Edmonton Telephone Corporation

Case Questions

(Privatizing Edmonton Telephones Corporation)

* What is the main issue in the case?

The main issue in this case is the ownership and running of Edmonton Telephones Corporation also known as ED TEL. The Edmonton Telephones Corporation became a corporation in 1990 when the City Council decided to change governance of the organisation from the city to a corporate governance structure; an 11-person board including a CEO where the city became the regulator and representative of the citizens who were shareholders. Secondly because of changing technologies some regulations were changed that opened the long-distance market for competition in 1992. Further ahead in 1994 the Supreme Court made CRTC as the regulator of the company instead of the City of Edmonton. Because of this the city not only lost its revenues but would still have to make financial investments in the corporation. This would end in Edmonton losing significant city revenues for 1995 and beyond. Because of this the city was considering options on changing ownership of the corporation.

* Describe and assess the ED TEL Board strategy to meet external changes of technology and regulation?

Looking at the external changes in technology and regulation that, the ED TEL Board devised a strategy to come up with options it could take. The options were concerning the ownership of the corporation. The Board reviewed decisions to either let the corporation remain as it is; under city ownership but with a corporate governance structure. Another option was to take over operational control of the corporation too and bring it back to the pre-1990 situation. The other two options were concerned with the sale of ED TEL. It could either have been sold as a privatisation buyout for which they already had negotiated terms with TELUS (although the terms TELUS offered were unacceptable) and could be renegotiated. The second sale option was a sale through an IPO to an investor who would purchase...