A tumultuous situation has unfolded at Rogers Communications Inc., a telecommunications giant grappling with stagnant share prices and underwhelming performance in its wireless division.
According to recent reports, Chairman Edward Rogers attempted to oust Chief Executive Officer Joe Natale from his position. However, this effort was met with resistance from the majority of board members, who ultimately sided with Natale, who has been at the helm since April 2017.
Frustration Over Performance is Understandable
BMO Capital Markets analyst Tim Casey acknowledged that frustration over Rogers’ performance is "understandable." In a note to investors, Casey attributed the company’s struggles to its wireless unit, which accounts for approximately 60% of its revenue. He pointed out that growth in network service revenue was sluggish even before the COVID-19 pandemic and declined more sharply compared to BCE Inc. and Telus Corp., Rogers’ main competitors.
"It is not debatable that Rogers’ key loading and revenue statistics compare unfavourably to Bell and Telus," Casey emphasized, noting that the boardroom power struggle adds long-term risk for investors. As a result, BMO reduced its price target to $68 from $72.
Rogers’ Struggling Wireless Unit
The telecommunications industry has been facing intense competition in recent years, and Rogers has struggled to keep pace with its peers. The company’s shares have trailed those of BCE Inc. and Telus Corp. by a significant margin over the past three years.
One factor contributing to Rogers’ woes is the proposed US$16 billion takeover of Shaw Communications Inc., announced in March. This acquisition has raised concerns among investors, who are anxiously awaiting its outcome.
Challenges Ahead
Rogers faces significant challenges as it seeks to revitalize its wireless division and regain ground on its competitors. The company must address the decline in network service revenue, which fell more sharply compared to BCE Inc. and Telus Corp. after COVID-19 hit.
"The boardroom power struggle adds long-term risk for investors," Casey warned, emphasizing that Rogers’ struggles are far from over.
A Look at Rogers’ Rivals
BCE Inc. and Telus Corp., Rogers’ main competitors, have been performing relatively well in the wireless market. BCE’s shares have been steadily increasing over the past three years, while Telus Corp.’s performance has also been robust.
In contrast, Rogers’ share price has stagnated, trailing behind its rivals by a wide margin.
Rogers’ Long-Serving CFO Steps Down Amid Shaw Takeover
The proposed takeover of Shaw Communications Inc. has led to the departure of Rogers’ long-serving Chief Financial Officer (CFO). This development has sparked concerns among investors and raised questions about the company’s ability to execute the acquisition successfully.
Rogers Dealmaker Touts 5G Plan, Says Shaw Merger ‘Will Get Done’
Despite the challenges ahead, Rogers’ dealmakers remain optimistic about the proposed takeover. In a recent interview, one of the key players behind the merger stated that the company is committed to delivering on its 5G plans and securing the necessary regulatory approvals.
Rogers’ Victory in Shaw Auction Puts Key Assets in Play
The auction for Shaw Communications Inc. has sparked intense competition among telecommunications giants BCE Inc. and Telus Corp. Rogers emerged victorious, securing key assets that are expected to boost its wireless division.
However, this victory has also raised concerns about the company’s ability to integrate these new assets effectively and deliver on its promises to investors.
Conclusion
Rogers Communications Inc.’s boardroom drama and struggles in its wireless division have sent shockwaves through the telecommunications industry. As the company navigates the challenges ahead, it must address the decline in network service revenue and regain ground on its competitors.
The proposed takeover of Shaw Communications Inc. has raised concerns among investors, who are anxiously awaiting its outcome. However, Rogers’ dealmakers remain optimistic about the merger’s potential to deliver long-term value to shareholders.
Only time will tell if Rogers can overcome its challenges and emerge as a leader in the telecommunications industry.
