Rogers says further regulation could lead to capex cuts

Rogers Communications Inc. has warned that, depending on what regulatory decisions are made in 2020, the company may cut their capital expenditure investments below the low end of their guidance for the year. Speaking on a conference call Wednesday with financial analysts about the results in the company’s fourth quarter of 2019, Rogers’ chief financial officer Tony Staffieri said that the guidance of a $2.7 billion to $2.9 billion range was based on the company’s “current regulatory outlook,” though he did not specify what that was. “To the extent that regulatory decisions in the year were adverse or negative to what currently exists, we could very well see an investment range of less than $2.7 , or the bottom end of our capex range,” Staffieri told analysts. The comments come on the eve of the CRTC’s wireless review hearings, which are due to begin in February and will address whether or not the regulator will mandate MVNO access to wireless infrastructure -- something the incumbents have long said would harm investment. They have also made the same arguments in fighting the CRTC’s new, lower wholesale internet rates. Back in September, executives from both Rogers and BCE Inc. told investors that they thought mandated MVNO access was unlikely. Pointing to the 120,000 people he said are employed in telecoms across the country, as well as the investments made in infrastructure, Staffieri told investors at the September BMO Media and Telecom Conference in Toronto that the company is “optimistic that that all gets factored in” when the wireless review process assesses mandated MVNO access. Elsewhere on the call Wednesday, Staffieri pointed to what Rogers described as a stabilization in wireless pricing plans, after a summer of competition that saw a precipitous drop in plans following Rogers’ introduction of “unlimited” or “no overage” data plans in June, followed by Telus Corp. and a promise from Bell to do the same. The company reported that it now has 1.4 million subscribers on its unlimited plans, “triple the number we had expected at this time,” according to the company's financial statement. The company said the million unlimited subscribers they reported in October was also three times the number they had expected by that time. “It’s important to note that price plans have stayed stable,” Staffieri said Wednesday, adding that subsidies on handsets have declined, “albeit at rates still well below our expectations when we first launched equipment installment plans back in July.” In October, Rogers reported a third-quarter wireless revenue decline. At the time, CEO Joe Natale said the quarter was “was the beginning of a critical and necessary shift in the Canadian wireless industry. The launch of unlimited data is fundamentally changing how Canadians use their wireless service and how operators drive sustainable growth economics into the long term.” In today’s fourth-quarter results, overall revenue for the three months that ended Dec. 31 was marginally up, to $3.95 billion from $3.94 billion, with a profit of $468 million for the quarter, down seven per cent from the $502 million the company made in profit for the same period the previous year. Within the overall revenue number, wireless revenue was up one per cent to $2.49 billion to $2.46 billion. Television revenue in the quarter was down two per cent to $355 million from $363 million, while internet revenues were up seven per cent to $575 million from $536 million last year. Rogers had 131,000 net additional postpaid wireless subscribers in the last quarter of 2019, 19,000 more than the 112,000 they added in the final quarter of 2018, bringing the company's total postpaid subscribers to 9.44 million, up from the 9.16 million they had at the end of 2018. Churn increased three base percentage points, to 1.26 per cent from 1.23 per cent. In prepaid wireless, the company reported losses of 76,000 subscribers, down from the 139,000 subscribers they lost in the corresponding quarter last year, bringing their total to 1.4 down from the 1.63 million they had this time last year. Wireless ARPU was down 65 cents to $55.26 from $55.91 this time last year, reflective of the continuing decline in overage revenues. In internet service, Rogers reported net additions of 27,000, slightly more than the 25,000 they added at the end of 2018, bringing the total number of internet subscribers to 2.53 million, up from 2.43 million a year ago. The company lost 17,000 television subscribers, a slight increase on the 16,000 they lost in the last quarter of 2018. The company now has 1.58 million television subscribers, down from the 1.685 million they had a year ago. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Rogers says further regulation could lead to capex cuts

News | January 22, 2020

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Rogers says further regulation could lead to capex cuts

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