DISK004:[98CLG6.98CLG3726]BA3726A.;28 - About TELUS

THE ARRANGEMENT
General
BC TELECOM and TELUS have agreed, subject to the satisfaction of certain conditions precedent,
to a merger of equals by way of the Arrangement pursuant to which they will form a new public
company, BCT.TELUS Communications Inc. BCT.TELUS will be the second largest domestic Canadian
telecommunications provider with the financial capacity and other capabilities to enable it to compete in all of
the major Canadian markets as a provider of communication services. See ‘‘The Effect of the Arrangement on
Shareholdings — Schematic Representations of the Arrangement Process’’.
The Arrangement will be effected by way of a court approved Plan of Arrangement pursuant to the
Arrangement Agreement. BC TELECOM Shareholders are being asked to approve the BC TELECOM Special
Resolution and TELUS Shareholders are being asked to approve the TELUS Special Resolution.
Pursuant to the Arrangement, TELUS Common Shareholders will exchange 75% of their TELUS Common
Shares on the basis of 0.7773 BCT.TELUS Common Shares for each TELUS Common Share held and 25% of
their TELUS Common Shares on the basis of 0.7773 BCT.TELUS Non-Voting Shares for each TELUS
Common Share held. BC TELECOM Common Shareholders will exchange 75% of their BC TELECOM
Common Shares for BCT.TELUS Common Shares on a one for one basis and 25% of their BC TELECOM
Common Shares for BCT.TELUS Non-Voting Shares on a one for one basis. See ‘‘The Effect of the
Arrangement on Shareholdings — Share Exchange’’. The BC TELECOM Optionholders and the TELUS
Optionholders will see their respective options exchanged for options to acquire BCT.TELUS Common Shares
and BCT.TELUS Non-Voting Shares on a similar basis. See ‘‘The Effect of the Arrangement on
Shareholdings — Option Exchange’’.
Background to the Arrangement
Given recent regulatory and competitive developments and consolidations in the communications industry
in Canada and worldwide, each of BC TELECOM and TELUS concluded that shareholder value would be
enhanced by achieving higher revenue growth and increased operating efficiencies through a strategic business
combination with another telecommunications service provider.
In early May 1998, members of the senior management of BC TELECOM and TELUS initiated discussions
with respect to the possibility of a business combination of the two companies. At their respective meetings held
in early June, the Boards of Directors were advised of the discussions. Effective June 1, 1998, TELUS retained
RBC Dominion Securities Inc. (‘‘RBC DS’’) and Salomon Smith Barney Inc. (‘‘Salomon Smith Barney’’) as its
financial advisors in connection with the proposed transaction and on June 15, 1998, BC TELECOM retained
TD Securities Inc. (‘‘TD Securities’’) and J.P. Morgan Securities Inc. (‘‘J.P. Morgan Securities’’) as its financial
advisors in connection with the proposed transaction.
On June 30, 1998, BC TELECOM and TELUS entered into the Non-Disclosure Agreement in which they
agreed to exchange information for the purpose of evaluating a potential transaction and to deal exclusively with
one another. Following the execution of the Non-Disclosure Agreement, BC TELECOM and TELUS, and their
respective representatives, proceeded to exchange and review information, to conduct investigations of their
respective financial positions, operations and prospects, and to discuss the terms and conditions upon which a
business combination could be structured. Subsequently, GTE and TELUS entered into a non-disclosure
agreement in respect of confidential information to be exchanged between them and providing for exclusivity
and stand-still commitments.
At a BC TELECOM Board of Directors meeting held on July 23, 1998, its Strategic Policy Committee
reported on the business combination discussions between BC TELECOM and TELUS and the Board of
Directors established a special committee of independent directors (the ‘‘Independent Committee’’) for the
purposes of determining whether any proposed merger transaction, including one involving TELUS, would be
fair and reasonable to the shareholders of BC TELECOM and in the best interests of BC TELECOM and to
report to the Board of Directors concerning such determinations. The Independent Committee retained
CIBC Wood Gundy Securities Inc. (‘‘CIBC Wood Gundy’’) to serve as its financial advisor.
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