Big cuts will allow Shaw to do ‘what we intended,’ says CEO.

WILL ALLOW SHAW TO DO ‘WHAT WE INTENDED’: CEO

650

BUYOUTS SHAW EXPECTED TO GET

3,300

BUYOUTS SHAW ENDED UP GETTING

$450M

ONE-TIME CHARGE FOR RESTRUCTURING

$225M

ANNUAL SAVINGS SHAW PREDICTS FROM CUTS

Shaw Communications

Inc. will eliminate 25 per cent of its workforce after about 3,300 employees accepted buyouts, five times more departures than originally anticipated as the company charts its path into a digital future.

The Calgary-based communications giant announced Thursday the results of its voluntary buyout program, stating it expects to take a $450 million charge in the second quarter of fiscal 2018 in relation to the massive restructuring.

That includes severance and other employee costs, as well as expenses for the initiative it’s calling a “total business transformation.”

Shaw offered packages to 6,500 employees in late January. At the time, it said it expected only 650 employees to accept the offer.

But Shaw’s workforce of about 13,200 employees will shrink to 9,900 after the high uptake of the generous packages that offered six months pay plus one month for every year of service. Starting in fiscal 2020, Shaw expects to save $225 million annually due to reduced labour expenses.

“It’s a hard first step, but it enables (us to do) what we intended,” Shaw President Jay Mehr said in an interview.

The number of departing employees fell within expectations, Mehr said. Shaw is confident it can manage the pace of change, as it will control when employees leave over an 18-month transition period. “The take-up that we have in this first phase means that we won’t have to do cuts later on.”

Employees at all levels accepted the packages, including 25 per cent of management, Mehr said.

“This package is the first that we know of where the kind of packages that were normally reserved for senior executives have been made available to everyone,” he said. “We think the response shows that’s how people should be treated.”

Some Shaw employees who remain in Western offices said the departures will affect morale and increase pressure on them to perform. But Mehr said the vast majority of employees he’s spoken with feel good about the transition whether they chose to stay or go. There’s a companywide recognition that Shaw needs to adapt as consumers go digital.

“Canadians are clear in how they interact with Google and Netflix and Amazon that they want to interact digitally,” he said. “The growth in this country is in new-world approaches to business, not old-world approaches to business.”

Shaw said the changes shouldn’t affect customers, as most customer-facing employees were not eligible for the buyout. People in operational roles will leave toward the end of the transition period, Mehr said.

Analysts had mixed reaction to the cuts.

“Overall, a reduction in operating costs is necessary at Shaw in order to relieve the pressure on the cable business operations,” Desjardins analyst Maher Yaghi wrote to clients. “However, the size of the reduction at Shaw will be very large, which raises the question of whether this could disrupt operations over the ensuing 18-month transition.”

RBC analyst Drew McReynolds noted Shaw’s control over the timing of departures and its decision to keep customer-facing workers should mitigate risk during the transition period.

“Despite mixed optics, we view the transformation (including the voluntary departure program) as a muchneeded overhaul of the company’s cost structure in order to adjust to the reality of a lower-growth wireline revenue environment,” McReynolds wrote to clients.

PETER J. THOMPSON / NATIONAL POST Shaw said changes brought about by its staff cuts shouldn’t affect customers, as most customer-facing employees were not eligible for the company’s buyout program.