Bell Canada to Follow Telus, Converting to Income Fund Structure

7:00 am on October 12, 2006 | Category: Business, Corporate, Telephone

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Bell Canada Enterprises Inc. announced on Wednesday that it will scrap its holding company structure, and convert its entire core business into Canada’s largest income trust.

As a tax-advantaged trust, the “Bell Canada Income Fund” will start with an annual cash distribution of C$2.55 per share, compared to BCE’s current dividend of C$1.32. This announcement sent the company’s shares to a one-year high of $34.25, before dropping back to C$32.44, still an increase of $0.89, or 2.82%.

Bell Canada’s move comes just one month after Canada’s #2 telecom provider, Telus Corp., made its own strikingly similar income trust announcement.

CEO, Michael Sabia, admitted that new of Telus’ plans was an “important” factor in his company’s decision. “We’re acting now to restore greater parity in the capital markets and greater parity with respect to cost of capital,” he explained.

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    Published by TeleClick Enterprises
    Edited by Jeremy Maddock