BCE to let go 1,700 employees

In a move that is being called voluntary, Bell Canada Enterprises (BCE) Inc. announced Wednesday that it will cut approximately 1,700 positions across Bell Canada.

A Bell spokesperson said the cuts are on a voluntary basis, where employees can choose early retirement as one option. The job losses could touch on any of Bell Canada’s business units but the company doesn’t expect to lose a significant portion of its employees from any specific area, said Bell spokesperson Catherine Hudon.

However, statements made by Michael Sabia, president and CEO at BCE, indicate that with growth expected to remain virtually unchanged for the next year, the company had little choice in announcing cuts to appease stakeholders. For 2002, BCE reported revenues of $19.5 billion and has projected revenues to be between $19.3 billion to $20 billion for 2003.

As one of the incumbent carriers, BCE now finds itself following the lead made by rival Telus Corp., who recently announced job cuts of 4,000 and later upped its target to 6,500 employees.

The announcement only further cements the feeling that the telco industry isn’t likely to rebound over the next year.

“In a challenging environment in 2002, we reorganized BCE to restore the financial flexibility we require to meet the demands of the marketplace,” Sabia said.

In light of the cuts made by Telus Corp. and the ongoing problems of both AT&T Canada Inc. and Sprint Canada, one analyst noted the news wasn’t all bad, considering that BCE only cut four per cent of its 40,000 plus workforce.

“We’re looking at a very flat revenue base. Where are you going to get efficient (and) in order to have a flat performance, you’ve got to cut somewhere and the first place the telcos always cut is its employees,” said Brownlee Thomas, research analyst at Giga Information Group Inc. in Montreal.

Part of the blame rests with former chairman and CEO of BCE Jean C. Monty who, as Thomas explained, pulled the company into an unsuccessful convergence model by trying to combine the print and pay T.V. sides of the business together. Under Sabia, the company will now follow a more predictable direction, Thomas said.

Still, Mark Quigley said that job cuts – even four per cent – is still significant and represents a shift within the sector overall.

“It’s just a sign of what the industry trend is today. If you’re not seeing a whole lot of growth on the bottom line one way you try and grow is by taking a look at costs,” said Quigley, an analyst with Ottawa-based The Yankee Group in Canada.

And more to the point, while double digit growth that the telcos enjoyed for years may now have levelled back to more traditional growth rates of five per cent, the telcos remain profitable at a time when most of IT is down.

Thomas suggested that BCE would look to continue to bundle its offerings to turn profits and that means combining local and long-distance, offering discounts on calling cards while pursuing mobile and Internet customers. Quigley added that one area – DSL – likely won’t be cut because the company still sees it as a future growth area.

For additional details, visit BCE at http://www.bce.com.