Rogers Quarterly Sales Rise 1.5% on Smartphone Usage
Stock Chart for Rogers Communications Inc (RCI/B)
Sales climbed to C$3.22 billion ($3.1 billion), compared with an average estimate of C$3.25 billion compiled by Bloomberg. Profit, excluding one-time items, was 97 Canadian cents a share, the Toronto-based company said in a statement today. That was in line with analysts’ predictions.
Rivals BCE Inc. (BCE) and Telus Corp. (T) have cut into Rogers’ wireless lead by adding smartphone subscribers more quickly. Chief Executive Officer Nadir Mohamed has fought back by investing more in the company’s Toronto Blue Jays baseball franchise and buying businesses like Score Media Inc. and a stake in Maple Leaf Sports & Entertainment Ltd. to offer more programming to subscribers.
Rogers fell 2.7 percent to C$45.83 at the close in Toronto. The stock has climbed 1.5 percent this year in Toronto trading, compared with BCE’s 6 percent gain and Telus’s 11 percent.
Rogers’s average revenue per contract customer -- a key indicator of how much each subscriber is spending on calls, video and Web surfing from a mobile device -- was C$68.77, beating the average estimate of C$64.23. Rogers signed up 64,000 customers to long-term contracts in the quarter, compared with the 77,000 average forecast of seven analysts surveyed by Bloomberg. The miss was due to consumers’ shift to two-year plans from the three-year plans that used to be more prevalent, the company said.
Rogers’s renewed investment in the Blue Jays may be paying off, according to data compiled by Bloomberg on Major League Baseball franchise values. Mohamed bankrolled the addition of five All-Stars and $165 million in payroll before last season. While the Jays missed the playoffs with a losing record, the team and its related businesses are now worth $950 million, 12th in the 30-team league.
That valuation puts the team at $573 million and the Sportsnet broadcasting business at $236 million. Sportsnet at that price is “significantly undervalued,” Keith Pelley, head of Rogers’s media business, told reporters on a conference call today.
“The Blue Jays and Sportsnet are a powerful combination in isolation but are unbelievably powerful when you put them together,” he said.
Revenue from the media business climbed 12 percent last quarter to C$440 million as more fans flocked to Jays games. Sales from the cable business climbed 4 percent to C$873 million. The company’s net income was C$464 million, or 90 cents a share, little changed from C$466 million, or 90 cents, a year earlier.
Sales for the wireless unit, the biggest division of Rogers, slipped 2 percent to C$1.85 billion as the introduction of cheaper roaming call plans to fight low-cost competitors outweighed higher data spending.
The European Commission last month proposed legislation that would ban carriers from charging premiums for roaming services across the 28-nation bloc. The Canadian government last week followed suit, vowing to help consumers reduce their phone bills in part by lowering roaming charges.
Mohamed is retiring in early December and will be replaced by Guy Laurence, who had been running Vodafone Group Plc (VOD)’s U.K. business. Laurence’s experience negotiating topics such as roaming in the U.K. will serve him well in his new role, said Mohamed.
“Guy is a seasoned veteran, who’s lived through a very competitive environment in the U.K,” Mohamed told reporters on the call. “He knows the business -- is fully aware of the challenges of getting roaming right, including the regulatory environment he’s been in.”
(Rogers held a conference call to discuss its results at 8 a.m. New York time today. For details, click here.)
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