By Sammy Hudes, The Canadian Press on February 8, 2024.
TORONTO – The parent company of Bell Canada is slashing nine per cent of its workforce and could further scale back network spending as it remains at loggerheads with the CRTC over what it calls “predetermined” regulatory direction.
The cuts, which affect about 4,800 jobs including 750 contractors, were announced to employees Thursday morning in an open letter by chief executive Mirko Bibic. The company also reported its fourth-quarter profit fell compared with a year ago, but raised its quarterly dividend.
BCE Inc. said it earned net income attributable to common shareholders of $382 million or 42 cents per diluted share in its latest quarter compared with a profit of $528 million or 58 cents per diluted share a year earlier.
Operating revenue totalled $6.47 billion, up from $6.44 billion a year earlier. On an adjusted basis, BCE says it earned 76 cents per share in its fourth quarter of 2023, up from 71 cents per share in the last three months of 2022.
On Thursday, the company also announced plans to sell 45 of its 103 regional radio stations and close 107 The Source stores. It said the restructuring is expected to save Bell around $150 million to $200 million in 2024 and $250 million on an annual basis.
“Restructuring the business is never an easy decision, but it’s what we need to do to simplify our organization and accelerate our transformation,” Bibic told analysts on the company’s earnings call.
Bibic said in his letter that Bell is moving away “from highly regulated parts of the business to new growth areas” while aligning costs to revenue potential in each business segment.
“We know these decisions are hardest on those leaving Bell.”
The changes came as BCE said it would now pay a quarterly dividend of 99.75 cents per common share, up from 96.75 cents per share.
The job cuts follow the elimination of 1,300 positions last June, when Bell announced a restructuring and pinned the blame on untenable regulatory conditions.
Bell chief legal and regulatory officer Robert Malcolmson acknowledged in an interview with The Canadian Press that the 6,000-plus jobs cut since last year was “a big number.”
“It’s really the current regulatory and public policy environment that’s causing profound structural change and that we have to mitigate through the measures we’re announcing today,” he said.
“We have to make tough decisions sometimes and hopefully these decisions will cause government and regulators to notice. Hopefully we can have a rational conversation about pivoting to public policy that supports investment and employment.”
The latest job losses will be felt across the media and telecom company’s various divisions, including some vacant positions that will go unfilled.
The company said fewer than 10 per cent of the total job cuts were at Bell Media specifically.
Some employees have already been notified or will be informed throughout the day Thursday of having been laid off. The balance will be told by the spring, the company said.
The move also comes ahead of hearings next week by the federal telecom regulator as part of a review into the rates smaller internet competitors pay the major carriers for network access.
The CRTC announced last November it would temporarily require large telephone companies, namely Bell and Telus Corp., to provide competitors with access to their fibre-to-the-home networks in Ontario and Quebec within six months. (The rule doesn’t apply to Canada’s other major carrier, Rogers Communications Inc., which uses a cable network.)
The decision was meant to stimulate competition for internet services, as the CRTC said at the time its review could potentially make that direction permanent and apply it to other provinces.
Bell responded by announcing a plan to reduce its network investment by $1.1 billion by 2025 – “and counting,” Malcolmson noted – including a minimum reduction of $500 million this year.
“We, needless to say, take a dim view of the decision because … it reduces any incentive we have to continue building out our fibre network,” he said.
At the time, Bell also filed documents with the Federal Court of Appeal requesting permission to appeal the CRTC’s temporary ruling, and for a stay of the decision pending the outcome of the court process. Last week, it asked the federal cabinet to review the regulatory decision.
Malcolmson said Bell would wait and see what the CRTC decides following the hearing before making further decisions on future network investment, but that “it seems like the outcome is predetermined.”
Asked if that meant Bell was preparing to announce further scalebacks, he said “that’s up to the CRTC and ultimately the government.”
“We hope not. We’re in the business of building networks,” said Malcolmson. “That’s what we want to do. That’s what our shareholders invest in us for.”
In a statement, the CRTC said it was concerned about the job losses.
“The CRTC does not determine how private companies allocate their profits,” said spokeswoman Mirabella Salem.
“The CRTC is an independent, quasi-judicial tribunal that regulates the broadcasting and telecommunications industries in the public interest.”
Malcolmson said before last November, Bell planned to reach nine million locations through its fibre network build by the end of 2025, which has been scaled back to 8.3 million.
“We can’t justify investing that capital when we’re just building a network for our competitors to resell,” he said.
Bibic hinted at further cost reductions in the years to come if the company feels it has to stay ahead of regulatory decisions it finds unfavourable.
“The short answer is there could be more to come depending on where this goes,” he told analysts.
“The question we have to ask ourselves is why continue to invest at the pace that we did in 2020, 2021, 2022 and 2023?”
This report by The Canadian Press was first published Feb. 8, 2024.
Companies in this story: (TSX:BCE)