Rogers’ new CEO coming from U.K. market to familiar auction territory

Guy Laurence, the head of Vodafone Group plc's U.K. division, will be in familiar territory in December when he becomes the new CEO of Rogers Communications Inc., a role that will involve dealing with a Canadian federal government unwavering in its pursuit of more wireless competition. Laurence, 51, will become chief executive of Rogers on Dec. 2, replacing outgoing CEO Nadir Mohamed and bringing in 30 years of international experience in telecom, media, and pay TV, Rogers said in a release Thursday. Laurence will be able to draw on his experience dealing with the U.K. government's approach to wireless policy and competition. The wireless landscape in Canada will probably feel familiar to Laurence after this year's fourth-generation spectrum auction in the U.K., where the government used auction rules intended to spur competition for 800 MHz licences, including reserved spectrum blocks. Laurence led Vodafone UK through the auction as it competed with Everything Everywhere Ltd. (a joint venture between France Telecom S.A. and German operator Deutsche Telekom AG), and 3 (owned by Hutchison Whampoa Ltd.) "My view of 3 is very clear. They dress up in short trousers and they run around the playground complaining that they're being bullied by the older boys," Laurence told the Telegraph in an interview in October 2011, speaking about competition in the U.K. and the government's auction rules. "They entered this market of their own free will. They are not some poor little startup. Hutchison's market capitalisation is bigger than Barclays' so it's perplexing to me why the government thinks it needs to protect a company the size of Barclays," he said. "The main argument of 3 is that they're being bullied somehow, but let's be clear. According to Hutchison's own figures, they sell more iPhones than Vodafone or O2 or Everything Everywhere. That doesn't sound like bullying to me." Laurence joined Vodafone in 2000, moving up through the executive ranks to become CEO of Vodafone Netherlands in 2005, and chief executive of the company's U.K. unit in 2008. Vodafone, headquartered in London, is one of the world's largest mobile companies with operations in more than 30 countries and more than 400 million subscribers. The new CEO's main challenges in Canada will include the upcoming auction of valuable 700 MHz spectrum and the federal Conservative government's steadfast policy objective of ensuring more competition in the wireless sector. Canaccord Genuity analyst Dvai Ghose said in a note to clients Thursday that Laurence headed a Vodafone unit "operating in one of the most competitive communication markets in the world," and that his experience dealing with European regulatory challenges "could be very useful in his new role." Verizon Communications Inc., the largest wireless provider in the U.S., said this month that it has no plans at this time to expand into Canada, though Canada's wireless sector will be watching for any other foreign entrants into the 700 MHz auction, whose participants won’t be public until after a Sept. 17 deadline for deposits. BNN reported Thursday that AT&T Inc., Vodafone, and Norwegian multinational telco Telenor Group have "looked at" bidding in Canada's upcoming auction, though it was unclear how seriously the companies have considered it. "Rogers is an iconic and well respected company in a great country and I'm looking forward to joining," Laurence—who led a Vodafone UK turnaround from falling to rising revenues—said in a statement Thursday. "Its unique mix of wireless, cable and media assets offer a brilliant platform to provide innovative service to Canadians. I intend to build on the strong foundation established under Nadir's leadership to compete and win in the market," Laurence said. The new chief executive will also face Rogers' rising cable TV subscriber losses and competition from fibre-based TV providers as television service companies move to next-generation wireline technology. "Rogers Cable is now losing industry leading video market share and facing a resurgent Bell with a superior IPTV interface," Ghose wrote in the note Thursday. "In our view, Laurence must cut costs aggressively in the cable division as video revenues are expected to continue to decline and accelerate Rogers’ own IPTV overlays, even if this may increase near term cable capex ." Ghose said the track record of foreign CEOs at Rogers "has not been stellar," and pointed to former Rogers chief executives Stanley Kabala, who came from AT&T Wireless, and Charles Hoffman, who came from Sprint. "Some investors fear how committed foreign execs are to Canadian opportunities. That being said, Darren Entwistle, who came from Cable & Wireless UK to run TELUS has been highly successful. We also view the appointment of an experienced new CEO ahead of the January 14, 2014 700 MHz spectrum auction as a key positive and believe that he has the potential of making a real impact," Ghose wrote. Laurence was known for implementing "cultural change" at the company's Dutch and U.K. units, moving the company away from conventional, old-fashioned office culture, according to the same interview with Telegraph in October 2011. "We decided to rewrite the way we worked," Laurence told the newspaper. "A lot of the Western way of working is broken and old-fashioned. It's the tyranny of the office. We said we were going to break every rule we felt was no longer relevant to Generation Y. That's how it started. Now it's become a way of life for us." Under Laurence, executives at Vodafone UK's head office in Newbury, Berkshire, do not have offices, while employees take on any available desk in "zones," use mobile phones and laptops, and have meetings at the company coffee shop rather than relying on their own desks and landline phones, the newspaper said. Laurence also eliminated a formal dress code and implemented a strong paper reduction policy, calling it "a fundamentally different way of working" that was partly intended to get more out of younger staff who thrive in challenging, as opposed to hierarchical, office structures, the Telegraph reported. Laurence, who has previous work experience with UCI Cinemas, MGM Studios Inc., Planet Hollywood, and Ondigital, should also prioritize Rogers' wireless subscriber and revenue share as competitors BCE Inc. and Telus Corp. grow faster, Ghose said in his note, adding that churn, or the rate of customer cancelations, are "a big challenge at Rogers Wireless and we believe that poor customer service is the main driver." He said Canaccord will be watching Laurence's approach to wireless pricing given that the company has been aggressive in wireless promotions this year. "But perhaps his biggest challenge will be making peace with the Government in light of this summer’s Verizon wars which thankfully seem behind us," Ghose wrote, referring to a summer campaign by Rogers, BCE, and Telus to try and change the government's wireless policies favouring more competition and new entrants. Laurence replaces current Rogers CEO Mohamed, who announced in February that he would retire at the end of this year after joining the company in 2001 and becoming president and CEO in 2009. BMO analyst Tim Casey said in a note to clients Thursday that Laurence has extensive experience and that the "only hole in the portfolio would appear to be a lack of direct experience in the Canadian market." Casey said Laurence "is an unknown commodity" to Rogers' core stakeholder base and that "his resume appears to be an excellent fit with Rogers’ asset mix." —With reporting by Simon Doyle at sdoyle@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Rogers’ new CEO coming from U.K. market to familiar auction territory

News | September 12, 2013

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