It’s tough to talk about selling the home quarter. It’s a conversation full of memories and hopes. But even if it’s hard, and regardless of the ultimate decision, it’s healthy. Can we still care for the property, what does the market look like and what’s best for the grandkids?

Everyone is talking about the future of SaskTel. It’s not easy, but we can’t be afraid to talk it over. Most importantly, we have to trust Saskatchewanians to make the right decision through a referendum. (Photo: Jordan Cooper/Flickr/Creative Commons)

Premier Brad Wall is currently outlining the right way to discuss selling SaskTel.

“A province-wide referendum would be the only way to deal with such an offer,” said Premier Wall. “The people would have to decide, not the government.”

This is a nice reaffirmation of respect for the will of the people, but it’s also a statement of the obvious.

Consider an analogy from our agricultural heritage. The neighbour comes over, leans on the tailgate and offers to buy the home quarter. It would be wrong to accept or decline the offer on the spot. That decision requires a pot of coffee (and hopefully rollkuchen and watermelon) and a good long chat with the whole family.

Premier Wall must listen to any offer for SaskTel, but it would be wrong for him to accept or decline on the spot. He has a fiduciary responsibility to all Saskatchewanians to let us talk it over and have our say.

There are important points to talk about.

SaskTel makes money. It generated dividends averaging about $62 million annually from 2012 to 2015, although the payouts are trending downwards, according to the risk assessment produced by Mark H. Goldberg and Associates. If SaskTel is sold, the price will have to reflect the company’s profits.

The market is changing. SaskTel served 409,905 landlines in 2015. In 2010, there were 528,546. The good news for SaskTel is that it serves two thirds of the province’s cell customers, but there’s still cause for concern because that’s down from more than three quarters of the market in 2010. It’s clearly getting tougher for SaskTel to compete.

There’s also the matter of the price.

Bell is paying about $3.1 billion for Manitoba Telecom Services. MTS has annual revenues of $1 billion and debts of about $800 million. SaskTel is somewhat bigger with annual revenues of $1.26 billion and a net debt of $861 million. SaskTel may well be worth more than MTS.

What is certain is that we pay hundreds of millions to cover interest payments on the provincial debt every year. We calculate the Saskatchewan’s taxpayer-supported debt at more than $5.8 billion (that is: debt that isn’t backed with a specific asset such as a Crown corporation).

For every billion in debt we could pay off through a sale of SaskTel, we would save $30 million every year, even at a historically low interest rate of 3 per cent. It’s virtually certain the interest savings would be greater than the dividends SaskTel generates

Of course, it would be irresponsible to sell a capital asset while continuing to run up debt. Last year, the government borrowed more than $700 million for infrastructure even before falling resource revenues contributed to an operational deficit. This year, the government plans add more than a billion in borrowing. Selling SaskTel to pay down debt only makes sense if we’re actually committed to reducing debt.

These are a few of the many things we need to talk about. We need to discuss concerns about whether SaskTel’s returns will continue to fall in an increasingly competitive market place. We need to ask ourselves whether we want to lighten the burden of debt we’re passing on to our kids and grandkids. Some parts of the discussion will be hard, others will be exciting, but all of it will be healthy.