The Canadian Radio-television and Telecommunications Commission (CRTC) has ordered Telus (TSX:T) to open up its books and explain just how it calculates the foreign ownership composition on its stock.
Telus has been waging an ongoing battle with a competitor – Globalive Wireless Management Corp. (WIND Mobile) – and some of its own shareholders – the New York hedge fund Mason Capital Management LLC – over the composition of its shareholders.
The Canadian government limits the amount of foreign ownership in Canadian telecoms. This is just one of the reasons Telus has a dual class of shares – voting and non-voting – vestige of a time when Verizon owned stock in BC Tel.
Telus wants to get rid of the dual class shares and had asked shareholders to vote in favour of turning non-voting shares into voting shares, which are worth more.
Mason, which owns a significant amount of Telus stock, waged a vigorous public war against the move – a tactic Telus claimed was intended to enrich Mason because it needed non-voting shares to go down, not up, if it wanted to profit from short-selling non-voting shares.
Mason has questioned Telus’ claims that its stock composition is just within the legal limits – no more than 33% foreign owned.
Telus claims its foreign ownership is 32.59%. Mason challenged Telus to disclose how it arrived at that calculation.
Globalive then entered the fray with a formal request to the CRTC to force Telus to provide details on how it makes that calculation, and on Monday the CRTC agreed to the request.
The CRTC has given Telus until August 24 to provide the details Globalive has demanded.
The order includes an explanation of what Telus requires of shareholders to determine factors such as residency, citizenship or permanent residency status.
Telus spokesman Shawn Hall told Business in Vancouver that both Mason and Globalive have been using erroneous numbers reported by Broadridge, an investor communications firm, which had reported Telus shares at 214 million. Hall said there are only 175 million shares in Telus.
If the report had been accurate, it would have meant that between 42% and 48% of Telus shares were indeed owned by non-Canadians.
“In the end, this is a nuisance filing that is a waste of taxpayer dollars that should be dismissed,” Hall said.
