Look for strategy refresh from new Rogers CEO
TELECOM
• Rogers Communications Inc.’ s incoming CEO Joe Natale isn’t expected to wait long before refreshing the cable giant’s strategy once he takes the helm later this week.
BMO analyst Tim Casey wrote Monday that he expects a “relatively quick ramp- up period” for Natale, the former Telus CEO known for his customer service expertise who takes the top job at Rogers on Wednesday. Natale was scheduled to start in July, but Rogers announced last week it negotiated an early release from his noncompete contract with Telus in a confidential deal.
In his so- called “first 100 days,” Natale is expected to focus on the three priorities of improving wireless churn, reversing losses in television and r esuming dividend growth, Casey wrote.
Churn, the rate of customers that cut ties with a provider in a given quarter, has long been a sore spot for Rogers. “Rogers has consistently underperformed for years while (Natale’s) former company Telus has consistently led the industry,” Casey said in his note.
Natale’s predecessor Guy Laurence, who was fired last October, also made tackling customer service problems his top priority in his Rogers 3.0 strategy. Still, Rogers monthly wireless churn was 1.23 per cent in 2016 compared to Telus’ churn rate of 0.95 per cent, according to financial statements.
Natale must also focus on “reversing competitive losses in video by flawlessly executing the rollout of Comcast’s X1 next- generation video platform,” Casey wrote.
Rogers announced in December it would axe the internal development of its own next- generation video product and use Comcast’s platform instead. The strategy shift cost $ 484 million and five years of lost time.
While Rogers has said it doesn’t expect to roll out the platform until 2018, it is expected to help bring back subscribers who l eft the cable company for superior Internet- protocol television offerings from its main telecom competitor. Shaw Communications Inc. credits the Comcast platform for the improving subscriber metrics it reported earlier this month.
Casey said he believes Natale’s third top priority should be to resume dividend growth by sustainably growing earnings before interest, tax, depreciation and amortization ( EBITDA) and free cash flow. Momentum has recently turned in Rogers’ favour following years of underperformance in wireless, he wrote.