Rogers Quarterly Revenue Improves, Wireless A Mixed Bag

by Gaurav Kheterpal on July 25, 2012

In April, Rogers’ weak performance set the alarm bells ringing as quarterly profit dropped by 16 percent largely due to rising competition in cable and wireless divisions. In an effort to reduce costs, Rogers last month announced that it will eliminate 375 jobs across a variety of skills and including some management and sales positions.

Analysts expected a better showing from Rogers this quarter, riding on the cost-cutting benefits and the company hasn’t disappointed. The company yesterday reported second-quarter profit that beat analysts’ estimates. However, net income declined 2.4 per cent to $400 million, or 75 cents per share, off from $410 million a year ago, or 74 cents per share. Revenue was $3.11 billion, up slightly from $3.1 billion in the comparable period

All in all, Rogers improved its earlier performance even though weak wireless sales continue to be a cause for concern.

Rogers says it activated and upgraded 629,000 smartphones, a marginal increase from 591,000 compared to last year. Out of these, 87,000 were new postpaid activations. The company now boasts of 9.3 million userbase which include 7.7 million postpaid and 1.6 million prepaid subscribers. Rogers continues to gain in the smartphone segment as 63 per cent of its postpaid subscribers now belong to this category. Wireless data revenue rose by 13 per cent and it now represents 39 per cent of wireless unit revenue.

On the other hand, Rogers’ cable division continued its downfall as cable subscriptions dropped by 21,000. It’s believed that Rogers lost 4,000 cable subscribers to Bell.

“We accelerated a number of cost-management initiatives aimed at offsetting the top-line (revenue) pressures and worked on changes that will address the topline in the coming quarters,” chief executive Nadir Mohamed said on a conference call to discuss the second-quarter results.  “To be clear, our definition of winning longer term is from top-line growth. Where we saw stable or modest growth in wireless and cable in Q2, we’re committed to improving this trajectory.”

Analysts believe Rogers might be forced to continue its cost-reduction measures to cope up with the competition and maintain its wireless margins. Earlier this month, the company announced that it will launch LTE services in 28 more cities by the end of this year. If Rogers sticks to the advertised rollout plan, it would be in a total of 35 of Canada’s top markets by the end of 2012, covering 60 per cent of the Canadian population.

Rogers would be hoping to get increased revenues from its LTE penetration as well as a better showing from new business lines such as mobile banking.

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

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