Rogers Wireless counting on data traffic to drive revenue growth

Speaking at Barclay Capital’s Worldwide Wireless and Wireline Conference in New York City on Wednesday, the president of Rogers Wireless said that an expected surge in data traffic will drive top-line growth. Getting the right handhelds to the right consumers is considered key to its strategy. Rob Bruce began his presentation with some background numbers, highlighting the fact that Rogers has over eight million wireless subscribers and 37% market share. He suggested that Rogers was “not unlike a combination of AT&T and Comcast” in that it is the only North American company that can offer quadruple play – wireless, TV, internet, and telephony. “Each of these is in full-on growth mode with wireless leading,” said Bruce. “There is still plenty of headroom for growth in Canada.” It became apparent from Bruce’s presentation and the questions afterwards, however, that Rogers is not only betting on cross- and up-selling of its subscriber base – it’s also expecting increased data traffic to drive revenue growth. “With cable, TV, internet, and telephone we can take a more and more an integrated approach through our three fibre-linked clusters in Ontario,” he said. “And steep growth in our data business continues to be a contributor to our top line growth and ARPU ”. Bruce added that although triple play customers represent a small portion of Rogers’ subscriber base, with an ARPU of $210, there is a strong incentive to “drive higher” with marketing and branding initiatives. Bruce fielded a question about the possible threat of the new wireless entrants in the Canadian market. After running down the list of new players, he concluded that the threat was manageable, even from the bigger companies. “Globalive Communications Corp. is finding it more difficult and time-consuming than they initially thought, but Public Mobile is moving reasonably briskly in the Windsor to Quebec City corridor. And, as far as we can discern, DAVE Wireless is moving relatively more slowly than the other two.” Another question regarded the potential threat of the move by Bell Canada Enterprises and Telus Corp. to roll out an HSPA overlay, and what this might mean to the handset market. “We are the largest device buyer in Canada and have a lot of clout,” said Bruce. “We are the only carrier with iPhone, and (we) just announced two HTC Corporation phones with Android OS, as well as long-standing and deep penetration with the BlackBerry.” Bruce added that Rogers would attempt to maintain dominance on device selection, and that Telus and Bell will face some challenges on this front. “They have to take devices out of their customers’ hands while their competitors are shooting at them. At the same time, we think it will take them 18 months to a couple of years to get tuned up to be we are. We can more than leverage this to our benefit.” This led into a question regarding churn – the real battleground in advanced markets like Canada’s that are approaching saturation. “We believe that churn is the absolute biggest leverage in wireless. It will be a constant focus for us,” said Bruce. “ acquisition costs have gone up in the past two or three years, and the 50% subsidy on smartphones is close to double what it is on a traditional phone. That is reflected in our COA .” For Bruce, the answer is to get the right device into the right hands, including slider phones for people who are SMS-centric. This in turn ties in to a larger strategy to control device costs. “We want to drive a mix of devices to motivate friendly manufacturing suppliers to pull down prices.” Finally, Bruce fielded a question on netbooks and USB sticks for wireless enablement. “This will be big and come fast,” said Bruce. “We are very active in that space...more focused on sticks than netbooks. We want to be fully exploiting sticks, and have machines working efficiently on sticks – we don’t want to give away netbooks to subscribers.” As it stands, the Rogers Rocket Stick, which was released late in 2008, fits into a laptop’s USB slot and provides wireless access across Canada, though obviously coverage is better in urban areas. Data plans start at $30 a month, although Bruce said Rogers is considering charging on a daily basis.

Rogers Wireless counting on data traffic to drive revenue growth

News | 05/28/2009 2:56 pm EDT

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