October 17, 2016 - 10:00 AM
TORONTO - In a surprise move, Rogers Communications announced Monday the immediate departure of its CEO Guy Laurence and the uncertain arrival time for his replacement, former Telus chief executive Joe Natale.
The man assigned to bridge the gap as interim CEO of the telecommunications and media giant — veteran Rogers chairman Alan Horn — said the company is working to hire Natale as soon as he is able to join.
"We can't be more specific on timing at present," Horn said in a conference call.
Analysts noted that Natale is bound by a non-compete contract with Telus. They asked why the change of leadership was announced Monday and why Laurence departed so abruptly, without a transition period.
Horn said the timing of the change was driven by an opportunity to get Natale "who we think is a unique individual in terms of the Canadian telecom landscape."
As for a smoother transition between Laurence and Natale, Horn said each situation is unique and "in this case, the actual situation meant this was the way this transition had to take place."
Natale and Laurence didn't issue statements in the announcement and couldn't be reached for comment.
Laurence, a former head of Vodafone UK, was brought to Canada with great fanfare in late 2013 to turn the company around following a period of lacklustre growth.
His departure came minutes before Rogers (TSX:RCI.B) announced its latest financial report, which showed the impact of a failed attempt to use Shomi to compete against Netflix but success in other parts of the business.
Horn said repeatedly that there was no change planned for the strategic direction taken by Laurence and that there's a strong management team in place to carry on the progress.
"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," CanaccordGenuity analyst Aravinda Galappatthige wrote in a client note.
Chief financial officer Tony Staffieri said that the company had a solid third quarter — with its biggest division, wireless, having one of its best growth in years and the media division performing well because of its sports coverage.
"We are entering what is looking to be a good start of the NHL (season) but we also have the baseball season that continues to do well," Staffieri said.
"We think the right content is going to be key to media in the long term and we've said the right content for Canada and for us is sports and that's what we're focused on."
Under Laurence's stewardship, Rogers finalized a groundbreaking 12-year rights deal with the National Hockey League. The relationship got off to a rough start with the 2015-16 season when none of Canada's NHL teams made it to the playoffs.
Rogers has also navigated difficult waters in the media industry as a result of an ongoing shift towards digital publication and regulatory changes and competitive challenges that are pressuring the Rogers cable, broadcasting and publishing arms.
In releasing its results Monday, Rogers said its net income for the quarter was $220 million or 43 cents per share, down from $464 million or 90 cents per share, mainly because of the previously announced shutdown of video streaming service Shomi. Its adjusted profit was 83 cents per share.
The Shomi writeoff accounted for $140 million of the year-over-year decline in net income. Another $102 million was due to an unusual gain recorded in the third quarter of 2015.
Analysts estimated net income would be 89 cents per share and adjusted profit would be 88 cents per share, according to Thomson Reuters.
On the other hand, Rogers said its wireless operation — the main engine for its revenue and profit — had its biggest revenue growth and post-paid customer additions since 2010 with 114,000 net additions.
Revenue for the quarter was $3.49 billion, in line with analyst estimates and up three per cent from last year's $3.38 billion. The only major division to see a decline in revenue was cable, which slipped to $865 million from $871 million.
The release of the third-quarter results on Monday was three days ahead of schedule. They had been expected before the opening of markets on Thursday.
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News from © The Canadian Press, 2016