Rogers Communications Inc., Canada's largest wireless company, is making approximately 10,000 employees eligible for voluntary buyouts as the telecommunications sector contends with significant growth and debt challenges. The move affects about half of Rogers' 20,000 staff, excluding those employed by the Toronto Blue Jays baseball club and Maple Leaf Sports and Entertainment Ltd., a sports business in which Rogers holds a 75 percent stake, according to sources familiar with the matter. The Blue Jays and MLSE are not included in the staff-reduction plan.
Expected Departures
The actual number of departures is likely to be significantly lower than the total eligible. Past examples of buyout programs suggest that around 10 percent of eligible employees typically apply for an exit package, which would represent approximately 1,000 employees in this case. Not everyone who applies will be accepted.
Company Statement
"We are taking steps to adjust our cost structure to reflect the business realities of the current environment," Rogers spokesperson Zac Carreiro said in a statement. "As part of this, some teams have chosen to offer voluntary departure and retirement programs to give some employees the choice to decide whether they'd like to stay with the company or begin a new chapter."
Market Reaction
Following the news, Rogers shares rose as much as 2.1 percent to $50.28 in Toronto trading, after the Globe and Mail newspaper reported that Rogers was scaling back its workforce.
Capital Spending Cut
Last week, Rogers slashed its capital spending outlook for the year by 30 percent, redirecting that windfall to its free cash flow. The company and its two largest competitors, BCE Inc. and Telus Corp., have struggled with slow wireless revenue growth since the Canadian government set lower immigration targets, reducing the potential pool of new subscribers. This has led the firms to compete for existing customers by lowering prices on mobile packages.
The buyout program is part of broader efforts to reduce costs amid a challenging economic environment for the telecom industry.
