Good day, everyone. Welcome to the TELUS 2025 Q4 Earnings Conference Call. I would like to introduce your speaker, Ian McMillan. Please go ahead.

Thank you, Carl, and hello, everyone. Thank you for joining us today. Our fourth quarter 2025 news release, annual MD&A, and financial statements, as well as detailed supplemental investor information, were posted on our website earlier this morning. On our call, we will begin with remarks by Darren and Doug. For the Q&A portion, we'll be joined by Zainul, Navin, and Tobias. Briefly, prepared remarks, slides, and answers to questions contain forward-looking statements. Actual results could vary from these statements. The assumptions on which they are based and the material risks that could cause them to differ are outlined in our public filings with securities commissions in Canada and the United States, including our 2025 annual MD&A. With that, over to you, Darren.

Thanks, Igor, and hello, everyone. As you know, this morning, I announced that I'll be retiring from TELUS on the 30th of June 2026. It has, without a shadow of a doubt, been a tremendous privilege to be part of the TELUS team for the past 26 years and to have an opportunity to work alongside many of the people on this call. The success TELUS has realized belongs to the extraordinary team members who have built so passionately the amazing culture that sets this company apart and has led to our significant accomplishments over the years. This team shows up every single day to serve our customers, support our communities, and build a company that Canadians and shareholders can trust. To be part of this extraordinary team and to support them has indeed been the greatest honor of my career. As a result of my retirement, I'm pleased to share that Victor Dodig, an exceedingly accomplished and talented leader, will become CEO effective the 1st of July. I'll remain part of the TELUS family as an adviser to Victor until May of 2027. The CEO progression was enabled through a robust succession planning process. Indeed, our Board of Directors has selected an outstanding successor in Victor, who is, of course, the former CEO of CIBC. Victor embodies TELUS' core values, embraces a commitment to putting customers first, demonstrates exceptional character and excellent business acumen, and cares deeply about creating stronger communities. Victor's tremendous skills, CEO expertise, leadership values, and his proven track record of value creation will effectively complement TELUS' strong leadership team and position him well and the company well to lead TELUS into this exciting new chapter. We'll have more time to speak about this leadership progression in the coming weeks. However, today, I'd like to focus on TELUS' strong fourth quarter and 2025 full-year operating and financial results. In the fourth quarter and for 2025, our team's unwavering commitment to operational excellence continues to differentiate the TELUS organization, delivering strong quality customer growth and robust financial performance. Our leading asset portfolio and focus on profitable customer expansion delivered strong results to close out 2025, including our fourth consecutive year surpassing 1 million combined mobility and fixed customer additions, powered by our world-leading broadband networks and, of course, our famous customer-centric culture. This momentum positions us well for continued growth in 2026 and beyond. Once again, TELUS led the industry with 1.1 million mobile and fixed customer net additions in 2025. This included record connected device net additions of 716,000, robust mobile phone net additions of 207,000, and fixed net additions of 158,000, representing our 16th consecutive year delivering positive wireline net additions, which is indeed a highlight and significantly and positively differentiate the TELUS story within Canadian and global telecoms. This performance is a testament to the compelling value of our comprehensive bundled offerings across mobile and home nationally and our team's passion for delivering client service excellence in combination with our fiber moat and our best-in-class 5G wireless network. Indeed, our sustained focus on customer experience leadership continues to drive best-in-class customer loyalty results. This was demonstrated by industry-leading postpaid mobile phone churn of 0.97% for the full year in 2025 and notably marks our 12th consecutive year below the 1% threshold, which is a global hallmark of the TELUS organization and, of course, a best-in-class result. This churn result is up to 25 basis points better than our peer group. Despite a dynamic operating environment, TTech adjusted EBITDA, including Health, increased 3.1% for 2025. This result is within our guidance range and demonstrates our team's disciplined execution and unrelenting focus on cost efficiency and effectiveness. Furthermore, TELUS achieved record free cash flow of $2.2 billion for the full year. This represented an increase of 11% over 2024 and exceeded our annual target. It is notable that this growth of 11% in 2025 is on top of the 12% free cash flow growth we realized in 2024 and the 38% free cash flow growth we realized in 2023. Of course, it is foundational to the double-digit free cash flow we are forecasting to deliver through 2028. Let's turn now and take a look at our fourth quarter results. In the fourth quarter, our team achieved industry-leading total telecom customer net additions of 377,000. In wireless, we drove strong industry-leading total net additions of 337,000. This included mobile phone net additions of 50,000 and industry-leading connected device net additions of 287,000, representing an all-time quarterly record for our organization. This was supported by our commitment, our strong and unrelenting commitment to economic margin-accretive customer growth. This is once again evidenced by our consistent industry-leading customer lifetime revenue, supported by our industry best churn results and improving ARPU performance that was the best in the industry on a sequential basis. Indeed, as a result of our moderating ARPU decline, network revenue returned to positive growth in the fourth quarter, something that we intend to build upon in 2026. This is an encouraging result that we look forward to executing against in the coming year and thereafter. Moving now to take a look at our wireline portfolio. TELUS delivered another quarter of industry-leading total wireline customer growth of 40,000 in the fourth quarter. This included 35,000 Internet net additions powered by our leading PureFibre offering on a national basis. Our consistent strategy of leveraging our superior and growing portfolio of bundled products and services on a national basis continues to differentiate our company meaningfully from the competition in a way that matters to customers and creates shareholder value. We are delivering far more than connectivity. We are empowering Canadians with transformative digital experiences, including AI-powered smart home energy solutions, cutting-edge tech-enabled health care and well-being services, comprehensive security offerings and, of course, premium entertainment solutions. Furthermore, we drove continued strong momentum in our unique and highly differentiated data-centric B2B growth businesses. Our TELUS Health team delivered another strong quarter of double-digit revenue and adjusted EBITDA growth, fueled by strategic investments, continuous product innovation, and disciplined execution across our global platforms. We successfully delivered $431 million in LifeWorks annualized synergies, surpassing our $427 million public target and the commitment that I made to you in this regard. This comprises $334 million in cost efficiencies and $97 million in cross-selling revenue, demonstrating our ability to execute on transformational integrations. Notably, this result is nearly 3x above our original target of $150 million that we set when we first acquired LifeWorks in September of 2022. Moreover, we expanded our global reach to more than 161 million lives covered, solidifying our position as the world leader in workforce, digital health, and well-being services. By way of just one example, our commercial initiative with M42's Abu Dhabi Health Data Services marks a significant milestone in our expansion into high-growth markets globally. This collaboration combines TELUS' proven global expertise with M42's regional clinical excellence and AI capabilities to deliver comprehensive workforce health solutions across the Middle East and within the broader region, and it clearly aligns explicitly with Prime Minister Carney's Snow and Fan International Trade initiative. As we continue to expand our operational footprint, our engagement with financial advisers to explore strategic investment opportunities for TELUS Health demonstrates tangible progress on our well-articulated commitments to the investment community. As a leading digital health platform with expanding global reach, AI-driven innovation, and strong profit and cash flow growth, TELUS Health is well positioned to attract strategic partners that unlock significant value for our shareholders. In parallel, following the privatization of TELUS Digital, we are accelerating our enterprise-wide AI and data capabilities, enabling strategic cross-promotion of our industry-leading AI product set throughout our entire business portfolio. At the same time, we are enhancing TELUS Digital's capacity to drive growth opportunities across its external client base. This positions TELUS for differentiated growth with our AI-enabling capabilities revenue targeted to grow from circa $800 million in 2025 to approximately $2 billion in 2028 across both TELUS Digital and TELUS Business Solutions, including important contributions from our sovereign AI factories. Notably, in the fourth quarter of 2025, AI-enabling capabilities revenue increased by 44% to $229 million, supporting a 35% increase for the full year, underscoring the strong momentum in this high-growth area and what it portends for the future. This performance reinforces our position as a trusted partner to enterprises navigating digital transformation and implementation of AI and validates our strategy of leveraging TELUS as an innovation lab to commercialize cutting-edge AI enabling capabilities for our clients. Alongside this growth, we expect the integration of TELUS Digital to unlock meaningful operational efficiencies that we intend on harvesting. This includes delivering annual cash synergies of approximately $150 million to $200 million, with circa $150 million being realized within the 2026 financial year. Driving our performance is a disciplined approach to financial management, supported by strong business fundamentals and significant free cash flow growth generation. Our confidence in delivering free cash flow growth at a minimum of 10% compounded annual growth through 2028 reflects our strong financial momentum in action. Additionally, effective with today's dividend declaration, we are reducing our DDRIP discount to 1.75% from 2%, with further reductions planned through 2026 and into 2027, with the full removal taking effect in the 2027 financial year. Importantly, we continue to assess a more accelerated step-down, facilitated by the execution of our monetization program targeting $7 billion of assets under management. I think it's interesting to note when we look at the $7 billion of dispositions that we are considering the synergistic effect with our overall growth strategy. For example, our PureFibre build is what is enabling our real estate monetization and our copper recycling. Our real estate monetization and our copper recycling cumulatively are going to end up paying for about half of the cost of our fiber build. Now that's a strong strategy. Secondly, when you look at the opportunity to bring in a strategic investor in TELUS Health, the investments that we have made historically in this business are going to yield significant multiples over the capital that we’ve invested. As part of our capital allocation framework, we are maintaining our dividend at the current level until our share price and associated dividend yield better reflects the considerable growth prospects of TELUS. Based on the current quarterly dividend, our cash dividend payout ratio is approximately 70% on a prospective basis, and we anticipate that it will remain in the 70s over the course of our multi-year plan with the net effect of our deleveraging plan in action and the DDRIP removal. Resuming dividend growth will be contingent upon maintaining this payout ratio trajectory with the DDRIP discount fully removed as we execute against our strategic plan, including free cash flow generation and achieving our deleveraging target. Indeed, in 2025, we undertook several targeted activities to further appreciably strengthen our balance sheet. This included the successful issuance of hybrid debt securities as well as our partnership with La Caisse and Terrion, our dedicated wireless tower infrastructure operator, enabling wholesale access and colocation. Notably, our Terrion transaction reduced TELUS' net debt by $1.26 billion or approximately 17 points on TELUS' net debt-to-EBITDA ratio, accelerating deleveraging and advancing TELUS' progress towards robust and long-term sustainable growth. Looking ahead to 2026, our team is advancing additional monetization opportunities, including strategic investors for both TELUS Health and TELUS Agriculture and Consumer Goods and the accelerated monetization of real estate and copper assets. These efforts will be buttressed by operational growth, including robust EBITDA and free cash flow expansion, supported by moderating capital expenditures and an industry-leading CapEx intensity ratio of 12%, trending to circa 10%. Our comprehensive deleveraging strategy is moving ahead of plan, with a leverage ratio ending 2025 at 3.4x and expected to reach circa 3.3x or lower by the end of 2026 and achieve 3x or better by the end of 2027. Our strong financial and operational performance is enabled by our world-leading broadband networks, our data-centric growth assets, and our commitment to customer service excellence. This provides a sustainable foundation for delivering on our 2026 targets announced today, including consolidated service revenue and adjusted EBITDA growth of up to 4%, consolidated free cash flow of approximately $2.45 billion, and finally, moderating capital expenditures of circa $2.3 billion that support that CapEx intensity ratio ending from 12 to 10. Underpinning our outlook is a growth strategy centered on amplifying profitable revenue expansion, complemented by ongoing and important focus on cost efficiencies being realized, positioning TELUS to deliver sustainable value-accretive growth. In closing, 2025 marked the 25th anniversary of our iconic TELUS brand and the 20th year that our team members have participated in our annual TELUS Day of Giving. Since 2000, TELUS, our team members, and retirees have contributed $1.85 billion, including 2.5 million days of giving, equivalent to 19 million hours in our global communities. This is more than any other company on the planet. And here's the equation at TELUS: social purpose and leading the way globally drives higher employee engagement. Higher employee engagement drives better business execution. And this has yielded a culture where better business execution from that higher engagement leads us to deliver the type of customer service outcomes and the lowest churn rate within global telecoms for decades now. It's quite the combination. And in closing, I'd like to express my gratitude to our global team for their efforts and expertise in executing on our consistent strategy to meet our commitments to all stakeholders. And on that note, I'll turn the call over to you, Doug.

Thank you, Darren, and congratulations on your retirement. Our fourth quarter and full-year results demonstrated strong operational execution and financial discipline, closing out 2025 with strong momentum across all key metrics and continued significant progress on our deleveraging commitments. During the seasonal competitive fourth quarter, we executed in a highly tactical and disciplined manner that is evident in our financial results. We delivered positive network revenue growth, while ARPU continued to stabilize, declining 1.6%, demonstrating an accelerated sequential quarterly improvement. Notably, this is the strongest sequential improvement amongst our peers, reinforcing the effectiveness of our go-to-market strategy and the focus on economic loading. Furthermore, TTech adjusted EBITDA, excluding lower mobile equipment margin from lower contracted volumes, increased 2.7%, and free cash flow increased 7%, supported by our positive free cash flow impact of lower contracted volumes on disciplined device financing in addition to our lower cash restructuring. To summarize, in wireless, we had the largest network revenue growth, the largest improvement in ARPU, and the lowest contracted volumes in subsidies in handsets. This is a trifecta in value generation. And the numbers, not talk, support the financial market discipline that we have shown. Fixed data services revenue in the fourth quarter increased approximately 2%, driven by continued Internet customer growth and higher Internet ARPU. Declines in business fixed data revenue continued to reflect revenue variability and customer contract changes and were partially offset by continued growth in small and medium business. Overall, TTech adjusted EBITDA margin expanded 240 basis points to 40.9%, driven by our commitment to strong economic growth and persistent efforts to reduce costs, including our competitive advantage of TELUS Digital's AI enablement. In Health, operating revenues and adjusted EBITDA grew by 13% and 10%, respectively. The growth was attributed to the acquisition of Workplace Options, as well as our organic growth in payer and Provider Solutions and with strong performance across all product lines. Moving to TELUS Digital, operating revenues grew 3% for the quarter, supported by services in our TTech and Health segment, as well as expansion with our external customers, notably in banking and financial services. This was partially offset by a reduction in volumes from certain technology and e-commerce clients. While TELUS Digital's adjusted EBITDA declined 5% year-over-year, the margin of 13.7% improved 260 basis points compared to the third quarter. The team continues to streamline operations through digital transformation and further implementation of AI, particularly in CX delivery, as well as looking closely at geographical optimization. On our balance sheet, we continue to benefit from a strong free cash flow generation as we're executing a disciplined capital allocation and deleveraging strategy. In 2025, we made meaningful progress targeting our financial position and our net debt-to-EBITDA leverage ratio declined to 3.4x as compared to 3.9 at the end of 2024, positioning us well as we advance towards our leverage targets highlighted earlier today in '26 and '27. During the year, we completed several proactive initiatives to support this initiative. These include the issuance of our junior subordinated notes as well as successful execution of multiple debt tenders that retired $2.9 billion of outstanding debt securities. Notably, the $400 million of 5.375% fixed-to-float rate junior subordinated notes represented the lowest hybrid notes issued in Canada Telecom cable hybrid debt history. At the end of the year, our long-term debt carried an average maturity of approximately 14.7 years and a weighted average cost of debt of 4.75%. Moving on to our financial outlook for 2026 guidance, which reinforces our commitment to delivering strong shareholder value, and it includes consolidated service revenue growth of 2% to 4%, consolidated adjusted EBITDA growth of 2% to 4%, consolidated capital expenditures of $2.3 billion, including real estate, or approximately 10% decrease, and consolidated free cash flow of approximately $2.45 billion, circa 10% growth. Our outlook for free cash flow is driven by higher EBITDA and moderating CapEx, stable impact from contract assets, offset by higher interest and restructuring charges. A detailed list of our assumptions for 2026 is included in our annual MD&A released today. To conclude, our 2026 guidance reinforces our commitment to strong delivery of shareholder value. We are confident in our ability to deliver sustained profitable growth, supported by a robust asset mix, diversified business portfolio, and proven operational excellence. With that, back to you, Ian.

Thank you, Doug. Carl, please proceed with questions from the queue.

The first question is from Stephanie Price from CIBC.

Darren, congratulations on your retirement.

Thanks, Stephanie.

I was hoping you could maybe talk a little bit about the current wireless environment. It seems like it's a little bit more promotional than we typically see in Q1. How does TELUS think about its strategy on the flanker versus fighter brand side here?

Thanks for the question, Stephanie. I'll hand it over to Zai to comment on that.

Stephanie, thanks for the question. So you're correct in observing that the industry is engaged in some irrational tactics, unfortunately, following a period of some additional sanguine behavior that you've seen flow through in our results, of course. When this activity is manifested both above and more recently below the line, our response has been pretty unequivocal. We believe maintaining healthy industry economics is contingent on driving brand differentiation, as you highlighted, between premium flanker and prepaid segments. And when we see behavior of masking promotions to erode value at the premium level, that undermines the perception of premium brands and initiates a pretty detrimental race to the bottom in the mind of the consumer. So in that situation, flanker and prepaid brands serve as a really important function in catering to the value-focused demographic within the market. And we don't want to be criticized or really apologetic for how we respond to that competitive aggression. Our performance substantiates our position. We're the undisputed leader in establishing the optimal balance and quality loading to ensure superior economics. We've led in churn reduction in network revenue growth, ARPU amelioration, and most critically in cash flow growth year-over-year. That's on the back of significant improvement year-over-year, not on the back of a poor performance in one year. So that sustained level of value creation is not the result of destroying value on our part. We've accomplished it through a series of deliberate strategic moves ranging from redefining the premium segment and optimizing bundling economics to enhancing customer retention, achieving sustained year-over-year unit economics and judicious device subsidy management, as you've seen in our cash flow improvement. So given the industry scrutiny regarding debt load and uncertainty that we've seen, cash flow is paramount, and TELUS is unmatched in our capacity to demonstrate quality loading with a high payback. If you observe a period of time boxed, high irrational market behavior, our track record should unequivocally indicate that that’s a reaction to aggression.

That's good color. And maybe just a follow-up on ARPU. I think both Doug and Darren highlighted the rate of decline has improved pretty significantly sequentially. Just curious about the puts and takes there and how you think about TELUS working towards ARPU growth.

Yes, I think that's great. I would say that the other element of that is that we participated as well more significantly in the value segment through that ARPU growth. So what you're really seeing is a reestablishment, as I highlighted, of premium and giving customers a reason to step up—and our value props in terms of true Unlimited, price lock for value step-up, and offering some roaming plans in that value proposition for premium have really redefined the premium. So with that, we've seen a renewal step-up that we haven't seen in the last several years actually. And that's manifested itself. And then finally, it gives us the ability to differentiate the promotional subsidy and attach a higher level of subsidy to where the higher value for what customers are willing to pay for premium plans is. And that's what's really created that differentiation.

The next question is from Drew McReynolds from RBC.

And just would echo congratulations on retirement, Darren, I certainly wish you all the best going forward.

Thanks, Drew.

Two for me, if I may. I think first, in terms of the guidance range, and I think we could probably just stick to revenue growth, but maybe EBITDA growth. Just the usual question of what gets you closer to 4% versus 2% and some of the moving parts and assumptions there? And then secondly, just with TELUS Digital now in the guidance and underneath the hood, just wondering if you could provide us with an update on kind of growth and outlook expectations there. And then specifically, just what its role is here in 2026 and helping to drive that $150 million in synergies and the broader TELUS strategy?

Thanks, Drew. In terms of what gets us closer to the high end of either revenue or EBITDA, I think it's pretty simple at TELUS. We've got three significant areas that we need to execute on. One is telecom, where the key growth drivers within that are within consumer and small business. Second is TELUS Digital, and third is TELUS Health. As it relates to both TELUS Digital and TELUS Health, we're looking in 2026 to realize double-digit EBITDA growth from both of those assets and a significant step-up in nominal EBITDA and cash flow generation. I think it's a laudable and an exciting story. Within the telecom business, it's pretty clear to us. We want to see growth coming from four areas. Number one, and this is common to both consumer and SMB. We want to do well at new product development and new product scaling. We have a number of products within our portfolio that are highly differentiated from our competition and pretty meaningful and exciting to our consumers. Getting them into our bundles and scaling that, I think, will be not just a growth opportunity in and of itself but also a halo effect, protecting our traditional telecom services from areas like price aggression because we are differentiated within our overall product suite. The second area of growth for us is improving churn. We have a significant opportunity to lower our churn rate at TELUS on both wireless and wireline, both consumer and business, and get back into a churn ZIP code that is emblematic of the type of churn rates that we posted in 2022 and 2023. So that's a specific goal for this organization. And again, the economics go beyond the obvious on that. Not only do we get a better yield on gross to net by improving churn, but we can be more discretionary when it comes to COA because we don't have to chase net adds because we're doing very well at the churn line, and that's a very positive economic story. The third area of growth is product intensity. We have a material number of clients on the SMB front and on the consumer front that are single-product customers. Getting those single-product customers to two-product customers, three-product customers, and four-product customers when we have the quality of the product portfolio that we do is a very doable undertaking for this organization. And again, we get a synergy with that because, as you know, as we drive up product intensity, where the opportunity, as I just said, is plentiful, we are simultaneously going to be driving down churn because the more products that we have with a client, the stickier the relationship is. The last growth area for us is national expansion. We have the opportunity on both a build-it basis and a wholesale basis to pursue smart, economically accretive quality customer acquisition strategies on both consumer wireline and SMB wireline within Ontario and Quebec, and we intend to do just that. The final area of growth is the margin level. And God forbid that we ever forget this or become so blinded by the pure revenue to EBITDA growth opportunities that we miss our OpEx responsibility on cost efficiency. It's incumbent upon TELUS to really drive that cost efficiency story for two reasons. One is we have TELUS Digital. We own the totality of that asset, and we should be able to get excellent cost efficiency without sacrificing customer service because of how we drive that particular asset. Secondly, TELUS Digital is truly a world leader when it comes to CX AI applications, truly a world leader. You don't have to ask just TELUS; you could look at some of the blue-chip clients that are buying our CX AI solution set and leveraging AI to drive down our cost and improve our go-to-market outcomes is a big part of our growth story as well. That's where it's going to be coming from. I like the fact that, from a diversification point of view, we're not a one-trick pony on growth. We've got growth coming from telecoms, we've got double-digit growth coming from TELUS Digital, and we've got double-digit growth coming from TELUS Health. I think that provides a robust story. So if there's any shenanigans in one particular area, it can't knock us off our stride. And of course, we're never going to take our eye off the ball of cost efficiency along the growth path glide.

And on the second question on the efficiencies of TELUS Digital, we split them out into four categories. We have below the line, which is interest and capital, which is probably one-third of the savings. The other two-thirds are split between TELUS Digital and TELUS from efficiency and effectiveness. All of these are being executed in a lot of what Darren highlighted as we speak.

The next question is from Vince Valentini from TD Securities.

Let me start trying to clarify just a couple of things. Your last comment there, Doug. First off, did I hear Darren correctly that double-digit EBITDA growth is expected for both TELUS Digital and Health in 2026?

That is correct.

Okay. So assuming I got that right, TELUS Digital has double-digit growth even though some of the $150 million of synergies, it sounds like it's allocated to the telecom division as opposed to being allocated to digital?

That's correct.

Okay. And do we know yet if the reporting segments are going to stay the same? Will we still get revenue and EBITDA for TELUS Digital going forward?

We will be resegmenting in Q1, and the segmentation at the moment, I'm still doing some refinements. What will be external customers will be the TELUS Digital segment. The internal TELUS business for customer experience will be put back into telecom. We will restate, so you'll get the year-over-year comparative. Then it will be the digital AI and external CX that will be left in that number.

Okay. And I also try to clarify what Zainul said earlier on the ARPU. It doesn't sound like there's anything unusual this quarter in terms of the material improvement in the ARPU trend, no like roaming contracts or any other unusual items. So keying off of that, given the good improvement you're seeing in renewal upsell and gradual improvement in pricing discipline in the market. Is there any reason to think that we should take a step backwards from minus 1.6% in Q1 or Q2, or it continues to get better from that level?

Certainly not from us. So I would say that you have the readout right. It's organic improvement, and we're continuing to see that progress.

Zainul can do better.

Good point.

I appreciate that.

Last one, apologies, but I mean, we're just—I'm inundated with this question all day. I assume some of the other analysts on the line are as well. But is the change in CEO meaning that we should be thinking about any sort of change in capital allocation or dividend policy? And if so, do these questions start to get addressed in the next couple of months? Or do we wait until after Darren takes his well-deserved retirement?

I think it's important to focus on the facts, Vince. It was only 2 months ago that the Board unanimously approved our three-year strategic plan and all that it entails. So I would expect strong continuity in terms of what this organization is doing and more specifically, strong continuity in respect of our growth initiatives, strong continuity in respect of our capital allocation initiatives, and strong continuity as it relates to our deleveraging program. We have a portfolio of activities underway to achieve that, which we have well communicated to the Street. This organization is intent on following through and delivering on those, whether it's the current administration or the prospective one. We are excited by the catalysts that delivering against these initiatives will entail in terms of value creation at the TELUS organization.

The next question is from Maher Yaghi from Scotiabank.

Great. Darren, I recognize you're going to be around for a while still, but I wanted to say it was a privilege to interact with you, and I wish you all the best in the next stage of your life.

That's very kind.

Of course, you mentioned that more will be shared in the transition process in the coming weeks. But could you provide just for us an understanding of what the Board was making sure to lock in by hiring Victor?

I think the Board was looking to lock in a great leader with a proven track record, a leader that's familiar with driving a complex organization, dealing with all sorts of exciting opportunities, but working through some of the challenges that come with that, whether it's technological or regulatory. I think they're looking for a leader that had a set of leadership values that reflected the culture that has served the TELUS organization so well. When I look at the excellent business acumen and strong leadership values that Victor exhibits, I think his propensity for customer service excellence—our nomenclature is customers first—will fit very well with the TELUS organization, supporting the type of world-leading churn rates that we have posted for decades. The focus on growth through strength will be something that he'll continue to focus on and deliver against those initiatives. You heard in my comments about the link I made to social purpose and leading the way in that regard, driving higher employee engagement, which leads to better business execution. If we're known for one thing at TELUS, it's execution. We have done it well forever. The grist for the mill is our culture. Victor's affinity with social purpose and the importance he places on people and culture will serve him tremendously well within the fold of the TELUS organization going forward. I'm excited to see what the new administration—Victor and his leadership team—will bring to the organization in a positive way, making their mark while putting customers first.

Okay. Just a follow-up on the discussion about the pricing environment early this year and how it has evolved compared to Q4. One of the frustrations that TELUS team has had was, as you mentioned, below-the-line discounting, especially on EPPs and stuff like that. You tried to correct the situation with some of your discounts on Public and Koodo. But I did notice that this week, you made some changes to your EPP plans, and we have seen them drop. The $15 below the TELUS branded price is on BYOD, and possibly even more if you go to the store. So I was wondering if that change is also a reflection of your frustration, and could we see that being removed as we come back to traditional pricing, or does the environment remain frustrating for you up until now?

Zainul, why don't you answer that, and maybe I'll make a closing comment.

Sounds good. Thank you, Darren. I think we have seen some better economics in the industry. When you look at plans like EPP or other plans that are a function of the premium segment but catered towards a specific target market, whether it's EPP or SMB, there's a couple of elements. One is the eligibility. We ensure that if you have very strict and tight eligibility for those plans, they play a meaningful role in the overall portfolio. What I would say is you will see that we will be more reactionary; you will see that we will ensure that, where we are losing some ground in value, we will want to participate effectively, whether that's in the value segment or in the premium segment. You will see that we will drive the discussion around keeping certain promotions tightly managed so that they play their requisite role in the portfolio.

I think, Maher, from our point of view, if the mean time to emulate an irrational price move is measured in seconds, it instantly commoditizes any benefit associated with the aggressive pricing on a land grab move. If that speed of emulation drives instantaneous commoditization, then what was the point of it in the first place? That's the type of discipline that Zainul is looking to instill in the marketplace, which hopefully should drive a shift to differentiated value propositions that are more sustainable, that create value, and at the end of the day, provide more benefits to customers over the long term and more benefits to investors. That's the hallmark of an organization at TELUS trying to do the right thing.

The next question is from Jerome Dubreuil from Desjardins.

First of all, congratulations, Darren, on an outstanding career. I wanted to ask about leveraging AI, coming back to that conversation. I think last quarter, you discussed the strategy of chips ownership for your several AI initiatives. Owning the chips can be expensive depending on the model. So the question is whether the chip strategy is still the right one, if this investment is included in the guidance? And if it is, would the assets be on the balance sheet?

Yes, it's included in the guidance, and I'll comment a little bit more on that front. Yes, on the balance sheet as well. But why don't I pass it over to Tobias to make some comments? And then if there's any cleanup, I'll do it at that juncture.

Thank you, and thank you for the question. Darren, congratulations on your retirement, and thank you for all the unwavering support of TELUS Digital and our alignment throughout the TELUS ecosystem. When you think about TELUS Digital, what we accomplished in the fourth quarter is part and parcel of our growing momentum that you see in the numbers. We've unified all our capabilities across web, app development, Salesforce, Google Cloud, data, and AI, specifically our CX AI capabilities. This positions us for winning the moments that matter. As Darren said, serving the customer is everything. For us, it's serving our clients across their customer journey, and every piece of that is now underpinned by AI. When we look at where we have permission to be successful and what advantages we have versus other competitors, it falls into a couple of categories. One is with TELUS, right? TELUS is a fertile testing ground for us. It's a real-life lab. It's where we show real capabilities in motion, in practice, such as significantly reducing first call resolution and save rates, and where we partner on the full stack of sovereign AI. The second area that we can differentiate ourselves in is CX AI. AI impacts enterprises across the ecosystem. We're winning in this area, where we have hundreds of existing clients and tens of thousands of seats we provide those clients, enabling the scale deployment of CX AI. We also received a Gold Stevie Award for our B2B sales efforts with a major fintech customer, where we improved conversion rates by nearly 50% and generated over $100 million of incremental value for them. Outbound B2B sales is an area where AI will support what we do because empathy is essential. It isn't completely replaceable by AI but complements it. This is an area we're focusing on. As Darren mentioned, in Q4, AI-enabling capabilities revenue grew by 44% to $229 million, supporting a 35% growth for the full year, which underscores our strong momentum in this high-growth area and what it portends for the future. We're also mindful of effective cost management with our goal of achieving $150 million to $200 million in total efficiencies.

I think, Jerome, we're fortunate, and perhaps lucky as well as smart, to have legacy data centers in Rimouski and Kamloops that we did not sell, unlike others. We're leveraging that sunk cost. The architectural qualities of those data centers were such that we could make them fungible and turn them into sovereign AI factories with a minimum amount of capital investment, which we've accomplished. This is why we can get it done within the CapEx envelope that's seen our CapEx intensity drift from 12 towards 10. At the OpEx level, these sovereign AI factories will be run by, because of the technology prowess that we have, a skeleton crew. We're extremely cost-efficient at both the CapEx and OpEx level. The other critical point Tobias and Hisham have made is that balancing growth so that supply equals demand. The rollout and enablement of these data centers are aligned with the pace of demand. We've secured a great strategic partnership with NVIDIA that gives us an advantageous position related to new chips, cost economics, and volumes that benefit TELUS. Every element of our sovereign AI thesis is controlled by TELUS, enhancing the sovereign component of our story, which matters significantly at both the customer and government levels.

Thanks, Jerome. Carl, I'm recognizing that we're through the hour, so we'll pause the call there. Thank you, everyone, for joining the call today, and please reach out to the IR team with any follow-ups.

This concludes the TELUS 2025 Q4 Earnings Conference Call. Thank you for your participation, and have a nice day.