Wireless Data Accounts for 45% of Rogers’ Revenue

by Istvan Fekete on April 23, 2013

The investment in smartphone subsidies is paying off: Rogers can generate bigger monthly bills driven by surging data usage. Yet the battle for high-paying, continuously Internet-connected customers is heating up.

Rogers reported its first-quarter earnings on Monday, and the numbers speak for themselves: data revenue accounted for 45% of the wireless carrier’s total network revenue, up from 39% recorded a year ago.

The rapid adoption of smartphones and tablets — the trend of owning the slickest, fanciest device on the market — is benefitting Canada’s No. 1 wireless player, as users access Internet-based services that generate higher data revenues for the company.

However, the so-called retention spending increased in the first quarter to $247 million from $208 million reported a year ago. As this spending includes subsidies on smartphone upgrades, this signals the company has spent much more on providing the latest gadgets such as the iPhone or Samsung devices.

This also signals that the battle for both existing and new customers is heating up. It’s a trend that won’t slow down as carriers of all sizes compete for customers in the highly uncompetitive Canadian wireless market.

The retention spending is also paying off: Rogers activated and upgraded 673,000 smartphones, with 33% of those being for subscribers new to the wireless players. With smartphones now representing 71% of the overall postpaid subscribers, Rogers has a vested interest in keeping that rate growing, as this is the most lucrative segment for the company.

Obviously, from Rogers’ perspective, the $247 million in retention spending is an investment in the customer, because these customers, who pick up a subsidized smartphone are the ones who are driving profits for the company, as they are locked into a highly criticized three-year contract.

However, in terms of new customers, Rogers didn’t perform as well as expected. The quarterly report highlights that only 32,000 new postpaid customers were added during the January to March period, versus 47,000 reported during the same period a year ago.

With 45% of Rogers’ network revenue attributable to wireless data revenue, as customers connect to the Internet for reading email, surfing the Web and using other Internet-based services, this has pushed the carrier’s blended average revenue per user (ARPU) to $59.68, up $2.03 on a year-over-year basis.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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