TORONTO – Sales of the Apple iPhone helped push third quarter net income to $495 million at Rogers Communications, up 84% over the same period last year.
The company’s third quarter results, for the period ended September 30th, also reported that consolidated revenue for the company grew 14% to $3 billion, and adjusted operating profit increased 4% to $1 billion.
“The double-digit revenue growth and continued healthy level of subscriber additions that Rogers generated in the third quarter reflect the quality and utility of our service offerings in the face of an increasingly challenging economic backdrop which we are well financed to endure," said Ted Rogers, president and CEO, in the release. "The results for the quarter also clearly reflect the substantial and very successful investment Rogers has made to bring Apple’s iPhone 3G to more than a quarter million Canadians over a very short period of time. While the upfront cost associated with adding this many iPhone subscribers so rapidly is high, it is an investment that we expect will provide considerable returns in the form of higher revenue per customer and lower churn in subsequent periods."
Rogers launched the touch screen gadget in July and reports that approximately 255,000 of the devices were activated this quarter, approximately one third of them to new subscribers.
On the broadcast side, Rogers Media saw a 14% growth in operating revenue over last year to $386 million, primarily reflecting the acquisition of Citytv which closed on October 31, 2007. The release says this contributed $32 million and $112 million to revenue in the three and nine months ended September 30, 2008, respectively, or approximately 68% and 75%, respectively, of the revenue increases.
Additional highlights from the RCI press release include the following:
* Generated continued double-digit growth in quarterly revenue of 14%, while net income increased to $495 million (or to $465 million on an adjusted basis), and adjusted operating profit less interest expense and property plant and equipment additions was steady at $442 million.
* Wireless subscriber net additions totaled 239,000, with postpaid net additions of 191,000. Postpaid monthly ARPU (average revenue per user) increased 4% year-over-year to $78.46 driven in part by the 38% growth in data revenue to $253 million, representing 16.5% of network revenue.
* Wireless launched the Apple iPhone 3G in Canada on July 11, 2008 and activated approximately 255,000 of the devices during the quarter. Approximately one-third of these activations were to subscribers new to Wireless with the other two-thirds being to existing Rogers Wireless subscribers who upgraded to the iPhone and committed to new term contracts. The vast majority of iPhone subscribers have attached both voice and monthly data packages and are generating monthly ARPU considerably above the monthly ARPU generated from Wireless’ overall subscriber base. The initial sales volumes of this device drove significantly higher acquisition and retention costs at Wireless.
* Canada’s Advanced Wireless Services ("AWS") wireless spectrum auction ended on July 21, 2008 following 39 days and 331 rounds of bidding with bids totaling $4.25 billion. Wireless was the only carrier to successfully acquire 20 MHz of spectrum across all 13 provinces/territories with winning bids that totaled approximately $1 billion, or approximately $1.67/MHz/pop.
* Cable’s Internet subscriber base grew during the quarter by 29,000 to 1.6 million, and digital cable households increased by 58,000 to reach 1.5 million of which more than 500,000 households now receive high-definition services. Cable ended the quarter with 800,000 residential voice-over-cable telephony subscriber lines, reflecting net additions of 55,000 lines for the quarter, of which approximately 23,000 were migrations from the circuit-switched platform. This brings the total penetration of cable telephony customers to 35% of basic cable subscribers up from 26% at September 30, 2007.
* Media successfully re-branded the recently acquired channel m television station in Vancouver to OMNI BC and launched two new OMNI stations in Edmonton and Calgary. OMNI’s multilingual/multicultural television stations now cover all major markets across Canada and reach approximately 75% of the country’s ethnic population. On July 31, 2008, Media also completed the acquisition of the remaining two-thirds interest in Outdoor Life Network ("OLN") that it did not already own, which joins the company’s other specialty television assets, including Sportsnet, The Biography Channel, G4TechTV and The Shopping Channel.
