Bell Canada plans to eliminate between 3,000 and 4,000 jobs as its parent company, BCE Inc., reported weaker first-quarter earnings.

The cost-cutting announcement comes as Bell Canada faces increased competition in the phone business from upstarts and cable companies.

Bell Canada's aim is to save a total of between $1.2 billion and $1.4 billion by the end of this year, and $2 billion by 2007.




About half of the job cuts will come through attrition, BCE (TSX:BCE) said in a release issued Wednesday before the opening of trading on stock markets.

"It has taken us two years to lay the foundations for the transformation of Bell Canada," said BCE's president and chief executive, Michael Sabia.

"We are now moving through a transition, equipped to accelerate the change in Bell's revenue mix. There are no short cuts, no quick fixes."

Profit dips

As of Wednesday, BCE reported a fourth-quarter profit of $413 million (44 cents a share), down from $417 million (45 cents per share) in the same quarter a year earlier. The most recent quarter included a $16-million charge for restructuring and other items.

BCE's revenue for the quarter rose 4.6 per cent to $4.99 billion.

For all of 2005, BCE made $1.89 billion ($2.04 a share), compared with $1.52 billion ($1.65 a share) in 2004. The company's full-year revenue rose four per cent to $19.1 billion.

"As we expected, our performance bounced back in the fourth quarter and we ended 2005 on a strong footing from which to continue our progress in 2006," said Sabia.

For the current year, BCE is projecting revenue growth of between one and three per cent, while earnings per share are expected to come in between $1.80 and $1.90. That's down from 2005 because BCE expects earnigns per share will be reduced by about 14 cents per share due to an increase in its pension expense.

Spinoffs planned

As part of its annual review, BCE also plans two spinoffs, including an initial public offering of a minority stake in Telesat in the second half of this year.

BCE also announced it will create an income trust that will own and manage about 1.6 million local phone lines in Ontario and Quebec. BCE plans to distribute about half of the units of the trust to its shareholders and retain the rest.

The conglomerate also said it will use about $1 billion from recent asset sales to pay down debt.

In late 2005, BCE announced deals to unload several assets, included its stake in CGI, and the sale of a large chunk of its holding in its media division, Bell Globemedia.

Shares of BCE rose 49 cents on Wednesday, closing at $28.00 on the TSX.