Telus announces 6,000 job cuts, reports 61% drop in Q2 net income
Telus Corp. announced Friday it is cutting 6,000 jobs as it seeks to adapt to a "rapidly transforming industry," saying issues such as regulation and competition have prompted the need to reduce its payroll.
The Vancouver-based telecommunications company said the reduction includes 4,000 workers at its main Telus business, half of which are being laid off. The other portion is made up of those who would be offered early retirement and voluntary departure packages, along with vacancies that will not be refilled.
The remaining 2,000 cuts are at Telus International, which provides IT services and customer service to global clients.
"It was a very difficult decision," said Telus chief financial officer Doug French in an interview.
"The industry keeps changing and from a competitive perspective, we always want to prepare ourselves for the future. We see more digitization, we see prices are coming down in our industry, which customers are looking for. And so preparing to ensure we continue to be very competitive in the market, we need to align our cost structure to what that looks like."
Earlier this year, federal Industry Minister Francois-Philippe Champagne detailed a new mandate for the CRTC, requiring the federal telecommunications regulator to implement new rules to bolster consumer rights, affordability, competition and universal access.
The directive rescinded a 2006 policy direction for the agency to rely on market forces in making decisions.
But French said the federal government should let the market compete among the four national carriers.
"We obviously would prefer to just have straight competition and regulation. I believe the competitive environment in Canada is very, very strong."
French said the cuts also reflect a shift toward increased digitization in the sector, as customers "want more self-serve" options, while the finalization of recent mergers and acquisitions by the company also played a role.
Telus had 108,500 workers at the end of last year, according to financial markets data firm Refinitiv. French said cuts would affect employees across "all areas of our business" and be complete by the end of the year, with most done by the start of the fourth quarter.
The restructuring will cost the company $475 million in 2023 and lead to annual savings of more than $325 million, Telus said.
The cuts will help prepare the company for future challenges, said chief executive Darren Entwistle on a conference call Friday.
"When you look at the efficiencies that we're driving, they are pre-emptive in terms of how we see certain regulatory challenges evolving in the months and the years ahead and we want to get ahead of it," Entwistle told analysts.
"Our ability to take costs out of the business today will prepare us to better absorb any regulatory impediments … and we're an organization that just wants to control our own destiny along the way."
Other telecommunications businesses have also sought to streamline their operations this year as they grapple with regulatory action amid soaring interest rates and stubbornly high inflation.
Fellow telecommunications giant BCE Inc. said in mid-June that it would slash 1,300 positions, including six per cent of its media arm. It blamed the job cuts on a challenging public policy and regulatory environment, raising specific concerns about Bill C-11, the Online Streaming Act, and Bill C-18, the Online News Act.
Meanwhile, Rogers Communications Inc. told staff in a memo last month that it would offer voluntary departure packages as it worked to eliminate duplication in its businesses following the closure of its deal to buy Shaw Communications Inc., saying later that "a small percentage" left involuntarily since the combination with Shaw.
Telus' plans to reduce its workforce were announced at the same time as the company revealed its second-quarter net income fell almost 61 per cent from the same period last year to $196 million.
Last month, Telus revised doward its annual guidance for 2023, citing demand pressures affecting Telus International in particular as the technology sector looks to reduce costs. The company said it was targeting consolidated operating revenue growth of 9.5 to 11.5 per cent, down from 11 to 14 per cent.
But Telus continues to have a high level of confidence in the growth prospects of Telus International, which it spun off in 2021 but remains the controlling shareholder, said Entwistle.
He said Telus has no plans to buy back Telus International but that it was a critical enabler of the Telus' growth strategy and its future prospects were encouraging.
"As it deals with the macroeconomic challenges in front of it, with the right moves, the medium and longer term prospects for the organization are exceedingly strong," Entwistle said.
The cuts announced on Friday help balance the labour supply at Telus International with the level of revenue it's seeing, said French.
He did not rule out further job reductions at Telus beyond those announced Friday.
"When we make a decision like this, it is not easy and we'd prefer not to continue to do more in the future,"said French.
"That being said, depending on market conditions … that would be more determined on what that looks like, including regulation."
This report by The Canadian Press was first published Aug. 4, 2023.
Companies in this story: (TSX:T, TSX:RCI.B, TSX:BCE)
Sammy Hudes, The Canadian Press