October 19,1998, Burnaby, BC and Edmonton, AB

BC TELECOM Inc. (TSE: BCT) and TELUS Corp. (TSE: T) today announced plans to merge and create a new, growth-oriented telecommunications company. In a joint announcement, the two companies emphasized this proposed merger of equals is the first step toward becoming a leading, national telecommunications provider.

"We're excited about the opportunities for growth this merger presents to our customers, to our employees and to our shareholders," said Brian Canfield, BC TELECOM chairman. "Our combined size and financial strength, along with the expertise and commitment of our people, position us to become a communications provider of choice for Canadians."

"When we talk about growth, we mean a number of things," said George Petty, TELUS president and chief executive officer. "We mean accelerating the pace at which we expand into fast-growing, new businesses such as advanced data services, voice over the Internet and electronic commerce. We also mean building upon our existing network infrastructure and most importantly, expanding our customer base beyond our provincial borders."

The two companies also announced that an agreement has been signed to acquire fibre-optic links in eastern Canada from Ledcor Industries. Ledcor will provide a fibre ring through southern Ontario and Quebec as well as links from Vancouver to Seattle, from Montreal to Albany and from Toronto to Albany which will have the ability to connect to GTE's national backbone network.

Combining annual revenues of almost $6 billion and assets of more than $8 billion, the merged company is expected to achieve annual synergies by the third year of approximately $250 million in operating expenses and $115 million in capital expenses. In addition, the merged company is expected to generate new revenues by accelerating the introduction of new and emerging services on a national basis.

Terms of the merger agreement
The agreement calls for TELUS shareholders to receive .7773 of a share in the resulting merged company for each TELUS share they currently own. BC TELECOM shares will become shares of the merged company. As a result, BC TELECOM shareholders will continue to have one share of the merged company for each BC TELECOM share they currently own. This transaction, which is a merger of equals, will be accounted for as a pooling of interests.

As part of the transaction, GTE, which currently owns just over 50 per cent of BC TELECOM, will hold just over 26 per cent of the voting shares of the merged company. GTE has advised both BC TELECOM and TELUS that it supports the transaction and intends to vote in favor of the merger. The ownership of the merged company will comply with Canadian foreign ownership rules and regulations under the Telecommunications Act and the Broadcasting Act. The merged company will take all steps necessary to ensure such compliance, including ensuring that non-resident share ownership levels are within the levels permitted.

Under the terms of the merger agreement, the chairman will be Brian Canfield and the president and chief executive officer will be George Petty. The new board will be made up of 16 members, with an equal number coming from BC TELECOM's and TELUS' existing boards.

The senior executive team for the new company will be named by early November and is expected to be an equal blend of executives from BC TELECOM and TELUS, and will operate from executive offices located in both Burnaby and Edmonton. The companies will continue to maintain sizeable operating presences in their current operating territories. The merged company will be called BCT.TELUS Communications Inc. until a new branding strategy is developed.

"Clearly, the key to this merger is how it positions us for future growth," said Petty. "Maintaining the status quo simply doesn't give us the growth opportunities we need in today's intensely competitive marketplace. We are already working together, looking at ways to create operating efficiencies as well as ways to complement our existing national services and alliances. These options include further expansion of our existing networks through acquisitions or investments in new facilities, or by forming new alliances with other communications companies."

"This proposed merger is good news for customers, particularly customers who have business operations or personal ties across the country or around the world," said Don Calder, BC TELECOM president and chief executive officer. "The merged company will provide new high-speed data and Internet services to make businesses more competitive. It will also give consumers faster access to the latest products and services at competitive prices."

"An integral part of this proposed merger is to build upon our longstanding relationship with GTE," said Canfield. "As part of this agreement, GTE will offer access to its global resources including its branding strategies, technology agreements and intellectual property rights. These rights cover new and emerging services as well as support systems such as billing, customer contact and network management. Our relationship with GTE will also allow us, over time, to achieve greater economies of scale and scope."

"GTE intends to support the BC TELECOM-TELUS merger and the new company in every way possible," said Mike Masin, GTE vice-chairman and president - international operations. "BC TELECOM has been an important part of the GTE family for many years. This merger is an important strategic step for the two companies. The combination of BC TELECOM and TELUS will be a value creator for shareholders of both companies."

This merger combines the complementary capabilities of BC TELECOM and TELUS in their respective operating areas. Of Canada's top 750 businesses, 24 per cent have headquarters in the areas served by BC TELECOM and TELUS.

Strong local and long distance players
Together, the two companies have 4.4 million access lines in British Columbia and Alberta, which is 25 per cent of the total access lines in Canada. The companies have approximately 70 per cent of the long-distance market in their operating territories.

Leading wireless operations
BC TELECOM and TELUS are leaders in Canada's wireless communications market, providing advanced digital and analog wireless services to more than 900,000 customers throughout B.C. and Alberta. This represents a combined market share of 63 per cent and an industry-leading penetration rate of 13.5 per cent of the population in B.C. and Alberta.

Large Canadian Internet service provider
This is one of the fastest growing areas in both companies, with a combined customer base approaching 180,000, making them the leading Internet service provider in the region.

Leading business data services and networks
BC TELECOM and TELUS provide high-speed data and advanced Internet services, using the most sophisticated networks available in Canada today. As part of the transaction, GTE will provide access to a suite of new applications and services not yet available in Canada.

Powerful brands
Both BC TELECOM and TELUS will continue to leverage the strengths of their existing brands in their respective operating areas until a new branding strategy is developed. The new company will also have access to GTE's global branding strategies. In July, GTE announced a merger with Bell Atlantic, which is expected to be completed next year.

BC TELECOM and TELUS have a combined workforce of more than 25,000 people. BC TELECOM has approximately 14,000 employees. TELUS has approximately 11,000 employees.

"Obviously, when you put two companies of this size together, there are likely to be some overlapping positions - particularly at the senior management levels," said Petty. "However, since we are talking about expanding into new territories by delivering new services, we expect to create new employment and professional opportunities."

"This proposed merger is a critical first step in providing Canadians with even greater market-based choices," said Jim Palmer, TELUS chairman. "We are already competing against very aggressive national and international players in our home markets of British Columbia and Alberta. We are eager to combine our existing strengths as a springboard for growth."

Next steps
The transaction requires approval by the shareholders of both companies. It is anticipated that registered shareholders will be mailed proxy information circulars, which will contain more details of the proposed merger, in December. Both companies are currently planning to hold special shareholder meetings in mid January to allow shareholders to vote on the proposal. The companies anticipate a formal closing of the merger will take place in early 1999.

The full text of the arrangement agreement will be attached to the material change reports to be filed by the companies with Canadian securities regulators.

More information about the two companies can be found on the BC TELECOM web site at www.bctel.com and the TELUS web site at www.telus.com. The GTE web site is located at www.gte.com.

Jeff Welke
media relations manager
Phone: 403-498-7236
E-mail: jeff.welke@telus.com

Joanna Wyatt
media relations manager
Phone: 604-432-3853
E-mail: joanna_wyatt@bctel.com