Telus - Morningstar Report

Morningstar Equity Analyst Report | Report as of 27 Jun 2019 07:10, UTC | Page 1 of 15
TELUS Corp T (XTSE)

Morningstar Rating Last Price Fair Value Estimate Price/Fair Value Trailing Dividend Yield % Forward Dividend Yield % Market Cap (Bil) Industry Stewardship
QQQ 48.13 CAD 50.00 CAD 0.96 4.52 4.67 28.93 Telecom Services Standard
26 Jun 2019 26 Jun 2019 15 Feb 2019 26 Jun 2019 26 Jun 2019 26 Jun 2019
21:54, UTC 22:35, UTC
Morningstar Pillars Analyst Quantitative Important Disclosure:

Economic Moat Narrow Narrow The conduct of Morningstar’s analysts is governed by Code of Ethics/Code of Conduct Policy, Personal Security Trading Policy (or an equivalent of),
Valuation QQQ Fairly Valued and Investment Research Policy. For information regarding conflicts of interest, please visit http://global.morningstar.com/equitydisclosures
Uncertainty Medium Medium
Financial Health — Moderate Shaw's 3Q Results Show the Firm Making Strides in Wireless but Still
Source: Morningstar Equity Research
Facing Wireline Challenges
Quantitative Valuation
T Business Strategy and Outlook revenue and EBITDA consensus, while its EPS beat was
CAN i due to tax benefits, following the sale of its Corus position.
Matthew Dolgin, CFA, Eq. Analyst, 15 February 2019
Undervalued Fairly Valued Overvalued After years of having an inferior wireline network than Overall, revenue was up almost 3% year over year, and,
Shaw in the western Canadian geographies where it after adjusting for one-time items, EBITDA margin was
Current 5-Yr Avg Sector Country
competes, Telus is over 60% finished with replacing its flat. More important than those results, in our view, are
Price/Quant Fair Value 1.01 1.05 0.84 0.75
Price/Earnings 17.8 19.0 15.3 15.2 copper infrastructure with fiber-to-the-home (FTTH). By the trends we see in Shaw's businesses. We've expected
Forward P/E 16.3 — 14.6 10.8 the end of 2019, the company expects to have built FTTH Shaw to make progress in wireless as its network
Price/Cash Flow 7.2 7.4 6.0 8.4 to over 70% of the residences it passes, and it will likely improves, and it seems the firm is successfully executing
Price/Free Cash Flow 26.7 42.4 15.6 14.9
not expand much beyond that, as it will not likely be cost its vision and affecting the industry. However, we've
Trailing Dividend Yield% 4.52 4.22 4.22 3.71
effective to lay fiber in more rural areas. We think the posited Telus' fiber to the home buildout is creating a much
Source: Morningstar
network improvement cannot be overstated. Telus already stronger wireline competitor for Shaw, and Shaw's
Bulls Say was a respectable competitor to Shaw, despite its slower lackluster wireline results lend credence to that belief.
OWith the buildout of fiber-to-the-home, Telus' and less reliable network. Not only will it now offer faster Overall, our view of the firm is unchanged following the
wireline network quality has eclipsed that of its speeds than Shaw to most customers, the new network quarter, and we plan to raise our CAD 26 fair value
primary competitor, Shaw, over much of its footprint. should reduce maintenance costs and allow for higher estimate by CAD 1, primarily just reflecting the time value
Wireline pricing and margins will improve, and Telus pricing, all contributing to margin expansion and what we of money. We currently see narrow-moat Shaw as fairly
is poised to gain share. expect to be an increasing share of subscribers in western valued.
OWith the Canadian wireless market far less Canada.
penetrated than the U.S. and Europe, a long growth We think Shaw deserves credit for its wireless execution.
runway exists. As an industry leader, Telus is well We also see Telus with strength in its wireless segment. The firm added another 61,000 postpaid subscribers in the
positioned to take advantage. With just less than 30% share of Canadian wireless quarter, leaving it with 210,000 new customers year to
customers, it is one of the big three national providers, date and on track to meet our full-year projection of roughly
OTelus' fiber-to-the-home buildout leaves it better
including Rogers and BCE, that collectively serve almost 275,000. Also in line with our expectations was the
positioned than most competitors for a transition to
90% of the market. It also has a network sharing year-over-year growth in average billings per user (6%)
5G, which we expect will require significant fiber
agreement with BCE that we think leaves the service it and adjusted EBITDA margin expansion (120 basis points).
capacity.
provides second to none, as evidenced by industry-low We expect both metrics to maintain those trajectories as
churn and its place as the current holder of PCMag's Shaw's network quality improves and it gains scale,
Bears Say
"Fastest Canadian Mobile Network" title. We are allowing EBITDA margin to eventually rise well beyond
OFavored status in spectrum auctions for smaller the current 20% range, which is relatively low. Most
concerned Telus may be more susceptible to Shaw's move
players and the Canadian government's seeming impressive, postpaid churn declined another 18 basis
to become a national wireless competitor, as Shaw's
desire for another legitimate wireless competitor will points in the quarter, to 1.18%, as it trends toward the
gains may come disproportionately in the western
cause share losses for the three big wireless leaders. level of larger competitors--around 1%. With continued
provinces where it has a wireline business and name
OWith an overlapping wireline footprint with Shaw, 700 MHz deployment and a long runway to further network
recognition, a footprint that overlaps with Telus.
Telus is more exposed than Rogers or BCE to Shaw's buildout, including with the recent 600 MHz spectrum won
Nonetheless, we expect Telus' wireless business to
move into the wireless space. at auction, we expect the wireless story to stay on track
benefit from industry growth. With less than 90% mobile
OTelus has spent billions of dollars to upgrade its penetration in Canada (as opposed to over 100% in the and for Shaw to make further inroads versus the big three
wireline network, but secular trends that reduce U.S. and up to 140% in parts of Europe), we expect Canadian wireless incumbents.
television and landline phone subscriptions could continued expansion in Canadian wireless. We think
make it difficult to ever earn a sufficient return. Telus' network strength will help it to continue gaining Economic Moat
subscribers, even as we project it to lag industry growth. Matthew Dolgin, Eq. Analyst, 15 February 2019
Telus' narrow moat stems from efficient scale and cost
Analyst Note advantages in its wireless segment and efficient scale in
Matthew Dolgin, CFA, Eq. Analyst, 27 June 2019 its wireline segment. The two segments accounted for
Shaw's fiscal third-quarter earnings fell modestly below 56% and 44% of total sales in 2018, respectively. Telus'
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Morningstar Equity Analyst Report |Page 2 of 15
TELUS Corp T (XTSE)

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Close Competitors Currency (Mil) Market Cap TTM Sales Operating Margin TTM/PE around 9 million subscribers and Rogers has 10.5 million.
Rogers Communications Inc RCI.B CAD 35,474 15,050 24.61 17.57 And while Rogers historically had the top network, the
evolution of a network sharing agreement between BCE
Shaw Communications Inc SJR.B CAD 13,690 5,336 14.06 29.94
and Telus closed the gap and resulted in them leapfrogging
Rogers in many "best network" surveys. While Telus is the
current holder of PCMag's Best Network title, we don't
adjusted returns on invested capital have remained steady see an inherent edge that will sustainably keep distance
at about 11% over the last decade. Capital spending has over BCE and Rogers. Given the long-term similarity we
been elevated in recent years as Telus brings fiber to the expect from the networks of Telus, BCE, and Rogers, with
home over much of its network, but we believe that has their similar resources and current positioning, we don't
reached an inflection point and is now trending down. think any of the three have long-term advantages or
However, we expect a succession of spectrum auctions disadvantages among each other, and we think the
over the next three years to weigh on ROICs. Still, we efficient scale with which each operates will allow all of
project ROICs to remain comfortably above the firm's them to maintain economic profitability. We think any
roughly 7.5% WACC throughout our five-year forecast. attempt by any one of them to make drastic changes in
pricing or network enhancements to edge the others would
In wireless, Telus is one of the three big national simply serve to weigh on that company's returns. With our
competitors, and we believe these three firms have solid view that each of the three companies is rational, we don't
moats that protect them from any current or future see that happening.
competition. Rogers, BCE, and Telus share 90% of the
total market, and we don't foresee Shaw's Freedom Nearly all of Telus' wireline footprint is in British Columbia
Mobile or any other upstarts that lack national networks and Alberta, where in both places it is the ILEC (incumbent
or such large subscriber bases, as these three have, local exchange carrier). Telus' primary competitor in those
matching the scale of these firms any time soon. Although provinces is Shaw, and the two companies address
wireless penetration in Canada—just under 90%—is virtually the entire market with similar shares. We see the
less than the U.S. and some European countries (where two companies operating with efficient scale, as
penetration is as high as 140%), it is a mature enough hypothetical competitors would be starting from scratch
market that other competitors would have to siphon and needing to build a very expensive network to compete.
subscribers from incumbents to succeed. Building and Historically, Telus has competed with an inferior network,
maintaining a wireless network is very capital intensive, and we chalk up its ability to be such a strong competitor
and we think the modest economic returns that national versus Shaw to excellent execution. The legacy copper
incumbents generate typically result in prospective network that Telus has cannot compare with the speed
national competitors either unable to fund a competing and quality of the hybrid fiber-coax network that Shaw
network or deciding against it. Canada is often regarded has. However, Telus is in the process of building out fiber
as having among the best wireless networks in the world, to the home over much of its footprint; it has already
and with the top three Canadian carriers' 4G LTE service covered over half of its core urban/suburban footprint with
blanketing 99% of the Canadian population, we don't FTTH. Apart from the speed and the higher quality service,
believe competitors could hope to offer superior service, FTTH has several advantages for Telus, including lower
leaving them to compete on price and facing unattractive operating expenses due to less maintenance and customer
returns. With the scale that the incumbents have come calls, lower churn rates, and higher average revenue per
significant cost advantages, as they can spread their user. We expect improved margins and a diminished cost
marketing, overhead, and other fixed costs over disadvantage relative to Shaw over the next few years,
comparatively massive subscriber bases. and we think Telus has positioned its network as an even
stronger competitor.
Between the three main wireless competitors, pricing has
historically stayed rational and network quality is The biggest factor keeping us from labeling Telus a
generally similar. We don't expect this to change, and we wide-moat company is the ever-present threat of
don't think any of the three is likely to meaningfully regulation in the telecom industry. Management itself has
separate from the pack. Telus and BCE each currently have stated that historically, onerous government intervention
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TELUS Corp T (XTSE)

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has been more problematic than competition from other 1% annually, on average, during that span.
companies. Telecom services are sometimes viewed as
public utilities (a classification that the U.S. government Though we expect the additional wireless competition to
used regarding broadband Internet when it was defending result in wireless EBITDA margins remaining flat over the
net neutrality), and the government tends to keep a next five years, we think it will be more than offset by
watchful eye over service offerings, competition, and strength in wireline, supporting our forecast for the
network requirements. In the wireless space, the company's EBITDA margin to rise 100 basis points, to
government seemingly favors more robust competition for about 37%, between 2018 and 2023. We think the margin
the top three providers, as evidenced by it historically strength in wireline (200 basis points of expansion) will
giving other competitors favored status in spectrum come not only from increased pricing power, but also from
auctions. Even in the wireline space, we believe the substantial cost savings that come with having a fiber
Canadian government views broadband as a public good rather than copper network.
to some extent, which leaves a threat of things like price
caps, mandatory network sharing, or other means of With the bulk of the FTTP buildout complete, we believe
enhancing competition. With that in mind, we cannot capital spending, which was elevated in recent years,
assume that the environment that the firm has historically peaked in 2017 and will continue to decline through 2023.
navigated will persist, and our level of confidence in By 2023, we project it to be less than 16% of sales, down
long-term projections is tempered by the industry's from a high of 23% in 2017.
sensitivity to government influence.
Risk & Uncertainty
Fair Value & Profit Drivers Matthew Dolgin, Eq. Analyst, 15 February 2019
Matthew Dolgin, Eq. Analyst, 15 February 2019 We rate Telus as having medium uncertainty. Given
We are raising our fair value estimate for Telus to CAD consumers' reliance on wireless and broadband
50 from CAD 49 due to the time value of money. Our connections that we expect to increase, Telus should
valuation implies a P/E multiple of 18 and EV/EBITDA produce stable growth. However, intense competition,
multiple of 8, based on our 2019 forecasts. some exposure to the macroeconomic environment, and
threat of government regulation keep us from rating it as
We expect Telus' wireline business (56% of total revenue) low.
to be the bigger driver of the average 5% annual revenue
growth we project over the next five years. We think Telus' The most pressing regulatory risk is the Canadian
fiber to the premises, or FTTP, network upgrade over most government's consideration of whether to ban Huawei
of its footprint will lead to higher pricing and market share equipment in wireless networks. Telus uses Huawei
gains. The strength we foresee underlies our assumptions equipment in its 3G and 4G networks, and we think it would
for wireline data ARPUs (average revenue per user) and have been likely to choose Huawei for 5G but for the
broadband subscribers to each grow about 5% annually controversy. Still unless regulation goes so far as to require
on average over the next five years. The strength, in our Telus to remove all existing Huawei equipment, which we
view, will be mitigated by continued declines in voice and think is unlikely, we don't expect the cost of the potential
more moderate TV subscriber growth, as consumers ban to be too costly or impactful to Telus' network.
continue to have alternative options to traditional linear
TV. We believe Telus' wireline business is the most
susceptible of the Canadian incumbents to Shaw's
Despite competition from Shaw, we think Telus will wireless insurgence, due to Telus' overlapping wireline
continue to benefit from its best-in-class wireless network footprint with Shaw. We think Shaw is likely to get the
and excellent execution, which should mitigate damage. most traction in areas where it offers wireline service, as
We project Telus to continue adding subscribers—about name recognition, bundled promotional opportunities, and
1.5% average annual growth from 2019 through 2023— the ability to offer WiFi service to wireless customers on
but we think the growth will lag that of the industry. its wireline network will make it a stronger competitor.
Further, we think more aggressive price competition will Despite Telus' best in class network, we think it will have
limit average billings per user, or ABPU, growth to about to adapt to Shaw, which will likely mean reduced pricing
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power and margins.

We also applaud what we see as good corporate
Wireline risks in Telus' business, in our view, stem mostly governance practices from Telus. Each member of the
from secular trends. Though in our view Telus has not been 13-person board is elected annually, and several years
seriously hurt by cord cutting, a continuation of that ago, the company combined its voting and non-voting
movement in society could ultimately affect wireline. shares, so control is now aligned with financial interests,
Similarly, continued decline in landline phone service will unlike two of its competitors. The company also seems to
continue to weigh on the segment. From a competitive strictly adhere to split chairman and CEO roles. When
standpoint we think Telus is in good shape, especially as Entwistle stepped down as CEO in 2014, he took the
it has improved its network, but Shaw's new BlueSky TV chairman role that had been held for his entire CEO tenure
offering (from Comcast) could be an incremental negative by Brian Canfield. When he retook the CEO role, he
for Telus. relinquished his chairman role. Additionally, executive pay
is not out of line with the industry. Entwistle's base salary
Stewardship of CAD 1.375 million in 2017 was similar to CEOs of BCE
Matthew Dolgin, Eq. Analyst, 15 February 2019 and Rogers and represented 12% of his total
We assign Telus a standard Stewardship rating. Darren compensation. Restricted stock made up over 75% of his
Entwistle became CEO in 2000, and with the exception of compensation, and excluding restricted shares, ownership
a 15-month period from 2014 to 2015, he has held the role requirements state that he must own shares worth seven
ever since. The board's chairman is Dick Auchinleck. times his base salary, leaving him well invested in the
Although we don't think the circumstances surrounding company's performance.
the 15-month hiatus (Entwistle moved to the executive
chairman role and relinquished the CEO title to Joe Natale,
who was let go the following year, reportedly for his
unwillingness to move from Toronto to Vancouver) reflect
well on leadership, we view it as a one-time hiccup that
is in the past.
We think Entwistle deserves much credit for his vision

and ability to execute, and we don't think Telus would be
the Canadian telecom behemoth it is today had it not been
for moves made under his watch. Shortly after he took the
CEO role in 2000, Telus acquired Clearnet, which gave
Telus a presence in wireless but was unpopular. At the
time, Telus was simply a regional wireline operator, and
the wireless industry was in its early days. Telus paid CAD
6.6 billion in what it described as the biggest telecom deal
in Canadian history, and Telus' stock dropped 10% on the
news. Today, wireless makes up well over half of Telus'
total revenue, and Telus has a roughly 30% share of
Canada's wireless market.
Beyond the home run that we think Entwistle hit with

Clearnet, we think the company has been a good steward
of capital. We think the company has been well served by
avoiding the media business, unlike some competitors,
and focusing on its core wireline and wireless businesses.
The company has continued returning cash to
shareholders via its dividend, which it has raised at least
7% each year since 2011.
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Matthew Dolgin, Eq. Analyst, 11 April 2019
Analyst Notes Archive The 600-megahertz spectrum auction was more expensive
than we anticipated, but more surprising was the
Telus Ends 2018 With Another Solid Quarter and divergent strategies of the biggest firms. At the extremes,
Results That Justify Its Fiber Build Rogers spent CAD 1.7 billion on 600 MHz spectrum, while
Matthew Dolgin, Eq. Analyst, 14 February 2019 BCE acquired none. Of the other two Canadian firms we
Like its wireless peers, narrow-moat Telus reported follow in the industry, Telus spent CAD 931 million, and
excellent subscriber numbers in the fourth quarter. All Shaw spent CAD 492 million. We had already modeled
major Canadian providers, as well as upstart Freedom each of the firms to spend between CAD 500 million and
Mobile, have produced numerous strong quarters in a row, CAD 1 billion on 600 MHz spectrum, so the deviations
which we broadly attribute to the Canadian consumer don't result in material changes to our fair value estimates.
more than any individual company's strategy. In our view, Given other puts and takes associated with the results,
the greater point of differentiation for Telus is in its including the need for other capital spending and the
wireline business, where it had its best fourth quarter in benefits of better networks, we are maintaining our fair
five years and is reaching the tail end of its values of CAD 63 for BCE, CAD 62 for Rogers, CAD 50 for
fiber-to-the-premises build-out. We expect Telus' wireline Telus, and CAD 26 for Shaw. Similarly, the auction does
business to continue outperforming, but we think that the not affect the narrow moat ratings we assign to each of
wireless business will remain highly competitive and these firms.
industry tailwinds will moderate in 2019. We don't expect
to make material changes to our CAD 49 fair value Rogers has recently fallen behind Telus and BCE in many
estimate, leaving the stock only mildly undervalued at industry "best network" tests, and we've postulated that
current levels. Rogers' business would begin to feel the effects. We
thought greater network investment was necessary, so
Adjusted EBITDA, up 4%, could not keep up with Telus' we're encouraged to see Rogers aggressively pursue
6% year-over-year revenue growth in the fourth quarter, network enhancement with its 52 new licenses. Though
but it does not materially affect our long-term forecast, the firm's spending more than doubled the CAD 800 million
which calls for negligible margin expansion over the next we projected, we think an improved network will be worth
five years. the cost, and the incremental spending isn't outrageous
relative to the firm's CAD 3 billion in other capital
We've been big fans of Telus' strategy to build fiber over expenditures, so we don't see the larger outlay as
most of its footprint. Although up-front costs are detrimental to valuation.
significant, we believe fiber results in better cost
efficiency than the firm's legacy copper networks and, BCE and Telus share a network, with each responsible for
crucially, an offering more competitive with its cable covering 50% of the population, which made the
peers. Telus is now seeing the payoff with subscribers, difference in their spending notable. BCE determined that
and we can see the end of the steeper capital spending it had enough low-band spectrum that the cost required
on the horizon. Telus added 28,000 high-speed Internet to secure more was not economical. BCE can split cells
customers in the quarter and 115,000 for the full year, the and refarm spectrum that had previously been used for its
first time it eclipsed 100,000 in at least a decade. More 3G network to address 5G needs. We also expect it will
impressively, in a time when television subscriptions are participate in upcoming midband and millimeter-wave
waning, Telus added 24,000 in the quarter and 63,000 for auctions to support 5G.
the year. Along with growth in Telus Health and Telus
International, subscriber growth contributed to wireline Disappointing First-Quarter for Rogers Still Has a
revenue being up over 7% in the quarter and 8% for the Few Bright Spots; Maintaining CAD 62 FVE
year, despite continued contraction in voice customers. Matthew Dolgin, Eq. Analyst, 18 April 2019
Narrow-moat Rogers reported a disappointing first quarter
In Canada's 600 MHz Auction, Contrary Strategies across most metrics, with the firm adding its fewest
Put Rogers and BCE on Opposite Ends of the number of postpaid wireless subscribers in three years
Spectrum and revenue falling below our projections in each of its
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three segments. Adjusting for an accounting change, the

EBITDA margin was flat, despite tepid customer growth. Consolidated revenue grew 3.8% year over year and
While those results were clearly negative, record-low adjusted EBITDA margin expanded 180 basis points,
wireless churn, better pricing, and the firm's recent although we estimate the expansion would've been only
spectrum win bode well for Rogers' long-term prospects. 30 basis points after adjusting for the newly implemented
With a more optimistic view about Rogers' competitive IFRS 16 lease accounting standard, which has no economic
position offsetting current operating weakness and higher impact. Telus' first-quarter results were better than those
spectrum spending than we anticipated, we are of Rogers (flat revenue, 40 basis points of margin
maintaining our CAD 62 fair value estimate. expansion) and BCE (2.5% revenue growth, 170 points of
margin expansion), both of which also implemented IFRS
Postpaid wireless net additions totaled 23,000 in the 16 in the quarter. We forecast Telus to lead the industry
quarter, which is weak considering the firm's postpaid with 4% revenue growth in 2019 while expanding
churn was 0.99%, its lowest level ever and a continuation like-for-like EBITDA margin by 60 basis points.
of a steady decline. We've previously stated that we
thought 2018 was a near-term high-water mark for Telus disclosed that it added 11,000 mobile phone
Canadian postpaid wireless subscriber growth, and given subscribers in the quarter versus a net loss of 3,000 mobile
the low churn, we expect the quarter's weakness is likely subscribers in the year-ago period. However, it changed
industrywide rather than company specific. We were its wireless reporting structure, so it no longer breaks
encouraged to see year-over-year average billings per down prepaid versus postpaid subscribers, and churn and
user, or ABPU, growth exceeding 3%, tracking ahead of average billings per user will no longer be comparable to
the 2% we project for the year. Moreover, we have been prior periods or competitors. While the first quarter was
concerned that Rogers' wireless network has been falling not a great start on mobile phone adds, it will not cause
behind the shared network of Telus and BCE, its primary us to revisit our forecast for over 200,000 additions in 2019.
rivals, but our concerns are being alleviated. Rogers The first quarter is typically slower--under last year's
acquired far more 600 MHz spectrum than Telus and BCE reporting structure, Telus added only 5,000 subscribers in
combined, and we now think its network will make up the first quarter but reached 347,000 for the year.
ground with its rivals once it begins deploying the
spectrum next year. With lower normalized churn, good Shaw's 3Q Results Show the Firm Making Strides
pricing, an improving network, and a Canadian wireless in Wireless but Still Facing Wireline Challenges
industry that we believe is fundamentally healthy despite Matthew Dolgin, Eq. Analyst, 27 June 2019
potential near-term weakness, our long-term outlook for Shaw's fiscal third-quarter earnings fell modestly below
Rogers' wireless business has improved. revenue and EBITDA consensus, while its EPS beat was
due to tax benefits, following the sale of its Corus position.
Telus' Good 1Q Financial Results Slightly Marred Overall, revenue was up almost 3% year over year, and,
by Weak Mobile Phone Net Adds; Maintaining $50 after adjusting for one-time items, EBITDA margin was
FVE flat. More important than those results, in our view, are
Matthew Dolgin, Eq. Analyst, 09 May 2019 the trends we see in Shaw's businesses. We've expected
Telus posted an excellent first quarter, driven primarily by Shaw to make progress in wireless as its network
wireline, and outperformed its peers in terms of revenue improves, and it seems the firm is successfully executing
growth and margin expansion. However, wireless results its vision and affecting the industry. However, we've
were somewhat soft and blurred by a change in reporting posited Telus' fiber to the home buildout is creating a much
that resulted in less disclosure regarding mobile phone stronger wireline competitor for Shaw, and Shaw's
customers. We think the quarter supports our thesis that lackluster wireline results lend credence to that belief.
Telus will take wireline share due to its Overall, our view of the firm is unchanged following the
fiber-to-the-premises build-out, but it is the most quarter, and we plan to raise our CAD 26 fair value
vulnerable of the big three Canadian wireless firms to estimate by CAD 1, primarily just reflecting the time value
Shaw's aggressive push into wireless. We plan to of money. We currently see narrow-moat Shaw as fairly
maintain our CAD 50 fair value estimate and narrow moat valued.
rating, leaving the shares fairly valued, in our view.
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We think Shaw deserves credit for its wireless execution.

The firm added another 61,000 postpaid subscribers in
the quarter, leaving it with 210,000 new customers year
to date and on track to meet our full-year projection of
roughly 275,000. Also in line with our expectations was
the year-over-year growth in average billings per user (6%)
and adjusted EBITDA margin expansion (120 basis points).
We expect both metrics to maintain those trajectories as
Shaw's network quality improves and it gains scale,
allowing EBITDA margin to eventually rise well beyond
the current 20% range, which is relatively low. Most
impressive, postpaid churn declined another 18 basis
points in the quarter, to 1.18%, as it trends toward the
level of larger competitors--around 1%. With continued
700 MHz deployment and a long runway to further network
buildout, including with the recent 600 MHz spectrum won
at auction, we expect the wireless story to stay on track
and for Shaw to make further inroads versus the big three
Canadian wireless incumbents.
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Quantitative Equity Report | Release: 27 Jun 2019, 14:10 UTC | Reporting Currency: CAD | Trading Currency: CAD | Exchange:XTSE Page
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TELUS Corp T QQQQ 27 Jun 2019 02:00 UTC

Last Close Fair ValueQ Market Cap Sector Industry Country of Domicile
26 Jun 2019 27 Jun 2019 02:00 UTC 26 Jun 2019
48.13 47.56 28,926.1 Mil i Communication Services Telecom Services CAN Canada
There is no one analyst in which a Quantitative Fair Value Estimate and Quantitative
Star Rating are attributed to; however, Mr. Lee Davidson, Head of Quantitative
Price vs. Quantitative Fair Value
Research for Morningstar, Inc., is responsible for overseeing the methodology that 2015 2016 2017 2018 2019 2020 Quantitative Fair Value Estimate
supports the quantitative fair value. As an employee of Morningstar, Inc., Mr. Total Return
Davidson is guided by Morningstar, Inc.’s Code of Ethics and Personal Securities
Trading Policy in carrying out his responsibilities. For information regarding Conflicts Sales/Share
70
of Interests, visit http://global.morningstar.com/equitydisclosures Forecast Range
Forcasted Price
56 Dividend
Company Profile
Split
Telus is one of the big three wireless service providers in Momentum: —
42
Canada, with its 9 million subscribers nationwide constituting Standard Deviation: 8.87
almost 30% of the total market. It is also the ILEC (incumbent Liquidity: High
28
local exchange carrier; the legacy telephone provider) in the
western Canadian provinces of British Columbia and Alberta, 43.88 52-Wk 51.22
where it provides Internet, television, and landline phone 14
services. It also has a small wireline presence in eastern 35.51 5-Yr 51.22
Quebec. In recent years Telus has moved to bring fiber to the
-4.7 16.5 16.0 -0.6 8.8 Total Return %
home over most of its wireline footprint as it upgrades its
3.7 -4.5 6.9 8.3 -6.7 +/– Market (S&P/TSX Composite)
Quantitative Scores Scores 4.39 4.30 4.14 4.64 4.52 Trailing Dividend Yield %
All Rel Sector Rel Country 4.60 4.49 4.24 4.82 4.67 Forward Dividend Yield %
Quantitative Moat Narrow 99 97 100 16.2 18.1 22.5 18.1 17.8 Price/Earnings
Valuation Fairly Valued 13 16 6 1.9 2.0 2.2 2.0 2.0 Price/Revenue
Quantitative Uncertainty Medium 100 99 100 Morningstar RatingQ
Financial Health Moderate 87 79 86 QQQQQ
QQQQ
QQQ
T QQ
Q
CAN i
2014 2015 2016 2017 2018 TTM Financials (Fiscal Year in Mil)
Undervalued Fairly Valued Overvalued 11,927 12,430 12,725 13,202 14,095 14,233 Revenue
Source: Morningstar Equity Research 5.2 4.2 2.4 3.7 6.8 1.0 % Change
2,362 2,329 2,144 2,535 2,587 2,640 Operating Income
7.3 -1.4 -7.9 18.2 2.1 2.0 % Change
Valuation Sector Country
Current 5-Yr Avg Median Median 1,425 1,382 1,223 1,460 1,600 1,618 Net Income
Price/Quant Fair Value 1.01 1.05 0.84 0.75 3,407 3,542 3,219 3,947 4,058 4,010 Operating Cash Flow
Price/Earnings 17.8 19.0 15.3 15.2 -3,544 -4,570 -2,897 -3,081 -2,875 -2,930 Capital Spending
Forward P/E 16.3 — 14.6 10.8 -137 -1,028 322 866 1,183 1,080 Free Cash Flow
Price/Cash Flow 7.2 7.4 6.0 8.4 -1.1 -8.3 2.5 6.6 8.4 7.6 % Sales
Price/Free Cash Flow 26.7 42.4 15.6 14.9 2.31 2.29 2.06 2.46 2.68 2.70 EPS
Trailing Dividend Yield % 4.52 4.22 4.22 3.71 14.9 -0.9 -10.0 19.4 8.9 0.7 % Change
Price/Book 2.8 3.2 2.0 1.7 -0.31 -1.63 0.95 0.97 1.88 1.81 Free Cash Flow/Share
Price/Sales 2.0 2.1 1.3 2.3 1.52 1.68 1.84 1.97 2.10 2.14 Dividends/Share
13.37 12.48 14.03 14.23 16.58 17.10 Book Value/Share
Profitability Sector Country 609,024 594,557 590,425 594,573 598,674 601,000 Shares Outstanding (K)
Current 5-Yr Avg Median Median
Profitability
Return on Equity % 16.4 16.9 13.0 11.2
18.4 18.3 15.7 18.1 17.3 16.4 Return on Equity %
Return on Assets % 4.9 5.3 4.8 4.6
6.4 5.6 4.5 5.1 5.1 4.9 Return on Assets %
Revenue/Employee (K) 245.4 257.0 685.3 412.0
12.0 11.1 9.6 11.1 11.4 11.4 Net Margin %
0.53 0.50 0.47 0.46 0.45 0.43 Asset Turnover
Financial Health Sector Country
Current 5-Yr Avg Median Median 3.1 3.4 3.5 3.6 3.2 3.4 Financial Leverage
Distance to Default 0.7 0.7 0.5 0.5 55.6 55.5 55.8 55.0 54.8 55.2 Gross Margin %
Solvency Score 569.2 — 527.0 560.6 19.8 18.7 16.9 19.2 18.4 18.6 Operating Margin %
Assets/Equity 3.2 3.4 1.9 1.2 9,055 11,182 11,604 12,256 13,265 14,434 Long-Term Debt
Long-Term Debt/Equity 1.3 1.4 0.3 0.3 7,454 7,672 7,917 8,221 10,259 10,278 Total Equity
1.4 1.3 1.3 1.2 1.2 1.1 Fixed Asset Turns
Growth Per Share Quarterly Revenue & EPS Revenue Growth Year On Year %
1-Year 3-Year 5-Year 10-Year Revenue (Mil) Mar Jun Sep Dec Total
Revenue % 5.9 4.3 4.5 3.9 2019 3,489.0 — — — — 9.1
Operating Income % -3.1 3.6 3.3 2.0 2018 3,351.0 3,440.0 3,591.0 3,713.0 14,095.0 7.0
Earnings % 1.9 5.4 5.9 4.3 2017 3,185.0 3,259.0 3,355.0 3,403.0 13,202.0
5.2 5.6
Dividends % 6.6 7.7 9.1 8.7 2016 3,096.0 3,116.0 3,225.0 3,288.0 12,725.0 4.6
4.0 4.1
Earnings Per Share () 3.5
Book Value % 8.2 9.9 5.9 4.9 2.9
Stock Total Return % 7.3 9.8 7.9 15.2 2019 0.71 — — — —
2018 0.69 0.66 0.74 0.59 2.68
2017 0.73 0.64 0.62 0.47 2.46
2017 2018 2019
2016 0.64 0.70 0.59 0.13 2.06
© Morningstar 2019. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and ®
opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore is not an offer to buy or sell a security; are not warranted to be correct, complete or accurate; and
are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, ß
analyses or opinions or their use. The information herein may not be reproduced, in any manner without the prior written consent of Morningstar. Please see important disclosures at the end of this report.
Research Methodology for Valuing Companies

Qualitative Equity Research Overview intangible assets, switching costs, network effect, cost Our model is divided into three distinct stages:
At the heart of our valuation system is a detailed projection advantage, and efficient scale.
of a company's future cash flows, resulting from our Stage I: Explicit Forecast
analysts' research. Analysts create custom industry and Companies with a narrow moat are those we believe In this stage, which can last five to 10 years, analysts
company assumptions to feed income statement, balance are more likely than not to achieve normalized excess make full financial statement forecasts, including items
sheet, and capital investment assumptions into our globally returns for at least the next 10 years. Wide-moat such as revenue, profit margins, tax rates, changes in
standardized, proprietary discounted cash flow, or DCF, companies are those in which we have very high working-capital accounts, and capital spending. Based
modeling templates. We use scenario analysis, in-depth confidence that excess returns will remain for 10 years, on these projections, we calculate earnings before
competitive advantage analysis, and a variety of other with excess returns more likely than not to remain for at interest, after taxes, or EBI, and the net new
analytical tools to augment this process. We believe this least 20 years. The longer a firm generates economic investment, or NNI, to derive our annual free cash flow
bottom-up, long-term, fundamentally based approach profits, the higher its intrinsic value. We believe low- forecast.
allows our analysts to focus on long-term business drivers, quality no-moat companies will see their normalized
which have the greatest valuation impact, rather than short- returns gravitate toward the firm's cost of capital more Stage II: Fade
term market noise. quickly than companies with moats. The second stage of our model is the period it will take
the company's return on new invested capital—the
Morningstar's equity research group (“we," "our") believes To assess the direction of the underlying competitive return on capital of the next dollar invested ("RONIC")—
that a company's intrinsic worth results from the future advantages, analysts perform ongoing assessments of to decline (or rise) to its cost of capital. During the Stage
cash flows it can generate. The Morningstar Rating for the moat trend. A firm's moat trend is positive in cases II period, we use a formula to approximate cash flows in
stocks identifies stocks trading at an uncertainty-adjusted where we think its sources of competitive advantage lieu of explicitly modeling the income statement,
discount or premium to their intrinsic worth—or fair value are growing stronger; stable where we don't anticipate balance sheet, and cash flow statement as we do in
estimate, in Morningstar terminology. Five-star stocks sell changes to competitive advantages over the next Stage I. The length of the second stage depends on the
for the biggest risk-adjusted discount to their fair values several years; or negative when we see signs of strength of the company's economic moat. We forecast
whereas 1-star stocks trade at premiums to their intrinsic deterioration. this period to last anywhere from one year (for
worth. companies with no economic moat) to 10–15 years or
All the moat and moat trend ratings undergo periodic more (for wide-moat companies). During this period,
Four key components drive the Morningstar rating: (1) our review and any changes must be approved by the cash flows are forecast using four assumptions: an
assessment of the firm's economic moat, (2) our estimate of Morningstar Economic Moat Committee, comprised of average growth rate for EBI over the period, a
the stock's fair value, (3) our uncertainty around that fair senior members of Morningstar's equity research normalized investment rate, average return on new
value estimate and (4) the current market price. This department. invested capital, or RONIC, and the number of years
process ultimately culminates in our single-point star rating. until perpetuity, when excess returns cease. The
2. Estimated Fair Value investment rate and return on new invested capital
1. Economic Moat Combining our analysts' financial forecasts with the decline until the perpetuity stage is reached. In the case
The concept of an economic moat plays a vital role not firm's economic moat helps us assess how long returns of firms that do not earn their cost of capital, we
only in our qualitative assessment of a firm's long-term on invested capital are likely to exceed the firm's cost of assume marginal ROICs rise to the firm's cost of capital
investment potential, but also in the actual calculation capital. Returns of firms with a wide economic moat (usually attributable to less reinvestment), and we may
of our fair value estimates. An economic moat is a rating are assumed to fade to the perpetuity period over truncate the second stage.
structural feature that allows a firm to sustain excess a longer period of time than the returns of narrow-moat
profits over a long period of time. We define excess firms, and both will fade slower than no-moat firms, Stage III: Perpetuity
economic profits as returns on invested capital (or ROIC) increasing our estimate of their intrinsic value. Once a company's marginal ROIC hits its cost of capital,
over and above our estimate of a firm's cost of capital, we calculate a continuing value, using a standard
or weighted average cost of capital (or WACC). Without perpetuity formula. At perpetuity, we assume that any
a moat, profits are more susceptible to competition. We growth or decline or investment in the business neither
have identified five sources of economic moats: creates nor destroys value and that any new investment
provides a return in line with estimated WACC.
Morningstar Research Methodology for Valuing Companies Because a dollar earned today is worth more than a
dollar earned tomorrow, we discount our projections of
cash flows in stages I, II, and III to arrive at a total
present value of expected future cash flows. Because we
are modeling free cash flow to the firm—representing cash
available to provide a return to all capital providers—we
discount future cash flows using the WACC, which is a
weighted average of the costs of equity, debt, and preferred
stock (and any other funding sources), using expected
future proportionate long-term market-value weights.
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3. Uncertainty Around That Fair Value Estimate Morningstar Equity Research Star Rating Methodology
Morningstar's Uncertainty Rating captures a range of likely
potential intrinsic values for a company and uses it to
assign the margin of safety required before investing, which
in turn explicitly drives our stock star rating system. The
Uncertainty Rating represents the analysts' ability to bound
the estimated value of the shares in a company around the
fair value estimate, based on the characteristics of the
business underlying the stock, including operating and
financial leverage, sales sensitivity to the overall
economy, product concentration, pricing power, and
other company-specific factors.
Analysts consider at least two scenarios in addition to

their base case: a bull case and a bear case.
Assumptions are chosen such that the analyst believes
there is a 25% probability that the company will perform
better than the bull case, and a 25% probability that the
company will perform worse than the bear case. The
distance between the bull and bear cases is an
important indicator of the uncertainty underlying the
fair value estimate.
Our recommended margin of safety widens as our

uncertainty of the estimated value of the equity
increases. The more uncertain we are about the
estimated value of the equity, the greater the discount
we require relative to our estimate of the value of the
firm before we would recommend the purchase of the Morningstar Star Rating for Stocks The Morningstar Star Ratings for stocks are defined below:
shares. In addition, the uncertainty rating provides Once we determine the fair value estimate of a stock, we
guidance in portfolio construction based on risk compare it with the stock's current market price on a daily QQQQQ We believe appreciation beyond a fair risk-
tolerance. basis, and the star rating is automatically re-calculated at adjusted return is highly likely over a multiyear time frame.
the market close on every day the market on which the The current market price represents an excessively
Our uncertainty ratings for our qualitative analysis are stock is listed is open. pessimistic outlook, limiting downside risk and maximizing
low, medium, high, very high, and extreme. Please note, there is no predefined distribution of stars. upside potential.
That is, the percentage of stocks that earn 5 stars can
× Low–margin of safety for 5-star rating is a 20% discount fluctuate daily, so the star ratings, in the aggregate, can QQQQ We believe appreciation beyond a fair risk-
and for 1-star rating is 25% premium. serve as a gauge of the broader market's valuation. When adjusted return is likely.
× Medium–margin of safety for 5-star rating is a 30% there are many 5-star stocks, the stock market as a whole is
discount and for 1-star rating is 35% premium. more undervalued, in our opinion, than when very few QQQ Indicates our belief that investors are likely to
× High–margin of safety for 5-star rating is a 40% discount companies garner our highest rating. receive a fair risk-adjusted return (approximately cost of
and for 1-star rating is 55% premium. equity).
× Very High–margin of safety for 5-star rating is a 50% We expect that if our base-case assumptions are true the
discount and for 1-star rating is 75% premium. market price will converge on our fair value estimate over QQ We believe investors are likely to receive a less than
× Extreme–margin of safety for 5-star rating is a 75% time, generally within three years (although it is impossible fair risk-adjusted return.
discount and for 1-star rating is 300% premium. to predict the exact time frame in which market prices may
adjust). Q Indicates a high probability of undesirable risk-adjusted
4. Market Price returns from the current market price over a multiyear time
The market prices used in this analysis and noted in the Our star ratings are guideposts to a broad audience and frame, based on our analysis. The market is pricing in an
report come from exchange on which the stock is listed, individuals must consider their own specific investment excessively optimistic outlook, limiting upside potential and
which we believe is a reliable source. goals, risk tolerance, tax situation, time horizon, income leaving the investor exposed to Capital loss.
needs, and complete investment portfolio, among other
For more details about our methodology, please go to factors.
https://shareholders.morningstar.com.
?

Other Definitions quantitative report and the quantitative ratings, there is no Value Estimate, current market price, and the Quantitative
one analyst in which a given report is attributed to; Uncertainty Rating. The rating is expressed as 1-Star, 2-Star,
Last Price: Price of the stock as of the close of the market however, Mr. Lee Davidson, Head of Quantitative Research 3-Star, 4-Star, and 5-Star.
of the last trading day before date of the report. for Morningstar, Inc., is responsible for overseeing the
methodology that supports the quantitative equity ratings Q: the stock is overvalued with a reasonable margin of
Stewardship Rating: Represents our assessment of used in this report. As an employee of Morningstar, Inc., safety.
management's stewardship of shareholder capital, with Mr. Davidson is guided by Morningstar, Inc.'s Code of Ethics Log (Quant FVE/Price)<–1*Quantitative Uncertainty
particular emphasis on capital allocation decisions. Analysts and Personal Securities Trading Policy in carrying out his
consider companies' investment strategy and valuation, responsibilities. QQ: the stock is somewhat overvalued.
financial leverage, dividend and share buyback policies, Log (Quant FVE/Price) between (–1*Quantitative
execution, compensation, related party transactions, and Quantitative Equity Ratings Uncertainty, –0.5*Quantitative Uncertainty)
accounting practices. Corporate governance practices are Morningstar's quantitative equity ratings consist of:
only considered if they've had a demonstrated impact on (i) Quantitative Fair Value Estimate QQQ: the stock is approximately fairly valued.
shareholder value. Analysts assign one of three ratings: (ii) Quantitative Star Rating Log (Quant FVE/Price) between (–0.5*Quantitative
"Exemplary," "Standard," and "Poor." Analysts judge (iii) Quantitative Uncertainty Uncertainty, 0.5*Quantitative Uncertainty)
stewardship from an equity holder's perspective. Ratings (iv) Quantitative Economic Moat
are determined on an absolute basis. Most companies will (v) Quantitative Financial Health QQQQ: the stock is somewhat undervalued.
receive a Standard rating, and this is the default rating in (collectively the "Quantitative Ratings"). Log (Quant FVE/Price) between (0.5*Quantitative
the absence of evidence that managers have made Uncertainty, 1*Quantitative Uncertainty)
exceptionally strong or poor capital allocation decisions. The Quantitative Ratings are calculated daily and derived
from the analyst-driven ratings of a company's peers as QQQQQ: the stock is undervalued with a reasonable
Quantitative Valuation: Using the below terms, intended to determined by statistical algorithms. Morningstar, Inc. margin of safety. Log (Quant FVE/Price) >1*Quantitative
denote the relationship between the security's Last Price ("“Morningstar," "we," "our") calculates Quantitative Uncertainty
and Morningstar's quantitative fair value estimate for that Ratings for companies whether it already provides analyst
security. ratings and qualitative coverage. In some cases, the Quantitative Uncertainty: Intended to represent
Quantitative Ratings may differ from the analyst ratings Morningstar's level of uncertainty about the accuracy of the
× Undervalued: Last Price is below Morningstar's because a company's analyst-driven ratings can quantitative fair value estimate. Generally, the lower the
quantitative fair value estimate. significantly differ from other companies in its peer group. quantitative Uncertainty, the narrower the potential range
× Fairly Valued: Last Price is in line with Morningstar's of outcomes for that particular company. The rating is
quantitative fair value estimate. Quantitative Fair Value Estimate: Intended to represent expressed as Low, Medium, High, Very High, and Extreme.
× Overvalued: Last Price is above Morningstar's Morningstar's estimate of the per share dollar amount that
quantitative fair value estimate. a company's equity is worth today. Morningstar calculates × Low: the interquartile range for possible fair values is less
the quantitative fair value estimate using a statistical model than 10%.
Risk Warning derived from the fair value estimate Morningstar's equity × Medium: the interquartile range for possible fair values is
Please note that investments in securities are subject to analysts assign to companies. Please go to less than 15% but greater than 10%.
market and other risks and there is no assurance or https://shareholders.morningstar.com for information about × High: the interquartile range for possible fair values is
guarantee that the intended investment objectives will be fair value estimates Morningstar's equity analysts assign to less than 35% but greater than 15%.
achieved. Past performance of a security may or may not be companies. × Very High: the interquartile range for possible fair values
sustained in future and is no indication of future is less than 80% but greater than 35%.
performance. A security investment return and an investor's Quantitative Economic Moat: Intended to describe the × Extreme: the interquartile range for possible fair values is
principal value will fluctuate so that, when redeemed, an strength of a firm's competitive position. It is calculated greater than 80%.
investor's shares may be worth more or less than their using an algorithm designed to predict the Economic Moat
original cost. A security's current investment performance rating a Morningstar analyst would assign to the stock. The Quantitative Financial Health: Intended to reflect the
may be lower or higher than the investment performance rating is expressed as Narrow, Wide, or None. probability that a firm will face financial distress in the near
noted within the report. Morningstar's Uncertainty Rating future. The calculation uses a predictive model designed to
serves as a useful data point with respect to sensitivity × Narrow: assigned when the probability of a stock anticipate when a company may default on its financial
analysis of the assumptions used in our determining a fair receiving a "Wide Moat" rating by an analyst is greater obligations. The rating is expressed as Weak, Moderate,
value price. than 70% but less than 99%. and Strong.
× Wide: assigned when the probability of a stock receiving
Quantitative Equity Reports Overview a "Wide Moat" rating by an analyst is greater than 99%. × Weak: assigned when Quantitative Financial Health <0.2
The quantitative report on equities consists of data, × None: assigned when the probability of an analyst × Moderate: assigned when Quantitative Financial Health
statistics and quantitative equity ratings on equity receiving a "Wide Moat" rating by an analyst is less than is between 0.2 and 0.7
securities. Morningstar, Inc.'s quantitative equity ratings are 70%. × Strong: assigned when Quantitative Financial Health >0.7
forward looking and are generated by a statistical model
that is based on Morningstar Inc.'s analyst-driven equity Quantitative Star Rating: Intended to be the summary
ratings and quantitative statistics. Given the nature of the rating based on the combination of our Quantitative Fair
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Other Definitions
Last Close: Price of the stock as of the close of the market

of the last trading day before date of the report.
Quantitative Valuation: Using the below terms, intended to

denote the relationship between the security's Last Price
and Morningstar's quantitative fair value estimate for that
security.
× Undervalued: Last Price is below Morningstar's

quantitative fair value estimate.
× Fairly Valued: Last Price is in line with Morningstar's
× Overvalued: Last Price is above Morningstar's
This Report has not been made available to the issuer of the
security prior to publication.
Risk Warning
Please note that investments in securities are subject to
market and other risks and there is no assurance or
guarantee that the intended investment objectives will be
achieved. Past performance of a security may or may not be
sustained in future and is no indication of future
performance. A security investment return and an investor's
principal value will fluctuate so that, when redeemed, an
investor's shares may be worth more or less than their
original cost. A security's current investment performance
may be lower or higher than the investment performance
noted within the report.
The quantitative equity ratings are not statements of fact.

Morningstar does not guarantee the completeness or
accuracy of the assumptions or models used in determining
the quantitative equity ratings. In addition, there is the risk
that the price target will not be met due to such things as
unforeseen changes in demand for the company's products,
changes in management, technology, economic
development, interest rate development, operating and/or
material costs, competitive pressure, supervisory law,
exchange rate, and tax rate. For investments in foreign
markets there are further risks, generally based on
exchange rate changes or changes in political and social
conditions.
A change in the fundamental factors underlying the

quantitative equity ratings can mean that the valuation is
subsequently no longer accurate.
For more information about Morningstar's quantitative

methodology, please visit
http://global.morningstar.com/equitydisclosures.
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General Disclosure
The analysis within this report is prepared by the person
(s) noted in their capacity as an analyst for Morningstar’s
equity research group. The equity research group
consists of various Morningstar, Inc. subsidiaries
(“Equity Research Group)”. In the United States, that
subsidiary is Morningstar Research Services LLC, which
is registered with and governed by the U.S. Securities
and Exchange Commission.
The opinions expressed within the report are given in

good faith, are as of the date of the report and are
subject to change without notice. Neither the analyst
nor Equity Research Group commits themselves in
advance to whether and in which intervals updates to
the report are expected to be made. The written analysis
and Morningstar Star Rating for stocks are statements the Report and are subject to change. While financial situation or particular needs of any specific
of opinions; they are not statements of fact. Morningstar has obtained data, statistics and recipient. This publication is intended to provide
information from sources it believes to be reliable, information to assist institutional investors in making
The Equity Research Group believes its analysts make Morningstar does not perform an audit or seeks their own investment decisions, not to provide
a reasonable effort to carefully research information independent verification of any of the data, statistics, investment advice to any specific investor. Therefore,
contained in the analysis. The information on which the and information it receives. investments discussed and recommendations made
analysis is based has been obtained from sources herein may not be suitable for all investors: recipients
believed to be reliable such as, for example, the The quantitative equity ratings are not a market call, must exercise their own independent judgment as to
company’s financial statements filed with a regulator, and do not replace the User or User’s clients from the suitability of such investments and recommendations
company website, Bloomberg and any other the conducting their own due-diligence on the security. The in the light of their own investment objectives,
relevant press sources. Only the information obtained quantitative equity rating is not a suitability experience, taxation status and financial position.
from such sources is made available to the issuer who assessment; such assessments take into account may
is the subject of the analysis, which is necessary to factors including a person’s investment objective, The information, data, analyses and opinions presented
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information result in considerable changes, a statement of which are factors the quantitative equity rating complete or timely. Unless otherwise provided in a
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Equity Research Group has obtained data, statistics and Equity Research Group represents that the report
information from sources it believes to be reliable, Prices noted with the Report are the closing prices on contents meet all of the presentation and/or disclosure
neither the Equity Research Group nor Morningstar, Inc. the last stock-market trading day before the publication standards applicable in the jurisdiction the recipient is
performs an audit or seeks independent verification of date stated, unless another point in time is explicitly located.
any of the data, statistics, and information it receives. stated.
Except as otherwise required by law or provided for in
General Quantitative Disclosure General Disclosure (applicable to both Quantitative a separate agreement, the analyst, Morningstar, Inc.
The Quantitative Equity Report (“Report”) is derived and Qualitative Research) and the Equity Research Group and their officers,
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such Users or their clients in making an investment pertaining to the security concerned, including without
decision. The quantitative equity ratings noted the This report is for informational purposes only and has limitation, information relevant to its investment
Report are provided in good faith, are as of the date of no regard to the specific investment objectives, objectives, risks, and costs before making an
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21:54, UTC 22:35, UTC
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Morningstar Equity Analyst Report | Report as of 27 Jun 2019 07:10, UTC | Page 1 of 15

TELUS Corp T (XTSE)

Morningstar Pillars Analyst Quantitative Important Disclosure:

TELUS Corp T (XTSE)

TELUS Corp T (XTSE)

TELUS Corp T (XTSE)

power and margins.

We think Entwistle deserves much credit for his vision

Beyond the home run that we think Entwistle hit with

TELUS Corp T (XTSE)

Matthew Dolgin, Eq. Analyst, 11 April 2019

TELUS Corp T (XTSE)

three segments. Adjusting for an accounting change, the

TELUS Corp T (XTSE)

We think Shaw deserves credit for its wireless execution.

TELUS Corp T QQQQ 27 Jun 2019 02:00 UTC

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

Analysts consider at least two scenarios in addition to

Our recommended margin of safety widens as our

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

Last Close: Price of the stock as of the close of the market

Quantitative Valuation: Using the below terms, intended to

× Undervalued: Last Price is below Morningstar's

The quantitative equity ratings are not statements of fact.

A change in the fundamental factors underlying the

For more information about Morningstar's quantitative

TELUS Corp T (XTSE)

The opinions expressed within the report are given in

TELUS Corp T (XTSE)

TELUS Corp T (XTSE)

SEBI or any other legal/regulatory body. Morningstar

The Research Analyst has not served as an officer,

*The Conflicts of Interest disclosure above also applies

For recipients in Japan: The Report is distributed by

For recipients in Singapore: This Report is

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