An interview with Darren Entwistle–New Telus president outlines his company’s plans to compete against ‘Ma Bell’

The new president and CEO of Telus Corp says his company is preparing to make further acquisitions, but unlike its main competitor BCE Inc, the western telco has no immediate plans to move into dark fibre deployment, content ownership or residential services. Telus has been busy of late, buying regional telco QuebecTel in March for $585 million and wireless company Clearnet Communications Inc last August for $6 billion. Darren Entwistle promises more to come. "You’ll see us doing a blend of things," he told Network Letter. "There will be some moves where we do things off of our own bat and call it organic development, if you will. I think the IP backbone that we’re putting in place coast-to-coast across Canada is a good example of that. You can expect us to be acquisitive in a manner that is consistent with our strategy." Cynthia Lewis, VP and head of eastern initiatives, was recently quoted as saying Telus is interested in buying e-commerce and web-hosting companies, particularly in the Ottawa region. Entwistle maintains that Telus’ finances are strong enough to sustain more acquisitions, despite what some analysts have suggested. "We’re well within our operating limits," he notes. "We’ve got very strong operating cash flow. You’re looking at a company that generates about $2.5 billion of EBITDA which is pretty good going by any comparison." Since being appointed last spring, Entwistle has been busy moving the western ILEC into the rest of the Canadian market, and dealing with the aftermath of its merger with BC Tel. Earlier this month the president announced that an executive shake up is in the works. A third of the current leaders will be retained, existing staff will be promoted into another third of management jobs and the remaining third will be filled by outside hires. The acquisitions and restructuring are designed to make Telus a more formidable competitor as it attempts to cream skim Bell’s prime business accounts in Ontario and Quebec. However, Entwistle rejects the idea of moving into non-telecom areas, as Bell Canada and its parent have done. "The best way to be successful in competing against a Bell Canada is by being focused," he declares. For example, he says telecom watchers shouldn’t expect to see Telus buying a television broadcaster, as BCE did with CTV Inc. "We’ve decided to take a different approach on content. It will be a part of the portfolio that we offer to customers. But we believe that it’s better to offer it through partnerships than taking an equity position on the content side," says Entwistle. "I don’t think our core competencies include managing content well and driving value out of content. So we’ll seek to partner," he adds. "The other thing that’s key is when you take an equity position on the content side, all those other content owners that previously saw you as a partner and a potential channel to market start looking at you in a different light. They now start seeing you as a competitor. That ends up limiting your choice and you’re relegated to your own content solution." Exponential fibre growth Like all telecom companies, Telus is focusing much of its attention these days on fibre backbone. The growth of applications means that customers are demanding more bandwidth. Entwistle warns about underestimating the amount of broadband needed. He remembers when major telcos would declare their infrastructure would last for a decade or more. Now those firms are digging up their pipes after a few years to lay higher capacity facilities. Telus inherited a sizable fibre network when it purchased QuebecTel and has been laying more fibre on its own. There has been speculation that the company may seek to buy the extensive fibre assets of Group Vidéotron ltée which has been put on the market by Quebecor Inc. (NL, Sept. 25/00). There’s no doubt that demand for fibre is growing, but as Entwistle points out, it’s growing exponentially, not linearly. "You need to be smart about it, because you don’t want to have idle assets in the ground. That’s not going to help your return on capital," he says. "But you can, when you’re laying your fibre, you can deploy quite a bit of capacity then light it up as required to maximize the return you get on capital." Entwistle admits he was "a little disappointed" when the Alberta government recently granted a Bell Intrigna-led consortium the contract for its Supernet provincial fibre build (NL, Nov. 6/00). Saying "you can’t win them all," he pledges to continue to use the Telus infrastructure in the province and to roll out services in other sections of the nation. The president gives two reasons why his company will not pursue similar ventures in central Canada. "One is we’re not really into selling dark fibre or variations. We’re into providing managed solutions. That’s our business strategy." he explains. "Number two is our focus is on the business market. So while I think there are lots of social benefits associated with connecting schools and hospitals and the like, when we attack the Ontario and Quebec market we will be going after the business heartland." The firm is not planning to enter the residential market for the foreseeable future, he adds.

An interview with Darren Entwistle–New Telus president outlines his company’s plans to compete against ‘Ma Bell’

News | November 20, 2000

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