WIRELESS LIFTS ROGERS TO ‘BEST’ SHOWING IN YEARS.

Beats estimates for wireless additions

reported what analysts called its “best performance in many years” fuelled by the addition of more wireless customers than expected in the high-demand market.

The Toronto-based communications giant said Thursday it added 122,000 wireless customers on contract in the three months ended Jun. 30, topping analysts’ expectations of 90,000 additions. It also reduced the rate of customers cancelling their service to 1.01 per cent, the lowest level in nine years.

On the cable side, Rogers beat subscriber expectations by healthy margins.

Its internet division added 23,000 customers, the most additions in 13 years and nearly double analysts’ expectations despite heightened competition with Bell in the Toronto area.

Revenue for the division increased 10 per cent as more customers adopted higherspeed services.

Even Rogers’ television division, which has struggled, lost fewer customers than expected, down by 9,000 compared to predictions of a 19,000 customer loss.

The only miss was media, where revenue fell five per cent to $608 million on lower Blue Jays and ad revenue. Margins and adjusted earnings, however, improved slightly thanks to cost-cutting. In June, Rogers laid off about 75 staff when it slashed one-third of its digital content and publishing unit.

Overall subscriber numbers drove profit to $538 million from $528 million in the same period last year, with adjusted earnings per share of $1.07 beating analysts’ expectations of $1.05. Chief executive Joe Natale said it made for a “rock solid first half of the year.”

“We’re very pleased with our healthy, robust performance,” Natale said on a conference call with analysts.

Yet adjusted earnings growth was strong enough in the first half of the year that analysts were surprised Rogers didn’t revise its guidance upward from current expectations of five- to seven-percent growth. TD Securities analyst Vince Valentini questioned whether Rogers was anticipating “huge” marketing costs in the second half of the year to bring growth down to those levels.

Natale, who said 65 per cent of volume happens in the second half, said he expects momentum to continue and that Rogers takes a conservative approach to financial guidance.

Analysts zeroed in on expected marketing costs for Rogers new TV product Ignite, which launched an ad campaign last week and has thus far rolled out to thousands of employees and select customers. Natale said those costs are baked into the annual guidance.

The new TV product uses Comcast’s X1 platform — Shaw Communications uses the same technology out West — and is expected to better compete with BCE Inc.’s internet protocol TV product.

Over time, the voice-controlled platform is expected to be the basis of the connected home that provides services like security and temperature control. Much like the shift to smartphones a decade ago, Natale said he expects a mass-market shift toward connected homes.

For wireless, average billings per user grew four per cent despite heightened competition from Shaw’s Freedom Mobile, whose large data buckets at lower prices have put pressure on the Big Three incumbents Rogers, Bell and Telus Corp.

Natale said the growth was related to high demand for data, higher adoption of smartphones, upgrading customers to more expensive plans and managing the customer base.

It marks another excellent quarter for the wireless industry, which has enjoyed two years of consistently strong growth thanks to a mix of immigration, a healthy economy, an increase in hand-me-down phones and more people having both a work and a personal phone.

“Both wireless and cable delivered the best metrics we have seen in many years,” Barclays analyst Phillip Huang noted to clients. “We were surprised that management did not raise guidance despite the strong year-todate guidance.”

Desjardins analyst Maher Yaghi noted to clients that Rogers beat subscriber expectations in a meaningful way for “strong all around” results. The strong results, however, might mean a weaker quarter for Roger’s top competitor Bell, Yaghi wrote.