Rogers plans to advance Ignite at ‘thoughtful pace’ to replace legacy systems

Rogers Communications Inc. top brass say they expect to see enough long-term growth from the recently-launched IPTV service Ignite TV that the company can eventually sunset legacy TV product sales – but won’t rush the roll-out nor put a timeline on it. Rogers president and CEO Joe Natale said during an investors call with analysts following its positive third quarter results Friday that it’s still “early days” for the IPTV service, but the platform is so far working well and driving positive average revenues per user (ARPU) and “improved early lifecycle churn.” He said their goal is to grow Ignite TV at a “thoughtful pace” and focus on quality and capability for the service. “At some point in the future, you will see us stop selling legacy TV” , he replied in response to an analyst question, but wouldn’t offer any sort of timeframe. One analyst predicted this year that process could take almost five years. “Over the long term, we expect cable capital intensity to decline significantly as the penetration of Ignite TV reaches our entire base and we move off of legacy set-top boxes,” said Anthony Staffieri, Rogers’ chief financial officer. Natale said having various vintages of set-top boxes creates “complexities” in the field, while the IPTV install costs are cheaper and its “cash prospects” are “very strong.” The company starts its employee trials later this month in Atlantic Canada and started roll out in Ontario earlier this year. The company posted a loss of 18,000 TV subscribers in its third quarter that ended on Sep. 30, about the same loss in the same quarter last year. The overall number of TV subscribers was down by 52,000 to 1.7 million. Revenue in the segment was also down five per cent to $357 million compared to a year ago. “TV additions were below expectations in spite of the Ignite TV launch and internet subscriber numbers were strong, likely on the back of improved wholesale trends vs. ,” Desjardins analyst Maher Yaghi said in a research note. TV shares the same category as internet and home phone -- the “cable” segment. Rogers added 35,000 new internet subscribers in the quarter, an increase of six thousand over the year, for a total of 2.4 million. Revenues for that segment were up eight per cent to $534 million. Meanwhile, the home phone segment revenues were down 13 per cent to $88 million on no new subscribers in the quarter versus a gain of about a thousand last year, but the base increased by 21,000 over the year to 1.1 million. Rogers partially attributed its cable growth to internet customers moving to higher speed and usage tiers, pricing changes and growing its subscriber base. All told, cable segment revenues grew by one per cent to $983 million. “The cable sub loading (mainly internet) performance in Q3 was very encouraging when one considers the promotional activity in the market and Bell’s new product launches and heavy marketing around FTTP in the GTA,” Canaccord Genuity analyst Aravinda Galappatthige wrote in an analyst note Friday. Media revenue was also down five per cent this quarter from lower revenue from the Toronto Blue Jays and lower advertising revenue. The wireless division added 5,000 fewer postpaid customers in the quarter at 124,000 compared to the same quarter last year. Total postpaid subscribers sat at about 9 million, up by 206,000. Natale said the company saw its best third quarter postpaid churn number in nine years, at 1.09 per cent. Churn is the percentage of customers who quit for another provider. Rogers has topped previous bests in churn recently, and vowed to gun for a sub-one-per-cent churn. The prepaid division saw 37,000 fewer subscribers sign up compared to last year, as it added 60,000 this quarter. Total prepaid subscribers was down by 21,000 to 1.77 million compared to last year. Monthly ARPU was also up $1.40 to $57.21. Rogers’ total revenue growth was up three per cent from last year to $3.8 billion, driven by wireless revenue growth of five per cent, it said in a release. That growth, which Natale said he expects to continue, was attributed in part to growth in per-user revenue from subscribers moving up to higher-rate plans and a bigger postpaid subscriber base. The company experienced a net income increase of 17 per cent over the year to $594 million. — With reporting by Kyle Duggan at kduggan@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Rogers plans to advance Ignite at ‘thoughtful pace’ to replace legacy systems

News | 10/19/2018 6:42 pm EDT

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