Telus Corp. has substantially increased its efficiency target for 2009 and reduced its revenue and profit expectations because of the weak economy, the telecom giant said Thursday.

Telus 3-month TSX chart The Vancouver-based company said it spent $28 million on restructuring in the first quarter, when it cut the equivalent of 500 full-time domestic employees as part of ongoing efficiency efforts.

It has also reduced staffing by a further 600 since Dec. 31 as a result of fewer seasonal staff and a decrease at its offshore outsourcing business.

Telus said it has increased its restructuring cost estimate for the full year to $125 million from the previous range of $50 million to $75 million. It didn't disclose how many employees would be affected.

Guidance cut

The company, Canada's second-largest telecommunications company after Bell Canada, said it has reduced its revenue and profitability expectations for the year from its previous guidance.

Revenue from wireless and wireline revenue is now expected to be $350-million lower than the previous estimate. Earnings before interest, taxes, depreciation and amortization will be $125-million below guidance while the earnings per share target was lowered slightly to between $3.35 to $3.65 for the year.

Thanks to a favourable income tax adjustment, however, Telus net income rose to $322 million in the first quarter, up 10 per cent from $292 million a year earlier.

On a per-share basis, net income rose to $1.01 from 90 cents.

The increased profit was attributed to a tax adjustment that added $62 million or 20 cents to the latest quarter's net income. Without that, Telus profit fell five per cent from a year earlier.

Revenue up

Revenue increased one per cent to $2.375 billion from $2.350 billion.

"Clearly, Telus' wireless results do not meet the expectations we set late last year and are reflective of the weakening Canadian economy and competitive activity," Telus CEO Darren Entwistle said in a statement.

"Given the current environment, Telus has accelerated our efficiency initiatives. Accordingly, we have significantly increased our restructuring cost estimate for this year to approximately $125 million to drive efficiency and enhance our competitiveness."