Telus paints a gloomy financial picture as it feels the squeeze

  • Multiple companies in the industry are facing hard times due to the global financial crunch
  • Canadian telco Telus is feeling the pressure and lowering its outlook for 2023
  • It plans to reduce costs by cutting jobs and adopting AI in its enterprise services unit

Canadian operator Telus has lowered its 2023 outlook due to “unprecedented” macroeconomic pressures affecting its enterprise IT services business, Telus International, and has announced plans to reduce costs by slashing jobs and adopting generative AI (GenAI) to automate operations.

In a cautionary statement, the telco revealed revised financial guidance for the full year, noting that its consolidated operating revenue growth is now expected to be between 9.5% and 11.5%, down from its previous forecast of between 11% and 14%. Its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) is now expected to grow by between 7% and 8%, down from an earlier target of between 9.5% and 11%.

The gloomier picture was driven by struggles at Telus International (TI), due to “more pronounced than anticipated demand challenges in the near-term from certain clients within the technology vertical,” the company noted in its statement.

“The severe, global pressures that TI has faced have been unprecedented, particularly within the technology vertical as clients aggressively address their cost structures, including successive employee downsizing activities,” explained Darren Entwistle, president and CEO of Telus.

So, what now?

The Telus chief said that the company is “judiciously focused” on optimising the cost structure at TI, which is widely known as a developer of digital customer experience platforms for enterprises across the world. Measures involve cutting jobs to address “lower service volumes” in the technology sector, and “pervasively deploying automation and GenAI-enabled solutions internally to drive down its cost to serve,” he added.

Despite this, Entwistle was bullish about TI’s operational execution and financials for the medium-term and long-term future. “Indeed, the opportunities remain strong for TI as it relates to digital transformation, GenAI adoption and the continuing, critical importance of differentiated digital customer experience solutions in the market that will fuel TI’s long-term growth and profitability,” he noted.

Fortunately for the operator, its mobile and fixed line services, which are part of its Telus Technology Solutions (TTech) operating unit, have been enjoying “continued robust customer growth”. In the second quarter of 2023, its mobile and fixed base grew by 293,000 customer net additions – up 46,000 year on year, marking Telus’s “strongest second quarter on record”, according to Entwistle.

Gains were driven by “strong demand” for its mobility and fixed services, and were backed by “our industry-best customer experience, and world-leading wireless and wireline broadband PureFibre networks,” he added.

The company also recorded its best second-quarter results since 2010 in terms of mobile phone net addition, with the addition of 110,000 customers in the period, up 17,000 from the same period in 2022.

Its full results for the period will be published on 4 August 2023.

The updated financial landscape comes after the United Steelworkers Union (USW), a general trade union in North America, asked the Canadian government to “stop paying Telus to cut Canadian jobs”. In a letter addressing an announcement that Telus is to cut 4,000 jobs in its domestic market, the USW urged authorities to “stop handing millions of Canadian dollars to Telus through procurement contracts without any required benefit to the country or workers”.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV