Rogers Communications Inc posted a 23 percent rise in quarterly earnings on Wednesday, driven by wireless data revenue growth and an improving economy. It’s noteworthy that Rogers curtailed its advertising budget in the first quarter, leading to lower-than-expected subscriber additions. Despite the lower spending on advertising, it managed to report a net income of $408 million thanks to a 40 per cent increase in wireless data revenue. Rogers has made a conscious effort to encourage customers to migrate from traditional and outdated cellphones to smartphones, which open up new avenues of revenues from web surfing, email and other data-centric activities.
It’s phenomenal that nearly one-third of Rogers’ customers now use 3G smartphones. The company reported 348,000 new smartphone activations and added nearly 47,000 new wireless subscribers during the last quarter. Rogers’ strategy of migrating users to smartphones seems to be paying rich dividends so far and its last quarter ARPU stands at an impressive $72.14, much higher than that of arch rivals TELUS and Bell Mobility.
Rogers has also benefited from an improving economy which boosted its TV, internet and residential phone business. Company CEO Nadir Mohamed, who will head Rogers’ presentation to shareholders Thursday at its annual general meeting in Toronto, described the quarter as “solid”. In his words, Rogers will continue to focus on “high value customers”, referring to smartphone users with high-end data plans. He further clarified that Rogers is in no rush to move its network from HSPA+ to LTE. Bob Berner, Rogers CTO added that it will be some time before LTE handsets with a voice client are available. Rogers is planning to focus more on existing wireless data business rather than joining the LTE rat race. Coincidentally, Shaw Communications had recently announced its aggressive plans to launch a LTE powered wireless data network late next year.
The last quarter has been a mixed bag for Rogers. The company has cut costs on advertising and laid-off people in order to improve its bottom line as it prepares for vigorous competition from new entrants such as WIND Mobile, Mobilicity and Videotron. New entrants, CRTC regulations, New Pricing Plans and what not – I’d expect this quarter to be much more exciting and happening than the last one. What do you think?