Why decisions to keep shareholders on a pedestal might backfire for the Big 3 telcos this time
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We might be on the verge of a real-time test of whether shareholders’ interests are always best served by being given the biggest possible stake of a company’s revenue.
The telcos have for decades used their market power to mostly get their way, even though they operate in a highly regulated industry. They will soon be counting on a number of decisions to once again tilt in their favour, including rates the resellers must pay to use their networks, conditions related to an upcoming spectrum auction, and the divvying up of the federal government’s $1.75-billionrural broadband fund.
But Parliament might not be so quick to bend the knee this time. Nathaniel Erskine-Smith, a Liberal MP from Toronto, pushed back against a BCE executive’s suggestion that resellers were a burden, saying, “without the resellers, you would gouge Canadians even worse.” Robert Malcolmson, the company’s top lawyer, testily replied that he “wasn’t sure that was even a question.” Erskine-Smith countered that it wasn’t: “It’s a fact,” he said.
The telecom companies’ actions show that they put their shareholders on a pedestal. But they know it’s a bad look to do so during a national crisis. If they weren’t worried about it, they wouldn’t refuse to disclose the same numbers to reporters that they are obligated to disclose in order to lobby various provincial governments.
BCEfired at least a couple of hundred people in its media division this week. At the same time, the companyannounced it would spend an additional $1 billion on its networks over the next two years, an investment that chief executive Mirko Bibic said would create more than 5,000 “direct and indirect” jobs. Amidst all that, he told analysts on a Feb. 4 conference call that he was “equally pleased” to say that the company’s board had decided to increase the dividend by 5.1 per cent.
