Telus Corp. is ramping up efforts to reduce the size of its work force and says it will cut 1,500 jobs over the next several quarters as it looks to save as much as $125-million in annual costs.
The Vancouver-based telecommunications company revealed the restructuring plan Thursday as it reported third-quarter results in line with projections but lighter than expected on the wireless side of its business.
Telus shares closed down 4.1 per cent, or $1.80 per share, at $41.91 on Thursday.
Telus said many of the job reductions will include early retirement and voluntary buyouts and added that the cuts will double what it expects to spend on restructuring costs for 2015, to $250-million from $125-million.
CEO Darren Entwistle said in an interview that half of the cuts would be management jobs and the other half would be unionized roles. In the latter case, he said, Telus plans to offer voluntary buyout packages.
"We have 43,000 employees at Telus, so one of the things we can do to soften the impact at the human level is, where we have natural attrition taking place, we don't replace those employees," he added.
Mr. Entwistle said the company needed to make the cuts due to "prevailing economic conditions," citing the broader business market in Canada as well as Alberta in particular. Plus, he said, "there were latent efficiency opportunities in telus that needed to be harvested."
"Having said that, it's never an easy thing to do," Mr. Entwistle added.
He said the company will also look for cost savings in supply chain efficiencies and through gradually shutting down some of its older wireless network technology.
The company reported a 4.2-per-cent increase in revenue for the third quarter, to $3.15-billion, up from $3.03-billion in the same quarter last year and in line with projections.
Net income and adjusted net income both grew 2.8 per cent, to $365-million and $398-million, respectively. The company reported adjusted earnings of 66 cents per share, just ahead of analyst expectations.
Telus said it will increase its quarterly dividend to 44 cents per share, payable Jan. 4.
Telus maintained a low rate of customer turnover with churn at less than 1 per cent for the ninth consecutive quarter, but it added only 69,000 new postpaid wireless customers in the period.
That fell short of the approximately 87,000 analysts had predicted, according to data from Bloomberg, and also lagged behind both Rogers Communications Inc. and BCE Inc.'s wireless additions in the quarter; Rogers reported two weeks ago that it had added 77,000 new postpaid wireless customers in the quarter, while BCE, which also reported Thursday morning, said it had added 78,000.
The third quarter has seen heightened competition for wireless customers as it is the first full three-month period to be affected by the "double cohort."
That was due to a deadline for the full implementation of the national wireless code – which requires carriers to recoup the value of smartphone subsidies over a period of no more than two years – and effectively ended some remaining three-year contracts early, beginning on June 3.
Canaccord Genuity analyst Aravinda Galappatthige noted that revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) were lower than expected in Telus's wireless division, writing that it reflected "the heightened competitive activity during this period, including a resurgent Rogers Wireless."
Mr. Entwistle admitted that it was a "soft quarter" for the company's wireless division but added, "We've built two growth engines at Telus, both wireline and wireless. And that diversity is extremely important. We posted very strong numbers on the wireline side of our business."
For its wireless division, Telus reported operating revenue of $1.78-billion and adjusted EBITDA of $729-million, up 1.4 per cent from the same time last year.
On wireline, which includes its business and residential customers, operating revenues grew 3 per cent to $1.43-billion and adjusted EBITDA was up 3.6 per cent to $390-million.
Telus added 24,000 new Internet customers and 26,000 new IPTV subscribers in the quarter while it lost a total of 25,000 residential landline telephone customers.