Mohamed to leave Rogers as mobile, Internet businesses continue to grow

President and CEO of Rogers Communications Inc., Nadir Mohamed, will retire in January 2014 to usher in a “new generation of leadership,” Rogers said Thursday. In a release, Rogers said Mohamed, who first joined the company in 2001 and who became its president and CEO in 2009, will continue on in his current role through 2013 and will work with the board to ensure a smooth transition to his successor. "Nadir is a highly regarded executive who has delivered strong results and substantial value for more than a decade," Alan Horn, chair of the company's board, said in the release. "Thanks to his disciplined and strategic management approach we've strengthened our core business, solidified our financial position and set Rogers up for long-term success. The board is grateful for his significant contributions and looks forward to working with him to ensure a seamless and orderly transition." Mohamed's departure comes at a time of change in some of Rogers' core lines of business, as it shifts its focus from its legacy, cable television service to its Internet offerings. That change has been driven by increasing consumer Internet consumption and by the steady losses in cable TV customers as fibre-based Internet protocol television (IPTV) providers, such as BCE Inc. and Telus Corp., continue to make subscriber gains in their TV divisions. Rogers, which released its fourth quarter and year-end financial results Thursday evening, lost 83,000 cable subscribers in 2012, including 25,000 in the fourth quarter, after a loss of 69,000 a year earlier. The company said it added 73,000 cable Internet subscribers in 2012, including 22,000 in the fourth quarter, down from 83,000 in 2011. Operating revenues from its television segment were down one per cent on the year to $1.868 billion, the company said, while its Internet segment's operating revenues increased eight per cent to $998 million. “The year-over-year increase in Internet revenue ... reflects the increase in our Internet subscriber base, combined with a general movement to higher end speed and usage tiers combined with Internet service pricing changes made during the previous twelve months,” the company said in the report. “With our high-speed Internet customer base at 1.9 million subscribers, Internet penetration is approximately 49% of the homes passed by our cable network and 84% of our television subscriber base as at December 31, 2012, compared to Internet penetration of approximately 48% of the homes passed by our cable network and 78% of our television subscriber base as at December 31, 2011.” The company also reported continued growth across its wireless business, with operating revenues reaching $1.92 billion in the fourth quarter and $7.28 billion on the year, up from $1.826 billion and $7.138 billion, respectively. Rogers said its board of directors will appoint a search committee and work with an outside search firm to seek out candidates to replace Mohamed at the company's helm. The company said Edward S. Rogers, Rogers’ deputy chairman and executive vice-president of emerging business and corporate development and Melinda M. Rogers, vice-president of strategy and development, are not candidates for the position. They will be involved in the selection process with Mohamed, the release said. Mohamed said the company is in “great shape” and that he felt the time is right for it to look towards a "new generation of leadership." “The Company has a seasoned executive team, the best asset mix in North America, the most advanced networks and the best platform to lead the next wave of growth,” he said in the release. Alan Breznick, a senior analyst with Heavy Reading, said the company would be wise to seek a new president and CEO who has experience in the mobile industry. Mohamed, who has been with Rogers since 2000 and who has more than 30 years of experience in the communications industry, was president and CEO of Rogers' wireless subsidiary from 2001 to 2005. “Mobile is clearly the way of the future for the company and for the industry,” Breznick said. “I would expect whoever they bring in would also be somebody who’s really strong on the mobile side.” Rogers and other wireless carriers have seen increases in their wireless data revenues in recent years as consumers increasingly access the Internet and other online applications on their mobile devices. In its quarterly report, Rogers said its wireless data revenues climbed to $727 million in the fourth quarter of 2012, up 21 per cent from the same period a year earlier, and up 244 per cent from $298 million in the first quarter of 2009, when Mohamed took over as the company's president. Cisco Systems Inc. said this month that Canadian mobile data traffic will increase at an average annual rate of 57 per cent between 2012 and 2017, and predicted that the average Canadian smartphone will use 3,133 megabytes of mobile data per month in 2017. Rogers said wireless data revenues represented 42 per cent of its total wireless network revenues in the fourth quarter of 2012, up from 20 per cent in the first quarter of 2009. RBC Capital Markets analyst Drew McReynolds said in a research note on Friday that though Mohamed’s retirement comes a few years earlier than expected, “we would expect a constructive transition.” Breznick said the company will have plenty of time to plan Mohamed's exit and find a replacement. “It’s not an abrupt thing,” he said. “He still has a year to go and he is leaving the company on a high with a strong earnings report.” During Mohamed’s tenure, Rogers also moved to bolster its broadcasting subsidiary by expanding its CityTV network, and by expanding its access to sports content. The company teamed up with Bell to acquire Maple Leaf Sports and Entertainment Ltd. (MLSE), which owns the Toronto Maple Leafs, the Toronto Raptors, Major League Soccer’s Toronto FC and a trio of sports specialty channels, including the hockey-themed Leafs TV. Breznick said the MLSE deal will be a key part of Mohamed’s legacy at the company as it was a “huge” step for Rogers into the content ownership business. “I think he’ll be remembered on the cable side for pushing the company into IP video distribution and switching the technology that Rogers uses to deliver video to the homes,” Breznick said. Peter Miller, a lawyer and consultant who specializes in the broadcasting and telecommunications industries, said in an emailed statement Friday that Mohamed led the company through a period when Bell and other telcos started picking away at its core cable business. “Nadir has been an excellent CEO at a challenging time for Rogers, with the tables turned Bell,” he said. —With reporting by Danika Grenier at dgrenier@thewirereport.ca and editing by Nick Kyonka at nkyonka@thewirereport.ca

Mohamed to leave Rogers as mobile, Internet businesses continue to grow

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Mohamed to leave Rogers as mobile, Internet businesses continue to grow

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