Analysts optimistic about Natale at Rogers after Laurence’s surprise exit

In an unexpected move, Rogers Communications Inc. has announced Guy Laurence is no longer CEO of the company and will be replaced by former Telus Corp. CEO Joe Natale, a choice analysts responded to positively Monday. “He’s got a great reputation in Canada within the Canadian telecom space. He did a great job at Telus. He knows the space inside and out. From everything I’ve heard, employees like working with him and he’s just generally considered a top player,” Troy Crandall, an equity specialist at Raymond James Ltd., said in a phone interview. “He’s always been well-respected by the Street for sure, by the analyst community, by investors.” Natale was named CEO of Telus after 11 years with the company and served in the post for a year. He was replaced by Darren Entwistle in 2015, after Natale declined to move to Western Canada for the job. Laurence was named CEO of Rogers in 2013. Alan Horn, currently chairman of the board at Rogers, will serve as interim CEO until Natale takes over. “Natale’s got a solid track record at Telus and should be a welcome addition” at Rogers, a note from Macquarie Capital Markets analyst Greg MacDonald read. In a conference call with analysts Monday, Horn declined to offer more details about the timing of the transition or specify whether the result of the delay was due to a non-compete agreement from Natale’s time at Telus. “There are obviously some complications resulting from Joe’s prior roles and those are things that we’re working through, but we’re working hard to get him as soon as possible,” Horn said. He also didn’t offer details about why the company chose to move away from Laurence. “You should look at this as the opportunity to secure the services in due course of Joe Natale, and that’s a unique situation and that’s the one that we’ve moved on with,” Horn said. Natale “is a unique individual in terms of the Canadian telecom landscape and this is an opportunity with Joe at this time,” he said, adding that “timing is never perfect on these things…but we did feel that it was important for our organization and employees to know what the long-term CEO plan is.” Crandall noted that Rogers’ quarterly results, which the company released early on Monday, were “quite good this quarter,” following improvements in the past few quarters. “Which makes the question even greater as to why did they choose to let Guy Laurence go?” Crandall asked. He said the company’s emphasis on the issue of timing in the conference call gave him the “impression that the clock was ticking for them to make the decision whether they wanted to keep Guy Laurence or to go with Joe Natale.” Horn indicated on the call the company will stay the course that Laurence set. “The board has complete confidence in the…direction that’s been set and will continue to focus on the customer first, customer experience aspects of 3.0,” though he noted Natale would “possibly” make “some modifications.” Rogers 3.0 was a multi-year plan first announced by Laurence in 2014 that aimed to overhaul its customer service and restructure its corporate hierarchy. Since then, among other initiatives, the company launched new roaming plans, introduced additional options to get in touch with customer service, and most recently gave customers more control over shared data buckets. MacDonald noted the reason Laurence was brought on board in the first place was to improve customer service, adding it was “mission accomplished, in our opinion.” Iain Grant, a Seaboard Group Inc. analyst, said in an email that the roaming plans were a positive aspect of Laurence’s legacy, in addition to increased investment in the Toronto Blue Jays and the purchase of Mobilicity, after the government vetoed Telus’ attempts to buy the small wireless carrier. Negatives under Laurence’s tenure included recent cuts to its magazine division that saw “some pretty iconic titles hitting the rim of the bin,” and the shutdown of the Rogers-Shaw Communications Inc. streaming service Shomi, on which Rogers took a $140 million write down, Grant said. Desjardins Capital Markets analyst Maher Yaghi said in a note that Laurence “has done a very good job reenergizing the company since his arrival and repositioning it for the future, and his departure could be perceived as a negative," though he added Natale is “also a very capable operator and commands a high level of credibility in his role to lead Rogers going forward.” Crandall noted that Laurence had “deep media experience” when he began his tenure at Rogers and made moves in the media space as CEO, like investments in Vice Media Inc. and the launch of the Shomi streaming service. Since then, Shomi has folded and there have been very few metrics to judge the Vice partnership, he said. Crandall noted that Natale is moving from Telus, which has made the choice not to own media content. “Not to say that Joe Natale is going to go and start selling off assets — I really don’t expect that — but just given the history of Telus,” Crandall said. “He there a long time, so he’s obviously played a key role in its strategy along the way.” Aravinda Galappatthige, an analyst with Canaccord Genuity, said in a research note Monday the move was a surprise, though the ultimate effect on the company is still not clear. “In our view, sudden and unexpected changes such as these would be viewed negatively by the market, at least at the outset. 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,” he wrote. “In that backdrop, the initial reaction 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.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and reporting and editing by Ahmad Hathout at ahathout@thewirereport.ca

Analysts optimistic about Natale at Rogers after Laurence’s surprise exit

Broadcast | October 17, 2016

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Analysts optimistic about Natale at Rogers after Laurence’s surprise exit

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