GATINEAU – On Wednesday, July 4, Globalive Wireless Management (Wind Mobile) asked the CRTC to add a new piece of evidence to its file which says Telus is currently off-side when it comes to Canada’s telecom regulations on foreign ownership.
As we reported previously, Globalive wants the CRTC to launch a public proceeding to examine whether or not the number of foreign investors in Telus is too great. On June 20th in a submission to the Commission, Globalive said that Telus’s recent aborted attempt to convert to a single share structure exposed the Vancouver-based telco’s non-compliance with the Canada’s telecom ownership rules and that it may well be in breach of the Telecom Act – and that the Regulator has to find out now whether or not Telus’s ownership is Canadian enough.
“Only by doing so, and establishing whether Telus is in compliance and – whether it is or is not – what is acceptable to the Commission in this regard, will the Commission create an informed ‘substantive precedent and a level of much needed certainty to all industry players. [A] public decision would afford industry players and the general public with a better understanding of the Commission’s interpretation of the [Ownership Rules]’,” reads the original Globalive submission, quoting Telecom Regulatory Policy 2009-428.
Last week, U.S. hedge fund Mason Capital Management LLC (whose trading antics, says Telus, scuttled its share conversion plan) made public a letter that it sent Telus citing information from the proxies submitted for Telus’ recent annual shareholders meeting which it claims shows about 42% of voting shares voted at the meeting were held by shareholders who declared themselves non-Canadian or refused to answer the required declaration as to their residency. Under the Telecommunications Act and other related statutes, non-Canadian ownership of voting shares of Telus is limited to 33.3% of the outstanding voting shares.
In the letter to the Telus board of directors, the American company states: “Mason understands that the 33.3% allocation of voting shares formally designated by Telus under its foreign ownership reservation system for ownership by non-Canadians has, for several months now, been fully or close to fully allocated to non-Canadian shareholders. Yet in addition to these shares, there appear to be substantial numbers of voting shares held by non-Canadian shareholders who, unlike Mason, failed to comply with Telus’ control procedures and hold their voting shares outside of Telus’ reservation system. The formal ownership declarations included with the proxies show that approximately 7.8 million voting shares were held outside the reservation system by shareholders who declared themselves non-Canadian or refused to answer the ownership declaration, contrary to the requirements of the proxy.
In its Wednesday submission, Globalive has requested that the CRTC make the Mason letter to the Telus board a part of its record because it is “compelling corroboration of the strong prima facie evidence set forth in Wind’s Application to the effect that Telus is not currently in compliance with the Canadian ownership regime set out in the Act,” reads the Globalive submission.
“Wind respectfully suggests that the Commission should require Telus to provide true copies the proxies themselves, with an affidavit as to their veracity, as part of the Commission’s public process to review Telus compliance with the ownership regime…
“The Proxy Vote Disclosure clearly reinforces the need for the Commission to conduct an open and transparent review of Telus’s compliance with the Act. At the same time, the information in the Proxy Vote Disclosure was presumably already known to Telus, and it merely corroborates the information that Wind has already placed on the record to provide prima facie evidence that Telus is in breach of the ownership regime. Accordingly, the addition of the Proxy Vote Disclosure to the record of Wind’s Application is not unduly prejudicial to Telus and should not increase the time required by Telus to prepare its Answer to the Application,” continues the newest submission.
While the Commission has yet to respond, Telus has insisted all along that all is in order on its ownership front and that the complaining parties are making hay because it suits their business interests, not that they care about the levels of foreign ownership in the telco. (Ed note: There is another document, the Annual Report and Statutory Declaration each company must file with the CRTC which details, among other items, the levels of foreign ownership and control. However, that is a confidential document neither Telus nor the Commission is releasing.)
“Simply put, there is no uncertainty around our compliance with foreign ownership restrictions,” Telus spokesman Shawn Hall told Cartt.ca last week. “Telus has been and continues to be fully compliant with foreign ownership restrictions, and have our own control processes in place to ensure we remain compliant.”
Referencing Mason’s “empty voting trading tactics” that it says played a role in its move to withdraw the share conversion proposal earlier this year, Telus cautioned that Mason’s comments or allegations “should be viewed as self interested, an attempt to drive the spread between our two share classes wider so they can exit their short and long investment positions in Telus without incurring a loss.”
– Greg O’Brien
