment and Share Purchase Plan under which eligible holders of TELUS Corporation Common Shares may acquire additional TELUS Corporation Common Shares by reinvesting dividends and by making additional optional cash payments to the trustee. Under this plan, we have the option of offering TELUS Corporation Common Shares from Treasury or having the trustee acquire TELUS Corporation Common Shares in the stock market. We may, at our discretion, offer TELUS Corporation Common Shares at a discount of up to 5% from the market price under the plan. Effective with our dividends paid October 1, 2019, we offered TELUS Corporation Common Shares from Treasury at a discount of 2%. In respect of TELUS Corporation Common Shares held by eligible shareholders who have elected to participate in the plan, dividends declared during the three-month and six-month periods ended June 30, 2022, of $158 million (2021 - $146 million) and $307 million (2021 - $289 million), respectively, were to be reinvested in TELUS Corporation Common Shares.



30\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

14	share-based compensation

(a)

Details of share-based compensation expense

Reflected in the Consolidated statements of income and other comprehensive income as Employee benefits expense and in the Consolidated statements of cash flows are the following share-based compensation amounts:


Periods ended June 30 (millions)		2022						2021
		Employee		Associated		Statement		Employee		Associated		Statement
		benefits		operating		of cash		benefits		operating		of cash
		expense ¹		cash		flows		expense		cash		flows
	Note			outflows		adjustment				outflows		adjustment
THREE-MONTH
Restricted share units	(b)	$	44	$	(1)	$	43	$	48	$	—	$	48
Employee share purchase plan	(c)		11		(11)		—		11		(11)		—
Share option awards	(d)		—		(1)		(1)		4		—		4
		$	55	$	(13)	$	42	$	63	$	(11)	$	52
TELUS technology solutions		$	47	$	(11)	$	36	$	39	$	(11)	$	28
Digitally-led customer experiences			8		(2)		6		24		—		24
		$	55	$	(13)	$	42	$	63	$	(11)	$	52
SIX-MONTH
Restricted share units	(b)	$	85	$	(8)	$	77	$	98	$	—	$	98
Employee share purchase plan	(c)		22		(22)		—		20		(20)		—
Share option awards	(d)		(2)		(7)		(9)		11		(22)		(11)
		$	105	$	(37)	$	68	$	129	$	(42)	$	87
TELUS technology solutions		$	87	$	(29)	$	58	$	74	$	(20)	$	54
Digitally-led customer experiences			18		(8)		10		55		(22)		33
		$	105	$	(37)	$	68	$	129	$	(42)	$	87

Within employee benefits expense (see Note 8), for the three-month period ended June 30, 2022, restricted share units expense of $43 (2021 – $48) and share option awards expense of $NIL (2021 – $4) are presented as share-based compensation expense and the balance is included in restructuring costs (see Note 16) of the digitally-led customer experiences segment; for the six-month period ended June 30, 2022, restricted share units expense of $83 (2021 - $93) and share option awards expense of $(2) (2021 - $10) are presented as share-based compensation expense and the balance is included in restructuring costs (see Note 16) of the digitally-led customer experiences segment.

(b)

Restricted share units

TELUS Corporation restricted share units

We also award restricted share units that largely have the same features as our general restricted share units, but have a variable payout (0% – 200%) that depends upon the achievement of our total customer connections performance condition (with a weighting of 25%) and the total shareholder return on TELUS Corporation Common Shares relative to an international peer group of telecommunications companies (with a weighting of 75%). The grant-date fair value of the notional subset of our restricted share units affected by the total customer connections performance condition equals the fair market value of the corresponding TELUS Corporation Common Shares at the grant date, and thus the notional subset has been included in the presentation of our restricted share units with only service conditions. The estimate, which reflects a variable payout, of the fair value of the notional subset of our restricted share units affected by the relative total shareholder return performance condition is determined using a Monte Carlo simulation. Grants of restricted share units in 2022 and 2021 are accounted for as equity-settled, as that was their expected manner of settlement when granted.



		June 30, 2022\|31


notes to condensed interim consolidated financial statements	(unaudited)

The following table presents a summary of outstanding TELUS Corporation non-vested restricted share units.


	June 30,	December 31,
Number of non-vested restricted share units as at	2022	2021
Restricted share units without market performance conditions
Restricted share units with only service conditions	7,610,246	5,481,486
Notional subset affected by total customer connections performance condition	513,712	366,983
	8,123,958	5,848,469
Restricted share units with market performance conditions
Notional subset affected by relative total shareholder return performance condition	1,541,137	1,100,949
	9,665,095	6,949,418

The following table presents a summary of the activity related to TELUS Corporation restricted share units without market performance conditions.

Periods ended June 30, 2022

Three months

Six months

Number of restricted

Weighted

Number of restricted

Weighted

share units ¹

average

share units ¹

average

Non-vested

Vested

grant-date

Non-vested

Vested

grant-date

fair value

Outstanding, beginning of period

Non-vested

8,110,430

—

27.58

5,848,469

—

25.67

Vested

—

49,679

25.65

—

49,138

25.63

Granted

Initial award

73,911

—

31.30

2,540,787

—

31.82

In lieu of dividends

81,946

504

32.26

145,737

1,045

31.16

Vested

(30,157)

30,157

27.61

(198,671)

198,671

26.00

Settled in cash

—

(30,157)

27.61

—

(198,671)

26.00

Forfeited

(112,172)

—

27.85

(212,364)

—

26.82

Outstanding, end of period

Non-vested

8,123,958

—

27.65

8,123,958

—

27.65

Vested

—

50,183

25.68

—

50,183

25.68

1	Excluding the notional subset of restricted share units affected by the relative total shareholder return performance condition.

TELUS International (Cda) Inc. restricted share units

We also award restricted share units that largely have the same features as the TELUS Corporation restricted share units, but have a variable payout (0% – 150%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions. Grants of restricted share units in 2022 and 2021 are accounted for as equity-settled, as that was their expected manner of settlement when granted.



32\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

The following table presents a summary of the activity related to TELUS International (Cda) Inc. restricted share units.

Periods ended June 30, 2022

Three months

Six months

Number of restricted

Weighted

Number of restricted

Weighted

share units

average

share units

average

Non-vested

Vested

grant-date

Non-vested

Vested

grant-date

fair value

Outstanding, beginning of period

2,343,529

—

US$

23.71

1,850,807

—

US$

21.94

Granted – initial award

16,685

—

US$

22.60

806,395

—

US$

26.30

Vested

(365,673)

365,673

US$

14.67

(519,645)

519,645

US$

17.73

Settled:

In equity

—

(109,547)

US$

29.17

—

(263,519)

US$

26.73

In cash

—

(256,126)

US$

8.46

—

(256,126)

US$

8.46

Forfeited

(29,128)

—

US$

17.95

(172,144)

—

US$

17.12

Outstanding, end of period

1,965,413

—

US$

25.47

1,965,413

—

US$

25.47

(c)

TELUS Corporation employee share purchase plan

We have an employee share purchase plan under which eligible employees can purchase TELUS Corporation Common Shares through regular payroll deductions. In respect of TELUS Corporation Common Shares held within the employee share purchase plan, TELUS Corporation Common Share dividends declared during the three-month and six-month periods ended June 30, 2022, of $12 million (2021 - $11 million) and $23 million (2021 - $21 million), respectively, were to be reinvested in TELUS Corporation Common Shares acquired by the trustee from Treasury, with a discount applicable, as set out in Note 13(b).

(d)Share option awards

TELUS Corporation share options

Employees may be granted share option awards to purchase TELUS Corporation Common Shares at an exercise price equal to the fair market value at the time of grant. Share option awards granted under the plan may be exercised over specific periods not to exceed seven years from the time of grant. Share option awards granted in fiscal 2021 and 2020 were for front-line employees.

These share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature.

The following table presents a summary of the activity related to the TELUS Corporation share option plan.


Periods ended June 30, 2022	Three months			Six months
	Number of	Weighted		Number of	Weighted
	share	average share		share	average share
	options	option price ¹		options	option price ¹
Outstanding, beginning of period	2,969,600	$	22.04	3,050,300	$	22.04
Forfeited	(66,900)	$	21.95	(147,600)	$	22.00
Outstanding, end of period	2,902,700	$	22.04	2,902,700	$	22.04

1	The weighted average remaining contractual life is 4.8 years. No options were exercisable as at the balance sheet date.



		June 30, 2022\|33


notes to condensed interim consolidated financial statements	(unaudited)

TELUS International (Cda) Inc. share options

Employees may be granted equity share options (equity-settled) to purchase TELUS International (Cda) Inc. subordinate voting shares at a price equal to, or a multiple of, the fair market value at the time of grant and/or phantom share options (cash-settled) that provide them with exposure to TELUS International (Cda) Inc. subordinate voting share price appreciation. Share option awards granted under the plan may be exercised over specific periods not to exceed ten years from the time of grant. All equity share option awards and most phantom share option awards have a variable payout (0% – 100%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions.

The following table presents a summary of the activity related to the TELUS International (Cda) Inc. share option plan.


Periods ended June 30, 2022	Three months			Six months
	Number of	Weighted		Number of	Weighted
	share	average share		share	average share
	options	option price ¹		options	option price ¹
Outstanding, beginning of period	3,028,634	US$	10.94	3,180,767	US$	10.74
Exercised ²	(293,860)	US$	8.46	(293,860)	US$	8.46
Forfeited	(5,203)	US$	8.46	(157,336)	US$	6.80
Outstanding, end of period	2,729,571	US$	11.21	2,729,571	US$	11.21

For 2,233,471 share options, the range of share option prices is US$4.87 – US$8.95 per TELUS International (Cda) Inc. subordinated voting share and the weighted average remaining contractual life is 4.7 years; for the balance of share options, the price is US$25.00 and the weighted average remaining contractual life is 8.7 years.

2	The weighted average price at the date of exercise was US$23.75.



34\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

15employee future benefits

(a)	Defined benefit pension plans – summary

Amounts in the primary financial statements relating to defined benefit pension plans


Three-month periods ended June 30		2022						2021
				Defined benefit						Defined benefit
				obligations						obligations
(millions)	Note	Plan assets		accrued ¹		Net		Plan assets		accrued ¹		Net
Employee benefits expense	8
Benefits earned for current service		$	—	$	(28)			$	—	$	(30)
Benefits earned for past service			—		—				—		(3)
Employees’ contributions			5		—				4		—
Administrative fees			(2)		—				(1)		—
			3		(28)	$	(25)		3		(33)	$	(30)
Financing costs	9
Notional income on plan assets ² and interest on defined benefit obligations accrued			74		(74)				59		(65)
Interest effect on asset ceiling limit			(2)		—				(1)		—
			72		(74)		(2)		58		(65)		(7)
DEFINED BENEFIT (COST) INCLUDED IN NET INCOME ³							(27)						(37)
Other comprehensive income	11
Difference between actual results and estimated plan assumptions ⁴			(875)		—				386		—
Changes in plan financial assumptions			—		1,536				—		(231)
Changes in the effect of limiting net defined benefit assets to the asset ceilings ⁵			(475)		—				(16)		—
			(1,350)		1,536		186		370		(231)		139
DEFINED BENEFIT (COST) INCLUDED IN COMPREHENSIVE INCOME ³						$	159					$	102



		June 30, 2022\|35


notes to condensed interim consolidated financial statements	(unaudited)


Six-month periods ended June 30		2022						2021
				Defined benefit						Defined benefit
				obligations						obligations
(millions)	Note	Plan assets		accrued ¹		Net		Plan assets		accrued ¹		Net
Employee benefits expense	8
Benefits earned for current service		$	—	$	(55)			$	—	$	(60)
Benefits earned for past service			—		(3)				—		(3)
Employees’ contributions			9		—				9		—
Administrative fees			(3)		—				(2)		—
			6		(58)	$	(52)		7		(63)	$	(56)
Financing costs	9
Notional income on plan assets ² and interest on defined benefit obligations accrued			148		(149)				119		(130)
Interest effect on asset ceiling limit			(3)		—				(2)		—
			145		(149)		(4)		117		(130)		(13)
DEFINED BENEFIT (COST) INCLUDED IN NET INCOME ³							(56)						(69)
Other comprehensive income	11
Difference between actual results and estimated plan assumptions ⁴			(1,418)		—				237		—
Changes in plan financial assumptions			—		3,027				—		864
Changes in the effect of limiting net defined benefit assets to the asset ceilings ⁵			(1,209)		—				(51)		—
			(2,627)		3,027		400		186		864		1,050
DEFINED BENEFIT (COST) INCLUDED IN COMPREHENSIVE INCOME ³							344						981
AMOUNTS INCLUDED IN OPERATING ACTIVITIES CASH FLOWS
Employer contributions			25		—		25		28		—		28
BENEFITS PAID BY PLANS			(234)		234		—		(236)		236		—
PLAN ACCOUNT BALANCES
Change in period			(2,685)		3,054		369		102		907		1,009
Balance, beginning of period			10,043		(10,233)		(190)		9,608		(10,521)		(913)
Balance, end of period		$	7,358	$	(7,179)	$	179	$	9,710	$	(9,614)	$	96
FUNDED STATUS – PLAN SURPLUS (DEFICIT)
Pension plans that have plan assets in excess of defined benefit obligations accrued	20	$	7,354	$	(6,832)	$	522	$	8,835	$	(8,196)	$	639
Pension plans that have defined benefit obligations accrued in excess of plan assets
Funded			4		(162)		(158)		875		(1,174)		(299)
Unfunded			—		(185)		(185)		—		(244)		(244)
	27		4		(347)		(343)		875		(1,418)		(543)
		$	7,358	$	(7,179)	$	179	$	9,710	$	(9,614)	$	96

1	Defined benefit obligations accrued are the actuarial present values of benefits attributed to employee services rendered to a particular date.



36\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

The interest income on the plan assets portion of the employee defined benefit plans net interest amount included in Financing costs reflects a rate of return on plan assets equal to the discount rate used in determining the defined benefit obligations accrued at the end of the immediately preceding fiscal year.

3	Excluding income taxes.

Financial assumptions in respect of plan assets (interest income on plan assets included in Financing costs reflects a rate of return on plan assets equal to the discount rate used in determining the defined benefit obligations accrued) and demographic assumptions in respect of the actuarial present values of the defined benefit obligations accrued, both as at the end of the immediately preceding fiscal year.

5	Effect of asset ceiling limit at June 30, 2022, was $1,391 (December 31, 2021 - $179).

(b)Defined contribution plans – expense

Our total defined contribution pension plan costs recognized were as follows:


	Three months				Six months
Periods ended June 30 (millions)	2022		2021		2022		2021
Union pension plan and public service pension plan contributions	$	5	$	6	$	9	$	10
Other defined contribution pension plans		25		22		47		40
	$	30	$	28	$	56	$	50



		June 30, 2022\|37


notes to condensed interim consolidated financial statements	(unaudited)

16	restructuring and other costs

(a)	Details of restructuring and other costs

With the objective of reducing ongoing costs, we incur associated incremental non-recurring restructuring costs, as discussed further in (b) following. We may also incur atypical charges when undertaking major or transformational changes to our business or operating models or post-acquisition business integration. In other costs, we include incremental atypical external costs incurred in connection with business acquisition or disposition activity; significant litigation costs in respect of losses or settlements; adverse retrospective regulatory decisions; and certain incremental atypical costs incurred in connection with the COVID-19 pandemic.

Restructuring and other costs are presented in the Consolidated statements of income and other comprehensive income, as set out in the following table:


	Restructuring (b)				Other (c)				Total
Periods ended June 30 (millions)	2022		2021		2022		2021		2022		2021
THREE-MONTH
Goods and services purchased	$	11	$	14	$	5	$	8	$	16	$	22
Employee benefits expense		13		16		—		—		13		16
	$	24	$	30	$	5	$	8	$	29	$	38
SIX-MONTH
Goods and services purchased	$	37	$	27	$	8	$	18	$	45	$	45
Employee benefits expense		23		34		—		—		23		34
	$	60	$	61	$	8	$	18	$	68	$	79

(b)	Restructuring provisions

Employee-related provisions and other provisions, as presented in Note 25, include amounts in respect of restructuring activities. In 2022, restructuring activities included ongoing and incremental efficiency initiatives, some of which involved personnel-related costs and rationalization of real estate. These initiatives were intended to improve our long-term operating productivity and competitiveness.

(c)

Other

During the three-month and six-month periods ended June 30, 2022, incremental external costs were incurred in connection with business acquisition activity. In connection with business acquisitions, non-recurring atypical business integration expenditures that would be considered neither restructuring costs nor part of the fair value of the net assets acquired have been included in other costs.

Also during the three-month and six-month periods ended June 30, 2022, other costs were incurred in connection with the COVID-19 pandemic. Incremental costs were incurred due to proactive steps we elected to take in order to keep our customers and employees safe, including adjustments to the frequency of real estate cleaning and maintenance, among other items. As well, costs that have been incurred in the normal course but which are unable to contribute normally to the earning of revenues have been deemed atypical.



38\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

17	property, plant and equipment


		Owned assets												Right-of-use lease assets (Note 19)
				Buildings and		Computer
		Network		leasehold		hardware				Assets under				Network		Real
(millions)	Note	assets		improvements		and other		Land		construction		Total		assets		estate		Other		Total		Total
AT COST
As at January 1, 2022		$	34,510	$	3,537	$	1,525	$	75	$	771	$	40,418	$	594	$	1,694	$	99	$	2,387	$	42,805
Additions ¹			240		16		31		8		922		1,217		—		138		13		151		1,368
Additions arising from business acquisitions	18(b)		1		7		2		—		—		10		—		2		—		2		12
Assets under construction put into service			380		40		49		—		(469)		—		—		—		—		—		—
Transfers			38		—		12		—		—		50		(50)		—		—		(50)		—
Dispositions, retirements and other			(393)		(6)		28		—		—		(371)		—		(15)		(2)		(17)		(388)
Net foreign exchange differences			—		(1)		(3)		—		(1)		(5)		—		(10)		—		(10)		(15)
As at June 30, 2022		$	34,776	$	3,593	$	1,644	$	83	$	1,223	$	41,319	$	544	$	1,809	$	110	$	2,463	$	43,782
ACCUMULATED DEPRECIATION
As at January 1, 2022		$	23,070	$	2,207	$	938	$	—	$	—	$	26,215	$	64	$	566	$	34	$	664	$	26,879
Depreciation ²			772		68		90		—		—		930		37		111		9		157		1,087
Transfers			9		—		7		—		—		16		(16)		—		—		(16)		—
Dispositions, retirements and other			(407)		(5)		(33)		—		—		(445)		—		(8)		(3)		(11)		(456)
Net foreign exchange differences			—		(1)		(2)		—		—		(3)		—		(7)		—		(7)		(10)
As at June 30, 2022		$	23,444	$	2,269	$	1,000	$	—	$	—	$	26,713	$	85	$	662	$	40	$	787	$	27,500
NET BOOK VALUE
As at December 31, 2021		$	11,440	$	1,330	$	587	$	75	$	771	$	14,203	$	530	$	1,128	$	65	$	1,723	$	15,926
As at June 30, 2022		$	11,332	$	1,324	$	644	$	83	$	1,223	$	14,606	$	459	$	1,147	$	70	$	1,676	$	16,282

1	For the six-month period ended June 30, 2022, additions include $(222) in respect of asset retirement obligations (see Note 25).

2	For the six-month period ended June 30, 2022, depreciation includes $1 in respect of impairment of real estate right-of-use lease assets.

As at June 30, 2022, our contractual commitments for the acquisition of property, plant and equipment totalled $446 million over a period ending December 31, 2025 (December 31, 2021 - $574 million over a period ending December 31, 2023).

18intangible assets and goodwill

(a)Intangible assets and goodwill, net


												Intangible
												assets with
		Intangible assets subject to amortization										indefinite lives
		Customer contracts,				Access to												Total
		related customer				rights-of-way,		Assets						Total				intangible
		relationships and				crowdsource assets		under				Spectrum		intangible				assets and
(millions)	Note	subscriber base		Software		and other		construction		Total		licences		assets		Goodwill ¹		goodwill
AT COST
As at January 1, 2022		$	3,028	$	6,723	$	437	$	275	$	10,463	$	12,185	$	22,648	$	7,645	$	30,293
Additions			—		76		2		370		448		—		448		—		448
Additions arising from business acquisitions	(b)		204		18		23		—		245		—		245		196		441
Assets under construction put into service			—		208		—		(208)		—		—		—		—		—
Dispositions, retirements and other (including capitalized interest)	9		20		(289)		9		—		(260)		27		(233)		—		(233)
Net foreign exchange differences			(31)		—		(1)		—		(32)		—		(32)		(38)		(70)
As at June 30, 2022		$	3,221	$	6,736	$	470	$	437	$	10,864	$	12,212	$	23,076	$	7,803	$	30,879
ACCUMULATED AMORTIZATION
As at January 1, 2022		$	712	$	4,279	$	172	$	—	$	5,163	$	—	$	5,163	$	364	$	5,527
Amortization			162		392		32		—		586		—		586		—		586
Dispositions, retirements and other			11		(287)		(11)		—		(287)		—		(287)		—		(287)
Net foreign exchange differences			(8)		(1)		(2)		—		(11)		—		(11)		—		(11)
As at June 30, 2022		$	877	$	4,383	$	191	$	—	$	5,451	$	—	$	5,451	$	364	$	5,815
NET BOOK VALUE
As at December 31, 2021		$	2,316	$	2,444	$	265	$	275	$	5,300	$	12,185	$	17,485	$	7,281	$	24,766
As at June 30, 2022		$	2,344	$	2,353	$	279	$	437	$	5,413	$	12,212	$	17,625	$	7,439	$	25,064

1	Accumulated amortization of goodwill is amortization recorded prior to 2002; there are no accumulated impairment losses in the accumulated amortization of goodwill.



		June 30, 2022\|39


notes to condensed interim consolidated financial statements	(unaudited)

As at June 30, 2022, our contractual commitments for the acquisition of intangible assets totalled $14 million over a period ending December 31, 2023 (December 31, 2021 – $26 million over a period ending December 31, 2023).

(b)Business acquisitions

Fully Managed Inc.

On January 1, 2022, we acquired 100% ownership of Fully Managed Inc., a provider of managed information technology support, technology strategy and network management. The acquisition was made with a view to growing our end-to-end capabilities to support small and medium-sized business customers.

The primary factor that contributed to the recognition of goodwill was the earnings capacity of the acquired business in excess of the net tangible and intangible assets acquired (such excess arising from the acquired workforce and the benefits of acquiring an established business). The amount assigned to goodwill may be deductible for income tax purposes.

Vivint Smart Home

On June 8, 2022, we acquired the Canadian customers, assets and operations of Vivint Smart Home, a security business that is complementary to our existing lines of business. The investment was made with a view to leveraging our telecommunications infrastructure and expertise to continue to enhance connected home, business, security and health services for our customers.

Individually immaterial transactions

During the six-month period ended June 30, 2022, we acquired 100% ownership of businesses complementary to our existing lines of business. The primary factor that gave rise to the recognition of goodwill was the earnings capacity of the acquired businesses in excess of the net tangible and intangible assets acquired (such excess arising from the low level of tangible assets relative to the earnings capacities of the businesses). A portion of the amounts assigned to goodwill may be deductible for income tax purposes. Any differences between the results of operations currently presented and pro forma operating revenues, net income and basic and diluted net income per Common Share amounts reflecting the results of operations as if the business acquisitions had been completed at the beginning of the current fiscal year are immaterial (as are the post-acquisition operating revenues and net income of the acquired businesses for the three-month and six-month periods ended June 30, 2022).



40\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

Acquisition-date fair values

Acquisition-date fair values assigned to the assets acquired and liabilities assumed are set out in the following table:


					Total of
					individually
	Fully		Vivint Smart		immaterial
(millions)	Managed Inc. ¹		Home ¹		transactions ¹		Total
Assets
Current assets
Cash	$	3	$	3	$	1	$	7
Accounts receivable²		49		9		3		61
Other		2		2		2		6
		54		14		6		74
Non-current assets
Property, plant and equipment Owned assets		1		—		9		10
Right-of-use lease assets		—		1		1		2
Intangible assets subject to amortization ³		132		76		37		245
Other		—		4		—		4
		133		81		47		261
Total identifiable assets acquired		187		95		53		335
Liabilities
Current liabilities
Accounts payable and accrued liabilities		31		2		3		36
Income and other taxes payable		—		6		—		6
Advance billings and customer deposits		2		2		7		11
Current maturities of long-term debt		—		31		—		31
		33		41		10		84
Non-current liabilities
Long-term debt		70		—		5		75
Other long-term liabilities		2		—		3		5
Deferred income taxes		34		11		5		50
		106		11		13		130
Total liabilities assumed		139		52		23		214
Net identifiable assets acquired		48		43		30		121
Goodwill		77		58		61		196
Net assets acquired	$	125	$	101	$	91	$	317
Acquisition effected by way of:
Cash consideration	$	90	$	101	$	82	$	273
Provisions		29		—		9		38
Issue of TELUS Corporation Common Shares		6		—		—		6
	$	125	$	101	$	91	$	317

The purchase price allocation, primarily in respect of customer contracts, related customer relationships and leasehold interests and deferred income taxes, had not been finalized as of the date of issuance of these consolidated financial statements. As is customary in a business acquisition transaction, until the time of acquisition of control, we did not have full access to the books and records of the acquired businesses. Upon having sufficient time to review the books and records of the acquired businesses, we expect to finalize our purchase price allocations.

2	The fair value of accounts receivable is equal to the gross contractual amounts receivable and reflects the best estimate at the acquisition date of the contractual cash flows expected to be collected.

Customer contracts and customer relationships (including those related to customer contracts) are generally expected to be amortized over a period of 8 years; software is expected to be amortized over a period of 5 years; and other intangible assets are expected to be amortized over a period of 5 years.



		June 30, 2022\|41


notes to condensed interim consolidated financial statements	(unaudited)

(c)LifeWorks Inc.

On June 16, 2022, we announced that we had entered into a definitive agreement with LifeWorks Inc. pursuant to which we would acquire all of the issued and outstanding common share of LifeWorks Inc. for $33.00 per LifeWorks Inc. common share, representing total offer consideration of approximately $2.3 billion, and the assumption of net debt of approximately $0.6 billion, subject to the satisfaction of customary closing conditions. The proposed acquisition would be complementary to our vision of employer-based healthcare, increasing access to high quality, proactive healthcare and mental wellness for employees by unifying digital-first solutions across the care continuum. Aggregate consideration to LifeWorks Inc. common shareholders will consist of 50% in cash and 50% in our Common Shares (approximately 37 million Common Shares at a ratio of 1.06420 Common Share per LifeWorks Inc. common share). The proposed transaction is subject to satisfaction of customary closing conditions, including court, LifeWorks Inc. shareholders, stock exchange and regulatory approvals, and is expected to close in or about the fourth quarter of 2022. As of August 4, 2022, the LifeWorks Inc. shareholders had approved the transaction (99.93% of votes) and we had received conditional approval from the Toronto Stock Exchange and clearance from the New York Stock Exchange for the listing of our Common Shares issuable to LifeWorks Inc. shareholders, subject to satisfaction of customary listing conditions; as of August 5, 2022, all the requisite court and regulatory approvals had not been received.

19	leases

Maturity analyses of lease liabilities are set out in Note 4(b) and Note 26(h); the period interest expense in respect thereof is set out in Note 9. The additions to, the depreciation charges for, and the carrying amounts of, right-of-use lease assets are set out in Note 17. We have not currently elected to exclude low-value and short-term leases from lease accounting.


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
Income from subleasing right-of-use lease assets
Co-location sublet revenue included in operating service revenues		$	5	$	4	$	9	$	12
Other sublet revenue included in other income	7	$	2	$	1	$	3	$	2
Lease payments		$	143	$	140	$	282	$	280

20	other long-term assets


		June 30,		December 31,
As at (millions)	Note	2022		2021
Pension assets	15	$	522	$	453
Unbilled customer finance receivables	4(a)		514		545
Derivative assets	4(d)		224		76
Deferred income taxes			16		35
Costs incurred to obtain or fulfill contracts with customers			110		109
Real estate joint venture advances	21(b)		114		114
Investment in real estate joint venture	21(b)		1		1
Investment in associates	21		95		100
Portfolio investments ¹
At fair value through net income			22		26
At fair value through other comprehensive income			407		370
Investment in Lifeworks Inc. ²	18(c)		212		—
Prepaid maintenance			65		62
Refundable security deposits and other			126		113
		$	2,428	$	2,004

1	Fair value measured at reporting date using significant other observable inputs (Level 2).

2	Fair value measured at reporting date for identical item in an active market (Level 1).



42\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

The costs incurred to obtain and fulfill contracts with customers are set out in the following table:


Periods ended June 30, 2022 (millions)	Three months						Six months
	Costs incurred to						Costs incurred to
	Obtain						Obtain
	contracts with		Fulfill contracts				contracts with		Fulfill contracts
	customers		with customers		Total		customers		with customers		Total
Balance, beginning of period	$	329	$	6	$	335	$	336	$	6	$	342
Additions		75		—		75		135		1		136
Amortization		(67)		—		(67)		(134)		(1)		(135)
Balance, end of period	$	337	$	6	$	343	$	337	$	6	$	343
Current ¹							$	230	$	3	$	233
Non-current								107		3		110
							$	337	$	6	$	343

1	Presented in the Consolidated statements of financial position in prepaid expenses.

21	real estate joint ventures and investment in associate

(a)

General

Real estate joint ventures

In 2013, we partnered, as equals, with two arm’s-length parties in a residential, retail and commercial real estate redevelopment project, TELUS Sky, in Calgary, Alberta. The new-build tower, completed in 2020, was to be built to the LEED Platinum standard.

Associate

We have acquired a 35% basic equity interest in Miovision Technologies Incorporated, an associate that is complementary to, and is viewed to grow, our existing Internet of Things business; our judgment is that we obtained significant influence over the associate concurrent with acquiring our equity interest.



		June 30, 2022\|43


notes to condensed interim consolidated financial statements	(unaudited)

(b)Real estate joint ventures

Summarized financial information


	June 30,		December 31,
As at (millions)	2022		2021
ASSETS
Current assets
Cash and temporary investments, net	$	8	$	11
Other		27		28
		35		39
Non-current assets
Investment property		328		328
Other		10		10
		338		338
	$	373	$	377
LIABILITIES AND OWNERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	11	$	10
		11		10
Non-current liabilities
Construction credit facilities		342		342
		342		342
		353		352
Owners’ equity
TELUS¹		7		9
Other partners		13		16
		20		25
	$	373	$	377

1	The equity amounts recorded by the real estate joint venture differ from those recorded by us by the amount of the deferred gains on our real estate contributed and the valuation provision we have recorded in excess of that recorded by the real estate joint venture.


	Three months				Six months
Periods ended June 30 (millions)	2022		2021		2022		2021
Revenue	$	6	$	3	$	10	$	5
Depreciation and amortization	$	2	$	3	$	4	$	4
Interest expense	$	1	$	1	$	4	$	1
Net income (loss) and comprehensive income (loss) ¹	$	(2)	$	(3)	$	(6)	$	(10)

1	As the real estate joint ventures are partnerships, no provision for income taxes of the partners is made in determining the real estate joint ventures’ net income and comprehensive income.



44\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

Our real estate joint ventures activity

Our real estate joint ventures investment activity is set out in the following table.


Three-month periods ended June 30 (millions)	2022						2021
	Loans and						Loans and
	receivables ¹		Equity ²		Total		receivables ¹		Equity ²		Total
Related to real estate joint ventures’ statements of income and other comprehensive income
Comprehensive income (loss) attributable to us ³	$	—	$	(1)	$	(1)	$	—	$	(1)	$	(1)
Related to real estate joint ventures’ statements of financial position
Items not affecting currently reported cash flows
Construction credit facilities financing costs charged by us (Note 7)		—		—		—		1		—		1
Cash flows in the current reporting period
Construction credit facilities
Financing costs paid to us		—		—		—		(1)		—		(1)
Funds we advanced or contributed, excluding construction credit facilities		—		2		2		—		2		2
Funds repaid to us and earnings distributed		—		(1)		(1)		—		—		—
Net increase (decrease)		—		—		—		—		1		1
Real estate joint ventures carrying amounts
Balance, beginning of period		114		(8)		106		114		(7)		107
Valuation provision		—		—		—		—		(1)		(1)
Balance, end of period	$	114	$	(8)	$	106	$	114	$	(7)	$	107


Six-month periods ended June 30 (millions)	2022						2021
	Loans and						Loans and
	receivables¹		Equity²		Total		receivables¹		Equity²		Total
Related to real estate joint ventures’ statements of income and other comprehensive income
Comprehensive income (loss) attributable to us ³	$	—	$	(1)	$	(1)	$	—	$	(2)	$	(2)
Related to real estate joint ventures’ statements of financial position
Items not affecting currently reported cash flows
Construction credit facilities financing costs charged by us (Note 7)		1		—		1		2		—		2
Cash flows in the current reporting period
Construction credit facilities
Financing costs paid to us		(1)		—		(1)		(2)		—		(2)
Funds we advanced or contributed, excluding construction credit facilities		—		2		2		—		8		8
Funds repaid to us and earnings distributed		—		(1)		(1)		—		—		—
Net increase (decrease)		—		—		—		—		6		6
Real estate joint ventures carrying amounts
Balance, beginning of period		114		(8)		106		114		(11)		103
Valuation provision		—		—		—		—		(2)		(2)
Balance, end of period	$	114	$	(8)	$	106	$	114	$	(7)	$	107

1	Loans and receivables are included in our consolidated statements of financial position as Real estate joint venture advances and are comprised of advances under construction credit facilities.

We account for our interests in the real estate joint ventures using the equity method of accounting. As at June 30, 2022, and December 31, 2021, we had recorded equity losses in excess of our recorded equity investment in respect of one of the real estate joint ventures; such resulting balance has been included in long-term liabilities (Note 27).



		June 30, 2022\|45


notes to condensed interim consolidated financial statements	(unaudited)

3	As the real estate joint ventures are partnerships, no provision for income taxes of the partners is made in determining the real estate joint ventures’ net income and comprehensive income.

We have entered into lease agreements with the TELUS Sky real estate joint venture. During the three-month and six-month periods ended June 30, 2022, the TELUS Sky real estate joint venture recognized $2 million (2021 – $2 million) and $4 million (2021 – $4 million), respectively, of revenue from our office tenancy; of this amount, one-third was due to our economic interest in the real estate joint venture and two-thirds was due to our partners’ economic interests in the real estate joint venture.

Construction credit facilities

The TELUS Sky real estate joint venture has a credit agreement, maturing August 31, 2023, with Canadian financial institutions (as 66-2/3% lender) and TELUS Corporation (as 33-1/3% lender) to provide $342 million of construction financing for the project. The construction credit facilities contain customary real estate construction financing representations, warranties and covenants and are secured by demand debentures constituting first fixed and floating charge mortgages over the underlying real estate assets. The construction credit facilities are available by way of bankers’ acceptance or prime loan and bear interest at rates in line with similar construction financing facilities.

22	short-term borrowings

On July 26, 2002, one of our subsidiaries, TELUS Communications Inc., entered into an agreement with an arm’s-length securitization trust associated with a major Schedule I bank under which it is currently able to sell an interest in certain trade receivables up to a maximum of $600 million (unchanged from December 31, 2021). The term of this revolving-period securitization agreement ends December 31, 2024 (unchanged from December 31, 2021), and it requires minimum cash proceeds of $100 million from monthly sales of interests in certain trade receivables. TELUS Communications Inc. is required to maintain a credit rating of at least BB (December 31, 2021 – BB) from DBRS Limited or the securitization trust may require the sale program to be wound down prior to the end of the term.

Sales of trade receivables in securitization transactions are recognized as collateralized short-term borrowings and thus do not result in our derecognition of the trade receivables sold. When we sell our trade receivables, we retain reserve accounts, which are retained interests in the securitized trade receivables, and servicing rights. As at June 30, 2022, we had sold to the trust (but continued to recognize) trade receivables of $318 million (December 31, 2021 – $118 million). Short-term borrowings of $275 million (December 31, 2021 – $100 million) are comprised of amounts advanced to us by the arm’s-length securitization trust pursuant to the sale of trade receivables.

The balance of short-term borrowings (if any) is comprised of amounts drawn on bilateral bank facilities and/or other.

23	accounts payable and accrued liabilities


	June 30,		December 31,
As at (millions)	2022		2021
Accrued liabilities	$	1,494	$	1,539
Payroll and other employee-related liabilities		575		633
Restricted share units liability		10		28
		2,079		2,200
Trade accounts payable		1,003		1,213
Interest payable		180		173
Indirect taxes payable and other		144		119
	$	3,406	$	3,705



46\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

24	advance billings and customer deposits


	June 30,		December 31,
As at (millions)	2022		2021
Advance billings	$	647	$	636
Deferred customer activation and connection fees		5		6
Customer deposits		9		10
Contract liabilities		661		652
Other		197		202
	$	858	$	854

Contract liabilities represent our future performance obligations to customers in respect of services and/or equipment for which we have received consideration from the customer or for which an amount is due from the customer. Our contract liability balances, and the changes in those balances, are set out in the following table:


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
Balance, beginning of period		$	883	$	821	$	870	$	806
Revenue deferred in previous period and recognized in current period			(644)		(618)		(630)		(593)
Net additions arising from operations			638		598		631		588
Additions arising from business acquisitions			6		1		12		1
Balance, end of period		$	883	$	802	$	883	$	802
Current						$	791	$	727
Non-current	27
Deferred revenues							85		66
Deferred customer activation and connection fees							7		9
						$	883	$	802
Reconciliation of contract liabilities presented in the Consolidated statements of financial position – current
Gross contract liabilities						$	791	$	727
Reclassification to contract assets of contracts with contract liabilities less than contract assets	6(c)						(114)		(113)
Reclassification from contract assets of contracts with contract assets less than contract liabilities	6(c)						(16)		(12)
						$	661	$	602



		June 30, 2022\|47


notes to condensed interim consolidated financial statements	(unaudited)

25	provisions


					Written put
	Asset				options and
	retirement		Employee-		contingent
(millions)	obligation		related		consideration		Other		Total
As at April 1, 2022	$	504	$	50	$	202	$	106	$	862
Additions ¹		59		13		2		12		86
Reversals		(9)		—		(20)		(15)		(44)
Uses		(2)		(9)		—		(5)		(16)
Interest effects ²		(268)		—		—		—		(268)
As at June 30, 2022	$	284	$	54	$	184	$	98	$	620
As at January 1, 2022	$	501	$	66	$	203	$	100	$	870
Additions ¹		59		23		29		52		163
Reversals		(9)		—		(46)		(15)		(70)
Uses		(2)		(35)		(2)		(39)		(78)
Interest effects ²		(265)		—		—		—		(265)
As at June 30, 2022	$	284	$	54	$	184	$	98	$	620
Current	$	8	$	41	$	—	$	33	$	82
Non-current		276		13		184		65		538
As at June 30, 2022	$	284	$	54	$	184	$	98	$	620

1	For the three-month and six-month periods ended June 30, 2022, asset retirement obligation additions include $39 for the removal of specified telecommunications infrastructure equipment as required by Innovation, Science and Economic Development Canada.

The difference of $273 and $273 between the asset retirement obligation interest effects in this table for the three-month period and six-month period ended June 30, 2022, respectively, and the amounts disclosed in Note 9 are in respect of the change in the discount rates applicable to the provision, with such difference included in the cost of the associated asset(s) by way of being included with (netted against) the additions detailed in Note 17.

Asset retirement obligation

We establish provisions for liabilities associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development and/or normal operation of the assets. We expect that the associated cash outflows in respect of the balance accrued as at the financial statement date will occur proximate to the dates these assets are retired.

Employee-related

The employee-related provisions are largely in respect of restructuring activities (as discussed further in Note 16(b)). The timing of the associated cash outflows in respect of the balance accrued as at the financial statement date is substantially short-term in nature.

Written put options and contingent consideration

In connection with certain business acquisitions, we have established provisions for written put options in respect of non-controlling interests. Provisions for some written put options are determined based on the net present value of estimated future earnings results, and such provisions require us to make key economic assumptions about the future. Similarly, we have established provisions for contingent consideration. No cash outflows in respect of the written put options are expected prior to their initial exercisability, and no cash outflows in respect of contingent consideration are expected prior to completion of the periods during which the contingent consideration can be earned.



48\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

Other

The provisions for other include: legal claims; non-employee-related restructuring activities; contract termination costs and onerous contracts related to business acquisitions; and costs incurred in connection with the COVID-19 pandemic. Other than as set out following, we expect that the associated cash outflows in respect of the balance accrued as at the financial statement date will occur over an indeterminate multi-year period.

As discussed further in Note 29, we are involved in a number of legal claims and we are aware of certain other possible legal claims. In respect of legal claims, we establish provisions, when warranted, after taking into account legal assessments, information presently available, and the expected availability of recourse. The timing of cash outflows associated with legal claims cannot be reasonably determined.

In connection with business acquisitions, we have established provisions for contract termination costs and onerous contracts acquired.

26	long-term debt

(a)Details of long-term debt


		June 30,		December 31,
As at (millions)	Note	2022		2021
Senior unsecured
TELUS Corporation senior notes	(b)	$	16,459	$	15,258
TELUS Corporation commercial paper	(c)		1,922		1,900
TELUS Communications Inc. debentures			199		448
Secured
TELUS International (Cda) Inc. credit facility	(e)		984		1,062
Other	(f)		300		308
			19,864		18,976
Lease liabilities	(g)		1,764		1,876
Long-term debt		$	21,628	$	20,852
Current		$	3,146	$	2,927
Non-current			18,482		17,925
Long-term debt		$	21,628	$	20,852

(b)	TELUS Corporation senior notes

The notes are senior unsecured and unsubordinated obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated obligations, are senior in right of payment to all of our existing and future subordinated indebtedness, and are effectively subordinated to all existing and future obligations of, or guaranteed by, our subsidiaries. The indentures governing the notes contain certain covenants that, among other things, place limitations on our ability, and the ability of certain of our subsidiaries, to: grant security in respect of indebtedness; enter into sale-leaseback transactions; and incur new indebtedness.

Interest is payable semi-annually. The notes require us to make an offer to repurchase them at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture.



		June 30, 2022\|49


notes to condensed interim consolidated financial statements	(unaudited)

At any time prior to the respective maturity dates set out in the table below, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 days’ and not more than 60 days’ prior notice. On or after the respective redemption present value spread cessation dates set out in the table below, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 days’ and not more than 60 days’ prior notice, at redemption prices equal to 100% of the principal amounts thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption.


														Redemption present
								Principal face amount						value spread
						Effective					Outstanding at
			Issue			interest		Originally			financial			Basis	Cessation
Series	Issued	Maturity	price			rate ¹		issued			statement date			points ²	date
3.35% Notes, Series CJ	December 2012	March 2023	$	998.83		3.36	%	$	500	million	$	500	million	40	Dec. 15, 2022
3.35% Notes, Series CK	April 2013	April 2024	$	994.35		3.41	%	$	1.1	billion	$	1.1	billion	36	Jan. 2, 2024
3.75% Notes, Series CQ	September 2014	January 2025	$	997.75		3.78	%	$	800	million	$	800	million	38.5	Oct. 17, 2024
3.75% Notes, Series CV	December 2015	March 2026	$	992.14		3.84	%	$	600	million	$	600	million	53.5	Dec. 10, 2025
2.75% Notes, Series CZ	July 2019	July 2026	$	998.73		2.77	%	$	800	million	$	800	million	33	May 8, 2026
2.80% U.S. Dollar Notes ³	September 2016	February 2027	US$	991.89		2.89	%	US$	600	million	US$	600	million	20	Nov. 16, 2026
3.70% U.S. Dollar Notes ³	March 2017	September 2027	US$	998.95		3.71	%	US$	500	million	US$	500	million	20	June 15, 2027
2.35% Notes, Series CAC	May 2020	January 2028	$	997.25		2.39	%	$	600	million	$	600	million	48	Nov. 27, 2027
3.625% Notes, Series CX	March 2018	March 2028	$	989.49		3.75	%	$	600	million	$	600	million	37	Dec. 1, 2027
3.30% Notes, Series CY	April 2019	May 2029	$	991.75		3.40	%	$	1.0	billion	$	1.0	billion	43.5	Feb. 2, 2029
3.15% Notes, Series CAA	December 2019	February 2030	$	996.49		3.19	%	$	600	million	$	600	million	39.5	Nov. 19, 2029
2.05% Notes, Series CAD	October 2020	October 2030	$	997.93		2.07	%	$	500	million	$	500	million	38	July 7, 2030
2.85% Sustainability-Linked Notes, Series CAF	June 2021	November 2031	$	997.52		2.88	% ⁴	$	750	million	$	750	million	34	Aug. 13, 2031
3.40% U.S. Dollar Sustainability-Linked Notes	February 2022	May 2032	US$	997.13		3.43	% ⁴	US$	900	million	US$	900	million	25	Feb. 13, 2032
4.40% Notes, Series CL	April 2013	April 2043	$	997.68		4.41	%	$	600	million	$	600	million	47	Oct. 1, 2042
5.15% Notes, Series CN	November 2013	November 2043	$	995.00		5.18	%	$	400	million	$	400	million	50	May 26, 2043
4.85% Notes, Series CP	Multiple ⁵	April 2044	$	987.91	⁵	4.93	% ⁵	$	500	million ⁵	$	900	million ⁵	46	Oct. 5, 2043
4.75% Notes, Series CR	September 2014	January 2045	$	992.91		4.80	%	$	400	million	$	400	million	51.5	July 17, 2044
4.40% Notes, Series CU	March 2015	January 2046	$	999.72		4.40	%	$	500	million	$	500	million	60.5	July 29, 2045
4.70% Notes, Series CW	Multiple ⁶	March 2048	$	998.06	⁶	4.71	% ⁶	$	325	million ⁶	$	475	million ⁶	58.5	Sept. 6, 2047
4.60% U.S. Dollar Notes ³	June 2018	November 2048	US$	987.60		4.68	%	US$	750	million	US$	750	million	25	May 16, 2048
4.30% U.S. Dollar Notes ³	May 2019	June 2049	US$	990.48		4.36	%	US$	500	million	US$	500	million	25	Dec. 15, 2048
3.95% Notes, Series CAB	Multiple ⁷	February 2050	$	997.54	⁷	3.97	% ⁷	$	400	million ⁷	$	800	million ⁷	57.5	Aug. 16, 2049
4.10% Notes, Series CAE	April 2021	April 2051	$	994.70		4.13	%	$	500	million	$	500	million	53	Oct. 5, 2050

1	The effective interest rate is that which the notes would yield to an initial debt holder if held to maturity.

For Canadian dollar-denominated notes, the redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof.

For U.S. dollar-denominated notes, the redemption price is equal to the greater of (i) the present value of the notes discounted at the U.S. Adjusted Treasury Rate (at the U.S. Treasury Rate for the 3.40% U.S. Dollar Sustainability-Linked Notes) plus the redemption present value spread calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof.

3	We have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively converted the principal payments and interest obligations to Canadian dollar obligations as follows:


			Canadian dollar
	Interest rate		equivalent		Exchange
Series	fixed at		principal		rate
2.80% U.S. Dollar Notes	2.95	%	$	792 million	$	1.3205
3.70% U.S. Dollar Notes	3.41	%	$	667 million	$	1.3348
3.40% U.S. Dollar Sustainability-Linked Notes	3.89	%	$	1,148 million	$	1.2753
4.60% U.S. Dollar Notes	4.41	%	$	974 million	$	1.2985
4.30% U.S. Dollar Notes	4.27	%	$	672 million	$	1.3435



50\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

If we have not obtained a sustainability performance target verification assurance certificate for the fiscal year ended December 31, 2030, the 2.85% Sustainability-Linked Notes, Series CAF will bear interest at a rate of 3.85% for the period from November 14, 2030, through November 13, 2031, and the 3.40% U.S. Dollar Sustainability-Linked Notes will bear interest at a rate of 4.40% for the period from November 14, 2030, through November 13, 2032. The interest rate on the 3.40% U.S. Dollar Sustainability-Linked Notes may also increase in certain circumstances if we fail to meet additional sustainability and/or environmental, social or governance targets as may be provided for in a sustainability-linked bond. The interest rate on the 3.40% U.S. Dollar Sustainability-Linked Notes, however, can in no event exceed the initial rate of 3.40% by more than 1.50%, in the aggregate, whether as a result of not obtaining a sustainability performance target verification assurance certificate and/or any targets under one or more future sustainability-linked bonds.

Similarly, if we redeem either series of notes and we have not obtained a sustainability performance target verification assurance certificate at the end of the fiscal year immediately preceding the date fixed for redemption, the interest accrued (if any) will be determined using a rate of 3.85% for the Series CAF notes and using a rate of 4.40% for the 3.40% U.S. Dollar Sustainability-Linked Notes.

$500 million of 4.85% Notes, Series CP were issued in April 2014 at an issue price of $998.74 and an effective interest rate of 4.86%. This series of notes was reopened in December 2015 and a further $400 million of notes were issued at an issue price of $974.38 and an effective interest rate of 5.02%.

$325 million of 4.70% Notes, Series CW were issued in March 2017 at an issue price of $990.65 and an effective interest rate of 4.76%. This series of notes was reopened in February 2018 and a further $150 million of notes were issued at an issue price of $1,014.11 and an effective interest rate of 4.61% in March 2018.

$400 million of 3.95% Notes, Series CAB were issued in December 2019 at an issue price of $991.54 and an effective interest rate of 4.00%. This series of notes was reopened in May 2020 and a further $400 million of notes were issued at an issue price of $1,003.53 and an effective interest rate of 3.93%.

(c)

TELUS Corporation commercial paper

TELUS Corporation has an unsecured commercial paper program, which is backstopped by our $2.75 billion syndicated credit facility (see (d)) and is to be used for general corporate purposes, including capital expenditures and investments. This program enables us to issue commercial paper, subject to conditions related to debt ratings, up to a maximum aggregate amount at any one time of $1.9 billion equivalent (US$1.5 billion maximum). Foreign currency forward contracts are used to manage currency risk arising from issuing commercial paper denominated in U.S. dollars. Commercial paper debt is due within one year and is classified as a current portion of long-term debt, as the amounts are fully supported, and we expect that they will continue to be supported, by the revolving credit facility, which has no repayment requirements within the next year. As at June 30, 2022, we had $1.9 billion (December 31, 2021 - $1.9 billion) of commercial paper outstanding, all of which was denominated in U.S. dollars (US$1.5 billion; December 31, 2021 - US$1.5 billion), with an effective average interest rate of 1.79%, maturing through October 2022.

(d)

TELUS Corporation credit facilities

As at June 30, 2022, TELUS Corporation had an unsecured revolving $2.75 billion bank credit facility, expiring on April 6, 2026 (unchanged from December 31, 2021), with a syndicate of financial institutions, which is to be used for general corporate purposes, including the backstopping of commercial paper. As at June 30, 2022, TELUS Corporation had incremental commitments for an unsecured non-revolving $1.9 billion bank credit facility, maturing July 9, 2024, with a syndicate of financial institutions, which is to be used for general corporate purposes; subsequent to June 30, 2022, a definitive credit agreement was executed.

The TELUS Corporation credit facilities bear interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (as such terms are used or defined in the credit facilities), plus applicable margins. The credit facilities contain customary representations, warranties and covenants, including two financial quarter-end ratio tests. These tests are that our leverage ratio must not exceed 4.25:1.00 and our operating cash flow to interest expense ratio must not be less than 2.00:1.00, all as defined in the credit facilities.



		June 30, 2022\|51


notes to condensed interim consolidated financial statements	(unaudited)

Continued access to the TELUS Corporation credit facilities is not contingent upon TELUS Corporation maintaining a specific credit rating.


	June 30,		December 31,
As at (millions)	2022		2021
Net available	$	828	$	850
Backstop of commercial paper		1,922		1,900
Gross available revolving credit facility	$	2,750	$	2,750

We had $124 million of letters of credit outstanding as at June 30, 2022 (December 31, 2021 – $193 million), issued under various uncommitted facilities; such letter of credit facilities are in addition to the ability to provide letters of credit pursuant to our committed revolving bank credit facility.

(e)

TELUS International (Cda) Inc. credit facility

As at June 30, 2022, TELUS International (Cda) Inc. had a credit facility, secured by its assets, expiring on January 28, 2025, with a syndicate of financial institutions, joined in 2020 by TELUS Corporation. The credit facility is comprised of US$620 million (TELUS Corporation as a lender of approximately 7.5%) and US$230 million (TELUS Corporation as a lender of 12.5%) revolving components and amortizing US$600 million (TELUS Corporation as 12.5% lender) and US$250 million term loan components. The credit facility is non-recourse to TELUS Corporation. The outstanding revolving components and term loan components had a weighted average interest rate of 3.12% as at June 30, 2022.

As at (millions)

June 30, 2022

December 31, 2021

Revolving

Term loan

Revolving

Term loan

components ¹

components ²

Total

components

Total

Available

US$

788

US$

N/A

US$

788

US$

725

US$

N/A

US$

725

Outstanding

Due to other

717

771

109

737

846

Due to TELUS Corporation

US$

850

US$

786

US$

1,636

US$

850

US$

808

US$

1,658

1	Revolving component available is gross of swingline draw of US$NIL (December 31, 2021 - US$8).

2	We have entered into a receive-floating interest rate, pay-fixed interest rate exchange agreement that effectively converts our interest obligations on US$92 of the debt to a fixed rate of 2.64%.

Relative to amounts owed to the syndicate of financial institutions, excluding TELUS Corporation, we have entered into foreign exchange derivatives (cross currency interest rate exchange agreements) that effectively convert an amortizing amount of US$386 of the principal payments, and associated interest obligations, to European euro obligations with an effective fixed interest rate of 0.65% and an effective fixed economic exchange rate of US$1.0932:€1.00. These have been accounted for as a net investment hedge in a foreign operation (see Note 4).

The TELUS International (Cda) Inc. credit facility bears 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 facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter-end ratio tests; the TELUS International (Cda) Inc. quarter-end net debt to operating cash flow ratio must not exceed: 4.50:1.00 during fiscal 2022 and 3.75:1.00 subsequently; the quarter-end operating cash flow to debt service (interest and scheduled principal repayment) ratio must not be less than 1.50:1.00; all as defined in the credit facility.

The term loan components are subject to an amortization schedule which requires that 5% of the principal advanced be repaid each year of the term of the agreement, with the balance due at maturity and December 22, 2022, for the US$250 million component, respectively.



52\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

(f)Other

Other liabilities bear interest at 3.19%, are secured by the AWS-4 spectrum licences associated with these other liabilities and a real estate holding, and are subject to amortization schedules, so that the principal is repaid over the periods to maturity, the last period ending March 31, 2035.

(g)Lease liabilities

Lease liabilities are subject to amortization schedules, so that the principal is repaid over various periods, including reasonably expected renewals. The weighted average interest rate on lease liabilities was approximately 3.63% as at June 30, 2022.

(h)

Long-term debt maturities

Anticipated requirements to meet long-term debt repayments, calculated for long-term debt owing as at June 30, 2022, are as follows:

Other

Composite long-term debt denominated in

Canadian dollars

U.S. dollars

currencies

Long-term

debt,

Currency swap agreement

excluding

Leases

excluding

Leases

amounts to be exchanged

Leases

Years ending December 31 (millions)

leases

(Note 19)

Total

leases

(Note 19)

(Receive) ¹

Pay

Total

(Note 19)

Total

2022 (remainder of year)

180

189

2,237

(1,957)

1,941

2,237

2,447

2023

533

258

791

(28)

890

2024

1,118

227

1,345

(28)

1,415

2025

1,019

119

1,138

611

(413)

395

606

1,764

2026

1,420

1,515

—

1,547

2027-2031

4,164

284

4,448

1,417

(1,417)

1,459

1,467

5,953

Thereafter

4,664

292

4,956

2,770

—

(2,770)

2,794

—

7,750

Future cash outflows in respect of composite long-term debt principal repayments

12,927

1,455

14,382

7,103

(6,613)

6,637

7,223

161

21,766

Future cash outflows in respect of associated interest and like carrying costs ²

6,369

296

6,665

2,623

(2,564)

2,594

2,669

9,364

Undiscounted contractual maturities (Note 4(b))

19,296

1,751

21,047

9,726

112

(9,177)

9,231

9,892

191

31,130

1	Where applicable, cash flows reflect foreign exchange rates as at June 30, 2022.

2	Future cash outflows in respect of associated interest and like carrying costs for commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the rates in effect as at June 30, 2022.

27	other long-term liabilities


		June 30,		December 31,
As at (millions)	Note	2022		2021
Contract liabilities	24	$	85	$	82
Other			2		3
Deferred revenues			87		85
Pension benefit liabilities	15		343		643
Other post-employment benefit liabilities			68		66
Derivative liabilities	4(d)		20		73
Investment in real estate joint ventures	21(b)		9		9
Other			46		23
			573		899
Deferred customer activation and connection fees	24		7		8
		$	580	$	907



		June 30, 2022\|53


notes to condensed interim consolidated financial statements	(unaudited)

28	owners’ equity

(a)

TELUS Corporation Common Share capital - general

Our authorized share capital is as follows:


	June 30,		December 31,
As at	2022		2021
First Preferred Shares	1	billion	1	billion
Second Preferred Shares	1	billion	1	billion
Common Shares	4	billion	4	billion

Only holders of Common Shares may vote at our general meetings, with each holder of Common Shares entitled to one vote per Common Share held at all such meetings so long as not less than 66-2/3% of the issued and outstanding Common Shares are owned by Canadians. With respect to priority in the payment of dividends and in the distribution of assets in the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding up our affairs, preferences are as follows: First Preferred Shares; Second Preferred Shares; and finally Common Shares.

As at June 30, 2022, approximately 52 million Common Shares were reserved for issuance from Treasury under a dividend reinvestment and share purchase plan (see Note 13(b)); approximately 20 million Common Shares were reserved for issuance from Treasury under a restricted share unit plan (see Note 14(b)); and approximately 93 million Common Shares were reserved for issuance from Treasury under a share option plan (see Note 14(d)).

(b)Purchase of TELUS Corporation Common Shares for cancellation pursuant to normal course issuer bid

As referred to in Note 3, we may purchase a portion of our Common Shares for cancellation pursuant to normal course issuer bids in order to maintain or adjust our capital structure. In June 2022, we received approval for a normal course issuer bid to purchase and cancel up to 10 million of our Common Shares (up to a maximum amount of $250 million) from June 6, 2022, to June 5, 2023.

(c)Subsidiary with significant non-controlling interest

Our TELUS International (Cda) Inc. subsidiary is incorporated under the Business Corporations Act (British Columbia) and has geographically dispersed operations with principal places of business in Asia, Central America, Europe and North America.

Due to the voting rights associated with the remaining multiple voting shares held by TELUS Corporation, as at June 30, 2022, we retained a 72.4% (December 31, 2021 - 70.9%) voting and controlling interest and a 56.1% (December 31, 2021 - 55.1%) economic interest in TELUS International (Cda) Inc. Changes in interests during the six-month period ended June 30, 2022, and which are reflected in the statement of changes in owners’ equity, arose from share-based compensation and the acquisition of shares from a non-controlling interest.



54\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

Summarized financial information

Summarized financial information of our TELUS International (Cda) Inc. subsidiary is set out in the following table.


	Three months				Six months
	June 30,		June 30,		June 30,		June 30,		December 31,
As at, or for the periods ended, (millions) ¹	2022		2021		2022		2021		2021
Statement of financial position
Current assets					$	1,038			$	874
Non-current assets					$	3,682			$	3,804
Current liabilities					$	1,164			$	1,098
Non-current liabilities					$	1,350			$	1,475
Statement of income and other comprehensive income
Revenue and other income	$	797	$	658	$	1,556	$	1,297
Net income	$	70	$	19	$	115	$	24
Comprehensive income (loss)	$	75	$	(25)	$	77	$	(59)
Statement of cash flows
Cash provided by operating activities	$	108	$	114	$	261	$	156
Cash used by investing activities	$	(63)	$	(29)	$	(90)	$	(47)
Cash used by financing activities	$	(87)	$	(85)	$	(153)	$	(149)

1	As required by IFRS-IASB, this summarized financial information excludes inter-company eliminations.

29	contingent liabilities

(a)	Claims and lawsuits

General

A number of claims and lawsuits (including class actions and intellectual property infringement claims) seeking damages and other relief are pending against us and, in some cases, other mobile carriers and telecommunications service providers. As well, we have received notice of, or are aware of, certain possible claims (including intellectual property infringement claims) against us and, in some cases, other mobile carriers and telecommunications service providers.

It is not currently possible for us to predict the outcome of such claims, possible claims and lawsuits due to various factors, including: the preliminary nature of some claims; uncertain damage theories and demands; an incomplete factual record; uncertainty concerning legal theories and procedures and their resolution by the courts, at both the trial and the appeal levels; and the unpredictable nature of opposing parties and their demands.

However, subject to the foregoing limitations, management is of the opinion, based upon legal assessments and information presently available, that it is unlikely that any liability, to the extent not provided for through insurance or otherwise, would have a material effect on our financial position and the results of our operations, including cash flows, with the exception of the items enumerated following.



		June 30, 2022\|55


notes to condensed interim consolidated financial statements	(unaudited)

Certified class actions

Certified class actions against us include the following:

Per minute billing class action

In 2008, a class action was brought in Ontario against us alleging breach of contract, breach of the Ontario Consumer Protection Act, breach of the Competition Act and unjust enrichment, in connection with our practice of “rounding up” mobile airtime to the nearest minute and charging for the full minute. The action sought certification of a national class. In November 2014, an Ontario class only was certified by the Ontario Superior Court of Justice in relation to the breach of contract, breach of Consumer Protection Act, and unjust enrichment claims; all appeals of the certification decision have now been exhausted. At the same time, the Ontario Superior Court of Justice declined to stay the claims of our business customers, notwithstanding an arbitration clause in our customer service agreements with those customers. This latter decision was appealed and on May 31, 2017, the Ontario Court of Appeal dismissed our appeal. The Supreme Court of Canada granted us leave to appeal this decision and on April 4, 2019, granted our appeal and stayed the claims of business customers.

Call set-up time class actions

In 2005, a class action was brought against us in British Columbia alleging that we have engaged in deceptive trade practices in charging for incoming calls from the moment the caller connects to the network, and not from the moment the incoming call is connected to the recipient. In 2011, the Supreme Court of Canada upheld a stay of all of the causes of action advanced by the plaintiff in this class action, with one exception, based on the arbitration clause that was included in our customer service agreements. The sole exception was the cause of action based on deceptive or unconscionable practices under the British Columbia Business Practices and Consumer Protection Act, which the Supreme Court of Canada declined to stay. In January 2016, the British Columbia Supreme Court certified this class action in relation to the claim under the Business Practices and Consumer Protection Act. The class is limited to residents of British Columbia who contracted mobile services with us in the period from January 21, 1999, to April 2010. We have appealed the certification decision. A companion class action was brought against us in Alberta at the same time as the British Columbia class action. The Alberta class action duplicates the allegations in the British Columbia action, but has not proceeded to date and is not certified. Subject to a number of conditions, including court approval, we have now settled both the British Columbia and the Alberta class actions.

Uncertified class actions

Uncertified class actions against us include:

9-1-1 class actions

In 2008, a class action was brought in Saskatchewan against us and other Canadian telecommunications carriers alleging that, among other matters, we failed to provide proper notice of 9-1-1 charges to the public, have been deceitfully passing them off as government charges, and have charged 9-1-1 fees to customers who reside in areas where 9-1-1 service is not available. The plaintiffs advance causes of action in breach of contract, misrepresentation and false advertising and seek certification of a national class. A virtually identical class action was filed in Alberta at the same time, but the Alberta Court of Queen’s Bench declared that class action expired against us as of 2009. No steps have been taken in this proceeding since 2016.

Public Mobile class actions

In 2014, class actions were brought against us in Quebec and Ontario on behalf of Public Mobile’s customers, alleging that changes to the technology, services and rate plans made by us contravene our statutory and common law obligations. In particular, the Quebec action alleges that our actions constitute a breach of the Quebec Consumer Protection Act, the Quebec Civil Code, and the Ontario Consumer Protection Act. On June 28, 2021, the Quebec Superior Court approved the discontinuance of this claim against TELUS. The Ontario class action alleges negligence, breach of express and implied warranty, breach of the Competition Act, unjust enrichment, and waiver of tort. No steps have been taken in this proceeding since it was filed and served.



56\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

Summary

We believe that we have good defences to the above matters. Should the ultimate resolution of these matters differ from management’s assessments and assumptions, a material adjustment to our financial position and the results of our operations, including cash flows, could result. Management’s assessments and assumptions include that reliable estimates of any such exposure cannot be made considering the continued uncertainty about: the nature of the damages that may be sought by the plaintiffs; the causes of action that are being, or may ultimately be, pursued; and, in the case of the uncertified class actions, the causes of action that may ultimately be certified.

(b)	Concentration of labour

In 2021, we commenced collective bargaining with the Telecommunications Workers Union, United Steelworkers Local 1944, to renew a collective agreement that expired on December 31, 2021; the contract covered approximately 22% of our Canadian workforce as at June 30, 2022. The expired contract remains in effect while the parties are bargaining, until a new agreement is reached.

30	related party transactions

(a)

Transactions with key management personnel

Our key management personnel have authority and responsibility for overseeing, planning, directing and controlling our activities and consist of our Board of Directors and our Executive Team.

Total compensation expense for key management personnel, and the composition thereof, is as follows:


	Three months				Six months
Periods ended June 30 (millions)	2022		2021		2022		2021
Short-term benefits	$	4	$	5	$	8	$	8
Post-employment pension ¹ and other benefits		2		2		7		4
Share-based compensation ²		22		19		40		36
	$	28	$	26	$	55	$	48

1	Our Executive Team members are members of our Pension Plan for Management and Professional Employees of TELUS Corporation and certain other non-registered, non-contributory supplementary defined benefit and defined contribution pension plans.

We accrue an expense for the notional subset of our restricted share units with market performance conditions using a fair value determined by a Monte Carlo simulation. Restricted share units with an equity settlement feature are accounted for as equity instruments. The expense for restricted share units that do not ultimately vest is reversed against the expense that was previously recorded in their respect.



		June 30, 2022\|57


notes to condensed interim consolidated financial statements	(unaudited)

As disclosed in Note 14, we made initial awards of share-based compensation in 2022 and 2021, including, as set out in the following table, to our key management personnel. As most of these awards are cliff-vesting or graded-vesting and have multi-year requisite service periods, the related expense is being recognized rateably over a period of years and thus only a portion of the 2022 and 2021 initial awards are included in the amounts in the table above.


Six-month periods ended June 30 ($ in millions)	2022					2021
	Number of	Notional		Grant-date		Number of	Notional		Grant-date
	units	value ¹		fair value ¹		units	value ¹		fair value ¹
TELUS Corporation
Restricted share units	1,007,431	$	32	$	39	1,222,589	$	32	$	35
TELUS International (Cda) Inc.
Restricted share units	265,617		9		9	205,308		7		7
Share options	—		—		—	167,693		1		1
			9		9			8		8
		$	41	$	48		$	40	$	43

The notional value of restricted share units is determined by multiplying the equity share price at the time of award by the number of units awarded; the grant-date fair value differs from the notional value because the fair values of some awards have been determined using a Monte Carlo simulation (see Note 14(b)). The notional value of share options has been determined using an option pricing model.

The amount recorded for liability-accounted restricted share units and share options awards outstanding as at June 30, 2022 was $2 million (December 31, 2021 – $7 million).

Our Directors’ Deferred Share Unit Plan provides that, in addition to his or her annual equity grant of deferred share units, a director may elect to receive his or her annual retainer and meeting fees in deferred share units, TELUS Corporation Common Shares or cash. Deferred share units entitle directors to a specified number of TELUS Corporation Common Shares. Deferred share units accounted for as liabilities have been paid out when a director ceased to be a director, for any reason, at a time elected by the director in accordance with the Directors’ Deferred Share Unit Plan; during the three-month and six-month periods ended June 30, 2022 and 2021, no amounts were paid out. As at June 30, 2022 and December 31, 2021, no liability-accounted awards were outstanding.

During the three-month period ended March 31, 2021, key management personnel exercised 255,973 TELUS International (Cda) Inc. share options, which had an intrinsic value of $7 million at the time of exercise, reflecting a weighted average price at the date of exercise of $39.58; no options were exercised during the three-month period ended June 30, 2021. During the three-month and six-month periods ended June 30, 2022, key management personnel exercised 125,806 TELUS International (Cda) Inc. share options, which had an intrinsic value of $2 million at the time of exercise, reflecting a weighted average price at the date of exercise of $30.33.

Employment agreements with members of the Executive Team typically provide for severance payments if an executive’s employment is terminated without cause: generally 18–24 months of base salary, benefits and accrual of pension service in lieu of notice, and 50% of base salary in lieu of an annual cash bonus. In the event of a change in control, Executive Team members are not entitled to treatment any different than that given to our other employees with respect to non-vested share-based compensation.

(b)

Transactions with defined benefit pension plans

During the three-month and six-month periods ended June 30, 2022, we provided management and administrative services to our defined benefit pension plans; the charges for these services were on a cost recovery basis and amounted to $2 million (2021 – $2 million) and $4 million (2021 – $4 million), respectively.

(c)

Transactions with real estate joint venture

During the three-month and six-month periods ended June 30, 2022 and 2021, we had transactions with the TELUS Sky real estate joint venture, which is a related party, as set out in Note 21. As at June 30, 2022, we had recorded lease liabilities of $94 million (December 31, 2021 – $95 million) in respect of our TELUS Sky lease, and monthly cash payments are made in accordance with the lease agreement; one-third of those amounts is due to our economic interest in the real estate joint venture.



58\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)

31	additional statement of cash flow information

(a)Statements of cash flows – operating activities and investing activities


		Three months				Six months
Periods ended June 30 (millions)	Note	2022		2021		2022		2021
OPERATING ACTIVITIES
Net change in non-cash operating working capital
Accounts receivable		$	(206)	$	(61)	$	29	$	25
Inventories			76		58		11		44
Contract assets			21		8		36		27
Prepaid expenses			(30)		5		(170)		(123)
Accounts payable and accrued liabilities			(2)		134		(157)		31
Income and other taxes receivable and payable, net			46		(5)		70		(85)
Advance billings and customer deposits			(22)		(2)		(7)		(4)
Provisions			5		(14)		(14)		(2)
		$	(112)	$	123	$	(202)	$	(87)
INVESTING ACTIVITIES
Cash payments for capital assets, excluding spectrum licences
Capital asset additions
Gross capital expenditures
Property, plant and equipment	17	$	(881)	$	(753)	$	(1,590)	$	(1,335)
Intangible assets subject to amortization	18		(250)		(214)		(448)		(376)
			(1,131)		(967)		(2,038)		(1,711)
Additions arising from leases	17		77		55		151		113
Additions arising from non-monetary transactions			—		(1)		—		—
Capital expenditures	5		(1,054)		(913)		(1,887)		(1,598)
Effect of asset retirement obligations			222		—		222		—
			(832)		(913)		(1,665)		(1,598)
Other non-cash items included above
Change in associated non-cash investing working capital			38		142		(142)		77
Non-cash change in asset retirement obligation			(222)		—		(222)		—
			(184)		142		(364)		77
		$	(1,016)	$	(771)	$	(2,029)	$	(1,521)



		June 30, 2022\|59


notes to condensed interim consolidated financial statements	(unaudited)

(b)Changes in liabilities arising from financing activities


			Statement of cash flows				Non-cash changes
							Foreign
					Redemptions,		exchange
	Beginning		Issued or		repayments		movement				End of
(millions)	of period		received		or payments		(Note 4(e))		Other		period
THREE-MONTH PERIOD ENDED JUNE 30, 2021
Dividends payable to holders of Common Shares	$	404	$	—	$	(404)	$	—	$	428	$	428
Dividends reinvested in shares from Treasury		—		—		153		—		(153)		—
	$	404	$	—	$	(251)	$	—	$	275	$	428
Short-term borrowings	$	100	$	—	$	—	$	—	$	—	$	100
Long-term debt
TELUS Corporation senior notes	$	14,987	$	1,250	$	—	$	(42)	$	(11)	$	16,184
TELUS Corporation commercial paper		918		—		(700)		(21)		—		197
TELUS Communications Inc. debentures		622		—		(175)		—		1		448
TELUS International (Cda) Inc. credit facility		1,168		—		(60)		(13)		(3)		1,092
Other		320		—		(3)		—		—		317
Lease liabilities		1,757		—		(124)		(3)		64		1,694
Derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt – liability		61		707		(735)		68		(39)		62
		19,833		1,957		(1,797)		(11)		12		19,994
To eliminate effect of gross settlement of derivatives used to manage currency risks arising from U.S. dollar-denominated long-term debt		—		(707)		707		—		—		—
	$	19,833	$	1,250	$	(1,090)	$	(11)	$	12	$	19,994
THREE-MONTH PERIOD ENDED JUNE 30, 2022
Dividends payable to holders of Common Shares	$	450	$	—	$	(450)	$	—	$	467	$	467
Dividends reinvested in shares from Treasury		—		—		160		—		(160)		—
	$	450	$	—	$	(290)	$	—	$	307	$	467
Short-term borrowings	$	108	$	175	$	(4)	$	—	$	—	$	279
Long-term debt
TELUS Corporation senior notes	$	16,328	$	—	$	—	$	127	$	4	$	16,459
TELUS Corporation commercial paper		1,414		1,759		(1,296)		45		—		1,922
TELUS Communications Inc. debentures		448		—		(249)		—		—		199
TELUS International (Cda) Inc. credit facility		1,009		11		(68)		32		—		984
Other		304		—		(39)		—		35		300
Lease liabilities		1,816		—		(125)		1		72		1,764
Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt – liability (asset)		(12)		1,303		(1,296)		(198)		31		(172)
		21,307		3,073		(3,073)		7		142		21,456
To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt		—		(1,303)		1,303		—		—		—
	$	21,307	$	1,770	$	(1,770)	$	7	$	142	$	21,456



60\|June 30, 2022


notes to condensed interim consolidated financial statements	(unaudited)


			Statement of cash flows				Non-cash changes
							Foreign
					Redemptions,		exchange
	Beginning		Issued or		repayments		movement				End of
(millions)	of period		received		or payments		(Note 4(e))		Other		period
SIX-MONTH PERIOD ENDED JUNE 30, 2021
Dividends payable to holders of Common Shares	$	403	$	—	$	(807)	$	—	$	832	$	428
Dividends reinvested in shares from Treasury		—		—		305		—		(305)		—
	$	403	$	—	$	(502)	$	—	$	527	$	428
Short-term borrowings	$	100	$	—	$	—	$	—	$	—	$	100
Long-term debt
TELUS Corporation senior notes	$	15,021	$	1,250	$	—	$	(79)	$	(8)	$	16,184
TELUS Corporation commercial paper		731		975		(1,478)		(31)		—		197
TELUS Communications Inc. debentures		622		—		(175)		—		1		448
TELUS International (Cda) Inc. credit facility		1,804		—		(684)		(26)		(2)		1,092
Other		273		—		(8)		—		52		317
Lease liabilities		1,837		—		(247)		(9)		113		1,694
Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt – liability		120		1,492		(1,526)		91		(115)		62
		20,408		3,717		(4,118)		(54)		41		19,994
To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt		—		(1,492)		1,492		—		—		—
	$	20,408	$	2,225	$	(2,626)	$	(54)	$	41	$	19,994
SIX-MONTH PERIOD ENDED JUNE 30, 2022
Dividends payable to holders of Common Shares	$	449	$	—	$	(899)	$	—	$	917	$	467
Dividends reinvested in shares from Treasury		—		—		316		—		(316)		—
	$	449	$	—	$	(583)	$	—	$	601	$	467
Short-term borrowings	$	114	$	175	$	(10)	$	—	$	—	$	279
Long-term debt
TELUS Corporation senior notes	$	15,258	$	1,143	$	—	$	66	$	(8)	$	16,459
TELUS Corporation commercial paper		1,900		2,903		(2,912)		31		—		1,922
TELUS Communications Inc. debentures		448		—		(249)		—		—		199
TELUS International (Cda) Inc. credit facility		1,062		11		(107)		17		1		984
Other		308		—		(114)		—		106		300
Lease liabilities		1,876		—		(248)		(5)		141		1,764
Derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt – liability (asset)		4		2,926		(2,925)		(135)		(42)		(172)
		20,856		6,983		(6,555)		(26)		198		21,456
To eliminate effect of gross settlement of derivatives used to manage currency risk arising from U.S. dollar-denominated long-term debt		—		(2,926)		2,926		—		—		—
	$	20,856	$	4,057	$	(3,629)	$	(26)	$	198	$	21,456



		June 30, 2022\|61


notes to condensed interim consolidated financial statements	(unaudited)



62\|June 30, 2022