John Wheeler - VP, IR Robert McFarlane - Executive Vice-President and CFO Darren Entwistle - President and CEO

Greg MacDonald - National Bank Financial Vince Valentini - TD Newcrest Dvai Ghose - Genuity Capital Markets Jeffrey Fan - UBS Securities Randall Rudniski - Credit Suisse Simon Flannery - Morgan Stanley John Henderson - Scotia Capital Glen Campbell - Merrill Lynch Peter Rhamey - BMO Nesbitt Burns

Thank you and welcome to the first quarter 2008 conference call and webcast. Let me introduce the TELUS executive online with us today.

They are Bob McFarlane, Executive Vice President and CFO, and Darren Entwistle, President and CEO. Also in attendance today are Joe Natale, the President of Business Solutions, and Karen Radford, President of Partner Solutions and TELUS Québec.

We'll start with the introductory comments by Bob. This will be followed by a question and answer session with both executives.

The call is scheduled for one hour or less. The news release on the first quarter financial and operating results and detailed supplemental investor information are posted on our website at telus.com.

This was released prior to our annual meeting here in Calgary. Darren's presentation to the shareholders this morning is also available on our website at telus.com, AGM.

For those with access to the internet the first quarter slides are posted for viewing at telus.com investors, you will be on listen-only mode during the opening comment. Let me now direct your attention to slide 2, the forward-looking nature of the presentation, answers to questions and statements about future events are subject to risks and uncertainties and assumptions.

Accordingly actual results could differ materially from statements made today so do not place undo reliance on them. We also disclaim any obligation to update forward-looking statements except as required by laws.

I ask that you read our legal disclaimers and refer you to the risks and assumptions outlined in our public disclosure and filings with Securities Commissions in Canada and the United States. Now over to Bob on slide 3.

Great, thanks. Thanks John for the introduction and thanks everyone for joining us on the call today.

Starting on slide 4. Our first quarter results were encouraging.

Wireless revenues were up 10% in line with subscriber growth. Its revenue per customer remained relatively stable.

EBITDA as adjusted increased just over 8%. We did see increases in certain network operating expenses due to a very strong growth in data usage and roaming as well as higher retention costs, however cost of acquisition was lower which I'll discuss in a moment.

While CapEx decreased more than 40% year-over-year, if you look back several years $65 million is a seasonally normal level. CapEx in the first quarter of 2007 was higher due to network upgrades to EVDO Rev A which has since been completed as well as expenditures to implement wireless number portability incurred this time last year.

Turning to slide 5 at 88,400 net additions TELUS had a good quarter in wireless subscriber loading with a higher proportion of postpaid net loading than in the past four quarters. Postpaid net additions were 72,400 representing 82% of TELUS's total net adds in the quarter.

Slide 6 shows that total quarterly ARPU remained essentially flat, down by only $0.15 to $61.88 as declining voice ARPU was substantially offset by growth in data. Voice ARPU continued its declining pattern experienced in recent years due to lower per minute rates, increased price competition in the business in discount segments of the market and a slight decrease in voice roaming.

Offsetting the voice decline was data ARPU which increased by $2.45 to $8.72 and now represents over 14% of total ARPU. Data service revenue increased by $51 million or 53% year-over-year from the strong growth in text messaging, increased browsing and internet use with smart phones in both the consumer and business areas as well as mobile computing.

We remain very bullish at TELUS for a continued strong wireless data growth given the increasing penetration of EVDO-capable devices in our subscriber base, the expected introduction of higher bandwidth applications and devices given the deployment of EVDO Rev A as well as the successful ongoing migration of non-dispatch mike users to PCS smart phones. However, the strong data roaming growth experienced in the first quarter of 2008 may not be sustainable.

Notably, this is resulting in higher overall ARPU for these customers after migration. Now slide 7 shows the key metrics that focus on our wireless marketing efficiency in this quarter.

Gross additions improved significantly in both pre and postpaid. Churn also increased to 1.53%.

Importantly, this is the last quarter of year-over-year comparison of post versus pre wireless number portability. Churn declined slightly on a sequential basis versus the fourth quarter of 2007 and represents about the average churn rate in the three quarters since the introduction of WNP.

COA or cost of acquisition per gross add decreased 27% year-over-year to $319 per growth addition, reflecting lower advertising and promotions costs on a per unit basis due to the strong increase in gross additions, a higher proportion of new subscriber loading from lower cost channels and lower equipment subsidies in part due to Canadian dollar appreciation. So a pretty effective quarter for wireless marketing with overall marketing expenses stable even with the startup costs related to launch of our new value brand.

We continue to focus on investing in retention. The costs of retention increased by $22 million to support handset upgrades including emphasis on upgrades to smart phones to support data growth and the ongoing mike to PCS conversion program for a non-push to talk centric users which I mentioned earlier.

Please move to slide 8, in the later part of March, TELUS began to launch of a new value wireless brand and service called Koodo Mobile. While Koodo Mobile benefits through use of TELUS' national network, it is a separate brand with its own innovative marketing and sales approach and distribution.

The new initiative strengthens our marketing effort and the potential benefits in the investment include more flexibility in serving various customer segments, augmenting our wireless distribution, increasing customer adds and complementing our premium TELUS brand. Distribution consists of mall kiosks and national retailers and self service directly over the internet.

Clearly it's early days for this new brand. Most analysts have already noted and we can confirm that the estimated financial impact of its ongoing launch was reflected in the 2008 wireless segment targets we shared with you last December Let me now turn to our wireline business starting with a look at a revenue breakdown on slide 9.

Total wireline revenue rose nearly 4% but there were the usual moving parts. Local revenue decline reflects the continued competitive environment and substitution from wireless and VOIP as well as impact from the deferral account which I'll outline shortly.

Long distance revenue only declined 4.5%, a better result on a relative basis to prior periods as a result of continued lower minute volumes but an improvement in average per minute rate erosion. Local and LD revenue declines were fully offset by the 19% increase in data revenue.

A major factor in the data growth were revenues from the Emergis acquisition. Fast growth in high speed internet increased managed data revenues from the business side and regulatory impacts recorded a year ago.

The next slide provides a better indication of a normalized quarter-over-quarter growth rates for local and data revenue. In the first quarter of 2007, TELUS recognized $15 million in local revenues as a drawdown from the price cap deferral accounts, where the revenue was previously reduced in setting up the price cap deferral account.

That drawdown offset CRTC directed unfavorable retroactive data rate adjustments and covered recoveries for previously incurred expenses for local number portability and startup costs. Adjusted for this deferral account drawdown for competitor digital network services, or CDNS discounts, local revenue declined a more modest 3.3%.

Data revenue growth was impacted by the acquisition of Emergis and to a much smaller extent Fastvibe in January 2008 and by retroactive rate adjustments in both periods for CDNS discounts. Excluding these factors normalized data growth was about 8%.

Turning to slide 11 we can see that wireline profitability fell 5.6% due to increased costs. Total operating expenses including the net cash settlement of options expense increased 10% mainly due to cost of sales for increased data equipment sales with lower margins, expenses from the acquired companies that I just referred, and higher cost for the provisioning of TELUS TV.

External labor costs also increased to improve service levels and to implement services for new enterprise customers related to a number of significant contract win in recent periods. Of course it was leap year, so believe it or not there was an extra pay day in the first quarter relative to prior first quarters, and that contributed to higher compensation costs as well.

I should note that cost control must be a key management focus to protect wireline margins better than experienced in this particular quarter. CapEx decreased 6% as expenditures for the ADSL 2 plus build declined from 2007 levels as well as lower demand in 2008 for a network access bills resulting from a more moderate residential construction activity in B.C.

and Alberta. Also lower was the CapEx related to the new residential integrated billing and client care system which peaked in Q2 2007, prior to the implementation in Alberta in the second quarter of 2007.

These decreases were partially offset by increased upfront expenditures to provide services to new enterprise customers. Slide 12 provides an update on the Emergis integration strategically focused on the important healthcare vertical.

Immediately upon closing TELUS began implementing its post merger integration plan to ensure a seamless transition for team members and customers while maintaining a continued focus on delivering business goals. Emergis' complementary expertise, applications and customer base are expected to strengthen TELUS' industry leading healthcare solutions.

The sales teams are now focused on working together on cross-selling opportunities and successfully completing implementations on contracts already won. Of note TELUS was recently recognized by Brandon's [ph] recent survey of IT companies as the number one and most influential player in Canadian healthcare.

Let's move to slide 13 and examine briefly our internet results. High speed net adds in the quarter were 20,300 down 37% due to competitive dynamics as well as market maturity.

The high speed internet subscriber base was up 10% year-over-year and we are striving to build better execution including an increase in TELUS home bundle offers to maintain or increase our share in 2000... in the balance of 2008.

Slide 14 highlights our wireline resilience and network access line performance compared to peers. TELUS experienced increased network access line losses of 3.6% year-over-year as residential losses climbed to 7.2% due to competition from VoIP competitors particularly cable TV companies as well as ongoing technological substitution to wireless services.

This is being partially offset by continued healthy business line growth, especially in central Canada reflecting our success in non-ILEC markets. Slide 15 illustrates the robust growth trajectory and changing mix of TELUS' total customer connections which is consistent to our value creating growth strategy.

Growth in wireless and high speed internet is significantly outpacing declines in residential network access line and dial-up internet. Wireless and internet now account for 61% of total connection and we have generated nearly 1 million and more connections in the past few years.

So putting it all together let's look at TELUS on a consolidated basis starting on slide 16. Consolidated revenue in the first quarter grew by 6.6% while EBITDA as adjusted increased at a lower 1.3% rate due to the wireline results just outlined.

Reported EPS increased 55% mainly due to the net cash settlement feature expense of $0.32 recorded in Q1 '07. When excluding this expense as well as a positive $0.05 tax adjustment, from adjustment for tax related matters this quarter and a $0.01 tax adjustment in the same period a year ago, underlying EPS decreased by 4.5%.

I'll elaborate on the various drivers behind the EPS on the next slide. Meanwhile CapEx was seasonally low and this is not the expected run rate.

CapEx should increase in future quarters consistent with our full year guidance. This next slide shows the detail breakdown of the components of reported EPS.

Underlying EBITDA growth generated $0.02 in growth. Incremental tax related adjustments as mentioned earlier totaled $0.04 more than last year, total shares outstanding due to our NCIB share repurchase program contributed $0.04, while lower financing expenses contributed $0.02 to the improvement.

Higher depreciation and amortization impacted EPS by $0.11 and this reflects the reduction in estimated useful service lives for circuit switching network assets, the new Alberta consumer billing system that went into service in the second quarter last year as well as additional amortization from acquisitions. Slide 18 summarizes our share repurchases in the quarter since December of 2004 when we commenced the program.

We remained active in the market in the first quarter of '08 repurchasing a total of 2.9 million TELUS shares, for about $123 million. This brings TELUS' aggregate share repurchases since inception of the NCIB program to nearly 56 million shares for $2.6 billion.

For investors this has lead to 10% or 37 million reduction in the total shares outstanding since the start of these four programs with some partial offset or dilution per shares issued on option exercises. Notably TELUS' move to the tax efficient net cash settlement method for past options beginning in 2007 has accelerated the impact of share repurchases by reducing share dilution.

Outstanding shares were lower by 3.9% on a year-over-year basis. Slide 19 provides a financing update for the quarter.

In March, TELUS closed the previously announced $700 million, 364 day credit facility to provide substantial liquidity for TELUS following the cash acquisition of the Emergis organization. In April, TELUS demonstrated its financial strength by successfully completing an offering of $500 million of 5.95% seven year notes despite difficult capital markets.

The proceeds of this offering increased available liquidity and effectively refinanced for the long term through short term bank borrowings and commercial paper use to acquire Emergis in January. So our overall effective debt did not change post issuance.

It increases the strength of our balance sheet and notably in advance of the May wireless spectrum auction. Now as shown in slide 20 there were a number of regulatory developments in the quarter including the clarification of the guidelines for roaming and other items in advance of the wireless AWS spectrum auction.

The auction is to commence on May 27 and TELUS is interested in acquiring non-satisfied AWS spectrum. In addition, the CRTC reduced the scope of wholesale services that would be subject to mandatory supply obligations including a phase-out period.

The new rules give all carriers market based incentives to continue to invest in their networks. And finally, the use of proceeds from the deferral account issue remained in limbo pending another set of appeals from both sides.

Now to conclude on slide 21, we are reaffirming TELUS' consolidated and segmented wireless and wireline targets for '08 as announced in mid December with no changes. So to wrap up on slide 22 TELUS saw good wireless revenue, EBITDA and cash flow growth.

In wireless we are pleased with the progress we are making on several key initiatives including the start of the value brand rollout across the country and our targeted mike to PCS migration. We are looking forward to actively participating as mentioned in the upcoming wireless spectrum auction.

Meanwhile wireline had a more difficult but active quarter with 4% revenue growth but a decline in EBITDA. The integration of the Emergis is underway.

I should mention that we've moved to mass market advertising of our TELUS TV products starting in Edmonton indicating the expansion of our ADSL 2 plus coverage footprint. HDTV is also starting to roll out.

The competitive nature of our industry and the margins in our growth business make it incumbent on TELUS management to focus on cost discipline for the remainder of the 2008. And finally we are reaffirming our consolidated and segmented guidance for '08.

So with that Darren and I would be pleased to answer your questions, so I'll turn the call back over to John to start the Q&A session.

Thanks Bob, and just before I turn the call over Ron to conduct the Q&A session can I ask your cooperation please in one question at a time. Ron please proceed.

Question And Answer

Thanks, I am going to ask a strategic question on wireless. We saw a pretty big deal past week with Sprint and Clearwire includes a number of potential strategic backers or not potential real strategic backers including Cable Quest [ph].

One could argue that post this deal WiMAX could actually accelerate wireless broadband trend. TELUS has no WiMAX hedge like Rogers and Dell, not sure that that's important or not.

But I was surprised in conjunction with that, that TELUS was one of the lower deposits in the spectrum auction. Wonder if you just might comment on whether the company feels at risk with respect to its ability to offer wireless broadband if in fact demand ends up going in that direction a lot more than we currently think.

Greg, really I think you introduced two concepts, at firstly this very directly we've deposited lesser credit efficient to acquire spectrum network, likely to acquiring on advice by counsel, we are not supposed to talk much more about intention etcetera in this so called quiet period leading up to the actual auction. But suffice it to say we have a secured intent and desire to acquire non-satisfied spectrum and we believe that will be consistent with our strategy to date, and we look forward to being successful in that regard.

In respect of the Sprint Clearwire announcement which is real new news, seven way joint venture, so, that's an interesting dynamics but the participation in the Cable Codes [ph] there or some of them in any event is interesting because you may recall that the Cable Codes [ph] had participated in the joint venture to acquire more conventional spectrum in the past which they haven't deployed on. So, it seems to be bit of fragmentation on the cable side in regards to which technology path to pursue in the United States.

Clearly in Canada, we have the incumbent Rogers organization which is operating on the conventional cellular band as well as partner with Dell and Inmarsat. Certainly in terms of technology path I think the evolution in the past three, four months have made one thing clear if that long term evolution or LTE is more likely to be the overwhelming choice of most carriers globally whether they're on the CDMA path currently or the GSM path currently.

And so that's where most of industries is going evolve to which really raise the question as to what is... what's going to be done with WiMAX as Sprint's been troubled and to deal with the strategy, an evolution in that regard.

So rather than go it alone they have brought in some other partners but it remains to be seen as to what the success of WiMAX deployment and business is going to be and certainly the overwhelming view in the industry is that LTE in the long term is where the vast majority of global carriers are going to go.

Hey, good evening. Thanks so much I was just wondering if you could talk a little bit about your mike customers.

And I know that flattened ARPU is pretty encouraging to us. I would assume that the mike customers not using the push talk functionality have higher churn rates probably as well as the lower ARPU, and I just wanted to make sure that's the case.

And then Sprint talks about a quarter of their iDEN customers is having... somewhere in that range, is having little to no usage of the push to talk functionality.

Just wondering if that's anywhere near your levels. Thanks.

Thanks for the question, Scott. Yes first of all I think we are encouraged by our ARPU overall essentially being flat, there's always gives and takes.

But given we remain the highest ARPU I think that's good going in the Canadian Sea [ph]. In respect of mike I wouldn't say that those that use PTT are necessarily the highest ARPU users, it really depends on the profile.

The handicap of the mike service is high speed data, and so as some of the users who are more voice and data intensive users as their needs have evolved really the solution that's appropriate for them is on our PCS service. So that's why we have been doing an orderly measured conversion program as contracts expire with retention incentives.

And what we found is that's been a very positive program has on conversion, they have really taken typically a PDA device, taken a data subscription along with that and even though there is the voice re-price net, net we found the ARPU to go up for those users. The PTT centric users generally are lower ARPU than the average overall for mike but you are correct to say because of the nature of that service, because of the work group aspect of how it works in collaboration and as well as the advance in the technology, they tend to have attractive churn rates.

Overall you may have noticed with our results that we have maintained a steady churn rates over the past three quarters. We did have a bit of bump after wireless number portability that would not be an iDEN related or specific factor.

And so in that regard I think we have had good going for the organization. I think one of the big differences in our situation as it relates to say Sprint in the U.S.

is the fact that we did not or Nextel or our predecessor, we did not emphasize iDEN for consumer markets. We have always from the getgo had a PCS capability, which had higher capacity, more mass marketing call and et cetera.

And so we did not direct consumer loading onto our service and therefore we really don't have a situation where we've got a large embedded base of consumers looking to migrate and shopping around, which seemingly is a bit of the circumstance, which brings United States. What we have is a business centric base, and we are basically seeing those that are likely to want higher speed data solutions, like to be proactive, like to be responsive and convert them in an orderly way over to our PCS service.

And so in that sense that's why here we are in the first quarter, we led the industry in subscriber growth in Canada, and that's certainly had a complete contrast to the enforcement situation that Sprint has been experiencing in recent periods. Next question, please.

Yes, thanks very much. Question on the EBITDA contribution from Emergis.

I don't assume you will give us the figure for Q1, but can you give us some indication, would margins there have been in line with historical for Emergis? And how do you see this phasing over the course of the year?

Are there some upfront integration projects that are depressing EBITDA at Emergis and then a little swing up as those projects get finished and as you start generate synergies?

Well, in respect of Emergis, you are right, Vince. We don't...

we are not... tend to give specific disclosure with respect to their results.

But in a general sense, yes, on the integration front, there are some costs. I think we gave a rough ballpark of $10 million of integration costs that are budgeted for that integration over time is certainly worried all in the first quarter.

But over the course of this year and given that entity only came into the TELUS family on June... sorry, January 16th, it was an entity, where there were outstanding analysts expectations et cetera for 2008.

So, there has really been no change in the business, and as you can imagine we required it during the quarter and they've continued trucking long sort to speak things are going well. But there has been no dramatic changes in their business.

So, I would just refer you to the sort of public estimate that existed prior to the acquisition.

Okay. Next question, please.

Yes, thanks very much. I was really amazed by how low the COA was in the quarter on the wireless side especially something like 60% of your gross additions were postpaid, generally generating relatively high COA.

Were there any one-time handset credits or any items in the quarter? And is this number sustainable especially with the launch of Koodo which was very, very much at the end of first quarter and I assume it will be lot more expense in the second quarter?

Okay, well, a couple of comments there. As I thought I mentioned in the presentation, the new brand launch so late in the quarter, it really didn't affect our results notably whether you are trying to subscribers or the like.

There were some startup costs that affected our expense line, which we mentioned. But other than that, it was very negligible impact in the first quarter.

So, when you look at the COA number, clearly one thing I have to conclude is the fixed spend for advertising and promotions was effective or efficient, for anyone who want to subscribe it as fixed spend that was spread over a quite a good increase in gross loading and therefore the dividing the denominator gave a good ratio. Secondly, in terms of one time that affects what comes in mind if I would be...

there weren't credits or anything like that. But on a year-over-year basis we did experience a significant appreciation of the Canadian dollar relative to the U.S.

dollar which is the primary currency that we buy the handset. And that contributed roughly 25 bucks of the change, so that would be...

whether that happens in the future or not is certainly a difficult to predict, but it's... it was a normal factor on a trailing basis.

The other thing that comes to mind is that we had been expanding over the past while our investments in corporate owned distribution and we had an increased percentage of load through those channels. And they are more cost effective for us to third parties.

So the mix in terms of the commission and comp structure in the channels was more favorable than the mix in prior quarters, so that helped the number. But at the end of the day, it was good going on the marketing front.

Okay, thank you, Ron.

Thanks very much. I have a question on your wireless margins.

When we look at a lot of the headline metrics like ARPU and COA as other speakers' question, I mean it all look very good across the board. But when we look at some of your expenses, one item kind of speck, it was the higher network operating expense.

And it looks like it's related to some of your... related to some of your data revenue growth and related to some of the data content and licensing costs.

Maybe in the... specifically in the quarter, can you talk about some of the impact and more longer-term you've got great ARPU on data but are these ARPU coming in at lower margin because of some of these other costs?

Okay. Let me parse through that.

On the roaming side, we did have an uptick in roaming, on the data roaming particularly and in part. So not front, we also incur through a network sharing arrangement with the Dell organization where we roam on to their network, a roaming cost.

So both the revenue went up from roaming as well as we had costs that went up. But we do make margin on that either way.

So from a profitability perspective we are okay. Certainly when you look at the OpEx line network expense, that was one of the dynamics.

You may recall that there is some flock rate pricing that was introduced by our peer and that drove a significant data growth for a period of time, although that has a return on back. In terms of content which you refer to absolutely as the mix goes away from say traditional messaging that's driven much of the data growth in the past years and we're getting into more content applications, on data growth.

There is a higher cost associated with that most definitely. And so that's part of it.

And so at the end of the day I think on the network expense side we are okay with that regard. When you are going to the overall EBITDA flow-through margins which I think you are really trying to garner as we had a new good COA.

But the COA has prognossed [ph] that that and we had great gross loading growth etcetera but on a year-over-year basis we nevertheless had a higher churn rate. So we therefore didn't have the flow though from gross than that as much as we would have otherwise and consequently that impacts our profitability margins at least the growth rate year-over-year basis.

The second material element in this area is cost retention. So I already referenced that, had a question on transition program mike PCS, but more broadly than that we also have had efforts as we have people just on PCS, they are maturing they are asking for smart phones, asking for PDAs which have a higher subsea cost associated with them and perhaps we make things to do so we've been making investments in that area on the retention side.

And consequently that investment has led to some increased expenses. In the long run, I think it's the right thing to do.

We think it mitigates churn, it mitigates to get ARPU erosion, key store customers have these so on and so forth and we actually have competitive reality dote there, but there is no dote. It has a short term in a margin impact same time.

Net, net, it's a great quarter in wireless, so don't want to lose sight of that but that would be in a two normal items that would explain flow through being not as good that might first appear when look at our ARPU and our COA metrics.

Ron, the operator. We are getting some reports that the volumes get low, is it okay at your end?

Okay, well we will continue on and we will move the speaker look closer and try to get the volume up for our callers.

Thanks. Question on the migration of the mike customers who are migrating over CDMAs to take advantage of the better data functionality.

The question is how far is through the migration process, are you at the present time and how long do you think it will take to... to complete the heavy lifting?

Hi, Randall. The...

in terms of the migration program, I am sorry you used the word orderly measured and really what we are doing is as the contract base comes up and nearing maturity of their contracts, or contacting them and encourage them to convert it etcetera, so in that sense if you think we have contracts that go up to three years, get... tend to transition over a couple year period and we've been doing this for about a year or now.

So, that gives sort of a broad idea of the time frame involved.

Next question Ron?

Okay. Thank you very much, good afternoon.

I think you mentioned in your comments throughout that you were seeing some impact in slower housing starts for benefiting your capital spending. Can you just talk about some of the sort of macroeconomic conditions you are seeing and to what extent that might some impact as the year goes on?

Thanks a lot.

Sure and I know it's been a big topic particularly in the United States. The Canadian economy continues to grow certainly it's a much different situation in Canada.

On a national basis the GDP growth rate that our conference board has been re-estimated to be 1.8% and really our guidance was predicated and are factored that in. Now 1.8% is the average, we don't have housing crisis or subprime crisis in Canada that really has not been the emergence really of a material subprime element that different culture, different lending practices people pin up equity in their homes, prices are appreciating across the country still.

So it's quite a different dynamic in that respect. However, there are certain sectors of the economy that are export oriented such as manufacturing that depend on demand in the United States.

And so the slowdown in the U.S. economy is having a secondary effect with respect to their production levels.

And so the manufacturing industry in Canada is largely... not totally but largely present in the Ontario, Quebec, central Canada region.

We are present, we're a national company but our relative degree of exposure is much more in Western Canada. In Western Canada, Alberta remains quite a boom country...

region with GDP growth even this year to be in excess of 5%, British Columbia with resource industry etcetera is expected to have GDP growth of over 2.5%. So, our sort of home territory, if you will is certainly higher than the average for GDP growth this year.

So, when we have talked about housing slowdown in the Canadian context it's really going from record housing construction rates to more moderate levels as opposed to what's being experienced the U.S where there basically is a complete shutdown, the new construction and a significant overhang of product in the marketplace. So, consequently in our bad debt line really hasn't changed notably.

We are still seeing growth and quite frankly in Western Canada, there's been such hyper growth and labor shortage, from a broader labor perspective, balancing its market opportunity moderation and growth is probably a healthy thing. Although, certainly we are seeing in Ontario where we are less exposed and there is a relative slowdown in that particular region.

So the net of it is a completely different dynamic than there is in the U.S. than we are today, so well insulated probably anywhere in North America happened to be located and dependent on the faster growing areas of the economy.

Next question Ron, please.

Thanks, good afternoon. My questions are on wireline specifically on the residential line loss, they seem to have accelerated recently and certainly in the quarter, are there any changes in the competitive environment?

I know you mentioned the CableGo competition ongoing and also from wireless substitution, but have been there any changes as far as bundling policies or programs when the cable goes? And related to that are there any thoughts to perhaps accelerate the IPTV rollout or are you really looking the [indiscernible] in place before you can make such decision?

Thanks.

Yes. Thanks, Bob.

Basically setting the context and then you got it right in your question. We experienced an increase in the erosion rate on our network access lines, so that's one way of looking at it which is appropriate.

Another way is we probably have the lowest erosion rate in North America until growth, so growing significant margin, so that's good going. Certainly one that's has there been competition.

And so basically we continue to do well but why has the trend worsened somewhat is in the consumer side as we continue to do quite well in the business side with roughly 2% year-over-year, now growth in the business segment. So whether it's the continued wins in Central Canada, that's how we're reporting or whether it's playing good defense actually in Western Canada where on the business front overall what that's blending into 2% growth rate and so we're doing quite well there.

On the consumer side we got the 7% erosion rate that therefore leads to the blended 3.5% negative CAGR. Really what's going on is the further rollout of the Shaw Digital Phone Service where they are through continued geographic expansion on a year-over-year basis.

They are certainly covering and marketing in much broader territories in Alberta, BC incumbent territory than they were in previous periods. So that's one dynamic, the other one combined with that specific to the first quarter this year is they did lower pricing in the marketplace on their bundled offerings and so that was a dynamic.

And so clearly we believe that we lost incremental share to the Shaw organization in the quarter.

Ron?

I am just going to follow-up on the second part of that question on the IPTV and I wonder if you could... are prepared yet to share the, any details on the sort of dilutive impacts on EBITDA and earnings and any other updates in terms of maybe coverage by yearend '08 or '09?

Okay well respect to our TELUS TV branded IPTV service, we did continue to build out more coverage and therefore increased our marketing activities in new geographies more intensely and where we were previously marketing only neighborhoods. We've broadened that out in the case of, for example the city of Edmonton.

The... they did add incremental costs, so if you in fact look at the wireline side did our cost increase year-over-year due to cost of acquisition etcetera on our TELUS TV service?

Yes they did. We don't give specific numbers in that regard.

But I would say it was one but just one of the minor contributors to a long list of items on the wireline side. And I think Bob referred in the prior question which I may not have completed my answer to, but clearly as part of TELUS' strategy that continue to roll out of TELUS TV service to invest in our network to increase speed, to offer HD as we are rolling that out in our geographies over the course of this year and next and so we believe that's an important strategic thrust of the company.

And so I don't know about going faster. We are kind of going at the right speed given the resources that the organization has consistent with the guidance we previously given for CapEx all within the window.

But it does reflect a significant investment in our internet network to bring the connections closer, the fiber closer to the premise. And therefore I have to do bang of increasing our internet speeds significantly which means a fundamental connectivity offering of TELUS is improved, while at the same time thereby allowing applications like TV are to be sold and to be bundled into our offering.

So we do believe that's an important element in our strategy going forward.

Ron?

Thanks very much, is Darren on the line there?

Glen, he has stepped out of the room. So if you got something for me that...

Sure, I had one for you. You've mentioned in this last answer and also in your introduction about, I guess you are concerned about seeing wireline operating expenses stay on track and I was just wondering if give us a little bit more color and context around that.

I mean are you... is this a concern sort of where you are relative to guidance which you reaffirmed or is...

are there some expense in there that maybe didn't need to be in there? Are there objectives to kind of changes within the year?

Could you just give us a little bit of an elaboration on that please?

Sure, we started off by saying that we do reaffirm our guidance for wireline as well as wireless. So we do believe we will be on track for our guidance ranges for wireline for the full year.

One thing we are not counting on in the subsequent quarters is next to a day on the calendar that we did experience. And I don't want to make too much of it but that did contribute about $6 million of extra costs in the quarter that weren't there a year ago.

What we did have in the quarter was a concentration of large data type of implementations, the large scale Calgary [indiscernible] insulation was completed in the quarter. And so, in these large sort of equipment-oriented implementations, the margins are much thinner than they are in other services.

So, that was certainly an element. The other thing Glen is, as you know, we have been quite successful in Central Canada in terms of landing a number of high profile large complex deals and with that we're in implementation mode currently.

Now as a result of revenues that are generated by these transactions is rather limited to date because in some cases having started, whereas obviously we're incurring some expenses putting those services and capabilities in place. That's consistent of the business plan, it's a class A hockey stick.

I think what makes it different than the norm is when you think a Government of Ontario Department, National Defense Government of Canada and City of Montreal transactions in aggregate, there is the concentration that is lending a bit of unusual effect in terms of expense line. Finally, what I can say is that we...

I think we can do better just on some discretionary cost control, we certainly have programs in place with that. So, I think it's our responsibility to improve the margins.

And as we mentioned our guidance reflects our confidence in doing so over the balance of the year. And Glen, the question for Darren, do you want go ahead, please?

Yes, I was wondering if we get an update on the TV deployment in Edmonton, and not like for number so much but just a sense of how it's going well relative to your expectations and what are the kind of gaining factors on the speed of deployment and so on? Thanks.

Thanks for the question Glen. The deployment in Edmonton with the mass marketing given the strong footprint coverage that we have in Edmonton is certainly meeting our expectations, we are pleased with demand and we are pleased with our execution in terms of fulfilling that demand.

Okay. Ron, we'll take the last question now please.

Great. Thank you for taking the question, under the wire I see and I want to switch back over to wireless, if Bob in your script you mentioned, increased penetration obviously of smart devices EVDO enabled devices but in the basis.

I wonder you can give us that some color on to where you are and now that I know you had some heavy promotions at the end of Q4. And I am just wondering and what the adoption has been thus far and what the uptake by customers has been of data plans?

Do they tend to get these devices and nibble away on plans and then start to use more over time, just to give us some sense of where we are on that curve for data adoption. Is it accelerating, is it steady state?

Anything you could add to that, I've also noticed that you are promoting PC cards for the first time instead of mass market press which I thought it was a departure from your previous strategy?

Well I think generally, Peter we are encouraged by the trends that we've experienced. That was, I remarked before but maybe just repeating that we've observed a significant trend evolve over the past year in the consumer segment that really largely ignore the PDA segment.

And then woke up to the likes of Blackberry and other devices and said they want some too. And so that trend has been ongoing in the Canadian marketplace over the past year and certainly with our product lineup having world addition Blackberry that is on EVDO etcetera.

We've had leading product in the marketplace which has some indications... in some periods over the past number of years.

And so we've done well in that regard. In terms of the investment we get PDAs or subsidize them on a retention program, we do tie that into a data subscription.

So if someone is wanting a PDA on a contract renewal, we don't just say here's the PDA and continue on a voice service. We tie the incentive to a data subscription and therefore we sort of lock in the economics associated with that retention investment.

And I think that's the prudent way to do it. So we are seeing significant data uptick, you've seen the growth 56% growth rate here in data year-over-year.

So it is working and it's really across the board. The business segment has continued to grow and the consumer segment is there is an acceleration there and so we're getting both cylinders firing.

Okay, thank you very much everybody for taking the time to join us today. We certainly appreciate your interest and continued support of TELUS.

Have a good day.