Telus Catches Convergence Fever

The growing fixed/mobile convergence trend has carriers and vendors scrambling to merge business units, with Canada's second operator (NYSE: TU; Toronto: T) the latest to announce it's combining its fixed-line and wireless divisions. (See Telus Merges Units.)

"Telus is focused on providing applications that enhance the lifestyles of consumers and the competitiveness of business irrespective of the physical medium over which they are delivered. We are focused on being one team, united behind one strategy and defined by one brand," said Darren Entwistle, president and CEO, in a prepared statement.

Entwistle said the integration "is consistent with the advancement of Telus's national growth strategy, focused on data and wireless, that we established five years ago." As with most carriers these days, the wireless unit, with revenues up 16 percent in the firm's most recent quarter, has been driving growth at the company, while fixed-line revenues were flat. (See Telus Reports Q3.)

Telus is not alone in jumping on the convergence bandwagon. Carriers across North America and Europe have been busy reorganizing their businesses to incorporate fixed and mobile operations, and many have been buying other mobile operations to expand their presence in key growth markets. (See TI Plans Converged Services, Sprint, Nextel Confirm Merger, Eurobites: Big Guns Fire Salvos, France Telecom Buys Amena, and Telefónica Acquires O2.)

Major vendors have also been combining fixed and wireless assets. (See Siemens Converges in Venice and Lucent Converges, Jobs to Go.)

While the system suppliers hope to capture more business from their converging operator customers, the carriers hope their reorganizations will enable them to develop and deliver more attractive ubiquitous services and better bundles, as well as help cut costs and increase "operational efficiencies."

Those efficiencies include outsourcing and job cuts, and it seems likely that Telus will announce both in the coming months. Its business unit convergence will create duplicate posts, so layoffs are expected.

Outsourcing also looks likely if the details of a recent staff deal are anything to go by. Telus recently announced new agreements with the unions that ended a four-month strike. (See Union Ratifies Telus Agreement and Telus Strikes Deal With Union.)

That agreement incorporates "contracting out provisions that provide Telus with improved flexibility in a competitive telecoms market," and, "specific provisions... for employees impacted by the outsourcing of non-core functions or the consolidation of some customer service and administrative functions," according to a statement released at the time.

One impact of the consolidation is that Telus no longer needs to find a new Telus Mobility CEO. Mobility has been without a chief executive since George Cope defected last month to become chief operating officer at (NYSE/Toronto: BCE). Now the carrier says that, following its operational revamp, the remaining execs will share responsibility for the wireless side.

— Nicole Willing, Reporter, Light Reading

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