-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TjruCXp6t7aPjXqt0Z/eRzuGIwKpV8DIo6NbSkB7BoptySbYHnapKI09cJ46XBEN Q+fpKLCoiRrexAse0ijahA== /in/edgar/work/20000825/0000912057-00-039180/0000912057-00-039180.txt : 20000922 0000912057-00-039180.hdr.sgml : 20000922 ACCESSION NUMBER: 0000912057-00-039180 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000825 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CLEARNET COMMUNICATIONS INC CENTRAL INDEX KEY: 0000924900 STANDARD INDUSTRIAL CLASSIFICATION: [4812 ] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: SEC FILE NUMBER: 000-24876 FILM NUMBER: 710287 BUSINESS ADDRESS: STREET 1: 1305 PICKERING PARKWAY SUITE 300 STREET 2: PICKERING CITY: ONTARIO CANADA LIV 3 STATE: A6 BUSINESS PHONE: 9058316222 MAIL ADDRESS: STREET 1: 1305 PICKERING PARKWAY STREET 2: SUITE 300 CITY: ONTARIO CANADA LIV 3 STATE: A6 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TELUS CORPORATION CENTRAL INDEX KEY: 0000868675 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 3777 KINGSWAY CITY: BURNABY STATE: D1 ZIP: 00000 425 1 a425.txt FORM 425 [QUANTUM LEAP LOGO] LEADING THE CONVERGENCE REVOLUTION AUGUST 2000 [TELUS CLEARNET LOGO] forward looking disclaimer safe harbour notice for forward looking disclosure Some statements in this presentation and accompanying commentary look forward in time and deal with other than historical or current facts for TELUS and Clearnet. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including but not limited to, the risks associated with: general business conditions in Canada and the companies' service territories in Canada; competition on wireless services (cellular), local and long distance services, data and Internet services and within the Canadian telecommunications industry generally; adverse regulatory action; technological change; taxation; availability of sufficient funding; and generation of operating cashflow sufficient to provide financial viability. For additional information with respect to certain of these and other factors, see the reports filed by TELUS and Clearnet with Canadian provincial securities commissions and the United States Securities and Exchange Commission. TELUS and Clearnet disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and security holders are advised to read the offer to exchange/prospectus, the solicitation/recommendation statement on Schedule 14D-9 and other offer documentation regarding the transaction to be filed with Canadian provincial securities commissions and the United States Securities and Exchange Commission, as they will contain important information. Security holders may obtain a free copy of the offer to exchange/prospectus (when available) and other related documents filed by TELUS and Clearnet at the SEC's Web site at www.sec.gov. When available, the offer to exchange/prospectus and the other documents may also be obtained from TELUS, Attention: TELUS Corporation Investor Relations, Floor 30-D, 10020-100 Street, Edmonton, AB T5J 0N5. 1 regulatory disclaimer Neither the Securities and Exchange Commission nor any state securities commission, other regulatory authority or Canadian securities commission has approved of or passed on the adequacy or accuracy of the information in this document. The information in this document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities by any such person in any jurisdiction in which it is unlawful for such person to make such an offering or solicitation. The transactions contemplated herein may only be completed by means of a formal take-over bid and a take-over bid circular will be mailed to shareholders of Clearnet upon completion. Upon receipt of the take-over bid circular, Clearnet shareholders should consult their investment dealer, broker, lawyer or other professional advisor if they have any questions. 2 [TELUS LOGO] SECOND LARGEST TELECOM IN CANADA [MAP] [VERIZON LOGO] - - 26.7% equity interest in TELUS - - 10-year marketing & technology arrangement dominant full- service telecom in Western Canada - - created by 1999 merger of BC TELECOM and TELUS - - 98% of access lines (4.6 million) - - 71% of long distance market - - 57% of wireless market (1.2 million subscribers) - - leading ISP (354,000 customers) TELUS 1999 results (Cdn$ billion) revenue 5.9 EBITDA 2.3 net income* 0.614 net debt to total capital 32%
*before extraordinary and restructuring charges DARREN ENTWISTLE PRESIDENT AND CHIEF EXECUTIVE OFFICER - - ASSUMED POSITION JULY 10, 2000 - - RECENT PRESIDENT, CABLE & WIRELESS UK & IRELAND - - INCREASING SENIOR POSITIONS IN FINANCE, STRATEGY, M&A - - MULTIPLE COUNTRY OPERATIONS IN IP, DATA, MOBILITY, VOICE [QUANTUM LEAP LOGO] 3 [TELUS LOGO] strategy TURNING IP TECHNOLOGY INTO COMPELLING SOLUTIONS FOR CANADIANS AT HOME, IN THE WORKPLACE OR ON THE MOVE TWO IMMEDIATE PRIORITIES 1. establish a national foot- print for our mobility business 2. accelerate the development and deployment of data and IP capabilities behavior defined by a performance culture - - acting DECISIVELY - speed is essential in today's competitive, changing marketplace - - acting WITH CLARITY & FOCUS - we know our priorities and recognize strategic fit - - acting RESPONSIBLY - taking a balanced approach for all stake- holders "TELUS IS ON THE MOVE - ACTING ON THE PRIORITIES AND THE CORPORATE DIRECTION THAT WE FIRST ANNOUNCED TO YOU BARELY A MONTH AGO." DE [QUANTUM LEAP LOGO] 4 largest acquisition THIS DEAL MAKES HISTORY THE LARGEST CANADIAN TELECOM ACQUISITION IN HISTORY - - a bold and decisive step - - creates the largest Canadian mobility company - - sets stage for mobility, data and Internet growth strategy this deal signals the behavior you can expect from TELUS ACTING WITH ... VISION - to be a leader throughout North America SPEED - essential in today's competitive market- place FOCUS - integrated voice, data, Internet and mobility services OUR STRATEGY is to turn data, IP and mobility technology into compelling solutions for Canadians - at home - at work - on the move [QUANTUM LEAP LOGO] 5 the acquisition POWERFUL AND BENEFICIAL IMPACT ... ... ON OUR TWO IMMEDIATE PRIORITIES 1. establish a national foot- print for our mobility business DONE 2. accelerate the development and deployment of data and IP capabilities READY data and IP mobility opportunity - - the new distribution platform for data, Internet, e-commerce - - will drive subscriber growth and ARPU - - increased revenues, profits and cash flow [ARROW DOWN] WILL FUNDAMENTALLY SHIFT THE VALUE OF WIRELESS ASSETS RESOLVE: TO BE A NORTH AMERICAN LEADER IN THE CONVERGENCE OF MOBILITY, DATA AND IP [CHART] [CLEARNET LOGO] HIGHEST PERCENTAGE OF WEB-ENABLED HANDSETS IN CANADA [QUANTUM LEAP LOGO] 6 strategic partnerships NO ONE CAN GO IT ALONE partnerships - - are critical in the telecommu- nications industry - - provide for shared human and financial resources - - strategic alliances and part- nerships with leaders in the global mobile industry [MOTOROLA LOGO] [NEXTEL LOGO] [VERIZON LOGO] VERIZON SHARES OUR VISION OF A CONVERGED WORLD - - strategic marketing and tech- nology agreement - - EXPLOIT services, applica- tions, technology and pur- chasing power - - seamless service across North America for our busi- ness customers - - Verizon wireless is the U.S.A.'s largest mobile operator with 25.5 MILLION SUBSCRIBERS [QUANTUM LEAP LOGO] 7 highlights of the deal EXECUTION IS EVERYTHING TOTAL CONSIDERATION (CDN$ BILLION) cash $2.3 53.86 million TELUS shares 2.3 ---- 4.6 Clearnet net debt 2.0 ---- ---- enterprise value $6.6
VALUE PER CLEARNET SHARE - - $70* - - exchange ratio 1.636 TELUS Non-Voting shares per Clearnet share * based on the weighted average trading price of T.A. (TSE) August 18, 2000 - - Clearnet shareholders can make an all-stock or all-cash election, subject to pro-ration - - Clearnet board recommends acceptance - - Nextel and Motorola have agreed to elect to receive 100% and 75% equity, respec- tively (with 12 month escrow) - - majority shareholders agree to irrevocably tender (represent- ing over 86% of voting interest and over a 30% economic interest in Clearnet) - Nextel, Motorola, Lenbrook, Madison Dearborn CONDITIONS - - AT LEAST 66 2/3% OF EACH CLASS TO BE TENDERED - - REGULATORY APPROVALS CALENDAR - - SHAREHOLDER MAILING - SEPTEMBER - - EXPECTED CLOSING - OCTOBER - - U.S. LISTING - FOLLOWING CLOSING [QUANTUM LEAP LOGO] 8 buy versus build NO CONTEST the decision to buy Clearnet is superior to building our own wireless network
Buy Build ----------------------------------------- speed to market immediate leadership 3 years secure management 2,600 skilled recruit talent/employee base entrepreneurial employees from scratch spectrum largest owner limited in Canada bandwidth
buy vs build NPV impact $1.5 BILLION "IT WOULD HAVE TAKEN US THREE YEARS TO REACH THIS POSITION. THE CONVERGENCE REVOLUTION IS NOW, AND WE INTEND TO LEAD IT." DE [QUANTUM LEAP LOGO] 9 opportune timing impetus for concluding the deal NOW 1. MOBILITY PENETRATION RATES - positive momentum driven by convergence, innovation and new data and IP applications - Canada's wireless penetra- tion is 25% - G7 experience says growth accelerates rapidly beyond the 20%-25% penetration rate 2. THE SPECTRUM AUCTION - eliminate uncertainty with respect to spectrum acquisition - we intend to participate in the auction to enhance our competitive advantage 3. FOREIGN OWNERSHIP RESTRICTIONS - exploiting window of appor- tunity under current rules - when rules relax we will leverage international capital markets to fuel our growth WORLDWIDE PREFERRED WEB-ACCESS METHOD [GRAPH] [QUANTUM LEAP LOGO] 10 synergies MAKING A GREAT DEAL EVEN BETTER this is a GROWTH STORY with rationalization opportunities
NPV --------------------- $/share $ billion Clearnet --------------------- Operating* 1.6 24 Tax losses 0.5 - 0.8 8 - 12 --------------------- TOTAL $21 - 2.4 $32 - 36 --------------------- ---------------------
- - revenue - grow customer base - focus on higher ARPU, business customers - - operating - reduced roaming costs - combined marketing and administration - network efficiency - avoidance of start-up losses from re-sale pro- gram in Eastern Canada - - capital - elimination of network duplication TELUS HAS A PROVEN TRACK RECORD ACHIEVING SYNERGY TARGETS [QUANTUM LEAP LOGO] 11 why clearNET GREAT COMPANY GREAT FIT partner of choice 1. a national wireless footprint overnight 2. fastest growing year-over- year network revenue growth 3. compatible CDMA technology 4. talented management and growth-oriented culture 5. highest percentage of Web- enabled handsets in Canada strategic relationships [MOTOROLA LOGO] [NEXTEL LOGO] - - leaders in the global mobile wireless industry - - have agreed to take TELUS stock subject to a one-year escrow - - extending existing contracts (roaming, channel sharing, handsets) "YOU CAN APPRECIATE MY ENTHUSIASM FOR BRINGING ON BOARD IN A QUANTUM LEAP 2,600 SKILLED EMPLOYEES, LOCATED PREDOMINANTLY IN EASTERN CANADA." DE [QUANTUM LEAP LOGO] 12 clearNET TWO GROWING NETWORKS [MIKE LOGO] - - launched 1996 - business market - - full PCS + mobile data - - unique, instant Direct Connect - - highest usage and ARPU in Canada - - accelerating subscriber growth Q2/2000 - ------------------- +36,000 SUBSCRIBERS (TOTAL 274,000) [CLEARNET LOGO] - - launched 1997 - consumer market - - creative advertising fuels success, cool image - - large national distribution network - - continued innovation (e.g. Web marketing) - - Pay & Talk recently launched MORE THAN 400,000 POST-PAID PCS SUBSCRIBERS IN JUST 33 MONTHS [MIKE LOGO] [CLEARNET LOGO] 20.8 MILLION 17.2 MILLION COVERED POPS COVERED POPS CLEARNET IS LICENSED FOR 30.7 MILLION POPS [QUANTUM LEAP LOGO] 13 clearNET WHY TENDER good for Clearnet shareholders - - potential upside return for TELUS shares - - tax-free rollover for most Canadian shareholders - - creates considerable share- holder value improved competitive position - - creates strong national franchise - - provides improved credit capability - - lowers cost of capital - - significant operational synergies - - CDMA technology "THIS IS TRULY A MARRIAGE OF TWO WINNERS AND I AM EAGER TO ASSUME MY ROLE AS PRESIDENT AND CEO OF THE NEW TELUS MOBILITY" GC [QUANTUM LEAP LOGO] 14 the new [TELUS MOBILITY LOGO] an all-Canadian solution 1. THE WIRELESS INDUSTRY RETAINS A RATIONAL COMPETITIVE STRUCTURE 2. THE TRANSACTION FREES UP CAPITAL FOR INVEST- MENT IN NETWORK AND SERVICE INFRASTRUCTURE 3. CANADIANS BENEFIT FROM A STRONGER FOUNDATION FOR FUTURE JOBS 4. THE TRANSACTION ENSURES MOVE COMPETITIVE, STATE-OF-THE-ART DIGITAL WIRELESS SERVICE TO MORE OF CANADA [QUANTUM LEAP LOGO] 15 the new [TELUS MOBILITY LOGO] THE MARKET LEADER / / TELUS / / ROGERS AT&T / / BELL MOBILITY MICROCELL Latest twelve months ended June 30, 2000 highest average revenue per unit (ARPU, dollars per month) [GRAPH] leading customer growth net subscriber adds (000s) [GRAPH] highest wireless revenue (millions of dollars) [GRAPH] industry leading churn (churn rate percentage) [GRAPH] [QUANTUM LEAP LOGO] 16 deal structure [TELUS LOGO] remains financially robust DEAL STRUCTURED TO ACHIEVE THREE GOALS 1. ensure ability to finance future growth in data and IP 2. maintain investment grade credit ratings 3. maintain dividend to meet expectations of existing shareholders $7.7 billion bridge financing - - finance cash portion of acquisition - - refinance existing debt when necessary or desirable - - refinance $5 billion in public debt market - - fully underwritten by TD Securities and J.P. Morgan 2001E EBITDA/NET INTEREST APPROXIMATELY 4X 2001E NET DEBT/EBITDA APPROXIMATELY 3X SUMMARY BALANCE SHEET DRAFT PRO FORMA AS AT JUNE 30, 2000 ($ BILLION) total assets $16.3 PP+E 7.4 goodwill 5.3 net debt 7.6 shareholders' equity 6.8
[QUANTUM LEAP LOGO] 17 valuation RECENT COMPARABLE TRANSACTIONS clearNET
transaction value to ----------------------------------- Cdn$ premium subscribers revenues ----------------- --------------- 1-day 52-wk High FY 0 FY 1(1) FY 0 FY 1(1) ------- ------- ----- ------- TELUS/Clearnet 53% (4%)(2) $ 7,241 $ 5,238 11.9x 8.8x DT/VoiceStream 56% 25% 23,647 13,561 31.4 16.3 VoiceStream/Aerial 28% 28% 8,375 5,826 13.3 8.4 VoiceStream/Omnipoint 55% 29% 8,800 6,040 12.9 8.5
(1) analyst estimates (2) intra-day high global precedents best comparables PREMIUM JUSTIFIED - - 100% OF A NATIONAL PLAYER - - SPEED-TO-MARKET ADVANTAGE - - SUBSTANTIAL SYNERGIES - - SUPERIOR TO BUILD ALTERNATIVE [QUANTUM LEAP LOGO] 18 valuation SUM OF THE PARTS wireless - - largest national player - - spectum-rich - - well-positioned for data and IP revenue growth wireline - - strong brand - - high regional market share - - national expansion strategy - - fibre-based network data and IP - - 350,000 Internet subscribers - - growing rapidly in value [QUANTUM LEAP LOGO] 19 valuation TELUS - THE BEST VALUE OF ANY CANADIAN TELCO [TELUS LOGO] as a whole
multiple(1) growth rate(2) ----------------------------- EV/Revenues 2001E 2.6x 8% EV/EBITDA 2001E 7x 16%
(1) based on analysts' consensus forecast for 2001 (2) forecast CAGR 2000-2003 TELUS BEST VALUE AMONGST CANADIAN TELCOS - - SUPERIOR GROWTH RATES - - CAPITAL FLEXIBILITY - - FREE CASH FLOW AND DIVIDEND - - VALUATION MULTIPLES [QUANTUM LEAP LOGO] 20 [TELUS LOGO] A GREAT INVESTMENT OPPORTUNITY WE INTEND TO BECOME THE LEADING PLAYER - - converging voice, data, IP and mobility services - - compelling solutions to deliver competitive advantage to our customers TELUS + Clearnet a powerful combination - - huge latent value - - shared focus on growth - - the right corporate culture - - a complete operational and technology platform WE HAVE THE CAPABILITIES, RESOURCES AND CULTURE FINANCIAL MUSCLE - - EXCELLENT CASH FLOW - - STRONG BALANCE SHEET - - FLEXIBILITY AND ACCESS TO CAPITAL - - PROVEN TRACK RECORD ACHIEVING SYNERGIES [QUANTUM LEAP LOGO] 21 [TELUS LOGO] A GREAT INVESTMENT OPPORTUNITY investment of choice in the growing data, IP and mobility market HALLMARKS OF OUR BEHAVIOR - - we will act quickly and decisively in a manner con- sistent with our strategy - - we will focus relentlessly on building our competitive position - - we will pay attention to eco- nomic benefits and financial implications of our actions EXPECT MORE BOLD MOVES "THIS DEAL IS SIGNIFICANT ... FOR WHAT IT SAYS ABOUT TELUS, AND WHERE WE WILL BE TAKING THIS COMPANY." DE [QUANTUM LEAP LOGO] 22 appendix 23 -----END PRIVACY-ENHANCED MESSAGE-----