Offer to purchase CLEARNET.pdf - About TELUS

1.9 GHz band which it uses for the provision of its PCS services. For the QuébecTel Territory, QuébecTel
Communications Inc. is the licensee of spectrum in the 800 MHz band which it uses for the provision of its
analogue and digital cellular services and of spectrum in the 1.9 GHz band which it uses for the provision of its
PCS services. The license conditions for the 800 MHz and 1.9 GHz spectrum include investing 2% of adjusted
gross revenues in research and development and compliance with the foreign ownership and control
requirements. In addition to the above conditions, the PCS license conditions include the requirement for the
licensee, in its serving area, to offer PCS resale to other PCS licensees; to offer a roaming arrangement for
analogue cellular service to non-cellular PCS licensees; and, to offer analogue cellular resale to all non-cellular
PCS licensees.
Spectrum Cap
A Spectrum Cap of 40 MHz of spectrum to be used for public high mobility radiotelephony that any
licensee, its affiliates (as such term is defined in the Telecommunications Act), or any entity which has a
marketing and/or operating arrangement with the licensee (or its affiliates) may hold in any one geographic area
was announced by the Minister in June, 1995. In November 1999, the Minister raised the Spectrum Cap to
55 MHz of spectrum. Upon the closing of the Offers, the Spectrum Cap will be exceeded in British Columbia,
Alberta and certain parts of the Province of Québec (the QuébecTel Territory) unless TELUS and Clearnet take
steps to rationalize their spectrum in these areas prior to such closing. TELUS and Clearnet have sought advice
from the Minister on how to become compliant with the Spectrum Cap after the Take-up Date. Any disposition
of spectrum in excess of the Spectrum Cap requires the approval of the Minister.
Spectrum Auction
On June 28, 2000, the Minister issued the Policy and Licensing Procedures for the Auction of Additional
PCS Spectrum in the 1.9 to 2 GHz frequency band for the Spectrum Auction. The Minister will make available
for bid in the Spectrum Auction four blocks of 10 MHz of spectrum in the 1.9 to 2 GHz band in fourteen
geographical service areas in Canada. Both TELUS and Clearnet are expected to register for the Spectrum
Auction. The bidding is expected to commence in November 2000. Upon the closing of the Offers, it is expected
that only one of TELUS or Clearnet will bid in the Spectrum Auction for licenses in geographic service areas
where the acquisition of more spectrum does not violate the Spectrum Cap. Until the Offers close, TELUS and
Clearnet will comply with the Spectrum Auction anti-collusion rules regarding bidding, the amounts to be bid,
bidding strategies and the licensed areas to be bid upon.
Foreign Ownership
Certain ownership and control requirements contained in the Telecommunications Act and
Radiocommunication Act must be satisfied in order for the carriers to maintain eligibility to operate as Canadian
carriers and hold radiocommunication licences as carriers. 80% of the voting shares of a Canadian carrier must
be owned by ‘‘Canadians’’ and not less than 80% of the members of the board of directors must be Canadian. In
addition, not more than one third of the voting shares of a non-operating parent corporation of a Canadian
carrier may be beneficially owned or controlled by non-Canadians and neither the Canadian carrier nor its
parent may be otherwise controlled in fact by non-Canadians.
The Offers have been structured to facilitate compliance with these statutory ownership and control
requirements so that the TELUS and Clearnet operating subsidiaries will maintain their eligibility to operate as
Canadian carriers and hold radiocommunication licences as carriers.
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