Rogers Communications Inc. RCI-B-T +1.43%increase saw its fourth-quarter profit decline by 35 per cent to $328-million, while its revenue rose 28 per cent to $5.34-billion.
The profit for the three-month period ended Dec. 31 amounted to 62 cents per share, down 38 per cent from $1.00 per share during the same quarter last year.
The Toronto-based telecom giant attributed the lower profit to higher depreciation and amortization on assets it acquired when it took over Shaw Communications Inc., higher financing costs and higher restructuring, acquisition and other costs, primarily due to the takeover and integration of Shaw.
After adjusting for some of those items, Rogers had $630-million of profit, up 14 per cent from a year ago.
The adjusted profit amounted to $1.19 per share, surpassing analyst expectations of $1.12 per share for adjusted earnings and revenue of $5.27-billion, according to the consensus estimate from S&P Capital IQ.
“Today, Alberta and B.C. are our fastest growing markets, and we’re gaining healthy market share,” Rogers president and CEO Tony Staffieri told analysts during a conference call Thursday. “We said we would increase competition in the west and we have.”
Rogers added 111,000 net new wireless customers during the quarter, down from 186,000 a year ago. On a net basis, the telecom added 184,000 postpaid wireless customers but lost 73,000 prepaid customers. (Postpaid customers are billed at the end of the month for the services they used, versus prepaid customers, who pay upfront for wireless services.)
Churn – the rate of customer turnover on a monthly basis – in the telecom’s postpaid subscriber base increased to 1.67 per cent, from 1.24 per cent during the fourth quarter of 2022.
During Thursday’s conference call, TD Securities analyst Vince Valentini called the churn figure the highest “we’ve seen in a long time.”
However, Mr. Staffieri said he is “not concerned about what we’re seeing on churn.”
“What we saw in the fourth quarter was a heightened level of what I would call promotional activity in the bottom end of the market … our focus was on the premium,” Mr. Staffieri said.
Wireless ARPU, or Average Revenue Per User, was $57.96, down 73 cents from a year ago when it came in at $58.69.
The company also issued its financial guidance for 2024, projecting that service revenue will grow between 8 to 10 per cent while adjusted EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization – is expected to increase between 12 to 15 per cent.
The company anticipates capital expenditures of $3.8-billion to $4-billion and free cash flow of $2.9-billion to $3.1-billion, up from $2.4-billion in 2023.
Scotiabank analyst Maher Yaghi said Rogers is executing well on “merger related synergies” and that its wireless results “continue to show strong momentum supported by immigration growth.”
Mr. Yaghi wrote in a research note that he expects Rogers to continue exerting additional pressure on its competitors, “but not necessarily with lower prices; actually we have seen Rogers push price increases lately.”
Rather, the competitive pressure will come from “beefed up marketing, customer service improvements with AI and new potential product offerings like fixed wireless access to fill in areas where the company does not have a fixed line high speed internet solution,” Mr. Yaghi wrote.
Shares of Rogers rose $1.05, or 1.67 per cent, to $63.85 in Thursday morning trading on the Toronto Stock Exchange.
Leave a Reply
You must be logged in to post a comment.