NEWS

More wireless customers push Rogers' revenue higher

07/24/2012 01:59 EDT | Updated 09/23/2012 05:12 EDT
Rogers Communications Inc. saw weaker profit in the second quarter, even as the key wireless unit added 87,000 new customers.

The Toronto-based telecommunications company pulled in $3.106 billion in revenue between March and June, ever so slightly ahead of the figure for the same time a year earlier. It was also less than the $3.14 billion the company itself was anticipating.

Profit dipped 2.4 per cent to $400 million, or 75 cents a share, down from $410 million, or 74 cents a share, a year earlier.

Tougher competition in key wireless and cable divisions were cited as factors.

Rogers added 87,000 net new subscribers during the period. Known as post-paid customers and a key measure of a wireless company's competitive health, they are usually on three-year contracts for BlackBerry, Apple or Android smartphones.

Smartphone users now make up 63 per cent of Rogers' post-paid subscriber base, up from 48 per cent in the same quarter last year. But Rogers was able to squeeze less revenue from each of their customers, on average. The monthly average revenue per wireless user (known as ARPU) dropped to $68.46 in the quarter compared with $70.07 in the same quarter in 2011.

Wireless data revenue was up by 13 per cent in the quarter, and data currently makes up 39 per cent of the division's revenue. The company activated 629,000 smartphones during the quarter.

Customers with smartphones tend to generate more revenue for Rogers than those with conventional cell phones because they rack up data and texting charges.

Cable also weak

The cable division also lost 4,000 subscribers in the quarter due to the end of the post-secondary school year, which saw students move, and competition from Bell's Internet Protocol TV service.

Rogers has been cutting costs of late, eliminating more than 650 jobs so far this year. The company's strategy, CEO Nadir Mohammed said, is based on increasing revenue.

"To be clear our definition of winning longer term is from top-line growth," chief executive Nadir Mohamed said during a conference call to discuss the results.

"We are focused on executing on our roadmap and we believe we will achieve our financial targets," chief financial officer Anthony Staffieri added.

"There are obviously continued pressures facing our businesses, but we're making meaningful progress around a number of cost management initiatives that we believe can offset the topline pressure that we have seen to date."

Rogers shares were up $1.76 or almost five per cent, to $39 on the Toronto Stock Exchange Tuesday.

Rogers is Canada's largest cable TV operator and wireless operator and is a major magazine publisher, TV and radio broadcaster and owner of the Toronto Blue Jays. It also owns a slate of print magazines including Maclean's and Chatelaine.

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