Telus announces 6,000-person layoff, reports 61% drop in Q2 net income

Telus announces 6,000-person layoff, 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.”

RELATED: Telus reports Q1 profit down from a year ago, raises quarterly dividend

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The directive rescinded a 2006 policy direction for the agency to rely on market forces in making decisions.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.”

“We’re one of the few countries in the world that still has four national competitors. There’s been consolidation everywhere else,” he said.

“We obviously would prefer to just have straight competition and regulation. I believe the competitive environment in Canada is very, very strong.”

He added major telecommunications providers such as Telus pay among the highest spectrum costs globally given Canada’s size and relatively small population.

“It’s very, very expensive to do that,” he said.

“To keep investment going, you have to have a return.”

French said the cuts also reflect a shift toward increased digitization in the sector, as customers “want more self-serve” options, along with the finalization of recent mergers and acquisitions by the company.

Last month, Telus revised its annual guidance for 2023 downward, 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.

“Part of the announcement today is also a rightsizing within Telus International to align their supply of labour, let’s say, to the revenue stream that they see,” said French on Friday.

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.

Its 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.

The company’s net income amounted to 14 cents per share for the quarter ended June 30 compared with 34 cents per share in the same quarter a year earlier.

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.

The Online Streaming Act aims to regulate streaming platforms like Netflix and Disney+ and require them to contribute to the creation and promotion of Canadian content. The Online News Act, which passed this year, forced Google and Meta to pay news publishers for content they link to on their platforms.

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.

When the memo was sent, the company did not say how many employees would be affected by the voluntary departure program, but confirmed “a small percentage” left involuntarily since the combination with Shaw.

French 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,” he said.

“That being said, depending on market conditions … that would be more determined on what that looks like, including regulation.”

Telus’ adjusted net earnings for the second quarter totalled $273 million, or 19 cents per share, compared with $422 million, or 32 cents per share, a year prior. Analysts on average had expected an adjusted profit of 22 cents per share for the period ended June 30, according to estimates compiled by Refinitiv.

Operating revenue and other income ticked up to $4.95 billion from $4.40 billion a year earlier.

The company added 110,000 net mobile phone subscribers in the quarter, up 18 per cent from 93,000 last year. Its monthly churn rate for postpaid mobile phone subscribers — a measure of subscribers who cancelled their service — was 0.73 per cent, up from 0.64 per cent during its previous second quarter, which was attributed to higher levels of retail traffic and increased market-driven promotional activity.

Telus’ wireless mobile phone average revenue per user was $58.80, up 1.8 per cent from the second quarter of the prior year, which the company said was largely due to higher roaming revenues from increased international travel.

This report by The Canadian Press was first published Aug. 4, 2023.

The Canadian PressThe Canadian Press

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