TORONTO – Third quarter profits at Rogers Communications dropped 24% as Canada’s largest wireless company began to feel the impact of new wireless competitors.
Net income fell to $370 million in the three month period ended September 30th, down from $485 million at the same time a year earlier, while on an adjusted basis, net income was down 6% to $476 million. Revenue increased 3% to $3.1 billion.
"The third quarter 2010 results demonstrate continued steady growth in new subscribers, revenues and free cash flow, and the return of significant amounts of cash to our shareholders through dividends and share buybacks," said president and CEO, Nadir Mohamed, in a statement. “Importantly, we continued to make significant investments in both customer retention initiatives and opportunistic acquisitions consistent with our strategic priorities to support the future growth of the business."
While competition in the Canadian wireless market resulted in fewer net subscriber additions to Rogers’ wireless services, the company’s wireless division provided more than half of its overall operating revenue, at $1.8 billion. Wireless network revenue growth was fuelled by data revenue growth of 28% and net subscriber additions of 211,000. Wireless data revenue now comprises 28% of Wireless network revenue and was helped by the activation and upgrade of 529,000 additional smart phones during the quarter, of which approximately 33% were for subscribers new to Wireless, compared to 370,000 in the prior year quarter.
The number of new smart phone subscribers was the second highest ever in a quarter. This resulted in subscribers with smart phones, who typically generate average monthly revenue per user (ARPU) nearly twice that of voice only subscribers, representing 37% of the overall postpaid subscriber base at quarter end, up from 28% at the same time last year.
The Cable division’s revenue was $1 billion as it grew its total service units (television, Internet and telephony subscribers) by 54,000 during the quarter or 8% faster than the third quarter of 2009.
Rogers’ total number of TV subscribers stands at 2.31 million subscribers. Its digital cable subscriber base grew by 6% from September 30, 2009 to September 30, 2010, to 74% of television households passed by its cable networks, compared to 71% last year. Internet subscriber penetration is now at 72% of television subscribers and residential voice-over-cable telephony penetration is at 43% of television subscribers.
Rogers Media generated $376 million in revenue for the quarter, up 3% from the same period last year.
On a segmented basis, Wireless generated $823 million in adjusted operating profit, Cable contributed $379 million and Media $38 million.
In other company news, Rogers’ board of directors approved the creation of a Dividend Reinvestment Plan (DRIP) effective November 1, 2010. The DRIP will enable eligible shareholders to have all or a portion of their regular quarterly cash dividends automatically reinvested in additional Class B non-voting shares of Rogers’ common stock.
