Skip to main content

The Globe and Mail

Rogers shakeup raises pressure as rivals surge

President and Chief Executive Officer Nadir Mohamed of Rogers Communications gestures at their annual general meeting for shareholders in Toronto, April 25, 2012.

MARK BLINCH/REUTERS

Nadir Mohamed's days were numbered before he ever set foot in the corner office.

When Mr. Mohamed took over as chief executive officer in 2009, he was hailed as a steady hand who could help Rogers Communications Inc. manage its growth at a time when traditional competitors such as BCE Inc. were launching new products intended to cut into Rogers' long dominance in the cable and cellphone markets.

But sources said some members of the board have grown concerned the company is being outclassed by the rivals it once dismissed, and wants Rogers to reassert itself as the nimble, aggressive and swashbuckling company that founder Ted Rogers presided over until his death in 2008.

Story continues below advertisement

Rogers announced Mr. Mohamed's planned departure Thursday night, saying he will step down in January, 2014. Though the timing caught many in the industry off-guard, Mr. Rogers himself had predicted that his successor wouldn't likely remain in the top job for longer than five years.

With Mr. Mohamed's one-year notice officially filed after one of the strongest quarters in the company's history, the board must now begin an international search for a CEO who can meet the challenge posed by resurgent rivals. Mr. Mohamed made it clear that it was time for someone else to take over Mr. Rogers' legacy.

"I think the company is in absolutely terrific shape. We've got a balance sheet that's never been stronger, the operations are in great shape, we've got momentum," he said on a call with media. "I feel it's the right time to pass it on to what I describe as the next generation of leadership."

Despite his optimism, Mr. Mohamed's tenure at Rogers bears a striking similarity to Tim Cook's tenure at the top of Apple Inc.

Both Mr. Mohamed and Mr. Cook inherited market-leading companies from charismatic leaders and have watched their dominance slip. Rogers, like Apple, has seen competition intensify in the last several years as established players reassert themselves and a slew of entrants drive down prices as they fight to steal customers from the established companies.

"If you look at its big businesses – wireless and cable in particular – there's been significant changes in customer share" said Dvai Ghose, managing director and head of research at Canaccord Genuity.

Rogers announced Mr. Mohamed's retirement plans Thursday night along with its fourth-quarter results, which came with an unexpected bonus for shareholders in the form of a 10-per-cent increase to the company's dividend and a $500-million share repurchase plan as its adjusted quarterly profit jumped 30 per cent to $455-million.

Story continues below advertisement

But as strong as the quarter was, it also hinted at challenges that continue to plague the company. Its main challenge has come from BCE, which has spent the past four years under chief executive officer George Cope aggressively upgrading its infrastructure so it could offer its Fibe service to directly compete with Rogers for home television and Internet subscribers. BCE has also mounted a dramatic turnaround of its wireless business.

As well, BCE has bulked up on content, buying CTV in 2010 and bidding $3-billion for Astral Media in a deal that has been rejected once already but will be back in front of regulators later this year. The investments have paid off handsomely for BCE, with Mr. Cope stressing during his last conference call that he considered the company an increasingly dominant force. BCE owns a 15-per-cent stake in The Globe and Mail.

"I used to say for years and years when I competed with Bell 'What would you do if Bell ever woke up?'" said Mr. Cope, who held senior roles at Telus and Clearnet Communications before taking over at BCE. "Well, we woke up."

Rogers' board noticed the telecom giant stirring as well, sources said. It was particularly concerned about the $1-billion deal that saw Rogers partner with BCE to buy matching stakes in Maple Leaf Sports and Entertainment. Rogers had a chance to do the deal on its own but backed off because Mr. Mohamed wasn't sure it was a fit for the company and only jumped back in when it was clear BCE was interested as well.

There are other pressures: Rogers said 25,000 customers cancelled their cable television packages in the final quarter of 2012, and although the company activated a record number of smartphones, it said the 30 per cent of customers who haven't upgraded yet aren't likely to spend as much on data as early adopters.

Mr. Mohamed conceded the company can no longer afford to think of its cable business – the company's historical strength – solely in terms of television subscribers, given that many of its customers consume content via the Internet. Many in the industry believe that cable companies will be able to offset the money they are losing, as customers give up their monthly packages, with money they are earning on their Internet services – many of which charge extra as users increase their usage by downloading large television and movie files to watch at home.

Story continues below advertisement

"It's a bit of a misnomer. It's a cable business if you think in historical terms, but it's very much an Internet business going forward," he said. "If you look at our Internet business, it's very strong in terms of subscribers and usage or consumption … our assumption is, more and more, the Internet is the platform for how people consume video and content. Any winning strategy is anchored on the Internet."

He also strenuously denied the suggestion that he had been pushed out of the CEO role by members of the Rogers family.

"Absolutely categorically my choice and … I know it sounds like I am repeating, but I'm really feeling good about our achievements over the last 12 years as a team. So, (I am) very proud of what is been accomplished," said Mr. Mohamed, adding he had discussed his decision with his wife. "It feels right."

With Mr. Mohamed's intentions clear, the company must now recruit a new leader who both understands the nuances of the heavily regulated Canadian market and has an entrepreneurial flair that can help the company develop new services.

Its choice of leader – the company said Mr. Rogers' grown children Edward and Melinda Rogers aren't interested – will send a signal about where the company is headed, said Glenn Rowe, an associate professor of strategic communications management at the Richard Ivey School of Business.

"It really depends on what they think of the talent that is available inside the firm," he said. "If a company's board feels it is not well-run or that there are big changes in strategies that need to be made, then it's much more likely they'd look to bring in someone from the outside."

_____________________________

NADIR MOHAMED, BY THE NUMBERS

From appointment to resignation, how Nadir Mohamed's tenure stacks up (Fourth quarter of 2008 vs. fourth-quarter 2012):

Operating revenue

Q4 2008: $2.94-billion

Q4 2012: $3.26-billion

Basic cable TV subscribers

Q4 2008: 2,320,000

Q4 2012: 2,214,000

Digital cable TV households

Q4 2008: 1,550,000

Q4 2012: 1,768,000

Residential cable Internet subscribers

Q4 2008: 1,582,000

Q4 2012: 1,864,000

Wireless (prepaid and postpaid retail) subscribers

Q4 2008: 7,942,000

Q4 2012: 9,437,000

Monthly average revenue per postpaid wireless user

Q4 2008: $74.71

Q4 2012: $69.75

Staff

Report an error Licensing Options
About the Author
Senior Writer

Grant Robertson is an award-winning journalist who has been recognized for investigative journalism, sports writing and business reporting. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.