National Post (National Edition)
Rogers profit misses on fewer wireless subscriber additions
Customers migrate to unlimited plans
Rogers Communications Inc., Canada’s largest wireless carrier, on Tuesday reported a slightly lower-than-expected quarterly profit in a softer market that hit subscriber additions.
The telecom company, which has been enduring tougher competition, added just 77,000 net postpaid wireless subscribers in the second quarter ended June 30, down from 122,000 new customers a year earlier.
Rogers, among Canada’s Big Three telecoms, was the first in the country to introduce unlimited data plans last month, which was quickly followed by rivals BCE Inc.’s Bell Mobility and Telus Corp.
The company said 365,000 customers have already switched to the newly introduced “Infinite” data plan and their usage grew 50 per cent within six weeks of its launch.
Rogers expects a shortterm moderation in growth with respect to the new data plan, chief financial officer Anthony Staffieri said on a conference call.
Analysts expect Canadian telecoms to face near-term pressure as customers migrate to unlimited plans, which will affect average revenue per user (ARPU).
However, the company’s wireless customers on an average paid $56.73 a month for its services in the quarter, up from $55.60 a year earlier.
Desjardins analyst Maher Yaghi said the acceleration of wireless ARPU is encouraging as it could lift expectations.
The company is entering a period of higher ARPU base after the launch, which is a positive sign, Yaghi wrote in a note.
The Toronto-based company’s net income rose 10 per cent to $591 million, or $1.15 per share, in the quarter. On an adjusted basis, the company earned $1.16 per share, missing analysts’ estimates by 1 cent, according to IBES data from Refinitiv.
Revenue rose 0.6 per cent to $3.78 billion, falling below analysts’ estimates of $3.87 billion.
The company has been facing increased competition from players such as Shaw Communications Inc., which snatched 37 per cent of new postpaid subscribers among the top four Canadian telecoms in the first quarter of 2019, according to Bloomberg Intelligence data. Rogers’ market share of industry net adds declined to 13 per cent from 35 per cent in the same period.
Rogers is fighting back, announcing Infinite in June. Competitors BCE and Telus responded with their own promotional offers, sparking a price war.
Infinite is the “the right move for our customers, our company,” Rogers’ chief executive Joe Natale, said on a post-earnings analyst call. Natale sees the unlimited data plan, along with Rogers’ zero-financing options for devices, helping to drive growth in the second half of the year.
David Heger, an analyst at Edward Jones, said that a dramatic slowdown in the wireless business became apparent in the first quarter, which helped manage expectations. Subscriber additions are “still down a fair amount from a year ago, but at least it’s more in line since expectations have been readjusted.”
The company’s shares, which fell as much as three per cent, closed 0.8-per-cent lower Tuesday at $69.34 in Toronto trading.