- Had 77,000 new contract users compared with estimate of 13,500
- Blue Jays' baseball success helped drive media profit higher
Rogers Communications Inc., Canada’s largest wireless operator, reported profit that topped analysts’ estimates, driven by a surge in new customers and a winning streak for its Blue Jay’s baseball team.
Profit excluding certain items was 92 Canadian cents a share (70 cents) in the third quarter, the Toronto-based company said Thursday in a statement. Analysts predicted 82 Canadian cents, the average of estimates compiled by Bloomberg. Sales grew 4 percent to C$3.38 billion from C$3.25 billion a year earlier, compared with projections for C$3.32 billion.
Rogers added 77,000 new contract wireless customers, a second straight quarterly gain as the company vies with BCE Inc. and Telus Corp. for a wave of extra customers looking for new phone plans. Canada’s government in 2013 put an end to cancellation fees for contracts longer than two years, potentially leaving twice the usual number of wireless users free to switch providers this year. Eight analysts surveyed by Bloomberg said the company would add 13,500 on average.
“Wireless held up well in the marketplace during a period of heightened activity driven by the double cohort and new device releases,” Aravinda Galappatthige, an analyst with Canaccord Genuity Corp., said in a note to clients. “We would caution against interpreting this as a wireless recovery,” he said, as the rate of customers leaving the service every quarter hasn’t improved yet.
Rogers rose 4.4 percent to C$51.87 at 2:03 p.m. in Toronto. The shares have climbed 10 percent this year through Wednesday.
Profit from the company’s media division more than doubled to C$58 million from C$23 million in the same quarter last year as the success of the Blue Jays, which is owned by Rogers, boosted advertising and ticket sales. The Jays are set to play the Kansas City Royals on Friday in game six of a best-of-seven-game series for the American League championship.
“Media drove much of the profit beat, so sustainability of the results will be a topic of discussion,” Michael Rollins, an analyst with Citigroup, said in a note to clients.
Under Chief Executive Officer Guy Laurence, the company has focused on higher-paying customers, often signing up fewer new users each quarter than BCE and Telus. Laurence said the subscriber number got a boost from the larger pool of customers in the market but was also a sign consumers are coming to Rogers for extra features such as cheaper roaming and extra sports content.
A third of the company’s wireless users are using more expensive "Share Everything" plans that give them access to those features, up from 17 percent last year, Chief Financial Officer Tony Staffieri said on a conference call.
Customers flocking to the big-screened iPhone 6, released late last year, has helped too, Staffieri said, with the number of new iPhone customers jumping 28 percent compared to the same quarter last year. Nearly nine in 10 Rogers customers are now using a smartphone, he said.
“These devices continue to drive significant growth in data consumption, as customers consume roughly twice the data,” Staffieri said.