Darren Entwistle isn’t going anywhere.
Telus is on track to finish swapping out all the copper wire in its network with fibre-optic cable next year, allowing it to deliver faster and more symmetrical upload and download speeds. Decommissioning the copper network will be a major accomplishment – the result of more than $7-billion of investments over more than a decade – but it’s just one of several goals Mr. Entwistle, who turned 60 in August, would like the company to achieve before he cedes the CEO’s chair.
During an hour-long interview in his Toronto office, Telus’s intense, hard-driving chief executive rattles off the other items on his to-do-before-retirement list: oversee the commercialization of 5G wireless services; double the size of Telus International, the IT services business Telus took public last year; and spin out the telecom’s health and agricultural technology subsidiaries on the public markets, to position both for global expansion. He’s hoping to complete those IPOs within three or four years, but notes that a number of factors could accelerate or delay that timeline.
Currently, rising interest rates are dampening the market’s appetite for IPOs. “These aren’t the best times to do things of this nature,” Mr. Entwistle said, adding he hopes conditions will be better by the time Telus is actually ready to spin out its health and agricultural divisions. “That would be a fortuitous confluence of events.”
As he plots his final chess moves, the loquacious and, by his own admission, anxiety-riddled CEO has other worries on his mind, as well. Among them is a potential seismic shift in the industry’s competitive landscape, as federal regulators mull a proposed $26-billion merger between Rogers Communications Inc. RCI-A-T and Shaw Communications Inc. SJR-A-X
If approved, the deal will not only combine two of the country’s largest cable networks, providing Shaw with fresh capital to deploy in Western Canada. It will also create an opportunity for Videotron Ltd. owner Quebecor Inc. QBR-B-T to expand its wireless business outside Quebec. In order to appease regulatory concerns about consolidation in the cellphone market, Rogers has agreed to sell Shaw’s Freedom Mobile, Canada’s fourth-largest wireless carrier, to Quebecor for $2.85-billion.
Shaw has been steadily losing market share to Telus in Western Canada in recent years, and Mr. Entwistle admits he’s worried a recapitalized Shaw could be a fiercer competitor for Telus. “Anyone that tells you that they’re not worried about the competition shouldn’t be in the job,” he said, adding that anxiety can drive creativity and innovation.
“I get paid to be anxious about stuff even when there’s nothing obvious to be anxious about. … So yeah, I’m anxious about [Rogers-Shaw]. I’m anxious about how the market may evolve. People would say to me, ‘If the Rogers-Shaw deal doesn’t go through I guess you’re happy.’ I said, ‘No, I’m anxious either way.’”
As for whether a successful Shaw-Rogers combination could put pressure on Telus and BCE Inc.’s BCE-T Bell Canada to find similar synergies by combining their wireline networks, Mr. Entwistle doubts regulators would approve such a combination.
“I think that’s a kind of an Arnhem-in-Holland bridge too far for the government,” he said, referring to the failure by the Allies to seize the bridge over the Rhine during the Second World War. “We’ll see what happens down the road, but I don’t think so.”
A Montreal native, Mr. Entwistle was just 37 when he took the top job at Telus. At the time, the company was an amalgamation of several regional utilities, without a defined corporate culture.
Telus recruited its leader from the senior ranks of one of Britain’s largest telecom companies, Cable & Wireless PLC. Industry consultant Mark Goldberg first met Mr. Entwistle in Britain and said: “Among the Canadian telecom CEOs, he is the only one with international operating experience, and I wonder if that helps shapes a global perspective.”
Mr. Entwistle’s first big move was a $6.6-billion acquisition of Clearnet Communications, turning Telus into a national wireless carrier. Today, Telus has 17.3 million customers, generates $17-billion in annual revenue and owns several high-growth technology businesses. Its total shareholder return since 2000 is 833 per cent, tops among domestic and foreign peers over that period, and it has outpaced the S&P/TSX Composite Index by 473 percentage points.
While rivals Bell and Rogers snapped up television networks and sports teams, Telus poured billions into the IT services and health care sectors, in a bid to capitalize on what Mr. Entwistle forecast would be explosive growth in data-based businesses. The telecom entered the health care space in 2008 by acquiring Montreal-based electronic medical-records provider Emergis Inc. for $763-million.
Then there was the tiny Telus International subsidiary, which, at the time, was little more than a call centre in Manila that served Telus customers and a handful of American technology and telecom firms.
Both businesses have grown dramatically since then. Telus Health has expanded its offerings to include services such as virtual care, electronic prescribing and health-benefits management.
Telus International, which now runs the digital customer experience for clients such as Fitbit and Uber, went public on the Toronto Stock Exchange and the New York Stock Exchange in early 2021. The public market debut – which raised US$1.06-billion, making it the largest technology IPO in TSX history – fulfilled an important strategic purpose: giving Telus International its own valuation to help it attract talent and make acquisitions.
In 2020, Telus also entered the agricultural technology space, after acquiring more than half a dozen companies in the sector. Its Telus Agriculture subsidiary aims to digitize the world’s food-supply system, leveraging technology to reduce food waste, increase crop yields, and improve quality and safety.
The common thread unifying all of these offshoots is that they all leverage the very thing that Telus delivers through its networks: data. “The data insights opportunity here will be bigger than the broadband evolution,” Mr. Entwistle boldly proclaims.
Mr. Goldberg said Telus has pursued a different approach from its peers by not acquiring broadcasting assets or content, such as sports teams, as part of a convergence strategy. “Instead, they look to apply core communications and digital technologies to sectors such as health and agriculture that appeared to be crying out for digitization and improved interconnectivity,” he said.
For Mr. Entwistle, who utters the phrase “social capitalism” a total of seven times during the interview, investing in the health and agriculture sectors is about more than just capitalizing on a potentially lucrative opportunity. He believes that Telus Health and Telus Agriculture have a chance to tackle some of society’s most pressing crises, for instance by leveraging virtual care to fill the gaps in overburdened public health care systems.
But in order for Telus’s high-growth technology businesses to reach their full potential, they’ll need to strike out on their own, Mr. Entwistle said. “It can’t just be Mama Telus and our balance sheet supporting their ambitions, particularly given that both businesses are global in their orientation.”
It’s unclear how much revenue and profit Telus Health and Telus Agriculture currently generate, as the company doesn’t break out detailed financials for those divisions. But as Telus takes steps toward spinning out those divisions, it’s been disclosing some performance metrics.
In its most recent quarterly report, Telus noted that health services revenues increased by $10-million, or 7.9 per cent, during the second quarter of 2022, compared with a year earlier. Revenues derived from agriculture and consumer goods services revenues grew by $23-million, or 40 per cent.
Earlier this year, Telus announced it had struck a deal to acquire human-resources firm LifeWorks Inc. LWRK-T for $2.9-billion, including debt, which boosted the scale of its health subsidiary. The acquisition expands Telus Health into 160 countries, some of which overlap with markets Telus Agriculture would like to enter.
The acquisition was a “rather elegant catapult” said Mr. Entwistle, adding he’s about three years behind on his plan to expand Telus Health internationally. “I think we could have, should have, moved faster than what we did,” Mr. Entwistle said, referring to the delay as “another one of my never-ending list of screw-ups.”
Mr. Entwistle has always been in a hurry. “I always feel my time is limited,” he told The Globe back in 2006, blaming his impatience on the fact that his parents both died of cancer while they were young.
When Telus first started planning its copper-to-fibre migration, its leadership wasn’t in agreement about how fast to move. “We were not a house united, we were a house divided,” Mr. Entwistle said. “There was a lot of back and forth – not so much on doing it, but what’s the right pace? Should we take an incrementalist approach versus going all in? Thankfully, we went all in.”
Now, while the telecom wraps up the final stages of the project, it’s also in the process of upgrading its wireless network to 5G, a technology that promises much faster online speeds, less lag time and a vast increase in the number of devices that can be connected.
The decade-long conversion to a fibre network and the 5G rollout put Telus at the forefront of technology and give Mr. Entwistle enormous strategic flexibility. “We expect the company to emerge in 2023 with a distinctively different financial and operational profile relative to most global telecom peers,” said analyst Drew McReynolds at RBC Capital Markets in a report. “We see strong strategic and financial rationale for Telus to explore a transformational re-organization that can fully unlock the value of core infrastructure assets and core technology assets.”
Although the fifth generation of wireless technology has yet to deliver the bold, game-changing applications consumers have been promised for years – Mr. Entwistle refers to it as “lunchbag letdown” – he still believes the ability to deliver huge amounts of bandwidth and process reams of data will eventually deliver massive benefits to society. “I want to stay around for that because right now it’s been more sizzle than steak on the 5G front,” he said.
He also believes that deploying fibre and 5G throughout Telus’s entire footprint will give the telecom an edge over its rivals.
“When I move on, if I can sit in a rocking chair and reflect back and say, ‘Did I take care of the company?,’ that unassailable competitive advantage on fibre and 5G ubiquity, it will be hard for the competition to overcome that.”