Rogers Q3 Profit Falls 9%

by Gaurav Kheterpal on July 27, 2011

The last quarter has been a mixed bag for Rogers. Although the carrier added more smartphone customers than ever before in a three-month period, it faced tough competition from Bell, Telus and other new wireless entrants. As a result, the company’s second-quarter profit dropped by nine per cent.

The company was boosted by improved margins and sales in the cable unit, but on the other hand, its wireless division continues to be a drag on results. Though the company offers two discounted services – Chatr and Fido, they’ve failed to make a significant impact in the lucrative “$15 unlimited segment”.

Although the company’s performance beat analysts’ estimates, I have no doubt that Rogers needs to do better in the wireless department if it wants to be unchallenged as ‘Canada’s largest wireless carrier’.

Net income dropped to 410 million Canadian dollars, marginally down from last year’s 452 million Canadian dollars. The company’s adjusted profit increased to 467 million Canadian dollars, from 464 million Canadian dollars. Quarterly operating revenues were 3.11 billion Canadian dollars, a minor increase compared to the 3.02 billion Canadian dollars a year ago.

Rogers activated and upgraded roughly 591,000 smartphones in the quarter. Forty per cent of those were new wireless subscribers. Smartphone users now make up 48 per cent of Rogers’ postpaid subscriber base, up from 35 per cent last year. The sharp increase in smartphone subscriber base meant wireless data revenue increased by 31 per cent as compared to last year. Despite the strong growth in wireless segment, the company’s wireless adjusted operating profit declined seven per cent primarily due to costs associated with the record number of new smartphone sales and ongoing declines in voice ARPU.

Rogers reported that the average monthly bill for wireless customers dipped by 4.8 percent, thereby taking a significant toll on the ARPU statistics. The carrier claims an increasing number of people are texting and emailing more and calling less, thereby leading to a loss in voice revenues.

Chief executive Nadir Mohamed says he’s satisfied with the company’s Q3 performance. On a conference call, he said “The latest results continue to reflect the impact of increased competition, particularly on the (wireless) voice side.”

Wireless data now accounts for 35 per cent of total revenue flowing from Rogers’ wireless network. Earlier this month, the carrier launched Canada’s first Long Term Evolution (LTE) wireless network in Ottawa. LTE delivers mobile broadband at speeds several times faster than the HSPA+ technology, that’s used by rivals Bell and Telus and it might well prove to be Rogers’ trump card for the next couple of quarters.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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