Bibic’s background an asset in CEO transition at Bell: observers

The imminent departure of BCE Inc. CEO George Cope, announced Friday morning, has left analysts with somewhat mixed feelings: both surprised by the earlier-than-expected leave date of January 2020, but also confident his successor Mirko Bibic, surrounded by top industry brass, will have no problem steering the ship. “Consistent with BCE's high standard of corporate governance and deep bench strength, we would expect the transition to be seamless,” RBC analyst Drew McReynolds said. But it’s not just the team surrounding Bibic; it’s Bibic himself that may put investor nerves at ease, McReynolds wrote in a research note. “Given Mr. Bibic's extensive background and experience along with a converging Canadian telecom industry that through the medium-term is likely to play into BCE's strengths, the risk and uncertainty around such a transition in our view is low.” Bibic brings a “wealth of knowledge across all business lines,” being involved in the Lucky Mobile launch, the company’s fibre-to-the-home planning, and its Crave TV launch, Canaccord Genuity analyst Aravinda Galappatthige said. He added Bibic had also been head of corporate development overseeing the acquisition of MTS and Astral. Before he was appointed to the role of chief operating officer in October 2018, Bibic was Bell’s senior vice-president of regulatory and government affairs, and in 2012 became chief legal and regulatory officer. That extensive government, regulatory and legal background will be a benefit when he takes over as CEO, John Lawford, executive director of the Public Interest Advocacy Centre (PIAC) said. “I think it gives them a big advantage at this point because there’s a lot of regulatory review going on right now, which is tied in with a lot of political unrest and a lot of political focus on the telecoms,” Lawford -- who has often squared off against Bell at the CRTC -- said in a phone interview. “I think it’s the right time to have somebody who’s regulatory in there, and who’s done a lot of political work, and who’s a good speaker, thinker on these sorts of issues.” Barclays Capital analyst Phillip Huang also pointed out in a note that Bibic has "been the face of BCE in all its regulatory affairs over the past decade." He said that Bell's "most important competency at the top may be managing regulatory risks over the coming years," adding he also expects a seamless transition from Cope to Bibic. Over the past year, telecom pricing and sales practices have become regulatory and political issues. Innovation Minister Navdeep Bains directed the CRTC to investigate sales tactics and aimed to improve affordability of telecom prices, including putting out a new policy direction to the CRTC focusing on consumers and pricing. “I would have thought someone like Mirko would have been able to address those political statements and some of the regulatory rumblings sooner and more effectively than was done,” Lawford said. He noted that when the government first began taking issue with prices and sales prices, “that kind of thing can be defused, and Mirko is an expert at defusing bombs before they get set.” Bibic has been with Bell since 2004, when he joined the company as senior vice-president of regulatory affairs. Telecom consultant Gerry Wall noted that aside from his position as managing partner at law firm Stikeman Elliott, Bibic has “been with Bell for his entire corporate career.” Wall said in an email that “telecom is such a detail intensive business that background solely at Bell may turn out to be his greatest strength - especially as IT technology creates and destroys businesses in a matter of years, not decades.” He added that in his role as head of regulatory and legal head Bibic “will have had some experience with every department and business line of the company. My view is he won’t view his job through a legal lens -- he will bring a broader analytical approach with a priority on the business aspects of the company.” Cope will depart on January 5, 2020, on the eve of when the next-generation of 5G wireless networks are largely expected to roll-out. This brings Cope’s tenure full-circle: he became president and CEO of the company in July 2008, the year the AWS-1 wireless spectrum was auctioned off. He will not be a member of the company’s board after his departure. “The majority of people thought that Mr. Cope would lead the company into the 5G era over the next two to three years,” said National Bank analyst Adam Shine in a note. After Bibic was named COO, financial analysts saw the appointment as Bell paving the way for the long-time executive to take over Cope’s role and, as such, there were few surprises Friday when the successor was named. When that would happen, however, was a different matter. “Even though we knew the retirement was coming when Mr. Bibic was promoted to the COO role in October 2018, it does feel a little earlier than expected,” Scotiabank analyst Jeff Fan said in a note. McReynolds said in his own note that the succession timing was “unclear,” but he believes the announcement “should not come as a surprise to the investment community.” Whether Bibic will chart a different course is less ambiguous to the analysts, however. “Will he change much of the focus and strategy of the company? Not likely,” Shine said. As for how the market will react to the announcement, some analysts felt the “initial reaction” will be “cautious,” as Galappatthige noted. Bell’s stock was down 15 cents, or 0.25 per cent, by late afternoon Friday. “We believe much depends on the new leadership enunciating its strategy, to put investors at ease with respect to the key underlying policies,” Galappatthige said, adding Bell has a “strong roster of operators within its business and we expect the company’s strategy and capital markets policy to remain largely unchanged with Mirko at the helm.” Fan said that “Mr. Cope believes this is the right time.” “We cannot help but wonder whether his decision was also driven by the state of the industry that is arguably at an important transition point,” he said. Perennial rival Telus Corp. sent a message of respect to Cope on Twitter. https://twitter.com/TELUS/status/1144571754490322944 Cope was a former chief operating officer of Telus before joining Bell in 2006. Since taking the head job at Bell, he oversaw the launch of Fibe TV and heavy investments in fibre and wireless. Fan noted that because many of the current brass joined Cope from Telus, his departure will likely similarly signal changes at Bell. Wall said that there are significant similarities between Cope and Bibic, who are both “smart, extremely hard working and decisive.” “These common attributes may ultimately be more important than their differences,” Wall said. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and Anja Karadeglija at akarad@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Bibic’s background an asset in CEO transition at Bell: observers

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