TORONTO – Rogers’ fourth quarter profits fell 7% despite gains in its Wireless and Media divisions, the company announced Thursday.
For the quarter ended December 31, 2014, Rogers posted net income of $297 million, down from $320 million in the fourth quarter of 2013, on operating revenue of $3.37 billion, which increased 4% from $3.24 billion year-over-year. Adjusted net income was $355 million which dipped 1% from $357 million last year.
Rogers said that the lift in consolidated revenue reflected 3% revenue growth in Wireless and 20% in Media, flat revenue in Cable, and a decline of 1% in Business Solutions. Wireless revenue increased as a result of higher network revenue from the continued adoption of higher ARPU-generating simplified plans and from greater smartphone sales. Cable revenue was stable as continued Internet revenue growth was offset by decreased revenue in Television and Phone. Media revenue increased as a result of the NHL licensing agreement and growth at Sportsnet and Radio, partially offset by continued softness in conventional broadcast TV and print advertising.
President and CEO Guy Laurence said that Rogers delivered on last year’s financial guidance and is entering 2015 with a 5% dividend increase “which reflects our financial strength and confidence in the future."
"We saw a healthy acceleration in revenue growth and adjusted operating profit along with improvement in Wireless revenue and ARPU," he said in a statement. "We continued our shift from volume to value this quarter, and as expected we saw vibrations in both our Wireless and Cable subscriber metrics as we made certain commercial policy changes, consistent with our longer-term strategic goals. We remain committed to the strategy of providing our customers with added value while making the necessary adjustments to remain competitive in the market."
Wireless
– Operating revenue increased 3% to $1.90 billion from $1.85 billion, while adjusted operating profit grew 4% from $696 million to $725 million;
– Activated 836,000 wireless smartphones this quarter, compared to approximately 790,000 in the same period last year, of which 28% were new subscribers. Higher-value smartphone customers grew to represent 84% of Wireless postpaid subscribers;
– Lost 58,000 post-paid customers in the period and added 11,000 pre-paid customers;
– Blended average revenue per user (ARPU) increased $1.27 to $59.86 from $58.59 last 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 was unchanged at $871 million this quarter primarily as a result of a higher subscriber base for Internet products combined with the movement of customers to higher-end speed and usage tiers; and the November 2014 acquisition of Source Cable; offset by Television subscriber losses over the past year; and lower Phone revenue from promotional discounting.
– The number of cable homes passed in the second quarter was 4.07 million, up from 3.98 million during the same period in 2013;
– Total number of television subscribers fell from 2.13 million last year to 2.02 million this quarter;
– Internet subscribers increased to 2.01 million and Phone subscribers dipped to 1.15 million.
Media
– Operating revenue increased by 20% to $544 million this quarter as a result of revenue of approximately $100 million generated by the NHL licensing agreement that became effective for the 2014-2015 season; higher subscription revenue generated by its Sportsnet properties; higher radio revenue; and revenue growth in Next Issue Canada; partially offset by continued softness in conventional television and print advertising.
– Operating expenses increased by 15% to a loss of $466 million this quarter as a result of incremental costs associated with the NHL licensing agreement which are expensed based on the proportion of the season's games played during a specified period; partially offset by lower publishing costs related to the lower print volume; and lower programming costs due to conventional Television schedule changes.
Business Solutions
Service revenue decreased by 2% this quarter as a result of
– the continuing planned decline in the legacy off-net voice and data business, a trend that Rogers says it expects to continue as it focuses the business on on-net opportunities and customers move to more advanced and cost effective IP-based services; partially offset by
– continuing execution of its plan to grow higher margin on-net and next generation IP-based services revenue; and
– higher revenue from data centre operations.
