Telus 2011 Annual Report Download - page 156

152 . TELUS 2011 ANNUAL REPORT
Regulatory
In 2002, the CRTC issued Decision 2002-34 and Decision 2002-43, which
resulted in the creation of non-high cost serving area deferral accounts.
The deferral account arises from the CRTC requiring the Company to defer
the statement of income and other comprehensive income recognition
of a portion of the monies received in respect of residential basic services
provided to non-high cost serving areas. In order to extinguish the deferral
account liability, the Company will be: expanding broadband services
in its incumbent local exchange carrier territories to rural and remote
communities; enhancing accessibility to telecommunications services
for individuals with disabilities; and rebating the balance of the deferral
account to local residential customers in non-high cost serving areas.
The CRTC rendered its final decision on the use of the deferral account
in August 2010. The decision required $54 million in customer rebates
to be effected by February 2011, and the remaining $111 million is to be
applied to providing broadband services and initiatives for the disabled,
both of which are to be completed by 2014. The amounts used, rebated,
to be applied in the next twelve months or for which the timing or amount
are no longer uncertain are reflected in the table above as a use.
Asset retirement obligation
As discussed further in Note 1(r), the Company recognizes liabilities
associated with the retirement of property, plant and equipment when
those obligations result from the acquisition, construction, development
and/or normal operation of the assets. The Company expects that
the cash outflows in respect of the balance accrued as at the financial
statement date will occur proximate to the dates these long-term
assets are retired.
Employee related
The employee related provisions are largely in respect of restructuring
activities (as discussed further in (b) following). The timing of the cash
outflows in respect of the balance accrued as at the financial statement
date is substantially short-term in nature.
Other
The provision for other includes disputes and non-employee related
restructuring activities (as discussed further in (b) following), as well as a
written put option related to a business acquisition. As discussed further
in Note 22(d), the Company is involved in a number of legal disputes
and is aware of certain possible legal disputes. In respect of legal dis-
putes, the Company has established provisions, when warranted, after
taking into account legal assessment, information presently available,
and the expected availability of insurance or other recourse. The timing
of cash outflows associated with legal claims cannot be reasonably
determined. As discussed further in Note 16(e), the Company incurred
a liability for contingent consideration in connection with acquiring
an initial 29.99% economic interest in Transactel (Barbados) Inc.
in December 2008; as at December 31, 2011, the timing and amount
of the contingent consideration are no longer uncertain and thus
the amount to be paid is reflected in the table above as a use and the
difference of $1 million is reflected as a reversal. Also as discussed
further in Note 16(e), the Company provided a written put option
in respect of the remaining 5% non-controlling interest in Transactel
(Barbados) Inc.; cash outflows are not expected to occur prior to
initial exercisability of the written put option on December 22, 2015.
The Company expects that the cash outflows in respect of the
balance accrued as at the financial statement date will occur over
an indeterminate, multi-year period.
(b) Restructuring
Employee related provisions and other provisions, in (a) preceding,
include amounts in respect of restructuring activities. In 2011, restructuring
activities included ongoing efficiency initiatives such as:
.simplifying or automating processes to achieve operating efficiencies,
which includes workforce reductions;
.simplifying organizational structures through consolidation of functions
and reducing organizational layers;
.consolidating administrative real estate to create a smaller environ-
mental footprint through mobile working, encouraging less inter-city
travel, reduced daily commutes, and lower use of real estate space,
which includes vacating premises;
.decommissioning uneconomic services and products; and
.leveraging business process outsourcing and off-shoring to the
Company’s own international call centres.