Bell Aliant’s decision to reduce management lay off 500 employees isn’t good news for customers, says a telecommunications consultant.
“This is prime recognition that they haven’t been able to maintain their market share,” Eamon Hoey of Hoey Associates in Toronto said Tuesday, “and will not be able to do so in the future.”
“How can you talk about better customer service when you’re streamlining your organization?” he asked.
However, Aliant spokesman Kelly Gallant said the cuts are aimed at improving service to customers, as well as improving results to shareholders. The changes are “all about ensuring we have a leaner management structure, bringing employees closer to customers and we’re also reducing costs,” she said.
On Monday Aliant cut the number of executives reporting to president and CEO Karen Sheriff to seven from 11, and also let go 500 managers. That represents about 15 per cent of management, or five per cent of the workforce of 9,000.
It’s similar to the moves made last year at Bell Canada by Aliant’s controlling shareholder, BCE, shortly after George Cope took over the reins of that corporation. Just days before, Sheriff was named as Aliant's next head.
Asked what the cuts say about the financial state of Aliant, which has revenue last year of $3.4 billion, Gallant replied that the company’s fourth quarter results will be released Feb. 3. At that time it will also give financial guidance for 2009.
Recently, Aliant has been showing tiny revenue growth. Hoey believes it’s hobbled in part by not having its own wireless service, which was sold to Bell Mobility several years ago.
In October, Aliant reported that in its third quarter operating revenue went up $6.8 million over the same period in 2007, a mere 0.8 per cent increase. As with other telcos, it reported declines in local and long distance revenues.
Serving customers in the Atlantic provinces, Ontario and Quebec, is an income fund that makes tax sheltered distributions to shareholders. However, its future is somewhat unclear for two reasons: First, the collapse last month of parent BCE’s $35 billion privatization plan, and second, Ottawa will end the favourable tax treatment of most income funds in 2011.
As a result some industry analyst believe BCE is mulling whether to sell Aliant and get cash for funding needed network infrastructure upgrades. Gallant said Aliant management has made no decision on going back to a publicly-traded company.
Among the senior executive changes, Mary-Ann Bell has become senior vice-president for Ontario and Quebec. She had been Bell Canada’s vice-president of customer service. Heather Tulk becomes senior vice-president for customer solutions, which includes contact centres. Chuck Hartlen is senior VP for customer experience, as well as the CIO. Rod MacGregor becomes vice-president for corporate development and strategy, while David Rathburn becomes president of xWave, Aliant’s IT services division.