CRTC should proceed with Rogers-Shaw hearing: Rogers, analyst

Rogers Communications Inc. says there is no reason to delay the CRTC on its merger with Shaw Communications Inc., after a Supreme Court of British Columbia judge ruled Friday that formerly ousted now-reinstated chairman, Edward Rogers,’ reconvening of the board was legitimate. Several hours after the decision was issued, Edward Rogers released a personal statement that Rogers CEO and president Joe Natale would remain in his position and the company’s focus remains on its acquisition of Shaw. Then on Sunday the company issued a press release announcing that it will not appeal the court’s ruling. In a Monday letter to the CRTC, Rogers vice president of regulatory Ted Woodhead wrote that the Friday decision in the B.C. Supreme Court "effectively resolve" the dispute over the company’s control. As such, the regulator should deny the request from the Public Interest Advocacy Centre and carry on with the hearing scheduled to begin on Nov. 22. Canaccord Genuity Corp. analyst Aravinda Galappatthige wrote in a Sunday evening note that the “path forward is still murky” for the telecom company, which BCE Inc. and Telus Corp. can potentially benefit from. “While the court decision settled the most significant issue, the question of sustainability of the current management team and the path forward remain unclear, in our view," he wrote "How temporary is this ‘gesture’ of maintaining the leadership status quo? One is tempted to consider that the decision to not immediately make leadership changes was connected to the Shaw transaction and the desire to successfully lead this process to a close,” he wrote. Galappatthige wrote that media reports that Natale was supposed to be let go, alongside other senior staff, raises concern that there will be eventual management changes either by the board or by disgruntled senior staff. “Our recommendation on Rogers remains HOLD,” he wrote. “There is genuine risk around execution due to the impact these matters can have on management focus and motivation… On the matter of corporate governance, if recent events crystallized challenges around governance, we believe there is nothing to suggest that this decision has in any way ameliorated Rogers’ profile in this regard.” National Bank analyst Adam Shine wrote in a Sunday evening note that he expects the “waters to calm” for the company. Shine wrote that there is “no valid reason” to delay the CRTC hearing, as the current management team has legal certainty and is positioned to present its case to the CRTC while also recuperating from economic consequences caused by the COVID-19 pandemic. “Here's where a calming of the waters will definitely serve the company well,” Shine said, adding that if the family members against Edward Rogers moved for an appeal it would not accomplish anything “beyond more noise”. The board of Rogers now consists of Robert Dépatie, Robert Gemmell, Alan Horn, Philip Lind, Melinda Rogers-Hixon, Martha Rogers, Loretta Rogers, Joe Natale, Michael Cooper, Jan Innes, Ivan Fecan, Jack Cockwell and John Kerr, with Edward Rogers as chair. ‘ “After this ruling, one has to wonder if an appeal truly serves the best interests of stakeholders who presumably would like to see the company move on from the resolution with a full focus on operations and the consummation of its critical acquisition instead of the performance of a perfunctory belated meeting,” Shine wrote. “Efforts to improve RCI's corporate governance would now best be explored prospectively rather than retroactively.” Shine wrote that despite elevated volatility in the company’s stock, it appears to be undervalued. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

CRTC should proceed with Rogers-Shaw hearing: Rogers, analyst

News | November 8, 2021

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CRTC should proceed with Rogers-Shaw hearing: Rogers, analyst

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