TORONTO (Reuters) - Telus Corp announced a surprise change in its leadership on Monday, with former Chief Executive Officer Darren Entwistle returning as CEO of the major Canadian telecoms company a little over a year after handing the reins to Joe Natale.
Telus, which is based in Vancouver on Canada’s West Coast, said it made the change after Natale said he would not move to Western Canada by 2017, sparking an “extensive review.”
Natale has been working in Toronto.
Analysts were sanguine about the move even as Telus shares dropped 1.4 percent to C$43.97.
“While the news is a surprise, we do not see any change to the strategic direction or financial priorities of the company,” RBC Capital Markets analyst Drew McReynolds wrote in a note.
The move comes less than two months after Telus was beaten out by market leader Rogers Communications in a drawn-out quest to acquire struggling telecom startup Mobilicity.
Entwistle’s appointment is effective immediately, but Telus said Natale would stay on in an executive, non board capacity through the end of the year. He has an 18-month noncompete clause after that.
Entwistle, as executive chairman, has remained closely involved in Telus’s day-to-day operations, many analysts said, despite stepping out of the CEO role. He had been CEO for 14 years until May 2014.
He is widely lauded for taking a C$6 billion ($4.60 billion) plus gamble to buy cellular company Clearnet early in his tenure to build a wireless service that is now the single-largest revenue generator for Telus.
“Entwistle is well known to the Street as a strong operator with a proven track record,” said Barclays analyst Phillip Huang in a note to clients. “Given Mr Entwistle has remained very active in the company’s operations as executive chairman, we believe it will be a smooth transition.”
Telus named Dick Auchinleck its new independent chairman. The company said Auchinleck and Entwistle both agreed to serve in their new capacities on a long-term basis.
On Friday, Telus announced a 5.1 percent rise in quarterly revenue, driven by gains in wireless, Internet and television customers.
In the second quarter, Telus added 76,000 contract wireless customers, who typically spend much more per month for wireless service than those who prepay. By comparison, BCE Inc’s Bell added more than 61,000 such customers, while Rogers added 24,000 after two quarters of net defections.
Additional reporting by Anet Josline Pinto in Bengaluru; Editing by Bernadette Baum; and Peter Galloway