The second largest Canadian telecommunications company, Telus Corporation ([stock]TU[/stock]) entered into a tentative agreement with Telecommunications Workers Union (TWU), which represents approximately 12,100 Telus employees countrywide.
After the previous contract expired on November 18, 2010, Telus initiated talks with TWU to work out mutually feasible terms. The TWU will present the tentative agreement to its members and will work toward pursuing them to vote in its favor.
The TWU is a trade union in Canada for employees in telephone and cable companies. The majority of TWU members are employees of Telus. The union also represents employees at Shaw Communications Inc. ([stock]SJR[/stock]).
Both parties have agreed not to disclose details of the agreement, which is subject to finalization of contract terms and conditions. The company expects details of the contract to be finalized by the end of this week.
Looking back, Telus had a major union dispute back in 2005 that was settled after its employees went a lock out. This discord took several months to be resolved and hurt its production. We believe Telus does not want a repetition of the same events while reinstating its recent agreement.
Negotiations on the current agreement began around July 2010. Telus remains optimistic on the agreement as it believes the process of negotiation has been progressive. It effectively addresses the needs of customers, employees and investors. Hence, the company expects a positive outcome at the ballot, which is expected sometime in the weeks ahead. We believe the agreement will enhance synergies between employees and management, and will lead to accelerated growth and profitability for the company.
Currently, we maintain our long-term Outperform recommendation on Telus supported by the Zacks # 2 (Buy) Rank.
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