Rogers bounces back on wireless with 95,000 postpaid ads

Rogers Communications Inc. reported increases in wireless revenue and subscribers in the three months ending March 31, which it said drove its overall revenue up eight per cent over the year to $3.63 billion. It added a net 95,000 postpaid wireless subscribers in the quarter, which was not only more than the 60,000 in the same quarter of 2017, but its “highest Q1 postpaid net additions in nine years,” Rogers said in its results press release Thursday. It added the postpaid churn of 1.08 per cent was its best first-quarter churn rate in 15 years. The results followed a quarter in which the company’s churn was negatively affected by a technical issue that saw customers go elsewhere. CEO Joe Natale said in a call with analysts that the improved churn metrics are sustainable and could be further improved. “We think there’s still room on that front,” he said. “I’m loathe to kind of give you a number overall but I do think we’ll continue to chip away at it over the quarters and years to come.” Net income jumped 37 per cent over that time, to $425 million, which Rogers said was largely due to an increase in wireless adjusted earnings before interest, taxes, depreciation and amortization (EBIDTA), “due to the strong growth in revenue as well as continued progress on our cost efficiency mandate.” The results were reported according to a new standard, IFRS 15, which Rogers said had significant effects on its wireless results due to changes in recording revenue from customer contracts, resulting in “an increase to equipment revenue recognized at contract inception and a decrease to service revenue recognized over the course of the contracts.” The company restated the prior-year results to be consistent with the new standards. Those restated results showed nine-per-cent growth in wireless revenue, to $2.2 billion, and an average revenue per user (ARPU) of $53.68, up from $52.03. Rogers chalked that up to “our balanced approach to continue monetizing the increasing demand for data along with attracting a desirable mix of subscribers to our brand.” It ended the quarter with 8.8 million postpaid wireless subscribers. Prepaid wireless subscribers increased and stood at 1.7 million, despite a loss of 60,000 in the quarter, which was bigger than the 42,000 loss a year ago. Internet revenue and overall subscribers also increased. Revenue was up seven per cent to $506 million, while it added 26,000 in the quarter (compared to 33,000 in the same quarter the previous year) to 2.3 million by quarter-end. Rogers said that increase was due to customers moving to higher speed and usage tiers, a larger subscriber base, and price changes. Meanwhile, TV revenue was down three per cent to $365 million, as it shed 12,000 subscribers in the three-month period, fewer than 24,000 it lost a year earlier. Rogers, which ended the quarter with 1.7 TV customers, said the revenue decrease was due to customer losses and price changes. Canaccord Genuity analyst Aravinda Galappatthige said in a research note Friday that results in the cable segment, “which we were frankly concerned about, proved to be a lot better than feared. While we expect pressure throughout the year as expands its Fibre broadband service across the GTA, and X1 unlikely to be a material factor through 2018, it appears to be less threatening than we expected pre-Q1.” Rogers is among the Canadian cablecos moving to Comcast Corp.’s X1 platform for IPTV service. Barclays Capital analyst Phillip Huang also said Rogers’ overall Q1 results were better than expected, though he also noted Bell’s fibre push in Toronto and growing competition from Shaw Communications Inc.’s Freedom Mobile, concluding that “Q1's outperformance may be more difficult to repeat in the seasonally more competitive quarters ahead.” But it was Rogers’ media division that saw the biggest increase in the quarter, as revenue rose 12 per cent to $532 million. The company said in its results that the increase was driven by higher subscription revenue of its Sportsnet specialty channel, and “a higher distribution to the Toronto Blue Jays from Major League Baseball and the earlier start to the regular season this year.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Rogers bounces back on wireless with 95,000 postpaid ads

Broadcast | April 20, 2018

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