ROGERS REBUFFED CALLS TO JOIN BCE BID Grant Robertson – Globe and Mail Ted Rogers has no time for the private equity players who have approached his company to partner on a bid for rival BCE Inc. and on other deals in recent months. In fact, the head of Rogers Communications Inc. said Monday: "We told them all to go to hell."
At a time when the cable and wireless company is flush with cash after spending years pulling itself out of junk debt status, Mr. Rogers said he wants nothing to do with the "suits" and their advice on how to spend the money.
Mr. Rogers, who turned 74 on Sunday, said he would rather pursue small acquisitions while the company churns out cash to investors.
In a move that would have been unthinkable only a few years ago when Rogers was investing heavily in building its cellphone and cable networks, Rogers announced a tripling of its dividend Monday, which pushed up the company's shares 2.69 per cent.
That means an extra $216-million will be paid out to Rogers investors, including Mr. Rogers, who is the company's largest shareholder. Of that, $178-million will go to holders of the widely traded class B non-voting shares.
He would not say who the private equity overtures came from, nor describe the nature of the proposals, but insisted they were turned away.
"I believe we should just keep doing what we're doing and don't get diverted by all this high-falutin stuff going on — big suits walking around having meetings all the time," Mr. Rogers said before the company's annual meeting at its Toronto headquarters. "I can't imagine anything worse for a company than having all these suits going in and out of your head office literally morning, noon and night. It utterly disrupts operations — so we want the suits out of here."
The dividend increase boosts Rogers' payout to 50 cents a share from 16 cents annually, and helps increase Rogers' yield, which was lagging behind BCE and Telus. With a yield of 1.12 per cent, Rogers still trails its rivals. BCE's is 3.7 per cent and Telus's is 2.28 per cent.
The dividend increase means an extra $34.7-million a year for Mr. Rogers, based on the more than 102-million class A shares the CEO held as of last month.
Rogers amassed large amounts of debt through acquisitions such as the 2004 purchase of No. 4 cellphone player Microcell Telecommunications — part of a spree that saw the company spend $3.5-billion and rack up debt.
However, the company hasn't been known for doling out cash to investors. Aside from a two-for-one stock split last year, the dividend has only increased slightly, from 10 cents a year in 2000 to 12 cents annually before Monday's increase.
Rogers will also book costs of $380-million in the second quarter from changes to its options program. It will allow employees to exchange stock options for cash, in an effort to issue fewer shares.
Mr. Rogers admitted Monday that he never expected to live long enough to see the company's debt ratings improve to the extent they have. Rogers is now investment grade.
"Not in my lifetime," said the CEO, who made $16.37-million last year, with two-thirds of his pay package coming from exercised options.
With Rogers facing the prospect of upstart competitors in the wireless industry looking to take market share from the cellphone incumbents, Mr. Rogers also had bitter words for rivals such as Quebecor and MTS who are calling for more competition in the Canadian market.
Ottawa is preparing to auction off more wireless spectrum in 2008. MTS and Quebecor's Videotron Ltée say carriers need certain rules in place to protect them from the dominant players, who could freeze them out.
They want spectrum, or airwaves, to be set aside for new entrants into the market, and argue that reasonable roaming agreements should be mandated, rather than left up to individual negotiations with the bigger players.
Mr. Rogers called the companies who say Rogers, Bell and Telus aren't providing enough competition "scallywags" who "should be put in jail."
He also suggested they are just out to get cheap spectrum in the auctions by forcing the government to set some aside, rather than bid against the bigger players.
"It's just a rip-off trying to get low-priced spectrum," Mr. Rogers said. "And you know that some of them [will] sell out to the Americans when the ownership rules are changed. What else is new?"
A spokesman for Quebecor said he didn't want to get into a debate with Mr. Rogers, but argued Rogers was able to amass much of its spectrum at very low cost over the years, and has since obtained an attractive position in the market through the same methods it is now trying to prevent.
"It's just colourful language from Rogers. And Ted Rogers is known for colourful language. He's a colourful guy," Quebecor spokesman Luc Lavoie said.
"Let's not forget how Rogers got a lot of its spectrum. They essentially started in the mobile business for free." |