Rogers Signals Wireless Growth to Keep Rolling; Shares Surge

Updated on
  • Big wireless subscriber number bodes well for Telus, BCE too
  • Gains seen in 2016 to continue into this year, CFO says

Rogers Communications Inc. jumped the most in six months after forecasting faster revenue growth in 2017 and saying a wave of new wireless customers was set to keep rolling.

Rogers signed up 93,000 new wireless contract customers, according to a statement from the Toronto-based company Thursday. That beat the 60,000 estimate by analysts from Canaccord Genuity Corp. and Barclays Plc. Revenue this year will grow 3 percent to 5 percent compared with about 2 percent growth in 2016, Rogers said. Shares gained as much as 3.9 percent, the most since July and were up C$1.94 to C$54.54 at 10:18 a.m. in Toronto.

Canada’s telecom industry has posted record-beating numbers of new wireless customers over the past year as companies expand their reach, selling more plans to teenagers and grandparents alike. The subscriber number bodes well for the rest of the industry. Analysts had been looking to Rogers, which reports before its rivals BCE Inc. and Telus Corp., to see if the fourth quarter would continue the wave of new wireless customers entering the market. 

“This speaks well for the wireless sector as a whole,” Aravinda Galappatthige, an analyst with Canaccord Genuity Corp. said in a note to clients.

Chief Financial Officer Tony Staffieri said the surge would likely extend into 2017 and, combined with people paying up for faster Internet service, will lead to the 3 percent to 5 percent revenue growth rate.

“You have more devices, more family members coming in,” Staffieri said. Teenagers and senior citizens, who might not have had contract phone plans in the past, are now more likely to have them and spend more money on bigger data plans, he said.

For Rogers, the quarter is the first after former Chief Executive Officer Guy Laurence left the firm. Staffieri and Chairman Alan Horn have been at the helm as the company waits for incoming CEO Joseph Natale’s non-compete clause to expire in July.

  • Sales rose to C$3.51 billion. Analysts were projecting C$3.55 billion.
  • Earnings, excluding some items, was 74 Canadian cents a share, which topped the 71-cent average of analysts’ estimates compiled by Bloomberg.
  • The company sees 2017 revenue increasing 3 percent to 5 percent, with adjusted operating profit up 2 percent to 4 percent. 
  • Rogers gained 30,000 internet customers, 14,000 more from the same period last year.
  • Rogers didn’t increase its dividend, sticking with a freeze it instituted a year ago. Staffieri said they wouldn’t change the rate of shareholder returns until Natale came on board and had a chance to assess strategy.
  • Media revenue decreased because the Toronto Blue Jays baseball team, which Rogers owns, didn’t make it as far into the Major League Baseball playoffs this year, affecting advertising revenue.
(Updates with CFO quote in fifth paragraph.)
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