Mark Evans

Welcome to Bell Canada Lite

One of the most puzzling aspects of Bell Canada’s announcement earlier this week it was slashing 2,500 management jobs was that some analysts seemed surprised.

In the wake of a leveraged buy-out that has left with more than $30-billion of debt, the company needs to be aggressive to boost cash flow. A key part will be lower operating costs, much of it through streamlining operations (aka wide-scale staff reductions).

It’s the only way that Bell Canada can support its new financial structure as well as give it enough money to make investments to remain competitive viable. For example, Bell Mobility may have to invest $500-million to do an GSM overlay to put it on a level playing field with Rogers.

At the same time, the competitive landscape is challenging. Bell Canada’s local telephone service, high-speed, wireless and satellite-TV are experiencing, at best, modest growth. This means revenue growth will have to come from small but steady price increases - not an easy trick to pull off when you’ve got pesky competitors looking to capitalize on any misstep.

George Cope may have his dream job as Bell Canada’s CEO but sometimes you should be careful what you wish for.

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