TELUS has announced its plan to reorganize itself, in its entirety, as an income trust.
There will be many who will analyse the valuations, the tax implications, the costs, etc. For now, I will note that TELUS has distinguished itself in that it isn’t reorganizing its operations, spinning out parts of the company, departments, geographies; the entire company will fall under this structure.
Their objective is clear – put shareholders in control of their tax planning. I have commented before that I don’t like energy expended on income trusts when the government could eliminate the advantages in its next budget. Bringing the entire company under the income trust structure may give TELUS the best of both worlds. Let Bob McFarlane’s finance folks work on optimal finance structures, while the rest of the company does what makes sense operationally.
Update:
Red faced award has to go to Morgan Stanley that issued a downgrade just last Friday, missing today’s run up of almost 15% (more than 15% at the peak). Ouch.