Telus 2007 Annual Report Download - page 21

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advantageous than the benefits provided under the respective former pension plans,
contrary to applicable legislation, that insufficient contributions were made to the plans
and contribution holidays were taken and that the defendants wrongfully used the
diverted funds, and that administration fees and expenses were improperly deducted.
TELUS has filed statements of defence to both the original and the amended statements
of claims. As a term of settlement of the 2005 collective agreement between TELUS
and the TWU, the TWU has agreed to not provide any direct or indirect financial or other
assistance to the plaintiffs in these actions, and to communicate to the plaintiffs the
TWU’s desire and recommendation that these proceedings be dismissed or
discontinued. TELUS has been advised by the TWU that the plaintiffs have not agreed
to dismiss or discontinue these actions. The likelihood of the actions being determined
adversely against TELUS is still being evaluated, but TELUS believes it has good
defences to the actions. Should the lawsuits continue because of the actions of the
court, the plaintiffs or for any other reason, and their ultimate resolution differ from
management’s assessment and assumptions, a material adjustment to the Company’s
financial position and the results of its operations could result.
A class action was brought August 9, 2004, under the Class Actions Act
(Saskatchewan), against a number of past and present wireless service providers
including the Company. The claim alleges that each of the carriers is in breach of
contract and has violated competition, trade practices and consumer protection
legislation across Canada in connection with the collection of system access fees, and
seeks to recover direct and punitive damages in an unspecified amount. Similar
proceedings have been filed by or on behalf of plaintiffs’ counsel in other provincial
jurisdictions. The class was certified on September 17, 2007, by the Saskatchewan
Court of Queen’s Bench. On February 20, 2008, applying two recent decisions of the
Supreme Court of Canada, the Saskatchewan court removed from the class all TELUS
customers who are bound by an arbitration clause. The Company has applied for leave
to appeal the certification decision. Certification is a procedural development. If the
Company is unsuccessful with its appeal of the certification decision, the plaintiffs would
still be required to prove the merits of these claims. The Company believes that it has
good defences to the action.
FOREIGN OWNERSHIP RESTRICTIONS
Certain subsidiaries of TELUS or partnerships in which TELUS has a controlling interest,
as Canadian carriers, holders of radio authorizations or licences, and holders of
broadcasting licences, are required by the Telecommunications Act (Canada) (the
“Telecommunications Act”), the Radiocommunication Act (Canada) (the
“Radiocommunication Act”) and a Direction to the CRTC (Ineligibility of Non-Canadians)
given under the Broadcasting Act (Canada) (the “Broadcasting Act”) to be Canadian-
owned and controlled. Each of the Canadian carriers, under the Telecommunications
Act, is considered to be Canadian-owned and controlled as long as: (a) not less than 80
per cent of the members of its board of directors are individual Canadians; (b)
Canadians beneficially own not less than 80 per cent of its issued and outstanding voting
shares; and (c) it is not otherwise controlled in fact by persons who are not Canadians.
Substantially the same rules apply under the Radiocommunication Act and the
Broadcasting Act. After the 2006 legal entity restructure, TELUS filed with the CRTC the
requisite documentation affirming TCC’s status as a Canadian carrier. TELUS further
intends that TCC will remain controlled by TELUS and that it will ensure that TCC
remains “Canadian” for the purposes of these ownership requirements.