Telecommunications behemoth Telus Corp (TSX: T) has announced its intention to cut 6,000 jobs as part of an effort to free up cash flow and maintain its competitive edge.
The job cuts— which consist of early retirement and voluntary departure packages, will be split between Telus’ main business, where 4,000 positions will be eliminated, and Telus International, which will see a reduction of 2,000 jobs. “Given the scale of this program, we now expect incremental restructuring investments of up to $475 million in 2023. The program we are announcing today will yield expected cumulative annual cost savings of more than $325 million,” the company unveiled in its second quarter earnings.
Telus CEO Darren Entwistle explained that the cuts were necessitated by an “evolving regulatory, competitive, and macroeconomic environment,” which the company plans to maneuver via increased efficiency initiatives. “Against the backdrop of rapid transformation in our industry and the ways in which our customers want to engage with us, today we are announcing a significant investment in an extensive efficiency and effectiveness initiative across Telus,” he said in a news release.
Still, the restructuring announcement comes at an interesting time for Telus. Despite describing the second-quarter results as “resilient” and touting a nearly six per cent increase in mobile network revenue compared to the same period last year, the company’s net income fell a staggering 61% to $196 million. The decrease in net income, from $0.34 per share to $0.14 in the recent quarter, marks a stark contrast with the company’s efforts to position itself as “winning” through strategies such as building out broadband networks, digitizing operations, and streamlining costs.
However, the latest job cuts aren’t just focused across Telus; Numerous telecommunications businesses are facing intense pressures as they attempt to streamline operations, grapple with a combination of regulatory actions, soaring interest rates, and high inflation. The federal government’s introduction of bills such as Bill C-11 (the Online Streaming Act) and Bill C-18 (the Online News Act) are also creating added headwinds.
Telus last traded at $23.14 on the TSX.
Information for this story was found via Telus. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.