Stock Market: Tough Times for Telecoms as Thousands Being Laid Off


As telecom companies axe thousands in a firing binge, we look at the latest financial reports from the Big Three telecoms. Photo: Kar-Tr/Getty Images

It’s not a great time to be an employee in Canada’s telecom sector. Workers across the country are biting their nails as their employers axe thousands in a firing binge unlike any we’ve seen in years.

Vancouver-based Telus plans to lay off 6,000 employees, including 2,000 from Telus International, in a move that is expected to save the company $325 million a year. 

Rogers Communications has already started to lay off staff following the completion of its take-over of Shaw Communications. The company has not announced a target for staff reduction, but it expects to realize $200 million in synergies in 2023, and annualized cost synergies of at least $600 million by the end of the first quarter of 2024. Those numbers have staff wondering where the axe will fall. 

BCE Inc. is also laying off staff, particularly in the high-profile media division. After the surprise ousting of CTV news anchor Lisa LaFlamme last year, an uneasy calm set in. That ended in June when the company announced it was terminating 1,300 employees including veteran correspondents Tom Walters, Paul Workman, Joyce Napier, Glen McGregor, and Daniele Hamamdjian. CTV also closed its London and Los Angeles bureaus, leaving Washington as its only non-Canadian outpost. 

These moves reflect the underlying problems of all telecom companies. By its nature, the industry carries a heavy debt load, resulting from massive infrastructure investments over the years. That process continues to this day, with the upgrade to 5G wireless and the installation of fibre optic cables. BCE spent $5.1 billion on capital expenditures in 2022, up 5.8 per cent from the previous year. 

At the end of 2022, BCE reported net debt of $33.7 billion. Of that, $4.1 billion was short-term debt (due within one year), which was up $1.5 billion from the previous year. This portion of corporate debt would be the most vulnerable to rising interest rates. Interest expense in 2022 was over $1.1 billion. 

Here’s a look at the latest financial reports from the Big Three telecoms.

BCE Inc. (BCE-T)

Background: BCE is Canada’s largest communications company, providing a comprehensive suite of broadband, mobile, landline, and cable communication services to residential and business customers through Bell Canada and Bell Aliant. Bell Media is the company’s multimedia arm, with assets in television, radio, and digital media. Television assets include the CTV television network and many of the country’s most-watched specialty channels. The company also owns the Crave streaming service.

Performance: The stock was trading at over $65 in early April but has been on a downward slide since.

Recent developments: The company has been laying off staff and took a big hit on second quarter profits as a result. The media division has seen a drop in revenue, as ad dollars bleed to U.S. multinationals. As if that weren’t enough, the rising interest rate environment has been a drag on the share price.

The latest financial results showed operating revenue of $6.1 billion in the second quarter, up 3.5 per cent from $5.9 billion in the same period last year. However, earnings attributed to common shareholders fell 44.8 per cent to $329 million ($0.37 a share), compared to $596 million ($0.66 a share) in 2022. 

Free cash flow was just over $1 billion, down 23.8 per cent from $1.3 billion a year ago.

On the positive side of the ledger, the company reported 241,516 total wireless mobile phone and mobile connected device net activations, up 76.5 per cent over last year and the best performance in 15 years. 

Chief financial offer Glen LeBlanc said the results were achieved 

“despite ongoing media advertising headwinds, increased competitive intensity, and a B2B sector that has not yet fully recovered from the global supply chain disruptions experienced over the past several years.” 

Bell Media revenue decreased by 1.9 per cent to $805 million. Advertising revenue was down 9 per cent, as advertiser demand and spending across all traditional media platforms remained soft due to unfavourable macroeconomic conditions. This was partly offset by strong growth in digital advertising. 

The company confirmed its guidance for the rest of the year, but the ranges are very broad, reflecting corporate uncertainty of how the rest of 2023 will unfold. Revenue is expected to be up between 1-5 per cent, compared to 3.1 per cent last year. Earnings per share will decline 3-7 per cent (up 5 per cent in 2022). Free cash flow will increase between 2-10 per cent, from 2.9 per cent a year ago.

Dividend: The shares pay a quarterly dividend of $0.9675 ($3.87 per year) to yield 6.8 per cent at the current price. 

Outlook: As the guidance indicates, the rest of the year looks choppy. However, the strong growth in wireless services and the roll-out of Bell’s 5G network should produce better results going forward.

The share price should rebound when interest rates stabilize. Meantime, you’re being paid very handsomely to wait.

Telus (T-T)

Background: Telus Corp. is Canada’s second largest wireless telecom company after Rogers Communications Inc. Its core business includes internet and mobile phone service through the Telus and Koodo brands. It recently spun off Telus International, which provides IT and customer service. It is using that as a model to grow its healthcare and agriculture businesses with an eye to spinning them off as well.

Performance: The stock was trading at around $29 in late April but has been in a decline since, along with the rest of the sector.

Recent developments: Second quarter results showed a similar pattern to those of BCE: revenue up, profits down. Operating revenue for the three months to June 30 was $4.9 billion, up 12.8 per cent from $4.4 billion in the same period last year. But net income attributable to common shares took a 57 per cent nose-dive to $200 million ($0.14 a share) from $468 million ($0.34 a share) in 2022. Higher interest costs were among the main culprits in the profit decline. Telus reported financing expenses of $323 million in the quarter, a big jump from $97 million the year before.

On the positive side, the company reported 110,000 net mobile phone additions, its best second quarter since 2010.

Telus expects to incur restructuring costs of $475 million this year as it proceeds with its lay-off plans, which focus on early retirement and voluntary departure packages. The company expects the pay-off will be annual savings of $325 million. 

Dividend: The shares pay a quarterly dividend of $0.3636 ($1.4544 a year) to yield 6.1 per cent at the current price. 

Outlook: Telus downgraded its guidance for the rest of 2023. Operating revenue is now expected to grow between 9.5 per cent and 11.5 per cent, down from 11-14 per cent. Adjusted EBITDA is forecast to increase 7-8 per cent, a decrease from the previous range of 9.5-11 per cent. Free cash flow will come in at around $1.5 billion. Previously, the company had expected $2 billion. The drop reflects the high restructuring costs related to the cost-cutting programs.

Rogers Communications (RCI.B-T)

Background: Toronto-based Rogers is Canada’s largest wireless and cable company. The company also owns the Toronto Blue Jays and their home stadium, the Rogers Centre. 

Performance: The chart looks like a profile of the Rocky Mountains, but the bottom line is that the trend for this year is down.

Recent developments: The company posted strong second quarter results, boosted by the takeover of Calgary-based Shaw Communications, which closed on April 3.

Rogers reported revenue of just over $5 billion for the quarter, up 30 per cent from $3.9 billion last year. Adjusted net income was $544 million ($1.02 per diluted share), a gain of 17 per cent from $463 million ($0.86 per share) in 2022. Free cash flow was $476 million, up from $344 million a year ago.

CEO Tony Staffieri said the integration with Shaw is running ahead of schedule. The acquisition brings Rogers cable telecommunications, satellite video services, and data networking to residential customers, businesses, and public-sector entities in British Columbia, Alberta, Saskatchewan, and Manitoba, greatly expanding the company’s reach.

Dividend: The shares pay a quarterly dividend of $0.50 ($2 annually) to yield 3.5 per cent at Friday’s closing price in Toronto of $56.70. 

Outlook: Winning approval of the Shaw deal was a long, tough fight but now Rogers is starting to reap the rewards. The company raised its guidance for the year for both adjusted EDITDA and free cash flow.

The p/e ratio is the lowest of these three telecoms, a point in its favour. But all these stocks should see their prices increase when interest rates start to trend back down. Meantime, Rogers’ dividend yield is about half of the other two. For many investors, yield is an important consideration in deciding which telecom stock to buy. If cash flow is your priority, choose BCE or Telus over Rogers. 

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to 


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