Rogers Shares Rise as Wireless User Additions Almost Tripleby
Profit gains limited as marketing, phone subsidy costs rise
Company adds 12,000 internet customers in second quarter
Rogers Communications Inc., Canada’s second-biggest media and telecommunications company, rose the most in nine months after adding almost twice the number of wireless customers in the second quarter than analysts had projected.
Earnings excluding some items were 83 Canadian cents a share, the Toronto-based company said in a statement Thursday. That exceeded the 82-cent average of estimates compiled by Bloomberg. Sales of C$3.46 billion ($2.65 billion), compared with predictions of C$3.48 billion. Rogers added 65,000 wireless contract customers, up 41,000 from a year ago. Nine analysts surveyed by Bloomberg predicted a gain of 35,000 on average.
Rogers shares climbed as much as 4.6 percent to C$56.08, the biggest intraday increase since October. The stock had risen 12 percent this year through Wednesday’s close.
The quarter suggests Chief Executive Officer Guy Laurence’s focus on customer service, cheaper international roaming plans and bundling internet and mobile phone service together is paying off. Average revenue per wireless user increased and the number of people leaving the service dropped.
Still, the subscriber gains didn’t lead to a sizable jump in profit, as Rogers increased spending on promotions and smartphone subsidies to get consumers to buy its plans. The weakened Canadian dollar also hurt revenue because Rogers buys phones from manufacturers like Samsung Electronics Co. Ltd. and Apple Inc. in U.S. dollars.
“Despite lingering wireless margin pressure, postpaid net additions were strong while cable results were slightly better than expected,” Drew McReynolds, an analyst with RBC Capital Markets, said in a note to clients. “Results reflect a notable improvement after a slow start to the year.”
During calls with journalists and analysts on Thursday, Laurence stressed that the quarter was just as competitive as any other, contradicting some analysts who had previously said competition weakened over the last several months.
“All the players are slugging it out to win the affections of customers,” Laurence said.
Rogers is the first among its biggest peers to report earnings this season, with Telus Corp. and BCE Inc. results due in August.
- Rogers added 12,000 internet customers during the quarter. A year earlier, the company gained 4,000 broadband customers.
- Average revenue per wireless customer was C$60.18, compared with projections for C$59.92.
- Profit at its media division was unchanged at C$90 million from a year earlier as the company cut costs and as the Toronto Blue Jays baseball team, which Rogers owns, saw success on the field, offsetting declines in advertising revenue.
- Wireless equipment revenue, or smartphone sales, dropped 27 percent to C$143 million from a year earlier.
- Rogers added landline phone customers for the first time in two years as they bundled the service with internet and mobile-phone plans.