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The Globe and Mail

Facing cost pressures, Rogers axes 375 jobs

The Rogers Communications sign is marks the company's headquarters in Toronto, April 25, 2012.

Aaron Vincent Elkaim/THE CANADIAN PRESS

Faced with pressures to minimize costs, Rogers Communications Inc. moved Tuesday to cut loose more than 300 employees from its cable and wireless divisions.

The cuts are effective as of Tuesday. Rogers spokeswoman Patricia Trott said about 375 employees will be offered severance packages. They come from a range of different levels within the company's wireless and cable properties.

It's Rogers' second layoff announcement this year. In March, the telecom giant laid off about 300 positions, largely in management. While Ms. Trott said there are "no plans" for more job cuts, she did not close the door on the possibility, stressing "we continuously need to make sure we're managing our costs effectively."

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The company employs about 30,000 people across Canada.

She said Rogers is looking at axing projects, reducing discretionary spending and finding supply chain efficiencies in further attempts to reduce costs.

"We recognize we're in a challenging environment right now," Ms. Trott said. "We know we need to do business this way going forward."

Dvai Ghose, an analyst with Canaccord Genuity, said that despite Rogers' "aggressive" cost-cutting, he would remain cautious on the stock. On the one hand, he said, the 675 cuts this year make up less than 3 per cent of Rogers' employee base, which is far less than the 13-per-cent cut of Bell's labour force, which totalled about 7,200 employees, after its 2008 leveraged buyout.

On the other hand, "cost-cutting is not as easy as one might think." He points out that rival Shaw had to rehire after cutting 550 employees in 2011 because of a noticeable decline in customer service.

But, Mr. Ghose said, he believes that Rogers "still has high margin wireless roaming revenue to lose to Bell and Telus," noting as well that Bell's use of IPTV (Internet protocol television) technology to eat at Rogers' TV market share is "still at an early stage."

Drew McReynolds, of RBC Dominion Securities Inc., said Rogers' efforts to slim its work force reflects its goal of keeping costs down as it faces revenue pressures, and is "indicative of the operational focus" of Rogers' new CFO, Anthony Staffieri, who was appointed two months ago.

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As competitors gnaw at Rogers' wireless and cable market shares, the company is leveraging new revenue sources to coincide with cost reductions. Among these is "mobile wallet" technology that enables consumers to use their handsets to wirelessly make retail purchases. Rogers, with CIBC, announced the first Canadian attempt for mobile payments in May.

Rogers is Canada's largest wireless provider and one of the country's biggest telecom companies. It owns a variety of media entities from Sportsnet and CityTV to Maclean's magazine, and shares a controlling stake in the Maple Leaf Sports Entertainment empire with rival BCE Inc., which owns Bell.

The job cuts on Tuesday range from office support positions to channel sales and product management.

Rogers posted a $305-million profit last quarter, down $30-million from a year earlier.

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