TSX Commentary

Vertias Research: Telus Corp. (T) – $31.79 – Q4/09 Results Summary
Sell, Intrinsic Value Estimate: $30.00
Telus Inc. reported YoY wireless ARPU decline of 7.7% in Q4-F09 compared to a decline of 5.8% at BCE Inc. (“BCE”) and 6.8% for F09 compared to 4.8% at BCE. As discussed in Veritas’s Telus report, dated December 09, Mike subscribers (9% of
the customer base) are unlikely to latch on to data plans and therefore Veritas expects an ARPU decline rate in excess of the industry average for 2010. Furthermore, given an expectation of rising smartphone subsidies and an increase in competition in Alberta and BC – especially in the second half of 2010 – Veritas believes that the midpoint of the current F10 wireless EBITDA
guidance of $1.975 billion embeds an ARPU decline of 3%. That is an optimistic assumption and Veritas believes that by Q2-F10 Telus will revise its wireless EBITDA guidance downwards to $1.90 billion. With the wireless franchise under duress and the ILEC segment in perpetual decline/restructuring mode, a dividend increase in the near future is neither possible nor desirable. Veritas continues to prefer BCE and Shaw and maintains its SELL recommendation on Telus. Veritas is fine tuning its valuation to $30.00.