BCE talks driven by regulatory issues

Steve Rosenbush

Like just about everything else in telecom, the buyout talks between the Ontario Teachers' Pension Fund and Bell Canada parent BCE are driven by regulatory issues. BCE wanted to enjoy a tax loophole popular with many Canadian companies for the last few years. Income trusts own many smaller Canadian companies. That has allowed them to avoid paying corporate taxes on distributions to the trusts, as long as those distributions are within certain limits. The Canadian government, concerned that is losing tax revenue, has put an end to the game. The prospect of larger companies such as BCE turning into trusts led to tax reform last fall. Now the Ontario pension fund wants to own BCE directly so it can control costs more closely in a tighter regulatory and tax environment.