Will a New CEO Lead Rogers Communications Inc. to New Highs?

After an up and down tenure, Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) parted ways with CEO Guy Laurence. Will new CEO Joe Natale take the company to new heights?

The Motley Fool

It’s been a busy time for Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI).

Canada’s leading wireless provider shocked investors by announcing president and CEO Guy Laurence has stepped down, effective immediately. Former Telus Corporation (TSX:T)(NYSE:TU) CEO Joe Natale will take over.

The company has been mum about why Laurence stepped down. His tenure started out dealing with the company’s new 12-year deal to broadcast the NHL in Canada, expanding coverage to channels other than Sportsnet and CBC. This deal was negotiated under the watch of Laurence’s predecessor, Nadir Mohamed.

This deal is looking like a bit of a flop, at least thus far. Ratings haven’t lived up to expectations, especially during last year’s playoffs when no Canadian teams qualified for the postseason.

Laurence was in charge when Rogers teamed up with Shaw Communications to create Shomi, a video streaming service meant to compete against Netflix. That didn’t go so well. After less than two years, the two companies announced they’d be shutting down the partnership. In total, Rogers lost some $200 million on the failed venture.

Laurence’s tenure also had its share of success, too. The company’s marquee sports franchise, the Toronto Blue Jays, made the playoffs twice, which has been a nice boost to the media division. The company also announced the Roam like Home mobile add-on, which allows users unlimited texts, calls, and internet while traveling for one low daily fee. Roam like Home has been popular with customers.

Overall, Laurence’s tenure wasn’t so bad for investors. Rogers shares have increased close to 16% (excluding dividends) since he took over, which is slightly better than Telus. BCE Inc. (TSX:BCE)(NYSE:BCE) smoked them both, however, increasing its share price by nearly 30%.

Why Natale?

There’s one obvious reason why Rogers would turn to a former Telus CEO. The board of directors think that company is doing something right, and they want that formula.

Although Natale was only Telus’s CEO for just over a year, he was previously the company’s chief commercial officer. Altogether, he spent more than 12 years working for the telecom giant.

During Natale’s time, Telus made significant gains against Rogers, primarily in the wireless space. Telus focused on customer service, affordable plans, and slick marketing to gain market share. It worked well.

At the end of 2010, Rogers commanded a market share of 36.5%, with Bell and Telus coming in second and third with market shares of 29.5% and 28.4%, respectively, according to figures from the Canadian Wireless Telecommunications Association. By the middle of 2016, Rogers had a market share of 33.7%, Telus had moved into second place with 28.5%, and BCE had 28% of the market. New carriers have moved in and taken the other 10% of the market.

Telus actually gained ground during the last six-and-a-half years, while Rogers lost some 3% of the total market. It’s easy to see why the company would turn to a seasoned Telus exec. Telus obviously did something right.

What does it mean?

Investors are cheering the move so far, sending Rogers shares up some 1% in early trading on Monday morning. Both main competitors are down a bit.

Natale will have his work cut out for him. The wireless space in Canada is more competitive than ever. BCE continues to get bigger through acquisitions. Telus does a nice job retaining customers. And upstart competitors are undercutting Rogers in various key markets.

Time will tell whether or not Natale is the right man for the job.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nelson Smith owns Shaw Communications preferred shares. David Gardner owns shares of Netflix. Tom Gardner owns shares of Netflix. The Motley Fool owns shares of Netflix.

More on Dividend Stocks

A worker drinks out of a mug in an office.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

The largest telecom company in Canada is brutally discounted, and the dividend yield is naturally up, but it's too risky…

Read more »

a man celebrates his good fortune with a disco ball and confetti
Dividend Stocks

Get Ready to Invest $7,000 in This Dividend Stock for New Year Passive Income

This is the year you get ahead, and maxing out your TFSA contribution is the best way to start.

Read more »

ways to boost income
Dividend Stocks

Buy 2,653 Shares of This Top Dividend Stock for $10K in Annual Passive Income

Enbridge is a blue-chip TSX dividend stock that offers shareholders a forward yield of 6%. Is it still a good…

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

CPP at 70: Is it Enough if Invested in an RRSP?

Even if you wait to take out CPP at 70, it's simply not going to cut it during retirement. Which…

Read more »

a person looks out a window into a cityscape
Dividend Stocks

1 Marvellous Canadian Dividend Stock Down 11% to Buy and Hold Immediately

Buying up this dividend stock while it's down isn't just a smart move, it could make you even more passive…

Read more »

happy woman throws cash
Dividend Stocks

Step Aside, Side Jobs! Earn Cash Every Month by Investing in These Stocks

Here are two of the best Canadian monthly dividend stocks you can consider buying in December 2024 and holding for…

Read more »

chip with the letters "AI" on it
Dividend Stocks

The Top Canadian AI Stocks to Buy for 2025

AI stocks are certainly strong companies, and there are steady gainers in Canada as well. But these three are the…

Read more »

calculate and analyze stock
Dividend Stocks

2 High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These stocks pay attractive dividends for investors seeking passive income.

Read more »