Rogers aims to improve churn, ‘reset’ enterprise division

Joe Natale, president and CEO of Rogers Communications Inc., reiterated his focus on the customer experience after the release of the company’s second-quarter earnings Thursday, suggesting it will be part of a formula that can help drive its postpaid wireless churn rate below one per cent. “We’ve gone after things like bill shock and upgraded some very important elements like overage alerts and data management we’ve gone after different parts of individual channels with respect to customer contact,” Natale said during the second-quarter conference call with analysts Thursday, regarding how the company improved the customer experience. “We’ll go after how we measure outcomes across the business, we’ll go after how we’re structured for success, having the right people in the right roles, looking at the fundamental processes across the business, and I believe we can drive the churn rate below one per cent — it will just take some time to move to it in a fundamental way that’s sustainable.” Natale did not give details about when that target churn might be achieved. The company’s postpaid wireless churn dropped nine basis points to 1.05 per cent in the quarter year-over-year, its lowest rate since 2009. That beat Barclays Capital analyst Phillip Huang’s estimate of 1.08 per cent, he said in a Thursday note. It also beat Desjardins Capital Markets’ estimate of 1.13 per cent, which analyst Maher Yaghi pointed out in his Thursday note. Total quarterly revenue increased four per cent to $3.6 billion, compared to $3.4 billion in the same period last year. Net income leapt 35 per cent to $531 million compared to $394 million in the same period in 2016. This is the first quarter for Natale at Rogers. In his inaugural address at the company’s annual general meeting in April — one day after the company released its first quarter results — Natale said consumer issues are a core focus for the company moving forward, continuing the trajectory of his predecessor Guy Laurence. Natale’s comments come after the CRTC released its wireless code decision in June, which banned device unlocking fees and mandated that all new phones be sold unlocked by December. One intended effect of the decision is to “reduce a significant barrier to switching by improving device portability,” the CRTC said at the time. Following the decision, Yaghi said the result could “slightly” increase churn rates, but the impact shouldn’t be material. The wireless industry has already seen consecutive strong quarters, and it was no exception for Rogers for the three months ended June 30. The company saw total wireless revenue growth of six per cent in the quarter, increasing to approximately $2 billion compared to the $1.9 billion in the second quarter of 2016. The company added 93,000 postpaid wireless subscribers in the quarter, up 28,000 compared to the equivalent quarter in 2016, with average revenue per user increasing $1.95 over the year to $62.13. Total postpaid subscribers were up 360,000 to 8.7 million by quarter end compared to the same period last year, while prepaid subscribers stood at 1.7 million, compared to 1.6 a year earlier. Cable revenues—composed of internet, television and phone—were flat, staying at $870 million compared to last year’s equivalent period. Breaking that down, the internet segment increased seven per cent over the year to $402 million due to factors including more subscribers and a “general movement” to higher speed and usage tiers, Rogers said. Despite that, net additions were lower in this quarter at 11,000 compared to 12,000 in the same quarter last year. Total internet subscribers increased by 110,000 over the year to 2.2 million. National Bank Financial analyst Adam Shine said the CRTC’s decision to lower interim rates for wholesale internet cost the company $11 million in revenues. Television revenues declined four per cent to $377 million compared to the same period last year. The revenue decrease was due partly to fewer subscribers and more promotional pricing, Rogers said. Total subscribers declined by 76,000 over the year for a total of 1.77 million, while net losses stood at 25,000 this quarter, more than the 23,000 lost in the second quarter in 2016. Last year, Rogers dropped its in-house IPTV product in favour of Comcast Corp.’s X1 platform. Chief financial officer Tony Staffieri said on the Thursday analyst call that he “would be careful not to overstate” what’s going on with a changing dynamic in the marketplace, including the trend of cord-cutting and the move to over-the-top (OTT) options. “There’s a lot of compelling , just to name a few, that continue to have value for linear , and we think that something like the X1 user interface, for example, is going to be key to making that happen,” Staffieri said. Shine added in the Thursday note that Rogers, leveraging Comcast’s scale and technical roadmap, “will be gearing up over the year for a significant improvement to its Cable solutions for customers which bodes well in its battle with Bell.” Media segment revenues were up four per cent to $637 million compared to the same quarter last year, due partly to higher sports-related revenue and broadcast TV advertising revenue. Also this week, Rogers announced that Dean Prevost will replace Nitin Kawale, who left in May, as enterprise business president. On the call, Natale said the company is looking to have Prevost make a big impact when he arrives in September. “Right now we’re in the middle of a reset in that business,” Natale said, noting a less than five per cent market share. “We’re going to go back to basics: fewer, but core products we’re going to rebuild the sales team as a whole.” “We’re very fortunate to have Dean coming on board. There’s a good experienced team with enterprise there and many parts of the organization. With Dean’s leadership, we’ll bring the whole thing together, and really go after the fact that we have underutilized plant and facilities across all of our networks that are running right by businesses all across Canada.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Rogers aims to improve churn, ‘reset’ enterprise division

Broadcast | July 20, 2017

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Rogers aims to improve churn, ‘reset’ enterprise division

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