The U.S. hedge fund that's been squabbling with Telus Corp. for months over compensation issues appears to be backing down and selling much of its stake in the Canadian telecom firm.

In a release Friday, B.C.-based Telus said its non-Canadian ownership has fallen to less than 15 per cent. That's an indication some major foreign shareholders must have sold off, since Telus had been denying foreigners the right to buy its shares for months, after the company was pressed up against a legally-mandated 33 per cent foreign ownership cap.

Telus has been fighting since March with Mason over the former's plan to consolidate its preferred and common shares. Preferred shares get increased voting rights, and Telus wants to make all shareholders equal under a plan it describes as "good governance."

Mason owns a significant amount of the premium shares and is looking to be compensated for losing those voting privileges.

Last month, Telus shareholders dealt a blow to Mason by approving the plan to make all shares equal. Mason is seeking to block that vote in court, but Telus suggested Friday that Mason might be giving up the fight somewhat and selling its stake.

"Based in part on this change in foreign ownership levels and short trading positions, Telus believes Mason Capital has materially reduced both its long and short positions," Telus said in its statement.

In August, Mason disclosed it owned almost 19 per cent of Telus. Given that the total foreign ownership of the company has now dropped to 15, "Mason has clearly reduced a significant portion of its holdings," Telus suggested in the release.

Mason Capital has declined comment on the report.

Whatever the cause, Telus says it can resume selling its shares to foreign investors again since it's well off the 33 per cent limit at any rate.