Canadian telco giant BCE (TSX: BCE) is undergoing significant restructuring measures, including substantial layoffs and the divestiture of a significant portion of its regional radio stations. The company’s CEO, Mirko Bibic, confirmed these developments in an open letter released on Thursday, signaling a nine percent reduction in the company’s workforce across various levels.
The impact of these measures is widespread, affecting regions across British Columbia, Ontario, Quebec, and Atlantic Canada. As part of the restructuring, Bell Media, a subsidiary of BCE, is set to sell off 45 of its 103 regional radio stations to seven different buyers, pending approval from the Canadian Radio-television and Telecommunications Commission (CRTC) and meeting other closing conditions.
Bell Media President Sean Cohan acknowledged the strategic shift, citing a move towards digital transformation for both entertainment and news. However, uncertainties linger regarding the profitability of prioritizing digital growth in the absence of regulatory support.
Robert Malcolmson, Bell’s chief legal and regulatory officer, expressed frustration with the federal government’s delayed response in providing relief for media companies, alongside criticism of the CRTC’s pace in addressing the industry’s challenges.
The layoffs at Bell Media are not isolated incidents but are directly influenced by regulatory directives such as Bill C-11, which aims to update the Broadcasting Act to require digital platforms to contribute to Canadian content. However, the immediate relief sought by companies like Bell remains elusive amidst ongoing regulatory processes.
In response to declining advertising revenues and operational losses in its news division, BCE is reassessing its network investments in the telecommunications sector. This includes a planned reduction in capital expenditures and a rollback of fiber network expansion, reflecting dissatisfaction with government policies and regulatory decisions perceived to discourage investment.
Despite these challenges, BCE reported achieving its financial targets for the fourth quarter of 2023 and the full year. The company announced a 3.1 percent increase in its annual dividend to $3.99 per share, signaling confidence in its financial performance despite the broader industry challenges.
The company’s financial results for 2023 indicate a mixed picture, with consolidated adjusted EBITDA growing by 5.3 percent in the fourth quarter. However, net earnings saw a decline, attributed to various factors including lower operating costs and higher working capital.
Notably, Bell Media’s adjusted EBITDA witnessed a notable increase in the fourth quarter, driven by lower operating costs and restructuring initiatives. Despite these positive indicators, the challenging advertising market conditions have led to a decline in total revenue for the division.
Embarking on its most extensive workforce restructuring effort in nearly three decades, BCE is poised to reduce approximately 4,800 positions in 2024, constituting around 9% of its total employee count. This follows the company’s move in 2023 to cut down 1,300 positions and shut down six radio stations, and selling three others.
This recent reduction would reflect a nearly 30% decrease in its workforce over a span of three years. These measures are expected to yield substantial cost savings, ranging from $150 million to $200 million for the current fiscal year and an annualized savings of $250 million.
BCE last traded at $53.07 on TSX.
Information for this briefing was found via Toronto Star and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.