Telus cuts 1,500 jobs from Canadian workforce

 

Company cites reduced demand in oil sector, cost of upgrading and expansion

 
 
 
 
Telus Corp. says it’s planning to reduce its workforce by 1,500 positions in an effort to cut annual costs by up to $125 million.
 

Telus Corp. says it’s planning to reduce its workforce by 1,500 positions in an effort to cut annual costs by up to $125 million.

Photograph by: DARRYL DYCK, THE CANADIAN PRESS

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Telus is cutting 1,500 jobs from the ranks of its 27,000 employees across Canada as the company faces reduced demand for its wireless services in Alberta’s hard hit oil sector at the same time it is making multi-billion dollar investments to upgrade and expand its networks.

Despite the job cuts, more than half of which are expected to come through voluntary departures and early retirements for savings of $125 million a year, the company is upping dividends to shareholders to 44 cents per share, its tenth dividend increase under a dividend growth program first announced in 2011.

In the company’s conference call announcing its third quarter results, Telus president and CEO Darren Entwistle said the generational investments Telus is making in infrastructure, also come with “efficiency measures.”

“In this vein we are increasing our current efficiency initiatives by an additional $125 million in the fourth quarter, which will include a net reduction of approximately 1,500 full-time positions, a notable number of which are voluntary departures and early retirements,” he said. “These are indeed difficult decisions to make but a necessary element of aligning our organization with the growth, customer service and capital allocation activities that we are implementing now and into the future.”

The company, which has 47,000 employees in total, with 20,000 of those in Telus’s international division, is expecting 40 per cent of the job cuts will come from its unionized workforce with buyouts and early retirement incentives, described by chief corporate officer Josh Blair as “industry-leading, very generous buyouts.”

The balance of reductions will come from the company’s management ranks and will include early retirements, attrition and “some true downsizing,” said Blair. He said less than half of the 1,500 job losses will be ‘true downsizing,’ and that will among management and professional staff.

Blair said the job losses would be spread out across Canada. Asked what jobs would be cut, Blair said: “We’re looking to minimize any impact on our customer service, so more so back office roles, but a range of roles.”

He said Telus will increase efficiencies in customer service, including more online self-service and giving front-line staff the power to solve customer issues on the first call.

“When you focus your customer service on resolving a customer’s inquiry or issue the first time they call in versus having to call in multiple times, again you become more efficient as a company,” he said.

While Telus’ third-quarter financial results showed profits and revenue grew in line with analyst expectations, with net income and adjusted net income both up about 2.8 per cent, rising to $365 million and $398 million respectively, the company characterized it as a “soft quarter,” with wireless revenue growth squeezed by layoffs in Alberta’s oilpatch.

“I would say the No. 1 impact is the economy we are seeing in Alberta,” Blair said of the decision behind the job cuts. “No. 2 impact is the telecom industry in general … one that drives you to be more efficient each and every year. As the wireless market, for example, is maturing you have to look for growth, both through revenue and cost improvements.

“You can’t just get it through revenue improvements.”

Blair said wireless growth was impacted more than wireline. Revenue growth in wireless was 3.3 per cent with earnings before interest, income taxes, depreciation and amortization (EBITDA) growth at 3.6 per cent, compared to wireless EBITDA growth at 1.4 per cent on a normalized basis, lower than Telus’s typical increase in that area.

“We would characterize it as a soft quarter for us,” said Blair.

Blair said 38,000 jobs lost in the oil sector led to wireless cancellations.

“If you look at the 38,000 people and that’s just the announced number of people who left energy sector jobs this year alone, each one of those had a business wireless line that got cancelled,” he said. “They might also have a personal phone but at least on the business side, that’s a significant impact.”

Blair said Telus’ introduction in the quarter of a data notification service warning customers when they are reaching the end of their data allowance also contributed to a reduction in data revenue.

“That has had an impact, that has slowed our ARPU (average revenue per user) growth but we believe it’s the right thing to do for customer for the long term and that’s always going to guide our thinking,” said Blair.

Blair said the decision to cut costs is also related to the company’s investments in infrastructure and wireless spectrum.

“There is a direct relation,” he said. “When you’re investing for the future you have to become more efficient as an organization and if you look at 2015, between spectrum purchases and capital expenditures, we’re going to spend $4.5 billion dollars. That’s the highest number in Telus’ history by an order of magnitude of about a billion dollars.”

gshaw@vancouversun.com

vancouversun.com/digitallife

 
 
 
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Telus Corp. says it’s planning to reduce its workforce by 1,500 positions in an effort to cut annual costs by up to $125 million.
 

Telus Corp. says it’s planning to reduce its workforce by 1,500 positions in an effort to cut annual costs by up to $125 million.

Photograph by: DARRYL DYCK, THE CANADIAN PRESS

 
 
 
 
 
 
 
 
 
 
 
 
 
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