Rogers Q3 Profit Boosted By Media, Cable Despite Weak Wireless Growth

by Gaurav Kheterpal on October 27, 2011

Despite having an average second quarter, Rogers tried its hand at all directions in Q3 – including several unconventional business lines such as machine-to-machine (M2M) wireless connectivitybanking or home monitoring service. The carrier stamped its authority as an early mover in the LTE space by launching Canada’s first LTE wireless network in Ottawa and Toronto.

Analysts expected an improved Q3 showing and Rogers hasn’t disappointed. Despite weakened wireless growth in an increasingly competitive market environment, Rogers yesterday announced higher-than-expected third quarter numbers, due partly to gains in its media and cable divisions.

Though Rogers claims Q3 is the “strongest quarter of wireless subscriber gross additions ever,” there’s little doubt that it’s now feeling the heat of intense competition in the wireless industry. As a result, the company now plans to focus on predominantly high-value mobile subscribers to offset any customer losses through growth in wireless data revenue.

Rogers Q3 net profit rose to $491 million, up significantly from $380 million in the same quarter last year. Adjusted earnings per share increased to $0.89 from $0.83 last year. Revenue was up one per cent to $3.15 billion. The company says its wireless data revenues increased by 28 per cent and it now accounts for 36 per cent of overall wireless revenues which stood at $1.71 billion in the last quarter. Rogers media division profits jumped by 38 percent while operating profits from its cable division were relatively unchanged.

On the wireless front, Rogers added 74,000 net new postpaid subscribers, significantly lower as compared to analyst expectations of around 120,000. It added 87,000 new prepaid customers, marking one per cent growth over last year. The carrier’s churn rate for postpaid subscribers was 1.36 per cent and 3.37 per cent in the prepaid segment. Rogers attributes this year-over-year decrease in subscriber net additions to an increase in the level of post-paid churn associated with heightened competitive intensity. Overall, the carrier activated and upgraded 609,000 additional smartphones, compared to 529,000 in the prior-year quarter.

Interestingly, year-over-year postpaid ARPU decreased by three percent, largely due to a decline in traditional wireless voice revenues, offset by higher wireless data sales.

“Rogers delivered a balanced set of financial and subscriber results in the third quarter, with continued growth in the face of an extremely competitive environment,” said president and CEO, Nadir Mohamed. “The strength of our asset mix, combined with a focused execution on our priorities – wireless data growth, customer retention and managing our cost structure – enabled Rogers to generate continued strong margins and free cash flow while increasing the amount of cash returned to shareholders by double digits year-over-year.”

Mohamed pointed out that Rogers Q3 customer retention ratio is still better than competitors such as Bell Mobility which reported an overall churn in the previous quarter of 2 per cent. He made it clear that Rogers will aggressively pursue the high-value customer segment to revive its diminishing ARPU. Though Rogers launched Chatr wireless to cater to the less-valuable, less-loyal customers on pre-paid plans, its overall Q3 performance in the prepaid segment was rather disappointing.

Did you like this post? publishes daily news, editorial, thoughts, and controversial opinion – you can subscribe by: RSS (click here), or email (click here).

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

Comments on this entry are closed.

Previous post:

Next post: