Still lots of room for industry growth in wireless: Rogers CEO

Explaining the relentless pace of growth in Canada’s wireless industry, Rogers Communications Inc.’s CEO Joe Natale said Canada still hasn’t reached its peak potential for subscribing Canadians. Natale noted that Canada is still only at 87 per cent penetration for wireless versus 120 per cent in the United States. He mentioned other factors are contributing to the momentum, including strong immigration and the economy, as well as Canadians using multiple devices. “There’s really no structural reason why we shouldn’t be at U.S. levels of penetration,” he said on a conference call with analysts following the company’s second quarter earnings release. “In the fullness of time, we will advance that from 87 to 120 as an industry and it’ll happen over the course of the next few years.” CRTC data from the last quarter of 2017 showed Canada standing at 31.5 million mobile subscriptions out of a population of roughly 37 million. That grew 3.3 per cent on a year-over-year basis. The OECD recently reported lower mobile subscriptions at 26.4 million. Comparatively, in 2016, the number of mobile subscriptions in the United States was 416 million out of a population of about 323 million, according to stats website Statista. In the three months that ended June 30, Rogers added 122,000 new postpaid wireless customers, 29,000 more than it added in the same quarter last year, for a total of 8.9 million subscribers. And despite suffering a net loss of 13,000 prepaid subscribers in the quarter, that base still expanded to 1.7 million over the year. Natale was faced with a couple of questions about the company’s wireless subscriber mix. Telus Corp. executives have previously raised concerns about the “quality” of its competition’s postpaid adds -- how many of those adds are purely new smartphones. “Pre-to-post is a typical kind of activity,” Natale said on the call, reiterating what he’s said in the past. “We think it’s a strong value-added activity and it’s not of any material difference in mix or consequence that we’ve seen in the last little while.” The company saw a 14-per cent increase in equipment revenue in the quarter from device upgrades by existing subscribers and higher postpaid gross additions. Overall, though, Natale said he hasn’t seen any “new dramatic factor” over the past year explaining the seemingly unending improvements in wireless. He pointed to Rogers’ improved execution on its strategy, which includes its focus on customer service. That customer-first focus has helped propel it to a record low churn in the quarter of 1.01 per cent, its lowest churn in nine years. That improved by four basis points over the second quarter last year, when it reported a 1.05, its previous best in nine years. This gets the company closer to the coveted sub-one-per cent churn that it has said it’s been pushing for in past quarters. “What we’re looking for is the capability that is truly sustainable in terms of managing churn,” Natale said. Adding dramatic effect, he reminded listeners that “Rome wasn’t built in a day.” Natale was also asked about whether he sees opportunity as a wholesaler when it comes to Cogeco Inc.’s potential entrance into the wireless space as an MVNO. “As it relates to different types of wholesale arrangements or an MVNO-type approach, it’s not something that’s part of our strategy or our focus,” Natale said. Cogeco CEO Louis Audet spoke about possibility, in a conference call earlier this month, that it could employ a hybrid wireless model, where segments will rely on an MVNO model and others that are facilities-based. Rogers improved its monthly average revenue per user by $1.39 to $55.6 compared to last year. The average billing per user , a new financial reporting metric that divides mobile billing by number of mobile subscribers, was up $2.67 to $64.8. That was driven by a mix of higher rate plans and postpaid subscribers. Analyst Phillip Huang of Barclays Capital Markets said in a Thursday note that those wireless numbers are likely the best among the Big 3 -- BCE Inc. and Telus rounding out the trio. The company’s figures largely beat analyst expectations, including on cable subscribers, which includes internet, TV and phone. The company added 10,000 subscribers compared to last year for a quarter total of 23,000 new subscribers, which pushed the base up to 2.37 million. It’s the best second quarter for internet adds the company has had since 2005, it said. Television losses of 9,000 in the quarter weren’t as bad as the 25,000 it lost in the same quarter last year, or as bad as Desjardins Capital Markets analysts Maher Yaghi was expecting at 18,000 and consensus at 16,500, he said in a Thursday note. The base now sits at 1.72 million, down 52,000 over the same period. New telephone adds of 3,000 pushed the sub-base up 22,000 to 1.12 million. The numbers were similarly higher than consensus estimates of 1,000 but lower than Desjardins’ at 5,000. “Overall, cable subscribers were ahead of expectations, which suggests BCE’s marketing campaign in the for has likely still not made solid gains,” Yaghi noted. All in all, cable revenues were up two per cent to $991 million compared to the equivalent period. The struggling Toronto Blue Jays baseball team took the fall for lower media revenues of $698 million, down five per cent from the year before. All said, the company’s revenues and profits were up four per cent and two per cent, respectively, to roughly $3.8 billion and $538 million year-over-year. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Still lots of room for industry growth in wireless: Rogers CEO

News | July 19, 2018

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Still lots of room for industry growth in wireless: Rogers CEO

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