BCE, Rogers not ready to follow income trust trend

14 Sep 2006

Amidst increasing market speculation, Canadian telecoms groups BCE and Rogers have ruled out the possibility of converting their company structures to income trusts, at least for now, reports local newspaper The Globe and Mail. Nadir Mohamed, chief operating officer of Rogers Communications, told a media and telecoms conference yesterday that ‘there’s probably about 3.8 billion reasons why we wouldn’t do a trust,’ referring to the current dollar amount of the company’s tax losses. The comment followed the previous day’s announcement by rival TELUS Corp that it plans to form the country’s largest income trust in January 2007. Maintaining a shield from corporate taxes is a major driver of TELUS’ decision to convert to a trust because its tax losses inherited through corporate acquisitions expire this year. In July BCE moved its wholly owned unit Bell Canada’s rural wireline telephony business into an income trust with its majority-owned subsidiary Aliant’s regional fixed line operations under the Bell Aliant banner, but has put a damper on investors’ hopes that it might convert the rest of Bell into a trust any time soon. ‘At the last AGM in June… we indicated we were not prepared to convert the balance of Bell Canada at that time,’ Bell’s chief operating officer George Cope told the conference, adding that ‘we also said management and the board continue to review the suitability of an income trust structure in light of technical and competitive change. And that remains our position.’

Canada, BCE (old)