Rogers Adds the Most Wireless Customers in 8 YearsBy
New CEO Natale also cuts quarterly churn, boosts profit
Cable segment shows growth; revenue less than expected
Six months into his new job, Rogers Communications Inc. Chief Executive Officer Joe Natale presided over the biggest addition in wireless customers and the best third-quarter churn rate in eight years.
Toronto-based Rogers added 129,000 new wireless postpaid customers, above the 116,000 average of analysts’ estimates. Profit was C$1.01 a share excluding some items, compared with the average analyst estimate of C$1. Revenue was C$3.58 billion ($2.87 billion), up from C$3.49 billion a year ago but less than the C$3.62 billion average estimate. That weighed on the shares, which fell 0.6 percent to C$66.44 at 10:30 a.m. in Toronto.
“The stock’s had such a strong performance year-to-date that maybe expectations had gone a little too high coming into the quarter,” Edward Jones analyst David Heger said in a phone interview. Rogers was up 29 percent through Wednesday. “When you’ve had a big run like that, the earnings report needs to be across the board stronger than expected to keep the momentum going.”
The company boosted its forecast for 2017 adjusted operating profit growth to 5 percent to 6 percent from 2 percent to 4 percent. Churn, or the percentage of people canceling or not renewing their plans each quarter, was 1.16 percent for postpaid customers, the company said.
The results boost confidence in CEO Natale’s efforts to improve customer service and retention, a key goal since he joined Rogers from rival Telus Corp. in April. The company reported on Thursday that adjusted wireless operating margin expanded by 80 basis points and Natale said on a conference call that company is on track for a 100-basis points improvement in wireless and 200-basis point improvement in cable.
“We significantly grew subscribers, revenue, adjusted operating profit, and margins," said Natale in a statement Thursday. Wireless revenue growth was driven by new subscribers and higher-rate plans. Media revenue dropped 3 percent as last year’s boost from the World Cup of Hockey disappeared and publishing sales fell in the shift to digital media.
Wireless makes up about 60 percent of the company’s sales and cable about 25 percent, according to a report from Bloomberg Intelligence. Cable revenue grew 1 percent. Rogers is planning to roll out Comcast Corp.’s X1 cable system in 2018, which should jump-start growth in their cable business, according to Bloomberg Intelligence. The video platform makes it easier to search for shows and movies on TV and Netflix from a cable set-top box.
“At some point later in 2018, we’ll do a full commercial launch,” Natale said on the call. “I call it the ‘loud and proud phase’ where you will see advertising in all forms announcing the arrival of our X1 platform.”’
When Comcast first rolled out their X1 platform, they saw their TV subscriber numbers switch from significant subscriber losses to gaining subscribers, Heger said. Canada’s Shaw Communications Inc. also saw a similar growth in subscribers after rolling out their X1 platform.