December price-war glitch costs Rogers customers
TORONTO — A technical glitch that caused delays and alienated some Rogers Communications subscribers lured some customers to its competitors during a major pre-Christmas pricing war.
As a result, Rogers reported 72,000 net additions for the fourth quarter — still enough to bring the annual net additions for Rogers to 354,000, the best in years — but not enough to meet analyst estimates of 100,000 new additions.
The telecom giant started a competitive pricing battle just before Christmas when it advertised a limited-time offer of 10 gigabytes of data for $60 per month, with certain conditions. Its major rivals Bell and Telus followed suit. Customers waited in long lines in stores and complained of hours-long wait times when calling customer service as a result.
“Clearly, execution for us was a challenge,” Rogers CEO Joe Natale told analysts in a call to discuss the company’s fourth-quarter results and 2018 outlook.
He said Rogers experienced a technical problem with its price-adjustment system — limiting its ability to sign up customers and resulting in some prospective customers turning to its competitors.
“I do believe it’s an isolated incident, but we’ve found the root cause, corrected it and it’s been isolated and behind us.”
He said the whole organization — from the call centre, to the stores, others in the field and management — had rallied to face the crisis and found “all sorts of clever work-arounds” that will make Rogers stronger and better.
But Natale also estimated that the technical problems during a seasonally important period had cost Rogers about 35,000 net additions to its subscriber base.
He was asked if the December promotion — which Telus and Bell eventually matched — was sparked by a very similar deal introduced weeks earlier by Shaw’s Freedom Mobile. “The promotional activity in Q4 had nothing to do with any one of our competitors ... full stop,” Natale said.
He added that the impact from Freedom “is very small. At the margin. Nonmaterial. Not of consequence overall. And there’s absolutely zero concern from the board, from management, about that impact, whatsoever.”
Natale said Rogers has a clear plan “for sustained financial growth, along with strategic capital investments in our core business.”
He said the company’s dividend — 48 cents per share quarterly, the same as it has been since early 2015 — will be increased when the time is right, but didn’t indicate when that would happen.
Natale said capital spending is the No. 1 priority for investing its free cash flow.
The company’s key priorities include investments in upgrading its wireless networks to fifth-generation technology, bidding on spectrum licences at a government auction, and rolling out the next generation of home TV and internet technology on a neighbourhood-by-neighbourhood basis, he said.
He and chief financial officer Anthony Staffieri said there are no plans to sell the Toronto Blue Jays — addressing speculation that arose last month.
Rogers said its net income for the fourth quarter was $419 million and amounted to 81 cents per share.