Nadir Mohamed knows he has his work cut out for him.
The chief executive officer of Rogers Communications Inc. is planning to step down in less than a year, but insists his job is far from over.
Appointed CEO in 2009, Mr. Mohamed has spent the last four years overseeing a key transition phase for the communications giant following the death of founder Ted Rogers in 2008. Mr. Rogers was a spirited entrepreneur, who made big bets on cable TV and cellular services and presided over the company during a period of unprecedented growth.
But since Mr. Mohamed took the helm, those businesses have matured and a growing number of competitors have begun eroding Rogers’ dominance. Mr. Mohamed, however, says he plans to take key steps this year to fend off rivals and position the company for future growth.
“The job is never done,” said Mr. Mohamed during an interview on Friday. “And I’m fully committed to actually doing a lot more in ’13 to drive home our advantage.”
With respect to its mainstay cable business, Rogers has shifted its focus. Internet, rather than television service, is the new anchor product. As more consumers cut the cable cord, Mr. Mohamed wants to ensure they keep their Internet service with Rogers as they increasingly consume content on the Net.
“I will tell you that connectivity businesses generally have better margins than content businesses,” he said. “We will move from a world where people think of it as paying for cable, paying for phone, paying for Internet to paying for a connection to any and every piece of content that you want.”
Still, it remains unclear when those Internet-only customers would become as profitable as those who currently subscribe to both its cable and Internet services.
Over the short-term, Rogers is duking it out for subscribers with BCE Inc., which is rolling out its Fibe television and Internet service. BCE had 248,000 Fibe customers at the end of 2012, but has a service footprint that covers 3.3 million homes.
Although Rogers is pushing its deluxe cable product, NextBox 2.0, to defuse BCE’s Fibe threat, Mr. Mohamed remains focused on striking a balance between protecting market share and margins, which top 49 per cent for cable.
But sources say the board of directors is also concerned about the ongoing “slippage” of Rogers in wireless, an area where both BCE’s Bell, and Telus Corp., have made gains at its expense. (BCE owns a 15-per-cent stake in The Globe and Mail.)
During the final quarter of 2012, Rogers activated and upgraded a record number of smartphones, but significantly lagged Bell and Telus on net additions of postpaid subscribers, top-end customers who pay their bills at the end of the month rather than paying upfront.
Moreover, Rogers’ postpaid churn rate, a metric that reflects how many customers leave the company, remains higher than its incumbent rivals at 1.4 per cent. The comparable rate at Bell was 1.3 per cent, while Telus’s was 1.12 per cent.
“Frankly, our churn needs to get to be even better because the reality is our base of customers is much larger,” said Mr. Mohamed, later adding “that to me is the best way to get an improved net share.”
Rogers is also busy seeding future wireless growth initiatives such as machine-to-machine connections (think traffic lights and bank machines), mobile commerce and mobile video. Additionally, it has secured an option to eventually buy spectrum from Shaw Communications Inc. to bolster its wireless network in key western markets.
Even so, its rivals are looking to make improvements of their own. For its part, Telus, which already has the lowest churn of the big three, is also intently focused on driving that figure lower this year.
“I would say that Telus is an organization that is permanently dissatisfied with the status quo,” said Telus CEO Darren Entwistle in an interview. “We think we can always do better.”
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