Weakness in wireless business weighs on Rogers' results
Rogers Communications Inc. missed expectations for first-quarter revenue and profit as wireless subscriber additions slowed on the lack of new iconic smartphones and subdued mobile data promotions after the busy holiday season.
“Overall, it was a quiet first quarter for the industry,” chief executive officer Joe Natale said on a conference call with analysts Thursday.
Rogers reported 23,000 net wireless contract additions in the period ended March 31. That’s versus the consensus forecast of analysts for more than 60,000 and well off the 95,000 new post-paid customers in the year earlier first quarter.
The Toronto-based wireless, cable, internet and media company also missed analysts’ forecasts for new subscribers in its internet and cable divisions as it lost a worse-than-forecast 28,000 television customers. Natale said new cable additions were hit by macro-economic factors, including an easing of housing starts.
Rogers said net income was $391 million or 76 cents per share for the period, compared with a profit of $425 million or 80 cents per share a year ago when the owner of the Toronto Blue Jays recorded a special payment from Major League Baseball. Factoring out baseball-related transactions, Rogers said its net income would have been up 10 per cent from last year and adjusted net income would have been stable.
Revenue of $3.59 billion was down from $3.63 billion in the same quarter in 2018 partly on lower revenue from handset sales. Analysts on average had expected 94 cents per share in profit on $3.72 billion in revenue.
“Excluding last year’s payment by the MLB, revenue growth would have been flat,” Desjardins Securities analyst Maher Yaghi said in a note, “which is still significantly below the Street’s forecast of 2.4 per cent.”
Natale said the company “didn’t do anything really aggressive” to spur wireless subscriber additions in the quarter, which he said comes at an economic price. “So we will weigh that against growth in customer additions, in the right time of the marketplace, and save our powder for those times of the year when we really can make a difference when there are great customer adds to be had.”
He said the wireless market in Canada remains strong with room for penetration levels to grow, adding that subscriber additions may benefit from a busier second half that includes the back-to-school shopping season.
“We continue to see robust growth opportunities. It may not be as high as Q4 (2018) … but still very healthy growth overall. Overall, we have confidence in our long-term growth plans, and remain on track to deliver on our healthy outlook for 2019.”
Natale said Rogers is focused on balancing the need to bolster average revenue per user and profit margins through “disciplined pricing” while still maintaining growth in subscriber numbers and continuing to compete in the lower segment of the market via its discount and lower-priced wireless brands.
“We have no intention of yielding anything to anyone,” Natale said.
He also noted that churn — a measure of customer retention — improved to a company record 0.99 per cent from a year-earlier 1.08 per cent while average monthly revenue per user from both postpaid and prepaid subscribers improved to $54.13 from $53.68.
With a file from The Canadian Press
Michael Lewis is a Toronto-based reporter covering business. Follow him on Twitter: @MLewisStar