TORONTO – Rogers Communications says the economic downturn was a key factor that lead to a fourth quarter loss of $138 million.
The company took a “non-cash impairment loss” totaling $294 million on its conventional television business “to adjust its carrying value to reflect a lower assessment of fair value amidst recent recessionary declines in advertising revenues,” said the press release announcing the company’s financial results.
For the full year ending December 31, 2008, Rogers reported its operating revenues rose 12% to $11.3 billion, operating profits increased 32% to $4.1 billion and net income was up 57% to just over $1 billion.
However, the release said that an overall economic slowdown in Ontario resulted in lower net additions of most of its cable products compared to the previous year, particularly with the Internet and its home phone products.
Rogers’ Internet base subscriber base grew 19,000 during the quarter to 1.58 million, or approximately 45% penetration of homes passed by its cable networks. The year-over-year increase in Internet revenues for the three months ended December 31, 2008 reflects the 8% increase in the Internet subscriber base combined with increased ARPU (average revenue per user).
The base of cable telephony lines grew 28% from December 31, 2007 to December 31, 2008, representing 36% of its basic cable subscribers and 24% of homes passed. Rogers’ total landline phones were just over 1 million (840,000 digital phone lines and 215,000 circuit-switched subscriber lines).
Digital cable subscribers grew by 15% from the end of last fiscal year to 1.55 million, resulting in digital penetration of about 67% of basic cable households. HDTV digital cable subscribers were up 37% year-over-year to 568,000.
The cable division added 523,000 revenue generating units (RGUs), which are made up of basic cable subscribers, digital cable households, residential high-speed Internet subscribers and cable telephony subscribers.
Alan Horn, chairman and acting CEO, described Rogers’ top line growth as “a respectable performance in the face of the increasingly challenging economic backdrop.”
“Our Wireless and Cable businesses continue to generate good subscriber growth, which speaks to the quality and utility of our products,” Horn continued in the release. “Our operating results also reflect the large but successful investment our Wireless business again made this quarter in activating a very significant number of smart phone customers who will in turn provide higher than average revenue per customer and lower churn in subsequent periods.”
On the broadcast side, Rogers Media saw a 8% increase in revenue for the quarter, and 14% for the year, which it said reflects the October, 2007 acquisition of Citytv which contributed $40 million and $28 million to revenue in the fourth quarter of 2008 and 2007, respectively.
Excluding the impact of the Citytv acquisition, the Media division’s revenue for the fourth quarter of 2008 would have increased by 5% versus the corresponding period last fiscal, due to contributions from the Buffalo Bills NFL Toronto series, revenues from Major League Baseball and Sportsnet. However, this would be offset by “modest revenue declines” in its publishing and radio divisions driven by “advertising softness”, and The Shopping Channel due to a “challenging retail environment”.
Additional highlights from the RCI press release include the following:
– Generated growth in quarterly revenue of 9%, while adjusted operating profit grew 1% to $968 million as strong double-digit operating profit growth at Cable is partially offset by acquisition and retention costs from the successful smart phone campaign at Wireless and advertising revenue declines at Media.
– Wireless subscriber net additions totaled 199,000, with higher-value postpaid net additions of 158,000. Postpaid monthly ARPU increased 2% year-over-year to $74.71, driven in part by the 36% growth in data revenue to $262 million, representing approximately 18% of network revenue, while churn was further reduced to 1.12%.
– Wireless activated more than 400,000 smart phone devices during the quarter. Approximately 40% of these activations were to subscribers new to Wireless with the other 60% being to existing Wireless subscribers who upgraded devices, committed to new term contracts, and in most cases attached both voice and monthly data packages which generate considerably above average ARPU. The results of this successful smart phone campaign drove significantly higher acquisition and retention costs at Wireless.
– Wireless unveiled even faster speeds on its 3.5G next generation HSPA network, with 7.2 Mbps speeds now available from coast-to-coast to more than 75% of the Canadian population. Rogers’ 3.5G network ranks amongst the fastest mobile networks anywhere in the world and allows customers to communicate in innovative ways with mobile multimedia, download large files ultra-fast and utilize Internet speeds on the go that are similar to a standard broadband connection.
– Fido launched new branding and a suite of straightforward ‘all-in’ plans aimed at the value oriented consumer segment that include usage alerts, easy price plan switching and the option of no term contract.
– At December 31, 2008, Rogers had approximately $1.8 billion in available credit under its $2.4 billion committed bank credit facility that matures in July, 2013. This liquidity position is also enhanced by the fact that the earliest scheduled debt maturity is in May 2011. This financial position provides substantial liquidity and flexibility.
– Rogers Board of Directors approved a 16% increase in the annual dividend to $1.16 per share effective immediately, and has approved the renewal of a normal course issuer bid to repurchase up to $300 million of Rogers shares on the open market during the next twelve months.
