Telus Corp. is asking Canada’s telecom regulator to reject “misleading allegations” made by rival Globalive Wireless Management Corp. about its compliance with the industry’s foreign investment rules, while affirming that it remains onside with the law.
In doing so, Vancouver-based Telus provided investors with a long-awaited update of its foreign ownership levels. It stated that as of June 29, 32.59 per cent of its voting shares were held by non-Canadians – a level that is below the federal limit of 33.3 per cent for large telcos.
Moreover, the company confirmed Monday that amount includes the ownership stake of its largest shareholder, U.S. hedge fund Mason Capital Management LLC, which controls 19.98 per cent of Telus’s common shares.
Ted Woodhead, vice-president of telecom policy and regulatory affairs at Telus, said Globalive’s application calling for the CRTC to hold a public review amounts to a “nuisance filing” that has resulted in a “waste” of regulatory resources.
Chief financial officer Robert McFarlane echoed that sentiment, arguing Globalive relies on “flawed data” to support its claims.
“The CRTC should dismiss their complaint,” he said in a statement. “Telus continues to be fully compliant with Canada’s foreign ownership restrictions and has again proven that decisively with the information we put forward to the CRTC today.”
Globalive declined comment on Monday but is expected to reply to Telus’s filing within 10 days. In late June, Globalive filed an application with the Canadian Radio-television and Telecommunications Commission asking that it “initiate an open and transparent public process” to review whether Telus was flouting foreign investment restrictions for large telecommunications companies.
Although the federal government recently amended the Telecommunications Act to allow for 100-per-cent foreign ownership of small telcos such as Globalive, Canadians must control at least 66.6 per cent of the voting shares of major companies such as Telus.
In filing its application, Globalive argued that Telus’s “complex and rarely-used measures for controlling the level of foreign ownership of its publicly-traded voting securities, along with its recent proposal to restructure its share capital by converting its non-voting shares into voting shares, raises complex and novel issues that have not been dealt with by the Commission in a public proceeding to date.”
Globalive, which operates under the Wind Mobile brand name and receives financial backing from Amsterdam-based carrier VimpelCom Ltd., said it wanted the CRTC to provide industry players with “a better understanding” of its interpretation of foreign investment rules.
It pointed to a report prepared by investor services firm Broadridge Financial Solutions Inc., that suggests roughly 48 per cent of the beneficial holders of Telus’s voting shares are located outside of Canada. That report relies heavily on postal code and zip code data, rather than actual residency of investors, and Telus has taken issue with the methodology.
Earlier this month, meanwhile, Mason Capital filed a petition with the Supreme Court of British Columbia as a legal tactic to force Telus to disclose more details about how shareholders voted on its now-withdrawn share consolidation proposal.
It wants full access to the ballots cast by shareholders during an advance vote, before Telus nixed the proposal just hours before its annual general meeting in May. Telus’s proposal had sought to convert each non-voting share into a common share on a one-for-one basis – a ratio that Mason opposed given the historical premium paid by investors who own voting shares.
“Globalive and Mason both used reports from Broadridge Financial Solutions as the basis for their allegations. Broadridge reports use geographical and mailing information to provide companies a snapshot of where their investors are based, but do not filter out short trading and other factors that can result in shares being counted more than once,” Telus said in its release.
“As a result, the Broadridge reports counted 214 million Telus voting shares, yet the company has only 175 million such shares. Subsequent to Globalive and Mason’s claims, Broadridge confirmed to Telus its reports did not accurately portray Telus foreign ownership, and should never be used for that purpose.”