Bell Canada restructuring seen as first move in long-term evolution, possible end of BCE

A reorganization of the corporate structure at Bell Canada is being downplayed as a simple housecleaning, but signs indicate that greater changes will be forthcoming. BCE Inc. announced earlier this month that it was streamlining its executive branch, effective June 1 (NL Update, May 12/03). The positions of president of Bell Canada, Bell Ontario and Bell Quebec are being eliminated, although all of the incumbents will continue to work for the ILEC.Bell Canada president John Sheridan will become president of the business markets division. Bell Ontario president Terry Mosey will be in charge of customer operations and will report to Sheridan, while Bell Quebec boss Guy Marier will work alongside BCE president and CEO Michael Sabia before retiring in December. The company has set up units for consumers, large enterprises and small- and medium-sized businesses. The corporate office, administered by executive VP Stephen Wetmore, is the fourth section of Bell. The company estimates that the consumer sector brought in $8 billion in revenues in 2002-2003, with small- and medium-sized businesses bringing in $2 billion and large enterprises another $3 billion. Many industry observers see the reworking of the corporate flow chart as a way for Sabia to put his imprint on the conglomerate. He doesn't deny he will be closer to the telco than previously."I am going to be very focused on, and have been for some time, the development and evolution and execution of issues within Bell Canada," he told a teleconference hours after the changes were announced, "because I regard that as a fundamentally important part of my job, indeed the most important part of my job." One telecom analyst doesn't understand what all the hoopla is. "Call me a cynic, but I think reorganizations are of great concern, if not an obsession, to people within a company. To customers and investors, it doesn't matter," Lawrence Surtees, director of telecom research for IDC Canada, tells Network Letter. "That being said, there is a need and a reason for organizations to change and do things differently as markets evolve and business evolves. So I think organized along major customer product sectors probably makes good sense and its time is long come. Bell and leaders at Bell have been talking about being customer-centric and customer-focused for years and they haven't really." Sabia's restructuring comes a little more than two years after the last reorganization at BCE (NL, Nov. 6/00). Sabia's predecessor Jean Monty set up divisions for Teleglobe Inc., BCE Emergis, BCE Ventures and BCE's media holdings. They will continue to exist as part of BCE and are not affected by the reorganization, Sabia said. "This is about simplifying on the staff function side between BCE and Bell," he explained. "But these changes have absolutely no operational or strategic implications for any of our other assets." While initial reaction swirled around Sheridan's loss of the president's title, Surtees finds more meat in the creation of a systems and technology section under the leadership of Eugene Roman. He is in charge of system delivery and productivity, technology, and enterprise systems and infrastructure. Network operations will continue to be run by David Southwell. "That to me is profound. That's one-stop shopping," the analyst opines. "It harkens back to the early '70s, when the big power centre in Bell was network operations. It was called network engineering. And nothing happened in Bell without going past those guys 30 years ago." While Bell Ontario and Bell Quebec will disappear officially, the SME and the enterprise sections will have separate units for each province. That needed to be done, Surtees asserts. "If there wasn't provision made for recognizing the distinct features of the Ontario and Quebec markets, Bell would be setting itself up for further problems," he states. "But I think there is enough recognition of that. So that's a good thing." While the two provinces have separate divisions, many wonder how long the overall corporate structure will remain segregated. The need for an overall holding company may soon become moot."I see this as another move that brings BCE and Bell closer to being reintegrated into one entity. And I think they may be one to one-and-a-half heartbeats away of BCE imploding into Bell or vice-versa," Surtees offers. "And in effect, the corporate reorganization that created BCE in '82 perhaps coming undone. And I think they've been heading down this path with Monty for almost four or five years now. And I see this as another step and I think it's only a matter of time before Sabia goes 'why do we have to have two organizations?'" Sabia conceded as much in his presentation."I'm not preoccupied with names, be they Bell Canada Enterprises, BCE or Bell, but clearly you do see here a continuing tightening in the alignment between, let's call it Bell Canada Enterprises and Bell Canada. And that is implicit in the changes that we made." More changes are in the offing, but will take time to roll out, the BCE chief stated. Any further restructuring is months or years away, Sabia intimated. "If you're asking whether or not I believe you're going to, in a month's time or two month's time, see radical change, the answer to that is: no, don't expect it, we're not thinking it," he maintained. "This is something that we put in place now and build on the basis of this." One area where Bell does hope to move is on Bell West, its CLEC partnership with Manitoba Telecom Services Inc. (NL, Apr. 23/02). Bell holds 60% of the company, with MTS owning the rest. Sabia hints that a buyout could be in the cards. "We'll be starting some discussions about that and certainly we hope to achieve a mutually satisfactory result there," he stated. "Bell West is an important asset for us, and important strategically for us, so we'll be talking to our friends at MTS and getting that sorted out in the next period." Sabia estimates the number of senior executives in Bell has been cut by about 25% over the past few months. Approximately 20 people at the level of VP or higher were declared surplus last year and a further 16 have just been eliminated.

Bell Canada restructuring seen as first move in long-term evolution, possible end of BCE

News | May 20, 2003

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