Stock Markets11 minutes ago (Oct 21, 2021 06:22AM ET)
© Reuters. FILE PHOTO: A sign is pictured outside a Rogers Communications retail store in Ottawa, Ontario, Canada July 20, 2017. REUTERS/Chris Wattie
By Moira Warburton and Eva Mathews
(Reuters) – Rogers (NYSE:) Communications Inc’s third-quarter earnings report on Thursday is set to be overshadowed by a boardroom tussle between the members of the founding family over the leadership of the Canadian telecoms company.
The spilling into the open of the boardroom spat is rare in the Canadian corporate landscape and caught analysts by surprise. It comes as Rogers is trying to boost its position in Canada’s already concentrated telecoms market with a C$20 billion ($16.2 billion) takeover bid for smaller rival Shaw Communications (NYSE:).
The deal is attracting scrutiny from multiple government regulators over whether it will decrease competition.
Rogers is also dealing with the sudden exit of Chief Financial Officer Tony Staffieri last month. That came after Chairman Edward Rogers, son of the company’s late founder Ted Rogers, made an unsuccessful bid to replace Chief Executive Joe Natale, a move that was opposed by his sister and deputy chair, Melinda Rogers-Hixon, Globe and Mail newspaper reported last week.
Scott Rattee, senior vice president at DBRS Morningstar, said the disagreement came as a surprise, pointing out that the credit ratings agency had recently improved Rogers’ credit outlook, in part due to Natale’s leadership.
While board disagreements were not a bad thing, how the tussle was handled could affect the company long term if it took resources and attention away from other issues, he added.
Rogers Communications declined to comment.
Rogers stock price underperformance has also worried investors. Rogers shares have risen more than 3% this year, well below nearly 14% gains in Telus (NYSE:) Corp and a 16% rally in BCE (NYSE:) Inc.
Chairman Edward Rogers said in a statement on Tuesday there was “room for improvement” in the company’s long-term performance following a report that he had held talks with potential candidates to replace board members.
“It’s disappointing the focus of others has strayed from what is best for the business,” he said.
Rogers is chair of the Rogers Control Trust, the controlling shareholder of Rogers Communications, as well as the chairman of the Rogers-owned Toronto Blue Jays baseball team and a board member of the company that owns the city’s professional basketball, hockey and soccer clubs.
The Toronto-based company is expected to report a 0.4% rise in revenue to C$3.68 billion from C$3.67 billion a year ago, according to the mean estimate from 9 analysts, based on Refinitiv data, while earnings per share is forecast to drop to C$1.02 per share, from C$1.08 per share a year ago.
“Our view was that Joe Natale had stabilized a number of the financial metrics in the organization,” Rattee said. “It seemed from our view at the time that a steady hand at the helm was benefiting the organization overall.”
($1 = 1.2322 Canadian dollars)
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