When Nadir Mohamed walks down the street, he sees dozens of potential new customers. But they aren’t the ones you might think.
As the man in charge of the country’s largest wireless business – about one in three Canadians over the age of 14 carries a handset from Rogers Communications Inc. – Mr. Mohamed is, of course, paying attention to the phones that consumers are using to talk, surf the Web and text. But he’s also taking notice of the humble parking meter.
Once simple devices, meters are becoming increasingly sophisticated. In many cities, they can take credit cards, relay information to drivers looking for spots, or alert city employees of the need for maintenance. This requires a wireless connection, and each transmission uses data – and represents a chance for Rogers to make money. And that’s something Mr. Mohamed can’t get out of his mind.
This is his view of the future: Machines talking to machines, wirelessly, making the world a more efficient place – with Rogers in the middle of many of those digital conversations. The company’s network is already used to control traffic lights. It might be used for a lot of other things, too. “There is a world out there that we haven’t even seen,” he said.
That the Rogers chief is talking about things like parking meters and traffic signals is either a sign that he’s a visionary or a portent of trouble at one of the country’s top communications firms. The latest set of financial results, which sent the stock tumbling this week, hint at a difficult truth: After decades of growth on the back of two big consumer trends – the move to cable television and the mass adoption of wireless phones – Rogers lacks an obvious third act.
All of the company’s main businesses are now either facing significant headwinds or are in decline. In wireless, it is battling network-sharing incumbents BCE Inc. and Telus Corp., which have broken Rogers’ once-lucrative Canadian monopoly on the iPhone, while being undercut by scrappy upstarts at a time when most Canadians already own a cellphone. The cable-TV business, while still very profitable, is now losing customers, and is threatened by new technologies. The home phone business has flat-lined. Rogers’ media unit, which owns a host of television channels and magazines, is struggling in a soft advertising market.
Small wonder that at this week’s annual general meeting, Mr. Mohamed spent as much time talking about saving money as he did about earning money. He talked about a recent decision to stop renting videos and games at its remaining 93 retail outlets and danced around questions about the need for more layoffs following a 300-person reduction in the last quarter.
“I expect it to continue being a tough period, but I have no doubt in the strength of the franchise,” he said as the company reported first-quarter revenue that was about 1 per cent lower than a year ago.
His challenges are clear. The economics of the smartphone are changing. Consumers still want iPhones and other high-end devices, but most want to avoid $100-a-month bills for using them, so they choose lower-cost data plans. Rivals such as Mobilicity are offering Android phones with cheaper plans, putting further pressure on prices.
The cable business, meanwhile, is being bruised by the budding popularity of Internet protocol TV offered by BCE Inc., which is helping that company gain urban customers that have traditionally shunned its satellite service. Other TV alternatives, including over-the-top services like Netflix that provide movies and television shows with an $8 monthly subscription, are also giving consumers fresh incentive to cut the cable cord.
The pressures have left revenues flat, margins under pressure, while thrusting the company into a new era of austerity that analysts predict will include more cuts to its work force of 30,000. Beyond the cost cuts, Mr. Mohamed faces the formidable challenge of steering the communications giant through a slow-growth environment.