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Verizon Communications Inc. has reached an agreement with Telus Corp. to sell its 21-per-cent stake in Canada's second-largest phone company.

The Telus shares, worth about $2.3-billion based on recent market activity, are expected to be sold by the end of the week to institutional investors on both sides of the border, according to investment bankers working on the transaction.

New York-based Verizon first informed Telus's board in May that it wanted to sell its minority stake as part of the company's continuing strategy of divesting international investments to focus on growth opportunities in broadband and wireless services. The two companies reached an agreement on terms of the disposal yesterday, according to a filing with the U.S. Securities and Exchange Commission.

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Verizon's decision follows recent moves by other major U.S. carriers to sell their stakes in Canadian telecom plays, as the U.S. companies work to pay down debt following the technology bust and to invest in new equipment.

Texas-based SBC Communications Inc. sold two big blocks of BCE Inc. shares last summer, raising more than $500-million and ending a relationship that at one point saw the U.S. phone company hold a 20-per-cent stake in the Montreal-based company.

Early last month, Motorola sold just over half of its stake in Telus, or five million non-voting share shares. The move came just after the Canadian company raised its dividend and reported a 37-per-cent gain in quarterly profit. The sale reduced Motorola's stake in the Telus to about 4.7 million non-voting shares. At the time, Motorola said the transaction was driven by the company's decision to reap a gain on the holding. Industry analysts say Motorola is expected to sell the rest of its position in the new year.

Under the terms of yesterday's agreement between Verizon and Telus, Verizon will pay the Vancouver-based company a non-refundable fee of $125-million (U.S.).

Telus will continue to have the exclusive rights in Canada to the Verizon trademarks, as well as the software and technology it has acquired under an existing relationship. Verizon has agreed to continue to provide upgrades and support on the software and technology licensed to Telus. By using Verizon's technology, Telus has been able to provide its mobile phone customers with seamless, single-rate roaming across North America.

The two companies said they will continue their business relationship and co-operation with respect to sharing each other's cross-border services. As part of the terms, Telus will be released from its obligation not to compete against Verizon in the United States, the SEC filing said.

Telus has no plans to move into the U.S. market at this point, a company spokesman said.

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Verizon has until Dec. 31 to complete the sale as part of its agreement with Telus, a deadline the U.S. carrier is not expected to have any problems meeting.

Verizon has engaged Merrill Lynch & Co. Inc., Morgan Stanley and RBC Dominion Securities Inc. as managing underwriters to sell its shares. In a statement, the carrier said marketing efforts will begin immediately and sales to the public will commence by early next week.

The fees on the transaction are expected to be relatively small -- less than $15-million (Canadian) -- as the three investment dealers marketing the stock aren't putting their own capital at risk, the investment banking sources said.

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