Paul Carpino - Darren Entwistle - Executive Chairman Joseph M. Natale - Chief Executive Officer and President John R. Gossling - Chief Financial Officer and Executive Vice-President

Simon Flannery - Morgan Stanley, Research Division Phillip Huang - Barclays Capital, Research Division Dvaipayan Ghose - Canaccord Genuity, Research Division Maher Yaghi - Desjardins Securities Inc., Research Division Vince Valentini - TD Securities Equity Research Drew McReynolds - RBC Capital Markets, LLC, Research Division Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division Tim Casey - BMO Capital Markets Canada

Good morning, ladies and gentlemen. Welcome to the TELUS 2014 Q2 Earnings Conference Call. I would like to introduce your speaker, Mr. Paul Carpino. Please go ahead.

Thank you, Peter. Good morning, everyone, and thank you for joining us today. The second quarter news release and detailed supplemental investor information are posted on our website, telus.com/investors. On the call today will be Executive Chair Darren Entwistle, who will provide some opening comments; followed by a review of operational highlights by Joe Natale, President and Chief Executive Officer; John Gossling, our CFO, will then provide a review of our second quarter financial results. After our prepared remarks, we will conclude with a question-and-answer session. Let me direct your attention to Slide #2. This presentation, answers to questions and statements about future events, such as 2014 targets, intentions for dividend growth and future share purchases, are subject to risks and uncertainties and assumptions. Accordingly, actual performance could differ materially from statements made today, so do not place undue reliance on them. We also disclaim any obligation to update forward-looking statements except as required by law. I ask that you read our legal disclaimers and refer you to the risks and assumptions outlined in our public disclosures and filings with the securities commissions in Canada and the United States. Let me now turn the call over to Darren, starting on Slide 3.

Thanks, Paul. TELUS once again realized strong results in the second quarter that were driven by our company's consistent investment and execution in our wireless and wireline broadband growth strategy and our unwavering focus on operational efficiency, also driven by our uncompromising commitment to our Customers First philosophy and as well our differentiating focus to return cash to shareholders through our multiyear dividend growth model and share purchase program. TELUS' second quarter operational and shareholder highlights include 80,000 total net new customer connections; delivering an industry-leading wireless postpaid churn rate of 0.9%, our fourth consecutive quarter at less than 1%; achieving an industry-leading wireless lifetime revenue of almost $5,000; realizing the best access line retention result in more than 8 years with positive wireline net additions of 23,000, representing our ninth straight quarter of positive wireline RGU growth, a notable achievement compared to negative wireline RGU growth at most of our global peers; generating EBITDA growth in both wireless and wireline, leading to adjusted EPS growth of circa 17%; and finally, maintaining a robust balance sheet that supports our long-term commitment to meaningful CapEx investments and multiyear, shareholder friendly capital programs. On an absolute basis, or on a relative basis with our global peers, TELUS continues to be the industry leader. As a result of this performance, TELUS continues to reward shareholders with the industry's most robust, multiyear dividend growth and share purchase programs. In the first 7 months of 2014, TELUS has returned an impressive $1.1 billion to shareholders, building on the more than $1.85 billion returned in 2013, and now exceeding $10.3 billion since 2004. Indeed our capital return policy is a sustainable value driver for shareholders, backstopped by an asset mix and an investment approach that delivers both wireline and wireless growth engines. In combination with TELUS' prudently managed balance sheet and track record for overcoming adversity, our company represents a unique combination of growth, value and safe haven attributes. Additionally, by maintaining our focus on these core areas of our business, the sustainability of our capital return policy is further buttressed by the offsetting regulatory hedge of our wireline versus wireless businesses. For example, our wireline business is not impacted by the regulatory dynamics of the wireless industry, yet is often the beneficiary of the mandated regulatory requirements around content distribution and pricing. Given the attributes of our business model, our track record for execution and our commitment to a focused strategy on a sustained basis, TELUS has established itself as a growth-oriented company with a track record for successfully navigating change and delivering consistent shareholder returns despite the environment. Before I turn the call over to Joe and John to provide some additional details on our strong second quarter, I want to share some perspectives on the superior Canadian telecommunications networks that have emerged over the past decade, an area where TELUS has been a leader. Indeed, these networks were built for Canadians in a regulatory environment that mandated meaningful and rapidly deployed, facilities-based investment, giving our citizens a global competitive advantage. Notably, according to the most recent OECD report, Canadians enjoy wireless data speeds that are the second fastest in the world and are twice the average speeds in Germany and Italy, 3x the speeds offered in the U.S. and France and 9x faster than the United Kingdom. Certainly, Canada's global leadership in the speed of our wireless data services is not through happenstance. The same OECD study shows that Canada is #1 in respect to telecom investment per client connection amongst its 34 member nations and effectively double the OECD average. The rapid pace of innovation in our industry require that national and regional carriers commit to frequent, timely and significant capital investments in infrastructure, with an appetite to maintain that investment for the foreseeable future. Such are the challenges and the opportunities of our industry. Moreover, this investment must be buttressed by a support structure at every customer touch point that is as reliable and effective as the networks themselves. Indeed, TELUS alone has committed more than $30 billion in capital and $111 billion in technology and operations across Canada since 2000, capital that was invested to bridge the digital divide by providing best-in-class technology and customer service. Today, our wireless coverage reaches an impressive 99% of the Canadian population, and our 4G+ LTE service now covers 84% of the population and growing. Additionally, 79% of our postpaid customers are smartphone users, representing a penetration rate reflective of the OECD report which recognized Canada as having the third highest smartphone penetration in the world. Moreover, Canadians also enjoy competitive pricing amongst developed nations according to the recent OECD report and also reflected in the recent Wall report. This is particularly impressive, considering our dispersed population base and geographic landscape that is far more complex than those of our G7 peers, not to mention that Canadians are the second-highest users of voice and data wireless services on the planet. Our nation's wireless infrastructure is already the envy of the world and must become even more robust in order to meet the demand customers have for fast and reliable wireless services. TELUS customers have entrusted us with their patronage, and consequently, they trust that we will deliver as promised in respect of the speed and quality of our networks and services. We earned this confidence and this reputation as a result of many years serving Canadians and understanding the investments necessary to deliver exceptional client experiences. Whilst our industry continues to evolve within a challenging regulatory environment, we remain confident in our ability to deliver value to all Canadians. How? Through our unique growth strategy that emphasizes investment in core growth opportunities, a commitment to returning significant capital to shareholders despite any adversities we encounter along the way and the culture at our company that drives industry-leading customer loyalty and retention and delivers the lowest churn rates. I now invite Joe to take you through a review of our key second quarter operating highlights before John covers the financials. Thank you. Joseph M. Natale: Thanks, Darren. Our second quarter results were once again characterized by strong traction on our journey to put our Customers First. The effectiveness of our strategy is evident in the strong operating momentum we continue to see in both wireless and wireline. Starting with wireless on Slide 4. TELUS reported industry-leading second quarter postpaid wireless net additions of 78,000. Notably, TELUS has led the industry in postpaid net additions for 4 of the 5 last quarters. We continue to see a shift towards postpaid as a result of our consistent strategic focus on higher value smartphone subscribers. Postpaid net additions were down slightly year-over-year, reflecting slower market growth and continued competitive intensity. However, our leading 43% share of industry postpaid net additions reported by the national carriers underpin the ongoing expansion of our postpaid subscriber base and market share. Notably, we are on track to surpass 8 million wireless subscribers by year end. Turning to Slide 5. TELUS reported a second quarter blended churn rate of 1.26%, a 14 basis point improvement over last year. Postpaid churn improved a substantial 13 points to an industry leading 0.9%. This matched our all-time record low achieved 8 years ago and is our fourth consecutive quarter below 1%. Postpaid churn at less than 1% is an outstanding accomplishment by our TELUS team and demonstrates the continued success of our relentless efforts to differentiate TELUS through a superior customer experience. Moving to Slide 6. We reported a 15th consecutive quarter of year-over-year blended ARPU growth, up a strong 2.3% in the quarter. We remain confident in the economics and customer appeal of our SharePlus plans and in the ongoing prospects for future growth from increased data penetration and roaming, enhanced speeds and an expanding consumer appetite for services and applications. Our smartphone subscriber base continues to grow. Smartphone subscribers now make up an industry leading 79% of our postpaid subscribers, an 8 percentage point increase over the same period last year. As evidenced by our higher CapEx in the quarter, we continue to make significant investments in our infrastructure to meet the needs of our customers for access to high-speed and reliable data services. Data and smartphone growth is being supported by the continued enhancement of our 4G+ LTE network, now covering more than 84% of the Canadian population, while 99% of Canadians enjoy 4G HSPA+ coverage. Turning to Slide 7. Our industry-leading churn and 15 consecutive quarters of year-over-year ARPU growth are driving continued leadership in lifetime revenue per subscriber. Lifetime revenue per subscriber increased again this quarter to nearly $5,000, up to 28% better than our peers and the highest result the TELUS team has achieved. Our marketing efficiency, measured as a ratio of cost of acquisition per gross addition to lifetime revenue, remains industry leading at 8%, a 60 basis point improvement year-over-year. In summary, our superior wireless operating metrics continue to be underpinned by our strategic focus on high-quality loading, continued smartphone and data adoption and delivering an exceptional customer experience. Turning to wireline on Slide 8. We continue to build increased scale in TV and high-speed Internet. We reported 23,000 TV net additions, while our base expanded by 16% year-over-year to 865,000 customers as we continue to grow our market share. The demand for our premium Optik TV service remains healthy, and there continues to be strong pull-through growth in the demand for higher-margin, high-speed Internet with an increase of 15,000 subscribers in the quarter. As a result, our Internet base grew by more than 5% year-over-year to over 1.4 million customers. Increased capital investments in the quarter were growth oriented. Through ongoing strategic broadband investments aimed at pushing fiber deeper into the network, including directly to homes and businesses, we now offer Internet speeds of 50 megabits per second to close to 90% of our more than 2.8 million Optik-TV-capable households. We continue to see improvements in the metrics and economics of both Optik TV and Internet. Our successful focus on offering compelling bundles and winning the home is illustrated by the lowest residential NAL losses we have seen in over 9 years, down more than 40% to 19,000, reflecting ongoing yet moderating substitution trends. This is the third straight quarter we have seen residential NAL losses trending in the mid- to low-20,000 range or lower. TELUS also continues to demonstrate strength in the business market with business NAL additions up 4,000, positive for the first time since Q2 2011 and the fourth straight quarter of improvement. This highlights the benefits of our ongoing investments in providing fully managed solutions in the business market. For the 16th consecutive quarter, combined TV and high-speed net additions of 38,000 exceeded residential NAL losses. Notably, combined TV and high speed exceeded residential NAL losses by 2x for the third straight quarter. Total wireline customer connections increased by 22,000 in the quarter, more than 5x the second quarter of last year. TELUS continues to be the only Canadian provider to report positive wireline growth in customer connections as well as revenue and EBITDA growth. Offsetting the year-over-year decline in TV net additions was our overall richer mix, including 2,000 additional high-speed net additions and 13,000 improvement in residential NAL losses. These dynamics represent a positive impact to both EBITDA and margin. Our triple play product offering has never been more compelling as we expand coverage and speeds and continually add new contents. While the market is competitive, we remain very focused on initiatives aimed at enhancing efficiency to mitigate impacts of substitution and competition and to ensure we're allocating resources to our growth product portfolio. In addition to protecting margins and supporting growth, our ongoing focus on operating efficiency continues to help us enhance effectiveness in delivering a superior experience to our customers. Before I turn it over to John, let me summarize key operational highlights reflected in our second quarter results. First, is our leading postpaid wireless subscriber growth, 43% share of net additions generated by the major national carriers. Second, is our postpaid churn of 0.9%, the lowest in Canada, and matching our all-time record. Third, is wireless ARPU, the highest in Canada, with 15 consecutive quarters of growth. Fourth, is wireless lifetime revenue per customer up close to 14%, by far the highest in Canada. And fifth, is our wireline growth with the future friendly home, the most rapidly growing wireline business in the country. All these achievements have led to strong revenue and EBITDA growth in both the wireless and wireline business. We operate in a highly competitive and dynamic industry and one that is constantly changing. We have successfully navigated many challenges based on the sound and consistent strategy since the year 2000. We are very confident that we can extend this track record with our focus on strong execution and an elevated customer experience to continue to create value for our investors. I will now turn the call over to John to take you through some of the financials. John? John R. Gossling: Thanks, Joe; and good morning, everyone. I'm on Slide 10. Second quarter wireless results continue to demonstrate our strong operational execution. Total revenue was up 6.2% driven by network revenue growth, which was up an industry leading 6.1% due primarily to the continued growth in our subscriber base, higher ARPU as a result of continued smartphone adoption and data usage as well as increased data roaming volumes. EBITDA increased by 6.3% due primarily to network revenue growth and lower acquisition spending. EBITDA excluding restructuring and other like costs and the $2 million negative impact from Public Mobile was $714 million, an increase of 5.7%, reflecting a margin of 44.8%, up 40 basis points year-over-year. Capital expenditures increased due to continued investment in wireless broadband network infrastructure, including investments for the deployment of 700 megahertz spectrum and system resiliency and reliability in support of our ongoing focus to deliver an exceptional customer experience. As shown on Slide 11, our wireline financial results also contributed to show -- also continue to show solid growth. Revenue increased by 2.4% due to an 8.7% data revenue growth, primarily as a result of continued TELUS TV and high-speed Internet subscriber growth and increasing revenue per customer. Reported wireline EBITDA increased by 9.8%; however, as you may recall, EBITDA in the same period a year ago was impacted by higher restructuring and other like costs. When you exclude these restructuring and other like costs in both periods, wireline EBITDA increased by a healthy 3.1% with a margin of 26.8%, up 20 basis points year-over-year. This EBITDA growth reflected data revenue growth as well as an operational efficiency initiatives. Wireline capital expenditures increased year-over-year to support business service growth, ongoing investments in customer first initiatives and, as Joe mentioned, broadband network infrastructure expenditures. On Slide 12. Our consolidated results continue to reflect the success of our strategic and operating execution, which is delivering strong revenue and EBITDA growth, while we continue to return significant capital to our shareholders, as Darren mentioned. Consolidated revenue increased by 4.4%, benefiting from continued growth in both our wireline and wireless operations. Notably, consolidated data revenue increased by 14% year-over-year. Consolidated EBITDA was up 7.5%, on a reported basis or 4.8% when excluding the Public Mobile impact and the impact of restructuring other like costs in both periods. Basic earnings per share of $0.62 increased by 41%. However, the year-over-year growth was impacted by certain items in the prior year that I will discuss in more detail on the next slide. Adjusted EPS was up 17%. Simple cash flow of $437 million declined year-over-year as $75 million of EBITDA growth was offset by capital expenditures as we continue to invest in our business for future sustainable growth. Slide 13 provides a breakdown of EPS drivers this quarter. Before reviewing the growth drivers this quarter, it's worth highlighting that reported EPS in the year ago period was impacted by a total of $0.10, reflecting 3 specific items: higher restructuring and other like costs; long-term debt prepayment premium related to the early redemption of long-term debt last year; and income tax-related adjustments, including the BC provincial corporate income tax rate increase from 10% to 11%. Strong EBITDA growth, excluding restructuring and other like costs in both wireless and wireline, was again the primary driver of EPS growth, adding $0.06 to the upside. Lower shares outstanding reflecting our ongoing share repurchase program added $0.03 of growth, and overall TELUS delivered strong double-digit EPS growth on a reported and adjusted basis. Turning to Slide 14. TELUS' continued operational execution combined with our strong balance sheet leaves us well positioned to continue executing on our multiyear shareholder-friendly initiatives, including our dividend growth and share purchase programs. We have raised our quarterly dividend 14x since 2004. Half of those increases have occurred since we implemented our semiannual dividend growth program in May 2011. After raising our quarterly dividend with the release of our first quarter results in May this year, our quarterly dividend is now $0.38 per share or $1.52 annually. Through our 2014 normal-course issuer bid program to the end of July 2014, we have purchased 10.7 million shares for $410 million. TELUS' shares outstanding are now lower year-over-year by approximately 3.7% or 24 million shares. Notably, we have returned over $10 billion in cash to shareholders over the past decade, representing approximately $17 per share. Let me now pass the call back to Paul to take your questions.

Thanks, John. Peter, can you please proceed with questions from the queue for Darren, Joe and John?

Our first question comes from Richard Chow [ph].

Just wanted to touch on the wireless side. Another strong ARPU growth quarter with smartphones at 79%. How much more can this grow? What's usage like and what's driving the ARPU there? Joseph M. Natale: Sure. Why don't I take that, Richard. It's Joe. First of all, we are very pleased with our momentum in wireless, especially the growth in data and the smartphone penetration. I think there's no question there's still lots of upside opportunity on that front. If you look at wireless penetration overall in Canada, it's roughly hovering at 80%, so there's still a ways to go in terms of getting to penetration levels that we see in the U.S., close to 100%. Look, at smartphone penetration of 79%, there is no reason why we can't continue to try to drive forward and gets very close to 100% with respect to smartphone penetration. Every new device that's on the market now is a smartphone of some type or variety overall. Another thing you have to bear in mind also is that we're seeing a lot of customers go from older versions, older vintages of smartphones to newer ones, so sort of this data-to-data migration that goes on when you go from light consumption to heavier consumption. And I think the biggest thing of all that's driving ARPU right now is just the appetite for data. The appetite for data is very strong. It's become a very important factor in everyday life. And as I've said to you on this call in the past, the smartphone has become the remote control for your life. As a result, it insinuated itself into many different activities. And then there's a roaming factor. We are relatively new to the international roaming market outside the U.S., and there's a continued growth opportunity on that front as we only first entered that market in 2009 with the launch of HSPA. In terms of ARPU, overall, certainly as we add tablets and we add bring-your-own-device customers to our base, there is downward pressure on the ARPU number as a whole, but it's largely completely overcome by the data growth and appetite that I just mentioned. One thing I would remind everyone on the call is that TELUS we certainly are probably focused on ARPU, but we're as focused on AMPU or average margin per unit. And at the end of the day, we have some customers in various segments with lower ARPU but very strong margin characteristics, and both are very important factors as we drive forward in our execution.

Your next question comes from Simon Flannery. Simon Flannery - Morgan Stanley, Research Division: Just following up on the wireless strength. The churn was, yes, a really impressive number for you and really relative to most other players out there. Can you -- we've seen this at other players this quarter. Can you just talk through the -- to what extent this reflects the 2-year contracts, the network service but also pending iPhone upgrade where customers are kind of sitting on their hands and really not doing anything. So in other words, how sustainable is it? And you mentioned tablets there a second ago. We are seeing much higher tablets take rates in the U.S. Is that something where you're looking at some of their marketing opportunities as a way to push that deeper into your base over the next couple of quarters? Joseph M. Natale: Sure, Simon. It's Joe again. So first of all, on churn, if it were a 1-quarter anomaly, I might entertain some of the comments that you've made with respect to people suppressing purchasing decisions because of upcoming iconic phones, et cetera, but we haven been on a steady improvement of churn now for a very long time. And stringing 4 quarters in a row at sub-1% is the direct result of the hard work of the TELUS team and a journey now that is 6-years old; a journey in putting Customers First and looking at all the various aspects of rate plans, policies, call center support, web support, all the various touch points with customers that could make or break our relationship with them and will influence their likelihood to recommend TELUS. And I think that's the greatest factor we have at our disposal, and I would say that's the biggest driver that our strong and more resilient, roughly more resilient, churn rate is predicated on. I think at the end of the day customers have choice. The market is still competitively intense, and churn is becoming an overriding factor, especially when you consider that in many markets -- many urban markets in Canada, we're already approaching 100% penetration overall, so churn is the most important driver. And for us, it's imbued in the culture of the organization. It's not a remnant of some particular condition around pricing or plans, et cetera. With respect to tablets, we do think there's an opportunity on the tablet front. We're seeing good growth with respect to tablets. We remain committed to finding mechanisms such that we don't end up in a place where we are subsidizing tablets. Our tablet sales are such that we are seeing many customers add a tablet to their SharePlus plans, and the SharePlus construct has become a very convenient and compelling place for customers to add a tablet. And with the easy-pay program that we've created for customers, where they have an opportunity to pay down the cost of that tablet over time, we've engendered, I think, a good mechanism to continue good growth of the tablet market.

Next question comes from Phillip Huang. Phillip Huang - Barclays Capital, Research Division: A question on the progress of migrating subscribers to 2-year contracts. Would you be able to give us a sense as to the size of your postpaid base that is still on 2-year contract? And also, what do you think is the best strategy for the industry to mitigate the potential churn impact of having more subscribers with expiring contracts by June of next year? Joseph M. Natale: Sure. At the end of the day, we launched SharePlus plans last September. We have seen a good and steady migration to those SharePlus plans. And one of the features of the plans, Phillip, was all-in nationwide long-distance, all-in unlimited texting; and we said to you last year, we did see a long-tail erosion challenge as launched the plans. We've largely gotten to a place where we are overcoming that long-tail erosion. We've managed to actually increase and drive ARPU growth, despite the fact that we're managing that long tail. And we've seen now in the last number of months, us -- seen us cross the line with respect to the number of customers that are re-upping on those plans because the other facility around those plans is they offer a more-for-more value proposition to customers who are willing to trade smaller minute buckets and smaller plans overall for cost certainty with respect to all-in plans. So in the last few months, we've seen the uplift phenomena overshadow the long-tail erosion phenomena that I mentioned a few calls ago. So I think that's a good thing. We're not going to get into the specifics or what percentage of our base is on which plan. I think that's a very competitively sensitive piece of information that won't serve investors well in terms of speaking about it at great length. I think, at the end of the day, it's a good movement overall with respect to the business. And I think your second question was on double cohort and what's happening with respect to double cohort. There's no question, we're seeing a confluence of customers on expiring plans heading into 2015; both 2-year and 3-year plans are coming together. I think a few things you have to bear in mind on that front. One is that heading into our SharePlus and 2-year plans in the previous quarter, 1.5 quarters heading into it, we were seeing as much as 40% of our customers already signing up on 2-year plans. So part of the double cohort challenge has been dampened or lessened because of that factor overall. Secondly, a lot of our customers do midterm upgrades. So they will re-up with us in the middle of a contract, so that's the other factor that will help to kind of flatten that spike that we're going to see heading into 2015. Third factor is with the handset balance construct that we have at TELUS there are many customers that, let's say, will get to a place where their handset balance is $100 and the traded value on their iPhone, for example, might also be $100; so they will take advantage of that moment in time where they can trade in their iPhone for $100, pay off the handset balance and, as a result, again, renew with us, et cetera. So we have a number of these mechanisms at our disposal. Take comfort in the fact that our marketing and sales teams are working very hard to try to flatten out that peak in the fullness of time overall. And we feel confident that, yes, there'll be an impact with respect to that double cohort in 2015, but you got to also understand that it's a onetime impact. It's a onetime impact and won't repeat itself in terms of that bump or that spike. The thing I take the most comfort with is what I talked about a few minutes ago, and that is I really believe in that sort of confluence of customers coming all at once looking to renew their rate plans. And whoever has the lower churn rate has an opportunity to take advantage of that froth in the marketplace. And I think given our leading churn rate at 0.9% postpaid churn and the resiliency around it, the TELUS organization is very well equipped to enter the marketplace next year as all those customers come to market, and that gives me some confidence in that fact.

Our next question comes from Dvai Ghose. Dvaipayan Ghose - Canaccord Genuity, Research Division: Question for Darren and/or Joe. So look, despite the fact that yourselves and your peer Bell have consistently produced excellent wireless results, despite the fact that Rogers is now backing away from very aggressive promotions, despite the fact that new entrants have failed consistently, there is a major fear in the market about fourth player recapitalization risk. And if you ask those who fear it why, they will tell you lower roaming rates from the government. How important are lower roaming rates, potentially from the government, when it comes to the wireless dynamic? And do low rates ensure new entrant success in your view? Joseph M. Natale: Okay, Dvai, I'll handle this. Number 1, I think it would be strange to see the government depart from an infrastructure-based or facilities-based competition model in this country that has served us particularly well. And when you contrast the quality of wireless networks and services in Canada with other jurisdictions that have followed different regulatory models, I do think it reinforces the efficacy of a facilities-based competitive model in Canada. And I would expect any type of adjudication that the government would conclude with, as it relates to the wholesale roaming review, to be consistent with the regulatory thesis of infrastructure-based competition that has served the country and customers effectively well. And if you look at other jurisdictions where they have been on a different model, without a doubt what you've seen is a discouragement of investment that's had very punitive repercussions for those countries where we've seen investment stifle; and of course, when you stifle investment, you stifle innovation. And without a doubt, the investment within technology, in general, and wireless, in particular, is a key factor driving GDP growth within developed countries. So I would expect to see consistency and continuity in terms of the facilities-based competitive model in Canada as being reflected in the outcome of the wholesale roaming review. The other component is that a roaming rate is not a panacea to a successful future for any new entrant. Having worked in a number of jurisdictions around the planet, I've not seen very many sustainable MVNO models, despite any regulatory concessions these companies were afforded; it just didn't turn out to be sustainable. The roaming component overall is but one parameter that a new entrant has to consider. You still have to deploy your own technology from a build perspective, and you have to do that in an environment where the half-life these days on a technology rollover is some 12 months. You've got to invest in developing brand, distribution and marketing. You better do well in client care. Because in looking at how the established players are doing in this industry, I do note that TELUS is not that unique in terms of our improving churn profile. In addition to that, you've got to build your billing systems and processes within your organization. You better get well-acclimatized to the device subsidies that you're going to have to absorb if you're going to have a competitive product profile in the marketplace. And at the end of the day, those things, along with roaming, are the plethora of parameters that new entrants are going to have to process effectively on a sustained basis if they're going to build a competitive model that's effective. So I would not put everything in a view on roaming as the key enabler to success in the future. It is but 1 parameter along with a range of others. And I'm dubious as to deep-seated concessions that would be forthcoming in this area because they would be -- because that would be inconsistent with established regulatory policy.

Next question comes from Maher Yaghi. Maher Yaghi - Desjardins Securities Inc., Research Division: I wanted to get your view on the other ongoing CRTC review regarding wireline wholesale services, specifically the idea of favoring a service-based competition versus sticking, like you said, with the current facilities-based competition. You have made significant investments in fiber deployment. Could you discuss what the impact could be on your operation if the CRTC mandates access to your FTTP facilities? Joseph M. Natale: Yes, I can give you a very conclusive answer to that. We would stop deploying fiber facilities. I think it's interesting to note that the wireline model here is entirely discretionary and modular in nature. It's a bandwidth view that's different than stepping up into a spectrum option on the wireless side where you have to be all-in from the outset. As it relates to a fiber model, it's a progressive modular build plan that is dictated by market circumstances. And if market circumstances change and because someone is commoditizing the value of the asset that's being deployed and the return that you would be expecting to derive from the CapEx investment, then you'll change your CapEx investment decision and if necessary retrench until the market is more favorable to getting a fair return for shareholders on what is a risk-based investment, an investment that's certainly not for the faint of heart given the amount of money it takes not just the deploy fiber but to light it up to -- for customers and to invest in marketing spend to hit a desired penetration rate. And so I think this is entirely within our control, and we will advance our program or rest our program as dictated by market circumstances informed by the regulatory model of the day. I would say, however, that when it comes to competition in Canada and the right regulatory framework, again, I'll go back to infrastructure-based competition has served this country particularly well as a regulatory model. I think when you're in a country like Canada that has our topography, our vast geographical expanses and our demographics, we are in deep need of technology deployment. That's a good thing for us to do, and I think the government and the policies of the government should continue to encourage that, and we've got a very successful track record in that regard. If you look at what facilities-based competition in Canada has delivered for us, the success of that regulatory model, the quality of telecommunication services in Canada are second to none on a global basis. And that's not through happenstance. That's because -- going back to that OECD report -- we're #1 on investment per capita and access path. And as a result of that, when it comes to speed, reliability, coverage considerations and the like, we're unparalleled on a global basis. And I would think that government policy would be loathe to forsake those advantages when technology is such an important underpinning of knowledge-based economies and your competitive standing within G7 and G20 groups. And we've done all that, and we've still been fairly middle-of-the-road in terms of pricing and affordability. We rank, from a pricing perspective, middle of the pack in terms of our G7 peers. And again, that's despite the challenges that we have given the size of our country and the fact that Canadians are extremely high users of voice and data services. And so I would expect to see continuity of that model, but the thing that I like about our fiber program is that it's entirely discretionary and modular, and we will adjust it to the market circumstances in terms of either accelerating or retrenching on our deployment model.

Our next question comes from Vince Valentini. Vince Valentini - TD Securities Equity Research: Can I ask about margins in the wireline sector? If you exclude restructuring costs of sort of 27.6 versus 27.5 last year, so, yes, margins were up but very marginally. Can you update us on your plans to get back to 30% plus and how the pacing of that should go over the next couple of years? John R. Gossling: Sure, Vince, it's John. A couple of data points before I get into that longer view that you've asked about. If you look at the quarter, the wireline operating expenses were flat, absolutely flat. So that's reflecting progress we've made on costs, for sure. The other thing, if you look at the quarter and you're looking at the year-over-year, there was a bit of noise in the prior year, so you'll recall the impact of some rumors last year in the second and third quarter on our share price. That actually has an effect on our mark-to-market of some of our stock-based compensation plans, and that actually lifted the prior year by about $5 million from an EBITDA perspective. So while we don't normalize for that, as some of the others -- our competitors do, that certainly has an impact on the year-over-year. So -- but having said all that, sure, the margin situation, just under 27%, which is a slight improvement from the prior year, as I mentioned, is certainly showing us some progress towards that 30%. I don't think our commitment to getting there has changed at all. I think in terms of what we're doing on costs, as I mentioned at the start, that's a big part of the driver. And of course, the growth that we're seeing from the investments that we're making is also a big part of that story. So there's really not a change in any of our plans there, but, hopefully, that extra color helps you a little bit.

Our next question comes from Drew McReynolds. Drew McReynolds - RBC Capital Markets, LLC, Research Division: Two questions for me. Just first on the residential NAL losses. Obviously, very positive flow-through effects as you've loaded Optik. As the rate of those net adds ease and as promotional subs come off, should we see that positive flow-through impact ease as well? And then second question for, I guess, either Darren or Joe. Just in terms of your spectrum position, we've talked about that the fourth-player dynamics around the build versus wholesale access. Just want to talk about spectrum. We've seen some chunks of spectrum proposed to be set aside in terms of the AWS 3 and AWS 4. From your perspective, are you comfortable with your spectrum position and the roadmap ahead, given where your capacity is relative to data growth? And can you just provide any comment on how the decommissioning of CDMA and iDEN helps improve that spectrum position? Joseph M. Natale: Why don't I start? I'll talk about NAL losses. Maybe, Darren, I'll ask you to make some comments on spectrum. So just I'm clear on your question -- you faded off for a second -- you're saying NAL losses flow-through with respect to EBITDA? Drew McReynolds - RBC Capital Markets, LLC, Research Division: Yes. Just in terms of -- yes. No. No. Sorry, the positive subscriber flow-through, particularly on telephony. Obviously, you're getting positive flow-through effects both for Internet and telephony. Just as the rate of net adds eases should we see that positive flow-through impact that you've been getting ease as well? Joseph M. Natale: Sure. Well, I think it comes down to the quality of that loading and the mix that we're getting overall has the biggest impact on the EBITDA or financial flow-through. Our margin is strongest with respect to high speed and Home Phone and less so with TV, although there's margin in all 3 products. That mix of RGUs is very important. At the end of the day, we're going to continue to bolster our NAL opportunities. We're seeing really most of the NAL erosion coming from wireless substitution at this point in time, materially so -- more so than what we're seeing with respect to competitive losses from our cable competitor. And we'll continue to actually look for ways of taking costs out of the equation as well as we manage through the future. John talked to wireline margins as a whole. We're going after some very important elements of our business on that front. We're finding as we're remediating our infrastructure we're working hard to improve repair rates. Repair rates are an important cost consideration when we look at the various RGUs that we manage or maintain in our portfolio. Calls per customer, another big factor in that equation, overall, and trying to simplify billing, trying to simplify value proposition, various offers that we have so we reduce the number of calls per customer and bolster that with self-serve capabilities as well. Install time is the other area that we're going after. And then, there are a number of elements in the whole COGS line from various pieces of equipment and media and content that we're managing to a better outcome. So I think at the end of the day having that mix, that RGU mix, that is certainly skewed more heavily towards Home Phone and high speed is a good thing in our quest to own the home, and churn rates are holding up very strongly in all 3 categories. I hope that helps eliminate some of the thoughts on that front. Joseph M. Natale: In terms of the spectrum question, and I guess the way you encapsulated it was, are you satisfied with your spectrum position? I would say if there is any wireless company in the world that's satisfied with their spectrum position in a data-consumptive society, I would be quite surprised. So I would say we are personally, consistently, permanently dissatisfied with our spectrum position, but that's borne out of necessity. Because if you're focused on client service excellence, your spectrum philosophy should be informed by what you could do right for the customer through your spectrum acquisition and development strategy. And all of our activities at TELUS work their way back from the customer and serve the customer better from a speed and a reliability perspective, and spectrum is a big part of that. Number 2, in terms of what we're doing to address our requirements on that front. As you alluded to, yes, retiring of technology and redeploying spectrum accordingly is part of the program in that regard. Yes, in terms of spectrum pooling on a partner model and leveraging that when and where appropriate, it's certainly part of our thesis. I would note that when it comes to the upcoming AWS 3 spectrum, I think the fact that we have been strident in managing our balance sheet so prudently puts us in a very competitive position to ensure that we've got a good probability of a positive outcome in securing additional spectrum to meet the requirements of our customer. I also note that there are 2 spectrum auctions coming up in 2015, and I like the dynamic of the 2.5 gig option and the rules as set out and our ability to secure up to 40 megahertz of spectrum within the 2.5 band. And that will be a positive development for our organization on a fairly unique basis. And we're very interested in that spectrum as it relates to LTE and urban deployment. The other thing that people forget about, but when it comes to meeting client requirements, spectrum is 1 component. The other way that you can do it to complement your spectrum utilization is through network densification and cell splitting. So that if you have a given amount of spectrum and you've got to process more bandwidth in that regard, then your ability to invest in network infrastructure from a densification perspective and undertake mathematical cell splitting activity is an important consideration. And in that regard, I would note that we have leveraged quite astutely a network-sharing model with a partner now for 14 years in terms of cost economics that have been beneficial to this organization. Next, although our industry has never been renowned for its marketing efficacy when it comes to the pricing of scarce services, I think looking forward into the future taking a more sanguine view of data pricing would be a sensible thing for us to do given the cost associated with spectrum, given the scarcity of spectrum and given the relentless appetite that customers seem to have for data services. And I think that, that's a good lever to pull to moderate the flow and make sure that demand and supply are in balance and reflective of the type of economics that we have to invest in securing scarce spectrum in the first place. The other thing that I would note is we're well positioned for future spectrum auctions as they come online, including low-band frequencies, such as 600. And our network-sharing model also works very good on the backhaul front, which, again, complements our spectrum position in terms of the overall effectiveness of our bandwidth model for the client. And then lastly, 1 of the things that we're currently working on at the TELUS organization from a deployment perspective is our small cell strategy. And to the extent to which we build a micro wireless network underlay to our macro wireless network and have the ability to offload data from the macro network to the micro network seamlessly for our customers, that will provide both network and spectrum lead for our organization at the macro level, and that's a very important consideration. And as the future gets to networks, seamless interoperable macro -- micro networks, our ability to toggle client traffic from the macro to the micro to relieve pressure on the macro network, including spectrum utilization, will be a very attractive component of our technology strategy.

Next question comes from Jeff Fan. Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division: Two quick ones. Joe, I think you mentioned some of the long-tail erosion related SharePlus that started in the second half of last year. Wondering if that's really going to be the contributor to get your service revenue grow to get to somewhere near the midpoint of your guidance for the year? Is that the key driver as we look out to the second half, along with other factors that we've been seeing? But certainly that year-over-year lapse of that long-tail erosion should help. And the second part of the question is we're seeing what seems to be an increased popularity of the BYOD, the bring-your-own-device, and you mentioned it as well. We -- some carriers are saying that's almost 30% of their activations are now coming on this type of arrangement. Wondering if that's consistent with what you're seeing as well? Joseph M. Natale: Sure. Jeff, first of all, in terms of service revenue as a whole, yes, 1 factor is our lines crossing -- accretive migrations versus long-tail erosion, which I said happened to us in the last number of months and continues to ramp in the right direction. That's one factor. The other factor is we have a number of ARPU and AMPU enhancement initiatives that we're working on right now that will help to support and bolster our efforts on that front. And I feel comfortable that as an organization we've got enough in the pipeline to continue to manage momentum and execution that we've experienced in the past. So that's the kind of short answer on the service revenue and long-tail migration. BYOD. BYOD is an interesting sort of phenomena. It's actually incredibly beneficial to the organization on a few different fronts. First of all, if you look at the AMPU of the BYOD customer, given that there is no subsidy or very limited financial support of any sort on that front, it is a very high AMPU customer as a whole as they kind of add a line. Second factor is that the household that has a number of BYOD customers in it tends to have also some tablet share on the plan as well, and it tends to have a much better churn profile because the household is truly committed to the TELUS organization. And we see a lot of factors within that. Like we see hand-me-down type phenomena where mom or dad gets a new phone, and the phone becomes a BYOD device for someone else in the household as a result. And those are all good factors as we kind of look for ways of maintaining economic efficiency around COA and driving the type of COA marketing efficiency that I spoke about in the opening remarks. So it is an increasing phenomena within our business and our base, but it has very strong AMPU characteristics.

Last question comes from Tim Casey. Tim Casey - BMO Capital Markets Canada: Cable companies continue to purchase data center businesses. You've pursued a buy or a build model on that. Can you talk about how you're -- that business -- what you're seeing in that business and how your go-to-market strategy is positioned? Is it always part of a bundle? Or do you have stand-alone data center customers? And just a general impression of performance in that market. Joseph M. Natale: Sure, Tim. I think, first of all, it's fair to say that we've been in the managed IT services business for a very long time. In fact we were a significant player in that business when I first joined TELUS 11 years ago and been an important part of our strategy from the year 2000 when we made a series of very important investments in developing that capability with understanding and a vision that the future of our business lay in data services, lay in what is now being called cloud services. Back then, I don't think we use the word cloud in that vein, but the intent and the understanding was very much the same 14 years ago, and we've been on a very strong progression on that front ever since. We've made the decision, as you articulated, to build versus buy, and I think we've been well served by that. We have 2 state-of-the-art super Internet data centers, 1 in Kamloops and 1 in Rimouski. And we've had an opportunity to kind of build them, if you will, for the future, and the future for us is really wrapped around the notion of integrated and managed solutions. We see our competitors out there buying data centers and spending hundreds of millions of dollars on data centers. But I look at the composite of revenue in some of the organizations that have been purchased, a lot of them are colocation-based services, which is completely a commodity play, a stand-alone play. It is really more of a real estate play than a managed data center play where you're offering a customer a portion of a space on the floor and light and power around that space and have no real involvement in what they're doing with that space other than providing the real estate and the infrastructure. We are in the data center business to offer integrated solutions, and you see that in what we're doing in health care. You see that with what we're doing with respect to a lot of our managed network services and IT services contracts, where we have become the effective IT and telecom organization for many of our business customers, and you see it in our small business bundles. I've talked in the past about Business Anywhere. Business Anywhere is really a bundle that is a combination of, yes, wireless and wireline connectivity services but also a whole host of data center-centric services, from PC backup and security and other kind of hosted managed offerings that are cloud-like in nature. And in this converged IP world, we're headed to a place where everything becomes an application in a data center, including voice services. And I think we're very well positioned as an organization with the investments that we've made and the purity and focus of those investments from 2000 through the current day without having to have the challenge of integrating disparate pieces with interesting mixes of revenue composition and the like. John R. Gossling: I think it's also important to note that when it comes to privacy and data storage from an identity perspective, doing things onshore versus offshore can be a superior model, particularly when you think about data and privacy considerations in addressing the health care market. So having that domestic capability onshore where we store, house the date of our clients is a superior model to offshore when we're addressing privacy needs but also key verticals, including health care.

On behalf of Darren, Joe and John, thank you for joining us today.

Ladies and gentlemen, this concludes the TELUS 2014 Q2 Earnings Conference Call. Thank you for your participation, and have a nice day.