TELUS plans to become Canada’s largest income trust

TELUS Corporation yesterday announced a plan to restructure itself into an income trust, with an estimated market capitalisation of CAD20 billion (USD17.85 billion), surpassing the size of Canada’s current largest income trust, Canadian Oil Sands Trust, which is valued at around CAD15 billion. The Vancouver-based telco, the second largest Canadian telecoms group after Bell Canada, requires the approval of two-thirds of its shareholders at a meeting scheduled for January 2007 when the firm plans to consolidate its shares into a single class of units. Income trusts pay out a portion of profit as regular distributions to ‘unitholders’, reducing the amount of corporate taxes. Taxes on distributions are paid by the unitholders, not the company. Unlike the Bell Aliant Regional Communications Income Fund created earlier this year, the TELUS trust will include its highly profitable wireless business, which generates nearly two-thirds of the company’s cash flow.