Telus 2005 Annual Report Download - page 20

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Mobility and Verizon Wireless negotiated and implemented mutually beneficial changes to their
reciprocal roaming arrangements. On November 29, 2004, TELUS Mobility and Verizon
Wireless expanded their roaming agreements under a consolidated long-term roaming agreement
to improve each other’s ability to provide more consistent and comprehensive Canada and U.S.
roaming services to each other’s customers.
The initial term of the Verizon Agreement was for one year ending December 31, 2001. Prior to
the amendment made on December 14, 2004, the term was renewable annually for successive
one-year periods at TELUS’ sole discretion with a last renewal right for a term ending
December 31, 2008. Any renewal beyond December 31, 2008 requires the mutual agreement of
the parties. In the event of termination, there will be in most instances a two-year transition
period and TELUS will have a licence to use the then current software and other technology on a
non-exclusive basis, allowing TELUS to properly manage the transition to new technology.
TELUS has renewed the Verizon Agreement for 2005, and as at December 14, 2004, the term of
the agreement was further extended to December 31, 2008 without any transition period.
The Verizon Agreement provides for the following annual payments to be made by TELUS
(including both licence purchase prices and fees to be paid for all other property rights and
services provided or granted to TELUS under the Verizon Agreement): U.S. $155 million during
the initial term (2001), U.S. $100 million in the first renewal term (2002), U.S. $20 million in
2003 and in each subsequent annual renewal term up to December 31, 2008. As amended on
December 14, 2004, annual payments in the aggregate of U.S. $82 million for the years 2005 to
2008 were reduced to an aggregate nominal amount of only four U.S. dollars for that time
period.
Genuity software and related technology and services
In order to obtain regulatory approvals for the merger between GTE Corporation and Bell
Atlantic Corporation, GTE Corporation transferred substantially all of its Internet business into a
separate public corporation known as Genuity Inc. (formerly GTE Internetworking) prior to the
closing of the merger.
Effective June 30, 2000, Genuity Inc. and its subsidiary, Genuity Solutions Inc. (collectively,
“Genuity”), and TELUS entered into a Brand, Technology and Co-Marketing Agreement (the
“Genuity Agreement”) that was similar to the GTE Agreement. Subject to rights of early
termination in certain instances, the initial term of the Genuity Agreement was to expire on
January 31, 2009, during which term TELUS was not required to make any payments directly to
Genuity and TELUS’ payments to Verizon under the Verizon Agreement constituted sufficient
consideration in that regard.
On or about July 24, 2002, Verizon announced that it would not exercise its right to reacquire
control of Genuity Inc. On November 27, 2002, Genuity Inc., together with Genuity Solutions
Inc. and certain other affiliates (collectively, the “Debtors”) filed voluntary petitions for relief
under chapter 11 of the United States Bankruptcy Code. On February 4, 2003, the Debtors sold
substantially all of their assets and operations to Level 3 Communications Inc. and certain of its
subsidiaries (collectively, “Level 3”).