Rogers Q3 buoyed by wireless adds, sports advertising

Rogers Communications Inc. showed a rebound in its third-quarter earnings report Thursday, with media and wireless revenue roughly back to the levels they were at in 2019 following a second quarter that its CFO described as the "most volatile" the business had seen. Executives were tight lipped about a pair of offers the company has made to acquire Cogeco Inc. alongside New York-based Altice USA Inc. The Audet family, which has controlling shares in Cogeco, has rejected both offers and accused the CEOs of Rogers and Altice of "misleading" investors. Responding to a question from TD Securities analyst Vince Valentini on a Thursday morning call about whether or not Rogers would sell its shares in Cogeco should Cogeco continue to refuse offers, Rogers CEO Joe Natale demurred, saying he would not comment on the offer while it was still on the table. "If is not accepted, we would do what you would expect us to do: we would review our capital allocation priorities with our board, as part of our normal course of planning and strategic priority setting," Natale said. In wireless, the company added 138,000 net wireless postpaid subscribers, 35,000 more than the 103,000 the company added in the same quarter last year, for a total of 9.57 million, up from the 9.36 million at the end of the third quarter of 2019. In prepaid wireless, Rogers added 30,000 subscribers, 3,000 more than the 27,000 they added in the quarter last year for a total of 1.3 million. The prepaid total was down 178,000 from the 1.48 million the company reported last year. The growth in wireless subscribers, Natale said on a Thursday morning call with financial analysts, "was driven by a number of factors: pent up consumer demand, an active back to school shopping period, growth in our digital sales service capabilities, and a continued growth in our 5G-ready unlimited plans." In wireless, the company reported $2.23 billion in revenue, a four per cent fall from the $2.32 billion Rogers reported this time last year. As has been the case throughout the COVID-19 pandemic, Rogers wireless revenue was hampered by lower roaming fees due to travel restrictions, in addition to the movement toward unlimited data plans and the subsequent lack of revenue from overage fees. Natale said that the average unlimited plan customer is worth about $20 more in ARPU than customers on the older plans with less data. "We have capabilities to drive people up the tier of different price plans into unlimited, and even from pre to post along the way, so that the profitability is part of the balancing act as well," he said. Average wireless revenue per user (ARPU) was down to $51.12 from $56.01 for the quarter. In the third quarter Rogers added some 16,000 internet subscribers, a large drop from the 41,000 the company added in the third quarter of 2019, for a total of 2.57 million internet subscribers at the end of the quarter. The company also added 38,000 subscribers to its Ignite TV platform, 27,000 less than the 65,000 they added a year ago. The Ignite TV platform now has 473,000 total subscribers, more than double the 220,000 the company reported in the third quarter 2019. On the cable side of things, the company reported $988 million in revenue, a one per cent drop from $994 million a year ago. Cable revenues were down, the company said, because of the "the combined effects of bundled pricing constructs that provide home phone for a lower incremental cost and waiving certain fees and the programs implemented to help customers during COVID-19," according to the company's quarterly report. The media division held steady with $489 million, up one per cent from the $483 million reported in the third quarter of 2019. The company said the slight increase in media revenues was a result of increased advertising, subscription, and broadcasting revenues from the resumption of professional hockey over the summer. Those increases were partially offset, Rogers said, because of lower game-day revenues from the Toronto Blue Jays. Professional sports had been shut down in mid-March in the early days of the COVID-19 pandemic. Natale said that advertising across the media division was up 18 per cent, with sports advertising "showing even stronger gains." "This underscores the essential strength and resilience of live sports above all other media categories," he told analysts. Rogers’ total revenue was down two per cent to $3.67 billion from $3.75 billion at this time last year. Profits were down 14 per cent from this time last year, to $512 million from $593 million. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija

Rogers Q3 buoyed by wireless adds, sports advertising

Broadcast | October 22, 2020

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Rogers Q3 buoyed by wireless adds, sports advertising

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