Dear Mr. Entwistle… (or, on idiotic shareholders)

English: A Telus store in Moncton

LAST WORD: Dear Mr. Entwistle… (or, idiotic shareholders)

Lexpert, January 2007

by Marzena Czarnecka

Dear Mr Entwistle,

I’ve been meaning to write you for the past 12 months, ever since I stopped being a Telus customer. I thought you’d want to know why I was no longer a Telus customer and why, although I was possibly paying more by having my landline, mobile, long-distance and Internet needs met by several of your competitors, I never ever wanted to talk to another Telus employee again. But then, I thought—he knows.

Of course he knows. He’s smart and sharp. I don’t need to tell him that with everyone competing on price, service is paramount on both the high-end and the low-end of the game. If he could fire all of the Telus employees who have ticked me off over the years, he would. If he could foster a culture of responsive service, customer care, and solutiojn-oriented flexibility, he would. Not that I know you personally, but I do know people who know people who know you, and when they talk about you, “sharp as a marble” is eschewed in favour of adjectives such as “dynamic,” “driven,” and, that ultimate compliment, “strategically minded.”

So, I let the matter rest. You had enough on your shoulders without getting yet another kick in the shins. I sat back, sent my money elsewhere, and waited to see how you—hopefully ahead of your Eastern-based competitors, because I’m a Western-lovin’ gal—would reinvent your company and the industry. I was prepared to come back under the right circumstances.

And then… you let your idiotic shareholders pressure you into converting into an income fund.

I don’t use the word “idiotic” lightly. There have been some ridiculous trust conversions over the last three years; those of the telecom sector take the cake. Frankly, you should thank the angels that watch over you that Ottawa moved to stop you—and I say that as someone whose financial well-being has been for some time at least partially entwined with energy income trusts. A Telus income trust would have benefited nobody but the shareholders who sold their shares immediately after the conversions (ditto Bell).

Now, you know this too. I know you know this. Your management knows this. Your board knows this. I bet your legal advisors know it too, although in the pre-October 31st climate, they probably didn’t say it very loudly.

The only ones who don’t know this—or choose not to know this—are your shareholders. I repeat, idiotic shareholders. I vehemently hope they got hammered. I know they didn’t learn any lasting lesson.

But did you?

The US and international corporate scandals of c. 2000 had academics and lawyers (and the somewhat rumpled accountants) preaching to all and sundry about boards’ responsibility to shareholders; shareholders in turn took upon themselves increased vigilance. But frankly, no one learnt any lessons there: the corporate scandals were caused as much by shareholder greed as by that of unscrupulous management. Shareholders wanted ridiculous and unjustified short-term gains. Management delivered. We all lived through the price. Well, most of us (a moment of silence for Arthur Anderson please).

No one has raised any corporate governance flags in the trust conversion madness, because they were all done with full shareholder approval and support—indeed, in many cases, as a direct result of shareholder pressure.

The income trust debacle—coupled with some of the larger and more meaningful deals that unfolded across the Canadian corporate landscape (see cover story)—shows that shareholder interest isn’t necessarily aligned with long-term (heck, even medium-turn) company interest and strategy. Shareholders, be they hedge funds, other institutional investors or even individuals, have shown themselves, time and time again, to be greedy, short-sighted and in many cases, down-righted irresponsible. Unfortunately, unlike the shareholders in the corporate governance scandals, they don’t stick around long enough to suffer.

So, Mr. Entwistle, what are you going to do? Continue to be held hostage by irresponsible shareholders? Because that’s your current reality under Canadian law…

Or are you going to go private, and do what you have to do?

They may try to stop you, of course. But not if it looks like you may ache in the short-term. How’s that for finding a silver-lining in a dropping share price?

Marzena Czarnecka is a Calgary-based freelance writer. She’d like to apologize to all those Telus employees who haven’t ticked her off over the years. And she concedes that had she been a Bell or Rogers customer for 20 years, she probably would have amassed a chronicle of horror stories about them too.