Rogers Misses Profit Estimates as Promotion Costs Stay High

  • Company added 31,000 new postpaid wireless customers
  • Profit at media business falls nearly 30% year over year

Rogers Communications Inc., Canada’s largest wireless operator, reported fourth-quarter earnings that missed analysts’ estimates as increased competition for subscribers led to higher advertising and promotions costs.

Profit excluding certain items was 64 Canadian cents a share (45 cents), the Toronto-based company said Wednesday in a statement. Analysts predicted 69 Canadian cents, the average of estimates compiled by Bloomberg. Rogers also unexpectadly skipped a dividend increase, saying it was going to use the money to pay down debt. The shares slumped as much as 6.3 percent to C$47.68, the biggest intraday decline in more than two years.

The fourth quarter covers the busy holiday season, when Rogers fought with BCE Inc. and Telus Corp. to scoop up a wave of customers looking for new phone plans. Canada’s government in 2013 put an end to cancellation fees for contracts longer than two years, potentially doubling the number of wireless users free to switch providers in 2015.

Rogers added 31,000 new contract customers, compared with a loss of 58,000 last year. On average, analysts had estimated the company would add 24,000 new contract customers.

“Wireless competition in Q4 was more intense than it has been in years, with not only steeper discounts on handsets, but also some promotions on pricing plans,” Phillip Huang, a Toronto-based analyst with Barclays Plc, said in a Jan. 20 note to clients.

Sales rose 2.6 percent to C$3.45 billion, compared with projections for C$3.48 billion, Rogers said. The company also projected 2016 revenue would be C$13.6 billion to C$13.8 billion, compared with C$13.4 billion in 2015. Analysts had estimated Rogers would forecast 2016 revenue of C$13.8 billion.

Television revenue fell 7 percent to C$403 million as more customers ditched their cable packages for Internet-delivered alternatives like Netflix. Revenue at Rogers’s media business increased though profit fell almost 30 percent to C$56 million from the same quarter last year as advertising revenue dipped. Rogers announced 200 job cuts in its media business earlier this week.

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