Rogers Sees Talking Machines Making Up 5% of Revenue by 2015

Rogers Communications Inc. (RCI/B), Canada’s largest wireless carrier, expects to get at least 5 percent of sales by 2015 from machines using its network to talk to each other, a fresh revenue source as smartphone growth slows.

Machine-to-machine communications can help oil and gas companies, for example, monitor equipment and employees who are working alone at remote sites, alerting humans if something goes wrong. Rogers is eyeing an opportunity to sell such devices and services in the consumer electronics, retail, financial and energy markets, taking the lead in an industry that will reach $1 billion in Canadian sales by 2015, said Mansell Nelson, vice president for advanced business solutions.

“We are pretty well positioned to get a good chunk of that,” Nelson said in an interview today at Barcelona’s Mobile World Congress. “It’s still a small number relative to our total revenue but it will be one of our fastest-growing categories.”

Rogers, which sold the first BlackBerry smartphone in Canada and offered Apple Inc.’s iPhone for two-and-a-half years before competitors could, is looking for new sources of revenue as smartphone sales growth slows and rivals BCE Inc. (BCE) and Telus Corp. (T) win a growing share of the Canadian market for the high- end phones.

Reviving Growth

Rogers is aiming for machine-to-machine sales of $700 million to $800 million a year by 2015, Nelson said. That year, Rogers’s total revenue is expected to climb to C$13.4 billion ($13.2 billion) from C$12.5 billion in 2012, according to the average estimate of analysts surveyed by Bloomberg. Overall sales have grown by less than 2 percent each of the past two years after averaging 3.5 percent in 2009 and 2010.

Rogers fell 0.6 percent to C$48.09 at the close in Toronto. The stock has climbed 6.5 percent this year, compared with a 1.8 percent gain for the Standard & Poor’s/TSX composite index.

In addition to their industrial applications, machine-to- machine communications can be used by consumers to allow their devices to relay information to each other. A mobile phone, for example, could keep tabs on a home alarm to notify its user if it detects signs of an intrusion.

Rogers, which also owns TV and radio stations, publishes magazines and owns Major League Baseball’s Toronto Blue Jays, said earlier this month that its machine-to-machine business finished last year with 800,000 connected end-to-end devices, up 27 percent from a year earlier. Rogers doesn’t disclose its revenue from machine-to-machine installations.

Once people see the impact of this technology on their lives, its growth should accelerate, Nelson said. The company is targeting so-called M2M revenue to grow 50 percent a year.

“If we make it easier for customers to understand what this technology will do for them we are going to see the adoption rate increase rapidly,” Nelson said. “There’s a lot of positive reaction from our customers.”

To contact the reporters on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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