By Ahmad Hathout
TORONTO – Rogers CEO Tony Staffieri said Wednesday that the company’s side agreements with Videotron that are part of its deal to acquire Shaw are “not much different” than existing ones it has in place for other competitors.
The cable giant committed to providing favourable wholesale internet access and roaming deals to the Montreal-based company, which acquired Shaw’s Freedom in the deal, to appease regulators and allay fears that the combination would diminish competition.
But over the last several months, questions were raised by competitors as to the nature of the deals and whether they would significantly advantage Videotron to the detriment of the rest of the market.
“There is no advantage in those commercial agreements that are structural advantages for [Videotron parent] Quebecor,” Staffieri said on the company’s first quarter earnings conference call Wednesday.
“Those commercial terms are not much different than agreements we otherwise have,” he added. “A key principle in doing the Shaw transaction is to make sure we do not detract value from our wireless franchise, and we’ve been very clear on that and we’re confident in that deal we put together is not going to do that.”
Staffieri reiterated that Rogers expects Quebecor to “vigorously compete” in the market, including in new lands in western Canada, and that his company is prepared to compete.
The CRTC is currently investigating the Rogers-Videotron deals, which are not public, as well as other deals in the industry that do not follow regulated tariff rates. The investigation comes after TekSavvy challenged the legality of the deals they allege violate the Telecommunications Act’s undue preference provision.
Rogers said in its reply to the TekSavvy application earlier this year that there is no undue preference in its agreements with Videotron and that the independent telecom could not draw that conclusion because it hasn’t seen the details.
Company executives also noted that Rogers didn’t follow in the footsteps of Bell and Telus in increasing roaming rates, which has prompted a concerned letter from the innovation minister and CRTC chair Vicky Eatrides publicly stating that the regulator is looking into the issue.
Since the closing of its acquisition of Shaw, Rogers said it has been in the process of transitioning pieces and integrating the company into the fold. Earlier this month, the company announced changes in the executive ranks, which most notably includes the hiring of former Innovation Minister Navdeep Bains as head of public policy.
Staffieri also pitched the company’s focus on customer service. He said Wednesday that the company is aiming to improve call answering and issue resolution times.
For the three months that ended March 31, the company reported a 6 per cent increase in revenue to $3.8 billion, with service revenue up 4 per cent to $3.3 billion – both driven by wireless and media growth. Net income was up 30 per cent to $511 million.
Wireless revenue was up 7 per cent due to higher roaming as a result of increased travel and a larger postpaid subscriber base, which sat at 9.5 million by quarter-end – up by 574,000 year over year. The company added 95,000 net new postpaid subscribers compared to 66,000 in the equivalent period last year.
Rogers also added more prepaid phone subscribers to its base for a total of roughly 1.2 million, up 97,000 year-over-year. It lost 8,000 fewer net subscribers over that time.
Cable revenues were down 2 per cent to $1.02 billion, impacted by lower service revenue but offset by higher equipment revenue. Lower service revenue was attributed to increased competition and lower video and home phone revenue.
Total retail internet subscribers was up 53,000 year-over-year to 2.3 million, with 14,000 net new subscribers in the quarter. The video subscriber base increased by 10,000 over the year to 1.52 million.
Meanwhile, landlines decreased by 67,000 year-over-year to a base by quarter-end of 823,000.
