Rogers loses 21,000 cable subs in quarter, largely to IPTV

Rogers Communications Inc. lost 21,000 cable TV subscribers during the first quarter of 2012, including a loss of 1,000 digital TV customers, the company said in a financial statement Tuesday. The company said it had 2.276 million TV subscribers at the end of the first quarter ended March 31, down from 2.303 million at the same time a year earlier. UBS analyst Phillip Huang, in a research note Wednesday, attributed the losses to competition from BCE Inc.'s fibre-based, Internet-protocol TV service, Fibe TV, and predicted that the losses will continue. “Given FibeTV penetration is still nascent, we would not view this quarter's basic subs loss as a 'one-off' event,” Huang wrote. He wrote that if Bell follows through on passing 1.7 million homes with fibre and achieves a six-to-seven per cent penetration rate by the end of the year, Rogers is estimated to lose 86,000 basic cable subscribers in the 2012 fiscal year. Huang said Rogers has raised prices through March but those revenues will be offset by ongoing promotions and “retention offers.” Bell is rolling out fibre-to-the-node and fibre-to-the-home services in Toronto, Montreal and Quebec City to support its Fibe Internet and TV offerings. Telus Corp. is also rolling out fibre-based TV services and has been drawing subscribers from Shaw Communications Inc. in the West. The Wire Report reported in March that, in fiscal 2011, Telus added 194,802 TV subscribers; Bell Canada added 68,000 subscribers; Shaw lost 50,988; and Rogers lost 8,000 during the year. TV distributors are also facing competitive pressures from online streaming sources. Nadir Mohamed, Rogers’ president and CEO, acknowledged increased competition in the TV market. “While Q1 is generally a seasonally slow quarter in cable, we did also face intensified IPTV competition in our territory during the quarter,” he told analysts during a conference call Tuesday, following the release of Rogers’ financial statement after markets closed at 4 p.m. “Clearly, we're entering a period of stepped-up competition where our primary telco competitor, who already has a broadly deployed satellite offering, is now pushing with deeper concessions on its more widely available IPTV product,” he said. Mohamed said the competition affected growth in the company’s cable revenues, which were “dampened” by “the impact of retention and promotional offers” the company “needed to utilize.” For its wireless division, increasing revenues from data services and 47,000 more postpaid subscribers were offset by lower voice revenues, costly subsidies and other costs for new iPhone activations, Rogers said. For the three month period ending March 31, Rogers reported $2.954 billion in operating revenues, a one per cent drop from totals accumulated over the same three months a year earlier, and its $305 million in net income represented a nine per cent drop over the previous year. Much of the lost revenues can be attributed to declines in the company’s Rogers Business Solutions division and in video and wireless equipment sales this year, the company said. The company’s media division saw $14 million in losses during the first quarter—a 40 per cent increase over a $10 million loss in the same period a year earlier—which the company attributed to sluggish advertising sales. Rogers said a seven per cent decline in wireless profits was a result of “the upfront costs associated with the second highest number of smartphone activations and iPhone sales in the quarter and a decline in voice average monthly revenue per user.” The company said it added 47,000 high-revenue postpaid subscribers during the period and had seen a “stabilizing trend in postpaid churn.” Wireless data revenues increased by 16 per cent and now represent 39 per cent of the company’s wireless revenues, a five per cent increase from the same period a year earlier. Rogers ended the quarter with 1.806 million Internet subscriptions, up from 1.698 million a year earlier. Total cable connections across TV, Internet and phone services were 5.135 million as of March 31, Rogers said, up from 5.015 million a year earlier. news@thewirereport.ca

Rogers loses 21,000 cable subs in quarter, largely to IPTV

Broadcast | April 25, 2012

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