TORONTO – Rogers’ third quarter profits fell 28% while revenues rose slightly over the same period last year, the company announced Thursday.
For the quarter ended September 30, 2014, Rogers posted net income of $332 million, down from $464 million in the third quarter of 2013, on operating revenue of $3.25 billion, which increased marginally from $3.22 billion year-over-year. Adjusted net income was $405 million, a 19% drop from $501 million last year.
Rogers said that consolidated revenue increased 1% this quarter, reflecting revenue growth of 2% year-over-year in Wireless and 3% in Business Solutions, while revenue in Media was steady, and was partially offset by a decline of 1% in Cable. Wireless revenue increased from higher equipment sales and moderate growth in service revenue. Cable revenue decreased as a result of Television subscriber losses over the past year, partially offset by continued Internet revenue growth and the impact of pricing changes. Media revenue was flat as growth at Sportsnet, The Shopping Channel, and the Toronto Blue Jays was offset by continued softness in conventional television and print advertising.
President and CEO Guy Laurence said that Rogers has completed the customer-centric structural reorganization announced in May dubbed Rogers 3.0.
"The business is gaining momentum with the recent unveiling of our awesome new NHL experiences and with the launch in the coming days of our shomi subscription video on-demand service," he said in a statement. "While it will take time to fully execute on our multi-year plan, Q3 results are where we expected them to be. Wireless revenue and postpaid ARPU profiles improved again this quarter and we continue to generate strong margins and operating cash flow."
Wireless
– Operating revenue increased 2% to $1.88 billion from $1.84 billion;
– Added 17,000 post-paid customers in the period, a 47% decrease from last year, and 41,000 pre-paid customers;
– Blended average revenue per user (ARPU) increased 15 cents to $60.96 from $60.81 last year;
– Postpaid churn increased to 1.31%, compared to 1.23% in the third quarter of 2013 which Rogers said was due to competitive intensity and a heightened focus towards migrating customers to current price plans to optimize subscriber value;
– Rogers activated and upgraded approximately 614,000 smartphones for new and existing subscribers this quarter, up 7% from approximately 574,000 in the same period last year;
– The percentage of subscribers with smartphones this quarter was 77% of its total postpaid subscriber base, compared to 73% year-over-year;
– Data revenue increased by 9% this quarter primarily because of the continued penetration and growing use of smartphones, tablet devices and wireless laptops, which are increasing the use of e-mail, Internet access, social media, mobile video, text messaging and other wireless data services. Data revenue exceeded voice revenue and represented approximately 52% of total network revenue this quarter, compared to approximately 48% in the same period last year.
Cable
– Overall Cable revenue decreased by 1% this quarter to $864 million due to television subscriber losses over the past year and retention-related discounting, partially offset by continued growth in subscribers to its Internet products combined with the impact of pricing changes;
– The number of cable homes passed in the second quarter was 4.02 million, compared to 3.95 million during the same period in 2013;
– Total number of television subscribers fell from 2.15 million last year to 2.04 million this quarter;
– Internet and phone subscribers increased, to 1.99 million and 1.15 million respectively, compared to 1.94 million Internet and 1.14 million phone subscribers in Q3 2013.
Media
– Operating revenue remained unchanged this quarter at $440 million as a result of higher subscription revenue generated by its Sportsnet properties, higher revenue associated with the Toronto Blue Jays, and higher sales at The Shopping Channel, and Next Issue Canada. This was offset by continued softness in conventional television and print advertising.
– Operating expenses increased by 8% this quarter due to higher player salaries of approximately $10 million this quarter at the Toronto Blue Jays, higher programming costs, costs of approximately $6 million associated with the growth of Next Issue Canada, and ramp-up costs of approximately $6 million this quarter associated with the NHL licensing agreement which became effective July 1, 2014 in advance of the current NHL season.
Business Solutions
Service revenue increased by 3% to $96 million this quarter as a result of:
– growth from the acquisitions of Pivot Data Centres and Blackiron in October and April 2013, respectively; and
– continuing execution of its plan to grow higher margin on-net and next generation IP-based services revenue; partially offset by
– the continuing decline in the legacy off-net voice and data business. Rogers said that it expects this trend to continue as it focusses the business on on-net opportunities and customers move to more advanced and cost effective IP services.
