BCE scraps income trust plan

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TORONTO -- Canadian phone giant BCE Inc. on Tuesday became the latest Canadian TV content carrier to scrap plans to convert itself into an income trust.

The decision follows the federal government in October closing a popular loophole by choosing to tax publicly listed income trusts for the first time.

Rival phone giant Telus Corp. dropped its own income trust conversion plans Nov. 24. It had hoped the tax-avoidance investment vehicle would give it an edge as domestic telecom and cable players increasingly move onto each other's turf in the Canadian digital space.

Since October, Canadian broadcasters that were considering income trust conversions -- such as Astral Media and Corus Entertainment -- have also dropped those plans, while existing income trusts include Rainmaker Income Fund, Cineplex Galaxy Income Fund and Cinram International Income Fund have begun revamping their tax planning and corporate structures to adjust to the changed tax-payment environment in Canada.

BCE executives also told an analyst conference in Toronto that new growth markets, including wireless phone, satellite TV and Internet access offerings, were expected to account for 60% of total revenue by the end of next year as the phone giant continues to weas itself off its landline phone business.

BCE CEO Michael Sabia said his company's wireless subscriber base is expected to grow 8%-10% in 2007, while video subscribers, including satellite TV viewers, will grow 5%-7% by the end of next year.

BCE's high-speed Internet customer base will account for 10% of all revenues by the end of 2007, he predicted.

Sabia told analysts that BCE will achieve that growth by rolling out mobile TV and music download offerings for its wireless phone subscribers, while offering additional high-definition TV channels and interactive TV services to satellite TV and other video subscribers.

Also Tuesday, rival phone giant MTS Allstream said it has launched next-generation digital radio and TV services for distribution to its cell phone subscribers.

Winnipeg, Manitoba-based MTS said that the branded Streaming TV and Streaming Radio services will be distributed to cell phone subscribers using Toronto-based QuickPlay Media's server software, which enables customers to access up to 40 radio stations and other digital content on their wireless receivers.
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