Shaw president calls voluntary departure of 3,300 employees 'good outcome'

The departure of one-quarter of Shaw Communications Inc.'s workforce will be manageable and mitigated by a technology-driven push toward customer self-service, its president said Thursday.

The 3,300 who elected to take a voluntary severance package was five times more than its original estimate.

The Calgary-based company, which owns Canada's second-largest cable TV operation and the country's fourth-largest mobile phone service, had initially aimed the package at 6,500 employees and estimated about 10 per cent would accept the deal offered about two weeks ago.

It said Thursday that all eligible employees who volunteered to take the deal will be accepted.

"We publicly set a modest goal," Shaw president Jay Mehr said in an interview.

"I think what we have now learned and it's a good outcome is that the takeup we now have in the first phase means that we won't have to do cuts later on."

Multi-year initiative

The departures will be spread over 18 months with people in operational positions likely to stay longer than those in leadership positions, he said.

The move is part of a multi-year initiative aimed at succeeding amid technological changes in a rapidly changing and intensely competitive marketplace. Shaw has said it plans to make more use of online and smartphone apps to provide customer service, and provide more self-installed service.

"To be clear, overwhelmingly, the takeup has been in areas that are the focus of the transformation," Mehr said.

"But we're going to serve our customers and we're going to do what's right and make whatever investments are required to do that."

The majority of departures will be outside its customer support, retail and sales operations and involve roles that are being affected by technological change as Shaw adopts some of the methods used by Google and Amazon. He added that departures among senior management ranks will be proportionately higher than those in its overall workforce.

All through an app

"Two years from now, people will not say that we were being too bold to embrace the new model. As we talk to both Canadians and our team about it, people understand that digital and self-serve is the way of the future," Mehr said.

"And it's how Canadians actually want to be served."

Instead of getting orders for a video service by phone and sending technicians to install set-top boxes, he said, orders will be placed through an app. Then a hockey puck-sized device will be delivered to the home within hours, and the customer will enable the service by scanning a bar-code with a smartphone.

The anticipated long-term net cost savings estimated at $225 million by fiscal 2020 will provideroom to make "appropriate investments" as required, Mehr said, without providing specifics on future spending.

At least one analyst applauded Shaw's announcement as a "much-needed" overhaul to adjust to lower revenue growth in its cable and internet operations, which comprise the bulk of its business.

CFO leaves

"While operational execution will remain a focus for investors as the company works through the transition, execution risk should be mitigated by the company's control over the timing of employee departures and limited participation from customer-facing employees," wrote Drew McReynolds of RBC Dominion Securities in a note to clients.

Among the departures will be chief financial officer Vito Culmone, will be leaving the organization May 4. He'll be replaced by Trevor English, who has been chief strategy officer responsible for business development.

Mehr said the company took a new approach by offering people at all levels of the organization excluding those covered by a union contract with the type of voluntary packages normally reserved for senior management, but did not elaborate on the details.

As a result of the departures, Shaw will incur a $450 million restructuring charge in the second quarter of its 2018 financial year, primarily related to severance costs. Actual payments will be spread over 18 months, starting in April.