condensed interim consolidated statements of income and other comprehensive income

(unaudited)

		Three months						Six months
Periods ended June 30 (millions except per share amounts)	Note	2016			2015			2016			2015
OPERATING REVENUES
Service		$	2,952		$	2,884		$	5,876		$	5,713
Equipment		164			208			336			390
Revenues arising from contracts with customers		3,116			3,092			6,212			6,103
Other operating income	6	32			10			44			27
		3,148			3,102			6,256			6,130
OPERATING EXPENSES
Goods and services purchased		1,331			1,372			2,631			2,656
Employee benefits expense	7	628			649			1,296			1,258
Depreciation	16	385			361			770			708
Amortization of intangible assets	17	114			103			229			212
		2,458			2,485			4,926			4,834
OPERATING INCOME		690			617			1,330			1,296
Financing costs	8	134			110			257			227
INCOME BEFORE INCOME TAXES		556			507			1,073			1,069
Income taxes	9	140			166			279			313
NET INCOME		416			341			794			756
OTHER COMPREHENSIVE INCOME	10
Items that may subsequently be reclassified to income
Change in unrealized fair value of derivatives designated as cash flow hedges		1			2			(9		)	(2		)
Foreign currency translation adjustment arising from translating financial statements of foreign operations		6			(5		)	2			5
Change in unrealized fair value of available-for-sale financial assets		(3		)	—			(3		)	(3		)
		4			(3		)	(10		)	—
Item never subsequently reclassified to income
Employee defined benefit plan re-measurements		94			(122		)	17			115
		98			(125		)	7			115
COMPREHENSIVE INCOME		$	514		$	216		$	801		$	871
NET INCOME ATTRIBUTABLE TO:
Common Shares		$	416		$	341		$	794		$	756
Non-controlling interest		—			—			—			—
		$	416		$	341		$	794		$	756
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Common Shares		$	510		$	216		$	797		$	871
Non-controlling interest		4			—			4			—
		$	514		$	216		$	801		$	871
NET INCOME PER COMMON SHARE	11
Basic		$	0.70		$	0.56		$	1.34		$	1.25
Diluted		$	0.70		$	0.56		$	1.34		$	1.24

TOTAL WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		593			605			593			606
Diluted		594			606			594			608

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

condensed interim consolidated statements of financial position

(unaudited)

As at (millions)	Note	June 30, 2016		December 31, 2015
ASSETS
Current assets
Cash and temporary investments, net		$	428	$	223
Accounts receivable	25(a)	1,317		1,428
Income and other taxes receivable		21		1
Inventories	25(a)	351		360
Prepaid expenses		359		213
Real estate joint venture advances	18(c)	41		66
Current derivative assets	4(d)	11		40
		2,528		2,331
Non-current assets
Property, plant and equipment, net	16	10,043		9,736
Intangible assets, net	17	10,250		9,985
Goodwill, net	17	3,761		3,761
Other long-term assets	25(a)	630		593
		24,684		24,075
		$	27,212	$	26,406

LIABILITIES AND OWNERS’ EQUITY
Current liabilities
Short-term borrowings	19	$	103	$	100
Accounts payable and accrued liabilities	25(a)	1,983		1,990
Income and other taxes payable		28		108
Dividends payable	12	274		263
Advance billings and customer deposits	25(a)	749		760
Provisions	20	170		197
Current maturities of long-term debt	21	1,688		856
Current derivative liabilities	4(d)	20		2
		5,015		4,276
Non-current liabilities
Provisions	20	418		433
Long-term debt	21	10,834		11,182
Other long-term liabilities	25(a)	709		688
Deferred income taxes		2,155		2,155
		14,116		14,458
Liabilities		19,131		18,734
Owners’ equity
Common equity	22	8,073		7,672
Non-controlling interest		8		—
		8,081		7,672
		$	27,212	$	26,406
Commitments and Contingent Liabilities	23

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

condensed interim consolidated statements of changes in owners’ equity

(unaudited)

		Common equity
		Equity contributed											Accumulated
		Common Shares (Note 22)											other						Non-
(millions)	Note	Number of shares		Share capital			Contributed surplus			Retained earnings			comprehensive income			Total			controlling interest		Total
Balance as at January 1, 2015		609		$	5,175		$	141		$	2,100		$	38		$	7,454
Net income		—		—			—			756			—			756
Other comprehensive income	10	—		—			—			115			—			115
Dividends	12	—		—			—			(496		)	—			(496		)
Share option award expense	13(a)	—		—			1			—			—			1
Share option award net-equity settlement feature	13(d)	—		4			(4		)	—			—			—
Normal course issuer bid purchase of Common Shares		(7	)	(60		)	—			(231		)	—			(291		)
Liability for automatic share purchase plan commitment pursuant to normal course issuer bids for Common Shares	22(b)
Reversal of opening liability		—		15			—			60			—			75
Recognition of closing liability		—		(16		)	—			(64		)	—			(80		)
Balance as at June 30, 2015		602		$	5,118		$	138		$	2,240		$	38		$	7,534
Balance as at January 1, 2016		594		$	5,050		$	135		$	2,428		$	59		$	7,672		$	—	$	7,672
Net income		—		—			—			794			—			794			—		794
Other comprehensive income	10	—		—			—			17			(14		)	3			4		7
Dividends	12	—		—			—			(535		)	—			(535		)	—		(535		)
Share option award net-equity settlement feature	13(d)	—		1			(1		)	—			—			—			—		—
Normal course issuer bid purchase of Common Shares		(2	)	(25		)	—			(86		)	—			(111		)	—		(111		)
Liability for automatic share purchase plan commitment pursuant to normal course issuer bids for Common Shares	22(b)
Reversal of opening liability		—		14			—			46			—			60			—		60
Recognition of closing liability		—		(10		)	—			(40		)	—			(50		)	—		(50		)
Change in ownership interests of subsidiary	1(b), 25(c)	—		—			240			—			—			240			4		244
Balance as at June 30, 2016		592		$	5,030		$	374		$	2,624		$	45		$	8,073		$	8	$	8,081

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

condensed interim consolidated statements of cash flows

(unaudited)

		Three months						Six months
Periods ended June 30 (millions)	Note	2016			2015			2016			2015
OPERATING ACTIVITIES
Net income		$	416		$	341		$	794		$	756
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		499			464			999			920
Deferred income taxes	9	32			119			1			46
Share-based compensation expense, net	13(a)	22			25			38			2
Net employee defined benefit plans expense	14(a)	22			26			44			54
Employer contributions to employee defined benefit plans		(14		)	(21		)	(39		)	(48		)
Other		(17		)	18			(13		)	14
Net change in non-cash operating working capital	25(b)	(68		)	(29		)	(369		)	(83		)
Cash provided by operating activities		892			943			1,455			1,661
INVESTING ACTIVITIES
Cash payments for capital assets, excluding spectrum licences	25(b)	(614		)	(674		)	(1,260		)	(1,287		)
Cash payments for spectrum licences		(145		)	(1,688		)	(145		)	(1,990		)
Real estate joint ventures advances and contributions	18(c)	(11		)	(16		)	(23		)	(24		)
Real estate joint venture receipts	18(c)	41			1			41			2
Other		(6		)	—			(8		)	(4		)
Cash used by investing activities		(735		)	(2,377		)	(1,395		)	(3,303		)
FINANCING ACTIVITIES	25(c)
Dividends paid to holders of Common Shares	12(a)	(261		)	(243		)	(524		)	(487		)
Purchase of Common Shares for cancellation	22(b)	(61		)	(106		)	(121		)	(262		)
Issuance and repayment of short-term borrowings	19	3			400			3			400
Long-term debt issued	21	2,041			447			3,287			3,294
Redemptions and repayment of long-term debt	21	(2,212		)	(566		)	(2,783		)	(1,277		)
Issue of shares by subsidiary to non-controlling interest	1(b)	292			—			292			—
Other		(9		)	—			(9		)	(9		)
Cash provided (used) by financing activities		(207		)	(68		)	145			1,659
CASH POSITION
Increase (decrease) in cash and temporary investments, net		(50		)	(1,502		)	205			17
Cash and temporary investments, net, beginning of period		478			1,579			223			60
Cash and temporary investments, net, end of period		$	428		$	77		$	428		$	77
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS
Interest paid		$	(132	)	$	(129	)	$	(255	)	$	(214	)
Interest received		$	1		$	3		$	1		$	3
Income taxes paid, net		$	(150	)	$	(63	)	$	(423	)	$	(178	)

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

notes to condensed interim consolidated financial statements

(unaudited)

JUNE 30, 2016

TELUS Corporation is one of Canada’s largest telecommunications companies, providing a wide range of telecommunications services and products, including wireless and wireline voice and data. Data services include: Internet protocol; television; hosting, managed information technology and cloud-based services; healthcare solutions; and business process outsourcing.

TELUS Corporation was incorporated under the Company Act (British Columbia) on October 26, 1998, under the name BCT.TELUS Communications Inc. (BCT). On January 31, 1999, pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act among BCT, BC TELECOM Inc. and the former Alberta-based TELUS Corporation (TC), BCT acquired all of the shares of BC TELECOM Inc. and TC in exchange for Common Shares and Non-Voting Shares of BCT, and BC TELECOM Inc. was dissolved. On May 3, 2000, BCT changed its name to TELUS Corporation and in February 2005, TELUS Corporation transitioned under the Business Corporations Act (British Columbia), successor to the Company Act (British Columbia). TELUS Corporation maintains its registered office at Floor 7, 510 West Georgia Street, Vancouver, British Columbia, V6B 0M3.

The terms “TELUS”, “we”, “us”, “our” or “ourselves” are used to refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.

Notes to condensed interim consolidated financial statements		Page
General application
1.	Condensed interim consolidated financial statements	6
2.	Accounting policy developments	7
3.	Capital structure financial policies	8
4.	Financial instruments	10
Consolidated results of operations focused
5.	Segmented information	15
6.	Other operating income	17
7.	Employee benefits expense	17
8.	Financing costs	17
9.	Income taxes	18
10.	Other comprehensive income	18
11.	Per share amounts	19
12.	Dividends per share	20
13.	Share-based compensation	20
14.	Employee future benefits	23
15.	Restructuring and other costs	24
Consolidated financial position focused
16.	Property, plant and equipment	25
17.	Intangible assets and goodwill	25
18.	Real estate joint ventures	26
19.	Short-term borrowings	29
20.	Provisions	29
21.	Long-term debt	30
22.	Common Share capital	32
23.	Commitments and contingent liabilities	33
Other
24.	Related party transactions	35
25.	Additional financial information	37

1 condensed interim consolidated financial statements

(a) Basis of presentation

The notes presented in our condensed interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our interim consolidated financial statements are referred to as condensed. Our condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2015.

Our condensed interim consolidated financial statements are expressed in Canadian dollars and follow the same accounting policies and methods of their application as set out in our consolidated financial statements for the year ended December 31, 2015, other than as set out in Note 2. The generally accepted accounting principles that we use are International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) and Canadian generally accepted accounting principles. Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.

Our condensed interim consolidated financial statements for the six-month period ended June 30, 2016, were authorized by our Board of Directors for issue on August 5, 2016.

(b) Consolidation

Our consolidated financial statements include our accounts and the accounts of all of our subsidiaries, the principal one of which is TELUS Communications Inc. in which we have a 100% equity interest. Currently, through a 100% equity interest in each of the TELUS Communications Company partnership and the TELE-MOBILE COMPANY partnership, TELUS Communications Inc. includes substantially all of our wireless and wireline segments’ operations.

notes to condensed interim consolidated financial statements

(unaudited)

We manage our capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of our telecommunications infrastructure. In order to maintain or adjust our capital structure, we may adjust the amount of dividends paid to holders of Common Shares, purchase Common Shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or increase or decrease the amount of trade receivables sold to an arm’s-length securitization trust.

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

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

The dividend payout ratio presented is a historical measure calculated as the sum of the last four quarterly dividends declared per Common Share, as recorded in the financial statements, divided by the sum of basic earnings per share for the most recent four quarters for interim reporting periods (divided by annual basic earnings per share if the reported amount is in respect of a fiscal year). The dividend payout ratio of adjusted net earnings presented, also a historical measure, differs in that it excludes the gain on exchange of wireless spectrum licences, net gains and equity income from real estate joint ventures, long-term debt prepayment premium and income tax-related adjustments.

During 2016, our financial objectives, which are reviewed annually and which were unchanged from 2015 other than for a revision to our debt ratio long-term objective, included maintaining the financial objectives set out in the following table. We believe that our financial objectives are supportive of our long-term strategy.

As at, or for the12-month periods ended, June 30 ($ in millions)	Objective	2016			2015
Components of debt and coverage ratios
Net debt 1		$	12,257		$	11,795
EBITDA — excluding restructuring and other costs 2		$	4,596		$	4,414
Net interest cost 3		$	525		$	460
Debt ratio
Net debt to EBITDA — excluding restructuring and other costs	2.00 – 2.50 4	2.67			2.67
Coverage ratios
Earnings coverage 5		4.6			5.1
EBITDA — excluding restructuring and other costs interest coverage 6		8.8			9.6
Other measures
Dividend payout ratio of adjusted net earnings 7		75		%	68		%
Dividend payout ratio	65%–75% 8	74		%	69		%

(1) Net debt is calculated as follows:

As at June 30	Note	2016			2015
Long-term debt	21	$	12,522		$	11,323
Debt issuance costs netted against long-term debt		59			49
Derivative liabilities, net		1			—
Cash and temporary investments, net		(428		)	(77		)
Short-term borrowings	19	103			500
Net debt		$	12,257		$	11,795

(2) EBITDA — excluding restructuring and other costs is calculated as follows:

	EBITDA (Note 5)			Restructuring and other costs (Note 15)			EBITDA — excluding restructuring and other costs
Add
Six-month period ended June 30, 2016	$	2,329		$	71		$	2,400
Year ended December 31, 2015	4,262			226			4,488
Deduct
Six-month period ended June 30, 2015	(2,216		)	(76		)	(2,292		)
EBITDA — excluding restructuring and other costs	$	4,375		$	221		$	4,596

* EBITDA does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define EBITDA as operating revenues less goods and services purchased and employee benefits expense. We have issued guidance on, and report, EBITDA because it is a key measure that management uses to evaluate the performance of our business and it is also utilized in measuring compliance with certain debt covenants.

notes to condensed interim consolidated financial statements

(unaudited)

(3) Net interest cost is defined as financing costs, excluding employee defined benefit plans net interest and recoveries on long-term debt prepayment premium and repayment of debt, calculated on a 12-month trailing basis (expenses recorded for long-term debt prepayment premium, if any, are included in net interest cost).

(4) Our long-term objective range for this ratio is 2.00 — 2.50 times. The ratio as at June 30, 2016, is outside the long-term objective range. In the short term, we may permit this ratio to go outside the objective range (for long-term investment opportunities), but will endeavor to return this ratio to within the objective range in the medium term, as we believe that this range is supportive of our long-term strategy. We are well in compliance with our credit facilities leverage ratio covenant which states that we may not permit our net debt to operating cash flow ratio to exceed 4.00:1.00 (see Note 21(d)); the calculation of the debt ratio is substantially similar to the calculation of the leverage ratio covenant in our credit facilities.

(5) Earnings coverage is defined as net income before borrowing costs and income tax expense, divided by borrowing costs (interest on long-term debt; interest on short-term borrowings and other; long-term debt prepayment premium); and adding back capitalized interest.

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

(7) Adjusted net earnings attributable to Common Shares is calculated as follows:

12-month periods ended June 30	2016			2015
Net income attributable to Common Shares	$	1,420		$	1,423
Gain from exchange of wireless spectrum licences, after income taxes	(13		)	—
Gain and net equity income related to real estate redevelopment project, after income taxes	(5		)	—
Income tax-related adjustments	(13		)	11
Long-term debt prepayment premium, after income tax	—			10
Adjusted net earnings attributable to Common Shares	$	1,389		$	1,444

(8) Our target guideline for the dividend payout ratio is 65%—75% of sustainable earnings on a prospective basis.

Net debt to EBITDA — excluding restructuring and other costs was 2.67 times as at June 30, 2016, unchanged from one year earlier. The increase in net debt, primarily due to the purchase of spectrum licences, was offset by growth in EBITDA — excluding restructuring and other costs. The earnings coverage ratio for the twelve-month period ended June 30, 2016, was 4.6 times, down from 5.1 times one year earlier. Higher borrowing costs reduced the ratio by 0.4 and lower income before borrowing costs and income taxes reduced the ratio by 0.1. The EBITDA — excluding restructuring and other costs interest coverage ratio for the twelve-month period ended June 30, 2016, was 8.8 times, down from 9.6 times one year earlier. Growth in EBITDA — excluding restructuring and other costs increased the ratio by 0.4, while an increase in net interest costs reduced the ratio by 1.2.

4 financial instruments

(a) Credit risk

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

As at (millions)	June 30, 2016		December 31, 2015
Cash and temporary investments, net	$	428	$	223
Accounts receivable	1,317		1,428
Derivative assets	15		40
	$	1,760	$	1,691

Cash and temporary investments

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

Accounts receivable

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

The following table presents an analysis of the age of customer accounts receivable for which an allowance has not been made as at the dates of the Condensed interim consolidated statements of financial position. As at June 30, 2016, the weighted average age of customer accounts receivable was 29 days (December 31, 2015 — 28 days) and the weighted average age of past-due customer accounts receivable was 67 days (December 31, 2015 — 62 days). Any late payment charges are levied, at an industry-based market or negotiated rate, on outstanding non-current customer account balances.

notes to condensed interim consolidated financial statements

(unaudited)

As at (millions)	Note	June 30, 2016			December 31, 2015
Customer accounts receivable, net of allowance for doubtful accounts
Less than 30 days past billing date		$	774		$	823
30-60 days past billing date		156			208
61-90 days past billing date		38			52
More than 90 days past billing date		61			64
		$	1,029		$	1,147
Customer accounts receivable	25(a)	$	1,081		$	1,199
Allowance for doubtful accounts		(52		)	(52		)
		$	1,029		$	1,147

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

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

	Three months						Six months
Periods ended June 30 (millions)	2016			2015			2016			2015
Balance, beginning of period	$	52		$	48		$	52		$	44
Additions (doubtful accounts expense)	13			10			29			29
Net use	(13		)	(8		)	(29		)	(23		)
Balance, end of period	$	52		$	50		$	52		$	50

Derivative assets (and derivative liabilities)

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

(b) Liquidity risk

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

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

· maintaining bilateral bank facilities (Note 19) and syndicated credit facilities (Note 21(d)-(e));

· maintaining an agreement to sell trade receivables to an arm’s-length securitization trust (Note 19);

· maintaining a commercial paper program (Note 21(c));

· maintaining an in-effect shelf prospectus;

· continuously monitoring forecast and actual cash flows; and

· managing maturity profiles of financial assets and financial liabilities.

Our debt maturities in future years are as disclosed in Note 21(f). As at June 30, 2016, we could offer $3.0 billion of debt or equity securities pursuant to a shelf prospectus that is in effect until April 2018 (December 31, 2015 — $250 million until December 2016). We believe that our investment grade credit ratings contribute to reasonable access to capital markets.

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

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

notes to condensed interim consolidated financial statements

(unaudited)

	Non-derivative								Derivative
	Non-interest				Construction		Composite long-term debt
As at June 30,	bearing				credit facilities		Long-term		Currency swap agreement							Currency swap agreement
2016	financial		Short-term		commitment		debt 1		amounts to be exchanged 3							amounts to be exchanged
(millions)	liabilities		borrowings 1		(Note 18) 2		(Note 21)		(Receive)			Pay		Other		(Receive)			Pay		Total
2016	$	1,700	$	103	$	108	$	1,234	$	(976	)	$	977	$	—	$	(230	)	$	236	$	3,152
2017	158		—		—		1,197		—			—		4		(210		)	214		1,363
2018	9		—		—		728		—			—		—		—			—		737
2019	8		—		—		1,476		—			—		—		—			—		1,484
2020	6		—		—		1,425		—			—		—		—			—		1,431
Thereafter	14		—		—		12,366		—			—		—		—			—		12,380
Total	$	1,895	$	103	$	108	$	18,426	$	(976	)	$	977	$	4	$	(440	)	$	450	$	20,547
							Total (Note 21(f))					$	18,427

(1) Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at June 30, 2016.

(2) The drawdowns on the construction credit facilities are expected to occur as construction progresses through 2018.

(3) The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar denominated long-term debt, and the corresponding amounts in the long-term debt currency swaps receive column, have been determined based upon the currency exchange rates in effect as at June 30, 2016. The hedged U.S. dollar denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swaps pay column as gross cash flows are exchanged pursuant to the currency swap agreements.

	Non-derivative								Derivative
As at	Non-interest				Construction		Composite long-term debt
December 31,	bearing				credit facilities		Long-term		Currency swap agreement							Currency swap agreement
2015	financial		Short-term		commitment		debt 1		amounts to be exchanged 3							amounts to be exchanged
(millions)	liabilities		borrowings 1		(Note 18) 2		(Note 21)		(Receive)			Pay		Other		(Receive)			Pay		Total
2016	$	1,895	$	101	$	131	$	1,353	$	(256	)	$	242	$	4	$	(415	)	$	390	$	3,445
2017	28		—		—		1,174		—			—		9		—			—		1,211
2018	8		—		—		705		—			—		—		—			—		713
2019	6		—		—		1,453		—			—		—		—			—		1,459
2020	6		—		—		1,402		—			—		—		—			—		1,408
Thereafter	6		—		—		12,057		—			—		—		—			—		12,063
Total	$	1,949	$	101	$	131	$	18,144	$	(256	)	$	242	$	13	$	(415	)	$	390	$	20,299
							Total					$	18,130

(2) The drawdowns on the construction credit facilities are expected to occur as construction progresses through 2018.

(3) The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar denominated long-term debt, and the corresponding amounts in the long-term debt currency swaps receive column, have been determined based upon the currency exchange rates in effect as at December 31, 2015. The hedged U.S. dollar denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swaps pay column as gross cash flows are exchanged pursuant to the currency swap agreements.

(c) Market risk

Net income and other comprehensive income for the six-month periods ended June 30, 2016 and 2015, could have varied if the Canadian dollar: U.S. dollar exchange rate and our Common Share price varied by reasonably possible amounts from their actual statement of financial position date amounts.

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

The sensitivity analysis of our exposure to other price risk arising from share-based compensation at the reporting date has been determined based upon a hypothetical change taking place at the relevant statement of financial position date. The relevant notional number of Common Shares at the statement of financial position date, which includes those in the cash-settled equity swap agreements, has been used in the calculations.

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

notes to condensed interim consolidated financial statements

(unaudited)

Six-month periods ended June 30	Net income						Other comprehensive income						Comprehensive income
(increase (decrease) in millions)	2016			2015			2016			2015			2016			2015
Reasonably possible changes in market risks 1
10% change in Cdn.$: U.S.$ exchange rate
Canadian dollar appreciates	$	(3	)	$	(24	)	$	(6	)	$	(5	)	$	(9	)	$	(29	)
Canadian dollar depreciates	$	3		$	22		$	6		$	5		$	9		$	27
25% 2 change in Common Share price 3
Price increases	$	(12	)	$	(7	)	$	20		$	18		$	8		$	11
Price decreases	$	8		$	7		$	(20	)	$	(18	)	$	(12	)	$	(11	)

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

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

No consideration has been made for a difference in the notional number of Common Shares associated with share-based compensation awards made during the reporting period that may have arisen due to a difference in the Common Share price.

(2) To facilitate ongoing comparison of sensitivities, a constant variance of approximate magnitude has been used. Reflecting a twelve-month data period and calculated on a monthly basis, the volatility of our Common Share price as at June 30, 2016, was 16.2% (2015 — 10.5%).

(3) The hypothetical effects of changes in the price of our Common Shares are restricted to those which would arise from our share-based compensation awards that are accounted for as liability instruments and the associated cash-settled equity swap agreements.

(d) Fair values

General

The carrying values of cash and temporary investments, accounts receivable, short-term obligations, short-term borrowings, accounts payable and certain provisions (including restructuring accounts payable) approximate their fair values due to the immediate or short-term maturity of these financial instruments. The fair values are determined directly by reference to quoted market prices in active markets.

The carrying values of our investments accounted for using the cost method do not exceed their fair values. The fair values of our investments accounted for as available-for-sale are based on quoted market prices in active markets or other clear and objective evidence of fair value.

The fair value of our long-term debt is based on quoted market prices in active markets.

The fair values of the derivative financial instruments we use to manage our exposure to currency risks are estimated based upon quoted market prices in active markets for the same or similar financial instruments or on the current rates offered to us for financial instruments of the same maturity, as well as discounted future cash flows determined using current rates for similar financial instruments subject to similar risks and maturities (such fair value estimates being largely based on the Canadian dollar: U.S. dollar forward exchange rate as at the statement of financial position dates).

The fair values of the derivative financial instruments we use to manage our exposure to increases in compensation costs arising from certain forms of share-based compensation are based upon fair value estimates of the related cash-settled equity forward agreements provided by the counterparty to the transactions (such fair value estimates being largely based on our Common Share price as at the statement of financial position dates).

The financial instruments that we measure at fair value on a recurring basis in periods subsequent to initial recognition and the level within the fair value hierarchy at which they are measured are as set out in the following table.

					Fair value measurements at reporting date using
					Quoted prices in active markets for identical items				Significant other observable inputs				Significant unobservable inputs
	Carrying value				(Level 1)				(Level 2)				(Level 3)
As at (millions)	June 30, 2016		Dec. 31, 2015		June 30, 2016		Dec. 31, 2015		June 30, 2016		Dec. 31, 2015		June 30, 2016		Dec. 31, 2015
Assets
Foreign exchange derivatives	$	9	$	40	$	—	$	—	$	9	$	40	$	—	$	—
Share-based compensation derivatives	6		—		—		—		6		—		—		—
Available-for-sale portfolio investments	26		30		1		2		25		28		—		—
	$	41	$	70	$	1	$	2	$	40	$	68	$	—	$	—
Liabilities
Foreign exchange derivatives	$	20	$	—	$	—	$	—	$	20	$	—	$	—	$	—
Share-based compensation derivatives	4		11		—		—		4		11		—		—
	$	24	$	11	$	—	$	—	$	24	$	11	$	—	$	—

notes to condensed interim consolidated financial statements

(unaudited)

Derivative

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

			June 30, 2016				December 31, 2015
As at (millions)	Designation	Maximum maturity date	Notional amount		Fair value and carrying value		Notional amount		Fair value and carrying value
Current Assets 1
Derivatives used to manage
Currency risks arising from U.S. dollar denominated purchases	HFT 2	2016	$	8	$	3	$	115	$	15
Currency risks arising from U.S. dollar denominated purchases	HFH 3	2017	$	84	1		$	161	11
Currency risks arising from U.S. dollar revenues	HFT 2	2017	$	29	—		$	62	—
Changes in share-based compensation costs (Note 13(b))	HFH 3	2016	$	67	2		$	—	—
Currency risks arising from U.S. dollar denominated commercial paper (Note 21(c))	HFH 3	2016	$	416	5		$	243	14
					$	11			$	40
Other Long-Term Assets 1
Derivatives used to manage
Changes in share-based compensation costs (Note 13(b))	HFH 3	2018	$	75	$	4	$	—	$	—
Current Liabilities 1
Derivatives used to manage
Currency risks arising from U.S. dollar denominated purchases	HFT 2	2016	$	—	$	—	$	31	$	—
Currency risks arising from U.S. dollar denominated purchases	HFH 3	2017	$	264	14		$	11	—
Currency risks arising from U.S. dollar revenues	HFT 2	2017	$	65	—		$	8	—
Changes in share-based compensation costs (Note 13(b))	HFH 3	2016	$	7	—		$	71	2
Currency risks arising from U.S. dollar denominated commercial paper (Note 21(c))	HFH 3	2016	$	561	6		$	—	—
					$	20			$	2
Other Long-Term Liabilities 1
Derivatives used to manage
Changes in share-based compensation costs (Note 13(b))	HFH 3	2017	$	65	$	4	$	68	$	9

(1) Derivative financial assets and liabilities are not set off.

(2) Designated as held for trading (HFT) upon initial recognition; hedge accounting is not applied.

(3) Designated as held for hedging (HFH) upon initial recognition (cash flow hedging item); hedge accounting is applied.

Non-derivative

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

June 30, 2016

December 31, 2015

As at (millions)

Carrying
value

Fair value

Carrying
value

Fair value

Long-term debt (Note 21)

12,522

13,399

12,038

12,575

(e) Recognition of derivative gains and losses

The following table sets out the gains and losses, excluding income tax effects, on derivative instruments that are classified as cash flow hedging items and their location within the Condensed interim consolidated statements of income and other comprehensive income. There was no ineffective portion of derivative instruments classified as cash flow hedging items for the periods presented.

notes to condensed interim consolidated financial statements

(unaudited)

	Amount of gain (loss) recognized in other comprehensive income					Gain (loss) reclassified from other comprehensive income to income (effective portion) (Note 10)
	(effective portion) (Note 10)						Amount
(millions)	2016			2015		Location	2016			2015
THREE-MONTH PERIODS ENDED JUNE 30
Derivatives used to manage:
Currency risks arising from U.S. dollar denominated purchases	$	(1	)	$	1	Goods and services purchased	$	(3	)	$	—
Changes in share-based compensation costs (Note 13(b))	(3		)	5		Employee benefits expense	(1		)	3
Currency risks arising from U.S. dollar denominated commercial paper (Note 21(c))	(14		)	—		Financing costs	(14		)	—
	$	(18	)	$	6		$	(18	)	$	3

SIX-MONTH PERIODS ENDED JUNE 30
Derivatives used to manage:
Currency risks arising from U.S. dollar denominated purchases	$	(24	)	$	1	Goods and services purchased	$	(2	)	$	—
Changes in share-based compensation costs (Note 13(b))	15			5		Employee benefits expense	6			8
Currency risks arising from U.S. dollar denominated commercial paper (Note 21(c))	(52		)	—		Financing costs	(52		)	—
	$	(61	)	$	6		$	(48	)	$	8

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

		Gain (loss) recognized in income on derivatives
		Three months					Six months
Periods ended June 30 (millions)	Location	2016		2015			2016		2015
Derivatives used to manage currency risks	Financing costs	$	2	$	(1	)	$	—	$	9

5 segmented information

General

The operating segments that are regularly reported to our Chief Executive Officer (our chief operating decision-maker) are wireless and wireline. Operating segments are components of an entity that engage in business activities from which they earn revenues and incur expenses (including revenues and expenses related to transactions with the other component(s)), the operating results of which are regularly reviewed by a chief operating decision-maker to make resource allocation decisions and to assess performance.

As we do not currently aggregate operating segments, our reportable segments are also wireless and wireline. The wireless segment includes network revenues (data and voice) and equipment sales. The wireline segment includes data revenues (which includes Internet protocol; television; hosting, managed information technology and cloud-based services; business process outsourcing; and certain healthcare solutions), voice revenues, and other telecommunications services revenues, excluding wireless. Segmentation is based on similarities in technology, the technical expertise required to deliver the services and products, customer characteristics, the distribution channels used and regulatory treatment. Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties.

The following segmented information is regularly reported to our chief operating decision-maker.

notes to condensed interim consolidated financial statements

(unaudited)

Three-month periods ended	Wireless				Wireline				Eliminations						Consolidated
June 30 (millions)	2016		2015		2016		2015		2016			2015			2016		2015
Operating revenues
External revenue	$	1,754	$	1,722	$	1,394	$	1,380	$	—		$	—		$	3,148	$	3,102
Intersegment revenue	14		14		48		43		(62		)	(57		)	—		—
	$	1,768	$	1,736	$	1,442	$	1,423	$	(62	)	$	(57	)	$	3,148	$	3,102
EBITDA 1	$	793	$	719	$	396	$	362	$	—		$	—		$	1,189	$	1,081
CAPEX, excluding spectrum licences 2	$	258	$	227	$	511	$	437	$	—		$	—		$	769	$	664
									Operating revenues (above)						$	3,148	$	3,102
									Goods and services purchased						1,331		1,372
									Employee benefits expense						628		649
									EBITDA (above)						1,189		1,081
									Depreciation						385		361
									Amortization						114		103
									Operating income						690		617
									Financing costs						134		110
									Income before income taxes						$	556	$	507

(1) Earnings before interest, income taxes, depreciation and amortization (EBITDA) does not have any standardized meaning prescribed by IFRS-IASB and is therefore unlikely to be comparable to similar measures presented by other issuers; we define EBITDA as operating revenues less goods and services purchased and employee benefits expense. We have issued guidance on, and report, EBITDA because it is a key measure that management uses to evaluate the performance of our business, and it is also utilized in measuring compliance with certain debt covenants.

(2) Total capital expenditures (CAPEX); see Note 25(b) for a reconciliation of capital expenditures, excluding spectrum licences to cash payments for capital assets, excluding spectrum licences reported in the Condensed interim consolidated statements of cash flows.

Six-month periods ended June 30	Wireless				Wireline				Eliminations						Consolidated
(millions)	2016		2015		2016		2015		2016			2015			2016		2015
Operating revenues
External revenue	$	3,456	$	3,394	$	2,800	$	2,736	$	—		$	—		$	6,256	$	6,130
Intersegment revenue	28		28		95		86		(123		)	(114		)	—		—
	$	3,484	$	3,422	$	2,895	$	2,822	$	(123	)	$	(114	)	$	6,256	$	6,130
EBITDA 1	$	1,549	$	1,463	$	780	$	753	$	—		$	—		$	2,329	$	2,216
CAPEX, excluding spectrum licences 2	$	438	$	475	$	949	$	824	$	—		$	—		$	1,387	$	1,299
									Operating revenues (above)						$	6,256	$	6,130
									Goods and services purchased						2,631		2,656
									Employee benefits expense						1,296		1,258
									EBITDA (above)						2,329		2,216
									Depreciation						770		708
									Amortization						229		212
									Operating income						1,330		1,296
									Financing costs						257		227
									Income before income taxes						$	1,073	$	1,069

Geographical information

We attribute revenues from external customers to individual countries on the basis of the location where the goods and/or services are provided. We do not have material revenues that we attribute to countries other than Canada (our country of domicile), nor do we have material amounts of property, plant, equipment, intangible assets and/or goodwill located outside of Canada.

notes to condensed interim consolidated financial statements

(unaudited)

6 other operating income

		Three months					Six months
Periods ended June 30 (millions)	Note	2016		2015			2016		2015
Government assistance, including deferral account amortization		$	9	$	12		$	18	$	24
Investment income (loss)		9		(2		)	9		(2		)
Interest income	18(c)	1		1			1		2
Gain (loss) on disposal of assets and other		13		(1		)	16		3
		$	32	$	10		$	44	$	27

7 employee benefits expense

		Three months						Six months
Periods ended June 30 (millions)	Note	2016			2015			2016			2015
Employee benefits expense — gross
Wages and salaries		$	631		$	625		$	1,258		$	1,220
Share-based compensation 1	13	30			34			55			64
Pensions — defined benefit	14(a)	22			26			44			54
Pensions — defined contribution	14(b)	20			20			44			45
Restructuring costs 1	15(b)	11			29			55			34
Other		39			37			78			77
		753			771			1,534			1,494
Capitalized internal labour costs
Property, plant and equipment		(83		)	(82		)	(157		)	(159		)
Intangible assets subject to amortization		(42		)	(40		)	(81		)	(77		)
		(125		)	(122		)	(238		)	(236		)
		$	628		$	649		$	1,296		$	1,258

(1) For the three-month and six-month periods ended June 30, 2016, $NIL (2015 — $NIL) and $2 (2015 — $NIL), respectively, of share-based compensation was included in restructuring costs.

8 financing costs

		Three months						Six months
Periods ended June 30 (millions)	Note	2016			2015			2016			2015
Interest expense
Interest on long-term debt — gross		$	134		$	127		$	267		$	240
Capitalized long-term debt interest 1		(11		)	(9		)	(28		)	(9		)
Interest on long-term debt — net		123			118			239			231
Interest on short-term borrowings and other		1			2			2			3
Interest accretion on provisions	20	3			3			6			6
		127			123			247			240
Employee defined benefit plans net interest	14(a)	1			6			2			13
Foreign exchange		7			2			9			(5		)
		135			131			258			248
Interest income
Interest on income tax refunds		—			(20		)	—			(20		)
Other		(1		)	(1		)	(1		)	(1		)
		(1		)	(21		)	(1		)	(21		)
		$	134		$	110		$	257		$	227

(1) Long-term debt interest at a composite rate of 3.31% was capitalized to intangible assets with indefinite lives.

notes to condensed interim consolidated financial statements

(unaudited)

9 income taxes

	Three months						Six months
Periods ended June 30 (millions)	2016			2015			2016			2015
Current income tax expense
For current reporting period	$	110		$	124		$	280		$	344
Adjustments recognized in the current period for income taxes of prior periods	(2		)	(77		)	(2		)	(77		)
	108			47			278			267
Deferred income tax expense (recovery)
Arising from the origination and reversal of temporary differences	30			13			(2		)	(60		)
Revaluation of deferred income tax liability to reflect future statutory income tax rates	—			48			1			48
Adjustments recognized in the current period for income taxes of prior periods	2			58			2			58
	32			119			1			46
	$	140		$	166		$	279		$	313

Our income tax expense and effective income tax rate differs from that calculated by applying the applicable statutory rates for the following reasons:

Three-month periods ended June 30 ($ in millions)	2016					2015
Income taxes computed at applicable statutory rates	$	148		26.5	%	$	134		26.6	%
Revaluation of deferred income tax liability to reflect future income tax rates	—			—		48			9.5
Adjustments recognized in the current period for income taxes of prior periods	—			—		(19		)	(3.7	)
Other	(8		)	(1.3	)	3			0.3
Income tax expense per Condensed interim consolidated statements of income and other comprehensive income	$	140		25.2	%	$	166		32.7	%

Six-month periods ended June 30 ($ in millions)	2016					2015
Income taxes computed at applicable statutory rates	$	285		26.6	%	$	282		26.5	%
Revaluation of deferred income tax liability to reflect future income tax rates	1			0.1		48			4.5
Adjustments recognized in the current period for income taxes of prior periods	—			—		(19		)	(1.8	)
Other	(7		)	(0.7	)	2			0.1
Income tax expense per Condensed interim consolidated statements of income and other comprehensive income	$	279		26.0	%	$	313		29.3	%

10 other comprehensive income

	Items that may subsequently be reclassified to income																		Item never reclassified to income
	Change in unrealized fair value of derivatives designated as cash flow hedges in current period (Note 4(e))									Cumulative			Change in unrealized fair
(millions)	Gains (losses) arising			Prior period (gains) losses transferred to net income			Total			foreign currency translation adjustment			value of available-for- sale financial assets			Accumulated other comp. income			Employee defined benefit plan re-measurements			Other comp. income
THREE-MONTH PERIODS ENDED JUNE 30
Accumulated balance as at April 1, 2015							$	—		$	28		$	13		$	41
Other comprehensive income (loss)
Amount arising	$	6		$	(3	)	3			(5		)	1			(1		)	$	(174	)	$	(175	)
Income taxes	$	1		$	—		1			—			1			2			(52		)	(50		)
Net							2			(5		)	—			(3		)	$	(122	)	$	(125	)
Accumulated balance as at June 30, 2015							$	2		$	23		$	13		$	38
Accumulated balance as at April 1, 2016							$	(10	)	$	39		$	16		$	45
Other comprehensive income (loss)
Amount arising	$	(18	)	$	18		—			6			(3		)	3			$	129		$	132
Income taxes	$	(6	)	$	5		(1		)	—			—			(1		)	35			34
Net							1			6			(3		)	4			$	94		$	98
Accumulated balance as at June 30, 2016							$	(9	)	$	45		$	13		$	49

notes to condensed interim consolidated financial statements

(unaudited)

	Items that may subsequently be reclassified to income																	Item never reclassified to income
	Change in unrealized fair value of
	derivatives designated as cash flow											Change in
	hedges in current period (Note 4(e))									Cumulative		unrealized fair
(millions)	Gains (losses) arising			Prior period (gains) losses transferred to net income			Total			foreign currency translation adjustment		value of available-for- sale financial assets			Accumulated other comp. income			Employee defined benefit plan re-measurements		Other comp. income
SIX-MONTH PERIODS ENDED JUNE 30
Accumulated balance as at January 1, 2015							$	4		$	18	$	16		$	38
Other comprehensive income (loss)
Amount arising	$	6		$	(8	)	(2		)	5		(3		)	—			$	147	$	147
Income taxes	$	1		$	(1	)	—			—		—			—			32		32
Net							(2		)	5		(3		)	—			$	115	$	115
Accumulated balance as at June 30, 2015							$	2		$	23	$	13		$	38
Accumulated balance as at January 1, 2016							$	—		$	43	$	16		$	59
Other comprehensive income (loss)
Amount arising	$	(61	)	$	48		(13		)	2		(3		)	(14		)	$	24	$	10
Income taxes	$	(17	)	$	13		(4		)	—		—			(4		)	7		3
Net							(9		)	2		(3		)	(10		)	$	17	$	7
Accumulated balance as at June 30, 2016							$	(9	)	$	45	$	13		$	49
Attributable to:
Common Shares															$	45
Non-controlling interest															4
															$	49

As at June 30, 2016, our estimate of the net amount of existing gains (losses) arising from the unrealized fair value of derivatives designated as cash flow hedges that are reported in accumulated other comprehensive income and are expected to be reclassified to net income in the next twelve months, excluding income tax effects, is $NIL.

11 per share amounts

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

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

	Three months		Six months
Periods ended June 30 (millions)	2016	2015	2016	2015
Basic total weighted average number of Common Shares outstanding	593	605	593	606
Effect of dilutive securities
Share option awards	1	1	1	2
Diluted total weighted average number of Common Shares outstanding	594	606	594	608

For the three-month and six-month periods ended June 30, 2016 and 2015, no outstanding share option awards were excluded in the computation of diluted net income per Common Share.

notes to condensed interim consolidated financial statements

(unaudited)

12 dividends per share

(a) Dividends declared

Three-month periods ended

June 30 (millions except per

2016

2015

share amounts)

Declared

Paid to

Declared

Paid to

Common Share dividends

Effective

Per share

shareholders

Total

Effective

Per share

shareholders

Total

Quarter 1 dividend

Mar. 11, 2016

0.44

Apr. 1, 2016

261

Mar. 11, 2015

0.40

Apr. 1, 2015

243

Quarter 2 dividend

Jun. 10, 2016

0.46

Jul. 4, 2016

274

Jun. 10, 2015

0.42

Jul. 2, 2015

253

0.90

535

0.82

496

On August 4, 2016, the Board of Directors declared a quarterly dividend of $0.46 per share on our issued and outstanding Common Shares payable on October 3, 2016, to holders of record at the close of business on September 9, 2016. The final amount of the dividend payment depends upon the number of Common Shares issued and outstanding at the close of business on September 9, 2016.

(b) Dividend Reinvestment and Share Purchase Plan

We have a Dividend Reinvestment and Share Purchase Plan under which eligible holders of Common Shares may acquire additional Common Shares by reinvesting dividends and by making additional optional cash payments to the trustee. Under this Plan, we have the option of offering Common Shares from Treasury or having the trustee acquire Common Shares in the stock market.

We may, at our discretion, offer Common Shares at a discount of up to 5% from the market price under the Plan. We opted to have the trustee acquire the Common Shares in the stock market with no discount offered. In respect of Common Share dividends declared during the three-month and six-month periods ended June 30, 2016, $14 million (2015 — $12 million) and $30 million (2015 — $27 million), respectively, was to be reinvested in Common Shares.

13 share-based compensation

(a) Details of share-based compensation expense

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

	2016							2015
Three-month periods ended June 30 (millions)	Employee benefits expense		Associated operating cash outflows			Statement of cash flows adjustment		Employee benefits expense		Associated operating cash outflows			Statement of cash flows adjustment
Restricted stock units 1	$	20	$	2		$	22	$	25	$	—		$	25
Employee share purchase plan	10		(10		)	—		9		(9		)	—
Share option awards	—		—			—		—		—			—
	$	30	$	(8	)	$	22	$	34	$	(9	)	$	(25	)

(1) The expense arising from restricted stock units was net of cash-settled equity swap agreement effects (see Note 4(e)). Within employee benefits expense (see Note 7), restricted stock unit expense of $20 (2015 — $25) is presented as share-based compensation and the balance is included in restructuring costs.

	2016							2015
Six-month periods ended June 30 (millions)	Employee benefits expense		Associated operating cash outflows			Statement of cash flows adjustment		Employee benefits expense		Associated operating cash outflows			Statement of cash flows adjustment
Restricted stock units 1	$	38	$	—		$	38	$	44	$	(43	)	$	1
Employee share purchase plan	19		(19		)	—		19		(19		)	—
Share option awards	—		—			—		1		—			1
	$	57	$	(19	)	$	38	$	64	$	(62	)	$	2

(1) The expense arising from restricted stock units was net of cash-settled equity swap agreement effects (see Note 4(e)). Within employee benefits expense (see Note 7), restricted stock unit expense of $36 (2015 — $44) is presented as share-based compensation and the balance is included in restructuring costs.

notes to condensed interim consolidated financial statements

(unaudited)

For the three-month and six-month periods ended June 30, 2016, the associated operating cash outflows in respect of restricted stock units are net of cash inflows arising from the cash-settled equity swap agreements of $3 million (2015 — $2 million) and $4 million (2015 — $17 million), respectively. For the three-month and six-month periods ended June 30, 2016, the income tax benefit arising from share-based compensation was $8 million (2015 — $9 million) and $15 million (2015 — $17 million), respectively.

(b) Restricted stock units

We use restricted stock units as a form of retention and incentive compensation. Each restricted stock unit is nominally equal in value to one Common Share and is nominally entitled to the dividends that would arise thereon if it were an issued and outstanding Common Share. The notional dividends are recorded as additional issuances of restricted stock units during the life of the restricted stock unit. Due to the notional dividend mechanism, the grant-date fair value of restricted stock units equals the fair market value of the corresponding Common Shares at the grant date. The restricted stock units generally become payable when vesting is completed and typically vest over a period of 33 months (the requisite service period). The vesting method of restricted stock units, which is determined on or before the date of grant, may be either cliff or graded; the majority of restricted stock units outstanding have cliff vesting. The associated liability is normally cash-settled.

We also award restricted stock units that largely have the same features as our general restricted stock units, but have a variable payout (0% — 200%) depending upon the achievement of our total customer connections performance condition (with a weighting of 25%) and the total shareholder return on our Common Shares relative to an international peer group of telecommunications companies (with a weighting of 75%). The grant-date fair value of the notional subset of our restricted stock units affected by the total customer connections performance condition equals the fair market value of the corresponding Common Shares at the grant date and thus the notional subset has been included in the presentation of our restricted stock units with only service conditions. The recurring estimate, which reflects a variable payout, of the fair value of the notional subset of our restricted stock units affected by the relative total shareholder return performance element is determined using a Monte Carlo simulation.

The following table presents a summary of our outstanding non-vested restricted stock units.

Number of non-vested restricted stock units as at	June 30, 2016	December 31, 2015
Restricted stock units without market performance conditions
Restricted stock units with only service conditions	5,071,712	3,429,008
Notional subset affected by total customer connections performance condition	195,943	135,404
	5,267,655	3,564,412
Restricted stock units with market performance conditions
Notional subset affected by relative total shareholder return performance condition	587,829	406,243
	5,855,484	3,970,655

The following table presents a summary of the activity related to our restricted stock units without market performance conditions.

	Three months						Six months
	Number of restricted stock units 1				Weighted average		Number of restricted stock units 1				Weighted average
					grant-date						grant-date
Periods ended June 30, 2016	Non-vested		Vested		fair value		Non-vested		Vested		fair value
Outstanding, beginning of period
Non-vested	5,282,983		—		$	40.80	3,564,412		—		$	41.42
Vested	—		8,499		$	41.21	—		29,008		$	40.00
Issued
Initial award	25,253		—		$	40.51	1,886,688		—		$	39.66
In lieu of dividends	54,830		87		$	42.22	96,071		198		$	40.34
Vested	(8,262	)	8,262		$	40.46	(74,188	)	74,188		$	41.29
Settled in cash	—		(7,261	)	$	40.51	—		(93,807	)	$	40.91
Forfeited and cancelled	(87,149	)	—		$	26.64	(205,328	)	—		$	35.08
Outstanding, end of period
Non-vested	5,267,655		—		$	38.98	5,267,655		—		$	38.98
Vested	—		9,587		$	40.80	—		9,587		$	40.80

(1) Excluding the notional subset of restricted stock units affected by the relative total shareholder return performance element.

notes to condensed interim consolidated financial statements

(unaudited)

With respect to certain issuances of restricted stock units, we have entered into cash-settled equity forward agreements that fix our cost; that information, as well as a schedule of our non-vested restricted stock units outstanding as at June 30, 2016, is set out in the following table.

Vesting in years ending December 31	Number of fixed-cost restricted stock units	Our fixed cost per restricted stock unit		Number of variable-cost restricted stock units	Total number of non-vested restricted stock units 1
2016	1,798,900	$	41.02	118,576	1,917,476
2017	1,610,984	$	45.35	51,829	1,662,813
2018	1,552,377	$	40.77	134,989	1,687,366
	4,962,261			305,394	5,267,655

(1) Excluding the notional subset of restricted stock units affected by the relative total shareholder return performance element.

(c) Employee share purchase plan

	Three months				Six months
Periods ended June 30 (millions)	2016		2015		2016		2015
Employee contributions	$	25	$	25	$	54	$	57
Employer contributions	10		9		19		19
	$	35	$	34	$	73	$	76

(d) Share option awards

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

	Three months				Six months
Period ended June 30, 2016	Number of share options		Weighted average share option price		Number of share options		Weighted average share option price
Outstanding, beginning of period	1,913,843		$	23.81	2,375,596		$	22.96
Exercised 1	(101,199	)	$	24.29	(538,937	)	$	20.48
Forfeited	(3,496	)	$	25.68	(8,402	)	$	23.41
Expired	—		$	—	(19,109	)	$	15.29
Outstanding, end of period	1,809,148		$	23.78	1,809,148		$	23.78

(1) The total intrinsic value of share option awards exercised for the three-month and six-month periods ended June 30, 2016, was $1 million (reflecting a weighted average price at the dates of exercise of $40.94 per share) and $10 million (reflecting a weighted average price at the dates of exercise of $39.70 per share), respectively. The difference between the number of share options exercised and the number of Common Shares issued (as reflected in the Condensed interim consolidated statements of changes in owners’ equity) is the effect of our choosing to settle share option award exercises using the net-equity settlement feature.

The following is a life and exercise price stratification of our outstanding share options, all of which are vested, as at June 30, 2016.

Options outstanding and exercisable

									Weighted average
							Total		price
Range of option prices
Low	$	16.08	$	21.42	$	28.56	$	16.08
High	$	18.92	$	25.64	$	31.69	$	31.69
Year of expiry and number of options
2016	5,350		—		—		5,350		$	16.08
2017	488,719		35,020		—		523,739		$	16.70
2018	—		541,831		—		541,831		$	23.30
2019	—		—		738,228		738,228		$	29.21
	494,069		576,851		738,228		1,809,148
Weighted average remaining contractual life (years)	0.7		1.7		2.9		1.9
Weighted average price	$	16.35	$	23.20	$	29.21	$	23.78
Aggregate intrinsic value 1 (millions)	$	12	$	11	$	9	$	32

(1) The aggregate intrinsic value is calculated based on the June 30, 2016, price of $41.60 per Common Share.

notes to condensed interim consolidated financial statements

(unaudited)

14 employee future benefits

(a) Defined benefit pension plans — expense

Our defined benefit pension plan expense (recovery) was as follows:

	2016											2015
Three-month periods ended June 30 (millions)	Employee benefits expense		Financing costs			Other comp. income						Employee benefits expense		Financing costs			Other comp. income
Recognized in	(Note 7)		(Note 8)			(Note 10)			Total			(Note 7)		(Note 8)			(Note 10)		Total
Current service cost	$	20	$	—		$	—		$	20		$	24	$	—		$	—	$	24
Past service costs	—		—			—			—			—		—			—		—
Net interest; return on plan assets
Interest expense arising from accrued benefit obligations	—		85			—			85			—		87			—		87
Return, including interest income, on plan assets 1	—		(84		)	(129		)	(213		)	—		(82		)	171		89
Interest effect on asset ceiling limit	—		—			—			—			—		1			—		1
	—		1			(129		)	(128		)	—		6			171		177
Administrative fees	2		—			—			2			2		—			—		2
Changes in the effect of limiting net defined benefit assets to the asset ceiling	—		—			—			—			—		—			3		3
	$	22	$	1		$	(129	)	$	(106	)	$	26	$	6		$	174	$	206

(1) The interest income on the plan assets portion of the employee defined benefit plans net interest amount included in Financing costs reflects a rate of return on plan assets equal to the discount rate used in determining the accrued benefit obligations.

	2016											2015
Six-month periods ended June 30 (millions)	Employee benefits expense		Financing costs			Other comp. income						Employee benefits expense		Financing costs			Other comp. income
Recognized in	(Note 7)		(Note 8)			(Note 10)			Total			(Note 7)		(Note 8)			(Note 10)			Total
Current service cost	$	41	$	—		$	—		$	41		$	50	$	—		$	—		$	50
Past service costs	—		—			—			—			1		—			—			1
Net interest; return on plan assets
Interest expense arising from accrued benefit obligations	—		170			—			170			—		175			—			175
Return, including interest income, on plan assets 1	—		(169		)	(24		)	(193		)	—		(163		)	(153		)	(316		)
Interest effect on asset ceiling limit	—		1			—			1			—		1			—			1
	—		2			(24		)	(22		)	—		13			(153		)	(140		)
Administrative fees	3		—			—			3			3		—			—			3
Changes in the effect of limiting net defined benefit assets to the asset ceiling	—		—			—			—			—		—			6			6
	$	44	$	2		$	(24	)	$	22		$	54	$	13		$	(147	)	$	(80	)

(b) Defined contribution plans — expense

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

	Three months				Six months
Periods ended June 30 (millions)	2016		2015		2016		2015
Union pension plan and public service pension plan contributions	$	5	$	6	$	13	$	14
Other defined contribution pension plans	15		14		31		31
	$	20	$	20	$	44	$	45

notes to condensed interim consolidated financial statements

(unaudited)

15 restructuring and other costs

(a) Details of restructuring and other costs

With the objective of reducing ongoing costs, we incur associated incremental, non-recurring restructuring costs, as discussed further in (b) following. We may also incur atypical charges when undertaking major or transformational changes to our business or operating models. We also include incremental external costs incurred in connection with business acquisition or disposition activity, as well as litigation costs, in the context of significant losses or settlements, in other costs.

Restructuring and other costs are presented in the Condensed interim consolidated statements of income and other comprehensive income as set out in the following table:

	Three months				Six months
Periods ended June 30 (millions)	2016		2015		2016		2015
Goods and services purchased	$	12	$	30	$	16	$	42
Employee benefits expense	11		29		55		34
	$	23	$	59	$	71	$	76

(b) Restructuring provisions

Employee related provisions and other provisions, as presented in Note 20, include amounts in respect of restructuring activities. In 2016, restructuring activities included ongoing and incremental efficiency initiatives including personnel-related costs and rationalization of real estate. These initiatives were intended to improve our long-term operating productivity and competitiveness.

	2016									2015
Three-month periods ended June 30 (millions)	Employee related 1			Other 1			Total 1			Employee related 1			Other 1			Total 1
Restructuring costs
Additions	$	11		$	12		$	23		$	29		$	30		$	59
Reversal	—			—			—			—			—			—
Expense	11			12			23			29			30			59
Use	(22		)	(12		)	(34		)	(13		)	(4		)	(17		)
Expenses greater (less) than disbursements	(11		)	—			(11		)	16			26			42
Restructuring provisions
Balance, beginning of period	91			56			147			24			38			62
Balance, end of period	$	80		$	56		$	136		$	40		$	64		$	104

(1) The transactions and balances in this column, excluding share-based compensation amounts, are included in, and thus are a subset of, the transactions and balances in the column with the same caption in Note 20.

	2016									2015
Six-month periods ended June 30 (millions)	Employee related 1			Other 1			Total 1			Employee related 1			Other 1			Total 1
Restructuring costs
Additions	$	55		$	20		$	75		$	34		$	42		$	76
Reversal	—			(4		)	(4		)	—			—			—
Expense	55			16			71			34			42			76
Use	(91		)	(17		)	(108		)	(35		)	(6		)	(41		)
Expenses greater (less) than disbursements	(36		)	(1		)	(37		)	(1		)	36			35
Restructuring provisions
Balance, beginning of period	116			57			173			41			28			69
Balance, end of period	$	80		$	56		$	136		$	40		$	64		$	104

notes to condensed interim consolidated financial statements

(unaudited)

16 property, plant and equipment

(millions)	Network assets			Buildings and leasehold improvements			Other			Land		Assets under construction			Total
At cost
As at January 1, 2016	$	27,191		$	2,847		$	1,120		$	55	$	413		$	31,626
Additions	344			19			24			—		712			1,099
Dispositions, retirements and other	(345		)	(49		)	(91		)	—		—			(485		)
Assets under construction put into service	319			44			32			—		(395		)	—
As at June 30, 2016	$	27,509		$	2,861		$	1,085		$	55	$	730		$	32,240
Accumulated depreciation
As at January 1, 2016	$	19,351		$	1,810		$	729		$	—	$	—		$	21,890
Depreciation	666			47			57			—		—			770
Dispositions, retirements and other	(340		)	(42		)	(81		)	—		—			(463		)
As at June 30, 2016	$	19,677		$	1,815		$	705		$	—	$	—		$	22,197
Net book value
As at December 31, 2015	$	7,840		$	1,037		$	391		$	55	$	413		$	9,736
As at June 30, 2016	$	7,832		$	1,046		$	380		$	55	$	730		$	10,043

As at June 30, 2016, our contractual commitments for the acquisition of property, plant and equipment were $461 million over a period ending December 31, 2018 (December 31, 2015 — $326 million over a period ending December 31, 2017).

17 intangible assets and goodwill

	Intangible assets subject to amortization																Intangible assets with indefinite lives
	Subscriber base		Customer contracts, related customer relationships and leasehold interests		Software			Access to rights-of-way and other			Assets under construction			Total			Spectrum licences		Total intangible assets			Goodwill 1		Total intangible assets and goodwill
At cost
As at January 1, 2016	$	245	$	228	$	3,801		$	90		$	216		$	4,580		$	8,480	$	13,060		$	4,125	$	17,185
Additions	—		—		17			1			282			300			164		464			—		464
Dispositions, retirements and other (including capitalized interest)	—		—		(90		)	(3		)	—			(93		)	26		(67		)	—		(67		)
Assets under construction put into service	—		—		207			1			(208		)	—			—		—			—		—
As at June 30, 2016	$	245	$	228	$	3,935		$	89		$	290		$	4,787		$	8,670	$	13,457		$	4,125	$	17,582
Accumulated amortization
As at January 1, 2016	$	112	$	168	$	2,739		$	56		$	—		$	3,075		$	—	$	3,075		$	364	$	3,439
Amortization	7		15		205			2			—			229			—		229			—		229
Dispositions, retirements and other	—		—		(95		)	(2		)	—			(97		)	—		(97		)	—		(97		)
As at June 30, 2016	$	119	$	183	$	2,849		$	56		$	—		$	3,207		$	—	$	3,207		$	364	$	3,571
Net book value
As at December 31, 2015	$	133	$	60	$	1,062		$	34		$	216		$	1,505		$	8,480	$	9,985		$	3,761	$	13,746
As at June 30, 2016	$	126	$	45	$	1,086		$	33		$	290		$	1,580		$	8,670	$	10,250		$	3,761	$	14,011

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

notes to condensed interim consolidated financial statements

(unaudited)

(b) Real estate joint ventures — summarized financial information

As at (millions)	June 30, 2016		December 31, 2015
ASSETS
Current assets
Cash and temporary investments, net	$	24	$	20
Escrowed deposits for tenant inducements and liens	10		20
Sales contract deposits held by arm’s-length trustee	6		6
Other	19		21
Property under development — residential condominiums (subject to sales contracts)	110		156
	169		223
Non-current assets
Property under development — Investment property	120		96
Investment property	230		238
	350		334
	$	519	$	557
LIABILITIES AND OWNERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	26	$	46
Sales contract deposits
Payable	31		55
Held by arm’s-length trustee	6		6
Current portion of senior secured 3.4% bonds due July 2025	4		4
Construction credit facilities	46		96
Construction holdback liabilities	10		10
Other financial liability 1	18		18
	141		235
Non-current liabilities
Construction credit facilities	35		9
Other	—		4
Senior secured 3.4% bonds due July 2025	215		217
	250		230
Liabilities	391		465
Owners’ equity
TELUS 2	50		36
Other partners	78		56
	128		92
	$	519	$	557

(1) Other financial liability is due to us; such amount is non-interest bearing, is secured by an $18 mortgage on the TELUS Garden residential condominium tower, is payable in cash and is due subsequent to repayment of the residential condominium tower construction credit facility.

(2) The equity amounts recorded by the real estate joint ventures differ from those recorded by us by the amount of the deferred gains on our real estate contributed and the valuation provision we have recorded.

	Three months					Six months
Periods ended June 30 (millions)	2016		2015			2016		2015
Revenue
From investment property	$	14	$	4		$	20	$	4
From sale of condominiums	$	114	$	—		$	114	$	—
Depreciation and amortization	$	3	$	2		$	4	$	2
Interest expense 1	$	4	$	2		$	6	$	2
Net income (loss) and comprehensive income (loss) 2	$	36	$	(2	)	$	36	$	(2	)

(1) During the three-month and six-month periods ended June 30, 2016, the real estate joint ventures capitalized $NIL (2015 — $NIL) and $1 (2015 — $2), respectively, of financing costs.

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

notes to condensed interim consolidated financial statements

(unaudited)

(c) Our real estate joint ventures activity

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

	2016									2015
Three-month periods ended June 30 (millions)	Loans and receivables 1			Equity 2			Total			Loans and receivables 1			Equity 2			Total
Related to real estate joint ventures’ statements of income and other comprehensive income
Comprehensive income (loss) attributable to us 3	$	—		$	14		$	14		$	—		$	(1	)	$	(1	)
Related to real estate joint ventures’ statements of financial position
Items not affecting currently reported cash flows
Recognition of gain initially deferred on our real estate initially contributed	—			4			4			—			—			—
Construction credit facilities financing costs charged by us and other (Note 6)	1			—			1			1			—			1
Cash flows in the current reporting period
Construction credit facilities
Amounts advanced	11			—			11			13			—			13
Amounts repaid	(40		)	—			(40		)	—			—			—
Financing costs paid to us	(1		)	—			(1		)	(1		)	—			(1		)
Funds we contributed	—			—			—			—			3			3
Net increase (decrease)	(29		)	18			(11		)	13			2			15
Real estate joint ventures carrying amounts
Balance, beginning of period	81			25			106			127			22			149
Valuation provision	—			(9		)	(9		)	—			—			—
Balance, end of period	$	52		$	34		$	86		$	140		$	24		$	164

	2016									2015
Six-month periods ended June 30 (millions)	Loans and receivables 1			Equity 2			Total			Loans and receivables 1			Equity 2			Total
Related to real estate joint ventures’ statements of income and other comprehensive income
Comprehensive income (loss) attributable to us 3	$	—		$	14		$	14		$	—		$	(1	)	$	(1	)
Related to real estate joint ventures’ statements of financial position
Items not affecting currently reported cash flows
Recognition of gain initially deferred on our real estate initially contributed	—			4			4			—			—			—
Construction credit facilities financing costs charged by us and other (Note 6)	1			—			1			2			—			2
Cash flows in the current reporting period
Construction credit facilities
Amounts advanced	23			—			23			20			—			20
Amounts repaid	(40		)	—			(40		)	—			—			—
Financing costs paid to us	(1		)	—			(1		)	(2		)	—			(2		)
Funds we contributed	—			—			—			—			4			4
Net increase (decrease)	(17		)	18			1			20			3			23
Real estate joint ventures carrying amounts
Balance, beginning of period	69			25			94			120			21			141
Valuation provision	—			(9		)	(9		)	—			—			—
Balance, end of period	$	52		$	34		$	86		$	140		$	24		$	164

(1) Loans and receivables are included in our Condensed interim consolidated statements of financial position as Real estate joint venture advances and are comprised of advances under construction credit facilities (see (d)) and an $18 mortgage on the TELUS Garden residential condominium tower.

(2) We account for our interests in the real estate joint ventures using the equity method of accounting.

(3) As the real estate joint ventures are partnerships, no provision for income taxes of the partners is made in determining the real estate joint ventures’ net income (loss) and comprehensive income (loss); provision for income taxes is made in determining the comprehensive income (loss) attributable to us.

During the three-month and six-month periods ended June 30, 2016, the TELUS Garden real estate joint venture recognized $2 million (2015 — $1 million) and $5 million (2015 — $1 million), respectively, of revenue from our TELUS Garden office tenancy; of this amount, one-half is due to our economic interest in the real estate joint venture and one-half is due to our partner’s economic interest in the real estate joint venture.

notes to condensed interim consolidated financial statements

(unaudited)

(d) Commitments and contingent liabilities

Construction commitments

The TELUS Garden real estate joint venture is expected to spend a total of approximately $470 million on the construction of an office tower and a residential condominium tower. As at June 30, 2016, the real estate joint venture’s construction-related contractual commitments were approximately $9 million through 2016 (December 31, 2015 — $38 million through to 2016).

The TELUS Sky real estate joint venture is expected to spend a total of approximately $400 million on the construction of a mixed-use tower. As at June 30, 2016, the real estate joint venture’s construction-related contractual commitments were approximately $128 million through to 2018 (December 31, 2015 — $124 million through to 2018).

Construction credit facilities

The TELUS Garden real estate joint venture has a credit agreement with two Canadian financial institutions (as 50% lender) and TELUS Corporation (as 50% lender) to provide $56 million (December 31, 2015 — $136 million) of construction financing for the residential project. The TELUS Sky real estate joint venture has a credit agreement with three Canadian financial institutions (as 66-2/3% lender) and TELUS Corporation (as 33-1/3% lender) to provide $342 million of construction financing for the project.

The construction credit facilities contain customary real estate construction financing representations, warranties and covenants and are secured by demand debentures constituting first fixed and floating charge mortgages over the underlying real estate assets. The construction credit facilities are available by way of bankers’ acceptance or prime loan and bear interest at rates in line with similar construction financing facilities.

As at (millions)	Note	June 30, 2016		December 31, 2015
Construction credit facilities commitment — TELUS Corporation
Undrawn	4(b)	$	108	$	131
Advances		34		51
		142		182
Construction credit facilities commitment — other		256		296
		$	398	$	478

19 short-term borrowings

On July 26, 2002, one of our subsidiaries, TELUS Communications Inc., entered into an agreement with an arm’s-length securitization trust associated with a major Schedule I bank under which it is able to sell an interest in certain trade receivables up to a maximum of $500 million (December 31, 2015 — $500 million). This revolving-period securitization agreement term ends December 31, 2018, and it requires minimum cash proceeds of $100 million from monthly sales of interests in certain trade receivables. TELUS Communications Inc. is required to maintain at least a BB (December 31, 2015 — BB) credit rating by Dominion Bond Rating Service or the securitization trust may require the sale program to be wound down prior to the end of the term.

When we sell our trade receivables, we retain reserve accounts, which are retained interests in the securitized trade receivables, and servicing rights. As at June 30, 2016, we had sold to the trust (but continued to recognize) trade receivables of $116 million (December 31, 2015 — $124 million). Short-term borrowings of $100 million (December 31, 2015 — $100 million) are comprised of amounts advanced to us by the arm’s-length securitization trust pursuant to the sale of trade receivables.

The balance of short-term borrowings (if any) comprised amounts drawn on our bilateral bank facilities.

20 provisions

(millions)	Asset retirement obligation			Employee related			Other			Total
As at April 1, 2016	$	380		$	82		$	132		$	594
Additions 1	—			11			14			25
Use	(1		)	(21		)	(12		)	(34		)
Reversal	—			—			—			—
Interest effect	2			—			1			3
As at June 30, 2016	$	381		$	72		$	135		$	588

notes to condensed interim consolidated financial statements

(unaudited)

(millions)	Asset retirement obligation			Employee related			Other			Total
As at January 1, 2016	$	377		$	109		$	144		$	630
Additions 1	—			53			24			77
Use	(1		)	(90		)	(30		)	(121		)
Reversal	—			—			(4		)	(4		)
Interest effect	5			—			1			6
As at June 30, 2016	$	381		$	72		$	135		$	588
Current	$	18		$	71		$	81		$	170
Non-current	363			1			54			418
As at June 30, 2016	$	381		$	72		$	135		$	588

(1) For the three-month and six-month periods ended June 30, 2016, employee related additions are net of share-based compensation of $NIL and $2, respectively.

Asset retirement obligation

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

Employee related

The employee related provisions are largely in respect of restructuring activities (as discussed further in Note 15). The timing of the cash outflows in respect of the balance accrued as at the financial statement date is substantially short-term in nature.

Other

The provision for other includes: legal claims; non-employee related restructuring activities (as discussed further in Note 15); and written put options, contract termination costs and onerous contracts related to business acquisitions. Other than as set out following, we expect that the cash outflows in respect of the balance accrued as at the financial statement date will occur over an indeterminate multi-year period.

As discussed further in Note 23, we are involved in a number of legal claims and we are aware of certain other possible legal claims. In respect of legal claims, we establish provisions, when warranted, after taking into account legal assessments, information presently available, and the expected availability of recourse. The timing of cash outflows associated with legal claims cannot be reasonably determined.

In connection with business acquisitions, we have established provisions for contingent consideration, written put options in respect of non-controlling interests, contract termination costs and onerous contracts acquired. No cash outflows for the written put options occurred prior to their initial exercisability in December 2015. In respect of contract termination costs and onerous contracts acquired, cash outflows are expected to occur through mid-2018.

21 long-term debt

(a) Details of long-term debt

As at (millions)	Note	June 30, 2016		December 31, 2015
TELUS Corporation notes	(b)	$	10,569	$	11,164
TELUS Corporation commercial paper	(c)	975		256
TELUS Communications Inc. debentures		619		618
TELUS International (Cda) Inc. credit facility	(e)	359		—
Long-term debt		$	12,522	$	12,038
Current		$	1,688	$	856
Non-current		10,834		11,182
Long-term debt		$	12,522	$	12,038

(b) TELUS Corporation notes

The notes are our senior, unsecured and unsubordinated obligations and rank equally in right of payment with all of our existing and future unsecured, unsubordinated obligations, are senior in right of payment to all of our existing and future subordinated indebtedness, and are effectively subordinated to all existing and future obligations of, or guaranteed by, our subsidiaries. The indentures governing the notes contain certain covenants which, among other things, place

notes to condensed interim consolidated financial statements

(unaudited)

limitations on our ability and the ability of certain of our subsidiaries to: grant security in respect of indebtedness; enter into sale-leaseback transactions; and incur new indebtedness.

Principal face amount

Redemption present
value spread

Series 1

Issued

Maturity

Issue
price

Originally
issued

Outstanding at
financial
statement date

Basis
points

Cessation
date

4.95% Notes, Series CD

March 2007

March 2017

999.53

$700 million

24 2

N/A

5.05% Notes, Series CG 3

December 2009

December 2019

994.19

$1.0 billion

45.5 2

N/A

5.05% Notes, Series CH 3

July 2010

July 2020

997.44

$1.0 billion

47 2

N/A

3.65% Notes, Series CI 3

May 2011

May 2016

996.29

$600 million

$NIL

29.5 2

N/A

3.35% Notes, Series CJ 3

December 2012

March 2023

998.83

$500 million

40 4

Dec. 15, 2022

3.35% Notes, Series CK 3

April 2013

April 2024

994.35

$1.1 billion

36 4

Jan. 2, 2024

4.40% Notes, Series CL 3

April 2013

April 2043

997.68

$600 million

47 4

Oct. 1, 2042

3.60% Notes, Series CM 3

November 2013

January 2021

997.15

$400 million

35 2

N/A

5.15% Notes, Series CN 3

November 2013

November 2043

995.00

$400 million

50 4

May 26, 2043

3.20% Notes, Series CO 3

April 2014

April 2021

997.39

$500 million

30 4

Mar. 5, 2021

4.85% Notes, Series CP 3

Multiple 5

April 2044

987.91 5

$500 million 5

$900 million 5

46 4

Oct. 5, 2043

3.75% Notes, Series CQ 3

September 2014

January 2025

997.75

$800 million

38.5 4

Oct. 17, 2024

4.75% Notes, Series CR 3

September 2014

January 2045

992.91

$400 million

51.5 4

July 17, 2044

1.50% Notes, Series CS 3

March 2015

March 2018

999.62

$250 million

N/A 6

N/A

2.35% Notes, Series CT 3

March 2015

March 2022

997.31

$1.0 billion

35.5 4

Feb. 28, 2022

4.40% Notes, Series CU 3

March 2015

January 2046

999.72

$500 million

60.5 4

July 29, 2045

3.75% Notes, Series CV 3

December 2015

March 2026

992.14

$600 million

53.5 4

Dec. 10, 2025

(1) Interest is payable semi-annually.

(2) The notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 and not more than 60 days’ prior notice. The redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread, or (ii) 100% of the principal amount thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption.

(3) This series of notes requires us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture.

(4) At any time prior to the respective maturity dates set out in the table, the notes are redeemable at our option, in whole at any time, or in part from time to time, on not fewer than 30 and not more than 60 days’ prior notice. The redemption price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread calculated over the period to maturity, other than in the case of the Series CT and Series CU notes where it is calculated over the period to the redemption present value spread cessation date, or (ii) 100% of the principal amount thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption. On or after the respective redemption present value spread cessation dates set out in the table, the notes are redeemable at our option, in whole but not in part, on not fewer than 30 and not more than 60 days’ prior notice, at redemption prices equal to 100% of the principal amount thereof.

(5) $500 million of 4.85% Notes, Series CP were issued in April 2014 at an issue price of $998.74. This series of notes was reopened in December 2015 and a further $400 million of notes were issued at an issue price of $974.38.

(6) The notes are not redeemable at our option, other than in the event of certain changes in tax laws.

(c) TELUS Corporation commercial paper

TELUS Corporation has an unsecured commercial paper program, which is backstopped by our $2.25 billion syndicated credit facility (see (d)) and is to be used for general corporate purposes, including capital expenditures and investments. This program enables us to issue commercial paper, subject to conditions related to debt ratings, up to a maximum aggregate amount at any one time of $1.4 billion (December 31, 2015 — $1.4 billion). Foreign currency forward contracts are used to manage currency risk arising from issuing commercial paper denominated in U.S. dollars. Commercial paper debt is due within one year and is classified as a current portion of long-term debt as the amounts are fully supported, and we expect that they will continue to be supported, by the revolving credit facility, which has no repayment requirements within the next year. As at June 30, 2016, we had $975 million of commercial paper outstanding, all of which was denominated in U.S. dollars (U.S.$755 million), with an effective weighted average interest rate of 0.98%, maturing through September 2016.

(d) TELUS Corporation credit facility

As at June 30, 2016, TELUS Corporation had an unsecured, revolving $2.25 billion bank credit facility, expiring on May 31, 2021, with a syndicate of financial institutions, which is to be used for general corporate purposes, including the backstopping of commercial paper.

TELUS Corporation’s credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter-end financial ratio tests. These tests are that our net debt to operating cash flow ratio must not exceed 4.00:1.00 and our operating cash flow to interest expense ratio must not be less than 2.00:1.00, each as defined under the credit facility.

notes to condensed interim consolidated financial statements

(unaudited)

Continued access to TELUS Corporation’s credit facility is not contingent on TELUS Corporation maintaining a specific credit rating.

As at (millions)	June 30, 2016		December 31, 2015
Net available	$	1,275	$	1,994
Backstop of commercial paper	975		256
Gross available	$	2,250	$	2,250

We had $219 million of letters of credit outstanding as at June 30, 2016 (December 31, 2015 — $202 million), issued under various uncommitted facilities; such letter of credit facilities are in addition to the ability to provide letters of credit pursuant to our committed bank credit facility.

(e) TELUS International (Cda) Inc. credit facility

As at June 30, 2016, TELUS International (Cda) Inc. had a U.S.$330 million bank credit facility, secured by its assets, expiring on May 31, 2021, with a syndicate of financial institutions. The credit facility is comprised of a revolving U.S.$115 million component and a U.S.$215 million term loan component. The credit facility is non-recourse to TELUS Corporation. As at June 30, 2016, $368 million ($359 million net of unamortized issue costs) was outstanding, all of which was denominated in U.S. dollars (U.S.$285 million), with a weighted average interest rate of 2.68%.

TELUS International (Cda) Inc.’s credit facility bears interest at prime rate, U.S. Dollar Base Rate, a bankers’ acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or defined in the credit facility), plus applicable margins. The credit facility contains customary representations, warranties and covenants, including two financial quarter-end financial ratio tests. These tests, which must first be performed as at December 31, 2016, are that TELUS International (Cda) Inc.’s net debt to operating cash flow ratio must not exceed 3.75:1.00 through June 30, 2017, and 3.25:1.00 subsequently, and its operating cash flow to debt service (interest and scheduled principal repayment) ratio must not be less than 1.50:1.00, all as defined under the credit facility.

The term loan is subject to an amortization schedule that requires that 5% of the principal advanced be repaid each year of the term of the agreement, with the balance due at maturity.

(f) Long-term debt maturities

Anticipated requirements to meet long-term debt repayments, calculated upon such long-term debts owing as at June 30, 2016, for each of the next five fiscal years are as follows:

	Cdn. dollars		U.S. dollars
Long-term debt denominated in					Derivative liability
Years ending December 31 (millions)	Debt		Debt		(Receive) 1			Pay		Total		Total
2016	$	—	$	984	$	(976	)	$	977	$	985	$	985
2017	700		14		—			—		14		714
2018	250		14		—			—		14		264
2019	1,000		14		—			—		14		1,014
2020	1,000		14		—			—		14		1,014
Thereafter	8,324		305		—			—		305		8,629
Future cash outflows in respect of long-term debt principal repayments	11,274		1,345		(976		)	977		1,346		12,620
Future cash outflows in respect of associated interest and like carrying costs 2	5,762		45		—			—		45		5,807
Undiscounted contractual maturities (Note 4(b))	$	17,036	$	1,390	$	(976	)	$	977	$	1,391	$	18,427

(1) Where applicable, principal-related cash flows reflect foreign exchange rates at June 30, 2016.

(2) Future cash outflows in respect of associated interest and like carrying costs for commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the rates in effect at June 30, 2016.

22 Common Share capital

(a) General

Our authorized share capital is as follows:

As at	June 30, 2016	December 31, 2015
First Preferred Shares	1 billion	1 billion
Second Preferred Shares	1 billion	1 billion
Common Shares	2 billion	2 billion

notes to condensed interim consolidated financial statements

(unaudited)

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

	Three months				Six months
Periods ended June 30 (millions)	2016		2015		2016		2015
Short-term benefits	$	3	$	3	$	6	$	6
Post-employment pension 1 and other benefits	1		1		2		3
Share-based compensation 2	5		9		17		15
	$	9	$	13	$	25	$	24

(1) Our Executive Leadership Team members are either: members of our Pension Plan for Management and Professional Employees of TELUS Corporation and non-registered, non-contributory supplementary defined benefit pension plans; or members of one of our defined contribution pension plans.

(2) For the three-month and six-month periods ended June 30, 2016, share-based compensation is net of $NIL (2015 — $1) and $1 (2015 — $3), respectively, of the effects of derivatives used to manage share-based compensation costs (Note 13(b)). For the three-month and six-month periods ended June 30, 2016, $(1) (2015 — $NIL) and $4 (2015 — $(1)), respectively, is included in share-based compensation representing restricted stock unit and deferred share unit expense arising from changes in the fair market value of the corresponding Common Shares, which is not affected by derivatives used to manage share-based compensation costs. For the three-month and six-month periods ended June 30, 2016, share-based compensation of $NIL (2015 — $NIL) and $2 (2015 — $NIL), respectively, was included in restructuring costs (Note 15).

As disclosed in Note 13, we made awards of share-based compensation in 2016 and 2015, including, as set out in the table following, to our key management personnel. As most of these awards are cliff-vesting or graded-vesting and have multi-year requisite service periods, the expense will be recognized ratably over a period of years and thus only a portion of the 2016 and 2015 awards are included in the amounts in the table above.

	2016					2015
Six-month periods ended June 30 ($ in millions)	Number of restricted stock units	Notional value 1		Grant-date fair value 1		Number of restricted stock units	Notional value 1		Grant-date fair value 1
Quarter 1	575,871	$	23	$	15	529,563	$	23	$	27
Quarter 2	9,888	—		—		—	—		—
Awarded in period	585,759	$	23	$	15	529,563	$	23	$	27

(1) Notional value is determined by multiplying the Common Share price at the time of award by the number of units awarded. The grant-date fair value differs from the notional value due to the effect of some awards having fair values determined using a Monte Carlo simulation.

During the three-month period ended June 30, 2016, key management personnel (including retirees) exercised 4,119 share options (2015 — 15,502 share options) that had an intrinsic value of less than $1 million (2015 — less than $1 million) at the time of exercise, reflecting a weighted average price at the date of exercise of $41.50 (2015 — $42.54). During the six-month period ended June 30, 2016, key management personnel (including retirees) exercised 26,610 share options (2015 — 15,502 share options) that had an intrinsic value of $1 million (2015 — less than $1 million) at the time of exercise, reflecting a weighted average price at the date of exercise of $39.63 (2015 — $42.54).

The liability amounts accrued for share-based compensation awards to key management personnel are as follows:

As at (millions)	June 30, 2016		December 31, 2015
Restricted stock units	$	33	$	21
Deferred share units 1	30		29
	$	63	$	50

(1) Our Directors’ Deferred Share Unit Plan provides that, in addition to his or her annual equity grant of deferred share units, a director may elect to receive his or her annual retainer and meeting fees in deferred share units, Common Shares or cash. Deferred share units entitle directors to a specified number of, or a cash payment based on the value of, our Common Shares. Deferred share units are paid out when a director ceases to be a director, for any reason, at a time elected by the director in accordance with the Directors’ Deferred Share Unit Plan; during the three-month and six-month periods ended June 30, 2016, $1 (2015 — $NIL) and $4 (2015 — $NIL), respectively, was paid out.

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

(b) Transactions with defined benefit pension plans

During the three-month and six-month periods ended June 30, 2016, we provided management and administrative services to our defined benefit pension plans; the charges for these services were on a cost recovery basis and amounted to $1 million (2015 — $2 million) and $3 million (2015 — $4 million), respectively.

notes to condensed interim consolidated financial statements

(unaudited)

(c) Transactions with real estate joint ventures

During the three-month and six-month periods ended June 30, 2016 and 2015, we had transactions with the real estate joint ventures, which are related parties, as set out in Note 18.

25 additional financial information

(a) Statements of financial position

As at (millions)	Note	June 30, 2016			December 31, 2015
Accounts receivable
Customer accounts receivable	4(a)	$	1,081		$	1,199
Accrued receivables — customer		159			128
Allowance for doubtful accounts	4(a)	(52		)	(52		)
		1,188			1,275
Accrued receivables — other		129			153
		$	1,317		$	1,428
Inventories 1
Wireless handsets, parts and accessories		$	304		$	319
Other		47			41
		$	351		$	360
Other long-term assets
Pension assets		$	376		$	356
Investments		65			69
Real estate joint ventures	18(c)	34			25
Real estate joint venture advances	18(c)	11			3
Other		144			140
		$	630		$	593
Accounts payable and accrued liabilities
Accrued liabilities		$	882		$	843
Payroll and other employee related liabilities		335			410
Restricted stock units liability		76			58
		1,293			1,311
Trade accounts payable		488			476
Interest payable		137			134
Other		65			69
		$	1,983		$	1,990
Advance billings and customer deposits
Advance billings		$	696		$	706
Regulatory deferral accounts		12			16
Deferred customer activation and connection fees		18			19
Customer deposits		23			19
		$	749		$	760
Other long-term liabilities
Pension and other post-retirement liabilities		$	454		$	451
Other		146			150
Restricted stock units and deferred share units liabilities		83			57
		683			658
Deferred customer activation and connection fees		26			30
		$	709		$	688

(1) Costs of goods sold for the three-month and six-month periods ended June 30, 2016, were $403 (2015 — $421) and $806 (2015 — $809), respectively.

notes to condensed interim consolidated financial statements

(unaudited)

(b) Statements of cash flows — operating activities and investing activities

		Three months						Six months
Periods ended June 30 (millions)	Note	2016			2015			2016			2015
Net change in non-cash operating working capital
Accounts receivable		$	44		$	51		$	111		$	147
Inventories		(10		)	(50		)	9			(45		)
Prepaid expenses		(34		)	(47		)	(146		)	(182		)
Accounts payable and accrued liabilities		(16		)	15			(161		)	(84		)
Income and other taxes receivable and payable, net		(39		)	(35		)	(145		)	68
Advance billings and customer deposits		(10		)	(4		)	(12		)	(16		)
Provisions		(3		)	41			(25		)	29
		$	(68	)	$	(29	)	$	(369	)	$	(83	)
Cash payments for capital assets, excluding spectrum licences
Capital asset additions, excluding spectrum licences
Gross capital expenditures
Property, plant and equipment	16	$	(631	)	$	(538	)	$	(1,099	)	$	(1,048	)
Intangible assets	17	(146		)	(126		)	(300		)	(251		)
		(777		)	(664		)	(1,399		)	(1,299		)
Additions arising from non-monetary transactions		8			—			12			—
Capital expenditures		(769		)	(664		)	(1,387		)	(1,299		)
Change in associated non-cash investing working capital		155			(10		)	127			12
		$	(614	)	$	(674	)	$	(1,260	)	$	(1,287	)

notes to condensed interim consolidated financial statements

(unaudited)

(c) Changes in liabilities arising from financing activities

			Statement of cash flows						Non-cash changes
(millions)	Beginning of period		Issued or received			Redemptions, repayments or payments			Foreign exchange movement (Note 4(e))			Other			End of period
THREE-MONTH PERIOD ENDED JUNE 30, 2015
Dividends paid to holders of Common Shares	$	243	$	—		$	(243	)	$	—		$	253		$	253
Purchase of Common Shares for cancellation (excluding changes in liability for automatic share purchase plan)	$	3	$	—		$	(106	)	$	—		$	135		$	32
Short-term borrowings	$	100	$	400		$	—		$	—		$	—		$	500
Long-term debt
TELUS Corporation notes	$	10,177	$	—		$	—		$	—		$	3		$	10,180
TELUS Corporation commercial paper	519		47			(566		)	—			—			—
TELUS Corporation credit facility	—		400			—			—			—			400
	$	10,696	$	447		$	(566	)	$	—		$	3		$	10,580
THREE-MONTH PERIOD ENDED JUNE 30, 2016
Dividends paid to holders of Common Shares	$	261	$	—		$	(261	)	$	—		$	274		$	274
Purchase of Common Shares for cancellation (excluding changes in liability for automatic share purchase plan)	$	—	$	—		$	(61	)	$	—		$	61		$	—
Short-term borrowings	$	100	$	3		$	—		$	—		$	—		$	103
Long-term debt
TELUS Corporation notes	$	11,166	$	—		$	(600	)	$	—		$	3		$	10,569
TELUS Corporation commercial paper	891		1,668			(1,573		)	(11		)	—			975
TELUS International (Cda) Inc. credit facility	—		373			—			(5		)	(9		)	359
Derivatives used to manage currency risks arising from U.S. dollar denominated commercial paper — liability (asset)	26		1,573			(1,612		)	11			3			1
	12,083		3,614			(3,785		)	(5		)	(3		)	11,904
To eliminate effect of gross settlement of derivatives used to manage currency risks arising from U.S. dollar denominated commercial paper	—		(1,573		)	1,573			—			—			—
	$	12,083	$	2,041		$	(2,212	)	$	(5	)	$	(3	)	$	11,904
Issue of shares by subsidiary to non-controlling interest
Gross proceeds on share issuance	$	—	$	299		$	—		$	—		$	(299	)	$	—
Transaction costs	—		—			(7		)	—			12			5
Income taxes charged directly to contributed surplus 1	—		—			—			—			43			43
	—		299			(7		)	—			(244		)	48
To eliminate effect of gross settlement of transaction costs and income taxes	—		(7		)	7			—			—			—
	$	—	$	292		$	—		$	—		$	(244	)	$	48

(1) Income taxes charged directly to contributed surplus were comprised of a current income tax charge of $45 and a deferred income tax recovery of $2.

notes to condensed interim consolidated financial statements

(unaudited)

				Statement of cash flows						Non-cash changes
(millions)	Beginning of period			Issued or received			Redemptions, repayments or payments			Foreign exchange movement (Note 4(e))			Other			End of period
SIX-MONTH PERIOD ENDED JUNE 30, 2015
Dividends paid to holders of Common Shares	$	244		$	—		$	(487	)	$	—		$	496		$	253
Purchase of Common Shares for cancellation (excluding changes in liability for automatic share purchase plan)	$	3		$	—		$	(262	)	$	—		$	291		$	32
Short-term borrowings	$	100		$	400		$	—		$	—		$	—		$	500
Long-term debt
TELUS Corporation notes	$	8,437		$	1,747		$	—		$	—		$	(4	)	$	10,180
TELUS Corporation commercial paper	130			1,037			(1,167		)	—			—			—
TELUS Corporation credit facility	—			510			(110		)	—			—			400
	$	8,567		$	3,294		$	(1,277	)	$	—		$	(4	)	$	10,580
SIX-MONTH PERIOD ENDED JUNE 30, 2016
Dividends paid to holders of Common Shares	$	263		$	—		$	(524	)	$	—		$	535		$	274
Purchase of Common Shares for cancellation (excluding changes in liability for automatic share purchase plan)	$	10		$	—		$	(121	)	$	—		$	111		$	—
Short-term borrowings	$	100		$	3		$	—		$	—		$	—		$	103
Long-term debt
TELUS Corporation notes	$	11,164		$	—		$	(600	)	$	—		$	5		$	10,569
TELUS Corporation commercial paper	256			2,914			(2,146		)	(49		)	—			975
TELUS Communications Inc. debentures	618			—			—			—			1			619
TELUS International (Cda) Inc. credit facility	—			373			—			(5		)	(9		)	359
Derivatives used to manage currency risks arising from U.S. dollar denominated commercial paper — liability (asset)	(14		)	2,146			(2,183		)	49			3			1
	12,024			5,433			(4,929		)	(5		)	—			12,523
To eliminate effect of gross settlement of derivatives used to manage currency risks arising from U.S. dollar denominated commercial paper	—			(2,146		)	2,146			—			—			—
	$	12,024		$	3,287		$	(2,783	)	$	(5	)	$	—		$	12,523
Issue of shares by subsidiary to non-controlling interest
Gross proceeds on share issuance	$	—		$	299		$	—		$	—		$	(299	)	$	—
Transaction costs	—			—			(7		)	—			12			5
Income taxes charged directly to contributed surplus 1	—			—			—			—			43			43
	—			299			(7		)	—			(244		)	48
To eliminate effect of gross settlement of transaction costs and income taxes	—			(7		)	7			—			—			—
	$	—		$	292		$	—		$	—		$	(244	)	$	48

(1) Income taxes charged directly to contributed surplus were comprised of a current income tax charge of $45 and a deferred income tax recovery of $2.