Telus announces consolidation, plans layoffs

After a disappointing second quarter in Ontario and Quebec, Telus Corp. has decided to consolidate its enterprise-focused Client Solutions unit with its small- to medium-sized business-focused Business Solutions group, the company announced recently.

Nick Culo, spokesperson for Telus in Edmonton, said the company will be combining the sales, marketing and customer care plus all other functions of the two business units to be headed by Joe Natale, formerly in charge of the Client Solutions unit. Telus has had separate units dealing with enterprise versus smaller firms for the past four years, Culo noted.

“It’s the right thing to do for our business and our customers,” Culo said. “The logic for this is pretty strong. It allows us to effectively present one face to our business customers, it allows for a more aligned sales and marketing team that focuses on a singular set of customer-supportive priorities and it allows for operations to be more cost-effective.”

As a result of this consolidation, Telus plans to cut some jobs, but not until October after the restructuring is complete, Culo said. Telus has not yet determined where or how many jobs will be cut, he added. Telus currently has approximately 2,500 employees in both its Client Solutions and Business Solutions groups scattered across the country, he noted.

But one industry insider said the Telus restructuring is contrary to current industry trends.

Mark Quigley, research director at the Yankee Group Canada in Ottawa, said most large companies are in the process of creating new business units to focus on the small- and medium-sized (SMB) market, not dismantling them.

“I guess if you’re collapsing both groups it means there’s common functionality within both of them and you’ll end up just with redundancies that you can get rid of,” he said. “But the thing I find odd about it is that it goes contrary to what the rest of the market is doing — they are not distinguishing the SMB market.”

Bell Canada, for example, has a division that deals specifically with smaller companies.

Because the SMB market is remarkably different than the enterprise market, it needs to be focused on separately, especially since it has been traditionally underserviced in the telecom space, Quigley said.

“If you’re looking at an enterprise account that has multiple locations, multiple remote employees, the issues it has to grapple with are very different from a small business that has maybe one or two locations and has not gone down the line of becoming entirely IP-centric,” he explained. “The needs are going to be much simpler and more cost-based at the end of the day.”

As a result, servicing SMBs has less to do with providing a whole solution and more to do with providing reliable voice and data services at an affordable price, Quigley said.

“I’m not sure how you sell and support all of that under the same umbrella because those needs are very very different,” he said. Hopefully, Telus will still commit to looking at both types of organizations separately, he added.

But the fact that Telus is not making a huge dent in Bell Canada’s business in Ontario and Quebec is not surprising.

“It’s an unfair comparison to compare any non-incumbent with the incumbent in the territory,” said Lawrence Surtees, director, Canadian telecom and Internet research at IDC Canada Ltd. in Toronto. “Just as Bell has been finding it tough in the west, Telus has been finding it a bit tough here [in Ontario]. That being said, it has had a few high-profile wins and so has Bell. But to try to really erode an incumbent space is really tough.”

Additionally, Surtees said there are other players in this market that are becoming increasingly competitive, including Sprint Canada Inc., MTS Allstream Inc. and AT&T Inc.

“It’s not a cake walk,” he said.

Quigley noted that all telecom providers have had a difficult second quarter, especially in selling to businesses.

“The traditional core telecom market hasn’t exactly been burning the place up as of late,” he said. “If it wasn’t for consumer broadband and wireless services, the incumbent story across the board wouldn’t be a good one to tell — that’s where they have been driving most of the growth.”

Telus claims win after government decision

Telus Corp. says a recent federal government decision concerning wireless spectrum makes it easier for the company to acquire mobile phone service provider Microcell Telecommunications Inc. But one industry observer points out that the feds’ move could hurt — just as much as help — Telus with its purchase.

The Burnaby, B.C. telecommunications service provider recently commented on Industry Canada’s decision to eliminate the 55MHz spectrum cap.

Introduced in 1995, the cap meant companies like Telus could own no more than 55MHz of spectrum. Industry Canada said the spectrum cap was designed to ensure new wireless companies have enough spectrum to compete against established players.

According to Mark Langton of Telus Mobility, the firm was at the 55MHz limit in most of the markets in which it operates.

After a consultation process that started last October and ended this March, Industry Canada removed the spectrum cap, and said it would release at least 100MHz of new spectrum in the future.

In a statement on Aug. 27, Industry Canada said it lifted the cap because “Canada’s mobile telephone system is highly developed and cell phone users have a variety of service options.” The cap was no longer required to facilitate competition.

Telus, which began an unsolicited bid for Montreal-based wireless service provider Microcell in May, said the government’s decision to eliminate the cap “removes one of the principal approvals required” to take over Microcell.

Langton pointed out that Microcell has nearly 30MHz of spectrum across Canada. Adding that to Telus’ 55MHz would put the B.C.-based telco over the limit. Telus would need special permission from the government to operate. Now that the spectrum cap no longer exists, Telus doesn’t need unique consideration to run Microcell’s network alongside its own.

Iain Grant, an industry analyst with the Montreal-based SeaBoard Group, said Industry Canada’s spectrum decision could count as a significant step forward for Telus in its bid for Microcell. But, he added, it could also act as a hindrance.

Now that that spectrum cap is gone, Microcell might appear all the more alluring to other potential purchasers. Grant named Rogers Wireless Communications Inc., a Toronto-based mobile service provider, as an example. Rogers could acquire Microcell without worrying about going over the spectrum limit, he said.

— Stefan Dubowski