Shares of Telus (TSX:T) are down today after the said it would cut 1500 jobs, saving it as much as $125-million a year. The announcement, made on the same day the company reported it third quarter results, was paired with a dividend raise.
“These are very difficult decisions to make but a necessary element of aligning our organization with the growth, customer service and capital allocation activities we are implementing,” said Telus president and CEO Darren Entwistle.
Telus says some of the cuts would come through early retirements and voluntary departures. Whether investors were focusing on the results, the cuts, or the dividend raise, the totality of today’s news was not greeted warmly. At press time, shares of Telus were down 4% to $41.98.
As for Telus’s third quarter, the company earned $365-million, or $0.66 a share, and posted Adjusted EBITDA of $1.06-billion on revenue of $3.15-billion. The street’s expectation of was for EPS of $0.65, EBITDA of $1.11-billion and revenue of $3.16-billion.
Telus’s executive vice-president and CFO John Gossling focused on the good news for shareholders; a dividend hike to $0.44 cents per quarter, a figure that is up 10% from last year.
“Through the consistency of our performance and the quality of our asset mix, Telus also continued to reward our valued shareholders in the third quarter with our multiyear share purchase and dividend growth programs,” Gossling. “We returned an additional $363-million to shareholders in dividends paid and share purchases, and year to date, we have returned $1.4-billion. Today, we also announced our 10th double-digit dividend increase since 2011 under our multiyear dividend growth program. Telus has now returned $12.2-billion or more than $20 per share to shareholders over the past decade.”
Telus, which provides a range of services, including internet access, voice, satellite and IPTV television, saw its total subscriber base grow 2.8% in the third quarter to 8.4-milliom. The company’s high speed internet connections climbed 6.3% to 1.5-million, and its Telus TV subscriptions rose 10% to 980,000. On the downside, the company said the ongoing slide in traditional telephone network access lines continued in the quarter.
Telus says that the 1500 job cuts will create costs saving of between $100-million and $125-million annually, but means that restructuring costs will rise to about $250-million this year, instead of the $125-million the company had originally anticipated. The company says it doesn’t think the cutbacks will have an effect on customer service.
In August, Telus announced that long-time CEO Darren Entwistle would return and announced that Joe Natale is stepping down as president and CEO. At the time, board member Dick Auchinleck, which Telus announced will serve as its independent chair, noted that shareholder return under Entwistle was 351%, which the highest of telecom service providers globally.
Entwistle noted that the The $4.5-billion the company plans to spend on capital expenditures and spectrum in 2015 are the biggest bets the company has made to date.
“Telus is one of the largest and most important infrastructure investors in Canada, and has established a track record for leveraging these capital decisions, the generational investments we make also come with parallel investments in process and efficiency initiatives,” he said.