Rogers Communications Inc. CEO Guy Laurence has suddenly left the company, it was announced this morning, without an explanation for why he stepped down.
The Globe and Mail noted that last month Laurence told a Canadian Club lunch in Toronto that he had bought a house here and recently qualified for permanent residency as a Canadian.
The company intends to hire former Telus Corp. CEO Joseph Natale as president and chief executive officer as soon as he is in a position to join Rogers, the company said. Until then long-time Rogers chair Alan Horn will act as president and CEO.
Natale left Telus after only 15 months in the post. According to one financial analyst he has a non-compete clause that would keep him away from a competitor until July 2017.
“We have appreciated Guy’s leadership over the last three years,” Edward Rogers, deputy chairman of Rogers Communications Inc., said in an Oct. 17 statement. “He has moved the company forward… introducing innovative programs like Roam Like Home, while getting the company ready for its next phase of growth. On behalf of the Rogers family and the Board, I’d like to thank Guy for his competitive spirit and many contributions.”
“Following the transition, the board will look to Joe to take the company forward and continue the momentum we’ve established in the past couple of years,” Horn said in a statement. “Joe is a proven executive who has deep experience delivering strong financial results in a highly competitive and complex industry. His focus on the customer experience and demonstrated expertise delivering operational success makes him well suited to lead Rogers through the challenges and opportunities ahead.”
“During the transition, it’s business as usual,” Horn said. “We have a strong management team that will continue to execute the plan and build on the momentum we have established as we head into the fourth quarter.”
At the same time it announced Laurence’s departure, the company released its unaudited financial and operating results for the third quarter ending September 30, which showed net income had decreased to $220 million from $464 million compared to the same period a year ago – partly a result of higher investment-related expenses, primarily a result the winding down of the Shomi streaming service (a joint venture with Shaw Communications). However, there was higher adjusted operating profit.
Total revenue for the quarter was $3.49 billion, compared to $3.38 billion for the same period a year ago, a three per cent increase. The increase was largely driven by growth in wireless service and media revenue of six per cent and 13 per cent respectively.
Those looking for reasons for the change at the top might also see that in the release the company issued financial figures for the first nine months of the year that showed net income of $862 million during that period, down from just over $1 billion during the same nine months in 2015.
Laurence was named as incoming CEO from Vodafone UK almost exactly three years ago to lead the company after the death of founder Ted Rogers. He vowed to shake up the company, and did. Among the changes was hiring Cisco Systems Canada head Nitin Kawale to be president of Rogers’ enterprise business unit, a sign that the company intended to compete more aggressively against Telus and Bell Canada for business customers.
Equally aggressive was the company’s continued fight against Telus and Bell in wireless. In 2014 Rogers became the first carrier in the country to shift from LTE to LTE-Advanced, which roughly doubled the download speeds cellular users could see with devices that can handle the technology. He also bought fading wireless startup Mobilicity, gaining some valuable spectrum.
“I think that Joe Natale is a great choice for Captain of Team Rogers,” commented telecom analyst Iain Grant of the SeaBoard Group in an email. “He knows the marketplace, he knows the competitors and he knows the government and its agenda as well.”
“The Rogers board has obviously been looking for some time to already have a candidate that has been approved,” Grant added. “Key question is why pull trigger now … rather than wait for Natale non-compete to perfect [next year].” That suggests to Grant there had been a “show-down at the Rogers corral.”
Financial analyst Aravinda Galappatthige at Canaccord Genuity said in a note to investors that “there was a growing perception that Rogers was getting back on track as evidenced by the strength in its stock price both this year and the second half of last year. In that backdrop, the initial reaction [to the departure] may well be negative. On the flip side, this may spur some speculation around a restructuring at Rogers, with potential spin-offs etc., which may release incremental value. However, this is not immediately evident.”
In April at the company’s annual general meeting Laurence told shareholders 2015 had been “a good year. We re-established momentum in wireless and Internet, began our journey to fix TV and media and made good progress on customer experience.” The company is scheduled to launch a new IPTV service before the end of the year.
In May, 2014 — five months after he officially became CEO — Laurence announced his roadmap for the company. Dubbed Rogers 3.0, one of his main priorities was to improve customer service. Others were to drive meaningful growth in the business market, invest and develop staff, deliver “compelling content anywhere,” focus on innovation and network leadership, and bring services together under the One Rogers brand.