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W. David Gardner
July 30, 2008
2 Min Read
The $51 billion buyout of Bell Canada Enterprises (BCE) may have been saved earlier this month when a consortium of banks, pension funds, and private equity funds crafted a successful financing, but the deal can't save the jobs of 2,500 Bell Canada managers.
This week, BCE said the "departures" of 15% of management will represent a 30% total reduction in executive positions at Bell Canada that had been previously announced. The buyout -- billed as the biggest buyout ever -- was in jeopardy earlier this year after deteriorating financial markets caused banks to pull back on their earlier commitments to do the deal.
The company said the loss of positions will result in annual savings of about $300 million when combined with other reductions carried out earlier in the year.
"It is always difficult to see colleagues depart, but these changes are absolutely necessary," said George Cope, president of Bell Canada, in a statement. "We are moving forward with a streamlined management structure that brings everyone at Bell closer to the customer and allows us to compete more effectively."
The company said that the organizations realignment won't affect nonmanagement front-line service positions, which are being added to as the company intensifies its "customer-facing service force."
"This new structure positions us as a far more efficient and cost-effective operator in the intensely competitive Canadian communications marketplace," said Cope.
While the United States broke up the old AT&T monopoly more than two decades ago, the Canadian government moved to deregulate its telecommunications industry only a year ago. Almost immediately, financial institutions led by the Ontario Teachers' Pension Plan lined up partners to launch a takeover of Bell Canada.
With Providence Equity Partners in the United States leading the way, a group of global banks and investment groups teamed up to carry out the buyout of BCE. The buyout was delayed earlier this summer by litigation, but after a decision by the Supreme Court of Canada and a revision of financial terms by various investing institutions, the deal was saved.
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