TORONTO (Reuters) - BCE Inc said on Monday it will slash 2,500 management jobs at its main Bell Canada phone company unit to clamp down on costs as it gets ready to go private in the world’s biggest leveraged buyout later this year.
Canada’s biggest telecom company said the cuts amount to about 6 percent of the total Bell Canada work force, or about 15 percent of management. They include a 30 percent reduction in executive jobs that the company announced earlier this month.
The cuts, combined with other reductions the company made earlier this year, are expected to generate annualized savings of about C$300 million ($294.1 million).
“It was just a top-heavy structure and I think this kind of puts it more in line with what it should be in order to work more efficiently,” said Troy Crandall, an analyst at MacDougall, MacDougall & MacTier.
Montreal-based BCE is being taken private in a C$34.8 billion buyout led by the Ontario Teachers Pension Plan and a group of U.S. private-equity firms. The deal is due to close later this year and will saddle the company with billions of dollars of debt.
That, in turn, has put pressure on management to cut costs and generate as much cash as possible to repay that debt.
Crandall said BCE could limit pay increases and crimp employee savings plans in order to further tighten its cost structure.
George Cope, the new CEO of Bell Canada and BCE, had been widely expected by analysts to make sweeping cost cuts and other internal changes during his first months on the job.
In an interview, Cope said the company has no plans for further job cuts in the near future, but added that other changes were coming.
“We have a number of announcements that we’re going to make that we think ... will improve our competitiveness, both from a service and network investment and marketing perspective,” he said.
The management cuts come as new wireless operators prepare to enter the Canadian market -- now dominated by Bell Canada, Telus Corp and Rogers Communications Inc -- following an auction of wireless spectrum.
BCE’s strategy for defending its turf includes opening new stores to sell handsets and services, as well investing in its discount Solo brand and keeping its relationship with Virgin Mobile, Cope said.
Private equity firms also drive hard to extract as much value as possible from their acquisitions, which often means drastic cost cuts and asset sales.
“When private equity goes into a company, they don’t start hiring people,” Crandall said. “It’s the last thing they do.”
There has been speculation that BCE could shed its ExpressVu satellite television unit, but Cope said the business remains “important” to the company.
The company’s shares rose 4 Canadian cents to C$38.94 on the Toronto Stock Exchange.
Additional reporting by Scott Anderson; Editing by Frank McGurty