25% of Shaw workforce takes voluntary buyout, CFO leaving

Shaw Communications Inc. has revealed that 3,300 employees, or a quarter of its total staff, will take the company up on its offer of voluntary buyouts in a move that will cost $450 million next quarter, but then save it an expected $225 million a year. CFO Vito Culmone is also departing effective May 4. Trevor English, who has been with the company for 14 years, will be taking on his responsibilities as executive vice-president, chief financial and corporate development officer, Shaw said in a release Thursday. Desjardins Capital Markets analyst Maher Yaghi wrote in a research note that English, during his time with Shaw, has worked on several important transactions, including Shaw’s acquisition of Wind Mobile, since rebranded as Freedom Mobile. Barclays analyst Phillip Huang said in a note that English "already has a strong connection with the Street, and his promotion should be viewed as a logical and positive move for the company." Shaw announced in late January that it would offer voluntary buyouts to 6,500 of its employees and predicted 10 per cent would take them. In Thursday’s release, it said the buyouts were part of the early stages of a multi-year business transformation initiative, adding that more details about that initiative “will be provided as progress is made.” The company also said that the higher-than-expected number of staff who have opted for the offer won’t affect its operations or the customer experience. “As anticipated, the majority of employees who have chosen to accept the voluntary departure packages are in areas of Shaw’s business that can be further optimized through the use of technology and a more efficient service delivery model,” the release said. It added that Shaw has control over the timing of the departures, which will start in April 2018, and can “ensure they are actively managed through an orderly transition over the next 18 months.” The company also said it expects the projected $225 million in annual savings will be “fully realized in fiscal 2020,” and that it would provide further details about the timing of the savings, which it expects to be equally split between operating expenses and capital expenditures, when it releases its second-quarter financial results on April 12. Canaccord Genuity analyst Aravinda Galappatthige said in a research note that Shaw's "more concentrated approach" is different from other telecoms, "who have pursued more elongated stage-by-stage restructuring programmes." He said that much will depend on how the plan is executed, and that concerns include "near-term operational gaps impact on employee morale." Huang also pointed to employee morale, writing that while the restructuring is long overdue, "we are concerned it is happening too quickly. While the departures will be spread over 18 months (starting April) and in some instances replaced by automation, we are nonetheless concerned that those who have elected for voluntary departure but are expected to stay on for over a year will realistically deliver the same level of commitment to their roles." RBC Capital Markets analyst Drew McReynolds said in a research note that despite “mixed optics, we view the transformation (including the voluntary departure program) as a much-needed overhaul of the company's cost structure in order to adjust to the reality of a lower-growth wireline revenue environment.” He added that while investors will be watching how the transition is executed, the fact that the company has control over when employees will leave, and that participation by customer-facing employees is limited, will mitigate risk. However, Yaghi was more cautious, writing that while “some might appreciate the larger-than-expected scale of the restructuring, we highlight that challenges faced by the company recently will likely not be solved by today’s announced streamlining strategy.” He cited Shaw’s operational risk on the wireless side, and pressure on its cable operations from Telus Corp.’s fibre-to-the-home (FTTH) rollout as ongoing issues. “We also believe that further hires are possible down the road as the rollout of wireless is likely to require additional staff. Overall, a reduction in operating costs is necessary at in order to relieve the pressure on the cable business operations,” he said. Yaghi noted that companies like BCE Inc. and Rogers Communications Inc. are working on reducing their , but that the size of Shaw’s reduction will be “very large, which raises the question of whether this could disrupt operations over the ensuing 18-month transition.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca

25% of Shaw workforce takes voluntary buyout, CFO leaving

News | February 15, 2018

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

25% of Shaw workforce takes voluntary buyout, CFO leaving

News | February 15, 2018

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Watchdogs find deceptive privacy practices across majority of websites, apps studied

Meta considers blocking Facebook news in Australia

Rizwan Jamal leaves Xplore to become CEO of Beanfield

Internet service quality bill becomes law

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us