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Rogers Second-Quarter Profit Tops Analysts' Estimates on Wireless Growth
Rogers Communications Inc., Canada’s largest wireless carrier, reported second-quarter profit that surpassed analysts’ estimates as new subscribers for smartphones and devices such as Apple Inc.’s iPad fueled data growth.
Profit excluding some items was 80 Canadian cents a share, Toronto-based Rogers said today in a statement. Analysts in a Bloomberg survey predicted 68 cents on average.
Rogers started selling data plans for the iPad in May to bolster revenue after losing its Canadian monopoly on the iPhone as BCE Inc. and Telus Corp. began offering the device late last year. Rogers added fewer new subscribers last quarter than in the same period a year earlier. That reflects increased competition and a slowdown in iPhone purchases as customers held off for the availability of the iPhone 4, Rogers said.
“Net additions will be more evenly spread among the major players” said Maher Yaghi, an analyst at Desjardins Securities in Montreal who recommends buying the stock.
Rogers fell 57 cents, or 1.5 percent, to C$36.83 at 4:10 p.m. in Toronto Stock Exchange trading. The shares have gained 13 percent this year.
The company kept its full-year forecast unchanged. Rogers resisted changing it because it’s hard to predict demand for new products such as the iPhone 4, expected in the third quarter, Chief Executive Officer Nadir Mohamed said on a conference call with reporters.
Lack of Visibility
“Given that’s very difficult to do at this stage, we felt it wasn’t the time to change guidance because of the lack of visibility,” he said. “In terms of performance, we felt strongly about the first half and we’re optimistic about our outlook going forward.”
Sales at Rogers, which also offers cable television and publishes magazines, climbed 4.8 percent to C$3.03 billion ($2.94 billion), helped by wireless data revenue growth of 39 percent, the company said. Net income rose 21 percent to C$451 million, or 78 cents a share, from C$374 million, or 59 cents, a year earlier.
Rogers added 119,000 new subscribers last quarter, fewer than the 142,000 additions in the same period a year earlier.
To combat new carriers Wind Mobile, Mobilicity and Public Mobile who are targeting cost-conscious customers, Rogers is introducing chatr, a plan with unlimited talk and texting.
Chatr Plan
Chatr will have a “lean” cost structure, use extra network capacity, and complement its existing Fido and Rogers brands that are more focused on data-centric smartphones, Rob Bruce, president of Rogers’ communications unit, said on a conference call with analysts.
Helped by more smartphone adoption, the average wireless monthly bill increased to C$63.66, surpassing the C$62.80 estimate by Dvai Ghose, an analyst at Canaccord Genuity in Toronto who recommends holding the stock.
Wireless sales last quarter grew 5.2 percent to C$1.7 billion and cable operations revenue gained 3.5 percent to C$790 million. Sales from its media unit climbed 8.2 percent to C$396 million, the best performance in two years, the company said.
To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net
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