Telus Cutting 6% of its Workforce as Profit Slides

Paula Sambo, Geoffrey Morgan and Stephanie Hughes, Bloomberg News

A Telus store in Vancouver, British Columbia, Canada, on Tuesday, Sept. 6, 2022. , Bloomberg

(Bloomberg) -- Telus Corp. said it’s seeking to eliminate 6,000 jobs, or 6% of its workforce, after posting second-quarter profit that missed analysts estimates.

The cuts comprise of 4,000 workers at Telus and 2,000 at Telus International and includes offers of early retirement and voluntary departure packages, the Vancouver-based telecommunications company said Friday in its earnings statement. The reductions will cost Telus as much as C$475 million ($355 million) this year, and are expected to yield C$325 million in annual savings. Telus had 108,500 employees at the end of 2022.

Shares fell as much as 3.5% to its lowest intraday in three years before trimming some losses. Telus traded 0.4% lower at C$23.01 as of 9:57 a.m. in Toronto.

The companywide cost-cutting initiative comes against the “backdrop of rapid transformation in our industry and the ways in which our customers want to engage with us,” Chief Executive Officer Darren Entwistle said in an emailed statement. “This is in response to the evolving regulatory, competitive and macroeconomic environment that we currently face.”

The moves come about two months after rival BCE Inc. said it planned to cut about 3% of its workforce as part of a companywide restructuring, which also included its media operations. Canadian telecom companies have been grappling with a trend of lower cheaper wireless rates as regulators push to encourage more competition in a market that has been dominated by a handful of large companies.

“It’s a tougher regulatory and competitive environment,” CIBC Capital Markets analyst Stephanie Price said in a phone interview, noting increased competition from Quebecor Inc. after its acquisition of Freedom Mobile is pressuring large wireless carriers.

The cost-cutting measures are well-timed given expectations for less profitable wireless prices, Scotia Capital analyst Maher Yaghi said in a note to clients

“Investors who usually invest in a defensive sector like telecom might not appreciate the successive recent guidance reductions from the company,” Yaghi said.

Telus reported quarterly earnings that missed expectations, even after adding 110,000 net new phones. Adjusted earnings per share came in at 19 cents, falling short of the 23-cent estimate of analysts surveyed by Bloomberg.

(Adds CEO comment in fourth paragraph.)