4 Min Read
OTTAWA (Reuters) - Rogers Communications Inc said on Thursday it will cut 900 jobs across Canada, including 20 percent of its executives, in an effort to streamline operations and better respond to a changing industry.
Rogers, a major Canadian cable-TV provider and owner of the country's largest wireless carrier, also said it will spend about C$163 million ($153.7 million) to boost its stake in a rival cable and telecommunications group headed by Cogeco Inc.
Cogeco is based in Quebec and is strong in that province, where Toronto-based Rogers has had a lower profile. Rogers said, however, that the new purchase of Cogeco shares does not foreshadow an imminent takeover move.
The 900 jobs to be cut represent about 3 percent of Rogers' 30,000-strong work force.
"Back in September, we announced a reorganization that responds to changes in the industry," a Rogers spokeswoman said. "As part of that reorganization, we announced that 20 percent of our VPs in our cable, wireless and corporate groups would be eliminated."
Toronto-based Rogers said in September that it would further integrate its cable and wireless divisions and create a new emerging business and corporate development unit to help it more quickly meet changing customer needs.
"We need to be more nimble and efficient to drive further innovation and deliver long-term growth," the spokeswoman said.
Rogers said on Thursday it will buy 3.2 million subordinate voting shares of Cogeco Cable Inc at C$36.43 a share, a 9 percent premium over the closing price on Wednesday. It will also buy 1.6 million shares of Cogeco Inc at C$28.61 a share, 14 percent above Wednesday's closing price.
Rogers said it was buying the stock through private agreements with third parties for investment purposes and has no intention now of taking over either company.
"Rogers has owned a meaningful stake in Cogeco Cable and Cogeco Inc for roughly 10 years," BMO Capital Markets analyst Tim Casey said in a note.
"Control continues to rest with the Audet family through their position of multiple voting shares in each company. Nonetheless, the purchase of additional shares will increase speculation of further consolidation within the domestic cable industry, particularly given Shaw's recent purchase of Mountain Cablevision."
Cable-TV and telecom company Shaw, which is based in Western Canada, announced in July that it would pay an undisclosed amount of cash and stock to acquire Mount Cablevision, which provides cable, Internet and phone service in southern Ontario.
UBS analyst Phillip Huang said the premium Rogers paid for Cogeco stock demonstrates the underlying value of the shares, which have been hurt by problems Cogeco has had with its Portuguese television operations.
"They would have done enough diligence to feel that it's justified to pay the price that they did," he said in an interview.
After the transaction closes, Rogers will own 29.8 percent of subordinate voting shares in Cogeco Cable and 33.6 percent of subordinate voting shares in Cogeco Inc.
Cogeco Inc shares climbed 7.4 percent to end at C$27 on the Toronto Stock Exchange on Thursday, while Cogeco Cable shares gained about 5 percent to close at C$35.10.
Rogers stock fell 49 Canadian cents, or 1.5 percent, to end at C$32.26 on the TSX.
Reporting by Susan Taylor, with additional reporting by Frank Pingue and Scott Anderson in Toronto; editing by Peter Galloway