Well, it looks like the telcos are going to have to go back to earning money the old fashioned way. After the markets closed, the Minister of Finance, Jim Flaherty, closed the door on income trusts and said that he does not think the BCE and TELUS conversions will go through.
Back in July, I said
I’m not crazy about the financial engineering itself – it seems like a lot of cost and effort being expended that could be rendered moot by a federal budget.
At least in the case of the TELUS plan, the corporate organization was left intact; the trust structure affected only the finance arrangements. With Bell, the whole company was turned inside out.
Fascinating timing.
Earlier today, Rogers had its stock go up by creating shareholder value – increasing revenue per customer, adding customers and successfully entering adjacent markets. Late in the day, the government didn’t even need the formal process of a budget to undo the corporate restructuring that drove BCE and TELUS shares over the past month.
What is next for the telcos?
Update: [Oct 31 8:50 pm]
Adding link to the official Department of Finance page announcing the Tax Fairness Plan.