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Bell Nordiq Income Fund (TSX: BNO.UN)
Age: 47 | Years at the company: 8
For many investors, a company's conversion into an income trust is simply a calculated financial arrangement to avoid paying corporate taxes (and instantly boost market value). At Bell Nordiq, which became Canada's first telecom income fund in 2002, chief financial officer Michael Ross recognized that when the company issued units, it was more than a numbers game — it was going to require a cultural transformation.
Considering the technological and competitive pressures the telecom industry faced then, change was due. Bell Nordiq is the part of Bell Canada's business that operates in northern Ontario and Quebec, and it still suffered from lingering monopolistic practices in 1998, when Ross joined the organization. Becoming an income fund (the new Bell Aliant Regional Communications Income Fund holds 63.4% ownership) was a catalyst to shift to a more entrepreneurial culture. But in order to encourage calculated risk-taking and accountability, all employees also need to understand the business and the demands of investors, analysts and credit-rating agencies. “You can't do creative accounting to show good results,” says Ross, who played a lead role in educating the rank and file. “Cash is cash, and it has to be there, and there is no room for error.”
Now, employees must present business cases for new capital spending, including measuring internal rates of return, and are subject to followup assessments. Meanwhile, Ross ensures none of it gets snagged on red tape. “You have to be efficient, so employees don't feel we're just a big machine asking for a whole bunch of reports. You have to make sure what you ask is pertinent and is gathered rapidly.”
The discipline has paid off. Monthly distributions to unitholders have climbed steadily, from $.075 per unit in 2002 to the current $.095 — a 26.7% increase — while its unit price has risen from a $10 IPO in April 2002 to $18 at the end of September. It's no wonder Ross has spent some time over the past year answering questions from managers at Bell Aliant — about how to run an income trust.