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In biggest tech IPO in TSX history, Telus International bets on customer service

·4 min read

TORONTO — Telus Corp.'s digital consulting subsidiary is striking out on its own, hoping to gain recognition from investors as the realm of customer service is increasingly dominated by chat bots and social media management.

Telus International's public offering on Wednesday marks a long-awaited fork in the road for Telus Corp., which has tried to look beyond mobile phone and internet plans for new growth-making enterprise technology through Telus Health and Telus Agriculture.

"This transaction currency — our own publicly traded stock — is now something that Telus International can use to accelerate and amplify its own growth trajectory," says chief executive Jeff Puritt.

Telus International no longer has to "to rely upon and draw away from Telus in order to fuel and support our growth," he said, instead using the cash to fund everything from potential acquisitions to attracting and retaining talented staff.

For 15 years, Telus' customer service consultants had been quietly helping more and more companies and adding new services like artificial intelligence and chat bots, while under the telecom giant's umbrella. Puritt says the move to a standalone business will better help investors see its value relative to competitors.

Puritt says the spinoff will also, hopefully, help shareholders of Telus Corp., which still holds about 67 per cent of the voting power in Telus International. (Telus Corp. is also the biggest customer of Telus International's customer service offerings, followed by Alphabet Inc.'s Google and an unnamed "leading social media company.")

Telus International describes itself as a customer experience company, and has 600 clients, including Google, Uber, TikTok, PayPal and Zara. The customers span industries from games to communications, media, e-commerce, fintech, health care and hospitality.

Some examples of services sold by Telus International are helping a client move older systems to the cloud, creating a bot to help mobile phone users check their data plans, or finding and suspending fake social media accounts, Puritt says.

Telus International also counts consulting firms, IT companies and traditional call centres as competitors. The company, which operates in 20 countries and 50 languages, has said it that some of its services can be provided between “offshore” and “nearshore” businesses. (Telus International bought Competence Call Center in Germany for $1.3 billion last year and previously bought a company named CallPoint in Bulgaria and Romania.)

Telus International works on high-tech projects as well. It recently agreed to acquire Lionbridge AI, which labels text, images, videos and audio in more than 300 languages for social media, search, retail and mobile.

Puritt says that he still sees humans playing a key role in customer service going forward, but that they will become more and more specialized and highly trained to customize technology. For instance, he says, a customer service agent of the future would help a calorie-counting consumer reprogram their smart fridge to order different groceries from a Whole Foods drone.

On the other hand, says Puritt, "repeatable" customer service interactions should become faster and more predictable for consumers. For instance, he says that if someone gets locked out of their laptop at work, the password reset process should be automated to make it easier and more consistent.

Now, Puritt's vision for the customer service — and by extension, Telus Corp.'s push into enterprise technology — will face the test of investor sentiment on the public market.

The stock started trading on Wednesday on the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol “TIXT," rising more than 30 per cent on its first morning of trading in Toronto. The proceeds will make it the largest initial public offering of a technology company in the history of the Toronto Stock Exchange, and among the 10 largest IPOs ever on the TSX.

Telus International priced the IPO at US$25 per share overnight following its roadshow with investors, and the 37 million share offering could bring in upwards of US$925 million for Telus International and its key shareholders, Telus Corp. and Baring Private Equity Asia. Telus International itself will gain about US$490 million from the IPO to repay debt.

Puritt says he's confident the new corporate structure will help the company grow.

"I think you're just unnecessarily circumscribing the opportunity to access a deeper, broader talent pool — and to access evermore interesting, challenging, complex technologies — if you insist that it all be within a single entity," Puritt says.

"I think it's actually better for customers, and better for Telus and Telus International, to have a more progressive approach to this."

This report by The Canadian Press was first published Feb. 3, 2021.

Companies in this story: (TSX:TIXT, TSX:T)

Anita Balakrishnan, The Canadian Press