QUOTE:

Criticism of the planned conversion of Telus into a trust is “very superficial”. It’s by no means a tax dodge and won’t handicap the firm’s ability to reinvest and grow.

"Telus seeks to erase the Canadian stigma of income trusts as a structure designed mainly for creaky old businesses with few growth prospects.”

It’s my hope we can breach that stigma because of the characteristics of our business. We are not a typical trust. We are the . . . antithesis of that...Telus plans to boost cash distributions over time while keeping up the same pace of reinvestment in its technology-heavy business, from wireless offerings to television.

I can tell you categorically that we are going to carry on, unabated and undiminished, making these investments in Canada.

I would refute “superficial discussion, conjecture and analysis”.

It’s not proper for us to tell people, obviously, what opinions to hold, but I do think this particular development bears further analysis.

“The bigger picture shows gains for government...Ottawa and the provinces stand to reap hundreds of millions in capital gains tax revenue from Telus’s conversion to a trust, assuming its shares each incur an average $40 in capital gains.”

And the last time I checked, capital gains in Canada were still taxed. Take that capital gain per share and juxtapose it against the fact we have 344 million shares outstanding. That’s a nice revenue flow to the government.

“Telus would be boosting distributions for each income trust unit to levels that far exceed dividends a share—producing a much richer payout for investors that would then be taxed by government.”

What tax base would you rather have? The current dividend flow at Telus, which is $1.10 per share per annum or the $4 we’re proposing under the cash distribution of an income trust. I think the latter is a much more attractive tax base than the former.

“Telus wouldn’t have come under as much scrutiny if it had simply purchased an asset with “tax loss carry-forwards” that allowed the company to cut its corporate tax bill much as the income structure would”.

I think if we had done that, there wouldn’t have been a peep out of anyone.

“I expect Ottawa will approve the Telus conversion to a trust because federal officials will appreciate the benefits...but I think the Canadian Radio-television and Telecommunications Commission should rely more on market forces...to intervene in the business world only where absolutely necessary....the CRTC should usher in a new era of minimal regulations and take part in an overhaul of government policy.”

“Canada needs to relax its copyright, broadcasting and advertising laws to bring them in line with the digital world...Telus would make more capital investments if Canada had less regulation.”

FROM: Steven Chase and Simon Tuck
in Report for Globe & Mail on comments
after a Canadian Chamber of Commerce luncheon