Rogers Communications Inc. plans to focus on fewer, bigger initiatives to improve financial performance.
The company faced investors at its annual meeting on Tuesday, and new chief executive officer Guy Laurence offered a few details about what stakeholders can expect from the strategic plan he will present to the board in May.
The former CEO of Vodafone UK Ltd., who has experience with turnarounds, told the crowd that the changes he has in mind will take time. “I wanted to lead a company that thinks long term, and that’s a key benefit of having the Rogers family as a key shareholder,” he said.
One of the big initiatives will be a deeper focus on hockey, following the company’s $5.2-billion deal for rights to National Hockey League games for the next 12 years.
“I’m going to make it the poster child for how we can work together internally,” Mr. Laurence said. “Every part of the business will play a role, from the camera operator filming the game, to the tech streaming the playoffs to customers’ smartphones, to the publisher running a contest in Today’s Parent [magazine]. We’ll bring hockey to life in clever new ways.”
Mr. Laurence also highlighted the importance of improving customer service at Rogers, an issue that has long plagued the company. At last year’s annual meeting former CEO Nadir Mohamed highlighted this issue and said the company would roll out a new loyalty program to reward customers.
Better customer service is more important than ever, Mr. Laurence said. In his first months as CEO, Mr. Laurence spent 24 days on the road travelling 22,000 kilometres to the 12 largest Rogers markets with the goal of learning more about the country. He’s met more than 11,000 employees, dozens of senior managers and other stakeholders, government officials and customers.
Rogers expects its recent purchase of 700 MHz wireless spectrum will improve customers’ wireless experience. This spectrum is designed to offer better signal quality in buildings, and wider coverage in urban and rural areas.
“Mobile video use has exploded by over 700 per cent over the past three years, and this spectrum will double our customers’ video capability,” Mr. Laurence said.
But it may take time for the company to monetize that $3.3-billion investment. “Given its strong spectrum position and overall asset mix, we are really surprised at continued weak operating performance across all segments,” said Canaccord Genuity Corp. analyst Dvai Ghose in a note to clients. He downgraded the company to sell, from hold, on Tuesday.
Rogers reported limited growth in its first quarter of the year, with company revenue nearly unchanged at $3.02-billion. Some analysts expressed disappointment with these results and cautioned investors to wait for more details on the company’s direction.
“Until we have a clearer picture of the direction of the company, we continue to recommend that investors wait for a better entry point into the stock as we do not expect current levels to generate a double-digit total return over the next year,” said Maher Yaghi, analyst with Desjardins Securities, in a note to clients. He decreased his 2014 and 2015 revenue estimates following the results.
Mr. Laurence assured shareholders that he intends to improve results.
“Parts of the business are performing well … But our growth relative to our peers has slipped,” he said at the annual meeting. “This is not satisfactory. To me it’s all about winning, and winning consistently. You’re either No. 1, or you’re not.”