TORONTO – Rogers’ second quarter profits fell 24% while revenues for the period were virtually unchanged from last year, the company announced Thursday.
For the quarter ended June 30, 2014, Rogers posted consolidated net income of $405 million, well below $532 million in the same period last year, on operating revenue of $3.21 billion, which was flat from the second quarter of 2013. Adjusted net income was $432 million, a 13% drop from $497 million last year.
Rogers said that Wireless network revenue of $1.8 billion dipped 1% year-over-year due in part to the less expensive roaming plans introduced over the past year. Adjusted operating profit was 3% higher this quarter over the same period last year, mainly because of lower volumes of subsidized smartphone sales combined with the network revenue changes.
The company added 38,000 postpaid subscribers this quarter, down 60% from the 98,000 in the second quarter of 2013. Rogers activated 588,000 smartphones, of which 31% were new subscribers, with higher-value smartphone customers growing to 76% of Wireless postpaid subscribers.
Cable revenue of $872 million was consistent with the second quarter of 2013 as continued Internet revenue growth combined with the impact of pricing changes across all product types was mostly offset by television subscriber losses. Adjusted operating profit dipped 2% from the same period last year.
Business Solutions operating revenue grew 6% to $95 million this quarter, mainly because of continuing growth in on-net and next generation services and increased revenue from the new data centre businesses, partially offset by a reduction in low margin, off-net legacy revenue. Adjusted operating profits increased by 12% to $28 million.
Media operating revenue increased 1% to $475 million this quarter due primarily to revenue growth at Sportsnet, Radio, Toronto Blue Jays and The Shopping Channel. Adjusted operating profits fell 16% to $54 million.
Noting that the company was in the midst of turnaround, president and CEO Guy Laurence said in a statement that Rogers’ pending "new customer centric structure will streamline the organization, clarify accountabilities, and improve our agility and execution."
"During the second quarter, we continued to improve churn rates, generate strong margins and successfully expand upon our sports media platform," he added.
Wireless
– Data revenue was 12% higher this quarter mainly 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 51% of total network revenue this quarter, compared to approximately 46% in the same period last year.
– Postpaid churn fell to 1.13%, compared to 1.17% in the second quarter of 2013, which Rogers attributed partly to new simplified pricing plans and the introduction of higher value roaming plans.
– Gross postpaid subscriber additions were 312,000 this quarter, or 17% lower than the same period last year, which reduced net postpaid subscriber additions to 38,000, despite the lower postpaid churn.
– Blended ARPU dipped to $59.18 compared to $59.30 during the same period last year.
Cable
– The number of cable homes passed in the second quarter was 4.00 million, compared to 3.90 million during the same period in 2013.
– Internet and phone subscribers increased, to 1.98 million and 1.16 million respectively, compared to 1.93 million Internet and 1.14 million phone subscribers in Q2 2013.
– Total number of television subscribers fell from 2.19 million to 2.07 million this quarter.
Media
– Operating revenue increased 1% on the strength of higher subscription revenue generated by its Sportsnet properties and that associated with the Toronto Blue Jays, combined with higher sales at Radio, The Shopping Channel and Next Issue Canada. This was partially offset by lower advertising revenue in television and the impact of 25 fewer NHL games in 2014 resulting from the compressed season in the prior year.
– Despite the increase in operating revenue, Rogers Media also incurred higher operating expenses during the second quarter, which were partly due to higher programming costs due to contractual rate increases and investments to secure premium and exclusive content, partially offset by savings from fewer NHL games aired in 2014; the ramp-up associated with the NHL licensing agreement which became effective July 1, 2014; and costs associated with the growth of Next Issue Canada which launched in late 2013.
