Bell Canada will cut 2,500 jobs

Bell Canada said Monday that it will cut 2,500 jobs, or about 6 percent of its work force, as Canada's largest communications company streamlines management to lower operating costs just ahead of its impending $35 billion takeover by a private equity group.

The changes include a 30 percent reduction in executive jobs revealed earlier this month. The cuts will help save about 300 million Canadian dollars ($294 million) in annual costs, Bell Canada parent company BCE Inc. said in a release.

"It is always difficult to see colleagues depart, but these changes are absolutely necessary," president and new CEO George Cope said 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. This new structure positions us as a far more efficient and cost-effective operator in the intensely competitive Canadian communications marketplace."

Non-management front-line service positions are not affected, the company said.

Changes were expected to come as the telecom giant's new CEO took over from outgoing CEO Michael Sabia earlier this month.

Bell faces stiff competition from cable TV companies such as Rogers, Shaw and Videotron for its wireless and data businesses.

BCE is being taken private by an investment group led by the Ontario Teachers Pension Plan Board and several U.S. partners. The deal is the biggest takeover in Canadian history and is expected to close in December.

The banks financing the takeover have committed to provide billions in financing to complete the deal, assuaging fears of those who had worried the deal might fall through as credit conditions tightened in the wake of the subprime mortgage sector's meltdown.

Including assumed debt, the total value of the transaction is $51 billion.

The acquisition price remains at 42.75 Canadian dollars ($41.80) per share, but the company won't pay any further quarterly dividends to common shareholders before the transaction closes by Dec. 11.

The dividend suspension will save BCE up to 900 million Canadian dollars ($881 million) to help pay off debt or put towards working capital, and the delay in closing the transaction will give the banks more time to market and syndicate out part of their loans.

The only remaining concern rests on a further deterioration of credit markets that prompts the banks to unexpectedly walk away from the deal.

BCE, which has more than 54,000 employees, had annual revenue of 17.8 billion Canadian dollars ($17.5 billion) in 2007. It had 5.8 million wireless subscribers, 8.64 million phone lines, 1.94 million Internet subscribers and 1.82 million satellite television subscribers in 2006.

Shares in BCE were unchanged at 38.90 Canadian dollars ($38.01) Monday morning on the Toronto Stock Exchange.