TORONTO – Telus Corp. says it always intended for its most senior executives to be based in Western Canada after questions were raised about the sudden departure of president and CEO Joe Natale.
Telus announced early Monday that Darren Entwistle was retaking the reins of the company, just over a year after he handed them over to Natale, who has been based in the Toronto area.
The Vancouver-based telecommunications company, one of the largest in Canada, said Natale recently indicated that a move west would not work for his family and its board concluded that its CEO should reside in Western Canada.
Patrick Horan, principal at investment fund Agilith Capital, said that doesn’t fully explain why an executive at a major telecom company would give up his position.
“It doesn’t make sense that he’s been in there for a little over a year and they’re picking a fight over whether he’s located in Toronto or Vancouver,” he said.
Natale took over as president and CEO of Telus in May 2014 as Entwistle became executive chairman. He has agreed to serve in an executive capacity until the end of this year to ensure a smooth leadership transition, Telus said.
Telus chief corporate officer Josh Blair said it has always been the aim of the company to have its most senior management based in Western Canada and any other speculation about the reason for Natale’s departure is off the mark.
He said Natale wasn’t expected to move to Western Canada until he succeeded Entwistle as executive chairman in 2017.
The company’s board met multiple times to figure out a solution after Natale first informed them he wasn’t planning to move, Blair said, with the final meeting coming on Friday afternoon.
“It was a very significant situation for the board to consider,” he said. “They didn’t want to rush it.”
The company is not looking for a new CEO candidate at this time.
Under Natale’s brief tenure as CEO, the company’s financial results have been solid, making his departure all the more unusual, Horan said, adding that the move could make it more difficult for Telus to attract new talent for the position in the future.
Prior to appointing Natale as CEO, Entwistle had guided Telus through a period of rapid growth, primarily fuelled by its national wireless network.
Telus said Entwistle will be replaced as chairman of the board by Dick Auchinleck and both men have agreed to serve in those capacities on a long-term basis.
The company said the decision to oust Natale followed an extensive review that concluded late Friday after the company issued its second-quarter financial results.
Although Natale had been president and CEO for only four full quarters, he had been in a senior position as chief commercial officer since 2010, focused on building loyalty and retaining customers.
In the most recent quarter ended June 30, Telus added 76,000 wireless subscribers — more than either Rogers Communications (TSX:RCI.B) or BCE Inc.’s Bell (TSX:BCE), which added 24,000 and 61,000 respectively.
Overall, Telus (TSX:T) reported a 10.5 per cent decline in net income to $341 million, or 56 cents per share, in the second quarter, as it faced $59 million of costs related to the closure of the 59 Blacks photography stores.
Adjusted earnings, which filter out those expenses and other factors, showed a 4.9 per cent increased to $406 million or 66 cents per share. Operating revenue was up 5.1 per cent to $3.1 billion, with the wireless division accounting for about $1.7 billion of that amount.