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December 1, 2004
VANCOUVER and NEW YORK -- TELUS Corporation (TSX: T, T.NV; NYSE: TU) is announcing the public secondary offering of Verizon Communications Inc.'s entire equity interest in TELUS. TELUS has filed a preliminary prospectus with securities regulators in Canada and the United States in order to qualify the secondary distribution (the Offering) of 48.55 million TELUS Common Shares (25.1% of outstanding Common Shares) and 24.94 million TELUS Non-Voting Shares (15.1% of outstanding Non-Voting Shares), representing a combined 20.5% equity interest, owned by Verizon Canada Holdings Corporation, an indirect wholly owned subsidiary of Verizon Communications Inc.
Pursuant to the Long-Term Relationship Agreement between the companies, Verizon is prohibited from selling its interest in TELUS to below 19.9% without the approval of the independent directors of TELUS. On November 30, 2004 TELUS and Verizon entered into an agreement pursuant to which TELUS' Independent Directors agreed to accommodate the sale on certain conditions set out in that agreement. Under that agreement Verizon has paid TELUS U.S.$125 million (approximately Cdn $148.5 million), which is non refundable except in certain limited circumstances.
The companies will continue their business relationship with certain adjustments to reflect changes in their business requirements since the alliance was first established. The Amended and Restated Software and Related Technology and Services Agreement contains key provisions including: TELUS will have exclusive rights in Canada to Verizon trademarks, and software and technology acquired prior to the closing of the Verizon sale of its interest in TELUS, but not any other Verizon trademarks or software and technology and certain purchasing rights; corresponding reduction in annual fees payable by TELUS from U.S. $82 million to U.S. $4 for years 2005 to 2008; Verizon is required to continue to provide upgrade and support on the software and technology licensed to TELUS; the two companies remain committed to use each other's cross-border services where capabilities and customer requirements permit; TELUS is released from its obligation not to compete in the U.S.; and the agreement has been renewed for 2005 and will be extended to December 31, 2008.
Verizon indicated that it desires to divest the TELUS investment as part of its ongoing strategy of divesting selected international investments while it focuses on core business growth opportunities such as broadband and wireless.
Verizon Communications Inc.
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